[DESCRIPTION] Begin Attachment 1 of 5
Notice to Participants in the SCI Systems, Inc. Stock Purchase Plan
DEAR PLAN PARTICIPANT:
We are sending this letter and the enclosed materials to you as Trustee
of the SCI Systems Stock Purchase Plan (the ``Plan'').
The Annual Meeting of Shareholders of SCI Systems, Inc. (``SCI'') is
scheduled to be held on October 28, 1994. Enclosed are the 1994 Annual Report
and proxy materials which are being distributed in connection with SCI's
Annual Meeting. As the owner of SCI common stock through the Plan, you are
entitled to vote your shares on all proposals presented in Management's proxy
statement.
Enclosed is a WHITE voting instruction card which will enable you to vote
your shares. If you wish to direct the vote of your shares, mark the boxes on
the WHITE voting instruction card, then sign, date and mail the WHITE voting
instruction card in the return envelope provided. You are encouraged to read
the enclosed materials carefully and to exercise your right to vote. We make
no recommendation on how you should vote your shares. All instruction cards
received by us will remain confidential and not be disclosed to SCI or any
officer of SCI.
Please be aware that your shares will not be voted if you do not return
the WHITE voting instruction card; if your instruction card is not signed
exactly as your name appears on it; or if you return a properly signed
instruction card but no direction is given as to the vote of your shares.
Sincerely,
Mellon Bank, N.A.
[DESCRIPTION] End Attachment 1 of 5
[DESCRIPTION] Begin Attachment 2 of 5
Notice to Participants in the SCI Systems, Inc. Savings Plan and/or Deferred
Compensation Plan
DEAR PLAN PARTICIPANT:
We are sending this letter and the enclosed materials to you as Trustee
of the SCI Systems Savings and Deferred Compensation Plans (the ``Plans'').
The Annual Meeting of Shareholders of SCI Systems, Inc. (``SCI'') is
scheduled to be held on October 28, 1994. Enclosed for your information as
owner of SCI common stock through the Plans are the 1994 Annual Report and
Proxy Statement which are being distributed in connection with SCI's Annual
Meeting.
Sincerely,
Mellon Bank, N.A.
[DESCRIPTION] End Attachment 2 of 5
[DESCRIPTION] Begin Attachment 3 of 5
[DESCRIPTION] Begin Side One of Attachment 3 of 5
SCI SYSTEMS, INC.
This Proxy is solicited on behalf of the Board of Directors of the Company
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement, each dated September 28, 1994,
and does hereby appoint Olin B. King and A. Eugene Sapp, Jr., and either of
them, with full power of substitution, as proxy or proxies of the undersigned
to represent the undersigned and to vote all shares of SCI Systems, Inc.
Common Stock which the undersigned would be entitled to vote if personally
present at the Annual Meeting of Shareholders of SCI Systems, Inc. to be held
at The Harvard Club of Boston, 374 Commonwealth Avenue, Boston, Massachusetts
02215-2860, at 10:00 a.m., local time, on October 28, 1994, and at any
adjournment or postponement thereof, upon the following matters as specified:
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE ``FOR'' ITS NOMINEES AND
THE FOLLOWING PROPOSALS.
1. Election of Class I Directors
... FOR all nominees listed below (except as marked to the contrary
below)
... WITHHOLD AUTHORITY to vote for all nominees listed below
Olin B. King Howard H. Callaway
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
2. Approval of the SCI Systems, Inc. 1994 Stock Option Incentive Plan.
... FOR ... AGAINST ... ABSTAIN
3. Ratification of the selection of Ernst & Young LLP as the Company's
auditors for the fiscal year ending June 30, 1995.
... FOR ... AGAINST ... ABSTAIN
4. In their discretion, the Proxies are authorized to vote on such other
business as may properly come before the meeting or any adjournment or
postponement thereof.
This Proxy may be revoked at any time prior to the voting thereof.
(PLEASE SIGN AND DATE ON REVERSE SIDE)
[DESCRIPTION] End Side One of Attachment 3 of 5
[DESCRIPTION] Begin Side Two of Attachment 3 of 5
PLEASE DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE
This Proxy, when properly executed, will be voted in accordance with the
directions given by the undersigned shareholder. If no direction is made, it
will be voted in favor of Proposals 1, 2 and 3 and will be voted on any
discretionary matters in accordance with the best judgment and discretion of
the Proxies.
