UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 28, 1997
or
Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission File Number 0-11438
BURR-BROWN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 86-0445468
(State of Incorporation) (IRS Employer I.D. No.)
6730 South Tucson Boulevard
Tucson, Arizona 85706
(Address of principle executive offices)
(520) 746-1111
(Registrant's telephone number)
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
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, not including shares held in treasury, as
of the close of the period covered by this report.
Common Stock, $0.01 par value 24,038,294 Shares
BURR-BROWN CORPORATION AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION Page #
Item 1 Financial Statements (Unaudited)
Consolidated Statements of Income, Three and
Six Months Ended June 28, 1997, and
June 29, 1996 3
Consolidated Balance Sheets, June 28, 1997,
and December 31, 1996
4
Consolidated Statements of Cash Flows, Six
Months Ended June 28, 1997, and
June 29, 1996 5
Notes to Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis
of Financial Condition and Results of
Operations 7
PART II. OTHER INFORMATION
Item 4 Submission of Matters to a Vote of
Security Holders 10
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibit 10: Amended and Restated
Burr-Brown Corporation 1993 Stock
Incentive Plan 11
Exhibit 11: Computation of
Consolidated Earnings Per Share 26
(b) Reports on Form 8-K: The Company
did not file any reports on Form 8-K
during the quarter ended June 28, 1997
SIGNATURES
Signature Page 27
PART I. FINANCIAL
INFORMATION
BURR-BROWN CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited)
(In thousands except per
share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
Jun. 28, Jun. 29, Jun. 28, Jun. 29,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net Revenue $62,505 $58,181 $117,277 $119,355
% increase (decrease) in 7% (16%) (2%) (8%)
revenue over prior year
Cost of Goods Sold 31,237
28,427 58,637 58,924
Gross Margin 31,268 29,754 58,640 60,431
% of revenue 50% 51% 50% 51%
Expenses:
Research & Development
7,952 7,293 15,171 14,636
% of revenue 13% 13% 13% 12%
Sales, Marketing, General and
Administrative 13,071 14,061 24,617 28,890
% of revenue 21% 24% 21% 24%
Total Operating Expenses
21,023 21,354 39,788 43,526
% of revenue 34% 37% 34% 36%
Income from Operations
10,245 8,400 18,852 16,905
% of revenue 16% 14% 16% 14%
Interest Expense
113 172 215 370
(Gain) from Sale of - - (6,680)
Subsidiary -
Other (Income) Expense
(936) (949) (1,819) (2,070)
Income Before Income Taxes
11,068 9,177 20,456 25,285
% of revenue 18% 16% 17% 21%
Provision for Income Taxes
3,321 2,570 6,137 7,080
Effective Tax Rate 30% 28% 30% 28%
Net Income $7,747 $6,607 $14,319 $18,205
% of revenue 12% 11% 12% 15%
Earnings per Common Share $0.31 $0.26 $0.57 $0.72
(1) (1)
Shares used in per common 25,270 24,988 25,138 25,200
share calculation (1) (1)
<FN>
(1) Common share information reflects a 3 for 2 stock
split effective April, 1997.
See Notes to Consolidated
Financial Statements.
</TABLE>
BURR-BROWN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
<TABLE>
<CAPTION>
Jun. 28, Dec. 31,
1997 1996
ASSETS (Unaudited)
<S> <C> <C>
Current Assets
Cash and Cash Equivalents $32,523 $38,433
Short-Term Investments 2,999 14,407
Trade Receivables 52,743 39,546
Inventories 50,459 49,570
Deferred Income Taxes 7,619 6,705
Other 9,355 4,867
------- -------
Total Current Assets 155,698 153,528
Long-Term Investments 40,961 36,537
Land, Buildings, and Equipment
Land 3,417 3,427
Buildings and Improvements 26,056 25,344
Equipment 134,131 122,726
------- -------
163,604 151,497
Less Accumulated Depreciation (89,987) (83,967)
------- -------
73,617 67,530
Other Assets 2,874 3,993
------- -------
$273,150 $261,588
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes Payable $11,298 $14,533
Accounts Payable 15,940 17,641
Accrued Expenses 5,094 3,568
Accrued Employee Compensation
and Payroll Taxes 8,299 8,194
Deferred Profit from
Distributors 8,424 7,462
Income Taxes Payable 3,920 3,129
Current Portion of Long-Term
Debt 922 1,087
------- -------
Total Current Liabilities 53,897 55,614
Long-Term Debt 1,789 1,830
Deferred Gain 374 1,122
Deferred Income Taxes 1,709 1,709
Other Long-Term Liabilities 746 1,907
Stockholders' Equity
Preferred - -
Stock
Common Stock 252 166
Additional Paid-In Capital 92,316 90,326
Retained Earnings 131,599 117,467
Equity Adjustment from Foreign
Currency Translation 2,366 2,881
Unrealized Loss on Investments (434) -
Treasury Stock (11,464) (11,434)
--------- ---------
214,635 199,406
--------- ---------
$273,150 $261,588
<FN>
See Notes to Consolidated Financial Statements
</TABLE>
BURR-BROWN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands of dollars)
<TABLE>
<CAPTION>
Six Months Ended
June 28, June 29,
1997 1996
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income $14,319 $18,205
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 6,381 6,498
Amortization of Deferred Gain (748) (748)
Provision for Inventory Reserves 1,537 3,334
Benefit from Deferred Income Taxes (594) (2,744)
Increase (Decrease) in Deferred Profit 962 1,560
from Distributors
Gain from Sale of Subsidiary - (6,680)
Other (377) (104)
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Trade Receivables (13,173) 3,647
(Increase) Decrease in Inventories (2,681) (7,206)
(Increase) Decrease in Other Assets (3,383) (3,697)
Increase (Decrease) in Accounts Payable (1,832) 379
Increase (Decrease) in Accrued Expenses 1,484 (3,366)
and Other Liabilities
Net Cash Provided by Operating Activities 1,895 9,078
INVESTING ACTIVITIES:
Purchases of Investments (19,396) (3,963)
Maturities of Investments 25,651 27,813
Purchase of Land, Buildings and Equipment (12,123) (14,859)
Proceeds from Sale of Equipment 23 374
Proceeds from Sale of Subsidiary - 12,804
Net Cash Provided by (Used in) Investing (5,845) 22,169
Activities
FINANCING ACTIVITIES:
Proceeds from Short-Term and Long-Term
Borrowings - 7,158
Payments on Short-Term and Long-Term
Borrowings (3,800) (586)
Proceeds from (Payments for) Capital Stock
Activity, Net 1,859 (7,231)
Net Cash Used in Financing Activities (1,941) (659)
Effect of Exchange Rate Changes (19) 21
Increase (Decrease) in Cash and Cash Equivalents (5,910) 30,609
Cash and Cash Equivalents at Beginning
of Year 38,433 42,477
Cash and Cash Equivalents at End of Six
Months $32,523 $73,086
<FN>
See Notes to Consolidated
Financial Statements.
</TABLE>
BURR-BROWN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands)
1. BASIS OF PRESENTATION
The consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. 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
such rules and regulations. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating
results for the three months and six months ended June 28, 1997, are
not necessarily indicative of the results to be expected for the
year ending December 31, 1997. For further information, refer to
the consolidated financial statements and footnotes thereto included in
the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, filed with the Securities and Exchange
Commission.
In February, 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share, which is required to be
adopted on December 31, 1997. At that time, the Company will be
required to change the method currently used to compute earnings
per share and to restate all prior periods. Under the new
requirements for calculating primary earnings per share, the
dilutive effect of stock options will be excluded. The impact is
expected to result in an increase in primary earnings per share in
the second quarters ended June 28, 1997, and June 29, 1996, of $0.01
and $0.02 per share, respectively, and an increase in primary
earnings per share in both the first six months ended June 28,
1997, and June 29, 1996, of $.03 per share. The impact of Statement
128 on the calculation of fully diluted earnings per share for
these periods is not expected to be material.
2. INVENTORIES
Inventories consist of the following:
Jun. 28, Dec. 31,
1997 1996
Raw Material $10,002 $10,960
Work-in-Process
Finished Goods 23,017 20,227
17,440 18,383
$50,459 $49,570
3. TAX RATE
The effective tax rate for 1997 is estimated to be 30%. The
Company's effective tax rate is lower than the U.S. statutory rate
due to expected benefits from tax exempt investment income, a
foreign sales corporation, and tax credits.
4. STOCK SPLIT
On March 4, 1997, the Company's Board of Directors declared a three
for two stock distribution to stockholders of record on March 18,
1997, payable in April, 1997. Fractional shares were paid in cash
to those stockholders whose shares on the record date were not
evenly divisible by two.
5. CONTINGENCIES
Subsequent to March 29, 1997, the Company settled a patent infringement
case that had been outstanding at December 31, 1996. The plaintiff
had alleged that Burr-Brown had infringed upon its Small Computer
System Interface (SCSI) terminator patents. The terms of the
settlement agreement, which are confidential, are not expected to
materially impact the Company's financial condition, results of operations,
or cash flows.
BURR-BROWN CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion and analysis may contain forward-looking
statements that involve risks and uncertainties. Factors that might
cause actual results to differ from those currently anticipated
include, but are not limited to, those discussed under "Factors
Affecting Future Results."
