Exhibit 10.7
1987 STOCK OPTION PLAN
OF
MAGNETEK, INC.
AND
SECOND AMENDED AND RESTATED
1989 INCENTIVE STOCK COMPENSATION PLAN
OF
MAGNETEK, INC.
STANDARD TERMS AND CONDITIONS RELATING TO NON-QUALIFIED OPTIONS
revised as of July 24, 1996
The following standard terms and conditions apply to the Non-Qualified
Options granted under either the 1987 Stock Option Plan of MagneTek, Inc. (the
"1987 Plan") or the Second Amended and Restated 1989 Incentive Stock
Compensation Plan of MagneTek, Inc. (the "1989 Plan") (the applicable terms of
which are hereby incorporated by reference and made a part of these standard
terms and conditions). In turn, these standard terms and conditions are
incorporated by reference into each such Option.
ARTICLE I
DEFINITIONS
Whenever capitalized terms are used in these standard terms and
conditions, they shall have the meaning specified (i) in the Applicable Plan (as
defined below), (ii) in the MagneTek, Inc. Non-Qualified Stock Option Agreement
(the "Agreement") into which these standard terms and conditions are
incorporated by reference or (iii) below, unless the context clearly indicates
to the contrary. The masculine pronoun shall include the feminine and neuter,
and the singular the plural, where the context so indicates.
"Applicable Plan" shall mean either the 1987 Plan or the 1989 Plan
relating to the Option as indicated in the Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall mean MagneTek, Inc., a Delaware corporation.
"Fair Market Value" of a share of the Company's stock on a given
determination date shall mean: (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.
"Option" shall mean the non-qualified option to purchase $0.01 par
value Common Stock of the Company granted under the Applicable Plan and to which
these standard terms and conditions apply.
"Optionee" shall mean the Employee or Director to whom the Option is
granted under the Applicable Plan.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"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.
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, removal,
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.
ARTICLE II
ADJUSTMENTS TO OPTION
SECTION 2.1 - ADJUSTMENTS IN OPTION
In the event that the outstanding shares of the stock subject to the
Option are changed into or exchanged for a different number or kind of shares of
the Company 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, an
appropriate and equitable adjustment shall be made in the number and kind of
shares as to which the Option, 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 the Option shall be made without change in the total price
applicable to 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 the Option price per share.
Any such adjustment made by the Committee shall be final and binding upon the
Optionee, the Company and all other interested persons.
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SECTION 2.2 - MERGER, ACQUISITION, ETC. OF THE COMPANY*
In the event of the merger or consolidation of the Company with or
into another corporation, or the acquisition by another corporation, person or
group of all or substantially all of the Company's assets or forty percent (40%)
or more of the Company's then outstanding voting stock, or the liquidation or
dissolution of the Company:
(a) If so provided in the relevant agreement relating to a
merger, consolidation, acquisition of assets, liquidation or dissolution,
the Option shall be assumed or an equivalent option substituted by any
successor corporation to the Company.
(b) If no provision is made as set forth in paragraph (a), or in
the event of an acquisition of 40% or more of the Company's then
outstanding voting stock to which paragraph (c) is inapplicable, the Option
will become fully exercisable from and after the date which is (30) days
prior to such event and until the normal expiration of the Option, as to
all the shares covered by the Option.
(c) In the event of an acquisition of 40% or more of 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.
The foregoing provisions (a) through (c) 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.
ARTICLE III
PERIOD OF EXERCISABILITY
SECTION 3.1 - COMMENCEMENT OF EXERCISABILITY
(a) Subject to Section 3.1(b), the Option shall become exercisable as
set forth in the Agreement.
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* The provisions of this Section 2.2 are effective retroactively and govern
all options to which these terms and conditions apply.
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(b) No portion of the Option which is unexercisable at Termination of
Employment shall thereafter become exercisable.
SECTION 3.2 - EXPIRATION OF OPTION
The Option may not be exercised to any extent by anyone after the
first to occur of the following events:
(a) The expiration of ten (10) years after the date the Option was
granted; or
(b) The time of the Optionee's Termination of Employment unless such
Termination of Employment results from his death, his disability (within the
meaning of Section 22(e)(3) of the Code), his retirement or his voluntary or
involuntary discharge other than for cause; or
(c) The expiration of three (3) months from the date of the
Optionee's Termination of Employment by reason of the Optionee's retirement or
the Optionee's voluntary or involuntary discharge other than for cause, unless
the Optionee dies within said three-month period; or
(d) The expiration of one (1) year from the date of the Optionee's
Termination of Employment by reason of his disability (within the meaning of
Section 22(e)(3) of the Code) unless the Optionee dies within said one-year
period; or
(e) The expiration of one (1) year from the date of the Optionee's
death; or
(f) The circumstances referred to in Section 2.2(c) in which the
Option will automatically be converted into the right to receive a cash payment.
