0001095811-01-505061.txt : 20011009
0001095811-01-505061.hdr.sgml : 20011009
ACCESSION NUMBER: 0001095811-01-505061
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 21
CONFORMED PERIOD OF REPORT: 20010630
FILED AS OF DATE: 20010924
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: MAXIM INTEGRATED PRODUCTS INC
CENTRAL INDEX KEY: 0000743316
STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674]
IRS NUMBER: 942896096
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0626
FILING VALUES:
FORM TYPE: 10-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-16538
FILM NUMBER: 1742587
BUSINESS ADDRESS:
STREET 1: 120 SAN GABRIEL DR
CITY: SUNNYVALE
STATE: CA
ZIP: 94086
BUSINESS PHONE: 4087377600
MAIL ADDRESS:
STREET 1: 120 SAN GABRIEL DR
CITY: SUNNYVALE
STATE: CA
ZIP: 94086
10-K
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f75694e10-k.txt
FORM 10-K PERIOD ENDED JUNE 30, 2001
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended June 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to _______________
COMMISSION FILE NUMBER 0-16538
MAXIM INTEGRATED PRODUCTS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 94-2896096
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
120 San Gabriel Drive
Sunnyvale, California 94086
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (408) 737-7600
----------------------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 Par Value
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Sections 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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any Amendment to this
Form 10-K.
The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of August 31, 2001 was approximately $10,656,000,000. Shares of
voting stock held by executive officers, directors and holders of more than 5%
of the outstanding voting stock have been excluded from this calculation because
such persons may be deemed to be affiliates. Exclusion of such shares should not
be construed to indicate that any of such persons possesses the power,
direct or indirect, to control the Registrant, or that any such person is
controlled by or under common control with the Registrant.
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Number of shares outstanding of the Registrant's Common Stock, $.001 par value,
as of August 31, 2001: 331,387,831.
Documents Incorporated By Reference:
Part II of this Report on Form 10-K incorporates information by reference from
the Registrant's Annual Report to Stockholders for the fiscal year ended June
30, 2001. Part III of this Report on Form 10-K incorporates information by
reference from the Registrant's Proxy Statement for its 2001 Annual Meeting of
Stockholders.
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FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K and the documents incorporated herein by
reference contain forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, that have been made pursuant to and in reliance on the
provisions of the Private Securities Litigation Reform Act of 1995. All
Statements included or incorporated by reference in this Annual Report, other
than statements that are purely historical, are forward-looking statements.
Forward-looking statements may include (a) projections relevant to future
revenue, income, earnings, cash flows, costs, cost savings, capital
expenditures, capital structure or other financial items, (b) statements of
plans, strategies or objectives of the Company's management for future
operations, including, without limitation, plans, strategies or objectives
relating to the Company's products and their development, manufacture, marketing
and sale, and to personnel matters such as recruiting, training and retaining
employees (c) statements of future economic performance, and (d) statements of
any assumptions underlying or relating to any of the foregoing. Words such as
"anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates,"
variations of such words and similar expressions relating to the future identify
forward-looking statements.
All forward-looking statements are based on the Company's current outlook,
expectations, estimates, projections, beliefs and plans or objectives about its
business and its industry. These statements are not guarantees of future
performance and are subject to risk and uncertainty. Actual results may differ
materially from those predicted or implied in any such forward-looking
statements.
Risks and uncertainties that could cause actual results to differ materially
include those set forth throughout this Form 10-K and in the documents
incorporated herein by reference. Particular attention should be paid to the
section entitled "Trends, Risks and Uncertainties" at pages 12 through 18 below
and to the section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the Company's Annual Report to
Stockholders, which is incorporated herein by reference.
The Company undertakes no obligation to update any forward-looking statement,
whether as a result of new information relating to existing conditions, future
events or otherwise. Readers are cautioned not to place undue reliance on such
statements, which speak only as of the date of this Annual Report on Form 10-K.
Readers should carefully review future reports and documents that the Company
files from time to time with the Securities and Exchange Commission, such as its
quarterly reports on Form 10-Q (particularly Management's Discussion and
Analysis of Financial Condition and Results of Operations) and any current
reports on Form 8-K.
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PART I
ITEM 1. BUSINESS
Maxim Integrated Products, Inc. ("Maxim" or the "Company") designs, develops,
manufactures, and markets a broad range of linear and mixed-signal integrated
circuits, commonly referred to as analog circuits. The Company also provides a
range of high-frequency design processes and capabilities that can be used in
custom design. The analog market is highly fragmented and characterized by many
diverse applications, a great number of product variations, and, as to many
circuit types, relatively long product life cycles. Maxim's objective is to
develop and market both proprietary and industry-standard analog integrated
circuits that meet the increasingly stringent quality standards demanded by
customers. Based on product announcements by its competitors, Maxim believes
that in the past 18 years it has developed more products for the analog market,
including proprietary and second-source products, than any of its competitors
over the same period.
On April 11, 2001, the Company acquired Dallas Semiconductor Corporation. The
Company issued approximately 41.0 million shares of its common stock in exchange
for all the outstanding common stock of Dallas Semiconductor. In addition, the
Company assumed all stock options to purchase Dallas Semiconductor common stock
for options to purchase approximately 5.9 million shares of the Company's common
stock. The transaction has been accounted for as a pooling-of-interests.
Accordingly, unless specifically stated otherwise, all financial data of the
Company has been restated to include the historical financial data of Dallas
Semiconductor. See Note 3 "Business Combination" of the Notes to Consolidated
Financial Statements as set forth in the Company's Annual Report to Stockholders
for the fiscal year ended June 30, 2001. At the time of the acquisition, Dallas
Semiconductor's product line consisted of 390 proprietary base products sold to
over 15,000 customers worldwide. Applications for those products include battery
management, broadband telecommunications, wireless handsets, cellular base
stations, networking, servers, data storage, and a wide variety of industrial
equipment.
The Company is a Delaware corporation that was originally incorporated in
California in 1983. It is headquartered in Sunnyvale, California. The mailing
address for the Company's headquarters is 120 San Gabriel Drive, Sunnyvale,
California 94086, and the Company's telephone number is (408) 737-7600.
Additional information about the Company is available on the Company's website
at www.maxim-ic.com.
THE ANALOG INTEGRATED CIRCUIT MARKET
All electronic signals fall into one of two categories, linear or digital.
Linear (or analog) signals represent real world phenomena, such as temperature,
pressure, sound, or speed, and are continuously variable over a wide range of
values. Digital signals represent the "ones" and "zeros" of binary arithmetic
and are either on or off.
Three general classes of semiconductor products arise from this partitioning of
signals into linear or digital. There are those, such as memories and
microprocessors, that operate only in the digital domain. There are linear
devices such as amplifiers, references, analog multiplexers, and switches
that operate primarily in the analog domain. Finally, there are mixed-signal
devices that combine linear and digital functions on the same integrated circuit
and interface between the analog and
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digital worlds. Maxim's strategy has been to target both the linear and
mixed-signal markets, often collectively referred to as the analog market. With
the acquisition of Dallas Semiconductor, Maxim has expanded its product
offerings in the mixed signal area, which represented more than 90% of the
revenues of Dallas Semiconductor during its last three fiscal years. In
addition, Maxim has added some Dallas Semiconductor products that are
exclusively or principally digital as well as a significant number of engineers
skilled in digital design and software development. Although the acquisition has
not substantially affected Maxim's strong focus on the linear and mixed signal
market, it has significantly supplemented Maxim's capabilities in the digital
area in ways that should enable development of new products, mixed signal and
other, with very sophisticated digital characteristics. Risks associated with
fulfilling this expectation are discussed in "Item 1., Trends, Risks and
Uncertainties" below.
The Company believes that, compared to the digital integrated circuit market,
the analog market has generally been characterized by a wider range of standard
products used in smaller quantities by a larger number of customers, and in many
cases, by longer product life cycles and lower capital requirements as a result
of generally using more mature manufacturing technologies. The Company believes
that the widespread application of low-cost microprocessor-based systems and of
digital communication technologies has affected the market for analog integrated
circuits by increasing the need for interfaces with the analog world.
The analog market is a highly fragmented group of niche markets, serving
numerous and widely differing applications for instrumentation, industrial
control, data processing, communications, military, video, and selected medical
equipment. For each application, different users may have unique requirements
for circuits with specific resolution, accuracy, linearity, speed, power, and
signal amplitude capability, which results in a high degree of market
complexity. Maxim's products can be used in a variety of applications, but serve
only certain portions of the total analog market.
PRODUCTS AND APPLICATIONS
The Company believes that it addresses the requirements of the market by
providing competitively priced products that add value to electronic equipment
with superior quality and reliability.
The Company's research and development programs emphasize development of
technically innovative proprietary products. In addition, the Company also
develops second source products used for industry-standard parts. In the
Company's fiscal year 2001 product introduction year ending July 28, 2001, the
Company introduced over 500 products compared to over 400 products in the
Company's fiscal year 2000 product introduction year. The Company's products are
available with numerous packaging alternatives, including packages for surface
mount technology.
The following table illustrates the major industries served by the Company and
typical applications for which the Company's products can be used:
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Industry Typical Application
----------- -------------------
Communications ..................... Broadband Networks
Cable Systems
Cellular Base Stations
Central Office Switches
Direct Broadcast TV
DSL Modems
Fiber Optics
Optical Transceivers
Pagers
PBXs
Phones
o Cellular/PCS
o Cordless
Satellite Communications
T1/E1 and T3/E3
Video Communications
Wireless Communications
Industrial Control ................... Control of
o Flow
o Position
o Pressure
o Temperature
o Velocity
Robotics
Instrumentation ...................... Automatic Test Equipment
Analyzers
Data Recorders
Measuring Instruments
o Electrical
o Light
o Pressure
o Sound
o Speed
o Temperature
o Time
Testers
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Data Processing ...................... Bar-code Readers
Disk Drives
Global Positioning Systems
Hand-Held Computers/PDAs
Mainframes
Personal Computers
Printers
Point of Sale Terminals
Servers
Storage Systems
Tape Drives
Workstations
The Company also sells products for military, video, and selected medical
equipment.
While Maxim's proprietary products have received substantial market acceptance,
Maxim has experienced additional competition as Maxim's competitors have
developed second source products for some of Maxim's successful innovative
proprietary products. Typically in the semiconductor industry, when a
proprietary product becomes second sourced, the credibility of the original
design is enhanced, and there is an opportunity to increase total revenues as
the potential customers' reluctance to design in a sole-source product is
removed, but gross margins may be adversely affected due to increased price
competition.
PRODUCT QUALITY
Maxim places strong emphasis on product quality from initial design through
final quality assurance for the end product. In the product design phase, Maxim
applies a set of circuit design rules that it believes result in enhanced
product reliability. Upon receipt from Maxim's own fabrication facilities or
from silicon foundries, a majority of processed wafers are tested for
conformance with specific parameters. Products are individually tested using
specialized test equipment and complex programs to ensure that they meet data
sheet performance levels. In addition, long-term operating life and mechanical
stress tests are routinely performed on samples to assure continued, long-term
product performance. Maxim is in the process of making the design, fabrication,
test operations, and quality assurance of Dallas Semiconductor consistent with
Maxim's methodologies.
MANUFACTURING
Maxim uses its own wafer fabrication and, to a small extent, silicon foundries
to produce wafers. The majority of processed wafers are subjected to parametric
and functional testing at the Company's facilities. As is customary in the
industry, the Company ships most of its processed wafers to foreign assembly
subcontractors, located in the Philippines, Malaysia, Thailand and South Korea,
where wafers are separated into individual integrated circuits and assembled
into a variety of packages.
After assembly has been completed, the majority of the assembled product is
shipped to the Company's test facilities located in Cavite, the Philippines.
During fiscal 2001, the Company doubled the square footage, which tripled the
manufacturing space at its test facilities in Cavite, the Philippines. This
expansion provided space to accommodate Dallas Semiconductor's offshore test
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and shipping operations. In addition, the Company established wafer sort
operations at this facility with the capacity to electronically test and laser
trim the majority of the Company's wafers. Prior to the merger, product
assembled from wafers manufactured in the Dallas, Texas wafer fabrication
facility was tested primarily at subcontractors located in the Philippines.
Testing for Dallas product was also performed in a test facility located in
Dallas, Texas. At the end of fiscal 2001, the majority of the testing of Dallas
product was transferred to the Company's test facilities located in Cavite, the
Philippines. Except for low volume Dallas product which will continue to be
tested in Dallas, Texas, the Company intends to transfer the testing operations
for remaining Dallas product to the Company's test facilities located in Cavite,
the Philippines during the first quarter of fiscal 2002. The success of this
move will depend in part on the Company's ability to effect the physical move of
very sophisticated equipment and to bring that equipment into efficient
operation quickly.
In fiscal 2001, the Company hired employees and purchased capital equipment for
a second test facility located in Samutprakam, Thailand. It is expected that
this facility, as well as the facility in Cavite, the Philippines, will continue
to expand test capacity as demand dictates. Currently, the Company's facilities
located in Cavite, the Philippines and Samutprakam, Thailand combined have
enough test manufacturing and shipping space to meet the Company's fiscal year
2002 plan, subject always to normal and to unforeseen challenges in effecting
such expansions.
Once testing has been completed, the finished product is either shipped directly
to customers worldwide or to other Company locations for ultimate sale to end
customers.
The broad range of products demanded by the analog integrated circuit market
requires multiple manufacturing process technologies. Many different process
technologies are currently used for wafer fabrication of the Company's products.
Historically, wafer fabrication of analog integrated circuits has not required
the state-of-the-art processing equipment necessary for the fabrication of
advanced digital integrated circuits, although newer processes do utilize and
require some of these facilities and equipment. In addition, hybrid products are
manufactured using a complex multichip technology featuring thin-film,
thick-film, and laser-trimmed resistors.
For the majority of these technologies, the Company relies on its fabrication
facilities in San Jose, California, Beaverton, Oregon, Dallas, Texas and, to a
small extent, manufacturing subcontractors. The Company currently uses four
subcontract silicon foundries that represent less than 5% of wafer production.
None of the subcontractors currently used by Maxim is affiliated with Maxim.
Most of the wafers produced in fiscal 2001 were manufactured at one of the
Company's three wafer fabrication facilities. The Company's wafer fabrication
facility located in Dallas, Texas was originally built in 1986 and expanded in
1989, 1994 and 2001. This facility currently produces six-inch wafers. The
Company is in the process of replacing six-inch production capacity at this
facility with eight-inch wafer production. Once the production of eight-inch
wafers has been fully implemented, it is the Company's intention to discontinue
production of six-inch wafers at this facility. See Note 13 "Merger and Special
Charges" of the Notes to Consolidated Financial Statements as set forth in the
Company's Annual Report to Stockholders for the fiscal year ended June 30, 2001.
In December 1989, the Company acquired a wafer fabrication facility in
Sunnyvale, California capable of producing 3 micron CMOS and bipolar products.
In May 1994, the Company acquired a mixed-class wafer fabrication facility in
Beaverton, Oregon capable of producing CMOS and bipolar products. In November
1997, the company acquired a sub-micron wafer fabrication
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facility in San Jose, California. The Company transferred production from the
Sunnyvale facility to the Beaverton facility and suspended wafer production at
the Sunnyvale facility in December 1998. The Beaverton, Oregon and San Jose,
California wafer fabrication facilities currently manufacture six-inch wafers.
The Company is in the process of expanding production capacity at its San Jose,
California facility to include eight-inch wafer production. Once this has been
completed, the Company intends to discontinue six-inch wafer production at this
facility. See "Item 2., Properties" below.
In the past and as sometimes happens in the semiconductor industry, the Company
has experienced disruptions in the supply of processed wafers due to quality
problems or failure to achieve satisfactory electrical yields. If the foundries
used by the Company were unwilling or the Company's own internal wafer
fabrication facilities were unable to produce adequate supplies of processed
wafers conforming to the Company's quality standards, the Company's business and
relationships with its customers could be adversely affected.
Due to the relatively lengthy manufacturing cycle, the Company builds some of
its inventory in advance of receiving orders from its customers. As a
consequence of inaccuracies inherent in forecasting, inventory imbalances
periodically occur that result in surplus amounts of some Company products and
shortages of others. Such shortages can adversely affect customer relations and
surpluses can result in larger-than-desired inventory levels, which can
adversely affect the Company's financial position. Excess inventory issues can
also arise when customers cancel orders. Finished products and work in process
for those orders may be unsaleable. See "Item 1., Trends, Risks and
Uncertainties - Factors Affecting Future Operating Results."
SALES AND MARKETING
In the United States and Canada, the Company sells its products through a direct
sales and applications organization in nine regional sales offices and through
its own and other unaffiliated distribution channels. As is customary in the
industry, most domestic distributors are entitled to certain price rebates and
product return privileges.
International sales are conducted by 23 Maxim sales offices, 4 sales
representative organizations and 62 distributors. The Company plans to
consolidate and reorganize the Company's worldwide distribution channels in
fiscal year 2002. The Company sells in both United States dollars and various
foreign currencies. A majority of the Company's international sales are billed
and payable in United States dollars and are therefore not directly subject to
currency exchange fluctuations. A portion of the Company's sales from its United
Kingdom, French, and German affiliates is denominated in the local currencies.
The majority of the sales to customers and distributors located in Japan are
denominated in yen. The Company enters into foreign currency forward contracts
to protect the United States dollar value of its firm sales commitments and net
monetary assets. Changes in the relative value of the dollar, however, may
create pricing pressures for Maxim's products. In addition, various forms of
protectionist trade legislation have been proposed in the United States and
certain foreign countries. A change in current tariff structures or other trade
policies could adversely affect the Company's foreign marketing strategies. In
general, payment terms for foreign customers, distributors and others, are
longer than for U.S. customers, and certain major foreign customers generally
pay for product well beyond the scheduled payment dates. As is customary in the
semiconductor industry, the Company's domestic distributors may market products
competitive with Maxim's.
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International sales accounted for approximately 57%, 53%, and 53% of net
revenues in fiscal 2001, 2000 and 1999, respectively. (See Note 12 "Segment
Information" of the Notes to Consolidated Financial Statements as set forth in
the Company's Annual Report to Stockholders for the fiscal year ended June 30,
2001.)
The Company also sells product directly to original equipment manufacturers. In
particular, the Company has a long-term supply arrangement with Tektronix, Inc.
for the supply of products manufactured by Tektronix prior to its sale in May
1994 of its integrated circuits operation ("ICO") to the Company and for new
designs created by Tektronix. This arrangement expires in May 2004, after which
it becomes a month to month arrangement.
As of June 30, 2001, the Company's backlog was approximately $234 million as
compared to approximately $587 million at June 24, 2000. The Company includes in
its backlog customer-released orders with firm schedules for shipment within the
next 12 months. As is customary in the semiconductor industry, these orders may
be canceled in most cases without penalty to the customers. In addition, the
Company's backlog includes orders from domestic distributors as to which
revenues are not recognized until the products are sold by the distributors.
Accordingly, the Company believes that its backlog at any time should not be
used as a measure of future revenues. All of the backlog numbers have been
adjusted to be net of cancellations and estimated future U.S. distribution ship
and debit pricing adjustments.
The Company warrants its products to its customers generally for 12 months from
shipment, but in certain cases for longer periods. Warranty expense to date has
been minimal.
RESEARCH AND DEVELOPMENT
The Company believes that research and development is critical to its future
success. Objectives for the research and development function include definition
and design of innovative proprietary products that meet customer needs,
development of second-source products, design of parts for high yield and
reliability, and development of manufacturing processes and advanced packaging
to support an expanding product line.
Due to the research and development plans of the Company and the shortage of
qualified design engineering talent, the Company does not always have the number
of engineers required to meet its research and development goals.
Research and development expenses were approximately $280.2 million, $216.8
million, and $145.8 million in fiscal 2001, 2000, and 1999, respectively.
COMPETITION
The analog integrated circuit industry is intensely competitive, and virtually
all major semiconductor companies presently compete with, or conceivably could
compete with, some segment of the Company's business. Maxim's competitors are
Anadigics Inc., Analog Devices, Inc., Applied Micro Circuits Corporation,
Conexant Systems Inc., Infineon Technologies AG, Intersil Corporation, Linear
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Technology Corporation, Lucent Technologies, Micrel Inc., Microchip Technology
Inc., Mitsubishi Corporation, Mitsui & Co. Ltd., Motorola Inc., National
Semiconductor Corporation, ON Semiconductor Corporation, Philips Electronics
N.V., RF Micro Devices Inc., Ricoh Company Ltd., Seiko Corporation, Semtech
Corporation, STMicroelectronics N.V., Siliconix Inc., Sipex Corporation, Texas
Instruments Inc., Vitesse Semiconductor Corporation and others, including
start-up companies. Some of Maxim's competitors have substantially greater
financial, manufacturing, and marketing resources than the Company, and some of
Maxim's competitors have greater technical resources. The Company believes it
competes favorably with these corporations primarily on the basis of technical
innovation, product definition, quality, and service. There can be no assurance
that competitive factors will not adversely affect the Company's future
business.
PATENTS, LICENSES, AND OTHER INTELLECTUAL PROPERTY RIGHTS
The Company relies primarily upon know-how, rather than on patents, to develop
and maintain its competitive position. There can be no assurance that others
will not develop or patent similar technology or reverse engineer the Company's
products or that the confidentiality agreements with employees, consultants,
silicon foundries and other suppliers and vendors will be adequate to protect
the Company's interests.
The Company currently owns 420 U.S. patents and 90 foreign patents with
expiration dates ranging from 2001 to 2019. In addition, the Company has applied
for 163 U.S. patents, a large number of which have corresponding patent
applications in multiple foreign jurisdictions. It is the Company's policy to
seek patent protection for significant inventions that may be patented, though
the Company may elect, in appropriate cases, not to seek patent protection even
for significant inventions if other protection, such as maintaining the
invention as a trade secret, is considered more advantageous. In addition, the
Company has registered certain of its mask sets under the Semiconductor Chip
Protection Act of 1984.
There can be no assurance that any patent will issue on pending applications or
that any patent issued will provide substantive protection for the technology or
product covered by it. The Company believes that patent and mask work protection
is of less significance in its business than experience, innovation, and
management skill.
Maxim has registered several of its trademarks with the U.S. Patent and
Trademark Office and in foreign jurisdictions.
Maxim is a party to a number of licenses, including patent licenses and other
licenses obtained from Tektronix in connection with its acquisition of
Tektronix's ICO in May 1994.
Due to the many technological developments and the technical complexity of the
semiconductor industry, it is possible that certain of the Company's designs or
processes may involve infringement of patents or other intellectual property
rights held by others. From time to time, the Company has received, and in the
future may receive, notice of claims of infringement by its products on
intellectual property rights of third parties. (See "Item 1., Trends, Risks and
Uncertainties - Intellectual Property Litigation and Claims," and "Legal
Proceedings") If any such infringements were to exist, the Company might be
obligated to seek a license from the holder of the rights and
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might have liability for past infringement. In the past, it has been common
semiconductor industry practice for patent holders to offer licenses on
reasonable terms and rates. Although in some situations, typically where the
patent directly relates to a specific product or family of products, patent
holders have refused to grant licenses, though the practice of offering licenses
appears to be generally continuing. However, no assurance can be given that the
Company will be able to obtain licenses as needed in all cases or that the terms
of any license that may be offered will be acceptable to Maxim. In those
circumstances where an acceptable license is not available, the Company would
need either to change the process or product so that it no longer infringes or
else stop manufacturing the product or products involved in the infringement.
ENVIRONMENTAL REGULATION
Federal, state, and local regulations impose a variety of environmental controls
on the storage, handling, discharge and disposal of certain chemicals and gases
used in semiconductor manufacturing. The Company's facilities have been designed
to comply with these regulations, and it believes that its activities are
conducted in material compliance with such regulations. There can be no
assurance, however, that interpretation and enforcement of current or future
environmental regulations will not impose costly requirements upon the Company.
Any failure of the Company to control adequately the storage, use, and disposal
of regulated substances could result in future liabilities.
Increasing public attention has been focused on the environmental impact of
electronic manufacturing operations. While the Company to date has not
experienced any materially adverse effects on its business from environmental
regulations, there can be no assurance that changes in such regulations will not
have a materially adverse effect on the Company's financial position or results
of operations.
EMPLOYEES
The supply of skilled engineers required for Maxim's business is limited, and
competition for such personnel is intense. The Company's growth also requires
the hiring or training of additional middle-level managers. If the Company is
unable to hire, retain, and motivate qualified technical and management
personnel, its operations and financial results will be adversely affected.
None of the Company's employees is subject to a collective bargaining agreement.
As of June 30, 2001, Maxim had 6,317 employees, including Dallas Semiconductor
employees.
TRENDS, RISKS AND UNCERTAINTIES
An investment in the securities of Maxim involves certain risks. In evaluating
the Company and its business, prospective investors should give careful
consideration to the factors listed below, in addition to the information
provided elsewhere in this Annual Report on Form 10-K, in the documents
incorporated herein by reference and in other documents filed with the
Securities and Exchange Commission.
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Factors Affecting Future Operating Results
The Company's future operating results are difficult to predict and may be
affected by a number of factors.
The semiconductor market has historically been cyclical and subject to
significant economic downturns at various times. After a period of increasing
demand that extended through fiscal 2000, more recently the semiconductor
industry, including the portions in which the Company participates, has been
experiencing dramatically decreased demand. Although some of the causes of this
decrease are known, including significant excess inventories in the hands of
equipment manufacturers and other potential customers, it remains unclear what
all the causes may be and for what period the decrease in demand will continue.
Maxim's ability to achieve future revenue growth depends on whether, and the
extent to which, demand for its products increases and reflects real end user
demand and whether customer cancellations and delays of outstanding orders
decrease.
Other key factors affecting the Company's revenues and operating results that
could cause actual results to differ materially from past or predicted results
include the timing of new product announcements or introductions by the Company
and its competitors, competitive pricing pressures, fluctuations in
manufacturing yields and manufacturing efficiency, adequate availability of
wafers and other materials and manufacturing capacity, changes in product mix,
and economic conditions in the United States and international markets. As a
result of these and other factors, there can be no assurance that the Company
will not experience material fluctuations in its future operating results on a
quarterly or annual basis.
The Company's ability to realize its quarterly revenue goals and projections is
affected to a significant extent by its ability to match inventory and current
production mix with the product mix required to fulfill orders on hand and
orders received within a quarter for delivery in that quarter (referred to as
"turns business"). This issue, which has been one of the distinguishing
characteristics of the analog integrated circuit industry, results from the very
large number of individual parts offered for sale and the very large number of
customers combined with limitations on Maxim's and its customers' ability to
forecast orders accurately and relatively lengthy manufacturing cycles. Because
of this extreme complexity in the Company's business, no assurance can be given
that the Company will achieve a match of inventory on hand, production units,
and shippable orders sufficient to realize quarterly or annual revenue goals.
In addition, in certain markets where end-user demand may be particularly
volatile and difficult to predict, such as notebook computers and telephones,
some Maxim customers place orders that require Maxim to manufacture product and
have it available for shipment, even though the customer is unwilling to make a
binding commitment to purchase all, or even any, of the product. At any given
time, this situation could affect a portion of the Company's backlog. As a
result, in any quarterly fiscal period, the Company is subject to the risk of
cancellation of orders leading to a sharp fall-off of sales and backlog.
Further, those orders may be for products that meet the customer's unique
requirements so that those cancelled orders would, in addition, result in an
inventory of unsaleable products, resulting in potential inventory write-offs.
Because of lengthy manufacturing cycles for certain of the products subject to
these uncertainties, the amount of unsaleable product could be substantial. The
Company routinely estimates inventory reserves required for such product. Actual
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results may differ from these reserve estimates, and such differences may be
material to Maxim's financial condition, gross margins, and results of
operations.
Dependence on New Products and Process Technologies
The Company's future success will continue to depend on its continued ability to
introduce new products and to develop new process technologies. Semiconductor
design and process technology are subject to rapid technological change,
requiring a high level of expenditures for research and development. Design and
process development for the portions of the semiconductor market in which the
Company participates are particularly challenging. The success of new product
introductions is dependent on several factors, including proper new product
selection, timely product introduction, achievement of acceptable production
yields, and market acceptance. From time to time, Maxim has not fully achieved
its new product introduction and process development goals. There can be no
assurance that the Company will successfully develop or implement new process
technologies or that new products will be introduced on a timely basis or
receive substantial market acceptance.
In addition, the Company's growth is dependent on its continued ability to
penetrate new markets where the Company has limited experience and competition
is intense. There can be no assurance that the markets being served by the
Company will grow (in fact, it is natural, for example, that older markets do
saturate and decline); that the Company's existing and new products will meet
the requirements of such markets; that the Company's products will achieve
customer acceptance in such markets; that competitors will not force prices to
an unacceptably low level or take market share from the Company; or that the
Company can achieve or maintain profitability in these markets.
Manufacturing Risks
The fabrication of integrated circuits is a highly complex and precise process.
Minute impurities, contaminants in the manufacturing environment, difficulties
in the fabrication process, defects in the masks used in the wafer manufacturing
process, manufacturing equipment failures, wafer breakage, or other factors can
cause a substantial percentage of wafers to be rejected or numerous dice on each
wafer to be nonfunctional. The Company has from time to time experienced
lower-than-expected production yields, which have delayed product shipments and
adversely affected gross margins. There can be no assurance that the Company
will not experience a decrease in manufacturing yields or that the Company will
be able to maintain acceptable manufacturing yields in the future.
The number of shippable dice 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 delays in its wafer fabrication,
assembly or final test operations, its results of operations could be adversely
affected. During periods of decreased demand, fixed wafer fabrication costs
could have an adverse effect on the Company's financial condition, gross
margins, and results of operations.
The Company is currently in the process of upgrading and expanding its wafer
manufacturing capacity at its existing wafer manufacturing facilities in order
to convert to eight-inch wafers and develop new processes in anticipation of
increased customer demand for its products. Should the Company be unsuccessful
in completing this expansion on time or should customer demand fail to
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increase and the Company no longer needs the additional capacity, the Company's
financial position and results of operations could be adversely impacted.
The Company manufactures over 95% of its wafer production requirements
internally. Given the nature of the Company's products, it would be difficult to
arrange for independent manufacturing facilities to supply such products. Any
prolonged inability to utilize one of the Company's manufacturing facilities as
a result of fire, natural disaster, unavailability of electric power or
otherwise, would have a material adverse effect on the Company's results of
operations.
Competition
The Company experiences intense competition from a number of companies, some of
which have significantly greater financial, manufacturing, and marketing
resources than the Company and some of which have greater technical resources
than the Company and have intellectual property rights to which the Company is
not privy. To the extent that the Company's proprietary products become more
successful, competitors will offer second source products for some of those
products, possibly causing some erosion of profit margins. See "Item 1.,
Business - Competition."
Dependence on Independent Distributors and Sales Representatives
A significant portion of the Company's sales is realized through independent
electronics distributors and a limited portion of the Company's sales is
realized through independent sales representatives that are not under the
control of the Company. A larger percentage of the sales of Dallas Semiconductor
have been through distribution channels than the percentage for pre-acquisition
Maxim. These independent sales organizations generally represent product lines
offered by several companies and thus could reduce their sales efforts applied
to the Company's products or terminate their representation of the Company.
Payment terms for foreign distributors are substantially longer, either
according to contract or by practice, than for U.S. customers. The inability to
collect open accounts could adversely affect the Company's results of
operations. Termination of a significant distributor, whether at the Company's
or the distributor's initiative, could be disruptive to the Company's current
business. If the Company were unable to find suitable replacements, terminations
by significant distributors or representatives could have a material adverse
impact on the Company. See "Item 1., Business - Sales and Marketing."
Dependence on Independent Foundries, Subcontractors, and the Philippines Test
Facility
Although the Company has an internal capability to fabricate most of its wafers,
Maxim remains dependent on outside silicon foundries for a small but important
portion of its wafer fabrication. None of the foundries currently used by Maxim
is affiliated with Maxim. As is typical in the semiconductor industry, from time
to time, the Company has experienced disruptions in the supply of processed
wafers from these foundries due to quality problems, failure to achieve
satisfactory electrical yields, and capacity limitations. Procurement from
foundries is done by purchase order and long-term contracts. If these foundries
are unable or unwilling to produce adequate supplies of processed wafers
conforming to the Company's quality standards, the Company's business and
relationships with its customers for the limited quantities of products produced
by these foundries would be adversely affected. Finding alternate sources of
supply or initiating internal wafer processing for these products would not be
economically feasible.
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Maxim relies on subcontractors located in the Philippines, Malaysia, Thailand,
and South Korea to separate wafers into individual integrated circuits and
package them. The Company performs wafer sort operations for the majority of its
pre-acquisition wafers and final testing for about two-thirds of its
pre-acquisition Maxim products at a Philippines facility owned by the Company.
Product assembled from wafers manufactured in the Dallas, Texas wafer
fabrication facility was tested primarily at subcontractors located in the
Philippines. Although the Company has transferred the majority of the testing of
Dallas Semiconductor product to the Company's Philippines test facility, no
assurance can be given that the remaining transition will be completed on its
planned schedule and cost. In the past, South Korea and the Philippines have
experienced political disorders, labor disruptions, and natural disasters.
Although the Company has been affected by these problems, none has materially
affected the Company's revenues or costs to date. However, similar problems in
the future or more aggravated consequences of current problems, could affect
deliveries to Maxim of assembled, tested product, possibly resulting in
substantial delayed or lost sales and/or increased expense. The Thailand test
facility performs about one-third of the Company's final testing for
pre-acquisition Maxim products but would not provide sufficient capacity to make
up for a significant disruption in the Philippines test facility. See "Item 1.,
Business - Manufacturing."
Availability of Materials, Supplies, and Subcontract Services
Over the past few years, the semiconductor industry has experienced a very large
expansion of fabrication capacity and production worldwide. As a result of
increasing demand from semiconductor manufacturers, availability of certain
basic materials and supplies, such as polysilicon, silicon wafers, ultra-pure
metals, lead frames and molding compounds, and of subcontract services, like
epitaxial growth and ion implantation and assembly of integrated circuits into
packages, have from time to time, over the past few years, been in short supply
and may be expected to come into short supply again if overall industry demand
increases in the future. Maxim devotes continuous efforts to maintain
availability of all required materials, supplies, and subcontract services.
However, Maxim does not have long-term agreements providing for all of these
materials, supplies, and services, and shortages could occur as a result of
capacity limitations or production constraints on suppliers that could have a
materially adverse effect on Maxim's ability to achieve its planned production.
A number of Dallas Semiconductor products, including nonvolatile SRAMs, use
static memory circuits that are acquired from third parties. The Company
anticipates that from time to time supplies of these circuits may not be
sufficient to meet all customer requested delivery dates for products containing
the circuits. As a result of any such shortages, future sales and earnings from
products using these memory circuits, primarily nonvolatile SRAMs, could be
adversely affected. Additionally, significant fluctuations in the purchase price
for these circuits could affect gross margins for the products involved.
In addition, suppliers of semiconductor manufacturing equipment are sometimes
unable to deliver test and/or fabrication equipment to a schedule that meets the
Company's requirements. Delays in delivery of equipment needed for planned
growth could adversely affect the Company's ability to achieve its manufacturing
and revenue plans in the future.
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Protection of Proprietary Information
The Company relies primarily upon know-how, rather than on patents, to develop
and maintain its competitive position. There can be no assurance that others
will not develop or patent similar technology or reverse engineer the Company's
products or that the confidentiality agreements upon which the Company relies
will be adequate to protect its interests. Other companies have obtained patents
covering a variety of semiconductor designs and processes, and the Company might
be required to obtain licenses under some of these patents or be precluded from
making and selling the infringing products, if such patents are found to be
valid. There can be no assurance that Maxim would be able to obtain licenses, if
required, upon commercially reasonable terms. See "Item 1., Business - Patents,
Licenses, and Other Intellectual Property Rights," and "Item 1., Trends, Risks
and Uncertainties - Intellectual Property Litigation and Claims."
Intellectual Property Litigation and Claims
The Company is subject to various legal proceedings (See "Item 3., Legal
Proceedings") and other similar claims that involve possible infringement of
patent or other intellectual property rights of third parties. Maxim is
currently a defendant in a lawsuit brought by Linear Technology Corporation in
which Linear alleges that Maxim has willfully infringed Linear Technology
Corporation's patent relating to control circuits and methods for maintaining
high efficiencies over broad current ranges in a switching regulator circuit.
Linear Technology Corporation seeks unspecified actual and treble monetary
damages and a permanent injunction against Maxim. In addition to the above, from
time to time, the Company receives notices that its products or processes may be
infringing the intellectual property rights of others. See "Item 1., Business -
Patents, Licenses, and Other Intellectual Property Rights."
If one or more of the Company's products or processes were determined to
infringe any such intellectual property rights, a court might enjoin the Company
from further manufacture and/or sale of the affected products. The Company would
then need to obtain a license from the holders of the rights and/or to
reengineer the Company's products or processes in such a way as to avoid the
alleged infringement. In any of those cases, there can be no assurance that the
Company would be able to obtain any necessary license on commercially reasonable
terms or that the Company would be able to reengineer its products or processes
to avoid infringement. An adverse result in litigation arising from such a claim
could involve an injunction to prevent the sales of a material portion of the
Company's products, a reduction or the elimination of the value of related
inventories, and the assessment of a substantial monetary award for damages
related to past sales.
Foreign Trade and Currency Exchange
Many of the materials and manufacturing steps in the Company's products are
supplied by foreign companies or by the Company's operations abroad, such as its
test operations in the Philippines. Approximately 57% of the Company's net
revenues in fiscal year 2001 were from foreign customers. Accordingly, both
manufacturing and sales of the Company's products may be adversely affected by
political or economic conditions abroad. In addition, various forms of
protectionist trade legislation have been proposed in the United States and
certain foreign countries. A change in current tariff structures or other trade
policies could adversely affect the Company's foreign manufacturing or marketing
strategies. Currency exchange fluctuations could also increase the cost of
components
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manufactured abroad and the cost of the Company's products to foreign customers
or decrease the costs of products from the Company's foreign competitors.
Although export sales are subject to government regulation, those regulations
have not caused the Company significant difficulties to date. See "Item 1.,
Business - Manufacturing" and "Item 1., Business - Sales and Marketing."
Dependence on Key Personnel
The Company's success depends to a significant extent upon the continued service
of its president, John F. Gifford, its other executive officers, and key
management and technical personnel, particularly its experienced engineers, and
on its ability to continue to attract, retain, and motivate qualified personnel.
The competition for such employees is intense. The loss of the services of Mr.
Gifford or several of the Company's executive officers could have a material
adverse effect on the Company. In addition, there could be a material adverse
effect on the Company should the turnover rates for engineers and other key
personnel increase significantly or should the Company be unable to continue to
attract qualified personnel.
The Company does not maintain any key person life insurance policy on any of its
officers or employees.
Merger Transition and Integration
The Company acquired Dallas Semiconductor on April 11, 2001. Since that time,
the Company has been in the process of integrating the personnel and operations
of Dallas Semiconductor, with the goals of reducing cost and increasing
efficiency and productivity. That process has been proceeding well in most
regards, but no assurance can be given that the integration will be completed
according to the Company's schedule or that the results of the integration will
be successful.
ITEM 2. PROPERTIES
Maxim's headquarters is located in Sunnyvale, California. Manufacturing and
other operations are conducted in several locations worldwide. The following
table provides certain information as to the Company's principal general offices
and manufacturing facilities.
OWNED
PROPERTY LOCATION USE FLOOR SPACE
----------------- --- -----------
Sunnyvale, Corporate headquarters, office space, 319,000 sq. ft.
California engineering, manufacturing,
administration, customer service,
shipping, and other
San Jose, Wafer fabrication, office space, and 80,000 sq. ft
California administration
Chelmsford, Engineering, office space, and 30,000 sq. ft
Massachusetts administration
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OWNED
PROPERTY LOCATION USE FLOOR SPACE
----------------- --- -----------
Beaverton, Wafer fabrication, engineering, 226,000 sq. ft
Oregon office space, shipping, and administration
Hillsboro, Engineering, office space, and 325,000 sq. ft
Oregon administration
Dallas, Dallas corporate headquarters, office space, 711,000 sq. ft.
Texas engineering, manufacturing,
administration, wafer fabrication,
customer service, warehousing, shipping,
and other
Cavite, Testing, engineering, office space, 234,000 sq. ft
the Philippines shipping, and administration
LEASED
PROPERTY LOCATION USE FLOOR SPACE
----------------- --- -----------
Sunnyvale, Engineering and office space 30,000 sq. ft.
California
Dallas, Warehousing and offices 62,000 sq. ft.
Texas
Samutprakarn Province, Testing, office space, and administration 25,000 sq. ft.
Thailand
In addition to the leased property listed in the table, the Company also leases
sales offices and other premises at various locations in the United States and
overseas under operating leases. These leases expire at various dates through
the year 2010. The Company anticipates no difficulty in retaining occupancy of
any of its manufacturing, office or sales facilities through lease renewals
prior to expiration or through month-to-month occupancy or in replacing them
with equivalent facilities.
In October of 1999, the Company began construction of a 120,000 square foot
office building at its headquarters, with a parking structure adjacent to the
building. These structures became available for use at the end of fiscal 2001.
The Company expects these buildings and the contiguous land to be adequate for
its business purposes through fiscal year 2002.
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ITEM 3. LEGAL PROCEEDINGS
Linear Technology Corporation vs. Maxim Integrated Products, Inc. et al., Action
No. C-98-1727 FMS in the Federal District Court for the Northern District of
California.
On June 26, 1997, a complaint was filed by Linear Technology Corporation ("LTC")
naming the Company and certain other unrelated parties as defendants. The
complaint alleges that each of the defendants, including the Company, has
willfully infringed, induced infringement and contributorily infringed LTC's
United States Patent 5,481,178 relating to control circuits and methods for
maintaining high efficiencies over broad current ranges in a switching regulator
circuit, all of which has allegedly damaged LTC in an unspecified amount.
The complaint further alleges that the Company's actions have been, and continue
to be, willful and deliberate and seeks a permanent injunction against the
Company as well as unspecified actual and treble damages including costs,
expenses, and attorneys fees.
The Company answered the complaint on October 20, 1997, denying all of LTC's
substantive allegations and counterclaiming for a declaration that LTC's patent
is invalid and not infringed. The parties are still involved in discovery
proceedings. The case has been bifurcated into separate liability and damages
trials, with the issues of liability and willfulness likely to go to jury trial
in calendar year 2002.
The Company has asserted in its answer, and continues to believe, that the
allegations in the complaint are without merit. Although the outcome of a jury
trial involving patents and intellectual property involves complex issues of law
and fact and is therefore inherently uncertain, the Company does not believe
that the ultimate outcome of the matter will have a material adverse effect on
the Company's financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information required by this item is incorporated by reference from the
Company's Annual Report to Stockholders for the fiscal year ended June 30, 2001
under the headings "Financial Information - Financial Highlights by Quarter" and
"Corporate Data, Stockholder Information."
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ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is incorporated by reference from the
Company's Annual Report to Stockholders for the fiscal year ended June 30, 2001
under the heading "Financial Information - Selected Financial Data."
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this item is incorporated by reference from the
Company's Annual Report to Stockholders for the fiscal year ended June 30, 2001
under the heading "Financial Information - Management's Discussion and Analysis
of Financial Condition and Results of Operations."
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this item is incorporated by reference from the
Company's Annual Report to Stockholders for the fiscal year ended June 30, 2001
under the subheading "Interest Income and Other, Net," and under the heading
"Financial Information - Management's Discussion and Analysis of Financial
Condition and Results of Operations. "
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated by reference from the
Company's Annual Report to Stockholders for the fiscal year ended June 30, 2001
under the headings:
"Financial Information"
o Consolidated Balance Sheets
o Consolidated Statements of Income
o Consolidated Statements of Stockholders' Equity
o Consolidated Statements of Cash Flows
o Notes to Consolidated Financial Statements
o Report of Ernst & Young LLP, Independent Auditors
o Financial Highlights by Quarter
o The report of KPMG LLP with respect to the consolidated financial
statements of Dallas Semiconductor Corporation for the year ended
December 31, 2000 is part of this item and is included in Exhibit 99.1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Other than as follows, the information required by this item is incorporated by
reference from the Company's Proxy Statement for the 2001 Annual Meeting of
Stockholders under the headings "Proposal 1 - Election of Directors" and
"Compliance with Section 16(A) of the Securities Exchange Act of 1934."
The officers of the Company, including executive officers and other Vice
Presidents, are as follows:
Name Age Position
---- --- --------
John F. Gifford 60 President, Chief Executive
Officer and Chairman of
the Board
Frederick G. Beck 63 Vice President
Tunc Doluca 43 Vice President
Laszlo V. Gal, Ph.D. 53 Vice President
Robi B. Georges 43 Vice President
Parviz Ghaffaripour 38 Vice President
Jennifer E. Gilbert 35 Vice President
Alan P. Hale 40 Vice President
Richard C. Hood 51 Vice President
Kenneth J. Huening 40 Vice President
Carl W. Jasper 45 Vice President and
Chief Financial Officer
Nasrollah Navid, Ph. D. 52 Vice President
Pirooz Parvarandeh 41 Vice President
Charles G. Rigg 57 Vice President
Robert F. Scheer 48 Vice President
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Name Age Position
---- --- --------
Sharon E. Smith-Lenox 49 Corporate Controller and
Principal Accounting Officer
Vijay Ullal 42 Vice President
Mr. Gifford, a founder of the Company, has served as Maxim's President, Chief
Executive Officer and Chairman of the Board since the Company's incorporation in
April 1983.
Mr. Beck, a founder of the Company, has served as Vice President since May 1983,
except for a medical leave between December 1991 and January 1994.
Mr. Doluca joined Maxim in October 1984 and was promoted to Vice President in
July 1994. Prior to July 1994, he served in a number of integrated circuit
development positions.
Dr. Gal joined Maxim in April 1999 as Vice President. Prior to joining Maxim, he
was with Applied Micro Circuits Corporation where he served as Vice President of
Engineering from January 1997 to April 1999. Before joining Applied Micro
Circuits Corporation, Dr. Gal's tenure included eleven years at Unisys
Corporation (1983-1994) and three years at Motorola Inc. (1994-1997) in various
technical and management positions.
Mr. Georges joined Maxim in June 1983 and was promoted to Vice President in June
2000.
Mr. Ghaffaripour joined Maxim in March 1999 and was promoted to Vice President
in January 2001. Prior to joining Maxim, he was with National Semiconductor
Corporation from 1990 to 1999 where he held various technical and management
positions, most recently including that of Product line director for the Audio
Business Unit.
Ms. Gilbert joined Maxim in November 1986 and was promoted to Vice President in
July 2001.
Mr. Hale joined Dallas Semiconductor Corporation in June 1987 and served as Vice
President and Chief Financial Officer of Dallas Semiconductor Corporation since
1992. He became an officer of Maxim upon the consummation of the merger between
the Company and Dallas Semiconductor Corporation in April 2001.
Mr. Hood, a founder of the Company, joined the Company in June 1983 and was
promoted to Vice President in February 1997. Prior to February 1997, he served
in a number of engineering and manufacturing positions.
Mr. Huening joined Maxim in December 1983 and was promoted to Vice President in
December 1993. Prior to December 1993, he served in a number of quality
assurance positions.
Mr. Jasper joined Maxim in May 1998 as the Principal Accounting Officer and was
promoted in April 1999 to Vice President and Chief Financial Officer. Prior to
joining Maxim, he was with Read-Rite Corporation from November 1995 to April
1998, where he held the position of Vice President,
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Corporate Controller, and prior to that was with Ernst & Young LLP from
September 1983 to November 1995.
Dr. Navid joined Maxim in May 1997 as Vice President. Prior to joining Maxim and
since 1980, he was with Philips Semiconductors, where he served in a number of
wireless communications product line management positions.
Mr. Parvarandeh joined Maxim in August 1988 and was promoted to Vice President
in July 1997. Prior to July 1997, he served in a number of integrated circuit
development positions.
Mr. Rigg joined Maxim in August 1996 as managing director and general counsel
and was promoted to Vice President in April 1999. Prior to joining Maxim, he was
with Ropers, Majeski, Kohn and Bentley from 1970 to 1996 where he held various
positions, including director.
Mr. Scheer joined Maxim in June 1983 and was promoted to Vice President in June
1992.
Ms. Smith-Lenox joined Maxim in October 1999 as Principal Accounting Officer.
Prior to joining Maxim, she was with Hewlett Packard Company from September 1983
to October 1999, where she held various management positions in Accounting and
Finance, most recently that of Controller. Prior to that she was with KPMG, San
Francisco from 1980 to 1983.
Mr. Ullal joined Maxim in December 1989 and was promoted to Vice President in
March 1996. Prior to March 1996, he served in a number of wafer fab operation
positions.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference from the
Company's Proxy Statement for the 2001 Annual Meeting of Stockholders under the
headings "Executive Compensation" and "Performance Graph."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated by reference from the
Company's Proxy Statement for the 2001 Annual Meeting of Stockholders under the
heading "Security Ownership of Certain Beneficial Owners and Management."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference from the
Company's Proxy Statement for the 2001 Annual Meeting of Stockholders under the
heading "Certain Relationships and Related Transactions."
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following financial statements are included in the Company's 2001
Annual Report to Stockholders and are incorporated herein by reference
pursuant to Item 8:
(1) Consolidated Balance Sheets at June 30, 2001 and June 24, 2000.
Consolidated Statements of Income for each of the three years in the
period ended June 30, 2001.
Consolidated Statements of Stockholders' Equity for each of the three
years in the period ended June 30, 2001.
Consolidated Statements of Cash Flows for each of the three years in
the period ended June 30, 2001.
Notes to Consolidated Financial Statements.
(2) The following financial statement schedule is filed as part of this
Annual Report on Form 10-K and should be read in conjunction with the
financial statements.
Schedule II - Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable, or
because the required information is included in the consolidated
financial statements or notes thereto.
(3) Exhibits. See attached Exhibit Index.
(b) Reports on Form 8-K
(1) In the fourth quarter of fiscal 2001, the Company filed with the
Securities and Exchange Commission a Current Report on Form 8-K. The
Current Report was dated April 11, 2001 and was filed in connection
with the merger with Dallas Semiconductor Corporation. No financial
statements were filed with this Current Report.
(2) In the fourth quarter of fiscal 2001, the Company filed with the
Securities and Exchange Commission Amendment No. 1 to its Current
Report on Form 8-K dated April 11, 2001. This Current Report on Form
8-K/A was dated June 8, 2001. Filed with this Current Report on Form
8-K/A were the audited financial statements and notes thereto included
in Dallas Semiconductor Corporation's Annual Report on Form 10-K for
the year ended December 31, 2000 and the Unaudited Pro Forma Combined
Financial Statements that give effect to the merger of the Company and
Dallas Semiconductor on a pooling-of-interests basis.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: September 21, 2001 MAXIM INTEGRATED PRODUCTS, INC.
By: /s/ Carl W. Jasper
------------------------------------------
Carl W. Jasper
Vice President and Chief Financial Officer
(For the Registrant and as Principal
Financial Officer)
By: /s/ Sharon E. Smith-Lenox
------------------------------------------
Sharon E. Smith-Lenox
Corporate Controller
(Principal Accounting Officer)
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of John F. Gifford, Carl W. Jasper and
Sharon E. Smith-Lenox as his or her true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him or her and
in his or her name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this Report on Form
10-K, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in connection therewith and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his or her substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, the report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
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Signature Title Date
--------- ----- ----
/s/ John F. Gifford President, Chief September 21, 2001
---------------------------- Executive Officer and
John F. Gifford Chairman of the Board
(Principal Executive Officer)
/s/ Carl W. Jasper Vice President and Chief September 21, 2001
---------------------------- Financial Officer
Carl W. Jasper (Principal Financial Officer)
/s/ Sharon E. Smith-Lenox Corporate Controller September 21, 2001
-------------------------- (Principal Accounting
Sharon Smith-Lenox Officer)
/s/ James R. Bergman Director September 21, 2001
------------------------
James R. Bergman
/s/ B. Kipling Hagopian Director September 21, 2001
------------------------
B. Kipling Hagopian
/s/ Eric P. Karros Director September 21, 2001
-----------------------------
Eric P. Karros
/s/ M.D. Sampels Director September 21, 2001
---------------------------
M.D. Sampels
/s/ A.R. Wazzan Director September 21, 2001
----------------------------
A.R. Wazzan
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EXHIBIT INDEX
Exhibit
Number Description
------- -----------
2.1 (1) Agreement and Plan of Merger, dated as of January 28, 2001,
by and among the Company, MI Acquisition Sub, Inc. and
Dallas Semiconductor Corporation
3.1 (2) Restated Certificate of Incorporation of the Company, as
amended
3.3 (3) Amendment to Restated Certificate of Incorporation of the
Company as filed with the Delaware Secretary of State on
November 18, 1999
3.4 (4) Amended and Restated Bylaws of the Company, as amended
4.1 Reference is made to Exhibits 3.1, 3.3 and 3.4
10.5 (5) Agreement between John F. Gifford and the Company, dated as
of July 14, 1987, as amended and restated(A)
10.6 (6) Agreement between John F. Gifford and the Company, dated as
of March 7, 1991(A)
10.8 (7) The Company's Form of Indemnity Agreement
10.9 (8) Asset Purchase Agreement by and between the Company and
Tektronix, Inc., dated as of March 31, 1994, as amended,
with certain attachments(B)
10.10(5) Technology Transfer Agreement by and between the Company and
Tektronix, Inc., dated May 27, 1994(B)
10.11(5) The Company's Incentive Stock Option Plan, as amended(A)
10.12(9) The Company's 1987 Supplemental Stock Option Plan, as
amended(A)
------------
(A) Management contract or compensatory plan or arrangement.
(B) Schedules and certain attachments omitted pursuant to Item 601(b) of
Registration S-K. The Company hereby undertakes to furnish supplemental copies
of any of the omitted schedules upon request by the Commission. Certain material
omitted pursuant to the request for confidential treatment by the Company.
29
30
Exhibit
Number Description
------- -----------
10.13(9) The Company's Supplemental Nonemployee Stock Option Plan,
as amended(A)
10.14 The Company's 1987 Employee Stock Participation Plan, as
amended(A)
10.15(9) The Company's 1988 Nonemployee Director Stock Option Plan,
as amended(A)
10.16 The Company's 1996 Stock Incentive Plan, as amended(A)
10.17 Dallas Semiconductor Corporation - 1993 Officer and Director
Stock Option Plan, as amended, together with forms of stock
option agreements thereunder
10.18 Dallas Semiconductor Corporation Amended 1987 Stock Option
Plan, together with forms of stock option agreements
thereunder
10.19 Assumption Agreement relating to the Split Dollar Insurance
Agreement between Dallas Semiconductor Corporation and Alan
P. Hale, dated July 20, 2000, as amended
10.20 Assumption Agreement relating to the Split Dollar Insurance
Agreement between Dallas Semiconductor Corporation and M.D.
Sampels, dated July 20, 2000, as amended
10.21 Form of Shareholder Agreements between Dallas Semiconductor
Corporation and employee stockholders, as amended
10.22 Agreement between Dallas Semiconductor Corporation and Alan
P. Hale, dated May 20, 1999, as amended
10.23 Employment Agreement between Dallas Semiconductor
Corporation and Alan P. Hale, dated April 11, 2001
10.24 Split Dollar Insurance Agreement between Dallas
Semiconductor Corporation and Alan P. Hale, dated July 20,
2000, as amended
30
31
Exhibit
Number Description
------- -----------
10.25 Split Dollar Insurance Agreement between Dallas
Semiconductor Corporation and M.D. Sampels, dated July 20,
2000, as amended
10.26 Assumption Agreement, dated April 11, 2001, relating to
Dallas Semiconductor Corporation Executives Retiree Medical
Plan, as amended
10.27 Assumption Agreement, dated April 11, 2001, relating to
Dallas Semiconductor Corporation stock options
10.28 Dallas Semiconductor Corporation Executives Retiree Medical
Plan, as amended
10.29 Form of Indemnification Agreement between Dallas
Semiconductor Corporation and its directors and officers
13.1 Portions of the Annual Report to Stockholders for the fiscal
year ended June 30, 2001, incorporated by reference into
the Form 10-K
21.1 Subsidiaries of the Company
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of KPMG LLP, Independent Certified Public Accountants
24.1 Power of Attorney (see page 28)
99.1 Report of KPMG LLP
--------------------------
(1) Incorporated by reference to the exhibit with the corresponding exhibit
number in the Company's Report on Form 8-K filed with the Securities and
Exchange Commission on April 12, 2001.
(2) Incorporated by reference to the exhibit with the corresponding exhibit
number in the Company's Annual Report on Form 10-K for the year ended June
30, 1995 and the Company's Quarterly Report on Form 10-Q for the quarter
ended December 25, 1999.
(3) Incorporated by reference to the exhibit with the corresponding exhibit
number in the Company's Quarterly Report on Form 10-Q for the quarter ended
December 30, 2000.
(4) Incorporated by reference to the exhibit with the corresponding exhibit
number in the Company's Quarterly Report on Form 10-Q for the quarter ended
September 23, 2000.
31
32
(5) Incorporated by reference to the exhibit with the corresponding exhibit
number in the Company's Annual Report on Form 10-K for the year ended June
30, 1995.
(6) Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended June 30, 1991.
(7) Incorporated by reference to the Company's Registration Statement on Form
S-1 No. 33-19561.
(8) Incorporated by reference to the Company's Report on Form 8-K filed with
the Securities and Exchange Commission on June 11, 1994.
(9) Incorporated by reference to the exhibit with the corresponding exhibit
number in the Company's Annual Report on Form 10-K for the year ended June
27, 1998.
32
33
MAXIM INTEGRATED PRODUCTS, INC.
SCHEDULE II - VALUATION AND QUALIFYING
ACCOUNTS
(amounts in thousands)
Additions
Charged
Balance at to Costs Balance at
Beginning and End
of Period Expenses Deductions (1) of Period
--------- -------- -------------- ---------
Allowance for doubtful accounts:
Year ended June 26, 1999 $ 2,322 $ 259 $ 616 $ 1,965
Year ended June 24, 2000 $ 1,965 $ 501 $ 218 $ 2,248
Year ended June 30, 2001 $ 2,248 $ 1,032 $ 0 $ 3,280
(1) Uncollectible accounts written off.
33
EX-10.14
3
f75694ex10-14.txt
EXHIBIT 10.14
1
EXHIBIT 10.14
MAXIM INTEGRATED PRODUCTS, INC.
1987 EMPLOYEE STOCK PARTICIPATION PLAN
Adopted August 26, 1987
Approved by Shareholders on October 19, 1987
Amended January 29 and August 23, 1988
Approved by Stockholders on October 26, 1988
Amended August 24, 1989
Approved by Stockholders on November 3, 1989
Amended August 9, 1990
Approved by Stockholders on October 26, 1990
Amended May 8, 1991
Approved by Stockholders on November 7, 1991
Amended August 13, 1992
Approved by Stockholders on November 5, 1992
Amended August 25, 1993
Approved by Stockholders on November 5, 1993
Amended February 17, 1994, March 23, 1994,
April 21, 1994, and May 12, 1994
Approved by Stockholders on November 10, 1994
Amended November 10, 1994
Amended August 10, 1995
Approved by Stockholders on November 16, 1995
Amended August 16, 1996
Approved by Stockholders on November 14, 1996
Amended August 13, 1998
Approved by Stockholders on November 19, 1998
Amended August 12, 1999
Approved by Stockholders on November 18, 1999
Amended August 17, 2000
Approved by Stockholders on November 16, 2000
Amended August 23, 2001
1. PURPOSE
(a) The purpose of the Plan is to provide a means by which employees of
Maxim Integrated Products, Inc., a Delaware corporation (the "Company"), and its
Affiliates, as defined in subparagraph 1(b), which are designated as provided in
subparagraph 2(b), may be given an opportunity to purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent corporation
or subsidiary corporation of the Company, as those terms are defined in Sections
424(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended
from time to time (the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of its
employees, to secure and retain the services of new employees, and to provide
incentives for such persons to exert maximum efforts for the success of the
Company.
(d) The Company intends that the rights to purchase stock of the Company
granted under the Plan be considered options issued under an "employee stock
purchase plan" as that term is defined in Section 423(b) of the Code.
2. ADMINISTRATION
(a) The Plan shall be administered by the Board of Directors (the "Board")
of the Company unless and until the Board delegates administration to a
Committee, as provided in subparagraph 2(c). Whether or not the Board has
delegated administration, the Board shall have the final power to determine all
questions of policy and expediency that may arise in the administration of the
Plan.
(b) The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:
2
(i) To determine when and how rights to purchase stock of the Company
shall be granted and the provisions of each offering of such rights (which need
not be identical).
(ii) To designate from time to time which Affiliates of the Company
shall be eligible to participate in the Plan.
(iii) To construe and interpret the Plan and rights granted under it,
and to establish, amend and revoke rules and regulations for its administration.
The Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Plan, in a manner and to the extent it shall deem necessary
or expedient to make the Plan fully effective.
(iv) To amend the Plan as provided in paragraph 13
(v) Generally, to exercise such powers and to perform such acts as the
Board deems necessary or expedient to promote the best interests of the Company.
(c) The Board may delegate administration of the Plan to a Committee
composed of not fewer than three (3) members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
3. SHARES SUBJECT TO THE PLAN
Subject to the provisions of paragraph 12 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to rights granted under
the Plan shall not exceed in the aggregate 263,440,000 shares of the Company's
$.001 par value common stock [adjusted to reflect stock dividends effective in
1994, 1995, 1997 and 1999] (the "Common Stock"); provided, however, that such
aggregate number of shares shall be reduced to reflect the number of shares of
the Company's Common Stock that has been sold under, or may be sold pursuant to
outstanding options granted under, the Company's 1983 Incentive Stock Option
Plan, 1987 Supplemental Stock Option Plan, Supplemental Nonemployee Stock Option
Plan and 1996 Stock Incentive Plan to the same extent as if such sales had been
made or options had been granted pursuant to this Plan. If any right granted
under the Plan shall for any reason terminate without having been exercised, the
Common Stock not purchased under such right shall again become available for the
Plan. The shares to be issued pursuant to the Plan may be authorized, but
unissued or reacquired Common Stock.
4. GRANT OF RIGHTS; OFFERING
The Board or the Committee may from time to time grant or provide for the
grant of rights to purchase Common Stock of the Company under the Plan to
eligible employees (an "Offering") on a date or dates (the "Offering Date(s)")
selected by the Board or the Committee. Each Offering shall be in such form and
shall contain such terms and conditions as the Board or the Committee shall deem
appropriate. If an employee has more than one right outstanding under the Plan,
unless he or she otherwise indicates in agreements or notices delivered
hereunder: (1) each agreement or notice delivered by that employee will be
deemed to apply to all of his or her rights under the Plan, and (2) a right with
a lower exercise price (or an earlier-granted right, if two rights have
identical exercise prices), will be exercised to the fullest possible extent
before a right with a higher exercise price (or a later-granted right, if two
rights have identical exercise prices) will be exercised. The provisions of
separate Offerings need not be identical, but each Offering shall include
(through incorporation of the provisions of this Plan by reference in the
Offering or otherwise) the substance of the provisions contained in paragraphs 5
through 8, inclusive.
5. ELIGIBILITY
2
3
(a) Rights may be granted only to employees of the Company or, as the Board
or the Committee may designate as provided in subparagraph 2(b), to employees of
any Affiliate of the Company. Except as provided in subparagraph 5(b), an
employee of the Company or any Affiliate shall not be eligible to be granted
rights under the Plan, unless, on the Offering Date, such employee has been in
the employ of the Company or any Affiliate for such continuous period preceding
such grant as the Board or the Committee may require, but in no event shall the
required period of continuous employment be equal to or greater than two (2)
years. In addition, unless otherwise determined by the Board or the Committee
and set forth in the Offering, no employee of the Company or any Affiliate shall
be eligible to be granted rights under the Plan, unless, on the Offering Date,
such employee's customary employment with the Company or such Affiliate is at
least twenty (20) hours per week and at least five (5) months per calendar year.
(b) The Board or the Committee may provide that, each person who, during
the course of an Offering, first becomes an eligible employee of the Company or
designated Affiliate will, on a date or dates specified in the Offering which
coincides with the day on which such person becomes an eligible employee or
occurs thereafter, receive a right under that Offering, which right shall
thereafter be deemed to be a part of that Offering. Such right shall have the
same characteristics as any rights originally granted under that Offering, as
described herein, except that:
(i) the date on which such right is granted shall be the "Offering
Date" of such right for all purposes, including determination of the exercise
price of such right;
(ii) the Purchase Period (as defined below) for such right shall begin
on its Offering Date and end coincident with the end of such Offering; and
(iii) the Board or the Committee may provide that if such person first
becomes an eligible employee within a specified period of time before the end of
the Purchase Period (as defined below) for such Offering, he or she will not
receive any right under that Offering.
(c) Directors and executive officers of the Company or an Affiliate who are
highly compensated employees within the meaning of Section 423(b)(4)(D) of the
Code are not eligible to be granted rights under the Plan.
(d) No employee shall be eligible for the grant of any rights under the
Plan if, immediately after any such rights are granted, such employee owns stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or of any Affiliate. For purposes of this
subparagraph 5(d), the rules of Section 424(d) of the Code shall apply in
determining the stock ownership of any employee, and stock which such employee
may purchase under all outstanding rights and options shall be treated as stock
owned by such employee.
(e) An eligible employee may be granted rights under the Plan only if such
rights, together with any other rights granted under "employee stock purchase
plans" of the Company and any Affiliates, as specified by Section 423(b)(8) of
the Code, do not permit such employee's rights to purchase stock of the Company
or any Affiliate to accrue at a rate which exceeds twenty-five thousand dollars
($25,000) of fair market value of such stock (determined at the time such rights
are granted) for each calendar year in which such rights are outstanding at any
time.
6. RIGHTS; PURCHASE PRICE
3
4
(a) On each Offering Date, each eligible employee, pursuant to an Offering
made under the Plan, shall be granted the right to purchase the number of shares
of Common Stock of the Company purchasable with up to twenty percent (20%) of
such employee's Compensation (as defined in Section 7(a)) during the period
which begins on the Offering Date (or such later date as the Board determines
for a particular Offering) and ends on the date stated in the Offering, which
date shall be no more than twenty-seven (27) months after the Offering Date (the
"Purchase Period"). In connection with each Offering made under this Plan, the
Board or the Committee shall specify a maximum number of shares which may be
purchased by any employee as well as a maximum aggregate number of shares which
may be purchased by all eligible employees pursuant to such Offering. In
addition, in connection with each such Offering, the Board or the Committee may
specify the maximum fair market value of Common Stock which may be purchased by
any employee pursuant to such Offering as well as a maximum aggregate number of
shares which may be purchased by all eligible employees on any given Exercise
Date (as defined in the Offering) under the Offering. If the aggregate purchase
of shares upon exercise of rights granted under the Offering would exceed any
such maximum aggregate number, the Board or the Committee shall make a pro rata
allocation of the shares available in as nearly a uniform manner as shall be
practicable and as it shall deem to be equitable.
(b) The purchase price of stock acquired pursuant to rights granted under
the Plan shall be not less than the lesser of:
(i) an amount equal to eighty-five percent (85%) of the fair market
value of the stock on the Offering Date; or
(ii) an amount equal to eighty-five percent (85%) of the fair market
value of the stock on the Exercise Date.
7. PARTICIPATION; WITHDRAWAL; TERMINATION
(a) An eligible employee may become a participant in an Offering by
delivering an agreement to the Company within the time specified in the
Offering, in such form as the Company provides. Each such agreement shall
authorize payroll deductions of up to twenty percent (20%) of such employee's
Compensation during the Purchase Period. Compensation is defined as total cash
compensation, including commissions, bonuses, overtime and other cash
compensation, and amounts elected to be deferred by the employee (that would
otherwise have been paid) under the Company's Cash or Deferred Savings Plan. The
payroll deductions made for each participant shall be credited to an account for
such participant under the Plan and shall be deposited with the general funds of
the Company. At any time during the Purchase Period a participant may terminate
his or her payroll deductions. A participant may reduce, increase or begin such
payroll deductions after the beginning of any Purchase Period only as provided
for in the Offering. If specifically allowed pursuant to the terms of an
Offering, a participant may make direct payments into his or her account to the
extent that such participant has not had the maximum amount withheld during the
Purchase Period.
(b) If a participant terminates his or her payroll deductions, such
participant may withdraw from the Offering by delivering to the Company a notice
of withdrawal in such form as the Company provides. Such withdrawal may be
elected at any time prior to the end of the Purchase Period. Upon such
withdrawal from the Offering by a participant, the Company shall distribute to
such participant all of his or her accumulated payroll deductions (reduced to
the extent, if any, such deductions have been used to acquire stock for the
participant) under the Offering without interest, and such participant's
interest in that Offering shall be automatically terminated. A participant's
withdrawal from an Offering will have no effect upon such participant's
eligibility to participate in any other Offerings under the Plan but such
participant will be required to deliver a new participation agreement in order
to participate in other Offerings under the Plan.
(c) Rights granted pursuant to any Offering under the Plan shall terminate
immediately upon cessation of any participating employee's employment with the
Company or an Affiliate, for any reason, and the Company shall distribute to
such terminated employee all of his or her accumulated payroll deductions
(reduced to the extent, if any, such deductions have been used to acquire stock
for the terminated employee), without interest.
4
5
(d) Rights granted under the Plan shall not be transferable, and shall be
exercisable only by the person to whom such rights are granted.
8. EXERCISE
(a) On each exercise date, as defined in the relevant Offering (an
"Exercise Date"), each participant's accumulated payroll deductions (without any
increase for interest) will be applied to the purchase of whole shares of stock
of the Company, up to the maximum number of shares permitted pursuant to the
terms of the Plan and the applicable Offering, at the purchase price specified
in the Offering. No fractional shares shall be issued upon the exercise of
rights granted under the Plan. The amount, if any, of accumulated payroll
deductions remaining in each participant's account after the purchase of shares
which is less than the amount required to purchase one share of stock on the
final Exercise Date of an Offering shall be held in each such participant's
account for the purchase of shares under the next Offering under the Plan,
unless such participant withdraws from such next Offering, as provided in
subparagraph 7(b), or is no longer eligible to be granted rights under the Plan,
as provided in paragraph 5, in which case such amount shall be distributed to
such participant after such Exercise Date, without interest. The amount, if any,
of accumulated payroll deductions remaining in any participant's account after
the purchase of shares which is equal to the amount required to purchase whole
shares of stock on the final Exercise Date of an Offering shall be distributed
in full to such participant after such Exercise Date, without interest.
(b) No rights granted under the Plan may be exercised to any extent unless
the Plan (including rights granted thereunder) is covered by an effective
registration statement pursuant to the Securities Act of 1933, as amended (the
"Securities Act"). If, on an Exercise Date of any Offering hereunder, the Plan
is not so registered, no rights granted under the Plan or any Offering shall be
exercised and all payroll deductions accumulated during the Purchase Period
(reduced to the extent, if any, such deductions have been used to acquire stock
for the participants) shall be distributed to the participants, without
interest.
9. COVENANTS OF THE COMPANY
(a) During the terms of the rights granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such rights.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the rights granted under the
Plan. If, after reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell stock
upon exercise of such rights unless and until such authority is obtained.
10. USE OF PROCEEDS FROM STOCK
Proceeds from the sale of stock pursuant to rights granted under the Plan
shall constitute general funds of the Company.
11. RIGHTS AS A STOCKHOLDER
A participant shall not be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to rights granted
under the Plan unless and until certificates representing such shares shall have
been issued.
12. ADJUSTMENTS UPON CHANGES IN STOCK
(a) If any change is made in the stock subject to the Plan, or subject to
any rights granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property
5
6
other than cash, stock split, liquidating dividend, combination of shares,
exchange of shares, change in corporate structure or otherwise), the Plan and
outstanding rights will be appropriately adjusted in the class(es) and the
maximum number of shares subject to the Plan and the class(es) and the number of
shares and price per share of stock subject to outstanding rights.
(b) In the event of: (1) a dissolution or liquidation of the Company; (2) a
merger or consolidation in which the Company is not the surviving corporation;
(3) a reverse merger in which the Company is the surviving corporation but the
shares of the Company's Common Stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash or otherwise; or (4) any other capital reorganization
in which more than fifty percent (50%) of the shares of the Company entitled to
vote are exchanged, then, as determined by the Board in its sole discretion, any
surviving corporation shall assume outstanding rights or substitute similar
rights for those under the Plan, such rights shall continue in full force and
effect, or such rights shall be exercised immediately prior to such event.
13. AMENDMENT OF THE PLAN
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 12 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the vote of a
majority of the shares of the Company represented and voting at a duly held
meeting within 12 months before or after the adoption of the amendment, where
the amendment will:
(iii) Increase the number of shares reserved for rights under the
Plan;
(iv) Modify the provisions as to eligibility for participation in the
Plan (to the extent such modification requires stockholder approval in order for
the Plan to obtain employee stock purchase plan treatment under Section 423 of
the Code); or
(v) Modify the Plan in any other way if such modification requires
stockholder approval in order for the Plan to obtain employee stock purchase
plan treatment under Section 423 of the Code. It is expressly contemplated that
the Board may amend the Plan in any respect the Board deems necessary or
advisable to provide eligible employees with the maximum benefits provided or to
be provided under the provisions of the Code and the regulations promulgated
thereunder relating to employee stock purchase plans and/or to bring the Plan
and/or rights granted under it into compliance therewith.
(b) Rights and obligations under any rights granted before amendment of the
Plan shall not be impaired by any amendment of the Plan, except with the consent
of the person to whom such rights were granted.
14. TERMINATION OR SUSPENSION OF THE PLAN
(a) The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate on August 25, 2007. No rights may be
granted under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any rights granted while the Plan is in
effect shall not be impaired by suspension or termination of the Plan, except
with the consent of the person to whom such rights were granted.
15. EFFECTIVE DATE OF PLAN
The Plan as amended and restated herein shall become effective as
determined by the Board, but no rights granted after the date of this amendment
and restatement of the Plan shall be exercised unless and until this amended and
restated Plan has been approved by the vote of the holders of a majority of the
outstanding shares of the Company entitled to vote or by the written consent of
the holders of the outstanding shares of the Company entitled to vote to the
extent necessary to obtain employee stock purchase plan treatment under Section
423 of the Code, and, if required, an appropriate permit has been issued by the
Commissioner of Corporations of the State of California.
6
EX-10.16
4
f75694ex10-16.txt
EXHIBIT 10.16
1
EXHIBIT 10.16
MAXIM INTEGRATED PRODUCTS, INC.
1996 STOCK INCENTIVE PLAN
Adopted August 16, 1996
Approved by Shareholders November 14, 1996
As further amended by the Board of Directors on April 16, 1997 and May 15, 1997
Approved by Shareholders November 13, 1997
As further amended by the Board of Directors on March 10, 1998,
May 14, 1998, and August 13, 1998
Approved by Shareholders November 19, 1998
As further amended by the Board of Directors on August 12, 1999.
Approved by Shareholders November 18, 1999
As further amended by the Board of Directors on June 8, 2000,
and August 17, 2000.
Approved by Shareholders November 16, 2000
As further amended by the Board of Directors on August 23, 2001
1. Purposes of the Plan. The purposes of this Stock Incentive Plan are
to attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Directors and
Consultants of the Company and its Subsidiaries and to promote the success of
the Company's business.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of the Committees
appointed to administer the Plan.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act.
(c) "Applicable Laws" means the legal requirements relating to the
administration of stock incentive plans, if any, under applicable provisions of
federal securities laws, state corporate and securities laws, the Code, the
rules of any applicable stock exchange or national market system, and the rules
of any foreign jurisdiction applicable to Options granted to residents therein.
(d) "Board" means the Board of Directors of the Company.
1
2
(e) "Change in Control" means a change in ownership or control of
the Company effected through either of the following transactions:
(i) the direct or indirect acquisition by any person or
related group of persons (other than an acquisition from or by the Company or by
a Company-sponsored employee benefit plan or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) 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 a
majority of the Continuing Directors who are not Affiliates or Associates of the
offeror do not recommend such stockholders accept, or
(ii) a change in the composition of the Board over a period of
thirty-six (36) 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 contested
elections for Board membership, to be comprised of individuals who are
Continuing Directors.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Committee" means any committee appointed by the Board to
administer the Plan.
(h) "Common Stock" means the common stock of the Company.
(i) "Company" means Maxim Integrated Products, Inc., a Delaware
corporation.
(j) "Consultant" means any person who is a consultant, advisor,
independent contractor, vendor, customer or other person having a past, current
or prospective business relationship with the Company or any Parent or
Subsidiary.
(k) "Continuing Directors" means members of the Board who either
(i) have been Board members continuously for a period of at least thirty-six
(36) months or (ii) have been Board members for less than thirty-six (36) months
and were elected or nominated for election as Board members by at least a
majority of the Board members described in clause (i) who were still in office
at the time such election or nomination was approved by the Board.
(l) "Continuous Status as an Employee, Director or Consultant"
means that the employment, director or consulting relationship with the Company,
any Parent, or Subsidiary, is not interrupted or terminated. Continuous Status
as an Employee, Director or Consultant shall not be considered interrupted in
the case of (i) any leave of absence approved by the Company or (ii) transfers
between locations of the Company or between the Company, its Parent, any
Subsidiary, or any successor. A leave of absence approved by the Company shall
include sick leave, military leave, or any other personal leave approved by an
authorized representative of the Company. For purposes of Incentive Stock
Options, no such leave may exceed ninety (90) days, unless reemployment upon
expiration of such leave is guaranteed by statute or contract.
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(m) "Corporate Transaction" means any of the following
stockholder-approved transactions to which the Company is a party:
(i) a merger or consolidation 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,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company (including the capital stock of
the Company's subsidiary corporations) in connection with complete liquidation
or dissolution of the Company, or
(iii) 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.
(n) "Covered Employee" means any person who is a "covered
employee" under Section 162(m)(3) of the Code.
(o) "Director" means a member of the Board.
(p) "Employee" means any person, including an Officer or Director,
who is an employee of the Company or any Parent or Subsidiary of the Company for
purposes of Section 422 of the Code. The payment of a director's fee by the
Company shall not be sufficient to constitute "employment" by the Company.
Except for purposes of grants of Incentive Stock Options, "Employee" also
includes any person whom an officer identifies as a prospective employee of the
Company or any Parent or Subsidiary of the Company.
(q) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(r) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) Where there exists a public market for the Common Stock,
the Fair Market Value of a share of Common Stock shall be (A) the closing sale
price of the Common Stock for the last market trading day prior to the date of
the determination or on the date of the determination, as determined by the
Administrator at the time of the determination (or, if no sales were reported on
either such date, on the last trading date on which sales were reported) on the
stock exchange determined by the Administrator to be the primary market for the
Common Stock or the Nasdaq National Market, whichever is applicable or (B) if
the Common Stock is not traded on any such exchange or national market system,
the closing price of a Share on the Nasdaq Small Cap Market for the day prior to
the time of the determination (or, if no such price was reported on that date,
on the last date on which such price was reported), in each case, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable; or
(ii) In the absence of an established market of the type
described in (i), above, for the Common Stock, the Fair Market Value thereof
shall be determined by the Administrator in good faith.
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(s) "Grantee" means an Employee, Director or Consultant who
receives an Option under the Plan.
(t) "Incentive Stock Option" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.
(u) "Non-Qualified Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
(v) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(w) "Option" means a stock option granted pursuant to the Plan.
(x) "Option Agreement" means the written agreement evidencing the
grant of an Option executed by the Company and the Grantee, including any
amendments thereto.
(y) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(z) "Performance-Based Compensation" means compensation qualifying
as "performance-based compensation" under Section 162(m) of the Code.
(aa) "Plan" means this 1996 Stock Incentive Plan.
(bb) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange
Act or any successor thereto.
(cc) "Share" means a share of the Common Stock.
(dd) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
(ee) "Subsidiary Disposition" means the disposition by the Company
of its equity holdings in any subsidiary corporation effected by a merger or
consolidation involving that subsidiary corporation, the sale of all or
substantially all of the assets of that subsidiary corporation or the Company's
sale or distribution of substantially all of the outstanding capital stock of
such subsidiary corporation.
3. Stock Subject to the Plan.
(a) Subject to the provisions of Section 10 below, the maximum
aggregate number of Shares which may be issued pursuant to this Plan is
81,200,000 Shares [adjusted to reflect the stock dividend effective December 5,
1997, and November 30, 1999]; provided, however, that such maximum aggregate
number of Shares shall be increased by the number of Shares or options returned
to the Company's Incentive Stock Option Plan, 1987 Employee Stock Participation
Plan, and Supplemental Nonemployee Stock Option Plan. Notwithstanding the
foregoing, the maximum aggregate number of Shares available for grant of
Incentive Stock Options shall be 81,200,000 Shares, and such number shall not be
subject to increase as a result
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of return of Shares or options to the Company's Incentive Stock Option Plan,
1987 Employee Stock Participation Plan, and 1987 Supplemental Nonemployee Stock
Option Plan. The Shares to be issued pursuant to the Plan may be authorized, but
unissued, or reacquired Common Stock.
(b) If an Option expires or becomes unexercisable without having
been exercised in full, or is surrendered pursuant to an Option exchange
program, or if any unissued Shares are retained by the Company upon exercise of
an Option in order to satisfy the exercise price for such Option or any
withholding taxes due with respect to such Option, such unissued or retained
Shares shall become available for future grant under the Plan (unless the Plan
has terminated). Shares that actually have been issued under the Plan pursuant
to an Option shall not be returned to the Plan and shall not become available
for future distribution under the Plan, except that if unvested Shares are
forfeited, or repurchased by the Company at their original purchase price, such
Shares shall become available for future grant under the Plan.
4. Administration of the Plan.
(a) Plan Administrator.
(i) Administration with Respect to Directors and Officers.
With respect to grants of Options to Directors or Employees who are also
Officers or Directors of the Company, the Plan shall be administered by (A) the
Board or (B) a Committee designated by the Board, which Committee shall be
constituted in such a manner as to satisfy the Applicable Laws and to permit
such grants and related transactions under the Plan to be exempt from Section
16(b) of the Exchange Act in accordance with Rule 16b-3. Once appointed, such
Committee shall continue to serve in its designated capacity until otherwise
directed by the Board.
(ii) Administration With Respect to Consultants and Other
Employees. With respect to grants of Options to Employees or Consultants who are
neither Directors nor Officers of the Company, the Plan shall be administered by
(A) the Board or (B) a Committee designated by the Board, which Committee shall
be constituted in such a manner as to satisfy the Applicable Laws. Once
appointed, such Committee shall continue to serve in its designated capacity
until otherwise directed by the Board. The Board may authorize one or more
Officers to grant such Options and may limit such authority by requiring that
such Options must be reported to and ratified by the Board or a Committee within
six (6) months of the grant date, and if so ratified, shall be effective as of
the grant date.
(iii) Administration With Respect to Covered Employees.
Notwithstanding the foregoing, grants of Options to any Covered Employee
intended to qualify as Performance-Based Compensation shall be made only by a
Committee (or subcommittee of a Committee) which is comprised solely of two or
more Directors eligible to serve on a committee making Options qualifying as
Performance-Based Compensation. In the case of such Options granted to Covered
Employees, references to the "Administrator" or to a "Committee" shall be deemed
to be references to such Committee or subcommittee.
(iv) Administration Errors. In the event an Option is granted
in a manner inconsistent with the provisions of this subsection (a), such Option
shall be presumptively valid as of its grant date to the extent permitted by the
Applicable Laws.
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(b) Powers of the Administrator. Subject to Applicable Laws and
the provisions of the Plan (including any other powers given to the
Administrator hereunder), and except as otherwise provided by the Board, the
Administrator shall have the authority, in its discretion:
(i) to select the Employees, Directors and Consultants to whom
Options may be granted from time to time hereunder;
(ii) to determine whether and to what extent Options are
granted hereunder;
(iii) to determine the number of Shares or the amount of other
consideration to be covered by each Option granted hereunder;
(iv) to determine the Fair Market Value of the Common Stock in
accordance with Section 2(r) of the Plan;
(v) to approve forms of Option Agreement for use under the
Plan;
(vi) to determine the terms and conditions of any Option
granted hereunder;
(vii) to amend the terms of any outstanding Option granted
under the Plan in any lawful way, provided that any amendment that would
adversely affect the Grantee's rights under an outstanding Option shall not be
made without the Grantee's written consent and provided, further, that any
provision of the Plan to the contrary notwithstanding, the Administrator shall
not have the authority to reprice any outstanding option, it being understood
that "reprice" shall mean to amend any outstanding Option to reduce the exercise
price;
(viii) to construe and interpret the terms of the Plan and
Options granted pursuant to the Plan;
(ix) Notwithstanding any provision of the Plan to the
contrary, in order to facilitate compliance with the tax, securities, foreign
exchange, probate or other applicable provisions of the laws in other countries
in which the Company or its Affiliates operate or have key employees or
non-employee directors, the Committee, in its discretion, shall have the power
and authority to (A) determine which (if any) Employees, Directors, and/or
Consultants rendering services or employed outside the U.S. are eligible to
participate in the Plan or to receive any type of award hereunder; (B) determine
which non-U.S.-based Affiliates or operations (e.g., branches, representative
offices) participate in the Plan or any type of award hereunder; (C) modify the
terms and conditions of any awards made to such Employees, Directors, and/or
Consultants, or with respect to such non-U.S.-based Affiliates or operations;
and (D) establish sub-plans, modify methods of exercise, modify payment
restrictions on sale or transfer of shares and other terms and procedures to the
extent deemed necessary or desirable by the Committee to comply with applicable
laws of the non-U.S. jurisdiction. The Committee shall not, however, have the
power or authority to amend the Plan with respect to the maximum aggregate
number of Shares that may be issued under the Plan as set forth in Section
3.(a);
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increase the Individual Option Limit as set forth in Section 6.(c); or lengthen
the Term of the Option set forth in Section 6.(d). and
(x) to take such other action, not inconsistent with the terms
of the Plan, as the Administrator deems appropriate.
(c) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be conclusive and
binding on all persons.
5. Eligibility. Non-Qualified Stock Options may be granted to
Employees, Directors and Consultants. Incentive Stock Options may be granted
only to Employees. An Employee, Director or Consultant who has been granted an
Option may, if otherwise eligible, be granted additional Options. Options may be
granted to such Employees of the Company and its subsidiaries who are residing
in foreign jurisdictions as the Administrator may determine from time to time.
6. Terms and Conditions of Options.
(a) Designation of Option. Each Option shall be designated in the
Option Agreement as either an Incentive Stock Option or a Non-Qualified Stock
Option. However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value of Shares subject to Options designated as Incentive
Stock Options which become exercisable for the first time by a Grantee during
any calendar year (under all plans of the Company or any Parent or Subsidiary)
exceeds $100,000, such excess Options, to the extent of the Shares covered
thereby in excess of the foregoing limitation, shall be treated as Non-Qualified
Stock Options. For this purpose, Incentive Stock Options shall be taken into
account in the order in which they were granted, and the Fair Market Value of
the Shares shall be determined as of the date the Option with respect to such
Shares is granted.
(b) Conditions of Option. Subject to the terms of the Plan, the
Administrator shall determine the provisions, terms and conditions of each
Option including, but not limited to, the Option vesting schedule, form of
payment upon exercise of the Option and satisfaction of any performance
criteria.
(c) Individual Option Limit. The maximum number of Shares with
respect to which Options may be granted to any individual in any fiscal year of
the Company shall be 12,000,000 [adjusted to reflect the stock dividend
effective December 5, 1997 and November 30, 1999]. The foregoing limitation
shall be adjusted proportionately in connection with any change in the Company's
capitalization pursuant to Section 10, below. To the extent required by Section
162(m) of the Code or the regulations thereunder, in applying the foregoing
limitation with respect to an individual, if any Option is canceled, the
canceled Option shall continue to count against the maximum number of Shares
with respect to which Options may be granted to the individual. For this
purpose, the repricing of an Option shall be treated as the cancellation of the
existing Option and the grant of a new Option.
(d) Term of Option. The term of each Option shall be ten (10)
years from the date of grant for all Grantees other than Directors who are not
Employees, in whose case the term shall be five (5) years from the date of
grant. However, in the case of an Incentive Stock Option granted to a Grantee
who, at the time the Option is granted, owns stock representing more than
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ten percent (10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the term of the Incentive Stock Option shall be five
(5) years from the date of grant thereof or such shorter term as may be provided
in the Option Agreement.
(e) Transferability of Options. Incentive Stock Options may not be
sold, pledged, assigned, hypothecated, transferred or disposed of in any manner
other than by will or by the laws of descent or distribution, and may be
exercised during the lifetime of the Grantee only by the Grantee. Non-Qualified
Stock Options shall be transferable to the extent provided in the Option
Agreement.
(f) Time of Granting Options. The date of grant of an Option shall
for all purposes be the date on which the Administrator makes the determination
to grant such Option, or such other date as is determined by the Administrator.
Notice of the grant determination shall be given to each Employee, Director or
Consultant to whom an Option is so granted within a reasonable time after the
date of such grant.
(g) Vesting During Leave of Absence. During any leave of absence
from employment, directorship or consulting arrangement with the Company or any
Parent or Subsidiary, vesting of such Grantee's Options shall cease, and shall
resume upon the Grantee's return to his or her relationship with the Company,
Parent or Subsidiary. The dates on which such Grantee's Options vest shall
thereafter be adjusted by the duration of the leave of absence.
7. Option Exercise Price, Consideration and Taxes.
(a) Exercise Price. The exercise price for an Option shall be as
follows:
(i) In the case of an Incentive Stock Option:
(A) granted to an Employee who, at the time of the grant
of such Incentive Stock Option owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price shall be not less than one hundred
ten percent (110%) of the Fair Market Value per Share on the date of grant.
(B) granted to any Employee other than an Employee
described in the preceding paragraph, the per Share exercise price shall be not
less than one hundred percent (100%) of the Fair Market Value per Share on the
date of grant.
(ii) In the case of a Non-Qualified Stock Option, the per
Share exercise price shall be not less than eighty-five percent (85%) of the
Fair Market Value per Share on the date of grant unless otherwise determined by
the Administrator; provided, however, that in the case the per Share exercise
price is less than one hundred percent (100%) of the Fair Market Value per Share
on the date of the grant, the Administrator determines in writing and in good
faith that (A) such grants are made infrequently, (B) there is a good business
reason for the grant that outweighs the normal presumption of a per Share
exercise price of not less than one hundred percent (100%) of the Fair Market
Value per Share on the date of grant, and (C) the aggregate number of Shares
subject to such Options does not exceed five percent (5%) of the aggregate
maximum number of Shares under Section 3(a), above, as amended from time to
time.
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(iii) In the case of Options intended to qualify as
Performance-Based Compensation, the per Share exercise price shall be not less
than one hundred percent (100%) of the Fair Market Value per Share on the date
of grant.
(b) Consideration. Subject to Applicable Laws, the consideration
to be paid for the Shares to be issued upon exercise of an Option including the
method of payment, shall be determined by the Administrator (and, in the case of
an Incentive Stock Option, shall be determined at the time of grant). In
addition to any other types of consideration the Administrator may determine,
the Administrator is authorized to accept as consideration for Shares issued
under the Plan the following:
(i) cash;
(ii) check;
(iii) delivery of Grantee's promissory note with such
recourse, interest, security, and redemption provisions as the Administrator
determines as appropriate;
(iv) surrender of Shares (including withholding of Shares
otherwise deliverable upon exercise of the Option) which have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised (but only to the extent that
such exercise of the Option would not result in an accounting compensation
charge with respect to the Shares used to pay the exercise price unless
otherwise determined by the Administrator);
(v) delivery of a properly executed exercise notice together
with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price; or
(vi) any combination of the foregoing methods of payment.
(c) Taxes. In connection with each option granted pursuant to this
Plan, at any time when the Company could have any withholding obligation
(whether for Federal, state, local or foreign income, disability, Medicare,
employment or other taxes or otherwise) as a result of exercise of an option,
the lapse of any substantial risk of forfeiture to which the shares are subject
at the time of exercise, or the disposition of shares acquired upon such
exercise, the Company shall have no obligation to permit exercise of such option
or to issue any shares upon exercise of the option unless and until either the
exercise of the option is accompanied by sufficient payment, as determined by
the Company in its absolute discretion, to meet those withholding obligations on
such exercise, lapse or disposition or other arrangements are made that are
satisfactory to the Company in its absolute discretion to provide otherwise for
such payment. The Company shall have no liability to any optionee or transferee
for exercising the foregoing right not to permit exercise or issue shares.
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8. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder.
(i) Any Option granted hereunder shall be exercisable at such
times and under such conditions as determined by the Administrator under the
terms of the Plan and specified in the Option Agreement.
(ii) An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance with the
terms of the Option by the person entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has been
received by the Company. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing such Shares, no right to vote or
receive dividends or any other rights as a stockholder shall exist with respect
to Shares subject to an Option, notwithstanding the exercise of an Option. The
Company shall issue (or cause to be issued) such stock certificate promptly upon
exercise of the Option. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in the Option Agreement or Section 10, below.
(b) Exercise of Option Following Termination of Employment,
Director or Consulting Relationship.
(i) An Option may not be exercised after the termination date
of such Option set forth in the Option Agreement and may be exercised following
the termination of a Grantee's Continuous Status as an Employee, Director or
Consultant only to the extent that the Grantee was entitled to exercise it at
the date of such termination (but in no event later than the expiration of the
term of such option as set forth in the Option Agreement). Options shall be
exercisable for a period of ninety (90) days following termination generally,
and for a period of five hundred forty-seven (547) days following termination
due to death of the Grantee or three hundred sixty-five (365) days following
termination due to the disability of the Grantee (or, in each case, such other
period of time as is determined by the Administrator, which such determination
in the case of an Incentive Stock Option shall be made at the time of grant of
the Option).
(ii) All Options shall terminate to the extent not exercised
on the last day of the period specified in paragraph (i) above or the last day
of the original term of the Option, whichever occurs first.
(iii) Any Option designated as an Incentive Stock Option to
the extent not exercised within the time permitted by law for the exercise of
Incentive Stock Options following the termination of a Grantee's Continuous
Status as an Employee, Director or Consultant shall convert automatically to a
Non-Qualified Stock Option and thereafter shall be exercisable as such to the
extent exercisable by its terms for the period specified in the Option
Agreement.
(c) Exercise of Option Following Termination of Employment,
Director or Consulting Relationship. In the event of termination of a Grantee's
Continuous Status as an Employee, Director or Consultant with the Company for
any reason other than disability or death
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(but not in the event of an Grantee's change of status from Employee to
Consultant or from Consultant to Employee), such Grantee may, but only within
ninety (90) days after the date of such termination (but in no event later than
the expiration date of the term of such Option as set forth in the Option
Agreement), exercise his or her Option to the extent that the Grantee was
entitled to exercise it at the date of such termination or to such other extent
as may be determined by the Administrator. If the Grantee should die within
ninety (90) days after the date of such termination, the Grantee's estate or the
person who acquired the right to exercise the Option by bequest or inheritance
may exercise the Option to the extent that the Grantee was entitled to exercise
it at the date of such termination within five hundred forty-seven (547) days of
the Grantee's date of death, but in no event later than the expiration date of
the term of such Option as set forth in the Option Agreement. In the event of an
Grantee's change of status from Employee to Consultant, an Employee's Incentive
Stock Option shall convert automatically to a Non-Qualified Stock Option on the
ninety-first (91st) day following such change of status. If the Grantee does not
exercise such Option to the extent so entitled within the time specified herein,
the Option shall terminate.
