UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended April 4, 1998
or
Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Commission File Number 0-11438
BURR-BROWN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 86-0445468
(State of Incorporation) (IRS Employer I.D. No.)
6730 South Tucson Boulevard
Tucson, Arizona 85706
(Address of principle executive offices)
(520) 746-1111
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, not including shares held in treasury,
as of the close of the period covered by this report.
Common Stock, $0.01 par value 36,553,698 Shares
<PAGE>
BURR-BROWN CORPORATION AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION Page #
Item 1 Financial Statements (Unaudited)
Consolidated Statements of Income, Three
Months Ended April 4, 1998, and March 29, 1997 3
Consolidated Balance Sheets, April 4, 1998,
and December 31, 1997 4
Consolidated Statements of Cash Flows, Three
Months Ended April 4, 1998, and March 29, 1997 5
Notes to Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K 12
SIGNATURES
Signature Page 14
<PAGE>
PART I. FINANCIAL INFORMATION
BURR-BROWN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands except share and per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
Apr. 4, Mar. 29,
1998 1997
<S> <C> <C>
Net Revenue $68,685 $54,772
Cost of Goods Sold 33,087 27,400
------ ------
Gross Margin 35,598 27,372
% of revenue 52% 50%
Expenses:
Research & Development 9,810 7,219
% of revenue 14% 13%
Sales, Marketing, General and Administrative 12,131 11,546
% of revenue 18% 21%
------ ------
Total Operating Expenses 21,941 18,765
% of revenue 32% 34%
Income from Operations 13,657 8,607
% of revenue 20% 16%
Interest Expense 93 102
Other (Income) Expense (959) (883)
------ -----
Income Before Income Taxes 14,523 9,388
% of revenue 21% 17%
Provision for Income Taxes 4,357 2,816
Effective Tax Rate 30% 30%
------- ------
Net Income $10,166 $6,572
% of revenue 15% 12%
Basic Earnings per Common Share $0.28 $0.18
Shares used in basic per share calculation 36,448 35,799
Diluted Earnings per Common Share $0.27 $0.17
Shares used in diluted per share calculation 38,359 37,853
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
BURR-BROWN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands of dollars)
<TABLE>
<CAPTION>
Apr. 4, Dec. 31,
1998 1997
<S> <C> <C>
ASSETS
Current Assets
Cash and Cash Equivalents $71,941 $54,284
Trade Receivables 59,042 55,689
Inventories 46,496 44,533
Deferred Income Taxes 7,941 7,973
Other 12,842 10,069
------- -------
Total Current Assets 198,262 172,548
Long-Term Investments 32,679 44,767
Land, Buildings and Equipment
Land 3,413 3,418
Buildings and Improvements 25,596 25,690
Equipment 149,168 145,411
------- -------
178,177 174,519
Less Accumulated Depreciation (98,476) (95,053)
------ ------
79,701 79,466
Other Assets 2,519 2,607
------- -------
$313,161 $299,388
LIABILITIES AND STOCKHOLDERS'EQUITY
Current Liabilities
Notes Payable $14,606 $9,991
Accounts Payable 19,311 18,203
Accrued Expenses 5,256 4,678
Accrued Employee Compensation
and Payroll Taxes 5,875 9,299
Deferred Profit from Distributors 8,400 8,318
Income Taxes Payable 6,553 7,370
Current Portion of Long-Term Debt 760 672
------ ------
Total Current Liabilities 60,761 58,531
Long-Term Debt 1,190 1,482
Deferred Income Taxes 3,693 3,774
Other Long-Term Liabilities 837 685
Stockholders' Equity
Preferred Stock - -
Common Stock 382 380
Additional Paid-In Capital 97,476 94,779
Retained Earnings 159,656 149,915
Accumulated Other Comprehensive Income 705 1,381
Treasury Stock (11,539) (11,539)
------- -------
246,680 234,916
-------- --------
$313,161 $299,388
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
BURR-BROWN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands of dollars)
<TABLE>
<CAPTION>
Apr. 4, Mar. 29,
1998 1997
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income $10,166 $6,572
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 3,956 3,144
Amortization of Deferred Gain - (374)
