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EXHIBIT 10.3
ILX LIGHTWAVE CORPORATION
1998 LONG-TERM INCENTIVE
AND
STOCK OPTION PLAN
AMENDED MAY 5, 2000
1. Purpose of Plan.
This Plan shall be known as the "ILX LIGHTWAVE CORPORATION 1998
LONG-TERM INCENTIVE AND STOCK OPTION PLAN" and is hereinafter referred to as the
"Plan". The purpose of the Plan is to aid in maintaining and developing
personnel capable of assuring the future success of ILX Lightwave Corporation, a
Minnesota corporation (the "Company"), to offer such personnel additional
incentives to put forth maximum efforts for the success of the business, and to
afford them an opportunity to acquire a proprietary interest in the Company
through stock options and other long-term incentive awards as provided herein.
Options granted under this Plan may be either incentive stock options
("Incentive Stock Options") within the meaning of Section 422 of the Internal
Revenue Code of 1986 (the "Code"), or options which do not qualify as Incentive
Stock Options. Awards granted under this Plan shall be SARs, restricted stock or
performance awards as hereinafter described.
2. Stock Subject to Plan.
Subject to the provisions of Section 15 hereof, the stock to be subject
to options or other awards under the Plan shall be the Company's authorized
Common Shares, par value $.01 per share. Such shares may be either authorized
but unissued shares, or issued shares which have been reacquired by the Company.
Subject to adjustment as provided in Section 15 hereof, the maximum number of
shares on which options may be exercised or other awards issued under this Plan
shall be 463,000 shares; provided, however, that options or awards under this
Plan shall not exceed the number of shares
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permitted by Section 6.05(b) of the Stock Purchase Agreement dated February 26,
1991 among Newport Corporation, the Company and certain selling shareholders of
the Company (but only for so long as such Agreement shall remain in effect). If
an option or award under the Plan expires, or for any reason is terminated or
unexercised with respect to any shares, such shares shall again be available for
options or awards thereafter granted during the term of the Plan.
3. Administration of Plan.
(a) The Plan shall be administered by the Board of Directors of the
Company or a committee thereof. The members of any such committee shall be
appointed by and serve at the pleasure of the Board of Directors and shall
include only "non-employee directors" within the meaning of Rule 16b-3
promulgated under the Securities and Exchange Act of 1934. (The group
administering the Plan shall hereinafter be referred to as the "Committee".) If
no Committee is appointed, then the Committee as used elsewhere shall mean the
entire Board of Directors. In addition, to the extent required by Section 162(m)
of the Code (if Section 162(m) becomes applicable to the Company in the future),
all members of the Committee shall be "outside directors" within the meaning of
Section 162(m) of the Code.
(b) The Committee shall have plenary authority in its discretion, but
subject to the express provisions of the Plan: (i) to determine the purchase
price of the Common Stock covered by each option or award, (ii) to determine the
employees to whom and the time or times at which such options and awards shall
be granted and the number of shares to be subject to each, (iii) to determine
the form of payment to be made upon the exercise of an SAR or in connection with
performance awards, either cash, Common Shares of the Company or a combination
thereof, (iv) to determine the terms of exercise of each option and award, (v)
to accelerate the time at which all or any part of an option or award may be
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exercised, (vi) to amend or modify the terms of any option or award with the
consent of the optionee, (vii) to interpret the Plan, (viii) to prescribe, amend
and rescind rules and regulations relating to the Plan, (ix) to determine the
terms and provisions of each option and award agreement under the Plan (which
agreements need not be identical), including the designation of those options
intended to be Incentive Stock Options, and (x) to make all other determinations
necessary or advisable for the administration of the Plan, subject to the
exclusive authority of the Board of Directors under Section 16 hereof to amend
or terminate the Plan. The Committee's determinations on the foregoing matters,
unless otherwise disapproved by the Board of Directors of the Company, shall be
final and conclusive.