(d) Disability of Grantee. In the event of termination of a
Grantee's Continuous Status as an Employee, Director or Consultant as a result
of his or her disability, Grantee may, but only within three hundred sixty-five
(365) days from the date of such termination (and in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise the Option to the extent otherwise entitled to exercise it
at the date of such termination; provided, however, that if such disability is
not a "disability" as such term is defined in Section 22(e)(3) of the Code, in
the case of an Incentive Stock Option such Incentive Stock Option shall
automatically convert to a Non-Qualified Stock Option on the day three (3)
months and one day following such termination. To the extent that Grantee is not
entitled to exercise the Option at the date of termination, or if Grantee does
not exercise such Option to the extent so entitled within the time specified
herein, the Option shall terminate.
(e) Death of Grantee. In the event of the death of a Grantee, the
Option may be exercised at any time within five hundred forty-seven (547) days
following the date of death (but in no event later than the expiration of the
term of such Option as set forth in the Option Agreement), by the Grantee's
estate or by a person who acquired the right to exercise the Option by bequest
or inheritance, but only to the extent that the Grantee was entitled to exercise
the Option at the date of death. If, at the time of death, the Grantee was not
entitled to exercise his or her entire Option, the Shares covered by the
unexercisable portion of the Option shall immediately revert to the Plan. If,
after death, the Grantee's estate or a person who acquired the right to exercise
the Option by bequest or inheritance does not exercise the Option within the
time specified herein, the Option shall terminate.
(f) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Grantee at the time that such offer is made.
9. Conditions Upon Issuance of Shares.
(a) Shares shall not be issued pursuant to the exercise of an
Option unless the exercise of such Option and the issuance and delivery of such
Shares pursuant thereto shall comply with
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all Applicable Laws, and shall be further subject to the approval of counsel for
the Company with respect to such compliance.
(b) As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any
Applicable Laws.
10. Adjustments Upon Changes in Capitalization. Subject to any required
action by the stockholders of the Company, the number of Shares covered by each
outstanding Option, and the number of Shares which have been authorized for
issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan, as well as the price per share of Common
Stock covered by each such outstanding Option, shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock, or any other similar event resulting in
an increase or decrease in the number of issued shares of Common Stock. Except
as expressly provided herein, no issuance by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason hereof shall be made with respect to, the
number or price of Shares subject to an Option.
11. Corporate Transactions/Changes in Control/Subsidiary Dispositions.
(a) The Administrator shall have the authority, exercisable either
in advance of any actual or anticipated Corporate Transaction, Change in Control
or Subsidiary Disposition or at the time of an actual Corporate Transaction,
Change in Control or Subsidiary Disposition and exercisable at the time of the
grant of an Option under the Plan or any time while an Option remains
outstanding, to provide for the full automatic vesting and exercisability of one
or more outstanding unvested Options under the Plan and the release from
restrictions on transfer and repurchase or forfeiture rights of such Options in
connection with a Corporate Transaction, Change in Control or Subsidiary
Disposition, on such terms and conditions as the Administrator may specify. The
Administrator also shall have the authority to condition any such Option vesting
and exercisability or release from such limitations upon the subsequent
termination of the Continuous Status as an Employee or Consultant of the Grantee
within a specified period following the effective date of the Change in Control
or Subsidiary Disposition. The Administrator may provide that any Options so
vested or released from such limitations in connection with a Change in Control
or Subsidiary Disposition, shall remain fully exercisable until the expiration
or sooner termination of the Option. Effective upon the consummation of a
Corporate Transaction, all outstanding Options under the Plan shall terminate
unless assumed by the successor company or its Parent.
(b) The portion of any Incentive Stock Option accelerated under
this Section 11 in connection with a Corporate Transaction, Change in Control or
Subsidiary Disposition shall remain exercisable as an Incentive Stock Option
under the Code only to the extent the $100,000 dollar limitation of Section
422(d) of the Code is not exceeded. To the extent such dollar
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limitation is exceeded, the accelerated excess portion of such Option shall be
exercisable as a Non-Qualified Stock Option.
12. Term of Plan. The Plan shall become effective upon its adoption by
the Board. It shall continue in effect for a term of ten (10) years unless
sooner terminated.
13. Amendment, Suspension or Termination of the Plan.
(a) The Board may at any time amend, suspend or terminate the
Plan. To the extent required to comply with Applicable Laws, the Company shall
obtain stockholder approval of any Plan amendment in such manner and to such a
degree as required.
(b) No Option may be granted during any suspension of the Plan or
after termination of the Plan.
(c) Any amendment, suspension or termination of the Plan shall not
affect Options already granted, and such Options shall remain in full force and
effect as if the Plan had not been amended, suspended or terminated, unless
mutually agreed otherwise between the Grantee and the Administrator, which
agreement must be in writing and signed by the Grantee and the Company.
14. Reservation of Shares.
(a) The Company, during the term of the Plan, will at all times
reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.
(b) The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.
15. No Effect on Terms of Employment. The Plan shall not confer upon
any Grantee any right with respect to continuation of employment or consulting
relationship with the Company, nor shall it interfere in any way with his or her
right or the Company's right to terminate his or her employment or consulting
relationship at any time, with or without cause.
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EX-10.17
5
f75694ex10-17.txt
EXHIBIT 10.17
1
Exhibit 10.17
AS APPROVED BY THE STOCKHOLDERS ON APRIL 25, 2000
DALLAS SEMICONDUCTOR CORPORATION
1993 OFFICER AND DIRECTOR
STOCK OPTION PLAN, AS AMENDED
1. Purpose. The Dallas Semiconductor Corporation 1993 Officer and
Director Stock Option Plan (the "Plan") is intended to advance the interests of
Dallas Semiconductor Corporation, a Delaware corporation (the "Company"), and
its stockholders, by encouraging and enabling selected officers, directors and
employees, upon whose judgment, initiative and effort the Company is largely
dependent for the successful conduct of its business, to acquire and retain a
proprietary interest in the Company by ownership of its stock. It is intended
that options which do not qualify for treatment as "incentive stock options"
under Section 422A of the Internal Revenue Code of 1986, as amended, and
applicable regulations and rulings promulgated thereunder (collectively the
"Code"), may be granted under the Plan.
2. Definitions.
(a) "Board" means the Board of Directors of the Company or a
Committee of the Board to whom its authority has been delegated.
(b) "Change of Control" means a change in control of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A
of Regulation 14A promulgated under the Exchange Act, whether or not the
Company is then subject to such reporting requirement; provided that,
without limitation, such a Change of Control shall be deemed to have
occurred if (i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 15% or more of the combined voting
power of the Company's then outstanding securities; (ii) during any period
of two consecutive years (not including any period prior to the effective
date of the Plan, as hereby amended), individuals who at the beginning of
such period constitute the Board and any new director, whose election to
the Board or nomination for election to the Board by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously
so approved, cease for any reason to constitute a majority of the Board;
(iii) the stockholders of the Company approve a merger or consolidation of
the Company with any other corporation, other than a merger or
consolidation which would result in the voting
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securities of the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than 80% of the combined
voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation, except
that a merger or consolidation effected to implement a recapitalization of
the Company (or similar transaction) in which no "person" (as hereinabove
defined) acquires more than 15% of the combined voting power of the
Company's then outstanding securities shall not constitute a Change of
Control of the Company; (iv) the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the sale
or disposition by the Company of all or substantially all of the Company's
assets; or (v) the election of any person other than C. V. Prothro as
Chief Executive Officer of the Company.
(c) "Common Stock" means the Company's Common Stock, $.02 par
value per share.
(d) "Date of Grant" means the date on which an Option is granted
under the Plan, which will be the date the Board authorizes the Option
unless the Board specifies a later date.
(e) "Date of Exercise" means the date on which an Option is
validly exercised pursuant to the Plan.
(f) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(g) "Fair Market Value" of the Company's Common Stock means, as
long as the Company's Common Stock is traded on the New York Stock
Exchange, the closing price of such stock on the New York Stock Exchange
on such date (or if such date is not a trading day, on the last trading
day immediately preceding such date) or, if not so traded, on the NASDAQ
National Market System or another national exchange upon which the
Company's Common Stock is traded or as otherwise determined by the Board,
based on any reasonable valuation method.
(h) "Option" means an option granted under the Plan.
(i) "Optionee" means a person to whom an Option, which has not
expired, has been granted under the Plan.
(j) "Successor" means the legal representative of the estate of a
deceased optionee or the person or persons who acquire the right to
exercise an Option by bequest or inheritance or by reason of the death of
an Optionee.
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(k) "Stock Option Agreement" means the agreement between the
Company and the Optionee, in such form as may from time to time be adopted
by the Board, under which the Optionee may purchase Common Stock pursuant
to the terms of an Option granted under the Plan.
3. Administration and Interpretation of Plan. The Plan shall be
administered by the Board. The Board shall have full and final authority in its
discretion, subject to the provisions of the Plan: (i) to determine the
individuals to whom, and the time or times at which, Options shall be granted
and the number of shares of Common Stock covered by each Option; (ii) to
construe and interpret the Plan; and (iii) to make all other determinations and
take all other actions deemed necessary or advisable for the proper
administration of the Plan. All such actions and determinations by the Board
shall be final and conclusively binding for all purposes and upon all persons.
4. Common Stock Subject to Options. The maximum number of shares of the
Company's Common Stock which may be issued upon the exercise of Options granted
under the Plan is 6,600,000, increased on and as of January 1 of each calendar
year from and including January 1, 1994, by a number of shares equal to
one-percent (1%) of the number of shares of Common Stock outstanding on December
31 of the preceding year; subject to adjustment by the Board to reflect, as
deemed appropriate by the Board, any stock dividend, stock split, reverse stock
split, share combination, reorganization, recapitalization or the like, of or by
the Company. The shares of Common Stock to be issued upon the exercise of
Options may be authorized but unissued shares, shares issued and reacquired by
the Company or shares bought on the open market for the purposes of the Plan. In
the event any Option shall, for any reason, terminate or expire or be canceled
or surrendered without having been exercised in full, the shares subject to such
Option, but not purchased thereunder, shall again be available for Options to be
granted under the Plan.
5. Participants. Options may be granted under the Plan to any person
who is an officer or director of the Company or an employee of the Company
designated by the Board whose responsibilities are functionally equivalent to
those of the Company's officers.
6. Terms and Conditions of Options. Any Option granted under the Plan
shall be evidenced by a Stock Option Agreement executed by the Company and the
Optionee. Such agreement shall be subject to the following limitations and
conditions:
(a) Option Price. The option price per share with respect to each
Option shall be determined by the Board but in no instance shall the
option price for an Option be less than 100% of the Fair Market Value of a
share of the Common Stock on the Date of Grant.
(b) Payment of Option Price. Full payment for shares purchased
upon exercising an Option shall be made in cash or by check, or by
delivery of previously owned shares of Common Stock, or partly in cash or
by check and
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partly in such stock. The value of shares of Common Stock delivered in
connection with the payment of the option price shall be the Fair Market
Value of such shares on the Date of Exercise of the Option.
(c) Term of Option. The expiration date of each Option shall not
be more than ten (10) years from the Date of Grant.
(d) Vesting of Stockholder Rights. Neither an Optionee nor his
Successor shall have any of the rights of a stockholder of the Company
until the certificate or certificates evidencing the shares purchased
pursuant to the exercise of an Option are properly delivered to such
Optionee or his Successor.
(e) Exercise of an Option. Each Option shall be exercisable at any
time, and from time to time, and in no particular order if the Optionee
holds more than one Option, throughout a period commencing on or after the
Date of Grant, as specified by the Board, and ending upon the earliest of
the expiration, cancellation, surrender or termination of the Option.
Furthermore, the exercise of each Option shall be subject to the condition
that if at any time the Company shall determine in its discretion that the
satisfaction of withholding tax or other withholding liabilities, or that
the listing, registration, or qualification of any share otherwise
deliverable upon such exercise upon any securities exchange or under any
state or federal law, or that the report to, or consent or approval of,
the Company's stockholders or any regulatory body, is necessary or
desirable as a condition of, or in connection with, such exercise or the
delivery or purchase of shares pursuant thereto, then in any such event,
such exercise shall not be effective unless such withholding, listing,
registration, qualification, report, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Company.
(f) Tax Offset Bonus. The Board may grant a Tax Offset Bonus to
such Optionees and on such bases as the Board shall determine, and a
provision relating thereto shall be included in the stock option
agreement. A Tax Offset Bonus may be granted concurrently with or after
the grant of an Option. A Tax Offset Bonus shall entitle an Optionee to
receive from the Company an amount in cash no greater than the then
existing maximum statutory Federal income tax rate (including any surtax
or similar charge or assessment) for individuals multiplied by the amount
of ordinary income, if any, realized by the Optionee for Federal income
tax purposes as a result of the exercise of the Option. The Board may
cancel or place a limit on the term of, or the amount payable for, any Tax
Offset Bonus at any time. The Board shall determine all other terms and
provisions of any Tax Offset Bonus grant. The Company shall not be
required to fund such Tax Offset Bonus prior to the due date for such
taxes, and the proceeds of such Tax Offset Bonus shall be advanced to the
Optionee in the form of a check payable to the Internal Revenue Service
for the account of the Optionee or such other method as the Board may
determine. The Board shall have the right to require an Optionee to
present reasonable proof of the amount of such taxes as a condition
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precedent to the making of such payment. The Company shall be under no
obligation of any nature to grant any Tax Offset Bonus to any Optionee at
any time.
(g) Company Loans. The Company may make stock purchase loans in
connection with Option exercises upon the following terms and conditions:
(i) Upon the exercise by an Optionee of an Option, or any
part thereof, and the Optionee's request for a loan pursuant hereto,
the Company, upon approval by the Board, may loan said Optionee, for
the sole purpose of purchasing Common Stock from the Company
pursuant to the exercise of such Option, an amount equal to the
excess of the exercise price of the Option over the aggregate par
value of the Common Stock which the Optionee has elected to purchase
pursuant to such exercise; provided, however, that the Optionee
shall execute concurrently a promissory note in form satisfactory to
the Board for such amount payable to the order of the Company;
(ii) The Company shall have no obligation to make any loan to
any Optionee at any time;
(iii) The promissory note referenced hereinbefore shall
provide for interest to be payable upon the outstanding principal
balance thereof at such rate and times as the Board may determine.
Such note shall also provide that the Board may require the Optionee
to secure the payment thereof at any time with collateral deemed
adequate by the Board in its sole discretion. Such note shall
mature, and all outstanding principal and interest shall become
immediately due and payable in installments or in lump sum at such
time or times as the Board shall provide. The note will provide for
prepayment of principal and accrued interest in whole or in part
from time to time without premium or penalty and may be extended or
modified, from time to time, at the Board's discretion. The note
shall provide for acceleration of maturity by the Company upon the
happening of any events determined appropriate by the Board.
(h) Transferability of Option. Other than by will or by laws of
descent and distribution, an option granted under the Plan shall be
transferable or assignable by an Optionee only if and under terms and
conditions approved by the Board in its sole discretion. No Option or the
shares covered thereby shall be pledged or hypothecated in any way and no
Option or the shares covered thereby shall be subject to execution,
attachment, or similar process except with the prior express written
consent of the Board.
(i) Termination of Employment or Directorship. Unless otherwise
specified by the Board, upon termination of an Optionee's employment with
the Company for any reason other than retirement, permanent disability or
death, or
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upon removal of a non-employee director of the Company from office, any
and all outstanding Option(s) of such Optionee shall immediately thereupon
be null and void. Unless otherwise specified by the Board, upon
termination of an Optionee's employment with the Company by reason of his
retirement or permanent disability, but excluding his death, his option
privileges shall be limited to the shares which were immediately
purchasable by him at the date of its expiration or three (3) months after
the date of such termination, whichever occurs first. Upon the resignation
or retirement of a non-employee director who has served as a director of
the Company for more than three (3) years, any unvested options shall
immediately accelerate, so that all unexercised options shall become
immediately exercisable, and such option privileges will expire unless
exercised by him or (in the event of his subsequent death) his Successor,
on or before the date any such Option expires by its own terms. Upon the
resignation or retirement of a non-employee director who has served as a
director of the Company for less than three (3) years, such Optionee or
(in the event of his subsequent death) his Successor, will be entitled to
exercise all unexercised option privileges exercisable by the Optionee at
the time of his resignation or retirement on or before the date any such
Option expires by its own terms. Neither the adoption of this Plan nor the
grant of an Option to an eligible person shall alter in any way the
Company's rights to terminate such person's employment or directorship at
any time with or without cause nor does it confer upon such person any
rights or privileges to continued employment, or any other rights and
privileges, except as specifically provided in the Plan.
(j) Death of Optionee. Unless otherwise specified by the Board, if
an Optionee (other than a non-employee director) dies while in the employ
of the Company, his option privileges shall be limited to the shares which
were immediately purchasable by him at the date of death and such option
privileges shall expire unless exercised by his Successor prior to the
date of its expiration or one (1) year from the date of the Optionee's
death, whichever occurs first. If a non-employee director who is an
Optionee dies while a director of the Company, any vesting of his option
privileges shall immediately accelerate, so that all unexercised option
privileges shall become immediately exercisable, and such option
privileges shall expire unless exercised by his Successor, on or before
the such option expires by its terms.
(k) Other Terms. Each Stock Option Agreement may contain such
other provisions as the Board in its discretion may determine, including,
without limitation:
(i) any provision which shall condition the exercise of all
or part of an Option upon such matters as the Board may deem
appropriate (if any) such as the passage of time, or the attainment
of certain performance goals, appropriate to reflect the
contribution of the Optionee to the performance of the Company;
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(ii) any provision which shall accelerate the exercisability
of an Option upon the occurrence of a Change of Control or under
such other circumstances as the Board may deem appropriate in spite
of any provision contained in an Option pursuant to clause (i) above
or otherwise; and
(iii) the manner in which an Option is to be exercised.
7. Allotment of Shares. The Board shall, in its discretion, determine
the number of shares of Common Stock to be offered from time to time by grant of
Options to officers, directors and other selected employees of the Company as
provided in Section 5, provided that during any three-year period, options may
not be granted under this Plan for an aggregate number of shares of Common Stock
in excess of 2,500,000 shares, in the case of the Company's chief executive
officer, and 1,000,000 shares, in the case of any other officer, subject to
adjustment by the Board to reflect, as deemed appropriate by the Board, any
stock dividend, stock split, reverse stock split, share combination,
reorganization or the like, of or by the Company. The grant of an Option shall
not be deemed either to entitle the Optionee to, or disqualify the Optionee
from, participation in any other grant of options under this Plan or any other
stock option plan of the Company.
8. Adjustments. The number of shares of Common Stock covered by each
outstanding Option granted under the Plan and the option price shall be adjusted
to reflect, as deemed appropriate by the Board in its discretion, any stock
dividend, stock split, reverse stock split, share combination, exchange of
shares, recapitalization, merger, consolidation, separation, reorganization,
liquidation or the like of or by the Company. Decisions by the Board as to what
adjustments shall be made, and the extent thereof, shall be final, binding and
conclusive on all Optionees.
9. Notices. Whenever any notice is required or permitted hereunder,
such notice must be in writing and personally delivered or sent by mail. Any
notice required or permitted to be delivered hereunder shall be deemed to be
delivered on the date which it is personally delivered, or, whether actually
received or not, on the third business day after it is deposited in the United
States mail, certified or registered, postage prepaid, addressed to the person
who is to receive it at the address which such person has theretofore specified
by written notice delivered in accordance herewith. The Company or an Optionee
may change, at any time and from time to time, by written notice to the other,
the address which it or he had theretofore specified for receiving notices.
Until changed in accordance herewith, the Company and each Optionee shall
specify as its and his address for receiving notices the address set forth in
the option agreement pertaining to the shares to which such notice relates.
10. Amendment or Discontinuance. This Plan may be amended or
discontinued by the Board without the approval of the stockholders of the
Company, provided that the Board may not, except as expressly provided in the
Plan, increase the aggregate number of shares which may be issued under Options
granted pursuant to the Plan, materially amend the eligibility requirements of
the Plan or materially increase the
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benefits which may accrue to participants under the Plan, without such approval
(if any) as may be required by applicable law or the requirements of any
national stock exchange upon which the Company's Common Stock is traded.
11. Effect of the Plan. Neither the adoption of this Plan nor any action
of the Board shall be deemed to give any officer, director or employee any right
to be granted an option to purchase Common Stock of the Company or any other
rights except as may be evidenced by a stock option agreement, or any amendment
thereto, duly authorized by the Board and executed on behalf of the Company and
then only to the extent and on the terms and conditions expressly set forth
therein.
12. Stock Split. The share numbers set forth in Sections 4 and 7 hereof
have been adjusted to reflect the two-for-one split of the Company's Common
Stock in the form of a 100% stock dividend, declared by the Board of Directors
on January 25, 2000, and distributable on February 28, 2000, to stockholders of
record on February 7, 2000. Such share numbers are subject to further adjustment
as provided for in said Sections.
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DALLAS SEMICONDUCTOR CORPORATION
AMENDMENT TO 1993 OFFICER AND DIRECTOR
STOCK OPTION PLAN, AS AMENDED
(ADOPTED BY THE BOARD OF DIRECTORS ON NOVEMBER 18, 2000)
RESOLVED, that, effective immediately, clause (v) of Section 2(b) of the
Corporation's 1993 Officer and Director Stock Option Plan be, and the same
hereby is, deleted.
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STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is made and entered into
this ___ day of __________, 199_ (the "Date of Grant"), by and between DALLAS
SEMICONDUCTOR CORPORATION, a Delaware corporation (the "Company"), and
__________, an officer of the Company ("Optionee").
WHEREAS, the Company's 1993 Officer and Director Stock Option Plan (the
"Plan") provides that certain officers of the Company may from time to time be
granted an option to purchase shares of the Company's Common Stock, par value
$.02 per share (the "Common Stock"), as therein provided, in furtherance of the
purposes of the Plan;
NOW, THEREFORE, in consideration of the covenants herein set forth, the
parties hereto have agreed and do hereby agree as follows:
1. Grant of Option. The Company hereby grants to Optionee, pursuant to
Section 7(a) of the Plan, the terms and provisions of which Plan are
incorporated herein by reference, an option (the "Option") to purchase all or
any part of __________ shares of the Common Stock of the Company on the terms
and conditions herein set forth.
2. Purchase Price. The purchase price of each share of Common Stock
subject to this Option shall be __________ per share. Full payment for shares
purchased upon exercise of this Option shall be made in cash or by check, or by
delivery of previously owned shares of Common Stock, or partly in cash or such
check and partly in such stock. The value of shares of Common Stock delivered in
connection with the payment of the option price shall be the fair market value
of such shares as determined by the Board of Directors of the Company (the
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"Board") and such determinations shall be binding upon the Optionee. No shares
may be issued until full payment of the purchase price therefor has been made.
3. Term of Option. The term of the Option shall be for a period of ten
(10) years from the Date of Grant, subject to earlier termination or
cancellation as provided herein and in the Plan.
4. Exercise of the Option. Subject to the provisions of Paragraph 14
hereof, this Option shall be exercisable in installments (subject to the right
of accumulation described below) so that this Option shall be exercisable for
25% of the aggregate number of shares provided in Paragraph 1 hereof at the end
of first year of the term hereof and thereafter shall be exercisable for 6.25%
of such aggregate number of shares during each calendar quarter during the term
hereof (until it shall become fully vested at the end of sixteen (16) calendar
quarters from the Date of Grant); provided, however, that this Option, or any
unexercised portion hereof, shall become immediately exercisable in full upon
the occurrence of a Change of Control. To the extent an installment is not
exercised during the time stated, such installment shall accumulate and be
exercisable, in whole or in part, in any subsequent period during the term of
this Option. No fractional shares may be issued pursuant to the exercise of this
Option. Furthermore, the exercise of this Option shall be subject to the
condition that if at any time the Company shall determine in its sole discretion
that the satisfaction of withholding tax or other withholding liabilities, or
that the listing, registration, or qualification of any share otherwise
deliverable upon such exercise upon any national securities exchange or under
any state or federal law, or that the report to, or consent or approval of, any
regulatory body, is necessary or desirable as a condition of, or in connection
with, such exercise or the delivery or purchase of shares pursuant hereto, then
in any such event, such exercise shall not be effective unless such withholding,
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listing, registration, qualification, report, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the Company.
5. Notice of Election. Subject to the terms and conditions hereof,
Optionee may exercise this Option by delivering written notice to the Secretary
of the Company in person or by registered or certified mail, postage prepaid.
Such notice shall state the election to partially or totally exercise this
Option and the number of shares in respect of which it is being exercised, and
shall be signed by Optionee. Such notice shall be accompanied by payment as
provided for hereinbefore, in which event, the Company shall deliver a
certificate or certificates, as may be requested by Optionee, representing such
shares as soon as practicable after the notice and payment shall be received.
The certificate or certificates for the shares as to which the Option shall have
been exercised shall be registered as designated in the notice. In the event the
Option shall be exercised, pursuant to Paragraph 10 hereof, by any person or
persons other than the Optionee, such notice shall be accompanied by proof
deemed appropriate by the Company of the right of such person or persons to
exercise the Option. All shares that shall be purchased upon the exercise of
this Option as provided herein shall be fully paid and non-assessable.
6. Tax Benefit Right. The Board may in its sole discretion at any time
prior to the exercise of this Option grant to Optionee a bonus in an amount in
cash not to exceed the then existing maximum statutory Federal income tax rate
(including any surtax or similar charge or assessment) for individual taxpayers
multiplied by the amount of income, if any, realized by Optionee for Federal
income tax purposes as a result of the exercise of this Option. Any such
payment, if granted, shall be made by the Company upon the due date for such
taxes in the form of a check payable to the Internal Revenue Service for the
account of Optionee, or in such other manner as the Board in its sole discretion
may determine. Any such payment shall otherwise be
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made upon such terms and conditions as may from time to time be determined by
the Board and such right shall be subject to limitation (as to term, amount, or
otherwise) and to cancellation at any time by the Board in its sole discretion.
7. Company Loan. (a) Subject to the provisions of subparagraph (b)
below, upon request of Optionee made at least three (3) business days prior to
the intended exercise date, the Board may (on such exercise date) loan to
Optionee an amount equal to the excess of the aggregate option price of the
Common Stock which Optionee is then electing to purchase pursuant to the
exercise of this Option, or any part hereof, over the aggregate par value of
such Common Stock, less any other consideration delivered by Optionee upon such
exercise, provided that Optionee shall execute a promissory note for such
amount, payable to the order of the Company, in such form as is in accordance
with the provisions of the Plan and as is otherwise satisfactory to the Board.
(b) The Company shall have an obligation to make a loan to Optionee only
if the Board shall have determined in its sole discretion prior to the exercise
date that such loan should be made, but shall have no such obligation if the
Board shall have thereafter canceled or suspended the operation of the loan
provisions of the Plan, or if the loan and/or other loans to be made at such
time would exceed any limit on the maximum amount of loans that may be made
under the Plan established from time to time by the Board in its discretion.
(c) Such loan shall further be conditioned upon the delivery by Optionee
of such collateral as may be required by the Board and the execution by Optionee
of such stock powers or other instruments which the Board may deem necessary or
advisable in connection with such loan and creation of such security interest.
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8. Non-Transferability. During the lifetime of Optionee, this Option
shall be exercisable only by Optionee. This Option shall not be assignable or
transferable by Optionee, voluntarily or by operation of law, other than by will
or by laws of descent and distribution. Neither this Option nor the shares
covered hereby shall be pledged or hypothecated in any way. Neither this Option
nor the shares covered hereby shall be subject to the execution, attachment, or
similar process except with the prior written consent of the Board.
9. Termination of Employment. In the event that Optionee shall at any
time hereafter cease to be an employee of the Company for any reason other than
his death or retirement, any part of the Option granted hereunder which has not
been exercised by the date of such cessation shall immediately terminate on the
date of such cessation. In the event that Optionee's employment by the Company
shall terminate by reason of his retirement or permanent disability, the Option
may be exercised, to the extent of the shares with respect to which the Option
could have been exercised by Optionee on the date of such termination prior to
the date of its expiration or three (3) months after the date of such
termination, whichever occurs first.
10. Death of Option. If Optionee dies prior to the termination of his
right to exercise this Option in accordance with the provisions hereof without
having totally exercised the Option, the Option may be exercised, to the extent
of the shares with respect to which the Option could have been exercised by
Optionee on the date of Optionee's death, by the Optionee's Successor, provided
the Option is exercised prior to the date of its expiration or one (1) year from
the date of the Optionee's death, whichever occurs first.
11. Adjustments. The number of shares of Common Stock covered by this
Option and the option price may be adjusted to reflect, as deemed appropriate by
the Board in its
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discretion, any stock dividend, stock split, share combination, exchange of
shares, recapitalization, merger, consolidation, separation, reorganization,
liquidation or the like of or by the Company. Decisions by the Board as to what
adjustments shall be made, and the extent thereof, shall be final, binding and
conclusive on Optionees.
12. No Other Rights or Obligations. Optionee shall have no rights by
reason of this Option as a stockholder with respect to any shares covered hereby
until the date of the issuance of one or more stock certificates to him for such
shares pursuant to the due exercise of the Option. The granting of this Option
shall not confer on Optionee any continued right of employment or tenure as an
officer of the Company or any additional rights other than as expressly provided
for herein. There is no obligation upon Optionee to exercise this Option or any
part thereof.
13. Subject to Plan. This option is subject to all of the terms and
conditions of the Company's 1993 Officer & Director Stock Option Plan (and as
amended if the Plan is amended hereafter). In the event of any conflict between
such terms and conditions and those set forth herein, the terms of the Plan
shall govern and be determinative.
14. Stockholder Approval. This Option has been granted subject to the
approval of the Plan by stockholders of the Company. Notwithstanding the
provisions of Paragraph 4 hereof, this Option may not be exercised unless and
until the Plan has been duly approved by the stockholders of the Company.
15. Shareholders Agreement. The shares of Common Stock issued to
Optionee upon the exercise of this Option shall be deemed to be issued pursuant
to a "fully vested stock option" under the terms of any Shareholder's Agreement
previously entered into between the Company and Optionee.
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16. Defined Terms. Unless otherwise defined herein, the capitalized
terms used herein shall have the same meaning given to such terms in the Plan.
IN WITNESS WHEREOF, Dallas Semiconductor Corporation and Optionee have
executed this Stock Option Agreement as of the date first above written.
Address for Notices: DALLAS SEMICONDUCTOR CORPORATION
4401 South Beltwood Parkway
Dallas, Texas 75244 By: ______________________________
Title: ______________________________
______________________________________ ______________________________
Optionee
______________________________________
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STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is made and entered into
this ______ day of ________________, 19___ (the "Date of Grant"), by and between
DALLAS SEMICONDUCTOR CORPORATION, a Delaware corporation (the "Company"), and
_______________, a director of the Company ("Optionee").
WHEREAS, the Company's 1993 Officer and Director Stock Option Plan (the
"Plan") provides for the automatic grant of an option to purchase shares of the
Company's Common Stock, par value $.02 per share (the "Common Stock") to each of
the Company's non-employee directors in office on the date of adoption of the
Plan or subsequently elected, as therein provided, in furtherance of the
purposes of the Plan;
NOW, THEREFORE, in consideration of the covenants herein set forth, the
parties hereto have agreed and do hereby agree as follows:
1. Grant of Option. The Company hereby confirms the automatic grant to
Optionee, pursuant to Section 7(b) of the Plan, the terms and provisions of
which Plan are incorporated herein by reference, of an option (the "Option") to
purchase all or any part of ______________ shares of the Common Stock of the
Company on the terms and conditions herein set forth.
2. Purchase Price. The purchase price of each share of Common Stock
subject to this Option shall $______________ per share. Full payment for shares
purchased upon exercise of this Option shall be made in cash or by check, or by
delivery of previously owned shares of Common Stock, or partly in cash or such
check and partly in such stock. The value of shares of Common Stock delivered in
connection with the payment of the option price shall be the fair market value
of such shares as determined by the Board of Directors of the Company (the
18
Board") and such determinations shall be binding upon the Optionee. No shares
may be issued until full payment of the purchase price therefor has been made.
3. Term of Option. The term of the Option shall be for a period of ten
(10) years from the Date of Grant, subject to earlier termination or
cancellation as provided herein and in the Plan.
4. Exercise of the Option. Subject to the provisions of Paragraph 14
hereof, this Option shall be exercisable in installments (subject to the right
of accumulation described below) so that this Option shall be exercisable for
25% of the aggregate number of shares provided in Paragraph 1 hereof at the end
of first year of the term hereof and thereafter shall be exercisable for 6.25%
of such aggregate number of shares during each calendar quarter during the term
hereof (until it shall become fully vested at the end of sixteen (16) calendar
quarters from the Date of Grant); provided, however, that this Option, or any
unexercised portion hereof, shall become immediately exercisable in full upon
the occurrence of a Change of Control. To the extent an installment is not
exercised during the time stated, such installment shall accumulate and be
exercisable, in whole or in part, in any subsequent period during the term of
this Option. No fractional shares may be issued pursuant to the exercise of this
Option. Furthermore, the exercise of this Option shall be subject to the
condition that if at any time the Company shall determine in its sole discretion
that the satisfaction of withholding tax or other withholding liabilities, or
that the listing, registration, or qualification of any share otherwise
deliverable upon such exercise upon any national securities exchange or under
any state or federal law, or that the report to, or consent or approval of, any
regulatory body, is necessary or desirable as a condition of, or in connection
with, such exercise or the delivery or purchase of shares pursuant hereto, then
in any such event, such exercise shall not be effective unless such
2
19
withholding, listing, registration, qualification, report, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Company.
5. Notice of Election. Subject to the terms and conditions hereof,
Optionee, may exercise this Option by delivering written notice to the Secretary
of the Company in person or by registered or certified mail, postage prepaid.
Such notice shall state the election to partially or totally exercise this
Option and the number of shares in respect of which it is being exercised, and
shall be signed by Optionee. Such notice shall be accompanied by payment as
provided for hereinbefore, in which event, the Company shall deliver a
certificate or certificates, as may be requested by Optionee, representing such
shares as soon as practicable after the notice and payment shall be received.
The certificate or certificates for the shares as to which the Option shall have
been exercised shall be registered as designated in the notice. In the event the
Option shall be exercised, pursuant to Paragraph 10 hereof, by any person or
persons other than the Optionee, such notice shall be accompanied by proof
deemed appropriate by the Company of the right of such person or persons to
exercise the Option. All shares that shall be purchased upon the exercise of
this Option as provided herein shall be fully paid and non-assessable.
6. Tax Benefit Right. The Board may in its sole discretion at any time
prior to the exercise of this Option grant to Optionee a bonus in an amount in
cash not to exceed the then existing maximum statutory Federal income tax rate
(including any surtax or similar charge or assessment) for individual taxpayers
multiplied by the amount of income, if any, realized by Optionee for Federal
income tax purposes as a result of the exercise of this Option. Any such
payment, if granted, shall be made by the Company upon the due date for such
taxes in the form of a check payable to the Internal Revenue Service for the
account of Optionee, or in such other manner as the Board in its sole discretion
may determine. Any such payment shall otherwise be
3
20
made upon such terms and conditions as may from time to time be determined by
the Board and such right shall be subject to limitation (as to term, amount, or
otherwise) and to cancellation at any time by the Board in its sole discretion.
Any grant of such a bonus to Optionee shall be on such terms and conditions, if
any, as may be permitted under Rule l6b-3 without adversely affecting any
requirement of such rule that the Plan be administered by disinterested persons.
7. Company Loan. (a) Subject to the provisions of subparagraph (b)
below, upon request of Optionee made at least three (3) business days prior to
the intended exercise date, the Board may (on such exercise date) loan to
Optionee an amount equal to the excess of the aggregate option price of the
Common Stock which Optionee is then electing to purchase pursuant to the
exercise of this Option, or any part hereof, over the aggregate par value of
such Common Stock, less any other consideration delivered by Optionee upon such
exercise, provided that Optionee shall execute a promissory note for such
amount, payable to the order of the Company, in such form as is in accordance
with the provisions of the Plan and as is otherwise satisfactory to the Board.
(b) The Company shall have an obligation to make a loan to
Optionee only if the Board shall have determined in its sole discretion prior to
the exercise date that such loan should be made, but shall have no such
obligation if the Board shall have thereafter canceled or suspended the
operation of the loan provisions of the Plan, if the loan and/or other loans to
be made at such time would exceed any limit on the maximum amount of loans that
may be made under the Plan established from time to time by the Board in its
discretion. Any loan hereunder to Optionee shall be on such terms and
conditions, if any, as may be permitted by Rule 16b-3 without adversely
affecting any requirement of such rule that the Plan be administered by
disinterested persons.
4
21
(c) Such loan shall further be conditioned upon the delivery by
Optionee of such collateral as may be required by the Board and the execution by
Optionee of such stock powers or other instruments which the Board may deem
necessary or advisable in connection with such loan and creation of such
security interest.
8. Non-Transferability. During the lifetime of Optionee, this Option
shall be exercisable only by Optionee. This Option shall not be assignable or
transferable by Optionee, voluntarily or by operation of law, other than by will
or by laws of descent and distribution. Neither this Option nor the shares
covered hereby shall be pledged or hypothecated in any way. Neither this Option
nor the shares covered hereby shall be subject to the execution, attachment, or
similar process except with the prior written consent of the Board.
9. Termination of Directorship. In the event that Optionee shall at any
time hereafter cease to be a director of the Company by reason of his removal
from office, any part of the Option granted hereunder which has not been
exercised by the date of such removal shall immediately terminate on the date of
such removal. In the event that Optionee's services as a director of the Company
shall terminate by reason of his resignation or retirement and Optionee shall
have then served as a director of the Company for more than three (3) years, the
vesting of any unexercised portion of this Option shall immediately accelerate,
so that any such unexercised portion of this Option may thereafter be exercised
by Optionee (or in the event of his subsequent death, by his Successor), at any
time prior to the date of its expiration. In the event Optionee has not served
as a director of the Company for more than three (3) years at the time of his
resignation or retirement, he (or, in the event of his subsequent death, his
Successor) shall be entitled to exercise, at any time prior to the date of
expiration of this Option, any
5
22
unexercised portion of this Option exercisable by Optionee at the time of his
resignation or retirement.
10. Death of Optionee. If Optionee dies prior to the termination of his
right to exercise this Option in accordance with the provisions hereof without
having fully exercised the Option, the vesting of any unexercised portion of
this Option shall immediately accelerate, so that any such unexercised portion
of this Option may thereafter be exercised by the Optionee's Successor, provided
this Option is exercised prior to the date of its expiration.
11. Adjustments. The number of shares of Common Stock covered by this
Option and the option price may be adjusted to reflect, as deemed appropriate by
the Board in its discretion, any stock dividend, stock split, share combination,
exchange of shares, recapitalization, merger, consolidation, separation,
reorganization, liquidation or the like of or by the Company. Decisions by the
Board as to what adjustments shall be made, and the extent thereof, shall be
final, binding and conclusive on Optionees.
12. No Other Rights or Obligations. Optionee shall have no rights by
reason of this Option as a stockholder with respect to any shares covered hereby
until the date of the issuance of one or more stock certificates to him for such
shares pursuant to the due exercise of the Option. The granting of this Option
shall not confer on Optionee any continued right of service or tenure as a
director of the Company or any additional rights other than as expressly
provided for herein. There is no obligation upon Optionee to exercise this
Option or any part thereof.
13. Subject to Plan. This option is subject to all of the terms and
conditions of the Company's 1993 Officer & Director Stock Option Plan (and as
amended if the Plan is amended hereafter). In the event of any conflict between
such terms and conditions and those set forth herein, the terms of the Plan
shall govern and be determinative.
6
23
14. Stockholder Approval. This Option has been granted subject to the
approval of the Plan by stockholders of the Company. Notwithstanding the
provisions of Paragraph 4 hereof, this Option may not be exercised unless and
until the Plan has been duly approved by the stockholders of the Company.
15. Defined Terms. Unless otherwise defined herein, the capitalized
terms used herein shall have the same meaning given to such terms in the Plan.
IN WITNESS WHEREOF, Dallas Semiconductor Corporation and Optionee have
executed this Stock Option Agreement as of the date first above written.
Address for Notices: DALLAS SEMICONDUCTOR CORPORATION
4401 South Beltwood Parkway By: ______________________________
Dallas, Texas 75244
Title: ______________________________
______________________________________
______________________________________ ______________________________
Optionee
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24
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (the "Agreement") is made and
entered into this _____ day of __________, 19__ (the "Date of Grant"), by and
between DALLAS SEMICONDUCTOR CORPORATION, a Delaware corporation (the
"Company"), and __________, an employee of the Company ("Optionee").
WHEREAS, the Company desires, by affording Optionee an opportunity to
purchase shares of its Common Stock, par value $.02 per share (the "Common
Stock"), as hereinafter provided, to carry out the purposes of the Dallas
Semiconductor Corporation 1987 Stock Option Plan (the "Plan");
NOW, THEREFORE, in consideration of the covenants herein set forth, the
parties hereto have agreed and do hereby agree as follows:
1. Grant of Option. The Company hereby grants to Optionee, pursuant to
the Plan, the terms and provisions of which are incorporated herein by
reference, an option (the "Option") to purchase all or any part of
__________shares of the Common Stock of the Company on the terms and conditions
herein set forth.
2. Purchase Price. The purchase price of each share of Common Stock
subject to this Option shall be $______ per share. Full payment for shares
purchased upon exercise of this Option shall be made in cash or by check, or by
delivery of previously owned shares of Common Stock, or partly in cash or such
check and partly in such stock. The value of shares of Common Stock delivered in
connection with the payment of the option price shall be the fair market value
of such shares as determined by the Board of Directors of the Company (the
"Board") and such
1
25
determinations shall be binding upon the Optionee. No shares may be issued until
full payment of the purchase price therefor has been made.
3. Term of Option. The term of the Option shall be for a period of ten
(10) years from the Date of Grant, subject to earlier termination or
cancellation as provided herein and in the Plan.
4. Exercise of the Option. This Option shall be exercisable in full or
in part at any time, and from time to time, during the term hereof, at any time
after the Date of Grant. No fractional shares may be issued pursuant to the
exercise of this Option. Furthermore, the exercise of this Option shall be
subject to the condition that if at any time the Company shall determine in its
sole discretion that the satisfaction of withholding tax or other withholding
liabilities, or that the listing, registration, or qualification of any shares
otherwise deliverable upon such exercise upon any national securities exchange
or under any state or federal law, or that the report to, or consent or approval
of, any `regulatory body, is necessary or desirable as a condition of, or in
connection with, such exercise or the delivery or purchase of shares pursuant
hereto, then in any such event, such exercise shall not be effective unless such
withholding, listing, registration, qualification, report, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Company.
5. Notice of Election. Subject to the terms and conditions hereof,
Optionee may exercise this Option by delivering written notice to the Secretary
of the Company in person or by registered or certified mail, postage prepaid.
Such notice shall state the election to partially or totally exercise this
Option and the number of shares in respect of which it is being exercised, and
shall be signed by Optionee. Such notice shall be accompanied by payment as
provided for hereinbefore, in which event, the Company shall deliver a
certificate or certificates, as may be requested by Optionee, representing such
shares as soon as practicable after the notice and
2
26
payment shall be received. The certificate or certificates for the shares as to
which the Option shall have been exercised shall be registered as designated in
the notice. In the event the Option shall be exercised, pursuant to Paragraph 8
hereof, by any person or persons other than the Optionee, such notice shall be
accompanied by proof deemed appropriate by the Company of the right of such
person or persons to exercise the Option. All shares that shall be purchased
upon the exercise of this Option as provided herein shall be fully paid and
non-assessable.
6. Non-Transferability. During the lifetime of Optionee, this Option
shall be exercisable only by Optionee. This Option shall not be assignable or
transferable by Optionee, voluntarily or by operation of law, other than by will
or by the laws of descent and distribution. Neither this Option nor the shares
covered hereby shall be pledged or hypothecated in any way. Neither this Option
nor the shares covered hereby shall be subject to the execution, attachment, or
similar process except with the prior written consent of the Board.
7. Termination of Employment. In the event that Optionee shall at any
time hereafter cease to be an employee of the Company or its subsidiaries for
any reason other than his death, retirement or permanent disability, any part of
the Option granted hereunder which has not been exercised by the date of such
cessation shall immediately terminate on the date of such cessation. In the
event that Optionee's employment with the Company or its subsidiary shall
terminate by reason of his retirement or permanent disability, the Option may be
exercised, to the extent of the shares with respect to which the Option could
have been exercised by Optionee on the date of such termination prior to the
date of its expiration or three (3) months after the date of such termination,
whichever occurs first.
8. Death of Optionee. If Optionee dies prior to the termination of his
right to exercise the Option in accordance with the provisions hereof without
having totally exercised the Option, the Option may be exercised, to the extent
of the shares with respect to which the Option
3
27
could have been exercised by Optionee on the date of Optionee's death, by the
Optionee's estate or by the person who acquires the right to exercise the Option
by bequest, inheritance, or by reason of the death of the Optionee, provided the
Option is exercised prior to the date of its expiration or one (1) year from the
date of the Optionee's death, whichever occurs first.
9. Adjustments. The number of shares of Common Stock covered by this
Option and the option price may be adjusted to reflect, as deemed appropriate by
the Board in its discretion, any stock dividend, stock split, share combination,
exchange of shares, recapitalization, merger, consolidation, separation,
reorganization, liquidation or the like of or by the Company. Decisions by the
Board as to what adjustments shall be made, and the extent thereof, shall be
final, binding and conclusive on Optionees.
10. No Other Rights or Obligations. Optionee shall have no rights by
reason of this Option as a shareholder with respect to any shares covered hereby
until the date of the issuance of one or more stock certificates to him for such
shares pursuant to the due exercise of the Option. The granting of this Option
does not confer on Optionee any continued right of employment or directorship
with the Company or any additional rights other than as expressly provided for
herein. There is no obligation upon Optionee to exercise this Option or any part
thereof.
11. Subject to Plan. This option is subject to all of the terms and
conditions of the Company's 1987 Stock Option Plan (and as amended hereafter if
the Plan is amended hereafter). In the event of any conflict between such terms
and conditions and those set forth herein, the terms of the Plan shall govern
and be determinative.
12. Incentive Stock Option. This option is not intended to qualify as an
"incentive stock option" under the Internal Revenue Code of 1986, as amended,
and applicable regulations and rulings promulgated thereunder, and shall not be
so construed.
4
28
13. Amendment. The Board shall have the right, without the consent or
approval of the Optionee, to amend, modify, limit or terminate this Option or
any term or provision hereof. Any such action by the Board shall be final and
binding on Optionee.
14. Shareholder's Agreement. The exercise of this Option is expressly
conditioned upon the prior or contemporaneous execution by the Optionee and the
Company of a Shareholder's Agreement, as provided in the Plan. All rights of the
Optionee and his heirs, successors and assigns shall be determined by such
agreement and the Optionee and his heirs, successors and assigns shall be bound
thereby. The shares of Common Stock issued pursuant to the exercise hereof shall
not be deemed to be issued vested stock option" and shall be subject to the
repurchase rights as provided in such agreement.
15. Defined Terms. Unless otherwise defined herein, the capitalized
terms used herein shall have the same meaning given to such terms in the Plan.
IN WITNESS WHEREOF, Dallas Semiconductor Corporation and Optionee have
executed this Non-Qualified Stock Option Agreement as of the date first above
written.
Address for Notices: DALLAS SEMICONDUCTOR CORPORATION
4350 Beltwood Parkway South
Dallas, Texas 75244 By: ______________________________
Title: ______________________________
______________________________________ _____________________________________
______________________________________
5
29
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (the "Agreement") is made and
entered into this _____ day of __________, 19__ (the "Date of Grant"), by and
between DALLAS SEMICONDUCTOR CORPORATION, a Delaware corporation (the
"Company"), and __________, an employee of the Company ("Optionee").
WHEREAS, the Company desires, by affording Optionee an opportunity to
purchase shares of its Common Stock, par value $.02 per share (the "Common
Stock"), as hereinafter provided, to carry out the purposes of the Dallas
Semiconductor Corporation 1987 Stock Option Plan (the "Plan");
NOW, THEREFORE, in consideration of the covenants herein set forth, the
parties hereto have agreed and do hereby agree as follows:
1. Grant of Option. The Company hereby grants to Optionee, pursuant to
the Plan, the terms and provisions of which are incorporated herein by
reference, an option (the "Option") to purchase all or any part of __________
shares of the Common Stock of the Company on the terms and conditions herein set
forth.
2. Purchase Price. The purchase price of each share of Common Stock
subject to this Option shall be $______ per share. Full payment for shares
purchased upon exercise of this Option shall be made in cash or by check, or by
delivery of previously owned shares of Common Stock, or partly in cash or such
check and partly in such stock. The value of shares of Common Stock delivered in
connection with the payment of the option price shall be the fair market value
of such shares as determined by the Board of Directors of the Company (the
"Board") and such determinations shall be binding upon the Optionee. No shares
may be issued until full payment of the purchase price therefor has been made.
30
3. Term of Option. The term of the Option shall be for a period of ten
(10) years from the Date of Grant, subject to earlier termination or
cancellation as provided herein and in the Plan.
4. Exercise of the Option. This Option shall be exercisable in full or
in part at any time, and from time to time, during the term hereof, at any time
commencing on the last day of the first completed calendar quarter following the
Date of Grant. No fractional shares may be issued pursuant to the exercise of
this Option. Furthermore, the exercise of this Option shall be subject to the
condition that if at any time the Company shall determine in its sole discretion
that the satisfaction of withholding tax or other withholding liabilities, or
that the listing, registration, or qualification of any shares otherwise
deliverable upon such exercise upon any national securities exchange or under
any state or federal law, or that the report to, or consent or approval of, any
regulatory body, is necessary or desirable as a condition of, or in connection
with, such exercise or the delivery or purchase of shares pursuant hereto, then
in any such event, such exercise shall not be effective unless such withholding,
listing, registration, qualification, report, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the Company.
5. Notice of Election. Subject to the terms and conditions hereof,
Optionee may exercise this Option by delivering written notice to the Secretary
of the Company in person or by registered or certified mail, postage prepaid.
Such notice shall state the election to partially or totally exercise this
Option and the number of shares in respect of which it is being exercised, and
shall be signed by Optionee. Such notice shall be accompanied by payment as
provided for hereinbefore, in which event, the Company shall deliver a
certificate or. certificates, as may be requested by Optionee, representing such
shares as soon as practicable after the notice and payment shall be received.
The certificate or certificates for the shares as to which the Option
2
31
shall have been exercised shall be registered as designated in the notice. In
the event the Option shall be exercised, pursuant to Paragraph 10 hereof, by any
person or persons other than the Optionee, such notice shall be accompanied by
proof deemed appropriate by the Company of the right of such person or persons
to exercise the Option. All shares that shall be purchased upon the exercise of
this Option as provided herein shall be fully paid and non-assessable.
6. Tax Benefit Right. The Compensation Committee (the "Committee") of
the Board may in its sole discretion at any time prior to the exercise of this
Option grant to Optionee a bonus in an amount in cash not to exceed the then
existing maximum statutory Federal income tax rate (including any surtax or
similar charge or assessment) for individual taxpayers multiplied by the amount
of ordinary income, if any, realized by Optionee for Federal income tax purposes
as a result of the exercise of this Option. Any such payment, if granted, shall
be made by the Company upon the due date for such taxes in the form of a check
payable to the Internal Revenue Service for the account of Optionee, or in such
other manner as the Committee in its sole discretion may determine. Any such
payment shall otherwise be made upon such terms and conditions as may from time
to time be determined by the Committee and such right shall be subject to
limitation (as to term, amount, or otherwise) and to cancellation at any time by
the Committee in its sole discretion.
7. Company Loan. (a) Subject to the provisions of subparagraph (b)
below, upon request of Optionee made at least three (3) business days prior to
the intended exercise date, the Company may (on such exercise date) loan to
Optionee an amount equal to the excess of the aggregate option price of the
Common Stock which Optionee is then electing to purchase pursuant to the
exercise of this Option, or any part hereof, over the aggregate par value of
such Common Stock, less any other consideration delivered by Optionee upon such
exercise, provided that Optionee shall execute a promissory note for such
amount, payable to the order of the
3
32
Company, in such form as is in accordance with the provisions of the Plan and as
is otherwise satisfactory to the Committee.
(b) The Company shall have an obligation to make a loan to Optionee only
if the Committee shall have determined in its sole discretion prior to the
exercise date that such loan should be made, but shall have no such obligation
if the Committee shall have thereafter cancelled or suspended the operation of
the loan provisions of the Plan, or if the loan and/or other loans to be made at
such time would exceed any limit on the maximum amount of loans that may be made
under the Plan established from time to time by the Committee in its discretion.
(c) Such loan shall further be conditioned upon the delivery by Optionee
of such collateral as may be required by the Committee and the execution by
Optionee of such stock powers or other instruments which the Committee may deem
necessary or advisable in connection with such loan and creation of such
security interest.
8. Non-Transferability. During the lifetime of Optionee, this Option
shall be exercisable only by Optionee. This Option shall not be assignable or
transferable by Optionee, voluntarily or by operation of law, other than by will
or by the laws of descent and distribution. Neither this Option nor the shares
covered hereby shall be pledged or hypothecated in any way. Neither this Option
nor the shares covered hereby shall be subject to the execution, attachment, or
similar process except with the prior written consent of the Board.
9. Termination of Employment. In the event that Optionee shall at any
time hereafter cease to be an employee of the Company or its subsidiaries for
any reason other than his death, retirement or permanent disability, any part of
the Option granted hereunder which has not been exercised by the date of such
cessation shall immediately terminate on the date of such cessation. In the
event that Optionee's employment with the Company or its subsidiary shall
terminate by reason of his retirement or permanent disability, the Option may be
exercised, to the extent of the
4
33
shares with respect to which the Option could have been exercised by Optionee on
the date of such termination prior to the date of its expiration or three (3)
months after the date of such termination, whichever occurs first.
10. Death of Optionee. If Optionee dies prior to the termination of his
right to exercise the Option in accordance with the provisions hereof without
having totally exercised the Option, the Option may be exercised, to the extent
of the shares with respect to which the Option could have been exercised by
Optionee on the date of Optionee's death, by the Optionee's estate or by the
person who acquires the right to exercise the Option by bequest, inheritance, or
by reason of the death of the Optionee, provided the Option is exercised prior
to the date of its expiration or one (1) year from the date of the Optionee's
death, whichever occurs first.
11. Adjustments. The number of shares of Common Stock covered by this
Option and the option price may be adjusted to reflect, as deemed appropriate by
the Board in its discretion, any stock dividend, stock split, share combination,
exchange of shares, recapitalization, merger, consolidation, separation,
reorganization, liquidation or the like of or by the Company. Decisions by the
Board as to what adjustments shall be made, and the extent thereof, shall be
final, binding and conclusive on Optionees.
12. No Other Rights or Obligations. Optionee shall have no rights by
reason of this Option as a shareholder with respect to any shares covered hereby
until the date of the issuance of one or more stock certificates to him for such
shares pursuant to the due exercise of the Option. The granting of this Option
does not confer on Optionee any continued right of employment or directorship
with the Company or any additional rights other than as expressly provided for
herein. There is no obligation upon Optionee to exercise this Option or any part
thereof.
13. Subject to Plan. This option is subject to all of the terms and
conditions of the Company's 1987 Stock Option Plan (and as amended hereafter if
the Plan is amended hereafter).
5
34
In the event of any conflict between such terms and conditions and those set
forth herein, the terms of the Plan shall govern and be determinative.
14. Incentive Stock Option. This option is not intended to qualify as an
"incentive stock option" under the Internal Revenue Code of 1986, as amended,
and applicable regulations and rulings promulgated thereunder, and shall not be
so construed.
15. Amendment. The Board shall have the right, without the consent or
approval of the Optionee, to amend, modify, limit or terminate this Option or
any term or provision hereof. Any such action by the Board shall be final and
binding on Optionee.
16. Shareholder's Agreement. The exercise of this Option is expressly
conditioned upon the prior or contemporaneous execution by the Optionee and the
Company of a Shareholder's Agreement, as provided in the Plan. All rights of the
Optionee and his heirs, successors and assigns shall be determined by such
agreement and the Optionee and his heirs, successors and assigns shall be bound
thereby. The shares of Common Stock issued pursuant to the exercise hereof shall
not be deemed to be issued pursuant to a "fully vested stock option" and shall
be subject to the repurchase rights as provided in such agreement.
17. Defined Terms. Unless otherwise defined herein, the capitalized
terms used herein shall have the same meaning given to such terms in the Plan.
IN WITNESS WHEREOF, Dallas Semiconductor Corporation and Optionee have
executed this Non-Qualified Stock Option Agreement as of the date first above
written.
6
35
Address for Notices: DALLAS SEMICONDUCTOR CORPORATION
4350 Beltwood Parkway South
Dallas, Texas 75244 By: ______________________________
Title: ______________________________
______________________________________ _____________________________________
______________________________________
7
36
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (the "Agreement") is made and
entered into this _____ day of __________, 19__ (the "Date of Grant"), by and
between DALLAS SEMICONDUCTOR CORPORATION, a Delaware corporation (the
"Company"), and __________, an employee of the Company ("Optionee").
WHEREAS, the Company desires, by affording Optionee an opportunity to
purchase shares of its Common Stock, par value $.02 per share (the "Common
Stock"), as hereinafter provided, to carry out the purposes of the Dallas
Semiconductor Corporation 1987 Stock Option Plan (the "Plan");
NOW, THEREFORE, in consideration of the covenants herein set forth, the
parties hereto have agreed and do hereby agree as follows:
1. Grant of Option. The Company hereby grants to Optionee, pursuant to
the Plan, the terms and provisions of which are incorporated herein by
reference, an option (the "Option") to purchase all or any part of __________
shares of the Common Stock of the Company on the terms and conditions herein set
forth.
2. Purchase Price. The purchase price of each share of Common Stock
subject to this Option shall be $______ per share. Full payment for shares
purchased upon exercise of this Option shall be made in cash or by check, or by
delivery of previously owned shares of Common Stock, or partly in cash or such
check and partly in such stock. The value of shares of Common Stock delivered in
connection with the payment of the option price shall be the fair market value
of such shares as determined by the Board of Directors of the Company (the
"Board") and such determinations shall be binding upon the Optionee. No shares
may be issued until full payment of the purchase price therefor has been made.
37
3. Term of Option. The term of the Option shall be for a period of ten
(10) years from the Date of Grant, subject to earlier termination or
cancellation as provided herein and in the Plan.
4. Exercise of the Option This Option shall be exercisable in
installments (subject to the right of accumulation described below) so that this
Option shall be exercisable for 6.25% of the aggregate number of shares provided
in Paragraph 1 hereof during each calendar quarter during the term hereof
commencing at the end of the first completed calendar quarter (until it shall
become fully vested at the end of sixteen (16) calendar quarters). To the extent
an installment is not exercised during the time stated, such installment shall
accumulate and be exercisable, in whole or in part, in any subsequent period
during the term of this Option. No fractional shares may be issued pursuant to
the exercise of this Option. Furthermore, the exercise of this Option shall be
subject to the condition that if at any time the Company shall determine in its
sole discretion that the satisfaction of withholding tax or other withholding
liabilities, or that the listing, registration, or qualification of any shares
otherwise deliverable upon such exercise upon any national securities exchange
or under any state or federal law, or that the report to, or consent or approval
of, any regulatory body, is necessary or desirable as a condition of, or in
connection with, such exercise or the delivery or purchase of shares pursuant
hereto, then in any such event, such exercise shall not be effective unless such
withholding, listing, registration, qualification, report, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Company.
5. Notice of Election. Subject to the terms and conditions hereof,
Optionee may exercise this Option by delivering written notice to the Secretary
of the Company in person or by registered or certified mail, postage prepaid.
Such notice shall state the election to partially or totally exercise this
Option and the number of shares in respect of which it is being exercised, and
2
38
shall be signed by Optionee. Such notice shall be accompanied by payment as
provided for hereinbefore, in which event, the Company shall deliver a
certificate or certificates, as may be requested by Optionee, representing such
shares as soon as practicable after the notice and payment shall be received.
The certificate or certificates for the shares as to which the Option shall have
been exercised shall be registered as designated in the notice. In the event the
Option shall be exercised, pursuant to Paragraph 10 hereof, by any person or
persons other than the Optionee, such notice shall be accompanied by proof
deemed appropriate by the Company of the right of such person or persons to
exercise the Option. All shares that shall be purchased upon the exercise of
this Option as provided herein shall be fully paid and non-assessable.
6. Tax Benefit Right. The Compensation Committee (the "Committee") of
the Board may in its sole discretion at any time prior to the exercise of this
Option grant to Optionee a bonus in an amount in cash not to exceed the then
existing maximum statutory Federal income tax rate (including any surtax or
similar charge or assessment) for individual taxpayers multiplied by the amount
of ordinary income, if any, realized by Optionee for Federal income tax purposes
as a result of the exercise of this Option. Any such payment, if granted, shall
be made by the Company upon the due date for such taxes in the form of a check
payable to the Internal Revenue Service for the account of Optionee, or in such
other manner as the Committee in its sole discretion may determine. Any such
payment shall otherwise be made upon such terms and conditions as may from time
to time be determined by the Committee and such right shall be subject to
limitation (as to term, amount, or otherwise) and to cancellation at any time by
the Committee in its sole discretion.
7. Company Loan. (a) Subject to the provisions of subparagraph (b)
below, upon request of Optionee made at least three (3) business days prior to
the intended exercise date, the Company may (on such exercise date) loan to
Optionee an amount equal to the excess of the aggregate option price of the
Common Stock which Optionee is then electing to purchase pursuant to the
exercise of this Option,
3
39
or any part hereof, over the aggregate par value of such Common Stock, less any
other consideration delivered by Optionee upon such exercise, provided that
Optionee shall execute a promissory note for such amount, payable to the order
of the Company, in such form as is in accordance with the provisions of the Plan
and as is otherwise satisfactory to the Committee.
(b) The Company shall have an obligation to make a loan to Optionee only
if the Committee shall have determined in its sole discretion prior to the
exercise date that such loan should be made, but shall have no such obligation
if the Committee shall have thereafter cancelled or suspended the operation of
the loan provisions of the Plan, or if the loan and/or other loans to be made at
such time would exceed any limit on the maximum amount of loans that may be made
under the Plan established from time to time by the Committee in its discretion.
(c) Such loan shall further be conditioned upon the delivery by Optionee
of such collateral as may be required by the Committee and the execution by
Optionee of such stock powers or other instruments which the Committee may deem
necessary or advisable in connection with such loan and creation of such
security interest.
8. Non-Transferability. During the lifetime of Optionee, this Option
shall be exercisable only by Optionee. This Option shall not be assignable or
transferable by Optionee, voluntarily or by operation of law, other than by will
or by the laws of descent and distribution. Neither this Option nor the shares
covered hereby shall be pledged or hypothecated in any way. Neither this Option
nor the shares covered hereby shall be subject to the execution, attachment, or
similar process except with the prior written consent of the Board.
9. Termination of Employment. In the event that Optionee shall at any
time hereafter cease to be an employee of the Company or its subsidiaries for
any reason other than his death, retirement or permanent disability, any part of
the Option granted hereunder which has not been exercised by the date of such
cessation shall immediately terminate on the date of such cessation.
4
40
In the event that Optionee's employment with the Company or its subsidiary shall
terminate by reason of his retirement or permanent disability, the Option may be
exercised, to the extent of the shares with respect to which the Option could
have been exercised by Optionee on the date of such termination prior to the
date of its expiration or three (3) months after the date of such termination,
whichever occurs first.
10. Death of Optionee. If Optionee dies prior to the termination of his
right to exercise the Option in accordance with the provisions hereof without
having totally exercised the Option, the Option may be exercised, to the extent
of the shares with respect to which the Option could have been exercised by
Optionee on the date of Optionee's death, by the Optionee's estate or by the
person who acquires the right to exercise the Option by bequest, inheritance, or
by reason of the death of the Optionee, provided the Option is exercised prior
to the date of its expiration or one (1) year from the date of the Optionee's
death, whichever occurs first.
11. Adjustments. The number of shares of Common Stock covered by this
Option and the option price may be adjusted to reflect, as deemed appropriate by
the Board in its discretion, any stock dividend, stock split, share combination,
exchange or shares, recapitalization, merger, consolidation, separation,
reorganization, liquidation or the like of or by the Company. Decisions by the
Board as to what adjustments shall be made, and the extent thereof, shall be
final, binding and conclusive on Optionees.
12. No Other Rights or Obligations. Optionee shall have no rights by
reason of this Option as a shareholder with respect to any shares covered hereby
until the date of the issuance of one or more stock certificates to him for such
shares pursuant to the due exercise of the Option. The granting of this Option
does not confer on Optionee any continued right of employment or directorship
with the Company or any additional rights other than as expressly provided for
herein. There is no obligation upon Optionee to exercise this Option or any part
thereof.
5
41
13. Subject to Plan. This option is subject to all of the terms and
conditions of the Company's 1987 Stock Option Plan (and as amended hereafter if
the Plan is amended hereafter). In the event of any conflict between such terms
and conditions and those set forth herein, the terms of the Plan shall govern
and be determinative.
14. Incentive Stock Option. This option is not intended to qualify as an
"incentive stock option" under the Internal Revenue Code of 1986, as amended,
and applicable regulations and rulings promulgated thereunder, and shall not be
so construed.
15. Amendment. The Board shall have the right, without the consent or
approval of the Optionee, to amend, modify, limit or terminate this Option or
any term or provision hereof. Any such action by the Board shall be final and
binding on Optionee.
16. Shareholder's Agreement. The exercise of this Option is expressly
conditioned upon the prior or contemporaneous execution by the Optionee and the
Company of a Shareholder's Agreement, as provided in the Plan. All rights of the
Optionee and his heirs, successors and assigns shall be determined by such
agreement and the Optionee and his heirs, successors and assigns shall be bound
thereby. The shares of Common Stock issued pursuant to the exercise hereof shall
be deemed to be issued pursuant to a "fully vested stock option" and shall not
be subject to the repurchase rights as provided in such agreement.
17. Defined Terms. Unless otherwise defined herein, the capitalized
terms used herein shall have the same meaning given to such terms in the Plan.
IN WITNESS WHEREOF, Dallas Semiconductor Corporation and Optionee have
executed this Non-Qualified Stock Option Agreement as of the date first above
written.
6
42
Address for Notices: DALLAS SEMICONDUCTOR CORPORATION
4350 Beltwood Parkway South
Dallas, Texas 75244 By: ______________________________
Title: ______________________________
______________________________________ _____________________________________
______________________________________
7
43
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (the "Agreement") is made and
entered into this _____ day of __________, 19__ (the "Date of Grant"), by and
between DALLAS SEMICONDUCTOR CORPORATION, a Delaware corporation (the
"Company"), and __________, an employee of the Company ("Optionee").
WHEREAS, the Company desires, by affording Optionee an opportunity to
purchase shares of its Common Stock, par value $.02 per share (the "Common
Stock"), as hereinafter provided, to carry out the purposes of the Dallas
Semiconductor Corporation 1987 Stock Option Plan (the "Plan");
NOW, THEREFORE, in consideration of the covenants herein set forth, the
parties hereto have agreed and do hereby agree as follows:
1. Grant of Option. The Company hereby grants to Optionee, pursuant to
the Plan, the terms and provisions of which are incorporated herein by
reference, an option (the "Option") to purchase all or any part of ________
shares of the Common Stock of the Company on the terms and conditions herein set
forth.
2. Purchase Price. The purchase price of each share of Common Stock
subject to this Option shall be $_____ per share. Full payment for shares
purchased upon exercise of this Option shall be made in cash or by check, or by
delivery of previously owned shares of Common Stock, or partly in cash or such
check and partly in such stock. The value of shares of Common Stock delivered in
connection with the payment of the option price shall be the fair market value
of such shares as determined by the Board of Directors of the Company (the
"Board") and such determinations shall be binding upon the Optionee. No shares
may be issued until full payment of the purchase price therefor has been made.
44
3. Term of Option. The term of the Option shall be for a period of ten
(10) years from the Date of Grant, subject to earlier termination or
cancellation as provided herein and in the Plan.
4. Exercise of the Option. This Option shall be exercisable in full or
in part at any time, and from time to time, during the term hereof, at any time
commencing on the last day of the first completed calendar quarter following the
Date of Grant. No fractional shares may be issued pursuant to the exercise of
this Option. Furthermore, the exercise of this Option shall be subject to the
condition that if at any time the Company shall determine in its sole discretion
that the satisfaction of withholding tax or other withholding liabilities, or
that the listing, registration, or qualification of any shares otherwise
deliverable upon such exercise upon any national securities exchange or under
any state or federal law, or that the report to, or consent or approval of, any
regulatory body, is necessary or desirable as a condition of, or in connection
with, such exercise or the delivery or purchase of shares pursuant hereto, then
in any such event, such exercise shall not be effective unless such withholding,
listing, registration, qualification, report, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the Company.
5. Notice of Election. Subject to the terms and conditions hereof,
Optionee may exercise this Option by delivering written notice to the Secretary
of the Company in person or by registered or certified mail, postage prepaid.
Such notice shall state the election to partially or totally exercise this
Option and the number of shares in respect of which it is being exercised, and
shall be signed by Optionee. Such notice shall be accompanied by payment as
provided for hereinbefore, in which event, the Company shall deliver a
certificate or certificates, as may be requested by Optionee, representing such
shares as soon as practicable after the notice and payment shall be received.
The certificate or certificates for the shares as to which the Option
2
45
shall have been exercised shall be registered as designated in the notice. In
the event the Option shall be exercised, pursuant to Paragraph 10 hereof, by any
person or persons other than the Optionee, such notice shall be accompanied by
proof deemed appropriate by the Company of the right of such person or persons
to exercise the Option. All shares that shall be purchased upon the exercise of
this Option as provided herein shall be fully paid and non-assessable.
6. Tax Benefit Right. The Compensation Committee (the "Committee") of
the Board may in its sole discretion at any time prior to the exercise of this
Option grant to Optionee a bonus in an amount in cash not to exceed the then
existing maximum statutory Federal income tax rate (including any surtax or
similar charge or assessment) for individual taxpayers multiplied by the amount
of ordinary income, if any, realized by Optionee for Federal income tax purposes
as a result of the exercise of this Option. Any such payment, if granted, shall
be made by the Company upon the due date for such taxes in the form of a check
payable to the Internal Revenue Service for the account of Optionee, or in such
other manner as the Committee in its sole discretion may determine. Any such
payment shall otherwise be made upon such terms and conditions as may from time
to time be determined by the Committee and such right shall be subject to
limitation (as to term, amount, or otherwise) and to cancellation at any time by
the Committee in its sole discretion.
7. Company Loan. (a) Subject to the provisions of subparagraph (b)
below, upon request of Optionee made at least three (3) business days prior to
the intended exercise date, the Company may (on such exercise date) loan to
Optionee an amount equal to the excess of the aggregate option price of the
Common Stock which Optionee is then electing to purchase pursuant to the
exercise of this Option, or any part hereof, over the aggregate par value of
such Common Stock, less any other consideration delivered by Optionee upon such
exercise, provided that Optionee shall execute a promissory note for such
amount, payable to the order of the
3
46
Company, in such form as is in accordance with the provisions of the Plan and as
is otherwise satisfactory to the Committee.
(b) The Company shall have an obligation to make a loan to Optionee only
if the Committee shall have determined in its sole discretion prior to the
exercise date that such loan should be made, but shall have no such obligation
if the Committee shall have thereafter cancelled or suspended the operation of
the loan provisions of the Plan, or if the loan and/or other loans to be made at
such time would exceed any limit on the maximum amount of loans that may be made
under the Plan established from time to time by the Committee in its discretion.
(c) Such loan shall further be conditioned upon the delivery by Optionee
of such collateral as may be required by the Committee and the execution by
Optionee of such stock powers or other instruments which the Committee may deem
necessary or advisable in connection with such loan and creation of such
security interest.
8. Non-Transferability. During the lifetime of Optionee, this Option
shall be exercisable only by Optionee. This Option shall not be assignable or
transferable by Optionee, voluntarily or by operation of law, other than by will
or by the laws of descent and distribution. Neither this Option nor the shares
covered hereby shall be pledged or hypothecated in any way. Neither this Option
nor the shares covered hereby shall be subject to the execution, attachment, or
similar process except with the prior written consent of the Board.
9. Termination of Employment. In the event that Optionee shall at any
time hereafter cease to be an employee of the Company or its subsidiaries for
any reason other than his death, retirement or permanent disability, any part of
the Option granted hereunder which has not been exercised by the date of such
cessation shall immediately terminate on the date of such cessation. In the
event that Optionee's employment with the Company or its subsidiary shall
terminate by reason of his retirement or permanent disability, the Option may be
exercised, to the extent of the
4
47
shares with respect to which the Option could have been exercised by Optionee on
the date of such termination prior to the date of its expiration or three (3)
months after the date of such termination, whichever occurs first.
10. Death of Optionee. If Optionee dies prior to the termination of his
right to exercise the Option in accordance with the provisions hereof without
having totally exercised the Option, the Option may be exercised, to the extent
of the shares with respect to which the Option could have been exercised by
Optionee on the date of Optionee's death, by the Optionee's estate or by the
person who acquires the right to exercise the Option by bequest, inheritance, or
by reason of the death of the Optionee, provided the Option is exercised prior
to the date of its expiration or one (1) year from the date of the Optionee's
death, whichever occurs first.
11. Adjustments. The number of shares of Common Stock covered by this
Option and the option price may be adjusted to reflect, as deemed appropriate by
the Board in its discretion, any stock dividend, stock split, share combination,
exchange of shares, recapitalization, merger, consolidation, separation,
reorganization, liquidation or the like of or by the Company. Decisions by the
Board as to what adjustments shall be made, and the extent thereof, shall be
final, binding and conclusive on Optionees.
12. No Other Rights or Obligations. Optionee shall have no rights by
reason of this Option as a shareholder with respect to any shares covered hereby
until the date of the issuance of one or more stock certificates to him for such
shares pursuant to the due exercise of the Option. The granting of this Option
does not confer on Optionee any continued right of employment or directorship
with the Company or any additional rights other than as expressly provided for
herein. There is no obligation upon Optionee to exercise this Option or any part
thereof.
13. Subject to Plan. This option is subject to all of the terms and
conditions of the Company's 1987 Stock Option Plan (and as amended hereafter if
the Plan is amended hereafter).
5
48
In the event of any conflict between such terms and conditions and those set
forth herein, the terms of the Plan shall govern and be determinative.
14. Incentive Stock Option. This option is not intended to qualify as an
"incentive stock option" under the Internal Revenue Code of 1986, as amended,
and applicable regulations and rulings promulgated thereunder, and shall not be
so construed.
15. Amendment. The Board shall have the right, without the consent or
approval of the Optionee, to amend, modify, limit or terminate this Option or
any term or provision hereof. Any such action by the Board shall be final and
binding on Optionee.
16. Shareholder's Agreement. The exercise of this Option is expressly
conditioned upon the prior or contemporaneous execution by the Optionee and the
Company of a Shareholder's Agreement, as provided in the Plan. All rights of the
Optionee and his heirs, successors and assigns shall be determined by such
agreement and the Optionee and his heirs, successors and assigns shall be bound
thereby. The shares of Common Stock issued pursuant to the exercise hereof shall
not be deemed to be issued pursuant to a "fully vested stock option" and shall
be subject to the repurchase rights as provided in such agreement.
17. Stockholder Approval. This Option has been granted pursuant to an
amendment to the Plan adopted by the Board of Directors and subject to the
approval of the stockholders of the Company. Notwithstanding the provisions of
Section 4 hereof, this Option may not be exercised unless and until such
amendment to the Plan has been duly approved by the stockholders of the Company.
18. Defined Terms. Unless otherwise defined herein, the capitalized
terms used herein shall have the same meaning given to such terms in the Plan.
IN WITNESS WHEREOF, Dallas Semiconductor Corporation and Optionee have
executed this Non-Qualified Stock Option Agreement as of the date first above
written.
6
49
Address for Notices: DALLAS SEMICONDUCTOR CORPORATION
4350 Beltwood Parkway South
Dallas, Texas 75244 By: ______________________________
Title: ______________________________
______________________________________ _____________________________________
______________________________________
7
50
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (the "Agreement") is made and
entered into this _____ day of __________ 19__ (the "Date of Grant"), by and
between DALLAS SEMICONDUCTOR CORPORATION, a Delaware corporation (the
"Company"), and __________, an employee of the Company ("Optionee").
WHEREAS, the Company desires, by affording Optionee an opportunity to
purchase shares of its Common Stock, par value $.02 per share (the "Common
Stock"), as hereinafter provided, to carry out the purposes of the Dallas
Semiconductor Corporation 1987 Stock Option Plan (the "Plan");
NOW, THEREFORE, in consideration of the covenants herein set forth, the
parties hereto have agreed and do hereby agree as follows:
1. Grant of Option. The Company hereby grants to Optionee, pursuant to
the Plan, the terms and provisions of which are incorporated herein by
reference, an option (the "Option") to purchase all or any part of ________
shares of the Common Stock of the Company on the terms and conditions herein set
forth.
2. Purchase Price. The purchase price of each share of Common Stock
subject to this Option shall be $_____ per share. Full payment for shares
purchased upon exercise of this Option shall be made in cash or by check, or by
delivery of previously owned shares of Common Stock, or partly in cash or such
check and partly in such stock. The value of shares of Common Stock delivered in
connection with the payment of the option price shall be the fair market value
of such shares as determined by the Board of Directors of the Company (the
"Board") and such determinations shall be binding upon the Optionee. No shares
may be issued until full payment of the purchase price therefor has been made.
51
3. Term of Option. The term of the Option shall be for a period of ten
(10) years from the Date of Grant, subject to earlier termination or
cancellation as provided herein and in the Plan.
4. Exercise of the Option. This Option shall be exercisable in fun or
in part at any time, and from time to time, during the term hereof, at any time
after the Date of Grant. No fractional shares may be issued pursuant to the
exercise of this Option. Furthermore, the exercise of this Option shall be
subject to the condition that if at any time the Company shall determine in its
sole discretion that the satisfaction of withholding tax or other withholding
liabilities, or that the listing, registration, or qualification of any shares
otherwise deliverable upon such exercise upon any national securities exchange
or under any state or federal law, or that the report to, or consent or approval
of, any regulatory body, is necessary or desirable as a condition of, or in
connection with, such exercise or the delivery or purchase of shares pursuant
hereto, then in any such event, such exercise shall not be effective unless such
withholding, listing, registration, qualification, report, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Company.
5. Notice of Election. Subject to the terms and conditions hereof,
Optionee may exercise this Option by delivering written notice to the Secretary
of the Company in person or by registered or certified mail, postage prepaid.
Such notice shall state the election to partially or totally exercise this
Option and the number of shares in respect of which it is being exercised, and
shall be signed by Optionee. Such notice shall be accompanied by payment as
provided for hereinbefore, in which event, the Company shall deliver a
certificate or certificates, as may be requested by Optionee, representing such
shares as soon as practicable after the notice and payment shall be received.
The certificate or certificates for the shares as to which the Option shall have
been exercised shall be registered as designated in the notice. In the event the
Option
2
52
shall be exercised, pursuant to Paragraph 8 hereof, by any person or persons
other than the Optionee, such notice shall be accompanied by proof deemed
appropriate by the Company of the right of such person or persons to exercise
the Option. All shares that shall be purchased upon the exercise of this Option
as provided herein shall be fully paid and non-assessable.
6. Non-Transferability. During the lifetime of Optionee, this Option
shall be exercisable only by Optionee. This Option shall not be assignable or
transferable by Optionee, voluntarily or by operation of law, other than by will
or by the laws of descent and distribution. Neither this Option nor the shares
covered hereby shall be pledged or hypothecated in any way. Neither this Option
nor the shares covered hereby shall be subject to the execution, attachment, or
similar process except with the prior written consent of the Board.
7. Termination of Employment. In the event that Optionee shall at any
time hereafter cease to be an employee of the Company or its subsidiaries for
any reason other than his death, retirement or permanent disability, any part of
the Option granted hereunder which has not been exercised by the date of such
cessation shall immediately terminate on the date of such cessation. In the
event that Optionee's employment with the Company or its subsidiary shall
terminate by reason of his retirement or permanent disability, the Option may be
exercised, to the extent of the shares with respect to which the Option could
have been exercised by Optionee on the date of such termination prior to the
date of its expiration or three (3) months after the date of such termination,
whichever occurs first.
8. Death of Optionee. If Optionee dies prior to the termination of his
right to exercise the Option in accordance with the provisions hereof without
having totally exercised the Option, the Option may be exercised, to the extent
of the shares with respect to which the Option could have been exercised by
Optionee on the date of Optionee's death, by the Optionee's estate or by the
person who acquires the right to exercise the Option by bequest, inheritance, or
by
3
53
reason of the death of the Optionee, provided the Option is exercised prior to
the date of its expiration or one (1) year from the date of the Optionee's
death, whichever occurs first.
9. Adjustments. The number of shares of Common Stock covered by this
Option and the option price may be adjusted to reflect, as deemed appropriate by
the Board in its discretion, any stock dividend, stock split, share combination,
exchange of shares, recapitalization, merger, consolidation, separation,
reorganization, liquidation or the like of or by the Company. Decisions by the
Board as to what adjustments shall be made, and the extent thereof, shall be
final, binding and conclusive on Optionees.
10. No Other Rights or Obligations. Optionee shall have no rights by
reason of this Option as a shareholder with respect to any shares covered hereby
until the date of the issuance of one or more stock certificates to him for such
shares pursuant to the due exercise of the Option. The granting of this Option
does not confer on Optionee any continued right of employment or directorship
with the Company or any additional rights other than as expressly provided for
herein. There is no obligation upon Optionee to exercise this Option or any part
thereof.
11. Subject to Plan. This option is subject to all of the terms and
conditions of the Company's 1987 Stock Option Plan (and as amended hereafter if
the Plan is amended hereafter). In the event of any conflict between such terms
and conditions and those set forth herein, the terms of the Plan shall govern
and be determinative.
12. Incentive Stock Option. This option is not intended to qualify as an
"incentive stock option" under the Internal Revenue Code of 1986, as amended,
and applicable regulations and rulings promulgated thereunder, and shall not be
so construed.
13. Amendment. The Board shall have the right, without the consent or
approval of the Optionee, to amend, modify, limit or terminate this Option or
any term or provision hereof. Any such action by the Board shall be final and
binding on Optionee.
4
54
14. Shareholder's Agreement. The exercise of this Option is expressly
conditioned upon the prior or contemporaneous execution by the Optionee and the
Company of a Shareholder's Agreement, as provided in the Plan. All rights of the
Optionee and his heirs, successors and assigns shall be determined by such
agreement and the Optionee and his heirs, successors and assigns shall be bound
thereby. The shares of Common Stock issued pursuant to the exercise hereof shall
not be deemed to be issued pursuant to a "fully vested stock option" and shall
be subject to the repurchase rights as provided in such agreement.
15. Stockholder Approval. This Option has been granted pursuant to an
amendment to the Plan adopted by the Board of Directors and subject to the
approval of the stockholders of the Company. Notwithstanding the provisions of
Section 4 hereof, this Option may not be exercised unless and until such
amendment to the Plan has been duly approved by the stockholders of the Company.
16. Defined Terms. Unless otherwise defined herein, the capitalized
terms used herein shall have the same meaning given to such terms in the Plan.
IN WITNESS WHEREOF, Dallas Semiconductor Corporation and Optionee have
executed this Non-Qualified Stock Option Agreement as of the date first above
written.
Address for Notices: DALLAS SEMICONDUCTOR CORPORATION
4350 Beltwood Parkway South
Dallas, Texas 75244 By: ______________________________
Title: ______________________________
______________________________________ _____________________________________
______________________________________
5
EX-10.18
6
f75694ex10-18.txt
EXHIBIT 10.18
1
EXHIBIT 10.18
As Amended Effective 10-26-99
DALLAS SEMICONDUCTOR CORPORATION
AMENDED 1987 STOCK OPTION PLAN
1. Purpose. The Dallas Semiconductor Corporation 1987 Stock Option Plan
(the "Plan") is intended to advance the interests of Dallas Semiconductor
Corporation, a Delaware corporation (the "Company"), and its stockholders, by
encouraging and enabling selected officers, directors, consultants, agents and
employees, upon whose judgment, initiative and effort the Company is largely
dependent for the successful conduct of its business, to acquire and retain a
proprietary interest in the Company by ownership of its stock. It is intended
that options which may qualify for treatment as "incentive stock options" under
Section 422A of the Internal Revenue Code of 1986, as amended, and applicable
regulations and rulings promulgated thereunder (collectively the "Code"), as
well as options which may not so qualify, may be granted under the Plan.
2. Definitions.
(1) "Board" means the Board of Directors of the Company or a
Committee of the Board to whom its authority has been delegated.
(2) "Common Stock" means the Company's Common Stock, $.02 par value
per share.
(3) "Date of Grant" means the date on which an Option is granted
under the Plan, which will be the date the Board authorizes the Option
unless the Board specifies a later date.
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(4) "Date of Exercise" means the date on which an Option is validly
exercised pursuant to the Plan.
(5) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(6) "Fair Market Value" of the Company's Common Stock means, as long
as the Company's Common Stock is traded on the New York Stock Exchange,
the closing price of such stock on the New York Stock Exchange on such
date (or if such date is not a trading day, on the last trading day
immediately preceding such date) or, if not so traded, on the NASDAQ
National Market System or another national exchange upon which the
Company's Common Stock is traded or as otherwise determined by the
Board, based on any reasonable valuation method.
(7) "Option" means an option granted under the Plan.
(8) "Optionee" means a person to whom an Option, which has not
expired, has been granted under the Plan.
(9) "Subsidiary" or "Subsidiaries" means a subsidiary corporation or
corporations of the Company as defined in Section 425(f) of the Code.
(10) "Successor" means the legal representative of the estate of a
deceased optionee or the person or persons who acquire the right to
exercise an Option by bequest or inheritance or by reason of the death
of an Optionee.
(11) "Incentive Stock Option" means an option that qualifies as an
incentive stock option under all of the requirements of the Code.
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(12) "Incentive Stock Option Agreement" means the agreement between
the Company and the Optionee, in such form as may from time to time be
adopted by the Board, under which the Optionee may purchase Common Stock
pursuant to the terms of an Incentive Stock Option granted under the
Plan.
(13) "Non-Qualified Stock Option" means an option to purchase Common
Stock granted pursuant to the provisions of the Plan that does not
qualify as an Incentive Stock Option.
(14) "Non-Qualified Stock Option Agreement" means the agreement
between the Company and the Optionee, in such form as may from time to
time be adopted by the Board, under which the Optionee may purchase
Common Stock pursuant to the terms of a Non-Qualified Stock Option
granted under the Plan.
3. Administration and Interpretation of Plan. The Plan shall be
administered by the Board. The Board shall have full and final authority in its
discretion, subject to the provisions of the Plan: (i) to determine the
individuals to whom, and the time or times at which, Options shall be granted
and the number of shares of Common Stock covered by each Option; (ii) to
construe and interpret the Plan; and (iii) to make all other determinations and
take all other actions deemed necessary or advisable for the proper
administration of the Plan. All such actions and determinations by the Board
shall be final and conclusively binding for all purposes and upon all persons.
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4. Common Stock Subject to Options. The maximum number of shares of
Common Stock of the Company which may be issued upon the exercise of Options
granted under the Plan is 6,797,339, computed from the date of the adoption of
the Company's 1987 Stock Option Plan through the effective date of this amended
Plan (which number includes 850,000 shares authorized by the Board of Directors
on October 26, 1999, for issuance upon the exercise of Options under the Plan),
increased on and as of January 1 of each calendar year from and including
January 1, 2000, by a number of shares equal to one percent (1%) of the number
of shares of Common Stock outstanding on December 31 of the preceding year;
subject to appropriate adjustment by the Board to reflect any stock dividend,
stock split, reverse stock split, share combination, reorganization,
recapitalization or the like, of or by the Company. The shares of Common Stock
to be issued upon the exercise of Options may be authorized but unissued shares,
shares issued and reacquired by the Company or shares bought on the open market
for the purposes of the Plan. In the event any Option shall, for any reason,
terminate or expire or be canceled or surrendered without having been exercised
in full, the shares subject to such Option, but not purchased thereunder, shall
again be available for Options to be granted under the Plan.
5. Participants. Options may be granted under the Plan to any person who
is an officer, director, employee or consultant of the Company or any of its
Subsidiaries.
6. Terms and Conditions of Options. Any Option granted under the Plan
shall be evidenced by either an Incentive Stock Option Agreement or a Non-
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Qualified Stock Option Agreement executed by the Company and the Optionee. Such
agreement shall be subject to the following limitations and conditions:
(1) Option Price. The option price per share with respect to each
Option shall be determined by the Board but in no instance shall the
option price for an Option which is intended to qualify as an Incentive
Stock Option be less than 100% of the Fair Market Value of a share of
the Common Stock on the Date of Grant.
(2) Payment of Option Price. Full payment for shares purchased upon
exercising an Option shall be made in cash or by check, or by delivery
of previously owned shares of Common Stock, or partly in cash or by
check and partly in such stock. The value of shares of Common Stock
delivered in connection with the payment of the option price shall be
the Fair Market Value of such shares on the Date of Exercise of the
Option.
(3) Term of Option. The expiration date of each Incentive Stock
Option shall not be more than ten (10) years from the Date of Grant. The
expiration date of each Non-Qualified Stock Option shall not be more
than eleven (11) years from the Date of Grant.
(4) Vesting of Stockholder Rights. Neither an Optionee nor his
Successor shall have any of the rights of a stockholder of the Company
until the certificate or certificates evidencing the shares purchased
pursuant to the exercise of an Option are properly delivered to such
Optionee or his Successor.
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(5) Exercise of an Option. Each Option shall be exercisable at any
time, and from time to time, and in no particular order if the Optionee
holds more than one Option, throughout a period commencing on or after
the Date of Grant, as specified by the Board, and ending upon the
earliest of the expiration, cancellation, surrender or termination of
the Option; provided however, that no Option shall be exercisable in
whole or in part prior to the date of stockholder approval of the Plan.
Furthermore, the exercise of each Option shall be subject to the
condition that if at any time the Company shall determine in its
discretion that the satisfaction of withholding tax or other withholding
liabilities, or that the listing, registration, or qualification of any
share otherwise deliverable upon such exercise upon any securities
exchange or under any state or federal law, or that the report to, or
consent or approval of, stockholders or any regulatory body, is
necessary or desirable as a condition of, or in connection with, such
exercise or the delivery or purchase of shares pursuant thereto, then in
any such event, such exercise shall not be effective unless such
withholding, listing, registration, qualification, report, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Company.
(6) Stock Appreciation Rights. Any Option may include a Stock
Appreciation Right, either at the Date of Grant or later by amendment
approved by the Board, and provision therefor shall be included in the
stock option agreement at such time consistent with the terms hereof.
Such Stock Appreciation Right shall be subject to such terms and
conditions not
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inconsistent with the Plan as the Board shall impose, including the
following:
(1) It shall be exercisable only when and to the extent the
Option is exercisable and only at such time as the value of the
Company's Common Stock is equal to or greater than the option price
specified in such Option.
(2) It shall entitle the Optionee to surrender unexercised the
Option in which the Stock Appreciation Right is included (or any
portion of such Option) to the Company and to receive from the
Company in exchange therefor that number of shares of Common Stock
having an aggregate value equal to the excess of the Fair Market
Value of one share, on the day immediately preceding the date on
which the Stock Appreciation Right is exercised, over the purchase
price per share specified in such option, times the number of shares
called for by the Option, or portion thereof, which is so
surrendered. The Company, in its discretion, shall be entitled to
elect to settle its obligation arising out of the exercise of a
Stock Appreciation Right by the payment of cash equal to the
aggregate value of the shares it would otherwise be obligated to
deliver. The Company may also elect to settle such obligation partly
in cash and partly in Common Stock. In lieu thereof, the Company
shall have the right, in its discretion, to the extent it shall deem
advisable to consent to or disapprove the
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election of the Optionee to receive cash in full or partial
settlement of a Stock Appreciation Right.
(3) No fractional shares shall be delivered pursuant to exercise
of a Stock Appreciation Right but in lieu thereof a cash adjustment
shall be made.
(4) Notwithstanding the other provisions hereof, to the extent
that a Stock Appreciation Right included in an Option is exercised,
such Option shall be deemed to have been exercised to the extent of
the number of shares of Common Stock called for by the Option or
portion thereof which is surrendered on exercise of the Stock
Appreciation Right, so that such shares shall no longer be reserved
for issuance upon the exercise of Options to be granted under the
Plan.
(5) The Board shall have the right, without the consent or
approval of the Optionee, at any time after the grant of a Stock
Appreciation Right to limit the time within or extent to which such
Stock Appreciation Right may be exercisable, to limit the maximum
amount of appreciation that may be recognized in connection with the
exercise thereof or to in any other manner it, in its discretion,
shall deem advisable amend or terminate such Stock Appreciation
Right.
(6) A Stock Appreciation Right granted pursuant to the Plan
shall not be exercisable unless and until the Optionee shall have
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completed one (1) continuous year of full time employment with the
Company subsequent to the time of grant of such Stock Appreciation
Right. For the purposes hereof, full time employment shall be such
as may be established by the Board.
(7) The Company shall have the right at any time to amend this
provision of the Plan dealing with Stock Appreciation Rights, and
the provisions of any stock option agreement pursuant to the Plan
dealing with a Stock Appreciation Right, to the extent that it, in
its discretion, shall deem to be necessary in order to comply with
the provisions of Rule 16b-3.
(7) Non-ISO Tax Offset Bonus. The Board may grant a Tax Offset Bonus
to such Optionees and on such bases as the Board shall determine,
including, but not limited to, a Tax Offset Bonus which becomes
exercisable only upon an Optionee's being subject to the restrictions of
Section 16 of the Exchange Act. A Tax Offset Bonus may be granted only
with respect to a Non-Qualified Stock Option under the Plan, and may be
granted concurrently with or after the grant of the Non-Qualified Stock
Option. A Tax Offset Bonus shall entitle an Optionee to receive from the
Company or a Subsidiary an amount in cash no greater than the then
existing maximum statutory Federal income tax rate (including any surtax
or similar charge or assessment) for individuals multiplied by the
amount of ordinary income, if any, realized by the Optionee for Federal
income tax purposes as a result of the exercise of the Non-Qualified
Stock Option. The Board may cancel or
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place a limit on the term of, or the amount payable for, any Tax Offset
Bonus at any time. The Board shall determine all other terms and
provisions of any Tax Offset Bonus grant. The Company shall not be
required to fund such Tax Offset Bonus prior to the due date for such
taxes, and the proceeds of such Tax Offset Bonus shall be advanced to
the Optionee in the form of a check payable to the Internal Revenue
Service for the account of the Optionee or such other method as the
Board may determine. The Board shall have the right to require an
Optionee to present reasonable proof of the amount of such taxes as a
condition precedent to the making of such payment. The Company shall be
under no obligation of any nature to grant any Tax Offset Bonus to any
Optionee at any time.