Dated: ________________________, 1994
Signature _____________________
_____________________
Additional Signature, if held jointly
Please sign exactly as your name(s) appears hereon.
If your shares are held jointly, each shareholder
named should sign. When signing as attorney, ex-
ecutor, administrator, trustee or guardian, please
give your full title as such. If the signatory is a cor-
poration, please sign the full corporate name by
a duly authorized officer.
[DESCRIPTION] End Side Two of Attachment 3 of 5
[DESCRIPTION] End Attachment 3 of 5
[DESCRIPTION] Begin Attachment 4 of 5
[DESCRIPTION] Begin Side One of Attachment 4 of 5
ALLOCATED SHARES VOTING INSTRUCTIONS TO TRUSTEE
FOR THE ANNUAL MEETING OF SHAREHOLDERS OF SCI SYSTEMS, INC. OCTOBER 28, 1994
THE TRUSTEE SOLICITS THESE VOTING INSTRUCTIONS FROM PLAN PARTICIPANTS IN THE
SCI STOCK PURCHASE PLAN
The undersigned Participant in the SCI Systems, Inc. Stock Purchase Plan
(the ``Plan'') hereby instructs Mellon Bank, N.A., as Trustee under the Plan
(``Trustee''), to vote all shares of common stock of the Company allocated to
the account of the undersigned under the Plan (``Allocated Shares'') in
accordance with the instructions on the reverse hereof, and to represent the
undersigned at the Annual Meeting of Shareholders of the Company to be held at
The Harvard Club of Boston, 374 Commonwealth Avenue, Boston, Massachusetts
02215-2860, at 10:00 a.m., local time, on October 28, 1994, and at any
adjournments or postponements thereof, and to act in its discretion upon such
other matters as may properly come before the meeting or any adjournments or
postponements thereof.
The submission of this voting instruction form, if properly executed, revokes
all prior voting instruction forms.
TO ASSURE THAT YOUR VOTING INSTRUCTIONS ARE FOLLOWED, THIS FORM MUST BE
PROPERLY COMPLETED, SIGNED AND RECEIVED BACK BY THE TRUSTEE BY THE CLOSE OF
BUSINESS ON OCTOBER 21, 1994. IF YOUR VOTING INSTRUCTIONS ARE NOT TIMELY
RECEIVED, OR IF THIS FORM IS SIGNED AND RECEIVED BY THE TRUSTEE ON TIME BUT
YOU DO NOT INDICATE YOUR VOTING PREFERENCES, THE TRUSTEE WILL NOT VOTE THE
SHARES ALLOCATED TO YOUR ACCOUNT. YOUR VOTING INSTRUCTIONS WILL NOT BE
COUNTED, UNLESS YOU SIGN THIS FORM EXACTLY AS YOUR NAME APPEARS ON IT.
For your information, the Board of Directors recommends a vote ``FOR''
Proposals 1, 2 and 3. The Trustee makes no recommendations with respect to
your voting decision.
YOUR ALLOCATED SHARES:
(Please specify your choice on each proposal, date, sign (all on the reverse
hereof) and return in the enclosed envelope.)
[DESCRIPTION] End Side One of Attachment 4 of 5
[DESCRIPTION] Begin Side Two of Attachment 4 of 5
1. Election of Class I Directors
... FOR all nominees listed below (except as marked to be the contrary
below)
... WITHHOLD AUTHORITY to vote for all nominees listed below
Olin B. King Howard H. Callaway
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
the nominee's name in the space provided below)
2. Approval of the SCI Systems, Inc. 1994 Stock Option Incentive Plan.
... FOR ... AGAINST ... ABSTAIN
3. Ratification of the selection of Ernst & Young LLP as the Company's
auditors for the fiscal year ending June 30, 1995.
... FOR ... AGAINST ... ABSTAIN
4. In it's discretion the Trustee is authorized to vote on such other business
as may properly come before the meeting or any adjournment or postponement
thereof.
This Proxy may be revoked by you at any time prior to the voting thereof.
PLEASE DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENVELOPE ENCLOSED
Dated: _________________________, 1994
Signature ______________________
[DESCRIPTION] End Side Two of Attachment 4 of 5
[DESCRIPTION] End Attachment 4 of 5
[DESCRIPTION] Begin Attachment 5 of 5
Form of
SCI SYSTEMS, INC.
