SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the registrant [x]
Filed by a party other than the registrant
Check the appropriate box:
Preliminary proxy statement
X Definitive proxy statement
Definitive additional materials
Soliciting material pursuant to Rule 14a-11(c) or
Rule 14a-12
Burr-Brown Corporation
(Name of Registrant as Specified in Its Charter)
Burr-Brown Corporation
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
$125 per Exchange Act Rule 0-11(c)(1)(ii),
14a-6(i)(1), or 14a-6(j)(2).
$500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which
transaction applies:
(2) Aggregate number of securities to which
transactions applies:
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identity the
filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
BURR-BROWN CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 24, 1998 9:00 a.m.
You are hereby notified that the Annual Meeting of Stockholders
of Burr-Brown Corporation will be held on the 24th day of April
1998 at 9:00 a.m. at the principal executive offices of the
Company, 6730 South Tucson Boulevard, Tucson, Arizona 85706, to
consider and act upon the following matters:
1. To elect a Board of Directors consisting of the
number so fixed for the ensuing year;
2. To approve an amendment to the Company's 1993
Stock Incentive Plan to increase the number of
shares authorized for issuance under the Plan by
an additional 3,000,000 shares;
3. To approve the 1998 Employee Stock Purchase Plan
under which 600,000 shares of common stock will be
reserved for issuance;
4. To ratify the selection of Ernst & Young LLP to serve
as independent auditors for the Company for the year
ending December 31, 1998; and
5. To transact such other business as may properly
come before the meeting.
If you are unable to attend the meeting personally, please be
sure to date, sign, and return the enclosed proxy in the stamped
envelope provided.
Only stockholders of record on the books of the Company at the
close of business on March 4, 1998 will be entitled to vote at
the meeting.
By Order of the Board of
Directors,
Jill H. Rice
Corporate Secretary
March 24, 1998
IMPORTANT
A Proxy Statement and proxy are submitted herewith. All
stockholders are urged to complete and mail the proxy promptly
whether or not they plan to attend the meeting in person. The
enclosed envelope for return of the proxy requires no postage if
mailed in the U.S.A. or Canada. Stockholders attending the
meeting may personally vote on all matters which are considered,
in which event the signed proxy may be revoked. It is important
that your shares be voted.
BURR-BROWN CORPORATION
6730 South Tucson Boulevard
Tucson, Arizona 85706
PROXY STATEMENT
GENERAL
This Proxy Statement and accompanying Proxy Card are
furnished in connection with the solicitation by the Board of
Directors of Burr-Brown Corporation, a Delaware corporation (the
"Company" or "Burr-Brown"), of proxies to be voted at the Annual
Meeting of Stockholders to be held on April 24, 1998, or at any
adjournment or postponement thereof, for the purposes set forth
in the accompanying Notice of Annual Meeting of Stockholders.
The Annual Meeting will be held at 9:00 a.m. at the principal
executive offices of the Company located at 6730 South Tucson
Boulevard, Tucson, Arizona 85706. It is anticipated that this
Proxy Statement and the enclosed Proxy Card will be first mailed
to stockholders on or about March 24, 1998.
On February 20, 1998, the Board of Directors declared a 3-
for-2 split of the Company's common stock, in the form of a stock
dividend, payable on March 20, 1998 to stockholders of record on
March 6, 1998. The share numbers in this Proxy Statement give
effect to this stock split unless specifically stated as "pre-
split."
VOTING RIGHTS
The close of business on March 4, 1998 was the record date
for stockholders entitled to notice of and to vote at the Annual
Meeting and any adjournments thereof. As of March 4, 1998, the
Company had 36,546,429 shares of its common stock outstanding
and entitled to vote at the Annual Meeting. Holders of common
stock are entitled to one vote for each share of common stock so
held. The certificate of incorporation of the Company does not
provide for cumulative voting.
REVOCABILITY AND VOTING OF PROXIES
Any person giving a proxy has the power to revoke it at any
time before its exercise. A proxy may be revoked by filing with
the Secretary of the Company an instrument of revocation or a
duly executed proxy bearing a later date, or may be revoked by
attending the Annual Meeting and voting in person. When a proxy
is returned properly signed, the shares represented thereby will
be voted as directed by the persons named in the proxies. If a
proxy is returned without specifying choices, the shares will be
voted "FOR" the directors named in proposal 1 and "FOR" proposals
2, 3, and 4 and in the proxy holder's discretion for all other
matters properly under consideration at the Annual Meeting.
Abstentions and broker non-votes are each included in the
determination of the number of shares present for quorum
purposes. Abstentions are counted in tabulations of the votes
cast on proposals presented to stockholders and are treated as
negative votes, whereas broker non-votes are not counted for
purposes of determining whether a proposal has been approved.
SOLICITATION OF PROXIES
The Company will bear the cost of solicitation of proxies.
Copies of solicitation material will be furnished to brokerage
houses, fiduciaries, and custodians holding shares in their names
that are beneficially owned by others to forward to such
beneficial owners. The Company may reimburse such persons for
their costs of forwarding the solicitation material to such
beneficial owners. The original solicitation of proxies by mail
may be supplemented by solicitation by telephone, telegram, or
other means by directors, officers, employees or agents of the
Company. No additional compensation will be paid to these
individuals for any such services.
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table sets forth certain information as of
March 4, 1998, with the exception of information regarding
Warburg, Pincus Counsellors, Inc., J.W. Seligman & Co., Inc. and
INVESCO, PLC, which are stated as of December 31, 1997, regarding
the ownership of the Company's common stock by (i) all persons
known by the Company to be beneficial owners of five percent (5%)
or more of its outstanding common stock, (ii) each director of
the Company, including those who are nominees for election to
the Board at the Annual Meeting, (iii) each of the executive
officers named in the Summary Compensation Table, and (iv) all
executive officers and directors of the Company as a group. All
share numbers stated herein have been adjusted upward to take
into account the 3-for-2 stock split of the Company's common
stock which the Board authorized on February 20, 1998, payable in
the form of a dividend on March 20, 1998 to shareholders of
record on March 6, 1998.
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership(1)
Number of Percent of
Name of Beneficial Owner Shares Class
<S> <C> <C>
Thomas R. Brown, Jr. (2) 11,108,559 (3) 30
Director and Chairman
Francis J. Aguilar,
Director (2) 37,125 (4) *
John S. Anderegg, Jr. (2) 153,351 (4) *
Director
Marcelo A. Gumucio (2) 47,250 (5) *
Director
Syrus P. Madavi (2) 450,136 (6) 1
Director, President & CEO
Kenneth G. Wolf (2) 85 (7) *
Executive Vice President
J. Scott Blouin (2) 6,750 (8) *
CFO
All Current Directors and 11,803,256 (9) 32
Current Executive Officers
as a Group (7 persons)
Warburg, Pincus 1,855,873 5
Counsellors, Inc.
466 Lexington Avenue
New York, NY 10017
J.W. Seligman & Co. , Inc. 2,217,264 (10) 6
Mr. William C. Morris
100 Park Avenue
New York, NY 10017
INVESCO, PLC 2,037,448 (11) 6
11 Devonshire Square
London EC2M 4YR
England
</TABLE>
________________________________
* Less than one (1%) percent of the outstanding common stock.
(1) Percentage of beneficial ownership is calculated assuming
36,546,429 shares of common stock were outstanding on March
4, 1998. This percentage also includes common stock of which
such individual or entity has the right to acquire beneficial
ownership either currently or within sixty (60) days after
March 4, 1998, including but not limited to the exercise of
an option; however, such common stock is not be deemed
outstanding for the purpose of computing the percentage owned
by any other individual or entity. Such calculation is
required by General Rule 13d-3(a)(l)(i) under the Securities
Exchange Act of 1934. Unless otherwise indicated, each of
the beneficial owners named in the table has sole voting and
investment power with respect to all shares shown as owned by
them, subject to applicable community property laws.
(2) Unless otherwise indicated, the address of each person or
entity listed is Burr-Brown Corporation, 6730 South Tucson
Blvd., Tucson, Arizona 85706.
(3) Represents 10,608,630 shares held by Brown Investment
Management Limited Partnership, of which Mr. Brown is a
General Partner and pursuant to which he shares dispositive
power over these shares. Additionally, includes 499,929
shares held by Mr. Brown, individually. Of these shares, Mr.
Brown has sole dispositive power. Does not include 119,614
shares held in the Burr-Brown Corporation Stock Bonus Plan
and Trust pursuant to which Mr. Brown and Mr. Madavi have
voting power.
(4) Includes 33,750 shares subject to options granted pursuant to
the Company's Stock Incentive Plan which are currently
exercisable or which will become exercisable within sixty
(60) days after March 4, 1998.
(5) Includes 27,000 shares subject to options granted pursuant to
the Company's Stock Incentive Plan which are currently
exercisable or which will become exercisable within sixty
(60) days after March 4, 1998.
(6) Includes 403,180 shares subject to options granted pursuant
to the Company's Stock Incentive Plan which are currently
exercisable or which will become exercisable within sixty
(60) days after March 4, 1998.
(7) Mr. Wolf was appointed Executive Vice President on April 10,
1997.
(8) Includes 6,750 shares subject to options granted pursuant to
the Company's Stock Incentive Plan which are currently
exercisable or which will become exercisable within sixty
(60) days after March 4, 1998.
(9) Includes 504,430 shares subject to options granted to
directors and officers pursuant to the Company's Stock
Incentive Plan which are currently exercisable or which will
become exercisable within sixty (60) days after March 4,
1998. Also includes 10,608,630 shares held by Brown
Investment Management Limited Partnership, of which Mr. Brown
is a General Partner, as described in Note (2) above.
(10) Includes shares deemed to be beneficially owned by Mr.
William C. Morris by reason of his shared dispositive and
voting power.
(11) Includes shares deemed to be beneficially owned by reason
of shared dispositive and voting power by the following
affiliates: AIM Management Group, Inc., AMVESCAP Group
Services, Inc. AMVESCAP PLC; AVZ, Inc.; INVESCO Capital
Management, Inc., INVESCO Funds Group, Inc., INVESCO
Management & Research, Inc., INVESCO North American Holdings,
Inc., INVESCO Realty Advisers, Inc. and INVESCO, Inc.
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
Each director to be elected at the Annual Meeting will hold
office until the next annual meeting of stockholders and until a
successor for such director is elected and has been qualified, or
until the death, resignation, or removal of such director. At
the Annual Meeting there are five (5) directors to be elected.
There are five (5) nominees, each of whom is currently a
director of the Company. Each person nominated for election has
agreed to serve if elected, and the Board of Directors has no
reason to believe that any nominee will be unavailable or will
decline to serve. In the event, however, that any nominee is
unable or declines to serve as a director at the time of the
Annual Meeting, the proxies will be voted for any nominee who
shall be designated by the current Board of Directors to fill the
vacancy. Unless authority is withheld, the proxy holders will
vote the proxies received by them for the nominees named below.
In the event that additional persons are nominated for election
as directors, the proxy holders intend to vote all proxies
received by them for the nominees listed below, to the extent
authority is not withheld. The five (5) candidates receiving the
highest number of the affirmative votes of the shares entitled to
vote at the Annual Meeting will be elected directors of the
Company. The proxies solicited by this Proxy Statement may not
be voted for more than five (5) nominees.
NOMINEES
Set forth below is information regarding the nominees to the
Board of Directors.
Present Principal Employment
Name Age and Prior Business Experience
Thomas R. Brown, Jr. 71 Director since 1956.
Founder of the Company and has
served as its Chairman since 1956.
Mr. Brown served as Corporate
Secretary from February 1986 to
November 1987. Mr. Brown served as
the Chief Executive Officer until
February 1983 and President until
1976. Most recently, he served as
President and CEO from April 1993
to March 1994. Mr. Brown is a former
member of the Board of Directors of
the Los Angeles Regional Office of the
Federal Reserve Board.
Syrus P. Madavi 48 Director, President and Chief Executive
Officer of the Company since March 1994.
Formerly, Mr. Madavi was employed at
Raytheon from 1990 to 1994, the last
two years as President, Semiconductor
Division. Prior to that Mr. Madavi
served as the Vice President and General
Manager of Honeywell Signal Processing
Technologies from 1984 to 1989. He
also held management positions with Analog
Devices Inc. from 1980 to 1983.
John S. Anderegg, Jr. 74 Director since 1958. Chairman of the
Board of Dynamics Research Corporation
since 1955 and served as its President
from 1955 to 1986. He serves as a
Director of the Ivy Fund, Metritape, Inc.
and MacKenzie Funds.
