AMENDED AND RESTATED
1989 INCENTIVE STOCK COMPENSATION PLAN
OF
MAGNETEK, INC.
MAGNETEK, INC., a corporation organized under the laws of the State of
Delaware hereby adopts this 1989 Incentive Stock Compensation Plan of MagneTek,
Inc. The purposes of this Plan are as follows:
(1) To further the growth, development and financial success of the
Company by providing additional incentives to certain of its executive and
other key Employees who have been or will be given responsibility for the
management or administration of the Company's business affairs, by
assisting them to become owners of capital stock of the Company and thus to
benefit directly from its growth, development and financial success.
(2) To enable the Company to obtain and retain the services of the
type of professional, technical and managerial employees considered
essential to the long-range success of the Company by providing and
offering them an opportunity to become owners of capital stock of the
Company under awards of restricted and unrestricted stock, performance
units, stock appreciation rights, restricted stock rights and options,
including options that are intended to qualify as "incentive stock options"
under Section 422 of the Internal Revenue Code of 1986, as amended.
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.1 RULES OF CONSTRUCTION
As used herein, the masculine pronoun shall include the feminine and
neuter and the singular shall include the plural, where the context so
indicates. Titles are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of the Plan.
SECTION 1.2 DEFINITIONS
As used herein:
BOARD shall mean the Board of Directors of the Company.
CODE shall mean the Internal Revenue Code of 1986, as amended.
COMMITTEE shall mean the Compensation Committee of the Board,
appointed as provided in Section 11.1.
COMPANY shall mean MagneTek, Inc. In addition, COMPANY shall mean any
corporation assuming, or issuing new employee stock options in substitution for,
Incentive Stock Options, outstanding under the Plan, in a transaction to which
Section 424(a) of the Code applies.
DIRECTOR shall mean a member of the Board.
EMPLOYEE shall mean any employee (as defined in accordance with the
Regulations then applicable under Section 3401(c) of the Code) of the Company,
or of any corporation which is then a Parent
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Corporation or a Subsidiary, whether such employee is so employed at the time
this Plan is adopted or becomes so employed subsequent to the adoption of this
Plan.
EXCHANGE ACT shall mean the Securities Exchange Act of 1934, as
amended.
FAIR MARKET VALUE of a share of the Company's stock on a given
determination date shall be: (i) the mean between the highest and lowest sales
prices of a share of the Company's stock on the principal exchange on which
shares of the Company's stock are then trading, if any, on such determination
date, or, if shares were not traded on such date, then on the next preceding
trading day during which a sale occurred, as such prices are quoted in THE WALL
STREET JOURNAL; or (ii) if such stock is not traded on an exchange but is quoted
on NASDAQ or a successor quotation system, (1) the mean between the highest and
lowest sales prices (if the stock is then listed as a National Market Issue
under the NASD National Market System) or (2) the mean between the closing
representative bid and asked prices (in all other cases) for the stock on such
determination date as reported by NASDAQ or such successor quotation system; or
(iii) if such stock is not publicly traded on an exchange and not quoted on
NASDAQ or a successor quotation system, the mean between the closing bid and
asked prices for the stock, on such determination date, as determined in good
faith by the Committee; or (iv) if the Company's stock is not publicly traded,
the fair market value established by the Committee acting in good faith.
INCENTIVE STOCK OPTION shall mean an Option which qualifies under
Section 422 of the Code and which is designated as an Incentive Stock Option by
the Committee.
NON-QUALIFIED OPTION shall mean an Option other than an Incentive
Stock Option.
OFFICER shall mean an officer of the Company, any Parent Corporation
or any Subsidiary.
OPTION shall mean an option to purchase capital stock of the Company,
granted under the Plan. OPTIONS includes both Incentive Stock Options and Non-
Qualified Options.
OPTIONEE shall mean an Employee to whom an Option is granted under the
Plan.
PARENT CORPORATION shall mean any corporation that is a "parent" of
the Company within the meaning of Rule 405 under the Securities Act; provided,
that with respect to the provisions of the Plan relating to Incentive Stock
Options, such term shall have the meaning ascribed to it in the applicable
provisions of the Code and the Regulations promulgated thereunder.
PARTICIPANT shall mean an Employee or Director who shall have been
granted an Option, a Stock Appreciation Right, Restricted Stock, a Stock Award
or a Performance Unit under the Plan.
PERFORMANCE PERIOD shall mean a period of time determined by the
Committee over which the performance goals associated with a Performance Unit
are to be achieved.
PLAN shall mean this 1989 Incentive Stock Compensation Plan of
MagneTek, Inc.
RESTRICTED PERIOD shall mean the period of time for which Restricted
Stock or a Restricted Stock Right is subject to forfeiture or other Restrictions
pursuant to the Plan.
RESTRICTED STOCK shall mean capital stock of the Company issued
pursuant to Articles VII and VIII of the Plan.
RESTRICTED STOCKHOLDER shall mean a person to whom Restricted Stock
has been issued under the Plan.
RESTRICTED STOCK RIGHT shall mean a right to be issued shares of the
Company's capital stock, granted pursuant to Articles VII and VIII of the Plan.
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RESTRICTIONS shall mean the restrictions on Restricted Stock or
Restricted Stock Rights imposed by the Committee by the terms of an individual
Restricted Stock Agreement or Restricted Stock Right Agreement and shall include
the requirement that such Restricted Stock or Restricted Stock Rights be
forfeited back to, or subject to mandatory repurchase by, the Company upon a
Termination of Employment for the reasons specified in such Restricted Stock
Agreement or Restricted Stock Right Agreement.
SECRETARY shall mean the Secretary of the Company.
SECURITIES ACT shall mean the Securities Act of 1933, as amended.
SUB-COMMITTEE shall mean any Sub-Committee, comprised of one or more
individuals, of the Committee appointed as provided in Section 11.1.
STOCK APPRECIATION RIGHT shall mean a stock appreciation right granted
under the Plan.
STOCK AWARD shall mean an award of capital stock of the Company
pursuant to Article IX of the Plan.