1994 STOCK OPTION INCENTIVE PLAN
To be Voted on at Annual Shareholders Meeting
TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS 1
SECTION 2 THE STOCK INCENTIVE PLAN 2
2.1 Purpose of the Plan 2
2.2 Stock Subject to the Plan 2
2.3 Administration of the Plan 2
2.4 Eligibility and Limits 3
SECTION 3 TERMS OF STOCK OPTIONS GRANTED TO EMPLOYEES AND OFFICERS 3
3.1 Terms and Conditions of Options Granted to
Employees and Officers 3
(a) Number of Option Shares 3
(b) Stock Option Agreement 3
(c) Type of Option 4
(d) Option Price 4
(e) Option Term 4
(f) Payment 4
(g) Conditions to the Exercise of an Option 5
(h) Termination of Incentive Stock Option 5
(i) Special Provisions for Certain Substitute Options 5
(j) Date of Grant 5
(k) Nonassignability 5
3.2 Treatment of Awards Upon Termination of Employment
SECTION 4 TERMS OF STOCK OPTIONS GRANTED TO DIRECTORS 6
4.1 Number of Option Shares 6
4.2 Stock Option Agreement 6
4.3 Type of Option 6
4.4 Option Price 6
4.5 Option Term 6
4.6 Payment 7
4.7 Date of Grant 7
4.8 Nonassignability 7
4.9 Cessation of Board Membership 7
4.10 Timing of Directions 7
SECTION 5 RESTRICTIONS ON STOCK 7
SECTION 6 GENERAL PROVISIONS 7
6.1 Withholding 7
6.2 Changes in Capitalization; Merger; Liquidation 8
6.3 Cash Awards 9
6.4 Compliance with Code 9
6.5 Right to Terminate Employment 9
6.6 Non-alienation of Benefits 9
6.7 Restrictions on Delivery and Sale of Shares; Legends 9
6.8 Termination and Amendment of the Plan 9
6.9 Stockholder Approval 10
6.10 Choice of Law 10
6.11 Effective Date of Plan 10
SCI SYSTEMS, INC
1994 STOCK OPTION INCENTIVE PLAN
SECTION 1 DEFINITIONS
Whenever used herein, the masculine pronoun shall be deemed to include the
feminine, and the singular to include the plural, unless the context clearly
indicates otherwise, and the following capitalized words and phrases are used
herein with the meaning thereafter ascribed:
1.1 "Board" means the board of directors of the Company.
1.2 "Code" means the Internal Revenue Code of 1986, as amended.
1.3 "Committee" means the committee appointed by the Board to administer the
Plan.
1.4 "Company" means SCI Systems, Inc., a Delaware corporation.
1.5 "Director Fee" means fees payable for the performance of duties as a
director of the Company, but shall not include meeting or committee fees or
expense reimbursements paid to a director.
1.6 "Disposition" means any conveyance, sale, transfer, assignment,
pledge or hypothecation, whether outright or as security, inter vivos or
testamentary, with or without consideration, voluntary or involuntary.
1.7 "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
1.8 "Exercise Price" means the price per share of Stock purchasable under any
Option.
1.9 "Fair Market Value" with regard to a date means the closing price at which
Stock shall have been sold on the last trading date prior to that date as
reported by the Nasdaq National Market System (or, if applicable, as reported
by a national securities exchange selected by the Committee on which the
shares of Stock are then actively traded) and published in The Wall Street
Journal; provided that, for purposes of granting Options other than incentive
stock options, Fair Market Value of the shares of Stock may be determined by
the Committee by reference to the average market value determined over a
period certain or as of specified dates, to a tender offer price for the
shares of Stock (if settlement of an award is triggered by such an event) or
to any other reasonable measure of fair market value.
1.10 "Option" means a non-qualified stock option or an incentive stock option.
1.11 "Over 10% Owner" means an individual who at the time an incentive stock
option is granted owns Stock possessing more than 10% of the total combined
voting power of the Company or one of its Subsidiaries, determined by applying
the attribution rules of Code Section 424(d).
1.12 "Participant" means an individual who receives an Option hereunder.
1.13 "Plan" means the SCI Systems, Inc. 1994 Stock Option Incentive Plan.
1.14 "Stock" means the Company's common stock, $0.10 par value.
1.15 "Stock Option Agreement" means an agreement between the Company and a
Participant or other documentation evidencing an award of an Option.