Benefit from Deferred Income Taxes (158) (95)
Increase (Decrease) in Deferred Profit
from Distributors 82 (138)
Other (235) (60)
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Trade Receivables (4,455) (5,553)
(Increase) Decrease in Inventories (2,265) (2,525)
(Increase) Decrease in Other Assets (2,849) (2,078)
Increase (Decrease) in Accounts Payable 1,315 3,043
Increase (Decrease) in Accrued Expenses
and Other Liabilities (3,317) 411
--------- --------
Net Cash Provided by Operating Activities 2,240 2,347
INVESTING ACTIVITIES:
Purchases of Investments (3,568) -
Maturities of Investments 15,648 8,423
Purchases of Land, Buildings and Equipment (4,396) (6,167)
Proceeds from Sale of Equipment 101 -
------- -------
Net Cash Provided by Investing Activities 7,785 2,256
FINANCING ACTIVITIES:
Proceeds from Short-Term and Long-Term
Borrowings 5,012 -
Payments on Short-Term and Long-Term
Borrowings (156) (5,416)
Proceeds from Capital Stock Activity, Net 2,274 378
------- -------
Net CashProvided by (Used In) Financing
Activities 7,130 (5,038)
Effect of Exchange Rate Changes 502 (658)
------- -------
Increase (Decrease) in Cash and Cash
Equivalents 17,657 (1,093)
Cash and Cash Equivalents at Beginning
of Year 54,284 38,433
-------- --------
Cash and Cash Equivalents at End of
Three Months 71,941 37,340
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
BURR-BROWN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands except per share amounts)
1. BASIS OF PRESENTATION
The consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. In the opinion of
management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the quarter ended April 4, 1998,
are not necessarily indicative of the results to be expected for
the year ending December 31, 1998. For further information,
refer to the consolidated financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1997, filed with the Securities and
Exchange Commission.
2. EARNINGS PER SHARE
In 1997, the Financial Accounting Standards Board issued SFAS No.
128, Earnings per Share. SFAS No. 128 replaced the calculation
of primary and fully diluted earnings per share with basic and
diluted earnings per share. Unlike primary earnings per share,
basic earnings per share excludes any dilutive effects of
options, warrants and convertible securities. Diluted earnings
per share is very similar to the previously computed fully
diluted earnings per share. All earnings per share amounts for
all periods have been presented, and where appropriate, restated
to conform to SFAS No. 128 requirements. References to share and
per share amounts have been restated to reflect a three-for-two
stock split effective April, 1997, as well as a three-for-two
stock split declared on February 23, 1998 and distributed on
March 20, 1998 to stockholders of record on March 6, 1998.
Fractional shares were paid in cash to those stockholders whose
shares on the record date were not evenly divisible by two.
Shares used in the per common share calculation follow:
<TABLE>
<CAPTION>
Apr. 4, Mar. 29,
1998 1997
<S> <C> <C>
Weighted average common shares
outstanding 36,448 35,799
Dilutive effect of stock
options outstanding using
the Treasury Stock Method 1,911 2,054
------ ------
Shares used in computed Diluted
Earnings Per Share 38,359 37,853
</TABLE>
3. COMPREHENSIVE INCOME
As of January 1, 1998, the Company adopted SFAS No. 130,
Reporting Comprehensive Income. SFAS No. 130 establishes new
rules for the reporting and display of comprehensive income and
its components; however, the adoption of this Statement had no
impact on the Company's net income or stockholders' equity. SFAS
No. 130 requires unrealized gains or losses on the Company's
available-for-sale securities and foreign currency translation
adjustments, which prior to adoption were reported separately in
stockholders' equity, to be included in Other Comprehensive
Income. Prior year financial statements have been reclassified
to conform to the requirements of SFAS No. 130.