Francis J. Aguilar 65 Director since 1993. Professor Emeritus
Business Administration, Harvard Business
School, served as Faculty Chairman, Harvard
International Senior Manager's Program, 1972
to 1974 and Chairman, International Teachers
Program, 1968 to 1972. Dr. Aguilar is
Executive Director of the Management
Education Alliance and is also a consultant
and author. He serves as a Director of
Bowater, Inc. and Dynamics Research
Corporation.
Marcelo A. Gumucio 60 Director since 1995. Mr. Gumucio retired
as Chief Executive Officer of Micro Focus in
1997. From 1992 to 1996, Mr. Gumucio was
Chairman of the Management Board and the
Chief Executive Officer of Memorex Telex
N.V., and President and Chairman of the Board
of Memorex Telex Corporation. In 1990, Mr.
Gumucio founded the private investment firm
Gumucio, Burke and Associates, of which he
has been a partner since its formation.
Prior to his affiliation with that firm, Mr.
Gumucio was an executive at Cray Research,
Inc., where he served as Executive Vice
President from 1983 to 1988 and as President
and Chief Operating Officer from 1988 to
1990.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held four (4) meetings during 1997.
During this period, each Board member attended or participated in
at least 75% of the aggregate of (i) the total number of meetings
of the Board that were held while he was a member and (ii) the
total number of meetings held by all committees of the Board on
which he was a member.
The Audit Committee of the Board of Directors held three (3)
meetings during 1997. The Audit Committee, which is currently
comprised of Directors John S. Anderegg, Jr., Chairman, and
Marcelo A. Gumucio, recommends engagement of the Company's
independent accountants, approves services performed by such
accountants, and reviews and evaluates the Company's accounting
system and its system of internal controls.
The Compensation Committee held two (2) meetings during
1997. The Compensation Committee, which is currently comprised
of Directors, Francis J. Aguilar, and Marcelo A. Gumucio, has
overall responsibility for the Company's compensation policies
and determines the compensation payable to the Company's
executive officers, including their participation in certain of
the Company's employee benefit plans. The Compensation Committee
also administers the Company's Stock Incentive Plan.
DIRECTOR COMPENSATION
Non-employee Board members each received a quarterly
retainer fee of $5,000 and an additional $1,500 for each Board
meeting attended. In addition, each such Board member was
reimbursed for travel expenses incurred in connection with his
attendance at Board meetings and the committees thereof. None
of the non-employee Board members received any option grants
under the Stock Incentive Plan during the 1997 fiscal year.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES ACT OF 1934
Section 16(a) of the Securities and Exchange Act of 1934
requires the Company's directors and executive officers, and
persons who own more than ten percent of a registered class of
the Company's equity securities, to file with the Securities and
Exchange Commission (the "SEC") initial reports of ownership and
reports of changes in ownership of common stock and other equity
securities of the Company. Officers, directors and greater than
ten percent (10%) stockholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely upon review of
copies of such reports furnished to the Company and written
representations that no other reports were required during the
year ended December 31, 1997, there was compliance with all
Section 16(a) filing requirements applicable to the Company's
officers, directors and greater than ten percent (10%)
stockholders. All Form 4 filings were made on a timely basis
with the exception of one Form 4 filing for Mr. Madavi with
respect to an option exercise and same day sale of the purchased
shares effected in June, 1997 which was filed (4) four days late.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Cash and Certain Other Compensation
The following table provides certain summary information
concerning the compensation earned by the Company's Chief
Executive Officer and each of the Company's other executive
officers whose salary and bonus for the 1997 fiscal year was in
excess of $100,000, for services rendered in all capacities to
the Company and its subsidiaries for each of the fiscal years
ended December 31, 1997, 1996, and 1995. The individuals
included in the table will be hereafter referred to as the Named
Executive Officers. No other executive officer who would have
otherwise been included in such table on the basis of salary and
bonus earned for the 1997 fiscal year resigned or terminated
employment during that fiscal year.
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Compensation
Awards(3)
Options
Name and Annual (No of Other
Principal Salary Bonus Compen- Under- Compen-
Position Year ($)(1) ($)(5) sation lying sation
($)(2) Shares ($)(4)
<S> <C> <C> <C> <C> <C> <C>
Thomas R. Brown, 1997 195,000 6,832 --- --- 2,375
Jr., Chairman 1996 195,000 2,144 --- --- 2,375
of the Board 1995 195,000 11,660 --- --- 2,375
Syrus P. Madavi, 1997 350,000 311,169 --- --- 2,375
President and 1996 250,000 202,441 --- --- 2,375
Chief 1995 250,000 464,797 4,780 --- 2,310
Executive
Officer
Kenneth G. Wolf, 1997 161,000 80,591 75,299 191,250 1,274
Executive Vice 1996 --- --- --- --- ---
President (6) 1995 --- --- --- --- ---
J. Scott Blouin, 1997 161,423 65,868 --- 33,750 2,375
Chief Financial 1996 143,730 38,864 56,205 --- 2,375
Officer 1995 --- --- --- --- ---
</TABLE>
(1) Includes amounts deferred under the Company's Future Investment
Trust Plan ("401(k) Plan").
(2) Represents amounts paid as reimbursement for relocation expenses.
(3) None of the Named Executive Officers were awarded restricted
stock in the 1997 fiscal year nor held restricted stock at the
end of that year.
(4) All other compensation includes the contributions made by the
Company to the 401(k) Plan on behalf of each of the Named
Executive Officers to match part of his salary deferrals under
such plan.
(5) Includes a corporate bonus and profit sharing bonus paid in the
Year following the year in which services were performed.
(6) Mr. Wolf was appointed Executive Vice President on April 10, 1997.
Stock Options
The following table sets forth certain information regarding
options granted during the fiscal year ended December 31, 1997 by the
Company to the Named Executive Officers:
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
Number % of Potential Realizable
of Total Value at
Securities Options/ Assumed Annual
Underlying SARS Rates of Stock
Options/ Granted Exercise Price Appreciation
SARS to or for Option
Granted Employees Base Expiration Term (4)
(#)(1) in Fiscal Price Date
Year ($/Sh)(3) 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Kenneth G. Wolf 191,250 20.61% 15.16 04/09/07 1,824,176 4,622,842
J. Scott Blouin 33,750 3.64% 11.33 02/04/07 240,550 609,605
</TABLE>
(1) Represents options granted pursuant to the Company's 1993 Stock
Incentive Plan. The options granted to Mr. Wolf will become
exercisable for the Option Shares in a series of four (4) successive
equal annual installments, with the first such installment to become
exercisable upon completion of two years of service measured from the
April 10, 1997 grant date. Mr. Blouin's option grant will become
exercisable in a series of five (5) successive equal annual
installments, with the first such installment to become exercisable
upon completion of one year of Service measured from the February 5,
1997 grant date. These option grants have a maximum ten (10) year
term.
(2) The Company granted to employees in fiscal 1997 options to
purchase 928,125 shares of common stock.
(3) The exercise price is equal to the fair market value of the
Company's common stock on the date of grant.
(4) Potential realizable value is based on an assumption that the
market price of the stock will appreciate at the stated rate,
compounded annually, from the date of grant until the end of the ten
(10) year term. These values are calculated based on rules
promulgated by the Securities and Exchange Commission and do not
reflect the Company's estimate or projection of future stock prices.
Actual gains, if any, on stock option exercises will be dependent
upon the future performance of the price of the Company's common
stock.
Stock Option Exercises and Holdings
The following table sets forth certain information concerning the
exercise of stock options during the fiscal year ended December 31,
1997 by each of the Named Executive Officers and the number and value
of unexercised options held by each of the Named Executive Officers
at the end of the 1997. No stock appreciation rights have been
granted to the Named Executive Officers.
<TABLE>
<CAPTION>
Aggregated Option Exercises in 1997 and Option Values at 1997 Year End
Shares Number of Securities Value of Unexer-
Acquired Underlying Unexer- cised in-the-money
on Value cised Options at Options at 1997
Exercise Realized 1997 Year-End Year-End
Exercis- Unexercis- Exercis- Unexercis-
sable able able able
($) ($)
<S> <C> <C> <C> <C> <C> <C>
Thomas R. Brown, Jr. 0 0 0 0 0 0
Chairman of the
Board
Syrus P. Madavi, 301,821 4,967,700 350,679 202,501 6,805,365 3,924,905
President & CEO
Kenneth G. Wolf, 0 0 0 191,250 0 1,195,312
Executive Vice
President
J. Scott Blouin, 24,300 324,000 0 70,200 0 744,299
CFO
</TABLE>
(1) Value represents the difference between the closing price of the
Common Stock on the date of exercise and the exercise price,
multiplied by the number of shares acquired on exercise.
(2) "In-the-money" options are options whose exercise price was less
than the market price of the Company's common stock on December
31, 1997.
(3) Based on the market price of $21.4166 which was the closing
price per share of the Company's common stock on the Nasdaq
National Market on December 31, 1997, less the option exercise
price payable per share.
(4) Mr. Wolf was appointed Executive Vice President on April 10, 1997.
<TABLE>
<CAPTION>
Annual Retirement Benefits
The table below provides a schedule of estimated annual benefits
payable upon retirement to individuals who participate in the
Company's defined benefit pension plan:
Compensation Years of Service
5 10 15 20 or More
<S> <C> <C> <C> <C>
$100,000 $4,267 $8,535 $12,802 $17,070
125,000 5,517 11,035 16,552 22,070
150,000 6,767 15,535 20,302 27,070
200,000 9,267 18,535 27,802 37,070
</TABLE>
A participant's compensation covered by the Company's
retirement plan is his or her average salary for the five
consecutive calendar plan years during the last ten (10) years of
the participant's career for which such average is the highest.
Under the retirement plan, contributions are not specifically
allocated to individual participants. The table above shows
estimated annual retirement benefits payable at age sixty-five
(65) to participants, based upon the plan formula equal to 0.5%
of final average annual salary plus 0.5% of excess final average
salary over the individual's Social Security covered
compensation, multiplied by years of service, up to a maximum of
twenty (20) years. The estimates do not include Social Security
benefits payable from the federal government and assume that
benefits begin at age sixty-five (65) under a straight life
annuity form. The Social Security covered compensation used in
the calculation is that applicable to an individual attaining age
sixty-five (65) in 1997. Compensation covered under the plan for
named executives as of the end of 1997: Brown: $189,150; Madavi:
$152,500; Wolf: $160,000; Blouin $126,731. The estimated years
of service for each named executive are as follows: Brown: 42;
Madavi: 4; Wolf: 1; and Blouin: 3.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of
Burr-Brown Corporation is responsible for establishing the base
salary of the Company's executive officers and administering the
Company's Stock Incentive Plan under which grants may be made to
the executive officers and other key employees. In addition, the
Compensation Committee approves the individual bonus programs to
be in effect for the executive officers each year.
General Compensation Policy
The Compensation Committee's fundamental policy is to
offer the Company's executive officers competitive compensation
opportunities based substantially upon their contribution to the
financial success of the Company and their personal performance.
Accordingly, each executive officer's compensation package is
comprised of three elements: (i) base salary, which reflects
individual performance and is designed primarily to be competitive
with relevant salary levels in the industry, (ii) annual variable
performance awards payable in cash and tied to the achievement of
performance goals established by the Committee, and (iii) long-
term stock-based incentive awards that strengthen the mutuality of
interests between the executive officers and the Company's
stockholders. As an officer's level of responsibility increases,
a greater portion of his or her total compensation is to be
dependent upon Company performance and stock price appreciation
rather than base salary.
Factors. The principal factors considered in
establishing the components of each executive officer's
compensation package for the 1997 fiscal year are summarized
below. The Committee may in its discretion apply entirely
different factors, particularly different measures of financial
performance, in setting executive compensation for future years.
* Base Salary. The base salary for each executive
officer is set on the basis of personal performance, the
Compensation Committee's assessment of salary levels in effect for
comparable positions with the Company's principal competitors, and
internal comparability considerations. The weight given to each
of these factors may vary from individual to individual. The
Compensation Committee made its decisions as to the appropriate
market level of base salary for each executive officer on the
basis of its review and understanding of the salary levels in
effect for similar positions at those companies with which the
Company competes for executive talent. Base salaries are reviewed
on an annual basis, and adjustments, if any, will be made in
accordance with the factors indicated above. During 1997 the base
salary for Mr. Madavi was increased to $350,000 per year while the
annual salaries for Thomas R. Brown, Jr., and J. Scott Blouin
remained at $195,000 and $162,000 respectively. Mr. Blouin's
salary was further increased to $172,000 in early 1998. Mr.