1.16 "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, with respect to
incentive stock options, at the time of the granting of the Option, each of
the corporations other than the last corporation in the unbroken chain owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in the chain.
SECTION 2 THE STOCK INCENTIVE PLAN
2.1 Purpose of the Plan. The Plan is intended to (a) provide incentive to
selected employees, officers and directors of the Company and its affiliates
to stimulate their efforts toward the continued success of the Company and to
operate and manage the business in a manner that will provide for the
long-term growth and profitability of the Company; (b) encourage stock
ownership by selected employees, officers and directors by providing them with
a means to acquire a proprietary interest in the Company, acquire shares of
Stock, or to receive compensation which is based upon appreciation in the
value of Stock; and (c) provide a means of obtaining, rewarding and retaining
select employees, officers and directors.
2.2 Stock Subject to the Plan. Subject to adjustment in accordance with
Section 5.2, 1,300,000 shares of Stock (the "Maximum Plan Shares", of which
302,974 shares are those which were released from reservation under the
SCI Systems, Inc. Non-Qualified Stock Option Plan and the SCI Systems, Inc.
Incentive Stock Option Plan immediately prior to adoption of this Plan), are
hereby reserved exclusively for issuance pursuant to Options. At no time
shall the Company have outstanding Options subject to Section 16 of the
Exchange Act and shares of Stock issued in respect of Options in excess of the
Maximum Plan Shares; for this purpose, the outstanding Options and shares of
Stock issued in respect of Options shall be computed consistent with Rule
16b-3(a)(1) as promulgated under the Exchange Act. To the extent permitted by
Rule 16b-3(a)(1) as promulgated under the Exchange Act, the shares of Stock
attributable to the nonvested, unpaid, unexercised, unconverted or otherwise
unsettled portion of any Option that is forfeited or cancelled or expires or
terminates for any reason without becoming vested, paid, exercised, converted
or otherwise settled in full shall again be available for purposes of the
Plan.
2.3 Administration of the Plan. The Plan shall be administered by the
Committee.
(a) With respect to awards under the Plan to key employees and officers,
the Committee shall be comprised solely of "disinterested persons," as
defined in Rule 16b-3 as promulgated under the Exchange Act, who are then
members of the Board. The Committee shall have full authority in its
discretion to determine the key employees and officers of the Company or
its affiliates to whom Options shall be granted and the terms and
provisions of such Options.
(b) Subject to the provisions of the Plan, the Committee shall have full
and conclusive authority to interpret the Plan; to prescribe, amend and
rescind rules and regulations relating to the Plan; to determine the terms
and provisions of the respective Stock Option Agreements and to make all
other determinations necessary or advisable for the proper administration
of the Plan. The Committee's determinations under the Plan need not be
uniform and may be made by it selectively among persons who receive, or
are eligible to receive, awards under the Plan (whether or not such persons
are similarly situated). The Committee's decisions shall be final and
binding on all Participants.
2.4 Eligibility and Limits. Options may be granted only to employees, officers
and directors of the Company, or any affiliate of the Company; provided,
however, that directors who serve on the Committee shall not be eligible to
receive awards under Plan Section 3 that are subject to Section 16 of the
Exchange Act while they are members of the Committee and that an incentive
stock option may only be granted to an employee of the Company or any
Subsidiary. In the case of incentive stock options, the aggregate Fair Market
Value (determined as at the date an incentive stock option is granted) of
stock with respect to which stock options intended to meet the requirements of
Code Section 422 become exercisable for the first time by an individual during
any calendar year under all plans of the Company and its Subsidiaries shall
not exceed $100,000; provided further, that if the limitation is exceeded, the
incentive stock option(s) which cause the limitation to be exceeded shall be
treated as non-qualified stock option(s).
SECTION 3 TERMS OF STOCK OPTIONS GRANTED TO EMPLOYEES AND OFFICERS
3.1 Terms and Conditions of Options Granted to Employees and Officers. No
more than 1,200,000 shares of Stock shall be available for issuance as Options
to employees and officers under the Plan.
(a) Number of Option Shares. The number of shares of Stock as to which an
Option shall be granted pursuant to this Section 3 shall be determined by the
Committee in its sole discretion, subject to the provisions of Section 2.2
as to the total number of shares available for grants under the Plan.
Notwithstanding the preceding, to the extent required under Section 162(m)
of the Code and the regulations thereunder for compensation to be treated as
qualified performance-based compensation, the maximum number of shares of
Stock with respect to which Options may be granted during any one year
period to any employee shall not exceed 100,000.
