EA INDUSTRIES, INC.
1994 EQUITY INCENTIVE PLAN (AS AMENDED AND RESTATED)
1. PURPOSE
The purpose of this 1994 Equity Incentive Plan (the "Plan") is to advance
the interests of Electronic Associates, Inc. (the "Company") and its
subsidiaries by enhancing the ability of the Company to (i) attract and retain
employees and other persons or entities who are in a position to make
significant contributions to the success of the Company and its subsidiaries;
(ii) reward such persons or entities for such contributions; and (iii) encourage
such persons or entities to take into account the long-term interest of the
Company through ownership of shares ("Shares") of the Company's Common Stock
("Stock").
The Plan is intended to accomplish these goals by enabling the Company to
grant awards ("Awards") in the form of Options, Stock Appreciation Rights,
Restricted Stock or Deferred Stock, all as more fully described below.
2. ADMINISTRATION
The Plan will be administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Company (the "Board"). The
Committee will determine the recipients of Awards, the times at which Awards
will be made and the size and type or types of Awards to be made to each
recipient and will set forth in such Awards the terms, conditions and
limitations applicable to it. Awards may be made singly, in combination or in
tandem. The Committee will have full and exclusive power to interpret the Plan,
to adopt rules, regulations and guidelines relating to the Plan, to grant
waivers of Plan restrictions and to make all of the determinations necessary for
this administration. In its discretion, the Board of Directors may elect to
administer all or any aspects of the Plan and to perform any of the duties or
exercise any of the rights delegated or granted to the Committee under the terms
of the Plan; provided, however, that the Board may not make such election if the
election would result in the failure of the Plan to comply with Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), at a time at which the Plan would otherwise be in compliance with such
rule. Such determinations and actions of the Committee (or the Board as the case
may be), and all other determinations and actions of the Committee (or the Board
as the case may be) made or taken under authority granted by any provision of
the Plan, will be conclusive and binding on all parties. Nothing in this
paragraph shall be construed as limiting the power of the Committee to make
adjustments under Section 11 or to amend or terminate the Plan under Section 16.
3. EFFECTIVE DATE AND TERM OF PLAN
Subject to the approval of the Plan by the Company's shareholders*, the
Plan will be deemed effective on May 17, 1994. Grants of Awards under the Plan
may be made prior to the receipt of shareholder approval, subject to such
approval of the Plan.
The Plan will terminate ten (10) years after the effective date of the
Plan, subject to earlier termination of the Plan by the Board pursuant to
Section 16. No Award may be granted under the Plan after the termination date of
the Plan, but Awards previously granted may extend beyond that date.
- ----------
* Approved by the shareholders on June 28, 1994.
4. SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 11 below, the maximum
aggregate number of Shares of Stock that may be delivered for all purposes under
the Plan shall be nine million (9,000,000)**.
If any Award requiring exercise by the Participant for delivery of Stock is
canceled or terminates without having been exercised in full, or if any Award
payable in Stock or cash is satisfied in cash rather than Stock, the number of
Shares of Stock as to which such Award was not exercised or for which cash was
substituted will be available for future grants of Stock except that Stock
subject to an Option canceled upon the exercise of an SAR shall not again be
available for Awards under the Plan unless, and to the extent that, the SAR is
settled in cash. Likewise, if any Award payable in Stock or cash is satisfied in
Stock rather than cash, the amount of cash for which such Stock was substituted
will be available for future Awards of cash compensation. Shares of Stock
tendered by a Participant or withheld by the Company to pay the exercise price
of an Option or to satisfy the tax withholding obligations of the exercise or
vesting of an Award shall be available again for Awards under the Plan, but only
to Participants who are not subject to Section 16 of the Exchange Act. Shares of
Restricted Stock forfeited to the Company in accordance with the Plan and the
terms of the particular Award shall be available again for Awards under the Plan
unless the Participant has received the benefits of ownership (within the
applicable interpretation under Rule 16b-3 under the Exchange Act), in which
case such Shares may only be available for Awards to Participants who are not
subject to Section 16 of the Exchange Act.
Stock delivered under the Plan may be either authorized but unissued Stock
or previously issued Stock acquired by the Company and held in treasury. No
fractional Shares of Stock will be delivered under the Plan and the Committee
shall determine the manner in which fractional share value will be treated.
