Exhibit 10.1
NN BALL & ROLLER, INC.
STOCK INCENTIVE PLAN
1. PURPOSE
The NN Ball & Roller, Inc. Stock Incentive Plan (the "Plan") is
designed to enable officers and key employees of NN Ball & Roller, Inc.
(the "Company") to acquire or increase a proprietary interest in the
Company, and thus to share in the future success of the Company's
business. Accordingly, the Plan is intended as a means of attracting
and retaining officers and key employees of outstanding ability and of
increasing the identity of interests between them and the Company's
shareholders, by providing an incentive to perform in a superior manner
and rewarding such performance. Because the individuals eligible to
receive Awards under the Plan will be those who are in positions to
make important and direct contributions to the success of the Company,
the directors believe that the grant of Awards will advance the
interests of the Company and the shareholders.
2. DEFINITIONS
In this Plan document, unless the context clearly indicates otherwise,
words in the masculine gender shall be deemed to refer to females as
well as to males, any term used in the singular also shall refer to the
plural, and the following capitalized terms shall have the following
meanings:
(a) "Agreement" means the written agreement to be entered into by
the Company and the Grantee, as provided in Section 7 hereof.
(b) "Award" means an Option, Restricted Shares, a Right or any
award described in Section 13 hereof.
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(c) "Beneficiary" means the person or persons designated in writing by the
Grantee as his beneficiary with respect to an Award in the event of the
Grantee's death; or, in the absence of an effective designation or if
the designated person or persons predecease the Grantee, the Grantee's
Beneficiary shall be the person or persons who acquire by bequest or
inheritance the Grantee's rights in respect of an Award. In order to be
effective, a Grantee's designation of a Beneficiary must be on file
with the Committee before the Grantee's death. Any such designation may
be revoked by the Grantee and a new designation substituted therefor at
any time before the Grantee's death.
(d) "Board of Directors" or "Board" means the board of directors of the
Company.
(e) A "Change in Control" shall be deemed to occur when and if any of the
following events occurs:
(i) the Company acquires knowledge that any "person" or "group"
within the meaning of Section 13(d) and 14(d)(2) of the 1934 Act in a
transaction or series of transactions has become the "beneficial
owner," as defined in Rule 13d-3 under the 1934 Act, directly or
indirectly, of a majority of the then outstanding voting securities of
the Company (not including voting securities held by officers or
directors of the Company within the meaning of Section 16 of the 1934
Act), otherwise than through a transaction or series of transactions
arranged by, or consummated with the prior approval of, the Board,
except in a transaction provided for in clause (ii) hereof; or
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(ii) the consummation of a merger or consolidation of the Company
with, or a sale of all or substantially all of the assets of the
Company to, another corporation unaffiliated with the Company that has
been approved by the holders of a majority of the outstanding voting
securities of the Company (not including any voting securities that are
held by directors or officers of the Company within the meaning of
Section 16 of the 1934 Act) and after which merger, consolidation or
sale the shareholders of the Company immediately prior thereto do not
beneficially own at least a majority of the combined voting power of
the then outstanding voting securities entitled to vote generally in
the election of directors of the corporation surviving such merger or
consolidation or to which all or substantially all such assets are
transferred.
(f) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(g) "Committee" means a committee, appointed or approved by the Board
pursuant to Section 5(a) below, consisting of (i) prior to the
consummation of the initial public offering, some or all of the
directors, and (ii) after the consummation of the initial public
offering not less than two directors each of whom is a "disinterested
person" within the meaning of Rule 16b-3 under the 1934 Act (or any
successor rule of similar import) or such greater number of directors
as may be required to satisfy the requirements of Rule 16b-3 as in
effect from time to time. To the extent that it is determined desirable
to exempt any compensation earned under the Plan from the limitation on
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deductions imposed by Section 162(m) of the Code and the rules and
regulations thereunder, membership in the Committee may be limited as
necessary to exempt such compensation from such limitation.
(h) "Company" means NN Ball & Roller, Inc.
(i) "Disability" or "Disabled" means having a total and permanent
disability as defined in Section 22(e)(3) of the Code.
(j) "Fair Market Value" means, when used in connection with the Shares on a
certain date, (1) the last sale price if Shares are listed on a
national securities exchange, (2) if the Shares are not listed on a
national security exchange, the last sale price (or if last sale prices
are not disseminated, the mean of the closing bid and asked prices) as
reported by a nationally recognized quotation reporting service then
reporting such information or (3) if Shares are not so listed or such
prices are not so disseminated any other appropriate method that the
Committee deems fair and equitable.
(k) "Grantee" means a person to whom an Award has been granted under the
Plan.
(l) "Incentive Stock Option" means an Option that complies with the terms
and conditions set forth in Section 422(b) of the Code and is
designated by the Committee as an Incentive Stock Option.
(m) "Limited Stock Appreciation Right" means a right that provides for a
payment in accordance with Section 11 hereof.
(n) "1934 Act" means the Securities Exchange Act of 1934, as amended from
time to time.
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(o) "Nonqualified Stock Option" means an Option granted under the Plan
other than an Incentive Stock Option.
(p) "Option" means an option to purchase a Share or Shares under the Plan.
Unless the context clearly indicates otherwise, the term "Option" shall
include both Incentive Stock Options and Nonqualified Stock Options.
(q) "Parent" means any parent corporation of the Company within the meaning
of Section 424(e) of the Code (or a successor provision of similar
import).
(r) "Plan" means the NN Ball & Roller, Inc. Stock Incentive Plan, as set
forth herein and as amended from time to time.
(s) "Restricted Shares" means Shares granted pursuant to Section 12 hereof
subject to such restrictions and other terms and conditions as the
Committee shall determine in accordance with the Plan.
(t) "Retirement" means termination of employment after the Grantee's 60th
birthday and after the Grantee has completed five years of service
(within the meaning of the NN Ball and Roller, Inc. Employees' Profit
Sharing Plan) with the Company.
(u) "Right" means a Stock Appreciation Right or a Limited Stock
Appreciation Right. Unless the context clearly indicates otherwise, the
term "Right" shall include both Stock Appreciation Rights and Limited
Stock Appreciation Rights.
(v) "Shares" means shares of the common stock, par value $0.01 per share,
of the Company.
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(w) "Stock Appreciation Right" means a right that provides for a payment in
accordance with Section 10 hereof.
(x) "Subsidiary" means any subsidiary corporation of the Company within the
meaning of Section 424(f) of the Code (or a successor provision of
similar import).
(y) "Term" means the period during which a particular Option or Right may
be exercised.
3. ADOPTION AND DURATION OF THE PLAN
(a) The Plan is effective as of March 2, 1994, and shall terminate ten
years after such effective date, unless it is sooner terminated in
accordance with Section 23 hereof. Any Award outstanding at the time
that the Plan is terminated shall not cease to be or cease to become
exercisable pursuant to its terms because of the termination of the
Plan.