The components of comprehensive income, net of related tax, for
the quarters ended April 4, 1998 and March 29, 1997 are as
follows:
<TABLE>
<CAPTION>
Apr. 4, Mar. 29,
1998 1997
<S> <C> <C>
Net income $10,166 $6,572
Unrealized gain/(loss) on
investments (83) (291)
Foreign currency translation
adjustments (593) (1,153)
------- -------
Comprehensive income $9,490 $5,128
</TABLE>
The components of accumulated other comprehensive income, net of
related tax, at April 4, 1998 and December 31, 1997 are as
follows:
<TABLE>
<CAPTION>
Apr. 4, Dec. 31,
1998 1997
<S> <C> <C>
Unrealized gain on investments $110 $193
Foreign currency translation
adjustments 595 1,188
---- ------
Accumulated other comprehensive
income $705 $1,381
</TABLE>
4. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
Apr. 4, Dec. 31,
1998 1997
<S> <C> <C>
Raw Material $11,368 $9,608
Work-in-Process 21,658 22,719
Finished Goods 13,470 12,206
------- -------
$46,496 $44,533
</TABLE>
5. TAX RATE
The effective tax rate for 1998 is estimated to be 30%. The
Company's effective tax rate is lower than the U.S. statutory
rate due to expected benefits from tax exempt investment income,
a foreign sales corporation and tax credits.
6. SEGMENT INFORMATION
In June 1997, the Financial Accounting Standards Board issued
SFAS No. 131, Disclosures about Segments of an Enterprise and
Related Information. SFAS No. 131 establishes standards for the
way that public business enterprises report information about
operating segments in annual financial statements and requires
that those enterprises report selected information about
operating segments in interim financial reports. It also
establishes standards for related disclosures about products and
services, geographic areas, and major customers. SFAS No. 131 is
effective for financial statements for fiscal years beginning
after December 15, 1997, and therefore the Company will adopt the
new requirements retroactively in 1998. Management has not
completed its review of SFAS No. 131, but does not anticipate
that the adoption of this statement will have a significant
effect on the Company's reported segments.
BURR-BROWN CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion and analysis may contain forward-looking
statements that involve risks and uncertainties. Factors that
might cause actual results to differ from those currently
anticipated include, but are not limited to, those discussed
under "Factors Affecting Future Results."
RESULTS OF OPERATIONS
Net income for the first quarter of 1998 was $10.2 million or
$.27 per diluted share. This compares to net income of $9.8
million or $.26 per diluted share for the preceding quarter and
to net income of $6.6 million or $.17 per diluted share for the
year ago quarter.
First quarter new order bookings were up significantly over the
same quarter a year ago and were also ahead of bookings in the
fourth quarter of 1997. All regions were up over last year.
Sequentially, Southeast Asia and Europe showed the most
improvement; Japan and the U.S. were the weakest. The quarter's
book-to-bill ratio was above unity.
First quarter 1998 revenue of $68.7 million was up 25% over the
first quarter of 1997 but flat compared to the fourth quarter of
1997. The continuation of a mix shift toward higher volume
products introduced capacity bottlenecks in the Tucson factory.
Japan revenue, as expected, was below the prior quarter due to
seasonal factors. Sales into Europe were up 17% over last
quarter as this region appears to be gaining economic momentum.
Gross margin for the quarter was 51.8% of revenue, continuing a
trend of gross margin expansion. The shift to higher volume
products and a weaker Japanese Yen reduced total average selling
price by 6% from the prior quarter. The shift to higher volume
products improved operating efficiencies. Capacity bottlenecks
are currently being addressed in order to bring shipments in line
with higher levels of customer demand. Mix continues to shift
toward higher volume products with lower average selling prices
without having an adverse effect on aggregate gross margin. This
is consistent with the Company's strategy to offer high
performance analog and mixed signal ICs for high volume, fast
growing, emerging applications. Gross margin improvements are
expected to accelerate as revenue growth accelerates.
Operating expense growth was actively constrained given the
factory capacity situation. Hiring was deferred and expenses not
essential to increasing revenue, improving customer service or
the new product development process were postponed until later in
the year. Total operating expenses compared to the year ago
quarter increased $3.2 million. This increase was primarily in
the Research and Development (R&D) area. Total operating
expenses at $21.9 million were only slightly above the prior
quarter. Sales, Marketing, and General and Administrative
(SMG&A) expenses were flat sequentially. An increase in the
momentum of the new product development effort caused R&D
expenses to increase by $300 thousand over the fourth quarter of
1997. The Company plans to modulate operating expense growth
increases in revenue and by established spending models. It is
the Company's intention to maintain investment in R&D at
approximately 14% of sales and to maintain SMG&A at 18% of
revenue or lower. This reflects our continuing strategy to
maintain a substantial level of R&D investment as the primary
driver of revenue growth while driving SMG&A expenses to levels
more consistent within the industry.