(b) Stock Option Agreement. Each Option granted pursuant to this Section
3 shall either be evidenced by a Stock Option Agreement in such form and
containing such terms, conditions and restrictions as the Committee may
determine to be appropriate. Each Stock Option Agreement shall be subject
to the terms of the Plan and any provisions contained in the Stock Option
Agreement that are inconsistent with the Plan shall be null and void.
(c) Type of Option. At the time any Option is granted pursuant to this
Section 3, the Committee shall determine whether the Option is to be an
incentive stock option described in Code Section 422 or a non-qualified
stock option, and the Option shall be clearly identified as to its status as
an incentive stock option or a non-qualified stock option. At the time any
incentive stock option granted under the Plan is exercised, the Company
shall be entitled to legend the certificates representing the shares of Stock
purchased pursuant to the Option to clearly identify them as representing the
shares purchased upon the exercise of an incentive stock option. An
incentive stock option may only be granted within 10 years from the earlier
of the date the Plan is adopted or approved by the Company's stockholders.
(d) Option Price. Subject to adjustment in accordance with Section 6.2 and
the other provisions of this Section 3, the Exercise Price under any Option
shall be as set forth in the applicable Stock Option Agreement.
Notwithstanding the preceding, the Exercise Price under any incentive stock
option shall not be less than the Fair Market Value on the date the Option
is granted, and with respect to each grant of an incentive stock option to
a Participant who is an Over 10% Owner, the Exercise Price shall not be less
than 110% of the Fair Market Value on the date the Option is granted.
(e) Option Term. Any incentive stock option granted to a Participant
who is not an Over 10% Owner shall not be exercisable after the expiration
of 10 years after the date the Option is granted. Any incentive stock option
granted to a Participant who is an Over 10% Owner shall not be exercisable
after the expiration of five years after the date the Option is granted. The
term of any non-qualified stock option shall be as specified in the
applicable Stock Option Agreement.
(f) Payment. Payment for all shares of Stock purchased pursuant to the
exercise of an Option granted pursuant to this Section 3 shall be made in
any form or manner authorized by the Committee in the Stock Option Agreement,
including, but not limited to, (i) cash, (ii) by delivery to the Company of a
number of shares of Stock which have been owned by the holder for at least
six months prior to the date of exercise having an aggregate Fair Market
Value of not less than the product of the Exercise Price multiplied by the
number of shares the Participant intends to purchase upon exercise of the
Option on the date of delivery; (iii) in a cashless exercise through a
broker; or (iv) by having a number of shares of Stock withheld, the Fair
Market Value of which as of the date of exercise is sufficient to satisfy
the Exercise Price. In its discretion, the Committee also may authorize
(at the time an Option is granted or thereafter) Company financing to assist
the Participant as to payment of the Exercise Price on such terms as may be
offered by the Committee in its discretion. Any such financing shall require
the payment by the Participant of interest on the amount financed at a rate
not less than the "applicable federal rate" under the Code. If a Stock
Option Agreement so provides, the Participant may be granted a new Option to
purchase a number of shares of Stock equal to the number of previously owned
shares of Stock tendered in payment for each share of Stock purchased
pursuant to the terms of the Stock Option Agreement. Any such new Option
shall be subject to the terms and conditions of the Stock Option Agreement
pursuant to which such new Option is granted. Payment of the Exercise Price
shall be made at the time that the Option or any part thereof is exercised,
and no shares shall be issued or delivered upon exercise of an Option until
full payment has been made by the Participant. The holder of an Option, as
such, shall have none of the rights of a stockholder.
(g) Conditions to the Exercise of an Option. Each Option granted
pursuant to this Section 3 shall be exercisable by whom, at such time or
times, or upon the occurrence of such event or events, and in such amounts,
as the Committee shall specify in the Stock Option Agreement; provided,
however, that subsequent to the grant of an Option, the Committee, at any
time before complete termination of such Option, may accelerate the time or
times at which such Option may be exercised in whole or in part, and may
permit the Participant or any other designated person to exercise the Option,
or any portion thereof, for all or part of the remaining Option term,
notwithstanding any provision of the Stock Option Agreement to the contrary.