(b) The Plan shall be approved either (1) by the affirmative vote of the
holders of a majority of the outstanding Shares present in person or
represented by proxy and entitled to vote at a meeting of the
stockholders of the Company duly called for such purpose, or (2) by the
written consent of the holders of a majority of the outstanding Shares
entitled to vote (or any larger percentage of the Shares entitled to
vote as required by the Company's Certificate of Incorporation or
By-laws). If stockholder approval is not obtained, all Awards granted
under the Plan shall be of no effect. No Award may be exercised,
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and no restriction on Restricted Shares shall expire, lapse or be
removed, prior to stockholder approval of the Plan.
4. NUMBER AND SOURCE OF SHARES SUBJECT TO THE PLAN
(a) The Company may grant Awards under the Plan with respect to not more
than 500,000 Shares (subject, however, to adjustment as provided in
Section 22 hereof), which Shares may be provided from any or a
combination of the Company's treasury, the issuance of authorized but
unissued Shares, and/or the purchase of outstanding Shares in the open
market or in private transactions.
(b) If, and to the extent that, all or any part of an Award previously
granted is surrendered, lapses, expires, is forfeited or is terminated
(other than by reason of exercise in the case of an Option), in whole
or in part, in such manner that all or some of the Shares that are the
subject of the Award are not issued to the Grantee (and cash or any
other form of consideration is not paid in lieu thereof pursuant to any
tandem arrangement or otherwise), then such Shares subject to the Award
shall again become available for the granting of Awards under the Plan
within the limitation stated in subsection (a). Notwithstanding the
foregoing, (i) if, while any Award is outstanding, the Grantee thereof
receives any benefits of ownership of the Shares (such as the right to
vote or receive dividends on Restricted Shares) or (ii) if any Shares
previously issued under the Plan are surrendered, or any Shares
issuable under the Plan are withheld, in payment of the exercise price
of an Option or to satisfy tax
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withholding obligations associated with any Award, then in each such
case such Shares shall not again be available for Awards under the
Plan.
5. ADMINISTRATION OF THE PLAN
(a) The Plan shall be administered by the Committee. The members of the
Committee shall be appointed by the Board from time to time and shall
serve at the pleasure of the Board.
(b) The Committee shall adopt such rules of procedure as it may deem
appropriate for the proper administration of the Plan and as are in
accordance with the Certificate of Incorporation and Bylaws of the
Company. All actions of the Committee under the Plan shall be effective
if taken either (1) by a majority vote of the members then in office at
a meeting duly called and held or (2) by execution of a written
instrument signed by all of the members then in office.
(c) The powers of the Committee shall include plenary authority to
interpret the Plan. Subject to the provisions of the Plan, the
Committee shall have the authority, in its sole discretion, from time
to time: (1) to select the officers and key employees to whom Awards
shall be granted; (2) to determine the date on which each Award shall
be granted; (3) to prescribe the number of Shares subject to each
Award; (4) to determine the type of each Award; (5) to determine the
term of each Award; (6) to determine the periods during which Awards
may be exercised and the restrictions and limitations upon exercise of
Awards or the receipt of Shares, other property or cash thereunder; (7)
to
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prescribe any performance criteria pursuant to which Awards may be
granted or may become exercisable or payable; (8) to prescribe any
limitations, restrictions or conditions on any Award; (9) to prescribe
the provisions of each Agreement, which shall not be inconsistent with
the terms of the Plan; (10) to adopt, amend and rescind rules and
regulations relating to the Plan; and (11) to make all other
determinations and take all other actions that are necessary or
advisable for the implementation and administration of the Plan.
6. INDIVIDUALS ELIGIBLE TO RECEIVE AWARDS
(a) Awards may be granted under the Plan to officers and key employees of
the Company or any Subsidiary, including officers or key employees who
also serve as members of the Board. All determinations by the
Committee as to the individuals to whom Awards shall be granted
hereunder shall be conclusive.
(b) Directors who are not regular salaried employees of the Company or any
Subsidiary shall not be eligible to receive Awards.
(c) A Grantee may receive more than one Award. A Grantee may not receive
Awards with respect to more than 300,000 Shares (subject, however, to
adjustment as provided in Section 22) in any three-year period. For
purposes of the application of this limitation, if an Award is
cancelled, the Shares subject to the cancelled Award shall continue to
be counted against the maximum number of Shares for which Awards may
be granted to the Grantee. If, after the grant of an Award, the Option
price or purchase price
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of the Award is reduced, the transaction shall be treated as a
cancellation of the Award and a grant of a new Award, and both the
Shares subject to the Award that is deemed to be cancelled and the
Shares subject to the Award that is deemed to be granted shall reduce
the maximum number of Shares for which Awards may be granted to the
Grantee.
7. AGREEMENT
(a) Each Award shall be evidenced by an Agreement setting forth the number
of Shares subject to the Award or to which such Award corresponds, and
the terms, conditions and restrictions applicable thereto.
(b) Appropriate officers of the Company are hereby authorized to execute
and deliver Agreements in the name of the Company as directed from
time to time by the Committee.
8. INCENTIVE STOCK OPTIONS
(a) The Committee may authorize the grant of Incentive Stock Options to
officers and key employees, subject to the terms and conditions set
forth in the Plan. The Agreement relating to an Incentive Stock Option
shall state that the Option evidenced by the Agreement is intended to
be an "incentive stock option" within the meaning of Section 422(b) of
the Code.
(b) The Term of each Incentive Stock Option shall end (unless the Option
shall have terminated earlier under another provision of the Plan) on
a date fixed by the Committee and set forth in the applicable
Agreement. In no event
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shall the Term of the Option extend beyond ten years from the date of
grant of the Option. In the case of any Grantee who, on the date the
Option is granted, owns (within the meaning of Section 424(d) of the
Code) more than 10 percent of the total combined voting power of all
classes of stock of the Company, a Parent (if any), or a Subsidiary
(if any), the Term of the Option shall not extend beyond five years
from the date of grant.
(c) To the extent that the aggregate Fair Market Value of the stock with
respect to which Incentive Stock Options (determined without regard to
this subsection (c)) are exercisable by any Grantee for the first time
during any calendar year (under all stock option plans of the Company,
its Parent (if any) and its Subsidiaries (if any)) exceeds $100,000,
such Options shall not be Incentive Stock Options. For the purposes of
this subsection (c), the Fair Market Value of stock shall be
determined as of the time the Option with respect to such stock is
granted. This subsection (c) shall be applied by taking Options into
account in the order in which they were granted.
(d) The Option price per Share established by the Committee for an
Incentive Stock Option shall not be less than the Fair Market Value of
a Share on the date the Option is granted, except that in the case of
an Incentive Stock Option granted to a Grantee who, on the date the
Option is granted, owns (within the meaning of Section 424(d) of the
Code) more than 10 percent of the total combined voting power of all
classes of stock of the Company, a Parent (if any) or a Subsidiary (if
any), the Option price for each Share shall not be less than 110
percent of the Fair Market Value of a Share on the date
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the Option is granted. In no event may an Incentive Stock Option be
granted if the Option price per Share is less than the par value of a
Share.