5. ELIGIBILITY AND PARTICIPATION
Those eligible to receive Awards under the Plan ("Participants") will be
persons in the employ of the Company or any of its subsidiaries ("Employees")
and other persons or entities who, in the opinion of the Committee, are in a
position to make a significant contribution to the success of the Company or its
subsidiaries, including non-employee directors of the Company or a subsidiary of
the Company and consultants to the Company or a subsidiary of the Company. A
"subsidiary" for purposes of the Plan will be a corporation in which the Company
owns, directly or indirectly, stock possessing 50% or more of the total combined
voting power of all classes of stock.
6. OPTIONS
a. Nature of Options. An Option is an Award entitling the Participant to
purchase a specified number of Shares at a specified exercise price. Both
"incentive stock options," as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code") (referred to herein as an "ISO") and
non-incentive stock options may be granted under the Plan. ISOs may be awarded
only to Employees.
b. Exercise Price. The exercise price of each Option shall be determined by
the Committee, but in the case of an ISO shall not be less than 100% (110% in
the case of an ISO granted to a ten (10%) percent shareholder) of the Fair
Market Value of a Share at the time the ISO is granted. For purposes of this
Plan, "Fair Market Value" shall have the same meaning as it does in the
provisions of the Code and the regulations thereunder applicable to ISOs. For
purposes of this Plan, "ten-percent shareholder" shall mean any Employee who at
the time of grant owns directly, or is deemed to own by reason of the
attribution rules set forth in Section 424(d) of the Code, Stock possessing more
than ten (10%) percent of the total combined voting power of all classes of
stock of the Company or any of its subsidiaries.
c. Duration of Options. In no case shall an Option be exercisable more than
ten (10) years (five (5) years, in the case of an ISO granted to a "ten-percent
shareholder" as defined in (b) above) from the date the Option was granted.
- ----------
** Increase from 3,000,000 to 6,000,000 shares approved by the shareholders
on October 12, 1995. Increase from 6,000,000 to 9,000,000 shares approved by the
shareholders on May 30, 1996.
d. Exercise of Options and Conditions. Options granted under any single
Award will become exercisable at such time or times, and on and subject to such
conditions, as the Committee may specify; provided, however, that no Option will
become exercisable until the expiration date of such Option if subsequent to the
effectiveness of the Plan, the Sale Price (as defined below) of the Company's
Common Stock does not equal or exceed $6.00 per share for ten (10) consecutive
trading days. For purposes of this Plan, the Sale Price of the Company's Common
Stock shall be the average of the high and low sale prices or, in case no such
sale takes place on such day, the average of the high bid and low asked prices,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange-or, if the Common Stock is not then listed or admitted to trading
on the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading or, if the Common Stock is not listed or admitted to trading on any
national securities exchange, the average of the high bid and low asked prices
in the over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or such other
system then in use, or, if on any such date the Common Stock is not quoted by
any such organization, the average of the high bid and low asked prices as
furnished by a professional market maker making a market in the Common Stock
selected by the Board of Directors. In addition, options will not be exercisable
unless the shares subject thereto have been approved for listing on the New York
Stock Exchange or such other exchange or quotation system on which the Common
Stock is then listed or quoted. Subject to the conditions described above with
respect to the Sale Price and listing of the Common Stock, the Committee may at
any time and from time to time accelerate the time at which all or any part of
the Option may be exercised.
e. Payment for and Delivery of Stock. Full payment for Shares purchased
will be made at the time of the exercise of the Option, in whole or in part.
Payment of the purchase price will be made in cash or in such other form of
consideration as the Committee may approve, including, without limitation,
delivery of Shares of Stock.
7. STOCK APPRECIATION RIGHTS
a. Nature of Stock Appreciation Rights. A Stock Appreciation Right (an
"SAR") is an Award entitling the recipient to receive payment, in cash and/or
Stock, determined in whole or in part by reference to appreciation in the value
of a Share. In general, an SAR entitles the recipient to receive, with respect
to each Share as to which the SAR is exercised, the excess of the Fair Market
Value of a Share on the date of exercise over the Fair Market Value of a Share
on the date the SAR was granted. However, the Committee may provide at the time
of grant that the amount the recipient is entitled to receive will be adjusted
upward or downward under rules established by the Committee to take into account
the performance of the Shares in comparison with the performance of other stocks
or an index or indices of other stocks.
b. Grant of SARs. SARs may be granted in tandem with, or independently of,
Options granted under the Plan. An SAR granted in tandem with an Option which is
not an ISO may be granted either at or after the time the Option is granted. An
SAR granted in tandem with an ISO may be granted only at the time the Option is
granted.
c. Exercise of SARs. An SAR not granted in tandem with an Option will
become exercisable at such time or times, and on such conditions, as the
Committee may specify. An SAR granted in tandem with an Option will be
exercisable only at such times, and to the extent, that the related Option is
exercisable. An SAR granted in tandem with an ISO may be exercised only when the
market price of the Shares subject to the Option exceeds the exercise price of
such Option. The Committee may at any time and from time to time accelerate the
time at which all or part of the SAR may be exercised.