SECTION 3.3 - CONSIDERATION TO THE COMPANY
In consideration of the granting of the Option by the Company, the
Employee agrees to render faithful and efficient services to the Company, a
Parent Corporation or a Subsidiary, with such duties and responsibilities as the
Company shall from time to time prescribe, for a period of at least one (1) year
from the date the Option is granted, or in the case of an Optionee who is a non-
employee Director, the Optionee agrees to remain a Director for such one year
period. Nothing in these standard terms and conditions, in the Option Agreement
or in the Applicable Plan shall confer upon the Employee any right to continue
in the employ of the Company, any Parent Corporation or any Subsidiary 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 the Employee at any time for any reason whatsoever, with or without
cause. Further, nothing in these standard terms and conditions, in the Option
Agreement, or in the Applicable Plan shall confer upon any Director any right to
remain a Director.
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ARTICLE IV
EXERCISE OF OPTION
SECTION 4.1 - PERSON ELIGIBLE TO EXERCISE
During the lifetime of the Optionee, only he may exercise the Option
or any portion thereof. After the death of the Optionee, any exercisable
portion of the Option may, prior to the time when the Option becomes
unexercisable under Section 2.2 or 3.2, be exercised by his personal
representative or by any person empowered to do so under the Optionee's will or
under the then applicable laws of descent and distribution.
SECTION 4.2 - PARTIAL EXERCISE
Any exercisable portion of the Option or the entire Option, if then
wholly exercisable, may be exercised in whole or in part at any time prior to
the time when the Option or any portion thereof becomes unexercisable under
Section 3.2; PROVIDED, HOWEVER, that each partial exercise shall be for not less
than the minimum number of shares specified in the Agreement and shall be for
whole shares only.
SECTION 4.3 - MANNER OF EXERCISE
The 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 the Option or such portion becomes unexercisable under Section
2.2 or 3.2:
(a) Notice in writing signed by the Optionee or the other person then
entitled to exercise the Option or any portion thereof, stating that the Option
or portion thereof is thereby exercised, such notice complying with all
applicable rules established by the Committee; and
(b) Full payment:
(1) By delivery of cash or a check for the shares with respect
to which such Option or portion thereof is thereby exercised; or
(2) 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 a Fair Market Value
determined as of the date of delivery equal to the aggregate Option price
of the share with respect to which such Option or portion thereof is
thereby exercised; or
(3) 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 thereof is
thereby exercised; or
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(4) By means of any combination of the consideration provided in
the foregoing subsections (1), (2) or (3); and
(c) On or prior to the date the same is required to be withheld:
(1) 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
(2) 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 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
(3) 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
(4) Any combination of payments provided in the foregoing
subsections (1), (2) or (3); and
(d) In the event the Option or portion thereof shall be exercised
pursuant to Section 4.1 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.
The Committee may, in its absolute discretion, take whatever additional actions
it deems appropriate in connection with the exercise of the Option and the
issuance of shares pursuant thereto to insure compliance with the Securities Act
and any other federal or state securities laws or regulations.
SECTION 4.4 - CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES
The shares of stock deliverable upon the exercise of the Option, or
any portion thereof, may be either previously authorized but unissued shares or
issued shares which have then been reacquired by the Company. Such shares shall
be fully paid and nonassessable. The Company shall not be required to issue or
deliver any certificate or certificates for shares of stock purchased upon the
exercise of the Option or any 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
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(b) The completion of any registration or other qualification of such
shares under any state or federal law or under rulings or regulations of the
Securities and Exchange Commission or of any other governmental regulatory body,
which the Company shall deem necessary or advisable; and
(c) The obtaining of any approval or other clearance from any state
or federal governmental agency which the Company shall 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 from time to time establish for
reasons of administrative convenience.
SECTION 4.5 - RIGHTS AS SHAREHOLDER
The holder of the Option shall not be, nor have any of the rights or
privileges of, a shareholder of the Company in respect of any shares purchasable
upon the exercise of any part of the Option unless and until certificates
representing such shares shall have been issued by the Company to such holder.
