EXHIBIT 3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("this Agreement") is made this 17th day of May,
1995, by and between CRAY RESEARCH, INC., a Delaware corporation ("the
Company"), and J. XXXXXXX XXXXXX, a resident of Maryland ("the Executive").
WHEREAS, the Executive is experienced in managing significant business
enterprises; and
WHEREAS, the Company wishes to secure the Executive's services as Chairman
and Chief Executive Officer of the Company under the terms hereof; and
WHEREAS, the Executive wishes to provide such services to the Company;
NOW THEREFORE, in consideration of the premises and of the mutual covenants
and undertakings stated herein, the Executive and the Company hereby agree as
follows:
1. PERIOD OF EMPLOYMENT
Subject to all terms and conditions hereof, the Company shall employ the
Executive as, and the Executive shall serve the Company as, Chairman and Chief
Executive Officer of the Company, during the period commencing on the date
hereof and ending on December 31, 1999 ("the Employment Period"), unless the
Executive's employment hereunder terminates earlier in accordance with SECTION 5
hereof.
2. DUTIES AND POWERS OF THE EXECUTIVE
Subject to all terms and conditions hereof, the Company shall employ the
Executive as Chairman and Chief Executive Officer of the Company. The Board of
Directors of the Company has, effective as of the Executive's first day of
actual employment with the Company, appointed the Executive as, and the
Executive shall serve as, Chairman and Chief Executive Officer of the Company.
As Chairman and Chief Executive Officer of the Company, the Executive shall have
all duties customarily associated with the offices of chairman and chief
executive officer of a significant business enterprise, shall have primary
management responsibility for the Company, shall chair the governing board of
the Company, and shall perform such other duties consistent with the offices of
Chairman and Chief Executive Officer as may be specified by the Board of
Directors of the Company, to whom the Executive shall report. During the
Employment Period, the Executive shall devote full time to the Executive's
duties hereunder, except that the Executive may continue to serve on the boards
of directors of business corporations and charitable organizations on which he
currently serves for reasonable amounts of time and make reasonable personal
investments, and shall not accept other employment or engage in other material
business or charitable activities, except as approved in writing in advance by
the Chair of the Executive Committee of the Board of Directors of the Company.
3. COMPENSATION
(a) While the Executive is employed by the Company hereunder, the Company
shall pay to the Executive a base salary ("Base Salary") to be established by
the Board of Directors of the Company from time to time but no less than
$600,000 per year, and which has been established by the Board of Directors,
effective as of the Executive's first day of actual employment with the Company,
at a rate of $600,000.00 per year. The Company shall pay the Executive's Base
Salary to him in accordance with the Company's standard payroll practices as in
effect from time to time.
(b) While the Executive is employed by the Company hereunder, the Executive
shall participate in the Company's Performance Incentive Plan ("the Incentive
Plan"). For each plan year during which the Executive participates in the
Incentive Plan, the Company shall pay to the Executive an amount that is based
on a minimum performance target of 80 percent of the Executive's eligible wages
and a maximum performance target of 120 percent of his eligible wages, which
amount, subject to the Guaranteed Incentive Award (as defined below), shall be
prorated for plan year 1995 to reflect the actual amount of eligible wages paid
to the Executive by the Company during the 1995. For the first 12 months while
the Executive is employed by the Company hereunder, the Company shall pay to the
Executive under the Incentive Plan an amount equal to the greater of the amount
to which he otherwise would be entitled under the Incentive Plan or an amount
("the Guaranteed Incentive
Award") no less than he would have received if his minimum performance target of
80 percent of eligible wages had been achieved, which eligible wages shall be
prorated for plan year 1995 as provided above and shall be prorated for plan
year 1996 based on an amount equal to $600,000.00 minus the Executive's eligible
wages under the Incentive Plan for 1995, regardless of the Company's actual
annual business performance, and regardless of whether the Executive's
employment hereunder has terminated in accordance with SECTION 5 hereof before
the end of either plan year 1995 or plan year 1996, as the case may be, provided
that the total of the Guaranteed Incentive Award paid to the Executive by the
Company for the first 12 months of this employment hereunder for plan years 1995
and 1996 does not exceed $480,000.00. Except as modified by the provisions of
this SECTION 3(B), payments of Incentive Plan awards to the Executive by the
Company shall be governed by the terms of the Company's Incentive Plan as it is
in effect from time to time.
