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BALLANTYNE OF OMAHA, INC.
2001 NON-EMPLOYEE DIRECTORS
STOCK OPTION PLAN
1. NAME.
The name of this Plan is the Ballantyne of Omaha, Inc. 2001 Non-Employee
Directors Stock Option Plan.
2. DEFINITIONS.
For the purposes of the Plan, the following terms shall be defined as set
forth below:
(a) "Affiliate" means any partnership, corporation, firm, joint venture,
association, trust, limited liability company, unincorporated
organization, or other entity (other than a Subsidiary) that, directly
or indirectly through one or more intermediaries, is controlled by the
Company, where the term "controlled by" means the possession, direct
or indirect, of the power to cause the direction of the management and
policies of such entity, whether through the ownership of voting
interests, or voting securities, as the case may be, by contract, or
otherwise.
(b) "Board" means the board of directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and the Treasury regulations promulgated thereunder.
(d) "Common Stock" means the common stock, $.01 par value per share, of
the Company or any security of the Company identified by the Board as
having been issued in substitution or exchange therefor or in lieu
thereof.
(e) "Company" means Ballantyne of Omaha, Inc., a Delaware corporation.
(f) "Effective Date" means May 23, 2001.
(g) "Employee" means an individual whose wages are subject to the
withholding of federal income tax under Section 3401 of the Code.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor statute.
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(i) "Fair Market Value" of a Share as of a specified date means the mean
market price of a Share determined by reference to the principal
market or exchange on which the Shares are then traded.
(j) "Non-Employee Director" means an individual who: (i) is now, or
hereafter becomes, a member of the Board; and (ii) is not an Employee
of the Company or of any Subsidiary or Affiliate on the date of the
grant of the NQSO.
(k) "NQSO" means a stock option that is not qualified under Section 422 of
the Code.
(l) "Officer" means an individual elected or appointed by the Board or by
the board of directors of a Subsidiary, or chosen in such other manner
as may be prescribed by the by-laws of the Company or a Subsidiary, as
the case may be, to serve as such.
(m) "Participant" means a Non-Employee Director who is granted a NQSO
under the Plan.
(n) "Plan" means this 2001 Non-Employee Directors Stock Option Plan.
(o) "Rule 16b-3" means Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Exchange Act, or any successor or
replacement rule adopted by the Securities and Exchange Commission.
(p) "Share" means one share of Common Stock, adjusted in accordance with
Section 9(b), if applicable.
(q) "Stock Option Agreement" means the written agreement between the
Company and the Participant that contains the terms and conditions
pertaining to the NQSO.
(r) "Subsidiary" means any corporation or entity of which the Company,
directly or indirectly, is the beneficial owner of fifty percent (50%)
or more of the total voting power of all classes of its stock having
voting power, unless the Board shall determine that any such
corporation or entity shall be excluded hereunder from the definition
of the term Subsidiary.
3. PURPOSE.
The purpose of the Plan is (i) to enable the Company to grant options to
purchase Company stock to its Non-Employee Directors in lieu of all or part of
the cash retainer otherwise paid to them for service on the Board, in order to
provide incentives, which are linked directly to increases in stockholder value,
so that they will be encouraged to serve on
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the Board and exert their best efforts on behalf of the Company, and (ii) to
preserve cash for the Company.
4. ADMINISTRATION.
(a) BOARD OF DIRECTORS.
The Plan shall be administered by the Board of Directors, which shall
have the authority to administer the Plan in its sole and absolute
discretion; to grant NQSOs; to determine the number of Shares subject
to NQSOs and the price at which each Share covered by a NQSO may be
purchased pursuant to the Plan; all as set forth in Section 8. To this
end, the Board of Directors is authorized to construe and interpret
the Plan and to make all other determinations necessary or advisable
for the administration of the Plan. Subject to the foregoing, any
determination, decision, or action of the Board of Directors in
connection with the construction, interpretation, administration, or
application of the Plan shall be final, conclusive and binding upon
all Participants and any person validly claiming under or through a
Participant.
(b) LIABILITY OF BOARD MEMBERS.
No member of the Board will be liable for any action or determination
made in good faith by the Board with respect to the Plan or any grant
or exercise of a NQSO thereunder.