(e) Any Grantee who disposes of Shares purchased upon the exercise of an
Incentive Stock Option either (1) within two years after the date on
which the Option was granted, or (2) within one year after the
issuance or transfer of such Shares to the Grantee, shall promptly
notify the Company of the date of such disposition and of the amount
realized upon such disposition.
9. NONQUALIFIED STOCK OPTIONS
(a) The Committee may authorize the grant of Nonqualified Stock Options
subject to the terms and conditions set forth in the Plan. Unless an
Option is designated by the Committee as an Incentive Stock Option, it
is intended that the Option will not be an "incentive stock option"
within the meaning of Section 422(b) of the Code and, instead, will be
a Nonqualified Stock Option. The Agreement relating to a Nonqualified
Stock Option shall state that the Option evidenced by the Agreement
shall not be treated as an Incentive Stock Option.
(b) The Term of each Nonqualified Stock Option shall end (unless the
Option shall have terminated earlier under another provision of the
Plan) on a date fixed by the Committee and set forth in the applicable
Agreement. In no event shall the Term of the Nonqualified Stock Option
extend beyond ten years from the date of grant of the Option.
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(c) The Option price to be paid by the Grantee for each Share purchased
upon the exercise of a Nonqualified Stock Option shall not be less
than the Fair Market Value of a Share on the date the Option is
granted. In no event may a Nonqualified Stock Option be granted if the
Option price per Share is less than the par value of a Share.
10. STOCK APPRECIATION RIGHTS
(a) The Committee shall have authority, in its sole discretion, to provide
for the grant of Stock Appreciation Rights either (i) in tandem with
all or a portion of an Option granted under the Plan or (ii)
independent of any Option granted under the Plan. A tandem Right shall
be exercisable only at such times, and to such extent, as the related
Option is exercisable. Subject to shareholder approval of the Plan as
required by Section 3(b) above, an independent Right shall be
exercisable at such time and to such extent as the Committee shall
determine.
(b) Any Stock Appreciation Right shall permit the Grantee to receive, upon
exercise of the Right, an amount (to be paid in cash, in Shares or in
both cash and Shares, as determined by the Committee in its sole
discretion at any time prior to or after exercise) equal in value to
the difference between (1) the Fair Market Value on the date of
exercise of the Shares with respect to which the Right is exercised
and (2) either (i) the Option price of the related Option in the case
of a Right that is related to an Option or (ii) the Fair Market Value
of
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a Share on the date the Right was granted in the case of a Right that
is not related to any Option.
(c) With respect to Rights granted under the Plan, the Committee may
establish such waiting periods, exercise dates and other limitations
as it shall deem appropriate in its sole discretion, provided that (1)
no Right that is granted in tandem with an Option may be exercised
after the expiration of the Term of such Option and (2) the exercise
of a Right (whether or not in tandem with an Option) for cash by a
director or officer (within the meaning of Rule 16b-3 under the 1934
Act) of the Company is subject to the following conditions: (A) the
Company shall have been subject to the reporting requirements of
Section 13(a) of the 1934 Act for at least one year prior to the
exercise and shall have filed all reports required to be filed under
Section 13(a) during such period, (B) the Company shall have regularly
released for publication quarterly and annual summary statements of
sales and earnings, (C) the Committee, which shall have sole
discretion to approve or disapprove the election of the Grantee to
receive cash as whole or partial settlement of the Right, approves the
Grantee's election to receive cash after the election is made, (D) the
exercise occurs during one of the window periods described in clause
(e)(3) of Rule 16b-3 and (E) the Right is not exercised prior to the
expiration of a six-month period after the date of the grant or, if
later, stockholder approval of the Plan as provided in Section 3(b).
In addition, the Committee may impose a prohibition on the exercise of
Rights for such
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period or periods as it, in its sole discretion, deems to be in the
best interest of the Company.
(d) The right of a Grantee to exercise an Option shall be canceled if and
to the extent that the Shares subject to the Option are used to
calculate the amount to be received upon the exercise of a tandem
Right, and the right of a Grantee to exercise a tandem Right shall be
canceled if and to the extent that the Shares subject to the Right are
purchased upon the exercise of the related Option or are used to
calculate the amount to be received upon the exercise of another Right
that is related to the Right in question.
(e) A tandem Right may be granted coincident with or after the grant of
any related Option; provided that the Committee shall consult with
counsel before granting a tandem Right after the grant of a related
Incentive Stock Option.
11. LIMITED STOCK APPRECIATION RIGHTS
(a) The Committee shall have authority, in its sole discretion, to provide
for the grant of Limited Stock Appreciation Rights relating to all or
a portion of any Option, whether or not a Stock Appreciation Right has
been granted in connection with such Option, except that no Limited
Stock Appreciation Right shall be granted in response to a Change in
Control.
(b) A Limited Stock Appreciation Right shall be exercised automatically
upon the occurrence of a Change in Control. However, no Limited Stock
Appreciation Right shall be exercisable after the expiration of the
Term of the tandem
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Option and the exercise of a Limited Stock Appreciation Right by a
director or officer (within the meaning of Rule 16b-3 under the 1934
Act) of the Company is subject to the following conditions: (1) the
Company shall have been subject to the reporting requirements of
Section 13(a) of the 1934 Act for at least one year prior to the
exercise and shall have filed all reports required to be filed under
Section 13(a) during such period, (2) the Company shall have regularly
released for publication quarterly and annual summary statements of
sales and earnings, and (3) six months shall have expired since the
date of the grant of the Limited Stock Appreciation Right or, if
later, stockholder approval of the Plan as provided in Section 3(b).
(c) The amount to be received by the Grantee upon the exercise of a
Limited Stock Appreciation Right shall be paid in cash, and shall be
equal in amount to the number of Shares with respect to which the
Right is exercised multiplied by the excess of:
(1) the higher of (i) the highest Fair Market Value of a Share
during the period commencing on the ninetieth (90th) day preceding the
exercise of the Right and ending on the date of exercise and (ii)
either (A) if an event described in paragraph (i) of the definition of
"Change in Control," above, has occurred, the highest price per Share
paid for any Share as shown on a Schedule 13D (or any amendment
thereto) filed pursuant to Section 13(d) of the 1934 Act by any person
or group (as defined in that definition) whose acquisition caused the
Change in Control to occur, or (B) if an event described in paragraph
(ii) of the definition of "Change in Control," above,
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has occurred, the cash value per Share of the consideration
paid or to be paid pursuant to the reorganization agreement
(as defined in that definition) if such price is determinable
as of the date of exercise of the Limited Stock Appreciation
Rights, over
(2) the Option price of the related Option.
Any securities or property that are part or all of the
consideration paid for Shares pursuant to the reorganization
agreement shall be valued at the higher of (i) the valuation
placed on such securities or property by the corporation
issuing securities or property in the merger or consolidation
or to whom the Company is selling or otherwise disposing of
all or substantially all of the assets of the Company and (ii)
the valuation placed on such securities or property by the
Committee.