RESULTS OF OPERATIONS
Net income for the second quarter of 1997 was $7.7 million or $.31
per share. This compares to net income of $6.6 million or $.26 per
share for the preceding quarter and to net income of $6.6 million or
$.26 per share for the year ago quarter. Net income for the first
six months of 1997 was $14.3 million or $.57 per share. This
compares to $18.2 million or $.72 per share for the same period in
1996. The first six months' net income of 1996 is comprised of
income from recurring operations of $13.4 million or $.53 per share
and a non-recurring gain of $4.8 million or $.19 per share relating
to the sale of Power Convertibles Corporation (PCC), a subsidiary
sold in the first quarter of 1996. Excluding this gain, compared to
the first six months of 1996, net income increased by 6.9%.
Second quarter new order bookings were up significantly from the
second quarter of 1996 and were higher than bookings in the
preceding first quarter of 1997. For the first six months of 1997,
new order bookings have increased substantially from the same period
last year.
Revenue for the second quarter of 1997 was $62.5 million, an
increase of 14.1% from the first quarter this year and an increase
of 7.4% from the second quarter of 1996. Sales into all geographic
regions were up sequentially with the exception of Europe which
remained flat. All product lines were up sequentially, with digital
audio/video and communications products increasing the most.
Revenue for the first six months of 1997 was $117.3 million. Net of
1996 PCC activity, this was $1 million or 1% above 1996 revenue for
the same period.
Second quarter gross margin was sustained at 50% of sales
sequentially. This was due to various factors. A major reason was
that production yields for the quarter broke the Company records
set last quarter, and further manufacturing spending efficiencies
were achieved. Like product pricing remained stable. Product mix
continues to shift toward higher volume products with lower average
selling prices without having an adverse effect on aggregate gross
margin. A higher proportion of revenue for the second quarter was
realized from externally foundered products thus limiting
improvements in internal operating leverage. Although gross margin
benefited from lower wafer prices from external fab foundries,
the lack of increased internal wafer fab utilization constrained
overall gross margin gains. Implementation of the Consilium Workstream
Manufacturing Execution System (MES) was completed in the Tucson factory
assembly and test area, thereby bringing the entire location onto this
system. Year to date gross margin at 50% of sales was slightly lower
than the first half of last year, primarily the result of product mix
changes and a lower level of factory utilization. The Company's long
term model for gross margin is 53%, and management expects to make
progress toward that objective during the current year to the extent that
internal factory utilization increases. Gross margin improvements should
be realized if there is an acceleration in revenue growth.
Operating expenses for the second quarter were higher than the
previous quarter but declined as a percent of sales to 33.6% from
34.3%. Research and Development (R&D) spending was up sequentially
about $700,000 or 10% to a total of 12.7% of revenue. Hiring and wafer
and mask expenses relating to new product development accounted for
the increase. R&D expenses for the first half of 1997 were 3.7%
higher than those of the same period last year. R&D expenses for the
first six months of 1997 were 12.9% of revenue as compared to 12.3%
for the same period last year. This reflects management's strategy to
increase R&D investment as a primary driver of revenue growth. The
Company's model ratio for R&D is 14% of revenue, and management expects
to be near that level for most of the remainder of the current year in
order to support new product introductions and to continue development
of next generation, proprietary wafer fab processes.
Sales, Marketing, General and Administrative (SMG&A) expenses for
the second quarter of 1997 declined to 20.9% of revenue from 21.1%
in the preceding quarter. In absolute terms, SMG&A expenses
increased by $1.5 million over the previous quarter due to
increases in sales commissions, promotional expenses, and some
hiring. SMG&A expenses were reduced by nearly $1 million or 7%
from the second quarter 1996 level, reducing this ratio from 24.2%
of revenue. For the first six months of 1997, SMG&A expenses were
$4.3 million or 15% lower than those of the comparable period of
1996. For the same periods, SMG&A expense declined from 24.2% of
revenue to 21% of revenue. The Company's long term model for SMG&A is
18% of revenue. In order to further reduce SMG&A, the Company has
greatly expanded use of third party distribution to a point where
now about half of worldwide revenue is derived from this channel.
This not only reduces selling expenses but also expands market
coverage and allows the Company's direct sales force to focus on
key accounts. The Company is consolidating all administrative,
logistics, and inventory functions in three regional service
centers worldwide. The adoption of a common worldwide information
system is expected to further reduce administrative costs. During
the second quarter, the Company completed the second leg of this
initiative with the implementation of the SAP suite of business
applications in Europe and the transfer of all administrative,
logistics, and finance functions for the region to its U.K factory
location. An increase in the proportion of large product
opportunities, especially as regards digital audio and video and
communication application specific standard products, may reduce
the overall cost of selling.
Income from operations improved to 16.4% of revenue in the second
quarter of 1997, up from 15.7% in first quarter of 1997 and from
14.4% in the second quarter of last year. This improvement was
primarily due to increased operating leverage brought about by
revenue growth and operating expense control. The Company's long term
operating profit model is 21%, which the Company plans to achieve
by gross margin expansion, constraint on SMG&A expenses, and
revenue growth. The Company intends to grow revenue by R&D
investments, increased penetration of traditional markets, and
expanded participation in new, emerging markets. The Company plans
to make further progress on this ratio during the remainder of this
year.
The tax rate held constant with the first quarter of this year at
30%. This is up from the 25.5% tax rate of 1996 due to the absence
of any one-time favorable tax events. The Company expects the tax
rate to be approximately 30% for all of 1997. Long term
expectations are that the tax rate will trend toward the federal
statutory rate of 35%. The Company will, however, continue to
aggressively pursue opportunities to reduce its worldwide tax
expense, including the continued migration of income to lower tax
rate jurisdictions.
Net income for the quarter was $7.7 million or 12.4% of revenue, up
from $6.6 million or 12.0% of revenue last quarter. Net income was
up 17.9% sequentially on a revenue increase of 14.1%. The
Company's long term model for profit after tax is 15% of revenue.
FOREIGN OPERATIONS
International markets constitute a majority source of the Company's
revenues. The resulting transactions have exchange rate
fluctuation risk associated with them. Exchange rate risk is
reduced through the natural hedges afforded by the Company's
foreign operations, dollar-based or dollar-indexed sales
transactions whenever possible, and by the purchase of forward
foreign exchange and option contracts to hedge its foreign currency
net accounts receivable due from the international subsidiaries.
In addition, the Company has entered into forward contracts and
option contracts against anticipated foreign exchange cash flows.
These contracts are in three primary currencies: Japanese Yen,
British Pounds, and German Marks. Exchange rate fluctuations can
also affect the Company's reported revenue to the extent that the
international subsidiaries' sales are in non-indexed foreign
currencies but reported in the consolidated financial statements in
U.S. dollars using a weighted average exchange rate. When compared
to exchange rates in effect during the first half of 1996, the effect
of foreign exchange rate changes in 1997 had approximately a 5%
unfavorable impact on 1997 year to date revenue. Hedging activity
resulted in a much smaller unfavorable impact on net income.
FACTORS AFFECTING FUTURE RESULTS
The foregoing plans are subject to a number of risks and
uncertainties, including the following: Factors that could
materially and adversely affect net revenue, gross margin, and
profitability include the volume and timing of orders, changes in
product mix, market acceptance of the Company's and its customers'
products, competitive pricing pressures, fluctuations in foreign
currency exchange rates, new product introductions, and
fluctuations in manufacturing yields. Average selling prices
typically decrease over the life of particular products. If the
Company is unable to introduce new products with higher average
selling prices or reduce manufacturing costs to offset decreases in
the prices of its existing products, the Company's operating
results will be adversely affected. In addition, the Company is
limited in its ability to reduce costs quickly in response to any
revenue shortfalls. To meet anticipated future demand and to
utilize a broader range of fabrication processes, the Company
may increase its manufacturing capacity. Given the
complexity and expense of designing and constructing a significant
expansion of a semiconductor fabrication plant, during the
construction of the additions, the Company's manufacturing yields
could be materially and adversely impacted. The Company is subject
to several risks associated with its international operations;
including unexpected changes in regulatory requirements, delays
resulting from difficulty in obtaining export licenses for certain
technology, foreign exchange fluctuations, tariffs and other
barriers and restrictions, and the burdens of complying with a
variety of foreign laws. The semiconductor industry is intensely
competitive. Many of the Company's competitors have substantially
greater financial, technical, marketing, distribution, and other
resources than the Company. In the event of a downturn in the
market for analog circuits, companies that have broader product
lines may be in a stronger competitive position than the Company.
Other risks potentially affecting future operating results are set
forth in the Company's prior filings with the Securities and Exchange
Commission.
FINANCIAL CONDITION
The Company considers its financial position to be very sound. At
June 28, 1997; cash, equivalents, and investments of $76.5 million
had declined by $12.9 million from 1996 year end primarily due to
capital equipment purchases of $12 million, an increase in accounts
receivable and a decline in debt. Lower capital expenditures,
reduced inventories relative to sales, and improvements to accounts
receivable days sales outstanding are expected to generate a more
positive cash flow over the next several quarters.
Inventories declined by $1 million during the second quarter.
Inventory to quarterly sales ratio was reduced to 81% from 94%. As
compared to 1996 year end, inventories increased by less than 2%.
The Company expects that its inventory reduction program which
includes cost and cycle time reductions, increased use of the
distribution channel, consolidation of inventories in regional
service centers, and improved manufacturing planning will further
improve its inventory to sales ratio. For the remainder of the
year, inventory is expected to remain relatively flat in absolute
terms and decline as a percent of sales to the extent the Company
achieves revenue growth. Currently, annual inventory turns are somewhat
greater than two and the Company's near-term objective is to make this
greater than three.