(c) NQSO ACCOUNTS.
The Company shall maintain a journal in which a separate account for
each Participant shall be established. Whenever NQSOs are granted to
or exercised by a Participant, the Participant's account shall be
appropriately credited or debited. Appropriate adjustment shall also
be made in the journal with respect to each account in the event of an
adjustment pursuant to Section 9(b).
5. EFFECTIVE DATE , TERM OF THE PLAN, PLAN YEAR.
(a) EFFECTIVE DATE OF THE PLAN.
The Plan was adopted by the Board and became effective on May 23,
2001.
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(b) TERM OF THE PLAN.
No NQSO shall be granted pursuant to the Plan on or after May 22,
2011, but NQSOs theretofore granted may extend beyond that date.
(c) PLAN YEAR.
The initial Plan Year begins July 1, 2001 and ends June 30, 2002.
Subsequent Plan Years begin on July 1 of each year and end on June 30 of the
following calendar year.
6. SHARES SUBJECT TO THE PLAN.
The maximum aggregate number of Shares which may be subject to NQSOs
granted to Non-Employee Directors under the Plan shall be One Million
(1,000,000). The limitation on the number of Shares which may be subject to
NQSOs under the Plan shall be subject to adjustment as provided in Section 9(b).
If any NQSO granted under the Plan expires, or is terminated for any reason
without having been exercised in full, the Shares allocable to the unexercised
portion of such NQSO shall again become available for grant pursuant to the
Plan. At all times during the term of the Plan, the Company shall reserve and
keep available for issuance such number of shares as the Company is obligated to
issue upon the exercise of all then outstanding NQSOs.
7. SOURCE OF SHARES ISSUED UNDER THE PLAN.
Common Stock issued under the Plan shall be authorized and unissued Shares.
No fractional Shares shall be issued under the Plan.
8. NON-QUALIFIED STOCK OPTIONS.
(a) ELECTION.
At least thirty (30) days prior to the beginning of each Plan Year,
the Board of Directors shall fix the amount of the Non-Employee
Director's retainer fee for the coming year and shall notify each
Non-Employee Director of such amount. Each Non-Employee Director may
then elect to receive all or any part of his Director's retainer fee
in the form of stock options ("NQSOs"). To be effective, such election
shall be transmitted in writing to the Corporate Secretary of the
Company and received by the Secretary on or before the beginning of
the Plan Year for which the election is to take effect. Such
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election shall specify the dollar amount of the Director's retainer
fee for the Plan Year to be taken in the form of NQSOs.
(b) GRANT OF NQSOS; VESTING.
Except for new Directors who become Directors during a Plan Year, all
NQSOs shall be granted as of the first day of the Plan Year for which
they are given. The Board shall determine the number of NQSOs to be
issued according to the following formula: The dollar amount specified
in the election shall be divided by the Fair Market Value of a Share
as of the first day of the Plan Year, provided, however, if the first
day of the Plan Year falls on a weekend or holiday, the Fair Market
Value shall be determined as of the next business day. This quotient
shall be multiplied by two (2) to arrive at the number of NQSOs to be
issued. Upon receipt of an effective election by a Participant, the
Board shall approve the issuance of the NQSOs subject, to the
following vesting schedule: Twenty-five percent (25%) of such options
shall be vested as of September 30 of the Plan Year, and an additional
twenty-five percent (25%) of such options shall be vested as of
December 31, March 31 and June 30 of the Plan Year.
(c) THE EXERCISE PRICE.
The exercise price of a Share shall be the Fair Market Value of such
Share on the first day of the Plan Year for which the options are
granted (or the next business day if such date falls on a weekend or
holiday).
(d) NEW DIRECTORS
A person who becomes a Non-Employee Director during a Plan Year shall
be subject to the following conditions regarding NQSOs:
(i) Said Director shall become a Participant in the Plan as of the
first day of the calendar quarter if his appointment as a
Director is effective as of the first day of the calendar
quarter, otherwise he shall become a Participant on the first
day of the calendar quarter next following the effective date
of his appointment as a Director; and
(ii) Said Director shall have the opportunity to elect to receive
all, or any part of his Director's retainer fee as fixed by the
Board for that Plan Year, pro-rated for the number of full
quarters remaining in the Plan Year, in the form of stock
options ("NQSOs"). To be effective, such election shall be
transmitted in writing to the Corporate Secretary of the
Company and received by the Secretary on or before the
beginning of the first day of the calendar quarter which occurs
on or next following the effective date of his appointment as a
Director. Such election shall specify what dollar amount of the
Director's retainer fee for the Plan Year shall be taken in the
form of NQSOs.