(8) Company Loans. The Company may make stock purchase loans in
connection with Option exercises upon the following terms and
conditions:
(1) Upon the exercise by an Optionee of his Option, or any part
thereof, and the Optionee's request for a loan pursuant hereto, the
Company, upon approval by the Board, may loan said Optionee, for the
sole purpose of purchasing Common Stock from the Company pursuant to
the exercise of such Option, an amount equal to the excess of the
exercise price of the Option over the aggregate par value of the
Common Stock which the Optionee has elected to purchase pursuant to
such exercise; provided, however, that the Optionee shall
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execute concurrently a promissory note in form satisfactory to the
Board for such amount payable to the order of the Company;
(2) The Company shall have no obligation to make any loan to any
Optionee at any time;
(3) The promissory note referenced hereinbefore shall provide
for interest to be payable upon the outstanding principal balance
thereof at such rate and times as the Board may determine. Such note
shall also provide that the Board may require the Optionee to secure
the payment thereof at any time with collateral deemed adequate by
the Board in its sole discretion. Such note shall mature, and all
outstanding principal and interest shall become immediately due and
payable in installments or in lump sum at such time or times as the
Board shall provide. The note will provide for prepayment of
principal and accrued interest in whole or in part from time to time
without premium or penalty and may be extended or modified, from
time to time, at the Board's discretion. The note shall provide for
acceleration of maturity by the Company upon the happening of any
events determined appropriate by the Board, including without
limitation, any of the following events:
(1) failure of the Optionee to pay or perform any term
or provision thereof; or
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(2) termination of the Optionee's employment with the
Company or a Subsidiary for any reason, except retirement,
disability or death; or
(3) if the Optionee shall execute an assignment for the
benefit of creditors, or admit in writing his ability to pay
his debts generally as they become due, or voluntarily seek
the benefit of, or have a petition filed against him seeking
the benefit of, a judgment, order or decree filed against
him pursuant to any bankruptcy, insolvency, reorganization,
or similar debtor relief law affecting the rights of
creditors generally; or
(4) failure of the Optionee to have discharged within a
period of thirty (30) days after the commencement thereof
any attachment, sequestration, or similar proceeding against
any of the assets of the Optionee; or
(5) failure of the Optionee to pay any money judgment
against him at least thirty (30) days prior to the date on
which any of his assets may be lawfully sold to satisfy such
judgment; or
(6) failure or refusal of the Optionee to comply with
any of the terms and conditions of his stock option
agreement or any other oral or written agreement with the
Company; or
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(7) failure or refusal of the Optionee to provide
adequate security for payment of the promissory note
immediately upon request for collateral by the Board; or
(8) the divorce of the Optionee, unless arrangements
satisfactory to the Board are agreed to prior to the entry
of the divorce decree.
(9) Nontransferability of Option. Other than by will or by laws
of descent and distribution, an Option granted under the Plan shall
be transferable or assignable by an Optionee only if and under terms
and conditions approved by the Board, in its sole discretion.
Subject to the foregoing sentence, each Option shall be exercisable,
during the Optionee's lifetime, only by him. No Option or the shares
covered thereby shall be pledged or hypothecated in any way and no
Option or the shares covered thereby shall be subject to execution,
attachment, or similar process except with the prior express written
consent of the Board.
(10) Termination of Employment. Except as may otherwise be
authorized by the Board, upon termination of an Optionee's
employment with the Company or with any of its Subsidiaries for any
reason other than retirement, permanent disability or death, any and
all outstanding Option(s) of such Optionee shall immediately
thereupon be null and void. Neither the adoption of this Plan nor
the grant of an Option to an eligible person shall alter in any way
the Company's or the relevant Subsidiary's rights to terminate such
person's employment or directorship at any time with or
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without cause nor does it confer upon such person any rights or
privileges to continued employment, or any other rights and
privileges, except as specifically provided in the Plan.
(11) Death of Optionee. Except as may otherwise be authorized by
the Board, if an Optionee dies while in the employ of the Company or
any Subsidiary, his option privileges shall be limited to the shares
which were immediately purchasable by him at the date of death and
such option privileges shall expire unless exercised by his
Successor prior to the date of its expiration or one (1) year from
the date of the Optionee's death, whichever occurs first.
(12) Ten Percent Stockholder. Notwithstanding anything herein to
the contrary, an Option which is intended to qualify as an Incentive
Stock Option shall be granted hereunder to any Optionee who,
immediately before such Option is granted, beneficially owns,
directly or indirectly, more than 10% of the total voting power of
all classes of stock of the Company only if both of the following
conditions are met:
(1) The option price per share shall be no less than
110% of the Fair Market Value of a share of Common Stock on
the Date of Grant; and
(2) The expiration date of the Option shall be not more
than five (5) years from the Date of Grant.
(13) Other Terms. Each Incentive Stock Option Agreement or
Non-Qualified Stock Option Agreement, as the case may be, may
contain such
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other provisions as the Board in its discretion may determine,
including, without limitation:
(1) in the event that an Option shall be immediately exercisable,
any provision which shall provide that the shares acquired pursuant
thereto shall not be deemed to have been issued pursuant to a fully
vested stock option and thereby subject to repurchase rights (if any)
contained in the shareholder's agreement with the Optionee, entered
into pursuant to Paragraph 10 hereof;
(2) any provision which shall condition the exercise of all or
part of an Option upon such matters as the Board may deem appropriate
(if any) such as the passage of time, or the attainment of certain
performance goals, appropriate to reflect the contribution of the
Optionee to the performance of the Company;
(3) any provision which would accelerate the exercisability of an
Option in spite of any provision contained in an Option pursuant to
clause (2) above or otherwise, under such circumstances as the Board
may deem appropriate; and
(4) the manner in which an Option is to be exercised.
7. Allotment of Shares. The grant of an Option shall not be deemed
either to entitle the Optionee to, or disqualify the Optionee from,
participation in any other grant of options under this Plan or any other stock
option plan of the Company. The number of shares allotted to each Optionee shall
be determined as follows: The Board shall, in its discretion, determine the
number of shares of
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Common Stock to be offered from time to time by grant of Options to officers,
key employees and consultants of the Company or its Subsidiaries; provided that
the aggregate Fair Market Value (determined as of the time the option is
granted) of the Common Stock with respect to which Options which are intended to
qualify as Incentive Stock Options are exercisable for the first time by such
Optionee during any calendar year (under all such plans of the Optionee's
employer corporation and its parent and subsidiary corporations) shall not
exceed $100,000.
8. Adjustments. The number of shares of Common Stock covered by each
outstanding Option granted under the Plan and the option price shall be adjusted
to reflect, as deemed appropriate by the Board in its discretion, any stock
dividend, stock split, reverse stock split, share combination, exchange of
shares, recapitalization, merger, consolidation, separation, reorganization,
liquidation or the like of or by the Company. Decisions by the Board as to what
adjustments shall be made, and the extent thereof, shall be final, binding and
conclusive on all Optionees.
9. Designation of Incentive Stock Options. The Board shall cause each
Option granted hereunder to be clearly designated in the agreement evidencing
such Option, at the time of grant, as to whether or not it is intended to
qualify as an Incentive Stock Option.
10. Execution of Shareholder's Agreement. Options may only be exercised
hereunder by employees who have executed a Shareholder's Agreement in such form
as the Board may adopt from time to time.
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11. Notices. Whenever any notice is required or permitted hereunder,
such notice must be in writing and personally delivered or sent by mail. Any
notice required or permitted to be delivered hereunder shall be deemed to be
delivered on the date which it is personally delivered, or, whether actually
received or not, on the third business day after it is deposited in the United
States mail, certified or registered, postage prepaid, addressed to the person
who is to receive it at the address which such person has theretofore specified
by written notice delivered in accordance herewith. The Company or an Optionee
may change, at any time and from time to time, by written notice to the other,
the address which it or he had theretofore specified for receiving notices.
Until changed in accordance herewith, the Company and each Optionee shall
specify as its and his address for receiving notices the address set forth in
the option agreement pertaining to the shares to which such notice relates.
12. Amendment or Discontinuance. The Plan and any Option outstanding
hereunder may be amended or discontinued by the Board without the approval of
the stockholders of the Company, except that the Board may not, except as
expressly provided in the Plan, increase the aggregate number of shares which
may be issued under Options granted pursuant to the Plan, materially amend the
eligibility requirements of the Plan or materially increase the benefits which
may accrue to participants under the Plan, without such approval (if any) as may
be required pursuant to applicable law or the requirements of any national stock
exchange upon which the Company's Common Stock is traded.
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13. Effect of the Plan. Neither the adoption of this Plan nor any action
of the Board shall be deemed to give any officer or employee any right to be
granted an option to purchase Common Stock of the Company or any of its
Subsidiaries, or any other rights except as may be evidenced by a stock option
agreement, or any amendment thereto, duly authorized by the Board and executed
on behalf of the Company and then only to the extent and on the terms and
conditions expressly set forth therein.
14. Grant of Incentive Stock Options. No Incentive Stock Options shall
be granted pursuant to this Plan after the expiration of ten years from the date
of the earlier of: (i) the date the Plan is adopted, or (ii) the date the Plan
is approved by the stockholders of the Company.
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DALLAS SEMICONDUCTOR CORPORATION
AMENDMENT TO
AMENDED 1987 STOCK OPTION PLAN
(Adopted by the Board of Directors on November 27, 2000)
RESOLVED, that, subject to such approval (if any) as may be required
pursuant to the provisions of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended, or applicable law or the requirements of the
New York Stock Exchange, the Amended 1987 Stock Option Plan of the Corporation
be, and the same hereby is further amended, effective November 27, 2000, so as
to increase the number of shares of Common Stock available for the grant of
options thereunder by 1,250,000 shares.
EX-10.19
7
f75694ex10-19.txt
EXHIBIT 10.19
1
EXHIBIT 10.19
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT is executed and delivered pursuant to that
certain Agreement and Plan of Merger, dated as of January 28, 2001 (the "Merger
Agreement"), by and among Maxim Integrated Products, Inc., a Delaware
corporation (the "Company"), MI Acquisition Sub, Inc., a Delaware corporation,
and Dallas Semiconductor Corporation, a Delaware corporation ("Dallas
Semiconductor"), pursuant to which Dallas Semiconductor will become a wholly
owned subsidiary of the Company. Pursuant to Section 6.3(c) of the Merger
Agreement, the Company is required to expressly assume the obligations of that
certain Split-Dollar Insurance Agreement, dated as of January 23, 2001, by and
between Alan Hale and Dallas Semiconductor, as amended ("Split-Dollar
Agreement"), a copy of which is attached hereto as Exhibit A.
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, in accordance with the provisions of Section 14(a)
of the Split-Dollar Agreement, the Company hereby assumes and agrees to pay,
perform and discharge in accordance with the terms thereof, all of the duties,
liabilities and obligations of Dallas Semiconductor under the Split-Dollar
Agreement.
This Assumption Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
2
IN WITNESS WHEREOF, each party hereto has caused this instrument to be
executed by its duly authorized officer this the 11th day of April, 2001.
MAXIM INTEGRATED PRODUCTS, INC.
By: /s/ Carl W. Jasper
------------------------------------
Name: Carl W. Jasper
Title: Chief Financial Officer
DALLAS SEMICONDUCTOR CORPORATION
By: /s/ Chao C. Mai
------------------------------------
Name: Chao C. Mai
Title: President
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EXHIBIT A
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DALLAS SEMICONDUCTOR CORPORATION
SPLIT-DOLLAR INSURANCE AGREEMENT
THIS AGREEMENT is entered into as of this 20th day of July, 2000, by
and between Alan Hale ("Participant"), whose address is 5616 Walnut Spring
Court, Dallas, Texas 75252, and Dallas Semiconductor Corporation, a Delaware
corporation ("Company"), having its principal office and place of business
located at 4401 South Beltwood Parkway, Dallas, Texas 75244.
WHEREAS, the Company by resolution of the Board of Directors duly
adopted on December 17, 1993 ("Date of Adoption") has adopted the Dallas
Semiconductor Corporation Split-Dollar Insurance Plan to promote the interests
of the Company in retaining the officers and directors of the Company who have
made, and are capable of continuing to make, valuable contributions to the
Company's performance by providing life insurance protection; and
WHEREAS, Participant is a director of the Company who had completed at
least five (5) years of service as a director of the Company on the Date of
Adoption and has expressed a willingness to continue his services as a director
of the Company, or is an officer of the Company at the Vice President level or
above on the Date of Adoption; and
WHEREAS, Participant entered into an agreement with the Company dated
the 15th day of February, 1994, concerning a split-dollar life insurance
arrangement with the Company (the "Prior Agreement"); and
WHEREAS, this Agreement amends, restates and supersedes in its entirety
the terms of the Prior Agreement, effective the date of this Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. Policy. Participant has applied for, and the Company has caused to be
issued, a policy or policies of permanent life insurance described on Exhibit
"A" attached hereto, with the attributes described in Section 2 hereof (such
policy or policies, together with any additional policy or policies issued with
the consent of Participant in substitution or replacement for any such policy or
policies, are collectively referred to herein as the "Policy") from an insurance
company selected by the Company as described on Exhibit "A" ("Insurer"). The
Company will take all such action as may be necessary or appropriate to cause
the Policy to be maintained in force at all times, so as to provide Participant
with all of the benefits of the Policy and this Agreement.
2. Benefits. The Policy has been structured, based on a specified
interest rate, mortality and other assumptions, to provide Participant (over and
above benefits payable to the Company) with the benefits, during each year in
which the Policy is in force, provided in the
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Policy and those benefits described on Exhibit "A" attached hereto. The Company
assumes no responsibility or liability with respect to the actual performance of
the Policy.
3. Ownership of Policy. With respect to any Policy, the Participant (or
if Participant so elects, an individual or entity designated by Participant)
shall be the owner of the Policy, and the Participant, subject to the limited
collateral assignment of such Policy to the Company as provided in Section 7
hereof, may exercise all the rights of ownership with respect to the Policy,
including, but not limited to: (a) the right to designate, or change the
designation of, any beneficiary or beneficiaries of the Policy, (b) the right to
pledge the Policy as security for a loan or to obtain from the Insurer a loan
against the surrender or cash value, and in accordance with the terms, of the
Policy, (c) the right to assign or transfer the Policy, in whole or in part, and
(d) the right to sell, surrender or terminate the Policy.
4. Payment of Premiums. All premiums on the Policy shall be paid by the
Company (or in the discretion of the Company, on behalf of the Company by the
trustee [the "Trustee"] of the Dallas Semiconductor Corporation Executive
Split-Dollar Insurance Trust [the "Trust"]). The Company shall never permit the
Policy to lapse. Premium payments paid by the Trustee shall be considered as
payments by the Company for all purposes under this Agreement. While all
premiums on the Policy shall be paid by or on behalf of the Company, that
portion of the premium equal to the amount of income imputed to Participant for
federal and state income tax purposes on the value of the economic benefit of
the life insurance protection provided to Participant shall be deemed to have
been paid by the Company to the Participant and immediately paid by Participant
to the Insurer. If the Company elects to pay the premiums to the Trust, such
payment shall constitute sufficient funds to pay all premiums which may become
due on each such Policy.
5. Change of Control. In the event of the occurrence of a Change of
Control (as hereinafter defined): (a) the Company (or if so directed by the
Company, the Trustee) shall immediately pay to the Insurer all remaining
premiums on the Policy, regardless of whether such premiums are then due, and
(b) the collateral assignment of the Policy to the Company, as provided in
Section 7 hereof shall immediately and fully terminate, and the Participant
shall become fully vested in the entire cash value and death benefit payable
under the Policy. For purposes of this Agreement, a "Change in Control" shall
mean a change in control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether or not
the Company is then subject to such reporting requirement; provided that,
without limitation, such a Change in Control shall be deemed to have occurred if
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 15% or more of the combined voting power of the Company's then
outstanding securities; (ii) at any time following the date of execution of this
Agreement individuals who are directors of the Company at such date cease for
any reason to constitute a majority of the Board of Directors; (iii) the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into
2
6
voting securities of the surviving entity) more than 80% of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, except that a merger
or consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no "person" (as hereinabove defined) acquires more
than 15% of the combined voting power of the Company's then outstanding
securities shall not constitute a Change in Control of the Company; (iv) the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets; or (v) the election of any person
other than C. V. Prothro as Chairman of the Board and Chief Executive Officer of
the Company.
6. Tax Offset Payments. To the extent that the Participant may be deemed
to have realized gross income in any year for federal and state income tax
purposes or gift tax purposes by reason of this Agreement, including the value
of the insurance protection or other benefits thereunder provided by the Policy
or otherwise as a consequence of the Plan (including, but not limited to the
vesting of benefits to the Participant upon the occurrence of a Change of
Control or otherwise), the Company shall pay to Participant an additional amount
such that the after-tax cost to the Participant is zero.
7. Collateral Assignment of Policy. The Participant shall, and does
hereby, collaterally assign to the Company an interest in the cash values and
death benefit of the Policy as follows:
(a) If the Participant surrenders or sells the Policy, he shall
pay the Company, out of the proceeds of the Policy, an amount equal to
the lesser of (i) the cash value of the Policy, or (ii) the aggregate
amount of premiums paid by the Company with respect to the Policy;
(b) The Company shall be entitled to receive the cumulative
premiums paid for the Policy (the amount indicated in the column headed
Death Benefits Payable to the Company shown on Exhibit "A" attached
hereto) from the death benefits under the Policy. All death benefits
payable under the Policy that exceed the amount paid to the Company
under the preceding sentence shall be paid to the beneficiary or
beneficiaries of the Participant. The amount payable to such beneficiary
or beneficiaries is indicated in the column headed Death Benefit Payable
to Participant's Beneficiary: Individual Coverage shown on Exhibit "A"
attached hereto. If the death benefits payable under this Agreement
exceed the aggregate amount of premiums paid by the Company as set forth
on Exhibit "A," such excess death benefits shall be payable to the
Participant's beneficiary or beneficiaries.
The collateral assignment of the Policy shall not be altered or changed
without the consent of the Company and the Participant.
8. Adjustment of Benefits; Additional Policy Benefits or Riders. The
Company and the Participant may from time to time enter into agreements which
may adjust the value of each party's interests in the Policy. The Participant
may add any rider or endorsement to the Policy.
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If any such rider or endorsement is added upon the written request of the
Company, all premiums with respect to such rider or endorsement shall be paid by
the Company. A Participant shall not be required to withdraw any benefits
payable under the Policy and may elect to apply the value attributable to such
benefits to the purchase of additional benefits payable to the beneficiary or
beneficiaries named by Participant under the Policy, if the Participant so
elects, or to treat such benefits as additional insurance payable to the
beneficiary or beneficiaries of such Policy upon the death of the Participant.
9. Amendment. This Agreement may be amended by the Board of Directors of
the Company; provided, however, that no such amendment shall diminish, abrogate
or change any rights or benefits of the Participant under the Policy or this
Agreement without the Participant's prior written consent, and no amendment of
the Policy or this Agreement shall be made upon or after the occurrence of a
Change of Control without the prior written consent of each Participant.
10. Benefits Cumulative. The benefits to the Participant under this
Agreement shall be cumulative with, and shall not reduce or be deemed to be in
substitution of, any benefits, payments or compensation to which Participant may
otherwise be entitled under any other compensation, benefit, welfare, savings,
retirement or compensation plan of, or for the employees, officers or directors
of, the Company.
11. Further Assurances. The Company and Participant shall enter into,
execute and deliver all such documents, instruments, and other agreements as the
other party may reasonably request, or as the Insurer or Participant may
reasonably require, in order to carry out the intent and purposes of this
Agreement.
12. ERISA Requirements.
(a) Funding Policy. All premiums on the Policy shall be remitted by, or
on behalf of, the Company to the Insurer. The benefits provided by the Policy
shall be paid by the Insurer in accordance with the terms of the Policy and this
Agreement. The payment of such benefits is predicated on the payment of the
required premiums.
(b) Claims and Review Procedures. The following claims procedure shall
apply for purposes of this Agreement. The claims procedure in subparagraph
(b)(1) below shall be followed with respect to benefits provided by the Insurer
under the terms of the Policy. The claims procedure in subparagraph (b)(2) below
shall be followed with respect to benefits, if any, provided directly by the
Company. The Participant (or the other owner of the Policy designated by the
Participant) that owns the Policy (the "Policy Owner") and the Policy Owner's
successors, beneficiaries or representatives, as appropriate (individually or
collectively, "Claimant"), must follow both procedures, if necessary.
(i) Filing a Claim for Insurance Benefits. A Claimant shall make
a claim for benefits provided by the Insurer by submitting a written
claim and proof of claim to the Insurer in accordance with procedures
and guidelines established from time to time by the Insurer. On written
request, the Company, acting as the "Plan Administrator," shall provide
copies of any claim forms or instructions, or advise the Claimant how to
obtain
4
8
such forms or instructions. The Insurer shall decide whether the claim
shall be allowed. If a claim is denied in whole or in part, the Insurer
shall notify the Claimant and explain the procedure for reviewing a
denied claim.
(ii) Filing a Claim for Any Other Benefit. The following claims
procedure shall apply with respect to all benefits other than those
provided by the Insurer:
(A) Filing a Claim; Notification to Claimant of Decision:
The Claimant shall make a claim in writing in accordance with
procedures and guidelines established from time to time by the
Plan Administrator, which claim shall be delivered to the Plan
Administrator. The Plan Administrator shall review and make the
decision with respect to any claim. If a claim is denied in whole
or in part, written notice thereof shall be furnished to the
Claimant within thirty days after the claim has been filed. Such
notice shall set forth:
(1) the specific reason or reasons for the denial;
(2) specific reference to the provisions of this
Agreement on which denial is based;
(3) a description of any additional material or
information necessary for the Claimant to perfect a claim
and an explanation of why such material or information is
necessary; and
(4) an explanation of the procedure for review of
the denied claim.
(B) Procedure for Review: Any Claimant whose claim has
been denied in full or in part may individually, or through the
Claimant's duly authorized representative, request a review of
the claim denial by delivering a written application for review
to the Plan Administrator at any time within sixty days after
receipt by the Claimant of written notice of the denial of the
claim. Such request shall set forth in reasonable detail:
(1) the grounds upon which the request for review
is based and any facts in support thereof; and
(2) any issues or comments which the Claimant
considers pertinent to the claim.
Following such request for review, the Plan Administrator
fully and fairly shall review the decision denying the claim.
Prior to the decision of the Plan Administrator, the Claimant
shall be given an opportunity to review pertinent documents.
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9
(C) Decision on Review: A decision on the review of a
claim denied in whole or in part shall be made in the following
manner:
(1) The decision on review shall be made by the
Plan Administrator, which shall consider the application
and any written materials submitted by the Claimant in
connection therewith. The Plan Administrator, in its sole
discretion, may require the Claimant to submit such
additional documents or evidence as the Plan Administrator
may deem necessary or advisable in making such review.
(2) The Plan Administrator will render a decision
upon a review of a denied claim within sixty days after
receipt of a request for review. If special circumstances
(such as the need to hold a hearing on any matter
pertaining to the denied claim) warrant additional time,
the decision will be rendered as soon as possible, but not
later than one hundred twenty days after receipt of a
request for review. Written notice of any such extension
will be furnished to the Claimant prior to the
commencement of the extension.
(3) The decision on review shall be in writing and
shall include specific reasons for the decision, written
in a manner calculated to be understood by the Claimant,
and specific references to the provisions of this
Agreement on which the decision is based. The decision of
the Plan Administrator on review shall be final and
conclusive upon all persons. If the decision on review is
not furnished to the Claimant within the time limits
prescribed in subparagraph (c)(2) above, the claim will be
deemed denied on review.
13. Legal Fees. The Company shall pay to the Participant and his
beneficiary or beneficiaries upon demand all legal fees and expenses incurred by
the Participant or his beneficiary or beneficiaries in seeking to obtain or
enforce any right or benefit provided by the Policy and this Agreement.
14. Successors; Binding Agreement.
(a) In addition to the requirements of Section 5 of this Agreement, the
Company will, upon the request of Participant, require any proposed successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession were to take place. Failure of the Company to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle the Participant to all rights,
compensation and other benefits from the Company in the same amount and on the
same terms as the Participant would otherwise be entitled hereunder. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined and any
such successor to its business and/or assets as aforesaid, by operation of law,
or otherwise.
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10
(b) Subject to the provisions of Section 14(a) above, the terms and
provisions of this Agreement shall inure to the benefit of and be binding upon
(a) the Company and its successors and assigns and (b) the Participant and his
respective heirs, executors, administrators and legal representatives.
15. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
16. Miscellaneous. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Delaware. All references to sections of the Exchange
Act or the Code shall be deemed also to refer to any successor provisions to
such sections. The obligations of the Company under this Agreement shall survive
the expiration of this Agreement.
17. Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to the Company shall be directed to the attention of the Chief
Executive Officer with a copy to the Chief Financial Officer, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt.
18. Indemnification.
(a) The Company hereby agrees to indemnify and hold harmless the
Participant and any beneficiary or beneficiaries of Participant against any and
all expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement, actually and reasonably incurred by Participant or any beneficiary
or beneficiaries or Participant in connection with any threatened, pending or
completed action, suit, or proceeding, whether formal or informal, or civil,
criminal, administrative, legislative, arbitrative or investigative (hereinafter
a "Proceeding") to which the Participant or any beneficiary or beneficiaries of
Participant is, was, or at any time becomes a party, or is threatened to be made
a party, in any way arising out of, based upon or incident to this Agreement or
any of the rights, benefits and obligations provided for herein.
(b) The expenses (including attorneys' fees) incurred by Participant or
any beneficiary or beneficiaries of Participant in defending any Proceeding
shall be advanced by the Company at the request of the Participant or any such
beneficiary or beneficiaries. Any
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11
judgments, fines or amounts to be paid in settlement shall also be advanced by
the Company to the Participant or any beneficiary or beneficiaries of
Participant upon request.
19. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware.
20. Headings. Headings in this Agreement are inserted for reference and
convenience only and shall not be deemed a part of this Agreement.
21. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
as of the 20th day of July , 2000.
DALLAS SEMICONDUCTOR CORPORATION
By: /s/ C. V. Prothro
------------------------------------
/s/ Alan Hale
------------------------------------
Alan Hale, Participant
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12
EXHIBIT "A"
NAME OF PARTICIPANT: Alan Hale
NAME OF INSURED: Alan Hale
INSURER: Nationwide Policy No. N056104180
Death Benefit
Payable to Participant's Death Benefit
Policy Year Beneficiary: Payable to
Ending, April 15 Individual Coverage Company
---------------- ------------------- -------
2001 3,434,000 194,462
2002 3,434,000 284,683
2003 3,434,000 284,683
2004 3,434,000 284,683
2005 3,434,000 284,683
2006 3,434,000 284,683
2007 3,434,000 284,683
2008 3,434,000 284,683
2009 3,434,000 284,683
2010 3,434,000 284,683
2011 3,434,000 284,683
2012 3,434,000 284,683
2013 3,434,000 284,683
2014 3,434,000 284,683
2015 3,434,000 284,683
2016 3,434,000 284,683
2017 3,434,000 284,683
2018 3,434,000 284,683
2019 3,434,000 284,683
2020 3,434,000 284,683
9
13
AMENDMENT TO
DALLAS SEMICONDUCTOR CORPORATION
SPLIT-DOLLAR INSURANCE AGREEMENT
THIS AMENDMENT TO DALLAS SEMICONDUCTOR CORPORATION SPLIT-DOLLAR
INSURANCE AGREEMENT is entered into as of this 23rd day of January, 2001, by and
between Alan Hale ("Participant") and Dallas Semiconductor Corporation, a
Delaware corporation ("Company").
WHEREAS, Participant entered into a Split-Dollar Insurance Agreement
with the Company dated July 20, 2000 ("Agreement"); and
WHEREAS, the Company desires to amend the Agreement in the manner set
forth below and has requested the consent of Participant to such amendment;
NOW, THEREFORE, in consideration of the payment by the Company to
Participant of the sum of $10.00 and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by Participant,
Participant and the Company agree as follows:
1. Section 4. Section 4 is divided into subsections (a) and (b).
Existing Section 4 entitled "Payment of Premiums" is designated as Section 4(a),
and the following language is inserted as Section 4(b):
"(b) All premiums on the Policy shall be paid upon request or
demand by Participant or Participant's Insurer without regard to whether
or not the Participant is an employee or director of the Company, the
Participant's responsibilities to the Company or any other circumstance,
such obligation to pay to be absolute, continuing, irrevocable and
unconditional and not subject to any set-off, counterclaim, recoupment,
reduction, diminution or any defense of any kind or nature whatsoever."
2. Section 5. Section 5 is deleted in its entirety and the following is
substituted in its place:
"Reserved."
3. Section 6. The words "(including, but not limited to the vesting of
benefits to the Participant upon the occurrence of a Change of Control or
otherwise)" appearing in lines 4, 5 and 6 of Section 6 are deleted.
4. Section 9. The words "and no amendment of the Policy or this
Agreement shall be made upon or after the occurrence of a Change of Control
without the prior written consent of each Participant" found in lines 4 and 5 of
Section 9 are deleted.
5. Section 14. Subsection (a) of Section 14 is amended to delete the
words "In addition to the requirements of Section 5 of this Agreement" appearing
in line 1 thereof.
14
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the 23rd day of January, 2001.
DALLAS SEMICONDUCTOR CORPORATION
By: /s/ Chao C. Mai
------------------------------------
/s/ Alan P. Hale
------------------------------------
Alan Hale, Participant
2
EX-10.20
8
f75694ex10-20.txt
EXHIBIT 10.20
1
EXHIBIT 10.20
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT is executed and delivered pursuant to that
certain Agreement and Plan of Merger, dated as of January 28, 2001 (the "Merger
Agreement"), by and among Maxim Integrated Products, Inc., a Delaware
corporation (the "Company"), MI Acquisition Sub, Inc., a Delaware corporation,
and Dallas Semiconductor Corporation, a Delaware corporation ("Dallas
Semiconductor"), pursuant to which Dallas Semiconductor will become a wholly
owned subsidiary of the Company. Pursuant to Section 6.3(c) of the Merger
Agreement, the Company is required to expressly assume the obligations of that
certain Split-Dollar Insurance Agreement, dated as of January 23, 2001, by and
between M. D. Sampels and Dallas Semiconductor, as amended ("Split-Dollar
Agreement"), a copy of which is attached hereto as Exhibit A.
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, in accordance with the provisions of Section 14(a)
of the Split-Dollar Agreement, the Company hereby assumes and agrees to pay,
perform and discharge in accordance with the terms thereof, all of the duties,
liabilities and obligations of Dallas Semiconductor under the Split-Dollar
Agreement.
This Assumption Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
2
IN WITNESS WHEREOF, each party hereto has caused this instrument to be
executed by its duly authorized officer this the 11th day of April,
2001.
MAXIM INTEGRATED PRODUCTS, INC.
By: /s/ Carl W. Jasper
------------------------------------
Name: Carl W. Jasper
Title: Chief Financial Officer
DALLAS SEMICONDUCTOR CORPORATION
By: /s/ Alan P. Hale
------------------------------------
Name: Alan P. Hale
Title: Chief Financial Officer
2
3
EXHIBIT A
3
4
DALLAS SEMICONDUCTOR CORPORATION
SPLIT-DOLLAR INSURANCE AGREEMENT
THIS AGREEMENT is entered into as of this 20th day of July, 2000, by
and between Merlyn D. Sampels ("Participant"), whose address is 7718 Caruth
Boulevard, Dallas, Texas 75225, and Dallas Semiconductor Corporation, a Delaware
corporation ("Company"), having its principal office and place of business
located at 4401 South Beltwood Parkway, Dallas, Texas 75244.
WHEREAS, the Company by resolution of the Board of Directors duly
adopted on December 17, 1993 ("Date of Adoption") has adopted the Dallas
Semiconductor Corporation Split-Dollar Insurance Plan to promote the interests
of the Company in retaining the officers and directors of the Company who have
made, and are capable of continuing to make, valuable contributions to the
Company's performance by providing life insurance protection; and
WHEREAS, Participant is a director of the Company who had completed at
least five (5) years of service as a director of the Company on the Date of
Adoption and has expressed a willingness to continue his services as a director
of the Company, or is an officer of the Company at the Vice President level or
above on the Date of Adoption; and
WHEREAS, Participant entered into an agreement with the Company dated
the 15th day of February, 1994, concerning a split-dollar life insurance
arrangement with the Company (the "Prior Agreement"); and
WHEREAS, this Agreement amends, restates and supersedes in its entirety
the terms of the Prior Agreement, effective the date of this Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. Policy. Participant has applied for, and the Company has caused to be
issued, a policy or policies of permanent life insurance described on Exhibit
"A" attached hereto, with the attributes described in Section 2 hereof (such
policy or policies, together with any additional policy or policies issued with
the consent of Participant in substitution or replacement for any such policy or
policies, are collectively referred to herein as the "Policy") from an insurance
company selected by the Company as described on Exhibit "A" ("Insurer"). The
Participant has also applied for and the Company has caused to be issued a
policy or policies of permanent life insurance in which another Plan participant
is the named insured, such policy being identified on Exhibit "A" as the
Nationwide Policy. The term "Policy" shall also include such policy. The Company
will take all such action as may be necessary or appropriate to cause the Policy
to be maintained in force at all times, so as to provide Participant with all of
the benefits of the Policy and this Agreement.
5
2. Benefits. The Policy has been structured, based on a specified
interest rate, mortality and other assumptions, to provide Participant (over and
above benefits payable to the Company) with the benefits, during each year in
which the Policy is in force, provided in the Policy and those benefits
described on Exhibit "A" attached hereto. The Company assumes no responsibility
or liability with respect to the actual performance of the Policy, but the
Company agrees to timely pay to the insurer such amounts as may be needed for
the cash value in Nationwide Policy No. N056117510 to always be at least
$250,000.
3. Ownership of Policy. With respect to any Policy, the Participant (or
if Participant so elects, an individual or entity designated by Participant)
shall be the owner of the Policy, and the Participant, subject to the limited
collateral assignment of such Policy to the Company as provided in Section 7
hereof, may exercise all the rights of ownership with respect to the Policy,
including, but not limited to: (a) the right to designate, or change the
designation of, any beneficiary or beneficiaries of the Policy, (b) the right to
pledge the Policy as security for a loan or to obtain from the Insurer a loan
against the surrender or cash value, and in accordance with the terms, of the
Policy, (c) the right to withdraw, during the Participant's lifetime, all or any
part of the Policy's cash value (specifically including the cash value in
Nationwide Policy No. 56117510) on the date of Participant's withdrawal, (d) the
right to assign or transfer the Policy, in whole or in part, and (e) the right
to sell, surrender or terminate the Policy.
4. Payment of Premiums. All premiums on the Policy shall be paid by the
Company (or in the discretion of the Company, on behalf of the Company by the
trustee [the "Trustee"] of the Dallas Semiconductor Corporation Executive
Split-Dollar Insurance Trust [the "Trust"]). The Company shall never permit the
Policy to lapse. Premium payments paid by the Trustee shall be considered as
payments by the Company for all purposes under this Agreement. While all
premiums on the Policy shall be paid by or on behalf of the Company, that
portion of the premium equal to the amount of income imputed to Participant for
federal and state income tax purposes on the value of the economic benefit of
the life insurance protection provided to Participant shall be deemed to have
been paid by the Company to the Participant and immediately paid by Participant
to the Insurer. If the Company elects to pay the premiums to the Trust, such
payment shall constitute sufficient funds to pay all premiums which may become
due on each such Policy.
5. Change of Control. In the event of the occurrence of a Change of
Control (as hereinafter defined): (a) the Company (or if so directed by the
Company, the Trustee) shall immediately pay to the Insurer all remaining
premiums on the Policy, regardless of whether such premiums are then due, and
(b) the collateral assignment of the Policy to the Company, as provided in
Section 7 hereof shall immediately and fully terminate, and the Participant
shall become fully vested in the entire cash value and death benefit payable
under the Policy. For purposes of this Agreement, a "Change in Control" shall
mean a change in control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether or not
the Company is then subject to such reporting requirement; provided that,
without limitation, such a Change in Control shall be deemed to have occurred if
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of
2
6
the Company representing 15% or more of the combined voting power of the
Company's then outstanding securities; (ii) at any time following the date of
execution of this Agreement individuals who are directors of the Company at such
date cease for any reason to constitute a majority of the Board of Directors;
(iii) the stockholders of the Company approve a merger or consolidation of the
Company with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than 80% of
the combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation,
except that a merger or consolidation effected to implement a recapitalization
of the Company (or similar transaction) in which no "person" (as hereinabove
defined) acquires more than 15% of the combined voting power of the Company's
then outstanding securities shall not constitute a Change in Control of the
Company; (iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets; or (v) the election
of any person other than C. V. Prothro as Chairman of the Board and Chief
Executive Officer of the Company.
6. Tax Offset Payments. To the extent that the Participant may be deemed
to have realized gross income in any year for federal and state income tax
purposes or gift tax purposes by reason of this Agreement, including the value
of the insurance protection or other benefits thereunder provided by the Policy
or otherwise as a consequence of the Plan (including, but not limited to the
vesting of benefits to the Participant upon the occurrence of a Change of
Control or otherwise), the Company shall pay to Participant an additional amount
such that the after-tax cost to the Participant is zero.
7. Collateral Assignment of Policy. The Participant shall, and does
hereby, collaterally assign to the Company an interest in the cash values and
death benefit of the Policy as follows:
(a) If the Participant surrenders or sells the Policy, he shall
pay the Company, out of the proceeds of the Policy, an amount equal to
the lesser of (i) the cash value of the Policy, or (ii) the aggregate
amount of premiums paid by the Company with respect to the Policy;
(b) The Company shall be entitled to receive the cumulative
premiums paid for MetLife Policies Nos. 940250361 E3 and 940250367 E3
(the amount of which is a portion of the amount indicated in the column
headed Death Benefits Payable to the Company shown on Exhibit "A"
attached hereto) from the death benefit paid under Nationwide Policy No.
N056117510, and the Company shall be entitled to receive the cumulative
premiums paid for John Hancock Policy No. 534889 (the amount of which is
the remainder of the amount indicated in the column headed Death
Benefits Payable to the Company shown on Exhibit "A" attached hereto)
from the death benefits payable under such policy upon the death of the
survivor of the insured covered under such policy. All death benefits
payable under MetLife Policies Nos. 940250361 E3 and 940250367 E3 shall
be paid to the beneficiary or beneficiaries of the Participant, and all
3
7
death benefits payable under John Hancock Policy No. 534889 that exceed
the premiums reimbursed to the Company out of such policy's proceeds
under the preceding sentence shall be paid to the beneficiary or
beneficiaries of Participant. (The death benefits payable under the
MetLife policies are indicated in the column headed Death Benefit
Payable to Participant's Beneficiary: Individual Coverage, and the death
benefits payable under the John Hancock policy are indicated in the
column headed Death Benefit Payable to Participant's Beneficiary:
Survivorship Coverage, both columns as shown on Exhibit "A" attached
hereto.) All death benefits payable under Nationwide Policy No.
N056117510 that exceed the premiums reimbursed to the Company out of
such policy's proceeds under the first sentence of this paragraph shall
be paid as follows: (1) to Participant's beneficiary or beneficiaries,
the excess of (A) 1,300,000 over (B) the amounts, if any, paid to
Participant, in Participant's sole discretion, from Nationwide Policy
No. N056117510 during Participant's lifetime, and (2) the balance to the
Company. If the death benefits payable under this Agreement exceed the
sum of (i) the aggregate amount of premiums paid by the Company as set
forth on Exhibit "A" and (ii) the other amounts payable to the Company
under this paragraph, such excess death benefits shall be payable to the
Participant's beneficiary or beneficiaries.
The collateral assignment of the Policy shall not be altered or changed
without the consent of the Company and the Participant.
8. Adjustment of Benefits; Additional Policy Benefits or Riders. The
Company and the Participant may from time to time enter into agreements which
may adjust the value of each party's interests in the Policy. The Participant
may add any rider or endorsement to the Policy. If any such rider or endorsement
is added upon the written request of the Company, all premiums with respect to
such rider or endorsement shall be paid by the Company. A Participant shall not
be required to withdraw any benefits payable under the Policy and may elect to
apply the value attributable to such benefits to the purchase of additional
benefits payable to the beneficiary or beneficiaries named by Participant under
the Policy, if the Participant so elects, or to treat such benefits as
additional insurance payable to the beneficiary or beneficiaries of such Policy
upon the death of the Participant.
9. Amendment. This Agreement may be amended by the Board of Directors of
the Company; provided, however, that no such amendment shall diminish, abrogate
or change any rights or benefits of the Participant under the Policy or this
Agreement without the Participant's prior written consent, and no amendment of
the Policy or this Agreement shall be made upon or after the occurrence of a
Change of Control without the prior written consent of each Participant.
10. Benefits Cumulative. The benefits to the Participant under this
Agreement shall be cumulative with, and shall not reduce or be deemed to be in
substitution of, any benefits, payments or compensation to which Participant may
otherwise be entitled under any other compensation, benefit, welfare, savings,
retirement or compensation plan of, or for the employees, officers or directors
of, the Company.
11. Further Assurances. The Company and Participant shall enter into,
execute and deliver all such documents, instruments, and other agreements as the
other party may reasonably
4
8
request, or as the Insurer or Participant may reasonably require, in order to
carry out the intent and purposes of this Agreement.
12. ERISA Requirements.
(a) Funding Policy. All premiums on the Policy shall be remitted by, or
on behalf of, the Company to the Insurer. The benefits provided by the Policy
shall be paid by the Insurer in accordance with the terms of the Policy and this
Agreement. The payment of such benefits is predicated on the payment of the
required premiums.
(b) Claims and Review Procedures. The following claims procedure shall
apply for purposes of this Agreement. The claims procedure in subparagraph
(b)(1) below shall be followed with respect to benefits provided by the Insurer
under the terms of the Policy. The claims procedure in subparagraph (b)(2) below
shall be followed with respect to benefits, if any, provided directly by the
Company. The Participant (or the other owner of the Policy designated by the
Participant) that owns the Policy (the "Policy Owner") and the Policy Owner's
successors, beneficiaries or representatives, as appropriate (individually or
collectively, "Claimant"), must follow both procedures, if necessary.
(i) Filing a Claim for Insurance Benefits. A Claimant shall make
a claim for benefits provided by the Insurer by submitting a written
claim and proof of claim to the Insurer in accordance with procedures
and guidelines established from time to time by the Insurer. On written
request, the Company, acting as the "Plan Administrator," shall provide
copies of any claim forms or instructions, or advise the Claimant how to
obtain such forms or instructions. The Insurer shall decide whether the
claim shall be allowed. If a claim is denied in whole or in part, the
Insurer shall notify the Claimant and explain the procedure for
reviewing a denied claim.
(ii) Filing a Claim for Any Other Benefit. The following claims
procedure shall apply with respect to all benefits other than those
provided by the Insurer:
(A) Filing a Claim; Notification to Claimant of Decision:
The Claimant shall make a claim in writing in accordance with
procedures and guidelines established from time to time by the
Plan Administrator, which claim shall be delivered to the Plan
Administrator. The Plan Administrator shall review and make the
decision with respect to any claim. If a claim is denied in whole
or in part, written notice thereof shall be furnished to the
Claimant within thirty days after the claim has been filed. Such
notice shall set forth:
(1) the specific reason or reasons for the denial;
(2) specific reference to the provisions of this
Agreement on which denial is based;
5
9
(3) a description of any additional material or
information necessary for the Claimant to perfect a claim
and an explanation of why such material or information is
necessary; and
(4) an explanation of the procedure for review of
the denied claim.
(B) Procedure for Review: Any Claimant whose claim has
been denied in full or in part may individually, or through the
Claimant's duly authorized representative, request a review of
the claim denial by delivering a written application for review
to the Plan Administrator at any time within sixty days after
receipt by the Claimant of written notice of the denial of the
claim. Such request shall set forth in reasonable detail:
(1) the grounds upon which the request for review
is based and any facts in support thereof; and
(2) any issues or comments which the Claimant
considers pertinent to the claim.
Following such request for review, the Plan Administrator
fully and fairly shall review the decision denying the claim.
Prior to the decision of the Plan Administrator, the Claimant
shall be given an opportunity to review pertinent documents.
(C) Decision on Review: A decision on the review of a
claim denied in whole or in part shall be made in the following
manner:
(1) The decision on review shall be made by the
Plan Administrator, which shall consider the application
and any written materials submitted by the Claimant in
connection therewith. The Plan Administrator, in its sole
discretion, may require the Claimant to submit such
additional documents or evidence as the Plan Administrator
may deem necessary or advisable in making such review.
(2) The Plan Administrator will render a decision
upon a review of a denied claim within sixty days after
receipt of a request for review. If special circumstances
(such as the need to hold a hearing on any matter
pertaining to the denied claim) warrant additional time,
the decision will be rendered as soon as possible, but not
later than one hundred twenty days after receipt of a
request for review. Written notice of any such extension
will be furnished to the Claimant prior to the
commencement of the extension.
(3) The decision on review shall be in writing and
shall include specific reasons for the decision, written
in a manner calculated to be
6
10
understood by the Claimant, and specific references to the
provisions of this Agreement on which the decision is
based. The decision of the Plan Administrator on review
shall be final and conclusive upon all persons. If the
decision on review is not furnished to the Claimant within
the time limits prescribed in subparagraph (c)(2) above,
the claim will be deemed denied on review.
13. Legal Fees. The Company shall pay to the Participant and his
beneficiary and beneficiaries upon demand all legal fees and expenses incurred
by the Participant or by his beneficiary or beneficiaries, respectively, in
seeking to obtain or enforce any right or benefit provided by the Policy and
this Agreement.
14. Successors; Binding Agreement.
(a) In addition to the requirements of Section 5 of this Agreement, the
Company will, upon the request of Participant, require any proposed successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession were to take place. Failure of the Company to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle the Participant to all rights,
compensation and other benefits from the Company in the same amount and on the
same terms as the Participant would otherwise be entitled hereunder. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined and any
such successor to its business and/or assets as aforesaid, by operation of law,
or otherwise.
(b) Subject to the provisions of Section 14(a) above, the terms and
provisions of this Agreement shall inure to the benefit of and be binding upon
(a) the Company and its successors and assigns and (b) the Participant and his
respective heirs, executors, administrators and legal representatives.
15. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
16. Miscellaneous. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Delaware. All references to sections of the Exchange
Act or the Code shall be deemed also to refer to any successor provisions to
such sections. The obligations of the Company under this Agreement shall survive
the expiration of this Agreement.
7
11
17. Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to the Company shall be directed to the attention of the Chief
Executive Officer with a copy to the Chief Financial Officer, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt.
18. Indemnification.
(a) The Company hereby agrees to indemnify and hold harmless the
Participant and any beneficiary or beneficiaries of Participant against any and
all expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement, actually and reasonably incurred by Participant or any beneficiary
or beneficiaries or Participant in connection with any threatened, pending or
completed action, suit, or proceeding, whether formal or informal, or civil,
criminal, administrative, legislative, arbitrative or investigative (hereinafter
a "Proceeding") to which the Participant or any beneficiary or beneficiaries of
Participant is, was, or at any time becomes a party, or is threatened to be made
a party, in any way arising out of, based upon or incident to this Agreement or
any of the rights, benefits and obligations provided for herein.
(b) The expenses (including attorneys' fees) incurred by Participant or
any beneficiary or beneficiaries of Participant in defending any Proceeding
shall be advanced by the Company at the request of the Participant or any such
beneficiary or beneficiaries. Any judgments, fines or amounts to be paid in
settlement shall also be advanced by the Company to the Participant or any
beneficiary or beneficiaries of Participant upon request.
19. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware.
20. Headings. Headings in this Agreement are inserted for reference and
convenience only and shall not be deemed a part of this Agreement.
21. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
8
12
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
as of the 20th day of July, 2000.
DALLAS SEMICONDUCTOR CORPORATION
By: /s/ C. V. Prothro
------------------------------------
/s/ Merlyn D. Sampels
----------------------------------------
Merlyn D. Sampels, Participant
9
13
EXHIBIT "A"
NAME OF PARTICIPANT: Merlyn Sampels
NAME OF INSURED: Merlyn Sampels & Anita Sampels
INSURER: MetLife Policy No. 940 250 361 E3 & 940 250 367 E3
INSURER: John Hancock Policy No. 20 050 266
INSURER: Nationwide Policy No. N056117510
Death Benefit Death Benefit
Payable to Participant's Payable to Participant's Death Benefit
Policy Year Beneficiary: Beneficiary: Payable to
Ending April 15 Individual Coverage Survivorship Coverage Company
--------------- ------------------- --------------------- -------
2001 3,246,991 3,735,000 5,519,000
2002 3,293,365 3,678,000 5,914,000
2003 3,342,192 3,759,354 6,309,000
2004 3,390,719 4,001,519 6,541,657
2005 3,438,994 4,001,519 6,671,285
2006 3,489,342 4,001,519 6,801,284
2007 3,542,630 4,001,519 6,931,284
2008 3,450,183 4,001,519 3,877,657
2009 3,362,307 4,001,519 3,877,657
2010 3,281,168 4,001,519 3,877,657
2011 3,204,682 4,001,519 3,877,657
2012 3,132,924 4,001,519 3,747,382
2013 1,755,900 4,001,519 3,747,097
2014 1,724,966 4,001,519 3,746,804
2015 1,674,852 4,001,519 3,746,501
2016 1,623,153 4,001,519 2,848,531
2017 1,570,472 4,001,519 2,848,208
2018 1,516,905 4,001,519 2,848,874
2019 1,462,431 4,001,519 2,848,530
2020 1,406,824 4,001,519 2,847,174
10
14
AMENDMENT TO
DALLAS SEMICONDUCTOR CORPORATION
SPLIT-DOLLAR INSURANCE AGREEMENT
THIS AMENDMENT TO DALLAS SEMICONDUCTOR CORPORATION SPLIT-DOLLAR
INSURANCE AGREEMENT is entered into as of this 23rd day of January, 2001, by and
between Merlyn D. Sampels ("Participant") and Dallas Semiconductor Corporation,
a Delaware corporation ("Company").
WHEREAS, Participant entered into a Split-Dollar Insurance Agreement
with the Company dated July 20, 2000 ("Agreement"); and
WHEREAS, the Company desires to amend the Agreement in the manner set
forth below and has requested the consent of Participant to such amendment;
NOW, THEREFORE, in consideration of the payment by the Company to
Participant of the sum of $10.00 and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by Participant,
Participant and the Company agree as follows:
1. Section 4. Section 4 is divided into subsections (a) and (b).
Existing Section 4 entitled "Payment of Premiums" is designated as Section 4(a),
and the following language is inserted as Section 4(b):
"(b) All premiums on the Policy shall be paid upon request or
demand by Participant or Participant's Insurer without regard to whether
or not the Participant is an employee or director of the Company, the
Participant's responsibilities to the Company or any other circumstance,
such obligation to pay to be absolute, continuing, irrevocable and
unconditional and not subject to any set-off, counterclaim, recoupment,
reduction, diminution or any defense of any kind or nature whatsoever."
2. Section 5. Section 5 is deleted in its entirety and the following is
substituted in its place:
"Reserved."
3. Section 6. The words "(including, but not limited to the vesting of
benefits to the Participant upon the occurrence of a Change of Control or
otherwise)" appearing in lines 4, 5 and 6 of Section 6 are deleted.
4. Section 9. The words "and no amendment of the Policy or this
Agreement shall be made upon or after the occurrence of a Change of Control
without the prior written consent of each Participant" found in lines 4 and 5 of
Section 9 are deleted.
5. Section 14. Subsection (a) of Section 14 is amended to delete the
words "In addition to the requirements of Section 5 of this Agreement" appearing
in line 1 thereof.
15
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the 23rd day of January, 2001.
DALLAS SEMICONDUCTOR CORPORATION
By: /s/ Chao C. Mai
------------------------------------
/s/ Merlyn D. Sampels
----------------------------------------
Merlyn D. Sampels, Participant
2
EX-10.21
9
f75694ex10-21.txt
EXHIBIT 10.21
1
EXHIBIT 10.21
SHAREHOLDER'S AGREEMENT
THIS AGREEMENT is made as of the ___ day of ________________, 19__, by
and between DALLAS SEMICONDUCTOR CORPORATION, a Delaware corporation (the
"Company"), and _________________________________ (the "Purchaser").
WHEREAS, the Purchaser has been granted an option under the Company's
1987 Stock Option Plan to purchase shares of Common Stock, $.02 par value per
share (the "Common Stock"), of the Company; and
WHEREAS, the Purchaser and the Company desire to set forth certain
rights and obligations of the parties with respect to the Common Stock which may
from time to time be purchased by the Purchaser;
NOW, THEREFORE, IT IS HEREBY AGREED:
1. Sale and Purchase of Shares. Pursuant to the terms and conditions of
this Agreement, the Purchaser has been granted an option to purchase up to
______ shares of the Common Stock of the Company (the "Shares") for a
consideration of $_________ per share to be paid by Purchaser to the Company
upon exercise of such option in accordance with the terms of such option.
2. Company's Right to Repurchase. The Shares shall be subject to the
following right ("Repurchase Right"):
(a) If the Purchaser should cease to be employed by the Company,
for any reason or no reason, with or without cause, as determined by and in the
sole discretion of the Board of Directors of the Company (excluding leave(s) of
absence authorized in writing by the Company, specifying the date on which
Purchaser shall return to work), the Company shall have the right to repurchase
from the Purchaser, or the Purchaser's personal representative as the case may
be, all of the Shares subject to the Repurchase Right. For purposes of
determining this Repurchase Right, the parties hereby acknowledge and agree that
the Commencement Date (as used herein) with respect to the Shares shall be
deemed to be _________________, 19__.
(b) The percentage of the Shares which are subject to the
Repurchase Right shall be determined as follows:
Length of Time Employee
Has Been Employed by the Percentage of
Company Since the Shares Subject to
Commencement Date Repurchase Right
----------------- ----------------
Less than 4 completed quarters 100%
4 completed quarters 75%
5 completed quarters 68.75%
6 completed quarters 62.50%
2
Length of Time Employee
Has Been Employed by the Percentage of
Company Since the Shares Subject to
Commencement Date Repurchase Right
----------------- ----------------
7 completed quarters 56.25%
8 completed quarters 50%
9 completed quarters 43.75%
10 completed quarters 37.50%
11 completed quarters 31.25%
12 completed quarters 25%
13 completed quarters 18.75%
14 completed quarters 12.50%
15 completed quarters 6.25%
16 or more completed quarters None
A completed quarter excludes the specified time during which Purchaser is on any
approved leave(s) of absence and the measurement of time from the Commencement
Date shall abate during such specified time.
(c) Within sixty (60) days after the later of the date when
Purchaser's active employment ceases or the date any approved leave terminates,
Purchaser having failed to return to work within the time specified (the
"Termination Date"), upon notice to Purchaser specifying the time, place and
date for settlement, the Company may, at the Company's option, repurchase from
the Purchaser, in cash, the Shares which are subject to the Repurchase Right at
a total price equal to Purchaser's original purchase price per share as set
forth in Paragraph 1 above. If the Company expressly elects not to exercise its
Repurchase Right, or fails to exercise its Repurchase Right for whatever reason
with respect to such shares within such sixty day period, the Company's
Repurchase Right with respect to such shares shall expire.
(d) The Purchaser understands that he Is an employee at will and
that nothing in this Agreement shall interfere with or limit in any manner
whatsoever the right or power of the Company to terminate Purchaser's employment
with or without cause.
3. Rights as Stockholder; Escrow.
(a) From and after the date of issuance of the Shares and subject
to the terms and conditions of this Agreement, the Purchaser shall have all of
the rights of a stockholder of the Company with respect to the Shares unless and
until repurchased by the Company as provided hereinbefore or other disposition
of the Shares by Purchaser in accordance with the provisions of this Agreement.
(b) The parties hereby agree that all certificates representing
the Shares shall be held by either the Secretary of the Company or in an
appropriate safekeeping account maintained by the Company with a bank or other
financial institution ("Agent"). The Purchaser shall deliver to the Secretary of
the Company, for each such certificate, a duly executed stock power authorizing
any officer of the Company to effect the transfer of such Shares on the books
3
of the Company in accordance with the terms of this Agreement. Upon the written
request of Purchaser delivered to the Secretary of the Company, the Company will
cause the Secretary or the Agent to deliver to Purchaser a certificate or
certificates representing such number of Shares as are not then subject to the
Repurchase Right. Within five business days after the exercise or lapse without
exercise of the Repurchase Right, the Company will direct the Secretary or the
Agent to deliver to Purchaser a certificate or certificates representing the
aggregate number of Shares, if any, not repurchased by the Company.
4. Stock Splits, Recapitalizations, Etc. In the event of any of the
following:
(a) Any stock dividend, stock split, reverse stock split, share
combination, exchange of shares, recapitalization or other change in the
character or amount of the outstanding securities of the Company; or
(b) Any consolidation, separation, reorganization, liquidation,
merger, sale of all, or substantially all, of the assets of the Company or like
event or transaction;
then any and all new, substituted or additional securities or property to which
the Purchaser is entitled by reason of ownership of the Shares shall be
immediately subject to this Agreement and be included in the term "Shares" for
all purposes of this Agreement, and the repurchase price per share specified in
Paragraph 2(c) shall be appropriately adjusted by the Board of Directors of the
Company.
5. Purchase of Additional Stock. If the Purchaser at any time after the
date of this Agreement acquires any capital stock of the Company, in addition to
that described in Paragraphs 1 and 4 above (other than capital stock acquired on
the open market and capital stock acquired from the Company which the Board of
Directors of the Company, in its sole discretion, expressly designates as not
being subject to this Agreement), or any options, rights or warrants therefor
("Additional Stock"), such Additional Stock shall be immediately subject to this
Agreement and included in the term "Shares" for all purposes of this Agreement;
provided, however, that:
(a) The repurchase price per share of such Additional Stock shall
be the purchase price per share paid or to be paid by the Purchaser therefor;
(b) Any such Additional Stock purchased pursuant to an option
that conditions the right to exercise all or part of such option upon the
passage of an amount of time in excess of three (3) years shall be deemed to be
fully vested and not subject to the Repurchase Right; and
(c) The Commencement Date for purposes of the Repurchase Right
with respect to such Additional Stock shall be the date expressly designated as
such by the Board of Directors of the Company, in its sole discretion, or absent
such a designation shall be, in the case of Additional Stock acquired pursuant
to the exercise of an option, warrant or similar right, the date of grant of
such option, warrant or right, or, in the case of Additional Stock otherwise
purchased from the Company, the date of such purchase.
4
6. Investment Representations by Purchaser. The purchase of the Shares
and any Additional Stock shall be subject to the condition that, if required by
the Board of Directors of the Company, in its sole discretion, the Purchaser
shall make each of the following representations:
(a) That Purchaser is acquiring the Shares with his own funds and
not with a view to the sale or distribution of any part thereof, and that
Purchaser has no present intention of selling, granting any participation in or
otherwise distributing the same.
(b) That Purchaser has no contract, undertaking, agreement or
arrangement of any kind to sell, transfer or grant participations to any third
person with respect to the Shares or any part thereof.
(c) That Purchaser has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of his
investment and is able to fend for himself in the transaction contemplated by
this Agreement. That Purchaser has the ability to bear the economic risks of his
investment and has been furnished with and has had access to such information as
would be made available in the form of a registration statement, together with
such additional information as is necessary to verify the accuracy of the
information supplied and to have all questions answered by the Company.
(d) That Purchaser is familiar with Rule 144 under the Securities
Act of 1933, as amended (the "Act"), and understands that the Shares constitute
"restricted securities" within the meaning of that Rule. That sale of the Shares
may be made only after completing certain forms of representation letters
promulgated for such sales, which may be obtained from the Secretary of the
Company. That Purchaser understands that any sale of the Shares which might be
made by him in reliance upon Rule 144 may be made only in limited amounts in
accordance with the terms and conditions of that Rule and that he may not be
able to sell the Shares at the time or in the amount Purchaser so desires.
(e) Such other representations and warranties as the Company may,
in its discretion, require.
The parties hereby acknowledge, however, that such
representations shall be deemed inapplicable to any purchase of Shares, or any
part thereof, made in accordance with the terms of a registration statement
covering such purchase, which has been filed and has become effective under the
Act, and with respect to which no stop order suspending the effectiveness
thereof has been issued.
7. Restrictive Legends.
(a) All certificates representing any Shares subject to the
Repurchase Rights provided for in this Agreement shall have endorsed thereon
substantially the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE TERMS AND CONDITIONS OF A CERTAIN SHAREHOLDER'S AGREEMENT
WHICH, AMONG OTHER
5
THINGS, RESTRICTS THE TRANSFER OF SUCH SECURITIES AND GRANTS THE
CORPORATION THE RIGHT TO REPURCHASE THESE SECURITIES UNDER
CERTAIN CONDITIONS. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON
WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION."
(b) In addition to the foregoing legend, any certificate
representing any shares, other than shares which have been registered with the
Securities and Exchange Commission (the "Commission") pursuant to an effective
registration statement under the Act with respect to which no stop order
suspending the effectiveness thereof has been issued, shall have endorsed
thereon substantially the following legends:
(i) "THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 19331 AS AMENDED
(THE ACT") NOR UNDER ANY APPLICABLE STATE LAW, AND SUCH
SHARES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE
DISPOSED OF UNLESS A REGISTRATION STATEMENT UNDER THE ACT
WITH RESPECT TO SUCH DISPOSITION SHALL THEN BE IN EFFECT
AND ALL APPLICABLE STATE AND BLUE SKY LAWS HAVE BEEN
COMPLIED WITH, OR UNLESS THE PERSON REQUESTING THE
TRANSFER OF SUCH SHARES SHALL FURNISH AN OPINION OF
COUNSEL (BOTH COUNSEL AND OPINION TO BE SATISFACTORY TO
THE CORPORATION) TO THE EFFECT THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR DISPOSITION WILL NOT INVOLVE ANY VIOLATION
OF THE ACT OR ANY SUPERSEDING STATUTE OR ANY APPLICABLE
STATE OR BLUE SKY LAWS."
(ii) Any legend required to be placed thereon by applicable
state securities laws.
8. No Obligation to Transfer. The Company shall not be required W to
transfer or have transferred on its books any Shares which shall have been sold
or transferred in violation of any of the provisions set forth in this
Agreement, or (ii) to treat as the owner of such Shares or to accord the right
to vote as such owner or to pay dividends to any transferee to whom such Shares
shall have been so transferred.
9. Further Assurances. The parties agree to execute such further
instruments and to take such further action as may reasonably be necessary to
carry out the intent of this Agreement.
10. Notices. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail, with
postage prepaid, addressed to the other party
6
hereto at the address shown below his signature or at such other address as such
party may designate from time to time by advance written notice to the other
party hereto.
11. Governing Law. This Agreement shall be construed, and the provisions
hereof shall be enforced, in accordance with the laws of the State of Delaware.
12. Assigns. This Agreement shall be binding upon and inure to the
benefit of the Company and its successors and assigns and, subject to the
restrictions set forth herein on Purchaser's transfer of the Shares, shall be
binding upon and inure to the benefit of Purchaser, his heirs, executors,
administrators, guardians, transferees and assigns.
13. Entire Agreement; Amendments. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof. This
Agreement may be amended, modified or supplemented only by a written agreement
signed by both of the parties hereto.
14. Titles and Headings. The section titles and headings herein are for
convenience only and are not to be considered in construing or interpreting this
Agreement.
15. Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed for all purposes to be an
original and all of which together shall be deemed for all purposes to be one
agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
DALLAS SEMICONDUCTOR CORPORATION
Address for notices:
4350 Beltwood Parkway South
Dallas, Texas 75244
By:
------------------------------------
PURCHASER
----------------------------------------
Address:
-------------------------------
----------------------------------------
7
[87SOP/V5-3/89]
SHAREHOLDER'S AGREEMENT
THIS AGREEMENT is made as of the ___ day of _________________, 19__, by
and between DALLAS SEMICONDUCTOR CORPORATION, a Delaware corporation (the
"Company"), and ____________________________ (the "Purchaser").
WHEREAS, the Purchaser has been granted an option under the Company's
1987 Stock Option Plan to purchase shares of Common Stock, $.02 par value per
share (the "Common Stock"), of the Company; and
WHEREAS, the Purchaser and the Company desire to set forth certain
rights and obligations of the parties with respect to the Common Stock which may
from time to time be purchased by the Purchaser;
NOW, THEREFORE, IT IS HEREBY AGREED:
1. Sale and Purchase of Shares. Pursuant to the terms and conditions of
this Agreement, the Purchaser has been granted an option to purchase up to _____
shares of the Common Stock of the Company (the "Shares") for a consideration of
$___________ per share to be paid by Purchaser to the Company upon exercise of
such option in accordance with the terms of such option.
2. Company's Right to Repurchase. The Shares shall be subject to the
following right ("Repurchase Right"):
(a) If the Purchaser should cease to be employed by the Company,
for any reason or no reason, with or without cause, as determined by and in the
sole discretion of the Board of Directors of the Company (excluding leave(s) of
absence authorized in writing by the Company, specifying the date on which
Purchaser shall return to work), the Company shall have the right to repurchase
from the Purchaser, or the Purchaser's personal representative as the ease may
be, all of the Shares subject to the Repurchase Right. For purposes of
determining this Repurchase Right, the parties hereby acknowledge and agree that
the Commencement Date (as used herein) with respect to the Shares shall be
deemed to be ___________________, 20__.
(b) The percentage of the Shares which are subject to the
Repurchase Right shall be determined as follows:
Length of Time Employee
Has Been Employed by the Percentage of
Company Since the Shares Subject to
Commencement Date Repurchase Right
----------------- ----------------
Less than 4 completed quarters 100%
4 completed quarters 80%
5 completed quarters 75%
8
Length of Time Employee
Has Been Employed by the Percentage of
Company Since the Shares Subject to
Commencement Date Repurchase Right
----------------- ----------------
6 completed quarters 70%
7 completed quarters 65%
8 completed quarters 60%
9 completed quarters 55%
10 completed quarters 50%
11 completed quarters 45%
12 completed quarters 40%
13 completed quarters 35%
14 completed quarters 30%
15 completed quarters 25%
16 completed quarters 20%
17 completed quarters 15%
18 completed quarters 10%
19 completed quarters 5%
20 or more completed quarters None
A completed quarter excludes the specified time during which Purchaser is on any
approved leave(s) of absence and the measurement of time from the Commencement
Date shall abate during such specified time.
(c) Within sixty (60) days after the later of the date when
Purchaser's active employment ceases or the date any approved leave terminates,
Purchaser having failed to return to work within the time specified (the
"Termination Date"), upon notice to Purchaser specifying the time, place and
date for settlement, the Company may, at the Company's option, repurchase from
the Purchaser, in cash, the Shares which are subject to the Repurchase Right at
a total price equal to Purchaser's original purchase price per share as set
forth in Paragraph 1 above. If the Company expressly elects not to exercise its
Repurchase Right, or fails to exercise its Repurchase Right for whatever reason
with respect to such shares within such sixty day period, the Company's
Repurchase Right with respect to such shares shall expire.
(d) The Purchaser understands that he is an employee at will and
that nothing in this Agreement shall interfere with or limit in any manner
whatsoever the right or power of the Company to terminate Purchaser's employment
with or without cause.
3. Rights as Stockholder; Escrow.
(a) From and after the date of issuance of the Shares and subject
to the terms and conditions of this Agreement, the Purchaser shall have an of
the rights of a stockholder of the Company with respect to the Shares unless and
until repurchased by the Company as provided hereinbefore or other disposition
of the Shares by Purchaser in accordance with the provisions of this Agreement.
9
(b) The parties hereby agree that all certificates representing
the Shares shall be held by either the Secretary of the Company or in an
appropriate safekeeping account maintained by the Company with a bank or other
financial institution ("Agent"). The Purchaser shall deliver to the Secretary of
the Company, for each such certificate, a duly executed stock power authorizing
any officer of the Company to effect the transfer of such Shares on the books of
the Company in accordance with the terms of this Agreement. Upon the written
request of Purchaser delivered to the Secretary of the Company, the Company will
cause the Secretary or the Agent to deliver to Purchaser a certificate or
certificates representing such number of Shares as are not then subject to the
Repurchase Right. Within five business days after the exercise or lapse without
exercise of the Repurchase Right, the Company will direct the Secretary or the
Agent to deliver to Purchaser a certificate or certificates representing the
aggregate number of Shares, if any, not repurchased by the Company.
4. Stock Splits, Recapitalizations, Etc. In the event of any of the
following:
(a) Any stock dividend, stock split, reverse stock split, share
combination, exchange of shares, recapitalization or other change in the
character or amount of the outstanding securities of the Company; or
(b) Any consolidation, separation, reorganization, liquidation,
merger, sale of all, or substantially all, of the assets of the Company or like
event or transaction;
then any and all new, substituted or additional securities or property to which
the Purchaser is entitled by reason of ownership of the Shares shall be
immediately subject to this Agreement and be included in the term "Shares" for
all purposes of this Agreement, and the repurchase price per share specified in
Paragraph 2(c) shall be appropriately adjusted by the Board of Directors of the
Company.
5. Purchase of Additional Stock. If the Purchaser at any time after the
date of this Agreement acquires any capital stock of the Company, in addition to
that described in Paragraphs 1 and 4 above (other than capital stock acquired on
the open market and capital stock acquired from the Company which the Board of
Directors of the Company, in its sole discretion, expressly designates as not
being subject to this Agreement), or any options, rights or warrants therefor
("Additional Stock"), such Additional Stock shall be immediately subject to this
Agreement and included in the term "Shares" for an purposes of this Agreement;
provided, however, that:
(a) The repurchase price per share of such Additional Stock shall
be the purchase price per share paid or to be paid by the Purchaser therefor;
(b) Any such Additional Stock purchased pursuant to an option
that conditions the right to exercise all or part of such option upon the
passage of an amount of time in excess of three (3) years shall be deemed to be
fully vested and not subject to the Repurchase Right; and
(c) The Commencement Date for purposes of the Repurchase Right
with respect to such Additional Stock shall be the date expressly designated as
such by the Board of
10
Directors of the Company, in its sole discretion, or absent such a designation
shall be, in the case of Additional Stock acquired pursuant to the exercise of
an option, warrant or similar right, the date of grant of such option, warrant
or right, or, in the case of Additional Stock otherwise purchased from the
Company, the date of such purchase.
6. Investment Representations by Purchaser. The purchase of the Shares
and any Additional Stock shall be subject to the condition that, if required by
the Board of Directors of the Company, in its sole discretion, the Purchaser
shall make each of the following representations:
(a) That Purchaser is acquiring the Shares with his own funds and
not with a view to the sale or distribution of any part thereof, and that
Purchaser has no present intention of selling, granting any participation in or
otherwise distributing the same.
(b) That Purchaser has no contract, undertaking, agreement or
arrangement of any kind to sell, transfer or grant participations to any third
person with respect to the Shares or any part thereof.
(c) That Purchaser has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of his
investment and is able to fend for himself in the transaction contemplated by
this Agreement. That Purchaser has the ability to bear the economic risks of his
investment and has been furnished with and has had access to such Information as
would be made available in the form of a registration statement, together with
such additional information as is necessary to verify the accuracy of the
information supplied and to have all questions answered by the Company.
(d) That Purchaser is familiar with Rule 144 under the Securities
Act of 1933, as amended (the "Act"), and understands that the Shares constitute
"restricted securities" within the meaning of that Rule. That sale of the Shares
may be made only after completing certain forms of representation letters
promulgated for such sales, which may be obtained from the Secretary of the
Company. That Purchaser understands that any sale of the Shares which might be
made by him in reliance upon Rule 144 may be made only in limited amounts in
accordance with the terms and conditions of that Rule and that he may not be
able to sell the Shares at the time or in the amount Purchaser so desires.
(e) Such other representations and warranties as the Company may,
in its discretion, require.
The parties hereby acknowledge, however, that such
representations shall be deemed inapplicable to any purchase of Shares, or any
part thereof, made in accordance with the terms of a registration statement
covering such purchase, which has been filed and has become effective under the
Act, and with respect to which no stop order suspending the effectiveness
thereof has been issued.
11
7. Restrictive Legends.
(a) All certificates representing any Shares subject to the
Repurchase Rights provided for in this Agreement shall have endorsed thereon
substantially the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE TERMS AND CONDITIONS OF A CERTAIN SHAREHOLDER'S AGREEMENT
WHICH, AMONG OTHER THINGS, RESTRICTS THE TRANSFER OF SUCH
SECURITIES AND GRANTS THE CORPORATION THE RIGHT TO REPURCHASE
THESE SECURITIES UNDER CERTAIN CONDITIONS. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY
OF THE CORPORATION."
(b) In addition to the foregoing legend, any certificate
representing any shares, other than shares which have been registered with the
Securities and Exchange Commission (the "Commission") pursuant to an effective
registration statement under the Act with respect to which no stop order
suspending the effectiveness thereof has been issued, shall have endorsed
thereon substantially the following legends:
(i) "THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933v AS AMENDED
(THE "ACT") NOR UNDER ANY APPLICABLE STATE LAW, AND SUCH
SHARES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE
DISPOSED OF UNLESS A REGISTRATION STATEMENT UNDER THE ACT
WITH RESPECT TO SUCH DISPOSITION SHALL THEN BE IN EFFECT
AND ALL APPLICABLE STATE AND BLUE SKY LAWS HAVE BEEN
COMPLIED WITH, OR UNLESS THE PERSON REQUESTING THE
TRANSFER OF SUCH SHARES SHALL FURNISH AN OPINION OF
COUNSEL (BOTH COUNSEL AND OPINION TO BE SATISFACTORY TO
THE CORPORATION) TO THE EFFECT THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR DISPOSITION WILL NOT INVOLVE ANY VIOLATION
OF THE ACT OR ANY SUPERSEDING STATUTE OR ANY APPLICABLE
STATE OR BLUE SKY LAWS."
(ii) Any legend required to be placed thereon by applicable
state securities laws.
8. No Obligation to Transfer. The Company shall not be required (i) to
transfer or have transferred on its books any Shares which shall have been sold
or transferred in violation of any of the provisions set forth in this
Agreement, or (ii) to treat as the owner of such Shares or to accord the right
to vote as such owner or to pay dividends to any transferee to whom such Shares
shall have been so transferred.
12
9. Further Assurances. The parties agree to execute such further
instruments and to take such further action as may reasonably be necessary to
carry out the intent of this Agreement.
10. Notices. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail, with
postage prepaid, addressed to the other party hereto at the address shown below
his signature or at such other address as such party may designate from time to
time by advance written notice to the other party hereto.
11. Governing Law. This Agreement shall be construed, and the provisions
hereof shall be enforced, in accordance with the laws of the State of Delaware.
12. Assigns. This Agreement shall be binding upon and inure to the
benefit of the Company and its successors and assigns and, subject to the
restrictions set forth herein on Purchaser's transfer of the Shares, shall be
binding upon and Inure to the benefit of Purchaser, his heirs, executors,
administrators, guardians, transferees and assigns.
13. Entire Agreement; Amendments. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof. This
Agreement may be amended, modified or supplemented only by a written agreement
signed by both of the parties hereto.
14. Titles and Headings. The section titles and headings herein are for
convenience only and are not to be considered in construing or interpreting this
Agreement.
15. Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed for all purposes to be an
original and all of which together shall be deemed for all purposes to be one
agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
DALLAS SEMICONDUCTOR CORPORATION
Address for notices:
4350 Beltwood Parkway South
Dallas, Texas 75244
By:
------------------------------------
PURCHASER
----------------------------------------
Address:
-------------------------------
----------------------------------------
13
AMENDMENT TO
SHAREHOLDER'S AGREEMENT
THIS AMENDMENT is made as of the ____ day of ____________, 19__, by and
between DALLAS SEMICONDUCTOR CORPORATION, a Delaware corporation (the
"Company"), and ______________________________________________________________
(the "Purchaser").
WHEREAS, the Company and Purchaser entered into that certain
Shareholder's Agreement ("Agreement") dated as of _________________, 19__.
WHEREAS, on _________________, 19__, subsequent to the execution and
delivery of said Agreement, Purchaser was granted an additional option to
purchase up to _______ shares of the Company's Common Stock ("New Shares") under
the Company's 1987 Stock Option Plan, which are included within the definition
of "Additional Stock" as provided in Paragraph 5 of the Agreement;
WHEREAS, Purchaser and the Company desire to alter the terms under the
Agreement as it relates to the New Shares;
NOW, THEREFORE, IT IS HEREBY AGREED:
1. Defined Terms. Terms used herein and not otherwise defined herein
shall have the same meanings as defined for such terms in the Agreement.
2. Repurchase Right. The New Shares shall be subject to the Repurchase
Right as provided in Paragraph 2 of the Agreement, except that the terms thereof
(as they relate only to the New Shares, but to no other Shares) shall be amended
as follows:
(a) For purposes of determining the Repurchase Right with respect
to the New Shares, the parties hereby acknowledge and agree that the
Commencement Date (only with respect to the New Shares) shall be deemed to be
______________, 19__.
(b) The percentage of the New Shares which are subject to the
Repurchase Right shall be determined as follows:
Length of Time Employee
Has Been Employed by the Percentage of
Company Since the Shares Subject to
Commencement Date Repurchase Right
----------------- ----------------
Less than 4 completed quarters 100%
4 completed quarters 75%
5 completed quarters 68.75%
6 completed quarters 62.50%
7 completed quarters 56.25%
14
Length of Time Employee
Has Been Employed by the Percentage of
Company Since the Shares Subject to
Commencement Date Repurchase Right
----------------- ----------------
8 completed quarters 50%
9 completed quarters 43.75%
10 completed quarters 37.50%
11 completed quarters 31.25%
12 completed quarters 25%
13 completed quarters 18.75%
14 completed quarters 12.50%
15 completed quarters 6.25%
16 or more completed quarters None
3. Agreement Ratified. Except as expressly amended hereby, the Agreement
is and shall remain in full force and effect and is hereby ratified and
confirmed in all respects.
4. Entire Agreement. This Amendment, together with the Agreement,
constitute the entire agreement of the parties with respect to the subject
matter hereof. The Agreement may be further amended, modified and supplemented
only by a written agreement signed by both of the parties hereto.
5. Titles and Headings. The section titles and headings herein are for
convenience only and are not to be considered in construing or interpreting this
Amendment or the Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.
DALLAS SEMICONDUCTOR CORPORATION
By:
------------------------------------
PURCHASER:
----------------------------------------
2
EX-10.22
10
f75694ex10-22.txt
EXHIBIT 10.22
1
EXHIBIT 10.22
CONFIDENTIAL
May 20, 1999
Mr. Alan P. Hale
Vice President - Finance
Dallas Semiconductor Corporation
4401 South Beltwood Parkway
Dallas, Texas 75244
Dear Mr. Hale:
Dallas Semiconductor Corporation (the "Company") considers it essential
to the best interests of its stockholders to foster the continuous employment of
key management personnel. In this connection, should the Company receive a
proposal from a third party, whether solicited by the Company or unsolicited,
concerning a possible business combination with, or the acquisition of a
substantial share of the equity or voting securities of, the Company, the Board
of Directors of the Company (the "Board") has determined that it is imperative
that it and the Company be able to rely upon your continued services without
concern that you might be distracted by the personal uncertainties and risks
that such a proposal might otherwise entail.
Accordingly, the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
members of the Company's management, including you, to their assigned duties
without distraction in the face of potentially disturbing circumstances that
could arise out of a possible change in control of the Company.
In order to induce you to remain in the employ of the Company and its
subsidiaries, the Company agrees that you shall receive the benefits set forth
in this letter agreement ("Agreement") in the event of a Change in Control (as
defined in Section 1.3 hereof).
SECTION ONE -- DEFINITIONS
1.1 "Annual Compensation" shall mean the sum of: (i) your annualized
base salary, as determined by the payroll records of the Company, in effect on
the date that immediately precedes a Change in Control; plus (ii) (solely for
purposes of Section 3.1(b) the amounts payable to you under any Deferred
Compensation Plan determined as if, upon a Change in Control, you were fully
vested and entitled to payment of all deferred compensation earned or accrued by
you under any Deferred Compensation Plan; plus (iii) a bonus, as determined by
the payroll records of the Company, equal to the greater of (a) any bonus paid
or payable to you for personal services rendered during the Company's
2
fiscal year in which a Change in Control occurs, or (b) the highest annual bonus
paid to you for personal services rendered for any of four (4) fiscal years of
the Company preceding the Company's fiscal year in which a Change in Control
occurs.
1.2 "Beneficiary" shall mean the person(s) described in Section 5 of
this Agreement.
1.3 "Change in Control" shall mean a change in control of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), whether or not the Company is then subject to such
reporting requirement; provided that, without limitation, such a Change in
Control shall be deemed to have occurred if (i) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 15% or more of the
combined voting power of the Company's then outstanding securities; (ii) during
any period of two consecutive years (not including any period prior to the
execution of this Agreement), individuals who at the beginning of such period
constitute the Board and any new director, whose election to the Board or
nomination for election to the Board by the Company's stockholders was approved
by a vote of at least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority of the Board; (iii) the stockholders of the Company
approve a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, except that a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 15% of the combined voting
power of the Company's then outstanding securities shall not constitute a Change
in Control of the Company; (iv) the stockholders of the Company approve a plan
of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets;
or (v) the election of any person other than C. V. Prothro as Chief Executive
Officer of the Company.
1.4 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.5 "Deferred Compensation Plan" shall mean any of the Company's
nonqualified deferred compensation plans, programs or arrangements in which you
are a participant upon a Change in Control.
1.6 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
2
3
1.7 "Stock Option Plans" shall mean, collectively, any stock option
granted to you by the Company, the Company's 1987 Stock Option Plan, the
Company's 1993 Officer and Director Stock Option Plan, and such other Company
stock option plans under which grants of options are made to you during the term
of this Agreement.
SECTION 2 -- TERM AND TERMINATION
Subject to the provisions of Section 6 below, this Agreement shall
commence on the date set forth above and shall terminate on the earlier of:
(a) the tenth (10th) anniversary of the date of execution of this
Agreement; or
(b) the date on which the Board designates as long as a Change in
Control shall not have occurred.
SECTION THREE - BENEFITS
3.1 Upon the occurrence of a Change in Control, you shall be entitled to
the benefits provided below:
(a) Compensation. No later than the tenth (10th) calendar day
following the Change in Control or such earlier date as may be approved
by the Board, the Company shall pay you (or your Beneficiary, if
applicable) your full base salary through the date immediately preceding
a Change in Control at the rate in effect at such time, plus all other
amounts to which you are entitled under any benefit or compensation plan
of the Company applicable to you, including those benefits and
compensation payable pursuant to Section 3.1(c) - (g) below;
(b) Severance Payment. You (or your Beneficiary, if applicable)
shall receive from the Company a cash lump sum payment equal to 299% of
your Annual Compensation, payable within ten calendar (10) days after
the Change in Control or such earlier date as may be approved by the
Board. The Severance Payment shall not be reduced by the amount of any
other payment or the value of any benefit received or to be received by
you (whether payable pursuant to the terms of this Agreement or any
other agreement, plan or arrangement with the Company or an affiliate,
predecessor or successor of the Company or any person whose actions
result in a Change in Control of the Company or an affiliate of such
person).
3
4
(c) Incentives and Awards.
(i) You (or your Beneficiary, if applicable) shall own and be
immediately vested in all incentives, awards and perquisites previously
made available to you by the Company. To the extent that an incentive,
award or perquisite subject to this paragraph is based upon other than
stock, you shall receive an amount in cash equal to the fair market
value, as determined by you and the Company as of the first business day
immediately preceding the Change in Control, of such non-stock based
incentive, award or perquisite determined as if such incentive, award or
perquisite were payable under the respective plan as of the Change in
Control, which amount shall be payable in a single lump sum payment
within ten (10) calendar days after the Change in Control or such
earlier date as may be approved by the Board; (or at your sole option,
you may retain all such non-cash incentives, awards and perquisites.)
(ii) Your stock-based incentives or awards subject to this
Section 3.1(c) shall exercisable upon the Change in Control to the
extent and manner and within the time period, provided by the respective
Stock Options and awards;
(d) Employee Benefit Plans. Within ten (10) calendar days of the
Change in Control or such earlier date as may be approved by the Board,
you (or your Beneficiary, if applicable) shall also be paid an
additional lump sum payment equal to the sum of: (1) any accrued, unpaid
vacation pay which you have earned under any of the Company's vacation
policies and (2) the amounts payable to you under the terms of any
Deferred Compensation Plan determined as if, upon the Change in Control,
you were fully vested and entitled to payment to all deferred
compensation earned or accrued by you under any Deferred Compensation
Plan. If upon the Change in Control, any Deferred Compensation Plan has
not been amended by the Company to provide for vesting and payment as
provided in this Agreement, you shall have the choice, in your sole
discretion and without objection by the Company, (A) to consider this
Agreement as having amended the respective Deferred Compensation Plan
(and related documents) to make the changes to the respective Deferred
Compensation Plan (and related documents) that are described in this
Agreement, or (B) to receive from the Company a cash lump sum payment in
lieu of any payments which he would be entitled to receive in the future
under any Deferred Compensation Plan. If an election is made under
subsection (B) above, you shall forfeit any and all of your rights to
receive payment of benefits from any Deferred Compensation Plan, and in
lieu of that forfeited right, you shall receive an amount equal to the
fair market value, as determined by the Company and you, as of the first
business day immediately preceding the Change in Control, of the vested
and earned or accrued amount thereunder, in a cash lump sum payment
payable within ten (10) calendar days after the Change in Control or
such earlier date as may be approved by the Board;
4
5
(e) Welfare Benefit Plans and Life Insurance. From and after the
Change in Control, you (for your lifetime) and your spouse (for her
lifetime) shall, in your sole discretion, continue to participate, at no
cost to you or your spouse, in all health, dental, disability, accident
and life insurance plans or arrangements of the Company in which you or
your spouse were participating immediately prior to the Change in
Control as if you continued to be an employee of the Company;
(f) Retirement Benefit. (i) Within ten (10) calendar days following
your fifty-fifth (55th) birthday, and within ten (10) calendar days of
each successive birthday thereafter until your death, the Company shall
pay to you the sum of $65,000;
(g) Legal Fees. The Company shall also pay to you all legal fees and
expenses incurred by you as a result of the Change in Control (including
all such fees and expenses, if any, incurred in seeking to obtain or
enforce any right or benefit provided by this Agreement).
(h) Mitigation. You shall not be required to mitigate the amount of
any payment provided for in this Section 3 by seeking other employment
or otherwise, nor shall the amount of any payment or benefit provided
for in this Section 3 be reduced by any compensation earned by you as
the result of employment by another employer or by retirement benefits
after the Change in Control, or otherwise except as specifically
provided in this Section 3.
5
6
3.2 Tax Liability Gross Up.
(a) In the event that any amount paid under this Agreement is determined
to be an "excess parachute payment" under section 280G of the Code (or any
successor provision), which is subject to the excise tax imposed by section 4999
of the Code (or any successor provision) (the "Excise Tax"), the Company agrees
to pay to you an additional sum (the "Excise Tax Gross Up") in an amount such
that the net amount retained by you, after both (i) receiving all payments under
Section Three of this Agreement other than under this paragraph ("Payment") and
the Excise Tax Gross Up, and (ii) paying (y) any Excise Tax on the Payment and
(z) any Federal, state and local income taxes on the Excise Tax Gross Up, equals
the amount of the Payment.
(b) For purposes of determining the Excise Tax Gross Up, you shall be
deemed to pay Federal, state and local income taxes at the highest marginal rate
of taxation in your filing status for the calendar year in which the Payment is
to be made, based upon your domicile at the time of the Change in Control. The
determination of whether such Excise Tax is payable and the amount of such
Excise Tax shall be based upon the opinion of tax counsel selected by you and
the Company. If such opinion is not finally accepted by the Internal Revenue
Service, then appropriate adjustments shall be calculated (with an additional
Excise Tax Gross Up, if applicable) by such tax counsel based upon the final
amount of Excise Tax so determined, together with any applicable penalties and
interest.
(c) You shall not have any obligation to pay the Company any sums
allegedly due to the Internal Revenue Service by reason of excise tax or
otherwise.
SECTION FOUR -- RESTRICTIONS UPON FUNDING
4.1 The Company shall have no obligation to set aside or entrust any
money with which to pay its obligations under this Agreement; however, the
Company shall take and maintain all actions as are necessary to insure the
payment and performance of all of the benefits and obligations provided for in
Section 3 above.
4.2 The Company intends that this Agreement not be subject to ERISA. If
this Agreement is deemed subject to ERISA, it is intended to be an unfunded
arrangement for the benefit of a select member of management who is a highly
compensated employee of the Company, for the purpose of qualifying this
Agreement for the "top hat" plan exception under sections 201(2), 301(a)(3) and
401(a)(1) of ERISA.
4.3 Should the Company elect to purchase life insurance, mutual funds,
disability policies or annuities pursuant to this Agreement, the Company
reserves the absolute right, in its sole discretion, to terminate such
investments at any time, in whole or in part. At no time shall you have, or be
deemed to have, any lien, right, title or interest in or to any specific
investment or to any assets of the Company as a result of this Agreement;
rather, you shall remain a general unsecured creditor of the Company.
6
7
4.4 If the Company elects to invest in a life insurance, disability or
annuity policy upon your life, you shall assist the Company by freely submitting
to a physical examination and supplying such additional information necessary to
obtain such insurance or annuities.
SECTION FIVE -- DESIGNATION OF BENEFICIARY
5.1 Should you die prior to full payment of amounts due under Section
Three, payment shall be made to your Beneficiary. Your written designation of
one or more persons or entities as your Beneficiary shall operate to designate
your Beneficiary under this Agreement. You shall file with the Company a copy of
your Beneficiary designation on the form supplied to you by the Company. The
last such designation form received by the Company shall be controlling, and no
designation, or change or revocation of a designation shall be effective unless
received by the Company prior to your death.
5.2 If no Beneficiary designation is in effect at the time of your
death, if no designated Beneficiary survives you or if the otherwise applicable
Beneficiary designation conflicts with applicable law, your estate shall be the
Beneficiary.
SECTION SIX -- INTERPRETATION, AMENDMENT AND TERMINATION
6.1 Prior to the occurrence of a Change in Control, the Board shall have
exclusive authority to amend, suspend or terminate this Agreement, as determined
in its sole discretion. After the occurrence of a Change in Control, other than
as provided in Section Two, this Agreement may be amended, suspended or
terminated, in whole or in part, only by a written instrument signed by both a
duly authorized officer of the Company other than you, and by you.
SECTION SEVEN -- MISCELLANEOUS
7.1 Alienability and Assignment Prohibition. Neither you, your spouse
nor any other Beneficiary under this Agreement shall have any power or right to
transfer, assign, anticipate, hypothecate, mortgage, commute, modify or
otherwise encumber in advance any of the benefits payable under this Agreement
nor shall any of said benefits be subject to seizure for the payment of any
debts, judgments, alimony or separate maintenance owed by you or your
Beneficiary, nor be transferable by operation of law in the event of bankruptcy,
insolvency or otherwise.
7.2 Gender. Whenever in this Agreement words are used in the masculine
or neuter gender, they shall be read and construed as in the masculine, feminine
or neuter gender, whenever they should so apply.
7.3 Effect on Other Corporate Benefit Plans. Nothing contained in this
Agreement shall affect your right to participate in or be covered by any
qualified or non-qualified pension, profit sharing, group, bonus or other
supplemental compensation or
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fringe benefit plan constituting a part of the Company's existing or future
compensation structure.
7.4 Headings. Headings and subheadings in this Agreement are inserted
for reference and convenience only and shall not be deemed a part of this
Agreement.
7.5 No Employment Agreement. No provision of this Agreement shall be
deemed or construed to create specific employment rights to you or limit the
right of the Company to discharge you at any time with or without cause. In a
similar fashion, no provision shall limit your rights to voluntarily sever your
employment at any time.
7.6 Withholding of Taxes. Except as may otherwise be specifically
provided for in this Agreement, the Company shall deduct from the amount of any
payment made pursuant to this Agreement any amounts required to be paid or
withheld by the Company with respect to applicable Federal income, Federal
Insurance Contributions Act or Federal Unemployment Tax Act taxes or applicable
state taxes. By executing this Agreement, you agree to all such deductions.
7.7 Successors; Binding Agreement.
(a) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle you to compensation from the Company in the same amount and on the
same terms as you would be entitled hereunder upon a Change in Control. As used
in this Agreement, "Company" shall mean the Company as hereinbefore defined and
any such successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.
7.8 Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to the Company shall be directed to the attention of the Chief
Executive Officer with a copy to the Chief Financial Officer, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt.
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7.9. Miscellaneous. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior to subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Delaware. All references to sections of the Exchange
Act or the Code shall be deemed also to refer to any successor provisions to
such sections. The obligations of the Company under Section 3 shall survive the
expiration of the term of this Agreement.
7.10 Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
7.11 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter which
will then constitute our agreement on this subject.
Very truly yours,
DALLAS SEMICONDUCTOR CORPORATION
By: /s/ C. V. Prothro
-----------------------------------------
C. V. Prothro
Chairman of the Board, President
and Chief Executive Officer
/s/ Alan P. Hale
--------------------------------------
Alan P. Hale
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AMENDMENT TO
AGREEMENT, DATED MAY 20, 1999, WITH
ALAN P. HALE
(Adopted by the Board of Directors on November 18, 2000)
RESOLVED, that, a "Change in Control" as defined in Section 1.3
thereof having not occurred, the May 1999 Agreement between the
Corporation and Mr. Alan P. Hale, be, and the same hereby is, amended,
pursuant to Section 6.1 thereof, effective immediately, by: (i) the
insertion of the word "or" immediately preceding clause (iv) in Section
1.3 and the deletion of clause (v) of Section 1.3; (ii) the insertion of
the words "after a Change in Control" between the words "die" and
"prior" in the first line of Section 5.1; and (iii) the deletion of the
last sentence of Section 7.9; and, further, by the adoption of this
resolution, said amendments shall have the same force and effect as if
set forth in a separately executed amendment to said May 1999 Agreement.
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AMENDMENT TO
AGREEMENT, DATED MAY 20, 1999, WITH
ALAN P. HALE
(ADOPTED BY THE BOARD OF DIRECTORS ON JANUARY 28, 2001)
RESOLVED, that, a "Change in Control" as defined in Section 1.3
thereof having not occurred, the May 1999 Agreement between the Corporation and
Mr. Alan P. Hale, as heretofore amended on November 18, 2000, be and the same
hereby is, further amended, pursuant to Section 6.1 thereof, effective
immediately, by deleting Section 3.2 thereof in its entirety; and, further, by
the adoption of this resolution, said amendment shall have the same force and
effect as if set forth in a separately executed amendment to said May 1999
Agreement.
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AMENDMENT TO AGREEMENT DATED MAY 20, 1999, WITH
ALAN P. HALE
Dallas Semiconductor Corporation, a Delaware corporation (the
"Company"), and Alan P. Hale, an individual (the "Executive"), enter into this
Amendment to Agreement Dated May 20, 1999, dated as of April 11, 2001 (this
"Amendment").
RECITALS
WHEREAS, the Company and the Executive previously entered into that
certain Agreement, dated May 20, 1999, as amended on November 18, 2000 and on
January 28, 2001 (as amended, the "Agreement");
WHEREAS, the Company has entered into that certain Agreement and Plan of
Merger, dated as of January 28, 2001 (the "Merger Agreement"), by and among the
Company, Maxim Integrated Products, Inc., a Delaware corporation ("Maxim"), and
MI Acquisition Sub, Inc., a Delaware corporation and wholly-owned subsidiary of
Maxim; and
WHEREAS, the Merger Agreement requires that, as a condition to the
consummation of the transactions contemplated by the Merger Agreement, the
Company amend the Agreement in the manner specified in the Merger Agreement.
NOW THEREFORE, the parties hereto agree as follows:
1. AMENDMENT TO THE AGREEMENT.
(a) Section 3.1 of the Agreement is amended by adding a new subsection
(i) in its entirety as follows:
"(i) Payments. Notwithstanding anything to the contrary herein
contained, the aggregate of the total cash payments due to you
hereunder upon a Change in Control shall be reduced by $247,978."
(b) Section 3.2 of the Agreement is deleted in its entirety.
2. EFFECTIVE DATE. This Amendment will become effective upon the
execution hereof by each of the parties set forth on the signature page hereto.
3. MISCELLANEOUS.
(a) Except as expressly amended or waived herein, all terms,
covenants and provisions of the Agreement shall remain in full force and effect.
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(b) THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF DELAWARE AND APPLICABLE LAWS OF THE UNITED STATES
OF AMERICA, OTHER THAN THE CONFLICTS OF LAWS RULES THEREOF.