(c) The Committee shall select one of its members as its Chair and shall
hold its meetings at such times and places as it may determine. A majority of
its members shall constitute a quorum. All determinations of the Committee shall
be made by not less than a majority of its members. Any decision or
determination reduced to writing and signed by all of the members of the
Committee shall be fully effective as if it had been made by a majority vote at
a meeting duly called and held. The grant of an option or award shall be
effective only if a written agreement shall have been duly executed and
delivered by and on behalf of the Company following such grant. The Committee
may appoint a Secretary and may make such rules and regulations for the conduct
of its business as it shall deem advisable.
4. Eligibility.
Incentive Stock Options may only be granted under this Plan to any full
or part-time employee (which term as used herein includes, but is not limited
to, officers and directors who are also employees) of the Company and of its
present and future subsidiary corporations within the meaning of Section 424(f)
of the Code (herein called
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"subsidiaries"). Full or part-time employees of the Company, members of the
Board of Directors of the Company and consultants or independent contractors to
the Company or one of its subsidiaries shall be eligible to receive options
which do not qualify as Incentive Stock Options and awards. In determining the
persons to whom options and awards shall be granted and the number of shares
subject to each, the Committee may take into account the nature of services
rendered by the respective employees, board members, consultants or independent
contractors, their present and potential contributions to the success of the
Company and such other factors as the Committee in its discretion shall deem
relevant. A person who has been granted an option or award under this Plan may
be granted additional options or awards under the Plan if the Committee shall so
determine; provided, however, that for Incentive Stock Options granted after
December 31, 1986, to the extent the aggregate fair market value (determined at
the time the Incentive Stock Option is granted) of the Common Shares with
respect to which all Incentive Stock Options are exercisable for the first time
by an employee during any calendar year (under all plans described in subsection
(d) of Section 422 of the Code of his or her employer corporation and its parent
and subsidiary corporations) exceeds $100,000, such options shall be treated as
options which do not qualify as Incentive Stock Options. Nothing in the Plan or
in any agreement thereunder shall confer on any employee any right to continue
in the employ of the Company or any of its subsidiaries or affect, in any way,
the right of the Company or any of its subsidiaries to terminate his or her
employment at any time.
5. Price.
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The option price for all Incentive Stock Options granted under the Plan
shall be determined by the Committee but shall not be less than 100% of the fair
market value of the Common Shares at the date of grant of such option. The
option price for options granted under the Plan which do not qualify as
Incentive Stock Options and, if applicable, the price for all awards shall also
be determined by the Committee. For purposes of the preceding sentence and for
all other valuation purposes under the Plan, the fair market value of the Common
Shares shall be as reasonably determined by the Committee. If on the date of
grant of any option or award hereunder the Common Shares are not traded on an
established securities market, the Committee shall make a good faith attempt to
satisfy the requirements of this Section 5 and in connection therewith shall
take such action as it deems necessary or advisable.
6. Term.
Each option and award and all rights and obligations thereunder shall
expire on the date determined by the Committee and specified in the option or
award agreement. The Committee shall be under no duty to provide terms of like
duration for options or awards granted under the Plan, but the term of an
Incentive Stock Option may not extend more than ten (10) years from the date of
grant of such option and the term of options granted under the Plan which do not
qualify as Incentive Stock Options may not extend more than fifteen (15) years
from the date of granting of such option.
7. Exercise of Option or Award.
(a) The Committee shall have full and complete authority to determine
whether an option or award will be exercisable in full at any time or from time
to time during the term thereof, or to provide for the exercise thereof in such
installments, upon the occurrence of such events (such as termination of
employment for any reason) and at
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such times during the term of the option as the Committee may determine and
specify in the option or award agreement.
(b) The exercise of any option or award granted hereunder shall only be
effective at such time that the sale of Common Shares pursuant to such exercise
will not violate any state or federal securities or other laws.