First quarter operating income of $13.7 million or 20% of revenue
was an improvement over both the previous quarter and the year
ago quarter. Operating profit increased by nearly 58.7% over the
year ago quarter on a 25% increase in revenue.
Other income, primarily interest income on invested cash, was
higher than the previous quarter. The first quarter of 1998's
effective tax rate remains at the 1997 rate of 30% and slightly
below the planned rate of 31%. This difference reflects the
current projection of a more favorable distribution of income
from the various tax jurisdictions in which the Company operates.
The Company's effective tax rate is lower than the U.S. statutory
rate due to benefits from tax exempt investment income, a foreign
sales corporation and tax credits.
Net income for the quarter of $10.2 million was $400 thousand or
4% ahead of last quarter. As compared to the first quarter of
1997, net income was up 55% on a 25% increase in revenue. The
Company's goal is to improve profit performance through continued
gross margin expansion, by continued constraint on SMG&A expenses
and by revenue growth. The Company's strategy is to achieve
revenue growth through R&D investments, increased penetration of
traditional markets such as industrial process control and test
and instrumentation, and expanded participation in new, emerging
markets such as communications, digital audio and video, and
computing and multimedia.
FOREIGN OPERATIONS
International markets constitute a majority source of the
Company's revenues. The resulting transactions have exchange
rate fluctuation risk associated with them. Exchange rate risk
is reduced through the natural hedges afforded by the Company's
foreign operations, dollar-based or dollar-indexed sales
transactions whenever possible and by the purchase of forward
foreign exchange and option contracts to hedge its foreign
currency net accounts receivable due from the international
subsidiaries. In addition, the Company has entered into forward
contracts and option contracts against anticipated foreign
exchange cash flows. These contracts are in three primary
currencies: Japanese Yen, British Pounds and German Marks.
Exchange rate fluctuations can also affect the Company's reported
revenue to the extent that the international subsidiaries' sales
are in non-indexed foreign currencies but reported in the
consolidated financial statements in U.S. dollars using a
weighted average exchange rate. When compared to the first
quarter of 1997, the effect of foreign exchange rate changes had
approximately a 4% unfavorable impact on first quarter 1998
revenue. Hedging activity resulted in a much smaller unfavorable
impact on net income.
FINANCIAL CONDITION
The Company's financial position remains very sound. During the
first quarter of 1998, cash and investments increased by $6
million despite capital expenditures of $4.4 million, a nearly $3
million increase in accounts receivable and a $2 million
inventory increase. Net inventories increased by $2 million or
4.4% during the quarter. This was due to capacity bottlenecks in
the Tucson factory and the purchase of foundry wafers in
anticipation of future demand primarily at the Japan subsidiary.
Although inventory turns degraded slightly, this ratio remains
much improved as compared to recent history. Accounts receivable
days sales outstanding lengthened to 81 days from 77 days. Much
of this increase is driven by non-linearity of shipments,
especially in Asia. Payment performance also has degraded
slightly. Reducing the Company's investment in outstanding
receivables is a prime financial objective for 1998.
Capital expenditures totaled $4.4 million for the first quarter.
Total 1998 capital expenditures are expected to be in the range
of $28 to $34 million. A major portion of first quarter capital
expenditures target automated test equipment, test handlers and
other backend assembly and test equipment. This is driven in
large measure by the mix shift to higher volume products and by
the strategy to improve assembly and test efficiency. This
equipment is intended to reduce the capacity constraints that
impacted first quarter revenue.
At April 4, 1998, total debt was $16.6 million of which $2.0
million was term debt. This represented a $4.5 million increase
over total debt at December 31, 1997. All of the total debt was
held in Japan and represented an interest rate arbitrage for the
Company. In addition to term debt, credit facilities of
approximately $36.6 million, including overdraft credit
facilities with both domestic and international banks, were
available to the Company, of which approximately $14.6 million or
39.9% was utilized at April 4, 1998. The current ratio improved
to 3.26 at April 4, 1998 from 2.95 at December 31, 1997. The
debt-to-equity ratio declined from .05 at 1997's year-end to .07
at first quarter-end. Stockholders' equity increased by $11.8
million or 5% over 1997's year-end.