(c) This Amendment may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first above written.
DALLAS SEMICONDUCTOR CORPORATION
By: /s/ Chao C. Mai
--------------------------------
Name: Chao C. Mai
Title: President
EXECUTIVE
/s/ Alan P. Hale
----------------------------------------
Name: Alan P. Hale
3
EX-10.23
11
f75694ex10-23.txt
EXHIBIT 10.23
1
EXHIBIT 10.23
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as
of April 11, 2001, by and between Dallas Semiconductor Corporation, a Delaware
corporation (the "Company"), and Alan P. Hale ("Executive").
1. Employment.
1.1 Engagement of Executive. The Company agrees to employ
Executive as a member of the senior management of the Company and
Executive will be charged with the supervision of such activities of the
Company as delegated by the Board of Directors of the Company (the
"Board," which such terms shall be deemed to also include the board of
directors of Parent (as defined below)), and Executive agrees to accept
such employment, all in accordance with the terms and conditions of this
Agreement.
1.2 Duties and Powers. At all times during the Employment Period
(as defined herein), Executive will serve as a member of the Company's
senior management and will be charged with the supervision and
management of such activities of the Company as delegated by the Board
and will have such responsibilities, titles, duties and authorities, and
will render such services for the Company and its affiliates as the
Board shall from time to time reasonably direct.
1.3 Employment Period. Executive's employment under this
Agreement shall be for a period of one (1) year beginning on the date
hereof (the "Employment Period"). Notwithstanding anything to the
contrary contained herein, the Employment Period is subject to
termination by the mutual written consent of Executive and the Company.
In addition, subject to the provisions of Section 1.4, either party may
terminate this Agreement on thirty (30) days written notice.
1.4 Cash Payment. Subject to Executive's continuous employment
with the Company or its ultimate parent corporation (the "Parent"), or
an affiliate thereof, Executive shall be entitled to receive a cash
payment in the amount of $247,978 on the first anniversary of the date
of this Agreement; provided, however, that, notwithstanding the
foregoing, the Executive shall be immediately entitled to such payment
in the event that the Executive is terminated by the Company, Parent or
any affiliate thereof (i) for any reason (other than Executive's
voluntary termination), (ii) as the result of a Constructive Termination
(as defined below) or (iii) as a result of the Executive's death or
Disability (as defined below). For purposes hereof, "Constructive
Termination" means (A) an adverse change in Executive's responsibilities
or the person to whom Executive directly reports subsequent to the date
of this Agreement; or (B) a decrease in Executive's salary, benefits or
perquisites (other than equity-based awards or grants), other than as a
result of any amendment or termination of any employee and/or executive
benefit plan or arrangement, which amendment or termination is
applicable to all qualifying executives of the Company or the Parent.
For purposes hereof, "Disability" means Executive's inability to
perform, by reason of physical or mental incapacity, Executive's
material duties or obligations to the Company,
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the Parent or an affiliate thereof, as applicable, with or without
reasonable accommodation, for a total period of 21 consecutive days in
any 90-day period, as determined by the board of directors of the Parent
(such determination not to be arbitrary or unreasonable).
2. Compensation and Benefits.
2.1 Salary. In consideration of Executive performing his duties
under this Agreement during the Employment Period, the Company will pay
Executive a base salary at a rate of $208,650 per annum (the "Base
Salary"), payable in accordance with the Company's regular payroll
policy for salaried executives. The Base Salary may be increased (but
not decreased), from time to time during the Employment Period, as
determined by the Board in its sole discretion. If the Employment Period
is terminated pursuant to Section 1.4 above, then the Base Salary for
any partial year will be prorated based on the number of days elapsed in
such year during which services were actually performed by Executive.
2.2 Bonus. At the end of the Employment Period, Executive shall
be eligible to participate in the bonus plan applicable to the Company's
senior executives. The criteria and/or goals for such bonus plan shall
be established by the Board. All bonuses awarded to Executive hereunder
shall be payable in accordance with Company policy.
2.3 Stock Options. Executive shall be eligible to participate in
the stock option plans applicable to the Company's senior executives and
shall receive grants thereunder as may be determined by the Board from
time to time.
2.4 Benefits, Expenses and Pension Plan. During the Employment
Period, the Company agrees to provide to Executive such fringe and other
employee benefits as are generally provided, from time to time, to
senior executives of the Company, including, without limitation,
vacation, health and insurance benefits. The Company shall retain the
right to discontinue or modify any employee benefit program at any time.
The Company will reimburse Executive in accordance with Company policy
for his normal out-of-pocket expenses incurred in the course of
performing his duties hereunder.
3. Noncompetition; Nonsolicitation; Confidentiality.
3.1 Noncompetition; Nonsolicitation. Executive acknowledges and
recognizes the highly competitive nature of the businesses of the
Company and its affiliates and accordingly agrees as follows:
(a) During the Employment Period and, for a period of one
year following the date Executive ceases to be employed by the
Company (the "Restricted Period"), Executive will not, whether on
Executive's own behalf or on behalf of or in conjunction with any
person, company, business entity or other organization
whatsoever, directly or indirectly solicit or assist in
soliciting in competition with the Company, the business of any
client or prospective client:
(i) with whom Executive had personal contact or dealings
on
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behalf of the Company during the one year period preceding
Executive's termination of employment;
(ii) with whom employees reporting to Executive have had
personal contact or dealings on behalf of the Company during
the one year immediately preceding the Executive's
termination of employment; or
(iii) for whom Executive had direct or indirect
responsibility during the one year immediately preceding
Executive's termination of employment.
(b) During the Restricted Period, Executive will not directly
or indirectly:
(i) engage in any business that competes with the
business of the Company or its affiliates (including, without
limitation, businesses which the Company or its affiliates
have specific plans to conduct in the future and as to which
Executive is aware of such planning) in any geographical area
that is within 100 miles of any geographical area where the
Company or its affiliates manufactures, produces, sells,
leases, rents, licenses or otherwise provides its products or
services (a "Competitive Business");
(ii) enter the employ of, or render any services to, any
person or entity (or any division of any person or entity)
who or which engages in a Competitive Business;
(iii) acquire a financial interest in, or otherwise
become actively involved with, any Competitive Business,
directly or indirectly, as an individual, partner,
shareholder, officer, director, principal, agent, trustee or
consultant; or
(iv) interfere with, or attempt to interfere with,
business relationships (whether formed before, on or after
the date of this Agreement) between the Company or any of its
affiliates and customers, clients, suppliers of the Company
or its affiliates.
Notwithstanding anything to the contrary in this
Agreement, Executive may, directly or indirectly own, solely
as an investment, securities of any person engaged in the
business of the Company or its affiliates which are publicly
traded on a national or regional stock exchange or on the
over-the-counter market if Executive (x) is not a controlling
person of, or a member of a group which controls, such person
and (y) does not, directly or indirectly, own 5% or more of
any class of securities of such person.
(c) During the Restricted Period, Executive will not, whether
on Executive's own behalf or on behalf of, or in conjunction
with, any person, company, business entity or other organization
whatsoever, directly or indirectly:
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(i) solicit or encourage any employee of the Company or
its affiliates to leave the employment of the Company or its
affiliates; or
(ii) hire any such employee who was employed by the
Company or its affiliates as of the date of Executive's
termination of employment with the Company or who left the
employment of the Company or its affiliates coincident with,
or within six months prior to or one year after, the
termination of Executive's employment with the Company.
(d) During the Restricted Period, Executive will not,
directly or indirectly, solicit or encourage to cease to work
with the Company or its affiliates any consultant then under
contract with the Company or its affiliates.
It is expressly understood and agreed that although Executive
and the Company consider the restrictions contained in this
Section 3.1 to be reasonable, if a final judicial determination
is made by a court of competent jurisdiction that the time or
territory or any other restriction contained in this Agreement is
an unenforceable restriction against Executive, the provisions of
this Agreement shall not be rendered void but shall be deemed
amended to apply as to such maximum time and territory and to
such maximum extent as such court may judicially determine or
indicate to be enforceable. Alternatively, if any court of
competent jurisdiction finds that any restriction contained in
this Agreement is unenforceable, and such restriction cannot be
amended so as to make it enforceable, such finding shall not
affect the enforceability of any of the other restrictions
contained herein.
3.2 Confidentiality. Executive will not at any time (whether
during or after Executive's employment with the Company) disclose,
retain, or use for Executive's own benefit, purposes or account or the
benefit, purposes or account of any other person, firm, partnership,
joint venture, association, corporation or other business organization,
entity or enterprise other than the Company and any of its subsidiaries
or affiliates, any trade secrets, know-how, software developments,
inventions, formulae, technology, designs and drawings or any Company
property or confidential information relating to research, operations,
finances, current and proposed products and services, vendors,
customers, advertising, costs, marketing, trading, investment, sales
activities, promotion, manufacturing processes, or the business and
affairs of the Company generally, or of any subsidiary or affiliate of
the Company ("Confidential Information") without the written
authorization of the Board; provided, however, that the foregoing shall
not apply to information that is not unique to the Company or that is
generally known to the industry or the public, other than as a result of
Executive's breach of this covenant or the wrongful acts of others who
were under confidentiality obligations as to the item or items involved.
Except as required by law, Executive will not disclose to anyone, other
than his immediate family and legal or financial advisors, the existence
or contents of this Agreement. Executive agrees that, upon termination
of Executive's employment with the Company for any reason, he will
return to the Company immediately all memoranda, books, papers, plans,
information, letters and other data, and all copies thereof or
therefrom, in any way relating to the business of the
4
5
Company, its affiliates and subsidiaries, except that he may retain only
those portions of personal notes, notebooks and diaries that do not
contain Confidential Information of the type described in the preceding
sentence. Executive further agrees that he will not retain or use for
Executive's own benefit, purposes or account or the benefit, purposes or
account of any other person, firm, partnership, joint venture,
association, corporation or other business designation, entity or
enterprise, other than the Company and any of its subsidiaries or
affiliates, at any time any trade names, trademark, service mark, other
proprietary business designation, patent, or other intellectual property
used or owned in connection with the business of the Company or its
affiliates.
4. Miscellaneous.
4.1 Assignment. No party hereto may assign or delegate any of its
rights or obligations hereunder without the prior written consent of the
other party hereto; provided, however, that the Company shall have the
right to assign all or any part of its rights and obligations under this
Agreement (a) to any affiliate of the Company to which the business of
the Company is assigned at any time, any subsidiary or affiliate of the
Company or any surviving entity following any merger or consolidation of
any of those entities with any entity other than the Company, or (b) in
connection with the sale of the Company. Except as otherwise expressly
provided herein, all covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective legal representatives, heirs,
successors and assigns of the parties hereto whether so expressed or
not.
4.2 Entire Agreement. Except as otherwise expressly set forth
herein, this Agreement and all other agreements entered into by the
parties hereto on the date hereof set forth the entire understanding of
the parties, and supersede and preempt all prior oral or written
understandings and agreements with respect to the subject matter hereof.
4.3 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement is
held to be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement.
4.4 Amendment; Modification. No amendment or modification of this
Agreement and no waiver by any party of the breach of any covenant
contained herein shall be binding unless executed in writing by the
party against whom enforcement of such amendment, modification or waiver
is sought. No waiver shall be deemed a continuing waiver or a waiver of
any subsequent breach or default, either of a similar or different
nature, unless expressly so stated in writing.
4.5 Governing Law. This Agreement shall be construed and enforced
in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Agreement shall be
governed by, the laws of the State of Texas, without giving effect to
provisions thereof regarding conflict of laws.
5
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4.6 Notices. All notices, demands or other communications to be
given or delivered hereunder or by reason of the provisions of this
Agreement shall be in writing and shall be deemed to have been properly
served if (a) delivered personally, (b) delivered by a recognized
overnight courier service, (c) sent by certified or registered mail,
return receipt requested and first class postage prepaid, or (d) sent by
facsimile transmission. Such notices, demands and other communications
shall be sent to the addresses indicated below:
If to Executive:
Alan P. Hale
5616 Walnut Spring Court
Dallas, Texas 75252
with a copy to:
Jenkens & Gilchrist, P.C.
1445 Ross Avenue, Suite 3200
Dallas, Texas 75202
Attn: Ronald J. Frappier, Esq.
If to the Company:
Dallas Semiconductor Corporation
4401 South Beltwood Parkway
Dallas, Texas 75244
Attn: General Counsel
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with a copy to:
Jenkens & Gilchrist, P.C.
1445 Ross Avenue, Suite 3200
Dallas, Texas 75202
Attn: M. D. Sampels, Esq.
or to such other address or to the attention of such other
person as the recipient party has specified by prior written
notice to the sending party. Date of service of such notice shall
be (i) the date such notice is personally delivered or sent by
facsimile transmission (with issuance by the transmitting machine
of a confirmation of successful transmission), (ii) three
business days after the date of mailing if sent by certified or
registered mail or, (iii) one business day after date of delivery
to the overnight courier if sent by overnight courier.
4.7 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same Agreement.
4.8 Descriptive Headings; Interpretation. The descriptive
headings in this Agreement are inserted for convenience of reference
only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement. The use of the word "including" in
this Agreement shall be by way of example rather than by limitation.
4.9 No Strict Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties hereto to
express their mutual interest, and no rule of strict construction will
be applied against any party hereto.
4.10 Specific Performance. Executive acknowledges and agrees that
the Company's remedies at law for a breach or threatened breach of any
of the provisions of Section 3.1 or Section 3.2 would be inadequate and
the Company would suffer irreparable damages as a result of such breach
or threatened breach. In recognition of this fact, Executive agrees
that, in the event of such a breach or threatened breach, in addition to
any remedies at law, the Company, without posting any bond, shall be
entitled to cease making any payments or providing any benefit otherwise
required by this Agreement and obtain equitable relief in the form of
specific performance, temporary restraining order, temporary or
permanent injunction or any other equitable remedy which may then be
available.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
COMPANY:
DALLAS SEMICONDUCTOR CORPORATION
By: /s/ Chao C. Mai
----------------------------
Name: Chao C. Mai
Title: President
EXECUTIVE:
/s/ Alan P. Hale
-----------------------------------
Alan P. Hale
8
EX-10.24
12
f75694ex10-24.txt
EXHIBIT 10.24
1
EXHIBIT 10.24
DALLAS SEMICONDUCTOR CORPORATION
SPLIT-DOLLAR INSURANCE AGREEMENT
THIS AGREEMENT is entered into as of this 20th day of July, 2000, by
and between Alan Hale ("Participant"), whose address is 5616 Walnut Spring
Court, Dallas, Texas 75252, and Dallas Semiconductor Corporation, a Delaware
corporation ("Company"), having its principal office and place of business
located at 4401 South Beltwood Parkway, Dallas, Texas 75244.
WHEREAS, the Company by resolution of the Board of Directors duly
adopted on December 17, 1993 ("Date of Adoption") has adopted the Dallas
Semiconductor Corporation Split-Dollar Insurance Plan to promote the interests
of the Company in retaining the officers and directors of the Company who have
made, and are capable of continuing to make, valuable contributions to the
Company's performance by providing life insurance protection; and
WHEREAS, Participant is a director of the Company who had completed at
least five (5) years of service as a director of the Company on the Date of
Adoption and has expressed a willingness to continue his services as a director
of the Company, or is an officer of the Company at the Vice President level or
above on the Date of Adoption; and
WHEREAS, Participant entered into an agreement with the Company dated
the 15th day of February, 1994, concerning a split-dollar life insurance
arrangement with the Company (the "Prior Agreement"); and
WHEREAS, this Agreement amends, restates and supersedes in its entirety
the terms of the Prior Agreement, effective the date of this Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. Policy. Participant has applied for, and the Company has caused to be
issued, a policy or policies of permanent life insurance described on Exhibit
"A" attached hereto, with the attributes described in Section 2 hereof (such
policy or policies, together with any additional policy or policies issued with
the consent of Participant in substitution or replacement for any such policy or
policies, are collectively referred to herein as the "Policy") from an insurance
company selected by the Company as described on Exhibit "A" ("Insurer"). The
Company will take all such action as may be necessary or appropriate to cause
the Policy to be maintained in force at all times, so as to provide Participant
with all of the benefits of the Policy and this Agreement.
2. Benefits. The Policy has been structured, based on a specified
interest rate, mortality and other assumptions, to provide Participant (over and
above benefits payable to the Company) with the benefits, during each year in
which the Policy is in force, provided in the
2
Policy and those benefits I described on Exhibit "A" attached hereto. The
Company assumes no responsibility or liability with respect to the actual
performance of the Policy.
3. Ownership of Policy. With respect to any Policy, the Participant (or
if Participant so elects, an individual or entity designated by Participant)
shall be the owner of the Policy, and the Participant, subject to the limited
collateral assignment of such Policy to the Company as provided in Section 7
hereof, may exercise all the rights of ownership with respect to the Policy,
including, but not limited to: (a) the right to designate, or change the
designation of, any beneficiary or beneficiaries of the Policy, (b) the right to
pledge the Policy as security for a loan or to obtain from the Insurer a loan
against the surrender or cash value, and in accordance with the terms, of the
Policy, (c) the right to assign or transfer the Policy, in whole or in part, and
(d) the right to sell, surrender or terminate the Policy.
4. Payment of Premiums. All premiums on the Policy shall be paid by the
Company (or in the discretion of the Company, on behalf of the Company by the
trustee [the "Trustee"] of the Dallas Semiconductor Corporation Executive
Split-Dollar Insurance Trust [the "Trust"]). The Company shall never permit the
Policy to lapse. Premium payments paid by the Trustee shall be considered as
payments by the Company for all purposes under this Agreement. While all
premiums on the Policy shall be paid by or on behalf of the Company, that
portion of the premium equal to the amount of income imputed to Participant for
federal and state income tax purposes on the value of the economic benefit of
the life insurance protection provided to Participant shall be deemed to have
been paid by the Company to the Participant and immediately paid by Participant
to the Insurer. If the Company elects to pay the premiums to the Trust, such
payment shall constitute sufficient funds to pay all premiums which may become
due on each such Policy.
5. Change of Control. In the event of the occurrence of a Change of
Control (as hereinafter defined): (a) the Company (or if so directed by the
Company, the Trustee) shall immediately pay to the Insurer all remaining
premiums on the Policy, regardless of whether such premiums are then due, and
(b) the collateral assignment of the Policy to the Company, as provided in
Section 7 hereof shall immediately and fully terminate, and the Participant
shall become fully vested in the entire cash value and death benefit payable
under the Policy. For purposes of this Agreement, a "Change in Control" shall
mean a change in control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether or not
the Company is then subject to such reporting requirement; provided that,
without limitation, such a Change in Control shall be deemed to have occurred if
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 15% or more of the combined voting power of the Company's then
outstanding securities; (ii) at any time following the date of execution of this
Agreement individuals who are directors of the Company at such date cease for
any reason to constitute a majority of the Board of Directors; (iii) the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into
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voting securities of the surviving entity) more than 80% of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, except that a merger
or consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no "person" (as hereinabove defined) acquires more
than 15% of the combined voting power of the Company's then outstanding
securities shall not constitute a Change in Control of the Company; (iv) the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets; or (v) the election of any person
other than C. V. Prothro as Chairman of the Board and Chief Executive Officer of
the Company.
6. Tax Offset Payments. To the extent that the Participant may be deemed
to have realized gross income in any year for federal and state income tax
purposes or gift tax purposes by reason of this Agreement, including the value
of the insurance protection or other benefits thereunder provided by the Policy
or otherwise as a consequence of the Plan (including, but not limited to the
vesting of benefits to the Participant upon the occurrence of a Change of
Control or otherwise), the Company shall pay to Participant an additional amount
such that the after-tax cost to the Participant is zero.
7. Collateral Assignment of Policy. The Participant shall, and does
hereby, collaterally assign to the Company an interest in the cash values and
death benefit of the Policy as follows:
(a) If the Participant surrenders or sells the Policy, he shall pay
the Company, out of the proceeds of the Policy, an amount equal to the
lesser of (i) the cash value of the Policy, or (ii) the aggregate amount
of premiums paid by the Company with respect to the Policy;
(b) The Company shall be entitled to receive the cumulative premiums
paid for the Policy (the amount indicated in the column headed Death
Benefits Payable to the Company shown on Exhibit "A" attached hereto)
from the death benefits under the Policy. All death benefits payable
under the Policy that exceed the amount paid to the Company under the
preceding sentence shall be paid to the beneficiary or beneficiaries of
the Participant. The amount payable to such beneficiary or beneficiaries
is indicated in the column headed Death Benefit Payable to Participant's
Beneficiary: Individual Coverage shown on Exhibit "A" attached hereto.
If the death benefits payable under this Agreement exceed the aggregate
amount of premiums paid by the Company as set forth on Exhibit "A," such
excess death benefits shall be payable to the Participant's beneficiary
or beneficiaries.
The collateral assignment of the Policy shall not be altered or changed
without the consent of the Company and the Participant.
8. Adjustment of Benefits; Additional Policy Benefits or Riders. The
Company and the Participant may from time to time enter into agreements which
may adjust the value of each party's interests in the Policy. The Participant
may add any rider or endorsement to the Policy.
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If any such rider or endorsement is added upon the written request of the
Company, all premiums with respect to such rider or endorsement shall be paid by
the Company. A Participant shall not be required to withdraw any benefits
payable under the Policy and may elect to apply the value attributable to such
benefits to the purchase of additional benefits payable to the beneficiary or
beneficiaries named by Participant under the Policy, if the Participant so
elects, or to treat such benefits as additional insurance payable to the
beneficiary or beneficiaries of such Policy upon the death of the Participant.
9. Amendment. This Agreement may be amended by the Board of Directors of
the Company; provided, however, that no such amendment shall diminish, abrogate
or change any rights or benefits of the Participant under the Policy or this
Agreement without the Participant's prior written consent, and no amendment of
the Policy or this Agreement shall be made upon or after the occurrence of a
Change of Control without the prior written consent of each Participant.
10. Benefits Cumulative. The benefits to the Participant under this
Agreement shall be cumulative with, and shall not reduce or be deemed to be in
substitution of, any benefits, payments or compensation to which Participant may
otherwise be entitled under any other compensation, benefit, welfare, savings,
retirement or compensation plan of, or for the employees, officers or directors
of, the Company.
11. Further Assurances. The Company and Participant shall enter into,
execute and deliver all such documents, instruments, and other agreements as the
other party may reasonably request, or as the Insurer or Participant may
reasonably require, in order to carry out the intent and purposes of this
Agreement.
12. ERISA Requirements.
(a) Funding Policy. All premiums on the Policy shall be remitted by, or
on behalf of, the Company to the Insurer. The benefits provided by the Policy
shall be paid by the Insurer in accordance with the terms of the Policy and this
Agreement. The payment of such benefits is predicated on the payment of the
required premiums.
(b) Claims and Review Procedures. The following claims procedure shall
apply for purposes of this Agreement. The claims procedure in subparagraph
(b)(1) below shall be followed with respect to benefits provided by the Insurer
under the terms of the Policy. The claims procedure in subparagraph (b)(2) below
shall be followed with respect to benefits, if any, provided directly by the
Company. The Participant (or the other owner of the Policy designated by the
Participant) that owns the Policy (the "Policy Owner") and the Policy Owner's
successors, beneficiaries or representatives, as appropriate (individually or
collectively, "Claimant"), must follow both procedures, if necessary.
(i) Filing a Claim for Insurance Benefits. A Claimant shall make a
claim for benefits provided by the Insurer by submitting a written claim
and proof of claim to the Insurer in accordance with procedures and
guidelines established from time to time by the Insurer. On written
request, the Company, acting as the "Plan Administrator," shall provide
copies of any claim forms or instructions, or advise the Claimant how to
obtain
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such forms or instructions. The Insurer shall decide whether the claim
shall be allowed. If a claim is denied in whole or in part, the Insurer
shall notify the Claimant and explain the procedure for reviewing a
denied claim.
(ii) Filing a Claim for Any Other Benefit. The following claims
procedure shall apply with respect to all benefits other than those
provided by the Insurer:
(A) Filing a Claim; Notification to Claimant of Decision: The
Claimant shall make a claim in writing in accordance with procedures
and guidelines established from time to time by the Plan
Administrator, which claim shall be delivered to the Plan
Administrator. The Plan Administrator shall review and make the
decision with respect to any claim. If a claim is denied in whole or
in part, written notice thereof shall be furnished to the Claimant
within thirty days after the claim has been filed. Such notice shall
set forth:
(1) the specific reason or reasons for the denial;
(2) specific reference to the provisions of this Agreement
on which denial is based;
(3) a description of any additional material or information
necessary for the Claimant to perfect a claim and an
explanation of why such material or information is necessary;
and
(4) an explanation of the procedure for review of the
denied claim.
(B) Procedure for Review: Any Claimant whose claim has been
denied in full or in part may individually, or through the
Claimant's duly authorized representative, request a review of the
claim denial by delivering a written application for review to the
Plan Administrator at any time within sixty days after receipt by
the Claimant of written notice of the denial of the claim. Such
request shall set forth in reasonable detail:
(1) the grounds upon which the request for review is based
and any facts in support thereof; and
(2) any issues or comments which the Claimant considers
pertinent to the claim.
Following such request for review, the Plan Administrator fully
and fairly shall review the decision denying the claim. Prior to the
decision of the Plan Administrator, the Claimant shall be given an
opportunity to review pertinent documents.
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(C) Decision on Review: A decision on the review of a claim
denied in whole or in part shall be made in the following manner:
(1) The decision on review shall be made by the Plan
Administrator, which shall consider the application and any
written materials submitted by the Claimant in connection
therewith. The Plan Administrator, in its sole discretion, may
require the Claimant to submit such additional documents or
evidence as the Plan Administrator may deem necessary or
advisable in making such review.
(2) The Plan Administrator will render a decision upon a
review of a denied claim within sixty days after receipt of a
request for review. If special circumstances (such as the need
to hold a hearing on any matter pertaining to the denied claim)
warrant additional time, the decision will be rendered as soon
as possible, but not later than one hundred twenty days after
receipt of a request for review. Written notice of any such
extension will be furnished to the Claimant prior to the
commencement of the extension.
(3) The decision on review shall be in writing and shall
include specific reasons for the decision, written in a manner
calculated to be understood by the Claimant, and specific
references to the provisions of this Agreement on which the
decision is based. The decision of the Plan Administrator on
review shall be final and conclusive upon all persons. If the
decision on review is not furnished to the Claimant within the
time limits prescribed in subparagraph (c)(2) above, the claim
will be deemed denied on review.
13. Legal Fees. The Company shall pay to the Participant and his
beneficiary or beneficiaries upon demand all legal fees and expenses incurred by
the Participant or his beneficiary or beneficiaries in seeking to obtain or
enforce any right or benefit provided by the Policy and this Agreement.
14. Successors; Binding Agreement.
(a) In addition to the requirements of Section 5 of this Agreement, the
Company will, upon the request of Participant, require any proposed successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession were to take place. Failure of the Company to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle the Participant to all rights,
compensation and other benefits from the Company in the same amount and on the
same terms as the Participant would otherwise be entitled hereunder. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined and any
such successor to its business and/or assets as aforesaid, by operation of law,
or otherwise.
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(b) Subject to the provisions of Section 14(a) above, the terms and
provisions of this Agreement shall inure to the benefit of and be binding upon
(a) the Company and its successors and assigns and (b) the Participant and his
respective heirs, executors, administrators and legal representatives.
15. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
16. Miscellaneous. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Delaware. All references to sections of the Exchange
Act or the Code shall be deemed also to refer to any successor provisions to
such sections. The obligations of the Company under this Agreement shall survive
the expiration of this Agreement.
17. Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to the Company shall be directed to the attention of the Chief
Executive Officer with a copy to the Chief Financial Officer, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt.
18. Indemnification.
(a) The Company hereby agrees to indemnify and hold harmless the
Participant and any beneficiary or beneficiaries of Participant against any and
all expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement, actually and reasonably incurred by Participant or any beneficiary
or beneficiaries or Participant in connection with any threatened, pending or
completed action, suit, or proceeding, whether formal or informal, or civil,
criminal, administrative, legislative, arbitrative or investigative (hereinafter
a "Proceeding") to which the Participant or any beneficiary or beneficiaries of
Participant is, was, or at any time becomes a party, or is threatened to be made
a party, in any way arising out of, based upon or incident to this Agreement or
any of the rights, benefits and obligations provided for herein.
(b) The expenses (including attorneys' fees) incurred by Participant or
any beneficiary or beneficiaries of Participant in defending any Proceeding
shall be advanced by the Company at the request of the Participant or any such
beneficiary or beneficiaries. Any
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judgments, fines or amounts to be paid in settlement shall also be advanced by
the Company to the Participant or any beneficiary or beneficiaries of
Participant upon request.
19. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware.
20. Headings. Headings in this Agreement are inserted for reference and
convenience only and shall not be deemed a part of this Agreement.
21. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
as of the 20th day of July, 2000.
DALLAS SEMICONDUCTOR CORPORATION
By: /s/ C. V. Prothro
------------------------------------
/s/ Alan Hale
------------------------------------
Alan Hale, Participant
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EXHIBIT "A"
NAME OF PARTICIPANT: Alan Hale
NAME OF INSURED: Alan Hale
INSURER: Nationwide Policy No. N056104180
Death Benefit
Payable to Participant's Death Benefit
Policy Year Beneficiary: Payable to
Ending, April 15 Individual Coverage Company
---------------- ------------------------ -------------
2001 3,434,000 194,462
2002 3,434,000 284,683
2003 3,434,000 284,683
2004 3,434,000 284,683
2005 3,434,000 284,683
2006 3,434,000 284,683
2007 3,434,000 284,683
2008 3,434,000 284,683
2009 3,434,000 284,683
2010 3,434,000 284,683
2011 3,434,000 284,683
2012 3,434,000 284,683
2013 3,434,000 284,683
2014 3,434,000 284,683
2015 3,434,000 284,683
2016 3,434,000 284,683
2017 3,434,000 284,683
2018 3,434,000 284,683
2019 3,434,000 284,683
2020 3,434,000 284,683
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AMENDMENT TO
DALLAS SEMICONDUCTOR CORPORATION
SPLIT-DOLLAR INSURANCE AGREEMENT
THIS AMENDMENT TO DALLAS SEMICONDUCTOR CORPORATION SPLIT-DOLLAR
INSURANCE AGREEMENT is entered into as of this 23rd day of January, 2001, by and
between Alan Hale ("Participant") and Dallas Semiconductor Corporation, a
Delaware corporation ("Company").
WHEREAS, Participant entered into a Split-Dollar Insurance Agreement
with the Company dated July 20, 2000 ("Agreement"); and
WHEREAS, the Company desires to amend the Agreement in the manner set
forth below and has requested the consent of Participant to such amendment;
NOW, THEREFORE, in consideration of the payment by the Company to
Participant of the sum of $10.00 and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by Participant,
Participant and the Company agree as follows:
1. Section 4. Section 4 is divided into subsections (a) and (b).
Existing Section 4 entitled "Payment of Premiums" is designated as Section 4(a),
and the following language is inserted as Section 4(b):
"(b) All premiums on the Policy shall be paid upon request or demand
by Participant or Participant's Insurer without regard to whether or not
the Participant is an employee or director of the Company, the
Participant's responsibilities to the Company or any other circumstance,
such obligation to pay to be absolute, continuing, irrevocable and
unconditional and not subject to any set-off, counterclaim, recoupment,
reduction, diminution or any defense of any kind or nature whatsoever."
2. Section 5. Section 5 is deleted in its entirety and the following is
substituted in its place:
"Reserved."
3. Section 6. The words "(including, but not limited to the vesting of
benefits to the Participant upon the occurrence of a Change of Control or
otherwise)" appearing in lines 4, 5 and 6 of Section 6 are deleted.
4. Section 9. The words "and no amendment of the Policy or this
Agreement shall be made upon or after the occurrence of a Change of Control
without the prior written consent of each Participant" found in lines 4 and 5 of
Section 9 are deleted.
5. Section 14. Subsection (a) of Section 14 is amended to delete the
words "In addition to the requirements of Section 5 of this Agreement" appearing
in line 1 thereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the 23rd day of January, 2001.
DALLAS SEMICONDUCTOR CORPORATION
By: /s/ Chao C. Mai
-------------------------------------
/s/ Alan P. Hale
----------------------------------------
Alan Hale, Participant
2
EX-10.25
13
f75694ex10-25.txt
EXHIBIT 10.25
1
EXHIBIT 10.25
DALLAS SEMICONDUCTOR CORPORATION
SPLIT-DOLLAR INSURANCE AGREEMENT
THIS AGREEMENT is entered into as of this 20th day of July, 2000, by
and between Merlyn D. Sampels ("Participant"), whose address is 7718 Caruth
Boulevard, Dallas, Texas 75225, and Dallas Semiconductor Corporation, a Delaware
corporation ("Company"), having its principal office and place of business
located at 4401 South Beltwood Parkway, Dallas, Texas 75244.
WHEREAS, the Company by resolution of the Board of Directors duly
adopted on December 17, 1993 ("Date of Adoption") has adopted the Dallas
Semiconductor Corporation Split-Dollar Insurance Plan to promote the interests
of the Company in retaining the officers and directors of the Company who have
made, and are capable of continuing to make, valuable contributions to the
Company's performance by providing life insurance protection; and
WHEREAS, Participant is a director of the Company who had completed at
least five (5) years of service as a director of the Company on the Date of
Adoption and has expressed a willingness to continue his services as a director
of the Company, or is an officer of the Company at the Vice President level or
above on the Date of Adoption; and
WHEREAS, Participant entered into an agreement with the Company dated
the 15th day of February, 1994, concerning a split-dollar life insurance
arrangement with the Company (the "Prior Agreement"); and
WHEREAS, this Agreement amends, restates and supersedes in its entirety
the terms of the Prior Agreement, effective the date of this Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. Policy. Participant has applied for, and the Company has caused to be
issued, a policy or policies of permanent life insurance described on Exhibit
"A" attached hereto, with the attributes described in Section 2 hereof (such
policy or policies, together with any additional policy or policies issued with
the consent of Participant in substitution or replacement for any such policy or
policies, are collectively referred to herein as the "Policy") from an insurance
company selected by the Company as described on Exhibit "A" ("Insurer"). The
Participant has also applied for and the Company has caused to be issued a
policy or policies of permanent life insurance in which another Plan participant
is the named insured, such policy being identified on Exhibit "A" as the
Nationwide Policy. The term "Policy" shall also include such policy. The Company
will take all such action as may be necessary or appropriate to cause the Policy
to be maintained in force at all times, so as to provide Participant with all of
the benefits of the Policy and this Agreement.
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2. Benefits. The Policy has been structured, based on a specified
interest rate, mortality and other assumptions, to provide Participant (over and
above benefits payable to the Company) with the benefits, during each year in
which the Policy is in force, provided in the Policy and those benefits
described on Exhibit "A" attached hereto. The Company assumes no responsibility
or liability with respect to the actual performance of the Policy, but the
Company agrees to timely pay to the insurer such amounts as may be needed for
the cash value in Nationwide Policy No. N056117510 to always be at least
$250,000.
3. Ownership of Policy. With respect to any Policy, the Participant (or
if Participant so elects, an individual or entity designated by Participant)
shall be the owner of the Policy, and the Participant, subject to the limited
collateral assignment of such Policy to the Company as provided in Section 7
hereof, may exercise all the rights of ownership with respect to the Policy,
including, but not limited to: (a) the right to designate, or change the
designation of, any beneficiary or beneficiaries of the Policy, (b) the right to
pledge the Policy as security for a loan or to obtain from the Insurer a loan
against the surrender or cash value, and in accordance with the terms, of the
Policy, (c) the right to withdraw, during the Participant's lifetime, all or any
part of the Policy's cash value (specifically including the cash value in
Nationwide Policy No. 56117510) on the date of Participant's withdrawal, (d) the
right to assign or transfer the Policy, in whole or in part, and (e) the right
to sell, surrender or terminate the Policy.
4. Payment of Premiums. All premiums on the Policy shall be paid by the
Company (or in the discretion of the Company, on behalf of the Company by the
trustee [the "Trustee"] of the Dallas Semiconductor Corporation Executive
Split-Dollar Insurance Trust [the "Trust"]). The Company shall never permit the
Policy to lapse. Premium payments paid by the Trustee shall be considered as
payments by the Company for all purposes under this Agreement. While all
premiums on the Policy shall be paid by or on behalf of the Company, that
portion of the premium equal to the amount of income imputed to Participant for
federal and state income tax purposes on the value of the economic benefit of
the life insurance protection provided to Participant shall be deemed to have
been paid by the Company to the Participant and immediately paid by Participant
to the Insurer. If the Company elects to pay the premiums to the Trust, such
payment shall constitute sufficient funds to pay all premiums which may become
due on each such Policy.
5. Change of Control. In the event of the occurrence of a Change of
Control (as hereinafter defined): (a) the Company (or if so directed by the
Company, the Trustee) shall immediately pay to the Insurer all remaining
premiums on the Policy, regardless of whether such premiums are then due, and
(b) the collateral assignment of the Policy to the Company, as provided in
Section 7 hereof shall immediately and fully terminate, and the Participant
shall become fully vested in the entire cash value and death benefit payable
under the Policy. For purposes of this Agreement, a "Change in Control" shall
mean a change in control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether or not
the Company is then subject to such reporting requirement; provided that,
without limitation, such a Change in Control shall be deemed to have occurred if
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of
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the Company representing 15% or more of the combined voting power of the
Company's then outstanding securities; (ii) at any time following the date of
execution of this Agreement individuals who are directors of the Company at such
date cease for any reason to constitute a majority of the Board of Directors;
(iii) the stockholders of the Company approve a merger or consolidation of the
Company with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than 80% of
the combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation,
except that a merger or consolidation effected to implement a recapitalization
of the Company (or similar transaction) in which no "person" (as hereinabove
defined) acquires more than 15% of the combined voting power of the Company's
then outstanding securities shall not constitute a Change in Control of the
Company; (iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets; or (v) the election
of any person other than C. V. Prothro as Chairman of the Board and Chief
Executive Officer of the Company.
6. Tax Offset Payments. To the extent that the Participant may be deemed
to have realized gross income in any year for federal and state income tax
purposes or gift tax purposes by reason of this Agreement, including the value
of the insurance protection or other benefits thereunder provided by the Policy
or otherwise as a consequence of the Plan (including, but not limited to the
vesting of benefits to the Participant upon the occurrence of a Change of
Control or otherwise), the Company shall pay to Participant an additional amount
such that the after-tax cost to the Participant is zero.
7. Collateral Assignment of Policy. The Participant shall, and does
hereby, collaterally assign to the Company an interest in the cash values and
death benefit of the Policy as follows:
(a) If the Participant surrenders or sells the Policy, he shall pay
the Company, out of the proceeds of the Policy, an amount equal to the
lesser of (i) the cash value of the Policy, or (ii) the aggregate amount
of premiums paid by the Company with respect to the Policy;
(b) The Company shall be entitled to receive the cumulative premiums
paid for MetLife Policies Nos. 940250361 E3 and 940250367 E3 (the amount
of which is a portion of the amount indicated in the column headed Death
Benefits Payable to the Company shown on Exhibit "A" attached hereto)
from the death benefit paid under Nationwide Policy No. N056117510, and
the Company shall be entitled to receive the cumulative premiums paid
for John Hancock Policy No. 534889 (the amount of which is the remainder
of the amount indicated in the column headed Death Benefits Payable to
the Company shown on Exhibit "A" attached hereto) from the death
benefits payable under such policy upon the death of the survivor of the
insured covered under such policy. All death benefits payable under
MetLife Policies Nos. 940250361 E3 and 940250367 E3 shall be paid to the
beneficiary or beneficiaries of the Participant, and all
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death benefits payable under John Hancock Policy No. 534889 that exceed
the premiums reimbursed to the Company out of such policy's proceeds
under the preceding sentence shall be paid to the beneficiary or
beneficiaries of Participant. (The death benefits payable under the
MetLife policies are indicated in the column headed Death Benefit
Payable to Participant's Beneficiary: Individual Coverage, and the death
benefits payable under the John Hancock policy are indicated in the
column headed Death Benefit Payable to Participant's Beneficiary:
Survivorship Coverage, both columns as shown on Exhibit "A" attached
hereto.) All death benefits payable under Nationwide Policy No.
N056117510 that exceed the premiums reimbursed to the Company out of
such policy's proceeds under the first sentence of this paragraph shall
be paid as follows: (1) to Participant's beneficiary or beneficiaries,
the excess of (A) 1,300,000 over (B) the amounts, if any, paid to
Participant, in Participant's sole discretion, from Nationwide Policy
No. N056117510 during Participant's lifetime, and (2) the balance to the
Company. If the death benefits payable under this Agreement exceed the
sum of (i) the aggregate amount of premiums paid by the Company as set
forth on Exhibit "A" and (ii) the other amounts payable to the Company
under this paragraph, such excess death benefits shall be payable to the
Participant's beneficiary or beneficiaries.
The collateral assignment of the Policy shall not be altered or changed
without the consent of the Company and the Participant.
8. Adjustment of Benefits; Additional Policy Benefits or Riders. The
Company and the Participant may from time to time enter into agreements which
may adjust the value of each party's interests in the Policy. The Participant
may add any rider or endorsement to the Policy. If any such rider or endorsement
is added upon the written request of the Company, all premiums with respect to
such rider or endorsement shall be paid by the Company. A Participant shall not
be required to withdraw any benefits payable under the Policy and may elect to
apply the value attributable to such benefits to the purchase of additional
benefits payable to the beneficiary or beneficiaries named by Participant under
the Policy, if the Participant so elects, or to treat such benefits as
additional insurance payable to the beneficiary or beneficiaries of such Policy
upon the death of the Participant.
9. Amendment. This Agreement may be amended by the Board of Directors of
the Company; provided, however, that no such amendment shall diminish, abrogate
or change any rights or benefits of the Participant under the Policy or this
Agreement without the Participant's prior written consent, and no amendment of
the Policy or this Agreement shall be made upon or after the occurrence of a
Change of Control without the prior written consent of each Participant.
10. Benefits Cumulative. The benefits to the Participant under this
Agreement shall be cumulative with, and shall not reduce or be deemed to be in
substitution of, any benefits, payments or compensation to which Participant may
otherwise be entitled under any other compensation, benefit, welfare, savings,
retirement or compensation plan of, or for the employees, officers or directors
of, the Company.
11. Further Assurances. The Company and Participant shall enter into,
execute and deliver all such documents, instruments, and other agreements as the
other party may reasonably
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request, or as the Insurer or Participant may reasonably require, in order to
carry out the intent and purposes of this Agreement.
12. ERISA Requirements.
(a) Funding Policy. All premiums on the Policy shall be remitted by, or
on behalf of, the Company to the Insurer. The benefits provided by the Policy
shall be paid by the Insurer in accordance with the terms of the Policy and this
Agreement. The payment of such benefits is predicated on the payment of the
required premiums.
(b) Claims and Review Procedures. The following claims procedure shall
apply for purposes of this Agreement. The claims procedure in subparagraph
(b)(1) below shall be followed with respect to benefits provided by the Insurer
under the terms of the Policy. The claims procedure in subparagraph (b)(2) below
shall be followed with respect to benefits, if any, provided directly by the
Company. The Participant (or the other owner of the Policy designated by the
Participant) that owns the Policy (the "Policy Owner") and the Policy Owner's
successors, beneficiaries or representatives, as appropriate (individually or
collectively, "Claimant"), must follow both procedures, if necessary.
(i) Filing a Claim for Insurance Benefits. A Claimant shall make a
claim for benefits provided by the Insurer by submitting a written claim
and proof of claim to the Insurer in accordance with procedures and
guidelines established from time to time by the Insurer. On written
request, the Company, acting as the "Plan Administrator," shall provide
copies of any claim forms or instructions, or advise the Claimant how to
obtain such forms or instructions. The Insurer shall decide whether the
claim shall be allowed. If a claim is denied in whole or in part, the
Insurer shall notify the Claimant and explain the procedure for
reviewing a denied claim.
(ii) Filing a Claim for Any Other Benefit. The following claims
procedure shall apply with respect to all benefits other than those
provided by the Insurer:
(A) Filing a Claim; Notification to Claimant of Decision: The
Claimant shall make a claim in writing in accordance with procedures
and guidelines established from time to time by the Plan
Administrator, which claim shall be delivered to the Plan
Administrator. The Plan Administrator shall review and make the
decision with respect to any claim. If a claim is denied in whole or
in part, written notice thereof shall be furnished to the Claimant
within thirty days after the claim has been filed. Such notice shall
set forth:
(1) the specific reason or reasons for the denial;
(2) specific reference to the provisions of this Agreement
on which denial is based;
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(3) a description of any additional material or information
necessary for the Claimant to perfect a claim and an
explanation of why such material or information is necessary;
and
(4) an explanation of the procedure for review of the
denied claim.
(B) Procedure for Review: Any Claimant whose claim has been
denied in full or in part may individually, or through the
Claimant's duly authorized representative, request a review of the
claim denial by delivering a written application for review to the
Plan Administrator at any time within sixty days after receipt by
the Claimant of written notice of the denial of the claim. Such
request shall set forth in reasonable detail:
(1) the grounds upon which the request for review is based
and any facts in support thereof; and
(2) any issues or comments which the Claimant considers
pertinent to the claim.
Following such request for review, the Plan Administrator fully
and fairly shall review the decision denying the claim. Prior to the
decision of the Plan Administrator, the Claimant shall be given an
opportunity to review pertinent documents.
(C) Decision on Review: A decision on the review of a claim
denied in whole or in part shall be made in the following manner:
(1) The decision on review shall be made by the Plan
Administrator, which shall consider the application and any
written materials submitted by the Claimant in connection
therewith. The Plan Administrator, in its sole discretion, may
require the Claimant to submit such additional documents or
evidence as the Plan Administrator may deem necessary or
advisable in making such review.
(2) The Plan Administrator will render a decision upon a
review of a denied claim within sixty days after receipt of a
request for review. If special circumstances (such as the need
to hold a hearing on any matter pertaining to the denied claim)
warrant additional time, the decision will be rendered as soon
as possible, but not later than one hundred twenty days after
receipt of a request for review. Written notice of any such
extension will be furnished to the Claimant prior to the
commencement of the extension.
(3) The decision on review shall be in writing and shall
include specific reasons for the decision, written in a manner
calculated to
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be understood by the Claimant, and specific references to the
provisions of this Agreement on which the decision is based.
The decision of the Plan Administrator on review shall be final
and conclusive upon all persons. If the decision on review is
not furnished to the Claimant within the time limits prescribed
in subparagraph (c)(2) above, the claim will be deemed denied
on review.
13. Legal Fees. The Company shall pay to the Participant and his
beneficiary and beneficiaries upon demand all legal fees and expenses incurred
by the Participant or by his beneficiary or beneficiaries, respectively, in
seeking to obtain or enforce any right or benefit provided by the Policy and
this Agreement.
14. Successors; Binding Agreement.
(a) In addition to the requirements of Section 5 of this Agreement, the
Company will, upon the request of Participant, require any proposed successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession were to take place. Failure of the Company to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle the Participant to all rights,
compensation and other benefits from the Company in the same amount and on the
same terms as the Participant would otherwise be entitled hereunder. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined and any
such successor to its business and/or assets as aforesaid, by operation of law,
or otherwise.
(b) Subject to the provisions of Section 14(a) above, the terms and
provisions of this Agreement shall inure to the benefit of and be binding upon
(a) the Company and its successors and assigns and (b) the Participant and his
respective heirs, executors, administrators and legal representatives.
15. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
16. Miscellaneous. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Delaware. All references to sections of the Exchange
Act or the Code shall be deemed also to refer to any successor provisions to
such sections. The obligations of the Company under this Agreement shall survive
the expiration of this Agreement.
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17. Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to the Company shall be directed to the attention of the Chief
Executive Officer with a copy to the Chief Financial Officer, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt.
18. Indemnification.
(a) The Company hereby agrees to indemnify and hold harmless the
Participant and any beneficiary or beneficiaries of Participant against any and
all expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement, actually and reasonably incurred by Participant or any beneficiary
or beneficiaries or Participant in connection with any threatened, pending or
completed action, suit, or proceeding, whether formal or informal, or civil,
criminal, administrative, legislative, arbitrative or investigative (hereinafter
a "Proceeding") to which the Participant or any beneficiary or beneficiaries of
Participant is, was, or at any time becomes a party, or is threatened to be made
a party, in any way arising out of, based upon or incident to this Agreement or
any of the rights, benefits and obligations provided for herein.
(b) The expenses (including attorneys' fees) incurred by Participant or
any beneficiary or beneficiaries of Participant in defending any Proceeding
shall be advanced by the Company at the request of the Participant or any such
beneficiary or beneficiaries. Any judgments, fines or amounts to be paid in
settlement shall also be advanced by the Company to the Participant or any
beneficiary or beneficiaries of Participant upon request.
19. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware.
20. Headings. Headings in this Agreement are inserted for reference and
convenience only and shall not be deemed a part of this Agreement.
21. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
as of the 20th day of July, 2000.
DALLAS SEMICONDUCTOR CORPORATION
By: /s/ C. V. Prothro
-------------------------------------
/s/ Merlyn D. Sampels
----------------------------------------
Merlyn D. Sampels, Participant
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EXHIBIT "A"
NAME OF PARTICIPANT: Merlyn Sampels
NAME OF INSURED: Merlyn Sampels & Anita Sampels
INSURER: MetLife Policy No. 940 250 361 E3 & 940 250 367 E3
INSURER: John Hancock Policy No. 20 050 266
INSURER: Nationwide Policy No. N056117510
Death Benefit Death Benefit
Payable to Participant's Payable to Participant's Death Benefit
Policy Year Beneficiary: Beneficiary: Payable to
Ending April 15 Individual Coverage Survivorship Coverage Company
--------------- ------------------------ ------------------------ -------------
2001 3,246,991 3,735,000 5,519,000
2002 3,293,365 3,678,000 5,914,000
2003 3,342,192 3,759,354 6,309,000
2004 3,390,719 4,001,519 6,541,657
2005 3,438,994 4,001,519 6,671,285
2006 3,489,342 4,001,519 6,801,284
2007 3,542,630 4,001,519 6,931,284
2008 3,450,183 4,001,519 3,877,657
2009 3,362,307 4,001,519 3,877,657
2010 3,281,168 4,001,519 3,877,657
2011 3,204,682 4,001,519 3,877,657
2012 3,132,924 4,001,519 3,747,382
2013 1,755,900 4,001,519 3,747,097
2014 1,724,966 4,001,519 3,746,804
2015 1,674,852 4,001,519 3,746,501
2016 1,623,153 4,001,519 2,848,531
2017 1,570,472 4,001,519 2,848,208
2018 1,516,905 4,001,519 2,848,874
2019 1,462,431 4,001,519 2,848,530
2020 1,406,824 4,001,519 2,847,174
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AMENDMENT TO
DALLAS SEMICONDUCTOR CORPORATION
SPLIT-DOLLAR INSURANCE AGREEMENT
THIS AMENDMENT TO DALLAS SEMICONDUCTOR CORPORATION SPLIT-DOLLAR
INSURANCE AGREEMENT is entered into as of this 23rd day of January, 2001, by and
between Merlyn D. Sampels ("Participant") and Dallas Semiconductor Corporation,
a Delaware corporation ("Company").
WHEREAS, Participant entered into a Split-Dollar Insurance Agreement
with the Company dated July 20, 2000 ("Agreement"); and
WHEREAS, the Company desires to amend the Agreement in the manner set
forth below and has requested the consent of Participant to such amendment;
NOW, THEREFORE, in consideration of the payment by the Company to
Participant of the sum of $10.00 and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by Participant,
Participant and the Company agree as follows:
1. Section 4. Section 4 is divided into subsections (a) and (b).
Existing Section 4 entitled "Payment of Premiums" is designated as Section 4(a),
and the following language is inserted as Section 4(b):
"(b) All premiums on the Policy shall be paid upon request or demand
by Participant or Participant's Insurer without regard to whether or not
the Participant is an employee or director of the Company, the
Participant's responsibilities to the Company or any other circumstance,
such obligation to pay to be absolute, continuing, irrevocable and
unconditional and not subject to any set-off, counterclaim, recoupment,
reduction, diminution or any defense of any kind or nature whatsoever."
2. Section 5. Section 5 is deleted in its entirety and the following is
substituted in its place:
"Reserved."
3. Section 6. The words "(including, but not limited to the vesting of
benefits to the Participant upon the occurrence of a Change of Control or
otherwise)" appearing in lines 4, 5 and 6 of Section 6 are deleted.
4. Section 9. The words "and no amendment of the Policy or this
Agreement shall be made upon or after the occurrence of a Change of Control
without the prior written consent of each Participant" found in lines 4 and 5 of
Section 9 are deleted.
5. Section 14. Subsection (a) of Section 14 is amended to delete the
words "In addition to the requirements of Section 5 of this Agreement" appearing
in line 1 thereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the 23rd day of January, 2001.
DALLAS SEMICONDUCTOR CORPORATION
By: /s/ C. V. Prothro
-------------------------------------
/s/ Merlyn D. Sampels
----------------------------------------
Merlyn D. Sampels, Participant
12
EX-10.26
14
f75694ex10-26.txt
EXHIBIT 10.26
1
EXHIBIT 10.26
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT is executed and delivered pursuant to that
certain Agreement and Plan of Merger, dated as of January 28, 2001 (the "Merger
Agreement"), by and among Maxim Integrated Products, Inc., a Delaware
corporation (the "Company"), MI Acquisition Sub, Inc., a Delaware corporation,
and Dallas Semiconductor Corporation, a Delaware corporation ("Dallas
Semiconductor"), pursuant to which Dallas Semiconductor will become a wholly
owned subsidiary of the Company. Pursuant to Section 6.3(c) of the Merger
Agreement, the Company is required to expressly assume the obligations of that
certain Dallas Semiconductor Executives Retiree Medical Plan, effective as of
October 1, 1999, as amended (the "Plan"), a copy of which is attached hereto as
Exhibit A.
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, in accordance with the provisions of Section 13.11
of the Plan, the Company hereby assumes and agrees to pay, perform, and
discharge in accordance with the terms thereof, all of the duties, liabilities
and obligations of Dallas Semiconductor under the Plan.
This Assumption Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each party hereto has caused this instrument to be
executed by its duly authorized officer this the 11th day of April, 2001.
MAXIM INTEGRATED PRODUCTS, INC.
By: /s/ Carl W. Jasper
------------------------------------
Name: Carl W. Jasper
Title: Chief Financial Officer
DALLAS SEMICONDUCTOR CORPORATION
By: /s/ Alan P. Hale
------------------------------------
Name: Alan P. Hale
Title: Chief Financial Officer
2
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Exhibit A
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DALLAS SEMICONDUCTOR CORPORATION
EXECUTIVES RETIREE MEDICAL PLAN
(EFFECTIVE OCTOBER 1, 1999)
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TABLE OF CONTENTS
PAGE
ARTICLE I - INTRODUCTION.....................................................................1
1.1 Purpose of Plan...............................................................1
1.2 Medical Care Plan Status......................................................1
ARTICLE II - DEFINITIONS.....................................................................2
2.1 "Administrator"...............................................................2
2.2 "Board".......................................................................2
2.3 "Board Member"................................................................2
2.4 "Code"........................................................................2
2.5 "Covered Dependent"...........................................................2
2.6 "Creditable Coverage".........................................................2
2.7 "Dependent"...................................................................3
2.8 "Director"....................................................................3
2.9 "Effective Date"..............................................................3
2.10 "Eligible Employee"...........................................................3
2.11 "Eligible Individual".........................................................3
2.12 "Eligible Retiree"............................................................3
2.13 "Employer"....................................................................3
2.14 "Enrollment Date".............................................................3
2.15 "Enrollment Period"...........................................................4
2.16 "ERISA".......................................................................4
2.17 "Excepted Benefits":..........................................................4
2.18 "FMLA"........................................................................5
2.19 "Genetic Information".........................................................5
2.20 "Health Status - Related Factor"..............................................5
2.21 "Late Enrollee"...............................................................5
2.22 "Manager".....................................................................5
2.23 "Military Leave"..............................................................5
2.24 "Officer".....................................................................5
2.25 "Participant".................................................................6
2.26 "Participating Employer"......................................................6
2.27 "Placed for Adoption".........................................................6
2.28 "Plan"........................................................................6
2.29 "Plan Year"...................................................................6
2.30 "Policy"......................................................................6
2.31 "Pre-existing Condition"......................................................6
2.32 "Pre-existing Condition Exclusion"............................................6
2.33 "Qualified Medical Child Support Order".......................................6
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2.34 "Qualified Medical Expense"...................................................6
2.35 "Retirement" and "Retire".....................................................7
2.36 "Sponsor".....................................................................7
2.37 "Spouse"......................................................................7
2.38 "USERRA"......................................................................7
2.39 "Waiting Period"..............................................................7
ARTICLE III - PARTICIPATION..................................................................7
3.1 Eligibility to Participate....................................................7
3.2 Commencement of Participation.................................................8
3.3 Cessation of Participation....................................................8
3.4 USERRA Reinstatement Rules....................................................9
3.5 FMLA Compliance...............................................................9
3.6 Reinstatement of Former Participant..........................................10
3.7 No Eligibility Discrimination Due to Health..................................10
3.8 Special Enrollments..........................................................10
ARTICLE IV - ELECTION TO RECEIVE MEDICAL CARE BENEFITS......................................11
4.1 Election of Benefit Options..................................................11
4.2 Election Procedure...........................................................12
4.3 No Premium Discrimination Due to Health......................................12
ARTICLE V - MEDICAL CARE BENEFITS...........................................................12
5.1 Benefits.....................................................................12
5.2 Pre-existing Conditions......................................................12
5.3 Notification of Enrollment Rights............................................14
5.4 Newborns' and Mothers' Health Protection Act of 1996.........................14
5.5 Mental Health Parity Act of 1996.............................................14
5.6 Women's Health and Cancer Rights Act of 1998.................................15
ARTICLE VI - PAYMENT OF MEDICAL CARE EXPENSE REIMBURSEMENTS.................................15
6.1 Claims Procedure.............................................................15
6.2 Reimbursement of Expenses....................................................15
ARTICLE VII - COORDINATION OF BENEFITS......................................................15
7.1 Explanation..................................................................15
7.2 Definitions..................................................................16
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7.3 Coordination of Benefits Procedure...........................................16
7.4 Existence of Other Group Plans...............................................18
7.5 Recovery and Payment of Benefits.............................................18
7.6 Coordination with Medicare, Medicaid and CHAMPUS.............................19
7.7 Subrogation..................................................................20
ARTICLE VIII - TERMINATION OF PARTICIPATION.................................................21
8.1 Limitation on Covered Expenses...............................................21
8.2 Date of Policy Coverage Termination..........................................21
ARTICLE IX - CONTINUATION COVERAGE UNDER "COBRA"............................................22
9.1 Special Definitions..........................................................22
9.2 Entitlement to Continuation Coverage.........................................23
9.3 Notice Required..............................................................23
9.4 Election of Continuation Coverage............................................24
9.5 Premiums.....................................................................24
9.6 Period of Continuation Coverage..............................................24
9.7 Expiration of Continuation Coverage..........................................26
ARTICLE X - FUNDING.........................................................................26
ARTICLE XI - ADMINISTRATION.................................................................27
11.1 Named Fiduciary..............................................................27
11.2 Allocation of Fiduciary Responsibilities.....................................27
11.3 Records......................................................................27
11.4 Appointment of Committee.....................................................28
11.5 Actions of Committee.........................................................28
11.6 Other Powers and Duties of the Administrator.................................28
11.7 Indemnification..............................................................29
11.8 Reliance on Tables, Etc......................................................30
11.9 Claims and Review Procedures.................................................30
11.10 Participant's Responsibilities...............................................31
11.11 Missing Persons..............................................................31
11.12 Nondiscriminatory Exercise of Authority......................................31
11.13 Expenses.....................................................................31
ARTICLE XII - AMENDMENT OR TERMINATION OF PLAN..............................................32
12.1 Amendment of Plan............................................................32
12.2 Termination of Plan..........................................................32
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ARTICLE XIII - MISCELLANEOUS................................................................32
13.1 Information to be Furnished..................................................32
13.2 Limitation of Rights.........................................................32
13.3 Benefits Not Solely from Policy..............................................32
13.4 Nonassignability of Rights...................................................33
13.5 No Guarantee of Tax Consequences.............................................33
13.6 Severability.................................................................33
13.7 Construction of Terms........................................................33
13.8 Choice of Law/Jurisdiction and Venue.........................................33
13.9 No Vested Interest...........................................................33
13.10 No Guarantee of Employment...................................................33
13.11 Adoption by Successor Employer or Affiliates.................................34
13.12 Bonding......................................................................34
ARTICLE XIV - QUALIFIED MEDICAL CHILD SUPPORT ORDERS........................................34
14.1 Notification of Receipt of Child Support Order...............................34
14.2 Procedures to Determine if Medical Child Support Order is a Qualified
Medical Child Support Order..................................................35
14.3 Treatment of Alternate Recipient under Qualified Medical Child Support
Order........................................................................36
14.4 Cost of Qualified Medical Child Support Order Benefits.......................36
14.5 Qualified Medical Child Support Order and Medicaid...........................37
14.6 Payments or Reimbursements under a Qualified Medical Child Support
Order........................................................................37
14.7 Alternate Recipient..........................................................37
ARTICLE XV - POLICY.........................................................................37
ARTICLE XVI - PARTICIPATING EMPLOYERS.......................................................37
16.1 Adoption by Other Employers..................................................37
16.2 Requirements of Participating Employers......................................38
16.3 Designation of Agent.........................................................38
16.4 Transfers....................................................................38
16.5 Participating Employer's Contribution........................................38
16.6 Discontinuance of Participation..............................................38
16.7 Administrator's Authority....................................................39
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ARTICLE I
INTRODUCTION
1.1 PURPOSE OF PLAN. The purpose of this Plan is to enable the
Sponsor to provide retiree (and limited other) medical care benefits to (a)
Board Members during the term of their service as a Board Member on behalf of
the Sponsor, and (b) to Board Members and to Eligible Retirees upon their
Retirement from the employment, or service as a Board Member, as applicable, of
the Sponsor or any other Participating Employers. On the Effective Date, the
Plan makes available to Participants the medical insurance described in the
Policy attached as Exhibit A.
Board Members, Officers and Spouses are to get lifetime coverage and
benefits under this Plan. Each other Participant and his spouse are to get
coverage and benefits under the Plan until the covered individual reaches his
(or her, as appropriate) 65th birthday. Covered Dependents (other than a spouse)
of a Participant who is not a Board Member or Officer are to get coverages and
benefits until the Participant's 65th birthday.
The specific medical coverages and benefits available to Participants
are identified in the Policy. In the event a Policy is not in effect at the time
a qualifying expense was incurred, the specific medical coverages and benefits
available at that time will be those identified in the Policy most recently in
effect immediately prior to the date the expense was incurred.
Notwithstanding anything in the Plan to the contrary, the Plan is
intended to provide medical coverage and benefits without regard to whether a
Policy is in effect at a particular time. Except for the coordination of
benefits as required by ARTICLE VII, the benefits and coverages under this Plan
shall not decrease or be reduced in the aggregate or individually by more than
an immaterial amount during the life of this Plan, except as provided in SECTION
12.1 The Sponsor will select and utilize a Policy or Policies that provides
medical coverages and benefits that are not worse than the coverages and
benefits provided by Sponsor to active employees of the Sponsor outside of this
Plan at the time the Policy or Policies were selected, and in the event that it
is determined the Sponsor has attempted to reduce benefits and coverages in an
effort to circumvent the restrictions of this Section and its obligations under
the Plan, notwithstanding anything to the contrary in this Plan, (i) the Plan
shall provide, for the remainder of the Plan's existence, the most valuable
benefits and coverages the Plan provided at any time during the Plan's existence
up to that time, and (ii) the Sponsor shall obtain and maintain insurance
providing coverage and benefits at least as good as those required under this
paragraph.
1.2 MEDICAL CARE PLAN STATUS. This Plan is intended to qualify as a
"medical care plan" under sections 105 and 106 of the Code, and is to be
interpreted in a manner consistent with the requirements of sections 105 and 106
of the Code. It is intended that the value of medical coverage be excluded from
the Participants' income under Code section 106, to the extent applicable.
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The Plan is intended to satisfy all applicable requirements of the Code
and its regulations. This Plan is also intended to satisfy those requirements of
ERISA which are applicable to employee medical plans. Nothing in the Plan shall
be construed as requiring compliance with Code or ERISA provisions that do not
otherwise apply.
ARTICLE II
DEFINITIONS
Whenever used in this document, the following terms have the following
meanings unless a different meaning is clearly required by the context, and
defined terms from the Policy are incorporated in this document by reference,
but only to the extent that such terms are not inconsistent with the following
definitions:
2.1 "ADMINISTRATOR" means the Sponsor, which shall be the plan
administrator within the meaning of ERISA section 3(16).
2.2 "BOARD" means the Board of Directors of the Sponsor.
2.3 "BOARD MEMBER" means each person listed on Exhibit D to the Plan.
2.4 "CODE" means the Internal Revenue Code of 1986, as amended.
2.5 "COVERED DEPENDENT" means an individual who qualifies as a
Dependent or as a Spouse under this Plan and who was enrolled by a Participant
under this Plan when he was a Participant under this Plan.
2.6 "CREDITABLE COVERAGE" means, with respect to an individual,
coverage of the individual under any of the following:
(a) A group health plan;
(b) Health insurance coverage-,
(c) Part A or part B of title XVIII of the Social Security
Act;
(d) Title XIX of the Social Security Act, other than coverage
consisting solely of benefits under section 1928;
(e) Chapter 55 of title 10, United States Code;
(f) A medical care program of the Indian Health Service or of
a tribal organization;
(g) A State health benefits risk pool;
(h) A health plan offered under chapter 99 of title 5, United
States Code;
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(i) A public health plan (as defined in Federal regulations);
(j) A health benefit plan under section 5(e) of the Peace
Corps Act (22 U.S.C. 2504(e); or
(k) A state uninsured children's health insurance program.
Such term does not include coverage consisting solely of coverage of
Excepted Benefits.
2.7 "DEPENDENT" means any person who is a dependent of a Participant
(including, without limitation, a Participant's spouse on the date of his
Retirement) and who satisfies the definition of "dependent" in the Policy in
effect on the date of the Participant's Retirement, or if none, in the last
Policy in effect immediately prior to the Participant's Retirement.
2.8 "DIRECTOR" means the title awarded by an Employer to employees
(who are not members of the Board) in certain job classifications as specified
on its books and records.
2.9 "EFFECTIVE DATE" means October 1, 1999, the effective date of the
Plan, except where expressly stated otherwise in this document.
2.10 "ELIGIBLE EMPLOYEE" means (i) each Officer of the Sponsor on the
Effective Date, (ii) each common-law employee of an Employer who was designated
on the books and records of the Employer as a "functionally equivalent" officer
on the Effective Date and who shared in the contribution made on June 12, 1998,
to the Dallas Semiconductor Corporation Executive Deferred Compensation Plan,
(iii) each common-law employee of an Employer, on the Effective Date, who, on
the Effective Date (or within the five (5) calendar year period preceding the
Effective Date), also held the title of Director or was the Sponsor's corporate
controller, and (iv) each common-law employee of an Employer, on the Effective
Date, who, on the Effective Date, held the position of Manager and was required
to report for operating purposes directly to the Sponsor's President and Chief
Executive Officer. Each person who was an Eligible Employee on the Effective
Date is listed on either Exhibit C or Exhibit F to the Plan.
2.11 "ELIGIBLE INDIVIDUAL" means a Board Member or an Eligible
Retiree, as appropriate, who has satisfied (i) the requirements of Article III
to be eligible to participate in the Plan, and (ii) the eligibility requirements
stated in the Policy.
2.12 "ELIGIBLE RETIREE" means an Eligible Employee who has Retired
after the Effective Date.
2.13 "EMPLOYER" means the Sponsor and each Participating Employer
which shall adopt this Plan under Article XVI.
2.14 "ENROLLMENT DATE" means the earlier of (i) the last day of an
Enrollment Period during which an Eligible Individual did not elect under
SECTION 3.2 to not be a Participant, or (ii) the first day of the period that
must pass under ARTICLE III, if any, before an Eligible Employee, Board Member
or Dependent, as appropriate, is eligible to be covered for benefits under the
Plan.
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2.15 "ENROLLMENT PERIOD" means (i) in the case of an Eligible Retiree,
the thirty (30) day period occurring after the Eligible Retiree's Retirement
during which an Eligible Retiree may refuse in writing under Section 3.2 to
participate under the Plan, and (ii) in the case of a Board Member, the thirty
(30) day period occurring immediately after the Effective Date.
2.16 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
2.17 "EXCEPTED BENEFITS" means the following:
(a) benefits not subject to the requirements regarding
Creditable Coverage:
(1) coverage only for accident or disability income
insurance or any combination thereof,
(2) coverage issued as a supplement to liability
insurance;
(3) liability insurance, including general liability
insurance and automobile liability insurance;
(4) workers' compensation or similar insurance,
(5) automobile medical payment insurance;
(6) credit-only insurance;
(7) coverage for on-site medical clinics; and
(8) other similar insurance coverage, specified in
regulations, under which benefits for medical care
are secondary or incidental to other insurance
benefits.
(b) If offered separately:
(1) limited scope dental or vision benefits;
(2) benefits for long-term care, nursing home care,
home health care, community based care, or any
combination thereof,
(3) other similar limited benefits as specified in
regulations.
(c) If offered as independent non-coordinated benefits
(separate consent or policy, no coordination of benefits
with any other plan sponsored by the employer):
(1) coverage for a specified disease or illness;
(2) hospital indemnity or other fixed indemnity
insurance.
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(d) If offered as separate insurance policy, Medicare
supplemental health insurance and similar supplemental
coverage.
2.18 "FMLA" means the Family and Medical Leave Act of 1993, as
amended.
2.19 "GENETIC INFORMATION" means information about genes, gene
products, and inherited characteristics that may derive from the individual or a
family member. This includes information regarding carrier status and
information derived from laboratory tests that identify mutations in specific
genes or chromosomes, physical medical examinations, family histories, and
direct analysis of genes or chromosomes.
2.20 "HEALTH STATUS - RELATED FACTOR" means the following factors:
(a) health status,
(b) medical condition (include both physical and mental
illnesses),
(c) claims experience,
(d) receipt of health care,
(e) medical history,
(f) Genetic Information,
(g) evidence of insurability (including conditions arising out
of acts of domestic violence), and
(h) disability.
2.21 "LATE ENROLLEE" means a Participant or Covered Dependent who
enrolled under this Plan other than during his first Enrollment Period or a
Special Enrollment Period.
2.22 "MANAGER" means the title awarded by an Employer to employees in
certain job classifications as specified on its books and records.
2.23 "MILITARY LEAVE" means the absence due to the performance of duty
on a voluntary or involuntary basis under competent authority in (i) the Armed
Forces, (ii) the Army National Guard and the Air National Guard when engaged in
active duty for training, inactive duty training, or full-time National Guard
duty, (iii) the commissioned corps of the Public Health Service, and (iv) other
categories of persons designated by the President in time of war or emergency
for a period of up to thirty (30) days during which a person who previously
qualified as an employee is not employed on a full-time basis solely because the
person is engaged in active military service for the United States government.
2.24 "OFFICER" means each person listed on Exhibit C to the Plan.
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2.25 "PARTICIPANT" means any Eligible Individual who has elected to
participate in the Plan in accordance with ARTICLE III.
2.26 "PARTICIPATING EMPLOYER" means any entity which has adopted this
Plan pursuant to ARTICLE XVI.
2.27 "PLACED FOR ADOPTION" means the assumption and retention by an
Eligible Employee of a legal obligation for the total or partial support of an
individual in anticipation of adoption of a child prior to the date on which
such child attains age eighteen (18). A child's status as having been Placed for
Adoption ends on the date that the Eligible Employee's legal obligation
described in this Section ends.
2.28 "PLAN" means the Dallas Semiconductor Corporation Executives
Retiree Medical Plan, as set forth in this document, and any and all amendments,
schedules and supplements to this document.
2.29 "PLAN YEAR" means the period beginning on the Effective Date and
ending on the following December 31 and, thereafter, the fiscal year beginning
on each January 1 (starting on January 1, 2000) and ending on the following
December 31.
2.30 "POLICY" means the fully-insured medical insurance policy or
policies described on Exhibit A attached to this Plan, as such Exhibit A existed
on the Effective Date or as it may be amended in the future.
2.31 "PRE-EXISTING CONDITION" means a condition (whether physical or
mental), regardless of the cause of the condition, for which medical advice,
diagnosis, care or treatment was recommended or received within the six (6)
month period ending on the Enrollment Date.
2.32 "PRE-EXISTING CONDITION EXCLUSION" means with respect to
coverage, a limitation or exclusion of benefits relating to a condition based on
the fact that the condition was present before the date of enrollment for such
coverage, whether or not any medical advice, diagnosis, care or treatment was
recommended or received before such date. Genetic Information is not a
Pre-existing Condition in the absence of a diagnosis of the condition related to
such information.
2.33 "QUALIFIED MEDICAL CHILD SUPPORT ORDER" means any judgment,
decree, order (including a settlement agreement), administrative notice or
National Medical Support Notice (defined in section 609(a)(5)(C) of ERISA) which
satisfies the requirements set forth in ARTICLE XIV.
2.34 "QUALIFIED MEDICAL EXPENSE" means an expense incurred by a
Participant, by the Participant's spouse or by a Dependent of such Participant
for medical care as defined in Code section 213, including, without limitation,
amounts paid for hospital bills and doctor bills, but only to the extent that
(i) the Participant or other person is not reimbursed for the expense through
insurance or otherwise, other than under the Plan, and (ii) the expense is not
taken into account as a deduction by the Participant on his Internal Revenue
Service Form 1040; provided, however, that notwithstanding anything in this
document to the contrary, a Qualified Medical
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Expense shall be limited to only those expenses covered under the Policy, if a
Policy is in effect, and if no Policy is in effect so that the expense is
covered by Policy, to only those expenses covered under the Policy last in
effect immediately prior to the date the expense was incurred.
2.35 "RETIREMENT" and "RETIRE" mean (i) an Eligible Employee's
termination of employment with an Employer, voluntarily or involuntarily, after
the Effective Date when the Eligible Employee has at least (10) ten years of
employment by the Sponsor or its affiliates and has reached the age of at least
fifty (50) and (ii) an Officer's termination of employment with an Employer,
voluntarily or involuntarily, after the Effective Date when the Officer has at
least ten (10) years of employment by, and five (5) years as an Officer of, the
Sponsor or its affiliates. A Board Member shall be deemed to be Retired for
purposes of only this Plan on the Effective Date of the Plan.
2.36 "SPONSOR" means Dallas Semiconductor Corporation, a Delaware
corporation, or any successor or assign which shall adopt the Plan. Throughout
the Plan, a purposeful distinction is drawn between the Sponsor and the
Employers. The powers and responsibilities assigned to the Sponsor by the Plan
shall apply exclusively to the Sponsor, unless specifically delegated in writing
by the Sponsor.
2.37 "SPOUSE" means the wife of an Officer or of a Board Member on the
date of his Retirement. Each person who was a Spouse on the Effective Date is
listed on Exhibit E, but being listed on Exhibit E does not make an individual a
Spouse for purposes of this Plan.
2.38 "USERRA" means the Uniformed Services Employment and Reemployment
Rights Act of 1994, as amended.
2.39 "WAITING PERIOD" means with respect to a group health plan and an
individual who is a potential Participant or beneficiary in the plan, the period
that must pass with respect to the individual before the individual is eligible
to be covered for benefits under the terms of the plan. Any period of time
before a Late Enrollee enrolls under a Special Enrollment Period is not a
Waiting Period.
Special definitions used only for particular purposes are found in
ARTICLE VII and ARTICLE IX.
ARTICLE III
PARTICIPATION
3.1 ELIGIBILITY TO PARTICIPATE. Eligible Employees and Board Members
shall become Eligible Individuals on the Effective Date. No other individual may
become a Participant (or an Eligible Individual) under the Plan.
The Policy in effect on the date of a Participant's Retirement
determines (i) the Plan's Eligible Individuals, (ii) the Plan's Spouses and
(iii) those Dependents, if any, of an Eligible Individual who will be eligible
to be covered under its terms. When an Eligible Individual's
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eligible Dependents satisfy the eligibility requirements of the Policy in effect
on the date of a Participant's Retirement, those eligible Dependents shall also
be eligible to participate at that time under the Plan. If, at the date of a
Participant's Retirement, no Policy is then in effect, the Participant's
eligible Dependents shall be determined under the terms of the Policy last in
effect with respect to the Plan.
3.2 COMMENCEMENT OF PARTICIPATION. An Eligible Individual shall
become a Participant automatically when he becomes an Eligible Individual unless
he refuses in writing in a form acceptable to the Administrator that is received
by the Administrator before the Eligible Individual's Enrollment Date.
3.3 CESSATION OF PARTICIPATION. Subject to Section 12.2, a Board
Member and an Officer shall be a Participant and receive coverage under this
Plan for his life.
A Participant (other than a Board Member or an Officer) shall be a
Participant and receive coverage under the Plan until his 65th birthday and such
a Participant's spouse shall be a Covered Dependent and receive coverage under
the Plan until her 65th birthday; provided, however, that notwithstanding
anything in this Plan to the contrary, a Participant (other than a Board Member
or an Officer) shall also cease to be a Participant (and his spouse shall also
cease to be a Covered Dependent) as of the earliest of
(a) the date on which the Plan terminates as provided in
Section 12.2;
(b) the date on which the Participant (other than a Board
Member or an Officer) or his spouse fails to satisfy the
eligibility criteria of the Plan; or
(c) the date on which his election to receive medical care
under this Plan terminates or expires according to its
written terms.
Subject to Section 12.2, a Spouse shall receive coverage under the Plan
for her life.
A Covered Dependent (other than a Spouse and the spouse of a Participant
who is neither a Board Member nor an Officer) shall receive coverage under the
Plan until his or her Participant reaches his 65th birthday; provided, however,
that notwithstanding anything in this Plan to the contrary, a Covered Dependent
(other than a Spouse and the spouse of a Participant who is neither a Board
Member nor an Officer) shall also cease to be a Covered Dependent as of the
earliest of:
(a) the date on which the Plan terminates as provided in
Section 12.2;
(b) the date on which the Covered Dependent fails to satisfy
the eligibility criteria of the Plan; or
(c) the date on which his election to receive medical care
under this Plan terminates or expires according to its
written terms.
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3.4 USERRA REINSTATEMENT RULES.
(a) This Plan shall provide any health benefits otherwise
available to Eligible Employees, if any, in accordance
with USERRA and this Section, effective with respect to
Military Leaves that began on or after October 13, 1994.
(b) The maximum period of Plan coverage available to an
Eligible Employee and his Dependents under this Section
will not exceed the lesser of (i) eighteen months or (ii)
the period ending on the day after the date upon which the
person fails to apply for a return to a position of
employment under section 4312(a) of USERRA. The period of
Plan coverage available under this Section shall begin on
the date on which the person's qualifying absence begins.
(c) Only for purposes of determining eligibility for medical
benefits and only if the Eligible Employee pays all
amounts that the Employer is permitted to charge under
USERRA for coverage while on a qualifying leave, an
Eligible Employee who experiences a reduction in hours or
termination of employment solely due to a Military Leave
shall be deemed to continue to be an employee until the
earliest date that the termination of his Plan benefits is
permitted by USERRA and this Section.
3.5 FMLA COMPLIANCE.
(a) This Plan shall provide any health benefits otherwise
available to Eligible Employees, if any, in accordance
with FMLA for Eligible Employees.
(b) Unless an Eligible Employee chose not to retain health
coverage, the Employer must maintain medical coverage
under the Plan, if any, for such an Eligible Employee on
FMLA leave for the duration of his FMLA leave, at the
level and under the conditions that coverage would have
been provided if the Eligible Employee had continued
working and had not taken a FMLA leave.
(c) An Eligible Employee on FMLA leave shall have the same
opportunity as active employees to change Plan coverage,
such as from single coverage to family coverage on the
birth of a child, as required by FMLA.
(d) The Employer's obligation to continue to maintain health
coverage under FMLA and this Section ends on the earliest
of the following dates:
(1) the date the Eligible Employee informs the Employer
of his intent not to return from a FMLA leave;
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(2) the date the Eligible Employee's employment
relationship would be terminated but for the FMLA
leave (such as during a reduction in force);
(3) the date the Eligible Employee fails to return from
the FMLA leave; or
(4) the date the Eligible Employee fails to pay a
required employee contribution when due.
(e) Former Participants who lose eligibility during a FMLA
leave will have their benefits reinstated upon their
return at the end of the FMLA leave at the same levels as
were provided to them under the Plan when their FMLA leave
began, but subject to any changes in benefit levels that
may have occurred during the leave that affected the
entire work force. Participants returning from FMLA leave
shall not be required to requalify for any benefits.
3.6 REINSTATEMENT OF FORMER PARTICIPANT. A former Participant who
again meets the eligibility requirements under Section 3.1 will receive medical
coverages and benefits under the Plan and become a Participant in this Plan
again on the first day the former Participant satisfies the requirements of
Section 3. 1, unless the former Participant is (i) reinstated as a Participant
in the Plan as provided by Sections 3.4 and 3.5 or (ii) declines participation
as provided under Section 3.2.
3.7 NO ELIGIBILITY DISCRIMINATION DUE TO HEALTH. The Plan shall not
establish rules for eligibility (including continued eligibility) for any
individual under the Plan that are based on one or more Health Status-Related
Factors of the individual or his Dependent.
3.8 SPECIAL ENROLLMENTS.
(a) Notwithstanding any provision to the contrary, an Eligible
Individual or an eligible Dependent of an Eligible
Individual may elect health care coverage under Special
Enrollment, but only if
(1) the Eligible Individual (or the eligible Dependent)
was covered under a group health plan or health
insurance at the time coverage was offered under
this Plan;
(2) the Eligible Individual (or the eligible Dependent)
declined coverage under the Plan in writing for the
stated reason that he had the other health
coverage;
(3) the Eligible Individual (or the eligible Dependent)
has "Exhausted COBRA Coverage" or the other health
coverage (or the individual's former employer's
contribution toward the cost of such coverage) has
terminated; and
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(4) the Eligible Individual (or the eligible Dependent)
requests Special Enrollment under this Section in
writing within thirty (30) days after the date he
or she lost his or her other health coverage.
For purposes of this Plan, a person shall be treated as if
they have "Exhausted COBRA Coverage" if that individual's
COBRA coverage ceased for any reason other than either
failure of the individual to pay premiums on a timely
basis or for cause (such as making a fraudulent claim or
an intentional misrepresentation of a material fact in
connection with the plan). A person has "Exhausted COBRA
Coverage" if the COBRA coverage ceases because either (a)
the employer or other responsible entity fails to remit
the premiums on a timely basis, or (b) the individual no
longer resides in the service area of an HMO or a similar
program (whether or not within the choice of the
individual) and there is no other COBRA coverage available
to the individual.
(b) Special Enrollment must be offered to Dependents if. (a)
the Plan offers Dependent coverage, (b) the Eligible
Individual is a Participant under the Plan or has met the
Waiting Period and is eligible for coverage but for his
failure to enroll during a previous enrollment period, and
(c) the Dependent became a new Dependent as -a result of
marriage, birth, adoption or being Placed for Adoption. A
thirty (30) day Special Enrollment period shall be offered
to such Dependent beginning on the later of (i) the date
Dependent coverage is made available or (ii) the date of
marriage, birth, adoption or being Placed for Adoption, as
the case may be. If a Special Enrollment period is offered
to a new Dependent under the Plan, the Eligible Individual
who has the new Dependent may also enroll under the Plan
during that Special Enrollment period if he is not already
a Participant.
Coverage that is timely elected during a Special Enrollment period shall
be effective (i) if due to loss of coverage, on the first day of the month after
receipt of the completed enrollment request under the Plan, (ii) if due to
birth, on the date of birth, (iii) if due to adoption or being Placed for
Adoption, the date it occurred and (iv) if due to marriage, on the first day of
the month after receipt of the completed enrollment request under the Plan. A
person who enrolls during a Special Enrollment period is not a Late Enrollee.
ARTICLE IV
ELECTION TO RECEIVE MEDICAL CARE BENEFITS
4.1 ELECTION OF BENEFIT OPTIONS. An Eligible Individual shall be
deemed to have elected to receive medical care coverages and benefits under the
Plan as described in the Policy in effect on his Enrollment Date. If no Policy
is in effect on his Enrollment Date, an Eligible Individual will be deemed to
have elected to receive medical coverage and benefits under the
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Plan as described in the Policy in effect immediately prior to his Enrollment
Date. An Eligible Individual who declined participation during an Enrollment
Period will become a Participant in the subsequent Enrollment Period, if any,
during which he does not refuse to become a Participant.
4.2 ELECTION PROCEDURE. An Eligible Individual may decline to
participate in this Plan by filing a properly completed election form with the
Administrator.
4.3 NO PREMIUM DISCRIMINATION DUE TO HEALTH. The Plan shall not
require an individual (as a condition of enrollment or continued enrollment
under the Plan) to pay a premium or otherwise contribute an amount which exceeds
the amount paid by a similarly situated individual solely due to a Health Status
- Related Factor of the individual; provided, however, that the rules regarding
Health Status-Related Factors do not restrict the amount an Employer may charge
for coverage or prevent premium discounts or rebates or modified deductibles and
co-payments in return for adherence to programs of health promotion and disease
prevention.
ARTICLE V
MEDICAL CARE BENEFITS
5.1 BENEFITS. The Administrator shall offer to each Eligible
Individual, at the time he becomes eligible under ARTICLE III and at each
subsequent Enrollment Period applicable to that Eligible Individual, if any, the
opportunity to participate in the Plan. Subject to SECTION 12.1, the specific
coverages and benefits available to Participants are set forth in the Policy or
if there is no Policy, in the Policy last in effect in connection with the Plan.
The benefits and coverages under this Plan shall continue for the lifetime of
each Board Member, each Officer and each Spouse.
5.2 PRE-EXISTING CONDITIONS.
(a) PRE-EXISTING CONDITIONS. The Plan will not pay any
benefits for the care or treatment of pre-existing
conditions (as defined in the Policy) for the period of
time set forth in the Policy; provided, however, that (i)
notwithstanding anything in this Plan or any Policy to the
contrary, a pre-existing condition in the Policy shall not
include any condition that does not fall within the
definition of a Pre-existing Condition, (ii) no
pre-existing condition shall include a condition for which
Genetic Information was used as a basis for asserting the
existence of the condition if there has been no diagnosis
of the condition related to such information, and (iii)
the period during which any exclusion or limitation of
benefits (relating to a condition based on the fact that
the condition was present before a person's Enrollment
Date) in the Plan or the Policy will be enforced shall not
be longer than the excess of twelve (12) months (eighteen
(18) months for a Late Enrollee), beginning on his
Enrollment Date, over the aggregate
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of the periods of Creditable Coverage (if any) applicable
to the Participant as of his Enrollment Date.
For purposes of this subsection, a period of Creditable
Coverage shall not be counted, with respect to enrollment
of an individual under the Plan, if, after such period and
before his Enrollment Date, there was a 63 -day period for
all of which the individual was not credited with
Creditable Coverage. However, any period that an
individual is required to wait before becoming covered
under the Plan pursuant to the Policy or ARTICLE III shall
not be taken into account in determining the continuous
63-day period described in the preceding sentence.
The individual seeking to become a Participant and who
seeks to establish a period of Creditable Coverage must
obtain and provide to the Administrator a written
certification from the prior health insurance plan or the
prior health insurance issuer regarding each period of
Creditable Coverage of the individual under such prior
health insurance plan and COBRA continuation provisions.
Such certification should detail the Waiting Period, if
any, imposed with respect to the individual for any
coverage under such other health insurance plan. If a
written certification cannot be produced, Creditable
Coverage may be demonstrated through the presentation of
other documentation or through other means satisfactory to
the Administrator.
(b) EXCLUSION NOT APPLICABLE TO CERTAIN NEWBORNS. The Plan
shall not impose any pre-existing condition exclusion (as
defined in the Policy) in the case of an individual who,
as of the last day of the thirty (30) day period beginning
with the date of birth, is covered under Creditable
Coverage. However, this exclusion shall no longer apply to
an individual after the end of the first 63-day period
during all of which the individual was not covered under
any Creditable Coverage.
(c) EXCLUSION NOT APPLICABLE TO CERTAIN ADOPTED CHILDREN. The
Plan shall not impose any pre-existing condition exclusion
(as defined in the Policy) in the case of a child who is
adopted or Placed for Adoption before attaining eighteen
(18) years of age and who, as of the last day of the
thirty (30) day period beginning on the date of the
adoption or Placement of Adoption, is covered under
Creditable Coverage. The previous sentence shall not apply
to coverage before the date of such adoption or Placement
for Adoption. However, this exclusion shall no longer
apply to an individual after the end of the first 63-day
period during all of which the individual was not covered
under any Creditable Coverage.
(d) EXCLUSION NOT APPLICABLE TO PREGNANCY. The Plan shall not
impose any exclusion relating to pregnancy as a
pre-existing condition.
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(e) NOTICE OF CREDITABLE COVERAGE. The Administrator or its
designee shall provide written certification of Creditable
Coverage to any individual whose coverage terminates under
the Plan (i) at the time of the Qualifying Event or other
termination of coverage, (ii) at the time COBRA coverage
ceases, and (iii) upon any written request made by an
individual not later than twenty-four (24) months after
his Plan coverage ceased. The written certification will
include (i) the date the certificate is issued, (ii) the
name of the plan that provided the coverage, (iii) the
name of the participant and/or dependents to whom the
certificate applies, (iv) the name, address, and telephone
number of the plan administrator, (v) the telephone number
of the person to contact for additional information, and
(vi) either (a) a statement that the individual has at
least 18 months of Creditable Coverage without a 63-day
break in coverage, or (b) state (A) the Waiting Period (if
any) imposed on the individual for coverage under the
plan, (B) the date coverage began, and (C) the date
coverage ended (or indicate if it is continuing).
(f) NOTICE TO INDIVIDUAL OF PRE-EXISTING CONDITION EXCLUSION.
After the Plan receives a Creditable Coverage certificate
from a prior plan, the Plan will make a determination and
notify individuals within a reasonable period of time
regarding the length of any Pre-Existing Condition
Exclusion period that applies to them. If no Pre-Existing
Condition Exclusion applies to the individual, the Plan
will not send a notice. The notice shall explain the basis
of the Plan's determination, including the source and
substance of any information that the Plan relied on, and
the Plan's appeal procedures.
5.3 NOTIFICATION OF ENROLLMENT RIGHTS. All Eligible Individuals shall
be provided with a notice of his or her enrollment rights in writing at or
before the time the Eligible Individual elects to enroll, and such notification
shall be substantially in the same form as provided in Temp. Treas. Reg.ss.
54.9801-6T(c) and Interim U.S. Department of Labor Regulations.2590.701-6(c).
5.4 NEWBORNS' AND MOTHERS' HEALTH PROTECTION ACT OF 1996.
Notwithstanding the precertification requirements of the Plan to the contrary,
the Plan shall provide maternity care benefits in accordance with the Newborns'
and Mothers' Health Protection Act of 1996 (the "Newborns' Act"), effective on
the date specified in the Newborns' Act. In accordance with the Newborns' Act,
the Plan shall provide benefits for a minimum of 48 hours of inpatient hospital
stay following a normal vaginal delivery and a minimum of 96 hours of inpatient
hospital stay following caesarean section delivery unless the health care
provider and the mother agree that discharge from the hospital shall occur
earlier.
5.5 MENTAL HEALTH PARITY ACT OF 1996. In accordance with the Mental
Health Parity Act of 1996, the lifetime maximum limit and the annual maximum
limit on mental health benefits under the Plan shall be at least equal to the
lifetime maximum limit and the annual
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maximum limit, respectively, for medical and surgical benefits under the Plan,
unless one or more of the exceptions set forth in the Mental Health Parity Act
of 1996 apply
5.6 WOMEN'S HEALTH AND CANCER RIGHTS ACT OF 1998. Medical and
surgical benefits provided for mastectomies under the Plan will be provided in
accordance with the Women's Health and Cancer Rights Act of 1998 (the "Women's
Health Act"). In accordance with the Women's Health Act, coverage will be
provided for the following:
(a) reconstruction of the breast on which the mastectomy has
been performed;
(b) surgery and reconstruction of the other breast to produce
a symmetrical appearance; and
(c) prostheses and coverage for any complications in all
stages of mastectomy, including lymphedema.
ARTICLE VI
PAYMENT OF MEDICAL CARE EXPENSE REIMBURSEMENTS
6.1 CLAIMS PROCEDURE. Participants and Covered Dependents seeking
benefits under the Plan shall follow the claims procedures established by the
Policy under which they are covered, if any, at the time and the procedures set
forth in SECTION 11.9. Notwithstanding the claim filing procedures established
by this Plan or the applicable Policy, the Health Care Financing Administration
shall have three years from the date a claim is filed to seek recovery of a
mistaken payment when this Plan should have paid as the "Primary Plan" and
Medicare should have paid as the "Secondary Plan" pursuant to ARTICLE VII.
6.2 REIMBURSEMENT OF EXPENSES. All Qualified Medical Expenses of a
Participant or Covered Dependent that are covered under the Policy shall be
reimbursed as set forth in the Policy.
ARTICLE VII
COORDINATION OF BENEFITS
7.1 EXPLANATION. When a Participant is covered under this Plan and by
one or more other Group Plans, the benefits of this Plan shall be coordinated
and determined in accordance with the provisions of this Article. This Article
is intended to prevent the payment of medical benefits which exceed expenses.
Determination of benefits shall be made in relation to the services furnished to
a Participant during any one calendar year.
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7.2 DEFINITIONS. The following definitions apply to this Article.
(a) "Group Plan" means any group or group-type arrangement of
coverage whether insured or uninsured which provides
health benefits or services to a Participant (including
the Policy under this Plan), either by indemnity or
prepaid services, by means of (i) group or blanket
insurance, (ii) franchise insurance that terminates upon
cessation of employment, (iii) group hospital or medical
service plans and other group prepayment coverage, or (iv)
any coverage under labor-management trusteed arrangements,
union medical arrangements, employer organization
arrangements, government benefit arrangements or
government programs (excluding Medicare).
(b) "Allowable Expenses" means any necessary, reasonable, and
customary item of expense for health care when the item of
expense is covered at least in part by one or more Group
Plans covering the Participant for whom claim is made. An
Allowable Expense does not include (i) differences between
the cost of an average semiprivate hospital room and a
private hospital room unless the private hospital room is
medically necessary (as defined in the Policy), or (ii)
the amount of any reduction in benefits because a
Participant does not comply with the Group Plat)
provisions.
(c) "Primary Plan" means the Group Plan whose benefits for a
Participant's health care coverage must be determined
without consideration of the existence of any other plan.
(d) "Secondary Plan" means a Group Plan which is not a Primary
Plan. If a Participant is covered by more than one
Secondary Plan, the order of benefit determination rules
decide the order in which their benefits are determined in
relation to each other.
7.3 COORDINATION OF BENEFITS PROCEDURE. Without regard to what is
stated in the Policy, this Plan determines its order of benefits using the first
of the following rules which applies:
(a) The benefits of a Group Plan which covers the Participant
(on whose expenses the claim is based) other than as a
Dependent shall be determined before the benefits of a
Group Plan which covers the Participant as a Dependent.