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(iii) The number of NQSOs to be issued shall be determined according
to the formula set forth in Section 8(b) above, except that the
Fair Market Value of a Share shall be determined as of the
first business day of the calendar quarter which occurs on or
next following the effective date of said Director's
appointment to the Board.
(iv) The NQSOs elected by said Director shall vest in equal
percentages based on the number of full calendar quarters
remaining in the Plan Year as of the time of the election.
(e) TERMS AND CONDITIONS.
All NQSOs granted pursuant to the Plan shall be evidenced by a Stock
Option Agreement (which need not be the same for each Participant or
NQSO), approved by the Board, which shall be subject to the following
express terms and conditions and to the other terms and conditions
specified in this Section 8, and to such other terms and conditions as
shall be determined by the Board in its sole and absolute discretion
which are not inconsistent with the terms of the Plan:
(i) the failure of a NQSO to vest for any reason whatsoever shall
cause the NQSO to expire and be of no further force or effect;
(ii) unless terminated earlier pursuant to this Plan, the term of
each NQSO shall be five years from the date of grant;
(iii) NQSOs shall not be transferable by the Participant otherwise
than by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the Participant only
by him or by his guardian or legal representative;
(iv) No NQSO or interest therein may be transferred, assigned,
pledged, or hypothecated by the Participant during his lifetime
whether by operation of law or otherwise, or be made subject to
execution, attachment, or similar process; and
(v) payment for the Shares to be received upon exercise of a NQSO
may be made in cash, in Shares (determined with reference to
their Fair Market Value on the date of exercise) or any
combination thereof.
(f) ADDITIONAL MEANS OF PAYMENT.
Any Stock Option Agreement may, in the sole and absolute discretion of
the Board, permit payment by any other form of legal consideration
consistent with applicable law and any rules and regulations relating
thereto, including,
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but not limited to, the execution and delivery of a full recourse
promissory note (bearing interest at a rate not less than the prime
rate announced as then being in effect by the Company's principal
lender and whose maturity date shall not exceed beyond ten years) by
the Participant to the Company.
(g) EXERCISE.
The holder of a NQSO may exercise the same by filing with the
Corporate Secretary of the Company a written election, in such form as
the Board may determine, specifying the number of Shares with respect
to which such NQSO is being exercised. Such notice shall be
accompanied by payment in full of the exercise price for such Shares.
Notwithstanding the foregoing, the Board may specify a reasonable
minimum number of Shares that may be purchased on any exercise of an
Option, provided that such minimum number will not prevent the holder
from exercising the Option with respect to the full number of Shares
as to which the Option is then exercisable.
(h) TERMINATION OF NQSOS.
NQSOs granted under the Plan shall be subject to the following events
of termination:
(i) in the event a Participant is removed from the Board for cause
(as contemplated by the Company's by-laws), all unexercised
NQSOs held by such Participant on the date of such removal
(whether or not vested) will expire immediately;
(ii) in the event a Participant ceases to be a member of the Board,
other than by reason of removal for cause, a portion of the
Options which would otherwise vest on the last day of the
quarter during which a Participant leaves the Board shall vest
on the last day of such Participant's service as a Director.
Such portion shall be equal to that percentage of the total
shares which would otherwise vest for that quarter,
proportionate to the number of days the Director served as a
Director, compared to the total number of days in that quarter.
All other NQSOs which remain unvested shall expire immediately;
and
(iii) in the event a Participant becomes an Employee of the Company or
a Subsidiary (whether or not such Participant remains as a
member of the Board) a portion of the Options which would
otherwise vest during the quarter in which the Director becomes
an Employee of the Company, shall vest. All other NQSOs which
remain unvested shall expire immediately.
9. RECAPITALIZATION.
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(a) CORPORATE FLEXIBILITY.