Accounts receivable increased by 19% on a revenue increase of 14%
during the quarter. An increase in demand toward the end of the
quarter and a higher proportion of international business caused
accounts receivable days sales outstanding at the end of the second
quarter to increase to 77 days from 71 days at the end of the first
quarter. Although shipment linearity improved in total during the
quarter, international operations were somewhat less linear.
Accounts receivable days sales outstanding at the end of 1996 was
74 days. Accounts receivable is expected to increase commensurate
with revenue growth, but days sales outstanding are expected to
decline throughout the year as a result of increased use of the
distribution channels, improved shipment linearity, and increased
emphasis on timely collections.
Capital expenditures were $6 million in the second quarter of 1997,
bringing the total to $12 million year to date. Capital
expenditures were primarily allocated to modernization and
standardization of manufacturing equipment, next generation
technology development, and development of information systems.
Capital expenditure plans call for a total $18 to $21 million to be
invested in 1997.
At June 28, 1997, total debt was $14 million of which $2.7 million
was term debt. Most of this debt represents interest rate
arbitrage in Japan. In addition to term debt, credit facilities of
approximately $50.2 million with both domestic and international
banks were available to the Company of which approximately $11.3
million or 22.5% was utilized. The current ratio improved from
2.76 at year end to 2.89 at June 28, 1997. Total debt declined by
$3.4 million or 20% from 1996 year end. Accounts payable declined
by $4.6 million during the second quarter, reflecting the shorter
payment period of non-capital items. From 1996 year end, accounts
payable declined by $1.7 million.
In February, 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share, which is required to be
adopted on December 31, 1997. At that time, the Company will be
required to change the method currently used to compute earnings per
share and to restate all prior periods. Under the new requirements
for calculating primary earnings per share, the dilutive effect of
stock options will be excluded. The impact is expected to result in
an increase in primary earnings per share in the second quarters ended
June 28, 1997, and June 29, 1996, of $0.01 and $0.02 per share,
respectively, and an increase in primary earnings per share in both
the first six months ended June 28, 1997, and June 29, 1996, of
$0.03 per share. The impact of Statement 128 on the calculation of
fully diluted earnings per share for these periods is not expected to
be material.
Stockholders' equity increased by over $9.7 million or 4.7% on the
quarter, nearly twice the growth rate percentage of the prior
quarter. From 1996 year end, stockholder's equity increased by
$15.2 million or 8%.
Given both the current cash position and available credit
facilities, management believes the Company has sufficient capital
resources available to meet its requirements for the foreseeable
future.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY SHARE HOLDERS
a. The Annual Meeting of Shareholders was held April 25, 1997.
b. The following Directors were elected to serve until the next
Annual Meeting and until their successors are duly elected and
qualified. The Directors are as follows:
NOMINEE FOR WITHHELD
Thomas R. Brown, Jr. 14,127,996 244,277
Syrus P. Madavi 14,127,031 245,242
John S. Anderegg, Jr. 14,127,771 244,502
Francis J. Aguilar 14,122,928 249,345
Marcelo A. Gumucio 14,128,346 243,927
c. The shareholders approved an amendment to the Company's 1993
Stock Incentive Plan, which included a 500,000 share increase to
the number of shares authorized for issuance under the Plan.
Voting on this resolution were 9,914,059 shares for, 4,418,357
shares against, and 12,179 shares not voted.
d. The shareholders approved the selection of Ernst & Young LLP
as independent auditors for the Company for the ensuing fiscal
year.
Voting on this resolution were 14,364,010 shares for, 3,659
shares against, and 4,604 shares not voted.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 10
BURR-BROWN CORPORATION
1993 STOCK INCENTIVE PLAN
(As Amended and Restated through March 4, 1997)
PREAMBLE
The BURR-BROWN CORPORATION previously adopted the Burr-
Brown Research Corporation Incentive Stock Plan of 1981 that was
amended and restated in 1983. That plan shall be referred to as
the "Original Plan." The Burr-Brown Corporation 1993 Stock
Incentive Plan ("Plan") shall serve as the successor to the
Original Plan and will become effective as provided in Section 7 of
this Article One.
ARTICLE ONE
GENERAL
1. Definitions. As used herein, the following terms
have the meanings hereinafter set forth unless the context clearly
indicates to the contrary:
1.1 "Board" shall mean the Board of Directors of the
Company.
1.2 "Change in Control" shall mean a change in ownership
or control of the Company effected through either of the following
transactions:
1.2.1 any person or related group of
persons (other than the Company or a person that directly
or indirectly controls, is controlled by, or is under
common control with, the Company) directly or indirectly
acquires beneficial ownership (within the meaning of Rule
13d-3 of the Securities Exchange Act of 1934, as amended)
of securities possessing more than fifty percent (50%) of
the total combined voting power of the Company's
outstanding securities pursuant to a tender or exchange
offer made directly to the Company's stockholders; or
1.2.2 there is a change in the composition
of the Board over a period of twenty-four (24)
consecutive months or less such that a majority of the
Board members (rounded up to the next whole number)
ceases, by reason of one or more proxy contests for the
election of Board members, to be comprised of individuals
who either (A) have been Board members continuously since
the beginning of such period or (B) have been elected or
nominated for election as Board members during such
period by at least a majority of the Board members
described in clause (A) who were still in office at the
time such election or nomination was approved by the
Board.
1.3 "Code" shall mean the Internal Revenue Code of 1986.
1.4 "Committee" shall mean either the Primary Committee
or the Secondary Committee acting within the scope of its
administrative jurisdiction under the Plan, as determined pursuant
to Section 4 of Article One.
1.5 "Company" shall mean Burr-Brown Corporation, a
Delaware corporation.
1.6 "Corporate Transaction" shall mean any of the
following stockholder-approved transactions to which the Company is
a party:
1.6.1 a merger, consolidation or other
reorganization in which the Company is not the surviving
entity, except for a transaction the principal purpose of
which is to change the state in which the Company is
incorporated,
1.6.2 the sale, transfer or other
disposition of all or substantially all of the assets of
the Company in complete liquidation or dissolution of the
Company, or
1.6.3 any reverse merger in which the
Company is the surviving entity but in which securities
possessing more than fifty percent (50%) of the total
combined voting power of the Company's outstanding
securities are transferred to a person or persons
different from those who held such securities immediately
prior to such merger.
1.7 "Fair Market Value" shall mean the closing selling
price per share of Stock on the date in question, as reported by
the National Association of Securities Dealers on the Nasdaq
National Market. If there is no such reported price on the date in
question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
1.8 "Hostile Take-Over" shall mean a change in ownership
of the Company in which any person or related group of persons
(other than the Company or a person that directly or indirectly
controls, is controlled by, or is under common control with, the
Company) directly or indirectly acquires beneficial ownership
(within the meaning of Rule 13d-3 of the Securities Exchange Act of
1934, as amended) of securities possessing more than fifty percent
(50%) of the total combined voting power of the Company's
outstanding securities pursuant to a tender or exchange offer made
directly to the Company's stockholders which the Board does not
recommend such stockholders to accept.
1.9 "Option" shall mean an option to purchase Stock
granted pursuant to the provisions of the Discretionary Option
Grant or Automatic Option Grant Program.
1.10 "Optionee" shall mean any person to whom an Option
is granted pursuant to the Discretionary Option Grant or Automatic
Option Grant Program.
1.11 "Original Plan" shall mean the Burr-Brown Research
Corporation Incentive Stock Plan of 1981, as amended and restated
in 1983.
1.12 "Participant" shall mean an employee or consultant
to whom Stock is issued pursuant to the provisions of the Stock
Issuance Program.
1.13 "Plan" shall mean the Burr-Brown Corporation 1993
Stock Incentive Plan, as amended from time to time.
1.14 "Service" shall mean the performance of services on
a periodic basis to the Company (or any Subsidiary corporation) 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 Option or
Stock issuance agreement executed pursuant to the provisions of the
Plan.
1.15 "Stock" shall mean the Common Stock of the Company.
1.16 "Subsidiary" or "Subsidiaries" shall mean any
corporation, the majority of the outstanding capital stock of which
is owned, directly or indirectly, by the Company.
1.17 "Take-Over Price" shall mean the greater of (a) the
Fair Market Value per share of Stock subject to an outstanding
Option on the date that Option is surrendered to the Company in
connection with a Hostile Take-Over or (b) the highest reported
price per share of such Stock paid by the tender offeror in
effecting such Hostile Take-Over. However, if the surrendered
Option is an incentive stock option under Federal tax laws, the
Take-Over Price shall not exceed the clause (a) price per share.
2. Purpose. This Plan is intended to benefit the
Company by (i) providing an incentive to and encouraging Stock
ownership by key employees (including officers), non-employee
members of the Board and consultants of the Company and its
Subsidiaries; (ii) providing such key employees, non-employee Board
members and consultants the opportunity to acquire a proprietary
interest or to increase their proprietary interest in the Company's
success; and (iii) encouraging such individuals to remain in the
Service of the Company or its Subsidiaries.
3. Structure of the Plan.
3.1 Stock Programs. The Plan shall be divided into
three (3) separate components:
- The Discretionary Option Grant Program, under
which eligible individuals may, at the discretion of the
Committee, be granted Options to purchase shares of Stock
in accordance with the provisions of Article Two.