(c) Pursuant to the Company's 1989 Employee Stock Benefit Plan, as amended
("the Stock Plan"), the Compensation Committee of the Company has, effective as
of the Executive's first day of actual employment with the Company, granted to
the Executive: (i) an option, granted pursuant to a stock option agreement in
the form of Exhibit A hereto, to purchase 300,000 shares of common stock of the
Company at a price per share equal to the closing price for a share of common
stock of the Company on the New York Stock Exchange on the last trading day
immediately preceding the public announcement of the Executive's agreement to be
employed by the Company; and (ii) 200,000 shares of restricted common stock of
the Company, granted pursuant to a restricted stock agreement in the form of
Exhibit B hereto. The Executive and the Company agree that they will execute and
deliver a stock option agreement and restricted stock agreement in the form of
Exhibit A and Exhibit B hereto, respectively, on the first day of the
Executive's actual employment with the Company.
4. FRINGE BENEFITS
(a) While the Executive is employed by the Company hereunder, the Company
shall provide to the Executive such health insurance, life insurance, disability
insurance, retirement savings, and other fringe benefits as are provided from
time to time by the Company to its senior executives, in accordance with the
Company's general benefits practices then in effect, and as are not provided for
expressly in this Agreement. A listing of such fringe benefits as they are in
effect on the date hereof appears on Attachment 1 hereto.
(b) In addition to the fringe benefits provided to the Executive by the
Company in accordance with Section 4(a) hereof, while the Executive is employed
by the Company hereunder, the Executive shall be entitled to five weeks of paid
vacation per year (prorated for calendar year 1995), which shall include any
personal time benefit to which he is otherwise entitled under the Company's
general benefits practices, and, if the Executive elects to join a country club
located in the Twin Cities metropolitan area, then the Company shall reimburse
the Executive for the membership fees and monthly dues charged by such country
club.
(c) While the Executive is employed by the Company hereunder, the Company
shall reimburse the Executive for his reasonable and necessary business and
travel expenses in accordance with the Company's general expense reimbursement
practices in effect from time to time for its senior executives.
(d) After the Executive is employed by the Company hereunder, the Company
shall pay directly to the Executive's legal counsel a reasonable amount for the
attorneys' fees and costs that the Executive has incurred in connection with the
negotiation and preparation of this Agreement.
(e) Promptly after the execution of this Agreement by the Company and the
Executive hereunder, the Company shall pay to the Executive a one-time signing
bonus in the amount of $100,000.00.
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(f) After the Executive is employed by the Company hereunder, the Company
shall reimburse the Executive for the following expenses associated with his
search for a residence in and his move to the Twin Cities metropolitan area:
(i) transportation costs incurred by the Executive and his wife for
travel between Maryland and the Twin Cities for a period of up to six
months;
(ii) long-distance telephone charges incurred by the Executive and his
wife in connection with the search for a residence in the Twin Cities
metropolitan area for a period of up to six months;
(iii) the cost of temporary housing for the Executive and his wife in the
Twin Cities metropolitan area for a period of up to six months;
(iv) all real estate brokerage and related fees, closing costs, and legal
expenses incurred by the Executive and his wife in connection with the
purchase of a residence in the Twin Cities metropolitan area; and
(v) the actual cost of moving the household goods and personal effects
of the Executive and his wife from Maryland to the Twin Cities metropolitan
area.
5. TERMINATION
The Executive's employment by the Company hereunder shall end immediately
upon:
(a) receipt by the Company of the Executive's resignation from the
Company (whether written or oral),
(b) the Executive's receipt of written notice from the Company of
termination of the Executive's employment,
(c) the Executive's death or disability, or
(d) expiration of the Employment Period,
and the date on which Termination occurs shall be "the Termination Date"
hereunder.
6. PAYMENTS UPON TERMINATION
(a) If the Executive's employment hereunder ends by reason of:
(i) resignation by the Executive without Good Reason (as defined below)
or abandonment by the Executive of his employment,
(ii) termination by the Company For Cause (as defined below), or
(iii) the Executive's disability,
then the Company shall pay the Executive's Base Salary and the Guaranteed
Incentive Award, if any, only through the Termination Date.