(d) In the case of a Limited Stock Appreciation Right that is
related to an Incentive Stock Option, the amount payable under
subsection (c) may not exceed the difference between the Fair
Market Value, as of the exercise date, of the Shares with
respect to which the Right is exercised and the Option price
of the related Incentive Stock Option.
(e) The grant and exercise of Limited Stock Appreciation Rights
shall be subject to the terms and conditions set forth in
Sections 10(d) through 10(e).
12. RESTRICTED SHARES
(a) The Committee may authorize the grant of Restricted Shares
subject to the terms and conditions set forth in the Plan.
Subject to the provisions of this
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Section 12, the Committee shall determine at the time of grant
the size and the terms and conditions of each grant of
Restricted Shares, including the duration of the restrictions
that shall be imposed on the Restricted Shares, the dates on
which, or circumstances (such as the satisfaction of specified
performance criteria) in which, the restrictions shall expire,
lapse or be removed or the Restricted Shares shall be
forfeited, and the purchase price, if any, to be paid to the
Company by the Grantee (and the terms of payment thereof) for
the Restricted Shares. To the extent required by law, the
purchase price of a Restricted Share shall not be less than
the par value of a Share on the date of grant.
(b) A Grantee of Restricted Shares shall have beneficial ownership
of the Restricted Shares, including the right to receive
dividends on, and the right to vote, the Restricted Shares. A
certificate or certificates representing the number of
Restricted Shares acquired shall be registered in the name of
the Grantee. The Committee, in its sole discretion, shall
determine when the certificate or certificates shall be
delivered to the Grantee (or, in the event of the Grantee's
death, to his Beneficiary), may provide for the holding of
such certificate or certificates in custody by a bank or other
institution or by the Company itself pending their delivery to
the Grantee or Beneficiary, and may provide for any
appropriate legend to be borne by the certificate or
certificates referring to the terms, conditions and
restrictions applicable to the Restricted Shares.
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(c) While subject to the restrictions imposed by the Committee in
accordance with this Section 12, Restricted Shares shall not
be sold, assigned, conveyed, transferred, pledged,
hypothecated, or otherwise disposed of, and any attempt
thereto shall be ineffective. If the Grantee's continuous
employment with the Company or any Subsidiary shall terminate
for any reason, except as provided by the Committee pursuant
to subsection (d) below, all of the rights of the Grantee to
such Restricted Shares shall immediately terminate. Upon such
termination, the Grantee shall redeliver or cause to be
redelivered to the Company any certificate(s) for the Shares
previously delivered to the Grantee, accompanied by such
endorsement(s) and/or instrument(s) of transfer as may be
required by the Company. Upon the return of any certificate(s)
for such Restricted Shares, the Company shall pay to the
Grantee an amount in cash equal to the lesser of the aggregate
purchase price, if any, paid by the Grantee for the Restricted
Shares or the current fair market value of the Restricted
Shares.
(d) The restrictions imposed on Restricted Shares shall lapse on
such date or dates and in such circumstances as the Committee
shall determine at the time of the grant. The Committee shall
provide for the acceleration of the lapse of restrictions in
whole or in part upon the death or Disability of the Grantee
or upon the occurrence of a Change in Control, which
provisions shall be set forth in the Agreement.
Notwithstanding the foregoing, in no event shall Restricted
Shares granted to any director or officer (within the meaning
of Section 16 of the 1934 Act) of the Company be transferable
prior to the
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expiration of a period of six months from the date on which
the Restricted Shares were granted (or, if later, within six
months following the date of stockholder approval of the Plan
as provided in Section 3(b)).
(e) If, after Restricted Shares are transferred to a Grantee, the
Grantee properly and timely elects, pursuant to Section 83(b)
of the Code, to include in gross income for federal income tax
purposes the amount determined under Section 83(b) of the
Code, the Grantee shall furnish to the Company a copy of his
completed and signed election form, and shall pay (or make
arrangements satisfactory to the Company to pay) to the
Company any federal, state or local taxes required to be
withheld with respect to the Shares. If the Grantee fails to
make such payments, the Company and its Subsidiaries shall, to
the extent permitted by law, have the right to deduct from any
payment of any kind otherwise due to the Grantee any federal,
state or local taxes of any kind required by law to be
withheld with respect to the Shares.
13. OTHER STOCK-BASED AWARDS
The Committee may, from time to time, grant Awards (other than the
Awards described in Sections 8 through 12 above) under the Plan that
consist of, are denominated in or payable in, are valued in whole or
in part by reference to, or otherwise are based on or related to,
Shares, provided that such grants comply with applicable law. The
Committee may subject such Awards to such vesting or earnout
provisions, restrictions on transfer, and/or other restrictions on
incidents of ownership as the Committee may determine, provided that
such restrictions are not inconsistent
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with the terms of the Plan. The Committee may grant Awards under this
Section 13 that require no payment of consideration by the Grantee
(other than services previously rendered or, as may be permitted by
applicable law, services to be rendered), either on the date of grant
or the date any restriction(s) thereon are removed. Awards granted
under this Section 13 may include, by way of example, phantom Shares,
performance units, performance bonus awards, and other Awards that
are payable in cash, or that are payable in cash or Shares or other
property (at the election of the Committee or, if the Committee so
provides, at the election of the Grantee), provided that such Awards
are denominated in Shares, valued in whole or in part by reference to
Shares, or otherwise based on or related to Shares.
14. EXERCISABILITY OF OPTIONS AND RIGHTS
(a) The Committee shall have authority to grant (1) Options and
Rights that are exercisable in full at any time during their
Term and (2) Options and Rights that become exercisable in
installments during their Term. In exercising an Option or
Right, the Grantee may purchase less than all of the Shares
available under the Option or Right. Unless the Committee
provides otherwise at the time of grant, no Option or Right
granted to a director or officer (within the meaning of
Section 16 of the 1934 Act) of the Company shall be
exercisable within six months after the date of the grant of
such Option or Right (or, if later, within six months
following stockholder approval of the Plan as provided in
Section 3(b)).
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(b) Any Option or Right shall be exercisable in full,
notwithstanding the applicability of any limitation on the
exercise of such Option or Right (other than the six-month
waiting period described in the final sentence of subsection
(a) above if the Option or Right is subject to such a waiting
period and the requirement that the shareholders approve the
Plan) beginning on the date on which a Change in Control has
occurred.
15. EXERCISE OF OPTION OR RIGHT
(a) Options or Rights shall be exercised by delivering or mailing
to the Committee: (1) in the form and in the manner prescribed
by the Committee, a notice specifying the number of Shares to
be purchased or the number of Shares with respect to which a
Right shall be exercised, and (2) if an Option is exercised,
payment in full of the Option price for the Shares so
purchased by a method described in Section 18 hereof.
(b) Subject to Section 17(a) hereof, upon receipt of the notice of
exercise and payment of the Option price, the Company shall
promptly deliver to the Grantee (or Beneficiary) a certificate
or certificates for the Shares to which he is entitled,
without charge to him for issue or transfer tax.
