AMD 1997 Annual Report Download - page 49

CHANGE IN CONTROL ARRANGEMENTS
Management Continuity Agreements. The Company has entered into management
continuity agreements with each of its executive officers named in the Summary
Compensation Table, designed to ensure their continued services in the event
of a Change in Control. Except for Mr. Sanders' management continuity
agreement, all the agreements provide that benefits are payable only if the
executive officer's employment is terminated by the Company (including a
constructive discharge) within two years following a Change in Control. For
purposes of the agreements, a Change in Control includes any change of a
nature which 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. A Change in Control is conclusively presumed to have occurred on (1)
acquisition by any person (other than the Company or any employee benefit plan
of the Company) of beneficial ownership of more than 20 percent of the
combined voting power of the Company's then outstanding securities; (2) a
change of the majority of the Board of Directors during any two consecutive
years, unless certain conditions of Board approval are met; or (3) certain
members of the Board determine within one year after an event that such event
constitutes a Change in Control.
All of the management continuity agreements provide that, in the event of a
Change in Control, the Company will reimburse each executive officer who has
signed a management continuity agreement for any federal excise tax payable as
a result of benefits received from the Company. Other than Mr. Sanders'
agreement, the agreements provide that, if within two years after a Change in
Control the executive officer's employment is terminated by the Company or the
executive officer is constructively discharged, the executive officer will
receive: (1) a severance benefit equal to three times the sum of his rate of
base compensation plus the average of his two highest bonuses in the last five
years; (2) payment of his accrued bonus; (3) twelve months' continuation of
other incidental benefits; and (4) full and immediate vesting of all unvested
stock options, stock appreciation rights and restricted stock awards.
Mr. Sanders' management continuity agreement provides that, except for
awards under the Agreement, all stock options and stock appreciation rights
that he holds will become fully vested on the occurrence of a Change in
Control and the restrictions on any shares of restricted stock of the Company
which he may hold will lapse as of such date. Mr. Sanders' management
continuity agreement does not apply to amounts payable to or awards under the
Agreement, and is superseded by the Agreement with respect to such amounts or
awards.
Vesting of Stock Options, Limited Stock Appreciation Rights and Restricted
Stock. Except with respect to options and awards under Mr. Sanders' Agreement,
all options and associated limited stock appreciation rights (LSARs) granted
to officers of the Company shall become exercisable upon the occurrence of any
change in the beneficial ownership of any quantity of shares of common stock
of the Company (where the purpose for the acquisition of such beneficial
ownership is other than passive investment), that would effect a Change in
Control of the Company 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, other than a change that has been approved in
advance by the Company's Board of Directors. A Change in Control shall be
conclusively deemed to have occurred if any person (other than the Company,
any employee benefit plan, trustee or custodian therefor) is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing more than 20 percent of the combined voting power of the
Company's then outstanding securities. Under the Company's 1980 and 1986 stock
appreciation rights plans, outstanding LSARs may be exercised for cash during
a thirty-day period following the expiration date of any tender or exchange
offer for the Company's common stock (other than one made by the Company);
provided the offeror acquires shares pursuant to its offer and owns thereafter
more than 25 percent of the outstanding common stock. In addition, all options
granted under the 1982 Stock Option Plan, the 1992 Stock Incentive Plan, the
1995 Stock Plan of NexGen, Inc. and the 1996 Stock Incentive Plan become fully
vested on termination of employment within one year following a Change in
Control as defined in that plan. The options will be subject to accelerated
vesting if a change of control occurs (as defined under the terms of the
executive's management continuity agreement) and either the consideration to
be paid to stockholders of the Company for a share of the Company's common
stock is equal to or in excess of the stock price target, which if attained,
would otherwise result in the vesting of the stock, or the closing price of
the
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Source: ADVANCED MICRO DEVIC, 10-K405, March 03, 1998