(b) If the Executive's employment hereunder ends by reason of:
(i) termination by the Company without cause,
(ii) resignation by the Executive for Good Reason, or
(iii) expiration of the Employment Period,
then the Company (A) shall continue to pay the Executive's Base Salary
throughout the Employment Period or for two years, whichever is less, (B)
shall pay to the executive (i) the difference between $480,000.00 and the
amount of the Guaranteed Incentive Award already paid to him, if any, and
(ii) any other amount which he is entitled to receive under the Incentive
Plan, and (C) shall pay to the Executive an additional amount that is equal
to (i) two years of Base Salary,
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(ii) minus the amount, if any, of the Executive's vested retirement benefits
under the Company's Retirement Savings Plus Plan as it is then in effect,
which amount the Company shall pay to the Executive in equal monthly
installments.
(c) If the Executives's employment hereunder ends by reason of the
Executive's death, then the Company shall pay to the Executive's wife an amount
equal to the total of (i) six months of Base Salary, plus (ii) the Guaranteed
Incentive Award, if any.
(d) If the Executive's employment hereunder ends by reason of:
(i) resignation by the Executive for Good Reason,
(ii) termination by the Company without cause,
(iii) the Executive's death or disability, or
(iv) expiration of the Employment Period,
then the Company shall pay to the Executive (or to his estate) an amount equal
to the total of (i) the difference, if any, between the actual cost of his
residence in the Twin Cities metropolitan area and the actual price at which the
Executive (or his estate) sells such residence, assuming that the actual selling
price is at least equal to the appraised fair market value of such residence,
and (ii) the actual cost of moving the household goods and personal effects of
the Executive and his wife from Maryland to the Twin Cities metropolitan area
previously paid to the Executive pursuant to SECTION 4(F)(V) hereof, adjusted
for inflation, if any, since the time of such payment according to a standard
cost-of-living index.
(e) "Termination by the Company For Cause" shall mean termination for:
(i) an act or acts of dishonesty undertaken by the Executive and
intended to result in substantial gain or personal enrichment of the
Executive at the expense of the Company,
(ii) persistent failure to perform the duties and obligations of the
Executive's employment which are demonstrably willful and deliberate on the
Executive's part and which are not remedied in a reasonable period of time
after receipt of written notice from the Company, or
(iii) the conviction of the Executive of a felony.
(f) "Good Reason" for resignation by the Executive shall mean resignation
because of:
(i) the removal of the Executive as Chairman or Chief Executive Officer
of the Company by action of the Company's Board of Directors;
(ii) a "Change of Control" as defined in the Cray Research, Inc.
Executives Severance Compensation Plan (the "Severance Plan") that results
either in removal of the Executive as Chairman or Chief Executive Officer of
the Company;
(iii) any reason that would constitute "good reason" for termination
under the Severance Plan regardless of whether or not there has been a
Change of Control; or
(iv) a lapse of coverage under or determination by the Audit Committee of
the Board of Directors of the Company pursuant to SECTION 7 hereof of that
the Company has failed to maintain and is unable to obtain within 60 days
after such determination directors' and officers' liability insurance
satisfactory to the Audit Committee.
(g) In the event of termination of the Executive's employment, the sole
obligation of the Company shall be its obligation to make the payments called
for by SECTION 6(A), SECTION 6(B), SECTION 6(C), or SECTION 6(D) hereof, as the
case may be, and the Company shall have no other obligation to the Executive or
to his wife or his estate, except as otherwise provided by law, under the Stock
Option Agreement or the Restricted Stock Option Agreement or, in the event of
termination by reason of the Executive's death or disability, under insurance
policies then in effect. Without limiting the generality
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of the foregoing, the Company shall not be required to make any payments under
the Incentive Plan except to the extent provided in the Incentive Plan (as
modified by SECTION 3(B) hereof) with respect to plan years completed as of the
Termination Date.
(h) "Disability" means the inability of the Executive to perform the
Executive's duties hereunder by reason of illness or other physical or mental
impairment or condition, if such inability continues for an uninterrupted period
of 90 days or more. A period of inability shall be "uninterrupted" unless and
until the Executive returns to full-time work for a continuous period of at
least 30 days.
(i) Notwithstanding the foregoing provisions of this SECTION 6, if the
Executive's employment with the Company terminates after a "Change of Control"
as defined in the Severance Plan, then the Executive shall be entitled to
receive from the Company as a result of such employment termination the greater
of the amount provided under SECTION 6(B) hereof or under such Severance Plan.