SUBSIDIARY shall mean any corporation of which the Company has
"control" within the meaning of Rule 405 under the Securities Act; provided,
that with respect to the provisions of the Plan relating to Incentive Stock
Options, such term shall have the meaning ascribed to it in the applicable
provisions of the Code and the Regulations promulgated thereunder.
TERMINATION OF EMPLOYMENT shall mean the time when the employee-
employer relationship between the Participant and the Company, a Parent
Corporation or a Subsidiary is terminated for any reason, with or without cause,
including, but not by way of limitation, a termination by resignation,
discharge, death or retirement, but excluding terminations where there is a
simultaneous reemployment by the Company, a Parent Corporation or a Subsidiary
and, except with respect to Incentive Stock Options, terminations where
immediately thereafter the former Employee is a Director. In the case of a
Director who is not an Employee, Termination of Employment shall mean the time
when the Director ceases to be a Director for any reason, including, but not by
way of limitation, a cessation by resignation, discharge, death or retirement,
but excluding cessations where there is a simultaneous or prior and continuing
employment of the former Director by the Company, a Parent Corporation or a
Subsidiary. The Committee, in its absolute discretion, shall determine the
effect of all matters and questions relating to Termination of Employment,
including, but not by way of limitation, the question of whether a Termination
of Employment resulted from a discharge for good cause, and all questions of
whether particular leaves of absence constitute Terminations of Employment;
PROVIDED, HOWEVER, that, with respect to Incentive Stock Options, a leave of
absence shall constitute a Termination of Employment if, and to the extent that,
such leave of absence interrupts employment for the purposes of
Section 422(a)(2) of the Code and the then applicable Regulations under said
Section.
ARTICLE II
SHARES SUBJECT TO PLAN
SECTION 2.1 SHARES SUBJECT TO PLAN
The shares of stock subject to Options shall be shares of the
Company's $.01 par value Common Stock. The aggregate number of such shares
which may be issued upon exercise of Options and Stock Appreciation Rights or as
Restricted Stock or Stock Awards or at the end of the term of Restricted
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Stock Rights shall not exceed the sum of (i) the 1,250,000 shares originally
authorized and reserved for issuance under the Plan; plus (ii) annual amounts
equal to 1.5% (one and one-half percent) of the total issued and outstanding
Common Stock as of the last day of fiscal years 1991, 1992 and 1993; plus
(iii) annual amounts equal to 3% (three percent) of the total issued and
outstanding Common Stock as of the last day of fiscal year 1994 and each full or
partial fiscal year thereafter that the Plan is in effect. Any unused portion
of the respective foregoing percentage limits in any fiscal year, together with
any shares which remain available under clause (i) or become available under
Sections 2.2, 2.3, 2.4, or 2.5 hereof, shall be carried forward and available
for grant in succeeding fiscal years. Notwithstanding the foregoing, the
maximum number of shares of stock which may be issued upon exercise of Incentive
Stock Options under the Plan shall not exceed the 1,250,000 shares originally
authorized and reserved for issuance under the Plan.
SECTION 2.2 UNEXERCISED OPTIONS
If any Option expires or is cancelled without having been fully
exercised, the number of shares subject to such Option but as to which such
Option was not exercised prior to its expiration or cancellation may again be
optioned or issued upon exercise of Stock Appreciation Rights or as Restricted
Stock or Stock Awards or issued at the end of the term of Restricted Stock
Rights hereunder, subject to the limitations of Section 2.l.
SECTION 2.3 EXERCISED STOCK APPRECIATION RIGHTS
To the extent that a Stock Appreciation Right shall have been
exercised, the number of shares subject to any related Option, or portion
thereof, may again be optioned hereunder, subject to the limitations of Section
2.1.
SECTION 2.4 FORFEITED RESTRICTED STOCK
Any shares of Restricted Stock forfeited to the Company pursuant to
Restrictions may again be optioned or issued upon exercise of Stock Appreciation
Rights or as Restricted Stock or Stock Awards or issued at the end of the term
of Restricted Stock Rights hereunder, subject to the limitations of Section 2.1.
SECTION 2.5 FORFEITED RESTRICTED STOCK RIGHTS
Any shares of the Company's capital stock relating to Restricted Stock
Rights forfeited to the Company pursuant to Restrictions may again be optioned
or issued upon exercise Stock Appreciation Rights or as Restricted Stock or
Stock Awards or issued at the end of the term of Restricted Stock Rights
hereunder, subject to the limitations of Section 2.1.
SECTION 2.6 CHANGES IN COMPANY'S SHARES
In the event that the outstanding shares of Common Stock of the
Company are hereafter changed into or exchanged for a different number or kind
of shares or other securities of the Company, or of another corporation, by
reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, stock dividend or combination of shares,
appropriate adjustments shall be made by the Committee in the number and kind of
shares to which Options, Stock Appreciation Rights, Restricted Stock, Stock
Awards and Restricted Stock Rights thereafter to be granted or issued under this
Plan shall relate, including adjustments of the limitations in Section 2.1 on
the maximum number and kind of shares which may be issued on exercise of
Options, as Restricted Stock or Stock Awards or at the end of the term of
Restricted Stock Rights.
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ARTICLE III
GRANT OF OPTIONS
SECTION 3.1 ELIGIBILITY
Any executive or other key Employee of the Company or of any
corporation which is then a Parent Corporation or a Subsidiary and any Director
of the Company shall be eligible to be granted Options, except as provided in
Section 3.2 and 11.1(a).
SECTION 3.2 QUALIFICATION OF INCENTIVE STOCK OPTIONS
No Incentive Stock Option shall be granted unless such Option, when
granted, qualifies as an "incentive stock option" under Section 422 of the Code.
SECTION 3.3 GRANTING OF OPTIONS
(a) The Committee shall from time to time, in its absolute
discretion:
(i) Determine which Employees are executive or other key
Employees and select from among the executive or other key Employees
or Directors (including those to whom Options, Stock Appreciation
Rights and/or Restricted Stock Rights have been previously granted
and/or Restricted Stock, Stock Awards and/or Performance Units have
previously been issued under the Plan) such of them as in its opinion
should be granted Options; and
(ii) Determine the number of shares to be subject to such Options
granted to such selected executive or other key Employees or
Directors, and determine whether such Options are to be Incentive
Stock Options or Non-Qualified Options; and
(iii) Determine the terms and conditions of such Options,
consistent with the Plan.