The existence of the Plan and the NQSOs granted hereunder shall not
affect or restrict in any way the right or power of the Board or the
stockholders of the Company, in their sole and absolute discretion, to
make, authorize or consummate any adjustment, recapitalization,
reorganization or other change in the Company's capital structure or
its business, any merger or consolidation of the Company, any issue of
bonds, debentures, common stock, preferred or prior preference stocks
ahead of or affecting the Company's capital stock or the rights
thereof, the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other
grant of rights, issuance of securities, transaction, corporate act,
or proceeding, notwithstanding the fact that any such activity,
proceedings, action, transaction, or other event may have, or be
expected to have, an impact (whether positive or negative) on the
value of any NQSO.
(b) ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
Except as otherwise provided in Section 10 below and subject to any
required action by the stockholders of the Company, in the event of
any change in capitalization affecting the Common Stock of the
Company, such as a stock dividend, stock split or recapitalization,
the Board shall make proportionate adjustments with respect to: (1)
the aggregate number of Shares available for issuance under the Plan;
(ii) the number of Shares subject to each grant under the Plan; (iii)
the number and exercise price of Shares subject to outstanding NQSOs;
and (iv) such other matters as shall be appropriate in light of the
circumstances; PROVIDED, HOWEVER, that the number of Shares subject to
any NQSO shall always be a whole number and that no such adjustment
shall be made if the adjustment would cause the Plan to fail to comply
with the "formula award' exception, as set forth in Rule 16b-3
(c)(2)(ii) of the Exchange Act, for grants of NQSOs to non-employee
directors.
10. CHANGE OF CONTROL.
In the event of a Change of Control (as defined below), all Options not
vested on or prior to the effective time of any such Change of Control shall
immediately vest as of such effective time. The Board in its discretion may make
provisions for the assumption of outstanding Options, or the substitution for
outstanding Options of new incentive awards covering the stock of a successor
corporation or a parent or subsidiary thereof, with appropriate adjustments as
to the number and kind of shares and prices so as to prevent dilution or
enlargement of rights; provided, however, that no such adjustment shall be made
if the adjustment would cause the Plan to fail to comply with the "formula
award"
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exceptions, as set forth in Rule 16b-3(c)(2)(ii) of the Exchange Act, for grants
of NQSOs to non-employee directors.
A "Change of Control" will be deemed to occur on the date any of the
following events occur:
(a) any person or persons acting together which would constitute a "group"
for purpose of Section 13(d) of the Exchange Act (other than the
Company, any Subsidiary and any entity beneficiary owned by any of the
foregoing), beneficially own (as defined in Rule 13d-3 under the
Exchange Act) without Board approval, directly or indirectly, at least
30% of the total voting power of the Company entitled to vote
generally in the election of the Board;
(b) either (i) the Current Directors (as herein defined) cease for any
reason to constitute at least a majority of the members of the Board
(for these purposes, a "Current Director" means any member of the
Board as of May 23, 2001, and any successor of a Current Director, and
any additional Director filling a vacancy created by an expansion of
the size of the Board, whose election, or nomination for election by
the Company's shareholders, was approved by at least a majority of the
Current Directors then on the Board) or (ii) at any meeting of the
stockholders of the Company called for the purpose of electing
directors, a majority of the persons nominated by the Board for
election as directors fail to be elected;
(c) the stockholders of the Company approve (i) a Plan of complete
liquidation of the Company, or (ii) an agreement providing for the
merger or consolidation of the Company (A) in which the Company is not
the continuing or surviving corporation (other than consolidation or
merger with a wholly-owned subsidiary of the Company in which all
Shares outstanding immediately prior to the effectiveness thereof are
changed into or exchanged for the same consideration) or (B) pursuant
to which the Shares are converted into cash, securities or other
property, except a consolidation or merger of the Company in which the
holders of the Shares immediately prior to the consolidation or merger
have, directly or indirectly, at least a majority of the common stock
of the continuing or surviving corporation immediately after such
consolidation or merger, or in which the Board immediately prior to
the merger or consolidation would, immediately after the merger or
consolidation, constitute a majority of the board of directors of the
continuing or surviving corporation; or
(d) the stockholders of the Company approve an agreement (or agreements)
providing for the sale or other disposition (in one transaction or a
series of transactions) of all or substantially all of the assets of
the Company.