(b) The benefits of a Group Plan which covers the Participant
(on whose expenses the claim is based) as a Dependent of a
person whose birthday occurs earlier in a calendar year
shall be determined before the benefits of a Group Plan
which covers such Participant as a Dependent of a person
whose birthday occurs later in a calendar year. However,
if either Group Plan does not have the provisions of this
subsection (b) and the omission results either in each
Group Plan determining its benefits before the other,
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or in each Group Plan determining its benefits after the
other, the provisions of this subsection (b) shall not
apply, and the rule set forth in the other Group Plan
shall determine the order of benefits; provided, however,
that notwithstanding anything to the contrary in the Plan,
in the case of a Participant for whom claim is made as a
Dependent child:
(1) When the parents are separated or divorced and the
parent with custody of the child has not remarried,
the benefits of a Group Plan which covers the child
as a Dependent of the parent with custody of the
child will be determined before the benefits of a
Group Plan which covers the child as a Dependent of
the parent without custody.
(2) When the parents are divorced and the parent with
custody of the child has remarried, the benefits of
a Group Plan which covers the child as a Dependent
of the parent with custody shall be determined
before the benefits of a Group Plan which covers
that child as a Dependent of the stepparent, and
the benefits of a Group Plan which covers that
child as a Dependent of the stepparent will be
determined before the benefits of a Group Plan
which covers that child as a Dependent of the
parent without custody.
(3) Notwithstanding subparagraphs (1) and (2) of this
subsection (b), when the parents are divorced or
separated and there is a court decree which would
otherwise establish financial responsibility for
the health care expenses of the child, the benefits
of a Group Plan which covers the child as a
Dependent of the person with such financial
responsibility shall be determined before the
benefits of any other Group Plan which covers the
child as a Dependent.
(c) When subsections (a) and (b) above do not establish an
order of benefits determination, the benefits of a Group
Plan which has covered the Participant (on whose expenses
the claim is based) for the longer period of time shall be
determined before the benefits of a Group Plan which has
covered such Participant for the shorter period of time,
except that:
(1) The benefits of a Group Plan covering the
Participant (on whose expenses the claim is based)
as a laid-off or retired employee or as a Dependent
of such a Participant shall be determined after the
benefits of any other Group Plan covering such
Participant as an employee other than as a laid-off
or retired employee or a dependent of such a
person; and
(2) If either Group Plan does not have a provision
regarding laid-off or retired employees and as a
result each Group Plan determines its
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benefits after the other, the provisions of this
subsection (c) do not apply.
(d) When another Group Plan is a Primary Plan under the order
of benefit determination rules contained in this Article
but such Group Plan contains "excess" or "always
secondary" provisions, the Group Plan which has been in
force for the longest period of time will be the Primary
Plan.
(e) When this Plan is the Secondary Plan, the benefits of the
other Group Plan shall be deducted from the charges for
all items of Allowable Expenses for which any benefit is
provided under this Plan or the other Group Plan and this
Plan will pay the remainder of the charges for such items;
provided, however, that in no event shall the provisions
of this Article be construed to increase the amount of
total benefits which would be available under the Plan in
the absence of another Group Plan.
(f) If this Plan is the Secondary Plan under this Article, but
is unable to determine the benefits of the other Group
Plan, this Plan may estimate in good faith the benefits of
the other Group Plan and provide the benefits of this Plan
on the basis of that estimate. Payment under this
subsection shall constitute full discharge of the
liability of the Plan for the charges involved, subject
only to adjustment in the event the Plan later determines
the actual benefits of the other Group Plan.
7.4 EXISTENCE OF OTHER GROUP PLANS. This Plan assumes no obligation
to discover the existence of another Group Plan or the benefits available under
it if discovered. This Plan will give effect to the provisions of this Article
in accordance with information furnished it by an authoritative source. This
Plan shall, however, be entitled to obtain and to release such information as
reasonably necessary to give effect to these provisions without the consent of
or notice to any person, and any person claiming benefits under this Article
shall, as a condition precedent to his right of recovery, furnish to the Plan
full information concerning the existence of other Group Plans, their benefits,
and any other information as may be necessary to implement this Article.
7.5 RECOVERY AND PAYMENT OF BENEFITS. The Plan shall be entitled at
any time to recover benefits paid in excess of its obligation determined under
the provisions of this Article, irrespective of to whom such benefits were paid,
from an issuer, insurer, provider under the other Group Plan, hospital,
physician or other provider, any person or firm to (or for) whom such payment
was made, or from any combination of such sources.
When benefits have been paid under another Group Plan, the Plan shall
have the right, in its discretion, to pay to the issuer or provider of such
other Group Plan any portion of the benefits available under this Plan which the
Plan may determine to be due in order to give effect to the intent of this
Article and corresponding coordination of benefits provisions in such other
Group Plan. The amount so paid shall be deemed to be benefits provided under
this Plan and to the extent the Plan shall be fully discharged from liability.
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7.6 COORDINATION WITH MEDICARE, MEDICAID AND CHAMPUS. The term "Group
Plan" as used in this Article includes Medicare, Medicaid and CHAMPUS, and the
statutes, regulations, and other laws governing these programs take precedence
over the order of determination set forth in this Plan.
Any Participant eligible for Medicare has the following rights to
coordinate the coverage under this Plan with Medicare coverage and should see
the Administrator to determine what elections may be available with respect to
primary and secondary Medicare coverage and to obtain election forms.
(a) AGE SIXTY-FIVE (65) AND OLDER. Individuals and their
eligible spouses age sixty-five (65) or older are entitled
to receive the same Plan benefits, under the same
conditions, as those Individuals and Covered Dependents
under age sixty-five (65). The Plan is the Primary Plan
and Medicare is the Secondary Plan unless the Participant
elects otherwise, as set forth below.
(b) DISABLED INDIVIDUALS AND COVERED DEPENDENTS. Individuals
and their Covered Dependents who become eligible for
Medicare by reason of disability rather than by age (even
though they are not sixty-five (65) years of age) are
entitled to the same Plan benefits, under the same
conditions, as other Participants. The Plan is the Primary
Plan and Medicare is the Secondary Plan with respect to
these disabled persons.
(c) PARTICIPANTS WITH END STAGE RENAL DISEASE. Participants
who are medically determined to have end stage renal
disease (as defined by Medicare) are entitled to the same
Plan benefits, under the same conditions, as other
Participants for the first thirty (30) month period
following the earlier of (i) initiation of renal dialysis,
or (ii) eligibility for Medicare benefits due to such
condition. The Plan is the Primary Plan and Medicare is
the Secondary Plan with respect to these Participants.
(d) MEDICARE ELECTION NOTICE. Each Individual who is eligible
for Medicare upon attainment of age sixty-five (65) must
complete a Medicare Election Notice Form notifying the
Employer that they want Medicare as the Primary Plan with
this Plan as the Secondary Plan.
If the Individual's spouse is age sixty-five (65) or
older, such spouse will also be subject to the
Individual's election of the Primary Plan.
(e) COORDINATION WITH MEDICARE. Subject to the above
provisions and to the extent permitted by Medicare,
medical benefits payable under this Plan will be
coordinated with Medicare. Such coordination will apply
whether or not the Participant has or has not applied for
or is receiving Medicare.
(f) MEDICAID BENEFICIARY. When enrolling an individual or
making any payments for medical benefits to a Participant
or on a Participant's behalf,
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the Plan shall not take into account the Participant's
eligibility for medical assistance or benefits payable
under a plan under 42 U.S.C.ss. 1396, et seq.
The effective date for this subsection (f) was October 1,
1993.
7.7 SUBROGATION. If a Participant incurs charges for any sickness,
injury or other condition through the acts or omissions of another person or
organization, the Plan shall pay the medical benefits which are medically
necessary and provided by this Plan, subject to the following conditions:
(a) The Participant shall advise the Administrator of any
claim against a third party or insurance carrier within
sixty (60) days of the occurrence of the sickness or
injury, shall provide the Plan with any information
necessary to pursue its rights and shall cooperate with
the Administrator and shall do whatever is necessary to
secure those rights. The Participant agrees to do nothing
which would prejudice those rights;
(b) The Plan shall be subrogated, to the extent of payments
made for medical benefits, to all of the Participant's
rights of recovery of those medical benefits against any
person or organization who, by reason of such person's
acts or omissions, is responsible for the sickness or
injury in question;
(c) It is agreed that if the Participant fails to take the
necessary legal action to recover from a responsible party
within one (1) year after the date of the sickness or
injury, the Plan may proceed in the name of the
Participant against the responsible party and will be
entitled to the recovery of the amount of medical benefits
paid and the expenses for that recovery;
(d) The Plan will have a lien against the proceeds of a
settlement or judgment resulting from a Participant's
claim or suit against a third party in an amount equal to
all sums paid by the Plan with respect to the illness or
injury in question, regardless of whether the proceeds of
such settlement or judgment are designated as payment for
other specified damages. The Employer shall be entitled to
notify third parties, including insurance carriers, of
this lien. The Employer may deduct the amount covered by
the lien from any future claims payable to the Participant
if the lien has not been previously satisfied or the
Participant fails to notify the Employer of payment
received from the third party; and
(e) The Participant must agree in writing, prior to his
entitlement to medical benefits:
(1) To reimburse the Plan for medical benefits paid
under the Plan immediately upon receipt of any
damages collected from a third party, whether
pursuant to judgment, settlement or otherwise, net
of reasonable expenses incurred in collecting such
amount, such as
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reasonable attorneys' fees, and any amounts which
are allocated under the terms of any judgment for
payment of unreimbursed medical expenses;
(2) To execute and deliver such instruments and do
whatever else is reasonably necessary to secure the
Plan's right to reimbursement of medical payments
and to provide the Plan such information as is
necessary to enforce its rights under this
provision;
(3) To agree to a credit against payments to be made
under the Plan in the future equal to the amount of
any damages collected by the Participant from a
third party, less any amount paid to the Plan;
(4) If a covered person fails to comply with these
requirements, he will not be eligible to receive
any further medical benefits under the Plan until
he complies; and
(5) The Plan has the right to intervene at its own
expense in any suit or other proceeding to protect
these reimbursement rights. The Participant is
responsible for all fees and expenses of the
attorney handling his or her claim against the
third party.
In the event the Plan recovers an amount greater than the medical benefit paid,
the excess over the expenses of recovery will be paid to the Participant. The
Plan reserves the right to compromise the amount of its claim if, in its
opinion, it is appropriate to do so.
The Administrator may, in its sole discretion, elect not to enforce this
provision.
ARTICLE VIII
TERMINATION OF PARTICIPATION
8.1 LIMITATION ON COVERED EXPENSES. In the event that an individual
ceases to be a Participant or Covered Dependent in this Plan for any reason, the
individual (or his estate) shall be entitled to reimbursement only for Qualified
Medical Expenses incurred and submitted for reimbursement (following the date
the expense was incurred) in accordance with the terms of the Policy, but only
if the expense was incurred while the individual was a Participant or Covered
Dependent, and only if the individual (or his estate) applies for such
reimbursement in the time and manner provided in the Policy. Except to the
extent required in Article IX, no such reimbursement shall exceed the coverage
limitations provided by the Policy.
8.2 DATE OF POLICY COVERAGE TERMINATION. Coverage provided by a
Policy shall terminate according to the terms of the Policy unless continued
pursuant to SECTION 3.4, SECTION 3.5, or ARTICLE IX. Termination of a Policy
shall not terminate this Plan or its obligations.
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ARTICLE IX
CONTINUATION COVERAGE UNDER "COBRA"
9.1 SPECIAL DEFINITIONS. For purposes of this Article, the following
terms shall have the meaning given them as follows:
(a) "Qualified Beneficiary" means any individual who was the
spouse of a Participant or the dependent child of a
Participant whose expenses were eligible for reimbursement
under the Plan on the day before a Qualifying Event,
unless that individual was entitled to benefits under
Title XVIII of the Social Security Act on the day before
the Qualifying Event. Notwithstanding anything to the
contrary in the preceding sentence, the term "Qualified
Beneficiary" shall also include a child who is born to, or
Placed for Adoption with the Participant during the COBRA
continuation period as determined under SECTION 9.6.
(1) In the case of a Qualifying Event described in
SECTION 9.1(b)(2), the term "Qualified Beneficiary"
also includes the Participant, unless the
Participant is not an employee or was entitled to
benefits under Title XVIII of the Social Security
Act on the day before the Qualifying Event.
(2) In the case of a Qualifying Event described in
SECTION 9.1(b)(6), the term "Qualified Beneficiary"
includes a Participant who had retired on or before
the date of substantial elimination of coverage
under this Plan and any other individual who on the
day before such Qualifying Event was a beneficiary
under this Plan as a spouse, surviving spouse or
dependent child of the Participant.
(b) "Qualifying Event" means any of the following events which
would result in the loss of coverage under this Plan for a
Qualified Beneficiary:
(1) The death of the Participant,
(2) The termination of the Participant's employment
with an Employer (for reasons other than the
Participant's gross misconduct), the reduction of
hours of the Participant's employment, or a
Participant's notice to the Administrator he will
not return to work from a leave of absence under
FMLA,
(3) The divorce or legal separation of the Participant,
(4) The Participant's becoming entitled to benefits
under Title XVIII of the Social Security Act,
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(5) A dependent child ceasing to be a dependent child
under this Plan, or
(6) A proceeding under Title II of the United States
Code with respect to the Employer from whose
employment the Participant retired at any time.
9.2 ENTITLEMENT TO CONTINUATION COVERAGE.
(a) Notwithstanding any other provision of this Plan, a
Qualified Beneficiary who would otherwise lose coverage
under this Plan as a result of a Qualifying Event is
entitled to elect continuation coverage from the Employer
under this Plan.
(b) The continuation coverage will consist of coverage which,
as of the time the coverage is being provided, is
identical to the coverage provided under the Plan to
similarly situated beneficiaries under the Plan with
respect to whom a Qualifying Event has not occurred. If
coverage under the Plan is modified for any group of
similarly situated beneficiaries, coverage will be
modified in the same manner for the Qualified
Beneficiaries.
(c) The continuation coverage provided in this Article will
not be conditioned upon or discriminate on the basis of
lack of evidence of insurability.
9.3 NOTICE REQUIRED.
(a) At the time that coverage commences under this Plan,
Participants and their spouses, if any, shall be given
written notice of their rights under this Article.
(b) The Employer of any affected Participant shall notify the
Administrator of any Qualifying Event described in SECTION
9.1(b)(1), (2), (4) or (6) within thirty (30) days after
the date of such Qualifying Event.
(c) Each Qualified Beneficiary shall notify the Administrator
of the occurrence of a Qualifying Event described in
SECTION 9.1(b)(3) or (5) within sixty (60) days after the
later of the date of such Qualifying Event or the date as
of which the Qualified Beneficiary would otherwise lose
coverage under the Plan as a result of that Qualifying
Event. If the Qualified Beneficiary fails to notify the
Administrator of such a Qualifying Event within such sixty
(60) day period, such Qualified Beneficiary shall forfeit
his right to elect continuation coverage under this
Article.
(d) Any Qualified Beneficiary who is determined, under Titles
II or XVI of the Social Security Act, to have been
disabled at any time during the first sixty (60) days of
continuation coverage that began as a result of a
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Qualifying Event described in SECTION 9.1(b)(2) shall so
notify the Administrator within sixty (60) days of such
determination; provided, however, that such notice must
occur in any event before the expiration of the initial
eighteen (18) month period following the Qualifying Event.
In addition, such Qualified Beneficiary shall notify the
Administrator within thirty (30) days of any final
determination that he is no longer disabled.
(e) Within fourteen (14) days after the Administrator is
notified of a Qualifying Event, the Administrator shall
notify any Qualified Beneficiary of his or her rights
under this Article. Notice to a Qualified Beneficiary who
is the spouse or former spouse of a Participant will be
treated as notice to all other Qualified Beneficiaries
residing with such spouse at the time such notice is
given.
9.4 ELECTION OF CONTINUATION COVERAGE. Any Qualified Beneficiary who
desires continuation coverage under this Plan must make an election during the
applicable "election period" which begins on the date coverage would otherwise
terminate under the Plan by reason of a Qualifying Event, and ends sixty (60)
days after such date or sixty (60) days after the date the Qualified Beneficiary
receives notice of his or her fight to elect continuation coverage, whichever is
later. Unless specified otherwise in the election, any election by a Participant
or spouse to continue coverage under this Plan shall be deemed to be an election
of continuation coverage on behalf of any other Qualified Beneficiary who would
otherwise lose coverage under the Plan by reason of the same Qualifying Event.
9.5 PREMIUMS. The Qualified Beneficiary may be required to pay
premiums for any period of continuation coverage up to one hundred two percent
(102%) of the applicable premium, as defined under and determined in accordance
with Code section 498013(f)(4) and ERISA section 604; provided, however, that
notwithstanding the foregoing, that a Qualified Beneficiary who is entitled to
extended coverage under SECTION 9.6(a)(1)(A) may be required to pay premiums up
to one hundred fifty percent (150%) of the applicable premium for the coverage
period following the initial eighteen (18) month period. Premiums shall be
payable in monthly installments on the first day of every month; provided,
however, that the premium payment for the period of coverage prior to the date
of the participant's initial election shall not be required prior to forty-five
(45) days after the date of the election.
9.6 PERIOD OF CONTINUATION COVERAGE. Continuation of coverage timely
and properly elected by any Qualified Beneficiary under this Article shall
extend for a period that begins on the date of the Qualifying Event, and ends on
the earliest of the following dates:
(a) Maximum Period.
(1) In the case of a Qualifying Event described in
SECTION 9.1(b)(2), the date which is eighteen (18)
months after the date of the Qualifying Event;
provided, however,
(A) if the Qualified Beneficiary is. determined
to have been disabled at any time during the
first 60 days of continuation
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coverage following the Qualifying Event
under Titles 11 or XVI of the Social
Security Act, and if the Qualified
Beneficiary has timely notified the
Administrator of such determination in
accordance with SECTION 9.3(d), the maximum
period for that Qualified Beneficiary and
the covered members of the Qualified
Beneficiary's family shall end on the
earlier of (i) the date which is 29 months
after the date of the Qualifying Event, or
(ii) the first day of the month commencing
more than thirty (30) days after a final
determination that the Qualified Beneficiary
is no longer disabled;
(B) if another Qualifying Event, other than the
one described in SECTION 9.1(b)(6), occurs
during such eighteen (18) month period, the
date which is thirty-six (36) months after
the date of the original Qualifying Event;
and
(2) In the case of a Qualifying Event described in
Section 9.1(b)(2) that occurs less than 18 months
after the date the Covered Individual became
entitled to benefits under Article XVIII of the
Social Security Act, the period of coverage for
Qualified Beneficiaries other than the Participant
shall not terminate before the date which is
thirty-six (36) months after the date the
Participant became entitled to benefits under Title
XVIII of the Social Security Act, regardless of
whether such entitlement was the sole Qualifying
Event or if entitlement preceded the Qualifying
Event.
(3) In the case of a Qualifying Event described in
SECTION 9.1(b)(6), the date of death of the former
Participant; or if the Qualifying Event occurs
after the death of the former Participant, the date
of death of the surviving spouse of the former
participant; or with regard to the surviving spouse
or dependent children of a former Participant who
dies after the Qualifying Event, the date which is
thirty-six (36) months after the date of the former
Participant's death.
(4) In the case of any other Qualifying Event, the date
which is thirty-six (36) months after the date of
the Qualifying Event;
(b) The date on which the Employer of the Participant ceases
to provide any group health plan to any employee;
(c) If a premium is unpaid when due, the date that is thirty
(30) days after the first day on which the premium is due
under this Plan, or, if later, the date
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on which Participants would lose their coverage under this
Plan due to failure to pay premiums when due;
(d) The first date after a valid COBRA election is made that
the Qualified Beneficiary becomes entitled to benefits
under Title XVIII of the Social Security Act; or
(e) The first date after a valid COBRA election is made that
the Qualified Beneficiary becomes covered under any other
group health plan, as an employee or otherwise; provided,
however, that in order for this to stop a continuation of
coverage period, such other plan may not contain any
exclusion or limitation for pre-existing conditions with
respect to the Qualified Beneficiary, and provided,
however, that for any period commencing after December 31,
1996, the coverage provided under a group health plan with
respect to a Qualified Beneficiary who has continuation
coverage under the Plan shall not be considered to contain
any exclusion or limitation with respect to any
Pre-Existing Condition of that person by reason of the
existence of any limitation or exclusion which does not
apply to (or is satisfied by) such person continuing the
coverage by reason of Chapter 100 of the Code, part 7 of
the subtitle B of Title I of ERISA or Title XXVII of the
Public Health Service.
9.7 EXPIRATION OF CONTINUATION COVERAGE. In the case of any Qualified
Beneficiary whose continuation coverage expires under Section 9.6(a), the
Administrator shall, during the thirty-one (31) day period ending on such
expiration date, provide to the Qualified Beneficiary the option of enrolling in
a conversion plan otherwise generally available to Participants under the Plan,
if any. No conversion coverage shall be available to Participants under this
Plan.
ARTICLE X
FUNDING
Except for Board Members, Officers and Spouses, the Plan shall be funded
solely by contributions from Participants and Covered Dependents. In the case of
a Board Member, an Officer or a Spouse, notwithstanding anything in the Plan or
any other agreement to the contrary, the Sponsor will pay (i) all of the cost of
all of the Plan's benefits and coverages for that individual for that
individual's lifetime and (ii) to the individual, an additional sum in the
amount necessary to reimburse such individual for any federal income tax
liability resulting from (or associated with) the Sponsor's payments to or for
the benefit of the individual under this Plan, so that the benefits and
coverages under this Plan for that individual are provided at no cost to that
individual.
The Employers shall have no obligation, but shall have the right, to
establish a special trust or fund out of which benefits shall be paid. The
Employers shall have no obligation, but shall have the right, to reinsure, or to
purchase any type of additional coverage with respect to
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any benefits under the Plan. To the extent the Employer elects to purchase
insurance for any benefits under the Plan, any such benefits shall be the sole
responsibility of the insurer, and the Employer shall have no responsibility for
the payment of such benefits (except for refunding any Participant contributions
that were not remitted to an insurer).
ARTICLE XI
ADMINISTRATION
11.1 NAMED FIDUCIARY. The Named Fiduciaries of the Plan shall be the
Administrator, and any insurer or other persons, to the extent of its or their
discretionary authority with regard to the administration of the Plan. Except as
otherwise provided in the Policy, the Administrator shall have complete
authority to control and manage the operation and administration of the Plan.
The Administrator, subject to the succeeding provisions of this ARTICLE XI, is
authorized to take such actions as may be necessary to carry out the provisions
and purposes of the Plan and shall have the authority to control and manage the
operation and administration of the Plan. In order to effectuate the purposes of
the Plan, the Administrator shall have the discretionary power to construe and
interpret the Plan, to supply any omissions therein, to reconcile and correct
any errors or inconsistencies, to decide any questions in the administration and
application of the Plan, and to make equitable adjustments for any mistakes or
errors made in the administration of the Plan. All such actions or
determinations made by the Named Fiduciaries, and the application of rules and
regulations to a particular case or issue by the Named Fiduciaries, in good
faith, shall not be subject to review by anyone, but shall be final, binding,
and conclusive on all persons ever interested hereunder, subject only to the
claims review procedures set forth in SECTION 11.9. In construing the Plan and
in exercising its power under provisions requiring Administrator approval, the
Administrator shall attempt to ascertain the purpose of the provisions in
question and when such purpose is known or reasonably ascertainable, such
purpose shall be given effect to the extent feasible. Likewise, the
Administrator is authorized to determine all, questions with respect to the
individual rights of the Participants or Beneficiaries under this Plan,
including, but not limited to, all issues with respect to eligibility. The Named
Fiduciary in the exercise of any discretionary powers hereunder, shall exercise
such discretion in a uniform manner with respect to all similarly situated
Participants.
11.2 ALLOCATION OF FIDUCIARY RESPONSIBILITIES. The Administrator may
allocate certain of its fiduciary responsibilities among others and/or may
designate other persons to carry out certain of its fiduciary responsibilities
in accordance with and subject to the limitations of ERISA section 405. Any
person or group of persons may serve in more than one fiduciary capacity with
regard to the Plan. The Administrator and any fiduciary designated by the
Administrator may employ one or more persons to render advice concerning their
responsibilities under the Plan.
11.3 RECORDS. The Administrator shall exercise such authority as it
deems appropriate in order to comply with the terms of the Plan relating to the
records of Participants and the amounts which are payable under the Plan. The
Administrator shall make available to each
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Participant such of its records under the Plan as pertain to him for examination
at reasonable times during normal business hours.
11.4 APPOINTMENT OF COMMITTEE. The day-to-day administration of the
Plan shall be handled by a Committee comprised of at least one individual, if
such a Committee is appointed by the Administrator as its agent. If no Committee
is appointed, the Administrator shall be the Committee. Each member of the
Committee shall serve until his successor is appointed by the Administrator or
until he otherwise resigns. All expenses of the Committee shall be paid by the
Sponsor. A member of the Committee who is an employee shall not receive any
additional compensation for his or her services on the Committee, but shall be
reimbursed by the Sponsor for expenses incurred.
11.5 ACTIONS OF COMMITTEE. A majority of the members of the Committee
appointed pursuant to Section 11.4 shall constitute a quorum for the transaction
of business, and shall have full power to act hereunder. Action by the Committee
shall be official if approved by a vote of a majority of the members present at
any official meeting. The Committee may, without a meeting, authorize or approve
any action by written instrument signed by a majority of all of the members. Any
written memorandum signed by the Chairman, any other member of the Committee, or
any other person duly authorized by the Committee to act regarding the subject
matter of the memorandum, shall have the same force and effect as a formal
resolution adopted in open meeting.
A member of the Committee may not vote or decide upon any matter
relating solely to him or vote in any case in which his individual fight or
claim to any benefit under the Plan is specifically involved. If a Committee
member is so disqualified to act and the remaining members then present cannot,
by majority vote, act or decide, the Sponsor will appoint a temporary substitute
member to exercise all of the powers of the disqualified member concerning the
matter in which he is disqualified.
The Committee shall maintain minutes of its meetings and written records
of its actions. Members may participate and hold a meeting of the Committee by
means of telephone conference or similar communications equipment which permits
all persons participating in the meeting to hear each other; however, minutes
and written records must be maintained of such meeting. Participation in such a
meeting constitutes presence in person at such meeting.
11.6 OTHER POWERS AND DUTIES OF THE ADMINISTRATOR. The Administrator,
the Committee and any persons or entities designated by the Administrator,
except as otherwise set forth in the Policy, shall have all powers necessary or
desirable to administer the Plan, including, but not limited to, the following:
(a) in its sole discretion, to construe and interpret the
Plan, reconcile errors and supply omissions in the Plan,
and decide all questions of eligibility;
(b) to prescribe procedures to be followed by Participants in
making elections under the Plan and in filing claims under
the Plan;
(c) to prepare and distribute information explaining the Plan
to Participants;
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(d) to obtain from Participants such information as shall be
necessary for the proper administration of the Plan;
(e) to keep records of elections, claims, and disbursements
for claims under the Plan;
(f) to appoint individuals or committees to assist in the
administration of the Plan and to engage any other agents
it deems advisable, including legal and actuarial counsel;
(g) to purchase any insurance deemed necessary for providing
benefits under the Plan;
(h) to accept, modify, or reject elections under the Plan;
(i) to promulgate election forms and claims forms to be used
by Participants;
(j) to prepare and file any reports or returns regarding the
Plan required by the Code, ERISA, or any other laws;
(k) to determine and announce any Participant contributions
required hereunder;
(l) to determine and enforce any limits on benefits elected
hereunder;
(m) to take such action as may be necessary to cause the
payroll deduction of any Participant contributions
required hereunder;
(n) to, notwithstanding any other provision of the Plan, in
the event the Administrator determines that as a result of
administrative or arithmetic error, it has, with respect
to one or more Individuals, incorrectly determined
eligibility for participation, job classification, or
other items involving or concerning the continued
qualification of the, Plan under the Code, and determines
further that such error has resulted in one or more
Individuals receiving a smaller (or greater) benefit
provided by the Plan than they would have in the absence
of the error, take such steps as shall be necessary or
appropriate to correct such error with respect to the
affected individuals, utilizing whatever method will
result in the least overall cost to the Plan; and
(o) to recover overpayments erroneously made from the Plan to
Participants, Beneficiaries, or others utilizing whatever
method will result in the least overall cost to the Plan.
11.7 INDEMNIFICATION. The Sponsor and the Employers agree to and shall
indemnify and hold harmless each Indemnified Person (as defined in this Section)
from and against any and all claims, losses, damages, causes of action, suits,
and liability of every kind, including all
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expenses of litigation, court costs and reasonable attorney's fees, incurred in
connection with the Plan. "Indemnified Person" shall mean each member of the
Committee, and each employee, officer, or director of the Sponsor or of an
Employer acting as a fiduciary of the Plan. Such indemnity shall apply
regardless of whether the claims, losses, damages, causes of action, suits, or
liability arise in whole or in part from the negligence or other fault on the
part of the Indemnified Person, except to the extent there has been a final
adjudication that the claim or liability results from the gross negligence or
willful misconduct of the Indemnified Person.
11.8 RELIANCE ON TABLES, ETC. In administering the Plan, the
Administrator will be entitled, to the extent permitted by law, to rely
conclusively upon all tables, valuations, certificates, opinions and reports
which are furnished by accountants, counsel or other experts employed or engaged
by the Administrator.
11.9 CLAIMS AND REVIEW PROCEDURES.
(a) CLAIMS PROCEDURE. If any person believes he is being
denied any rights or benefits under the Plan, such person
may file a written claim with the Administrator. If the
claim is wholly or partially denied, the Administrator
will notify the claimant of its decision in writing. Such
notification will be written in a manner calculated to be
understood by such person and will contain: (i) specific
reasons for the denial, (ii) specific reference to
pertinent Plan provisions, (iii) a description of any
additional material or information necessary for the
person to perfect his claim and an explanation of why such
material or information is necessary, and (iv) information
as to the steps to be taken if the person wishes to submit
a request for review. Notification of a claim denial will
be given within ninety (90) days after the claim is
received by the Administrator, or within one hundred
eighty (180) days if special circumstances require an
extension of time for processing the claim, in which case
written notice of such extension and the circumstances
shall be given to the claimant within the initial ninety
(90) day period. If the claimant does not receive written
notice that the claim has been denied within the initial
ninety (90) day period, or within the one hundred eighty
(180) day period, if applicable, the claim will be deemed
to have been denied as of the last day of such period, and
such person may request a review of his claim.
(b) REVIEW PROCEDURE. Within sixty (60) days after the date on
which a person receives written notice of a claim denial,
or if applicable, within sixty (60) days after the date on
which such denial is deemed to have occurred, such person
or his duly authorized representative may file a written
request with the Administrator for a review of his denied
claim. The claimant and/or his authorized representative
may inspect pertinent documents and submit written issues
and comments to the Administrator. The Administrator will
notify the claimant of its decision in writing. Such
notification will be written in a manner calculated to be
understood by such person and will contain specific
reasons for the decision, as well as
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specific references to pertinent Plan provisions. The
decision on review will be made within sixty (60) days
after the request for review is received by the
Administrator, or within one hundred twenty (120) days if
special circumstances require an extension of time. If
such an extension of time is taken, the Administrator
shall notify the claimant in writing within the initial
sixty (60) day period and shall state the circumstances
and the date on which a decision is expected. If the
claimant does not receive written notice of the decision
within the initial sixty (60) day period, or within the
one hundred twenty (120) day period if applicable, the
claim shall be deemed to have been denied on review.
11.10 PARTICIPANT'S RESPONSIBILITIES. Each Participant shall be
responsible for providing the Administrator and the Sponsor with the
Participant's and his beneficiary's current address. Any notices required or
permitted to be given under this Section shall be deemed given if directed to
such address and mailed by regular United States mail. Neither the Administrator
nor the Sponsor shall have any obligation or duty to locate a Participant or
beneficiary. In the event that a Participant or beneficiary becomes entitled to
a payment under the Plan and such payment is delayed or cannot be made because:
(a) the current address according to Sponsor records is
incorrect;
(b) the Participant or beneficiary fails to respond to the
notice sent to the current address according to Sponsor
records;
(c) of conflicting claims to such payments; or
(d) of any other reason.
The amount of such payment, if and when made, shall be that determined under the
provisions of the Plan without consideration of any interest which may have
accrued.
11.11 MISSING PERSONS. If any amount becomes payable under the Plan to
a Participant or beneficiary and the same shall not have been claimed, or if any
check issued under the Plan remains uncashed, and reasonable care shall have
been exercised by the Administrator in attempting to make such payments, the
amount shall be forfeited within such period as is necessary to prevent escheat
under any applicable law and shall cease to be a liability of the Plan.
11.12 NONDISCRIMINATORY EXERCISE OF AUTHORITY. In the administration of
the Plan, whenever any discretionary action by the Administrator is required,
the Administrator shall exercise its authority in a nondiscriminatory manner in
order that all persons similarly situated will receive substantially the same
treatment.
11.13 EXPENSES. The Employer shall bear all costs and expenses
associated with the administration of this Plan which are not paid by an
established trust, if any.
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ARTICLE XII
AMENDMENT OR TERMINATION OF PLAN
12.1 AMENDMENT OF PLAN. The Sponsor expressly reserves the right to
amend the elections, terms and conditions of the Plan, if necessary; provided,
however, that without the express, prior written consent of each Participant and
Covered Dependent at the time the amendment is signed (or, if earlier, is
effective), no amendment to this Plan shall reduce the coverages available or
benefits payable under the Plan or decrease the individuals who may be
Participants or Covered Dependents under this Plan. Any amendment that is
necessary with respect to the Plan and permitted under this Section shall be
made only by a written instrument signed by the appropriate person or persons
and shall be binding upon and effective with respect to each Employer and its
Participants, Dependents, and Eligible Individuals.
12.2 TERMINATION OF PLAN. The Sponsor may terminate or discontinue
this Plan at any time, if necessary, only by a written instrument signed by its
authorized officer and only with the express, prior written consent of all
Participants and Covered Dependents at the effective date of the termination or
discontinuation. Notwithstanding anything in the Plan to the contrary, coverages
and benefits provided under this Plan are to be continued for the life of each
Board Member, each Officer and each Spouse, and the Plan and the Sponsor's
obligations under the Plan may not be terminated or discontinued without the
express, prior written consent of each Board Member, Officer and Spouse. Upon
termination or discontinuance of the Plan as permitted by this Section, all
elections shall terminate, and reimbursements or payments of Qualified Medical
Expenses shall be made only in accordance with ARTICLE VI.
ARTICLE XIII
MISCELLANEOUS
13.1 INFORMATION TO BE FURNISHED. Participants shall provide the
Employer and Administrator with such information and evidence as may reasonably
be requested from time to time for the purpose of administering the Plan.
13.2 LIMITATION OF RIGHTS. Neither the establishment of the Plan, nor
any amendment of the Plan, nor the payment of any benefits shall be construed as
giving to any Participant or other person any legal or equitable right against
the Employer or Administrator or their respective officers and directors, as an
employee or otherwise, except as expressly provided in this Plan, and in no
event will the terms of employment or service of any Participant or employee be
modified or in any way affected by this Plan.
13.3 BENEFITS NOT SOLELY FROM POLICY. Except as required by law,
applicable regulation or elsewhere in this Plan, the benefits provided under the
Plan shall be paid solely from the Policy so long as there is a Policy. If there
is no Policy, benefits payable under this Plan shall be paid from the general
assets of the Sponsor. Nothing in this Plan shall be construed to
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require (except as required by law and applicable regulation) any Fiduciary or
the Administrator to maintain any fund or segregate any amount for the benefit
of any Participant.
13.4 NONASSIGNABILITY OF RIGHTS. The right of any Participant to
receive any reimbursement under the Plan shall not be alienable by the
Participant by assignment or any other method and shall not be subject to being
taken by his creditors by any process whatsoever, and any attempt to cause such
right to be so subjected will not be recognized, except to such extent as may be
required by law.
13.5 NO GUARANTEE OF TAX CONSEQUENCES. Neither the Employer nor the
Administrator makes any commitment or guarantee that any amounts paid to or for
the benefit of a Participant under ARTICLES V or VI will be excludable from the
Participant's gross income for federal or state income employment tax purposes,
or that any other federal or state tax treatment will apply to or be available
to any Participant. It shall be the obligation of each Participant to determine
whether each payment under ARTICLES V or VI is excludable from the Participant's
gross income for federal and state income and employment tax purposes, and to
notify the Employer if the Participant has reason to believe that any such
payment is not so excludable.
13.6 SEVERABILITY. If any provision of this Plan is held invalid,
unenforceable or inconsistent with any law, regulation or requirement for a
medical plan governed by Code sections 104 or 105 or ERISA, its invalidity,
unenforceability or inconsistency shall not affect any other provision of the
Plan, and the Plan shall be construed and enforced as if such provision were not
a part of the Plan.
13.7 CONSTRUCTION OF TERMS. Words of gender shall include persons and
entities of any gender, the plural shall include the singular and the singular
shall include the plural. Section headings exist for reference purposes only and
shall not be construed as part of the Plan.
13.8 CHOICE OF LAW/JURISDICTION AND VENUE. THIS PLAN SHALL BE
CONSTRUED, ADMINISTERED, AND GOVERNED IN ALL RESPECTS (i) UNDER APPLICABLE
FEDERAL LAW, INCLUDING, WITHOUT LIMITATION, THE PROVISIONS OF ERISA AND THE CODE
AND RELEVANT INTERPRETATIONS OF BOTH, AND (ii) TO THE EXTENT NOT PREEMPTED BY
FEDERAL LAW, UNDER THE LAWS OF THE STATE OF TEXAS. EXCLUSIVE JURISDICTION AND
VENUE OF ALL DISPUTES ARISING OUT OF OR RELATING TO THIS PLAN SHALL BE IN ANY
COURT OF APPROPRIATE JURISDICTION IN DALLAS COUNTY, TEXAS. THE PROVISIONS OF
THIS SECTION SHALL SURVIVE AND REMAIN IN EFFECT UNTIL ALL OBLIGATIONS ARE
SATISFIED, NOTWITHSTANDING ANY TERMINATION OF THE PLAN.
13.9 NO VESTED INTEREST. Except for the right to receive any benefit
payable under the Plan in regard to a previously incurred claim, no person shall
have any right, title, or interest in or to the assets of any Employer because
of the Plan.
13.10 NO GUARANTEE OF EMPLOYMENT. Nothing in this Plan shall be
construed as a (i) contract of employment between an Employer and any
Individual, (ii) guarantee that any
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Individual will be continued in the employment or service of an Employer, or
(iii) limitation on the right of an Employer to discharge any of its employees
with or without cause.
13.11 ADOPTION BY SUCCESSOR EMPLOYER OR AFFILIATES. In the event of the
reorganization, purchase, merger, dissolution, or reconstitution, whether direct
or indirect, of the Sponsor, any successor entity shall be required to adopt and
continue the Plan; in which event, the Plan shall continue without any gap or
lapse in coverage or benefits. Failure of the Sponsor to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this agreement and shall entitle the Participants and Covered
Dependents at that time to a lump sum payment from the Sponsor as liquidated
damages that will be an amount equal to the sum of (i) the total value of the
coverages and benefits under the Plan to such individual and (ii) the cost to
obtain identical (or better) replacement coverage for Plan coverage for such
individual.
The Sponsor shall pay to each Participant and Covered Dependent all
legal fees and expenses incurred by that individual, if any, in seeking to
obtain or enforce any right, coverage or benefit provided by this Agreement. An
individual entitled to a payment under this Section shall not be required to
mitigate the amount of a payment due to him under this Section, and
notwithstanding anything in the Plan to the contrary, payments due under this
Section shall not be reduced by any coverage or benefits received by a payment's
recipient from any other source. Throughout the Plan, a purposeful distinction
is drawn between the Sponsor and the Employers. The powers and responsibilities
assigned to the Sponsor by the Plan shall apply exclusively to the Sponsor.
13.12 BONDING. Every Fiduciary, except a bank or an insurance company,
unless exempted by ERISA and its regulations, shall be bonded in an amount not
less than 10% of the amount of the funds such Fiduciary handles; provided,
however, that the minimum bond shall be $1,000 and the maximum bond, $500,000.
The amount of funds handled shall be determined at the beginning of each Plan
Year by the amount of funds handled by such person, group, or class to be
covered and their predecessors, if any, during the preceding Plan Year, or if
there is no preceding Plan Year, then by the amount of the funds to be handled
during the then current year. The bond shall provide protection to the Plan
against any loss by reason of acts of fraud or dishonesty by a Fiduciary alone
or in connivance with others. The surety shall be a corporate surety company (as
such term is used in section 412(a)(2) of ERISA), and the bond shall be in a
form approved by the Secretary of Labor. Notwithstanding anything in the Plan to
the contrary, the cost of such bonds shall be an expense of and may, at the
election of the Administrator, be paid by the Employer.
ARTICLE XIV
QUALIFIED MEDICAL CHILD SUPPORT ORDERS
14.1 NOTIFICATION OF RECEIPT OF CHILD SUPPORT ORDER. Upon receipt by
the Administrator of a medical child support order, an administrative notice, or
a National Medical Support Notice as set forth in ERISA, the Administrator shall
tell the Participant and the
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potential alternate recipient of the medical child support order, administrative
notice or National Medical Support Notice that it has received the medical child
support order, administrative notice, or National Medical Support Notice within
fifteen (15) days of the Administrator's receipt of the medical child support
order, administrative notice, or National Medical Support Notice. The
notification shall also describe the procedures for determining whether the
medical child support order, administrative notice, or National Medical Support
Notice is a "Qualified Medical Child Support Order"as defined in section 609 of
ERISA. The procedures shall permit a potential alternate recipient to designate
a representative to receive copies of notices with respect to a medical child
support order, administrative notice, or National Medical Support Notice.
The Administrator shall determine if the medical child support order,
the administrative notice or the National Medical Support Notice is a Qualified
Medical Child Support Order within sixty (60) days of receipt of such order or
notice, unless circumstances cause a delay. If a delay is required, the
potential alternate recipient shall be notified of any such delay in writing.
14.2 PROCEDURES TO DETERMINE IF MEDICAL CHILD SUPPORT ORDER IS A
QUALIFIED MEDICAL CHILD SUPPORT ORDER. The Administrator shall review the
medical child support order, the administrative notice, or the National Medical
Support Notice (or request legal counsel to review the medical child support
order, administrative notice or National Medical Support Notice) and verify that
the following items are appropriately addressed in the medical child support
order, administrative notice, or National Medical Support Notice:
(a) The medical child support order, administrative notice or
National Medical Support Notice must create or recognize
the existence of an alternate recipient's right to receive
benefits for which the Participant or beneficiary is
eligible under the Plan or to assign those rights;
(b) The medical child support order, administrative notice or
National Medical Support Notice must identify the parties
responsible for paying for the benefits that are the
subject of the order, notice or National Medical Support
Notice;
(c) The medical child support order, administrative notice, or
National Medical Support Notice must clearly specify the
name and last known mailing address of each alternate
recipient covered by the order, administrative notice or
National Medical Support Notice or must provide the name
and address of any state official or political subdivision
that will be substituted for that of the alternate
recipient. Payment made to any such selected official
shall be treated as payment made to the alternate
recipient;
(d) The medical child support order, administrative notice, or
National Medical Support Notice must specify in a
reasonable description the type of coverage to be provided
by the Plan to each alternate recipient or the manner in
which the type of coverage is to be determined;
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(e) The medical child support order, administrative notice or
National Medical Support Notice must specify the period to
which the order, administrative notice or National Medical
Support Notice applies;
(f) The medical child support order, administrative notice, or
National Medical Support Notice must not require the Plan
to provide any type or form of benefit not otherwise
provided under the Plan; and
(g) The medical child support order, administrative notice or
National Medical Support Notice must clearly be an order,
administrative notice, judgment, decree, approval of a
settlement or a National Medical Support Notice.
If the Administrator determines the medical child support order,
administrative notice or National Medical Support Notice satisfies all of the
above requirements, the medical child support order, administrative notice or
National Medical Support Notice shall, subject to SECTION 14.4, be a Qualified
Medical Child Support Order, and the Administrator shall notify, in writing,
each of the alternate recipient(s) or the alternate recipient(s)' selected
official or political subdivision, if applicable, and the Participant or
beneficiary related to such alternate recipient(s) that the order,
administrative notice, or National Medical Support Notice is a Qualified Medical
Child Support Order. The Administrator shall also notify the Participant that he
must execute a new enrollment form to cover the cost of such coverage or
otherwise notify the party responsible for paying for the coverage of their
obligations with respect to payment for the coverage. If the Administrator
determines that the order or administrative notice, or National Medical Support
Notice is not a Qualified Medical Child Support Order, the Administrator shall
notify, in writing, each of the proposed alternate recipient(s) or the alternate
recipient(s)' selected official or political subdivision, if applicable, and the
related Participant or beneficiary that the order, administrative notice, or
National Medical Support Notice is not a Qualified Medical Child Support Order,
why the order, administrative notice or National Medical Support Notice failed
to qualify as such and their rights, if any, to appeal such decision.
14.3 TREATMENT OF ALTERNATE RECIPIENT UNDER QUALIFIED MEDICAL CHILD
SUPPORT ORDER. The Administrator shall treat each alternate recipient under a
Qualified Medical Child Support Order as a Participant under the Plan, but only
for purposes of the reporting and disclosure requirements imposed by ERISA.
14.4 COST OF QUALIFIED MEDICAL CHILD SUPPORT ORDER BENEFITS. The cost
of the coverage provided under the Qualified Medical Child Support Order shall
be paid by the party designated as responsible for paying for such coverage in
the order, administrative notice or National Medical Support Notice.
In the event a medical child support order, administrative notice, or
National Medical Support Notice does not specify the party responsible for
payment for the alternate recipient's coverage under the medical child support
order, administrative notice, or National Medical Support Notice, the
Administrator shall either deny the medical child support order's,
administrative notice's, or National Medical Support Notice's qualified status
and send copies of
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the Qualified Medical Child Support Order procedures to the parties, or file an
appropriate pleading in either the Federal district court or in the domestic
relations court requesting revisions of the issued order, administrative notice
or National Medical Support Notice in such a manner as to qualify the order,
administrative notice, or National Medical Support Notice as a Qualified Medical
Child Support Order.
14.5 QUALIFIED MEDICAL CHILD SUPPORT ORDER AND MEDICAID. The
Administrator shall not consider the alternate recipient's eligibility for
Medicaid when enrolling the alternate recipient in the Plan. The Plan shall
comply with the alternate recipient's assignment rights under Medicaid, if any.
14.6 PAYMENTS OR REIMBURSEMENTS UNDER A QUALIFIED MEDICAL CHILD
SUPPORT ORDER. The Administrator is permitted to pay or reimburse the alternate
recipient, the alternate recipient's custodial parent, or any state official or
political subdivision selected by the alternate recipient to receive payments
for any benefit payments due under the Plan to or on behalf of the alternate
recipient.
14.7 ALTERNATE RECIPIENT. "Alternate recipient" means the individual
designated as the person entitled to receive health care coverage under the
Qualified Medical Child Support Order.
ARTICLE XV
POLICY
The Policy set forth on Exhibit A to this Plan is incorporated by this
reference as part of the Plan document. Any amendment or replacement of any of
the documents comprising the Policy may be certified by a duty authorized
officer of the Sponsor, and may be updated as required, without any need to
amend this document. But, to the extent any part of the Policy conflicts with or
contradicts the provisions of this document, this document shall govern in
determining (i) the rights of Participants, their Covered Dependents and, if
any, their other covered beneficiaries, and (ii) the obligations of the
Employers, Administrator, and any Fiduciary to Participants, Covered Dependents
and, if any, other covered beneficiaries.
ARTICLE XVI
PARTICIPATING EMPLOYERS
16.1 ADOPTION BY OTHER EMPLOYERS. Notwithstanding anything in this
document to the contrary, with the written consent of the Sponsor, any other
corporation or entity, whether an affiliate or subsidiary or not, may adopt this
Plan and become a Participating Employer, by a properly executed document
evidencing said intent and will of such Participating Employer. Participating
Employers who have adopted the Plan are listed on Exhibit B to this Plan, as it
may be amended from time to time.
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16.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS.
(a) The transfer of any Participant from or to an Employer
participating in this Plan, whether he be an employee of
the Sponsor or a Participating Employer, shall not affect
such Participant's rights under the Plan, and his length
of participation in the Plan shall continue to his credit.
(b) Any expenses of the Plan which are to be paid by the
Employer or borne by the Plan shall be paid by each
Participating Employer in the same proportion that the
total number of all Participants employed by such Employer
bears to the total number of all Participants.
16.3 DESIGNATION OF AGENT. Each Participating Employer shall be deemed
to be a part of this Plan-, provided, however, that with respect to all of its
relations with the Administrator for the purpose of this Plan, each
Participating Employer shall be deemed to have designated irrevocably the
Sponsor as its agent.
16.4 TRANSFERS. It is anticipated that an Individual who is an
employee may be transferred between Participating Employers, and in the event of
any such transfer, the employee involved shall carry with him his accumulated
service and eligibility. No such transfer shall effect a termination of
employment under this Plan, and the Participating Employer to which the employee
is transferred shall become obligated under this Plan with respect to such
employee in the same manner as was the Participating Employer from whom the
employee was transferred.
16.5 PARTICIPATING EMPLOYER'S CONTRIBUTION. All contributions made by
a Participating Employer, as provided for in this Plan, shall be determined
separately by each Participating Employer and shall be paid for the exclusive
benefit of the employees of such Participating Employer and the Beneficiaries of
such employees, subject to all the terms and conditions of this Plan. On the
basis of the information furnished by the Employers to the Administrator, the
Administrator shall keep separate books and records concerning the Plan affairs
of each Participating Employer and as to the accounts and credits of the
employees of each Participating Employer. The Administrator may, but need not,
register contracts so as to evidence that a particular Participating Employer is
the interested Employer, but in the event of an employee transfer from one
Participating Employer to another, the employing Employer shall immediately
notify the Administrator.
16.6 DISCONTINUANCE OF PARTICIPATION. Any Participating Employer shall
be permitted to discontinue or revoke its participation in the Plan. At the time
of any such discontinuance or revocation, satisfactory evidence of such action
and of any applicable conditions imposed shall be delivered to the
Administrator. The Administrator shall thereafter transfer, deliver and assign
the contracts and other assets allocable to the Participants of such
Participating Employer to such new Administrator as shall have been designated
by such Participating Employer, in the event that it has established a separate
medical care plan for its employees. If no successor is designated, the
Administrator shall retain such assets for the employees of said Participating
Employer. In no such event shall any part of the corpus or income of the Trust
as it relates to
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such Participating Employer be used for or diverted for purposes other than for
the exclusive benefit of the employees of such Participating Employer.
16.7 ADMINISTRATOR'S AUTHORITY. The Administrator shall have authority
to make any and all necessary rules or regulations, binding upon all
Participating Employers and all Participants, to effectuate the purpose of this
Article.
IN WITNESS WHEREOF, the Corporation has caused this Plan to be executed
in its name and on its behalf this 23rd day of June, 2000 authorized
representative.
"SPONSOR"
DALLAS SEMICONDUCTOR CORPORATION
By: /s/ Alan P. Hale
------------------------------------
Title: V. P. Finance & CFO
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EXHIBIT A
POLICY
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EXHIBIT B
PARTICIPATING EMPLOYERS
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EXHIBIT C
OFFICERS
C. V. Prothro
Chao C. Mai
Michael L. Bolan
Alan P. Hale
Jack Von Gillern
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EXHIBIT D
BOARD MEMBERS
Richard L. King
Merlyn D. Sampels
Carmelo J. Santoro
Adm. E.R. Zumwalt, Jr.
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EXHIBIT E
SPOUSES
Nancy J. Santoro
Anita R. Sampels
Carolyn Leftwich
Karen L. Hale
Shao S. Mai
Caren H. Prothro
Elizabeth L. Von Gillern
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EXHIBIT F
ELIGIBLE EMPLOYEES
(OTHER THAN OFFICERS)
Matt Adams
Philip A. Adams
G. Malcom Bayless
Heber L. Clement
Met Cruz
Stephen M. Curry
Don Dias
Jeffrey L. Hannon
Tom Harrington, III
David L. Heim
Jerry L. Housden
Joe Hundt
Reynold W. Kelm
Hal Kurkowski
Robert D. Lee
John E. Manton, III
Wayne Mendenhall
Kenneth B. Molitor
Joe Monroe
David J. Rapier
John Rea
Sandy Scherpenberg
Michael D. Smith
Gay T. Vencill
Clark R. Williams
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AMENDMENT ONE TO
THE DALLAS SEMICONDUCTOR CORPORATION
EXECUTIVES RETIREE MEDICAL PLAN
Amendment made to the Dallas Semiconductor Corporation Executives
Retiree Medical Plan, Effective October 1, 1999 (the "Plan"), by Dallas
Semiconductor Corporation (the "Corporation").
W I T N E S S E T H
WHEREAS, the Corporation sponsors the Plan to provide retiree (and
limited other) medical care benefits to board members, officers, certain other
eligible retirees, and the eligible spouses of board members and officers; and
WHEREAS, the Corporation desires to amend the Plan to permit the spouse
of Richard King, Carol Edgar, to participate in the Plan, effective June 24,
2000, the date of their marriage; and
WHEREAS, by the terms of Section 12.1 of the Plan, the Plan may be
amended by the Corporation.
NOW, THEREFORE, effective June 24, 2000, the Plan is hereby amended as
follows:
1. Section 2.37 is deleted in its entirety and the following is
substituted in its place:
"2.37 'SPOUSE' means the wife of an Officer or of a Board
Member on the date of his Retirement, and in the case of only
Richard King, means Carol Edgar, effective June 24, 2000. Carol
Edgar, effective June 24, 2000 and each person who was a spouse
of an Officer or of a Board Member on the Effective Date are
listed on Exhibit E, but being listed on Exhibit E does not make
an individual a Spouse for purposes of this Plan."
2. Existing Exhibit E to the Plan is deleted in its entirety, and
the attached Exhibit E is substituted in its place.
55
IN WITNESS WHEREOF, the Corporation, has caused this instrument to be
executed by its duly authorized officer on this 23rd day of June, 2000, to be
effective June 24, 2000.
DALLAS SEMICONDUCTOR CORPORATION
BY: /S/ ALAN P. HALE
----------------------------------------
Title: Vice President - Finance and Chief
Financial Officer
2
56
EXHIBIT E
SPOUSES
Nancy J. Santoro
Anita R. Sampels
Carolyn Leftwich
Karen L. Hale
Shao S. Mai
Caren H. Prothro
Elizabeth L. Von Gillern
Carol Edgar
3
57
AMENDMENT TWO TO
THE DALLAS SEMICONDUCTOR CORPORATION
EXECUTIVES RETIREE MEDICAL PLAN
Amendment made to the Dallas Semiconductor Corporation Executives
Retiree Medical Plan, effective October 1, 1999 (the "Plan"), by Dallas
Semiconductor Corporation (the "Corporation").
W I T N E S S E T H
WHEREAS, the Corporation sponsors the Plan to provide retiree (and
limited other) medical care benefits to board members, officers, certain other
eligible retirees, and the eligible spouses of board members and officers; and
WHEREAS, the Corporation desires to amend the Plan to clarify that the
Plan will not impose a pre-existing condition limitation; and
WHEREAS, by the terms of SECTION 12.1 of the Plan, the Plan may be
amended by the Corporation.
NOW, THEREFORE, effective October 1, 1999, the Plan is hereby amended as
follows:
1. SECTION 2.34 is deleted in its entirety, and the following is
substituted in its place:
"2.34 `QUALIFIED MEDICAL EXPENSE' means an expense incurred by a
Participant, by the Participant's spouse or by a Dependent of
such Participant for medical care as defined in Code section 213,
including, without limitation, amounts paid for hospital bills
and doctor bills, but only to the extent that (i) the participant
or other person is not reimbursed for the expense through
insurance or otherwise, other than under the Plan, and (ii) the
expense is not taken into account as a deduction by the
Participant on his Internal Revenue Service Form 1040."
2. The second sentence of SECTION 5.1 is deleted in its entirety,
and the following is substituted in its place:
"Subject to SECTIONS 5.2(A) and 12.1, the specific coverages and
benefits available to Participants are set forth in the Policy or
if there is no Policy, in the Policy last in effect in connection
with the Plan."
3. SECTION 5.2(A) is deleted in its entirety, and the following is
substituted in its place:
"5.2 PRE-EXISTING CONDITIONS.
58
(a) PRE-EXISTING CONDITIONS. Notwithstanding anything in the
Plan or any Policy to the contrary, the Plan shall not
impose any type of pre-existing condition exclusion.
Notwithstanding anything in any Policy to the contrary, a
pre-existing condition in a Policy shall not include any
condition that does not fall within the definition of a
Pre-existing Condition, no pre-existing condition shall
include a condition for which Genetic Information was used
as a basis for asserting the existence of the condition if
there has been no diagnosis of the condition related to
such information, and the period during which any
exclusion or limitation of benefits (relating to a
condition based on the fact that the condition was present
before a person's Enrollment Date) in the Policy would be
enforced (if the Plan allowed pre-existing condition
exclusions) for no longer than the excess of twelve (12)
months (eighteen (18) months for a Late Enrollee),
beginning on his Enrollment Date, over the aggregate of
the periods of Creditable Coverage (if any) applicable to
the Participant as of his Enrollment Date."
5. The last sentence of SECTION 8.1 is amended to delete the words
"coverage limitations" in that sentence and to substitute "coverage maximums" in
their place.
IN WITNESS WHEREOF, the Corporation has caused this instrument to
be executed by its duly authorized officer effective October 1, 1999.
DALLAS SEMICONDUCTOR CORPORATION
By: /s/ Alan P. Hale
------------------------------------
Title:
---------------------------------
2
59
AMENDMENT THREE TO
THE DALLAS SEMICONDUCTOR CORPORATION
EXECUTIVES RETIREE MEDICAL PLAN
Amendment made to the Dallas Semiconductor Corporation Executives
Retiree Medical Plan, effective October 1, 1999 (the "Plan"), by Dallas
Semiconductor Corporation (the "Corporation").
W I T N E S S E T H
WHEREAS, the Corporation sponsors the Plan to provide retiree (and
limited other) medical care benefits to board members, officers, certain other
eligible retirees, and the eligible spouses of board members and officers; and
WHEREAS, the Corporation desires to amend the Plan to permit three
Directors appointed after October 19, 1999, Jeffrey A. Koch, John K. Foley and
Larry N. Bright, to participate in the Plan, effective on the date each was
appointed as a Director; and
WHEREAS, by the terms of Section 12.1 of the Plan, the Plan may be
amended by the Corporation.
NOW, THEREFORE, effective as provided below, the Plan is amended as
follows:
1. SECTION 2.10 is deleted in its entirety, effective October 9,
2000, and the following is substituted in its place:
"ELIGIBLE EMPLOYEE" means (i) each Officer of the Sponsor
on the Effective Date, (ii) each common-law employee of an
Employer who was designated on the books and records of the
Employer as a "functionally equivalent" officer on the Effective
Date and who shared in the contribution made on June 12, 1998, to
the Dallas Semiconductor Corporation Executive Deferred
Compensation Plan, (iii) each common-law employee of an Employer,
on the Effective Date, who, on the Effective Date (or within the
five (5) calendar year period preceding the Effective Date), also
held the title of Director or was the Sponsor's corporate
controller, (iv) effective October 9, 2000, Larry N. Bright, John
K. Foley and Jeffrey A. Koch, and (v) each common-law employee of
an Employer, on the Effective Date, who, on the Effective Date,
held the position of Manager and was required to report for
operating purposes directly to the Sponsor's President and Chief
Executive Officer. Each person who was an Eligible Employee on
the Effective Date or become an Eligible Employee as a result of
an amendment to the Plan after the Effective Date is listed on
either Exhibit C or Exhibit F to the Plan."
1
60
2. Effective October 9, 2000, existing Exhibit F is deleted in its
entirety, and the attached Exhibit F is substituted in its place.
IN WITNESS WHEREOF, the Corporation, has caused this instrument to be
executed by its duly authorized officer on this 10th day of April, 2001.
DALLAS SEMICONDUCTOR CORPORATION
By: /s/ Alan P. Hale
------------------------------------
Name: Alan P. Hale
Title: Chief Financial Officer
2
61
EXHIBIT F
ELIGIBLE EMPLOYEES
(OTHER THAN OFFICERS)
(EFFECTIVE OCTOBER 9, 2000)
Matt Adams
Philip A. Adams
G. Malcom Bayless
Larry N. Bright
Heber L. Clement
Mel Cruz
Stephen M. Curry
Don Dias
John K. Foley
Jeffrey L. Hannon
Tom Harrington, III
David L. Heim
Jerry L. Housden
Joe Hundt
Reynold W. Kelm
Jeff Koch
Hal Kurkowski
Robert D. Lee
3
62
John E. Manton, III
Wayne Mendenhall
Kenneth B. Molitor
Joe Monroe
David J. Rapier
John Rea
Sandy Scherpenberg
Michael D. Smith
Gay T. Vencill
Clark R. Williams
4
EX-10.27
15
f75694ex10-27.txt
EXHIBIT 10.27
1
EXHIBIT 10.27
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT is executed and delivered pursuant to that
certain Agreement and Plan of Merger, dated as of January 28, 2001 (the "Merger
Agreement"), by and among Maxim Integrated Products, Inc., a Delaware
corporation (the "Company"), MI Acquisition Sub, Inc., a Delaware corporation,
and Dallas Semiconductor Corporation, a Delaware corporation ("Dallas
Semiconductor"), pursuant to which Dallas Semiconductor will become a wholly
owned subsidiary of the Company. Pursuant to Sections 1.8(a) and 5.5(a) of the
Merger Agreement, the Company is required at the Effective Time to expressly
assume all options to purchase the common stock, par value $.02 per share (the
"Common Stock"), of Dallas Semiconductor then outstanding, whether vested or
unvested, under Dallas Semiconductor's (i) 1984 Stock Option Plan, (ii) Amended
1987 Stock Option Plan and (iii) 1993 Officer and Director Stock Option Plan
(each as amended, collectively, the "Option Plans"), and the various option
agreements (the "Option Agreements"), including notice of grants thereto (each a
"Notice"), issued under such Option Plans. By way of example, and not by way of
limitation, a copy of the form of Notice and forms of Option Agreements are
attached hereto as Exhibit A. The failure to attach to this Assumption Agreement
all forms of Notice and all forms of Option Agreements that may be outstanding
shall in no way limit the Company's obligations under Sections 1.8(a) and 5.5(a)
of the Merger Agreement with respect to the assumptions addressed herein. All
capitalized terms not otherwise defined herein shall have the meaning ascribed
to such terms in the Merger Agreement.
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged the Company hereby assumes and agrees to pay,
perform, and discharge in accordance with the terms thereof, all of the duties,
liabilities and obligations of Dallas Semiconductor under the Option Plans, the
Option Agreements and the Notice.
This Assumption Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
2
IN WITNESS WHEREOF, each party hereto has caused this instrument to be
executed by its duly authorized officer this the 11th day of April, 2001.
MAXIM INTEGRATED PRODUCTS, INC.
By: /s/ Carl W. Jasper
-------------------------------------
Name: Carl W. Jasper
Title: Chief Financial Officer
DALLAS SEMICONDUCTOR CORPORATION
By: /s/ Alan P. Hale
-------------------------------------
Name: Alan P. Hale
Title: Chief Financial Officer
2
3
Exhibit A
3
4
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (the "Agreement") is made and
entered into this ____ day of _____________, 19__ (the "Date of Grant"), by and
between DALLAS SEMICONDUCTOR CORPORATION, a Delaware corporation (the
"Company"), and ________________________, an employee of the Company
("Optionee").
WHEREAS, the Company desires, by affording Optionee an opportunity to
purchase shares of its Common Stock, par value $.02 per share (the "Common
Stock"), as hereinafter provided, to carry out the purposes of the Dallas
Semiconductor Corporation 1987 Stock Option Plan (the "Plan");
NOW, THEREFORE, in consideration of the covenants herein set forth, the
parties hereto have agreed and do hereby agree as follows:
1. Grant of Option. The Company hereby grants to Optionee, pursuant to
the Plan, the terms and provisions of which are incorporated herein by
reference, an option (the "Option") to purchase all or any part of ___________
shares of the Common Stock of the Company on the terms and conditions herein set
forth.
2. Purchase Price. The purchase price of each share of Common Stock
subject to this Option shall be $_____ per share. Full payment for shares
purchased upon exercise of this Option shall be made in cash or by check, or by
delivery of previously owned shares of Common Stock, or partly in cash or such
check and partly in such stock. The value of shares of Common Stock delivered in
connection with the payment of the option price shall be the fair market value
4
5
of such shares as determined by the Board of Directors of the Company (the
"Board") and such determinations shall be binding upon the Optionee. No shares
may be issued until full payment of the purchase price therefor has been made.
3. Term of Option. The term of the Option shall be for a period of ten
(10) years from the Date of Grant, subject to earlier termination or
cancellation as provided herein and in the Plan.
4. Exercise of the Option This Option shall be exercisable in full or in
part at any time, and from time to time, during the term hereof, at any time
after the Date of Grant. No fractional shares may be issued pursuant to the
exercise of this Option. Furthermore, the exercise of this Option shall be
subject to the condition that if at any time the Company shall determine in its
sole discretion that the satisfaction of withholding tax or other withholding
liabilities, or that the listing, registration, or qualification of any shares
otherwise deliverable upon such exercise upon any national securities exchange
or under any state or federal law, or that the report to, or consent or approval
of, any regulatory body, is necessary or desirable as a condition of, or in
connection with, such exercise or the delivery or purchase of shares pursuant
hereto, then in any such event, such exercise shall not be effective unless such
withholding, listing, registration, qualification, report, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Company.
5. Notice of Election. Subject to the terms and conditions hereof,
Optionee may exercise this Option by delivering written notice to the Secretary
of the Company in person or by registered or certified mail, postage prepaid.
Such notice shall state the election to partially or totally exercise this
Option and the number of shares in respect of which it is being exercised, and
shall be signed by Optionee. Such notice shall be accompanied by payment as
provided for
5
6
hereinbefore, in which event, the Company shall deliver a certificate or
certificates, as may be requested by Optionee, representing such shares as soon
as practicable after the notice and payment shall be received. The certificate
or certificates for the shares as to which the Option shall have been exercised
shall be registered as designated in the notice. In the event the Option shall
be exercised, pursuant to Paragraph 8 hereof, by any person or persons other
than the Optionee, such notice shall be accompanied by proof deemed appropriate
by the Company of the right of such person or persons to exercise the Option.
All shares that shall be purchased upon the exercise of this Option as provided
herein shall be fully paid and non-assessable.
6. Non-Transferability. During the lifetime of Optionee, this Option
shall be exercisable only by Optionee. This Option shall not be assignable or
transferable by Optionee, voluntarily or by operation of law, other than by will
or by the laws of descent and distribution. Neither this Option nor the shares
covered hereby shall be pledged or hypothecated in any way. Neither this Option
nor the shares covered hereby shall be subject to the execution, attachment, or
similar process except with the prior written consent of the Board.
7. Termination of Employment. In the event that Optionee shall at any
time hereafter cease to be an employee of the Company or its subsidiaries for
any reason other than his death, retirement or permanent disability, any part of
the Option granted hereunder which has not been exercised by the date of such
cessation shall immediately terminate on the date of such cessation. In the
event that Optionee's employment with the Company or its subsidiary shall
terminate by reason of his retirement or permanent disability, the Option may be
exercised, to the extent of the shares with respect to which the Option could
have been exercised by Optionee on the date of such termination prior to the
date of its expiration or three (3) months after the date of such termination,
whichever occurs first.
6
7
8. Death of Optionee. If Optionee dies prior to the termination of his
right to exercise the Option in accordance with the provisions hereof without
having totally exercised the Option, the Option may be exercised, to the extent
of the shares with respect to which the Option could have been exercised by
Optionee on the date of Optionee's death, by the Optionee's estate or by the
person who acquires the right to exercise the Option by bequest, inheritance, or
by reason of the death of the Optionee, provided the Option is exercised prior
to the date of its expiration or one (1) year from the date of the Optionee's
death, whichever occurs first.
9. Adjustments. The number of shares of Common Stock covered by this
Option and the option price may be adjusted to reflect, as deemed appropriate by
the Board in its discretion, any stock dividend, stock split, share combination,
exchange of shares, recapitalization, merger, consolidation, separation,
reorganization, liquidation or the like of or by the Company. Decisions by the
Board as to what adjustments shall be made, and the extent thereof, shall be
final, binding and conclusive on Optionees.
10. No Other Rights or Obligations. Optionee shall have no rights by
reason of this Option as a shareholder with respect to any shares covered hereby
until the date of the issuance of one or more stock certificates to him for such
shares pursuant to the due exercise of the Option. The granting of this Option
does not confer on Optionee any continued right of employment or directorship
with the Company or any additional rights other than as expressly provided for
herein. There is no obligation upon Optionee to exercise this Option or any part
thereof.
11. Subject to Plan. This option is subject to all of the terms and
conditions of the Company's 1987 Stock Option Plan (and as amended hereafter if
the Plan is amended hereafter). In the event of any conflict between such terms
and conditions and those set forth herein, the terms of the Plan shall govern
and be determinative.
7
8
12. Incentive Stock Option. This option is not intended to qualify as an
"incentive stock option" under the Internal Revenue Code of 1986, as amended,
and applicable regulations and rulings promulgated thereunder, and shall not be
so construed.
13. Amendment. The Board shall have the right, without the consent or
approval of the Optionee, to amend, modify, limit or terminate this Option or
any term or provision hereof. Any such action by the Board shall be final and
binding on Optionee.
14. Shareholder's Agreement. The exercise of this Option is expressly
conditioned upon the prior or contemporaneous execution by the Optionee and the
Company of a Shareholder's Agreement, as provided in the Plan. All rights of the
Optionee and his heirs, successors and assigns shall be determined by such
agreement and the Optionee and his heirs, successors and assigns shall be bound
thereby. The shares of Common Stock issued pursuant to the exercise hereof shall
not be deemed to be issued vested stock option" and shall be subject to the
repurchase rights as provided in such agreement.
15. Defined Terms. Unless otherwise defined herein, the capitalized
terms used herein shall have the same meaning given to such terms in the Plan.
IN WITNESS WHEREOF, Dallas Semiconductor Corporation and Optionee have
executed this Non-Qualified Stock Option Agreement as of the date first above
written.
8
9
Address for Notices: DALLAS SEMICONDUCTOR CORPORATION
4350 Beltwood Parkway South
Dallas, Texas 75244
By:
----------------------------------
Title:
----------------------------------
------------------------------ ----------------------------------------
Optionee
------------------------------
9
10
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (the "Agreement") is made and
entered into this ____ day of _______________, 19__ (the "Date of Grant"), by
and between DALLAS SEMICONDUCTOR CORPORATION, a Delaware corporation (the
"Company"), and ___________________, an employee of the Company ("Optionee").
WHEREAS, the Company desires, by affording Optionee an opportunity to
purchase shares of its Common Stock, par value $.02 per share (the "Common
Stock"), as hereinafter provided, to carry out the purposes of the Dallas
Semiconductor Corporation 1987 Stock Option Plan (the "Plan");
NOW, THEREFORE, in consideration of the covenants herein set forth, the
parties hereto have agreed and do hereby agree as follows:
1. Grant of Option. The Company hereby grants to Optionee, pursuant to
the Plan, the terms and provisions of which are incorporated herein by
reference, an option (the "Option") to purchase all or any part of ______ shares
of the Common Stock of the Company on the terms and conditions herein set forth.
2. Purchase Price. The purchase price of each share of Common Stock
subject to this Option shall be $_____ per share. Full payment for shares
purchased upon exercise of this Option shall be made in cash or by check, or by
delivery of previously owned shares of Common Stock, or partly in cash or such
check and partly in such stock. The value of shares of Common Stock delivered in
connection with the payment of the option price shall be the fair market value
of such shares as determined by the Board of Directors of the Company (the
"Board") and such
10
11
determinations shall be binding upon the Optionee. No shares may be issued until
full payment of the purchase price therefor has been made.
3. Term of Option. The term of the Option shall be for a period of ten
(10) years from the Date of Grant, subject to earlier termination or
cancellation as provided herein and in the Plan.
4. Exercise of the Option. This Option shall be exercisable in full or
in part at any time, and from time to time, during the term hereof, at any time
commencing on the last day of the first completed calendar quarter following the
Date of Grant. No fractional shares may be issued pursuant to the exercise of
this Option. Furthermore, the exercise of this Option shall be subject to the
condition that if at any time the Company shall determine in its sole discretion
that the satisfaction of withholding tax or other withholding liabilities, or
that the listing, registration, or qualification of any shares otherwise
deliverable upon such exercise upon any national securities exchange or under
any state or federal law, or that the report to, or consent or approval of, any
regulatory body, is necessary or desirable as a condition of, or in connection
with, such exercise or the delivery or purchase of shares pursuant hereto, then
in any such event, such exercise shall not be effective unless such withholding,
listing, registration, qualification, report, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the Company.
5. Notice of Election. Subject to the terms and conditions hereof,
Optionee may exercise this Option by delivering written notice to the Secretary
of the Company in person or by registered or certified mail, postage prepaid.
Such notice shall state the election to partially or totally exercise this
Option and the number of shares in respect of which it is being exercised, and
shall be signed by Optionee. Such notice shall be accompanied by payment as
provided for
11
12
hereinbefore, in which event, the Company shall deliver a certificate or
certificates, as may be requested by Optionee, representing such shares as soon
as practicable after the notice and payment shall be received. The certificate
or certificates for the shares as to which the Option shall have been exercised
shall be registered as designated in the notice. In the event the Option shall
be exercised pursuant to Paragraph 10 hereof, by any person or persons other
than the Optionee, such notice shall be accompanied by proof deemed appropriate
by the Company of the right of such person or persons to exercise the Option.
All shares that shall be purchased upon the exercise of this Option as provided
herein shall be fully paid and non-assessable.
6. Tax Benefit Right. The Compensation Committee (the "Committee") of
the Board may in its sole discretion at any time prior to the exercise of this
Option grant to Optionee a bonus in an amount in cash not to exceed the then
existing maximum statutory Federal income tax rate (including any surtax or
similar charge or assessment) for individual taxpayers multiplied by the amount
of ordinary income, if any, realized by Optionee for Federal income tax purposes
as a result of the exercise of this Option. Any such payment, if granted, shall
be made by the Company upon the due date for such taxes in the form of a check
payable to the Internal Revenue Service for the account of Optionee, or in such
other manner as the Committee in its sole discretion may determine. Any such
payment shall otherwise be made upon such terms and conditions as may from time
to time be determined by the Committee and such right shall be subject to
limitation (as to term, amount, or otherwise) and to cancellation at any time by
the Committee in its sole discretion.
7. Company Loan. (a) Subject to the provisions of subparagraph (b)
below, upon request of Optionee made at least three (3) business days prior to
the intended exercise date, the Company may (on such exercise date) loan to
Optionee an amount equal to the excess of the aggregate option price of the
Common Stock which Optionee is then electing to purchase pursuant to the
exercise of this Option,
12
13
or any part hereof, over the aggregate par value of such Common Stock, less any
other consideration delivered by Optionee upon such exercise, provided that
Optionee shall execute a promissory note for such amount, payable to the order
of the Company, in such form as is in accordance with the provisions of the Plan
and as is otherwise satisfactory to the Committee.
(b) The Company shall have an obligation to make a loan to Optionee only
if the Committee shall have determined in its sole discretion prior to the
exercise date that such loan should be made, but shall have no such obligation
if the Committee shall have thereafter cancelled or suspended the operation of
the loan provisions of the Plan, or if the loan and/or other loans to be made at
such time would exceed any limit on the maximum amount of loans that may be made
under the Plan established from time to time by the Committee in its discretion.
(c) Such loan shall further be conditioned upon the delivery by Optionee
of such collateral as may be required by the Committee and the execution by
Optionee of such stock powers or other instruments which the Committee may deem
necessary or advisable in connection with such loan and creation of such
security interest.
8. Non-Transferability. During the lifetime of Optionee, this Option
shall be exercisable only by Optionee. This Option shall not be assignable or
transferable by Optionee, voluntarily or by operation of law, other than by will
or by the laws of descent and distribution. Neither this Option nor the shares
covered hereby shall be pledged or hypothecated in any way. Neither this Option
nor the shares covered hereby shall be subject to the execution, attachment, or
similar process except with the prior written consent of the Board.
9. Termination of Employment. In the event that Optionee shall at any
time hereafter cease to be an employee of the Company or its subsidiaries for
any reason other than his death, retirement or permanent disability, any part of
the Option granted hereunder which has not been
13
14
exercised by the date of such cessation shall immediately terminate on the date
of such cessation. In the event that Optionee's employment with the Company or
its subsidiary shall terminate by reason of his retirement or permanent
disability, the Option may be exercised, to the extent of the shares with
respect to which the Option could have been exercised by Optionee on the date of
such termination prior to the date of its expiration or three (3) months after
the date of such termination, whichever occurs first.
10. Death of Optionee. If Optionee dies prior to the termination of his
right to exercise the Option in accordance with the provisions hereof without
having totally exercised the Option, the Option may be exercised, to the extent
of the shares with respect to which the Option could have been exercised by
Optionee on the date of Optionee's death, by the Optionee's estate or by the
person who acquires the right to exercise the Option by bequest, inheritance, or
by reason of the death of the Optionee, provided the Option is exercised prior
to the date of its expiration or one (1) year from the date of the Optionee's
death, whichever occurs first.
11. Adjustments. The number of shares of Common Stock covered by this
Option and the option price may be adjusted to reflect, as deemed appropriate by
the Board in its discretion, any stock dividend, stock split, share combination,
exchange of shares, recapitalization, merger, consolidation, separation,
reorganization, liquidation or the like of or by the Company. Decisions by the
Board as to what adjustments shall be made, and the extent thereof, shall be
final, binding and conclusive on Optionees.
12. No Other Rights or Obligations. Optionee shall have no rights by
reason of this Option as a shareholder with respect to any shares covered hereby
until the date of the issuance of one or more stock certificates to him for such
shares pursuant to the due exercise of the Option. The granting of this Option
does not confer on Optionee any continued right of employment or
14
15
directorship with the Company or any additional rights other than as expressly
provided for herein. There is no obligation upon Optionee to exercise this
Option or any part thereof.
13. Subject to Plan. This option is subject to all of the terms and
conditions of the Company's 1987 Stock Option Plan (and as amended hereafter if
the Plan is amended hereafter). In the event of any conflict between such terms
and conditions and those set forth herein, the terms of the Plan shall govern
and be determinative.
14. Incentive Stock Option. This option is not intended to qualify as an
"incentive stock option" under the Internal Revenue Code of 1986, as amended,
and applicable regulations and rulings promulgated thereunder, and shall not be
so construed.
15. Amendment. The Board shall have the right, without the consent or
approval of the Optionee, to amend, modify, limit or terminate this Option or
any term or provision hereof. Any such action by the Board shall be final and
binding on Optionee.
16. Shareholder's Agreement. The exercise of this Option is expressly
conditioned upon the prior or contemporaneous execution by the Optionee and the
Company of a Shareholder's Agreement, as provided in the Plan. All rights of the
Optionee and his heirs, successors and assigns shall be determined by such
agreement and the Optionee and his heirs, successors and assigns shall be bound
thereby. The shares of Common Stock issued pursuant to the exercise hereof shall
not be deemed to be issued pursuant to a "fully vested stock option" and shall
be subject to the repurchase rights as provided in such agreement.
17. Defined Terms. Unless otherwise defined herein, the capitalized
terms used herein shall have the same meaning given to such terms in the Plan.
IN WITNESS WHEREOF, Dallas Semiconductor Corporation and Optionee have
executed this Non-Qualified Stock Option Agreement as of the date first above
written.
15
16
Address for Notices: DALLAS SEMICONDUCTOR CORPORATION
4350 Beltwood Parkway South
Dallas, Texas 75244
By:
-----------------------------
Title:
-----------------------------
----------------------------------- -----------------------------------
Optionee
-----------------------------------
16
17
Form of Stock Option Agreement under the 1993 Officer and Director Stock Option
Plan for grants on July 9, 1993, and October 3, 1996, to executive officers and
certain key employees
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STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is made and entered into
this ____ day of ____________,199__ (the "Date of Grant"), by and between DALLAS
SEMICONDUCTOR CORPORATION, a Delaware corporation (the "Company"), and
__________________, [an employee of the Company who has been determined by the
Compensation Committee of the Board of Directors of the Company to hold a
position functionally equivalent to a vice president of the Company (exclusive
of policy-making functions](1) ("Optionee").
WHEREAS, the Company's 1993 Officer and Director Stock Option Plan (the
"Plan") provides that certain officers of the Company may from time to time be
granted an option to purchase shares of the Company's Common Stock, par value
$.02 per share (the "Common Stock"), as therein provided, in furtherance of the
purposes of the Plan.
NOW, THEREFORE, in consideration of the covenants herein set forth, the
parties hereto have agreed and do hereby agree as follows:
1. GRANT OF OPTION. The Company hereby grants to Optionee, pursuant to
Section 7(a) of the Plan, the terms and provisions of which Plan are
incorporated herein by reference, an option (the "Option") to purchase all or
any part of _______ shares of the Common Stock of the Company on the terms and
conditions herein set forth.
----------
(1) Provision used in key employee options granted in 1996
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2. PURCHASE PRICE. The purchase price of each share of Common Stock
subject to this Option shall be $_______ per share. Full payment for shares
purchased upon exercise of this Option shall be made in cash or by check, or by
delivery of previously owned shares of Common Stock, or partly in cash or such
check and partly in such stock. The value of shares of Common Stock delivered in
connection with the payment of the option price shall be the fair market value
of such shares as determined by the Board of Directors of the Company (the
"Board") and such determinations shall be binding upon the Optionee. No shares
may be issued until full payment of the purchase price therefor has been made.
3. TERM OF OPTION. The term of the Option shall be for a period of ten
(10) years from the Date of Grant, subject to earlier termination or
cancellation as provided herein and in the Plan.
4. EXERCISE OF THE OPTION. Subject to the provisions of Paragraph 14
hereof, this Option shall be exercisable in installments (subject to the right
of accumulation described below) so that this Option shall be exercisable for
25% of the aggregate number of shares provided in Paragraph 1 hereof at the end
of first year of the term hereof and thereafter shall be exercisable for 6.25%
of such aggregate number of shares during each calendar quarter during the term
hereof (until it shall become fully vested at the end of sixteen (16) calendar
quarters from the Date of Grant); provided, however, that this Option, or any
unexercised portion hereof, shall become immediately exercisable in full upon
the occurrence of a Change of Control. To the extent an installment is not
exercised during the time stated, such installment shall accumulate and be
exercisable, in whole or in part, in any subsequent period during the term of
this Option. No fractional shares may be issued pursuant to the exercise of this
Option. Furthermore, the exercise
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of this Option shall be subject to the condition that if at any time the Company
shall determine in its sole discretion that the satisfaction of withholding tax
or other withholding liabilities, or that the listing, registration, or
qualification of any share otherwise deliverable upon such exercise upon any
national securities exchange or under any state or federal law, or that the
report to, or consent or approval of, any regulatory body, is necessary or
desirable as a condition of, or in connection with, such exercise or the
delivery or purchase of shares pursuant thereto, then in any such event, such
exercise shall not be effective unless such withholding, listing, registration,
qualification, report, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Company.
5. NOTICE OF ELECTION. Subject to the terms and conditions hereof,
Optionee may exercise this Option by delivering written notice to the Secretary
of the Company in person or by registered or certified mail, postage prepaid.
Such notice shall state the election to partially or totally exercise this
Option and the number of shares in respect of which it is being exercised, and
shall be signed by Optionee. Such notice shall be accompanied by payment as
provided for hereinbefore, in which event the Company shall deliver a
certificate or certificates, as may be requested by Optionee, representing such
shares as soon as practicable after the notice and payment shall be received.
The certificate or certificates for the shares as to which the Option shall have
been exercised shall be registered as designated in the notice. In the event the
Option shall be exercised, pursuant to Paragraph 10 hereof, by any person or
persons other than the Optionee, such notice shall be accompanied by proof
deemed appropriate by the Company of the right of such person or persons to
exercise the Option. All shares that shall be purchased upon the exercise of
this Option as provided herein shall be fully paid and non-assessable.
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6. TAX BENEFIT RIGHT. The Board may in its sole discretion at any time
prior to the exercise of this Option grant to Optionee a bonus in an amount in
cash not to exceed the then existing maximum statutory Federal income tax rate
(including any surtax or similar charge or assessment) for individual taxpayers
multiplied by the amount of income, if any, realized by Optionee for Federal
income tax purposes as a result of the exercise of this Option. Any such
payment, if granted, shall be made by the Company upon the due date for such
taxes in the form of a check payable to the Internal Revenue Service for the
account of Optionee, or in such other manner as the Board in its sole discretion
may determine. Any such payment shall otherwise be made upon such terms and
conditions as may from time to time be determined by the Board and such right
shall be subject to limitation (as to term, amount, or otherwise) and to
cancellation at any time by the Board in its sole discretion.
7. COMPANY LOAN. (a) Subject to the provisions of subparagraph (b)
below, upon request of Optionee made at least three (3) business days prior to
the intended exercise date, the Board may (on such exercise date) loan to
Optionee an amount equal to the excess of the aggregate option price of the
Common Stock which Optionee is then electing to purchase pursuant to the
exercise of this Option, or any part hereof, over the aggregate par value of
such Common Stock, less any other consideration delivered by Optionee upon such
exercise, provided that Optionee shall execute a promissory note for such
amount, payable to the order of the Company, in such form as is in accordance
with the provisions of the Plan and as is otherwise satisfactory to the Board.
(b) The Company shall have an obligation to make a loan to Optionee only
if the Board shall have determined in its sole discretion prior to the exercise
date that such loan should
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be made, but shall have no such obligation if the Board shall have thereafter
canceled or suspended the operation of the loan provisions of the Plan, or if
the loan and/or other loans to be made at such time would exceed any limit on
the maximum amount of loans that may be made under the Plan established from
time to time by the Board in its discretion.
(c) Such loan shall further be conditioned upon the delivery by Optionee
of such collateral as may be required by the Board and the execution by Optionee
of such stock powers or other instruments which the Board may deem necessary or
advisable in connection with such loan and creation of such security interest.
8. NON-TRANSFERABILITY. During the lifetime of Optionee, this Option
shall be exercisable only by Optionee. This Option shall not be assignable or
transferable by Optionee, voluntarily or by operation of law, other than by will
or by laws of descent and distribution. Neither this Option nor the shares
covered hereby shall be pledged or hypothecated in any way. Neither this Option
nor the shares covered hereby shall be subject to the execution, attachment, or
similar process except with the prior written consent of the Board.
9. TERMINATION OF EMPLOYMENT. In the event that Optionee shall at any
time hereafter cease to be an employee of the Company for any reason other than
his death or retirement, any part of the Option granted hereunder which has not
been exercised by the date of such cessation shall immediately terminate on the
date of such cessation. In the event that Optionee's employment by the Company
shall terminate by reason of his retirement or permanent disability, the Option
may be exercised, to the extent of the shares with respect to which the Option
could have been exercised by optionee on the date of such termination prior to
the date of its expiration or three (3) months after the date of such
termination, whichever occurs first.
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10. DEATH OF OPTIONEE. If the Optionee dies prior to the termination of
his right to exercise this Option in accordance with the provisions hereof
without having totally exercised the Option, the Option may be exercised, to the
extent of the shares with respect to which the Option could have been exercised
by Optionee on the date of Optionee's death, by the Optionee's Successor,
provided the Option is exercised prior to the date of its expiration or one (1)
year from the date of the Optionee's death, whichever occurs first.
11. ADJUSTMENTS. The number of shares of Common Stock covered by this
Option and the option price may be adjusted to reflect, as deemed appropriate by
the Board in its discretion, any stock dividend, stock split, share combination,
exchange of shares, recapitalization, merger, consolidation, separation,
reorganization, liquidation or the like of or by the Company. Decisions by the
Board as to what adjustments shall be made, and the extent thereof, shall be
final, binding and conclusive on Optionee.
12. NO OTHER RIGHTS OR OBLIGATIONS. Optionee shall have no rights by
reason of this Option as a stockholder with respect to any shares covered
thereby until the date of the issuance of one or more stock certificates to him
for such shares pursuant to the due exercise of the Option. The granting of this
Option shall not confer on Optionee any continued right to employment or tenure
as an officer of the Company or any additional rights other than as expressly
provided for herein. There is no obligation upon Optionee to exercise this
Option or any part thereof.
13. SUBJECT TO PLAN. This Option is subject to all of the terms and
conditions of the Company's 1993 Officer & Director Stock Option Plan (and as
amended if the Plan is amended hereafter). In the event of any conflict between
such terms and conditions and those set forth herein, the terms of the Plan
shall govern and be determinative.
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14. STOCKHOLDER APPROVAL. This Option has been granted subject to the
approval of the Plan by stockholders of the Company. Notwithstanding the
provisions of Paragraph 4 hereof, this Option may not be exercised unless and
until the Plan has been duly approved by the stockholders of the Company.(2)
15. SHAREHOLDERS AGREEMENT. The shares of Common Stock issued to
Optionee upon the exercise of this Option shall be deemed to be issued pursuant
to a "fully vested stock option" under the terms of any Shareholder's Agreement
previously entered into between the Company and Optionee.
16. DEFINED TERMS. Unless otherwise defined herein, the capitalized
terms used herein shall have the same meaning given to such terms in the Plan.
IN WITNESS WHEREOF, Dallas Semiconductor Corporation and Optionee have
executed this Stock Option Agreement as of the date first above written.
Address for Notices: DALLAS SEMICONDUCTOR CORPORATION
4401 South Beltwood Parkway
Dallas, Texas 75244 By:
-----------------------------
C. V. Prothro
Title:
-----------------------------
Chairman of the Board and
President
----------------------------------- -----------------------------------
Optionee
----------
(2) Stockholder approval of the 1993 Officer and Director Stock Option Plan was
obtained on April 26, 1994.
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-----------------------------------
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Form of Stock Option Agreement used for grants under the 1993 Officer and
Director Stock Option Plan on October 5, 1998 to employees who were both
officers and directors
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STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is made and entered into
this 5th day of October, 1998 (the "Date of Grant"), by and between DALLAS
SEMICONDUCTOR CORPORATION, a Delaware corporation (the "Company"), and C. V.
Prothro, an officer and director of the Company ("Optionee").
WHEREAS, the Company's 1993 Officer and Director Stock Option Plan (the
"Plan") provides that certain officers of the Company may from time to time be
granted an option to purchase shares of the Company's Common Stock, par value
S.02 per share (the "Common Stock"), as therein provided, in furtherance of the
purposes of the Plan.
NOW, THEREFORE, in consideration of the covenants herein set forth, the
parties hereto have agreed and do hereby agree as follows:
1. GRANT OF OPTION. The Company hereby grants to Optionee, pursuant to
Section 7(a) of the Plan, an option (the "Option") to purchase all or any part
of 270,000 shares of the Common Stock of the Company on the terms and conditions
herein set forth.
2. PURCHASE PRICE. The purchase price of each share of Common Stock
subject to this Option shall be $23.75 per share. Full payment for shares
purchased upon exercise of this Option shall be made in cash or by check, or by
delivery of previously owned shares of Common Stock, or partly in cash or such c
heck and partly in such stock. The value of shares of Common Stock delivered in
connection with the payment of the option price shall be the fair market value
of such shares as determined by the Board of Directors of the Company (the
"Board") and such determinations shall be binding upon the Optionee. No shares
may be issued until full payment of the purchase price therefor has been made.
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3. TERM OF OPTION. The term of the Option shall be for a period of ten
(10) years from the Date of Grant, subject to earlier termination or
cancellation as provided herein and in the Plan.
4. EXERCISE OF THE OPTION. This Option shall be exercisable in
installments (subject to the right of accumulation described below) so that this
Option shall be exercisable for 25% of the aggregate number of shares provided
in Paragraph 1 hereof at the end of first year of the term hereof and thereafter
shall be exercisable for 6.25% of such aggregate number of shares during each
calendar quarter during the term hereof (until it shall become fully vested at
the end of sixteen (16) calendar quarters from the Date of Grant); provided,
however, that this Option, or any unexercised portion hereof, shall become
immediately exercisable in full upon the occurrence of a Change of Control. To
the extent an installment is not exercised during the time stated, such
installment shall accumulate and be exercisable, in whole or in part, in any
subsequent period during the term of this Option. No fractional shares may be
issued pursuant to the exercise of this Option. Furthermore, the exercise of
this Option shall be subject to the condition that if at any time the Company
shall determine in its sole discretion that the satisfaction of withholding tax
or other withholding liabilities, or that the listing, registration, or
qualification of any share otherwise deliverable upon such exercise upon any
national securities exchange or under any state or federal law, or that the
report to, or consent or approval of, any regulatory body, is necessary or
desirable as a condition of, or in connection with, such exercise or the
delivery or purchase of shares pursuant thereto, then in any such event, such
exercise shall not be effective unless such withholding, listing, registration,
qualification, report, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Company.
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5. NOTICE OF ELECTION. Subject to the terms and conditions hereof,
Optionee may exercise this Option by delivering written notice to the Secretary
of the Company in person or by registered or certified mail, postage prepaid.
Such notice shall state the election to partially or totally exercise this
Option and the number of shares in respect of which it is being exercised, and
shall be signed by Optionee. Such notice shall be accompanied by payment as
provided for hereinbefore, in which event the Company shall deliver a
certificate or certificates, as may be requested by Optionee, representing such
shares as soon as practicable after the notice and payment shall be received.
The certificate or certificates for the shares as to which the Option shall have
been exercised shall be registered as designated in the notice. In the event the
Option shall be exercised, pursuant to Paragraph 9 hereof, by any person or
persons other than the Optionee, such notice shall be accompanied by proof
deemed appropriate by the Company of the right of such person or persons to
exercise the Option. All shares that shall be purchased upon the exercise of
this Option as provided herein shall be fully paid and non-assessable.
6. TAX BENEFIT RIGHT. The Board may in its sole discretion at any time
prior to the exercise of this Option grant to Optionee a bonus in an amount in
cash not to exceed the then existing maximum statutory Federal income tax rate
(including any surtax or similar charge or assessment) for individual taxpayers
multiplied by the amount of income, if any, realized by Optionee for Federal
income tax purposes as a result of the exercise of this Option. Any such
payment, if granted, shall be made by the Company upon the due date for such
taxes in the form of a check payable to the Internal Revenue Service for the
account of Optionee, or in such other manner as the Board in its sole discretion
may determine. Any such payment shall otherwise be made upon such terms and
conditions as may from time to time be determined by the Board and
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such right shall be subject to limitation (as to term, amount, or otherwise) and
to cancellation at any time by the Board in its sole discretion.
7. COMPANY LOAN. (a) Subject to the provisions of subparagraph (b)
below, upon request of Optionee made at least three (3) business days prior to
the intended exercise date, the Board may (on such exercise date) loan to
Optionee an amount equal to the excess of the aggregate option price of the
Common Stock which Optionee is then electing to purchase pursuant to the
exercise of this Option, or any part hereof, over the aggregate par value of
such Common Stock, less any other consideration delivered by Optionee upon such
exercise, provided that Optionee shall execute a promissory note for such
amount, payable to the order of the Company, in such form as is in accordance
with the provisions of the Plan and as is otherwise satisfactory to the Board.
(b) The Company shall have an obligation to make a loan to Optionee only
if the Board shall have determined in its sole discretion prior to the exercise
date that such loan should be made, but shall have no such obligation if the
Board shall have thereafter canceled or suspended the operation of the loan
provisions of the Plan, or if the loan and/or other loans to be made at such
time would exceed any limit on the maximum amount of loans that may be made
under the Plan established from time to time by the Board in its discretion.
(c) Such loan shall further be conditioned upon the delivery by Optionee
of such collateral as may be required by the Board and the execution by Optionee
of such stock powers or other instruments which the Board may deem necessary or
advisable in connection with such loan and creation of such security interest.