- The Stock Issuance Program, under which
eligible individuals may be issued shares of Stock
directly, either through the immediate purchase of such
shares at a price not less than their Fair Market Value
at the time of issuance or as a bonus tied to the
performance of services or the Company's attainment of
financial objectives, without any cash payment required
of the recipient.
- The Automatic Option Grant Program, under which
each non-employee Board member shall automatically
receive special Option grants at periodic intervals in
accordance with the provisions of Article Four.
3.2 General Provisions. Unless the context clearly
indicates otherwise, the provisions of Articles One and Five shall
apply to the Discretionary Option Grant, Stock Issuance and
Automatic Option Grant Programs and shall accordingly govern the
interests of all individuals under the Plan.
4. Administration.
4.1 The Discretionary Option Grant and Stock Issuance
Programs under the Plan shall, with respect to all individuals
subject to the short-swing profit restrictions of the Federal
securities laws, be administered by the Primary Committee. The
Primary Committee shall initially have the same membership as the
Board's Compensation Committee. Administration of the
Discretionary Option Grant and Stock Issuance Programs with respect
to all other persons eligible to participate in those programs
shall be vested in the Primary Committee. However, the Board may,
in its discretion, appoint a Secondary Committee of the Board to
exercise separate but concurrent jurisdiction with respect to the
participation of such persons in those programs.
4.2 Individuals serving on the Primary Committee or any
Secondary Committee shall serve for such term as the Board may
determine and shall be subject to removal by the Board at any time.
Each Committee shall, within the scope of its administrative
jurisdiction under the Plan, have full authority, subject to the
express provisions of the Plan, to administer the Discretionary
Option Grant and Stock Issuance Programs, including authority to
interpret and construe any provision of such programs and to adopt
such rules and regulations as it may deem necessary or appropriate.
Decisions of each Committee within the scope of its administrative
jurisdiction under the Plan shall be final and binding on all
parties who have an interest in the Discretionary Option Grant or
Stock Issuance Program or any outstanding Option grant or Stock
issuance hereunder. No member of the Board and no member of the
Primary Committee or any Secondary Committee shall be liable for
any action or determination made in good faith with respect to the
Discretionary Option Grant or Stock Issuance Program under its
jurisdiction or any Option grant or Stock issuance under it.
5. Option Grants and Stock Issuances.
5.1 The persons eligible to participate in the
Discretionary Option Grant Program under Article Two and the Stock
Issuance Program under Article Three are as follows:
- officers and other key employees of the
Company (or its parent or subsidiary corporations,
whether now existing or subsequently established) who
render services which contribute to the management,
growth and financial success of the Company (or such
parent or subsidiary corporations);
- non-employee Board members; and,
- those consultants or other independent
contractors who provide valuable services to the Company
(or its parent or subsidiary corporations).
5.2 Non-employee Board members shall also be eligible to
participate in the Automatic Option Grant Program under Article
Four.
5.3 Both the Primary Committee and the Secondary
Committee shall each have full authority, within the scope of their
administrative jurisdiction under the Plan, to determine, (i) with
respect to the Option grants made under the Discretionary Option
Grant Program, which eligible individuals are to receive Option
grants, the number of shares to be covered by each such grant, the
status of the granted Option as either an incentive stock option
meeting the requirements of Code Sections 421 and 422 ("Incentive
Option") or a nonstatutory option not intended to meet such
requirements ("Nonstatutory 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.
6. Stock.
6.1 Stock Available. The Stock to be issued under this
Plan may be either authorized but unissued shares or shares issued
and thereafter reacquired by the Company. The aggregate number of
shares of Stock which may be issued pursuant to this Plan shall not
exceed at any time 2,616,960 shares,* subject to adjustment from
time to time as provided in paragraph 6.3 below. Such authorized
share reserve is comprised of (i) the number of shares which
remained available for issuance under the Original Plan as of the
Effective Date, including the shares of Stock subject to the
outstanding options under the Original Plan incorporated into this
Plan and any other shares which would have been available for
future option grant under the Original Plan (estimated to be
716,960 shares in the aggregate), plus (ii) an additional increase
of 900,000 shares of Stock previously authorized by the Board and
approved by the Company's stockholders prior to the Plan Effective
Date, plus (iii) a subsequent increase of 500,000 shares of Stock
authorized by the Board on February 16, 1996 and approved by the
Company's stockholders at the 1996 Annual Meeting held on April 26,
1996 plus (iv) an additional increase of 500,000 shares of Stock
authorized by the Board as of March 4, 1997, subject to stockholder
approval at the 1997 Annual Meeting. All issuances of Stock under
the Plan, including any shares of Stock issued upon the exercise of
options incorporated into the Plan from the Original Plan, shall
reduce on a one-for-one basis the number of shares of Stock
available for subsequent issuance under the Plan. Should any
Option or any portion thereof be terminated or canceled for any
reason without being exercised or surrendered in accordance with
Section 4 of Article Two or Section 3 of Article Four, the shares
subject to the portion of the Option not so exercised or
surrendered shall be available for subsequent Option grants or
Stock issuances under this Plan. In addition, unvested shares
issued under the Plan and subsequently repurchased by the Company,
at the original exercise or issue price paid per share, pursuant to
the Company's repurchase rights under the Plan shall be added back
to the number of shares of Common Stock reserved for issuance under
the Plan and shall accordingly be available for reissuance through
one or more subsequent option grants or direct stock issuances
under the Plan. However, shares subject to an Option or portion
thereof surrendered in accordance with Section 4 of Article Two
shall not be available for subsequent Option grants or Stock
issuances under the Plan. If the Option price for any Options
granted under the Plan is paid with shares of Stock or if any
shares of Stock otherwise issuable under the Plan are withheld by
the Company in satisfaction of the income and employment tax
liability incurred in connection with any Optionee's or
Participant's acquisition of Stock hereunder, then the number of
shares of Stock available for subsequent issuance shall be reduced
by the gross number of shares for which the Option is exercised or
in which the Participant vests, and not by the net number of shares
actually issued to the Optionee or the Participant.
6.2 In no event may the aggregate number of shares of
Stock for which any one individual participating in the Plan may be
granted Options and direct Stock issuances exceed 900,000 shares in
the aggregate over the term of the Plan. For purposes of such
limitation, no Option grants or direct Stock issuances made prior
to January 1, 1994 shall be taken into account.
6.3 Corporate Reorganization. In the event that any
change is made to the securities issuable under the Plan (whether by
reason of merger, consolidation, reorganization, recapitalization, Stock
dividend, Stock split, combination of shares, exchange of shares or
other change in capitalization) then, subject to the provisions of
Section 2 of Article Two, Section 2 of Article Three and Section 3
of Article Four, the Primary Committee may make appropriate
adjustments in the maximum number and/or kind of securities
issuable under the Plan, the maximum number and/or kind of
securities for which Option grants and direct Stock issuances may
be made to any one participant in the aggregate after December 31,
1993 and the number and/or kind of securities for which automatic
Option grants are to be subsequently made to newly-elected and
continuing non-employee Board members under the Automatic Option
Grant Program in order to reflect the effect of such change upon
the Company's capital structure, and may make appropriate
adjustments to the number and/or kind of securities and Option
price of the securities subject to each outstanding Option to
prevent the dilution of benefits thereunder. The adjustments
determined by the Primary Committee shall be final, binding and
conclusive.
6.4 Excess Grants and Issuances. Options to purchase
shares of Stock may be granted and shares of Stock may be issued
under the Plan which are in both instances in excess of the number
of shares then available for issuance under the Plan, provided any
excess shares actually issued under the Plan are held in escrow
until the Company's stockholders approve an amendment sufficiently
increasing the number of shares of Stock available for issuance
under the Plan. If such stockholder approval is not obtained
within twelve (12) months after the date the initial excess
issuances are made, whether as Option grants or direct Stock
issuances, then (I) any unexercised Options representing such
excess shall terminate and cease to be exercisable and (II) the
Company shall promptly refund to the Optionees and Participants the
Option or purchase price paid for any excess shares 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, and such shares shall thereupon be automatically
cancelled and cease to be outstanding.
6.5 Restrictions. Shares issued under the Discretionary
Option Grant or Stock Issuance Program may be subject to such
restrictions on transfer, repurchase rights or other restrictions
as shall be determined by the Committee.
7. Effective Date and Term of Plan.
7.1 Effective Date. The Discretionary Option Grant and
Stock Issuance Programs under the Plan were adopted by the Board on
February 11, 1994, and the date of such adoption accordingly
constitutes the Effective Date for those two programs and the Plan.
The Automatic Option Grant Program under the Plan was adopted by
the Board on February 11, 1994 and became effective upon approval
by the stockholders at the 1994 Annual Meeting held on April 22,
1994. The date of such stockholder approval accordingly
constitutes the Effective Date of the Automatic Option Grant
Program.