Given both the current cash position and available credit
facilities, Management believes the Company has sufficient
capital resources available to meet its requirements for the
foreseeable future.
YEAR 2000 ISSUE
The Company has commenced a Year 2000 date conversion project to
assess possible impact of Year 2000 issues on its business.
However, the major operating internal software systems of the
Company are fairly new and therefore Year 2000 compliant. The
Company is looking at (a) its internal information and operating
systems, and (b) possible effects on the Company of third
parties' failure to fix their own Year 2000 issues. A plan has
been formulated to convert other minor systems to be Year 2000
compliant. The rest of the evaluation by the Company has not
been completed and expected future costs cannot be estimated at
this time. There can be no assurance that Year 2000 compliance
issues will not have an adverse affect on the Company's future
operating results.
FACTORS AFFECTING FUTURE RESULTS
The Company's quarterly and annual operating results are affected
by a variety of factors that could materially and adversely
affect revenue, net income, gross profit and profitability,
including the volume and timing of orders, changes in product
mix, market acceptance of the Company's and its customers'
products, competitive pricing pressures, fluctuations in foreign
currency exchange rates, economic conditions in the United States
and international markets, the timing of new product
introductions, availability of wafers and other materials and
services, fluctuations in manufacturing yields and the continued
service of key management, employees and providers. The Company
has experienced significant fluctuations in operating results in
the past and may likely experience such fluctuations in the
future. The semiconductor market has historically been cyclical
and subject to significant economic downturns at various times.
Historically, average selling prices in the semiconductor
industry have decreased over the life of particular products. If
the Company is unable to introduce new products with higher
average selling prices or is unable to reduce manufacturing costs
to offset decreases in the prices of its existing products, the
Company's operating results will be adversely affected. In
addition, the Company is limited in its ability to reduce costs
quickly in response to any revenue shortfalls.
The fabrication of integrated circuits is a highly complex and
precise process. Manufacturing yields can be impacted by a
variety of factors, many of which are outside the Company's
control. A large portion of the Company's manufacturing costs
are relatively fixed and consequently the number of shippable die
per wafer for a given product is critical to the Company's
results of operations. To the extent the Company does not achieve
acceptable manufacturing yields or experiences product shipment
delays, its financial condition, cash flows, and results of
operations would be materially and adversely affected. To meet
anticipated future demand and to utilize a broader range of
fabrication processes, the Company intends to increase its
manufacturing capacity at some future point. Although the Company
has internal capability to produce wafers for many of its
products, it is dependent on outside wafer fabs for a significant
portion of its wafer supply. As is typical in the semiconductor
industry, from time to time the Company has experienced
disruptions in the supply of processed wafers from external fabs
due to quality and yield problems and capacity constraints. If
these outside wafer foundries are not able to produce required
supplies of processed wafers conforming to the Company's quality
standards, the Company's business and relationships with its
customers for the quantities of products produced by these
foundries could be adversely affected. In addition, the Company
relies on domestic and international subcontractors to perform
assembly, packaging and testing services. Disruption of these
services could adversely affect the Company's operations.
The Company desires to continue to expand its operations outside
of the United States and to enter additional international
markets, which will require significant management attention and
financial resources and subject the Company further to the risks
of operating internationally. These risks include unexpected
changes in regulatory requirements, delays resulting from
difficulty in obtaining export licenses for certain technology,
tariffs, and other barriers and restrictions and the burdens of
complying with a variety of foreign laws. In addition, because
most of the Company's international sales are denominated in
foreign currencies, gains and losses on the conversion to U.S.
dollars of accounts receivable and accounts payable arising from
international operations may contribute to fluctuations in the
Company's operating results. A substantial portion of the
Company's revenue is attributable to sales in Japan and Southeast
Asia. Although the recent economic instability in certain Asian
countries has not yet had a significant impact on the Company,
there can be no assurance that this instability will not have a
material adverse effect on the Company's business, financial
condition, cash flows or operating results, particularly to the
extent that this instability impacts the sales of products
manufactured by the Company's customers.