(b) Upon the selection of an executive or other key Employee or
Director to be granted an Option, the Committee shall instruct the Secretary to
issue such Option and may impose such conditions on the grant of such Option as
it deems appropriate. Without limiting the generality of the preceding
sentence, the Committee may, in its discretion and on such terms as it deems
appropriate, require as a condition on the grant of an Option that the Optionee
surrender for cancellation some or all of the unexercised Options which have
been previously granted to him. An Option the grant of which is conditioned
upon such surrender may have an Option price lower (or higher) than the Option
price of the surrendered Option, may cover the same (or a lesser or greater)
number of shares as the surrendered Option, may contain such other terms as the
Committee deems appropriate and shall be exercisable in accordance with its
terms, without regard to the number of shares, price, Option period or any other
term or condition of the surrendered Option.
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ARTICLE IV
TERMS OF OPTIONS
SECTION 4.1 OPTION AGREEMENT
Each Option shall be evidenced by a written Stock Option Agreement,
which shall be executed by the Optionee and an authorized Officer of the Company
and which shall contain such terms and conditions as the Committee shall
determine, consistent with the Plan. Stock Option Agreements evidencing
Incentive Stock Options shall contain such terms and conditions as may be
necessary to qualify such Options as "incentive stock options" under Section 422
of the Code.
SECTION 4.2 OPTION PRICE
The price of the shares subject to each Option shall be set by the
Committee; PROVIDED, HOWEVER, that (i) the price per share for Non-Qualified
Options shall be not less than 100% of the Fair Market Value of such shares
determined as of the date such Option is granted; (ii) the price per share for
Incentive Stock Options other than those described in clause (iii) shall be not
less than 100% of the Fair Market Value of such shares determined as of the date
such Option is granted; and (iii) in the case of an Incentive Stock Option, the
price per share shall not be less than 110% of the Fair Market Value of such
shares determined as of the date such Option is granted in the case of an
individual then owning (within the meaning of Section 424(d) of the Code) more
than 10% of the total combined voting power of all classes of stock of the
Company, any Subsidiary or any Parent Corporation.
SECTION 4.3 COMMENCEMENT OF EXERCISABILITY
(a) Except as the Committee may otherwise provide, no Option may be
exercised in whole or in part during the first year after such Option is
granted.
(b) Subject to the provisions of Sections 4.3(a), 4.3(c) and 12.3,
Options shall become exercisable at such times and in such installments (which
may be cumulative) as the Committee shall provide in the terms of each Stock
Option Agreement; PROVIDED, HOWEVER, that by a resolution adopted after an
Option is granted the Committee may, on such terms and conditions as it may
determine to be appropriate and subject to Sections 4.3(c) and 12.3, accelerate
the time at which such Option or any portion thereof may be exercised.
(c) No portion of an Option which is unexercisable at Termination of
Employment shall thereafter become exercisable.
(d) To the extent that the aggregate fair market value of stock with
respect to which "incentive stock options" (within the meaning of Section 422 of
the Code, but without regard to Section 422(d) of the Code) are exercisable for
the first time by an Optionee during any calendar year (under the Plan and all
other incentive stock option plans of the Company, any Subsidiary and any Parent
Corporation) exceeds $100,000, such options shall be treated as Non-Qualified
Options. The rule set forth in the preceding sentence shall be applied by
taking options into account in the order in which they were granted. For
purposes of this Section 4.3(d), the fair market value of stock shall be
determined as of the time the option with respect to such stock is granted.
SECTION 4.4 EXPIRATION OF OPTIONS
(a) No Option may be exercised to any extent by anyone after the
first to occur of the following events:
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(i) The expiration of ten years from the date the Option was
granted; or
(ii) In the case of an Incentive Stock Option granted to an
Optionee owning (within the meaning of Section 424(d) of the Code), at
the time the Incentive Stock Option was granted, more than 10% of the
total combined voting power of all classes of stock of the Company,
any Subsidiary or any Parent Corporation, the expiration of five years
from the date the Incentive Stock Option was granted; or
(iii) Except in the case of any Optionee who is disabled (within
the meaning of Section 22(e)(3) of the Code), the expiration of three
months from the date of the Optionee's Termination of Employment for
any reason other than such Optionee's death unless the Optionee dies
within said three-month period; or
(iv) In the case of an Optionee who is disabled (within the
meaning of Section 22(e)(3) of the Code), the expiration of one year
from the date of the Optionee's Termination of Employment for any
reason other than such Optionee's death unless the Optionee dies
within said one-year period; or
(v) The expiration of one year from the date of the Optionee's
death.
(b) Subject to the provisions of Section 4.4(a), the Committee shall
provide, in the terms of each Stock Option Agreement, when such Option expires
and becomes unexercisable. Notwithstanding the foregoing, the Committee may
provide in the terms of Stock Option Agreements that Options expire immediately
upon a Termination of Employment for any reason.
SECTION 4.5 CONSIDERATION
In consideration of the granting of the Option, the Optionee shall
agree, in the written Stock Option Agreement, to remain in the employ of the
Company, a Parent Corporation or a Subsidiary for a period of at least one year
after the Option is granted, or in the case of an Optionee who is a non-employee
Director, to remain a Director for such period. Nothing in this Plan or in any
Stock Option Agreement hereunder shall confer upon any Optionee any right to
continue in the employ of the Company, any Parent Corporation or any Subsidiary
or to remain a Director or shall interfere with or restrict in any way the
rights of the Company, its Parent Corporations and its Subsidiaries, which are
hereby expressly reserved, to discharge any Optionee at any time for any reason
whatsoever, with or without cause.