(c) An optionee or grantee electing to exercise an option or award shall
give written notice to the Company of such election and of the number of shares
subject to such exercise. The full purchase price of such shares shall be
tendered with such notice of exercise. Payment shall he made to the Company in
cash (including bank check, certified check, personal check, or money order),
or, at the discretion of the Committee and as specified by the Committee, (i) by
delivering certificates for the Company's Common Shares already owned by the
optionee or grantee having a fair market value as of the date of grant equal to
the full purchase price of the shares, or (ii) by delivering the optionee's or
grantee's promissory note, which shall provide for interest at a rate not less
than the minimum rate required to avoid the imputation of income, original issue
discount or a below-market-rate loan pursuant to Sections 483, 1274 or 7872 of
the Code or any successor provisions thereto, or (iii) a combination of cash,
the optionee's or grantee promissory note and such shares. The fair market value
of such tendered shares shall be determined as provided in Section 5 hereof. The
optionee's or grantee's promissory note shall be a full recourse liability of
the optionee and may, at the discretion of the Committee, be secured by a pledge
of the shares being purchased. Until such person has been issued the shares
subject to such exercise, he or she shall possess no rights as a shareholder
with respect to such shares.
(d) Notwithstanding any other provision in this Plan, the Committee
shall have full and complete authority to assist any employee participating in
the Plan (including
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officers, whether or not they are directors) in the exercise of one or more
options granted to such employee under the Plan by (i) authorizing the extension
of a loan or loans to such employee from the Company or (ii) authorizing a
guarantee by the Company of a third-party loan or loans to such employee;
provided that any such loan or loans are used exclusively for (A) the cash
exercise of one or more options granted to such employee under the Plan or (B)
payment of any federal, state or local tax liability of such employee resulting
from exercise of one or more options which do not qualify as Incentive Stock
Options granted to such employee under the Plan. The terms of any loan or
guarantee (including the interest rate and terms of repayment) will be
established by the Committee in its sole discretion.
8. Stock Appreciation Rights.
(a) Grant. At the time of grant of an option or award under the Plan (or
at any other time), the Committee, in its discretion, may grant a Stock
Appreciation Right ("SAR") evidenced by an agreement in such form as the
Committee shall from time to time approve. Any such SAR may be subject to
restrictions on the exercise thereof as may be set forth in the agreement
representing such SAR, which agreement shall comply with and be subject to the
following terms and conditions and any additional terms and conditions
established by the Committee that are consistent with the terms of the Plan.
(b) Exercise. An SAR shall be exercised by the delivery to the Company
of a written notice which shall state that the holder thereof elects to exercise
his or her SAR as to the number of shares specified in the notice and which
shall further state what portion, if any, of the SAR exercise amount
(hereinafter defined) the holder thereof requests be paid to in cash and what
portion, if any, is to be paid in Common Shares of the Company. The Committee
promptly shall cause to be paid to such holder the SAR exercise amount either in
cash, in Common Shares of the Company, or any combination of cash and shares as
the Committee may determine. Such determination may be either in accordance with
the
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request made by the holder of the SAR or in the sole and absolute discretion of
the Committee. The SAR exercise amount is the excess of the fair market value of
one share of the Company's Common Shares on the date of exercise over the per
share exercise price in respect of which the SAR was granted, multiplied by the
number of shares as to which the SAR is exercised. For the purposes hereof, the
fair market value of the Company's shares shall be determined as provided in
Section 5 hereof.
9. Restricted Stock Awards.
Awards of Common Shares subject to forfeiture and transfer restrictions
may be granted by the Committee. Any restricted stock award shall be evidenced
by an agreement in such form as the Committee shall from time to time approve,
which agreement shall comply with and be subject to the following terms and
conditions and any additional terms and conditions established by the Committee
that are consistent with the terms of the Plan:
(a) Grant of Restricted Stock Awards. Each restricted stock
award made under the Plan shall be for such number of Common Shares as
shall be determined by the Committee and set forth in the agreement
containing the terms of such restricted stock award. Such agreement
shall set forth a period of time during which the grantee must remain in
the continuous employment of the Company in order for the forfeiture and
transfer restrictions to lapse. If the Committee so determines, the
restrictions may lapse during such restricted period in installments
with respect to specified portions of the shares covered by the
restricted stock award. The agreement may also, in the discretion of the
Committee, set forth performance or other conditions that will subject
the Common Shares to forfeiture and transfer restrictions. The Committee
may, at its discretion, waive all or any part of the restrictions
applicable to any or all outstanding restricted stock awards.