8. RESTRICTED STOCK
A Restricted Stock Award entitles the recipient to acquire Shares, subject
to certain restrictions or conditions, for no cash consideration, if permitted
by applicable law, or for such other consideration as determined by the
Committee. The Award may be subject to such restrictions, conditions and
forfeiture provisions as the Committee may determine, including, but not limited
to, restrictions on transfer, continuous service with the Company or any of its
subsidiaries; achievement of business objectives, and individual, unit and
Company performance. Subject to such restrictions, conditions and forfeiture
provisions as may be established by the Committee, any Participant receiving an
Award will have all the rights of a shareholder
of the Company with respect to Shares of Restricted Stock, including the right
to vote the Shares and the right to receive any dividends thereon.
9. DEFERRED STOCK
A Deferred Stock Award entitles the recipient to receive Shares to be
delivered in the future. Delivery of the Shares will take place at such time or
times, and on such conditions, as the Committee may specify. The Committee may
at any time accelerate the time at which delivery of all or any part of the
Shares will take place. At the time any Deferred Stock Award is granted, the
Committee may provide that the Participant will receive an instrument evidencing
the Participant's right to future delivery of Deferred Stock.
10. TRANSFERS
No Award (other than an Award in the form of an outright transfer of cash
or Stock) may be assigned, pledged or transferred other than by will or by the
laws of descent and distribution and during a Participant's lifetime will be
exercisable only by the Participant or, in the event of a Participant's
incapacity, his or her guardian or legal representative.
11. ADJUSTMENTS
a. In the event of a stock dividend, stock split or combination of Shares,
recapitalization or other change in the Company's capitalization, or other
distribution to holders of the Company's Common Stock other than normal cash
dividends, after the effective date of the Plan, the Committee will make any
appropriate adjustments to the maximum number of Shares that may be delivered
under the Plan and to any Participant under Section 4 above.
b. In any event referred to in paragraph (a), the Committee will also make
any appropriate adjustments to the number and kind of Shares of Stock or
securities subject to Awards then outstanding or subsequently granted, any
exercise prices relating to Awards and any other provision of Awards affected by
such change, including the requirement that the Sale Price of the Common Stock
equal or exceed the threshold described in Section 6(d). The Committee may also
make such adjustments to take into account material changes in law or in
accounting practices or principles, mergers, consolidations, acquisitions,
dispositions or similar corporate transactions, or any other event, if it is
determined by the Committee that adjustments are appropriate to avoid distortion
in the operation of the Plan.
12. RIGHTS AS A SHAREHOLDER
Except as specifically provided by the Plan, the receipt of an Award will
not give a Participant rights as a shareholder; the Participant will obtain such
rights, subject to any limitations imposed by the Plan or the instrument
evidencing the Award, upon actual receipt of Shares. However, the Committee may,
on such conditions as it deems appropriate, provide that a Participant will
receive a benefit in lieu of cash dividends that would have been payable on any
or all Shares subject to the Participant's Award had such Shares been
outstanding.
13. CONDITIONS ON DELIVERY OF STOCK
The Company will not be obligated to deliver any Shares pursuant to the
Plan or to remove any restrictions or legends from Shares previously delivered
under the Plan until, (a) in the opinion of the Company's counsel, all
applicable federal and state laws and regulations have been complied with, (b)
if the outstanding Shares are at the time listed on any stock exchange, until
the Shares to be delivered have been listed or authorized to be listed on such
exchange upon official notice of notice of issuance, and (c) until all other
legal matters in connection with the issuance and delivery of such Shares have
been approved by the Company's counsel. If the sale of Shares has not been
registered under the Securities Act of 1933, as amended, the Company may
require, as a condition to exercise of the Award, such representations and
agreements as counsel for the Company may consider appropriate to avoid
violation of such Act and may require that the certificates evidencing such
Shares bear an appropriate legend restricting transfer. If an Award is exercised
by the Participant's legal representative, the Company will be under no
obligation to deliver Shares pursuant to such exercise until the Company is
satisfied as to the authority of such representative.