SECTION 4.6 ADJUSTMENTS IN OUTSTANDING OPTIONS
In the event that the outstanding shares of the stock subject to
Options are changed into or exchanged for a different number or kind of shares
of the Company or other securities of the Company by reason of merger,
consolidation, recapitalization, reclassification, stock split-up, stock
dividend or combination of shares, the Committee shall make an appropriate and
equitable adjustment in the number and kind of shares as to which all
outstanding Options, or portions thereof then unexercised, shall be exercisable,
to the end that after such event the Optionee's proportionate interest shall be
maintained as before the occurrence of such event. Such adjustment in an
outstanding Option shall be made without change in the total price applicable to
the Option or the unexercised portion of the Option (except for any change in
the aggregate price resulting from rounding-off of share quantities or prices)
and with any necessary corresponding adjustment in Option price per share;
PROVIDED, HOWEVER, that, in the case of Incentive Stock Options, each such
adjustment shall be made in such manner as not to constitute a "modification"
within the meaning of Section 424(h)(3) of the Code. Any such adjustment made
by the Committee shall be final and binding upon all Optionees, the Company and
all other interested persons.
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SECTION 4.7 MERGER, CONSOLIDATION, ACQUISITION, LIQUIDATION OR DISSOLUTION
(a) The Committee shall provide by the terms of each Option that,
upon or in connection with the merger or consolidation of the Company with or
into another corporation, the acquisition by another corporation person or group
of all or substantially all of the Company's assets or 40% or more of the
Company's then outstanding voting stock or the liquidation or dissolution of the
Company:
(i) If so provided in the relevant agreement relating to a
merger, consolidation, acquisition of assets, liquidation or
dissolution, such Option shall be either assumed or replaced by a
substitute option, as applicable, issued by the successor or Parent
Corporation resulting from such transaction, without any further
action on the part of the Committee or the Optionee.
(ii) If no provision is made as set forth in (i), or in the event
of an acquisition of 40% or more of the Company's then outstanding
voting stock to which subsection (iii) is inapplicable, such Option
shall become fully exercisable from and after the date which is thirty
days prior to the effective date of the transaction and until the
normal expiration thereof.
(iii) In the event of an acquisition of 40% or more the Company's
then outstanding voting stock (other than pursuant to a merger
resulting in the ownership of all of the Company's outstanding Common
Stock by another corporation), if as a result of the transaction the
Company's Common Stock will cease to be traded on a national stock
exchange, listed as a National Market Issue on the National Market
System or quoted on the NASDAQ quotation system, each Option which has
not been exercised prior to the consummation of the transaction shall
be converted automatically into the right to receive, within thirty
days of such consummation, an amount in cash equal to the difference
between the aggregate exercise price for all shares subject to the
Option (whether or not then subject to exercise) and the Fair Market
Value of such shares on the date which is the last trading date
preceding the consummation of such transaction.
(iv) The foregoing provisions shall have no application to a
merger in which (A) the Company is the surviving corporation, (B) no
person or group acquires 40% or more of the Company's outstanding
voting stock and (C) the shares of the Company's Common Stock
outstanding prior to the merger remain outstanding thereafter.
(b) The Committee may make such determinations and adopt such rules
and conditions as it, in its absolute discretion, deems appropriate in
connection with (i) any acceleration of exercisability pursuant to subsection
(a)(ii), including, but not by way of limitation, provisions to ensure that any
such acceleration shall be conditioned upon the consummation of the contemplated
corporate transaction, and (ii) determinations regarding whether provisions for
assumption or substitution have been made as defined in subsection (a)(i).
ARTICLE V
EXERCISE OF OPTIONS
SECTION 5.1 PERSON ELIGIBLE TO EXERCISE
During the lifetime of Optionee, only he may exercise an Option
granted to him, or any portion thereof. After the death of the Optionee, any
exercisable portion of an Option may, prior to the time
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when such portion becomes unexercisable under Section 4.4 or Section 4.7, be
exercised by his personal representative or by any person empowered to do so
under the deceased Optionee's will or under the then applicable laws of descent
and distribution.
SECTION 5.2 PARTIAL EXERCISE; NO FRACTIONAL SHARES
The Committee may, by the terms of a Stock Option Agreement, require
any partial exercise to be with respect to a specified minimum number of shares.
The Company shall not be required to issue fractional shares upon the exercise
of Options.
SECTION 5.3 MANNER OF EXERCISE
An exercisable Option, or any exercisable portion thereof, may be
exercised solely by delivery to the Secretary or his office of all of the
following prior to the time when such Option or such portion becomes
unexercisable under Section 4.4 or Section 4.7:
(a) Notice in writing by the Optionee or other person then entitled
to exercise such Option or portion, stating that such Option or portion is
exercised, such notice complying with all applicable rules established by the
Committee; and
(b) Full payment:
(i) By delivery of cash or a check for the shares with respect
to which such Option or portion is thereby exercised; or
(ii) To the extent provided by the terms of the Option or
otherwise with the consent of the Committee, by delivery to the
Company of shares of the Company's Common Stock owned by the Optionee,
duly endorsed for transfer to the Company by the Optionee or other
person then entitled to exercise the Option or portion thereof, with
Fair Market Value determined as of the date of delivery equal to the
aggregate Option price of the shares with respect to such Option or
portion is thereby exercised; or
(iii) To the extent provided by the terms of the Option or
otherwise with the consent of the Committee, by retention by the
Company of shares of the Company's Common Stock to be issued with a
Fair Market Value determined as of the date of issuance equal to the
aggregate Option price of the shares with respect to which such Option
or portion is thereby exercised; or
(iv) By means of any combination of the consideration provided in
the foregoing subsections (i), (ii) or (iii); and
(c) On or prior to the date the same is required to be withheld:
(i) Full payment (in cash or by check) of any amount that must
be withheld by the Company, any Parent Corporation or any Subsidiary
for federal, state and/or local tax purposes in connection with the
exercise of the Option; or
(ii) To the extent provided by the terms of the Option or
otherwise with the consent of the Committee, full payment by delivery
to the Company of shares of the Company's Common Stock owned by the
Optionee, duly endorsed for transfer to the Company by the Optionee or
other person then entitled to exercise the Option or portion thereof,
with a Fair Market Value determined as of the date of delivery equal
to the amount
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that must be withheld by the Company, any Parent Corporation or any
Subsidiary for federal, state and/or local tax purposes in connection
with the exercise of the Option; or
(iii) To the extent provided by the terms of the Option or
otherwise with the consent of the Committee, full payment by retention
by the Company of shares of the Company's Common Stock to be issued
with a Fair Market Value determined as of the date of issuance equal
to the amount that must be withheld by the Company, any Parent
Corporation or any Subsidiary for federal, state and/or local tax
purposes in connection with the exercise of the Option; or
(iv) Any combination of payments provided for in the foregoing
subsections (i), (ii) or (iii);
PROVIDED, HOWEVER, that if the Optionee is an Officer or Director of the Company
required to file reporting forms pursuant to Section 16 of the Exchange Act,
then if and to the extent required by Rule 16b-3 thereunder, an election to make
full payment by the means described in Section 5(b)(iii) or Section 5(c)(iii)
shall be subject to the discretion of, and may be rejected by, the Committee,
and shall be made more than six months after the grant of the Option and either
(x) made and the Option exercised only during the period beginning on the third
business day following the date of release of the Company's quarterly or annual
summary statements of sales and earnings and ending on the twelfth business day
following such date or (y) irrevocably made more than six months prior to the
exercise of the Option in the case of Section 5(b)(iii) and more than six months
prior to the date the amount of tax to be withheld is determined in the case of
Section and 5(c)(iii); and
(d) Such representations and documents as the Committee, in its
absolute discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act and any other federal or state
securities laws or regulations. The Committee may, in its absolute discretion,
also take whatever additional actions it deems appropriate to effect such
compliance including, without limitation, placing legends on shares certificates
and issuing stop-transfer orders to transfer agents and registrars; and
(e) In the event that the Option or portion thereof shall be
exercised pursuant to Section 5.1 by any person or persons other than the
Optionee, appropriate proof of the right of such person or persons to exercise
the Option or portion thereof.