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(b) Delivery of Common Shares and Restrictions. At the time
of a restricted stock award, a certificate representing the number of
Common Shares awarded thereunder shall be registered in the name of the
grantee. Such certificate shall be held by the Company or any custodian
appointed by the Company for the account of the grantee subject to the
terms and conditions of the Plan, and shall bear such a legend setting
forth the restrictions imposed thereon as the Committee, in its
discretion, may determine. The grantee shall have all rights of a
shareholder with respect to the Common Shares, including the right to
receive dividends and the right to vote such shares, subject to the
following restrictions: (i) the grantee shall not be entitled to
delivery of the stock certificate until the expiration of the restricted
period and the fulfillment of any other restrictive conditions set forth
in the restricted stock agreement with respect to such Common Shares;
(ii) none of the Common Shares may be sold, assigned, transferred,
pledged, hypothecated or otherwise encumbered or disposed of during such
restricted period or until after the fulfillment of any such other
restrictive conditions; and (iii) except as otherwise determined by the
Committee, all of the Common Shares shall be forfeited and all rights of
the grantee to such Common Shares shall terminate, without further
obligation on the part of the Company, unless the grantee remains in the
continuous employment of the Company for the entire restricted period in
relation to which such Common Shares were granted and unless any other
restrictive conditions relating to the restricted stock award are met.
Any Common Shares, any other securities of the Company and any other
property (except for cash dividends) distributed with respect to the
Common Shares subject to restricted stock awards shall be subject to the
same restrictions, terms and conditions as such restricted Common
Shares.
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(c) Termination of Restrictions. At the end of the
restricted period and provided that any other restrictive conditions of
the restricted stock award are met, or at such earlier time as otherwise
determined by the Committee, all restrictions set forth in the agreement
relating to the restricted stock award or in the Plan shall lapse as to
the restricted Common Shares subject thereto, and a stock certificate
for the appropriate number of Common Shares, free of the restrictions
and the restricted stock legend, shall be delivered to the grantee or
his beneficiary or estate, as the case may be.
10. Performance Awards.
The Committee is further authorized to grant Performance awards. Subject
to the terms of this Plan and any applicable award agreement, Performance awards
granted under the Plan (i) may be denominated or payable in cash, Common Shares
(including, without limitation, restricted stock), other securities, other
awards, or other property and (ii) shall confer on the holder thereof rights
valued as determined by the Committee, in its discretion, and payable to, or
exercisable by, the holder of the Performance awards, in whole or in part, upon
the achievement of such performance goals during such performance periods as the
Committee, in its discretion, shall establish. Subject to the terms of this Plan
and any applicable award agreement, the performance goals to be achieved during
any performance period, the length of any performance period, the amount of any
Performance award granted, and the amount of any payment or transfer to be made
by the grantee and by the Company under any Performance award shall be
determined by the Committee.
11. Income Tax Withholding and Tax Bonuses.
(a) In order to comply with all applicable federal or state income tax
laws or regulations, the Company may take such action as it deems appropriate to
ensure that all
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applicable federal or state payroll, withholding, income or other taxes, which
are the sole and absolute responsibility of an optionee or grantee under the
Plan, are withheld or collected from such optionee or grantee. In order to
assist an optionee or grantee in paying all federal and state taxes to be
withheld or collected upon exercise of an option or award which does not qualify
as an Incentive Stock Option hereunder, the Committee, in its absolute
discretion and subject to such additional terms and conditions as it may adopt,
shall permit the optionee or grantee to satisfy such tax obligation by (i)
electing to have the Company withhold a portion of the shares otherwise to be
delivered upon exercise of such option or award with a fair market value,
determined in accordance with Section 5 hereof, equal to such taxes or (ii)
delivering to the Company Common Shares other than the shares issuable upon
exercise of such option or award with a fair market value, determined in
accordance with Section 5 hereof, equal to such taxes.