Kenneth G. Wolf joined the Company as Executive Vice President
Operations on April 10, 1997 at an annualized rate of $230,000.
* Annual Incentive Compensation. The Compensation
Committee established an executive incentive plan for fiscal 1997
designed to reward executive officers on the basis of the
Company's financial results for the year and each executive
officer's individual performance. Under the plan, a percentage of
the Company's pre-tax income for the 1997 fiscal year was set
aside for individual bonus awards to the Chief Executive Officer
and other executive officers and key employees of the Company.
The Compensation Committee determined the individual bonus award
for the Chief Executive Officer on the basis of his achievement of
a number of strategic objectives relating to product development,
increased market share and financial performance of the Company
relative to the industry. The Compensation Committee then
distributed the balance of the bonus pool to the other executive
officers and participating employees on the basis of the
individual performance evaluations and bonus recommendations
submitted by the Chief Executive Officer. The actual bonuses
awarded to the Chief Executive Officer and the other named
executive officers are set forth in the Summary Compensation Table
which appears earlier in this Proxy Statement.
* Long-Term Incentive Compensation. Stock options are
designed to align the interests of the executive officers with
those of the stockholders and to provide each with an equity stake
in the business. The Compensation Committee has established
general guidelines for awarding options to executive officers
which takes into account an individual's current position with the
Company, comparability with grants made to other Company
executives, and his or her potential for growth within the
Company, i.e., future responsibilities and possible promotions
over the option term. The Compensation Committee does not always
strictly adhere to these guidelines and will occasionally vary the
size of the option award as circumstances warrant.
CEO Compensation
In setting the compensation payable to the Company's Chief
Executive Officer, Mr. Syrus P. Madavi, for the 1997 fiscal year,
the Compensation Committee increased his base salary to $350,000
to provide him with a competitive level of compensation. It is
the Compensation Committee's intent to provide Mr. Madavi with a
level of stability and certainty each year with respect to base
salary and not to have this particular component of compensation
affected to any significant degree by Company performance factors.
As previously indicated, Mr. Madavi's incentive compensation
for the 1997 fiscal year was dependent upon the Company's
financial performance, measured in terms of pre-tax income, and
his achievement of a number of strategic objectives relating to
the Company's position in the industry. No additional stock
options were awarded to Mr. Madavi during the 1997 fiscal year.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code, enacted in 1993,
generally disallows a tax deduction to publicly held companies for
compensation exceeding $1 million paid to certain of the
corporation's executive officers. The limitation applies only to
compensation which is not considered to be performance-based. The
non-performance based compensation to be paid to the Company's
executive officers for the 1997 fiscal year did not exceed the $1
million limit per officer, nor is it expected that the non-
performance based compensation to be paid to the Company's
executive officers for fiscal 1998 will exceed that limit. The
Company's 1993 Stock Incentive Plan is structured so that any
compensation deemed paid to an executive officer in connection
with the exercise of option grants made under that plan will
qualify as performance based compensation which will not be
subject to the $1 million limitation. Because it is very unlikely
that the cash compensation payable to any of the Company's
executive officers in the foreseeable future will approach the $1
million limit, the Compensation Committee has decided at this time
not to take any action to limit or restructure the elements of
cash compensation payable to the Company's executive officers.
The Compensation Committee will reconsider this decision should
the individual compensation of any executive officer ever approach
the $1 million level.
Submitted by the Compensation Committee
Burr-Brown Corporation Board of Directors
Francis J. Aguilar
Marcelo A. Gumucio
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee is a former or
current officer or employee of the Company or any of its
subsidiaries. No executive officer of the Company serves as a
member of the board of directors or compensation committee of any
entity which has one or more executive officers serving as a
member of the Company's Board of Directors or Compensation
Committee.
PERFORMANCE GRAPH
The following graph compares the cumulative total
stockholder return on the common stock of the Company with that
of the Russell 2000 Index, a broad market index of companies with
comparable market capitalization, and Value Line's Semiconductors
Index, a published line-of-business index. The comparison for
each of the periods assumes that $100 was invested on December
31, 1992 in the Company's common stock, the stocks included in
the Russell 2000 Index and the stocks included in Value Line's
Semiconductors Index. These indices, which reflect formulas for
dividend reinvestment and weighing of individual stocks, do not
necessarily reflect returns that could be achieved by individual
investors.
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
Russell2000 100.00 118.91 116.75 149.95 174.67 213.73
Value Line 100.00 165.14 214.19 324.45 551.82 740.99
Burr-Brown 100.00 89.66 186.21 527.59 537.93 996.98
</TABLE>
Note: Assumes $100 invested on 12/31/92 in Burr-Brown,
Russell 2000 Index and Value Line's Semiconductor Index.
Assumes reinvestment of dividends on a daily basis.
Notwithstanding anything to the contrary set forth in any of
the Company's previous filings under the Securities Act of 1933
or the Securities Exchange Act of 1934 that might incorporate
future filings made by the Company under those statutes,
including this Proxy Statement, the preceding Compensation
Committee Report on Executive Compensation and the preceding
Company Stock Price Performance Graph are not to be incorporated
by reference into any such prior filings; nor will such report or
graph be incorporated by reference into any future filings made
by the Company under those statutes.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN
CONTROL ARRANGEMENTS
The Company does not have any employment contracts with its
executive officers. However, in October 1996, the Company entered
into a formal severance agreement with Mr. Syrus P. Madavi, the
Company's President and Chief Executive Officer, which replaces
his former severance arrangement. Under the new agreement,
severance benefits will be paid to Mr. Madavi upon his termination
of employment under certain specified circumstances. The nature
of those benefits and the various pay-out events may be summarized
as follows:
Voluntary Termination/Termination for Misconduct: In
the absence of a change in control of the Company, Mr. Madavi will
not be entitled to any severance benefits in the event of his
voluntary resignation, and under no circumstances will any
severance benefits be paid to him if his employment is terminated
for misconduct.
Termination for Just Cause: If the Company terminates
Mr. Madavi's employment for just cause (including his failure to
correct one or more material deficiencies in his performance after
receipt of written notice from the Board), then he will be
entitled to the following severance benefits: (i) a one-time lump
sum payment equal to his average annual base salary and bonus for
the preceding three years and (ii) the continuation of his base
salary for twelve months.
Termination without Cause: Should the Company
terminate Mr. Madavi's employment without cause (for any reason
other than misconduct or just cause), then the Company will pay
him a severance benefit equal to two times his average annual base
salary and bonus for the preceding three years, with one-half of
such amount to be paid in an immediate lump sum and the balance to
be paid in twelve equal monthly installments.
Should the Company undergo a change in control (a
change in ownership of securities possessing more than fifty
percent of the total combined voting power of the Company's
outstanding securities or the sale of all or substantially all of
the Company's assets in liquidation or dissolution of the
Company), then Mr. Madavi will be entitled to the following
severance benefits in connection with the subsequent termination
of his employment:
Resignation: If Mr. Madavi voluntarily leaves the
Company's employ within two years after the change in control,
then he will be entitled to a severance benefit equal to two times
his average annual base salary and bonus for the preceding three
years, with one-half of such amount to be paid in an immediate
lump sum and the balance to be paid in twelve equal monthly
installments.
Constructive Termination: Should Mr. Madavi resign
within six months following a constructive termination of his
employment triggered by a material reduction in his duties, a
greater than ten percent reduction in his level of compensation,
or a relocation of his principal place of employment by more than
fifty miles, then he will be entitled to a severance benefit equal
to three times his average annual base salary and bonus for the
preceding three years, with two-thirds of such amount to be paid
in an immediate lump sum and the balance to be paid in twelve
equal monthly installments.
Termination without Cause: Should the Company
terminate Mr. Madavi's employment without cause (for any reason
other than misconduct or just cause) at any time following a
change in control of the Company, then he will be entitled to a
severance benefit equal to four times his average annual base
salary and bonus for the preceding three years, with three-fourths
of such amount to be paid in an immediate lump sum and the balance
to be paid in twelve equal monthly installments.
Should the Company be acquired through a hostile take-over
(whether through the successful completion of a hostile tender
offer for more than fifty percent of the Company's outstanding
voting securities or a change in the majority of the Board of
Directors through one or more contested elections for Board
members) and Mr. Madavi leaves the Company's employ at any time
within the succeeding two years, then he will be entitled to a
lump sum severance payment equal to two times his average annual
base salary and bonus for the preceding three years.
The change in control severance benefits payable to Mr.
Madavi (other than in connection with a hostile take-over) are
subject to certain limitations to prevent any excess parachute
payments under the federal tax laws. The severance agreement also
imposes certain non-competition covenants and consulting
obligations upon Mr. Madavi during the period severance benefits
are to be paid to him following his termination of employment,
whether or not such termination is in connection with a change in
control. In addition, the Company will, at its expense, provide
continued health care coverage under the Company's medical/dental
plans to Mr. Madavi and his eligible dependents for up to a
twelve-month period following his termination.
The severance agreement also requires that all future option
grants made to Mr. Madavi contain certain vesting acceleration
provisions, ranging from twenty percent (20%) to one hundred
percent (100%) accelerated vesting, in connection with his
termination of employment or certain changes in control or
ownership of the Company. Mr. Madavi will have a one-year period
following his termination of service with the Company in which to
exercise those accelerated options. None of Mr. Madavi's current
options contain such provisions.
Mr. Madavi's severance agreement is to remain in effect
through December 31, 1999 and will automatically be renewed each
calendar year thereafter unless the Company gives written notice
of non-renewal at least one hundred eighty days prior to the start
of any such subsequent calendar year. Should Mr. Madavi resign
within six months after such non-renewal, the Company will be
obligated to negotiate a reasonable severance package with him on
the basis of the termination benefits provided similarly-situated
chief executive officers in the industry.
PROPOSAL NO. 2:
APPROVAL OF AMENDMENTS TO THE COMPANY'S 1993 STOCK INCENTIVE PLAN
The Board of Directors is requesting stockholder approval of
an amendment to the Company's 1993 Stock Incentive Plan (the "1993
Plan") that will increase the number of shares of the Company's
common stock authorized for issuance under the 1993 Plan by an
additional 3,000,000 shares.
All share numbers in this Proposal No. 2 have been adjusted
upward to take into account the 3-for-2 split of the Company's
common stock which the Board authorized on February 20, 1998 and
which is to become payable in the form of a stock dividend payable
on March 20, 1998 to stockholders of record on March 6, 1998.
Summary of the 1993 Stock Incentive Plan
The following is a summary of the principal features of the
1993 Plan, as most recently amended. The summary, however, does
not purport to be a complete description of all the provisions of
the 1993 Plan. Any stockholder who wishes to obtain a copy of the
actual plan document may do so by written request to the Corporate
Secretary at the Company's executive offices.
Structure of the 1993 Plan
The 1993 Plan contains three separate equity incentive
programs: (i) a Discretionary Option Grant Program, under which
key employees, non-employee Board members and consultants may be
granted options to purchase shares of the Company's common stock,
(ii) a Stock Issuance Program under which key employees, non-
employee Board members and consultants may be issued shares of the
Company's common stock directly, either through the purchase of
such shares or as a bonus tied to the performance of services or
the Company's attainment of financial objectives, and (iii) an
Automatic Option Grant Program, under which non-employee Board
members will automatically receive a series of special option
grants over their period of continued Board service.
Options granted under the Discretionary Option Grant Program
may be either incentive stock options designed to meet the
requirements of Section 422 of the Internal Revenue Code
("Incentive Stock Options") or nonstatutory options ("Nonstatutory
Options") not intended to satisfy such requirements. All grants
under the Automatic Option Grant Program will be Nonstatutory
Options.
Administration
The 1993 Plan is administered with respect to all executive
officers of the Company subject to the short-swing trading
restrictions of the federal securities laws by the Compensation
Committee of the Board comprised of two or more non-employee Board
members. With respect to all other participants, the 1993 Plan
may be administered either by the Compensation Committee or by a
secondary committee comprised of one or more Board members
appointed by the Board. The Compensation Committee or the
secondary committee acting within the scope of its administrative
jurisdiction under the 1993 Plan will be referred to in this
summary as the Plan Administrator, and each Plan Administrator
will have full authority, within the scope of its administrative
jurisdiction, to determine the eligible individuals who are to
receive option grants and/or share issuances under the
Discretionary Option Grant and Stock Issuance Programs, the type
of option (Incentive Option or Nonstatutory Option) to be granted,
the number of shares to be covered by each granted option or share
issuance, the date or dates on which the option is to become
exercisable or the issued shares are to vest, and the maximum term
for which a granted option is to remain outstanding.