ARTICLE V
OTHER PROVISIONS
SECTION 5.1 - ADMINISTRATION
The Committee shall have the power to interpret the Applicable
Plan, these standard terms and conditions and the Option Agreements,
and to adopt such rules for the administration, interpretation and
application of the Applicable Plan as are consistent therewith and to
interpret or revoke any such rules. Without limiting the generality of the
foregoing, in connection with mergers, consolidations and other corporate
transactions referred to in Section 2.2 hereof, the Committee may make such
determinations and adopt such rules and conditions as it, in its absolute
discretion, deems appropriate in connection with (a) the acceleration of
exercisability of options (including conditioning such acceleration upon
consummation of the contemplated corporate transaction) and (b)
determinations as to whether the relevant agreement for the corporate
transaction provides for the assumption or substitution of options. All
actions taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon the Optionee, 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 Applicable Plan or the Option. 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 Applicable Plan and
these standard terms and conditions.
SECTION 5.2 - OPTION NOT TRANSFERABLE
Neither the Option nor any interest or right therein or part thereof
shall be liable for the debts, contracts or engagements of the Optionee or his
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 an attempted disposition thereof shall
be null and
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void and of no effect; PROVIDED, HOWEVER, that this Section 5.2 shall not
prevent transfers by will or by the applicable laws of descent and distribution.
SECTION 5.3 - CONFIDENTIALITY AND NON-DISPARAGEMENT
Each Optionee hereby agrees to maintain in confidence and not disclose
or use, either during or after the term of his or her employment without the
prior express written consent of the Company, any proprietary or confidential
information or know-how belonging to the Company ("Proprietary Information"),
whether or not it is in written or permanent form, except to the extent required
to perform duties on behalf of the Company in his or her capacity as an
employee. Proprietary Information refers to any information, not generally
known in the relevant trade or industry, which was obtained from the Company or
which was learned, discovered, developed, conceived, originated, or prepared by
the Optionee in the scope of employment. Such Proprietary Information includes,
but is not limited to, software, technical and business information relating to
the Company's inventions or products, research and development, production
processes, manufacturing and engineering processes, machines and equipment,
finances, customers, marketing, production, future business plans, personnel
information, and any other information which is identified as confidential by
the Company. The Company considers all such Proprietary Information to be its
trade secrets. Upon Termination of Employment or at the request of Optionee's
supervisor before termination, Optionee agrees to deliver to the Company all
written and tangible material in his or her possession incorporating the
Proprietary Information or otherwise relating to the Company's business. These
obligations with respect to Proprietary Information extend to information
belonging to customers and suppliers of the Company who may have disclosed such
information to the Optionee.
The Optionee further agrees not, either orally or in writing, to speak
critically or negatively about the Company, or its past, present, or future
officers, directors, or employees, whether by expressing his or any other
person's opinion, or by speaking in any other manner whatsoever that would
reasonably be expected to result in the Company, or its past, present, or future
officers, directors, or employees being viewed by another person in a false or
negative light. The Optionee also agrees not to make any comments of a
denigrating or disparaging nature about any of the Company's products, goods, or
services.
SECTION 5.4 - AGREEMENT NOT TO SOLICIT EMPLOYEES
In order to remain eligible for the Option, Optionee agrees that
during Employment and for a period of two years after Termination of Employment
he or she will not solicit any employees of the Company or any Subsidiary for
purposes of providing services to or employment with any business organization
competitive with the Company or any Subsidiary.
SECTION 5.5 - SHARES TO BE RESERVED
The Company shall at all times during the term of the Option reserve
and keep available such number of shares of stock as will be sufficient to
satisfy the requirements of the Option.
SECTION 5.6 - NOTICES
Any notice to be given under the terms of these standard terms and
conditions to the Company shall be addressed to the Company in care of its
Secretary, and any notice to
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be given to the Optionee shall be addressed to him at the address given beneath
his name on the Agreement. By notice given pursuant to this Section 5.6, either
party may hereafter designate a different address for notices to be given to
him. Any notice which is required to be given to the Optionee shall, if the
Optionee is then deceased, be given to the Optionee's personal representative if
such representative has previously informed the Company of his status and
address by written notice under this Section 5.6. Any notice shall be deemed
duly given when enclosed in a properly sealed envelope or wrapper addressed as
aforesaid, deposited (with postage prepaid) in a post office or branch post
office regularly maintained by the United States Postal Service.
SECTION 5.7 - TITLES
Titles are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of the Option or these standard
terms and conditions.
SECTION 5.8 - CONSTRUCTION
The Option and these standard terms and conditions shall be
administered, interpreted and enforced under the laws of the State of Tennessee.
SECTION 5.9 - AMENDMENT
The Company and the Committee expressly reserve the right to amend,
modify, suspend or terminate these standard terms and conditions; PROVIDED,
HOWEVER, that no such amendment, modification, suspension or termination shall
impair or diminish any rights or increase any obligations of the holder of the
Option without such holder's consent.
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