SECTION 5.4 CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES
The shares of stock issuable and deliverable upon the exercise of any
Option, or any portion thereof, may be either previously authorized but unissued
shares or issued shares which have been reacquired by the Company. The Company
shall not be required to issue or deliver any certificate or certificates for
shares of stock purchased upon the exercise of any Option or portion thereof
prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges on
which such class of stock is then listed; and
(b) The completion of any registration or other qualification of such
shares under any state or federal law or under the rulings or regulations of the
Securities and Exchange Commission or any other governmental regulatory body,
which the Committee shall, in its absolute discretion, deem necessary or
advisable; and
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(c) The obtaining of any approval or other clearance from any state
or federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(d) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may establish from time to time for
reasons of administrative convenience.
SECTION 5.5 RIGHTS AS SHAREHOLDERS
The holders of Options shall not be, nor have any of the rights or
privileges of, shareholders of the Company in respect of any shares purchasable
upon the exercise of any part of an Option unless and until certificates
representing such shares have been issued by the Company to such holders.
SECTION 5.6 TRANSFER RESTRICTIONS
The Committee, in its absolute discretion, may impose such
restrictions on the transferability of the shares purchasable upon the exercise
of an Option as it deems appropriate. Any such restriction shall be set forth
in the respective Stock Option Agreement and may be referred to on the
certificates evidencing such shares. The Committee may require the Employee to
give the Company prompt notice of any disposition of shares of stock, acquired
by exercise of an Incentive Stock Option, within two years from the date of
granting such Option or one year after the transfer of such shares to such
Employee. The Committee may direct that the certificates evidencing shares
acquired by exercise of an Option refer to such requirement to give prompt
notice of disposition.
ARTICLE VI
STOCK APPRECIATION RIGHTS
SECTION 6.1 ELIGIBILITY
Any executive or other key Employee of the Company or of any
corporation which is then a Parent Corporation or a Subsidiary and any Director
of the Company (except as provided in Section 11.1) shall be eligible to be
issued Stock Appreciation Rights.
SECTION 6.2 GRANTING OF STOCK APPRECIATION RIGHTS
(a) The Committee shall from time to time, in its absolute
discretion:
(i) Determine which Employees are executive or key Employees and
select from among the executive or key Employees or Directors
(including those to whom Options, Stock Appreciation Rights and/or
Restricted Stock Rights have been previously granted and/or Restricted
Stock, Stock Awards and/or Performance Units have been previously
issued) such of them as in its opinion should be granted Stock
Appreciation Rights; and
(ii) Determine the amount of Stock Appreciation Rights to be
granted to such selected executive or key Employees or Directors; and
(iii) Determine the terms and conditions applicable to such Stock
Appreciation Rights, consistent with the Plan.
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(b) Stock Appreciation Rights may be granted (i) in connection and
simultaneously with the grant of Options, (ii) with respect to previously
granted Options or (iii) not in connection with Options.
SECTION 6.3 TERMS AND CONDITIONS
A Stock Appreciation Right shall be subject to such terms and
conditions not inconsistent with the Plan as the Committee shall impose,
including the following:
(a) A Stock Appreciation Right granted in connection with a
particular Option shall be exercisable only to the extent the related Option is
exercisable.
(b) A Stock Appreciation Right granted in connection with a
particular Option shall be granted to the Optionee to the maximum extent of 100%
of the number of shares subject to the Option.
(c) A Stock Appreciation Right granted in connection with a
particular Option shall entitle the Optionee (or other person entitled to
exercise the Option pursuant to Section 5.1) to surrender unexercised a portion
of the Option to which the Stock Appreciation Right relates to the Company and
to receive from the Company in exchange therefor an amount, payable in cash or,
in the discretion of the Committee, shares of the Company's Common Stock,
determined by multiplying the lesser of (i) the difference obtained by
subtracting the Option exercise price per share of the Company's Common Stock
subject to the related Option from the Fair Market Value of a share of the
Company's Common Stock determined as of the date of exercise of the Stock
Appreciation Right or (ii) two times the Option exercise price per share of the
Company's Common Stock subject to the related Option, by the number of shares of
stock subject to the related Option with respect to which the Stock Appreciation
Right shall have been exercised.
(d) A Stock Appreciation Right not granted in connection with a
simultaneously or previously granted Option shall entitle the Participant to
receive from the Company an amount, payable in cash or, in the discretion of the
Committee, shares of the Company's Common Stock, measured by reference to the
increase, if any, in the Fair Market Value of the Company's Common Stock
determined over the period from the date the Stock Appreciation Right was
granted through and including the date the Stock Appreciation Right is
exercised.