All grants under the Automatic Option Grant Program will be
made in strict compliance with the express provisions of that
program, and no administrative discretion will be exercised by any
Plan Administrator with respect to the grants made under that
program.
Eligibility
Key employees (including officers) of the Company or its
subsidiaries (whether now existing or subsequently established),
non-employee Board members and independent consultants are
eligible to participate in the Discretionary Option Grant and the
Stock Issuance Programs under the 1993 Plan. Non-employee Board
members are also eligible to participate in the Automatic Option
Grant Program. As of March 4, 1998, approximately 350 employees,
including 3 executive officers, and 3 non-employee Board members
were eligible to participate in the Discretionary Option Grant and
Stock Issuance Programs, and the 3 non-employee Board members were
also eligible to participate in the Automatic Option Grant
Program.
Share Reserve
The Company has reserved 8,888,160 shares of common stock for
issuance over the term of the 1993 Plan, subject to adjustment
from time to time in the event of certain changes to the Company's
capital structure. Such share reserve consists of (i) the
1,613,160 shares of the Company's common stock which remained
available for issuance under the Company's 1981 Stock Option Plan
at the time of its incorporation into the 1993 Plan, (ii) the
additional 2,025,000 shares approved by the stockholders in
connection with the implementation of the 1993 Plan, (iii) the
additional 1,125,000 share increase approved by the Company's
stockholders at the 1996 Annual Meeting, plus (iv) the additional
1,125,000 share increase approved by the Company's stockholders at
the 1997 Annual Meeting, plus (v) an additional 3,000,000 share
increase which is subject to stockholder approval of this
Proposal. The issuable shares may be made available either from
the Company's authorized but unissued shares of common stock or
from shares of the Company's common stock repurchased by the
Company, including shares purchased on the open market.
In no event may the aggregate number of shares of the
Company's common stock for which any one individual participating
in the 1993 Plan may be granted stock options, separately
exercisable stock appreciation rights and direct share issuances
exceed 2,025,000 shares in the aggregate over the remaining term
of the 1993 Plan. For purposes of this limitation, any stock
option grants, stock appreciation rights or direct share issuances
made prior to January 1, 1994 will not be taken into account.
Should an option expire or terminate for any reason prior to
exercise in full (including options incorporated from the 1981
Plan and options canceled in accordance with the cancellation-
regrant provisions described in the "Cancellation and Regrant of
Options" section below), the shares subject to the portion of the
option not so exercised will be available for subsequent option
grants or share issuances under the 1993 Plan. In addition,
unvested shares issued under the 1993 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 1993 Plan will be added back to the number of shares of
common stock reserved for issuance and will accordingly be
available for reissuance through one or more subsequent option
grants or direct stock issuances under the 1993 Plan. However,
shares subject to any option surrendered in accordance with the
stock appreciation right provisions of the 1993 Plan will not be
available for subsequent issuance.
As of March 4, 1998, options for 3,279,720 shares of common
stock were outstanding under the 1993 Plan, and 913,659 shares
were available for future option grants or direct stock issuances.
Assuming stockholder approval of the 3,000,000-share increase
which forms part of this Proposal, the total number of available
shares for future stock issuances will be 7,193,379 shares.
Valuation
For all purposes under the 1993 Plan, the fair market value
per share of the Company's common stock on any relevant date will
be the closing selling price per share on such date, as reported
on the Nasdaq National Market. On March 4, 1998, the fair market
value of the Company's common stock determined on such basis was
$25.8753 per share.
DISCRETIONARY OPTION GRANT PROGRAM
Price and Exercisability
The exercise price of options granted under the 1993 Plan may
not be less than the fair market value of the option shares on the
grant date. The exercise price is payable in cash or in shares of
the Company's common stock. The option may also be exercised
through a same-day sale program without any cash outlay on the
optionee's part.
The maximum period during which any option may remain
outstanding under the 1993 Plan may not exceed ten (10) years.
The Plan Administrator will have complete discretion to grant
options (i) which are immediately exercisable for vested shares,
(ii) which are immediately exercisable for unvested shares subject
to the Company's reacquisition rights or (iii) which become
exercisable in installments for vested shares over the optionee's
period of service.
Any vested options held by the optionee at the time of his or
her cessation of service for any reason other than death or
disability will normally not remain exercisable for more than a
three-month period thereafter. Should the optionee cease service
by reason of disability or die while holding one or more
outstanding vested options, then the outstanding vested options
will not remain exercisable for more than a twelve-month period
thereafter. The Plan Administrator may also permit a twelve-month
or longer post-exercise period in the event the optionee ceases
service by reason of retirement at or after attainment of age 65.
Under no circumstances, however, may any option be exercised after
the specified expiration date of the option term. Each such
option will normally, during the applicable post-service exercise
period, be exercisable only to the extent of the number of option
shares in which the optionee is vested at the time of his or her
cessation of service. For purposes of the 1993 Plan, the optionee
will be deemed to continue in service for so long as such
individual performs services for the Company or any majority-owned
subsidiary, whether as an employee, a non-employee member of the
board of directors or an independent consultant or advisor.
The Plan Administrator will have complete discretion,
exercisable at any time the option remains outstanding, to extend
the period following the optionee's cessation of service during
which his or her outstanding options may be exercised and/or to
accelerate the exercisability or vesting of such options in whole
or in part.
Stock Appreciation Rights
The Plan Administrator may grant options with tandem or
limited stock appreciation rights. Tandem stock appreciation
rights provide the holders with the right to surrender their
options for an appreciation distribution from the Company equal in
amount to the excess of (i) the fair market value of the vested
shares of common stock subject to the surrendered option over (ii)
the aggregate exercise price payable for those shares. Such
appreciation distribution may, at the discretion of the Plan
Administrator, be made in cash or in shares of the Company's
common stock. Officers of the Company subject to the short-swing
profit restrictions of the Federal securities laws may also be
granted limited stock appreciation rights in connection with their
option grants. Any option with such a limited stock appreciation
right may be surrendered to the Company upon the successful
completion of a hostile tender offer for more than 50% of the
Company's outstanding voting securities, to the extent the option
is at the time exercisable for vested shares of common stock. In
return for the surrendered option, the officer will be entitled to
a cash distribution from the Company in an amount per option share
equal to the excess of (i) the highest reported price per share of
common stock paid in the tender offer over (ii) the option
exercise price payable per share. The balance of the option (if
any) will continue to remain outstanding and become exercisable
and vest in accordance with the agreement evidencing such grant.
Stockholder Rights and Option Assignability
No optionee is to have any stockholder rights with respect to
the option shares until such optionee has exercised the option and
paid the exercise price for the purchased shares. Incentive
Options may be exercised only by the optionee during his or her
lifetime and may not be assignable or transferable by the optionee
other than a transfer of the option by will or by the laws of
inheritance 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.
Cancellation and Regrant of Options
The Plan Administrator has the authority to effect the
cancellation of any or all options outstanding under the 1993 Plan
(including options incorporated from the 1981 Plan) and to grant
in substitution new options covering the same or different numbers
of shares of the Company's common stock but with an exercise price
per share not less than the fair market value of the option shares
on the new grant date.
STOCK ISSUANCE PROGRAM
To the extent the shares of the Company's common stock issued
under the Stock Issuance Program are drawn from the Company's
authorized but unissued reserve of common stock, those shares must
be issued for consideration payable in (i) cash or cash
equivalents, (ii) promissory notes payable to the Company's order,
or (iii) services rendered, with such consideration to be valued
at not less than the fair market value of the issued shares.
Treasury shares (shares repurchased by the Company and held as
treasury shares) may be issued for similar consideration or for
such other consideration, including future services, as the Plan
Administrator deems appropriate under the circumstances.
The issued shares may be fully vested upon issuance or may
vest over a period of time. The holder of the issued shares will
have full stockholder rights with respect to those shares,
including the right to vote such shares and receive all cash divi-
dends paid on such shares, whether or not those shares are vested.
However, unvested shares may not be sold, transferred or assigned,
except for certain permitted transfers to the participant's spouse
or issue or transfers effected upon the participant's death.
Upon the participant's cessation of service (as defined
above) for any reason, his or her unvested shares will immediately
be surrendered to the Company for cancellation, and the
participant will cease to have any stockholder rights with respect
to those shares. If the surrendered shares were previously issued
to the participant for consideration paid in cash or cash
equivalent, the Company will repay to the participant the cash
consideration or cancel the principal balance of any outstanding
promissory notes payable to the extent attributable to the
surrendered shares. The Plan Administrator may at any time waive
in whole or in part the surrender and cancellation of the unvested
shares held by the participant and thereby accelerate the vesting
of the participant's interest in the shares as to which the waiver
applies.
AUTOMATIC OPTION GRANT PROGRAM
Under the Automatic Option Grant Program, each non-employee
Board member who first joined the Board on or before March 4,
1997 received, at the time of his or her initial election or the
appointment to the Board or (if later) on the date of the 1994
Annual Stockholders Meeting, an option grant for 33,750 shares
under the Automatic Option Grant Program. Each individual who
first joins the Board as a non-employee Board member at any time
after March 4, 1997 will, at the time of his or her initial
election to the Board by the stockholders or appointment by the
Board, receive an option grant for 18,000 shares. In addition,
each non-employee Board member will automatically be granted an
option for 6,000 shares at each Annual Stockholders Meeting at
which he or she continues to serve as a Board member, 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 33,750-share automatic
option grant 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 18,000-share automatic option grant becomes vested.
Stockholder approval of this Proposal will constitute pre-approval
of each option granted on or after the date of the Annual Meeting
pursuant to the provisions of the Automatic Option Grant Program
summarized below and the subsequent exercise of that option in
accordance with its terms.
Each option granted under the Automatic Option Grant Program
is subject to the following terms and conditions:
- The option price per share will be equal to
100% of the fair market value per share of the
Company's common stock on the automatic option grant
date.
- Each option will have a maximum term of ten
years measured from the grant date.
- Each option will be immediately exercisable
for all the option shares, but any purchased shares
will be subject to repurchase by the Company at the
exercise price paid per share should the optionee cease
Board service prior to vesting in those shares. The
shares subject to each automatic option grant, whether
the initial grant or any annual 6,000-share grant, will
vest in a series of five (5) successive equal annual
installments over the optionee's period of continued
Board service, with the first such installment to vest
upon the completion of one year of Board service
measured from the automatic option grant date.
- The option will remain exercisable for a six-
month period following the optionee's cessation of
Board service for any reason other than death or
permanent disability. Should the optionee die while in
Board service or within six months after his or her
cessation of Board service, then the option will remain
exercisable for a twelve-month period following such
optionee's death and may be exercised by the personal
representative of the optionee's estate or the person
to whom the grant is transferred by the optionee's will
or the laws of inheritance. Should the optionee cease
Board service by reason of permanent disability, then
he or she will have a twelve-month period in which to
exercise the option. In no event, however, may any
option be exercised after the expiration date of the
option term. During the applicable exercise period,
the option may not be exercised for more than the
number of shares (if any) in which the optionee is
vested at the time of his or her cessation of Board
service.
- In the event of a Corporate Transaction or
Change in Control (as those terms are defined in the
Option/Vesting Acceleration section below), the shares
subject to each outstanding automatic option grant will
immediately vest in full, and each such option may be
exercised for any or all of those vested shares until
the expiration or sooner termination of the option
term.
- Upon the successful completion of a hostile
tender offer for securities possessing more than 50% of
the combined voting power of the Company's outstanding
securities, each outstanding automatic option grant may
be surrendered to the Company for a cash distribution
per surrendered option share in an amount equal to the
excess of (A) the highest reported price per share of
the Company's common stock paid in such tender offer
over (B) the option exercise price payable per share.
Stockholder approval of this Proposal will constitute
pre-approval of each option surrender right granted
under the Automatic Option Grant Program on or after
the date of the Annual Meeting and the subsequent
exercise of that right in accordance with the foregoing
terms and provisions.
- The remaining terms and conditions of the
option will in general conform to the terms described
above for option grants made under the Discretionary
Option Grant Program and will be incorporated into the
option agreement evidencing the automatic option grant.