Notwithstanding the provisions of the Severance Plan, in the event that a Change
of Control occurs before the Executive has completed six months of continuous
employment with the Company, the amount to which the Executive shall be entitled
under the Severance Plan shall be determined, without reduction as otherwise
provided for under Section 4.3(b) of the Severance Plan, and "Cash Compensation"
as defined in the Severance Plan shall include the Guaranteed Incentive Award
provided in SECTION 3(B) hereof without regard to the actual date of the
Executive's employment termination.
7. DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
While the Executive is employed by the Company hereunder, the Audit
Committee of the Board of Directors of the Company shall review at least once
per year the Company's directors' and officers' liability insurance coverage to
determine whether the coverage is satisfactory to the Audit Committee. If, as a
result of such review, the Audit Committee concludes that such coverage is not
satisfactory, then the Company will take such steps as may be reasonable to
obtain coverage satisfactory to the Audit Committee, and if the Company is
unable to do so at a reasonable cost and within 60 days after such conclusion,
then the Audit Committee shall promptly so advise the Executive in writing.
8. CERTAIN COVENANTS OF THE EXECUTIVE
(a) As used in this SECTION 8, "Company" shall include the Company and each
corporation, partnership, and other entity which controls the Company, is
controlled by the Company, or is under common control with the Company (in each
case "control" meaning the direct or indirect ownership of 50 percent or more of
all outstanding equity interests).
(b) The Executive hereby agrees that, while the Executive is employed by the
Company, until the first anniversary of the Employment Period if the Executive's
employment ends at that time, or until the first anniversary of the Termination
Date if the Executive's employment ends as a result of one of the reasons set
forth in SECTIONS 6(A) AND (B) hereof, the Executive shall not, directly or
indirectly:
(i) own, operate, invest in, lend money to, be employed by, consult
with, render services to, act as agent, officer, or director for, or acquire
or hold any interest in (A) any computer business or other business of any
nature which competes with any business owned or operated by the Company; or
(B) any corporation, partnership, association, or other entity of any nature
which owns, operates, or has an interest in any such computer or other
competing business (except that nothing herein shall prohibit the Executive
from owning not more than 1.0 percent of the outstanding shares of any class
of stock of a corporation if such class of stock is regularly traded on a
recognized national securities exchange);
(ii) employ or attempt to employ any director, officer, or employee of
the Company, or otherwise interfere with or disrupt any employment
relationship (contractual or other) of the Company;
(iii) solicit, request, advise, or induce any present or potential
customer, supplier, or other business contact of the Company to cancel,
curtail, or otherwise change its relationship with the Company; or
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(iv) publicly criticize or disparage in any manner or by any means the
Company, or any aspect of its management, policies, operations, products,
services, practices, or personnel thereof.
(c) The Executive hereby acknowledges and agrees that all non-public
information and data of the Company, including without limitation that related
to product and service formulation, customers, pricing, sales, and financial
results (collectively "Trade Secrets") are of substantial value to the Company,
provide it with a substantial competitive advantage in its business, and are and
have been maintained in the strictest confidence as trade secrets. Except as
otherwise approved in writing in advance by the Chair of the Executive Committee
of the Board of Directors of the Company, the Executive shall not at any time
divulge, furnish, or make accessible to anyone (other than the Company and its
directors and officers) any Trade Secrets.
(d) The Executive hereby specifically acknowledges and agrees that this
SECTION 8 and each provision hereof are reasonable and necessary to ensure that
the Company receives the expected benefits of this Agreement and that violation
of this SECTION 8 will harm the Company to such an extent that monetary damages
alone would be an inadequate remedy. Therefore, in the event of any violation by
the Executive of any provision of this SECTION 8, the Company shall be entitled
to an injunction (in addition to all other remedies it may have) restraining the
Executive from committing or continuing such violation. If any provision or
application of this SECTION 8 is held unlawful or unenforceable in any respect,
then this SECTION 8 shall be revised or applied in a manner that renders it
lawful and enforceable to the fullest extent possible.
9. NO VIOLATION OF OTHER AGREEMENTS
The Executive hereby represents and agrees that neither (a) the Executive's
entering into this Agreement nor (b) the Executive's carrying out the provisions
of this Agreement, shall violate any other agreement (oral or written) to which
Executive is a party or by which Executive is bound.