(h) Termination of Incentive Stock Option. With respect to an incentive
stock option, in the event of termination of employment of a Participant for
any reason other than death or disability, the Option or portion thereof
held by the Participant which is unexercised shall expire, terminate, and
become unexercisable no later than the expiration of three months after the
date of termination of employment; provided, however, that in the case of a
holder whose termination of employment is due to death or disability, one
year shall be substituted for such three month period. For purposes of this
Subsection (h), termination of employment of the Participant shall not be
deemed to have occurred if the Participant is employed by another corporation
(or a parent or subsidiary corporation of such other corporation) which has
assumed the incentive stock option of the Participant in a transaction to
which Code Section 424(a) is applicable.
(i) Special Provisions for Certain Substitute Options. Notwithstanding
anything to the contrary in this Section 3, any Option issued in
substitution for an option previously issued by another entity, which
substitution occurs in connection with a transaction to which Code Section
424(a) is applicable, may provide for an exercise price computed in
accordance with such Code Section and the regulations thereunder and may
contain such other terms and conditions as the Committee may prescribe to
cause such substitute Option to contain as nearly as possible the same terms
and conditions (including the applicable vesting and termination provisions)
as those contained in the previously issued option being replaced thereby.
(j) Date of Grant. The date an Option is granted pursuant to this Section 3
shall be the date on which the Committee has approved the terms and
conditions of the Option and has determined the recipient of the Option and
the number of shares covered by the Option and has taken all such other
action necessary to complete the grant of the Option.
(k) Nonassignability. Options granted pursuant to this Section 3 shall not
be transferable or assignable except by will or by the laws of descent and
distribution. Such Options shall be exercisable, during the Participant's
lifetime, only by the Participant; or in the event of the death of the
Participant, by the legal representatives of the Participant's estate or if
no legal representative has been appointed, by the successor in interest
determined under the Participant's will.
3.2 Treatment of Awards Upon Termination of Employment. Except as
otherwise provided by Plan Section 3.1(h), any award pursuant to this
Section 3 to a Participant who has experienced a termination of employment
may be cancelled, accelerated, paid or continued, as provided in the
applicable Stock Option Agreement, or, in the absence of such provision, as
the Committee may determine. The portion of any award exercisable in the
event of continuation or the amount of any payment due under a continued
award may be adjusted by the Committee to reflect the Participant's period
of service from the date of grant through the date of the Participant's
termination of employment or such other factors as the Committee determines
are relevant to its decision to continue the award.
SECTION 4 TERMS OF STOCK OPTIONS GRANTED TO DIRECTORS
Each individual serving as a non-employee director of the Company
as of the effective date of the Plan may irrevocably direct that all or a
portion of his or her Director Fee for the remainder of the term for which he
or she is serving as a director be allocated to the purchase of Options on his
or her behalf. The direction shall be effective with respect to those
Director Fees payable after the expiration of six months following the
Company's receipt of the direction and must be made with respect to all or a
portion (in 25% increments) of each payment. Options granted under this
Section 4 shall be subject to the following terms and conditions:
4.1 Number of Option Shares. A Participant shall be granted an Option to
purchase that number of shares of Stock with an aggregate Fair Market Value
(determined as of the date of grant) equal to four times the amount of the
Director Fee which the Participant allocated to the purchase of Options.
4.2 Stock Option Agreement. Each Option shall be evidenced by a Stock Option
Agreement which shall incorporate the terms of the Plan.
4.3 Type of Option. Options shall be non-qualified stock options.
4.4 Option Price. The Exercise Price for a share of Stock subject
to an Option shall be the Fair Market Value (determined as of the date of
grant) of a share of Stock.
4.5 Option Term. Each Option may be exercised for that percentage
of shares of Stock subject to the Option as to which the Option has become
vested, reduced by that number of shares of Stock subject to the Option which
have been previously exercised. The Option shall vest in equal portions on
each "Vesting Date," provided that the Participant is still a director on the
Vesting Date. For purpose of this Section 4, the term Vesting Date shall
mean the date of grant and each Board meeting at which Director Fees are
payable during the remainder of the director's term, provided that Director
Fees are paid on a semi-annual basis. If Director Fees are no longer payable
on a semi-annual basis, then the term Vesting Date shall mean the date of
grant and thereafter any annual meeting of the Company's shareholders or any
six month anniversary of an annual meeting of the Company's shareholders
occuring during the director's term; provided that the next vesting date is
no less than four months from any other vesting date. Once exercisable, each
Option granted hereunder shall remain exercisable until the tenth anniversary
of the date of grant; provided, however, that in the event of a Participant's
death prior to the expiration of any such Option term, the Option may continue
to be exercised by the Participant's legal representative until the expiration
of such Option term.