GENERAL PROVISIONS
Option/Vesting Acceleration
Accelerated vesting of outstanding options and share
issuances under the 1993 Plan may occur under certain
circumstances in connection with changes in the ownership or
control of the Company. The transactions which may trigger such
acceleration may be identified as follows:
Corporate Transaction: any one of the following stockholder-
approved transactions to which the Company is a party:
(i) a merger, consolidation or other
reorganization in which the Company is not the
surviving entity,
(ii) the sale, transfer or other disposition of
all or substantially all of the Company's assets in
complete liquidation or dissolution of the Company, or
(iii) any reverse merger in which the Company is
the surviving entity but in which more than 50% of the
Company's outstanding voting securities are transferred
to persons other than those who held such securities
immediately prior to the merger.
Change in Control: either of the following events effecting
a change in ownership or control of the Company:
(i) the acquisition by any person or related
group of persons (other than the Company or its
affiliates) of securities possessing more than 50% of
the combined voting power of the Company's outstanding
securities pursuant to a tender or exchange offer made
directly to the Company's stockholders, or
(ii) a change in the composition of the Board over
a period of twenty-four (24) months or less such that a
majority of the Board members ceases, by reason of one
or more contested elections for Board membership, to be
comprised of individuals who either (a) have been
members of the Board 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.
In the event of a Corporate Transaction, each option at the
time outstanding under the 1993 Plan will automatically become
exercisable for all of the shares of the Company's common stock at
the time subject to that option and may be exercised for any or
all of such shares as fully-vested shares. However, an
outstanding option under the Discretionary Option Grant Program
will not so accelerate if and to the extent: (i) such option is
to be assumed by the successor corporation (or parent thereof) or
(ii) the acceleration of such option is precluded by other
limitations or restrictions imposed by the Plan Administrator at
the time of grant. Immediately following the consummation of the
Corporate Transaction, all outstanding options under the 1993 Plan
will, to the extent not previously exercised by the optionees or
assumed by the successor corporation (or its parent company),
terminate and cease to be exercisable. The Plan Administrator
will have the discretion to grant options under the Discretionary
Option Grant Program which will automatically accelerate in the
event the optionee's service terminates within a designated period
following a Corporate Transaction in which those options are
assumed.
All unvested shares outstanding under the Discretionary
Option Grant or Stock Issuance Program will immediately vest in
full upon the occurrence of a Corporate Transaction, except to the
extent (i) one or more of the Company's repurchase rights with
respect to those shares are expressly assigned to the successor
corporation (or its parent company) or (ii) such accelerated
vesting is precluded by other limitations imposed by the Plan
Administrator at the time the unvested shares are issued. The
outstanding repurchase rights of the Company under the Automatic
Option Grant Program will immediately terminate, and the shares
subject to those terminated rights will become fully vested, upon
the Corporate Transaction.
The Plan Administrator has full power and authority to
provide for the acceleration of options outstanding under the
Discretionary Option Grant Program and vesting of unvested shares
issued under the Discretionary Option Grant or Stock Issuance
Program upon the occurrence of a Change in Control.
Alternatively, the Plan Administrator may condition such
acceleration upon the individual's cessation of service under
certain prescribed circumstances following the Change in Control.
Upon a Change in Control, the shares subject to each outstanding
option under the Automatic Option Grant Program will immediately
vest in full, and the Company's repurchase rights will lapse as to
those shares.
The acceleration of options or vesting in the event of a
Corporate Transaction or Change in Control may be seen as an
anti-takeover provision and may have the effect of discouraging a
merger proposal, a takeover attempt, or other efforts to gain
control of the Company.
Changes in Capitalization
In the event any change is made to the common stock issuable
under the 1993 Plan by reason of any stock split, stock dividend,
combination of shares, merger, reorganization, consolidation,
recapitalization, exchange of shares, or other change in
capitalization of the Company affecting the common stock as a
class without the Company's receipt of consideration, the
Compensation Committee may make appropriate adjustments to (i) the
maximum number and/or class of securities issuable under the 1993
Plan, (ii) the maximum number and/or class of securities for which
any one individual may be granted stock options, separately
exercisable stock appreciation and direct stock issuances under
the 1993 Plan after December 31, 1993, (iii) the class and/or
number of securities and option price per share in effect under
each outstanding option, and (iv) the class and/or number 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. The
adjustments to the outstanding options will prevent the dilution
or enlargement of benefits thereunder.
The grant of stock options or stock appreciation rights under
the 1993 Plan will not affect 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.
Financial Assistance
The Plan Administrator may institute a loan program in order
to assist one or more optionees or participants in financing the
exercise of outstanding options under the Discretionary Option
Grant Program or the acquisition of shares under the Stock
Issuance Program. The form in which such assistance is to be made
available (including Company loans, or guarantees or installment
payments) and the terms upon which such assistance is to be
provided will be determined by the Plan Administrator. However,
the maximum amount of financing provided any optionee or
participant may not exceed the amount of cash consideration
payable for the issued shares plus all applicable federal and
state taxes incurred in connection with the acquisition of the
shares. Any such financing may be subject to forgiveness in whole
or in part, at the discretion of the Plan Administrator, over the
optionee's or participant's period of service.
Excess Issuances
Options to purchase shares of common stock may be granted and
shares of common stock may be issued under the 1993 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 are held in escrow until the Company's stockholders approve
an amendment sufficiently increasing the number of shares
available for issuance under the 1993 Plan.
Special Tax Election
The Plan Administrator may provide one or more holders of
Nonstatutory Options or unvested shares under the 1993 Plan with
the right to have the Company withhold a portion of the shares
otherwise issuable to such individuals in satisfaction of the
federal and state income and employment tax liability incurred by
such individuals in connection with the exercise of their options
or the vesting of their shares. Alternatively, the Plan
Administrator may allow such individuals to deliver already
existing shares of the Company's common stock in payment of such
tax liability.
Treatment of Options Outstanding Under the 1981 Plan
Each outstanding stock option under the 1981 Plan was
incorporated into the 1993 Plan when the 1993 Plan was approved by
the stockholders at the 1993 Annual Stockholders Meeting.
However, each such option will continue to be governed solely by
the terms and conditions of the instrument evidencing such grant,
and nothing in the 1993 Plan will be deemed to affect or otherwise
modify the rights or obligations of the holder of such stock
options with respect to their acquisition of shares of the
Company's common stock thereunder. However, one or more
provisions or features of the 1993 Plan (including the
option/vesting acceleration provisions applicable to Corporate
Transactions and Changes in Control) may, in the discretion of the
Plan Administrator, be extended to the incorporated options.
Amendment and Termination
The Board may amend or modify the 1993 Plan in any or all
respects whatsoever. However, no amendment to the 1993 Plan may
adversely affect the rights of existing optionees without their
consent. In addition, certain amendments may require the approval
of the Company's stockholders pursuant to applicable laws or
regulations.
The Board may terminate the 1993 Plan at any time, and the
1993 Plan will in all events terminate on February 10, 2003. Each
stock option or unvested share issuance outstanding at the time of
such termination will remain in force in accordance with the
provisions of the instruments evidencing such grant or issuance.
Stock Awards
The table below shows, as to the Company's executive officers and
the indicated groups, the following information for the period
commencing January 1, 1997 and ending March 4, 1998: (i) the
number of shares of the Company's common stock subject to options
granted under the 1993 Plan and (ii) the weighted average exercise
price payable per share. These share numbers and exercise prices
have been adjusted to reflect the 3-for-2 split of the Company's
common stock which will be effected on March 20, 1998. No direct
stock issuances have been made to date under the 1993 Plan, nor
have any stock appreciation rights been granted.
<TABLE>
<CAPTION>
OPTION TRANSACTIONS
Options Weighted Average
Granted Exercise Price
(Number of of Options Granted
Name Shares)
<S> <C> <C>
Thomas R. Brown, Jr., 0 $0
Chairman of the Board
Syrus P. Madavi, President 0 $0
& Chief Executive Officer
Kenneth G. Wolf, 228,750 $15.71
Executive Vice President
J. Scott Blouin, 71,250 $15.11
Chief Financial Officer
All current executive 300,000 $15.57
officers as a group (4 persons)
Francis J. Aguilar 0 $0
John S. Anderegg, Jr. 0 $0
Marcelo A. Gumucio 0 $0
All non-employee directors 0 $0
as a group (3 persons)
All employees, including 1,312,875 $16.83
current officers who are
not executive officers,
as a group
</TABLE>
No option grants have been made to date on the basis of the
3,000,000-share increase which is the subject of this Proposal.
FEDERAL INCOME TAX CONSEQUENCES
Option Grants
Options granted under the 1993 Plan may be either incentive
stock options which satisfy the requirements of Section 422 of the
Internal Revenue Code or nonstatutory options which are not
intended to meet such requirements. The Federal income tax
treatment for the two types of options differs as described below:
Incentive Stock Options. No taxable income is recognized by
the optionee at the time of the option grant, and no taxable
income is generally recognized at the time the option is
exercised. The optionee will, however, recognize taxable income
in the year in which the purchased shares are sold or otherwise
made the subject of disposition. For Federal tax purposes,
dispositions are divided into two categories: (i) qualifying and
(ii) disqualifying. The optionee will make a qualifying
disposition of the purchased shares if the sale or other
disposition of such shares is made after the optionee has held the
shares for more than two years after the grant date of the option
and more than one year after the exercise date. If the optionee
fails to satisfy either of these two minimum holding periods prior
to the sale or other disposition of the purchased shares, then a
disqualifying disposition will result.
Upon a qualifying disposition of the shares, the optionee
will recognize long-term capital gain in an amount equal to the
excess of (i) the amount realized upon the sale or other
disposition of the purchased shares over (ii) the option exercise
price paid for those shares. If there is a disqualifying
disposition of the shares, then the excess of (i) the fair market
value of those shares on the option exercise date over (ii) the
option exercise price paid for the shares will be taxable as
ordinary income. Any additional gain recognized upon the
disposition will be a capital gain.
If the optionee makes a disqualifying disposition of the
purchased shares, then the Company will be entitled to an income
tax deduction, for the taxable year in which such disposition
occurs, equal to the excess of (i) the fair market value of such
shares on the option exercise date over (ii) the option exercise
price paid for the shares. In no other instance will the Company
be allowed a deduction with respect to the optionee's disposition
of the purchased shares. The Company anticipates that any
compensation deemed paid by the Company upon one or more
disqualifying dispositions of incentive stock option shares under
the 1993 Plan will be deductible by the Company and will not have
to be taken into account for purposes of the $1 million limitation
per covered individual on the deductibility of the compensation
paid to certain executive officers of the Company.
Nonstatutory Options. No taxable income is recognized by an
optionee upon the grant of a nonstatutory option. The optionee
will in general recognize ordinary income, in the year in which
the option is exercised, equal to the excess of the fair market
value of the purchased shares on the exercise date over the option
exercise price paid for the shares, and the optionee will be
required to satisfy the tax withholding requirements applicable to
such income.
Special provisions of the Internal Revenue Code apply to the
acquisition of unvested shares of the Company's common stock under
a nonstatutory option. These special provisions may be summarized
as follows:
- If the shares acquired upon exercise of the
nonstatutory option are subject to repurchase by the Company at
the original option exercise price in the event of the optionee's
termination of service prior to vesting in those shares, then the
optionee will not recognize any taxable income at the time of
exercise but will have to report as ordinary income, as and when
the optionee vests in the shares, an amount equal to the excess of
(i) the fair market value of the shares on the date the optionee
vests in those shares over (ii) the option exercise price paid for
the shares.
- The optionee may, however, elect under Section 83(b) of
the Internal Revenue Code to include as ordinary income in the
year of exercise of the nonstatutory option an amount equal to the
excess of (i) the fair market value of the purchased shares on the
exercise date over (ii) the option exercise price paid for such
shares. If the Section 83(b) election is made, the optionee will
not recognize any additional income as and when he or she vests in
such shares.
The Company will be entitled to a business expense deduction
equal to the amount of ordinary income recognized by the optionee
with respect to the exercised nonstatutory option. The deduction
will in general be allowed for the taxable year of the corporation
in which such ordinary income is recognized by the optionee. The
Company anticipates that the compensation deemed paid by the
Company upon the exercise of nonstatutory options granted under
the 1993 Plan will be deductible by the Company and will not have
to be taken into account for purposes of the $1 million limitation
per covered individual on the deductibility of the compensation
paid to certain executive officers of the Company.