10. SUCCESSORS AND ASSIGNS
This Agreement is binding on the Executive and on the Company and its
successors and assigns. The rights and obligations of the Company under this
Agreement may be assigned to a successor. No rights or obligations of the
Executive hereunder may be assigned by the Executive to any other person or
entity.
11. SEPARATE REPRESENTATION
The Executive hereby acknowledges that the Executive has sought and received
independent advice from counsel of the Executive's own selection in connection
with this Agreement and has not relied to any extent on any officer, director,
or shareholder of, or counsel to, the Company in deciding to enter into this
Agreement.
12. GOVERNING LAW
This Agreement shall be construed under and governed by the laws of the
State of Minnesota.
13. SEVERABILITY
Each section and provision of this Agreement shall be considered severable
and any invalidity of any provision shall not render invalid or impair to any
extent any other section or provision hereof.
14. WITHHOLDING OF TAXES, ETC.
All payments to the Executive hereunder are subject to withholding of income
and employment taxes and all other amounts required by law.
15. ARBITRATION
If any dispute arises between the parties with respect to the application,
interpretation, or termination of this Agreement (excluding any dispute that
gives the Company the right to seek injunctive relief against the Executive
pursuant to SECTION 8 hereof), then such dispute shall be submitted to
arbitration for resolution. The arbitrator shall be selected and the arbitration
shall be
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conducted pursuant to the Employment Dispute Resolution Rules of the American
Arbitration Association ("AAA") (effective January 1, 1993). Any request for
arbitration must me made in writing by the party seeking arbitration and must be
delivered by hand or sent by registered or certified mail, return receipt
requested, postage prepaid, to both the other party and the AAA within 90 days
after the date on which the dispute between the parties first arose. The
decision of the arbitrator regarding any such dispute shall be final and binding
on both parties, and any court of competent jurisdiction may enter judgment upon
the award. In the event any dispute is arbitrated or the Company seeks
injunctive relief, the prevailing party shall be reimbursed by the other party
for any costs of the proceeding charged to such party, including reasonable
attorneys' fees and costs.
16. NOTICES
All notices hereunder shall be in writing and shall be deemed to have been
duly given if delivered by hand or send by registered or certified mail, return
receipt requested, postage prepaid, to the party to receive the same at the
address set forth with the signature of such party hereto or at such other
address as may have been furnished to the sender by notice hereunder. All
notices shall be deemed given on the date on which delivered or, if mailed, on
the date postmarked.
17. MISCELLANEOUS
This Agreement contains the entire understandings of the parties hereto with
respect to the employment of the Executive by the Company, and no provision
hereof may be altered, amended, modified, waived, or discharged in any way
whatsoever except by written agreement executed by both parties. No delay or
failure of either party to insist, in any one or more instances, upon
performance of any of the terms and conditions of this Agreement or to exercise
any rights or remedies hereunder shall constitute a waiver or a relinquishment
of such rights or remedies or any other rights or remedies hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on the date and year first above written.
J. XXXXXXX XXXXXX CRAY RESEARCH, INC.
804 Xxxxx Xxxx Xxxx 000X Xxxx Xxx Xxxxx
Xxxxxxxx Xxxxxx, XX 00000 Xxxxx, XX 00000
/s/ J. XXXXXXX XXXXXX By: /s/ XXXXXX X. XXXXXXX
------------------------------------------- ----------------------------------------
J. Xxxxxxx Xxxxxx Xxxxxx X. Xxxxxxx
MEMBER OF THE BOARD OF DIRECTORS
CRAY RESEARCH, INC.
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CRAY RESEARCH, INC.
RESTRICTED STOCK AGREEMENT
THIS AGREEMENT, made this 17th day of May, 1995, by and between CRAY
RESEARCH, INC., a Delaware corporation (the "Company") and J. Xxxxxxx Xxxxxx
("Employee").
The Cray Research, Inc. 1989 Employee Benefit Stock Plan (the "Plan")
permits the Company to award shares of its Common Stock to the Employee on the
restricted basis set forth herein.