7.2 Amendment. The Plan was amended and restated by the Board,
effective February 16, 1996 (the "February 1996 Restatement") to
increase the maximum number of shares of Stock authorized for
issuance over the term of the Plan by an additional 500,000 shares
to 2,116,959 shares. Stockholders approved the February 1996
Restatement at the 1996 Annual Meeting held on April 26, 1996. On
March 4, 1997, the Board restated the Plan to (i) increase the
maximum number of shares of Stock authorized for issuance over the
term of the Plan by an additional 500,000 share, (ii) reduce the
number of shares of Stock for which an Option grant is to be made
under the Automatic Option Grant Program to each non-employee Board
member when he or she first joins the Board from 15,000 shares to
8,000 shares, (iii) amend the provisions of the Automatic Option
Grant Program so that each non-employee Board member shall become
eligible to receive a series of annual Option grants, each for
2,667 shares of Stock, over his or her period of continued Board
service, with the first such annual grant for each individual
serving as a non-employee Board member on March 4, 1997 to be made
on the date of the Annual Stockholders Meeting held in the calendar
year in which the final installment of his or her initial 15,000-
share Option grant under the Automatic Option Grant Program becomes
vested, and with the first such annual grant for each individual
who first joins the Board after March 4, 1997 to be made on the
date of the Annual Stockholders Meeting held in the calendar year
in which the third annual installment of his or her initial 8,000-
share Option grant under the Automatic Option Grant Program becomes
vested, (iv) modify the vesting acceleration provisions of the
Automatic Option Grant Program so that no Options granted under
that program after March 4, 1997 shall vest on an accelerated basis
upon the Optionee's death or permanent disability, (v) allow any
unvested shares issued under the Plan and subsequently repurchased
by the Company at the option exercise price or issue price paid per
share to be reissued under the Plan, (vi) remove certain
restrictions on the eligibility of non-employee Board members to
serve on the Primary Committee and (vii) effect a series of
additional changes to the provisions of the Plan (including the
stockholder approval requirements) in order to take advantage of
the recent amendments to Rule 16b-3 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") which exempts certain
officer and director transactions under the Plan from the short-
swing liability provisions of the federal securities laws. The
March 4, 1997 restatement is subject to stockholder approval at the
1997 Annual Meeting and shall not become effective unless such
stockholder approval is obtained. Should such stockholder approval
not be obtained, the Plan shall continue in full force and effect
in accordance with the terms and provisions in effect under the
Plan immediately prior to the March 4, 1997 restatement, and Option
grants and Stock issuances may continue to be made under the Plan
until the existing share reserve under the Plan is issued. All
option grants made under the Plan prior to the March 4, 1997
restatement shall remain outstanding in accordance with the terms
and conditions of the respective instruments evidencing those
options, and nothing in the March 4, 1997 restatement shall be
deemed to modify or in any way affect those outstanding options.
7.3 Term of Plan. Unless sooner terminated in
accordance with Section 2 of Article Two, Section 2 of Article
Three, Section 3 of Article Four or by the Board, the Plan shall
terminate on the earlier of:
(i) the tenth (10th) anniversary of the
Effective Date of the Plan; or
(ii) the date on which all shares available for
issuance under the Plan shall have been issued or their
availability cancelled pursuant to the surrender of
Options granted hereunder.
If the date of termination is determined under (i) above,
then Options and unvested Stock issuances outstanding on such date
shall continue to have force and effect in accordance with the
provisions of the instruments evidencing such Options and Stock
issuances.
ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
1. Terms and Conditions of Options. Options granted
pursuant to this Discretionary Option Grant Program shall be
authorized by the Committee and may be either Incentive Options or
Nonstatutory Options. The granted Options shall be evidenced by
instruments in such form and including such terms and conditions as
the Committee shall from time to time approve; provided, however,
that each such instrument shall comply with the following terms and
conditions:
1.1 Option Price.
1.1.1 The Option price per share shall be fixed by
the Committee, but in no event shall the Option price per share be
less than the Fair Market Value of a share of the option Stock on
the date of the Option grant.
1.1.2 Subject to the provisions of Section 1 of
Article Five, the Option price shall become immediately due and
payable upon exercise of the Option and shall be payable in one of
the alternative forms specified below:
1.1.2.1 Full payment in United States dollars
in cash or cash equivalents;
1.1.2.2 Full payment in shares of Stock valued
at Fair Market Value on the date the Option is exercised and held
for the requisite period necessary to avoid a charge to the
Company's earnings for financial reporting purposes;
1.1.2.3 A combination of shares of Stock
valued at Fair Market Value on the date the Option is exercised and
held for the requisite period necessary to avoid a charge to the
Company's earnings for financial reporting purposes, and cash or
cash equivalents, equal in the aggregate to the Option price;
1.1.2.4 Full payment through a broker-dealer
sale and remittance procedure pursuant to which the Optionee
(I) shall provide irrevocable instructions to a designated
brokerage firm to effect the immediate sale of the purchased shares
and remit to the Company, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate Option
price payable for the purchased shares plus all applicable Federal,
state and local income and employment taxes required to be withheld
by the Company in connection with such purchase and (II) shall
provide directives to the Company to deliver the certificates for
the purchased shares directly to such brokerage firm in order to
complete the sale transaction; or
1.1.2.5 Such other lawful consideration as
the Committee shall determine.
1.2 Manner of Exercise of Options. Each Option granted
under the Discretionary Option Grant Program shall be exercisable
at such time or times and during such period as shall be determined
by the Committee and set forth in the instrument evidencing such
Option. However, no Option may be exercised after the expiration
of ten (10) years from the date such Option is granted. During the
lifetime of the Optionee, Incentive Options shall be exercisable
only by the Optionee and shall not be assignable or transferable by
the Optionee other than a transfer of the Option by will or by the
laws of descent and distribution following the Optionee's death.
However, Nonstatutory Options may, in connection with the
Optionee's estate plan, be assigned in whole or in part during the
Optionee's lifetime to one or more members of the Optionee's
immediate family or to a trust established exclusively for one or
more such family members. The assigned portion may only be
exercised by the persons or persons who acquire a proprietary
interest in the option pursuant to the assignment. The terms
applicable to the assigned portion shall be the same as those in
effect for the option immediately prior to such assignment and
shall be set forth in such documents issued to the assignee as the
Committee may deem appropriate. Options may be exercised by
written notice to the Company in such terms as the Committee shall
specify.
1.3 Stockholder Rights. An Option holder shall have
none of the rights of a stockholder with respect to any shares
issuable under the Plan until such individual shall have been
issued a stock certificate for the shares.
1.4 Dollar Limitation. The aggregate Fair Market Value
(determined as of the respective date or dates of grant) of the
Stock for which one or more Options granted to any employee under
this Plan (or any other option plan of the Company or its parent or
Subsidiary corporations) 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
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 nonstatutory option under the Federal tax laws.
1.5 Termination of Service.
1.5.1 Except to the extent otherwise provided in
paragraph 1.5.4 below, the following provisions shall govern the
exercise period applicable to any outstanding Options under this
Discretionary Option Grant Program held by the Optionee at the time
of cessation of Service or death.
- Should the Optionee cease to remain in
Service for any reason other than death or permanent
disability, then the period during which each outstanding
Option held by such Optionee is to remain exercisable
shall be limited to the three (3)-month period following
the date of such cessation of Service. However, the
Committee shall have the discretion to provide for a
longer post-Service exercise period (not to exceed the
expiration date of the maximum Option term) in the event
the Optionee ceases Service by reason of retirement at or
after attainment of age sixty-five (65).
- In the event such Service terminates by
reason of permanent disability (as defined in Code
Section 22(e)(3)) or should the Optionee die while
holding one or more outstanding Options, then the period
during which each such Option is to remain exercisable
shall be limited to the twelve (12)-month period
following the date of the Optionee's cessation of Service
or death. During the limited exercise period following
the Optionee's death, the Option may be 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.
- Under no circumstances, however, shall any such
Option be exercisable after the specified expiration date
of the Option term.
1.5.2 During the post-Service exercise period, the Option
may not be exercised for more than the number of shares of Stock in
which the Optionee is vested at the time of cessation of Service.
Upon the expiration of such post-Service exercise period or (if
earlier) upon the expiration of the Option term, the Option shall
terminate and cease to be outstanding for any vested shares for
which the Option has not been exercised.
However, each Option shall immediately terminate and
cease to be outstanding, at the time of the Optionee's
cessation of Service, with respect to any option shares for which
such Option is not otherwise at that time exercisable or in which
the Optionee is not otherwise at that time vested.
1.5.3 Should (i) the Optionee's Service be
terminated for misconduct (including, but not limited to, any act
of dishonesty, willful misconduct, fraud or embezzlement) or
(ii) the Optionee make any unauthorized use or disclosure of
confidential information or trade secrets of the Company or its
Subsidiaries, then in any such event all outstanding Options held
by the Optionee under this Discretionary Option Grant Program shall
terminate immediately and cease to be outstanding.
1.5.4 The Committee shall have full power and
authority 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 post-Service exercise period specified in
the instrument evidencing such grant to such greater period of time
as the Committee shall deem appropriate under the circumstances.
In no event, however, shall such Option be exercisable after the
specified expiration date of the Option term.
1.5.5 The Committee shall have complete
discretion, exercisable either at the time the Option is granted or
at any time the Option remains outstanding, to permit one or more
Options granted under this Discretionary Option Grant Program to be
exercised not only for the number of shares for which each such
Option is exercisable at the time of the Optionee's cessation of
Service but also for one or more subsequent installments of
purchasable shares for which the Option would otherwise have become
exercisable had such cessation of Service not occurred.