SECTION 6.4 EXERCISE OF STOCK APPRECIATION RIGHTS
(a) No Stock Appreciation Right granted in connection with a
particular Option shall be exercisable during the first six months after grant.
(b) A Stock Appreciation Right may only be exercised during the
period beginning on the third business day following the date of the release of
the Company's quarterly or annual summary statements of sales and earnings and
ending on the twelfth business day following such date.
ARTICLE VII
ISSUANCE OF RESTRICTED STOCK AND RESTRICTED STOCK RIGHTS
SECTION 7.1 ELIGIBILITY
Any executive or other key Employee of the Company or of any
corporation which is then a Parent Corporation or a Subsidiary and any Director
of the Company (except as provided in Section 11.1) shall be eligible to be
issued Restricted Stock and Restricted Stock Rights.
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SECTION 7.2 ISSUANCE OF RESTRICTED STOCK AND RESTRICTED STOCK RIGHTS
(a) The Committee shall from time to time, in its absolute
discretion:
(i) Determine which Employees are executive or key Employees and
select from among the executive and key Employees or Directors
(including those to whom Options, Stock Appreciation Rights and/or
Restricted Stock Rights have been previously granted and/or Restricted
Stock, Stock Awards and/or Performance Units have been previously
issued) such of them as in its opinion should be issued Restricted
Stock and/or granted Restricted Stock Rights; and
(ii) Determine the number of shares of Restricted Stock to be
issued and the amount of Restricted Stock Rights to be granted to such
selected executive or key Employees or Directors; and
(iii) Determine the terms, conditions and Restrictions applicable
to such Restricted Stock and Restricted Stock Rights, consistent with
the Plan.
(b) Shares Of the Company's capital stock issued as Restricted Stock
may be either previously authorized but unissued shares or issued shares which
have been acquired by the Company. The Committee shall establish the price to
be paid by a Restricted Stockholder for the issuance of Restricted Stock, which
price shall not be less than the minimum consideration required by applicable
law.
(c) Shares of the Company's capital stock to be issued at the end of
the term of a Restricted Stock Right may be either previously authorized but
unissued shares or issued shares which have been acquired by the Company. The
Committee shall establish the consideration to be furnished by the Participant
in exchange for the grant of Restricted Stock Rights and the issuance of shares
of the Company's capital stock pursuant thereto, which consideration may include
services to be rendered to the Company prior to the issuance of such shares.
(d) Upon the selection of an executive or key Employee or other
eligible person to be issued Restricted Stock or granted Restricted Stock
Rights, the Committee shall instruct the Secretary to issue such Restricted
Stock or grant such Restricted Stock Rights and may impose such conditions on
the issuance of such Restricted Stock or grant of such Restricted Stock Rights
as it deems appropriate.
ARTICLE VIII
TERMS OF RESTRICTED STOCK AND RESTRICTED STOCK RIGHTS
SECTION 8.1 RESTRICTED STOCK AGREEMENT
Restricted Stock shall be issued only pursuant to a written Restricted
Stock Agreement, which shall be executed by the Restricted Stockholder and an
authorized Officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with the Plan.
SECTION 8.2 RESTRICTED STOCK RIGHT AGREEMENT
Restricted Stock Rights shall be issued only pursuant to a written
Restricted Stock Right Agreement, which shall be executed by the Participant and
an authorized Officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with the Plan.
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SECTION 8.3 CONSIDERATION
As partial consideration for the issuance of Restricted Stock or the
grant of Restricted Stock Rights, the Participant shall agree, in the written
Restricted Stock Agreement or Restricted Stock Right Agreement, to remain in the
employ of the Company, a Parent Corporation or a Subsidiary for a period of at
least one year after the Restricted Stock is issued or the Restricted Stock
Rights are granted, or in the case of a Participant who is a non-employee
Director, to remain a Director for such period. Nothing in this Plan or in any
Restricted Stock Agreement or Restricted Stock Right Agreement hereunder shall
confer upon any Participant any right to continue in the employ of the Company,
any Parent Corporation or any Subsidiary or to remain a Director or shall
interfere with or restrict in any way the rights of the Company, its Parent
Corporations and its Subsidiaries, which are hereby expressly reserved, to
terminate or discharge any Participant at any time for any reason whatsoever,
with or without cause.
SECTION 8.4 RIGHTS AS SHAREHOLDERS
(a) Upon delivery of the shares of Restricted Stock to the escrow
holder pursuant to Section 8.8, the Restricted Stockholder shall have all the
rights of a stockholder with respect to said shares, subject to the restrictions
in his Restricted Stock Agreement, including the right to vote the shares and to
receive all dividends or other distributions paid or made with respect to the
shares.
(b) The holder of a Restricted Stock Right shall not be, nor have any
of the rights or privileges of, a shareholder of the Company in respect of any
shares of the Company's capital stock issuable upon the end of the term of a
Restricted Stock Right unless and until a certificate representing such shares
Has been issued by the Company to such holder.
SECTION 8.5 RESTRICTIONS
All shares of Restricted Stock issued (including any shares received
by holders thereof as a result of stock dividends, stock splits or any other
forms of recapitalization) and all Restricted Stock Rights granted under this
Plan shall be subject to such Restrictions as the Committee shall provide in the
terms of each individual Restricted Stock Agreement or Restricted Stock Right
Agreement; PROVIDED, HOWEVER, that by a resolution adopted after the Restricted
Stock is issued or the Restricted Stock Rights are granted, the Committee may,
on such terms and conditions as it may determine to be appropriate and subject
to Section 12.3, remove any or all of the Restrictions imposed by the terms of
the Restricted Stock Agreement or Restricted Stock Right Agreement. All
Restrictions shall expire within ten years of the date of issuance. Restricted
Stock may not be sold or encumbered until all Restrictions are terminated or
expire.