14. TAX WITHHOLDING
The Company will have the right to deduct from any cash payment under the
Plan taxes that are required to be withheld and further to condition the
obligation to deliver or vest Shares under this Plan upon the Participant's
paying the Company such amount as it may request to satisfy any liability for
applicable withholding taxes. The Committee may in its discretion permit
Participants to satisfy all or part of their withholding liability by delivery
of Shares with a Fair Market Value equal to such liability or by having the
Company withhold from Stock delivered upon exercise of an Award, Shares whose
Fair Market Value is equal to such liability.
15. MERGERS; ETC.
In the event of any merger or consolidation involving the Company, any sale
of substantially all of the Company's assets or any other transaction or series
of related transactions as a result of which a single person or several persons
acting in concert own a majority of the Company's then outstanding Stock (such
merger, consolidation, sale or other transaction being hereinafter referred to
as a "Transaction"), all outstanding Options and SARs shall become immediately
exercisable and each outstanding share of Restricted Stock and each outstanding
Deferred Stock Award shall immediately become free of all restrictions and
conditions. Upon consummation of the Transaction, all outstanding Options and
SARs shall terminate and cease to be exercisable. There shall be excluded from
the foregoing any Transaction as a result of which (a) the holders of Stock
prior to the Transaction retain or acquire securities constituting a majority of
the outstanding voting Common Stock of the acquiring or surviving corporation or
other entity and (b) no single person owns more than half of the outstanding
voting Common Stock of the acquiring or surviving corporation or other entity.
For purposes of this Section, voting Common Stock of the acquiring or surviving
corporation or other entity that is issuable upon conversion of convertible
securities or upon exercise of warrants or options shall be considered
outstanding, and all securities that vote in the election of directors (other
than solely as the result of a default in the making of any dividend or other
payment) shall be deemed to constitute that number of shares of voting Common
Stock which is equivalent to the number of such votes that may be cast by the
holders of such securities.
In lieu of the foregoing, if there is an acquiring or surviving corporation
or entity, the Committee may by vote of a majority of the members of the
Committee who are Continuing Directors (as defined below), arrange to have such
acquiring or surviving corporation or entity or an Affiliate (as defined below)
thereof grant to Participants holding outstanding Awards replacement Awards
which, in the case of ISOs, satisfy, in the determination of the Committee, the
requirements of Section 425 (e) of the Code. The term "Continuing Director"
shall mean any director of the Company who (i) is not an Acquiring Person or an
Affiliate of an Acquiring Person and (ii) either was (A) a member of the Board
of Directors of the Company on the effective date of the Plan or (B) nominated
for his or her initial term of office by a majority of the Continuing Directors
in office at the time of such nomination. The term "Acquiring Person" shall
mean, with respect to any Transaction, each Person who is a party to or a
participant in such Transaction or who, as a result of such Transaction, would
(together with other Persons acting in concert) own a majority of the Company's
outstanding Common Stock; provided, however, that none of the Company, any
wholly-owned subsidiary of the Company, any employee benefit plan of the Company
or any trustee in respect thereof acting in such capacity shall, for purposes of
this Section, be deemed an "Acquiring Person." The term "Affiliate", with
respect to any Person, shall mean any other Person who is, or would be deemed to
be an "affiliate" or an "associate" of such Person within the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended. The term
"Person" shall mean a corporation, association, partnership, joint venture,
trust, organization, business, individual or government or any governmental
agency or political subdivision thereof.
16. AMENDMENTS AND TERMINATION
The Committee will have the authority to make such amendments to any terms
and conditions applicable to outstanding Awards as are consistent with this Plan
provided that, except for adjustments under Section 11 hereof, no such action
will modify such Award in a manner adverse to the Participant without the
Participant's consent except as such modification is provided for or
contemplated in the terms of the Award.
The Board may amend, suspend or terminate the Plan without shareholder
approval.
17. NO GUARANTEE OF EMPLOYMENT
The grant of an Award under this Plan shall not constitute an assurance of
continued employment for any period.
18. MISCELLANEOUS
This Plan shall be governed by and construed in accordance with the laws of
the State of New Jersey.