Stock Appreciation Rights
An optionee who is granted a stock appreciation right will
recognize ordinary income in the year of exercise equal to the
amount of the appreciation distribution. The Company will be
entitled to a business expense deduction equal to the appreciation
distribution for the taxable year in which the ordinary income is
recognized by the optionee.
Direct Stock Issuances
The tax principles applicable to direct stock issuances under
the 1993 Plan will be substantially the same as those summarized
above for the exercise of nonstatutory option grants.
Accounting Treatment
The Company accounts for stock issued to employees under APB
Opinion No. 25, Accounting for Stock Issued to Employees (APB25).
Under APB25, option grants or stock issuances with exercise or
issue prices equal to the fair value of the shares on the grant or
issue date will not result in any direct charge for compensation
expense to the Company's reported earnings. However, outstanding
options are taken into account in the calculation of diluted
earnings per share. As required by statement of Financial
Accounting Standards No. 123, Accounting for Stock Based
Compensation (SFAS 123) the Company must disclose (in footnotes to
the Company's financial statements) the pro-forma impact which
options granted under the 1993 Plan since January 1, 1995, would
have upon the Company's reported earnings had those options at the
time of grant been accounted for under SFAS 123.
Should one or more optionees be granted stock appreciation
rights which have no conditions upon exercisability other than a
service or employment requirement, then such rights will result in
compensation expense to be charged against the Company's earnings.
Stockholder Approval
The affirmative vote of a majority of the outstanding shares
of the Company's voting stock present or represented and entitled
to vote at the 1997 Annual Meeting is required for approval of the
amendment to the 1993 Plan that is the subject of this Proposal.
If the stockholders do not approve such amendment, then the
3,000,000-share increase to the 1993 Plan will not be implemented
and no stock option grants or direct stock issuances will be made
on the basis of that proposed increase.
The Board of Directors recommends a vote IN FAVOR OF the approval
of the amendments to the 1993 Stock Incentive Plan.
PROPOSAL NO. 3:
APPROVAL OF 1998 EMPLOYEE STOCK PURCHASE PLAN
The Company's stockholders are being asked to approve the
implementation of the 1998 Employee Stock Purchase Plan (the "1998
Purchase Plan") which will provide eligible employees of the
Company and its participating affiliates with the opportunity to
acquire a proprietary interest in the Company through
participation in a payroll-deduction based employee stock purchase
program designed to operate in compliance with Section 423 of the
Internal Revenue Code. The 1998 Purchase Plan was adopted by the
Board of Directors on February 20, 1998 and will become effective
on August 1, 1998 (the "Effective Date"), provided the 1998
Purchase Plan is approved by the stockholders at the Meeting.
There has been no activity to date under the 1998 Purchase Plan.
All share numbers in this Proposal No. 3 take into account
the 3-for-2 split of the Company's common stock which the Board
authorized on February 20, 1998 and which is to become payable in
the form of a stock dividend payable on March 20, 1998 to
stockholders of record on March 6, 1998.
The following is a summary of the principal features of the
1998 Purchase Plan. The summary, however, does not purport to be
a complete description of all the provisions of the 1998 Purchase
Plan. Any stockholder of the Company who wishes to obtain a copy
of the actual plan document may do so upon written request to the
Corporate Secretary at the Company's executive offices.
Share Reserve
The Company will reserve 600,000 shares of Common Stock for
issuance over the ten-year term of the 1998 Purchase Plan. This
share reserve may be drawn from the Company's authorized but
unissued shares of Common Stock or from shares of Common Stock
repurchased by the Company, including shares purchased on the
open-market.
In the event any change is made to the outstanding shares of
Common Stock by reason of any recapitalization, stock dividend,
stock split, combination of shares, exchange of shares or other
change in corporate structure effected without the Company's
receipt of consideration, appropriate adjustments will be made to
(i) the class and maximum number of securities issuable under the
1998 Purchase Plan, including the class and maximum number of
securities issuable per participant or in the aggregate on any one
purchase date, and (ii) the class and maximum number of securities
subject to each outstanding purchase right and the purchase price
payable per share thereunder.
Administration
The 1998 Purchase Plan will be administered by the
Compensation Committee of the Board of Directors. Such committee,
as Plan Administrator, will have full authority to adopt such
rules and procedures as it may deem necessary for proper plan
administration and to interpret the provisions of the 1998
Purchase Plan. All costs and expenses incurred in plan
administration will be paid by the Company without charge to
participants.
Offering Periods
Shares will be issued through a series of successive offering
periods, each of six (6) months duration. The initial offering
period will run from August 1, 1998 to January 31, 1999.
Subsequent offering periods will run from the first business day
of February to the last business day of July each year and from
the first business day of August each year to the last business
day of January in the immediately succeeding year.
Each participant will be granted a separate purchase right
for each offering period in which he or she participates. Each
purchase right will entitle the participant to purchase the whole
number of shares of Common Stock obtained by dividing the
participant's payroll deductions for the offering period by the
purchase price in effect for such period.
Eligibility
Any individual who customarily works for more than twenty
(20) hours per week for more than five (5) months per calendar
year in the employ of the Company or any participating affiliate
will be eligible to participate in one or more offering periods.
An eligible employee may only join an offering period on the start
date of that period.
Participating affiliates include any parent or subsidiary
corporations of the Company, whether now existing or hereafter
organized, which elect, with the approval of the Plan
Administrator, to extend the benefits of the 1998 Purchase Plan to
their eligible employees.
As of March 4, 1998, approximately 990 employees, including 3
executive officers, were eligible to participate in the 1998
Purchase Plan.
Purchase Provisions
Each participant may authorize period payroll deductions in
any multiple of one percent (1%) of his or her base salary, up to
a maximum of ten percent (10%). A participant may not increase
his or her rate of payroll deduction for an offering period after
the start of that period, but he or she may decrease the rate once
per offering period.
On the last business day of each offering period, the
accumulated payroll deductions of each participant will
automatically be applied to the purchase of whole shares of Common
Stock at the purchase price in effect for that period. However,
no participant may, on any one purchase date within the offering
period, purchase more than six hundred (600) shares of Common
Stock. In addition, the maximum number of shares of Common Stock
purchasable by all participants in the aggregate on any one
purchase date cannot exceed sixty thousand (60,000) shares,
subject to periodic adjustments in the event of certain changes in
the Company's capitalization.
Purchase Price
The purchase price per share at which Common Stock will be
purchased on the participant's behalf for each offering period
will be equal to eighty-five percent (85%) of the lower of (i) the
fair market value per share of Common Stock on the start date of
that offering period or (ii) the fair market value per share of
Common Stock on that purchase date at the end of the offering
period.
Valuation
The fair market value per share of Common Stock on any
relevant date will be deemed equal to the average of the high and
low selling prices per share on such date on the Nasdaq National
Market.
Special Limitations
The 1998 Purchase Plan imposes certain limitations upon a
participant's rights to acquire Common Stock, including the
following limitations:
- No purchase right may be granted to any individual who
owns stock (including stock purchasable under any outstanding
options or purchase rights) possessing five percent (5%) or more
of the total combined voting power or value of all classes of
stock of the Company or any of its affiliates.
- No purchase right granted to a participant may permit
such individual to purchase Common Stock at a rate greater
than $25,000 worth of such Common Stock (valued at the time
such purchase right is granted) for each calendar year the
purchase right remains outstanding at any time.
- No participant may purchase more than 600 shares of
Common Stock on any one purchase date.
- No more than 60,000 shares of Common Stock may be
purchased in the aggregate by all participants on any one
purchase date.
Termination of Purchase Rights
A participant's purchase right will immediately terminate
upon such participant's loss of eligible employee status, and his
or her accumulated payroll deductions for the offering period in
which the purchase right terminates will be promptly refunded. A
participant may withdraw from an offering period at any time and
may elect to have his or her accumulated payroll deductions for
the offering period in which such withdrawal occurs either
refunded or applied to the purchase of shares of Common Stock on
the next purchase date.
Stockholder Rights
No participant will have any stockholder rights with respect
to the shares of Common Stock covered by his or her purchase right
until the shares are actually purchased on the participant's
behalf. No adjustment will be made for dividends, distributions
or other rights for which the record date is prior to the date of
such purchase.
Assignability
No purchase right will be assignable or transferable and will
be exercisable only by the participant.
Acquisition
Should the Company be acquired by merger or asset sale during
an offering period, all outstanding purchase rights will
automatically be exercised immediately prior to the effective date
of such acquisition. The purchase price will be equal to eighty-
five (85%) of the lower of (i) the fair market value per share of
Common Stock on the start date of that offering period or (ii) the
fair market value per share of Common Stock immediately prior to
such acquisition. The limitation on the maximum number of shares
purchasable in the aggregate on any one purchase date shall not
apply to the share purchases effected in connection with such
acquisition.
Amendment and Termination
The 1998 Purchase Plan will terminate upon the earliest to
occur of (i) July 31, 2008, (ii) the date on which all available
shares are issued or (iii) the date on which all outstanding
purchase rights are exercised in connection with an acquisition of
the Company.
The Board of Directors may at any time alter, suspend or
discontinue the 1998 Purchase Plan. However, the Board of
Directors may not, without stockholder approval, (i) increase the
number of shares issuable under the 1998 Purchase Plan, except in
connection with certain changes in the Company's capital
structure, (ii) alter the purchase price formula so as to reduce
the purchase price or (iii) modify the requirements for
eligibility to participate in the 1998 Purchase Plan.
Plan Benefits
No purchase rights will be granted, and no shares will be
issued, under the 1998 Purchase Plan prior to stockholder approval
of this Proposal at the Meeting.
Federal Tax Consequences
The 1998 Purchase Plan is intended to be an "employee stock
purchase plan" within the meaning of Section 423 of the Internal
Revenue Code. Under a plan which so qualifies, no taxable income
will be recognized by a participant, and no deductions will be
allowable to the Company, in connection with the grant or the
exercise of an outstanding purchase right. Taxable income will
not be recognized until there is a sale or other disposition of
the shares acquired under the 1998 Purchase Plan or in the event
the participant should die while still owning the purchased
shares.
If the participant sells or otherwise disposes of the
purchased shares within two (2) years after the start date of the
offering period in which such shares were acquired or within one
(1) one year after the actual purchase date of those shares, then
the participant will recognize ordinary income in the year of sale
or disposition equal to the amount by which the fair market value
of the shares on the purchase date exceeded the purchase price
paid for those shares, and the Company will be entitled to an
income tax deduction, for the taxable year in which such sale or
disposition occurs, equal in amount to such excess.
If the participant sells or disposes of the purchased shares
more than two (2) years after the start date of the offering
period in which such shares were acquired and more than one (1)
one year after the actual purchase date of those shares, then the
participant will recognize ordinary income in the year of sale or
disposition equal to the lesser of (i) the amount by which the
fair market value of the shares on the sale or disposition date
exceeded the purchase price paid for those shares or (ii) fifteen
percent (15%) of the fair market value of the shares on the start
date of the offering period, and any additional gain upon the
disposition will be taxed as a long-term capital gain. The
Company will not be entitled to any income tax deduction with
respect to such sale or disposition.
If the participant still owns the purchased shares at the
time of death, the lesser of (i) the amount by which the fair
market value of the shares on the date of death exceeds the
purchase price or (ii) fifteen percent (15%) of the fair market
value of the shares on his or her entry date into the offering
period in which those shares were acquired will constitute
ordinary income in the year of death.
Accounting Treatment
Under APB 25 the issuance of Common Stock under the 1998
Purchase Plan, after shareholder approval of up to the approved
number of shares, will not result in a direct charge for
compensation expense to the Company's reported earnings. However,
the Company must disclose the pro-forma impact which activity
under the 1998 Purchase Plan would have upon the Company's
reported earnings had such activity been accounted for in
accordance with SFAS 123 (under SFAS 123, compensation expense is
generally attributed both to the look-back feature at the grant
date and to the discounted purchase price.)
Stockholder Approval
The affirmative vote of a majority of the Company's voting
stock present or represented and entitled to vote at the Meeting
is required for approval of the 1998 Purchase Plan. Should such
stockholder approval not be obtained, then the 1998 Purchase Plan
will not be implemented, and no purchase rights will be granted
and no stock issuances will be made under the 1998 Purchase Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF
THE 1998 PURCHASE PLAN. THE BOARD BELIEVES THAT IT IS IN THE BEST
INTERESTS OF THE COMPANY TO IMPLEMENT A PROGRAM OF STOCK OWNERSHIP
FOR THE COMPANY'S EMPLOYEES IN ORDER TO PROVIDE THEM WITH A
MEANINGFUL OPPORTUNITY TO ACQUIRE A PROPRIETARY INTEREST IN THE
COMPANY AND THEREBY ENCOURAGE SUCH INDIVIDUALS TO REMAIN IN THE
COMPANY'S SERVICE AND MORE CLOSELY ALIGN THEIR INTERESTS WITH
THOSE OF THE STOCKHOLDERS.