Accordingly, in consideration of the agreements hereinafter set forth, the
parties hereto hereby agree as follows:
1. AWARD OF RESTRICTED STOCK
The Company hereby awards to the Employee 200,000 shares of its Common
Stock, subject to the restrictions set forth in the Plan and herein (the
"Restricted Stock"). Upon satisfaction of the conditions for the termination of
the restrictions set forth in the Plan and herein, the restrictions shall lapse
and the Restricted Stock shall vest in the Employee free of any restrictions. In
the event the conditions for the termination of such restrictions are not
satisfied, the Restricted Stock shall be forfeited to the Company and shall be
surrendered to and canceled by the Company.
2. VESTING AND FORFEITURE
(a) The Restricted Stock shall vest in the Employee free of the restrictions
in the Plan and herein at the end of the applicable period (the "Restricted
Period") set forth in Section 3 hereof and upon satisfaction of the conditions
for release or lapse of other restrictions contained in the Plan or herein. In
the event that the conditions for release or lapse of the restrictions are not
satisfied with respect to any shares of Restricted stock, such shares shall be
forfeited, and all rights of the Employee in such shares of Restricted Stock
(and to other securities and other property, other than cash dividends,
distributed with respect to such shares) shall terminate.
(b) Upon satisfaction of the conditions for release of restrictions
applicable to any shares of Restricted Stock, the Company shall issue a
certificate representing such shares and deliver the certificate to the Employee
free of any restriction, subject to any applicable federal or state securities
laws or other laws.
3. RESTRICTIONS
The Restricted Stock shall be forfeited to the Company in the event and to
the extent that such Restricted Stock does not vest in accordance with Exhibit A
hereto.
4. GENERAL CONDITIONS APPLICABLE TO RESTRICTED STOCK
(a) Shares of Restricted Stock may not be sold, exchanged, transferred,
pledged, hypothecated or otherwise disposed of until the shares vest and are
issued free of any restriction.
(b) A certificate or certificates evidencing the shares of Restricted Stock
awarded hereby shall be prepared and registered in the name of the Employee but
shall be held in the custody of the Company until the conditions for the
termination of restrictions thereon are satisfied. Prior to issuance of any
shares of the Restricted Stock, Employee shall deliver to the Company a stock
power or stock powers endorsed in blank relating to the Restricted Stock
sufficient to permit the Company to transfer the Restricted Stock to it or to
cancel the Restricted Stock. Certificates issued with respect to the Restricted
Stock shall bear a restrictive legend in substantially the following form:
The transferability of this certificate and the shares represented
hereby are subject to the terms and conditions (including forfeiture)
contained in the Cray Research, Inc. 1989 Employee Benefit Stock Plan
and a Restricted Stock Agreement entered into
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between the registered owner and Cray Research, Inc. Copies of such
Plan and Agreement are on file in the offices of Corporate Secretary
of Cray Research, Inc. The shares represented by this certificate may
not be sold, exchanged, transferred, pledged or otherwise disposed of
without the prior written consent of the Company.
When any shares of Restricted Stock vest and are to be issued free of any
restrictions, the Employee's certificate(s) being held by the Company evidencing
such shares shall be delivered to the Employee and the above restrictive legend
shall be removed therefrom subject only to such further restrictive legend, if
any, as may be required under the then applicable securities laws.
(c) Any additional shares of Common Stock or other securities or property
issued in respect of outstanding Restricted Stock shall be issued subject to the
same restrictions applicable to the Restricted Stock in respect of which they
are issued.
(d) In the event of forfeiture of any Restricted Stock, any additional
shares of Common Stock or other securities or property (other than cash
dividends) distributed with respect to such Restricted Stock shall be forfeited
as well and the Company shall be entitled to have any and all certificates and
other instruments evidencing such Restricted Stock and other securities and
property transferred to it or canceled.
(e) If, prior to vesting of Restricted Stock in accordance with the above
performance goals or forfeiture thereof, a Change of Control (as defined in the
Plan) of the Company occurs which, in the opinion of the Company's independent
certified public accountants may not be accounted for under generally accepted
accounting principles as a "pooling of interests", then, effective upon the
Change of Control Date (as so defined), all Restricted Stock shall vest
immediately. The committee of the Board of Directors of the Company that
administers the Plan may make such provision as it deems equitable respecting
the continuance of the restrictions contained herein on any Restricted Stock
held by the employee during an approved leave of absence.