2. Corporate Transactions/Changes in Control.
2.1 Option Acceleration. Each Option which is
outstanding under this Discretionary Option Grant Program at the
time of a Corporate Transaction 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 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
Discretionary Option Grant Program 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 Committee at the time of the Option grant. The
determination of option comparability under clause (i) above shall
be made by the Committee and its determination shall be final,
binding and conclusive. The Committee shall also have full power
and authority to grant Options under the Plan which are to
automatically accelerate in whole or in part upon the termination
of the Optionee's Service following a Corporate Transaction in
which those Options are assumed or replaced.
2.2 Termination of Options. Immediately following the
consummation of the Corporate Transaction, all outstanding Options
under this Discretionary Option Grant Program shall terminate and
cease to be outstanding, except to the extent assumed by the
successor corporation or its parent company.
2.3 Option Adjustments. Each outstanding Option under
this Discretionary Option Grant Program which 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 kind 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 Option price payable per share, provided the aggregate
Option price payable for such securities shall remain the same. In
addition, the class and kind of securities available for issuance
under the Plan on both an aggregate and per participant basis
following the consummation of the Corporate Transaction shall be
appropriately adjusted.
2.4 Change in Control. The Committee 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 Discretionary Option Grant Program upon the
occurrence of a Change in Control. The Committee shall also have
full power and authority to condition any such Option acceleration
upon the subsequent termination of the Optionee's Service within a
specified period following the Change in Control.
2.5 Option Continuation. Any Options accelerated in
connection with the Change in Control shall remain fully
exercisable until the expiration or sooner termination of the
Option term or the surrender of such Option in accordance with
Section 4 of this Article Two.
2.6 ISO Limitation. The exercisability as incentive
stock options under the Federal tax laws of any Options accelerated
under this Section 2 in connection with a Corporate Transaction or
Change in Control shall remain subject to the dollar limitation of
paragraph 1.4 of this Article Two.
2.7 Right to Modify Corporate Structure. The grant of
Options under this Plan shall in no way effect the right of the
Company to adjust, reclassify, reorganize, or otherwise change its
capital or business structure or to merge, consolidate, dissolve,
liquidate, sell or transfer all or any part of its business or
assets.
3. Cancellation and New Grant of Options. The
Committee shall have the authority to effect, at any time and from
time to time, with the consent of the affected Option holders, the
cancellation of any or all outstanding Options under this
Discretionary Option Grant Program and to grant in substitution
therefor new Options under the Plan covering the same or different
number and kind of shares of Stock but having an Option price per
share not less than the Fair Market Value of the option Stock on
the new grant date.
4. Surrender of Options for Cash or Stock.
4.1 Surrender Right. One or more Optionees may be
granted the right, exercisable upon such terms and conditions as
the Committee may establish, to surrender all or part of an
unexercised Option under this Discretionary Option Grant Program in
exchange for a distribution from the Company 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 Option price payable for such
vested shares.
4.2 Approval. No such Option surrender shall be
effective unless it is approved by the Committee. If the surrender
is so approved, then the distribution to which the Optionee shall
accordingly become entitled under this Section 4 may be made in
shares of Stock valued at Fair Market Value on the Option surrender
date, in cash or partly in shares and partly in cash, as the
Committee shall in its sole discretion deem appropriate.
4.3 Limited Rights. One or more officers of the Company
subject to the short-swing profit restrictions of the Federal
securities laws may, in the Primary Committee's sole discretion, be
granted limited stock appreciation rights in tandem with their
outstanding Options under this Discretionary Option Grant Program.
Upon the occurrence of a Hostile Take-Over, each such officer
holding one or more Options with such a limited stock appreciation
right shall have the unconditional right (exercisable for a thirty
(30)-day period following such Hostile Take-Over) to surrender each
such Option to the Company, to the extent the Option is at the time
exercisable for vested shares of Stock. In return for the
surrendered Option, the officer shall be entitled to a cash
distribution from the Company in an amount equal to the excess of
(i) the Take-Over Price of the shares of Stock which are at the
time vested under each surrendered Option (or surrendered portion)
over (ii) the aggregate Option price payable for such vested
shares. Such cash distribution shall be paid within five (5) days
following the Option surrender date. The Primary Committee shall
pre-approve, at the time the limited right is granted, the
subsequent exercise of that right in accordance with the terms of
the grant and provisions of this paragraph 4.3 of Article Two. No
additional approval of the Primary Committee or the Board shall be
required at the time of the actual Option surrender and cash
distribution. The balance of the Option (if any) shall continue in
full force and effect in accordance with the instrument evidencing
such grant.
ARTICLE THREE
STOCK ISSUANCE PROGRAM
1. Terms and Conditions of Direct Stock Issuances.
Stock may be issued under this Stock Issuance Program, either
through direct and immediate purchases without any intervening
Option grants or as unvested shares issued upon the exercise of
immediately exercisable Options granted under Article Two. The
issued shares shall be evidenced by a Stock Issuance Agreement
("Issuance Agreement") that complies with the following terms and
conditions:
1.1 Consideration.
1.1.1 Stock drawn from the Company's authorized
but unissued shares of Stock ("Newly Issued Shares") shall be
issued for one or more of the following items of consideration
which the Committee may deem appropriate in each individual
instance:
(i) cash or cash equivalents (such as a
personal check or bank draft) paid the Company;
(ii) a promissory note payable to the
Company'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 Committee; or
(iii) past services rendered to the Company
or any Subsidiary.
1.1.2 Newly Issued Shares must be issued for
consideration with a value not less than one-hundred percent (100%)
of the Fair Market Value of such shares at the time of issuance.
1.1.3 Shares of Stock reacquired by the Company
and held as treasury shares ("Treasury Shares") may be issued for
such consideration (including one or more of the items of
consideration specified in paragraph 1.1.1. of this Article Three)
as the Committee may deem appropriate. Treasury Shares may, in
lieu of any cash consideration, be issued subject to such vesting
requirements tied to the Participant's period of future Service or
the Company's attainment of specified performance objectives as the
Committee may establish at the time of issuance.
1.2 Vesting Provisions.
1.2.1 The issued Stock may, in the absolute
discretion of the Committee, be fully and immediately vested upon
issuance or may vest in one or more installments over the
Participant's period of Service. The elements of the vesting
schedule applicable to any unvested shares of Stock, namely:
(i) the Service period to be completed by the
Participant or the performance objectives to be achieved
by the Company,
(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, disability or
other event designated by the Committee is to have upon
the vesting schedule,
shall be determined by the Committee and incorporated into the
Issuance Agreement executed by the Company and the Participant at
the time such unvested shares are issued.
1.3 Stockholder Rights. The Participant shall have full
stockholder rights with respect to any shares of Stock issued to
him or her under this 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, reclassification of Stock or other similar change in the
Company's capital structure or by reason of any Corporate
Transaction shall be issued, subject to (i) the same vesting
requirements applicable to his or her unvested shares and (ii) such
escrow arrangements as the Committee shall deem appropriate.
1.4 Termination of Service.
1.4.1 Should the Participant cease to remain in
Service while holding one or more unvested shares of Stock, then
those shares shall be immediately surrendered to the Company for
cancellation, and the Participant shall have no further stockholder
rights with respect to those shares. To the extent the surrendered
shares were previously issued to the Participant for consideration
paid in cash or cash equivalent (including the Participant's
purchase-money promissory note), the Company 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
surrendered shares. The surrendered shares may, at the Committee's
discretion, be retained by the Company as Treasury Shares or may be
retired to authorized but unissued share status.
1.4.2 The Committee may in its discretion elect
to waive the surrender and cancellation of one or more unvested
shares of Stock (or other assets attributable thereto) which would
otherwise occur upon the non-completion of the vesting schedule
applicable to such shares. Such waiver shall result in the
immediate vesting of the Participant's interest in the shares of
Stock as to which the waiver applies. Such waiver may be effected
at any time, whether before or after the Participant's cessation of
Service or the attainment or non-attainment of the applicable
performance objectives.
2. Corporate Transactions/Changes in Control.
2.1 All unvested shares of Stock outstanding under this
Stock Issuance Program shall immediately vest in full upon the
occurrence of a Corporate Transaction, except to the extent the
Committee imposes limitations in the Issuance Agreement which
preclude such accelerated vesting in whole or in part.
2.2 The Committee shall have the discretionary
authority, exercisable either at the time the unvested shares are
issued or at any time while those shares remain outstanding, to
provide for the immediate and automatic vesting of one or more
unvested shares of Stock outstanding under this Stock Issuance
Program at the time of a Change in Control. The Committee shall
also have full power and authority to condition any such
accelerated vesting upon the subsequent termination of the
Participant's Service within a specified period following the
Change in Control.
3. Transfer Restrictions/Share Escrow.
3.1 Unvested shares may, in the Committee's discretion,
be held in escrow by the Company 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.
3.2 The Participant shall have no right to transfer any
unvested shares of Stock issued to him or her under this 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, and
neither the Participant nor the proposed transferee shall have any
rights with respect to those shares. However, the Participant
shall have the right to make a gift of unvested shares acquired
under this Stock Issuance Program to his or her spouse or issue,
including adopted children, or to a trust established for such
spouse or issue, provided the donee of such shares delivers to the
Company a written agreement to be bound by all the provisions of
the Plan and the Issuance Agreement applicable to the gifted
shares.