11. SECURITIES LAW REQUIREMENTS.
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No Shares shall be issued under the Plan unless and until: (i) the Company
and the Participant have taken all actions required to register the Shares under
the Securities Act of 1933, as amended, or perfect an exemption from the
registration requirements thereof; (ii) any applicable requirement of Nasdaq or
any stock exchange on which the Common Stock is listed has been satisfied; and
(iii) any other applicable provisions of state or federal law have been
satisfied. The Company shall be under no obligation to register the Shares under
the Securities Act of 1933, as amended, or to effect compliance with the
registration or qualification requirements of any state securities laws.
12. AMENDMENT AND TERMINATION.
(a) MODIFICATIONS TO THE PLAN.
The Board may, insofar as permitted by law, from time to time, with
respect to any Shares at the time not subject to NQSOs, suspend or
terminate the Plan or, subject to Sections 8(a) through 8(d), revise
or amend the Plan in any respect whatsoever. However, unless the Board
specifically otherwise provides, any revision or amendment that would
cause the Plan to fail to comply with Rule 16b-3 or any other
requirement of applicable law or regulation if such amendment were not
approved by the stockholders of the Company shall not be effective
unless and until such approval is obtained.
(b) RIGHTS OF PARTICIPANT.
No amendment, suspension or termination of the Plan that would
adversely affect the right of any Participant with respect to a NQSO
previously granted under the Plan will be effective without the
written consent of the affected Participant.
13. MISCELLANEOUS.
(a) STOCKHOLDERS' RIGHTS.
No Participant and no beneficiary or other person claiming under or
through such Participant shall acquire any rights as a stockholder of
the Company by virtue of such Participant having been granted a NQSO
under the Plan. No Participant and no beneficiary or other person
claiming under or through such Participant will have any right, title
or interest in or to any Shares, allocated or reserved under the Plan
or subject to any NQSO except as to Shares, if any, that have been
issued or transferred to such Participant. No adjustment shall be made
for cash dividends for which the record date is prior to the date of
exercise.
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(b) OTHER COMPENSATION ARRANGEMENTS.
Nothing contained in the Plan shall prevent the Board from adopting
other compensation arrangements, subject to stockholder approval if
such approval is required. Such other arrangements may be either
generally applicable or applicable only in specific cases.
(c) TREATMENT OF PROCEEDS.
Proceeds realized from the exercise of NQSOs under the Plan shall
constitute general funds of the Company.
(d) COSTS OF THE PLAN.
The costs and expenses of administering the Plan shall be borne by the
Company.
(e) NO RIGHT TO CONTINUE AS DIRECTOR.
Nothing contained in the Plan or in any instrument executed pursuant
to the Plan will confer upon any Participant any right to continue as
a member of the Board or affect the right of the Company, the Board or
the stockholders of the Company to terminate the directorship of any
Participant at any time with or without cause.
(f) SEVERABILITY.
The provisions of the Plan shall be deemed severable and the validity
or unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.
(g) BINDING EFFECT OF PLAN.
The Plan shall inure to the benefit of the Company, its successors and
assigns.
(h) NO WAIVER OF BREACH.
No waiver by any party hereto at any time of any breach by another party
hereto of, or compliance with, any condition or provision of the Plan to be
performed by such other party shall be deemed a wavier of the same, any similar
or any dissimilar provisions of conditions at the same or at any prior or
subsequent time.
(i) GOVERNING LAW.
The Plan and all actions taken thereunder shall be enforced, governed and
construed by and interpreted under the laws of the State of Delaware applicable
to
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contracts made and to be performed wholly within such State without giving
effect to the principles of conflict of laws thereof.
(j) HEADINGS.
The headings contained in the Plan are for reference purposes only and
shall not affect in any way the meaning or interpretation of the Plan.
14. EXECUTION.
To record the adoption of the Plan to read as set forth herein, the Company
has caused the Plan to be signed by its President and attested by its Secretary
on May 23, 2001.
BALLANTYNE OF OMAHA, INC.
By: /s/ John Wilmers
--------------------------
John P. Wilmers, President
ATTEST:
/s/ Brad French
- ----------------------
Brad French, Secretary
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