BRIGGS & STRATTON CORPORATION
FORM 10-Q for Quarterly Period Ended March 31, 2002
Exhibit 10.3
AMENDED AND RESTATED DIRECTOR'S LEVERAGED
STOCK OPTION PROGRAM
Effective July 1, 2002
BRIGGS & STRATTON CORPORATION
DIRECTOR'S LEVERAGED STOCK OPTION PROGRAM
As adopted by the Board of Directors on April 16,
1997, effective beginning Fiscal 1998 and amended
by resolutions effective July 1, 1999 and July 1, 2002
BRIGGS & STRATTON CORPORATION
DIRECTOR'S LEVERAGED STOCK OPTION PLAN
1.0 Objectives
The Director's Leveraged Stock Option Plan ("Director's LSO Plan" or "Plan") is
designed to build upon the Company's Economic Value Added Incentive Compensation
Plan ("EVA Plan") for key employees and Leveraged Stock Option Program ("LSO
Program") for Senior Executives by tying the interests of the Company's
directors to the long term market value added performance of the Company. In
this way, the objectives of directors will be more closely aligned with those of
the Company's Shareholders. The Director's LSO Plan will allow nonemployee
directors to participate in the long-term appreciation in the equity value of
the Company. In general, the Plan is structured such that each nonemployee
director may receive options on the Company's Stock ("LSOs"), the number of such
LSOs to be determined by reference to the Company Performance Factor achieved
under the EVA Plan. These LSOs become exercisable after they have been held for
three years, and they expire at the end of ten years. The Director's LSO Plan is
structured so that a fair return must be provided to the Company's Shareholders
before the options become valuable.
2.0 Administration
The Plan shall be administered by the Board of Directors ("Board").
3.0 Stock Subject to Plan
The total number of shares reserved and available for distribution pursuant to
LSOs under the Plan shall be 100,000 shares of the Company's common stock, par
value $0.01 per share ("Stock"). Such shares may consist, in whole or in part,
of treasury or market purchase shares.
In the event of any merger, reorganization, consolidation, recapitalization,
stock dividend, stock split or other change in corporate structure affecting the
Stock, such substitution or adjustments shall be made in the aggregate number of
shares reserved for issuance under the Plan, and in the number and option price
of shares subject to outstanding LSOs, as may be determined to be appropriate by
the Board, in its sole discretion; provided, however, that the number of shares
subject to any award shall always be a whole number.
4.0 Eligibility
Each nonemployee director of the Company shall be eligible to participate in the
Plan.
5.0 Leveraged Stock Option Grant
For fiscal 1998 and subsequent fiscal years, each nonemployee director of the
Company who serves as a director through the end of the fiscal year shall
receive a number of LSOs determined as follows, based on the Company Performance
Factor achieved under the EVA Plan for that fiscal year:
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Company Performance Factor Number of LSOs
-------------------------- --------------
Under .5 0
.5 1,000
1.0 2,000
1.5 3,000
2.0 4,000
Over 2.0 An additional 1,000
LSOs for each .5
increase in the Company
Performance Factor
LSO grants shall be evidenced by option agreements, the terms and provisions of
which shall be determined by this Director's LSO Plan or the Board. These grants
will be awarded at the same time the Company awards grants to Senior Executives
under the LSO Program. The LSOs shall constitute non-qualified stock options.
No LSO shall be transferable by the optionee other than by will or by the laws
of descent and distribution, and all LSOs shall be exercisable, during the
optionee's lifetime, only by the optionee or by the guardian or legal
representative of the optionee, it being understood that the terms "holder" and
"optionee" include the guardian and legal representative of the optionee named
in the option agreement and any person to whom an option is transferred by will
or the laws of descent and distribution.
If an optionee's service as a director terminates by reason of death, any LSO
held by such optionee may thereafter be exercised, to the extent then
exercisable or on such accelerated basis as the Board may determine, for a
period of one year (or such other period as the Board may specify at grant) from
the date of such death or until the expiration of the stated term of such LSO,
whichever period is shorter.
When an optionee's service as a director terminates due to reaching the
mandatory retirement age or due to retirement upon reaching the end of the term
for which elected, an LSO held by such optionee may thereafter be exercised by
the optionee, to the extent it was exercisable at the time of such retirement or
on such accelerated basis as the Board may determine, for a period of three
years (or such shorter period as the Board may specify at grant) from the date
of such retirement or until the expiration of the stated term of such LSO,
whichever period is shorter; provided, however, that if the optionee dies within
such three-year (or such shorter) period, any unexercised LSO held by such
optionee shall, notwithstanding the expiration of such three-year (or such
shorter) period, continue to be exercisable to the extent to which it was
exercisable at the time of death for a period of one year from the date of such
death or until the expiration of the stated term of such LSO, whichever period
is shorter.
When an optionee's service as a director terminates for any reason other than
death or retirement as described above, unless otherwise determined by the Board
at grant, the LSO shall thereupon terminate, except that such LSO, to the extent
then exercisable, may be exercised for the lesser of three months or the balance
of the term. Notwithstanding the foregoing, if an optionee's service as a
director terminates at or after a Change in Control (as defined in the Company's
Stock
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Incentive Plan), other than by death or retirement (as described above),
any LSO held by such optionee shall be exercisable for the lesser of (x)
six months and one day, and (y) the balance of such LSO's term.
6.0 Term
All LSOs shall be exercisable beginning on the third anniversary of the date of
grant, and shall terminate on the tenth anniversary of the date of grant, unless
sooner exercised or the Board determines other dates at grant.
7.0 Exercise Price
The exercise price for LSOs granted hereunder shall be the exercise price for
LSOs granted under the LSO Program for Senior Executives for that fiscal year.
8.0 Definitions
All capitalized terms used herein that are not otherwise defined shall have the
same meaning given to them in the EVA Plan, LSO Program or Stock Incentive Plan.
9.0 Amendments and Termination
The Board may amend, alter, or discontinue the Plan but no amendment, alteration
or discontinuation shall be made which would impair the rights of an optionee
under an LSO granted without the optionee's or recipient's consent.
The Board may amend the terms of any LSO theretofore granted, prospectively or
retroactively, but no such amendment shall impair the rights of any holder
without the holder's consent.
Subject to the above provisions, the Board shall have authority to amend the
Plan to take into account changes in law and tax and accounting rules, as well
as other developments.
10.0 Unfunded Status of Plan
It is presently intended that the Plan constitute an "unfunded" plan for
incentive and deferred compensation. The Board may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Stock; provided, however, that, unless the Board otherwise determines,
the existence of such trusts or other arrangements is consistent with the
"unfunded" status of the Plan.
11.0 General Provisions
(a) The Board may require each person purchasing shares pursuant to an LSO
grant to represent to and agree with the Company in writing that the
optionee or participant is acquiring the shares without a view to the
distribution thereof.
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All certificates for shares of Stock or other securities delivered
under the Plan shall be subject to such stock transfer orders and other
restrictions as the Board may deem advisable under the rules,
regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Stock is then listed and
any applicable Federal or state securities law, and the Board may cause
a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.
(b) Nothing contained in this Plan shall prevent the Company, a subsidiary
or affiliate from adopting other or additional compensation
arrangements for its nonemployee directors.
(c) The adoption of the Plan shall not confer upon any director any right
to continue to serve as a director.
(d) The Plan and all awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of
Wisconsin.
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