(c) Upon the purchase of Shares under an Option or Right, the
stock certificate or certificates may, at the request of the
purchaser or recipient, be issued in his name and the name of
another person as joint tenants with right of survivorship.
-23-
16. EXERCISE OF OPTION OR RIGHT AFTER TERMINATION OF EMPLOYMENT
(a) If Grantee's employment with the Company and its Subsidiaries
(if any) terminates for any reason other than Retirement,
Disability or death, any Option or Right then held by the
Grantee, to the extent exercisable on such date of
termination, shall continue to be exercisable at any time
within the three-month period following such termination of
employment, but not after such period.
(b) If the Grantee's employment with the Company and its
Subsidiaries (if any) terminates because of Retirement, any
Option or Right then held by the Grantee, to the extent
exercisable on such date of termination, shall be exercisable
at any time within the 12-month period following such
Retirement, but not after such period; provided that an
Incentive Stock Option exercised more than three months
following Retirement shall be treated as a Nonqualified Stock
Option.
(c) If the Grantee's employment with the Company and its
Subsidiaries (if any) terminates because of the Grantee's
Disability, any Option or Right then held by the Grantee shall
be exercisable at any time within the 12-month period
following such termination of employment, but not after such
period.
(d) If a Grantee's employment with the Company and its
Subsidiaries (if any) terminates because of the Grantee's
death, or if the Grantee dies after termination of employment
while an Option or Right is exercisable pursuant to subsection
(c), above, any Option or Right held by the Grantee on the
date of his death shall be exercisable at any time within the
24-month period fol-
-24-
lowing the Grantee's death, but not after such period;
provided that an Incentive Stock Option exercised more than 12
months after the Grantee's termination of employment because
of Disability shall be treated as a Nonqualified Stock Option.
Any Option or Right held by the Grantee on the date of his
death may be exercised only by the Grantee's Beneficiary;
provided, however, that if the Grantee's Beneficiary dies
while the Option is exercisable pursuant to this subsection
(d), the executor or administrator of the Beneficiary's estate
may exercise the Option within the period specified in the
preceding sentence hereof. If the Grantee and the Grantee's
Beneficiary die in circumstances in which there is not
sufficient evidence that the two have died otherwise than
simultaneously, the Beneficiary shall be deemed to have
predeceased the Grantee.
(e) Notwithstanding any provision of an Option or Right that
provides for the exercise of the Option or Right in
installments, except for the six-month waiting period
described in the final sentence of Section 14(a) (if the
Option or Right is subject to such waiting period) and the
requirement that the shareholders approve the Plan, the Option
or Right shall become immediately exercisable in full upon the
Disability or death of the Grantee; and any Option or Right
that would have become immediately exercisable in full upon
the Grantee's Disability or death but for the application of
such six-month waiting period shall become immediately
exercisable in full upon the expiration of such six-month
waiting period.
-25-
(f) Notwithstanding any other provision of this Section 16, in no event
shall an Option or Right be exercisable after the expiration date
specified in the Agreement.
17. CONDITIONS ON AWARDS
(a) The grant or exercise of an Award and the distribution of Shares or
cash under the Plan shall be subject to the condition that if at any
time the Company shall determine (in accordance with the provisions of
the following sentence) that it is necessary as a condition of, or in
connection with, such grant, exercise or distribution (1) to satisfy
withholding tax or other withholding liabilities, (2) to effect the
listing, registration or qualification on any securities exchange, on
any quotation system, or under any federal, state or local law, of any
Shares otherwise deliverable in connection with such grant, exercise or
distribution or (3) to obtain the consent or approval of any regulatory
body, then in any such event such grant, exercise or distribution shall
not be effective unless such withholding, listing, registration,
qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Company in its reasonable
and good faith judgment. In seeking to effect or obtain any such
withholding, listing, registration, qualification, consent or approval,
the Company shall act with all reasonable diligence. Any such
postponement or limitation affecting the right to exercise an Award or
the grant or distribution of an Award, Shares or cash shall not extend
the time within which the Award may be granted or exer-
-26-
cised or the Shares or cash distributed, unless the Company and the
Grantee choose to amend the terms of the Award to provide for such an
extension; and neither the Company, nor any of its directors or
officers shall have any obligation or liability to the Grantee or to a
Beneficiary by reason of any such postponement or limitation.
(b) All Awards granted under the Plan shall be nontransferable other than
by will or by the laws of descent and distribution, and an Award may be
exercised during the lifetime of the Grantee only by him.
18. PAYMENT FOR AWARD
Any exercise or purchase price of an Award may be payable, at the discretion
of the Committee, by any one or a combination of the following methods: (1)
by money order, cashier's check or certified check; (2) by having the
Company withhold Shares otherwise deliverable to the Grantee or by the
tender of other Shares to the Company; or (3) unless the Committee expressly
provides otherwise (at the time of grant in the case of Incentive Stock
Option or at any time prior to exercise or purchase in the case of any other
Award) by cash payment made by the Grantee's broker pursuant to the
Grantee's instructions (and, if so instructed by the Grantee, cash payment
by the Grantee's broker of the amount of any taxes to be withheld in
connection with the exercise), accompanied by the Grantee's irrevocable
instructions to the Company to deliver the Shares issuable upon exercise of
the Award promptly to the broker for the Grantee's account; provided that,
in the case of any director or officer (within the meaning of Section 16 of
the 1934 Act) of the Company, such
-27-
exercise would not subject the Grantee to short-swing profit recovery
provision of Section 16(b) of the 1934 Act. Shares tendered in satisfaction
of the exercise or purchase price shall be valued at their Fair Market Value
on the date of tender. The Committee shall determine acceptable methods for
tendering Shares to exercise an Award under the Plan, and may impose such
limitations and prohibitions on the use of Shares to exercise Awards as it
deems appropriate. The date of exercise of an Award shall be deemed to be
the date on which the notice of exercise and payment of the Option price are
received by the Committee or, if such notice of exercise and payment are
mailed in the United States and the United States Postal Service has stamped
its postmark thereon, then on the date of such postmark.
19. TAX WITHHOLDING
(a) The Company shall have the right to collect an amount sufficient to
satisfy any federal, state and/or local withholding tax requirements
that might apply with respect to any Award (including, without
limitation, the exercise of an Option or Right, the disposition of
Shares, or the grant or distribution of Shares or cash) in the manner
specified in subsection (b) or (c) below. Alternatively, a Grantee may
elect to satisfy any such withholding tax requirements in the manner
specified in subsection (d) or (e) below to the extent permitted
therein.
(b) The Company shall have the right to require Grantees to remit to the
Company in cash an amount sufficient to satisfy any such withholding
tax requirements.
-28-
(c) The Company and any Subsidiary also shall, to the extent permitted by
law, have the right to deduct from any payment of any kind (whether or
not related to the Plan) otherwise due to a Grantee any such taxes
required to be withheld.