PROPOSAL NO. 4:
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP,
independent auditors, to audit the books, records, and accounts
of the Company and its subsidiaries for the year ending December
31, 1998.
The firm of Ernst & Young LLP audits the Company's books
annually, has offices in or convenient to the localities in the
United States and foreign countries where the Company or its
subsidiaries operate and is considered to be well qualified. The
Board of Directors recommends that the stockholders approve the
proposal to ratify the selection of Ernst & Young LLP to serve as
independent auditors for the current year.
Ernst & Young LLP has no direct or indirect material
financial interest in the Company or any of its subsidiaries. A
representative of Ernst & Young LLP is expected to be present at
the Annual Meeting and will be given the opportunity to make a
statement on behalf of Ernst & Young LLP, if they so desire. The
representative also will be available to respond to questions
raised by those in attendance at the meeting.
The Board of Directors recommends that the stockholders vote
FOR the selection of Ernst & Young LLP to serve as independent
auditors for the year ending December 31, 1998.
OTHER BUSINESS
The Board of Directors knows of no other business that will
be presented for consideration at the Annual Meeting. If other
matters are properly brought before the Annual Meeting, however,
it is the intention of the persons named in the accompanying
proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.
STOCKHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented
at the Company's annual meeting of stockholders to be held in
1999 must be received by no later than November 17, 1998 in
order to be included in the proxy statement and proxy relating to
that meeting.
By order of the Board of
Directors
Jill H. Rice
Corporate Secretary
March 24, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
BURR-BROWN CORPORATION
Thomas R. Brown, Jr. and Syrus P. Madavi, or either of them,
are hereby appointed as the lawful agents and proxies of the
undersigned (with all powers the undersigned would possess if
personally present, including full power of substitution) to
represent and to vote all shares of capital stock of Burr-Brown
Corporation (the "Company") which the undersigned is entitled to
vote at the Company's Annual Meeting of Stockholders on April 24,
1998, and at any adjournments or postponements thereof as
follows:
1. The election of all nominees listed below for the Board
of Directors, as described in the Proxy Statement:
Thomas R. Brown, Jr., Syrus P. Madavi, John S. Anderegg,
Jr., Francis J. Aguilar and Marcelo A. Gumucio.
FOR [ ] AUTHORIZATION WITHHELD [ ]
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write such name or names in the space
provided below.)
2. Approve an amendment to the Company's 1993 Stock
Incentive Plan to increase the available share reserve by
an additional 3,000,000 shares.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Approve the 1998 Employee Stock Purchase Plan under which
600,000 shares of Common Stock will be reserved for
issuance.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Proposal to ratify the appointment of Ernst & Young LLP
as independent auditors of the Company for the year
ending December 31, 1998.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. Transaction of any other business which may properly come
before the meeting and any adjournment or postponement
thereof.
The Board of Directors recommends a vote FOR each of the
above proposals. This Proxy will be voted as directed, or, if no
direction is indicated, will be voted FOR each of the above
proposals and, at the discretion of the persons named as proxies,
upon such other matters as may properly come before the meeting.
This proxy may be revoked at any time before it is voted.
DATE: _______________________, 1998
___________________________________
(Signature)
___________________________________
(Signature if held jointly)
(Please sign exactly as shown on your stock certificate and
on the envelope in which this proxy was mailed. When
signing as partner, corporate officer, attorney, executor,
administrator, trustee, guardian or in any other rep-
resentative capacity, give full title as such and sign your
own name as well. If stock is held jointly, each joint
owner should sign.)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY,
USING THE ENCLOSED ENVELOPE.
BURR-BROWN CORPORATION PRIVATE
1993 STOCK INCENTIVE PLAN
(As Amended and Restated through March 20, 1998)
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.
All share numbers in this March 20, 1998 restatement
have been adjusted upward to take into account the 3-for-2 split
of the Stock which the Board authorized on February 20, 1998 and
which is to be effected in the form of a stock dividend payable on
March 20, 1998 to the Company's stockholders of record on March 6,
1998.
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 8,888,160 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 1,613,160 shares in the aggregate), plus (ii) an
additional increase of 2,025,000 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 1,125,000 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 1,125,000 shares of Stock authorized by the Board as
of March 4, 1997 and approved by the stockholders at the 1997
Annual Meeting plus (v) a further increase of an additional
3,000,000 shares of Stock authorized by the Board on
April 24, 1998, subject to stockholder approval at the 1998 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 2,025,000
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
1,125,000 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 1,125,000 shares, (ii) effect a
number of changes to the Automatic Option Grant Program in effect
for the non-employee Board members, (iii) 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, (iv) remove certain restrictions on
the eligibility of non-employee Board members to serve on the
Primary Committee and (v) 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 was approved by the stockholders at the 1997 Annual
Meeting. On February 20, 1998, the Board amended and restated
the Plan to increase the maximum number of shares of Stock
authorized for issuance over the term of the Plan by an additional
3,000,000 shares. The 1998 restatement is subject to stockholder
approval at the 1998 Annual Meeting and shall not become effective
unless such stockholder approval is obtained. Should such
stockholder approval not be obtained, then no Option grants or
Stock issuances shall be made on the basis of the 3,000,000-share
increase; however, 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 date the Board adopted the 1988
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 1998 restatement shall remain outstanding in accordance with
the terms and conditions of the respective instruments evidencing
those options, and nothing in the 1998 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 33,750 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 33,750 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 18,000 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
33,750-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 6,000 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 18,000-share automatic Option grant under paragraph
2.1.3 vests, automatically be granted a Non-Statutory Option to
purchase an additional 6,000 shares of Stock.
2.1.6 There shall be no limit on the number of such
6,000-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 20, 1998 Restatement of
the BURR-BROWN CORPORATION 1993 STOCK INCENTIVE PLAN is hereby
declared effective and is executed as of March 20, 1998 on behalf
of the Company by its hereunto duly authorized officer.
BURR-BROWN CORPORATION
By:
Title:
BURR-BROWN CORPORATION PRIVATE
EMPLOYEE STOCK PURCHASE PLAN
I. PURPOSE OF THE PLAN
This Employee Stock Purchase Plan is intended to
promote the interests of Burr-Brown Corporation by providing
eligible employees with the opportunity to acquire a proprietary
interest in the Corporation through participation in a payroll-
deduction based employee stock purchase plan designed to qualify
under Section 423 of the Code.
All share numbers in this plan document reflect the 3-
for-2 reverse split of the Common Stock which the Board authorized
on February 20, 1998 and which is to be effected in the form of a
stock dividend payable on March 20, 1998 to the Corporation's
stockholders of record on March 6, 1998.
Capitalized terms herein shall have the meanings
assigned to such terms in the attached Appendix.
II. ADMINISTRATION OF THE PLAN
The Plan Administrator shall have full authority to
interpret and construe any provision of the Plan and to adopt such
rules and regulations for administering the Plan as it may deem
necessary in order to comply with the requirements of Code Section
423. Decisions of the Plan Administrator shall be final and
binding on all parties having an interest in the Plan.
III. STOCK SUBJECT TO PLAN
A. The stock purchasable under the Plan shall be
shares of authorized but unissued or reacquired Common Stock,
including shares of Common Stock purchased on the open market.
The maximum number of shares of Common Stock which may be issued
over the term of the Plan shall not exceed Six Hundred Thousand
(600,000) shares.
B. Should any change be made to the Common Stock by
reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the
Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and class of securities
issuable under the Plan, (ii) the maximum number and class of
securities purchasable per Participant on any one Purchase Date,
(iii) the maximum aggregate number and class of securities
purchasable by all Participants on any one Purchase Date and (iv)
the number and class of securities and the price per share in
effect under each outstanding purchase right in order to prevent
the dilution or enlargement of benefits thereunder.
IV. PURCHASE PERIODS
A. Shares of Common Stock shall be offered for
purchase under the Plan through a series of successive purchase
periods until such time as (i) the maximum number of shares of
Common Stock available for issuance under the Plan shall have been
purchased or (ii) the Plan shall have been sooner terminated.
B. Each purchase period shall have a duration of six
(6) months. Purchase periods shall run from the first business
day in February to the last business day in July each year and
from the first business day in August each year to the last
business day in January of the following year. The first purchase
period under the Plan shall begin on August 1, 1998 and end on the
last business day in January 1999.
V. ELIGIBILITY
A. Each individual who is an Eligible Employee on the
start date of any purchase period shall be eligible to participate
in the Plan for that purchase period.
B. To participate in the Plan for a particular
purchase period, the Eligible Employee must complete the
enrollment forms prescribed by the Plan Administrator (including a
stock purchase agreement and a payroll deduction authorization)
and file such forms with the Plan Administrator (or its designate)
on or before the start date of the purchase period.
VI. PAYROLL DEDUCTIONS
A. The payroll deduction authorized by the Parti-
cipant for purposes of acquiring shares of Common Stock under the
Plan may be any multiple of one percent (1%) of the Base Salary
paid to the Participant during each purchase period, up to a
maximum of ten percent (10%). The deduction rate so authorized
shall continue in effect for the entire purchase period and for
each subsequent purchase period the Participant remains in the
Plan. The Participant may not increase his or her rate of payroll
deduction during a purchase period, but may effect such increase
as of the start date of any subsequent purchase period following
the filing of a new payroll deduction authorization with the Plan
Administrator. However, the Participant may, at any time during
the purchase period, reduce his or her rate of payroll deduction
to become effective as soon as possible after filing the
appropriate form with the Plan Administrator. The Participant may
not, however, effect more than one (1) such reduction per purchase
period.
B. Payroll deductions shall begin on the first pay
day following the start date of the purchase period and shall
(unless sooner terminated by the Participant) continue through the
pay day ending with or immediately prior to the last day of the
purchase period. The amounts so collected shall be credited to
the Participant's book account under the Plan, but no interest
shall be paid on the balance from time to time outstanding in such
account. The amounts collected from the Participant shall not be
required to be held in any segregated account or trust fund and
may be commingled with the general assets of the Corporation and
used for general corporate purposes.
C. Payroll deductions shall automatically cease upon
the termination of the Participant's purchase right in accordance
with the provisions of the Plan.
D. The Participant's acquisition of Common Stock
under the Plan on any Purchase Date shall neither limit nor
require the Participant's acquisition of Common Stock on any
subsequent Purchase Date.
VII. PURCHASE RIGHTS
A. Grant of Purchase Right. A Participant shall be
granted a separate purchase right on the start date of each
purchase period in which he or she participates. The purchase
right shall provide the Participant with the right to purchase
shares of Common Stock on the Purchase Date upon the terms set
forth below. The Participant shall execute a stock purchase
agreement embodying such terms and such other provisions (not
inconsistent with the Plan) as the Plan Administrator may deem
advisable.
Under no circumstances shall purchase rights be granted
under the Plan to any Eligible Employee if such individual would,
immediately after the grant, own (within the meaning of Code
Section 424(d)) or hold outstanding options or other rights to
purchase, stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the
Corporation or any Corporate Affiliate.
B. Exercise of the Purchase Right. Each purchase
right shall be automatically exercised on the Purchase Date, and
shares of Common Stock shall accordingly be purchased on behalf of
each Participant on such date. The purchase shall be effected by
applying the Participant's payroll deductions for the purchase
period ending on such Purchase Date to the purchase of shares of
Common Stock at the purchase price in effect for that purchase
period.
C. Purchase Price. The purchase price per share at
which Common Stock will be purchased on the Participant's behalf
on each Purchase Date shall be equal to eighty-five percent (85%)
of the lower of (i) the Fair Market Value per share of Common
Stock on the start date of the purchase period or (ii) the Fair
Market Value per share of Common Stock on that Purchase Date.
D. Number of Purchasable Shares. The number of
shares of Common Stock purchasable by a Participant on each
Purchase Date shall be the number of whole shares obtained by
dividing the amount collected from the Participant through payroll
deductions during the purchase period ending with that Purchase
Date by the purchase price in effect for such Purchase Date.