4.6 Payment. Payment for all shares of Stock purchased pursuant to the
exercise of an Option shall be made (i) in cash, (ii) by delivery to the
Company of a number of shares of Stock which have been owned by the holder for
at least six months prior to the date of exercise having an aggregate Fair
Market Value of not less than the product of the Exercise Price multiplied by
the number of shares the Participant intends to purchase upon exercise of the
Option on the date of delivery; or (iii) in a cashless exercise through a
broker. The holder of an Option, as such, shall have none of the rights of a
stockholder.
4.7 Date of Grant. An Option shall be granted as of the date on which the
Director Fee is payable for which a direction is applicable.
4.8 Nonassignability. Options shall not be transferable or assignable except
by will or by the laws of descent and distribution. Such Options shall be
exercisable, during the Participant's lifetime, only by the Participant; or
in the event of the death of the Participant, by the legal representatives
of the Participant's estate or if no legal representative has been appointed,
by the successor in interest determined under the Participant's will.
4.9 Timing of Directions. Each non-employee director shall make a direction
pursuant to this Section 4 no later than 30 days following his or her election,
reelection or appointment to the Board; provided, however, that any
non-employee director who is a member of the Board as of the Plan's effective
date shall make such a direction no later than 30 days following the Plan's
effective date.
SECTION 5 RESTRICTIONS ON STOCK
The Participant shall not have the right to make or permit to exist any
Disposition of the shares of Stock issued pursuant to the Plan except as
provided in the Plan or the Stock Option Agreement. Any Disposition of the
shares of Stock issued under the Plan by the Participant not made in
accordance with the Plan or the Stock Option Agreement shall be void. The
Company shall not recognize, or have the duty to recognize, any Disposition
not made in accordance with the Plan and the Stock Option Agreement, and the
shares so transferred shall continue to be bound by the Plan and the Stock
Option Agreement.
SECTION 6 GENERAL PROVISIONS
6.1 Withholding. The Company shall deduct from all cash distributions under
the Plan any taxes required to be withheld by federal, state or local
government. Whenever the Company proposes or is required to issue or transfer
shares of Stock under the Plan, the Company shall have the right to require
the recipient to remit to the Company an amount sufficient to satisfy any
federal, state and local withholding tax requirements prior to the delivery of
any certificate or certificates for such shares. A Participant may pay the
withholding tax in cash, or, if the Stock Option Agreement provides, a
Participant may elect to have the number of shares of Stock he is to receive
reduced by the smallest number of whole shares of Stock which, when multiplied
by the Fair Market Value of the shares of Stock determined as of the Tax Date
(defined below), is sufficient to satisfy federal, state and local, if any,
withholding taxes arising from exercise of an Option (a "Withholding
Election"). A Participant may make a Withholding Election only if both of
the following conditions are met:
(a) The Withholding Election must be made on or prior to the date on which
the amount of tax required to be withheld is determined (the "Tax Date") by
executing and delivering to the Company a properly completed notice of
Withholding Election as prescribed by the Committee; and
(b) Any Withholding Election made will be irrevocable except on six months
advance written notice delivered to the Company; however, the Committee
may in its sole discretion disapprove and give no effect to the Withholding
Election.
6.2 Changes in Capitalization; Merger; Liquidation.
(a) The number of shares of Stock reserved for the grant of Options; the
number of shares of Stock reserved for issuance upon the exercise or
payment, as applicable, of each outstanding Option; and the Exercise Price
of each outstanding Option shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Stock resulting from
a subdivision or combination of shares or the payment of a stock dividend in
shares of Stock to holders of outstanding shares of Stock or any other
increase or decrease in the number of shares of Stock outstanding effected
without receipt of consideration by the Company.
(b) In the event of or anticipation of a merger, consolidation or other
reorganization of the Company or tender offer for shares of Stock, the
Committee may make such adjustments with respect to awards and take such
other action as it deems necessary or appropriate to reflect or such merger,
consolidation, reorganization or tender offer, including, without limitation,
the substitution of new awards, the termination or adjustment of outstanding
awards, the acceleration of awards or the removal of restrictions on
outstanding awards. Any adjustment pursuant to this Section 6.2 may provide,
in the Committee's discretion, for the elimination without payment therefore
of any fractional shares that might otherwise become subject to any Option,
but shall not otherwise diminish the then value of the Option.