The Company may in the future be subject to or initiate
intellectual property litigation in the United States or
elsewhere, which can demand significant financial and management
resources. There can be no assurance that infringement claims by
third parties will not be asserted against the Company in the
future or that such assertions, if proven to be true, will not
materially adversely effect the Company's business, financial
condition, cash flows or operating results. Any litigation
relating to the intellectual property rights, whether or not
determined in the Company's favor or settled by the Company,
would at a minimum be costly and could divert the efforts and
attention of the Company's management and technical personnel,
which could have a material adverse effect on the Company's
business, financial condition, cash flows or operating results.
The Company's success depends upon its ability to develop new
products for existing and new markets, to introduce such products
in a timely manner and to have such products gain market
acceptance. The development of new products is highly complex,
and from time to time the Company has experienced delays in
developing and introducing new products. Successful product
development and introduction depends on a number of factors,
including proper new product definition, timely completion of
design and testing of new products, achievement of acceptable
manufacturing yields and market acceptance of the Company's and
its customers' products. Moreover, successful product design and
development is dependent on the Company's ability to attract,
retain and motivate qualified analog design engineers, of which
there is a limited number. There can be no assurance that the
Company will be able to meet these challenges or adjust to
changing market conditions as quickly and cost-effectively as
necessary to compete successfully. The semiconductor industry
is intensely competitive and is characterized by price erosion,
rapid technological change, product obsolescence and heightened
international competition in many markets. Many of the Company's
competitors have substantially greater financial, technical,
marketing, distribution, and other resources, broader product
lines and longer standing relationships with customers than the
Company. In the event of a downturn in the market for analog
circuits, companies that have broader product lines and longer
standing customer relationships may be in a stronger competitive
position than the Company. Competitors with greater financial
resources or broader product lines also may have more resources
than the Company to engage in sustained price reductions in the
Company's primary markets to gain market share.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
3.1 Restated Certificate of Incorporation of the Registrant,
incorporated by reference to Exhibit 3.1 of the
Registrant's 10-K filing for the period ended December
31, 1997. Amendment to Restated Certificate of
Incorporation dated May 15, 1996, incorporated by
reference to Exhibit 3.1 of the Registrant's 10-K filing
for the period ended December 31, 1996.
3.2 Restated By-laws of the Registrant dated October 21,
1994, incorporated by reference to Exhibit 3.2 of the
Registrant's 10-K filing for the period ended December
31, 1994.
4.1 Rights Agreement dated July 21, 1989, between the
Registrant and Valley National Bank of Arizona, incorporated
by reference to Exhibit 4.2 of the Registrant's 10-K
for the period ended December 31, 1989.
9.1 Brown Management Limited Partnership Agreement dated
November 11, 1988, among Thomas R. Brown, Jr., Mary B.
Brown and Sarah B. Smallhouse, incorporated by reference
to Exhibit 9.3 of the Registrant's 10-K filing for the
period ended December 31, 1988.
10.1 Registrant's Stock Bonus Plan, incorporated by reference
to Exhibit 10.7 of the Registrant's 10-K filing for the
period ended December 31, 1987. Amendments thereof,
dated June 27, 1989, incorporated by reference to Exhibit
10.7 of the Registrant's 10-K filing for the period ended
December 31, 1989. Amendment to Registrant's Stock Bonus
Plan, naming Syrus P. Madavi as Co-trustee, dated August
18, 1996, incorporated by reference to Exhibit 10.2 of the
Registrants 10-K filing for the period ended December 31,
1996.
10.2 Lease dated October 1, 1986, between Yugen Kaisha Kato
Shoji and Registrant, incorporated by reference to Exhibit
10.9 of the Registrant's 10-K filing for the period ended
December 31, 1986.
10.3 Lease dated February 28, 1985, between Livingston
Development Corporation and the Registrant as amended,
incorporated by reference to Exhibit 10.13 of the Registrant's
10-K filing for the period ended December 31, 1984.
10.4 Lease dated June 1, 1988, between EMBE Leasing Agency
Ltd. and Registrant, translation only incorporated by
reference to Exhibit 10.19 of the Registrant's 10-K filing
for the period ended December 31, 1988.