(d) If the Committee in its sole discretion approves, a Grantee may
irrevocably elect to have any withholding tax obligation satisfied by
(i) having the Company withhold Shares otherwise deliverable to the
Grantee with respect to the Award, or (ii) delivering other Shares to
the Company; provided that, to the extent necessary for a director or
an officer (within the meaning of Section 16 of the 1934 Act) of the
Company to obtain exemption from the short-swing profit recovery
provisions of Section 16(b) of the 1934 Act, any such election either
(i) shall be made by an irrevocable election made at least six months
before the date on which the amount of the tax to be withheld is
determined or (ii) is subject to the following conditions: (A) the
Company shall have been subject to the reporting requirements of
Section 13(a) of the 1934 Act for at least one year prior to the
election and shall have filed all reports required to be filed under
Section 13(a) during such period, (B) the Company shall have regularly
released for publication quarterly and annual summary statements of
sales and earning, (C) the Committee, which shall have sole discretion
to approve or disapprove such election, approves the election after the
election is made, (D) the election occurs during (or in advance to take
effect during) one of the window periods described in clause (c)(3) of
Rule 16b-3 and (E) the election does not occur prior to the expiration
-29-
of a six-month period after the date of the grant of the Award or, if
later, stockholder approval of the Plan as provided in Section 3(b).
(e) If permitted by the Committee, a Grantee may elect to have any
withholding tax obligation satisfied in the manner described in Section
18(3), to the extent permitted therein.
20. FRACTIONAL SHARES
No fractional Shares shall be issued pursuant to the Plan or any Award. The
Committee shall determine whether cash, other securities, or other property
shall be paid or transferred in lieu of fractional Shares, or whether
fractional Shares or any rights thereto shall be cancelled, terminated or
otherwise eliminated.
21. SHAREHOLDER RIGHTS
(a) No Award shall confer upon a Grantee any rights of a shareholder unless
and until Shares are actually issued to him.
(b) Subject to any required action by the Company's shareholders, if the
Company shall be a party to any merger, consolidation or reorganization
in which Shares are changed or exchanged, a Grantee holding an
outstanding Award shall be entitled to receive, upon the exercise of
such Award, the same consideration that a holder of the same number of
Shares that are subject to the Award is entitled to receive pursuant to
such merger, consolidation or reorganization.
-30-
22. ADJUSTMENT FOR CHANGES IN CAPITALIZATION
In addition to the provisions of Section 21(b) above, in the event of (i)
any change in the Shares through merger, consolidation, reorganization,
recapitalization, or otherwise, (ii) any dividend on the Shares that is
payable in such Shares, or (iii) a stock split or a combination of Shares,
then, in any such case, the aggregate number and type of Shares available
for Awards, the number and type of Shares subject to outstanding Awards, the
purchase or exercise price per Share of each outstanding Award and the
number of Shares with respect to which Awards may be granted to a Grantee
within any three-year period, shall be adjusted by the Committee as it deems
equitable in its sole and absolute discretion to prevent substantial
dilution or enlargement of the rights of the Grantees, subject to any
required action by the shareholders of the Company; and provided that with
respect to Incentive Stock Options, no such adjustment shall be required to
the extent that such adjustment would cause such Options to violate Section
422(b) of the Code.
23. TERMINATION, SUSPENSION OR MODIFICATION OF PLAN
The Board of Directors may at any time terminate, suspend or modify the
Plan, except that the Board shall not, without the approval of the holders
of a majority of the Company's outstanding Shares present in person or
represented by proxy and entitled to vote at a meeting of the stockholders
of the Company duly called for such purpose or by the written consent of the
holders of a majority of the outstanding Shares entitled to vote (or any
larger percentage of the Shares entitled to vote as required by the
Company's Certificate of Incorporation or By-laws), (a) change the
-31-
class of persons eligible for Awards; (b) change the exercise or purchase
price of Awards (other than through adjustment for changes in capitalization
as provided in Section 22 hereof); (c) increase the maximum duration of the
Plan; (d) materially increase the benefits accruing to participants under
the Plan; or (e) materially increase the number of securities that may be
issued under the Plan. No termination, suspension, or modification of the
Plan shall adversely affect any right acquired by any Grantee or by any
Beneficiary, under the terms of any Award granted before the date of such
termination, suspension or modification, unless such Grantee or Beneficiary
shall consent; but it shall be conclusively presumed that any adjustment for
changes in capitalization in accordance with Section 22 hereof does not
adversely affect any such right.
24. APPLICATION OF PROCEEDS
The proceeds received by the Company from the sale of Shares (including
Restricted Shares) under the Plan shall be used for general corporate
purposes.
25. UNFUNDED PLAN
The Plan shall be unfunded. Neither the Company nor any Subsidiary shall be
required to segregate any assets that may be represented by any Awards, and
neither the Company nor any Subsidiary nor the Board shall be deemed to be a
trustee of any amounts to be paid under any Award. Any liability of the
Company or any Subsidiary to pay any Grantee or Beneficiary with respect to
an Award shall be based solely upon any contractual obligations created
pursuant to the provisions of the Plan
-32-
and the applicable Agreement; no such obligation shall be deemed to be
secured by any pledge of, or encumbrance on, any property of the Company or
a Subsidiary.
26. GENERAL PROVISIONS
The grant of an Award at any time shall not give the Grantee any right to
similar grants at any other time or any right to be retained in the employ
of the Company or its Subsidiaries.
27. GOVERNING LAW
The Plan shall be governed and its provision construed, enforced and
administered in accordance with the laws of Delaware (excluding the conflict
of law provisions thereof), except to the extent that such laws may be
superseded by any federal law.
NN, INC.
INCENTIVE STOCK OPTION AGREEMENT
pursuant to the
STOCK INCENTIVE PLAN
THIS AGREEMENT, dated as of _____________________ by and
between NN, Inc., a Delaware corporation (the "Company"), and __________ of 2000
Waters Edge Drive, Building C, Suite 12, Johnson City, TN 37604 (the "Grantee").
WITNESSETH THAT:
WHEREAS, the Grantee is employed by the Company and serves as
the ____________________ thereof;
WHEREAS, the Company desires to reward the Grantee's superior
performance and to provide the Grantee with inducements to continue in the
employ of the Company and to continue to perform in a superior manner;
WHEREAS, the Company has adopted the NN, Inc. Stock Incentive
Plan (the "Plan"), authorizing the grant of Awards by the Company to officers
and key employees;
WHEREAS, the Committee referred to in the Plan (the
"Committee"), pursuant to authority vested in it by the Company's Board of
Directors, has approved the granting to the Grantee of an Incentive Stock Option
(the "Option") to purchase shares of the Company's common stock, par value $.01
per share ("Shares"), upon the terms and subject to the conditions set forth
hereinafter and in the Plan; and
WHEREAS, the Company desires to grant the Option to the
Grantee and to memorialize the terms and conditions thereof;
-2-
NOW, THEREFORE, in consideration of the above-mentioned
premises and the covenants and agreements contained herein, the Company and the
Grantee, intending to be legally bound, hereby agree as follows:
SECTION 1: Incentive Stock Option
1.1 Pursuant to the Plan and this Incentive Stock Option
Agreement (the "Agreement"), the Company hereby grants to the Grantee, effective
as of the date of this Agreement, an Option to purchase an aggregate of
__________ Shares at the Option price per Share described in Section 1.2 hereof
and pursuant to the terms and conditions set forth in the Plan and this
Agreement. Any capitalized terms used herein and not defined herein have the
respective meanings ascribed to them in the Plan.