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8. TRANSFERABILITY. Other than by will or by laws of descent and
distribution, this Option shall be assignable or transferable by Optionee, only
if and under terms and conditions approved by the Board in its sole discretion.
Neither this Option nor the shares covered hereby shall be pledged or
hypothecated in any way. Neither this Option nor the shares covered hereby shall
be subject to the execution, attachment, or similar process except with the
prior written consent of the Board.
9. TERMINATION OF EMPLOYMENT OR DIRECTORSHIP.
(a) In the event that Optionee shall at any time hereafter cease to be
an employee of the Company for any reason other than his death, retirement or
permanent disability, any part of the Option granted hereunder which has not
been exercised by the date of such cessation shall immediately terminate on the
date of such cessation. In the event that Optionee's employment by the Company
shall terminate by reason of his retirement or permanent disability, the Option
may be exercised, to the extent of the shares with respect to which the Option
could have been exercised by Optionee on the date of such termination, prior to
the date of its expiration or three (3) months after the date of such
termination, whichever occurs first. If the Optionee ceases to be an employee of
the Company by reason of his death prior to the termination of his right to
exercise this Option in accordance with the provisions hereof without having
totally exercised the Option, the Option may be exercised, to the extent of the
shares with respect to which the Option could have been exercised by Optionee on
the date of Optionee's death, by the Optionee's Successor, provided the Option
is exercised prior to the date of its expiration or one (1) year from the date
of the Optionee's death, whichever occurs first.
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(b) Notwithstanding the provisions of Paragraph 9(a) above, in the event
that Optionee shall at any time hereafter cease to be a director of the Company
(whether or not remaining an employee of the Company) for any reason, including,
but not limited to, his retirement, permanent disability or death, any part of
the Option granted hereunder which has not been exercised by the date of such
cessation shall, on the date of such cessation, become immediately exercisable
and may be exercised by Optionee, or by the Optionee's Successor, provided the
Option is exercised prior to the date of its expiration.
10. ADJUSTMENTS. The number of shares of Common Stock covered by this
Option and the option price may be adjusted to reflect, as deemed appropriate by
the Board in its discretion, any stock dividend, stock split, share combination,
exchange of shares, recapitalization, merger, consolidation, separation,
reorganization, liquidation or the like of or by the Company. Decisions by the
Board as to what adjustments shall be made, and the extent thereof, shall be
final, binding and conclusive on Optionee.
11. NO OTHER RIGHTS OR OBLIGATIONS. Optionee shall have no rights by
reason of this Option as a stockholder with respect to any shares covered
thereby until the date of the issuance of one or more stock certificates to him
for such shares pursuant to the due exercise of the Option. The granting of this
Option shall not confer on Optionee any continued right to employment or tenure
as an officer of the Company or any additional rights other than as expressly
provided for herein. There is no obligation upon Optionee to exercise this
Option or any part thereof.
12. SUBJECT TO PLAN. In the event of any conflict between the terms and
conditions of the Plan and those set forth herein, the terms of this Option
shall govern and be determinative.
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13. SHAREHOLDERS AGREEMENT. The shares of Common Stock issued to
Optionee upon the exercise of this Option shall be deemed to be issued pursuant
to a "fully vested stock option" under the terms of any Shareholder's Agreement
previously entered into between the Company and Optionee.
14. DEFINED TERMS. Unless otherwise defined herein, the capitalized
terms used herein shall have the same meaning given to such terms in the Plan.
IN WITNESS WHEREOF, Dallas Semiconductor Corporation and Optionee have
executed this Stock Option Agreement as of the date first above written.
Address for Notices: DALLAS SEMICONDUCTOR CORPORATION
4401 South Beltwood Parkway
Dallas, Texas 75244 By:
-----------------------------
Alan P. Hale
Title:
-----------------------------
Vice President -- Finance
----------------------------------- -----------------------------------
C. V. Prothro, Optionee
-----------------------------------
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Form of Stock Option Agreement used in 1998 and in 1999 (except as to exercise
price) for grants under the 1993 Stock Officer and Director Stock Option Plan to
non-director officers and employees
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STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is made and entered into
this 5th day of October, 1998 (the "Date of Grant"), by and between DALLAS
SEMICONDUCTOR CORPORATION, a Delaware corporation (the "Company"), and Michael
D. Smith ("Optionee").
WHEREAS, the Company's 1993 Officer and Director Stock Option Plan (the
"Plan") provides that certain officers of the Company may from time to time be
granted an option to purchase shares of the Company's Common Stock, par value
$.02 per share (the "Common Stock"), as therein provided, in furtherance of the
purposes of the Plan.
NOW, THEREFORE, in consideration of the covenants herein set forth, the
parties hereto have agreed and do hereby agree as follows:
1. GRANT OF OPTION. The Company hereby grants to Optionee, pursuant to
Section 7(a) of the Plan, the terms and provisions of which Plan are
incorporated herein by reference, an option (the "Option") to purchase all or
any part of 36,000 shares of the Common Stock of the Company on the terms and
conditions herein set forth.
2. PURCHASE PRICE. The purchase price of each share of Common Stock
subject to this Option shall be $23.75 per share. Full payment for shares
purchased upon exercise of this Option shall be made in cash or by check, or by
delivery of previously owned shares of Common Stock, or partly in cash or such
check and partly in such stock. The value of shares of Common Stock delivered in
connection with the payment of the option price shall be the fair market value
of such shares as determined by the Board of Directors of the Company (the
"Board") and such
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determinations shall be binding upon the Optionee. No shares may be issued until
full payment of the purchase price therefor has been made.
3. TERM OF OPTION. The term of the Option shall be for a period of ten
(10) years from the Date of Grant, subject to earlier termination or
cancellation as provided herein and in the Plan.
4. EXERCISE OF THE OPTION. This Option shall be exercisable in
installments (subject to the right of accumulation described below) so that this
Option shall be exercisable for 25% of the aggregate number of shares provided
in Paragraph 1 hereof at the end of first year of the term hereof and thereafter
shall be exercisable for 6.25% of such aggregate number of shares during each
calendar quarter during the term hereof (until it shall become fully vested at
the end of sixteen (16) calendar quarters from the Date of Grant); provided,
however, that this Option, or any unexercised portion hereof, shall become
immediately exercisable in full upon the occurrence of a Change of Control. To
the extent an installment is not exercised during the time stated, such
installment shall accumulate and be exercisable, in whole or in part, in any
subsequent period during the term of this Option. No fractional shares may be
issued pursuant to the exercise of this Option. Furthermore, the exercise of
this Option shall be subject to the condition that if at any time the Company
shall determine in its sole discretion that the satisfaction of withholding tax
or other withholding liabilities, or that the listing, registration, or
qualification of any share otherwise deliverable upon such exercise upon any
national securities exchange or under any state or federal law, or that the
report to, or consent or approval of, any regulatory body, is necessary or
desirable as a condition of, or in connection with, such exercise or the
delivery or purchase of shares pursuant thereto, then in any such event, such
exercise shall not be effective unless such
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withholding, listing, registration, qualification, report, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Company.
5. NOTICE OF ELECTION. Subject to the terms and conditions hereof,
Optionee may exercise this Option by delivering written notice to the Secretary
of the Company in person or by registered or certified mail, postage prepaid.
Such notice shall state the election to partially or totally exercise this
Option and the number of shares in respect of which it is being exercised, and
shall be signed by Optionee. Such notice shall be accompanied by payment as
provided for hereinbefore, in which event the Company shall deliver a
certificate or certificates, as may be requested by Optionee, representing such
shares as soon as practicable after the notice and payment shall be received.
The certificate or certificates for the shares as to which the Option shall have
been exercised shall be registered as designated in the notice. In the event the
Option shall be exercised, pursuant to Paragraph 10 hereof, by any person or
persons other than the Optionee, such notice shall be accompanied by proof
deemed appropriate by the Company of the right of such person or persons to
exercise the Option. All shares that shall be purchased upon the exercise of
this Option as provided herein shall be fully paid and non-assessable.
6. TAX BENEFIT RIGHT. The Board may in its sole discretion at any time
prior to the exercise of this Option grant to Optionee a bonus in an amount in
cash not to exceed the then existing maximum statutory Federal income tax rate
(including any surtax or similar charge or assessment) for individual taxpayers
multiplied by the amount of income, if any, realized by Optionee for Federal
income tax purposes as a result of the exercise of this Option. Any such
payment, if granted, shall be made by the Company upon the due date for such
taxes in the form of a check payable to the Internal Revenue Service for the
account of Optionee, or in such other
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manner as the Board in its sole discretion may determine. Any such payment shall
otherwise be made upon such terms and conditions as may from time to time be
determined by the Board and such right shall be subject to limitation (as to
term, amount, or otherwise) and to cancellation at any time by the Board in its
sole discretion.
7. COMPANY LOAN. (a) Subject to the provisions of subparagraph (b)
below, upon request of Optionee made at least three (3) business days prior to
the intended exercise date, the Board may (on such exercise date) loan to
Optionee an amount equal to the excess of the aggregate option price of the
Common Stock which Optionee is then electing to purchase pursuant to the
exercise of this Option, or any part hereof, over the aggregate par value of
such Common Stock, less any other consideration delivered by Optionee upon such
exercise, provided that Optionee shall execute a promissory note for such
amount, payable to the order of the Company, in such form as is in accordance
with the provisions of the Plan and as is otherwise satisfactory to the Board.
(b) The Company shall have an obligation to make a loan to Optionee only
if the Board shall have determined in its sole discretion prior to the exercise
date that such loan should be made, but shall have no such obligation if the
Board shall have thereafter canceled or suspended the operation of the loan
provisions of the Plan, or if the loan and/or other loans to be made at such
time would exceed any limit on the maximum amount of loans that may be made
under the Plan established from time to time by the Board in its discretion.
(c) Such loan shall further be conditioned upon the delivery by Optionee
of such collateral as may be required by the Board and the execution by Optionee
of such stock powers or other instruments which the Board may deem necessary or
advisable in connection with such loan and creation of such security interest.
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8. NON-TRANSFERABILILTY. During the lifetime of Optionee, this Option
shall be exercisable only by Optionee. This Option shall not be assignable or
transferable by Optionee, voluntarily or by operation of law, other than by will
or by laws of descent and distribution. Neither this Option nor the shares
covered hereby shall be pledged or hypothecated in any way. Neither this Option
nor the shares covered hereby shall be subject to the execution, attachment, or
similar process except with the prior written consent of the Board.
9. TERMINATION OF EMPLOYMENT. In the event that Optionee shall at any
time hereafter cease to be an employee of the Company for any reason other than
his death or retirement, any part of the Option granted hereunder which has not
been exercised by the date of such cessation shall immediately terminate on the
date of such cessation. In the event that Optionee's employment by the Company
shall terminate by reason of his retirement or permanent disability, the Option
may be exercised, to the extent of the shares with respect to which the Option
could have been exercised by optionee on the date of such termination prior to
the date of its expiration or three (3) months after the date of such
termination, whichever occurs first.
10. DEATH OF OPTIONEE. If the Optionee dies prior to the termination of
his right to exercise this Option in accordance with the provisions hereof
without having totally exercised the Option, the Option may be exercised, to the
extent of the shares with respect to which the Option could have been exercised
by Optionee on the date of Optionee's death, by the Optionee's Successor,
provided the Option is exercised prior to the date of its expiration or one (1)
year from the date of the Optionee's death, whichever occurs first.
11. ADJUSTMENTS. The number of shares of Common Stock covered by this
Option and the option price may be adjusted to reflect, as deemed appropriate by
the Board in its
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discretion, any stock dividend, stock split, share combination, exchange of
shares, recapitalization, merger, consolidation, separation, reorganization,
liquidation or the like of or by the Company. Decisions by the Board as to what
adjustments shall be made, and the extent thereof, shall be final, binding and
conclusive on Optionee.
12. NO OTHER RIGHTS OR OBLIGATIONS. Optionee shall have no rights by
reason of this Option as a stockholder with respect to any shares covered
thereby until the date of the issuance of one or more stock certificates to him
for such shares pursuant to the due exercise of the Option. The granting of this
Option shall not confer oil Optionee any continued right to employment or tenure
as an officer of the Company or any additional rights other than as expressly
provided for herein. There is no obligation upon Optionee to exercise this
Option or any part thereof.
13. SUBJECT TO PLAN. This Option is subject to all of the terms and
conditions of the Company's 1993 Officer & Director Stock Option Plan (and as
amended if the Plan is amended hereafter). In the event of any conflict between
such terms and conditions and those set forth herein, the terms of the Plan
shall govern and be determinative.
14. SHAREHOLDERS AGREEMENT. The shares of Common Stock issued to
Optionee upon the exercise of this Option shall be deemed to be issued pursuant
to a "fully vested stock option" under the terms of any Shareholder's Agreement
previously entered into between the Company and Optionee.
15. DEFINED TERMS. Unless otherwise defined herein, the capitalized
terms used herein shall have the same meaning given to such terms in the Plan.
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IN WITNESS WHEREOF, Dallas Semiconductor Corporation and Optionee have
executed this Stock Option Agreement as of the date first above written.
Address for Notices: DALLAS SEMICONDUCTOR CORPORATION
4401 South Beltwood Parkway
Dallas, Texas 75244 By:
-----------------------------
C. V. Prothro
Title:
-----------------------------
Chairman of the Board,
President and Chief
Executive Officer
----------------------------------- -----------------------------------
Michael D. Smith, Optionee
-----------------------------------
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42
Form of Stock Option Agreement used in 1998 in connection with "repricing" of
options under the 1987 Stock Option Plan to non-director employees
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NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (the "Agreement") is made and
entered into this 5th day of October, 1998 (the "Date of Grant"), by and between
DALLAS SEMICONDUCTOR CORPORATION, a Delaware corporation (the "Company"), and
____________________________, an employee of the Company ("Optionee").
WHEREAS, the Company desires, by affording Optionee an opportunity to
purchase shares of its Common Stock, par value $.02 per share (the "Common
Stock"), as hereinafter provided, to carry out the purposes of the Dallas
Semiconductor Corporation 1987 Stock Option Plan (the "Plan");
NOW, THEREFORE, in consideration of the covenants herein set forth, the
parties hereto have agreed and do hereby agree as follows:
1. Grant of Option. The Company hereby grants to Optionee, pursuant to
the Plan, the terms and provisions of which are incorporated herein by
reference, of an option (the "Option") to purchase all or any part of _______
shares of the Common Stock of the Company on the terms and conditions herein set
forth.
2. Purchase Price. The purchase price of each share of Common Stock
subject to this Option shall be $23.75 per share. Full payment for shares
purchased upon exercise of this Option shall be made in cash or by check, or by
delivery of previously owned shares of Common Stock, or partly in cash or such
check and partly in such stock. The value of shares of Common Stock delivered in
connection with the payment of the option price shall not be less than 100% of
the fair market value of such shares as determined by the Board of Directors of
the Company (the
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"Board") and such determinations shall be binding upon the Optionee. No shares
may be issued until full payment of the purchase price therefor has been made.
3. Term of Option. The term of the Option shall be for a period equal to
the unexpired term of the Prior Option (as defined in Paragraph 15 hereof) but
in no event greater than ten (10) years from the Date of Grant, subject to
earlier termination or cancellation as provided herein and in the Plan.
4. Exercise of the Option. Subject to the provisions of Paragraph 14 of
this Agreement and the Shareholder's Agreement referenced therein, this Option
shall be exercisable, after the expiration of one (1) year from the Date of
Grant, in installments (subject to the right of accumulation described below) so
that this Option shall be exercisable for 5.0% of the aggregate number of shares
provided in Paragraph I hereof during each calendar quarter during the term
hereof commencing on the last day of the first completed calendar quarter
following the Date of Grant until the end of twenty (20) calendar quarters.
[NOTE: CHANGE TO 6.25% AND 16 CALENDAR QUARTERS FOR GRANTS THAT VEST IN FOUR
YEARS.] To the extent an installment is not exercised during the time stated,
such installment shall accumulate and be exercisable, in whole or in part, in
any subsequent period during the term of this Option. No fractional shares may
be issued pursuant to the exercise of this Option. Furthermore, the exercise of
this Option shall be subject to the condition that if at any time the Company
shall determine, in its sole discretion, that the satisfaction of withholding
tax or other withholding liabilities, or that the listing, registration, or
qualification of any share otherwise deliverable upon such exercise upon any
national securities exchange or under any state or federal law, or that the
report to, or consent or approval of, any regulatory body, is necessary or
desirable as a condition of, or in
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connection with, such exercise or the delivery or purchase of shares pursuant
hereto, then in any such event, such exercise shall not be effective unless such
withholding, listing, registration, qualification, report, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Company.
5. Notice of Election. Subject to the terms and conditions hereof,
Optionee may exercise this Option by delivering written notice to the Secretary
of the Company, in person or by registered or certified mail, postage prepaid.
Such notice shall state the election to partially or totally exercise this
Option and the number of shares in respect of which it is being exercised, and
shall be signed by Optionee. Such notice shall be accompanied by payment as
provided for hereinbefore, in which event, the Company shall deliver a
certificate or certificates, as may be requested by Optionee, representing such
shares as soon as practicable after the notice and payment shall be received.
The certificate or certificates for the shares as to which the Option shall have
been exercised shall be registered as designated in the notice. In the event the
Option shall be exercised, pursuant to Paragraph 8 hereof, by any person or
persons other than the Optionee, such notice shall be accompanied by proof
deemed appropriate by the Company of the right of such person or persons to
exercise the Option. All shares that shall be purchased upon the exercise of
this Option as provided herein shall be fully paid and non-assessable.
6. Non-Transferability. During the lifetime of Optionee, this Option
shall be exercisable only by Optionee. This Option shall not be assignable or
transferable by Optionee, voluntarily or by operation of law, other than by will
or by laws of descent and distribution. Neither this Option nor the shares
covered hereby shall be pledged or hypothecated in any way. Neither this Option
nor the shares covered hereby shall be subject to execution, attachment, or
similar process except with the prior written consent of the Board.
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7. Termination of Employment. In the event that Optionee shall at any
time hereafter cease to be an employee of the Company for any reason other than
his death, retirement or permanent disability, any part of the Option granted
hereunder which has not been exercised by the date of such cessation shall
immediately terminate on the date of such cessation. In the event that
Optionee's employment with the Company shall terminate by reason of his
retirement or permanent disability, the Option may be exercised, to the extent
of the shares with respect to which the Option could have been exercised by
Optionee on the date of such termination prior to the date of its expiration or
three (3) months after the date of such termination, whichever occurs first.
8. Death of Optionee. If Optionee dies prior to the termination of his
right to exercise this Option in accordance with the provisions hereof without
having totally exercised the Option, the Option may be exercised, to the extent
of the shares with respect to which the Option could have been exercised by
Optionee on the date of Optionee's death, by the Optionee's estate or by the
person who acquires the right to exercise the Option by bequest, inheritance, or
by reason of the death of the Optionee, provided the Option is exercised prior
to the date of its expiration or one (1) year from the date of the Optionee's
death, whichever occurs first.
19. Adjustment. The number of shares of Common Stock covered by this
Option and the option price may be adjusted to reflect, as deemed appropriate by
the Board in its discretion, any stock dividend, stock split, share combination,
exchange of shares, recapitalization, merger, consolidation, separation,
reorganization, liquidation or the like of or by the Company. Decisions by the
Board as to what adjustments shall be made, and the extent thereof, shall be
final, binding and conclusive on Optionee.
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10. No Other Rights or Obligations. Optionee shall have no rights by
reason of this Option as a stockholder with respect to any shares covered hereby
until the date of the issuance of one or more stock certificates to him for such
shares pursuant to the due exercise of the Option. The granting of this Option
shall not confer on Optionee any continued right of employment with or service
to the Company or any additional rights other than as expressly provided for
herein. There is no obligation upon Optionee to exercise this Option or any part
thereof.
11. Subject to Plan. This Option is subject to all of the terms and
conditions of the Company's 1987 Stock Option Plan, as amended (and as amended
hereafter if the Plan is amended hereafter). In the event of any conflict
between such terms and conditions and those set forth herein, the terms of the
Plan shall govern and be determinative. Unless otherwise defined herein, each
capitalized term used herein shall have the same meaning given such term in the
Plan.
12. Incentive Stock Option. This Option is not intended to qualify as an
"incentive stock option" under the Internal Revenue Code of 1986, as amended,
and applicable regulations and rulings promulgated thereunder, and shall not be
so construed.
13. Amendment. The Board shall have the right, without the consent or
approval of the Optionee, to amend, modify, limit or terminate this Option or
any term or provision hereof. Any such action by the Board shall be final and
binding on Optionee. Neither this Option nor any term or provision hereof may be
amended, supplemented, waived or modified orally, but only by an instrument in
writing signed by a duly authorized officer of the Company.
14. Shareholder's Agreement. The exercise of this Option is expressly
conditioned upon the prior or contemporaneous execution by the Optionee and the
Company of a Shareholder's Agreement as provided in the Plan. All rights of the
Optionee and his heirs, successors and assigns, shall be determined by such
agreement and the Optionee and his heirs,
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successors and assigns shall be bound thereby. The shares of Common Stock issued
pursuant to the exercise hereof shall not be deemed to be issued pursuant to a
"fully vested stock option" and shall be subject to the repurchase rights as
provided in such agreement.
15. Cancellation of Prior Option. The grant of this Option is expressly
conditioned upon, and Optionee by his signature hereto, acknowledges, the
cancellation of that certain option (the "Prior Option") granted to Optionee on
_____________, 199__, covering ________ shares of Common Stock of the Company
with an exercise price of $________ per share. Optionee agrees to deliver to the
Company the original document evidencing the Prior Option, but the cancellation
of the Prior Option shall be effective regardless of whether or not such
delivery is made by Optionee.
IN WITNESS WBEREOF, Dallas Semiconductor Corporation and Optionee have
executed this Non-Qualified Stock Option Agreement as of the date first above
written.
Address for Notices: DALLAS SEMICONDUCTOR CORPORATION
4401 South Beltwood Parkway By:
Dallas, Texas 75244 -----------------------------
Title:
-----------------------------
----------------------------------- -----------------------------------
Optionee
-----------------------------------
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49
Form of Stock Option Agreement used in 1998 in connection with "repricing" of
options under the 1987 Stock Option Plan to non-employee directors
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NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (the "Agreement") is made and
entered into this 5th day of October, 1998 (the "Date of Grant") (October 4
being a non-business day), by and between DALLAS SEMICONDUCTOR CORPORATION, a
Delaware corporation (the "Company"), and Richard L. King, a director of the
Company ("Optionee").
WHEREAS, the Company's 1987 Stock Option Plan, as amended (the "Plan")
provides for the automatic annual grant of options to purchase shares of the
Company's Common Stock, par value $.02 per share (the "Common Stock") to certain
of the Company's non-employee directors, as hereinafter provided, in furtherance
of the purposes of the Plan;
NOW, THEREFORE, in consideration of the covenants herein set forth, the
parties hereto have agreed and do hereby agree as follows:
1. Grant of Option. Subject to the provisions of Paragraph 16 hereof,
the Company hereby confirms the automatic grant to Optionee, pursuant to Section
7(b) of the Plan, of an option (the "Option") to purchase all or any part of
10,000 shares of the Common Stock of the Company on the terms and conditions
herein set forth.
2. Purchase Price. The purchase price of each share of Common Stock
subject to this Option shall be $23.75 per share. Full payment for shares
purchased upon exercise of this Option shall be made in cash or by check, or by
delivery of previously owned shares of Common Stock, or partly in cash or such
check and partly in such stock. The value of shares of Common Stock delivered in
connection with the payment of the option price shall be the fair market value
of such shares as determined by the Board of Directors of the Company (the
"Board") and such
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determinations shall be binding upon the Optionee. No shares may be issued until
full payment of the purchase price therefor has been made.
3. Term of Option. The term of the Option shall be for a period equal to
the unexpired term of the Prior Option (as defined in Paragraph 16 hereof but in
no event greater than ten (10) years from the Date of Grant, subject to earlier
termination or cancellation as provided herein.
4. Exercise of the Option. This Option shall be exercisable, after the
expiration of one (1) year from the Date of Grant, in installments (subject to
the right of accumulation described below) so that this Option shall be
exercisable for 6.25% of the aggregate number of shares provided in Paragraph 1
hereof during each calendar quarter during the term hereof, commencing on the
last day of the first completed calendar quarter following the Date of Grant
(until it shall become fully vested at the end of sixteen (16) calendar
quarters). To the extent an installment is not exercised during the time stated,
such installment shall accumulate and be exercisable, in whole or in part, in
any subsequent period during the term of this Option. No fractional shares may
be issued pursuant to the exercise of this Option. Furthermore, the exercise of
this Option shall be subject to the condition that if at any time the Company
shall determine, in its sole discretion, that the satisfaction of withholding
tax or other withholding liabilities, or that the listing, registration, or
qualification of any share otherwise deliverable upon such exercise upon any
national securities exchange or under any state or federal law, or that the
report to, or consent or approval of, any regulatory body, is necessary or
desirable as a condition of, or in connection with, such exercise or the
delivery or purchase of shares pursuant hereto, then in any such event, such
exercise shall not be effective unless such withholding, listing, registration,
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qualification, report, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Company.
5. Notice of Election. Subject to the terms and conditions hereof,
Optionee may exercise this Option by delivering written notice to the Secretary
of the Company, in person or by registered or certified mail, postage prepaid.
Such notice shall state the election to partially or totally exercise this
Option and the number of shares in respect of which it is being exercised, and
shall be signed by Optionee. Such notice shall be accompanied by payment as
provided for hereinbefore, in which event, the Company shall deliver a
certificate or certificates, as may be requested by Optionee, representing such
shares as soon as practicable after the notice and payment shall be received.
The certificate or certificates for the shares as to which the Option shall have
been exercised shall be registered as designated in the notice. In the event the
Option shall be exercised, pursuant to Paragraph 9 hereof, by any person or
persons other than the Optionee, such notice shall be accompanied by proof
deemed appropriate by the Company of the right of such person or persons to
exercise the Option. All shares that shall be purchased upon the exercise of
this Option as provided herein shall be fully paid and non-assessable.
6. Tax Benefit Right. The Compensation Committee (the "Committee") of
the Board may, in its sole discretion, at any time prior to the exercise of this
Option, grant to Optionee a bonus in an amount in cash not to exceed the then
existing maximum statutory Federal income tax rate (including any surtax or
similar charge or assessment) for individual taxpayers multiplied by the amount
of ordinary income, if any, realized by Optionee for Federal income tax purposes
as a result of the exercise of this Option. Any such payment, if granted, shall
be made by the Company upon the due date for such taxes in the form of a check
payable to the Internal Revenue Service for the account of Optionee, or in such
other manner as the Committee in its sole discretion may
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determine. Any such payment shall otherwise be made upon such terms and
conditions as may from time to time be determined by the Committee and such
right shall be subject to limitation (as to term, amount, or otherwise) and to
cancellation at any time by the Committee, in its sole discretion.
7. Company Loan. (a) Subject to the provisions of subparagraph (b)
below, upon request of Optionee made at least three (3) business days prior to
the intended exercise date, the Company may (on such exercise date) loan to
Optionee an amount equal to the excess of the aggregate option price of the
Common Stock which Optionee is then electing to purchase pursuant to the
exercise of this Option, or any part hereof, over the aggregate par value of
such Common Stock, less any other consideration delivered by Optionee upon such
exercise, provided that Optionee shall execute a promissory note for such
amount, payable to the order of the Company, in such form as is in accordance
with the provisions of the Plan and as is otherwise satisfactory to the
Committee.
(b) The Company shall have an obligation to make a loan to Optionee only
if the Committee shall have determined, in its sole discretion prior to the
exercise date, that such loan should be made, but shall have no such obligation
if the Committee shall have thereafter canceled or suspended the operation of
the loan provisions of the Plan, or if the loan and/or other loans to be made at
such time would exceed any limit on the maximum amount of loans that may be made
under the Plan established from time to time by the Committee in its discretion.
(c) Such loan shall further be conditioned upon the delivery by Optionee
of such collateral as may be required by the Committee and the execution by
Optionee of such stock powers or other instruments which the Committee may deem
necessary or advisable in connection with such loan and creation of such
security interest.
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8. Transferability. Other than by will or by laws of descent and
distribution, this Option shall be assignable or transferable by Optionee, only
if and under terms and conditions approved by the Board in its sole discretion.
Neither this Option nor the shares covered hereby shall be pledged or
hypothecated in any way. Neither this Option nor the shares covered hereby shall
be subject to execution, attachment, or similar process except with the prior
written consent of the Board.
9. Termination of Directorship. In the event that Optionee shall at any
time hereafter cease to be a director of the Company for any reason, including,
but not limited to, his retirement, permanent disability or death, any part of
the Option granted hereunder which has not been exercised by the date of such
cessation shall, on the date of such cessation, become immediately exercisable
and may be exercised by Optionee, or by the Optionee's estate or by the person
who acquires the right to exercise the Option by bequest, inheritance, or by
reason of the death of the Optionee, provided the Option is exercised prior to
the date of its expiration.
10. Adjustments. The number of shares of Common Stock covered by this
Option and the option price may be adjusted to reflect, as deemed appropriate by
the Board in its discretion, any stock dividend, stock split, share combination,
exchange of shares, recapitalization, merger, consolidation, separation,
reorganization, liquidation or the like of or by the Company. Decisions by the
Board as to what adjustments shall be made, and the extent thereof, shall be
final, binding and conclusive on Optionee.
11. No Other Rights or Obligations. Optionee shall have no rights by
reason of this Option as a stockholder with respect to any shares covered hereby
until the date of the issuance of one or more stock certificates to him for such
shares pursuant to the due exercise of the Option. The granting of this Option
shall not confer on Optionee any continued right of service or tenure
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as a director of the Company or any additional rights other than as expressly
provided for herein. There is no obligation upon Optionee to exercise this
Option or any part thereof.
12. Option to Control. In the event of any conflict between the terms
and conditions of the Plan and those set forth herein, the terms of this Option
shall govern and be determinative.
13. Incentive Stock Option. This Option is not intended to qualify as an
"incentive stock option" under the Internal Revenue Code of 1986, as amended,
and applicable regulations and rulings promulgated thereunder, and shall not be
so construed.
14. Amendment. The Board shall have the right, without the consent or
approval of the Optionee, to amend, modify, limit or terminate this Option or
any term or provision hereof Any such action by the Board shall be final and
binding on Optionee.
15. Defined Terms. Unless otherwise defined herein, the capitalized
terms used herein shall have the same meaning given to such terms in the Plan.
16. Cancellation of Prior Option. The grant of this Option is expressly
conditioned upon, and Optionee by his signature hereto, acknowledges, the
cancellation of that certain option (the "Prior Option") granted to Optionee on
October 3, 1997, covering 10,000 shares of Common Stock of the Company with an
exercise price of $47.625 per share. Optionee agrees to deliver to the Company
the original document evidencing the Prior Option, but the cancellation of the
Prior Option shall be effective regardless of whether or not such delivery is
made by Optionee.
IN WITNESS WHEREOF, Dallas Semiconductor Corporation and Optionee have
executed this Non-Qualified Stock Option Agreement as of the date first above
written.
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Address for Notices: DALLAS SEMICONDUCTOR CORPORATION
4401 South Beltwood Parkway
Dallas, Texas 75244 By:
-------------------------------------
C. V. Prothro
Chairman of the Board, President
and Chief Executive Officer
809 Jeffrey Court ----------------------------------------
P. O. Box 4251 Richard L. King, Optionee
Incline Village, Nevada 89450
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57
Form of Stock Option Agreement in use prior to 1998 for automatic grants under
the 1987 Stock Option Plan to non-employee directors
57
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NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (the "Agreement") is made and
entered into this 4th day of October, 1996 (the "Date of Grant"), by and between
DALLAS SEMICONDUCTOR CORPORATION, a Delaware corporation (the "Company"), and
________________________ a director of the Company ("Optionee").
WHEREAS, the Company's 1987 Stock Option Plan, as amended (the "Plan")
provides for the automatic annual grant of options to purchase shares of the
Company's Common Stock, par value $.02 per share (the "Common Stock") to certain
of the Company's non-employee directors, as hereinafter provided, in furtherance
of the purposes of the Plan;
NOW, THEREFORE, in consideration of the covenants herein set forth, the
parties hereto have agreed and do hereby agree as follows:
1. Grant of Option. The Company hereby confirms the automatic grant to
Optionee, pursuant to Section 7(b) of the Plan, the terms and provisions of
which Plan are incorporated herein by reference, of an option (the "Option") to
purchase all or any part of _________ shares of the Common Stock of the company
on the terms and conditions herein set forth.
2. Purchase Price. The purchase price of each share of Common Stock
subject to this Option shall be $_________ per share. Full payment for shares
purchased upon exercise of this Option shall be made in cash or by check, or by
delivery of previously owned shares of Common Stock, or partly in cash or such
check and partly in such stock. the value of shares of Common Stock delivered in
connection with the payment of the option price shall be the fair market value
of such shares as determined by the Board of Directors of the Company (the
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"Board") and such determinations shall be binding upon the Optionee. No shares
may be issued until full payment of the purchase price therefor has been made.
3. Term of Option. The term of the Option shall be for a period of ten
(10) years from the Date of Grant, subject to earlier termination or
cancellation as provided herein and in the Plan.
4. Exercise of the Option. This Option shall be exercisable in
installments (subject to the right of accumulation described below) so that this
Option shall be exercisable for 6.25% of the aggregate number of shares provided
in Paragraph 1 hereof during each calendar quarter during the term hereof,
commencing on the last day of the first completed calendar quarter following the
Date of Grant (until it shall become fully vested at the end of sixteen (16)
calendar quarters). To the extent an installment is not exercised during the
time stated, such installment shall accumulate and be exercisable, in whole or
in part, in any subsequent period during the term of this Option. No fractional
shares may be issued pursuant to the exercise of this Option. Furthermore, the
exercise of this Option shall be subject to the condition that if at any time
the Company shall determine, in its sole discretion, that the satisfaction of
withholding tax or other withholding liabilities, or that the listing,
registration, or qualification of any share otherwise deliverable upon such
exercise upon any national securities exchange or under any state or federal
law, or that the report to, or consent or approval of, any regulatory body, is
necessary or desirable as a condition of, or in connection with, such exercise
or the delivery or purchase of shares pursuant hereto, then in any such event,
such exercise shall not be effective unless such withholding, listing,
registration, qualification, report, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Company.
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5. Notice of Election. Subject to the terms and conditions hereof,
Optionee may exercise this Option by delivering written notice to the Secretary
of the Company, in person or by registered or certified mail, postage prepaid.
Such notice shall state the election to partially or totally exercise this
Option and the number of shares in respect of which it is being exercised, and
shall be signed by Optionee. Such notice shall be accompanied by payment as
provided for hereinbefore, in which event, the Company shall deliver a
certificate or certificates, as may be requested by Optionee, representing such
shares as soon as practicable after the notice and payment shall be received.
The certificate or certificates for the shares as to which the Option shall have
been exercised shall be registered as designated in the notice. In the event the
Option shall be exercised, pursuant to Paragraph 10 hereof, by any person or
persons other than the Optionee, such notice shall be accompanied by proof
deemed appropriate by the Company of the right of such person or persons to
exercise the Option. All shares that shall be purchased upon the exercise of
this Option as provided herein shall be fully paid and non-assessable.
6. Tax Benefit Right. The Compensation Committee (the "Committee") of
the Board may, in its sole discretion, at any time prior to the exercise of this
Option, grant to Optionee a bonus in an amount in cash not to exceed the then
existing maximum statutory Federal income tax rate (including any surtax or
similar charge or assessment) for individual taxpayers multiplied by the amount
of ordinary income, if any, realized by Optionee for Federal income tax purposes
as a result of the exercise of this Option. Any such payment, if granted, shall
be made by the Company upon the due date for such taxes in the form of a check
payable to the Internal Revenue Service for the account of Optionee, or in such
other manner as the Committee in its sole discretion may determine. Any such
payment shall otherwise be made upon such terms and conditions as may from time
to time be determined by the Committee and such right shall be subject to
limitation (as
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to term, amount, or otherwise) and to cancellation at any time by the Committee,
in its sole discretion.
7. Company Loan. (a) Subject to the provisions of subparagraph (b)
below, upon request of Optionee made at least three (3) business days prior to
the intended exercise date, the Company may (on such exercise date) loan to
Optionee an amount equal to the excess of the aggregate option price of the
Common Stock which Optionee is then electing to purchase pursuant to the
exercise of this Option, or any part hereof, over the aggregate par value of
such Common Stock, less any other consideration delivered by Optionee upon such
exercise, provided that Optionee shall execute a promissory note for such
amount, payable to the order of the Company, in such form as is in accordance
with the provisions of the Plan and as is otherwise satisfactory to the
Committee.
(b) The Company shall have an obligation to make a loan to Optionee only
if the Committee shall have determined, in its sole discretion prior to the
exercise date, that such loan should be made, but shall have no such obligation
if the Committee shall have thereafter canceled or suspended the operation of
the loan provisions of the Plan, or if the loan and/or other loans to be made at
such time would exceed any limit on the maximum amount of loans that may be made
under the Plan established from time to time by the Committee in its discretion.
(c) Such loan shall further be conditioned upon the delivery by Optionee
of such collateral as may be required by the Committee and the execution by
Optionee of such stock powers or other instruments which the Committee may deem
necessary or advisable in connection with such loan and creation of such
security interest.
8. Non-Transferability. During the lifetime of Optionee, this Option
shall be exercisable only by Optionee. This Option shall not be assignable or
transferable by Optionee,
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voluntarily or by operation of law, other than by will or by laws of descent and
distribution. Neither this Option nor the shares covered hereby shall be pledged
or hypothecated in any way. Neither this Option nor the shares covered hereby
shall be subject to execution, attachment, or similar process except with the
prior written consent of the Board.
9. Termination of Directorship. In the event that Optionee shall at any
time hereafter cease to be a director of the Company for any reason other than
his death or retirement, any part of the Option granted hereunder which has not
been exercised by the date of such cessation shall immediately terminate on the
date of such cessation. In the event that Optionee's services as a director of
the Company shall terminate by reason of his retirement, the Option may be
exercised, to the extent of the shares with respect to which the Option could
have been exercised by Optionee on the date of such termination prior to the
date of its expiration or three (3) months after the date of such termination,
whichever occurs first.
10. Death of Optionee. If Optionee dies prior to the termination of his
right to exercise this Option in accordance with the provisions hereof without
having totally exercised the Option, the Option may be exercised, to the extent
of the shares with respect to which the Option could have been exercised by
Optionee on the date of Optionee's death, by the Optionee's estate or by the
person who acquires the right to exercise the Option by bequest, inheritance, or
by reason of the death of the Optionee, provided the Option is exercised prior
to the date of its expiration or one (1) year from the date of the Optionee's
death, whichever occurs first.
11. Adjustments. The number of shares of Common Stock covered by this
Option and the option price may be adjusted to reflect, as deemed appropriate by
the Board in its discretion, any stock dividend, stock split, share combination,
exchange of shares, recapitalization, merger, consolidation, separation,
reorganization, liquidation or the like of or by the Company. Decisions
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by the Board as to what adjustments shall be made, and the extent thereof, shall
be final, binding and conclusive on Optionee.
12. No Other Rights or Obligations. Optionee shall have no rights by
reason of this Option as a stockholder with respect to any shares covered hereby
until the date of the issuance of one or more stock certificates to him for such
shares pursuant to the due exercise of the Option. The granting of this Option
shall not confer on Optionee any continued fight of service or tenure as a
director of the Company or any additional rights other than as expressly
provided for herein. There is no obligation upon Optionee to exercise this
Option or any part thereof.
13. Subject to Plan. This Option is subject to all of the terms and
conditions of the Company's 1987 Stock Option Plan, as amended (and as amended
hereafter if the Plan is amended hereafter). In the event of any conflict
between such terms and conditions and those set forth herein, the terms of the
Plan shall govern and be determinative.
14. Incentive Stock Option. This Option is not intended to qualify as an
"incentive stock option" under the Internal Revenue Code of 1986, as amended,
and applicable regulations and rulings promulgated thereunder, and shall not be
so construed.
15. Amendment. The Board shall have the right, without the consent or
approval of the Optionee, to amend, modify, limit or terminate this Option or
any term or provision hereof Any such action by the Board shall be final and
binding on Optionee.
16. Defined Terms. Unless otherwise defined herein, the capitalized
terms used herein shall have the same meaning given to such terms in the Plan.
IN WITNESS WHEREOF, Dallas Semiconductor Corporation and Optionee have
executed this Non-Qualified Stock Option Agreement as of the date first above
written.
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Address for Notices: DALLAS SEMICONDUCTOR CORPORATION
4401 South Beltwood Parkway By:
Dallas, Texas 75244 -------------------------------------
C. V. Prothro
Chairman of the Board, President
and Chief Executive Officer
----------------------------------------
Optionee
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Form of Stock Option Agreement used in 1998 for automatic grants under the 1987
Stock Option Plan to non-employee directors
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NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (the "Agreement") is made and
entered into this 5th day of October, 1998 (the "Date of Grant") (October 4
being a non-business day), by and between DALLAS SEMICONDUCTOR CORPORATION, a
Delaware corporation (the "Company"), and ___________, a director of the Company
("Optionee").
WHEREAS, the Company's 1987 Stock Option Plan, as amended (the "Plan")
provides for the automatic annual grant of options to purchase shares of the
Company's Common Stock, par value $.02 per share (the "Common Stock") to certain
of the Company's non-employee directors, as hereinafter provided, in furtherance
of the purposes of the Plan;
NOW, THEREFORE, in consideration of the covenants herein set forth, the
parties hereto have agreed and do hereby agree as follows:
1. Grant of Option. The Company hereby confirms the automatic grant to
Optionee, pursuant to Section 7(b) of the Plan, of an option (the "Option') to
purchase all or any part of 10,000 shares of the Common Stock of the Company on
the terms and conditions herein set forth.
2. Purchase Price. The purchase price of each share of Common Stock
subject to this Option shall be per share. Full payment for shares purchased
upon exercise of this Option shall be made in cash or by check, or by delivery
of previously owned shares of Common Stock, or partly in cash or such check and
partly in such stock. The value of shares of Common Stock delivered in
connection with the payment of the option price shall be the fair market value
of such shares as determined by the Board of Directors of the Company (the
"Board") and such determinations shall be binding upon the Optionee. No shares
may be issued until full payment of the purchase price therefor has been made.
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3. Term of Option. The term of the Option shall be for a period of ten
(10) years from the Date of Grant, subject to earlier termination or
cancellation as provided herein.
4. Exercise of the Option. This Option shall be exercisable in
installments (subject to the right of accumulation described below) so that this
Option shall be exercisable for 6.25% of the aggregate number of shares provided
in Paragraph 1 hereof during each calendar quarter during the term hereof,
commencing on the last day of the first completed calendar quarter following the
Date of Grant (until it shall become fully vested at the end of sixteen (16)
calendar quarters). To the extent an installment is not exercised during the
time stated, such installment shall accumulate and be exercisable, in whole or
in part, in any subsequent period during the term of this Option. No fractional
shares may be issued pursuant to the exercise of this Option. Furthermore, the
exercise of this Option shall be subject to the condition that if at any time
the Company shall determine, in its sole discretion, that the satisfaction of
withholding tax or other withholding liabilities, or that the listing,
registration, or qualification of any share otherwise deliverable upon such
exercise upon any national securities exchange or under any state or federal
law, or that the report to, or consent or approval of, any regulatory body, is
necessary or desirable as a condition of, or in connection with, such exercise
or the delivery or purchase of shares pursuant hereto, then in any such event,
such exercise shall not be effective unless such withholding, listing,
registration, qualification, report, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Company.
5. Notice of Election. Subject to the terms and conditions hereof,
Optionee may exercise this Option by delivering written notice to the Secretary
of the Company, in person or by registered or certified mail, postage prepaid.
Such notice shall state the election to partially or totally exercise this
Option and the number of shares in respect of which it is being exercised, and
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shall be signed by Optionee. Such notice shall be accompanied by payment as
provided for hereinbefore, in which event, the Company shall deliver a
certificate or certificates, as may be requested by Optionee, representing such
shares as soon as practicable after the notice and payment shall be received.
The certificate or certificates for the shares as to which the Option shall have
been exercised shall be registered as designated in the notice. In the event the
Option shall be exercised, pursuant to Paragraph 9 hereof, by any person or
persons other than the Optionee, such notice shall be accompanied by proof
deemed appropriate by the Company of the right of such person or persons to
exercise the Option. All shares that shall be purchased upon the exercise of
this Option as provided herein shall be fully paid and non-assessable.
6. Tax Benefit Right. The Compensation Committee (the "Committee") of
the Board may, in its sole discretion, at any time prior to the exercise of this
Option, grant to Optionee a bonus in an amount in cash not to exceed the then
existing maximum statutory Federal income tax rate (including any surtax or
similar charge or assessment) for individual taxpayers multiplied by the amount
of ordinary income, if any, realized by Optionee for Federal income tax purposes
as a result of the exercise of this Option. Any such payment, if granted, shall
be made by the Company upon the due date for such taxes in the form of a check
payable to the Internal Revenue Service for the account of Optionee, or in such
other manner as the Committee in its sole discretion may determine. Any such
payment shall otherwise be made upon such terms and conditions as may from time
to time be determined by the Committee and such right shall be subject to
limitation (as to term, amount, or otherwise) and to cancellation at any time by
the Committee, in its sole discretion.
7. Company Loan. (a) Subject to the provisions of subparagraph (b)
below, upon request of Optionee made at least three (3) business days prior to
the intended exercise date, the
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Company may (on such exercise date) loan to Optionee an amount equal to the
excess of the aggregate option price of the Common Stock which Optionee is then
electing to purchase pursuant to the exercise of this Option, or any part
hereof, over the aggregate par value of such Common Stock, less any other
consideration delivered by Optionee upon such exercise, provided that Optionee
shall execute a promissory note for such amount, payable to the order of the
Company, in such form as is in accordance with the provisions of the Plan and as
is otherwise satisfactory to the Committee.
(b) The Company shall have an obligation to make a loan to Optionee only
if the Committee shall have determined, in its sole discretion prior to the
exercise date, that such loan should be made, but shall have no such obligation
if the Committee shall have thereafter canceled or suspended the operation of
the loan provisions of the Plan, or if the loan and/or other loans to be made at
such time would exceed any limit on the maximum amount of loans that may be made
under the Plan established from time to time by the Committee in its discretion.
(c) Such loan shall further be conditioned upon the delivery by Optionee
of such collateral as may be required by the Committee and the execution by
Optionee of such stock powers or other instruments which the Committee may deem
necessary or advisable in connection with such loan and creation of such
security interest.
8. Transferability. Other than by will or by laws of descent and
distribution, this Option shall be assignable or transferable by Optionee, only
if and under terms and conditions approved by the Board in its sole discretion.
Neither this Option nor the shares covered hereby shall be pledged or
hypothecated in any way. Neither this Option nor the shares covered hereby shall
be subject to execution, attachment, or similar process except with the prior
written consent of the Board.
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9. Termination of Directorship. In the event that Optionee shall at any
time hereafter cease to be a director of the Company for any reason, including,
but not limited to, his retirement, permanent disability or death, any part of
the Option granted hereunder which has not been exercised by the date of such
cessation shall, on the date of such cessation, become immediately exercisable
and may be exercised by Optionee, or by the Optionee's estate or by the person
who acquires the right to exercise the Option by bequest, inheritance, or by
reason of the death of the Optionee, provided the Option is exercised prior to
the date of its expiration.
10. Adjustments. The number of shares of Common Stock covered by this
Option and the option price may be adjusted to reflect, as deemed appropriate by
the Board in its discretion, any stock dividend, stock split, share combination,
exchange of shares, recapitalization, merger, consolidation, separation,
reorganization, liquidation or the like of or by the Company. Decisions by the
Board as to what adjustments shall be made, and the extent thereof, shall be
final, binding and conclusive on Optionee.
11. No Other Rights or Obligations. Optionee shall have no rights by
reason of this Option as a stockholder with respect to any shares covered hereby
until the date of the issuance of one or more stock certificates to him for such
shares pursuant to the due exercise of the Option. The granting of this Option
shall not confer on Optionee any continued right of service or tenure as a
director of the Company or any additional rights other than as expressly
provided for herein. There is no obligation upon Optionee to exercise this
Option or any part thereof.
12. Option to Control. In the event of any conflict between the terms
and conditions of the Plan and those set forth herein, the terms of this Option
shall govern and be determinative.
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13. Incentive Stock Option. This Option is not intended to qualify as an
"incentive stock option" under the Internal Revenue Code of 1986, as amended,
and applicable regulations and rulings promulgated thereunder, and shall not be
so construed.
14. Amendment. The Board shall have the right, without the consent or
approval of the Optionee, to amend, modify, limit or terminate this Option or
any term or provision hereof. Any such action by the Board shall be final and
binding on Optionee.
15. Defined Terms. Unless otherwise defined herein, the capitalized
terms used herein shall have the same meaning given to such terms in the Plan.
IN WITNESS WHEREOF, Dallas Semiconductor Corporation and Optionee have
executed this Non-Qualified Stock Option Agreement as of the date first above
written.
Address for Notices: DALLAS SEMICONDUCTOR CORPORATION
4401 South Beltwood Parkway By:
Dallas, Texas 75244 -------------------------------------
C. V. Prothro
Chairman of the Board, President
and Chief Executive Officer
----------------------------------------
Optionee
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Form of Stock Option Agreement under the 1993 Officer and Directors Stock Option
Plan used for July 1999 grants to non-employee directors and the Corporate
Secretary
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STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is made and entered into
this 21st day of July, 1999 (the "Date of Grant"), by and between DALLAS
SEMICONDUCTOR CORPORATION, a Delaware corporation (the "Company"), and M. D.
Sampels, a director of the Company ("Optionee").
WHEREAS, the Company's 1993 Officer and Director Stock Option Plan (the
"Plan") provides that certain officers and directors of the Company may from
time to time be granted an option to purchase shares of the Company's Common
Stock, par value $.02 per share (the "Common Stock"), as therein provided, in
furtherance of the purposes of the Plan.
NOW, THEREFORE, in consideration of the covenants herein set forth, the
parties hereto have agreed and do hereby agree as follows:
1. GRANT OF OPTION. The Company hereby grants to Optionee, pursuant to
Section 5 of the Plan, an option (the "Option") to purchase all or any part of
30,000 shares of the Common Stock of the Company on the terms and conditions
herein set forth.
2. PURCHASE PRICE. The purchase price of each share of Common Stock
subject to this Option shall be $50.5625 per share. Full payment for shares
purchased upon exercise of this Option shall be made in cash or by check, or by
delivery of previously owned shares of Common Stock, or partly in cash or such
check and partly in such stock. The value of shares of Common Stock delivered in
connection with the payment of the option price shall be the fair market value
of such shares as determined by the Board of Directors of the Company (the
"Board") and such
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determinations shall be binding upon the Optionee. No shares may be issued until
full payment of the purchase price therefor has been made.
3. TERM OF OPTION. The term of the Option shall be for a period of ten
(10) years from the Date of Grant, subject to earlier termination or
cancellation as provided herein and in the Plan.
4. EXERCISE OF THE OPTION. This Option shall be exercisable in
installments (subject to the right of accumulation described below) so that this
Option shall be exercisable for 25% of the aggregate number of shares provided
in Paragraph I hereof at the end of first year of the term hereof and thereafter
shall be exercisable for 6.25% of such aggregate number of shares during each
calendar quarter during the term hereof (until it shall become fully vested at
the end of sixteen (16) calendar quarters from the Date of Grant); provided,
however, that this Option, or any unexercised portion hereof, shall become
immediately exercisable in full upon the occurrence of a Change of Control. To
the extent an installment is not exercised during the time stated, such
installment shall accumulate and be exercisable, in whole or in part, in any
subsequent period during the term of this Option. No fractional shares may be
issued pursuant to the exercise of this Option. Furthermore, the exercise of
this Option shall be subject to the condition that if at any time the Company
shall determine in its sole discretion that the satisfaction of withholding tax
or other withholding liabilities, or that the listing, registration, or
qualification of any share otherwise deliverable upon such exercise upon any
national securities exchange or under any state or federal law, or that the
report to, or consent or approval of, any regulatory body, is necessary or
desirable as a condition of, or in connection with, such exercise or the
delivery or purchase of shares pursuant thereto, then in any such event, such
exercise shall not be effective unless such
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withholding, listing, registration, qualification, report, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Company.
5. NOTICE OF ELECTION. Subject to the terms and conditions hereof,
Optionee may exercise this Option by delivering written notice to the Secretary
of the Company in person or by registered or certified mail, postage prepaid.
Such notice shall state the election to partially or totally exercise this
Option and the number of shares in respect of which it is being exercised, and
shall be signed by Optionee. Such notice shall be accompanied by payment as
provided for hereinbefore, in which event the Company shall deliver a
certificate or certificates, as may be requested by Optionee, representing such
shares as soon as practicable after the notice and payment shall be received.
The certificate or certificates for the shares as to which the Option shall have
been exercised shall be registered as designated in the notice. In the event the
Option shall be exercised, pursuant to Paragraph 10 hereto by any person or
persons other than the Optionee, such notice shall be accompanied by proof
deemed appropriate by the Company of the fight of such person or persons to
exercise the Option. All shares that shall be purchased upon the exercise of
this Option as provided herein shall be fully paid and non-assessable.
6. TAX BENEFIT RIGHT. Optionee is hereby granted a bonus in an amount in
cash not to exceed the then existing maximum statutory Federal income tax rate
(including any surtax or similar charge or assessment) for individual taxpayers
multiplied by the amount of income, if any, realized by Optionee for Federal
income tax purposes as a result of the exercise of this Option. Such payment(s)
shall be made by the Company on the exercise date(s) in the form of a check
payable to the Internal Revenue Service for the account of Optionee.(3)
--------
(3) This provision is not contained in the Corporate Secretary's Option
Agreement.
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7. COMPANY LOAN.
(a) Subject to the provisions of subparagraph (b) below, upon request of
Optionee made at least three (3) business days prior to the intended exercise
date, the Board may (on such exercise date) loan to Optionee an amount equal to
the excess of the aggregate option price of the Common Stock which Optionee is
then electing to purchase pursuant to the exercise of this Option, or any part
hereof, over the aggregate par value of such Common Stock, less any other
consideration delivered by Optionee upon such exercise, provided that Optionee
shall execute a promissory note for such amount, payable to the order of the
Company, in such form as is in accordance with the provisions of the Plan and as
is otherwise satisfactory to the Board.
(b) The Company shall have an obligation to make a loan to Optionee only
if the Board shall have determined in its sole discretion prior to the exercise
date that such loan should be made, but shall have no such obligation if the
Board shall have thereafter canceled or suspended the operation of the loan
provisions of the Plan, or if the loan and/or other loans to be made at such
time would exceed any limit on the maximum amount of loans that may be made
under the Plan established from time to time by the Board in its discretion.
(c) Such loan shall further be conditioned upon the delivery by Optionee
of such collateral as may be required by the Board and the execution by Optionee
of such stock powers or other instruments which the Board may deem necessary or
advisable in connection with such loan and creation of such security interest.
8. NON-TRANSFERABILITY. Other than by will or by laws of descent and
distribution, this Option shall be assignable or transferable by Optionee only
if and under terms and conditions approved by the Board in its sole discretion.
Neither this Option nor the shares covered hereby
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shall be pledged or hypothecated in any way. Neither this Option nor the shares
covered hereby shall be subject to the execution, attachment, or similar process
except with the prior written consent of the Board.
9. TERMINATION OF DIRECTORSHIP. In the event that Optionee shall at any
time hereafter cease to be a director of the Company for any reason, including,
but not limited to, his retirement, permanent disability or death, any part of
the Option granted hereunder which has not been exercised by the date of such
cessation shall, on the date of such cessation, become immediately exercisable
and may be exercised by Optionee, or by the Optionee's Successor, provided the
Option is exercised prior to the date of its expiration.
10. ADJUSTMENTS. The number of shares of Common Stock covered by this
Option and the option price may be adjusted to reflect, as deemed appropriate by
the Board in its discretion, any stock dividend, stock split, share combination,
exchange of shares, recapitalization, merger, consolidation, separation,
reorganization, liquidation or the like of or by the Company. Decisions by the
Board as to what adjustments shall be made, and the extent thereof, shall be
final, binding and conclusive on Optionee.
11. NO OTHER RIGHTS OR OBLIGATIONS. Optionee shall have no rights by
reason of this Option as a stockholder with respect to any shares covered
thereby until the date of the issuance of one or more stock certificates to him
for such shares pursuant to the due exercise of the Option. The granting of this
Option shall not confer on Optionee any continued right to tenure as a director
of the Company or any additional rights other than as expressly provided for
herein.' There is no obligation upon Optionee to exercise this Option or any
part thereof
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12. DEFINED TERMS. Unless otherwise defined herein, the capitalized
terms used herein shall have the same meaning given to such terms in the Plan.
IN WITNESS WHEREOF, Dallas Semiconductor Corporation and Optionee have
executed this Stock Option Agreement as of the date first above written.
Address for Notices: DALLAS SEMICONDUCTOR CORPORATION
4401 South Beltwood Parkway
Dallas, Texas 75244 By: By:
----------------------------------
C. V. Prothro
Title: /s/ C. V. Prothro
----------------------------------
Chairman of the Board, President
and Chief Executive Officer
/s/ M. D. Sampels
----------------------------------- ----------------------------------
M. D. Sampels, Optionee
-----------------------------------
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FORM OF STOCK OPTION AGREEMENT PURSUANT TO 1987 STOCK OPTION PLAN
FOR USE WITH 12-15-00 GRANTS
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (the -'Agreement") is made and
entered into this 15th day of December, 2000 (the "Date of Grant"), by and
between DALLAS SEM[ICONDUCTOR CORPORATION, a Delaware corporation (the
"Company"), and . an employee of the Company ("Optionee").
WHEREAS, the Company desires, by affording Optionee an opportunity to
purchase shares of its Common Stock, par value $.02 per share (the "Common
Stock"), as hereinafter provided, to carry out the purposes of the Dallas
Semiconductor Corporation 1987 Stock Option Plan, as amended (the "Plan");
NOW, THEREFORE, in consideration of the covenants herein set forth, the
parties hereto have agreed and do hereby agree as follows:
1 . Grant of Option. The Company hereby grants to Optionee option (the
"Option") to purchase all or any part of shares of the Common Stock of the
Company on the terms and conditions herein set forth.
2. Purchase Price. The purchase price of each share of Common Stock
subject to this Option shall be $24.6875 per share. Full payment for shares
purchased upon exercise of this Option shall be made in cash or by check, or by
delivery of previously owned shares of Common Stock, or partly in cash or such
check and partly in such stock. The value of shares of Common Stock delivered in
connection with the payment of the option price shall be the fair market value
of such shares as determined by the Board of Directors of the Company (the
"Board") and such
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determinations shall be binding upon the Optionee. No shares may be issued until
full payment of the purchase price therefor has been made.
3. Term of Option. The term of the Option shall be for a period of ten
(10) years from the Date of Grant, subject to earlier termination or
cancellation as provided herein.
4. Exercise of the Option. This Option shall be exercisable in full or
in part at any time, and from time to time, during the term hereof, in
accordance with the vesting schedule contained in the "Notice of Grant of Stock
Options and Option Agreement" attached hereto and made a part hereof. No
fractional shares may be issued pursuant to the exercise of this Option.
Furthermore, the exercise of this Option shall be subject to the condition that
if at any time the Company shall determine, in its sole discretion, that the
satisfaction of withholding tax or other withholding liabilities, or that the
listing, registration, or qualification of any share otherwise deliverable upon
such exercise upon any national securities exchange or under any state or
federal law, or that the report to, or consent or approval of, the Company's
stockholders or any regulatory body, is necessary or desirable as a condition
of, or in connection with, such exercise or the delivery or purchase of shares
pursuant hereto, then in any such event, such exercise shall not be effective
unless such withholding, listing, registration, qualification, report, consent
or approval shall have been effected or obtained free of any conditions not
acceptable to the Company.
5. Notice of Election. Subject to the terms and conditions hereof,
Optionee may exercise this Option by delivering written notice to the Secretary
of the Company, in person or by registered or certified mail, postage prepaid.
Such notice shall state the election to partially or totally exercise this
Option and the number of shares in respect of which it is being exercised, and
shall be signed by Optionee. Such notice shall be accompanied by payment as
provided for
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hereinbefore, in which event, the Company shall deliver a certificate or
certificates, as may be requested by Optionee, representing such shares as soon
as practicable after the notice and payment shall be received. The certificate
or certificates for the shares as to which the Option shall have been exercised
shall be registered as designated in the notice. In the event the Option shall
be exercised, pursuant to Paragraph 8 hereof, by any person or persons other
than the Optionee, such notice shall be accompanied by proof deemed appropriate
by the Company of the right of such person or persons to exercise the Option.
All shares that shall be purchased upon the exercise of this Option as provided
herein shall be fully paid and non-assessable.
6. Non-Transferability. Except as may otherwise be approved by the
Board, during the lifetime of Optionee, this Option shall be exercisable only by
Optionee. This Option shall not be assignable or transferable by Optionee,
voluntarily or by operation of law, other than by will or by laws of descent and
distribution. Neither this Option nor the shares covered hereby shall be pledged
or hypothecated in any way. Neither this Option nor the shares covered hereby
shall be subject to execution, attachment, or similar process except with the
prior written consent of the Board.
7. Termination of Employment. In the event that Optionee shall at any
time hereafter cease to be an employee of the Company for any reason other than
his death, retirement or permanent disability, any part of the Option granted
hereunder which has not been exercised by the date of such cessation shall
immediately terminate on the date of such cessation. In the event that
Optionee's employment with of the Company shall terminate by reason of his
retirement or permanent disability, the Option may be exercised, to the extent
of the shares with respect to which the Option could have been exercised by
Optionee on the date of such termination prior to
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the date of its expiration or three (3) months after the date of such
termination, whichever occurs first.
8. Death of Optionee. If Optionee dies prior to the termination of his
right to exercise this Option in accordance with the provisions hereof without
having totally exercised the Option, the Option may be exercised, to the extent
of the shares with respect to which the Option could have been exercised by
Optionee on the date of Optionee's death, by the Optionee's estate or by the
person who acquires the right to exercise the Option by bequest, inheritance, or
by reason of the death of the Optionee, provided the Option is exercised prior
to the date of its expiration or one (1) year from the date of the Optionee's
death, whichever occurs first.
9. Adjustments. The number of shares of Common Stock covered by this
Option and the option price may be adjusted to reflect, as deemed appropriate by
the Board in its discretion, any stock dividend, stock split, share combination,
exchange of shares, recapitalization, merger, consolidation, separation,
reorganization, liquidation or the like of or by the Company. Decisions by the
Board as to what adjustments shall be made, and the extent thereof, shall be
final, binding and conclusive on Optionee.
10. No Other Rights or Obligations. Optionee shall have no rights by
reason of this Option as a stockholder with respect to any shares covered hereby
until the date of the issuance of one or more stock certificates to Optionee for
such shares pursuant to the due exercise of the Option. The granting of this
Option shall not confer on Optionee any continued right of employment or
directorship with the Company or any additional rights other than as expressly
provided for herein. There is no obligation upon Optionee to exercise this
Option or any part thereof.
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11. Option to Control. In the event of any conflict between the terms
and conditions of the Plan (as amended and as further amended if the Plan is
amended hereafter) and those set forth herein, the terms of this Agreement shall
govern and be determinative, it being distinctly understood and agreed that
Optionee has no rights with respect to the Option granted hereby other than as
specifically set forth in this Agreement and in the Stockholder's Agreement
provided for in Paragraph 14 below.
12. Incentive Stock Option. This Option is not intended to qualify as an
"incentive Stock option7 under the Internal Revenue Code of 1986, as amended,
and applicable regulations and rulings promulgated thereunder, and shall not be
so construed.
13. Amendment. The Board shall have the right, without the consent or
approval of the Optionee, to amend, modify, limit or terminate this Option or
any term or provision hereof Any such action by the Board shall be final and
binding on Optionee.
14. Shareholders Agreement. The grant of this Option is expressly
conditioned upon the contemporaneous execution by the Optionee and the Company
of a Stockholder Agreement, as provided in the Plan. All rights of Optionee as a
stockholder and heirs, successors and assigns shall be determined by such
agreement and the Optionee and heirs, successors and assigns shall be bound
thereby, including but not limited to the repurchase rights as provided in such
agreement.
15. Defined Terms. Unless otherwise defined herein, the capitalized
terms used herein shall have the same meaning given to such terms in the Plan.
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IN WITNESS WHEREOF, Dallas Semiconductor Corporation and Optionee have
executed this Non-Qualified Stock Option Agreement as of the date first above
written.
Address for Notices: DALLAS SEMICONDUCTOR CORPORATION
4401 South Beltwood Parkway
Dallas, Texas 75244
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Form of Notice of Grant of Stock Options and Option Agreement
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-------------------------------------------------------------------------------
DALLAS SEMICONDUCTOR
NOTICE OF GRANT OF STOCK OPTIONS ID: 75 19357 15 0
AND OPTION AGREEMENT 4401 Beltwood Parkway South
Dallas, TX 75244-3292
-------------------------------------------------------------------------------
OPTION NUMBER:
PLAN:
ID:
-------------------------------------------------------------------------------
Effective , you have been granted a(n) Non-Qualified Stock Option to
buy shares of Dallas Semiconductor (the Company) stock at $ per
share.
The total option price of the shares granted is $
Shares in each period will become fully vested on the date shown.
Shares Vest Type Full Vest Expiration
------ --------- --------- ----------
--------------------------------------------------------------------------------
By your signature and the Company's signature below, you and the Company agree
that these options are granted under and governed by the terms and conditions of
the Company's Stock Option Plan as amended and the Option Agreement all of which
are attached and made a part of this document.
--------------------------------------------------------------------------------
----------------------------------- ------------------------------
Dallas Semiconductor Date
----------------------------------- ------------------------------
Date
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STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is made and entered into
this 9th day of July, 1993 (the "Date of Grant"), by and between DALLAS
SEMICONDUCTOR CORPORATION, a Delaware corporation (the "Company"), and Richard
L. King, a director of the Company ("Optionee").
WHEREAS, the Company's 1993 Officer and Director Stock Option Plan (the
"Plan") provides for the automatic grant of an option to purchase shares of the
Company's Common Stock, par value $.02 per share (the "Common Stock") to each of
the Company's non-employee directors in office on the date of adoption of the
Plan or subsequently elected, as therein provided, in furtherance of the
purposes of the Plan;
NOW, THEREFORE, in consideration of the covenants herein set forth, the
parties hereto have agreed and do hereby agree as follows:
1. Grant of Option. The Company hereby confirms the automatic grant to
Optionee, pursuant to Section 7(b) of the Plan, the terms and provisions of
which Plan are incorporated herein by reference, of an option (the "Option") to
purchase all or any part of 100,000 shares of the Common Stock of the Company on
the terms and conditions herein set forth.
2. Purchase Price. The purchase price of each share of Common Stock
subject to this Option shall be $14.75 per share. Full payment for shares
purchased upon exercise of this Option shall be made in cash or by check, or by
delivery of previously owned shares of Common Stock, or partly in cash or such
check and partly in such stock. The value of shares of Common Stock delivered in
connection with the payment of the option price shall be the fair market value
of such shares as determined by the Board of Directors of the Company (the
"Board") and such
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determinations shall be binding upon the Optionee. No shares may be issued until
full payment of the purchase price therefor has been made.
3. Term of Option. The term of the Option shall be for a period of ten
(10) years from the Date of Grant, subject to earlier termination or
cancellation as provided herein and in the Plan.
4. Exercise of the Option. Subject to the provisions of Paragraph 14
hereof, this Option shall be exercisable in installments (subject to the right
of accumulation described below) so that this Option shall be exercisable for 25
% of the aggregate number of shares provided in Paragraph 1 hereof at the end of
first year of the term hereof and thereafter shall be exercisable for 6.25% of
such aggregate number of shares during each calendar quarter during the term
hereof (until it shall become fully vested at the end of sixteen (16) calendar
quarters from the Date of Grant); provided, however, that this Option, or any
unexercised portion hereof, shall become immediately exercisable in full upon
the occurrence of a Change of Control. To the extent an installment is not
exercised during the time stated, such installment shall accumulate and be
exercisable, in whole or in part, in any subsequent period during the term of
this Option. No fractional shares may be issued pursuant to the exercise of this
Option. Furthermore, the exercise of this Option shall be subject to the
condition that if at any time the Company shall determine in its sole discretion
that the satisfaction of withholding tax or other withholding liabilities, or
that the listing, registration, or qualification of any share otherwise
deliverable upon such exercise upon any national securities exchange or under
any state or federal law, or that the report to, or consent or approval of, any
regulatory body, is necessary or desirable as a condition of, or in connection
with, such exercise or the delivery or purchase of shares pursuant hereto, then
in any such event, such exercise shall not be effective unless such withholding,
listing, registration,
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qualification, report, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Company.
5. Notice of Election. Subject to the terms and conditions hereof,
Optionee may exercise this Option by delivering written notice to the Secretary
of the Company in person or by registered or certified mail, postage prepaid.
Such notice shall state the election to partially or totally exercise this
Option and the number of shares in respect of which it is being exercised, and
shall be signed by Optionee. Such notice shall be accompanied by payment as
provided for hereinbefore, in which event, the Company shall deliver a
certificate or certificates, as may be requested by Optionee, representing such
shares as soon as practicable after the notice and payment shall be received.
The certificate or certificates for the shares as to which the Option shall have
been exercised shall be registered as designated in the notice. In the event the
Option shall be exercised, pursuant to Paragraph 10 hereof, by any person or
persons other than the Optionee, such notice shall be accompanied by proof
deemed appropriate by the Company of the right of such person or persons to
exercise the Option. All shares that shall be purchased upon the exercise of
this Option as provided herein shall be fully paid and non-assessable.
6. Tax Benefit Right. The Board may in its sole discretion at any time
prior to the exercise of this Option grant to Optionee a bonus in an amount in
cash not to exceed the then existing maximum statutory Federal income tax rate
(including any surtax or similar charge or assessment) for individual taxpayers
multiplied by the amount of income, if any, realized by Optionee for Federal
income tax purposes as a result of the exercise of this Option. Any such
payment, if granted, shall be made by the Company upon the due date for such
taxes in the form of a check payable to the Internal Revenue Service for the
account of Optionee, or in such other manner as the Board in its sole discretion
may determine. Any such payment shall otherwise be
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made upon such terms and conditions as may from time to time be determined by
the Board and such right shall be subject to limitation (as to term, amount, or
otherwise) and to cancellation at any time by the Board in its sole discretion.
Any grant of such a bonus to Optionee shall be on such terms and conditions, if
any, as may be permitted under Rule l6b-3 without adversely affecting any
requirement of such rule that the Plan be administered by disinterested persons.
7. Company Loan. (a) Subject to the provisions of subparagraph (b)
below, upon request of Optionee made at least three (3) business days prior to
the intended exercise date, the Board may (on such exercise date) loan to
Optionee an amount equal to the excess of the aggregate option price of the
Common Stock which Optionee is then electing to purchase pursuant to the
exercise of this Option, or any part hereof, over the aggregate par value of
such Common Stock, less any other consideration delivered by Optionee upon such
exercise, provided that Optionee shall execute a promissory note for such
amount, payable to the order of the Company, in such form as is in accordance
with the provisions of the Plan and as is otherwise satisfactory to the Board.
(b) The Company shall have an obligation to make a loan to Optionee only
if the Board shall have determined in its sole discretion prior to the exercise
date that such loan should be made, but shall have no such obligation if the
Board shall have thereafter canceled or suspended the operation of the loan
provisions of the Man, or if the loan and/or other loans to be made at such time
would exceed any limit on the maximum amount of loans that may be made under the
Plan established from time to time by the Board in its discretion. Any loan
hereunder to Optionee shall be on such terms and conditions, if any, as may be
permitted by Rule 16b-3 without adversely affecting any requirement of such rule
that the Plan be administered by disinterested persons.
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(c) Such loan shall further be conditioned upon the delivery by Optionee
of such collateral as may be required by the Board and the execution by Optionee
of such stock powers or other instruments which the Board may deem necessary or
advisable in connection with such loan and creation of such security interest.
8. Non-Transferability. During the lifetime of Optionee, this Option
shall be exercisable only by Optionee. This Option shall not be assignable or
transferable by Optionee, voluntarily or by operation of law, other than by will
or by laws of descent and distribution. Neither this Option nor the shares
covered hereby shall be pledged or hypothecated in any way. Neither this Option
nor the shares covered hereby shall be subject to the execution, attachment, or
similar process except with the prior written consent of the Board.
9. Termination of Directorship. In the event that Optionee shall at any
time hereafter cease to be a director of the Company by reason of his removal
from office, any part of the Option granted hereunder which has not been
exercised by the date of such removal shall immediately terminate on the date of
such removal. In the event that Optionee's services as a director of the Company
shall terminate by reason of his resignation or retirement and Optionee shall
have then served as a director of the Company for more than three (3) years, the
vesting of any unexercised portion of this Option shall immediately accelerate,
so that any such unexercised portion of this Option may thereafter be exercised
by Optionee (or in the event of his subsequent death, by his Successor), at any
time prior to the date of its expiration. In the event Optionee has not served
as a director of the Company for more than three (3) years at the time of his
resignation or retirement, he (or, in the event of his subsequent death, his
Successor) shall be entitled to exercise, at any time prior to the date of
expiration of this Option, any unexercised portion of this Option exercisable by
Optionee at the time of his resignation or retirement.
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10. Death of Optionee. If Optionee dies prior to the termination of his
right to exercise this Option in accordance with the provisions hereof without
having fully exercised the Option, the vesting of any unexercised portion of
this Option shall immediately accelerate, so that any such unexercised portion
of this Option may thereafter be exercised by the Optionee's Successor, provided
this Option is exercised prior to the date of its expiration.
11. Adjustments. The number of shares of Common Stock covered by this
Option and the option price may be adjusted to reflect, as deemed appropriate by
the Board in its discretion, any stock dividend, stock split, share combination,
exchange of shares, recapitalization, merger, consolidation, separation,
reorganization, liquidation or the like of or by the Company. Decisions by the
Board as to what adjustments shall be made, and the extent thereof, shall be
final, binding and conclusive on Optionees.
12. No Other Rights or Obligations. Optionee shall have no rights by
reason of this Option as a stockholder with respect to any shares covered hereby
until the date of the issuance of one or more stock certificates to him for such
shares pursuant to the due exercise of the Option. The granting of this Option
shall not confer on Optionee any continued right of service or tenure as a
director of the Company or any additional rights other than as expressly
provided for herein. There is no obligation upon Optionee to exercise this
Option or any part thereof.
13. Subject to Plan. This option is subject to all of the terms and
conditions of the Company's 1993 Officer & Director Stock Option Plan (and as
amended if the Plan is amended hereafter). In the event of any conflict between
such terms and conditions and those set forth herein, the terms of the Plan
shall govern and be determinative.
14. Stockholder Approval. This Option has been granted subject to the
approval of the Plan by stockholders of the Company. Notwithstanding the
provisions of Paragraph 4 hereof, this
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Option may not be exercised unless and until the Plan has been duly approved by
the stockholders of the Company.
15. Defined Terms. Unless otherwise defined herein, the capitalized
terms used herein shall have the same meaning given to such terms in the Plan.
IN WITNESS WHEREOF, Dallas Semiconductor Corporation and Optionee have
executed this Stock Option Agreement as of the date first above written.
Address for Notices: DALLAS SEMICONDUCTOR CORPORATION
4401 South Beltwood Parkway
Dallas, Texas 75244 By: /s/ /C. V. Prothro
---------------------------------
Title:
---------------------------------
Carnegie Hall Tower /s/ Richard L. King
152 West 57th St. - 18th Floor ---------------------------------
New York, New York 10019 Optionee
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STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is made and entered into
this 21st day of July, 1999 (the "Date of Grant"), by and between DALLAS
SEMICONDUCTOR CORPORATION, a Delaware corporation (the "Company"), and MARLA K.
SUGGS ("Optionee").
WHEREAS, the Company's 1993 Officer and Director Stock Option Plan (the
"Plan") provides that certain officers and directors of the Company may from
time to time be granted an option to purchase shares of the Company's Common
Stock, par value $.02 per share (the "Common Stock"), as therein provided, in
furtherance of the purposes of the Plan.
NOW, THEREFORE, in consideration of the covenants herein set forth, the
parties hereto have agreed and do hereby agree as follows:
1. GRANT OF OPTION. The Company hereby grants to Optionee an option (the
"Option") to purchase all or any part of 7,500 shares of the Common Stock of the
Company on the terms and conditions herein set forth.
2. PURCHASE PRICE. The purchase price of each share of Common Stock
subject to this Option shall be $50.5625 per share. Full payment for shares
purchased upon exercise of this Option shall be made in cash or by check, or by
delivery of previously owned shares of Common Stock, or partly in cash or such
check and partly in such stock. The value of shares of Common Stock delivered in
connection with the payment of the option price shall be the fair market value
of such shares as determined by the Board of Directors of the Company (the
"Board") and such determinations shall be binding upon the Optionee. No shares
may be issued until full payment of the purchase price therefor has been made.
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3. TERM OF OPTION. The term of the Option shall be for a period of ten
(10) years from the Date of Grant, subject to earlier termination or
cancellation as provided herein and in the Plan.
4. EXERCISE OF THE OPTION. This Option shall be exercisable in
installments (subject to the right of accumulation described below) so that this
Option shall be exercisable for 25% of the aggregate number of shares provided
in Paragraph I hereof at the end of first year of the term hereof and thereafter
shall be exercisable for 6.25% of such aggregate number of shares during each
calendar quarter during the term hereof (until it shall become fully vested at
the end of sixteen (16) calendar quarters from the Date of Grant); provided,
however, that this Option, or any unexercised portion hereof, shall become
immediately exercisable in full upon the occurrence of a Change of Control. To
the extent an installment is not exercised during the time stated, such
installment shall accumulate and be exercisable, in whole or in part, in any
subsequent period during the term of this Option. No fractional shares may be
issued pursuant to the exercise of this Option. Furthermore, the exercise of
this Option shall be subject to the condition that if at any time the Company
shall determine in its sole discretion that the satisfaction of withholding tax
or other withholding liabilities, or that the listing, registration, or
qualification of any share otherwise deliverable upon such exercise upon any
national securities exchange or under any state or federal law, or that the
report to, or consent or approval of, any regulatory body, is necessary or
desirable as a condition of, or in connection with, such exercise or the
delivery or purchase of shares pursuant thereto, then in any such event, such
exercise shall not be effective unless such withholding, listing, registration,
qualification, report, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Company.
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5. NOTICE OF ELECTION. Subject to the terms and conditions hereof,
Optionee may exercise this Option by delivering written notice to the Secretary
of the Company in person or by registered or certified mail, postage prepaid.
Such notice shall state the election to partially or totally exercise this
Option and the number of shares in respect of which it is being exercised, and
shall be signed by Optionee. Such notice shall be accompanied by payment as
provided for hereinbefore, in which event the Company shall deliver a
certificate or certificates, as may be requested by Optionee, representing such
shares as soon as practicable after the notice and payment shall be received.
The certificate or certificates for the shares as to which the Option shall have
been exercised shall be registered as designated in the notice. In the event the
Option shall be exercised, pursuant to Paragraph 10 hereof, by any person or
persons other than the Optionee, such notice shall be accompanied by proof
deemed appropriate by the Company of the right of such person or persons to
exercise the Option. All shares that shall be purchased upon the exercise of
this Option as provided herein shall be fully paid and non-assessable.
6. TAX BENEFIT RIGHT. The Board may in its sole discretion at any time
prior to the exercise of this Option grant to Optionee a bonus in an amount in
cash not to exceed the then existing maximum statutory Federal income tax rate
(including any surtax or similar charge or assessment) for individual taxpayers
multiplied by the amount of income, if any, realized by Optionee for Federal
income tax purposes as a result of the exercise of this Option. Any such
payment, if granted, shall be made by the Company upon the due date for such
taxes in the form of a check payable to the Internal Revenue Service for the
account of Optionee, or in such other manner as the Board in its sole discretion
may determine. Any such payment shall otherwise be made upon such terms and
conditions as may from time to time be determined by the Board and
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such right shall be subject to limitation (as to term, amount, or otherwise) and
to cancellation at any time by the Board in its sole discretion.
7. COMPANY LOAN. (a) Subject to the provisions of subparagraph (b)
below, upon request of Optionee made at least three (3) business days prior to
the intended exercise date, the Board may (on such exercise date) loan to
Optionee an amount equal to the excess of the aggregate option price of the
Common Stock which Optionee is then electing to purchase pursuant to the
exercise of this Option, or any part hereof, over the aggregate par value of
such Common Stock, less any other consideration delivered by Optionee upon such
exercise, provided that Optionee shall execute a promissory note for such
amount, payable to the order of the Company, in such form as is in accordance
with the provisions of the Plan and as is otherwise satisfactory to the Board.
(b) The Company shall have an obligation to make a loan to
Optionee only if the Board shall have determined in its sole discretion prior to
the exercise date that such loan should be made, but shall have no such
obligation if the Board shall have thereafter canceled or suspended the
operation of the loan provisions of the Plan, or if the loan and/or other loans
to be made at such time would exceed any limit on the maximum amount of loans
that may be made under the Plan established from time to time by the Board in
its discretion.
(c) Such loan shall further be conditioned upon the delivery by
Optionee of such collateral as may be required by the Board and the execution by
Optionee of such stock powers or other instruments which the Board may deem
necessary or advisable in connection with such loan and creation of such
security interest.
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8. NON-TRANSFERABILITY. Other than by will or by laws of descent and
distribution, this Option shall be assignable or transferable by Optionee only
if and under terms and conditions approved by the Board in its sole discretion.
Neither this Option nor the shares covered hereby shall be pledged or
hypothecated in any way. Neither this Option nor the shares covered hereby shall
be subject to the execution, attachment, or similar process except with the
prior written consent of the Board.
9. TERMINATION OF SERVICE AS CORPORATE SECRETARY. In the event that
Optionee shall at any time hereafter cease to serve as Corporate Secretary of
the Company for any reason, including, but not limited to, her retirement,
permanent disability or death, any part of the Option granted hereunder which
has not been exercised by the date of such cessation shall, on the date of such
cessation, become immediately exercisable and may be exercised by Optionee, or
by the Optionee's Successor, provided the Option is exercised prior to the date
of its expiration.
10. ADJUSTMENTS. The number of shares of Common Stock covered by this
Option and the option price may be adjusted to reflect, as deemed appropriate by
the Board in its discretion, any stock dividend, stock split, share combination,
exchange of shares, recapitalization, merger, consolidation, separation,
reorganization, liquidation or the like of or by the Company. Decisions by the
Board as to what adjustments shall be made, and the extent thereof, shall be
final, binding and conclusive on Optionee.
11. NO OTHER RIGHTS OR OBLIGATIONS. Optionee shall have no rights by
reason of this Option as a stockholder with respect to any shares covered
thereby until the date of the issuance of one or more stock certificates to her
for such shares pursuant to the due exercise of the Option. The granting of this
Option shall not confer on Optionee any continued right to employment or
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tenure as an officer of the Company or any additional rights other than as
expressly provided for herein. There is no obligation upon Optionee to exercise
this Option or any part thereof.
12. DEFINED TERMS. Unless otherwise defined herein, the capitalized
terms used herein shall have the same meaning given to such terms in the Plan.
IN WITNESS WHEREOF, Dallas Semiconductor Corporation and Optionee have
executed this Stock Option Agreement as of the date first above written.
Address for Notices: DALLAS SEMICONDUCTOR CORPORATION
4401 South Beltwood Parkway
Dallas, Texas 75244 By: By: /s/ C. V. Prothro
----------------------------------
C. V. Prothro
Title:
----------------------------------
Chairman of the Board, President
and Chief Executive Officer
501 Brian Drive /s/ Marla K. Suggs
------------------------------ ----------------------------------------
Marla K. Suggs, Optionee
Grand Prairie, TX 75052
------------------------------
Address of Optionee
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EX-10.28
16
f75694ex10-28.txt
EXHIBIT 10.28
1
EXHIBIT 10.28
DALLAS SEMICONDUCTOR CORPORATION
EXECUTIVES RETIREE MEDICAL PLAN
(EFFECTIVE OCTOBER 1, 1999)
1
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TABLE OF CONTENTS
PAGE
----
ARTICLE I - INTRODUCTION.....................................................................1
1.1 Purpose of Plan...............................................................1
1.2 Medical Care Plan Status......................................................1
ARTICLE II - DEFINITIONS.....................................................................2
2.1 "Administrator"...............................................................2
2.2 "Board".......................................................................2
2.3 "Board Member"................................................................2
2.4 "Code"........................................................................2
2.5 "Covered Dependent"...........................................................2
2.6 "Creditable Coverage".........................................................2
2.7 "Dependent"...................................................................3
2.8 "Director"....................................................................3
2.9 "Effective Date"..............................................................3
2.10 "Eligible Employee"...........................................................3
2.11 "Eligible Individual".........................................................3
2.12 "Eligible Retiree"............................................................3
2.13 "Employer"....................................................................3
2.14 "Enrollment Date".............................................................3
2.15 "Enrollment Period"...........................................................4
2.16 "ERISA".......................................................................4
2.17 "Excepted Benefits":..........................................................4
2.18 "FMLA"........................................................................5
2.19 "Genetic Information".........................................................5
2.20 "Health Status - Related Factor"..............................................5
2.21 "Late Enrollee"...............................................................5
2.22 "Manager".....................................................................5
2.23 "Military Leave"..............................................................5
2.24 "Officer".....................................................................5
2.25 "Participant".................................................................6
2.26 "Participating Employer"......................................................6
2.27 "Placed for Adoption".........................................................6
2.28 "Plan"........................................................................6
2.29 "Plan Year"...................................................................6
2.30 "Policy"......................................................................6
2.31 "Pre-existing Condition"......................................................6
2.32 "Pre-existing Condition Exclusion"............................................6
2.33 "Qualified Medical Child Support Order".......................................6
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2.34 "Qualified Medical Expense"...................................................6
2.35 "Retirement" and "Retire".....................................................7
2.36 "Sponsor".....................................................................7
2.37 "Spouse"......................................................................7
2.38 "USERRA"......................................................................7
2.39 "Waiting Period"..............................................................7
ARTICLE III - PARTICIPATION..................................................................7
3.1 Eligibility to Participate....................................................7
3.2 Commencement of Participation.................................................8
3.3 Cessation of Participation....................................................8
3.4 USERRA Reinstatement Rules....................................................9
3.5 FMLA Compliance...............................................................9
3.6 Reinstatement of Former Participant..........................................10
3.7 No Eligibility Discrimination Due to Health..................................10
3.8 Special Enrollments..........................................................10
ARTICLE IV - ELECTION TO RECEIVE MEDICAL CARE BENEFITS......................................11
4.1 Election of Benefit Options..................................................11
4.2 Election Procedure...........................................................12
4.3 No Premium Discrimination Due to Health......................................12
ARTICLE V - MEDICAL CARE BENEFITS...........................................................12
5.1 Benefits.....................................................................12
5.2 Pre-existing Conditions......................................................12
5.3 Notification of Enrollment Rights............................................14
5.4 Newborns' and Mothers' Health Protection Act of 1996.........................14
5.5 Mental Health Parity Act of 1996.............................................14
5.6 Women's Health and Cancer Rights Act of 1998.................................15
ARTICLE VI - PAYMENT OF MEDICAL CARE EXPENSE REIMBURSEMENTS.................................15
6.1 Claims Procedure.............................................................15
6.2 Reimbursement of Expenses....................................................15
ARTICLE VII - COORDINATION OF BENEFITS......................................................15
7.1 Explanation..................................................................15
7.2 Definitions..................................................................16
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7.3 Coordination of Benefits Procedure...........................................16
7.4 Existence of Other Group Plans...............................................18
7.5 Recovery and Payment of Benefits.............................................18
7.6 Coordination with Medicare, Medicaid and CHAMPUS.............................19
7.7 Subrogation..................................................................20
ARTICLE VIII - TERMINATION OF PARTICIPATION.................................................21
8.1 Limitation on Covered Expenses...............................................21
8.2 Date of Policy Coverage Termination..........................................21
ARTICLE IX - CONTINUATION COVERAGE UNDER "COBRA"............................................22
9.1 Special Definitions..........................................................22
9.2 Entitlement to Continuation Coverage.........................................23
9.3 Notice Required..............................................................23
9.4 Election of Continuation Coverage............................................24
9.5 Premiums.....................................................................24
9.6 Period of Continuation Coverage..............................................24
9.7 Expiration of Continuation Coverage..........................................26
ARTICLE X - FUNDING.........................................................................26
ARTICLE XI - ADMINISTRATION.................................................................27
11.1 Named Fiduciary..............................................................27
11.2 Allocation of Fiduciary Responsibilities.....................................27
11.3 Records......................................................................27
11.4 Appointment of Committee.....................................................28
11.5 Actions of Committee.........................................................28
11.6 Other Powers and Duties of the Administrator.................................28
11.7 Indemnification..............................................................29
11.8 Reliance on Tables, Etc......................................................30
11.9 Claims and Review Procedures.................................................30
11.10 Participant's Responsibilities...............................................31
11.11 Missing Persons..............................................................31
11.12 Nondiscriminatory Exercise of Authority......................................31
11.13 Expenses.....................................................................31
ARTICLE XII - AMENDMENT OR TERMINATION OF PLAN..............................................32
12.1 Amendment of Plan............................................................32
12.2 Termination of Plan..........................................................32
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ARTICLE XIII - MISCELLANEOUS................................................................32
13.1 Information to be Furnished..................................................32
13.2 Limitation of Rights.........................................................32
13.3 Benefits Not Solely from Policy..............................................32
13.4 Nonassignability of Rights...................................................33
13.5 No Guarantee of Tax Consequences.............................................33
13.6 Severability.................................................................33
13.7 Construction of Terms........................................................33
13.8 Choice of Law/Jurisdiction and Venue.........................................33
13.9 No Vested Interest...........................................................33
13.10 No Guarantee of Employment...................................................33
13.11 Adoption by Successor Employer or Affiliates.................................34
13.12 Bonding......................................................................34
ARTICLE XIV - QUALIFIED MEDICAL CHILD SUPPORT ORDERS........................................34
14.1 Notification of Receipt of Child Support Order...............................34
14.2 Procedures to Determine if Medical Child Support Order is a Qualified
Medical Child Support Order..................................................35
14.3 Treatment of Alternate Recipient under Qualified Medical Child Support
Order........................................................................36
14.4 Cost of Qualified Medical Child Support Order Benefits.......................36
14.5 Qualified Medical Child Support Order and Medicaid...........................37
14.6 Payments or Reimbursements under a Qualified Medical Child Support
Order........................................................................37
14.7 Alternate Recipient..........................................................37
ARTICLE XV - POLICY.........................................................................37
ARTICLE XVI - PARTICIPATING EMPLOYERS.......................................................37
16.1 Adoption by Other Employers..................................................37
16.2 Requirements of Participating Employers......................................38
16.3 Designation of Agent.........................................................38
16.4 Transfers....................................................................38
16.5 Participating Employer's Contribution........................................38
16.6 Discontinuance of Participation..............................................38
16.7 Administrator's Authority....................................................39
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ARTICLE I
INTRODUCTION
1.1 PURPOSE OF PLAN. The purpose of this Plan is to enable the Sponsor
to provide retiree (and limited other) medical care benefits to (a) Board
Members during the term of their service as a Board Member on behalf of the
Sponsor, and (b) to Board Members and to Eligible Retirees upon their Retirement
from the employment, or service as a Board Member, as applicable, of the Sponsor
or any other Participating Employers. On the Effective Date, the Plan makes
available to Participants the medical insurance described in the Policy attached
as Exhibit A.
Board Members, Officers and Spouses are to get lifetime coverage and
benefits under this Plan. Each other Participant and his spouse are to get
coverage and benefits under the Plan until the covered individual reaches his
(or her, as appropriate) 65th birthday. Covered Dependents (other than a spouse)
of a Participant who is not a Board Member or Officer are to get coverages and
benefits until the Participant's 65th birthday.
The specific medical coverages and benefits available to Participants
are identified in the Policy. In the event a Policy is not in effect at the time
a qualifying expense was incurred, the specific medical coverages and benefits
available at that time will be those identified in the Policy most recently in
effect immediately prior to the date the expense was incurred.
Notwithstanding anything in the Plan to the contrary, the Plan is
intended to provide medical coverage and benefits without regard to whether a
Policy is in effect at a particular time. Except for the coordination of
benefits as required by ARTICLE VII, the benefits and coverages under this Plan
shall not decrease or be reduced in the aggregate or individually by more than
an immaterial amount during the life of this Plan, except as provided in SECTION
12.1 The Sponsor will select and utilize a Policy or Policies that provides
medical coverages and benefits that are not worse than the coverages and
benefits provided by Sponsor to active employees of the Sponsor outside of this
Plan at the time the Policy or Policies were selected, and in the event that it
is determined the Sponsor has attempted to reduce benefits and coverages in an
effort to circumvent the restrictions of this Section and its obligations under
the Plan, notwithstanding anything to the contrary in this Plan, (i) the Plan
shall provide, for the remainder of the Plan's existence, the most valuable
benefits and coverages the Plan provided at any time during the Plan's existence
up to that time, and (ii) the Sponsor shall obtain and maintain insurance
providing coverage and benefits at least as good as those required under this
paragraph.
1.2 MEDICAL CARE PLAN STATUS. This Plan is intended to qualify as a
"medical care plan" under sections 105 and 106 of the Code, and is to be
interpreted in a manner consistent with the requirements of sections 105 and 106
of the Code. It is intended that the value of medical coverage be excluded from
the Participants' income under Code section 106, to the extent applicable.
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The Plan is intended to satisfy all applicable requirements of the Code
and its regulations. This Plan is also intended to satisfy those requirements of
ERISA which are applicable to employee medical plans. Nothing in the Plan shall
be construed as requiring compliance with Code or ERISA provisions that do not
otherwise apply.
ARTICLE II
DEFINITIONS
Whenever used in this document, the following terms have the following
meanings unless a different meaning is clearly required by the context, and
defined terms from the Policy are incorporated in this document by reference,
but only to the extent that such terms are not inconsistent with the following
definitions:
2.1 "ADMINISTRATOR" means the Sponsor, which shall be the plan
administrator within the meaning of ERISA section 3(16).
2.2 "BOARD" means the Board of Directors of the Sponsor.
2.3 "BOARD MEMBER" means each person listed on Exhibit D to the Plan.
2.4 "CODE" means the Internal Revenue Code of 1986, as amended.
2.5 "COVERED DEPENDENT" means an individual who qualifies as a Dependent
or as a Spouse under this Plan and who was enrolled by a Participant under this
Plan when he was a Participant under this Plan.
2.6 "CREDITABLE COVERAGE" means, with respect to an individual, coverage
of the individual under any of the following:
(a) A group health plan;
(b) Health insurance coverage-,
(c) Part A or part B of title XVIII of the Social Security
Act;
(d) Title XIX of the Social Security Act, other than
coverage consisting solely of benefits under section
1928;
(e) Chapter 55 of title 10, United States Code;
(f) A medical care program of the Indian Health Service or
of a tribal organization;
(g) A State health benefits risk pool;
(h) A health plan offered under chapter 99 of title 5,
United States Code;
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(i) A public health plan (as defined in Federal
regulations);
(j) A health benefit plan under section 5(e) of the Peace
Corps Act (22 U.S.C. 2504(e); or
(k) A state uninsured children's health insurance program.
Such term does not include coverage consisting solely of coverage of
Excepted Benefits.