10.5 Restated Burr-Brown Employee Retirement Plan dated
January 1, 1988, incorporated by reference to Exhibit
10.17 to the Registrant's 10-K filing for the period
ended December 31, 1994. Amendment to Employee Retirement
Plan dated July 18, 1996, incorporated by reference to
Exhibit 10.9 of the Registrant's 10-K filing for the
period ended December 31, 1996.
10.6 Consent Decree filed with the United States District
Court on March 13, 1990, between the United States of
America on behalf of the Administrator of the United
States Environmental Protection Agency (EPA) and Burr-
Brown Corporation, incorporated by reference to Exhibit
10.32 of the Registrant's 10-K filing for the period
ended December 31, 1991.
10.7 Trust Agreement for Future Investment Trust dated October
12, 1993, between Burr-Brown Corporation and First
Interstate Bank of Arizona, incorporated by reference to
Exhibit 10.37 of the Registrant's 10-K filing for the
period ended December 31, 1993.
10.8 Burr-Brown Corporation 1993 Stock Incentive Plan as
Amended and Restated through March 20, 1998, filed
herein.
10.9 Future Investment Trust Plan Amended and Restated dated
July 18, 1996, incorporated by reference as Exhibit 10.17
to the Registrant's 10-K filing for the period ended
December 31, 1996.
10.10 Burr Brown's Cash Profit Sharing Plan dated April 21,
1995, incorporated by reference to Exhibit 10.18 of the
Registrant's 10-K filing for the period ended December
31, 1995.
10.11 Loan Agreement dated January 31, 1996, between Burr-
Brown Corporation and Wells Fargo Bank, N.A. (fka First
Interstate Bank of Arizona, N.A.,) incorporated by reference
to Exhibit 10.19 of the Registrant's 10-K filing for the
period ended December 31, 1995. Amendments to Loan
Agreement dated November 15, 1996 and December 21, 1997,
incorporated by reference to Exhibit 10.19 of the
Registrant's 10-K filing for the period ended December 31,
1996.
10.12 Burr-Brown Corporation's Employee Stock Purchase Plan
incorporated by reference to the Registrant's Proxy
Statement filed March 24, 1998.
27. Financial Data Schedule, filed herein.
b. Reports on Form 8-K: The Company did not file any
reports on Form 8-K during the quarter ended April 4, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities and Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
BURR-BROWN CORPORATION
Registrant
By: J. SCOTT BLOUIN
J. Scott Blouin
Chief Financial Officer
Principal Accounting Officer
Date: May 15, 1998
Exhibit 10.8
BURR-BROWN CORPORATION
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 February 20, 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: SYRUS P. MADAVI
Title: President & CEO
<TABLE> <S> <C>
<ARTICLE>5
<LEGEND>
YEAR-TO-DATE CONSOLIDATED STATEMENT OF INCOME, CONSOLIDATED
BALANCE SHEETS, AND CONSOLIDATED STATEMENTS OF CASH FLOWS
FOUND ON PAGES 3,4,5 RESPECTIVELY, ON THE COMPANY'S FORM 10-Q
FOR THE CURRENT PERIOD ENDED AND THE PREVIOUS PERIOD ENDED,
ARE LISTED BELOW IN TABULAR FORMAT AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> APR-04-1998
<CASH> 71,941
<SECURITIES> 32,679
<RECEIVABLES> 59,934
<ALLOWANCES> 892
<INVENTORY> 51,158
<CURRENT-ASSETS> 198,262
<PP&E> 178,177
<DEPRECIATION> 98,476
<TOTAL-ASSETS> 313,161
<CURRENT-LIABILITIES> 60,761
<BONDS> 0
0
0
<COMMON> 382
<OTHER-SE> 246,298
<TOTAL-LIABILITY-AND-EQUITY> 313,161
<SALES> 68,685
<TOTAL-REVENUES> 68,685
<CGS> 33,087
<TOTAL-COSTS> 33,087
<OTHER-EXPENSES> 10,260
<LOSS-PROVISION> (127)
<INTEREST-EXPENSE> 93
<INCOME-PRETAX> 14,523
<INCOME-TAX> 4,357
<INCOME-CONTINUING> 10,166
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,166
<EPS-PRIMARY> .28
<EPS-DILUTED> .27
</TABLE>