ARTICLE FOUR
AUTOMATIC OPTION GRANT PROGRAM
1. Eligibility.
1.1 Eligible Optionees. The individuals eligible to receive
automatic Option grants pursuant to the provisions of this Article
Four shall be limited to (i) those individuals who were serving as
non-employee Board members on the date of the 1994 Annual
Stockholders Meeting, (ii) those individuals who are first elected
or appointed as non-employee Board members on or after the date of
such Annual Meeting, whether through appointment by the Board or
election by the Company's stockholders, and (iii) those non-
employee Board members who continue to serve on the Board at one or
more Annual Stockholders Meetings beginning with the 1997 Annual
Meeting. Any non-employee Board member eligible to participate in
the Automatic Option Grant Program pursuant to the foregoing
criteria shall be designated an Eligible Director for purposes of
this Article Four.
2. Terms and Conditions of Automatic Option Grants.
2.1 Grant Dates. Option grants shall be made under this
Article Four on the dates specified below:
2.1.1 Each individual who was serving as an
Eligible Director on the date of the 1994 Annual Stockholders
Meeting was automatically granted, on such date, a Nonstatutory
Option to purchase 15,000 shares of Stock upon the terms and
conditions of this Article Four.
2.1.2 Each individual who first became an
Eligible Director on or after the date of the 1994 Annual Meeting
and before March 4, 1997, whether through election by the Company's
stockholders or appointment by the Board, was automatically
granted, at the time of such initial election or appointment, a
Nonstatutory Option to purchase 15,000 shares of Stock upon the
terms and conditions of this Article Four.
2.1.3 Each individual who first becomes an
Eligible Director on or after March 4, 1997, whether through
election by the Company's stockholders or appointment by the Board,
shall automatically be granted, at the time of such initial
election or appointment, a Nonstatutory Option to purchase 8,000
shares of Stock* upon the terms and conditions of this Article
Four.
2.1.4 An Eligible Director serving as a non-
employee Board member on March 4, 1997 shall, at each Annual
Stockholders Meeting at which he or she is to continue to serve as
a non-employee Board member, beginning with the Annual Stockholders
Meeting held in the calendar year in which the last installment of
the shares of Stock subject to his or her initial 15,000-share
automatic Option grant under paragraph 2.1.1 or 2.1.2 vests,
automatically be granted a Non-Statutory Option to purchase an
additional 2,667 shares of Stock.**
2.1.5 An Eligible Director who first joins the
Board as a non-employee Board member at any time after March 4,
1997 shall, at each Annual Stockholders Meeting at which he or she
is to continue to serve as a non-employee Board member, beginning
with the Annual Stockholders Meeting held in the calendar year in
which the third installment of the shares of Stock subject to his
or her initial 8,000-share automatic Option grant under paragraph
2.1.3 vests, automatically be granted a Non-Statutory Option to
purchase an additional 2,667 shares of Stock.**
2.1.6 There shall be no limit on the number of
such 2,667-share** Option grants which any one Eligible Director
may receive over his or her period of continued Board service.
2.2 Adjustments. The number of shares for which the
automatic Option grants are to be made to Eligible Directors shall
be subject to periodic adjustment pursuant to the applicable
provisions of paragraph 6.3 of Article One.
2.3 Option Price. The Option price per share of Stock
of each automatic Option grant made under this Article Four shall
be equal to one hundred percent (100%) of the Fair Market Value per
share of Stock on the automatic grant date.
2.4 Option Term. Each automatic Option grant under this
Article Four shall have a maximum term of ten (10) years measured
from the automatic grant date.
2.5 Exercisability/Vesting. Each automatic Option 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 Company, at the Option price paid per
share, upon the Optionee's cessation of Board service prior to
vesting in those shares in accordance with the schedule below:
2.5.1 Each initial automatic Option grant made
pursuant to paragraph 2.1.1, 2.1.2 or 2.1.3 of this Article Four
shall vest, and the Company's repurchase right shall lapse, in a
series of five (5) successive equal 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.
2.5.2 Each annual Automatic Option grant made
pursuant to paragraph 2.1.4 or 2.1.5 of Article Four shall vest,
and the Company's repurchase right shall lapse, in a series of five
(5) successive equal 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.
2.5.3 Vesting of the option shares
granted under this Article Four shall be subject to the
acceleration provisions of Section 3 of this Article Four. No
Option grant made under this Automatic Option Grant Program on or
after March 4, 1997 shall vest on an accelerated basis upon the
Optionee's cessation of Board service by reason of death or
permanent disability. Accordingly, no additional option shares
shall vest after the Optionee's cessation of Board service.
2.6 Payment. The Option price shall be payable in one
of the alternative forms specified in paragraph 1.1.2 of Article
Two. To the extent the Option is exercised for any unvested
shares, the Optionee must execute and deliver to the Company a
Stock issuance agreement for those unvested shares which provides
the Company with the right to repurchase, at the Option 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 any shares purchased under the Option, to
the extent those shares are subject to the Company's repurchase
right.
2.7 Limited Transferability. An automatic Option grant
may, in connection with the Optionee's estate plan, be assigned in
whole or in part during the Optionee's lifetime to one or more
members of the Optionee's immediate family or to a trust
established exclusively for one or more such family members. The
assigned portion may only be exercised by the persons or persons
who acquire a proprietary interest in the option pursuant to the
assignment. The terms applicable to the assigned portion shall be
the same as those in effect for the option immediately prior to
such assignment and shall be set forth in such documents issued to
the assignee as the Committee may deem appropriate.
2.8 Termination of Board Service.
2.8.1 Should the Optionee cease service as a
Board member for any reason other than death or permanent
disability, while holding any automatic Option grant under this
Article Four, then such individual shall have a six (6)-month
period following the date of such cessation of Board service in
which to exercise that Option for any or all of the option shares
in which the Optionee is vested at the time of such cessation of
Board service.
2.8.2 Should the Optionee die while in Board
service or within six (6) months after cessation of Board service,
then any automatic Option grant held by the Optionee at the time of
death may subsequently be exercised, for any or all of the option
shares in which the Optionee is vested at the time of his or her
cessation of Board service (less any option shares subsequently
purchased by the Optionee prior to death), by the personal
representative of the Optionee's estate or by the person or persons
to whom the Option is transferred pursuant to the Optionee's will
or in accordance with the laws of descent and distribution. The
right to exercise each such Option shall lapse upon the expiration
of the twelve (12)-month period measured from the date of the
Optionee's death.
2.8.3 Should the Optionee become permanently
disabled (as defined in Code Section 22(e)(3)) and cease to serve
as a Board member by reason of such disability, then the Optionee
shall have a twelve (12)-month period following such cessation of
Board service in which to exercise his or her outstanding automatic
Option grants 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.
2.8.4 Upon the Optionee's cessation of Board
service for any reason, his or her outstanding automatic Option
grants shall immediately terminate and cease to remain outstanding
with respect to any option shares in which the Optionee is not
otherwise at that time vested under those Options.
2.8.5 In no event shall any automatic Option
grant under this Article Four remain exercisable after the
expiration date of the ten (10)-year Option term. Upon the
expiration of the applicable post-Service exercise period under
paragraphs 2.8.1 through 2.8.3 above or (if earlier) upon the
expiration of the ten (10)-year Option term, the automatic Option
grant shall terminate and cease to remain outstanding for any
option shares in which the Optionee was vested at the time of his
or her cessation of Board Service but for which such Option was not
otherwise exercised.
2.9 Stockholder Rights. The holder of an automatic
Option grant under this Article Four 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
Option price for the purchased shares.
2.10 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.
3. Corporate Transactions/Changes in Control/Hostile
Take-Overs.
3.1 In the event of any Corporate Transaction, the
shares of Stock at the time subject to each outstanding Option
under this Article Four but not otherwise vested shall
automatically vest in full, and the Company'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 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 Stock. Immediately following the consummation of the
Corporate Transaction, all automatic Option grants under this
Article Four shall terminate and cease to remain outstanding.
3.2 In connection with any Change in Control, the shares
of Stock at the time subject to each outstanding Option under this
Article Four but not otherwise vested shall automatically vest in
full, and the Company's repurchase right with respect to those
shares shall terminate, so that each such Option shall, immediately
prior to the occurrence of such Change in Control, become fully
exercisable for all of the shares of 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 Stock. Each such Option shall
remain so exercisable until the expiration or sooner termination of
the Option term.
3.3 Upon the occurrence of a Hostile Take-Over, the
Optionee shall have a thirty (30)-day period in which to surrender
to the Company any Option granted to him or her under this Article
Four. The Optionee shall in return be entitled to a cash
distribution from the Company in an amount equal to the excess of
(i) the Take-Over Price of the shares of Stock at the time subject
to the surrendered Option (whether or not the Optionee is otherwise
at the time vested in those shares) over (ii) the aggregate Option
price payable for such shares. Such cash distribution shall be
paid within five (5) days following the surrender of the Option to
the Company. Stockholder approval of the March 4, 1997 restatement
of the Plan shall constitute pre-approval of each option surrender
right subsequently granted under the Automatic Option Grant Program
and the subsequent exercise of that right in accordance with the
terms and provisions of this paragraph 3.3 of Article Three. No
additional approval of the Committee or the Board shall be required
in connection with such Option surrender and cash distribution.
The shares of Stock subject to each Option surrendered in
connection with the Hostile Take-Over shall not be available for
subsequent issuance under the Plan.
3.4 The automatic Option grants outstanding under this
Article Four shall in no way affect the right of the Company 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.