However, the maximum number of shares of Common Stock purchasable
per Participant on any one Purchase Date shall not exceed Six
Hundred (600) shares, subject to periodic adjustments in the event
of certain changes in the Corporation's capitalization. In
addition, the maximum aggregate number of shares of Common Stock
purchasable by all Participants on any one Purchase Date shall not
exceed Sixty Thousand (60,000) shares, subject to periodic
adjustments in the event of certain changes in the Corporation's
capitalization.
E. Excess Payroll Deductions. Any payroll deductions
not applied to the purchase of shares of Common Stock on any
Purchase Date because they are not sufficient to purchase a whole
share of Common Stock shall be held for the purchase of Common
Stock on the next Purchase Date. However, any payroll deductions
not applied to the purchase of Common Stock by reason of the
limitation on the maximum number of shares purchasable by the
Participant on the Purchase Date or the limitation on the maximum
number of shares purchasable in the aggregate on the Purchase Date
by all Participants shall be promptly refunded.
F. Termination of Purchase Right. The following
provisions shall govern the termination of outstanding purchase
rights:
(i) A Participant may, at any time
prior to the last day of the purchase period, terminate
his or her outstanding purchase right by filing the
appropriate form with the Plan Administrator (or its
designate), and no further payroll deductions shall be
collected from the Participant with respect to the
terminated purchase right. Any payroll deductions
collected during the purchase period in which such
termination occurs shall, at the Participant's
election, be immediately refunded or held for the
purchase of shares on the next Purchase Date. If no
such election is made at the time the purchase right is
terminated, then the payroll deductions collected with
respect to the terminated right shall be refunded as
soon as possible.
(ii) The termination of such purchase
right shall be irrevocable, and the Participant may not
subsequently rejoin the purchase period for which the
terminated purchase right was granted. In order to
resume participation in any subsequent purchase period,
such individual must re-enroll in the Plan (by making a
timely filing of the prescribed enrollment forms)
before the start date of the new purchase period.
(iii) Should the Participant cease to
remain an Eligible Employee for any reason (including
death, disability or change in status) while his or her
purchase right remains outstanding, then that purchase
right shall immediately terminate, and all of the
Participant's payroll deductions for the purchase
period in which the purchase right so terminates shall
be immediately refunded. However, should the
Participant cease to remain in active service by reason
of an approved unpaid leave of absence, then the
Participant shall have the right, exercisable up until
the last business day of the purchase period in which
such leave commences, to (a) withdraw all the payroll
deductions collected to date on his or her behalf
during such purchase period or (b) have such funds held
for the purchase of shares on the next scheduled
Purchase Date. In no event, however, shall any further
payroll deductions be collected on the Participant's
behalf during such leave. Upon the Participant's
return to active service, his or her payroll deductions
under the Plan shall automatically resume at the rate
in effect at the time the leave began.
G. Corporate Transaction. Each outstanding purchase
right shall automatically be exercised, immediately prior to the
effective date of any Corporate Transaction, by applying the
payroll deductions of each Participant for the purchase period in
which such Corporate Transaction occurs to the purchase of whole
shares of Common Stock at a purchase price per share equal to
eighty-five percent (85%) of the lower of (i) the Fair Market
Value per share of Common Stock on the start date of the purchase
period in which such Corporate Transaction occurs or (ii) the Fair
Market Value per share of Common Stock immediately prior to the
effective date of such Corporate Transaction. However, the
applicable limitation on the number of shares of Common Stock
purchasable per Participant shall continue to apply to any such
purchase, but not the limitation on the aggregate number of shares
purchasable by all Participants.
The Corporation shall use its best efforts to provide
at least ten (10) days prior written notice of the occurrence of
any Corporate Transaction, and Participants shall, following the
receipt of such notice, have the right to terminate their
outstanding purchase rights prior to the effective date of the
Corporate Transaction.
H. Proration of Purchase Rights. Should the total
number of shares of Common Stock which are to be purchased
pursuant to outstanding purchase rights on any particular date
exceed either (i) the number of shares then available for issuance
under the Plan or (ii) the maximum aggregate number of shares
purchasable by all Participants on any one Purchase Date, then the
Plan Administrator shall make a pro-rata allocation of the
available shares on a uniform and nondiscriminatory basis, and the
payroll deductions of each Participant, to the extent in excess of
the aggregate purchase price payable for the Common Stock pro-
rated to such individual, shall be refunded.
I. Assignability. The purchase right shall be
exercisable only by the Participant and shall not be assignable or
transferable by the Participant.
J. Stockholder Rights. A Participant shall have no
stockholder rights with respect to the shares subject to his or
her outstanding purchase right until the shares are purchased on
the Participant's behalf in accordance with the provisions of the
Plan and the Participant has become a holder of record of the
purchased shares.
VIII. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights
to acquire Common Stock pursuant to any purchase right outstanding
under this Plan if and to the extent such accrual, when aggregated
with (i) rights to purchase Common Stock accrued under any other
purchase right granted under this Plan and (ii) similar rights
accrued under other employee stock purchase plans (within the
meaning of Code Section 423) of the Corporation or any Corporate
Affiliate, would otherwise permit such Participant to purchase
more than Twenty-Five Thousand Dollars ($25,000) worth of stock of
the Corporation or any Corporate Affiliate (determined on the
basis of the Fair Market Value of such stock on the date or dates
such rights are granted) for each calendar year such rights are at
any time outstanding.
B. For purposes of applying such accrual limitations,
the following provisions shall be in effect:
(i) The right to acquire Common Stock
under each outstanding purchase right shall accrue on
the Purchase Date in effect for the purchase period for
which such right is granted.
(ii) No right to acquire Common Stock
under any outstanding purchase right shall accrue to
the extent the Participant has already accrued in the
same calendar year the right to acquire Common Stock
under one (1) or more other purchase rights at a rate
equal to Twenty-Five Thousand Dollars ($25,000) worth
of Common Stock (determined on the basis of the Fair
Market Value per share on the date or dates of grant)
for each calendar year such rights were at any time
outstanding.
C. If by reason of such accrual limitations, any
purchase right of a Participant does not accrue for a particular
purchase period, then the payroll deductions which the Participant
made during that purchase period with respect to such purchase
right shall be promptly refunded.
D. In the event there is any conflict between the
provisions of this Article and one or more provisions of the Plan
or any instrument issued thereunder, the provisions of this
Article shall be controlling.
IX. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan was adopted by the Board on February 20,
1998 and shall become effective on the Effective Date, provided
the implementation of the Plan is approved by the Corporation's
stockholders at the 1998 Annual Meeting. No purchase rights
granted under the Plan shall be exercised, and no shares of Common
Stock shall be issued hereunder, until the Corporation shall have
complied with all applicable requirements of the 1933 Act
(including the registration of the shares of Common Stock issuable
under the Plan on a Form S-8 registration statement filed with the
Securities and Exchange Commission), all applicable listing
requirements of any stock exchange (or the Nasdaq National Market,
if applicable) on which the Common Stock is listed for trading and
all other applicable requirements established by law or regula-
tion.
B. Unless sooner terminated by the Board, the Plan
shall terminate upon the earliest to occur of (i) the last
business day in July 2008, (ii) the date on which all shares
available for issuance under the Plan shall have been sold
pursuant to purchase rights exercised under the Plan or (iii) the
date on which all purchase rights are exercised in connection with
a Corporate Transaction. No further purchase rights shall be
granted or exercised, and no further payroll deductions shall be
collected, under the Plan following such termination.
X. AMENDMENT OF THE PLAN
The Board may alter, amend, suspend or discontinue the
Plan at any time to become effective immediately following the
close of any purchase period. However, the Board may not, without
the approval of the Corporation's stockholders, (i) increase the
number of shares of Common Stock issuable under the Plan, except
for permissible adjustments in the event of certain changes in the
Corporation's capitalization, (ii) alter the purchase price
formula so as to reduce the purchase price payable for the shares
of Common Stock purchasable under the Plan, or (iii) modify the
requirements for eligibility to participate in the Plan.
XI. GENERAL PROVISIONS
A. All costs and expenses incurred in the
administration of the Plan shall be paid by the Corporation.
B. Nothing in the Plan shall confer upon the
Participant any right to continue in the employ of the Corporation
or any Corporate Affiliate for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the
Corporation (or any Corporate Affiliate employing such person) or
of the Participant, which rights are hereby expressly reserved by
each, to terminate such person's employment at any time for any
reason, with or without cause.
C. The provisions of the Plan shall be governed by
the laws of the State of California without resort to that State's
conflict-of-laws rules.
Schedule A
Corporations Participating in
Employee Stock Purchase Plan
As of August 1, 1998
Burr-Brown Corporation, a Delaware corporation
APPENDIX
The following definitions shall be in effect under the
Plan:
A. Base Salary shall mean the regular base salary
paid to a Participant by one or more Participating Companies
during such individual's period of participation in the Plan
before deduction of any pre-tax contributions made by the
Participant to any Code Section 401(k) salary deferral plan or any
Code Section 125 cafeteria benefit program now or hereafter
established by the Corporation or any Corporate Affiliate. The
following items of compensation shall not be included in Base
Salary: (i) all overtime payments, bonuses, commissions (other
than those functioning as base salary equivalents), profit-sharing
distributions and other incentive-type payments and (ii) any and
all contributions (other than Code Section 401(k) or Code Section
125 contributions) made on the Participant's behalf by the
Corporation or any Corporate Affiliate under any employee benefit
or welfare plan now or hereafter established.
B. Board shall mean the Corporation's Board of Directors.
C. Code shall mean the Internal Revenue Code of 1986,
as amended.
D. Common Stock shall mean the Corporation's common stock.
E. Corporate Affiliate shall mean any parent or
subsidiary corporation of the Corporation (as determined in
accordance with Code Section 424), whether now existing or
subsequently established.
F. Corporate Transaction shall mean either of the
following stockholder-approved transactions to which the
Corporation is a party:
(i) a merger or consolidation in which
securities possessing fifty percent (50%) or more of
the total combined voting power of the Corporation's
outstanding securities are transferred to a person or
persons different from the persons holding those
securities immediately prior to such transaction, or
(ii) the sale, transfer or other
disposition of all or substantially all of the assets
of the Corporation in complete liquidation or
dissolution of the Corporation.
G. Corporation shall mean Burr-Brown Corporation, a
Delaware corporation and any corporate successor to all or
substantially all of the assets or voting stock of Burr-Brown
Corporation which shall by appropriate action adopt the Plan.
H. Effective Date shall mean the August 1, 1998
effective date of the Plan, provided the implementation of the
Plan is approved by the Corporation's stockholders at the 1998
Annual Meeting.
I. Eligible Employee shall mean any person who is
employed by a Participating Corporation on a basis under which he
or she is regularly expected to render more than twenty (20)
hours of service per week for more than five (5) months per
calendar year for earnings considered wages under Code Section
3401(a).
J. Fair Market Value per share of Common Stock on any
relevant date shall be determined in accordance with the following
provisions:
(i) If the Common Stock is at the time
traded on the Nasdaq National Market, then the Fair
Market Value shall be the closing selling price per
share of Common Stock on the date in question, as such
price is reported by the National Association of
Securities Dealers on the Nasdaq National Market. If
there is no closing selling price for the Common Stock
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.
(ii) If the Common Stock is at the time
listed on any Stock Exchange, then the Fair Market
Value shall be the closing selling price per share of
Common Stock on the date in question on the Stock
Exchange determined by the Plan Administrator to be the
primary market for the Common Stock, as such price is
officially quoted in the composite tape of transactions
on such exchange. If there is no closing selling price
for the Common Stock 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.
K. 1933 Act shall mean the Securities Act of 1933, as
amended.
L. Participant shall mean any Eligible Employee of a
Participating Corporation who is actively participating in the
Plan.
M. Participating Corporation shall mean the
Corporation and such Corporate Affiliate or Affiliates as may be
authorized from time to time by the Board to extend the benefits
of the Plan to their Eligible Employees. The Participating
Corporations in the Plan as of the Effective Date are listed in
attached Schedule A.
N. Plan shall mean the Corporation's Employee Stock
Purchase Plan, as set forth in this document.
O. Plan Administrator shall mean the committee of two
(2) or more non-employee Board members appointed by the Board to
administer the Plan.
P. Purchase Date shall mean the last business day of
each purchase period. The initial Purchase Date shall be January
31, 1999.
Q. Stock Exchange shall mean either the American
Stock Exchange or the New York Stock Exchange.