5. RIGHTS OF A STOCKHOLDER
The Employee shall have all of the rights and privileges of a stockholder
and owner as of the date on which the Restricted Stock is awarded, including (i)
the right to vote the Restricted Stock and (ii) the right to receive all
dividends or other distributions paid or made with respect to the Restricted
Stock; provided, however, that all distributions with respect to Restricted
Stock (with the exception of cash dividends) shall be deposited with the Company
and shall be subject to forfeiture in accordance with the Plan and this
Agreement to the same extent as the Restricted Stock in respect of which such
distributions were made.
6. MISCELLANEOUS
(a) The Restricted Stock is awarded pursuant to the Plan and is subject to
its terms. A copy of the Plan is available to the Employee upon request.
(b) This Agreement shall not confer on the Employee any right with respect
to continuance of employment at any time.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the date first set forth above.
CRAY RESEARCH, INC.
By /s/ XXXXXX X. XXXXXXX
--------------------------------------
Its Director
--------------------------------------
EMPLOYEE
/s/ J. XXXXXXX
XXXXXX
--------------------------------------
Signature Date
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EXHIBIT A
VESTING OF RESTRICTED STOCK
(1) Subject to paragraph 2 below, the 200,000 shares of Restricted Stock
issued pursuant to the Restricted Stock Agreement between the Company and J.
Xxxxxxx Xxxxxx (the "Employee") shall vest as follows:
(a) At any time that the Fair Market Value (as hereinafter defined) of a
share of Common Stock of the Company (a "Share") equals or exceeds $25.00,
50,000 shares of Restricted Stock will vest.
(b) At any time that the Fair Market Value of a Share equals or exceeds
$30.00, an additional 50,000 shares of Restricted Stock will vest.
(c) At any time that the Fair Market Value of a Share equals or exceeds
$37.50, an additional 50,000 shares of Restricted Stock will vest.
(d) At any time that the Fair Market Value of a Share equals or exceeds
$45.00, the remaining 50,000 shares of Restricted Stock will vest.
If the Shares are affected by recapitalization, merger, consolidation,
reorganization, stock dividend, stock split or other change in
capitalization then the target Fair Market Values set forth above shall be
appropriately adjusted by the committee of the Board of Directors of the
Company that administers the Plan.
2. Notwithstanding the foregoing:
(a) if Employee's employment with the Company is terminated by reason of
Employee's death, disability or termination without cause or for good reason
(each as defined in the Employment Agreement), then any shares of Restricted
Stock that do not vest prior to the first anniversary of such termination of
employment will be forfeited to the Company; and
(b) if Employee's employment with the Company is terminated for any
reason other than Employee's death, disability or termination without cause
or for good reason (each as defined in the Employment Agreement), then any
shares of Restricted Stock that have not previously vested will be forfeited
to the Company.
3. For purposes hereof:
(a) "Fair Market Value" as of any date means: (i) the average closing
price of a Share on the composite tape for New York Stock Exchange ("NYSE")
listed shares, or, if the Shares are not quoted on the NYSE composite tape,
on the principle United States Securities Exchange on which the Shares are
listed, in either case during the twenty trading days preceding that date,
or (ii) if subparagraph (i) is not applicable, what the committee
administering the Plan determines in good faith to be 100% of the Fair
Market Value of a Share on that date.
(b) "Disability" has the meaning given it in Section 6(h) of the
Employment Agreement.
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CRAY RESEARCH, INC.
1989 NONSTATUTORY OPTION AGREEMENT
CRAY RESEARCH, INC., a Delaware corporation (the "Company"), pursuant to the
1989 Employee Benefit Stock Plan of the Company (the "Plan"), and in
consideration of services to be rendered to the Company or its subsidiaries by
J. Xxxxxxx Xxxxxx (the "Employee"), grants to the Employee a nonstatutory option
to purchase 300,000 shares of the Company's Common Stock (the "Shares") at a
price of $19.875 per share (the "Purchase Price"), all on the following terms
and conditions.
1. The Employee may exercise this nonstatutory option on a cumulative basis
at any time after May 16, 1996 (one year after the date of grant) and prior to
May 17, 2005 (ten years after the date of grant), subject to prior termination
or modification or acceleration of vesting as herein provided, in whole or in
part with respect to the following:
(a) 50% of the Shares one year after the date of grant; and
(b) the remaining 50% of the Shares two years after the date of grant.