1.2 The Option exercise price per share with respect to the
Shares covered by this Agreement shall be equal to ____________________________
($__________), such amount equaling one hundred percent of the Fair Market Value
of each Share on the date of grant of the Option. Upon exercise of the option,
in whole or in part, this Option price shall be payable to the Company in
accordance with Section 2.1 hereof.
1.3 The date of grant of the Option is _____________________.
1.4 Subject to the provisions of Section 1.7 hereof, the
Option is intended to be an Incentive Stock Option within the meaning of section
422 of the Code.
1.5 Subject to Sections 1.6 and 3 hereof, the Option shall be
exercisable from and after each initial exercisability date set forth below with
respect to the indicated number of Shares:
-3-
===============================================================================
Number of Shares for Which
Initial Exercisability Date the Option Becomes First Exercisable on
--------------------------- --------------
Such Date
---------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
===============================================================================
The Grantee at any time may purchase less than the full number of Shares for
which the option is then exercisable. Shares not purchased in earlier periods
shall accumulate and be available for purchase in later periods within the Term
of the Option.
1.6 Notwithstanding the application of any limitation on the
exercise of the Option, the Option shall be exercisable in full immediately
following the date on which a Change in Control has occurred if the Grantee's
employment with the Company and its Subsidiaries has not terminated prior to the
date on which the Change in Control occurred; provided, however, that the Option
shall not be exercisable at any time during the six-month period following the
date of this Agreement; and further provided, that nothing in this Section 1.6
shall extend the Term of the Option or have any effect other than to accelerate
the date on which the Option becomes exercisable in full.
1.7 To the extent that the aggregate Fair Market Value of the
stock with respect to which Incentive Stock Options (determined without regard
to this Section 1.7) are exercisable by the Grantee for the first time during
any calendar year (under all stock option plans of the Company, its Parent and
its Subsidiaries) exceeds $100,000, such Options are not Incentive Stock
Options. For the purposes of this Section 1.7, the Fair Market Value of stock
shall be determined as of the time the option with respect to such stock is
granted. This Section 1.7 shall be applied by taking options into account in the
order in which they were granted. To
-4-
the extent that the Option is to become exercisable for the first time during
any calendar year with respect to a number of Shares that exceeds the foregoing
limitation, the Option shall be considered to consist of (i) an Incentive Stock
Option to acquire the maximum number of Shares permitted under this Section 1.7
and (ii) a Nonqualified Stock Option to acquire the excess Shares on the same
terms described in this Agreement.
1.8 The Term of the Option shall continue until the tenth
anniversary of the grant of the Option. The Option shall terminate (if not
sooner terminated in accordance with the provisions of the Plan or the other
provisions hereof) and shall no longer be exercisable after such tenth
anniversary.
SECTION 2: Exercise and Withholding
2.1 The Grantee may exercise the Option in respect of Shares
on and after the appropriate dates set forth in Section 1.5 above (and before a
date or event of termination or cancellation) in whole at any time, or in part
from time to time. The Grantee shall give the Company written notice to exercise
the option in whole or in a specified part. Such notice shall specify the number
of Shares to be purchased and shall be accompanied by full payment for the
Shares then being purchased, which payment may be made in any of the following
ways: (a) delivering a money order, cashier's check or certified check payable
to the order of the Company; (b) delivering Shares to the Company; (c) subject
to limitations imposed by the Plan and the Committee, a cash payment by
Grantee's broker pursuant to the Grantee's instruction; or (d) combination
thereof. The notice also shall be accompanied by such agreement, statement, or
other evidence as the Committee may require in order to satisfy itself that the
issuance of the Shares being purchased pursuant to such exercise and any
subsequent resale thereof will be in compliance with applicable laws and
regulations relating to the issuance and sale of securities, including the
provisions of the Securities Act of 1933 and regulations promulgated thereunder.
-5-
Any Shares surrendered as payment in exercise of the Option shall be valued at
their Fair Market Value on the date of exercise. The exercise shall be deemed to
occur (a) on the date that the notice of exercise and, if applicable, the money
order, cashier's check, certified check, cash and/or Shares are received at the
office of the Chief Financial Officer of the Company, or at such other location
as may be established in accordance with Section 4.5 hereof or (b) if such
notice of exercise and payment are mailed in the United States and the United
States Postal Service has stamped its postmark thereon, then on the date of such
postmark.
2.2 In each case where the Grantee shall exercise the option,
in whole or in part, the Company shall notify the Grantee of the amount of
income or employment tax, if any, that must be withheld under federal and, where
applicable, state and local law by reason of such exercise. It shall be a
condition to any delivery of Shares hereunder that provision satisfactory to the
Company shall have been made for payment of any taxes required to be paid or
withheld pursuant to any applicable law or regulations. The Grantee may
irrevocably elect to have any withholding tax obligation satisfied (a) by a
money order, cashier's check or certified check payable to the order of the
Company; (b) by having the Company withhold Shares otherwise deliverable to the
Grantee with respect to the exercise of the Option; (c) by delivering Shares to
the Company; (d) subject to limitations imposed by the Plan and the Committee,
by a cash payment by the Grantee's broker pursuant to the Grantee's instruction;
or (e) by a combination thereof; provided that the Committee may disapprove, or
impose conditions upon, any such election.
2.3 As soon as practicable after each exercise of the Option
and compliance by the Grantee with all applicable conditions, including any
payments that may be required by the Company pursuant to Sections 2.1 and 2.2
hereof, the Company shall mail or deliver or cause
-6-
to be mailed or delivered to the Grantee a stock certificate or certificates
registered in the name of the Grantee for the number of Shares that the Grantee
shall be entitled to receive upon such exercise under the provisions of this
Agreement.
2.4 If the Grantee exercises all or a portion of this Option
and the Grantee sells, transfers, assigns or otherwise disposes of Shares
acquired by the exercise of this Option within two (2) years after the date the
Option was granted or within one (1) year after the date of such exercise, the
Grantee shall promptly notify the Company of the date of such disposition and of
the amount realized upon such disposition and shall provide (in a manner
satisfactory to the Company) for payment to the Company of the amounts, if any,
necessary to satisfy any applicable federal, state and local tax withholding
requirements imposed by reason of such sale, transfer, assignment or other
disposition. To the extent the Grantee does not otherwise satisfy any
withholding obligation with respect to the disposition, the Company and any
Subsidiary shall, to the extent permitted by law, have the right to deduct from
any payment of any kind (whether or not related to the Plan) otherwise due to
the Grantee any such taxes required to be withheld.