2.7 "DEPENDENT" means any person who is a dependent of a Participant
(including, without limitation, a Participant's spouse on the date of his
Retirement) and who satisfies the definition of "dependent" in the Policy in
effect on the date of the Participant's Retirement, or if none, in the last
Policy in effect immediately prior to the Participant's Retirement.
2.8 "DIRECTOR" means the title awarded by an Employer to employees (who
are not members of the Board) in certain job classifications as specified on its
books and records.
2.9 "EFFECTIVE DATE" means October 1, 1999, the effective date of the
Plan, except where expressly stated otherwise in this document.
2.10 "ELIGIBLE EMPLOYEE" means (i) each Officer of the Sponsor on the
Effective Date, (ii) each common-law employee of an Employer who was designated
on the books and records of the Employer as a "functionally equivalent" officer
on the Effective Date and who shared in the contribution made on June 12, 1998,
to the Dallas Semiconductor Corporation Executive Deferred Compensation Plan,
(iii) each common-law employee of an Employer, on the Effective Date, who, on
the Effective Date (or within the five (5) calendar year period preceding the
Effective Date), also held the title of Director or was the Sponsor's corporate
controller, and (iv) each common-law employee of an Employer, on the Effective
Date, who, on the Effective Date, held the position of Manager and was required
to report for operating purposes directly to the Sponsor's President and Chief
Executive Officer. Each person who was an Eligible Employee on the Effective
Date is listed on either Exhibit C or Exhibit F to the Plan.
2.11 "ELIGIBLE INDIVIDUAL" means a Board Member or an Eligible Retiree,
as appropriate, who has satisfied (i) the requirements of Article III to be
eligible to participate in the Plan, and (ii) the eligibility requirements
stated in the Policy.
2.12 "ELIGIBLE RETIREE" means an Eligible Employee who has Retired after
the Effective Date.
2.13 "EMPLOYER" means the Sponsor and each Participating Employer which
shall adopt this Plan under Article XVI.
2.14 "ENROLLMENT DATE" means the earlier of (i) the last day of an
Enrollment Period during which an Eligible Individual did not elect under
SECTION 3.2 to not be a Participant, or (ii) the first day of the period that
must pass under ARTICLE III, if any, before an Eligible Employee, Board Member
or Dependent, as appropriate, is eligible to be covered for benefits under the
Plan.
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2.15 "ENROLLMENT PERIOD" means (i) in the case of an Eligible Retiree,
the thirty (30) day period occurring after the Eligible Retiree's Retirement
during which an Eligible Retiree may refuse in writing under Section 3.2 to
participate under the Plan, and (ii) in the case of a Board Member, the thirty
(30) day period occurring immediately after the Effective Date.
2.16 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
2.17 "EXCEPTED BENEFITS" means the following:
(a) benefits not subject to the requirements regarding
Creditable Coverage:
(1) coverage only for accident or disability income
insurance or any combination thereof,
(2) coverage issued as a supplement to liability
insurance;
(3) liability insurance, including general liability
insurance and automobile liability insurance;
(4) workers' compensation or similar insurance,
(5) automobile medical payment insurance;
(6) credit-only insurance;
(7) coverage for on-site medical clinics; and
(8) other similar insurance coverage, specified in
regulations, under which benefits for medical
care are secondary or incidental to other
insurance benefits.
(b) If offered separately:
(1) limited scope dental or vision benefits;
(2) benefits for long-term care, nursing home care,
home health care, community based care, or any
combination thereof,
(3) other similar limited benefits as specified in
regulations.
(c) If offered as independent non-coordinated benefits
(separate consent or policy, no coordination of benefits
with any other plan sponsored by the employer):
(1) coverage for a specified disease or illness;
(2) hospital indemnity or other fixed indemnity
insurance.
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(d) If offered as separate insurance policy, Medicare
supplemental health insurance and similar supplemental
coverage.
2.18 "FMLA" means the Family and Medical Leave Act of 1993, as amended.
2.19 "GENETIC INFORMATION" means information about genes, gene products,
and inherited characteristics that may derive from the individual or a family
member. This includes information regarding carrier status and information
derived from laboratory tests that identify mutations in specific genes or
chromosomes, physical medical examinations, family histories, and direct
analysis of genes or chromosomes.
2.20 "HEALTH STATUS - RELATED FACTOR" means the following factors:
(a) health status,
(b) medical condition (include both physical and mental
illnesses),
(c) claims experience,
(d) receipt of health care,
(e) medical history,
(f) Genetic Information,
(g) evidence of insurability (including conditions arising
out of acts of domestic violence), and
(h) disability.
2.21 "LATE ENROLLEE" means a Participant or Covered Dependent who
enrolled under this Plan other than during his first Enrollment Period or a
Special Enrollment Period.
2.22 "MANAGER" means the title awarded by an Employer to employees in
certain job classifications as specified on its books and records.
2.23 "MILITARY LEAVE" means the absence due to the performance of duty
on a voluntary or involuntary basis under competent authority in (i) the Armed
Forces, (ii) the Army National Guard and the Air National Guard when engaged in
active duty for training, inactive duty training, or full-time National Guard
duty, (iii) the commissioned corps of the Public Health Service, and (iv) other
categories of persons designated by the President in time of war or emergency
for a period of up to thirty (30) days during which a person who previously
qualified as an employee is not employed on a full-time basis solely because the
person is engaged in active military service for the United States government.
2.24 "OFFICER" means each person listed on Exhibit C to the Plan.
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2.25 "PARTICIPANT" means any Eligible Individual who has elected to
participate in the Plan in accordance with ARTICLE III.
2.26 "PARTICIPATING EMPLOYER" means any entity which has adopted this
Plan pursuant to ARTICLE XVI.
2.27 "PLACED FOR ADOPTION" means the assumption and retention by an
Eligible Employee of a legal obligation for the total or partial support of an
individual in anticipation of adoption of a child prior to the date on which
such child attains age eighteen (18). A child's status as having been Placed for
Adoption ends on the date that the Eligible Employee's legal obligation
described in this Section ends.
2.28 "PLAN" means the Dallas Semiconductor Corporation Executives
Retiree Medical Plan, as set forth in this document, and any and all amendments,
schedules and supplements to this document.
2.29 "PLAN YEAR" means the period beginning on the Effective Date and
ending on the following December 31 and, thereafter, the fiscal year beginning
on each January 1 (starting on January 1, 2000) and ending on the following
December 31.
2.30 "POLICY" means the fully-insured medical insurance policy or
policies described on Exhibit A attached to this Plan, as such Exhibit A existed
on the Effective Date or as it may be amended in the future.
2.31 "PRE-EXISTING CONDITION" means a condition (whether physical or
mental), regardless of the cause of the condition, for which medical advice,
diagnosis, care or treatment was recommended or received within the six (6)
month period ending on the Enrollment Date.
2.32 "PRE-EXISTING CONDITION EXCLUSION" means with respect to coverage,
a limitation or exclusion of benefits relating to a condition based on the fact
that the condition was present before the date of enrollment for such coverage,
whether or not any medical advice, diagnosis, care or treatment was recommended
or received before such date. Genetic Information is not a Pre-existing
Condition in the absence of a diagnosis of the condition related to such
information.
2.33 "QUALIFIED MEDICAL CHILD SUPPORT ORDER" means any judgment, decree,
order (including a settlement agreement), administrative notice or National
Medical Support Notice (defined in section 609(a)(5)(C) of ERISA) which
satisfies the requirements set forth in ARTICLE XIV.
2.34 "QUALIFIED MEDICAL EXPENSE" means an expense incurred by a
Participant, by the Participant's spouse or by a Dependent of such Participant
for medical care as defined in Code section 213, including, without limitation,
amounts paid for hospital bills and doctor bills, but only to the extent that
(i) the Participant or other person is not reimbursed for the expense through
insurance or otherwise, other than under the Plan, and (ii) the expense is not
taken into account as a deduction by the Participant on his Internal Revenue
Service Form 1040; provided, however, that notwithstanding anything in this
document to the contrary, a Qualified Medical
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Expense shall be limited to only those expenses covered under the Policy, if a
Policy is in effect, and if no Policy is in effect so that the expense is
covered by Policy, to only those expenses covered under the Policy last in
effect immediately prior to the date the expense was incurred.
2.35 "RETIREMENT" and "RETIRE" mean (i) an Eligible Employee's
termination of employment with an Employer, voluntarily or involuntarily, after
the Effective Date when the Eligible Employee has at least (10) ten years of
employment by the Sponsor or its affiliates and has reached the age of at least
fifty (50) and (ii) an Officer's termination of employment with an Employer,
voluntarily or involuntarily, after the Effective Date when the Officer has at
least ten (10) years of employment by, and five (5) years as an Officer of, the
Sponsor or its affiliates. A Board Member shall be deemed to be Retired for
purposes of only this Plan on the Effective Date of the Plan.
2.36 "SPONSOR" means Dallas Semiconductor Corporation, a Delaware
corporation, or any successor or assign which shall adopt the Plan. Throughout
the Plan, a purposeful distinction is drawn between the Sponsor and the
Employers. The powers and responsibilities assigned to the Sponsor by the Plan
shall apply exclusively to the Sponsor, unless specifically delegated in writing
by the Sponsor.
2.37 "SPOUSE" means the wife of an Officer or of a Board Member on the
date of his Retirement. Each person who was a Spouse on the Effective Date is
listed on Exhibit E, but being listed on Exhibit E does not make an individual a
Spouse for purposes of this Plan.
2.38 "USERRA" means the Uniformed Services Employment and Reemployment
Rights Act of 1994, as amended.
2.39 "WAITING PERIOD" means with respect to a group health plan and an
individual who is a potential Participant or beneficiary in the plan, the period
that must pass with respect to the individual before the individual is eligible
to be covered for benefits under the terms of the plan. Any period of time
before a Late Enrollee enrolls under a Special Enrollment Period is not a
Waiting Period.
Special definitions used only for particular purposes are found in
ARTICLE VII and ARTICLE IX.
ARTICLE III
PARTICIPATION
3.1 ELIGIBILITY TO PARTICIPATE. Eligible Employees and Board Members
shall become Eligible Individuals on the Effective Date. No other individual may
become a Participant (or an Eligible Individual) under the Plan.
The Policy in effect on the date of a Participant's Retirement
determines (i) the Plan's Eligible Individuals, (ii) the Plan's Spouses and
(iii) those Dependents, if any, of an Eligible Individual who will be eligible
to be covered under its terms. When an Eligible Individual's
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eligible Dependents satisfy the eligibility requirements of the Policy in effect
on the date of a Participant's Retirement, those eligible Dependents shall also
be eligible to participate at that time under the Plan. If, at the date of a
Participant's Retirement, no Policy is then in effect, the Participant's
eligible Dependents shall be determined under the terms of the Policy last in
effect with respect to the Plan.
3.2 COMMENCEMENT OF PARTICIPATION. An Eligible Individual shall become a
Participant automatically when he becomes an Eligible Individual unless he
refuses in writing in a form acceptable to the Administrator that is received by
the Administrator before the Eligible Individual's Enrollment Date.
3.3 CESSATION OF PARTICIPATION. Subject to Section 12.2, a Board Member
and an Officer shall be a Participant and receive coverage under this Plan for
his life.
A Participant (other than a Board Member or an Officer) shall be a
Participant and receive coverage under the Plan until his 65th birthday and such
a Participant's spouse shall be a Covered Dependent and receive coverage under
the Plan until her 65th birthday; provided, however, that notwithstanding
anything in this Plan to the contrary, a Participant (other than a Board Member
or an Officer) shall also cease to be a Participant (and his spouse shall also
cease to be a Covered Dependent) as of the earliest of
(a) the date on which the Plan terminates as provided in
Section 12.2;
(b) the date on which the Participant (other than a Board
Member or an Officer) or his spouse fails to satisfy the
eligibility criteria of the Plan; or
(c) the date on which his election to receive medical care
under this Plan terminates or expires according to its
written terms.
Subject to Section 12.2, a Spouse shall receive coverage under the Plan
for her life.
A Covered Dependent (other than a Spouse and the spouse of a Participant
who is neither a Board Member nor an Officer) shall receive coverage under the
Plan until his or her Participant reaches his 65th birthday; provided, however,
that notwithstanding anything in this Plan to the contrary, a Covered Dependent
(other than a Spouse and the spouse of a Participant who is neither a Board
Member nor an Officer) shall also cease to be a Covered Dependent as of the
earliest of:
(a) the date on which the Plan terminates as provided in
Section 12.2;
(b) the date on which the Covered Dependent fails to satisfy
the eligibility criteria of the Plan; or
(c) the date on which his election to receive medical care
under this Plan terminates or expires according to its
written terms.
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3.4 USERRA REINSTATEMENT RULES.
(a) This Plan shall provide any health benefits otherwise
available to Eligible Employees, if any, in accordance
with USERRA and this Section, effective with respect to
Military Leaves that began on or after October 13, 1994.
(b) The maximum period of Plan coverage available to an
Eligible Employee and his Dependents under this Section
will not exceed the lesser of (i) eighteen months or
(ii) the period ending on the day after the date upon
which the person fails to apply for a return to a
position of employment under section 4312(a) of USERRA.
The period of Plan coverage available under this Section
shall begin on the date on which the person's qualifying
absence begins.
(c) Only for purposes of determining eligibility for medical
benefits and only if the Eligible Employee pays all
amounts that the Employer is permitted to charge under
USERRA for coverage while on a qualifying leave, an
Eligible Employee who experiences a reduction in hours
or termination of employment solely due to a Military
Leave shall be deemed to continue to be an employee
until the earliest date that the termination of his Plan
benefits is permitted by USERRA and this Section.
3.5 FMLA COMPLIANCE.
(a) This Plan shall provide any health benefits otherwise
available to Eligible Employees, if any, in accordance
with FMLA for Eligible Employees.
(b) Unless an Eligible Employee chose not to retain health
coverage, the Employer must maintain medical coverage
under the Plan, if any, for such an Eligible Employee on
FMLA leave for the duration of his FMLA leave, at the
level and under the conditions that coverage would have
been provided if the Eligible Employee had continued
working and had not taken a FMLA leave.
(c) An Eligible Employee on FMLA leave shall have the same
opportunity as active employees to change Plan coverage,
such as from single coverage to family coverage on the
birth of a child, as required by FMLA.
(d) The Employer's obligation to continue to maintain health
coverage under FMLA and this Section ends on the
earliest of the following dates:
(1) the date the Eligible Employee informs the
Employer of his intent not to return from a FMLA
leave;
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(2) the date the Eligible Employee's employment
relationship would be terminated but for the
FMLA leave (such as during a reduction in
force);
(3) the date the Eligible Employee fails to return
from the FMLA leave; or
(4) the date the Eligible Employee fails to pay a
required employee contribution when due.
(e) Former Participants who lose eligibility during a FMLA
leave will have their benefits reinstated upon their
return at the end of the FMLA leave at the same levels
as were provided to them under the Plan when their FMLA
leave began, but subject to any changes in benefit
levels that may have occurred during the leave that
affected the entire work force. Participants returning
from FMLA leave shall not be required to requalify for
any benefits.
3.6 REINSTATEMENT OF FORMER PARTICIPANT. A former Participant who again
meets the eligibility requirements under Section 3.1 will receive medical
coverages and benefits under the Plan and become a Participant in this Plan
again on the first day the former Participant satisfies the requirements of
Section 3. 1, unless the former Participant is (i) reinstated as a Participant
in the Plan as provided by Sections 3.4 and 3.5 or (ii) declines participation
as provided under Section 3.2.
3.7 NO ELIGIBILITY DISCRIMINATION DUE TO HEALTH. The Plan shall not
establish rules for eligibility (including continued eligibility) for any
individual under the Plan that are based on one or more Health Status-Related
Factors of the individual or his Dependent.
3.8 SPECIAL ENROLLMENTS.
(a) Notwithstanding any provision to the contrary, an
Eligible Individual or an eligible Dependent of an
Eligible Individual may elect health care coverage under
Special Enrollment, but only if
(1) the Eligible Individual (or the eligible
Dependent) was covered under a group health plan
or health insurance at the time coverage was
offered under this Plan;
(2) the Eligible Individual (or the eligible
Dependent) declined coverage under the Plan in
writing for the stated reason that he had the
other health coverage;
(3) the Eligible Individual (or the eligible
Dependent) has "Exhausted COBRA Coverage" or the
other health coverage (or the individual's
former employer's contribution toward the cost
of such coverage) has terminated; and
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(4) the Eligible Individual (or the eligible
Dependent) requests Special Enrollment under
this Section in writing within thirty (30) days
after the date he or she lost his or her other
health coverage.
For purposes of this Plan, a person shall be treated as
if they have "Exhausted COBRA Coverage" if that
individual's COBRA coverage ceased for any reason other
than either failure of the individual to pay premiums on
a timely basis or for cause (such as making a fraudulent
claim or an intentional misrepresentation of a material
fact in connection with the plan). A person has
"Exhausted COBRA Coverage" if the COBRA coverage ceases
because either (a) the employer or other responsible
entity fails to remit the premiums on a timely basis, or
(b) the individual no longer resides in the service area
of an HMO or a similar program (whether or not within
the choice of the individual) and there is no other
COBRA coverage available to the individual.
(b) Special Enrollment must be offered to Dependents if. (a)
the Plan offers Dependent coverage, (b) the Eligible
Individual is a Participant under the Plan or has met
the Waiting Period and is eligible for coverage but for
his failure to enroll during a previous enrollment
period, and (c) the Dependent became a new Dependent as
-a result of marriage, birth, adoption or being Placed
for Adoption. A thirty (30) day Special Enrollment
period shall be offered to such Dependent beginning on
the later of (i) the date Dependent coverage is made
available or (ii) the date of marriage, birth, adoption
or being Placed for Adoption, as the case may be. If a
Special Enrollment period is offered to a new Dependent
under the Plan, the Eligible Individual who has the new
Dependent may also enroll under the Plan during that
Special Enrollment period if he is not already a
Participant.
Coverage that is timely elected during a Special Enrollment period shall
be effective (i) if due to loss of coverage, on the first day of the month after
receipt of the completed enrollment request under the Plan, (ii) if due to
birth, on the date of birth, (iii) if due to adoption or being Placed for
Adoption, the date it occurred and (iv) if due to marriage, on the first day of
the month after receipt of the completed enrollment request under the Plan. A
person who enrolls during a Special Enrollment period is not a Late Enrollee.
ARTICLE IV
ELECTION TO RECEIVE MEDICAL CARE BENEFITS
4.1 ELECTION OF BENEFIT OPTIONS. An Eligible Individual shall be deemed
to have elected to receive medical care coverages and benefits under the Plan as
described in the Policy in effect on his Enrollment Date. If no Policy is in
effect on his Enrollment Date, an Eligible Individual will be deemed to have
elected to receive medical coverage and benefits under the
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Plan as described in the Policy in effect immediately prior to his Enrollment
Date. An Eligible Individual who declined participation during an Enrollment
Period will become a Participant in the subsequent Enrollment Period, if any,
during which he does not refuse to become a Participant.
4.2 ELECTION PROCEDURE. An Eligible Individual may decline to
participate in this Plan by filing a properly completed election form with the
Administrator.
4.3 NO PREMIUM DISCRIMINATION DUE TO HEALTH. The Plan shall not require
an individual (as a condition of enrollment or continued enrollment under the
Plan) to pay a premium or otherwise contribute an amount which exceeds the
amount paid by a similarly situated individual solely due to a Health Status -
Related Factor of the individual; provided, however, that the rules regarding
Health Status-Related Factors do not restrict the amount an Employer may charge
for coverage or prevent premium discounts or rebates or modified deductibles and
co-payments in return for adherence to programs of health promotion and disease
prevention.
ARTICLE V
MEDICAL CARE BENEFITS
5.1 BENEFITS. The Administrator shall offer to each Eligible Individual,
at the time he becomes eligible under ARTICLE III and at each subsequent
Enrollment Period applicable to that Eligible Individual, if any, the
opportunity to participate in the Plan. Subject to SECTION 12.1, the specific
coverages and benefits available to Participants are set forth in the Policy or
if there is no Policy, in the Policy last in effect in connection with the Plan.
The benefits and coverages under this Plan shall continue for the lifetime of
each Board Member, each Officer and each Spouse.
5.2 PRE-EXISTING CONDITIONS.
(a) PRE-EXISTING CONDITIONS. The Plan will not pay any
benefits for the care or treatment of pre-existing
conditions (as defined in the Policy) for the period of
time set forth in the Policy; provided, however, that
(i) notwithstanding anything in this Plan or any Policy
to the contrary, a pre-existing condition in the Policy
shall not include any condition that does not fall
within the definition of a Pre-existing Condition, (ii)
no pre-existing condition shall include a condition for
which Genetic Information was used as a basis for
asserting the existence of the condition if there has
been no diagnosis of the condition related to such
information, and (iii) the period during which any
exclusion or limitation of benefits (relating to a
condition based on the fact that the condition was
present before a person's Enrollment Date) in the Plan
or the Policy will be enforced shall not be longer than
the excess of twelve (12) months (eighteen (18) months
for a Late Enrollee), beginning on his Enrollment Date,
over the aggregate
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of the periods of Creditable Coverage (if any)
applicable to the Participant as of his Enrollment Date.
For purposes of this subsection, a period of Creditable
Coverage shall not be counted, with respect to
enrollment of an individual under the Plan, if, after
such period and before his Enrollment Date, there was a
63 -day period for all of which the individual was not
credited with Creditable Coverage. However, any period
that an individual is required to wait before becoming
covered under the Plan pursuant to the Policy or ARTICLE
III shall not be taken into account in determining the
continuous 63-day period described in the preceding
sentence.
The individual seeking to become a Participant and who
seeks to establish a period of Creditable Coverage must
obtain and provide to the Administrator a written
certification from the prior health insurance plan or
the prior health insurance issuer regarding each period
of Creditable Coverage of the individual under such
prior health insurance plan and COBRA continuation
provisions. Such certification should detail the Waiting
Period, if any, imposed with respect to the individual
for any coverage under such other health insurance plan.
If a written certification cannot be produced,
Creditable Coverage may be demonstrated through the
presentation of other documentation or through other
means satisfactory to the Administrator.
(b) EXCLUSION NOT APPLICABLE TO CERTAIN NEWBORNS. The Plan
shall not impose any pre-existing condition exclusion
(as defined in the Policy) in the case of an individual
who, as of the last day of the thirty (30) day period
beginning with the date of birth, is covered under
Creditable Coverage. However, this exclusion shall no
longer apply to an individual after the end of the first
63-day period during all of which the individual was not
covered under any Creditable Coverage.
(c) EXCLUSION NOT APPLICABLE TO CERTAIN ADOPTED CHILDREN.
The Plan shall not impose any pre-existing condition
exclusion (as defined in the Policy) in the case of a
child who is adopted or Placed for Adoption before
attaining eighteen (18) years of age and who, as of the
last day of the thirty (30) day period beginning on the
date of the adoption or Placement of Adoption, is
covered under Creditable Coverage. The previous sentence
shall not apply to coverage before the date of such
adoption or Placement for Adoption. However, this
exclusion shall no longer apply to an individual after
the end of the first 63-day period during all of which
the individual was not covered under any Creditable
Coverage.
(d) EXCLUSION NOT APPLICABLE TO PREGNANCY. The Plan shall
not impose any exclusion relating to pregnancy as a
pre-existing condition.
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(e) NOTICE OF CREDITABLE COVERAGE. The Administrator or its
designee shall provide written certification of
Creditable Coverage to any individual whose coverage
terminates under the Plan (i) at the time of the
Qualifying Event or other termination of coverage, (ii)
at the time COBRA coverage ceases, and (iii) upon any
written request made by an individual not later than
twenty-four (24) months after his Plan coverage ceased.
The written certification will include (i) the date the
certificate is issued, (ii) the name of the plan that
provided the coverage, (iii) the name of the participant
and/or dependents to whom the certificate applies, (iv)
the name, address, and telephone number of the plan
administrator, (v) the telephone number of the person to
contact for additional information, and (vi) either (a)
a statement that the individual has at least 18 months
of Creditable Coverage without a 63-day break in
coverage, or (b) state (A) the Waiting Period (if any)
imposed on the individual for coverage under the plan,
(B) the date coverage began, and (C) the date coverage
ended (or indicate if it is continuing).
(f) NOTICE TO INDIVIDUAL OF PRE-EXISTING CONDITION
EXCLUSION. After the Plan receives a Creditable Coverage
certificate from a prior plan, the Plan will make a
determination and notify individuals within a reasonable
period of time regarding the length of any Pre-Existing
Condition Exclusion period that applies to them. If no
Pre-Existing Condition Exclusion applies to the
individual, the Plan will not send a notice. The notice
shall explain the basis of the Plan's determination,
including the source and substance of any information
that the Plan relied on, and the Plan's appeal
procedures.
5.3 NOTIFICATION OF ENROLLMENT RIGHTS. All Eligible Individuals shall be
provided with a notice of his or her enrollment rights in writing at or before
the time the Eligible Individual elects to enroll, and such notification shall
be substantially in the same form as provided in Temp. Treas. Reg. Section
54.9801-6T(c) and Interim U.S. Department of Labor Regulation Section
2590.701-6(c).
5.4 NEWBORNS' AND MOTHERS' HEALTH PROTECTION ACT OF 1996.
Notwithstanding the precertification requirements of the Plan to the contrary,
the Plan shall provide maternity care benefits in accordance with the Newborns'
and Mothers' Health Protection Act of 1996 (the "Newborns' Act"), effective on
the date specified in the Newborns' Act. In accordance with the Newborns' Act,
the Plan shall provide benefits for a minimum of 48 hours of inpatient hospital
stay following a normal vaginal delivery and a minimum of 96 hours of inpatient
hospital stay following caesarean section delivery unless the health care
provider and the mother agree that discharge from the hospital shall occur
earlier.
5.5 MENTAL HEALTH PARITY ACT OF 1996. In accordance with the Mental
Health Parity Act of 1996, the lifetime maximum limit and the annual maximum
limit on mental health benefits under the Plan shall be at least equal to the
lifetime maximum limit and the annual
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maximum limit, respectively, for medical and surgical benefits under the Plan,
unless one or more of the exceptions set forth in the Mental Health Parity Act
of 1996 apply
5.6 WOMEN'S HEALTH AND CANCER RIGHTS ACT OF 1998. Medical and surgical
benefits provided for mastectomies under the Plan will be provided in accordance
with the Women's Health and Cancer Rights Act of 1998 (the "Women's Health
Act"). In accordance with the Women's Health Act, coverage will be provided for
the following:
(a) reconstruction of the breast on which the mastectomy has
been performed;
(b) surgery and reconstruction of the other breast to
produce a symmetrical appearance; and
(c) prostheses and coverage for any complications in all
stages of mastectomy, including lymphedema.
ARTICLE VI
PAYMENT OF MEDICAL CARE EXPENSE REIMBURSEMENTS
6.1 CLAIMS PROCEDURE. Participants and Covered Dependents seeking
benefits under the Plan shall follow the claims procedures established by the
Policy under which they are covered, if any, at the time and the procedures set
forth in SECTION 11.9. Notwithstanding the claim filing procedures established
by this Plan or the applicable Policy, the Health Care Financing Administration
shall have three years from the date a claim is filed to seek recovery of a
mistaken payment when this Plan should have paid as the "Primary Plan" and
Medicare should have paid as the "Secondary Plan" pursuant to ARTICLE VII.
6.2 REIMBURSEMENT OF EXPENSES. All Qualified Medical Expenses of a
Participant or Covered Dependent that are covered under the Policy shall be
reimbursed as set forth in the Policy.
ARTICLE VII
COORDINATION OF BENEFITS
7.1 EXPLANATION. When a Participant is covered under this Plan and by
one or more other Group Plans, the benefits of this Plan shall be coordinated
and determined in accordance with the provisions of this Article. This Article
is intended to prevent the payment of medical benefits which exceed expenses.
Determination of benefits shall be made in relation to the services furnished to
a Participant during any one calendar year.
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7.2 DEFINITIONS. The following definitions apply to this Article.
(a) "Group Plan" means any group or group-type arrangement
of coverage whether insured or uninsured which provides
health benefits or services to a Participant (including
the Policy under this Plan), either by indemnity or
prepaid services, by means of (i) group or blanket
insurance, (ii) franchise insurance that terminates upon
cessation of employment, (iii) group hospital or medical
service plans and other group prepayment coverage, or
(iv) any coverage under labor-management trusteed
arrangements, union medical arrangements, employer
organization arrangements, government benefit
arrangements or government programs (excluding
Medicare).
(b) "Allowable Expenses" means any necessary, reasonable,
and customary item of expense for health care when the
item of expense is covered at least in part by one or
more Group Plans covering the Participant for whom claim
is made. An Allowable Expense does not include (i)
differences between the cost of an average semiprivate
hospital room and a private hospital room unless the
private hospital room is medically necessary (as defined
in the Policy), or (ii) the amount of any reduction in
benefits because a Participant does not comply with the
Group Plat) provisions.
(c) "Primary Plan" means the Group Plan whose benefits for a
Participant's health care coverage must be determined
without consideration of the existence of any other
plan.
(d) "Secondary Plan" means a Group Plan which is not a
Primary Plan. If a Participant is covered by more than
one Secondary Plan, the order of benefit determination
rules decide the order in which their benefits are
determined in relation to each other.
7.3 COORDINATION OF BENEFITS PROCEDURE. Without regard to what is stated
in the Policy, this Plan determines its order of benefits using the first of the
following rules which applies:
(a) The benefits of a Group Plan which covers the
Participant (on whose expenses the claim is based) other
than as a Dependent shall be determined before the
benefits of a Group Plan which covers the Participant as
a Dependent.
(b) The benefits of a Group Plan which covers the
Participant (on whose expenses the claim is based) as a
Dependent of a person whose birthday occurs earlier in a
calendar year shall be determined before the benefits of
a Group Plan which covers such Participant as a
Dependent of a person whose birthday occurs later in a
calendar year. However, if either Group Plan does not
have the provisions of this subsection (b) and the
omission results either in each Group Plan determining
its benefits before the other,
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or in each Group Plan determining its benefits after the
other, the provisions of this subsection (b) shall not
apply, and the rule set forth in the other Group Plan
shall determine the order of benefits; provided,
however, that notwithstanding anything to the contrary
in the Plan, in the case of a Participant for whom claim
is made as a Dependent child:
(1) When the parents are separated or divorced and
the parent with custody of the child has not
remarried, the benefits of a Group Plan which
covers the child as a Dependent of the parent
with custody of the child will be determined
before the benefits of a Group Plan which covers
the child as a Dependent of the parent without
custody.
(2) When the parents are divorced and the parent
with custody of the child has remarried, the
benefits of a Group Plan which covers the child
as a Dependent of the parent with custody shall
be determined before the benefits of a Group
Plan which covers that child as a Dependent of
the stepparent, and the benefits of a Group Plan
which covers that child as a Dependent of the
stepparent will be determined before the
benefits of a Group Plan which covers that child
as a Dependent of the parent without custody.
(3) Notwithstanding subparagraphs (1) and (2) of
this subsection (b), when the parents are
divorced or separated and there is a court
decree which would otherwise establish financial
responsibility for the health care expenses of
the child, the benefits of a Group Plan which
covers the child as a Dependent of the person
with such financial responsibility shall be
determined before the benefits of any other
Group Plan which covers the child as a
Dependent.
(c) When subsections (a) and (b) above do not establish an
order of benefits determination, the benefits of a Group
Plan which has covered the Participant (on whose
expenses the claim is based) for the longer period of
time shall be determined before the benefits of a Group
Plan which has covered such Participant for the shorter
period of time, except that:
(1) The benefits of a Group Plan covering the
Participant (on whose expenses the claim is
based) as a laid-off or retired employee or as a
Dependent of such a Participant shall be
determined after the benefits of any other Group
Plan covering such Participant as an employee
other than as a laid-off or retired employee or
a dependent of such a person; and
(2) If either Group Plan does not have a provision
regarding laid-off or retired employees and as a
result each Group Plan determines its
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benefits after the other, the provisions of this
subsection (c) do not apply.
(d) When another Group Plan is a Primary Plan under the
order of benefit determination rules contained in this
Article but such Group Plan contains "excess" or "always
secondary" provisions, the Group Plan which has been in
force for the longest period of time will be the Primary
Plan.
(e) When this Plan is the Secondary Plan, the benefits of
the other Group Plan shall be deducted from the charges
for all items of Allowable Expenses for which any
benefit is provided under this Plan or the other Group
Plan and this Plan will pay the remainder of the charges
for such items; provided, however, that in no event
shall the provisions of this Article be construed to
increase the amount of total benefits which would be
available under the Plan in the absence of another Group
Plan.
(f) If this Plan is the Secondary Plan under this Article,
but is unable to determine the benefits of the other
Group Plan, this Plan may estimate in good faith the
benefits of the other Group Plan and provide the
benefits of this Plan on the basis of that estimate.
Payment under this subsection shall constitute full
discharge of the liability of the Plan for the charges
involved, subject only to adjustment in the event the
Plan later determines the actual benefits of the other
Group Plan.
7.4 EXISTENCE OF OTHER GROUP PLANS. This Plan assumes no obligation to
discover the existence of another Group Plan or the benefits available under it
if discovered. This Plan will give effect to the provisions of this Article in
accordance with information furnished it by an authoritative source. This Plan
shall, however, be entitled to obtain and to release such information as
reasonably necessary to give effect to these provisions without the consent of
or notice to any person, and any person claiming benefits under this Article
shall, as a condition precedent to his right of recovery, furnish to the Plan
full information concerning the existence of other Group Plans, their benefits,
and any other information as may be necessary to implement this Article.
7.5 RECOVERY AND PAYMENT OF BENEFITS. The Plan shall be entitled at any
time to recover benefits paid in excess of its obligation determined under the
provisions of this Article, irrespective of to whom such benefits were paid,
from an issuer, insurer, provider under the other Group Plan, hospital,
physician or other provider, any person or firm to (or for) whom such payment
was made, or from any combination of such sources.
When benefits have been paid under another Group Plan, the Plan shall
have the right, in its discretion, to pay to the issuer or provider of such
other Group Plan any portion of the benefits available under this Plan which the
Plan may determine to be due in order to give effect to the intent of this
Article and corresponding coordination of benefits provisions in such other
Group Plan. The amount so paid shall be deemed to be benefits provided under
this Plan and to the extent the Plan shall be fully discharged from liability.
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7.6 COORDINATION WITH MEDICARE, MEDICAID AND CHAMPUS. The term "Group
Plan" as used in this Article includes Medicare, Medicaid and CHAMPUS, and the
statutes, regulations, and other laws governing these programs take precedence
over the order of determination set forth in this Plan.
Any Participant eligible for Medicare has the following rights to
coordinate the coverage under this Plan with Medicare coverage and should see
the Administrator to determine what elections may be available with respect to
primary and secondary Medicare coverage and to obtain election forms.
(a) AGE SIXTY-FIVE (65) AND OLDER. Individuals and their
eligible spouses age sixty-five (65) or older are
entitled to receive the same Plan benefits, under the
same conditions, as those Individuals and Covered
Dependents under age sixty-five (65). The Plan is the
Primary Plan and Medicare is the Secondary Plan unless
the Participant elects otherwise, as set forth below.
(b) DISABLED INDIVIDUALS AND COVERED DEPENDENTS. Individuals
and their Covered Dependents who become eligible for
Medicare by reason of disability rather than by age
(even though they are not sixty-five (65) years of age)
are entitled to the same Plan benefits, under the same
conditions, as other Participants. The Plan is the
Primary Plan and Medicare is the Secondary Plan with
respect to these disabled persons.
(c) PARTICIPANTS WITH END STAGE RENAL DISEASE. Participants
who are medically determined to have end stage renal
disease (as defined by Medicare) are entitled to the
same Plan benefits, under the same conditions, as other
Participants for the first thirty (30) month period
following the earlier of (i) initiation of renal
dialysis, or (ii) eligibility for Medicare benefits due
to such condition. The Plan is the Primary Plan and
Medicare is the Secondary Plan with respect to these
Participants.
(d) MEDICARE ELECTION NOTICE. Each Individual who is
eligible for Medicare upon attainment of age sixty-five
(65) must complete a Medicare Election Notice Form
notifying the Employer that they want Medicare as the
Primary Plan with this Plan as the Secondary Plan.
If the Individual's spouse is age sixty-five (65) or
older, such spouse will also be subject to the
Individual's election of the Primary Plan.
(e) COORDINATION WITH MEDICARE. Subject to the above
provisions and to the extent permitted by Medicare,
medical benefits payable under this Plan will be
coordinated with Medicare. Such coordination will apply
whether or not the Participant has or has not applied
for or is receiving Medicare.
(f) MEDICAID BENEFICIARY. When enrolling an individual or
making any payments for medical benefits to a
Participant or on a Participant's behalf,
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the Plan shall not take into account the Participant's
eligibility for medical assistance or benefits payable
under a plan under 42 U.S.C. Section 1396, et seq.
The effective date for this subsection (f) was October
1, 1993.
7.7 SUBROGATION. If a Participant incurs charges for any sickness,
injury or other condition through the acts or omissions of another person or
organization, the Plan shall pay the medical benefits which are medically
necessary and provided by this Plan, subject to the following conditions:
(a) The Participant shall advise the Administrator of any
claim against a third party or insurance carrier within
sixty (60) days of the occurrence of the sickness or
injury, shall provide the Plan with any information
necessary to pursue its rights and shall cooperate with
the Administrator and shall do whatever is necessary to
secure those rights. The Participant agrees to do
nothing which would prejudice those rights;
(b) The Plan shall be subrogated, to the extent of payments
made for medical benefits, to all of the Participant's
rights of recovery of those medical benefits against any
person or organization who, by reason of such person's
acts or omissions, is responsible for the sickness or
injury in question;
(c) It is agreed that if the Participant fails to take the
necessary legal action to recover from a responsible
party within one (1) year after the date of the sickness
or injury, the Plan may proceed in the name of the
Participant against the responsible party and will be
entitled to the recovery of the amount of medical
benefits paid and the expenses for that recovery;
(d) The Plan will have a lien against the proceeds of a
settlement or judgment resulting from a Participant's
claim or suit against a third party in an amount equal
to all sums paid by the Plan with respect to the illness
or injury in question, regardless of whether the
proceeds of such settlement or judgment are designated
as payment for other specified damages. The Employer
shall be entitled to notify third parties, including
insurance carriers, of this lien. The Employer may
deduct the amount covered by the lien from any future
claims payable to the Participant if the lien has not
been previously satisfied or the Participant fails to
notify the Employer of payment received from the third
party; and
(e) The Participant must agree in writing, prior to his
entitlement to medical benefits:
(1) To reimburse the Plan for medical benefits paid
under the Plan immediately upon receipt of any
damages collected from a third party, whether
pursuant to judgment, settlement or otherwise,
net of reasonable expenses incurred in
collecting such amount, such as
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reasonable attorneys' fees, and any amounts
which are allocated under the terms of any
judgment for payment of unreimbursed medical
expenses;
(2) To execute and deliver such instruments and do
whatever else is reasonably necessary to secure
the Plan's right to reimbursement of medical
payments and to provide the Plan such
information as is necessary to enforce its
rights under this provision;
(3) To agree to a credit against payments to be made
under the Plan in the future equal to the amount
of any damages collected by the Participant from
a third party, less any amount paid to the Plan;
(4) If a covered person fails to comply with these
requirements, he will not be eligible to receive
any further medical benefits under the Plan
until he complies; and
(5) The Plan has the right to intervene at its own
expense in any suit or other proceeding to
protect these reimbursement rights. The
Participant is responsible for all fees and
expenses of the attorney handling his or her
claim against the third party.
In the event the Plan recovers an amount greater than the medical benefit paid,
the excess over the expenses of recovery will be paid to the Participant. The
Plan reserves the right to compromise the amount of its claim if, in its
opinion, it is appropriate to do so.
The Administrator may, in its sole discretion, elect not to enforce this
provision.
ARTICLE VIII
TERMINATION OF PARTICIPATION
8.1 LIMITATION ON COVERED EXPENSES. In the event that an individual
ceases to be a Participant or Covered Dependent in this Plan for any reason, the
individual (or his estate) shall be entitled to reimbursement only for Qualified
Medical Expenses incurred and submitted for reimbursement (following the date
the expense was incurred) in accordance with the terms of the Policy, but only
if the expense was incurred while the individual was a Participant or Covered
Dependent, and only if the individual (or his estate) applies for such
reimbursement in the time and manner provided in the Policy. Except to the
extent required in Article IX, no such reimbursement shall exceed the coverage
limitations provided by the Policy.
8.2 DATE OF POLICY COVERAGE TERMINATION. Coverage provided by a Policy
shall terminate according to the terms of the Policy unless continued pursuant
to SECTION 3.4, SECTION 3.5, or ARTICLE IX. Termination of a Policy shall not
terminate this Plan or its obligations.
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ARTICLE IX
CONTINUATION COVERAGE UNDER "COBRA"
9.1 SPECIAL DEFINITIONS. For purposes of this Article, the following
terms shall have the meaning given them as follows:
(a) "Qualified Beneficiary" means any individual who was the
spouse of a Participant or the dependent child of a
Participant whose expenses were eligible for
reimbursement under the Plan on the day before a
Qualifying Event, unless that individual was entitled to
benefits under Title XVIII of the Social Security Act on
the day before the Qualifying Event. Notwithstanding
anything to the contrary in the preceding sentence, the
term "Qualified Beneficiary" shall also include a child
who is born to, or Placed for Adoption with the
Participant during the COBRA continuation period as
determined under SECTION 9.6.
(1) In the case of a Qualifying Event described in
SECTION 9.1(b)(2), the term "Qualified
Beneficiary" also includes the Participant,
unless the Participant is not an employee or was
entitled to benefits under Title XVIII of the
Social Security Act on the day before the
Qualifying Event.
(2) In the case of a Qualifying Event described in
SECTION 9.1(b)(6), the term "Qualified
Beneficiary" includes a Participant who had
retired on or before the date of substantial
elimination of coverage under this Plan and any
other individual who on the day before such
Qualifying Event was a beneficiary under this
Plan as a spouse, surviving spouse or dependent
child of the Participant.
(b) "Qualifying Event" means any of the following events
which would result in the loss of coverage under this
Plan for a Qualified Beneficiary:
(1) The death of the Participant,
(2) The termination of the Participant's employment
with an Employer (for reasons other than the
Participant's gross misconduct), the reduction
of hours of the Participant's employment, or a
Participant's notice to the Administrator he
will not return to work from a leave of absence
under FMLA,
(3) The divorce or legal separation of the
Participant,
(4) The Participant's becoming entitled to benefits
under Title XVIII of the Social Security Act,
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(5) A dependent child ceasing to be a dependent
child under this Plan, or
(6) A proceeding under Title II of the United States
Code with respect to the Employer from whose
employment the Participant retired at any time.
9.2 ENTITLEMENT TO CONTINUATION COVERAGE.
(a) Notwithstanding any other provision of this Plan, a
Qualified Beneficiary who would otherwise lose coverage
under this Plan as a result of a Qualifying Event is
entitled to elect continuation coverage from the
Employer under this Plan.
(b) The continuation coverage will consist of coverage
which, as of the time the coverage is being provided, is
identical to the coverage provided under the Plan to
similarly situated beneficiaries under the Plan with
respect to whom a Qualifying Event has not occurred. If
coverage under the Plan is modified for any group of
similarly situated beneficiaries, coverage will be
modified in the same manner for the Qualified
Beneficiaries.
(c) The continuation coverage provided in this Article will
not be conditioned upon or discriminate on the basis of
lack of evidence of insurability.
9.3 NOTICE REQUIRED.
(a) At the time that coverage commences under this Plan,
Participants and their spouses, if any, shall be given
written notice of their rights under this Article.
(b) The Employer of any affected Participant shall notify
the Administrator of any Qualifying Event described in
SECTION 9.1(b)(1), (2), (4) or (6) within thirty (30)
days after the date of such Qualifying Event.
(c) Each Qualified Beneficiary shall notify the
Administrator of the occurrence of a Qualifying Event
described in SECTION 9.1(b)(3) or (5) within sixty (60)
days after the later of the date of such Qualifying
Event or the date as of which the Qualified Beneficiary
would otherwise lose coverage under the Plan as a result
of that Qualifying Event. If the Qualified Beneficiary
fails to notify the Administrator of such a Qualifying
Event within such sixty (60) day period, such Qualified
Beneficiary shall forfeit his right to elect
continuation coverage under this Article.
(d) Any Qualified Beneficiary who is determined, under
Titles II or XVI of the Social Security Act, to have
been disabled at any time during the first sixty (60)
days of continuation coverage that began as a result of
a
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Qualifying Event described in SECTION 9.1(b)(2) shall so
notify the Administrator within sixty (60) days of such
determination; provided, however, that such notice must
occur in any event before the expiration of the initial
eighteen (18) month period following the Qualifying
Event. In addition, such Qualified Beneficiary shall
notify the Administrator within thirty (30) days of any
final determination that he is no longer disabled.
(e) Within fourteen (14) days after the Administrator is
notified of a Qualifying Event, the Administrator shall
notify any Qualified Beneficiary of his or her rights
under this Article. Notice to a Qualified Beneficiary
who is the spouse or former spouse of a Participant will
be treated as notice to all other Qualified
Beneficiaries residing with such spouse at the time such
notice is given.
9.4 ELECTION OF CONTINUATION COVERAGE. Any Qualified Beneficiary who
desires continuation coverage under this Plan must make an election during the
applicable "election period" which begins on the date coverage would otherwise
terminate under the Plan by reason of a Qualifying Event, and ends sixty (60)
days after such date or sixty (60) days after the date the Qualified Beneficiary
receives notice of his or her fight to elect continuation coverage, whichever is
later. Unless specified otherwise in the election, any election by a Participant
or spouse to continue coverage under this Plan shall be deemed to be an election
of continuation coverage on behalf of any other Qualified Beneficiary who would
otherwise lose coverage under the Plan by reason of the same Qualifying Event.
9.5 PREMIUMS. The Qualified Beneficiary may be required to pay premiums
for any period of continuation coverage up to one hundred two percent (102%) of
the applicable premium, as defined under and determined in accordance with Code
section 498013(f)(4) and ERISA section 604; provided, however, that
notwithstanding the foregoing, that a Qualified Beneficiary who is entitled to
extended coverage under SECTION 9.6(a)(1)(A) may be required to pay premiums up
to one hundred fifty percent (150%) of the applicable premium for the coverage
period following the initial eighteen (18) month period. Premiums shall be
payable in monthly installments on the first day of every month; provided,
however, that the premium payment for the period of coverage prior to the date
of the participant's initial election shall not be required prior to forty-five
(45) days after the date of the election.
9.6 PERIOD OF CONTINUATION COVERAGE. Continuation of coverage timely and
properly elected by any Qualified Beneficiary under this Article shall extend
for a period that begins on the date of the Qualifying Event, and ends on the
earliest of the following dates:
(a) Maximum Period.
(1) In the case of a Qualifying Event described in
SECTION 9.1(b)(2), the date which is eighteen
(18) months after the date of the Qualifying
Event; provided, however,
(A) if the Qualified Beneficiary is.
determined to have been disabled at any
time during the first 60 days of
continuation
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coverage following the Qualifying Event
under Titles 11 or XVI of the Social
Security Act, and if the Qualified
Beneficiary has timely notified the
Administrator of such determination in
accordance with SECTION 9.3(d), the
maximum period for that Qualified
Beneficiary and the covered members of
the Qualified Beneficiary's family shall
end on the earlier of (i) the date which
is 29 months after the date of the
Qualifying Event, or (ii) the first day
of the month commencing more than thirty
(30) days after a final determination
that the Qualified Beneficiary is no
longer disabled;
(B) if another Qualifying Event, other than
the one described in SECTION 9.1(b)(6),
occurs during such eighteen (18) month
period, the date which is thirty-six
(36) months after the date of the
original Qualifying Event; and
(2) In the case of a Qualifying Event described in
Section 9.1(b)(2) that occurs less than 18
months after the date the Covered Individual
became entitled to benefits under Article XVIII
of the Social Security Act, the period of
coverage for Qualified Beneficiaries other than
the Participant shall not terminate before the
date which is thirty-six (36) months after the
date the Participant became entitled to benefits
under Title XVIII of the Social Security Act,
regardless of whether such entitlement was the
sole Qualifying Event or if entitlement preceded
the Qualifying Event.
(3) In the case of a Qualifying Event described in
SECTION 9.1(b)(6), the date of death of the
former Participant; or if the Qualifying Event
occurs after the death of the former
Participant, the date of death of the surviving
spouse of the former participant; or with regard
to the surviving spouse or dependent children of
a former Participant who dies after the
Qualifying Event, the date which is thirty-six
(36) months after the date of the former
Participant's death.
(4) In the case of any other Qualifying Event, the
date which is thirty-six (36) months after the
date of the Qualifying Event;
(b) The date on which the Employer of the Participant ceases
to provide any group health plan to any employee;
(c) If a premium is unpaid when due, the date that is thirty
(30) days after the first day on which the premium is
due under this Plan, or, if later, the date
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on which Participants would lose their coverage under
this Plan due to failure to pay premiums when due;
(d) The first date after a valid COBRA election is made that
the Qualified Beneficiary becomes entitled to benefits
under Title XVIII of the Social Security Act; or
(e) The first date after a valid COBRA election is made that
the Qualified Beneficiary becomes covered under any
other group health plan, as an employee or otherwise;
provided, however, that in order for this to stop a
continuation of coverage period, such other plan may not
contain any exclusion or limitation for pre-existing
conditions with respect to the Qualified Beneficiary,
and provided, however, that for any period commencing
after December 31, 1996, the coverage provided under a
group health plan with respect to a Qualified
Beneficiary who has continuation coverage under the Plan
shall not be considered to contain any exclusion or
limitation with respect to any Pre-Existing Condition of
that person by reason of the existence of any limitation
or exclusion which does not apply to (or is satisfied
by) such person continuing the coverage by reason of
Chapter 100 of the Code, part 7 of the subtitle B of
Title I of ERISA or Title XXVII of the Public Health
Service.
9.7 EXPIRATION OF CONTINUATION COVERAGE. In the case of any Qualified
Beneficiary whose continuation coverage expires under Section 9.6(a), the
Administrator shall, during the thirty-one (31) day period ending on such
expiration date, provide to the Qualified Beneficiary the option of enrolling in
a conversion plan otherwise generally available to Participants under the Plan,
if any. No conversion coverage shall be available to Participants under this
Plan.
ARTICLE X
FUNDING
Except for Board Members, Officers and Spouses, the Plan shall be funded
solely by contributions from Participants and Covered Dependents. In the case of
a Board Member, an Officer or a Spouse, notwithstanding anything in the Plan or
any other agreement to the contrary, the Sponsor will pay (i) all of the cost of
all of the Plan's benefits and coverages for that individual for that
individual's lifetime and (ii) to the individual, an additional sum in the
amount necessary to reimburse such individual for any federal income tax
liability resulting from (or associated with) the Sponsor's payments to or for
the benefit of the individual under this Plan, so that the benefits and
coverages under this Plan for that individual are provided at no cost to that
individual.
The Employers shall have no obligation, but shall have the right, to
establish a special trust or fund out of which benefits shall be paid. The
Employers shall have no obligation, but shall have the right, to reinsure, or to
purchase any type of additional coverage with respect to
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any benefits under the Plan. To the extent the Employer elects to purchase
insurance for any benefits under the Plan, any such benefits shall be the sole
responsibility of the insurer, and the Employer shall have no responsibility for
the payment of such benefits (except for refunding any Participant contributions
that were not remitted to an insurer).
ARTICLE XI
ADMINISTRATION
11.1 NAMED FIDUCIARY. The Named Fiduciaries of the Plan shall be the
Administrator, and any insurer or other persons, to the extent of its or their
discretionary authority with regard to the administration of the Plan. Except as
otherwise provided in the Policy, the Administrator shall have complete
authority to control and manage the operation and administration of the Plan.
The Administrator, subject to the succeeding provisions of this ARTICLE XI, is
authorized to take such actions as may be necessary to carry out the provisions
and purposes of the Plan and shall have the authority to control and manage the
operation and administration of the Plan. In order to effectuate the purposes of
the Plan, the Administrator shall have the discretionary power to construe and
interpret the Plan, to supply any omissions therein, to reconcile and correct
any errors or inconsistencies, to decide any questions in the administration and
application of the Plan, and to make equitable adjustments for any mistakes or
errors made in the administration of the Plan. All such actions or
determinations made by the Named Fiduciaries, and the application of rules and
regulations to a particular case or issue by the Named Fiduciaries, in good
faith, shall not be subject to review by anyone, but shall be final, binding,
and conclusive on all persons ever interested hereunder, subject only to the
claims review procedures set forth in SECTION 11.9. In construing the Plan and
in exercising its power under provisions requiring Administrator approval, the
Administrator shall attempt to ascertain the purpose of the provisions in
question and when such purpose is known or reasonably ascertainable, such
purpose shall be given effect to the extent feasible. Likewise, the
Administrator is authorized to determine all, questions with respect to the
individual rights of the Participants or Beneficiaries under this Plan,
including, but not limited to, all issues with respect to eligibility. The Named
Fiduciary in the exercise of any discretionary powers hereunder, shall exercise
such discretion in a uniform manner with respect to all similarly situated
Participants.
11.2 ALLOCATION OF FIDUCIARY RESPONSIBILITIES. The Administrator may
allocate certain of its fiduciary responsibilities among others and/or may
designate other persons to carry out certain of its fiduciary responsibilities
in accordance with and subject to the limitations of ERISA section 405. Any
person or group of persons may serve in more than one fiduciary capacity with
regard to the Plan. The Administrator and any fiduciary designated by the
Administrator may employ one or more persons to render advice concerning their
responsibilities under the Plan.
11.3 RECORDS. The Administrator shall exercise such authority as it
deems appropriate in order to comply with the terms of the Plan relating to the
records of Participants and the amounts which are payable under the Plan. The
Administrator shall make available to each
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Participant such of its records under the Plan as pertain to him for examination
at reasonable times during normal business hours.
11.4 APPOINTMENT OF COMMITTEE. The day-to-day administration of the Plan
shall be handled by a Committee comprised of at least one individual, if such a
Committee is appointed by the Administrator as its agent. If no Committee is
appointed, the Administrator shall be the Committee. Each member of the
Committee shall serve until his successor is appointed by the Administrator or
until he otherwise resigns. All expenses of the Committee shall be paid by the
Sponsor. A member of the Committee who is an employee shall not receive any
additional compensation for his or her services on the Committee, but shall be
reimbursed by the Sponsor for expenses incurred.
11.5 ACTIONS OF COMMITTEE. A majority of the members of the Committee
appointed pursuant to Section 11.4 shall constitute a quorum for the transaction
of business, and shall have full power to act hereunder. Action by the Committee
shall be official if approved by a vote of a majority of the members present at
any official meeting. The Committee may, without a meeting, authorize or approve
any action by written instrument signed by a majority of all of the members. Any
written memorandum signed by the Chairman, any other member of the Committee, or
any other person duly authorized by the Committee to act regarding the subject
matter of the memorandum, shall have the same force and effect as a formal
resolution adopted in open meeting.
A member of the Committee may not vote or decide upon any matter
relating solely to him or vote in any case in which his individual fight or
claim to any benefit under the Plan is specifically involved. If a Committee
member is so disqualified to act and the remaining members then present cannot,
by majority vote, act or decide, the Sponsor will appoint a temporary substitute
member to exercise all of the powers of the disqualified member concerning the
matter in which he is disqualified.
The Committee shall maintain minutes of its meetings and written records
of its actions. Members may participate and hold a meeting of the Committee by
means of telephone conference or similar communications equipment which permits
all persons participating in the meeting to hear each other; however, minutes
and written records must be maintained of such meeting. Participation in such a
meeting constitutes presence in person at such meeting.
11.6 OTHER POWERS AND DUTIES OF THE ADMINISTRATOR. The Administrator,
the Committee and any persons or entities designated by the Administrator,
except as otherwise set forth in the Policy, shall have all powers necessary or
desirable to administer the Plan, including, but not limited to, the following:
(a) in its sole discretion, to construe and interpret the
Plan, reconcile errors and supply omissions in the Plan,
and decide all questions of eligibility;
(b) to prescribe procedures to be followed by Participants
in making elections under the Plan and in filing claims
under the Plan;
(c) to prepare and distribute information explaining the
Plan to Participants;
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(d) to obtain from Participants such information as shall be
necessary for the proper administration of the Plan;
(e) to keep records of elections, claims, and disbursements
for claims under the Plan;
(f) to appoint individuals or committees to assist in the
administration of the Plan and to engage any other
agents it deems advisable, including legal and actuarial
counsel;
(g) to purchase any insurance deemed necessary for providing
benefits under the Plan;
(h) to accept, modify, or reject elections under the Plan;
(i) to promulgate election forms and claims forms to be used
by Participants;
(j) to prepare and file any reports or returns regarding the
Plan required by the Code, ERISA, or any other laws;
(k) to determine and announce any Participant contributions
required hereunder;
(l) to determine and enforce any limits on benefits elected
hereunder;
(m) to take such action as may be necessary to cause the
payroll deduction of any Participant contributions
required hereunder;
(n) to, notwithstanding any other provision of the Plan, in
the event the Administrator determines that as a result
of administrative or arithmetic error, it has, with
respect to one or more Individuals, incorrectly
determined eligibility for participation, job
classification, or other items involving or concerning
the continued qualification of the, Plan under the Code,
and determines further that such error has resulted in
one or more Individuals receiving a smaller (or greater)
benefit provided by the Plan than they would have in the
absence of the error, take such steps as shall be
necessary or appropriate to correct such error with
respect to the affected individuals, utilizing whatever
method will result in the least overall cost to the
Plan; and
(o) to recover overpayments erroneously made from the Plan
to Participants, Beneficiaries, or others utilizing
whatever method will result in the least overall cost to
the Plan.
11.7 INDEMNIFICATION. The Sponsor and the Employers agree to and shall
indemnify and hold harmless each Indemnified Person (as defined in this Section)
from and against any and all claims, losses, damages, causes of action, suits,
and liability of every kind, including all
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expenses of litigation, court costs and reasonable attorney's fees, incurred in
connection with the Plan. "Indemnified Person" shall mean each member of the
Committee, and each employee, officer, or director of the Sponsor or of an
Employer acting as a fiduciary of the Plan. Such indemnity shall apply
regardless of whether the claims, losses, damages, causes of action, suits, or
liability arise in whole or in part from the negligence or other fault on the
part of the Indemnified Person, except to the extent there has been a final
adjudication that the claim or liability results from the gross negligence or
willful misconduct of the Indemnified Person.
11.8 RELIANCE ON TABLES, ETC. In administering the Plan, the
Administrator will be entitled, to the extent permitted by law, to rely
conclusively upon all tables, valuations, certificates, opinions and reports
which are furnished by accountants, counsel or other experts employed or engaged
by the Administrator.
11.9 CLAIMS AND REVIEW PROCEDURES.
(a) CLAIMS PROCEDURE. If any person believes he is being
denied any rights or benefits under the Plan, such
person may file a written claim with the Administrator.
If the claim is wholly or partially denied, the
Administrator will notify the claimant of its decision
in writing. Such notification will be written in a
manner calculated to be understood by such person and
will contain: (i) specific reasons for the denial, (ii)
specific reference to pertinent Plan provisions, (iii) a
description of any additional material or information
necessary for the person to perfect his claim and an
explanation of why such material or information is
necessary, and (iv) information as to the steps to be
taken if the person wishes to submit a request for
review. Notification of a claim denial will be given
within ninety (90) days after the claim is received by
the Administrator, or within one hundred eighty (180)
days if special circumstances require an extension of
time for processing the claim, in which case written
notice of such extension and the circumstances shall be
given to the claimant within the initial ninety (90) day
period. If the claimant does not receive written notice
that the claim has been denied within the initial ninety
(90) day period, or within the one hundred eighty (180)
day period, if applicable, the claim will be deemed to
have been denied as of the last day of such period, and
such person may request a review of his claim.
(b) REVIEW PROCEDURE. Within sixty (60) days after the date
on which a person receives written notice of a claim
denial, or if applicable, within sixty (60) days after
the date on which such denial is deemed to have
occurred, such person or his duly authorized
representative may file a written request with the
Administrator for a review of his denied claim. The
claimant and/or his authorized representative may
inspect pertinent documents and submit written issues
and comments to the Administrator. The Administrator
will notify the claimant of its decision in writing.
Such notification will be written in a manner calculated
to be understood by such person and will contain
specific reasons for the decision, as well as
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specific references to pertinent Plan provisions. The
decision on review will be made within sixty (60) days
after the request for review is received by the
Administrator, or within one hundred twenty (120) days
if special circumstances require an extension of time.
If such an extension of time is taken, the Administrator
shall notify the claimant in writing within the initial
sixty (60) day period and shall state the circumstances
and the date on which a decision is expected. If the
claimant does not receive written notice of the decision
within the initial sixty (60) day period, or within the
one hundred twenty (120) day period if applicable, the
claim shall be deemed to have been denied on review.
11.10 PARTICIPANT'S RESPONSIBILITIES. Each Participant shall be
responsible for providing the Administrator and the Sponsor with the
Participant's and his beneficiary's current address. Any notices required or
permitted to be given under this Section shall be deemed given if directed to
such address and mailed by regular United States mail. Neither the Administrator
nor the Sponsor shall have any obligation or duty to locate a Participant or
beneficiary. In the event that a Participant or beneficiary becomes entitled to
a payment under the Plan and such payment is delayed or cannot be made because:
(a) the current address according to Sponsor records is
incorrect;
(b) the Participant or beneficiary fails to respond to the
notice sent to the current address according to Sponsor
records;
(c) of conflicting claims to such payments; or
(d) of any other reason.
The amount of such payment, if and when made, shall be that determined under the
provisions of the Plan without consideration of any interest which may have
accrued.
11.11 MISSING PERSONS. If any amount becomes payable under the Plan to a
Participant or beneficiary and the same shall not have been claimed, or if any
check issued under the Plan remains uncashed, and reasonable care shall have
been exercised by the Administrator in attempting to make such payments, the
amount shall be forfeited within such period as is necessary to prevent escheat
under any applicable law and shall cease to be a liability of the Plan.
11.12 NONDISCRIMINATORY EXERCISE OF AUTHORITY. In the administration of
the Plan, whenever any discretionary action by the Administrator is required,
the Administrator shall exercise its authority in a nondiscriminatory manner in
order that all persons similarly situated will receive substantially the same
treatment.
11.13 EXPENSES. The Employer shall bear all costs and expenses
associated with the administration of this Plan which are not paid by an
established trust, if any.
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ARTICLE XII
AMENDMENT OR TERMINATION OF PLAN
12.1 AMENDMENT OF PLAN. The Sponsor expressly reserves the right to
amend the elections, terms and conditions of the Plan, if necessary; provided,
however, that without the express, prior written consent of each Participant and
Covered Dependent at the time the amendment is signed (or, if earlier, is
effective), no amendment to this Plan shall reduce the coverages available or
benefits payable under the Plan or decrease the individuals who may be
Participants or Covered Dependents under this Plan. Any amendment that is
necessary with respect to the Plan and permitted under this Section shall be
made only by a written instrument signed by the appropriate person or persons
and shall be binding upon and effective with respect to each Employer and its
Participants, Dependents, and Eligible Individuals.
12.2 TERMINATION OF PLAN. The Sponsor may terminate or discontinue this
Plan at any time, if necessary, only by a written instrument signed by its
authorized officer and only with the express, prior written consent of all
Participants and Covered Dependents at the effective date of the termination or
discontinuation. Notwithstanding anything in the Plan to the contrary, coverages
and benefits provided under this Plan are to be continued for the life of each
Board Member, each Officer and each Spouse, and the Plan and the Sponsor's
obligations under the Plan may not be terminated or discontinued without the
express, prior written consent of each Board Member, Officer and Spouse. Upon
termination or discontinuance of the Plan as permitted by this Section, all
elections shall terminate, and reimbursements or payments of Qualified Medical
Expenses shall be made only in accordance with ARTICLE VI.
ARTICLE XIII
MISCELLANEOUS
13.1 INFORMATION TO BE FURNISHED. Participants shall provide the
Employer and Administrator with such information and evidence as may reasonably
be requested from time to time for the purpose of administering the Plan.
13.2 LIMITATION OF RIGHTS. Neither the establishment of the Plan, nor
any amendment of the Plan, nor the payment of any benefits shall be construed as
giving to any Participant or other person any legal or equitable right against
the Employer or Administrator or their respective officers and directors, as an
employee or otherwise, except as expressly provided in this Plan, and in no
event will the terms of employment or service of any Participant or employee be
modified or in any way affected by this Plan.
13.3 BENEFITS NOT SOLELY FROM POLICY. Except as required by law,
applicable regulation or elsewhere in this Plan, the benefits provided under the
Plan shall be paid solely from the Policy so long as there is a Policy. If there
is no Policy, benefits payable under this Plan shall be paid from the general
assets of the Sponsor. Nothing in this Plan shall be construed to
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require (except as required by law and applicable regulation) any Fiduciary or
the Administrator to maintain any fund or segregate any amount for the benefit
of any Participant.
13.4 NONASSIGNABILITY OF RIGHTS. The right of any Participant to receive
any reimbursement under the Plan shall not be alienable by the Participant by
assignment or any other method and shall not be subject to being taken by his
creditors by any process whatsoever, and any attempt to cause such right to be
so subjected will not be recognized, except to such extent as may be required by
law.
13.5 NO GUARANTEE OF TAX CONSEQUENCES. Neither the Employer nor the
Administrator makes any commitment or guarantee that any amounts paid to or for
the benefit of a Participant under ARTICLES V or VI will be excludable from the
Participant's gross income for federal or state income employment tax purposes,
or that any other federal or state tax treatment will apply to or be available
to any Participant. It shall be the obligation of each Participant to determine
whether each payment under ARTICLES V or VI is excludable from the Participant's
gross income for federal and state income and employment tax purposes, and to
notify the Employer if the Participant has reason to believe that any such
payment is not so excludable.
13.6 SEVERABILITY. If any provision of this Plan is held invalid,
unenforceable or inconsistent with any law, regulation or requirement for a
medical plan governed by Code sections 104 or 105 or ERISA, its invalidity,
unenforceability or inconsistency shall not affect any other provision of the
Plan, and the Plan shall be construed and enforced as if such provision were not
a part of the Plan.
13.7 CONSTRUCTION OF TERMS. Words of gender shall include persons and
entities of any gender, the plural shall include the singular and the singular
shall include the plural. Section headings exist for reference purposes only and
shall not be construed as part of the Plan.
13.8 CHOICE OF LAW/JURISDICTION AND VENUE. THIS PLAN SHALL BE CONSTRUED,
ADMINISTERED, AND GOVERNED IN ALL RESPECTS (i) UNDER APPLICABLE FEDERAL LAW,
INCLUDING, WITHOUT LIMITATION, THE PROVISIONS OF ERISA AND THE CODE AND RELEVANT
INTERPRETATIONS OF BOTH, AND (ii) TO THE EXTENT NOT PREEMPTED BY FEDERAL LAW,
UNDER THE LAWS OF THE STATE OF TEXAS. EXCLUSIVE JURISDICTION AND VENUE OF ALL
DISPUTES ARISING OUT OF OR RELATING TO THIS PLAN SHALL BE IN ANY COURT OF
APPROPRIATE JURISDICTION IN DALLAS COUNTY, TEXAS. THE PROVISIONS OF THIS SECTION
SHALL SURVIVE AND REMAIN IN EFFECT UNTIL ALL OBLIGATIONS ARE SATISFIED,
NOTWITHSTANDING ANY TERMINATION OF THE PLAN.
13.9 NO VESTED INTEREST. Except for the right to receive any benefit
payable under the Plan in regard to a previously incurred claim, no person shall
have any right, title, or interest in or to the assets of any Employer because
of the Plan.
13.10 NO GUARANTEE OF EMPLOYMENT. Nothing in this Plan shall be
construed as a (i) contract of employment between an Employer and any
Individual, (ii) guarantee that any
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Individual will be continued in the employment or service of an Employer, or
(iii) limitation on the right of an Employer to discharge any of its employees
with or without cause.
13.11 ADOPTION BY SUCCESSOR EMPLOYER OR AFFILIATES. In the event of the
reorganization, purchase, merger, dissolution, or reconstitution, whether direct
or indirect, of the Sponsor, any successor entity shall be required to adopt and
continue the Plan; in which event, the Plan shall continue without any gap or
lapse in coverage or benefits. Failure of the Sponsor to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this agreement and shall entitle the Participants and Covered
Dependents at that time to a lump sum payment from the Sponsor as liquidated
damages that will be an amount equal to the sum of (i) the total value of the
coverages and benefits under the Plan to such individual and (ii) the cost to
obtain identical (or better) replacement coverage for Plan coverage for such
individual.
The Sponsor shall pay to each Participant and Covered Dependent all
legal fees and expenses incurred by that individual, if any, in seeking to
obtain or enforce any right, coverage or benefit provided by this Agreement. An
individual entitled to a payment under this Section shall not be required to
mitigate the amount of a payment due to him under this Section, and
notwithstanding anything in the Plan to the contrary, payments due under this
Section shall not be reduced by any coverage or benefits received by a payment's
recipient from any other source. Throughout the Plan, a purposeful distinction
is drawn between the Sponsor and the Employers. The powers and responsibilities
assigned to the Sponsor by the Plan shall apply exclusively to the Sponsor.
13.12 BONDING. Every Fiduciary, except a bank or an insurance company,
unless exempted by ERISA and its regulations, shall be bonded in an amount not
less than 10% of the amount of the funds such Fiduciary handles; provided,
however, that the minimum bond shall be $1,000 and the maximum bond, $500,000.
The amount of funds handled shall be determined at the beginning of each Plan
Year by the amount of funds handled by such person, group, or class to be
covered and their predecessors, if any, during the preceding Plan Year, or if
there is no preceding Plan Year, then by the amount of the funds to be handled
during the then current year. The bond shall provide protection to the Plan
against any loss by reason of acts of fraud or dishonesty by a Fiduciary alone
or in connivance with others. The surety shall be a corporate surety company (as
such term is used in section 412(a)(2) of ERISA), and the bond shall be in a
form approved by the Secretary of Labor. Notwithstanding anything in the Plan to
the contrary, the cost of such bonds shall be an expense of and may, at the
election of the Administrator, be paid by the Employer.
ARTICLE XIV
QUALIFIED MEDICAL CHILD SUPPORT ORDERS
14.1 NOTIFICATION OF RECEIPT OF CHILD SUPPORT ORDER. Upon receipt by the
Administrator of a medical child support order, an administrative notice, or a
National Medical Support Notice as set forth in ERISA, the Administrator shall
tell the Participant and the
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potential alternate recipient of the medical child support order, administrative
notice or National Medical Support Notice that it has received the medical child
support order, administrative notice, or National Medical Support Notice within
fifteen (15) days of the Administrator's receipt of the medical child support
order, administrative notice, or National Medical Support Notice. The
notification shall also describe the procedures for determining whether the
medical child support order, administrative notice, or National Medical Support
Notice is a "Qualified Medical Child Support Order"as defined in section 609 of
ERISA. The procedures shall permit a potential alternate recipient to designate
a representative to receive copies of notices with respect to a medical child
support order, administrative notice, or National Medical Support Notice.
The Administrator shall determine if the medical child support order,
the administrative notice or the National Medical Support Notice is a Qualified
Medical Child Support Order within sixty (60) days of receipt of such order or
notice, unless circumstances cause a delay. If a delay is required, the
potential alternate recipient shall be notified of any such delay in writing.
14.2 PROCEDURES TO DETERMINE IF MEDICAL CHILD SUPPORT ORDER IS A
QUALIFIED MEDICAL CHILD SUPPORT ORDER. The Administrator shall review the
medical child support order, the administrative notice, or the National Medical
Support Notice (or request legal counsel to review the medical child support
order, administrative notice or National Medical Support Notice) and verify that
the following items are appropriately addressed in the medical child support
order, administrative notice, or National Medical Support Notice:
(a) The medical child support order, administrative notice
or National Medical Support Notice must create or
recognize the existence of an alternate recipient's
right to receive benefits for which the Participant or
beneficiary is eligible under the Plan or to assign
those rights;
(b) The medical child support order, administrative notice
or National Medical Support Notice must identify the
parties responsible for paying for the benefits that are
the subject of the order, notice or National Medical
Support Notice; (c) The medical child support order,
administrative notice, or National Medical Support
Notice must clearly specify the name and last known
mailing address of each alternate recipient covered by
the order, administrative notice or National Medical
Support Notice or must provide the name and address of
any state official or political subdivision that will be
substituted for that of the alternate recipient. Payment
made to any such selected official shall be treated as
payment made to the alternate recipient;
(d) The medical child support order, administrative notice,
or National Medical Support Notice must specify in a
reasonable description the type of coverage to be
provided by the Plan to each alternate recipient or the
manner in which the type of coverage is to be
determined;
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(e) The medical child support order, administrative notice
or National Medical Support Notice must specify the
period to which the order, administrative notice or
National Medical Support Notice applies;
(f) The medical child support order, administrative notice,
or National Medical Support Notice must not require the
Plan to provide any type or form of benefit not
otherwise provided under the Plan; and
(g) The medical child support order, administrative notice
or National Medical Support Notice must clearly be an
order, administrative notice, judgment, decree, approval
of a settlement or a National Medical Support Notice.
If the Administrator determines the medical child support order,
administrative notice or National Medical Support Notice satisfies all of the
above requirements, the medical child support order, administrative notice or
National Medical Support Notice shall, subject to SECTION 14.4, be a Qualified
Medical Child Support Order, and the Administrator shall notify, in writing,
each of the alternate recipient(s) or the alternate recipient(s)' selected
official or political subdivision, if applicable, and the Participant or
beneficiary related to such alternate recipient(s) that the order,
administrative notice, or National Medical Support Notice is a Qualified Medical
Child Support Order. The Administrator shall also notify the Participant that he
must execute a new enrollment form to cover the cost of such coverage or
otherwise notify the party responsible for paying for the coverage of their
obligations with respect to payment for the coverage. If the Administrator
determines that the order or administrative notice, or National Medical Support
Notice is not a Qualified Medical Child Support Order, the Administrator shall
notify, in writing, each of the proposed alternate recipient(s) or the alternate
recipient(s)' selected official or political subdivision, if applicable, and the
related Participant or beneficiary that the order, administrative notice, or
National Medical Support Notice is not a Qualified Medical Child Support Order,
why the order, administrative notice or National Medical Support Notice failed
to qualify as such and their rights, if any, to appeal such decision.
14.3 TREATMENT OF ALTERNATE RECIPIENT UNDER QUALIFIED MEDICAL CHILD
SUPPORT ORDER. The Administrator shall treat each alternate recipient under a
Qualified Medical Child Support Order as a Participant under the Plan, but only
for purposes of the reporting and disclosure requirements imposed by ERISA.
14.4 COST OF QUALIFIED MEDICAL CHILD SUPPORT ORDER BENEFITS. The cost of
the coverage provided under the Qualified Medical Child Support Order shall be
paid by the party designated as responsible for paying for such coverage in the
order, administrative notice or National Medical Support Notice.
In the event a medical child support order, administrative notice, or
National Medical Support Notice does not specify the party responsible for
payment for the alternate recipient's coverage under the medical child support
order, administrative notice, or National Medical Support Notice, the
Administrator shall either deny the medical child support order's,
administrative notice's, or National Medical Support Notice's qualified status
and send copies of
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the Qualified Medical Child Support Order procedures to the parties, or file an
appropriate pleading in either the Federal district court or in the domestic
relations court requesting revisions of the issued order, administrative notice
or National Medical Support Notice in such a manner as to qualify the order,
administrative notice, or National Medical Support Notice as a Qualified Medical
Child Support Order.
14.5 QUALIFIED MEDICAL CHILD SUPPORT ORDER AND MEDICAID. The
Administrator shall not consider the alternate recipient's eligibility for
Medicaid when enrolling the alternate recipient in the Plan. The Plan shall
comply with the alternate recipient's assignment rights under Medicaid, if any.
14.6 PAYMENTS OR REIMBURSEMENTS UNDER A QUALIFIED MEDICAL CHILD SUPPORT
ORDER. The Administrator is permitted to pay or reimburse the alternate
recipient, the alternate recipient's custodial parent, or any state official or
political subdivision selected by the alternate recipient to receive payments
for any benefit payments due under the Plan to or on behalf of the alternate
recipient.
14.7 ALTERNATE RECIPIENT. "Alternate recipient" means the individual
designated as the person entitled to receive health care coverage under the
Qualified Medical Child Support Order.
ARTICLE XV
POLICY
The Policy set forth on Exhibit A to this Plan is incorporated by this
reference as part of the Plan document. Any amendment or replacement of any of
the documents comprising the Policy may be certified by a duty authorized
officer of the Sponsor, and may be updated as required, without any need to
amend this document. But, to the extent any part of the Policy conflicts with or
contradicts the provisions of this document, this document shall govern in
determining (i) the rights of Participants, their Covered Dependents and, if
any, their other covered beneficiaries, and (ii) the obligations of the
Employers, Administrator, and any Fiduciary to Participants, Covered Dependents
and, if any, other covered beneficiaries.
ARTICLE XVI
PARTICIPATING EMPLOYERS
16.1 ADOPTION BY OTHER EMPLOYERS. Notwithstanding anything in this
document to the contrary, with the written consent of the Sponsor, any other
corporation or entity, whether an affiliate or subsidiary or not, may adopt this
Plan and become a Participating Employer, by a properly executed document
evidencing said intent and will of such Participating Employer. Participating
Employers who have adopted the Plan are listed on Exhibit B to this Plan, as it
may be amended from time to time.
37
43
16.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS.
(a) The transfer of any Participant from or to an Employer
participating in this Plan, whether he be an employee of
the Sponsor or a Participating Employer, shall not
affect such Participant's rights under the Plan, and his
length of participation in the Plan shall continue to
his credit.
(b) Any expenses of the Plan which are to be paid by the
Employer or borne by the Plan shall be paid by each
Participating Employer in the same proportion that the
total number of all Participants employed by such
Employer bears to the total number of all Participants.
16.3 DESIGNATION OF AGENT. Each Participating Employer shall be deemed
to be a part of this Plan-, provided, however, that with respect to all of its
relations with the Administrator for the purpose of this Plan, each
Participating Employer shall be deemed to have designated irrevocably the
Sponsor as its agent.
16.4 TRANSFERS. It is anticipated that an Individual who is an employee
may be transferred between Participating Employers, and in the event of any such
transfer, the employee involved shall carry with him his accumulated service and
eligibility. No such transfer shall effect a termination of employment under
this Plan, and the Participating Employer to which the employee is transferred
shall become obligated under this Plan with respect to such employee in the same
manner as was the Participating Employer from whom the employee was transferred.
16.5 PARTICIPATING EMPLOYER'S CONTRIBUTION. All contributions made by a
Participating Employer, as provided for in this Plan, shall be determined
separately by each Participating Employer and shall be paid for the exclusive
benefit of the employees of such Participating Employer and the Beneficiaries of
such employees, subject to all the terms and conditions of this Plan. On the
basis of the information furnished by the Employers to the Administrator, the
Administrator shall keep separate books and records concerning the Plan affairs
of each Participating Employer and as to the accounts and credits of the
employees of each Participating Employer. The Administrator may, but need not,
register contracts so as to evidence that a particular Participating Employer is
the interested Employer, but in the event of an employee transfer from one
Participating Employer to another, the employing Employer shall immediately
notify the Administrator.
16.6 DISCONTINUANCE OF PARTICIPATION. Any Participating Employer shall
be permitted to discontinue or revoke its participation in the Plan. At the time
of any such discontinuance or revocation, satisfactory evidence of such action
and of any applicable conditions imposed shall be delivered to the
Administrator. The Administrator shall thereafter transfer, deliver and assign
the contracts and other assets allocable to the Participants of such
Participating Employer to such new Administrator as shall have been designated
by such Participating Employer, in the event that it has established a separate
medical care plan for its employees. If no successor is designated, the
Administrator shall retain such assets for the employees of said Participating
Employer. In no such event shall any part of the corpus or income of the Trust
as it relates to
38
44
such Participating Employer be used for or diverted for purposes other than for
the exclusive benefit of the employees of such Participating Employer.
16.7 ADMINISTRATOR'S AUTHORITY. The Administrator shall have authority
to make any and all necessary rules or regulations, binding upon all
Participating Employers and all Participants, to effectuate the purpose of this
Article.
IN WITNESS WHEREOF, the Corporation has caused this Plan to be executed
in its name and on its behalf this 23rd day of June, 2000 authorized
representative.
"SPONSOR"
DALLAS SEMICONDUCTOR CORPORATION
By: /s/ Alan P. Hale
--------------------------------------
Title: V. P. Finance & CFO
39
45
EXHIBIT A
POLICY
40
46
EXHIBIT B
PARTICIPATING EMPLOYERS
41
47
EXHIBIT C
OFFICERS
C. V. Prothro
Chao C. Mai
Michael L. Bolan
Alan P. Hale
Jack Von Gillern
42
48
EXHIBIT D
BOARD MEMBERS
Richard L. King
Merlyn D. Sampels
Carmelo J. Santoro
Adm. E.R. Zumwalt, Jr.
43
49
EXHIBIT E
SPOUSES
Nancy J. Santoro
Anita R. Sampels
Carolyn Leftwich
Karen L. Hale
Shao S. Mai
Caren H. Prothro
Elizabeth L. Von Gillern
44
50
EXHIBIT F
ELIGIBLE EMPLOYEES
(OTHER THAN OFFICERS)
Matt Adams
Philip A. Adams
G. Malcom Bayless
Heber L. Clement
Met Cruz
Stephen M. Curry
Don Dias
Jeffrey L. Hannon
Tom Harrington, III
David L. Heim
Jerry L. Housden
Joe Hundt
Reynold W. Kelm
Hal Kurkowski
Robert D. Lee
John E. Manton, III
Wayne Mendenhall
Kenneth B. Molitor
Joe Monroe
David J. Rapier
John Rea
Sandy Scherpenberg
Michael D. Smith
Gay T. Vencill
Clark R. Williams
45
51
AMENDMENT ONE TO
THE DALLAS SEMICONDUCTOR CORPORATION
EXECUTIVES RETIREE MEDICAL PLAN
Amendment made to the Dallas Semiconductor Corporation Executives
Retiree Medical Plan, Effective October 1, 1999 (the "Plan"), by Dallas
Semiconductor Corporation (the "Corporation").
W I T N E S S E T H
WHEREAS, the Corporation sponsors the Plan to provide retiree (and
limited other) medical care benefits to board members, officers, certain other
eligible retirees, and the eligible spouses of board members and officers; and
WHEREAS, the Corporation desires to amend the Plan to permit the spouse
of Richard King, Carol Edgar, to participate in the Plan, effective June 24,
2000, the date of their marriage; and
WHEREAS, by the terms of Section 12.1 of the Plan, the Plan may be
amended by the Corporation.
NOW, THEREFORE, effective June 24, 2000, the Plan is hereby amended as
follows:
1. Section 2.37 is deleted in its entirety and the following is
substituted in its place:
"2.37 'SPOUSE' means the wife of an Officer or of a Board Member
on the date of his Retirement, and in the case of only Richard King,
means Carol Edgar, effective June 24, 2000. Carol Edgar, effective June
24, 2000 and each person who was a spouse of an Officer or of a Board
Member on the Effective Date are listed on Exhibit E, but being listed
on Exhibit E does not make an individual a Spouse for purposes of this
Plan."
2. Existing Exhibit E to the Plan is deleted in its entirety, and the
attached Exhibit E is substituted in its place.
52
IN WITNESS WHEREOF, the Corporation, has caused this instrument to be
executed by its duly authorized officer on this 23rd day of June, 2000, to be
effective June 24, 2000.
DALLAS SEMICONDUCTOR CORPORATION
BY: /S/ ALAN P. HALE
-----------------------------------------
Title: Vice President - Finance and Chief
Financial Officer
2
53
EXHIBIT E
SPOUSES
Nancy J. Santoro
Anita R. Sampels
Carolyn Leftwich
Karen L. Hale
Shao S. Mai
Caren H. Prothro
Elizabeth L. Von Gillern
Carol Edgar
AMENDMENT TWO TO
THE DALLAS SEMICONDUCTOR CORPORATION
EXECUTIVES RETIREE MEDICAL PLAN
Amendment made to the Dallas Semiconductor Corporation Executives
Retiree Medical Plan, effective October 1, 1999 (the "Plan"), by Dallas
Semiconductor Corporation (the "Corporation").
W I T N E S S E T H
WHEREAS, the Corporation sponsors the Plan to provide retiree (and
limited other) medical care benefits to board members, officers, certain other
eligible retirees, and the eligible spouses of board members and officers; and
WHEREAS, the Corporation desires to amend the Plan to clarify that the
Plan will not impose a pre-existing condition limitation; and
WHEREAS, by the terms of SECTION 12.1 of the Plan, the Plan may be
amended by the Corporation.
3
54
NOW, THEREFORE, effective October 1, 1999, the Plan is hereby amended as
follows:
1. SECTION 2.34 is deleted in its entirety, and the following is
substituted in its place:
"2.34 `QUALIFIED MEDICAL EXPENSE' means an expense incurred by a
Participant, by the Participant's spouse or by a Dependent of such
Participant for medical care as defined in Code section 213, including,
without limitation, amounts paid for hospital bills and doctor bills,
but only to the extent that (i) the participant or other person is not
reimbursed for the expense through insurance or otherwise, other than
under the Plan, and (ii) the expense is not taken into account as a
deduction by the Participant on his Internal Revenue Service Form 1040."
2. The second sentence of SECTION 5.1 is deleted in its entirety, and
the following is substituted in its place:
"Subject to SECTIONS 5.2(a) and 12.1, the specific coverages and
benefits available to Participants are set forth in the Policy or if
there is no Policy, in the Policy last in effect in connection with the
Plan."
3. SECTION 5.2(a) is deleted in its entirety, and the following is
substituted in its place:
"5.2 PRE-EXISTING CONDITIONS.
(A) PRE-EXISTING CONDITIONS. Notwithstanding anything in the
Plan or any Policy to the contrary, the Plan shall not
impose any type of pre-existing condition exclusion.
Notwithstanding anything in any Policy to the contrary,
a pre-existing condition in a Policy shall not include
any condition that does not fall within the definition
of a Pre-existing Condition, no pre-existing condition
shall include a condition for which Genetic Information
was used as a basis for asserting the existence of the
condition if there has been no diagnosis of the
condition related to such information, and the period
during which any exclusion or limitation of benefits
(relating to a condition based on the fact that the
condition was present before a person's Enrollment Date)
in the Policy would be enforced (if the Plan allowed
pre-existing condition exclusions) for no longer than
the excess of twelve (12) months (eighteen (18) months
for a Late Enrollee), beginning on his Enrollment Date,
over the aggregate of the periods of Creditable Coverage
(if any) applicable to the Participant as of his
Enrollment Date."
2
55
5. The last sentence of SECTION 8.1 is amended to delete the words
"coverage limitations" in that sentence and to substitute "coverage maximums" in
their place.
IN WITNESS WHEREOF, the Corporation has caused this instrument to be
executed by its duly authorized officer effective October 1, 1999.
DALLAS SEMICONDUCTOR CORPORATION
By: /s/ Alan P. Hale
--------------------------------------
Title:
-----------------------------------
3
56
AMENDMENT THREE TO
THE DALLAS SEMICONDUCTOR CORPORATION
EXECUTIVES RETIREE MEDICAL PLAN
Amendment made to the Dallas Semiconductor Corporation Executives
Retiree Medical Plan, effective October 1, 1999 (the "Plan"), by Dallas
Semiconductor Corporation (the "Corporation").
W I T N E S S E T H
WHEREAS, the Corporation sponsors the Plan to provide retiree (and
limited other) medical care benefits to board members, officers, certain other
eligible retirees, and the eligible spouses of board members and officers; and
WHEREAS, the Corporation desires to amend the Plan to permit three
Directors appointed after October 19, 1999, Jeffrey A. Koch, John K. Foley and
Larry N. Bright, to participate in the Plan, effective on the date each was
appointed as a Director; and
WHEREAS, by the terms of Section 12.1 of the Plan, the Plan may be
amended by the Corporation.
NOW, THEREFORE, effective as provided below, the Plan is amended as
follows:
1. SECTION 2.10 is deleted in its entirety, effective October 9, 2000,
and the following is substituted in its place:
"ELIGIBLE EMPLOYEE" means (i) each Officer of the
Sponsor on the Effective Date, (ii) each common-law employee of
an Employer who was designated on the books and records of the
Employer as a "functionally equivalent" officer on the Effective
Date and who shared in the contribution made on June 12, 1998,
to the Dallas Semiconductor Corporation Executive Deferred
Compensation Plan, (iii) each common-law employee of an
Employer, on the Effective Date, who, on the Effective Date (or
within the five (5) calendar year period preceding the Effective
Date), also held the title of Director or was the Sponsor's
corporate controller, (iv) effective October 9, 2000, Larry N.
Bright, John K. Foley and Jeffrey A. Koch, and (v) each
common-law employee of an Employer, on the Effective Date, who,
on the Effective Date, held the position of Manager and was
required to report for operating purposes directly to the
Sponsor's President and Chief Executive Officer. Each person who
was an Eligible Employee on the Effective Date or become an
Eligible Employee as a result of an amendment to the Plan after
the Effective Date is listed on either Exhibit C or Exhibit F to
the Plan."
1
57
2. Effective October 9, 2000, existing Exhibit F is deleted in its
entirety, and the attached Exhibit F is substituted in its place.
IN WITNESS WHEREOF, the Corporation, has caused this instrument to be
executed by its duly authorized officer on this 10th day of April, 2001.
DALLAS SEMICONDUCTOR CORPORATION
By: /s/ Alan P. Hale
--------------------------------------
Name: Alan P. Hale
Title: Chief Financial Officer
2
58
EXHIBIT F
ELIGIBLE EMPLOYEES
(OTHER THAN OFFICERS)
(EFFECTIVE OCTOBER 9, 2000)
Matt Adams
Philip A. Adams
G. Malcom Bayless
Larry N. Bright
Heber L. Clement
Mel Cruz
Stephen M. Curry
Don Dias
John K. Foley
Jeffrey L. Hannon
Tom Harrington, III
David L. Heim
Jerry L. Housden
Joe Hundt
Reynold W. Kelm
Jeff Koch
Hal Kurkowski
Robert D. Lee
3
59
John E. Manton, III
Wayne Mendenhall
Kenneth B. Molitor
Joe Monroe
David J. Rapier
John Rea
Sandy Scherpenberg
Michael D. Smith
Gay T. Vencill
Clark R. Williams
4
EX-10.29
17
f75694ex10-29.txt
EXHIBIT 10.29
1
EXHIBIT 10.29
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made as of the _____ day of __________, 19___, by and
between Dallas Semiconductor Corporation, a Delaware corporation (the
"Company"), and ________________________________________, a director and/or
officer of the Company ("Indemnitee").
WHEREAS, the Company's Certificate of Incorporation and By-Laws provide
for the indemnification of the directors and officers of the Company to the
maximum extent authorized by Delaware law; and
WHEREAS, Delaware law provides that indemnification under such statutes
shall not be deemed exclusive and thereby contemplates that contracts may be
entered into between the Company and its officers and directors with respect to
indemnification of such persons; and
WHEREAS, recent developments with respect to the substantial increase in
litigation subjecting officers and directors to litigation risks and liabilities
have indicated that it would be prudent to support and augment the protection
afforded the Company's officers and directors in this regard; and
WHEREAS, Indemnitee and other officers and directors may not be willing
to serve as such without adequate protection and the Company desires to attach
and retain the services of highly qualified individuals, such as Indemnitee, to
serve as an officer and/or director of the Company and to indemnify its officers
and directors so as to provide them with the maximum protection permitted by law
as an inducement to their continued service to the Company.
NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:
1. Indemnification in General. The Company shall indemnify and hold
harmless Indemnitee to the fullest extent permitted or authorized by Applicable
Law. For purposes hereof the term "Applicable Law" shall mean Section 145 of the
General Corporation Law of the State of Delaware as in effect on the date hereof
and as hereafter amended (but in the case of such amendment, only to the extent
such amendment permits the Company to provide broader indemnification rights
than permitted prior to such amendment).
2. Additional Indemnity. Subject only to the exclusions set forth in
Section 3 hereof, the Company shall further indemnify and hold harmless
Indemnitee:
(a) Against any and all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by Indemnitee in connection with any threatened, pending or
completed action, suit, or proceeding, whether formal or informal, or
civil, criminal, administrative, legislative, arbitrative or
investigative (including without limitation any action by or in the
right of the Company) (hereinafter a "Proceeding") to which Indemnitee
is, was or at any time becomes a party, or is threatened to be made a
party, by reason of the fact that Indemnitee is, was or at any time
becomes a director, officer
2
or agent of the Company, or is or was serving or at any time serves at
the request of the Company (which request need not be in writing) or on
behalf of the Company as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise (hereinafter an "Enterprise"); and
(b) Otherwise to the fullest extent as may be contractually
provided to Indemnitee by the Company under Applicable Law consistent
with any public policy limitations applicable thereto.
3. Limitations on Additional Indemnity. No indemnity pursuant to Section
2 hereof shall be paid by the Company:
(a) for amounts indemnified by the Company other than pursuant
to Section 2 of this Agreement;
(b) for amounts, if any, paid pursuant to any policies of
directors and officers liability insurance maintained by the Company for
the benefit of Indemnitee;
(c) with respect to remuneration paid to Indemnitee if it shall
be determined by a final judgment or other final adjudication that such
remuneration was in violation of law;
(d) on account of any suit in which judgment is rendered against
Indemnitee for an accounting of profits made from the purchase and sale
by Indemnitee of securities of the Company pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of 1934 and amendments
thereto or any similar provision of federal, state or local statutory
law;
(e) on account of Indemnitee's conduct which is finally adjudged
to have been knowingly fraudulent, deliberately dishonest or willful
misconduct; or
(f) if a final adjudication by a court having jurisdiction in
the matter shall determine that such indemnification is not lawful.
4, Notification and Defense of Claims. Promptly after the receipt by
Indemnitee of notice of the commencement of any Proceeding, Indemnitee will, if
a claim in respect thereof is to be made against the Company under this
Agreement, notify the Company of the commencement of such Proceeding; provided
however that the omission to so notify the Company will not relieve the Company
from any liability which it may have to Indemnitee otherwise than under this
Agreement. With respect to any such Proceeding as to which Indemnitee notifies
the Company of the commencement thereof:
(a) The Company shall be entitled to participate therein at its
expense; and
(b) Except as otherwise provided herein, to the extent it may
elect to do so, the Company (jointly with any other indemnifying party
similarly notified) will be entitled to
2
3
assume the defense thereof, with counsel of its own selection reasonably
satisfactory to Indemnitee. After notice from the Company to Indemnitee
of its election to assume the defense thereof, Company will not be
liable to Indemnitee under this Agreement for any legal or other
expenses subsequently incurred by Indemnitee in connection with the
defense of such Proceeding other than as otherwise provided below.
Indemnitee shall have the right to employ separate counsel in such
Proceeding but the fees and expenses of such counsel incurred after
notice from the Company of its assumption of the defense shall be at the
expense of the Indemnitee unless (i) the Company has authorized
Indemnitee to employ separate counsel and has agreed to assume the
reasonable fees and expenses of such counsel; (ii) Indemnitee shall have
reasonably concluded that there may be a conflict of interest between
the Company and Indemnitee in the conduct of the defense of such
Proceeding; or (iii) the Company shall not in fact have employed counsel
to assume the defense of such Proceeding, in each of which cases the
reasonable fees and expenses of counsel shall be at the expense of the
Company. The Company shall not be entitled to assume the defense of any
Proceeding brought by or on behalf of the Company or as to which
Indemnitee shall have made the conclusion provided for in (ii) above.