(b) The Committee shall have the authority, at the time of grant of an
option under the Plan or at any time thereafter, to approve tax bonuses to
designated optionees or grantees to be paid upon their exercise of options or
awards granted hereunder. The amount of any such payments shall be determined by
the Committee. The Committee shall have full authority in its absolute
discretion to determine the amount of any such tax bonus and the terms and
conditions affecting the vesting and payment thereafter.
12. Additional Restrictions.
The Committee shall have full and complete authority to determine
whether all or any part of the Common Shares of the Company acquired upon
exercise of any of the options or awards granted under the Plan shall be subject
to restrictions on the transferability thereof or any other restrictions
affecting in any manner the optionee's or grantee's rights with respect thereto,
but any such restriction shall be contained in the agreement relating to such
options or awards.
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13. Ten Percent Shareholder Rule.
Notwithstanding any other provision in the Plan, if at the time an
option is otherwise to be granted pursuant to the Plan the optionee owns
directly or indirectly (within the meaning of Section 424(d) of the Code) Common
Shares of the Company possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or its parent or
subsidiary corporations, if any (within the meaning of Section 422(b)(6) of the
Code), then any Incentive Stock Option to be granted to such optionee pursuant
to the Plan shall satisfy the requirements of Section 422(c)(5) of the Code, and
the option price shall be not less than 110% of the fair market value of the
Common Shares of the Company determined as described herein, and such option by
its terms shall not be exercisable after the expiration of five (5) years from
the date such option is granted.
14. Non-Transferability.
No option or award granted under the Plan shall be transferable by an
optionee or grantee, otherwise than by will or the laws of descent or
distribution. Except as otherwise provided in an option or award agreement,
during the lifetime of an optionee or grantee, the option shall be exercisable
only by such optionee or grantee.
15. Dilution or Other Adjustments.
If there shall be any change in the Common Shares through merger,
consolidation, reorganization, recapitalization, dividend in the form of stock
(of whatever amount), stock split or other change in the corporate structure,
appropriate adjustments in the Plan and outstanding options and awards shall be
made by the Committee. In the event of any such changes, adjustments shall
include, where appropriate, changes in the aggregate number of shares subject to
the Plan, the number of shares and the price per
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share subject to outstanding options and awards and the amount payable upon
exercise of outstanding awards, in order to prevent dilution or enlargement of
option or award rights.
16. Amendment or Discontinuance of Plan.
The Board of Directors may amend or discontinue the Plan at any time.
Subject to the provisions of Section 15 hereof, no amendment of the Plan,
however, shall without shareholder approval: (i) increase the maximum number of
shares under the Plan as provided in Section 2 hereof, (ii) decrease the minimum
price provided in Section 5 hereof, (iii) extend the maximum term under Section
6 hereof, or (iv) modify the eligibility requirements for participation in the
Plan. The Board of Directors shall not alter or impair any option or award
theretofore granted under the Plan without the consent of the holder of the
option.
17. Time of Granting.
Nothing contained in the Plan or in any resolution adopted or to be
adopted by the Board of Directors or by the shareholders of the Company, and no
action taken by the Committee or the Board of Directors (other than the
execution and delivery of an option or award agreement), shall constitute the
granting of an option or award hereunder.
18. Effective Date and Termination of Plan.
(a) The Plan was approved by the Board of Directors on May 5 , 2000, and
shall be approved by the shareholders of the Company within twelve (12) months
thereof.
(b) Unless the Plan shall have been discontinued as provided in Section
16 hereof, the Plan shall terminate September 3 , 2008. No option or award may
be granted after such termination, but termination of the Plan shall not,
without the consent of the optionee or grantee, alter or impair any rights or
obligations under any option or award theretofore granted.
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