SECTION 3: Termination of Employment
3.1 If the Grantee's employment with the Company terminates
for any reason other than Retirement, Disability or death, the Option shall
continue to be exercisable at any time within the three-month period following
such termination of employment, but not after such period. The Option shall not
become exercisable with respect to any Shares for which it was not exercisable
on the date of such termination of employment. For purposes of this Section 3,
references to employment with the Company shall be deemed to include employment
with any Subsidiary.
-7-
3.2 If the Grantee's employment with the Company terminates
because of Retirement, the Option shall continue to be exercisable at any time
within the 12-month period following such Retirement, but not after such period
(unless otherwise provided in Section 3.4 below); provided that the option will
be treated as a Nonqualified Stock Option if it is exercised more than three
months following Retirement. The Option shall not become exercisable with
respect to any Shares for which it was not exercisable on the date of
Retirement.
3.3 If the Grantee's employment with the Company terminates
because of the Grantee's Disability, the Option shall (a) become immediately
exercisable in full as of the date of such termination, and (b) be exercisable
at any time within the 12month period following such termination of employment,
but not after such period (unless otherwise provided in Section 3.4 below);
provided, however, that the Option shall not be exercisable at any time during
the six-month period following the date of this Agreement.
3.4 If Grantee's employment with the Company terminates
because of the Grantee's death, the Option shall become immediately exercisable
in full as of the date of termination of employment; provided, however, that the
option shall not be exercisable at any time during the six-month period
following the date of this Agreement. If the Grantee's employment with the
Company terminates because of the Grantee's death, or if the Grantee dies within
12 months after termination of employment while the Option is exercisable
pursuant to Section 3.3, above, the Option shall be exercisable at any time
within the 24-month period following the Grantee's death, but not after such
period; provided, however, that the Option shall be treated as a Nonqualified
Stock Option if the Option is exercised more than 12 months after the Grantee's
termination of employment because of Disability. If the Grantee's employment
with the Company terminates due to Retirement and the Grantee subsequently dies
within 12
-8-
months after termination of employment while the option is exercisable pursuant
to Section 3.2, above, the Option, to the extent it is exercisable on the date
of the Grantee's Retirement, shall be exercisable at any time within the
24-month period following the Grantee's death, but not after such period;
provided that the Option will be treated as a Nonqualified Stock Option if it is
exercised more than three months following the date of the Grantee's Retirement.
3.5 After the Grantee's death, the Option may be exercised
only by the Grantee's Beneficiary; provided, however, that if the Grantee's
Beneficiary dies within 24 months after the Grantee's death, the executor or
administrator of the Beneficiary's estate may exercise the Option within such
24-month period. If the Grantee has effectively designated a Beneficiary in
writing pursuant to the Plan and the Grantee and such designated Beneficiary die
in circumstances in which there is not sufficient evidence that the two have
died otherwise than simultaneously, the designated Beneficiary shall be deemed
to have predeceased the Grantee.
3.6 Any exercise by a Beneficiary of Options issued and
delivered hereunder shall be subject to all of the terms and conditions
contained in Section 2 of this Agreement.
3.7 Notwithstanding any other provision of this Section 3, in
no event shall the option be exercisable after the expiration date specified in
Section 1.8 of this Agreement.
SECTION 4: Miscellaneous
4.1 The Option granted hereunder shall not be transferable
(other than to a Beneficiary upon the death of the Grantee) and is exercisable
during the Grantee's lifetime only by the Grantee.
4.2 The Grantee shall be entitled to the privilege of stock
ownership with respect to Shares subject to this Option only with respect to
such Shares as are issued or delivered to the Grantee hereunder.
-9-
4.3 In the event of a stock dividend, stock split, combination
of Shares, recapitalization or other similar capital change, the number and kind
of Shares subject to the Option, the Option price and the other relevant
provisions of this Agreement shall be appropriately adjusted as provided in
Section 22 of the Plan.
4.4 Nothing contained in this Agreement shall be deemed by
implication or otherwise to impose any limitation on any right of the Company or
any Subsidiary to terminate the Grantee's employment at any time.
4.5 Any notice to be given hereunder by the Grantee shall be
either hand-delivered to the office of the Chief Accounting Officer of the
Company or sent by mail addressed to the Company to the attention of the Chief
Accounting Officer, 2000 Waters Edge Drive, Johnson City, TN 37604. Any notice
by the Company to the Grantee shall be either sent by mail addressed to the
Grantee at the address shown on page 1 hereof or hand-delivered personally to
the Grantee. Either party may, by written notice given to the other in
accordance with the provisions of this Section, change the address to which
subsequent notices shall be sent.
4.6 The Option is granted pursuant to the Plan. The grant of
the Option is subject to all the terms and provisions of the Plan, which are
hereby incorporated into this Agreement by reference and are made a part of this
Agreement. For the convenience of the Grantee, certain but not all of the
provisions of the Plan also are summarized or elaborated upon in this Agreement.
Each and every provision of this Agreement shall be administered, interpreted,
and construed so that the Option shall conform to the provisions of the Plan.
Any provisions of this Agreement that cannot be so administered, interpreted, or
construed shall be disregarded.
-10-
4.7 The Grantee hereby acknowledges receipt of a copy of the
Plan and further agrees to be bound by all of the terms and provisions thereof
and by all actions, pursuant to the Plan, of the Committee thereunder and of the
Company's Board of Directors. Whenever the word "Grantee" is used herein in a
context where the provision should logically be construed to apply to the
Grantee's Beneficiary, the word "Grantee" shall be deemed to include such
Beneficiary.
4.8 The Option shall not be exercisable in whole or in part
and no certificates representing Shares subject to the Option shall be delivered
if, at any time, the Company determines, in its discretion, that it is necessary
as a condition of, or in connection with, such exercise (or the delivery of
Shares thereunder):
(a) to satisfy withholding tax or other withholding
liabilities;
(b) to effect the listing, registration or qualification on
any securities exchange, or any quotation system, or under any
federal, state or local law, of any Shares otherwise
deliverable in connection with such exercise; or
(c) to obtain the consent or approval of any regulatory body;
unless such withholding, listing, registration, qualification, compliance,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Company in its reasonable and good faith judgment.
The Company shall act with all reasonable diligence to obtain
any such approval or consent and to effect compliance with any such applicable
law, regulation, order, withholding, or listing, registration or qualification
requirement, and the Grantee or other person entitled to exercise the Option
shall take any action reasonably requested by the Company in such connection.
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4.9 This Agreement shall be governed by, and its provisions
construed in accordance with, the laws of Delaware (irrespective of the conflict
of laws provisions thereof), except to the extent that such laws may be
superseded by any federal law.
4.10 Any amendment of this Agreement must be in writing and
duly signed by the Company and the Grantee. This Agreement may not be modified
orally.
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IN WITNESS WHEREOF, NN, Inc. has caused this Agreement to be
executed in its corporate name, and the Grantee has executed the same in
evidence of the Grantee's acceptance hereof, under the terms and conditions
herein set forth, as of the day and year first above written.
NN, Inc.
By____________________________________
Chief Accounting Officer:
GRANTEE
______________________________________
_______________________