ARTICLE FIVE
MISCELLANEOUS
1. Installment Payments, Loans and Guarantees of Loans.
1.1 The Committee may, in its discretion, assist any
Optionee or Participant (other than an Optionee or Participant who
is a non-employee member of the Board) in the exercise of one or
more Options granted to such Optionee or the purchase of one or
more shares of Stock issued to such Participant under the Plan,
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 Company to such
Optionee or Participant, (ii) permitting the Optionee or
Participant to pay the Option price or purchase price for the
purchased Stock in installments over a period of years or
(iii) authorizing a guarantee by the Company of a third-party loan
to the Optionee or Participant. The terms of any loan, installment
method of payment or guarantee (including the interest rate and
terms of repayment) shall be upon such terms as the Committee
specifies in the applicable Option or Issuance Agreement or
otherwise deems appropriate under the circumstances. Loans,
installment payments and guarantees may be granted with or without
security or collateral. However, the maximum credit available to
the Optionee or Participant may not exceed the Option 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.
1.2 The Committee may, in its absolute discretion,
determine that one or more loans extended under this financial
assistance program shall be subject to forgiveness by the Company
in whole or in part upon such terms and conditions as the Committee
may deem appropriate.
2. Amendment of the Plan. The Board shall have
complete and exclusive power and authority to amend or modify the
Plan, and the Committee may amend or modify the terms of any
outstanding Options or unvested Stock issuances under the Plan in
any or all aspects whatsoever not inconsistent with the terms of
the Plan. However, no such amendment or modification shall
adversely affect rights and obligations with respect to Options at
the time outstanding under the Plan, nor adversely affect the
rights of any Participant with respect to Stock issued under the
Plan prior to such action, unless the Optionee or Participant
consents to such amendment. In addition, certain amendments may
require stockholder approval pursuant to applicable laws or
regulations.
3. Use of Proceeds. Any cash proceeds received by the
Company from the sale of shares pursuant to Option grants or direct
Stock issuances under the Plan shall be used for general corporate
business.
4. Withholding.
4.1 The Company's obligation to deliver shares of Stock
upon the exercise of Options for such shares or upon 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 and employment tax withholding requirements.
4.2 The Committee may, in its discretion and in
accordance with the provisions of this Section 4 and such
supplemental rules as the Committee may from time to time adopt
(including applicable safe-harbor provisions of SEC Rule 16b-3),
provide any or all holders of Nonstatutory Options (other than the
automatic Option grants made pursuant to Article Four of the Plan)
or unvested shares under the Stock Issuance Program with the right
to use shares of Stock in satisfaction of all or part of the
Federal, state and local income and employment tax liabilities
incurred by such holders in connection with the exercise of their
Options or the vesting of their shares (the "Taxes"). Such right
may be provided to any such holder in either or both of the
following formats:
4.2.1 Stock Withholding. The holder of the
Nonstatutory Option or unvested shares may be provided with the
election to have the Company withhold, from the shares of Stock
otherwise issuable upon the exercise of such Nonstatutory Option or
the vesting of such shares, a portion of those shares with an
aggregate Fair Market Value equal to the percentage of the
applicable Taxes (not to exceed one hundred percent (100%))
designated by the holder.
4.2.2 Stock Delivery. The Committee may, in its
discretion, provide the holder of the Nonstatutory Option or the
unvested shares with the election to deliver to the Company, at the
time the Nonstatutory Option is exercised or the shares vest, one
or more shares of Stock already held by such individual with an
aggregate Fair Market Value equal to the percentage of the Taxes
incurred in connection with such Option exercise or share vesting
(not to exceed one hundred percent (100%)) designated by the
holder.
5. Regulatory Approvals. The implementation of the
Plan, the granting of any Option hereunder and the issuance of
Stock upon the exercise or surrender of any such Option or as a
direct issuance under the Plan shall be subject to the Company's
procurement of all approvals and permits required by regulatory
authorities having jurisdiction over the Plan, the Options granted
under it and the Stock issued pursuant to it.
6. No Employment Rights. Nothing in the Plan shall
confer upon the Optionee or the Participant any right to continue
in the Service of the Company (or any Subsidiary employing or
retaining such Optionee or Participant) for any period of specific
duration or interfere with or otherwise restrict in any way the
rights of the Company (or any such Subsidiary) or of the Optionee
or the Participant, which rights are hereby expressly reserved by
each, to terminate the Service of the Optionee or Participant at
any time for any reason whatsoever, with or without cause.
7. Certain Outstanding Options.
7.1 Each Option granted under the Company's Original
Plan or the 1980 Burr-Brown Research Corporation Executive Stock
Plan which was outstanding on the Effective Date of this Plan was
incorporated into this Plan and treated as an outstanding Option
under this Plan, but each such Option continues to be governed
solely by the terms and conditions of the instrument evidencing
such grant, and nothing in this Plan shall be deemed to affect or
otherwise modify the rights or obligations of the holders of such
Options with respect to their acquisition of shares of Stock
thereunder.
7.2 One or more provisions of this Plan, including the
Option/vesting acceleration provisions applicable in the event of a
Corporate Transaction or Change in Control or the limited surrender
rights exercisable in the event of a Hostile Take-Over, may, in the
Committee's discretion, be extended to one or more Options which
were outstanding under the Company's Original Plan or the 1980 Burr-
Brown Research Corporation Executive Stock Plan on the Effective
Date of this Plan but which do not otherwise provide for such
benefits.
IN WITNESS WHEREOF, this March 4, 1997 Restatement of the
BURR-BROWN CORPORATION 1993 STOCK INCENTIVE PLAN is hereby declared
effective and is executed as of March 4, 1997 on behalf of the
Company by its hereunto duly authorized officer.
BURR-BROWN CORPORATION
By: SYRUS P. MADAVI
Syrus P. Madavi
Title: President & CEO
Exhibit 11
BURR-BROWN CORPORATION AND SUBSIDIARIES
COMPUTATION OF CONSOLIDATED EARNINGS PER SHARE
(Unaudited)
Earnings per share are computed using the weighed average number
of shares outstanding plus incremental shares issuable upon exercise of
outstanding options under the treasury stock method.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
Jun. 28, Jun. 29, Jun. 28, Jun. 29,
1997 1996 (1) 1997 1996 (1)
<S> <C> <C> <C> <C>
INCOME:
Net Income $7,747,000 $6,607,000 $14,319,000 $18,205,000
PRIMARY EARNINGS PER
SHARE:
Weighted Average
Number of Shares 23,983,000 24,022,000 23,925,000 24,180,000
Outstanding
Net Effect of Dilutive
Stock Options Based on
the Treasury Stock
Method Using the Average
Market Price of Common
Stock 1,287,000 966,000 1,213,000 1,020,000
Common Stock and
Common Stock 25,270,000 24,988,000 25,138,000 25,200,000
Equivalents
Primary Earnings Per
Share $0.31 $0.26 $0.57 $0.72
FULLY DILUTED EARNINGS
PER SHARE:
Weighted Average
Number of Shares 23,983,000 24,022,000 23,925,000 24,180,000
Outstanding
Net Effect of Dilutive
Stock Options Based on
the Treasury Stock
Method Using the End
of Period Market
Price of Common Stock,
if Higher Than
Average 1,328,000 966,000 1,346,000 1,020,000
Common Stock and
Common Stock 25,311,000 24,988,000 25,271,000 25,200,000
Equivalents
Fully Diluted Earnings
Per Share $0.31 $0.26 $0.57 $0.72
<FN>
(1) Common share information reflects a 3 for 2 stock split
effective April, 1997.
</TABLE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities and Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
BURR-BROWN CORPORATION
Registrant
By: J. SCOTT BLOUIN
J. Scott Blouin
Chief Financial Officer
Principal Accounting Officer
Date: August 8, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
YEAR-TO-DATE CONSOLIDATED STATEMENTS OF INCOME, CONSOLIDATED
BALANCE SHEETS, AND CONSOLIDATED STATEMENTS OF CASH FLOWS
FOUND ON PAGES 3,4,5 RESPECTIVELY, ON THE COMPANY'S FORM 10-Q
FOR THE CURRENT PERIOD ENDED AND THE PREVIOUS PERIOD ENDED,
ARE LISTED BELOW IN TABULAR FORMAT AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-END> MAR-29-1997 JUN-28-1997
<CASH> 37,340 32,523
<SECURITIES> 42,032 43,960
<RECEIVABLES> 45,144 53,704
<ALLOWANCES> 919 961
<INVENTORY> 56,016 56,617
<CURRENT-ASSETS> 147,935 155,698
<PP&E> 156,194 163,604
<DEPRECIATION> 86,021 89,987
<TOTAL-ASSETS> 262,899 273,150
<CURRENT-LIABILITIES> 52,178 53,897
<BONDS> 0 0
0 0
0 0
<COMMON> 250 252
<OTHER-SE> 204,662 214,383
<TOTAL-LIABILITY-AND-EQUITY> 262,899 273,150
<SALES> 54,772 117,277
<TOTAL-REVENUES> 54,772 117,277
<CGS> 27,400 58,637
<TOTAL-COSTS> 27,400 58,637
<OTHER-EXPENSES> 7,270 15,733
<LOSS-PROVISION> 20 19
<INTEREST-EXPENSE> 102 215
<INCOME-PRETAX> 9,388 20,456
<INCOME-TAX> 2,816 6,137
<INCOME-CONTINUING> 6,572 14,319
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 6,572 14,319
<EPS-PRIMARY> 0.26 0.57
<EPS-DILUTED> 0.26 0.57
</TABLE>