(c) The Company shall not be liable to indemnify Indemnitee
under this Agreement for any amounts paid in settlement of any
Proceedings or claims effected without its prior written consent. The
Company shall not settle any Proceeding or claim in any manner which
might impose any penalty or limitation on Indemnitee without
Indemnitee's prior written consent. Neither the Company nor Indemnitee
will unreasonably withhold their consent to any proposed settlement.
5. Payment in Advance. The expenses (including attorneys' fees) incurred
by Indemnitee in defending any Proceeding shall be advanced by the Company at
the request of the Indemnitee. Any judgments, fines or amounts to be paid in
settlement shall also be advanced by the Company to Indemnitee upon request. If
it shall ultimately be determined that Indemnitee was not entitled to be
indemnified, or was not entitled to be fully indemnified, Indemnitee shall repay
to the Company all amounts advanced, or the appropriate portion thereof, so
advanced.
6. Right of Indemnitee to Bring Suit. If a claim for indemnification or
a claim for an advance under this Agreement is not paid in full by the Company
within 90 or 15 days, respectively, after the Company has received a written
claim therefor by Indemnitee, Indemnitee may bring suit against the Company to
recover the unpaid amount of the claim. If Indemnitee is successful in whole or
in part in such suit, Indemnitee shall also be paid the expense of prosecuting
such claim (including without limitation reasonable attorneys' fees).
7. Continuation of Indemnity. All agreements and obligations of the
Company contained herein shall continue during the period Indemnitee is a
director, officer or agent of the Company (or is serving at the request of the
Company or on behalf of the Company, as a director, officer, employee or agent
of another Enterprise) and shall continue thereafter so long as Indemnitee shall
be subject to any possible Proceeding or claim by reason of the fact that
Indemnitee was a director, officer or agent of the Company or serving in any
other capacity referred to herein.
3
4
8. Nonexclusivity. The indemnification and other rights provided by this
Agreement shall not be deemed exclusive of any other rights to which Indemnitee
may be entitled under any provision of statutory or common law, the Company's
Certificate of Incorporation, any Company By-Law, other agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in
Indemnitee's official capacity and as to action in another capacity while
occupying any of the positions or having any of the relationships referred to in
this Agreement, and shall continue after Indemnitee has ceased to occupy such
position or have such relationship.
9. Severability. If any provision of this Agreement shall be held to be
invalid, illegal or unenforceable (a) the validity, legality and enforceability
of the remaining provisions of this Agreement shall not be in any way affected
or impaired thereby, and (b) to the fullest extent possible, the provisions of
this Agreement shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable. Each section of this
Agreement is a separate and independent portion of this Agreement. If the
indemnification to which Indemnitee is entitled as respects any aspect of any
claim varies between two or more sections of this Agreement, that section
providing the most comprehensive indemnification shall apply.
10. Modification and Waiver. No supplement or amendment of this
Agreement shall be binding unless executed in writing by both parties hereto. No
waiver of any of the provisions of this Agreement shall be binding unless
executed in writing by the person making the waiver nor shall such waiver
constitute a continuing waiver.
11. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand and receipted for by the party to whom said notice or other
communication shall have been directed or if (ii) mailed by certified or
registered mail with postage prepaid, on the third business day after the date
on which it is so mailed:
(i) If to Indemnitee, to
or to such other address as may be furnished to the Company by
Indemnitee;
(ii) If to the Company, to
4
5
Dallas Semiconductor Corporation
4401 South Beltwood Parkway
Dallas, Texas 75244-3292
Attn: President
or to such other address as may be furnished to Indemnitee by the
Company.
12. GOVERNING LAW. THIS AGREEMENT IS MADE AND ENTERED INTO PURSUANT TO
SECTION 145 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE AND THIS
AGREEMENT SHALL BE GOVERNED BY, AND ITS PROVISIONS CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF DELAWARE.
13. Heirs, Successors and Assigns. This Agreement shall insure to the
benefit of, and be enforceable by the Indemnitee's personal or legal
representatives, executors, administrators, heirs, devisees and legatees. This
Agreement is binding on the successors and assigns of the Company. The Company
will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place (the assumption by such
successor shall be by written agreement in form and substance reasonably
satisfactory to Indemnitee).
14. Miscellaneous.
(a) This Agreement does not create any right in Indemnitee to
employment or continued employment with the Company or any other
Enterprise.
(b) All references herein in the masculine gender shall, when
appropriate, refer to the feminine gender.
(c) The section headings contained herein are for convenience
only and are not to be considered in construing or interpreting this
Agreement.
(d) In the event of any ambiguity, vagueness or other matter
involving the interpretation or meaning of this Agreement, this
Agreement shall be liberally construed so as to provide Indemnitee the
full benefits set out herein.
5
6
ENTERED into as of the day and year first above written.
DALLAS SEMICONDUCTOR CORPORATION
ATTEST:
By:
----------------------------- ---------------------------------
------------------------------------
Indemnitee
6
EX-13.1
18
f75694ex13-1.txt
EXHIBIT 13.1
1
EXHIBIT 13.1
COVER
2
FORWARD-LOOKING STATEMENTS
This Annual Report and the documents incorporated herein by reference contain
forward-looking statements that have been made pursuant to and in reliance on
the provisions of the Private Securities Litigation Reform Act of 1995. All
statements included or incorporated by reference in this Annual Report, other
than statements that are purely historical, are forward-looking statements.
Forward-looking statements include (a) projections relevant to future revenue,
income, earnings, capital expenditures, capital structure, sufficiency of cash
funds and other financial items, (b) statements of plans, strategies, or
objectives of the Company's management for future operations, including, without
limitation, facilities, personnel, operations, and balancing capacity with
demand; composition of our customer base; plans or objectives relating to the
Company's expenses, products, their development, manufacture, marketing, and
sale, (c) statements of the expected benefits, both financial and nonfinancial,
and synergies to be provided from the acquisition of Dallas Semiconductor
Corporation, (d) statements of future economic performance including, without
limitation, the Company's position to meet the demand for analog solutions, (e)
statements regarding bookings and backlog, and (f) statements of any assumptions
underlying or relating to any of the foregoing. Words such as "anticipates,"
"expects," "intends," "plans," "believes," "seeks," "estimates," and variations
of such words and similar expressions relating to the future identify
forward-looking statements.
All forward-looking statements are based on the Company's current outlook,
expectations, estimates, projections, beliefs, and plans or objectives about its
business and its industry. These statements are not guarantees of future
performance and are subject to risk and uncertainty. There are numerous factors
that could cause the Company's actual results to differ materially from results
predicted or implied. Important factors affecting the Company's ability to
achieve future revenue growth include whether, and the extent to which, demand
for the Company's products increases and reflects real end-user demand; whether
customer cancellations and delays of outstanding orders increase; whether the
Company is able to manufacture in a correct mix to respond to orders on hand and
new orders received in the future; whether the Company is able to achieve its
new product development and introduction goals, including, without limitation,
goals for recruiting, retaining, training, and motivating engineers,
particularly design engineers, and goals for conceiving and introducing timely
new products that are well received in the marketplace; and whether the Company
is able to successfully commercialize its new technologies, such as its
next-generation high-frequency technologies, that it has been investing in by
designing and introducing new products based on these new technologies.
Other important factors that could cause actual results to differ materially
from those predicted include overall worldwide economic conditions; demand for
electronic products and semiconductors generally; demand for the end-user
products for which the Company's semiconductors are suited; timely availability
of raw material, equipment, supplies, and services; unanticipated manufacturing
problems; technological and product development risks; and competitors that may
outperform the Company.
The Company undertakes no obligation to update any forward-looking statement,
whether as a result of new information relating to existing conditions, future
events, or otherwise. Readers are cautioned not to place undue reliance on such
statements, which are only as of the date of the Annual Report. Readers should
also carefully review future reports and documents that the Company files from
time to time with the Securities and Exchange Commission, such as its Annual
Reports on Form 10-K and its Quarterly Reports on Form 10-Q (particularly the
sections entitled "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Trends, Risks, and Uncertainties") and any
current reports on Form 8-K.
2
3
Established in 1983, Maxim Integrated Products, Inc., is a worldwide leader in
design, development, manufacture, and marketing of linear and mixed-signal
integrated circuits. Maxim circuits "connect" the real world and the digital
world by detecting, measuring, amplifying, and converting real world signals,
such as temperature, pressure, sound, voice, or light, into the digital signals
necessary for computer processing. Products include data converters, interface
circuits, real-time clocks, delay lines, microcontrollers, microprocessor
supervisors, operational amplifiers, power supplies, multiplexers, switches,
battery chargers, battery management circuits, RF circuits, fiber optic
transceivers, sensors, and voltage references. Our products are used in a wide
variety of microprocessor-based communications, industrial control,
instrumentation, and data processing equipment, including personal computers and
peripherals, process control, test equipment, handheld devices, wireless and
fiber communications, and video displays.
Maxim markets over 3,000 products, of which over 2,500 are proprietary. Net
revenues were $1,576.6 million for the year ended June 30, 2001. The Company has
over 6,300 employees. Our headquarters is in Sunnyvale, California, and we have
facilities in San Jose, California; Dallas, Texas; Beaverton, Oregon; Cavite,
the Philippines; Samutprakam, Thailand; and other locations worldwide.
In fiscal 2001, Maxim acquired Dallas Semiconductor Corporation, a leading
provider of specialty semiconductors. The acquisition has broadened Maxim's
product offerings, added engineering talent to Maxim's labor force, and
positioned Maxim to more effectively increase stockholder value. The acquisition
was accounted for as a pooling-of-interests. Accordingly, all financial data of
Maxim has been restated to include the historical financial data of Dallas
Semiconductor Corporation.
Maxim's mission is to continuously invent high-quality analog and mixed-signal
engineering solutions that add value to our customers' microprocessor-based
electronics worldwide. We have consistently increased our stockholders' equity
by meeting our cost and performance goals, minimizing time-to-market, and
maximizing our engineering productivity.
TABLE OF CONTENTS
Financial Highlights..............................................4
Letter To Our Stockholders........................................5
Quarterly Highlights..............................................8
Financial Information............................................11
Board of Directors, Corporate Officers, and Vice Presidents .....41
Corporate Data, Stockholder Information..........................42
3
4
FINANCIAL HIGHLIGHTS
(Amounts in thousands, except per share data) FY2001 FY2000 FY1999
--------------------------------------------- ---------- ---------- ----------
Net revenues $1,576,613 $1,376,085 $1,002,849
Net income $ 334,939 $ 373,083 $ 265,281
Earnings per share--diluted $ 0.93 $ 1.04 $ 0.77
[GRAPH]
[GRAPH]
[GRAPH]
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5
TO OUR STOCKHOLDERS
[IMAGE]
Fiscal 2001 has been one of the most challenging years in Maxim's history. We
began the year closely monitoring what we determined to be exaggerated customer
demand for our products, attempting to ship consistent with end equipment
consumption rates without inventory accumulation in the channel. The subsequent
dropoff in bookings levels, although certainly anticipated, was more precipitous
and sustained than anyone could have predicted. I have commented previously on
the effect that the rise and fall of DSL-driven telecom and dot com industries
have had on demand for integrated circuits and other technology products. It has
taken some time to get back to true demand levels. We estimate that 15 to 20
percent of our previous end market demand will need to be replaced because of
the demise of some of these companies and equipment markets.
Although no company relishes going through a period of inventory correction and
market dislocation, it is in times such as these that our conservative
management approach pays off; once again, Maxim has proven its ability to
operate efficiently and profitably in a difficult business environment.
FINANCIAL HIGHLIGHTS
Maxim ended fiscal 2001 with net revenues of $1.6 billion. Operating income for
fiscal 2001 was $445.2 million. The Company increased cash and short-term
investments by $323.4 million after paying $250.7 million for 4.0 million shares
of its common stock and acquiring $336.5 million of capital equipment. Diluted
earnings per share for fiscal 2001 were $0.93. Total assets increased to $2.4
billion. Stockholders' equity grew to $2.1 billion in fiscal 2001 from $1.7
billion in fiscal 2000. Return on average stockholders' equity for 2001 was 17.5
percent. This return, one of the highest in the industry, confirms that the
Company continues to make good product and capacity investment decisions with
stockholders' assets.
DALLAS SEMICONDUCTOR AND MAXIM COMBINE TALENT AND RESOURCES
Maxim's acquisition of Dallas Semiconductor, completed on April 11, 2001, was
not in our sights at the beginning of the fiscal year. Certainly Dallas would
not have been a candidate for acquisition had it not been for the untimely death
of the company's chief executive in November 2000. While Maxim has not
historically chosen the path of growth through acquisition, the Dallas
opportunity was unique from our perspective. It was clear to Maxim management
that Dallas' innovative and proprietary product lines should be every bit as
profitable as Maxim's and that it would be possible to impact the company's
profitability by restructuring its sales, distribution, and manufacturing
business models to align with Maxim's. We recognized a rare opportunity to
increase our engineering headcount by approximately 30 percent with the addition
of 250 skilled and experienced development engineers and were confident that we
could improve Dallas' engineering productivity. The two companies' product lines
were almost entirely complementary, with Dallas potentially adding six business
units to Maxim's existing eight. In addition, Maxim's product development
efforts would benefit from Dallas' excellent in-house microprocessor, packaging,
and module technologies.
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6
TO OUR STOCKHOLDERS
Today, a few months after the acquisition, we are more enthusiastic than ever
about the current performance and future potential of the combined company.
Several of our goals for cost savings at Dallas have already been accomplished.
Like Maxim, Dallas now sells its products through our direct Sales and
Applications organization. A variety of manufacturing efficiencies have been
achieved, including higher manufacturing yields and improved wafer fab
productivity. Dallas products are being tested at the new Maxim facility in
Cavite, the Philippines, significantly reducing the use of expensive on-shore
labor and subcontractors. Our joint purchasing power is resulting in cost
savings for the combined companies.
The Dallas engineers and the products they have invented have met our high
expectations. Dallas products that had little public exposure in the past are
now benefiting from renewed, Maxim-style applications engineering and media
attention, and customers are responding enthusiastically. Like Maxim, Dallas now
distributes sample circuits to customers worldwide within 24 hours.
OUR FOCUS ON NEW PRODUCT INTRODUCTIONS CONTINUED
Maxim introduced over 500 products during the 12-month product announcement year
ending in July 2001, a 30 percent increase over the previous year's record of
over 400 products. Our emphasis on research and development activities continues
to show tangible results. Included were several products from Dallas
Semiconductor, whose six business units now have the same focus on product
proliferation as their eight Maxim counterparts. We anticipate significantly
increased product introduction activity from Dallas in the coming years, with 58
Dallas products scheduled to announce in the 2002 product announcement year.
EXPANDED MANUFACTURING FACILITIES WILL IMPROVE EFFICIENCIES FOR BOTH MAXIM AND
DALLAS
Maxim and Dallas combined now have the facilities and equipment in place to ship
approximately $550 million per quarter. Since this capacity and its variable
expense exceeds the current needs of the Company, variable costs will be scaled
back in the short term until this capacity can be cost effectively utilized.
Our San Jose fabrication facility was expanded this year, with the addition of a
20,000-square-foot submicron Class 1 clean room and a 5,000-square-foot Class 10
clean room. The expansion area will run advanced technologies on 8-inch wafers.
The expansion of Dallas Semiconductor's fabrication facility in Dallas, begun in
calendar 2000, was completed and paid for in the fourth quarter of fiscal 2001,
and a conversion to 8-inch product is underway. The shift to 8-inch wafers will
result in significant wafer cost reduction when the facility becomes operational
in 12 to 18 months.
This year, we expanded our facility in Cavite, the Philippines, to 234,000
square feet of test, wafer sort, laser trim, and shipping operations. This
facility now supports Dallas as well as Maxim and, along with our Thailand
facility, is capable of testing and shipping 1 billion units per quarter.
Significant cost savings have been achieved by installing a shipping operation
at this facility.
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7
TO OUR STOCKHOLDERS
In July 2000, Maxim opened a test operation in Thailand, diversifying the
Company's Asian manufacturing presence. The Thailand operation has the capacity
to test more than 50 million units per quarter and is now testing approximately
25 percent of Maxim's units.
MAXIM AND DALLAS GIVE DISTRIBUTION CUSTOMERS BETTER SERVICE
The acquisition of Dallas Semiconductor afforded both Maxim and Dallas the
opportunity to reexamine international distribution channels for their products
to ensure that customers were being given the most attractive avenues for
procurement and service. Several changes were made to distribution channels,
including establishment of a captive worldwide Maxim/Dallas Direct! distribution
organization; replacement of Dallas' sales representatives with Maxim's direct
sales force; and plans to hone both companies' distributors worldwide to focus
on the most effective in each region. Also, customers using Maxim's e-commerce
website can order any quantity of parts online and have online access to a large
team of Maxim and Dallas technical experts.
WE ARE PREPARED FOR THE RECOVERY
At the time of this writing, no one can forecast with confidence when demand for
integrated circuits will return to the levels we saw at the beginning of fiscal
2001. What we at Maxim can say with confidence is that we have in place the new
products and processes, capacity, and efficient sales channels to meet future
demand for our circuits fueled by the global requirement for data communications
and analog signal conditioning. The period of slowed demand at the end of the
fiscal year was used effectively by Maxim and Dallas to align our operations,
execute on cost saving initiatives, and capitalize on the proven synergies from
the combined companies.
Maxim and Dallas have the broadest of product offerings in the industry. These
products are leading edge and very competitive in each market. Our customer and
product reach is broad and unequalled by competitors. We are not overly
dependent upon any equipment segment and, as an expected result, the depth of
Maxim's setback will not be as deep and we expect our recovery to be sooner and
more complete than most others.
Thank you again for your continued support of Maxim and its management.
Sincerely,
/s/ JOHN F. GIFFORD
John F. Gifford
President, Chief Executive Officer
and Chairman of the Board
7
8
QUARTERLY HIGHLIGHTS
FIRST QUARTER FY01
- Net revenues of $422.3 million
- Net income of $119.1 million ($0.33 diluted earnings per share)
[GRAPH]
[GRAPH]
[GRAPH]
SECOND QUARTER FY01
- Net revenues of $438.3 million
- Net income of $122.2 million ($0.34 diluted earnings per share)
[GRAPH]
[GRAPH]
[GRAPH]
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9
QUARTERLY HIGHLIGHTS
THIRD QUARTER FY01
- Net revenues of $397.8 million
- Net income of $109.9 million ($0.31 diluted earnings per share)
[GRAPH]
[GRAPH]
[GRAPH]
FOURTH QUARTER FY01
- Net revenues of $318.1 million
- Net loss of $(16.2) million [($0.05) diluted loss per share]
[GRAPH]
[GRAPH]
[GRAPH]
9
10
10
11
FINANCIAL INFORMATION
Management's Discussion and Analysis of Financial Condition and Results of Operations......12
Consolidated Balance Sheets................................................................20
Consolidated Statements of Income..........................................................21
Consolidated Statements of Stockholders' Equity............................................22
Consolidated Statements of Cash Flows......................................................23
Notes to Consolidated Financial Statements.................................................24
Report of Ernst & Young LLP, Independent Auditors..........................................38
Selected Financial Data....................................................................39
Financial Highlights by Quarter............................................................40
11
12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
Business Combination In December 2000, Maxim Integrated Products, Inc., (the
Company) entered into merger negotiations with Dallas Semiconductor Corporation
(Dallas Semiconductor), a leading supplier of speciality semiconductors. Merger
negotiations were undertaken as a result of the Company's belief that the
engineering talent, product offerings, and management philosophy at Dallas
Semiconductor, when combined with those of the Company, would lead to synergies
that would positively impact operating results and increase stockholder value.
On April 11, 2001, the stockholders of Dallas Semiconductor voted in favor of
the merger, and the Company issued approximately 41.0 million shares of its
common stock in exchange for all the outstanding common stock of Dallas
Semiconductor. In addition, the Company exchanged all options to purchase Dallas
Semiconductor common stock for options to purchase approximately 5.9 million
shares of the Company's common stock. The transaction was accounted for as a
pooling-of-interests and qualifies as a tax-free reorganization.
All financial data of the Company presented in these financial statements has
been restated to include the historical financial data of Dallas Semiconductor.
Adjustments relating to deferral of income on shipments to distributors were
required to conform the accounting policies of the acquired company. The Company
and Dallas Semiconductor had certain differences in the classification of
revenues and expenses in their historical statements of income and assets and
liabilities in their historical balance sheets. Adjustments have been made to
conform the combined company's income statement and balance sheet
classifications. In addition, the lives of the property, plant and equipment
acquired as part of the merger with Dallas Semiconductor were conformed to the
lives used by the Company as appropriate. The change, which was prospective in
nature, reflects the Company's anticipated economic benefit from those assets.
As previously noted, all financial data of the Company presented in these
financial statements has been restated to include the historical financial data
of Dallas Semiconductor in accordance with accounting principles generally
accepted in the United States and pursuant to Regulation S-X of the Securities
and Exchange Commission. The Company's statement of income for the fiscal year
ended June 26, 1999 has been combined with the Dallas Semiconductor statement of
income for the fiscal year ended January 2, 2000. The Company's statement of
income for the fiscal year ended June 24, 2000 has been combined with the Dallas
Semiconductor statement of income for the fiscal year ended December 31, 2000.
The Company's statement of income for the fiscal year ended June 30, 2001
includes the results of operation for Dallas Semiconductor for the 12 months
ended June 30, 2001. This presentation has the effect of including Dallas
Semiconductor's results of operations for the 6-month period ended December 31,
2000 in both the Company's fiscal years ended June 24, 2000 and June 30, 2001.
Net revenues and net income for Dallas Semiconductor for the 6-month period
ended December 31, 2000, were $270.4 million and $48.9 million, respectively.
The net income for Dallas Semiconductor for the 6-month period ended December
31, 2000 of $48.9 million has been reported as a decrease to the Company's
fiscal 2001 retained earnings. The Company's balance sheet as of June 24, 2000
was combined with Dallas Semiconductor's balance sheet as of December 31, 2000.
12
13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
[GRAPH]
Net Revenues The Company reported net revenues of $1,576.6 million in fiscal
2001, a 14.6% increase from net revenues of $1,376.1 million in fiscal 2000.
This increase in net revenues for fiscal 2001 is related primarily to higher
unit shipments resulting from continued introduction of new proprietary
products, increased market acceptance of the Company's existing proprietary and
second-source products, and an increase in market demand for analog
semiconductor products in general. This increased demand resulted in net
revenues' being greater in the first, second, and third quarters of fiscal 2001
than net revenues for the comparable quarters in fiscal 2000. While net revenues
increased from fiscal year 2000 to fiscal year 2001, market demand for the
Company's products decreased significantly in the third and fourth quarters of
fiscal 2001 due to downturns in certain industry segments (particularly Internet
and network-related businesses) and in the general economy. This resulted in net
revenues' being less in the fourth quarter of fiscal 2001 than the fourth
quarter of fiscal 2000.
The Company's net revenues of $1,376.1 million for fiscal 2000 represented an
increase of 37.2% from net revenues of $1,002.8 million for fiscal 1999. This
increase was primarily related to higher unit shipments resulting from continued
introduction of new proprietary products and increased market acceptance of the
Company's existing proprietary and second-source products, and an increase in
market demand for analog semiconductor products in general.
Approximately 57%, 53%, and 53% of the Company's net revenues in fiscal 2001,
2000, and 1999, respectively, were derived from customers located outside the
United States, primarily in the Pacific Rim and Europe. While the majority of
these sales are denominated in U.S. dollars, the Company enters into foreign
currency forward contracts to mitigate its risks on firm commitments and net
monetary assets denominated in foreign currencies. The impact of changes in
foreign exchange rates on net revenues and the Company's results of operations
for fiscal 2001, 2000, and 1999 was immaterial.
Gross Margin The Company's gross margin as a percentage of net revenues was
65.9% in fiscal 2001 compared to 63.4% in fiscal 2000. The improvement in gross
margin from fiscal 2000 to fiscal 2001 was principally due to production
efficiencies obtained through economies of scale and cost reductions. The
increase in gross margin for
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14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
fiscal 2001 was offset by $39.2 million recorded to reduce the carrying value of
plant and equipment that was abandoned, no longer in use, or whose estimated
useful lives were shortened, resulting in accelerated depreciation and an
increase of inventory reserves by $39.9 million. Gross margin for fiscal 2000
was negatively impacted by $27.1 million recorded to reduce the carrying value
of plant and equipment that was abandoned, no longer in use, or whose estimated
useful lives were shortened, resulting in accelerated depreciation and increased
inventory reserves of $3.3 million.
[GRAPH]
The Company's gross margin as a percentage of net revenues was 63.4% in fiscal
2000 compared to 62.2% in fiscal 1999. The improvement in gross margin in fiscal
2000 was principally due to production efficiencies obtained through economies
of scale and cost reductions. The increase in gross margin for fiscal 2000 was
offset by the items previously noted. In addition, gross margin for fiscal 2000
reflects certain expenses that the Company did not incur in fiscal 1999. These
include $3.0 million recorded for royalty expense and amounts recorded for
Medicare taxes on realized gains from the exercise of employee stock options.
Previously, the Medicare tax payments were recorded within Stockholders' Equity
as an offset against the proceeds received from the exercise of stock options.
Gross margin for fiscal 1999 was negatively impacted by an increase in inventory
reserves of $8.0 million, $7.5 million expensed for negative manufacturing
variances, charges of $3.6 million recorded to obsolete a 4-inch wafer
fabrication facility, and $2.7 million recorded to reduce the carrying value of
equipment.
[GRAPH]
Research and Development Research and development expenses were $280.2 million
and $216.8 million for fiscal 2001 and 2000, respectively, which represented
17.8% and 15.8% of net revenues, respectively. The increase in research and
development expenses both in terms of absolute dollars and as a percentage of
net revenues is due to the Company's continuous efforts to introduce new
products. Specifically, research and development expenses increased in fiscal
2001 due to increased headcount and related employee expenses to continue
product development to support revenue growth, increased wafer and mask expenses
to support new product development, and $11.2 million recorded to reduce the
carrying value of equipment that was abandoned, no longer in use, or whose
estimated useful lives were shortened, resulting in accelerated depreciation.
Included in research and development expenses in fiscal 2000 was
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
$8.1 million recorded to reduce the carrying value of equipment that was
abandoned, no longer in use, or whose estimated useful lives were shortened
resulting in accelerated depreciation.
Research and development expenses were $216.8 million and $145.8 million in
fiscal 2000 and 1999, respectively, which represented 15.8% and 14.5% of net
revenues, respectively. The increase in research and development expenses both
in terms of absolute dollars and as a percentage of net revenues in fiscal 2000
was due primarily to increased headcount and related employee expenses, wafer
and mask expenses to support new product development, $8.1 million recorded to
reduce the carrying value of equipment, and expenses for Medicare taxes on
realized gains from the exercise of employee stock options.
The level of research and development expenditures as a percentage of net
revenues will vary from period to period, depending, in part, on the level of
net revenues.
[GRAPH]
Selling, General and Administrative Selling, general and administrative expenses
were $150.6 million and $146.9 million in fiscal 2001 and 2000, respectively,
which represented 9.6% and 10.7% of net revenues, respectively. The increase in
selling, general and administrative expenses in absolute dollars in fiscal 2001
is primarily due to increased headcount and related employee expenses to support
the Company's higher revenues offset by a decrease of $9.5 million in charges
recorded primarily for technology licensing.
Selling, general and administrative expenses were $146.9 million and $107.6
million in fiscal 2000 and 1999, respectively, which represented 10.7% and 10.7%
of net revenues, respectively. The increase in selling, general, and
administrative expenses in absolute dollars in fiscal 2000 was primarily due to
additional headcount and related employee expenses to support the Company's
increased level of revenues, an increase of $12.5 million in charges recorded
primarily for technology licensing, and expenses for Medicare taxes on realized
gains from the exercise of employee stock options.
Merger and Special Charges As a result of the merger with Dallas Semiconductor,
during the fourth quarter of fiscal 2001, the Company recorded merger costs in
connection with the acquisition of Dallas Semiconductor of approximately $26.4
million. These costs consist of approximately $14.1 million intended to satisfy
the change in control payments under previously existing employment
15
16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
contracts and other non-employee director arrangements for which there was no
future economic benefit; a $5.8 million payment to be made under a change in
control provision in a previously existing life insurance arrangement for which
there was no future economic benefit; and $6.5 million for fees related to
investment banking, legal, accounting, filings with regulatory agencies,
financial printing, and other related costs. It is expected that substantially
all of these direct transaction costs will be paid out of existing cash reserves
within 12 months of the consummation of the merger.
During the fourth quarter of fiscal 2001, the Company recorded special charges
of $137.0 million. These special charges resulted from the significant decrease
in demand that occurred during the fourth quarter of fiscal 2001 for Dallas
Semiconductor's products in combination with the Company's intention to close
Dallas Semiconductor's 6-inch wafer manufacturing facility and dispose of the
related equipment. The Company intends to complete construction of an 8-inch
wafer manufacturing facility located in Dallas, Texas, that was under
construction when the merger was consummated between the Company and Dallas
Semiconductor. Once complete, the 8-inch wafer manufacturing facility will serve
as Dallas Semiconductor's primary wafer manufacturing facility. In addition, the
Company is concentrating test operations of the combined company at the
Company's test facilities located in the Philippines and Thailand. Once
complete, certain Dallas Semiconductor test equipment will be disposed of. The
Company concluded that the above facts indicated that Dallas Semiconductor's
long-lived assets might be impaired, and as required by accounting principles
generally accepted in the United States, performed a cash flow analysis of the
related assets. Based on the cash flow analysis, the cash flows expected to be
generated by Dallas Semiconductor's long-lived assets during their estimated
remaining useful lives are not sufficient to recover the net book value of the
assets. The Company obtained a valuation report from an independent appraiser of
the estimated fair value of the equipment at June 30, 2001, and validated the
report with its own knowledge of the semiconductor used equipment market. Based
on the cash flow analysis and valuation report, an impairment charge of $124.4
million was recorded to reduce the net book value of Dallas Semiconductor's
long-lived assets to fair value.
In addition to the above, the Company recorded special charges of $12.6 million
to reflect the reorganization of the Company's sales organization, purchase
order cancellation fees, and the reduction in the Company's manufacturing
workforce. The above actions directly impacted employees in the Company's sales,
marketing, and manufacturing organizations. It is expected that 230 employees
will be terminated by these actions, of which 93 were terminated and $2.0
million of termination benefits were paid by June 30, 2001.
Interest Income and Other, Net Interest income and other, net increased to $59.8
million in fiscal 2001 from $52.7 million in fiscal 2000. This increase was due
to significantly higher levels of invested cash, cash equivalents, and
short-term investments and higher average interest rates. Included in interest
income and other, net in fiscal 2000 was a $4.5 million gain from the cash sale
of the Company's 50% interest in its high-frequency packaging and assembly
subsidiary and a $5.6 million gain from the sale of an investment in an
unrelated test equipment company.
Interest income and other, net was $52.7 million in fiscal 2000 compared to
$28.0 million in fiscal 1999. The increase in interest income and other, net in
fiscal 2000 was primarily due to higher levels of invested cash,
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
cash equivalents, and short-term investments. In addition, included within
interest income and other, net in fiscal 2000 is a $4.5 million gain and a $5.6
million gain as discussed above.
The Company's exposure to market risk for changes in interest rates relates
primarily to the Company's investment portfolio, which includes U.S. Treasury
and Federal Agency debt securities, corporate notes, and municipal bonds.
Investments mature at frequent intervals during the year, at which time the
funds are available for use in the business, or for reinvestment, as cash
demands dictate. The Company places its investments only in high-quality
financial instruments, limits the amount invested in any one institution or
instrument, and limits portfolio duration. This policy is intended to reduce
default risk, market risk, and reinvestment risk. The Company does not use
derivative financial instruments in its investment portfolio. The fair value of
the Company's investment portfolio or related interest income would not be
significantly impacted by a material change in interest rates, due to the
primarily short-term nature of the Company's investment portfolio. At June 30,
2001, the Company's investment portfolio had an expected weighted average return
of 5.0% and a weighted maturity of 303 days.
Provision for Income Taxes The effective tax rate was 33.7%, 33.5%, and 33.4%
for fiscal 2001, 2000, and 1999, respectively.
Foreign Currency Risk The Company is exposed to fluctuations in foreign currency
exchange rates on accounts receivable from sales in foreign currency and the net
monetary assets and liabilities of its foreign subsidiaries. The Company hedges
its currency risk with forward exchange contracts. Gains and losses on these
forward exchange contracts would generally be offset by corresponding losses and
gains on the related hedged items, resulting in negligible exposure for the
Company.
OUTLOOK:
In the third and fourth quarters of fiscal 2001, the Company experienced a steep
decline in orders due to downturns in certain industry segments (particularly
Internet and network-related businesses) and in the general economy. These
decreases occurred in all geographic locations and product lines.
At the end of the fourth quarter of fiscal 2001, backlog shippable within the
next 12 months was approximately $234 million (compared to $587 million at the
end of fiscal 2000), including approximately $185 million requested for shipment
in the first quarter of fiscal 2002. Order cancellations decreased from $106
million in the third quarter of fiscal 2001 to $72 million in the fourth quarter
of fiscal 2001. In addition, turns orders increased from $50 million in the
third quarter of fiscal 2001 to $62 million in the fourth quarter of fiscal
2001. Turns orders are customer orders that are for delivery within the same
quarter and may result in revenue within the same quarter if the Company has
available inventory that matches those orders. Because the Company's backlog of
orders at any point is not necessarily based on firm, noncancelable orders and
because the Company's customers do in fact routinely cancel orders for their own
convenience with little notice, backlog has limited value as a predictor of
future revenues.
In the short term, the Company's ability to accurately forecast net revenues
remains limited as customers continue to decrease their inventory levels. As a
result of decreased order and backlog levels, the Company expects net revenues
to decline in the first quarter of fiscal 2002 from the fourth quarter of fiscal
2001. Net revenues for fiscal 2002 are expected to be significantly less than
net revenues for fiscal 2001.
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18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FINANCIAL CONDITION:
Overview Total assets grew to $2,430.5 million at the end of fiscal 2001, up
from $2,087.4 million at the end of fiscal 2000. The increase is primarily due
to favorable operating results for fiscal 2001. Net accounts receivable
decreased to $152.5 million at the end of fiscal 2001 from $228.9 million at the
end of fiscal 2000, primarily due to a significant decrease in sales volume in
the fourth quarter of fiscal 2001 compared to the fourth quarter of fiscal 2000.
Net inventory grew to $162.7 million in fiscal 2001 from $139.7 million in
fiscal 2000 primarily due to a decrease in demand for the Company's products
that occurred in the third and fourth quarters of fiscal 2001. Income tax refund
receivable increased to $50.2 million at the end of fiscal 2001 from $6.9
million at the end of fiscal 2000 primarily due to carryback claims resulting
from tax losses incurred during fiscal 2001. Property, plant and equipment at
cost increased to $1,408.5 million at the end of fiscal 2001 from $1,148.1
million at the end of fiscal 2000, reflecting the Company's efforts to expand
future capacity and reduce costs.
[GRAPH]
Liquidity and Capital Resources The Company's primary source of funds for fiscal
2001, 2000, and 1999 has been from net cash generated from operating activities
of approximately $809.6 million, $666.3 million, and $445.9 million,
respectively. In addition, the Company received approximately $114.3 million,
$99.1 million, and $69.2 million of proceeds from the exercises of stock options
and purchases of common stock under the Employee Stock Participation Plan during
fiscal 2001, 2000, and 1999, respectively.
Another source of cash from the Company's stock option programs is the tax
deductions that arise from exercise of options. These tax benefits amounted to
$238.9 million, $155.0 million, and $137.1 million in fiscal 2001, 2000, and
1999, respectively. In the past, it was the Company's policy to reduce the
dilution effect from stock options by repurchasing its common stock from time to
time in amounts based on estimates of proceeds from stock option exercises and
of tax benefits related to such exercises. That stock repurchase policy was
discontinued in the third quarter of fiscal 2001. Following the extraordinary
events that occurred in the United States on September 11, 2001, the Company has
authorized the repurchase of up to 10 million shares of its common stock during
the five business days following the reopening of the United States securities
markets on September 17, 2001.
18
19
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The principal uses of funds for fiscal 2001, 2000, and 1999 were repurchases of
$250.7 million, $270.2 million, and $131.5 million of the Company's common
stock, and purchases of property, plant and equipment of $336.5 million, $292.1
million, and $123.7 million, respectively.
As of June 30, 2001, the Company's available funds consisted of $1,220.4 million
in cash, cash equivalents, and highly liquid investment securities. The Company
anticipates that the available funds and cash generated from operations will be
sufficient to meet cash and working capital requirements, including its
anticipated level of capital expenditures, through the end of fiscal 2002.
19
20
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data) JUNE 30, 2001 June 24, 2000
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 93,796 $ 82,217
Short-term investments 1,126,556 814,719
---------- -----------
Total cash, cash equivalents and
short-term investments 1,220,352 896,936
---------- -----------
Accounts receivable (net of allowance for doubtful
accounts of $3,280 in 2001 and $2,248 in 2000) 152,488 228,857
Inventories 162,656 139,677
Deferred tax assets 103,205 100,359
Income tax refund receivable 50,187 6,893
Other current assets 10,204 15,631
---------- -----------
Total current assets 1,699,092 1,388,353
---------- -----------
Property, plant and equipment, at cost, less
accumulated depreciation 712,039 677,988
Other assets 19,400 21,097
---------- -----------
Total assets $2,430,531 $ 2,087,438
---------- -----------
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 100,921 $ 110,468
Income taxes payable 8,963 15,292
Accrued salary and related expenses 75,992 95,580
Accrued expenses 94,105 83,261
Deferred income on shipments to distributors 45,396 38,204
---------- -----------
Total current liabilities 325,377 342,805
---------- -----------
Other liabilities 4,000 4,000
Deferred tax liabilities -- 20,694
Commitments and contingencies
---------- -----------
Total liabilities 329,377 367,499
---------- -----------
Stockholders' equity:
Preferred stock, $0.001 par value;
Authorized: 2,000,000 shares;
Issued and outstanding: none -- --
Common stock, $0.001 par value;
Authorized: 960,000,000 shares;
Issued and outstanding: 330,235,460
in 2001 and 322,439,307 in 2000 330 322
Additional paid-in capital 351,652 258,092
Retained earnings 1,745,638 1,461,618
Accumulated other comprehensive income (loss) 3,534 (93)
---------- -----------
Total stockholders' equity 2,101,154 1,719,939
---------- -----------
Total liabilities and stockholders' equity $2,430,531 $ 2,087,438
---------- -----------
See accompanying Notes to Consolidated Financial Statements.
20
21
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
For the years ended JUNE 30, 2001 June 24, 2000 June 26, 1999
------------- ------------- -------------
Net revenues $1,576,613 $1,376,085 $1,002,849
Cost of goods sold 537,148 503,801 379,242
---------- ---------- ----------
Gross margin 1,039,465 872,284 623,607
---------- ---------- ----------
Operating expenses:
Research and development 280,228 216,823 145,807
Selling, general and administrative 150,622 146,901 107,642
Merger and special charges 163,449 -- --
---------- ---------- ----------
Total operating expenses 594,299 363,724 253,449
---------- ---------- ----------
Operating income 445,166 508,560 370,158
Interest income and other, net 59,822 52,657 27,960
---------- ---------- ----------
Income before provision
for income taxes 504,988 561,217 398,118
Provision for income taxes 170,049 188,134 132,837
---------- ---------- ----------
Net income $ 334,939 $ 373,083 $ 265,281
---------- ---------- ----------
Earnings per share:
Basic $ 1.03 $ 1.18 $ 0.88
Diluted $ 0.93 $ 1.04 $ 0.77
---------- ---------- ----------
Shares used in the calculation of earnings per share:
Basic 325,736 316,887 303,038
Diluted 361,620 359,548 344,360
---------- ---------- ----------
Dividends declared per share $ 0.02 $ 0.02 $ 0.02
---------- ---------- ----------
See accompanying Notes to Consolidated Financial Statements.
21
22
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Common
Stock Additional Other
-------------------------- Paid-In Retained Comprehensive
(Amounts in thousands, except share data) Shares Par Value Capital Earnings Income Total
------------ --------- ---------- ----------- ------------- -----------
BALANCE, JUNE 27, 1998 298,281,653 $ 298 $ 199,414 $ 836,872 $(2,163) $ 1,034,421
Components of comprehensive income:
Net income -- -- -- 265,281 -- 265,281
Translation adjustment -- -- -- -- 693 693
-----------
Total comprehensive income 265,974
-----------
Exercises under the Stock Option
and Purchase Plans 18,233,079 18 69,211 -- -- 69,229
Repurchase of common stock (6,300,580) (6) (131,451) -- -- (131,457)
Tax benefit on exercise of non-qualified
stock options and disqualifying
dispositions under stock plans -- -- 137,062 -- -- 137,062
Dividends declared -- -- -- (5,781) -- (5,781)
------------ ----- --------- ----------- ------- -----------
BALANCE, JUNE 26, 1999 310,214,152 310 274,236 1,096,372 (1,470) 1,369,448
Components of comprehensive income:
Net income -- -- -- 373,083 -- 373,083
Unrealized gain on available-
for-sale investments -- -- -- -- 1,377 1,377
-----------
Total comprehensive income 374,460
-----------
Exercises under the Stock Option
and Purchase Plans 18,130,266 18 99,111 -- -- 99,129
Repurchase of common stock (5,905,111) (6) (270,213) -- -- (270,219)
Tax benefit on exercise of non-qualified
stock options and disqualifying
dispositions under stock plans -- -- 154,958 -- -- 154,958
Dividends declared -- -- -- (7,837) -- (7,837)
------------ ----- --------- ----------- ------- -----------
BALANCE, JUNE 24, 2000 322,439,307 322 258,092 1,461,618 (93) 1,719,939
Components of comprehensive income:
Net income -- -- -- 334,939 -- 334,939
Unrealized gain on forward-
exchange contracts -- -- -- -- 406 406
Unrealized gain on available-
for-sale investments -- -- -- -- 4,598 4,598
-----------
Total comprehensive income 339,943
-----------
Adjustments to conform fiscal year
of pooled entity (384,103) -- (8,950) (44,942) (1,377) (55,269)
Exercises under the Stock Option
and Purchase Plans 12,206,590 12 114,257 -- -- 114,269
Repurchase of common stock (4,026,334) (4) (250,681) -- -- (250,685)
Tax benefit on exercise of non-qualified
stock options and disqualifying
dispositions under stock plans -- -- 238,934 -- -- 238,934
Dividends declared -- -- -- (5,977) -- (5,977)
------------ ----- --------- ----------- ------- -----------
BALANCE, JUNE 30, 2001 330,235,460 $ 330 $ 351,652 $ 1,745,638 $ 3,534 $ 2,101,154
------------ ----- --------- ----------- ------- -----------
See accompanying Notes to Consolidated Financial Statements.
22
23
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
Increase (decrease) in cash and cash equivalents
For the years ended JUNE 30, 2001 June 24, 2000 June 26, 1999
------------- ------------- -------------
Cash flows from operating activities:
Net income $ 334,939 $ 373,083 $ 265,281
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, amortization, and other 90,861 79,267 67,883
Plant and equipment charges 50,365 35,200 2,700
Charge for impairment of long-lived assets 124,432 -- --
Adjustment to conform fiscal year of pooled entity 3,608 -- --
Changes in assets and liabilities:
Accounts receivable 77,365 (92,307) 11,304
Inventories (27,939) (18,876) (3,704)
Deferred taxes 27,385 (29,415) (4,758)
Income tax refund receivable (43,937) 30,821 (36,649)
Other current assets 7,225 (5,624) (3,359)
Accounts payable (3,602) 41,147 18,717
Income taxes payable 163,263 163,743 110,278
Deferred income on shipments to distributors 7,428 4,911 (9,156)
All other accrued liabilities (1,745) 84,302 27,364
----------- --------- ---------
Net cash provided by operating activities 809,648 666,252 445,901
----------- --------- ---------
Cash flows from investing activities:
Additions to property, plant and equipment, net (336,545) (292,106) (123,652)
Other non-current assets (4,845) (11,402) 1,318
Purchases of available-for-sale securities (1,352,264) (706,144) (669,652)
Proceeds from sales/maturities of available-for-sale
securities 1,037,978 553,335 444,348
----------- --------- ---------
Net cash used in investing activities (655,676) (456,317) (347,638)
----------- --------- ---------
Cash flows from financing activities:
Issuance of common stock 114,269 99,129 69,229
Repurchase of common stock (250,685) (270,219) (131,457)
Dividends paid (5,977) (7,837) (5,781)
----------- --------- ---------
Net cash used in financing activities (142,393) (178,927) (68,009)
----------- --------- ---------
Net increase in cash and cash equivalents 11,579 31,008 30,254
Cash and cash equivalents:
Beginning of year 82,217 51,209 20,955
----------- --------- ---------
End of year $ 93,796 $ 82,217 $ 51,209
----------- --------- ---------
Supplemental disclosures of cash flow information:
Cash paid, net during the year for:
----------- --------- ---------
Income taxes $ 21,796 $ 21,573 $ 59,505
----------- --------- ---------
See accompanying Notes to Consolidated Financial Statements.
23
24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of Operations:
Maxim Integrated Products, Inc. (the Company) designs, develops, manufactures,
and markets linear and mixed-signal integrated circuits and is incorporated in
the state of Delaware. The Company's products include data converters, interface
circuits, microprocessor supervisors, operational amplifiers, power supplies,
multiplexers, delay lines, real-time clocks, microcontrollers, switches, battery
chargers, battery management circuits, RF circuits, fiber optic transceivers,
sensors, and voltage references. The Company is a global company with
manufacturing facilities in the United States, testing facilities in the
Philippines and Thailand, and sales offices throughout the world. The Company's
products are sold to customers in numerous markets, including communications,
industrial control, instrumentation, and data processing.
On April 11, 2001, the Company acquired Dallas Semiconductor Corporation (Dallas
Semiconductor), a leading supplier of specialty semiconductors. At the
completion of the merger, Dallas Semiconductor became a wholly owned subsidiary
of the Company. The transaction was accounted for as a pooling-of-interests for
financial reporting purposes in accordance with accounting principles generally
accepted in the United States, and accordingly, all financial data of the
Company presented in these financial statements has been restated to include the
historical financial data of Dallas Semiconductor. See Note 3 of the Notes to
Consolidated Financial Statements regarding this transaction.
2. Summary of Significant Accounting Policies:
Basis of presentation:
The consolidated financial statements include the accounts of the Company and
all of its wholly owned subsidiaries. Intercompany balances and transactions
have been eliminated. The Company has a 52-to-53-week fiscal year that ends on
the last Saturday in June. Accordingly, every sixth or seventh fiscal year will
be a 53-week fiscal year. Fiscal years 2000 and 1999 were 52-week years. Fiscal
year 2001 was a 53-week year. The impact of the additional week on the Company's
operating results consisted primarily of additional salary-related expenses.
These additional expenses were not material.
Cash equivalents and short-term investments:
For purposes of the statements of cash flows, the Company considers all highly
liquid debt instruments purchased with an original maturity of three months or
less at the date of purchase to be cash equivalents. Cash and cash equivalents
consist of demand accounts, government securities, and money market funds.
Short-term investments consist of U.S. Treasury and Federal Agency debt
securities, corporate notes, and municipal bonds with original maturities beyond
three months.
All of the Company's cash equivalents and short-term investments are considered
available-for-sale. Such securities are carried at fair market value based on
market quotes. Unrealized gains and losses, net of tax, on securities in this
category are reported as a separate component of stockholders' equity. The cost
of securities sold is based on the specific identification method. Interest
earned on securities is included in interest income.
24
25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Derivative financial instruments held for purposes other than trading:
The Company enters into forward exchange contracts to hedge certain firm sales
commitments denominated in foreign currencies and the net monetary assets and
liabilities of its foreign subsidiaries. The purpose of the Company's foreign
currency hedging activities is to protect the Company from the risk that the
eventual dollar cash flows resulting from the sale of products to international
customers will be adversely affected by changes in exchange rates.
The Company accounts for its forward exchange contracts under the provisions of
Statement of Financial Accounting Standards No. 133 (SFAS 133), "Accounting for
Derivative Instruments and Hedging Activities." The Company recognizes all
derivatives on the balance sheet at fair value. The Company does not enter into
any forward exchange contracts not designated as hedges. The criteria the
Company uses for designating an instrument as a hedge includes the instrument's
effectiveness in risk reduction, and one-to-one matching of derivative
instruments to underlying transactions. Gains and losses on forward exchange
contracts that are designated and effective as hedges of anticipated
transactions, for which a firm commitment has been attained, are deferred and
recognized in Other Comprehensive Income until the underlying transaction is
recognized in earnings. Gains and losses on forward exchange contracts generally
offset gains and losses on the underlying transactions. The Company adopted SFAS
133 as of the beginning of fiscal 2001. The effect of adopting SFAS 133 did not
have a material effect on the Company's financial position or results of
operations.
Inventories:
Inventories are stated at the lower of standard cost, which approximates actual
costs using the first in, first out method, or market.
Property, plant and equipment:
Property, plant and equipment are stated at cost. Depreciation is computed on
the straight line method over the estimated useful lives of the assets, which
range from 2 to 40 years. Leasehold improvements are amortized over the lesser
of their useful lives or the remaining term of the related lease. The Company
evaluates its property, plant and equipment in accordance with Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." The Company
performs periodic reviews to determine whether facts and circumstances exist
that would indicate that the carrying amount of property, plant and equipment
might not be fully recoverable. If facts and circumstances indicate that the
carrying amount of property, plant and equipment might not be fully recoverable,
the Company compares the projected undiscounted net cash flows associated with
the related asset or group of assets over their estimated remaining useful life
against their respective carrying amounts. Impairment, if any, is based on the
excess of the carrying amount over the fair value of those assets.
Revenue recognition:
Revenue from product sales direct to customers is generally recognized upon the
transfer of title. A portion of the Company's sales are made to domestic
distributors under agreements which provide for certain sales price rebates and
limited product return privileges. As a result, the Company defers recognition
of such sales until the merchandise is sold by the domestic distributors.
25
26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Securities and Exchange Commission (SEC) issued in December 1999 SEC Staff
Accounting Bulletin No. 101 (SAB101), "Revenue Recognition in Financial
Statements." SAB101 was adopted by the Company in the fourth quarter of fiscal
2001. The effect of adopting SAB101 did not have a material effect on the
Company's financial position or results of operations.
Foreign currency translation and remeasurement:
The U.S. dollar is the functional currency for the Company's foreign operations.
Using the U.S. dollar as the functional currency, monetary assets and
liabilities are remeasured at the year-end exchange rates. Certain non-monetary
assets and liabilities are remeasured using historical rates. Statements of
operations are remeasured at the average exchange rates during the year. Net
gains and losses from foreign currency remeasurements have been minimal and are
included in selling, general and administrative expenses.
During fiscal 1999, the Company changed the functional currency of its foreign
operations having the local currency as the functional currency to the U.S.
dollar to reflect the significance of U.S. dollar-based revenues for its foreign
operations. This change did not have a material impact on the Company's
financial position or results of operations.
Employee stock plans:
The Company accounts for its stock option and employee stock purchase plans in
accordance with provisions of the Accounting Principles Board's Opinion No. 25
(APB 25), "Accounting for Stock Issued to Employees." In addition, the Company
discloses pro forma information related to its stock plans according to
Financial Accounting Standards Board Statement No. 123 (SFAS 123), "Accounting
for Stock Based Compensation." See Note 9 of "Notes To Consolidated Financial
Statements."
Earnings per share:
Basic earnings per share are computed using the weighted average number of
common shares outstanding during the period. Diluted earnings per share
incorporates the incremental shares issuable upon the assumed exercise of stock
options and other potentially dilutive securities. The number of incremental
shares from the assumed issuance of stock options and other potentially dilutive
securities is calculated applying the treasury stock method.
Use of estimates:
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period.
Such estimates relate to the useful lives and fair value of fixed assets,
allowances for doubtful accounts and customer returns, inventory reserves,
potential reserves relating to litigation matters, accrued liabilities, and
other reserves. Actual results may differ from those estimates, and such
differences may be material to the financial statements.
Concentration of credit risk:
Due to the Company's credit evaluation and collection process, bad debt expenses
have not been significant. Credit risk with respect to trade receivables is
limited, because a large number of geographically diverse customers make up the
Company's customer base, thus spreading the credit risk. While a significant
portion
26
27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
of the Company's revenues is made through domestic and international
distributors, no single customer has accounted for greater than 10% of net
revenues in the last three fiscal years.
The Company places its investments with high credit quality financial
institutions, limits the amount of credit exposure to any one financial
institution or instrument, and is exposed to credit risk in the event of default
by these institutions to the extent of amounts recorded at the balance sheet
date. To date, the Company has not experienced losses on any investments.
Concentration of other risks:
The semiconductor industry is characterized by rapid technological change,
competitive pricing pressures, and cyclical market patterns. The Company's
results of operations are affected by a wide variety of factors, including
general economic conditions, both at home and abroad; economic conditions
specific to the semiconductor industry and to the analog portion of that
industry; demand for the Company's products; the timely introduction of new
products; implementation of new manufacturing technologies; manufacturing
capacity; the ability to manufacture efficiently; the ability to safeguard
patents and intellectual property in a rapidly evolving market; and reliance on
assembly and, to a small extent, wafer fabrication subcontractors and on
independent distributors and sales representatives. As a result, the Company may
experience substantial period-to-period fluctuations in future operating results
due to the factors mentioned above or other factors.
3. Business Combination:
On April 11, 2001, the Company acquired Dallas Semiconductor, a leading supplier
of specialty semiconductors. The Company issued approximately 41.0 million
shares of its common stock in exchange for all the outstanding common stock of
Dallas Semiconductor. In addition, the Company exchanged all options to purchase
Dallas Semiconductor common stock for options to purchase approximately 5.9
million shares of the Company's common stock. The transaction was accounted for
as a pooling-of-interests and qualifies as a tax-free reorganization. As a
result of the acquisition, during the fourth quarter of fiscal 2001, the Company
recorded merger costs of $26.4 million. In addition, the Company recorded
special charges of $137.0 million in the fourth quarter of fiscal 2001. The
special charges resulted from the significant decrease in demand that occurred
during the fourth quarter of fiscal 2001 for Dallas Semiconductor products in
combination with the Company's plan for the utilization of Dallas
Semiconductor's long-lived assets. See "Merger and Special Charges" in Note 13
of the Notes to Consolidated Financial Statements.
All financial data of the Company presented in these financial statements has
been restated to include the historical financial data of Dallas Semiconductor
in accordance with accounting principles generally accepted in the United States
and pursuant to Regulation S-X of the Securities and Exchange Commission.
Adjustments relating to deferral of income on shipments to distributors were
required to conform the accounting policies of the acquired company. Both the
Company and Dallas Semiconductor have sales to domestic distributors under
agreements that provide for certain price rebates, allowances and return
privileges. The Company defers recognition of these sales until the merchandise
is sold by the domestic distributors. Dallas Semiconductor recognized these
sales, which were reduced by estimated future price reductions and returns, upon
shipment to domestic distributors. These adjustments reflect the conformity of
Dallas Semiconductor's accounting policies and presentation to that of the
Company's.
27
28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company and Dallas Semiconductor had certain differences in the
classification of revenues and expenses in their historical statements of
operations and assets and liabilities in their historical balance sheets.
Adjustments have been made to conform the combined companies' income statement
and balance sheet classifications. In addition, the lives of the property, plant
and equipment acquired as part of the merger with Dallas Semiconductor were
conformed to the lives used by the Company as appropriate. The change, which was
prospective in nature, reflects the Company's anticipated economic benefit from
those assets.
The Company's statement of income for the fiscal year ended June 26, 1999 has
been combined with the Dallas Semiconductor statement of income for the fiscal
year ended January 2, 2000. The Company's statement of income for the fiscal
year ended June 24, 2000 has been combined with the Dallas Semiconductor
statement of income for the fiscal year ended December 31, 2000. The Company's
statement of income for the fiscal year ended June 30, 2001 includes the results
of operations for Dallas Semiconductor for the 12 months ended June 30, 2001.
This presentation has the effect of including Dallas Semiconductor's results of
operations for the 6-month period ended December 31, 2000 in both the Company's
fiscal years ended June 24, 2000 and June 30, 2001. Net revenues and net income
for Dallas Semiconductor for the 6-month period ended December 31, 2000, were
$270.4 million and $48.9 million, respectively. The net income for Dallas
Semiconductor for the 6-month period ended December 31, 2000, of $48.9 million
has been reported as a decrease to the Company's fiscal 2001 retained earnings
within the Consolidated Statement of Stockholders' Equity for the year ended
June 30, 2001. The Company's balance sheet as of June 24, 2000 was combined with
Dallas Semiconductor's balance sheet as of December 31, 2000. The combining
periods for the Consolidated Statements of Income are summarized as follows:
Fiscal 2001 Quarterly Periods
Fiscal 1999 Fiscal 2000 ---------------------------------------------------------------
Year Ended Year Ended First Second Third Fourth
------------- ------------- -------------- ------------- ------------- -------------
Maxim June 26, 1999 June 24, 2000 Sept. 23, 2000 Dec. 30, 2000 Mar. 31, 2001 June 30, 2001
Dallas Semiconductor Jan. 2, 2000 Dec. 31, 2000 Oct. 1, 2000 Dec. 31, 2000 Apr. 1, 2001 June 30, 2001
The results of operations previously reported by the separate entities and the
combined amounts presented in the accompanying financial statements are
summarized below:
(Amounts in thousands)
For the years ended June 24, 2000 June 26, 1999
------------- -------------
Net Revenues:
Maxim $ 864,924 $ 606,965
Dallas Semiconductor 516,965 390,207
Adjustments to conform accounting policies (8,116) 3,443
Reclassifications to conform financial
statement presentation 2,312 2,234
----------- ----------
Combined $ 1,376,085 $1,002,849
----------- ----------
Net Income:
Maxim $ 280,619 $ 196,122
Dallas Semiconductor 95,415 68,338
Adjustments to conform accounting policies (2,951) 821
----------- ----------
Combined $ 373,083 $ 265,281
----------- ----------
28
29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Financial Instruments:
Investments:
In accordance with Statement of Financial Accounting Standard No. 115 (SFAS
115), "Accounting for Certain Investments in Debt and Equity Securities," the
Company recorded an unrealized holding gain of $7.2 million on short-term
investments at June 30, 2001 ($2.2 million at June 24, 2000). The unrealized
holding gain resulted from a decline in interest rates that occurred during the
third and fourth quarters of fiscal 2001. Fair market values are calculated
based upon prevailing market quotes at the end of each fiscal year.
Available-for-sale investments at June 30, 2001 were as follows:
Unrealized Unrealized Estimated
(Amounts in thousands) Cost Gain Loss Fair Value
---------- ---------- ---------- ----------
U.S. Treasury securities $ 424,014 $1,551 $ -- $ 425,565
Federal Agency Debt securities 525,097 2,018 -- 527,115
Corporate notes 98,455 2,076 -- 100,531
Municipal bonds 71,830 1,515 -- 73,345
---------- ---------- ---------- ----------
$1,119,396 $7,160 $ -- $1,126,556
---------- ---------- ---------- ----------
Available-for-sale investments at June 24, 2000 were as follows:
Unrealized Unrealized Estimated
(Amounts in thousands) Cost Gain Loss Fair Value
---------- ---------- ---------- ----------
U.S. Treasury securities $ 290,023 $ -- $ -- $ 290,023
Federal Agency Debt securities 297,866 -- -- 297,866
Corporate notes 187,753 1,877 -- 189,630
Municipal bonds 36,891 309 -- 37,200
---------- ---------- ---------- ----------
$ 812,533 $2,186 $ -- $ 814,719
---------- ---------- ---------- ----------
Gross realized gains or losses for fiscal 2001, 2000, and 1999 were immaterial.
The amortized cost and estimated fair value of investments in debt securities at
June 30, 2001, by contractual maturity, were as follows:
Estimated
(Amounts in thousands) Cost Fair Value
---------- ----------
Due in 1 year or less $ 969,643 $ 973,399
Due in 1-2 years 58,883 60,526
Due in 2-4 years 45,446 46,428
Due after 4 years 45,424 46,203
---------- ----------
$1,119,396 $1,126,556
---------- ----------
29
30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Foreign exchange contracts:
At June 30, 2001, the Company held forward exchange contracts, all having
maturities of less than one year, to exchange various foreign currencies for
U.S. dollars in the amount of $63.6 million. The table below summarizes, by
currency, the notional amounts of the Company's forward exchange contracts and
net unrealized gain or loss at the end of fiscal 2001 and 2000. The net
unrealized gain or loss approximates the carrying value of these contracts.
JUNE 30, 2001 June 24, 2000
----------------------------- -----------------------------
NOTIONAL UNREALIZED NOTIONAL UNREALIZED
(Amounts in thousands) AMOUNTS GAIN/(LOSS) AMOUNTS GAIN/(LOSS)
-------- ----------- -------- -----------
Currency:
Japanese Yen $30,089 $ 1,084 $59,326 $ 1,593
British Pound Sterling 18,295 356 20,307 612
Euro 14,659 648 19,045 555
Swiss Franc 552 27 477 (8)
------- ------- ------- -------
$63,595 $ 2,115 $99,155 $ 2,752
------- ------- ------- -------
The net unrealized gain is potentially subject to market and credit risk as it
represents appreciation of the hedge position over spot exchange rates at year
end. The Company controls credit risk through credit approvals and monitoring
procedures.
5. Inventories:
The components of inventories are:
(Amounts in thousands) JUNE 30, 2001 June 24, 2000
------------- -------------
Raw materials $ 21,893 $ 21,333
Work-in-process 91,727 72,485
Finished goods 49,036 45,859
-------- --------
$162,656 $139,677
-------- --------
6. Property, Plant and Equipment:
Property, plant and equipment consist of:
(Amounts in thousands) JUNE 30, 2001 June 24, 2000
------------- -------------
Land $ 52,596 $ 51,344
Buildings and building improvements 307,774 247,932
Machinery and equipment 1,048,176 848,776
----------- -----------
1,408,546 1,148,052
----------- -----------
Less accumulated depreciation (696,507) (470,064)
----------- -----------
$ 712,039 $ 677,988
----------- -----------
During fiscal 2001, the Company recorded charges of $39.2 million to cost of
goods sold and $11.2 million to research and development costs to reduce the
carrying value of plant and equipment that was abandoned, no longer in use, or
whose estimated useful lives were shortened, resulting in accelerated
depreciation. In addition, in the fourth quarter of fiscal 2001, the Company
recorded impairment charges of $124.4 million related to the long-lived assets
of Dallas Semiconductor. See Note 13 of the Notes to Consolidated Financial
Statements. During fiscal 2000, the Company recorded charges of $27.1 million to
cost of goods sold and $8.1 million to research and development costs to reduce
the carrying value of plant and equipment that was abandoned, no longer in use,
or whose estimated useful lives were shortened, resulting in accelerated
depreciation.
30
31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. Commitments and Contingencies:
The Company is a defendant in a patent infringement lawsuit that alleges that
certain of the Company's products infringe a United States patent owned by the
plaintiff in the lawsuit. The lawsuit is in the discovery phase, with a jury
trial on the issues of liability and willfulness likely to occur in calendar
2002. In addition, the Company is subject to other legal proceedings and claims
that arise in the normal course of its business. The Company does not believe
that the ultimate outcome of these matters will have a material adverse effect
on the financial position of the Company.
The Company leases certain of its facilities under various operating leases that
expire at various dates through 2010. The lease agreements generally include
renewal provisions and require the Company to pay property taxes, insurance, and
maintenance costs.
Future annual minimum lease payments for all leased facilities are as follows:
Fiscal Year (Amounts in thousands)
----------------------
2002 $ 3,122
2003 2,436
2004 1,640
2005 1,054
2006 691
2007-2010 1,194
-------
$10,137
-------
Rent expense was approximately $3.7 million, $2.7 million and $2.0 million in
fiscal 2001, 2000, and 1999, respectively.
8. Comprehensive Income:
Comprehensive income consists of net income and net unrealized gains on
available-for-sale investments and forward exchange contracts. The components of
other comprehensive income and related tax effects were as follows:
(Amounts in thousands)
For the years ended JUNE 30, 2001 June 24, 2000
------------- -------------
Change in unrealized gains on investments,
net of tax of $2,618 in 2001 and $809 in 2000 $ 4,598 $1,377
Change in unrealized gains on forward exchange contracts,
net of tax of $209 in 2001 406 --
Adjustment to conform fiscal year of pooled entity (1,377) --
------- ------
$ 3,627 $1,377
------- ------
Accumulated other comprehensive income presented in the Consolidated Balance
Sheets consists of the accumulated net unrealized gains on available-for-sale
investments and forward exchange contracts and the accumulated foreign currency
translation adjustments. Foreign currency translation adjustments are not tax
affected.
31
32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. Employee Stock and Benefit Plans:
Stock option and purchase plans:
At June 30, 2001, the Company has reserved a total of 93,343,721 of its common
shares for issuance to employees and certain others under its 1996 Stock
Incentive Plan, 1993 Officer and Director Stock Option Plan, 1987 Stock Option
Plan, 1987 Supplemental Stock Option Plan, 1983 Incentive Stock Option Plan,
1987 Employee Stock Participation Plan (ESP Plan), 1988 Nonemployee Director
Stock Option Plan, and Supplemental Nonemployee Stock Option Plan. Under the
plans, options are generally granted at a price not less than fair market value
as determined by the Board or Plan administrator at the date of grant. Subject
to certain limitations, the Board or Plan administrator has authority to make
grants at prices less than fair market value. Options granted under the stock
option plans described above generally vest within 5 years and expire from 5 to
10 years from the date of the grant or such shorter term as may be provided in
the agreement. Under the 1987 Employee Stock Participation Plan and the Dallas
Semiconductor Stock Purchase Plan, employees of the Company may purchase shares
of common stock at a price not less than the lesser of 85% of the fair market
value of the stock on the date the purchase right is granted or the date the
right is exercised. During fiscal 2001, the Company recorded $238,934,000 of tax
benefit on the exercise of nonqualified stock options and on disqualifying
dispositions under stock plans ($154,958,000 in fiscal 2000 and $137,062,000 in
fiscal 1999).
Information with respect to activity under the stock option plans and ESP Plan
is set forth below:
Outstanding Options
-----------------------------------
Shares Weighted Average
Available Number of Price
for Grant Shares Per Share
----------- ----------- ----------------
BALANCE, JUNE 27, 1998 3,073,242 96,761,269 $ 6.39
Shares reserved 16,878,418 -- --
Options granted (17,438,391) 17,438,391 $18.64
Options terminated 5,763,082 (5,763,082) $ 9.22
Options exercised -- (18,233,079) $ 3.40
----------- ----------- ------
BALANCE, JUNE 26, 1999 8,276,351 90,203,499 $ 9.11
Shares reserved 14,910,256 -- --
Options granted (14,571,524) 14,571,524 $39.77
Options terminated 3,443,779 (3,443,779) $14.70
Options exercised -- (18,130,266) $ 4.75
----------- ----------- ------
BALANCE, JUNE 24, 2000 12,058,862 83,200,978 $14.86
Adjustment to conform fiscal
year of pooled entity (2,374,944) (941,841) --
Shares reserved 13,607,256 -- --
Options granted (23,022,427) 23,022,427 $46.78
Options terminated 3,789,540 (3,789,540) $25.31
Options exercised -- (12,206,590) $ 9.44
----------- ----------- ------
BALANCE, JUNE 30, 2001 4,058,287 89,285,434 $24.20
----------- ----------- ------
At June 30, 2001, 33,070,686 options to purchase shares of common stock were
exercisable. Options exercisable at June 24, 2000 and June 26, 1999 were
32,811,193 and 36,716,962, respectively.
32
33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes information about options outstanding at June 30,
2001:
Outstanding Options Options Exercisable
------------------------------------------------- --------------------------------
Weighted Average Weighted Weighted
Range of Number Remaining Average Number Average
Exercise Outstanding at Contractual Exercise Exercisable at Exercise
Prices June 30, 2001 Life (Years) Price June 30, 2001 Price
--------------- -------------- ---------------- -------- -------------- --------
$ 0.45 - $7.47 18,705,447 3.03 $ 3.72 16,968,806 $ 3.52
$ 7.48 - $14.53 20,450,192 5.67 $11.48 10,713,391 $10.20
$14.68 - $33.50 19,487,013 7.27 $21.73 3,341,285 $20.32
$33.53 - $48.63 18,752,867 9.32 $39.57 1,403,294 $38.32
$48.96 - $87.06 11,889,915 9.08 $58.09 643,910 $58.53
--------------- ---------- ------ ------ ---------- ------
$ 0.45 - $87.06 89,285,434 6.69 $24.20 33,070,686 $ 9.93
--------------- ---------- ------ ------ ---------- ------
Stock-based compensation:
Under SFAS 123, the Company may elect to continue to account for the grant of
stock options under APB Opinion 25, in which options granted with an exercise
price equal to the fair market value on the date of grant do not require
recognition of expense in the Company's financial statements. Under SFAS 123,
the Company is, however, required to provide pro forma disclosure regarding net
income and earnings per share as if the Company had accounted for its employee
stock options (including shares issued under the 1996 Stock Incentive Plan, 1993
Officer and Director Stock Option Plan, 1987 Stock Option Plan, 1987
Supplemental Stock Option Plan, 1988 Nonemployee Director Stock Option Plan, and
Supplemental Nonemployee Stock Option Plan, collectively called "options")
granted subsequent to June 30, 1995, under the methodology prescribed by that
statement. Since the Company has elected to account for the grant of options
under APB Opinion No. 25, the following information is for disclosure purposes
only and it will not affect the current or future earnings of the Company.
The valuation of options granted in fiscal 2001, 2000, and 1999 reported below
has been estimated at the date of grant using the Black-Scholes option pricing
model with the following weighted average assumptions:
Stock Option Plans Employee Stock Participation Plan
----------------------------------- -----------------------------------
Fiscal year 2001 2000 1999 2001 2000 1999
------- ------- ------- ------- ------- -------
Expected option holding period (in years) 4.5 4.6 4.6 0.5 0.5 0.5
Risk-free interest rate 5.1% 5.9% 6.0% 5.1% 5.6% 5.4%
Stock price volatility 0.59 0.54 0.50 0.59 0.54 0.50
Dividend yield .04% .05% .05% .04% .05% .05%
The Black-Scholes option pricing model was developed for use in estimating the
value of traded options that have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions, including the expected stock price volatility. Because
the Company's options have characteristics significantly different from those of
traded options, and because changes in the subjective input assumptions can
materially affect the estimate of value, in the opinion of management, the
existing models do not necessarily provide a reliable single measure of the
value of the options. The following is a summary of weighted average grant date
values generated by application of the Black-Scholes model:
33
34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Weighted Average Grant Date Value
For the years ended JUNE 30, 2001 June 24, 2000 June 26, 1999
------------------- ------------- ------------- -------------
Stock Option Plans $23.86 $20.93 $ 9.39
Employee Stock Participation Plan $12.29 $ 7.82 $ 4.88
------ ------ ------
As required under SFAS 123, the reported net income and earnings per share have
been presented to reflect the impact had the Company been required to include
the amortization of the Black-Scholes option value as an expense. The adjusted
amounts are as follows:
For the years ended JUNE 30, 2001 June 24, 2000 June 26, 1999
------------------- ----------- ----------- -----------
Pro forma net income adjusted for
SFAS 123 (in thousands) $ 205,414 $ 292,567 $ 221,219
----------- ----------- -----------
Pro forma diluted earnings per share
adjusted for SFAS 123 $ 0.57 $ 0.81 $ 0.64
----------- ----------- -----------
401(k) retirement plan:
The Company sponsors a 401(k) retirement plan [401(k) Plan] under which
full-time U.S. employees may contribute, on a pretax basis, between 1% and 20%
of their total annual income from the Company, subject to a maximum aggregate
annual contribution imposed by the Internal Revenue Code. Company contributions
to the 401(k) Plan were $3.0 million, $2.5 million, and $1.7 million in fiscal
2001, 2000, and 1999, respectively.
10. Earnings Per Share:
The following table sets forth the computation of basic and diluted earnings per
share:
(Amounts in thousands, except per share data)
For the years ended JUNE 30, 2001 June 24, 2000 June 26, 1999
------------------- ------------- ------------- -------------
Numerator for basic earnings per share
and diluted earnings per share
Net Income $334,939 $373,083 $265,281
-------- -------- --------
Denominator for basic earnings per share 325,736 316,887 303,038
Effect of dilutive securities:
Stock options and warrants 35,884 42,661 41,322
-------- -------- --------
Denominator for diluted earnings per share 361,620 359,548 344,360
-------- -------- --------
Earnings per share:
Basic $ 1.03 $ 1.18 $ 0.88
Diluted $ 0.93 $ 1.04 $ 0.77
-------- -------- --------
11. Income Taxes:
The provision for income taxes consists of the following:
(Amounts in thousands)
For the years ended JUNE 30, 2001 June 24, 2000 June 26, 1999
------------------- --------- --------- ---------
Federal
Current $ 175,874 $ 192,570 $ 119,668
Deferred (22,800) (27,835) (4,667)
State
Current 16,195 21,010 13,754
Deferred (2,100) (1,845) (207)
Foreign
Current 3,313 4,260 4,289
Deferred (433) (26) --
--------- --------- ---------
$ 170,049 $ 188,134 $ 132,837
--------- --------- ---------
34
35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Pretax income from foreign operations was approximately $9.2 million, $17.4
million, and $12.6 million for the years ended June 30, 2001, June 24, 2000, and
June 26, 1999, respectively.
The Company enjoys tax holidays with respect to its operations in the
Philippines and Thailand that will expire in fiscal 2002 and 2004, respectively.
The impact of these tax holidays was to increase net income by approximately
$1.1 million ($0.003 diluted earnings per share), $2.7 million ($0.008 diluted
earnings per share), and $1.1 million ($0.003 diluted earnings per share) during
fiscal 2001, 2000, and 1999, respectively. At June 30, 2001, accumulated pretax
earnings of approximately $12.5 million are intended to be permanently
reinvested outside the United States, and no federal tax has been provided on
these earnings.
The provision for income taxes differs from the amount computed by applying the
statutory rate as follows:
For the years ended JUNE 30, 2001 June 24, 2000 June 26, 1999
------------------- ------------- ------------- -------------
Federal statutory rate 35.0% 35.0% 35.0%
State tax, net of federal benefit 1.8 2.1 2.2
General business credits (1.3) (0.8) (0.9)
Exempt earnings of Foreign Sales Corporation (2.5) (2.1) (2.1)
Other 0.7 (0.7) (0.8)
---- ---- ----
33.7% 33.5% 33.4%
---- ---- ----
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The components of the
Company's deferred tax assets and liabilities are as follows:
(Amounts in thousands) JUNE 30, 2001 June 24, 2000
---------------------- --------- ---------
Deferred tax assets:
Inventory valuation and reserves $ 64,087 $ 32,423
Distributor related accruals and
sales return and allowance accruals 37,647 36,860
Deferred revenue 4,745 5,588
Accrued compensation 19,242 20,063
Net operating loss carryovers 84,120 84,087
Tax credit carryovers 52,325 19,100
Other reserves and accruals not
currently deductible for tax reporting 22,538 15,787
Other 2,929 4,166
--------- ---------
Total deferred tax assets 287,633 218,074
Deferred tax liabilities--fixed assets cost recovery (47,983) (30,496)
--------- ---------
Net deferred tax assets before
valuation allowance 239,650 187,578
Valuation allowance (136,445) (107,913)
--------- ---------
Net deferred tax assets $ 103,205 $ 79,665
--------- ---------
The valuation allowance of $136.4 million is attributable to the tax benefits on
gains realized from the exercise of stock options, and when realized, will be
recorded as a credit to additional paid-in capital. Realization of the net
deferred tax assets is dependent upon the Company's ability to generate future
taxable income.
35
36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. Segment Information:
The Company operates and tracks its results in one reportable segment. The
Company designs, develops, manufactures, and markets a broad range of linear and
mixed-signal integrated circuits. The Chief Executive Officer has been
identified as the Chief Operating Decision Maker as defined by Statement of
Financial Accounting Standards No. 131 (SFAS 131), "Disclosures about Segments
of an Enterprise and Related Information."
Enterprise-wide information is provided in accordance with SFAS 131.
Geographical revenue information is based on the customer's ship-to location.
Long-lived assets consist of property, plant and equipment. Property, plant and
equipment information is based on the physical location of the assets at the end
of each fiscal year.
Net revenues from unaffiliated customers by geographic region were as follows:
(Amounts in thousands)
For the years ended JUNE 30 2001 June 24, 2000 June 26, 1999
---------------------- ---------- ---------- ----------
United States $ 682,670 $ 648,921 $ 470,946
Europe 384,827 298,741 221,824
Pacific Rim 486,407 415,634 298,725
Rest of World 22,709 12,789 11,354
---------- ---------- ----------
$1,576,613 $1,376,085 $1,002,849
---------- ---------- ----------
Net long-lived assets by geographic region were as follows:
(Amounts in thousands) JUNE 30, 2001 June 24, 2000
---------------------- -------- --------
United States $646,519 $622,782
Rest of World 65,520 55,206
-------- --------
$712,039 $677,988
-------- --------
13. Merger and Special Charges:
During the fourth quarter of fiscal 2001, the Company recorded merger costs in
connection with the acquisition of Dallas Semiconductor of approximately $26.4
million. These costs consist of approximately $14.1 million intended to satisfy
the change in control payments under previously existing employment contracts
and other non-employee director arrangements for which there was no future
economic benefit; a $5.8 million payment to be made under a change in control
provision in a previously existing life insurance arrangement for which there
was no future economic benefit; and $6.5 million for fees related to investment
banking, legal, accounting, filings with regulatory agencies, financial
printing, and other related costs. It is expected that substantially all of
these direct transaction costs will be paid out of existing cash reserves within
12 months of the consummation of the merger.
During the fourth quarter of fiscal 2001, the Company recorded special charges
of $137.0 million. These special charges resulted from the significant decrease
in demand that occurred during the fourth quarter of fiscal 2001 for Dallas
Semiconductor's products in combination with the Company's intention to close
Dallas Semiconductor's 6-inch wafer manufacturing facility and dispose of the
related equipment. The Company intends to complete construction of an 8-inch
wafer manufacturing facility located in Dallas, Texas, that was under
construction when the merger was consummated between the Company and Dallas
Semiconductor. Once complete, the 8-inch wafer manufacturing facility will serve
as Dallas
36
37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Semiconductor's primary wafer manufacturing facility. In addition, the Company
is concentrating test operations of the combined company at the Company's test
facilities located in the Philippines and Thailand. Once complete, certain
Dallas Semiconductor test equipment will be disposed of. The Company concluded
that the above facts indicated that Dallas Semiconductor's long-lived assets
might be impaired, and as required by accounting principles generally accepted
in the United States, performed a cash flow analysis of the related assets.
Based on the cash flow analysis, the cash flows expected to be generated by
Dallas Semiconductor's long-lived assets during their estimated remaining useful
lives are not sufficient to recover the net book value of the assets. The
Company obtained a valuation report from an independent appraiser of the
estimated fair value of the equipment at June 30, 2001, and validated the report
with its own knowledge of the semiconductor used equipment market. Based on the
cash flow analysis and valuation report, an impairment charge of $124.4 million
was recorded to reduce the net book value of Dallas Semiconductor's long-lived
assets to fair value.
In addition to the above, the Company recorded special charges of $12.6 million
to reflect the reorganization of the Company's sales organization, purchase
order cancellation fees, and the reduction in the Company's manufacturing
workforce. The above actions directly impacted employees in the Company's sales,
marketing, and manufacturing organizations. It is expected that 230 employees
will be terminated by these actions, of which 93 were terminated and $2.0
million of termination benefits were paid by June 30, 2001.
The following table summarizes the activity related to the above actions for the
year ended June 30, 2001:
Purchase Order
Merger Impairment Cancellation
(Amounts in thousands) Costs Charges Severance Fees Other Total
-------------------------- -------- --------- ------- ------- ------ ---------
Merger and special charges $ 26,434 $ 124,432 $ 2,542 $ 7,797 $2,244 $ 163,449
Non-cash charges (2,622) (124,432) -- -- -- (127,054)
Cash payments (15,671) -- (1,989) (284) -- (17,944)
-------- --------- ------- ------- ------ ---------
Reserve balance at June 30, 2001 $ 8,141 $ -- $ 553 $ 7,513 $2,244 $ 18,451
-------- --------- ------- ------- ------ ---------
14. Subsequent Event (unaudited):
Following the extraordinary events that occurred in the United States on
September 11, 2001, the Company has authorized the repurchase of up to 10
million shares of its common stock during the five business days following the
reopening of the United States securities markets on September 17, 2001.
37
38
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Maxim Integrated Products, Inc.
We have audited the accompanying consolidated balance sheets of Maxim Integrated
Products, Inc., as of June 30, 2001 and June 24, 2000, and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the three fiscal years in the period ended June 30, 2001. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of Dallas Semiconductor
Corporation, a wholly owned subsidiary, which statements reflect total assets of
$728.4 million as of December 31, 2000 and total revenues of $517.0 million for
the year then ended. Those statements were audited by other auditors whose
report has been furnished to us, and our opinion, insofar as it relates to data
included for Dallas Semiconductor for the year ended December 31, 2000, is based
solely on the report of the other auditors.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits and the report of other auditors
provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material respects,
the consolidated financial position of Maxim Integrated Products, Inc., at June
30, 2001 and June 24, 2000, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended June 30, 2001, in
conformity with accounting principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
San Jose, California
August 14, 2001
38
39
SELECTED FINANCIAL DATA
(Amounts in thousands, except per share data)
Fiscal Year 2001 2000 1999 1998 1997
----------------------- ---------- ---------- ---------- ---------- --------
Net revenues $1,576,613 $1,376,085 $1,002,849 $ 904,438 $786,770
---------- ---------- ---------- ---------- --------
Cost of goods sold $ 537,148 $ 503,801 $ 379,242 $ 346,071 $315,864
Gross margin % 65.9% 63.4% 62.2% 61.7% 59.9%
---------- ---------- ---------- ---------- --------
Operating income $ 445,166 $ 508,560 $ 370,158 $ 331,959 $281,687
% of net revenues 28.2% 37.0% 36.9% 36.7% 35.8%
---------- ---------- ---------- ---------- --------
Net income $ 334,939 $ 373,083 $ 265,281 $ 234,000 $197,048
---------- ---------- ---------- ---------- --------
Earnings per share:
Basic $ 1.03 $ 1.18 $ 0.88 $ 0.79 $ 0.69
Diluted $ 0.93 $ 1.04 $ 0.77 $ 0.69 $ 0.60
---------- ---------- ---------- ---------- --------
Shares used in the calculation
of earnings per share:
Basic 325,736 316,887 303,038 296,151 286,309
Diluted 361,620 359,548 344,360 340,356 329,890
---------- ---------- ---------- ---------- --------
Dividends declared per share $ 0.02 $ 0.02 $ 0.02 $ 0.02 $ 0.01
---------- ---------- ---------- ---------- --------
Cash, cash equivalents
and short-term investments $1,220,352 $ 896,936 $ 710,074 $ 453,302 $340,372
Working capital $1,373,715 $1,045,548 $ 886,697 $ 589,340 $469,382
Total assets $2,430,531 $2,087,438 $1,603,122 $1,242,190 $985,858
Stockholders' equity $2,101,154 $1,719,939 $1,369,449 $1,034,422 $804,845
---------- ---------- ---------- ---------- --------
Net income for fiscal 2001 included merger and special charges of $163.4 million
($0.30 diluted earnings per share). Excluding the merger and special charges
noted above, net income and diluted net income per share would have been $442.8
million and $1.22, respectively, for the year ended June 30, 2001. See Note 13
to the Notes to Consolidated Financial Statements for additional information on
the "Merger and Special Charges."
39
40
FINANCIAL HIGHLIGHTS BY QUARTER
Unaudited
(Amounts in thousands, except per share data)
Quarter Ended
Fiscal 2001 6/30/01 3/31/01 12/30/00 9/23/00
--------------------- ------------ ------------ ------------ ------------
Net revenues $ 318,147 $ 397,840 $ 438,317 $ 422,309
------------ ------------ ------------ ------------
Cost of goods sold $ 96,231 $ 138,390 $ 154,112 $ 148,415
Gross margin % 69.8% 65.2% 64.8% 64.9%
------------ ------------ ------------ ------------
Operating income (loss) $ (40,671) $ 150,835 $ 169,259 $ 165,743
% of net revenues (12.8%) 37.9% 38.6% 39.2%
------------ ------------ ------------ ------------
Net income (loss) $ (16,166) $ 109,856 $ 122,176 $ 119,073
------------ ------------ ------------ ------------
Earnings (loss) per share:
Basic $ (0.05) $ 0.34 $ 0.38 $ 0.37
Diluted $ (0.05) $ 0.31 $ 0.34 $ 0.33
------------ ------------ ------------ ------------
Shares used in calculation
of earnings (loss) per share:
Basic 328,789 326,716 324,491 322,946
Diluted 328,789 360,071 361,563 364,493
------------ ------------ ------------ ------------
Dividends declared per share $ -- $ 0.006 $ 0.006 $ 0.006
------------ ------------ ------------ ------------
Market price range - High $ 58.40 $ 69.06 $ 85.06 $ 87.69
- Low $ 34.92 $ 41.59 $ 47.75 $ 62.19
------------ ------------ ------------ ------------
Quarter Ended
Fiscal 2000 6/24/00 3/25/00 12/25/99 9/25/99
--------------------- ------------ ------------ ------------ ------------
Net revenues $ 389,823 $ 363,754 $ 324,678 $ 297,830
------------ ------------ ------------ ------------
Cost of goods sold $ 141,084 $ 132,538 $ 119,066 $ 111,113
Gross margin % 63.8% 63.6% 63.3% 62.7%
------------ ------------ ------------ ------------
Operating income $ 141,574 $ 135,016 $ 120,904 $ 111,066
% of net revenues 36.3% 37.1% 37.2% 37.3%
------------ ------------ ------------ ------------
Net income $ 106,010 $ 100,503 $ 86,709 $ 79,861
------------ ------------ ------------ ------------
Earnings per share:
Basic $ 0.33 $ 0.32 $ 0.28 $ 0.26
Diluted $ 0.29 $ 0.28 $ 0.24 $ 0.22
------------ ------------ ------------ ------------
Shares used in calculation
of earnings per share:
Basic 321,602 318,733 314,714 312,497
Diluted 363,358 361,834 357,537 355,463
------------ ------------ ------------ ------------
Dividends declared per share $ 0.006 $ 0.006 $ 0.006 $ 0.006
------------ ------------ ------------ ------------
Market price range - High $ 75.69 $ 73.69 $ 47.94 $ 36.91
- Low $ 50.31 $ 45.50 $ 31.55 $ 30.13
------------ ------------ ------------ ------------
Net income for the quarter ended June 30, 2001, included merger and special
charges of $163.4 million ($0.30 diluted earnings per share). Excluding the
merger and special charges noted above, net income and diluted net income per
share would have been $91.7 million and $0.25, respectively, for the quarter
ended June 30, 2001. See Note 13 to the Notes to Consolidated Financial
Statements for additional information on the "Merger and Special Charges."
40
41
BOARD OF DIRECTORS, CORPORATE OFFICERS, AND VICE PRESIDENTS
BOARD OF DIRECTORS
John F. Gifford
Chairman of the Board, President
and Chief Executive Officer
James R. Bergman
Director
General Partner of DSV Partners
B. Kipling Hagopian
Director
Special Limited Partner of Brentwood Venture Capital
Partner,
Apple/Oaks Partners LLC
Eric P. Karros
Director
Los Angeles Dodgers Organization
A. R. Frank Wazzan, Ph.D.
Director
Distinguished Professor and Dean Emeritus,
School of Engineering & Applied Sciences at
University of California, Los Angeles
M.D. Sampels
Director
Shareholder in Jenkens & Gilchrist, a Professional Corporation
CORPORATE OFFICERS AND VICE PRESIDENTS
John F. Gifford
Chairman of the Board, President
and Chief Executive Officer
Frederick G. Beck
Vice President
Tunc Doluca
Vice President
Laszlo V. Gal, Ph.D.
Vice President
Robi B. Georges
Vice President
Parviz Ghaffaripour
Vice President
Anthony C. Gilbert
Corporate Secretary
Jennifer E. Gilbert
Vice President
Alan P. Hale
Vice President
Richard C. Hood
Vice President
Kenneth J. Huening
Vice President
Carl W. Jasper
Vice President and Chief Financial Officer
Nasrollah Navid, Ph.D.
Vice President
Pirooz Parvarandeh
Vice President
Charles G. Rigg
Vice President
Robert F. Scheer
Vice President
Sharon E. Smith-Lenox
Corporate Controller and
Principal Accounting Officer
Vijay Ullal
Vice President
41
42
CORPORATE DATA
STOCKHOLDER INFORMATION
INDEPENDENT AUDITORS
Ernst & Young LLP
San Jose, California
LEGAL COUNSEL
Morrison & Foerster LLP
Palo Alto, California
REGISTRAR/TRANSFER AGENT
EquiServe Trust Company, N.A.
Boston, Massachusetts
CORPORATE HEADQUARTERS
120 San Gabriel Drive
Sunnyvale, California 94086
(408) 737-7600
FORM 10-K
A copy of the Company's Form 10-K filed with the Securities & Exchange
Commission, without exhibits, is available without charge upon writing to:
Stockholder Relations
Maxim Integrated Products, Inc.
120 San Gabriel Drive
Sunnyvale, California 94086
STOCK LISTING
At June 30, 2001, there were approximately 2,260 stockholders of record of the
Company's common stock. Maxim common stock is traded on the Nasdaq National
Market under the symbol MXIM. The Company has paid cash dividends on its common
stock in the past but has no present plans to do so in the future.
ANNUAL MEETING
The annual meeting of stockholders will be on Thursday, November 15, 2001 at
11:00 a.m. at the Company's Event Center, 433 North Mathilda Avenue, Sunnyvale,
California 94086.
42
EX-21.1
19
f75694ex21-1.txt
EXHIBIT 21.1
1
EXHIBIT 21.1
SUBSIDIARIES OF THE COMPANY
Name of Subsidiary Jurisdiction of Incorporation
------------------ -----------------------------
Maxim Integrated Products England
UK Limited
Maxim GmbH Germany
Maxim SARL France
Maxim Japan Co., Ltd. Japan
Maxim Integrated Products Korea, Inc. Korea
Maxim Phil. Assembly Corporation Philippines
Maxim Phil. Operating Corporation Philippines
Maxim Phil. Holding Corporation Philippines
Maxim Phil. Land Corporation * Philippines
* This Subsidiary is 40% owned by the Registrant.
Maxim Integrated Products Switzerland
Switzerland AG
Maxim Integrated Products Thailand
(Thailand) Co., Ltd.
Maxim Dallas/Direct, Inc. United States
Maxim International, Inc. U. S. Virgin Islands
Dallas Semiconductor Corporation Delaware
Dallas Semiconductor Corporation (Germany) Delaware
Dallas Semiconductor Corporation (Taiwan) Delaware
2
Name of Subsidiary Jurisdiction of Incorporation
------------------ -----------------------------
Dallas Semiconductor FSC Corporation Barbados
Dallas Semiconductor Limited United Kingdom
Dallas Semiconductor Philippines, Inc. Philippines
Dallas Semiconductor GmbH Germany
Dallas Semiconductor Asia Limited Hong Kong
Proximity Devices Corporation Delaware
Chartec Laboratories A/S Denmark
Chartec Laboratories Holding ApS Denmark
Chartec, Inc. Delaware
EX-23.1
20
f75694ex23-1.txt
EXHIBIT 23.1
1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Maxim Integrated Products, Inc. of our report dated August 14, 2001, included
in the 2001 Annual Report to Stockholders of Maxim Integrated Products, Inc.
Our audits also included the consolidated financial statement schedule of Maxim
Integrated Products, Inc. listed in Item 14(a). This schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits. We did not audit the financial statement schedule
of Dallas Semiconductor Corporation, a wholly-owned subsidiary, which schedule
reflects Additions Charged to Costs and Expenses, Deductions, and a Balance at
End of Period of $1,000, $4000, and $477,000 as of and for the year ended
December 31, 2000, respectively. That schedule was audited by other auditors
whose report has been furnished to us, and our opinion, insofar as it relates to
data included for Dallas Semiconductor for the year ended December 31, 2000, is
based solely on the report of the other auditors. In our opinion, the financial
statement schedule referred to above, when considered in relation to the basic
consolidated financial statements taken as a whole and the report of other
auditors, presents fairly in all material respects the information set forth
therein.
We also consent to the incorporation by reference in the Registration Statements
(Form S-8 Nos. 333-88535, 33-57849, 33-72186, 33-54026, 33-44485, 33-37470,
33-37469, 33-34728, 33-34519, 33-25639, 33-22147, and 333-58772) pertaining to
the 1996 Stock Incentive Plan, the 1993 Incentive Stock Option Plan, the 1983
Supplemental Nonemployee Stock Option Plan, the 1987 Supplemental Stock Option
Plan, the 1987 Employee Stock Option Participation Plan, the 1988 Nonemployee
Director Stock Option Plan, the Amended and Restated 1987 Stock Option Plan, and
the 1993 Officer and Director Stock Option Plan of Maxim Integrated Products,
Inc. of our report dated August 14, 2001, with respect to the consolidated
financial statements incorporated herein by reference, and our report included
in the preceding paragraph with respect to the consolidated financial statement
schedule included in this Annual Report (Form 10-K) of Maxim Integrated
Products, Inc.
/s/ Ernst & Young LLP
---------------------
San Jose, California
September 21, 2001
EX-23.2
21
f75694ex23-2.txt
EXHIBIT 23.2
1
EXHIBIT 23.2
Consent of KPMG LLP, Independent Certified Public Accountants
The Board of Directors
Maxim Integrated Products, Inc.:
We consent to the incorporation by reference in the Registration Statements
previously filed on Form S-8 (Nos. 333-88535, 33-57849, 33-72186, 33-54026,
33-44485, 33-37470, 33-37469, 33-34728, 33-34519, 33-25639, 33-22147, and
333-58772) of our report dated January 12, 2001, except for Note 7 which is as
of January 28, 2001, with respect to the consolidated balance sheet of Dallas
Semiconductor Corporation as of December 31, 2000, and the related consolidated
statements of income, stockholders' equity, cash flows and financial statement
schedule for the year then ended, which report appears in the December 31, 2000
annual report on Form 10-K of Dallas Semiconductor Corporation and has been
filed as an exhibit to the annual report on Form 10-K of Maxim Integrated
Products, Inc. for the fiscal year ended June 30, 2001.
/s/ KPMG LLP
Dallas, Texas
September 21, 2001
EX-99.1
22
f75694ex99-1.txt
EXHIBIT 99.1
1
EXHIBIT 99.1
REPORT OF KPMG LLP
To the Board of Directors and Stockholders:
We have audited the accompanying consolidated balance sheet of Dallas
Semiconductor Corporation and subsidiaries as of December 31, 2000 and the
related consolidated statements of income, stockholders' equity, and cash flows
for the fiscal year then ended. Our audit also included the financial statement
schedule listed in the Index at Item 14(a) as of and for the year ended
December 31, 2000. These consolidated financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and schedule based on our
audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Dallas
Semiconductor Corporation and subsidiaries at December 31, 2000, and the
consolidated results of their operations and their cash flows for the fiscal
year then ended, in conformity with accounting principles generally accepted in
the United States. Also, in our opinion, the related consolidated financial
statement schedule as of and for the year ended December 31, 2000, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
/s/ KPMG LLP
Dallas, Texas
January 11, 2001, except for Note 7
which is as of January 28, 2001