2. This nonstatutory option shall not be transferable by the Employee,
except by will or the laws of descent and distribution and, during the
Employee's life, shall be exercisable only by the Employee and only while and if
the Employee is continuously employed by the Company or a subsidiary of the
Company, except as provided in Section 4 of this Agreement.
3. This nonstatutory option may be exercised in whole or in part, from time
to time, by delivery to the Company of a written notice specifying the number of
Shares desired to be purchased and accompanied by full payment to the Company of
the Purchase Price, at the election of the Employee, in cash and/or by deliver
of certificate(s) duly endorsed for transfer, in shares of the Company's Common
Stock already owned by the Employee, or by delivery of a notice of exercise of
the option and simultaneous sale of the shares of Common Stock thereby acquired
pursuant to a brokerage or similar arrangement approved by the Company, using
the proceeds from the sale as payment of the Purchase Price. Any shares endorsed
and delivered to the Company in payment of the Purchase Price shall be valued at
the closing price for the Common Stock on the New York Stock Exchange (or other
appropriate market price) on the last business day preceding such exercise date
on which there were sales. Any fractional share not required for payment of the
Purchase Price shall be paid for by the Company in cash on the basis of the same
value utilized for such exercise.
4. In the event that the Employee's employment with the Company and its
subsidiaries is terminated by reason of death, disability or retirement (as
defined below), this nonstatutory stock option, to the extent not previously
exercised, shall become immediately exercisable in full without regard to the
percentage limitations set forth in Section 1(a) through (d) above as follows:
(a) DEATH -- at any time by the Employee's estate prior to expiration of
the term of the option specified in Section 1;
(b) DISABILITY -- within one year after termination of employment
because of disability; provided, however, that the option must be exercised
prior to the expiration of the term of the option; and
(c) RETIREMENT -- within two years after termination of employment;
provided, however, that the option must be exercised prior to the expiration
of the term of the option.
If employment is terminated for any other reason, the unexercised portion of
this nonstatutory stock option shall expire. For purposes of this Agreement:
"retirement" shall mean termination of Employee's employment under that
certain Employment Agreement, dated May 17, 1995 (the "Employment
Agreement"), between the Company and Employee either (i) by the Company
without cause (cause being defined in Section 6(e) of the Employment
Agreement), (ii) by the
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Employee for good reason (good reason being defined in Section 6(f) of the
Employment Agreement), or (iii) by reason of the expiration of the
Employment Period (Employment Period being defined in Section 1 of the
Employment Agreement); and "disability" shall have the meaning given it in
Section 6(h) of the Employment Agreement.
5. Unless the issuance of the Shares purchased upon the exercise of this
nonstatutory option is registered with federal and state regulatory authorities,
or is determined by counsel for the Company to be exempt from such registration,
the Employee shall be required to give an investment representation in
connection with such exercise and purchase, and transfer of the Shares received
shall be appropriately restricted and requisite legends placed upon certificates
of the Shares.
6. If prior to the expiration of this nonstatutory option, the Shares then
subject to this nonstatutory option shall be affected by any recapitalization,
merger, consolidation, reorganization, stock dividend, stock split, or other
change in capitalization affecting the present Common Stock of the Company, then
the number and kind of shares covered by this Agreement, and the Purchase Price
per share, shall be appropriately adjusted by the Compensation Committee, as it
may deem necessary to prevent dilution or enlargement of rights which might
otherwise result.
7. If a Charge of Control of the Company occurs which, in the opinion of
the Company's independent certified public accountants may not be accounted for
under generally accepted accounting principles as a "pooling of interests", then
from and after the "Change of Control Date" all options outstanding hereunder
shall be immediately exercisable in full, notwithstanding the provisions of
paragraph 1. The terms "Change of Control" and "Change of Control Date" shall
have the meanings given to such terms in the Plan.
8. It is intended that the Plan and this nonstatutory option comply and be
interpreted in accordance with Rule 16b-3 under the Securities Exchange Act of
1934, as amended. The provisions of the Plan pertaining to nonstatutory options,
to the extent not set forth in this Agreement, are incorporated by reference.
IN WITNESS WHEREOF, this Nonstatutory Stock Option Agreement is hereby
executed as of May 17, 1995 (date of grant).
CRAY RESEARCH, INC.
By /s/ XXXXXX X. XXXXXXX
--------------------------------------
Company Representative Signature
/s/ J. XXXXXXX XXXXXX
--------------------------------------
Employee Signature
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