SECTION 8.6 FORFEITURE
The Committee shall provide in the terms of each individual Restricted
Stock Agreement or Restricted Stock Right Agreement that the Restricted Stock or
Restricted Stock Rights then subject to Restrictions be forfeited by the
Participant back to the Company immediately upon a Termination of Employment for
any reason during the Restricted Period; PROVIDED, HOWEVER, that provision may
be made that no such forfeiture shall occur in the event of a Termination of
Employment because of Employee's or Director's normal retirement, death, total
disability or early retirement with the consent of the Committee.
SECTION 8.7 MERGER, CONSOLIDATION, ACQUISITION, LIQUIDATION OR DISSOLUTION
The Committee may provide, in the terms of the individual Restricted
Stock Agreement or Restricted Stock Right Agreement, that upon the merger or
consolidation of the Company with or into another corporation, the acquisition
by another corporation or person of all or substantially all of the
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Company's assets or 40% or more of the Company's then outstanding voting stock
or the liquidation of the Company, the Restrictions relating to some or all
shares of Restricted Stock or Restricted Stock Rights then outstanding shall
immediately expire and/or that some or all of such shares or Restricted Stock
Rights shall cease to be subject to forfeiture under Section 8.6.
SECTION 8.8 ESCROW
The Secretary or such other escrow holder as the Committee may appoint
shall retain physical custody of the certificates representing Restricted Stock
until all of the restrictions imposed under the Restricted Stock Agreement
expire or shall have been removed; PROVIDED, HOWEVER, that in no event shall any
Restricted Stockholder retain physical custody of any certificates representing
Restricted Stock issued to him.
SECTION 8.9 LEGEND
In order to enforce the restrictions imposed upon shares of Restricted
Stock hereunder, the Committee shall cause a legend or legends to be placed on
certificates representing all shares of Restricted Stock that are still subject
to Restrictions under Restricted Stock Agreements, which legend or legends shall
make appropriate reference to the conditions imposed thereby.
ARTICLE IX
ISSUANCE OF STOCK AWARDS
SECTION 9.1 ELIGIBILITY
Any executive or other key Employee of the Company or of any
corporation which is then a Parent Corporation or a Subsidiary and any Director
of the Company (except as provided in Section 11.1) shall be eligible to be
issued Stock Awards.
SECTION 9.2 ISSUANCE OF STOCK AWARDS
(a) The Committee shall from time to time, in its absolute
discretion:
(i) Determine which Employees are executive or key Employees and
select from among the executive or key Employees or Directors
(including those to whom Options, Stock Appreciation Rights and/or
Restricted Stock Rights have been previously granted and/or Restricted
Stock, Stock Awards and/or Performance Units have been previously
issued) such of them as in its opinion should be issued Stock Awards;
and
(ii) Determine the number of shares of Common Stock to be issued
to such selected executive or key Employees or Directors.
(b) Shares of the Company's capital stock issued as Stock Awards may
be either previously authorized but unissued shares or issued shares which have
been acquired by the Company.
(c) Stock Awards shall be issued for legal consideration (which may
include previous or future services, as permitted by law) but no other payment.
Capital stock issued pursuant to a Stock Award shall not be subject to
Restrictions or forfeiture by the terms of the Plan.
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ARTICLE X
ISSUANCE OF PERFORMANCE UNITS
SECTION 10.1 ELIGIBILITY
Any executive or other key Employee of the Company or of any
corporation which is then a Parent Corporation or a Subsidiary and any Director
of the Company (except as provided in Section 11.1) shall be eligible to be
issued Performance Units.
SECTION 10.2 ISSUANCE OF PERFORMANCE UNITS
The Committee shall from time to time, in its absolute discretion:
(i) Determine which Employees are executive or key Employees and
select from among the executive or key Employees or Directors
(including those to whom Options, Stock Appreciation Rights and/or
Restricted Stock Rights have been previously granted and/or Restricted
Stock, Stock Awards and/or Performance Units have been previously
issued) such of them as in its opinion should be issued Performance
Units; and
(ii) Determine the terms and conditions applicable to such
Performance Units, consistent with the Plan.
SECTION 10.3 TERMS OF PERFORMANCE UNITS
(a) At the time that Performance Units are issued, the Committee
shall designate certain goals for the financial and other business performance
of the Company, its Parent Corporations and its Subsidiaries and the Performance
Period over which such goals are to be achieved. Such designated goals must be
achieved in order for a Participant to receive the full value of the Performance
Units following the end of the Performance Period. To the extent earned upon
the achievement of such designated goals during the Performance Period, all
Performance Units shall be payable in cash as soon as practicable following the
end of the Performance Period.
(b) The Committee shall determine the terms and conditions of the
Performance Units, consistent with the Plan. The Committee shall provide by the
terms of each individual Performance Unit that the Performance Unit be forfeited
by the Participant back to the Company immediately upon a Termination of
Employment for any reason during the Performance Period; PROVIDED, HOWEVER, that
provision may be made that no such forfeiture shall occur in the event of a
Termination of Employment because of the Participant's normal retirement, death,
total disability or early retirement with the consent of the Committee.
ARTICLE XI
ADMINISTRATION
SECTION 11.1 COMMITTEE
(a) The Committee shall consist of at least three Directors,
appointed by and holding office during the pleasure of the Board, none of whom
shall be Officers. Notwithstanding any other provision in the Plan, no Options
or Stock Appreciation Rights may be granted and no Restricted Stock, Stock
Awards or Performance Units may be issued to any member of the Committee during
the term of his membership on the Committee. No person shall be eligible to
serve on the Committee unless he is then a
16
"disinterested person" within the meaning of Rule 16b-3 under the Exchange Act,
if and as such Rule is then in effect.
(b) Appointment of Committee members shall be effective upon
acceptance of appointment. Committee members may resign at any time by
delivering written notice to the Board. Vacancies in the Committee shall be
filled by the Board.
(c) The Board or the Committee may from time to time appoint one or
more Sub-Committees comprised of one or more Officers, Directors or others,
which Sub-Committee shall have the powers of the Committee described in
Articles III and IV of the Plan solely with respect to the grant of Options to
Employees who are not then Directors or Officers of the Company within the
meaning of Rule 16a-1(f) promulgated under the Exchange Act, if and as such Rule
is then in effect except for those powers described in Sections 3.3(b), 4.3, 4.6
and 4.7. Each such sub-Committee may be subject to any such additional
restrictions or limitations as the Board or the Committee may impose at any
time. Each Sub-Committee so appointed may be disbanded by the Board or the
Committee at any time, provided that no such termination shall affect the
validity of any Option theretofore approved by any such Sub-Committee.