(c) The existence of the Plan and the Options granted pursuant to the Plan
shall not affect in any way the right or power of the Company to make or
authorize any adjustment, reclassification, reorganization or other change
in its capital or business structure, any merger or consolidation of the
Company, any issue of debt or equity securities having preferences or
priorities as to the Stock or the rights thereof, the dissolution or
liquidation of the Company, any sale or transfer of all or any part of its
business or assets, or any other corporate act or proceeding.
6.3 Cash Awards. The Committee may, at any time and in its discretion, grant
to any holder of an Option the right to receive, at such times and in such
amounts as determined by the Committee in its discretion, a cash amount which
is intended to reimburse such person for all or a portion of the federal,
state and local income taxes imposed upon such person as a consequence of
the receipt of the Option or the exercise of rights thereunder.
6.4 Compliance with Code. All incentive stock options to be granted hereunder
are intended to comply with Code Section 422, and all provisions of the Plan
and all incentive stock options granted hereunder shall be construed in such
manner as to effectuate that intent.
6.5 Right to Terminate Employment. Nothing in the Plan or in any Option shall
confer upon any Participant the right to continue as an employee, officer or
director of the Company or any of its affiliates or affect the right of the
Company or any of its affiliates to terminate the Participant's employment or
other relationship with the Company at any time.
6.6 Non-alienation of Benefits. Other than as specifically provided with
regard to the death of a Participant, no benefit under the Plan shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge; and any attempt to do so shall be void. No
such benefit shall, prior to receipt by the Participant, be in any manner
liable for or subject to the debts, contracts, liabilities, engagements or
torts of the Participant.
6.7 Restrictions on Delivery and Sale of Shares; Legends. Each Option is
subject to the condition that if at any time the Committee, in its discretion,
shall determine that the listing, registration or qualification of the shares
covered by such Option upon any securities exchange or under any state or
federal law is necessary or desirable as a condition of or in connection with
the granting of such Option or the purchase or delivery of shares thereunder,
the delivery of any or all shares pursuant to such Option may be withheld
unless and until such listing, registration or qualification shall have been
effected. If a registration statement is not in effect under the Securities
Act of 1933 or any applicable state securities laws with respect to the shares
of Stock purchasable or otherwise deliverable under Options then outstanding,
the Committee may require, as a condition of exercise of any Option or as a
condition to any other delivery of Stock pursuant to an Option, that the
Participant or other recipient of an Option represent, in writing, that the
shares received pursuant to the Option are being acquired for investment and
not with a view to distribution and agree that the shares will not be disposed
of except pursuant to an effective registration statement, unless the Company
shall have received an opinion of counsel that such disposition is exempt from
such requirement under the Securities Act of 1933 and any applicable state
securities laws. The Company may include on certificates representing shares
delivered pursuant to an Option such legends referring to the foregoing
representations or restrictions or any other applicable restrictions on r
esale as the Company, in its discretion, shall deem appropriate.
6.8 Termination and Amendment of the Plan. The Board at any time may amend or
terminate the Plan without stockholder approval; provided, however, that the
Board may condition any amendment on the approval of stockholders of the
Company if such approval is necessary or advisable with respect to tax,
securities or other applicable laws. No such termination or amendment without
the consent of the holder of an Option shall adversely affect the rights of
the Participant under such Option.
6.9 Stockholder Approval. The Plan shall be submitted to the stockholders of
the Company for their approval within 12 months before or after the adoption
of the Plan by the Board. If such approval is not obtained, any Option
granted hereunder shall be void.
6.10 Choice of Law. The laws of the State of Alabama shall govern the Plan,
to the extent not preempted by federal law.
6.11 Effective Date of Plan. The Plan shall become effective as of the date
of its approval by the Board, subject, however, to the approval of the Plan
by the Company's shareholders at their next annual meeting. Options granted
hereunder prior to such shareholder approval shall be conditioned upon such
shareholder approval. Unless such shareholder approval is obtained by the
first anniversary of the Board's approval, this Plan and any Options awarded
hereunder shall become void thereafter.
SCI SYSTEMS, INC.
By:
Title:
ATTEST:
_________________________________ Secretary
[CORPORATE SEAL]
[DESCRIPTION] End Attachment 5 of 5