SECTION 11.2 DUTIES AND POWER OF COMMITTEE
It shall be the duty of the Committee to conduct the general
administration of the Plan in accordance with its provisions. The Committee
shall have the power to interpret the Plan, Options, Stock Appreciation Rights,
Restricted Stock, Restricted Stock Rights, Stock Awards and Performance Units
and to adopt such rules for the administration, interpretation and application
of the Plan as are consistent therewith and to interpret, amend or revoke any
such rules. Any such interpretations and rules in regard to Incentive Stock
Options shall be consistent with the basic purpose of the Plan to grant
"incentive stock options" within the meaning of Section 422 of the Code. In its
absolute discretion, the Board may at any time and from time to time exercise
any and all rights and duties of the Committee under the Plan.
SECTION 11.3 MAJORITY RULE
The Committee shall act by a majority of its members in office. The
Committee may act either by vote at a meeting or by a memorandum or other
written instrument signed by a majority of the Committee.
SECTION 11.4 COMPENSATION; PROFESSIONAL ASSISTANCE; GOOD FAITH ACTIONS
Members of the Committee shall receive such compensation for their
services as members as may be determined by the Board. All expenses and
liabilities incurred by members of the Committee in connection with the
administration of the Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Company and its
Officers and Directors shall be entitled to rely upon the advice, opinions or
valuations of any such persons. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon all Optionees, the Company and all other interested persons. No member of
the Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the Options, and
all members of the Committee shall be fully protected by the Company in respect
to any such action, determination or interpretation.
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ARTICLE XII
OTHER PROVISIONS
SECTION 12.1 RIGHTS NOT TRANSFERABLE
No Option, Stock Appreciation Right, Restricted Stock, Restricted
Stock Right or Performance Unit or interest or right therein or part thereof
shall be liable for the debts, contracts or engagements of the Participant or
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect; PROVIDED, HOWEVER, that nothing in this
Section 12.1 shall prevent transfers by will or by the applicable laws of the
descent and distribution. The provisions of this Section 12.1 shall not apply
to the capital stock of the Company issued pursuant to a Stock Award under the
Plan.
SECTION 12.2 AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN
The Plan may be wholly or partially amended or otherwise modified,
suspended or terminated at any time or from time to time by the Board or the
Committee. However, without approval of the Company's shareholders given within
12 months before or after the action by the Board or the Committee, no action of
the Board or the Committee may, except as provided in Section 2.4, amend or
modify the Plan to:
(a) increase any limit imposed in Section 2.1 on the maximum number
of shares which may be issued on exercise of Options or Stock Appreciation
Rights, as Restricted Stock or Stock Awards or at the end of the term of
Restricted Stock Rights;
(b) modify the eligibility requirements of Section 3.1, Section 6.1,
Section 7.1, Section 9.1 or Section 10.1;
(c) reduce the minimum Option price requirements of Section 4.2(a);
or
(d) extend the limit imposed in this Section 12.2 on the period
during which Options, Stock Appreciation Rights or Restricted Stock Rights may
be granted or Restricted Stock, Stock Awards or Performance Units may be issued.
Neither the amendment, suspension nor termination of the Plan shall, without the
consent of the holder of the Option, Stock Appreciation Right, Restricted Stock,
Stock Award, Restricted Stock Right or Performance Unit, alter or impair any
rights or obligations under any Option, Stock Appreciation Right or Restricted
Stock Right theretofore granted or Restricted Stock, Stock Award or Performance
Unit theretofore issued. No Option, Stock Appreciation Right or Restricted
Stock Right may be granted and no Restricted Stock, Stock Award or Performance
Unit may be issued during any period of suspension nor after termination of the
Plan, and in no event may any Option, Stock Appreciation Right or Restricted
Stock Right be granted or any Restricted Stock, Stock Award or Performance Unit
be issued under this Plan after the first to occur of the following events:
(i) The expiration of ten years from the date the Plan is
adopted by the Board; or
18
(ii) The expiration of ten years from the date the Plan is approved by
the Company's shareholders under Section 12.3.
SECTION 12.3 APPROVAL OF PLAN BY SHAREHOLDERS
This Plan will be submitted for the approval of the Company's
shareholders within 12 months after the date of the Board's initial adoption of
the Plan. Options, Stock Appreciation Rights and Restricted Stock Rights may be
granted and Restricted Stock and Performance Units (but not Stock Awards) may be
issued prior to such shareholder approval; PROVIDED, HOWEVER, that such Options
and Stock Appreciation Rights shall not be exercisable, and shares of the
Company's capital stock shall not be issuable under Restricted Stock Rights,
prior to the time when the Plan is approved by the shareholders; PROVIDED,
FURTHER, that if such approval has not been obtained at the end of said 12-month
period, all Options, Stock Appreciation Rights and Restricted Stock Rights
previously granted and all Restricted Stock and Performance Units previously
issued under the Plan shall thereupon be cancelled and become null and void.
SECTION 12.4 EFFECT OF PLAN UPON OTHER OPTION AND COMPENSATION PLANS
The adoption of this Plan shall not affect any other compensation or
incentive plans in effect for the Company, any Parent Corporation or any
Subsidiary. Nothing in this Plan shall be construed to limit the right of the
Company, any Parent Corporation or any Subsidiary (a) to establish any other
forms of incentives or compensation for employees of the Company, and Parent
Corporation or any Subsidiary or (b) to grant or assume options, stock
appreciation rights or restricted stock rights or to issue or award restricted
or unrestricted stock or performance units otherwise than under this Plan in
connection with any proper corporate purpose, including, but not by way of
limitation, the grant or assumption of options, stock appreciation rights or
restricted stock rights or the issuance or award of restricted or unrestricted
stock or performance units in connection with the acquisition by purchase,
lease, merger, consolidation or otherwise, of the business, stock or assets of
any corporation, firm or association.
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