STRATTEC SECURITY CORPORATION
STOCK INCENTIVE PLAN
(As amended effective May 20, 2003)
1. Purpose; Definitions. The purpose of the Plan is to
enable key employees of the Company, its subsidiaries and affiliates to
participate in the Company's future by offering them proprietary interests in
the Company. The Plan also provides a means through which the Company can
attract and retain key employees of merit.
For purposes of the Plan, the following terms are
defined as set forth below:
(a) "Board" means the Board of Directors of the
Company.
(b) "Code" means the Internal Revenue Code of
1986, as amended from time to time, and any successor thereto.
(c) "Commission" means the Securities and
Exchange Commission or any successor agency.
(d) "Committee" means the Committee referred to
in Section 2.
(e) "Company" means STRATTEC SECURITY
CORPORATION, a corporation organized under the laws of the State of Wisconsin,
or any successor corporation.
(f) "Disability" means permanent and total
disability as determined under procedures established by the Committee for
purposes of the Plan.
(g) "Early Retirement" means retirement, with
the consent of and for purposes of the Company, from active employment with the
Company, a subsidiary or affiliate pursuant to the early retirement provisions
of the applicable pension plan of such employer.
(h) "Exchange Act" means the Securities Exchange
Act of 1934, as amended from time to time, and any successor thereto.
(i) "Fair Market Value" means, except as
provided in Sections 5(k) and 6(b)(ii): (i) with respect to Non-Qualified Stock
Options granted in connection with the distribution of Stock made by Briggs &
Stratton Corporation to its shareholders, the average closing price of the Stock
on the NASDAQ National Market System during the five trading days after the
effective date of such distribution; and (ii) in all other instances, the mean,
as of any given date, between the highest and lowest reported sales prices of
the Stock on the NASDAQ National Market System or, if no such sale of Stock
occurs on the NASDAQ National Market System on such date, the fair market value
of the Stock as determined by the Committee in good faith.
(j) "Incentive Stock Option" means any Stock
Option intended to be and designated as an "incentive stock option" within the
meaning of Section 422 of the Code.
(k) "Non-Employee Director" shall have the
meaning set forth in Rule 16b-3(b)(3)(i), as promulgated by the Commission under
the Exchange Act, or any successor definition adopted by the Commission.
(l) "Non-Qualified Stock Option" means any Stock
Option that is not an Incentive Stock Option.
(m) "Normal Retirement" means retirement from
active employment with the Company, a subsidiary or affiliate at or after age
65.
(n) "Plan" means the STRATTEC SECURITY
CORPORATION Stock Incentive Plan, as set forth herein and as hereinafter amended
from time to time.
(o) "Retirement" means Normal Retirement or
Early Retirement.
(p) "Rule 16b-3" means Rule 16b-3, as
promulgated by the Commission under Section 16(b) of the Exchange Act, as
amended from time to time.
(q) "Stock" means the Common Stock, $.01 par
value per share, of the Company.
(r) "Stock Appreciation Right" means a right
granted under Section 6.
(s) "Stock Option" or "Option" means an Option
or Leveraged Stock Option granted under Section 5.
In addition, the terms "Change in Control" and
"Change in Control Price" have the meanings set forth in Sections 7(b) and (c),
respectively, and other capitalized terms used herein shall have the meanings
ascribed to such terms in the relevant section of this Plan.
2. Administration. The Plan shall be administered by the
Compensation Committee of the Board or such other committee of the Board,
composed solely of two or more Non-Employee Directors, who shall be appointed by
the Board and who shall serve at the pleasure of the Board. If at any time no
Committee shall be in office, the functions of the Committee specified in the
Plan shall be exercised by the Board.
The Committee shall have plenary authority to grant
to eligible employees, pursuant to the terms of the Plan, Stock Options and
Stock Appreciation Rights.
In particular, the Committee shall have the
authority, subject to the terms of the Plan:
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(a) to select the officers and other key
employees to whom Stock Options and Stock Appreciation Rights may from time to
time be granted;
(b) to determine whether and to what extent
Incentive Stock Options, Non-Qualified Stock Options and Stock Appreciation
Rights or any combination thereof are to be granted hereunder,
(c) to determine the number of shares to be
covered by each award granted hereunder,
(d) to determine the terms and conditions of any
award granted hereunder (including, but not limited to, the share price, any
restriction or limitation and any vesting acceleration or forfeiture waiver
regarding any Stock Option or other award and the shares of Stock relating
thereto, based on such factors as the Committee shall determine);
(e) to adjust the performance goals and
measurements applicable to performance-based awards pursuant to the terms of the
Plan;
(f) to determine under what circumstances a
Stock Option may be settled in cash under Section 5(k); and
(g) to determine to what extent and under what
circumstances Stock and other amounts payable with respect to an award shall be
deferred.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any award issued under the Plan (and any agreement relating thereto)
and to otherwise supervise the administration of the Plan.
The Committee may act only by a majority of its
members then in office, except that the members thereof may authorize any one or
more of their number or any officer of the Company to execute and deliver
documents on behalf of the Committee.
Any determination made by the Committee pursuant to
the provisions of the Plan with respect to any award shall be made in its sole
discretion at the time of the grant of the award or, unless in contravention of
any express term of the Plan, at any time thereafter. All decisions made by the
Committee pursuant to the provisions of the Plan shall be final and binding on
all persons, including the Company and Plan participants.
3. Stock Subject to Plan. The total number of shares of
Stock reserved and available for distribution under the Plan shall be 1,600,000
shares. Such shares may consist, in whole or in part, of authorized and unissued
shares or treasury shares.
Subject to Section 6(b)(iv), if any shares of Stock
that have been optioned cease to be subject to a Stock Option or if any Stock
Option or other award otherwise terminates
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without a payment being made to the participant in the form of Stock, such
shares shall again be available for distribution in connection with awards under
the Plan.
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,
in the number and option price of shares subject to outstanding Stock Options
and in the number of shares subject to other outstanding awards granted under
the Plan 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. Such adjusted option price shall also be used to
determine the amount payable by the Company upon the exercise of any Stock
Appreciation Right associated with any Stock Option.
4. Eligibility. Officers and other key employees of the
Company, its subsidiaries and affiliates (but excluding members of the Committee
and any person who serves only as a director) who are responsible for or
contribute to the management, growth and profitability of the business of the
Company, its subsidiaries or affiliates are eligible to be granted awards under
the Plan.
5. Stock Options. Stock Options may be granted alone or
in addition to other awards granted under the Plan and may be of two types:
Incentive Stock Options and Non-Qualified Stock Options. Any Stock Option
granted under the Plan shall be in such form as the Committee may from time to
time approve.
The Committee shall have the authority to grant to
any optionee Incentive Stock Options, Non-Qualified Stock Options or both types
of Stock Options (in each case with or without Stock Appreciation Rights).
Incentive Stock Options may be granted only to
employees of the Company and its subsidiaries (within the meaning of Section
425(f) of the Code). To the extent that any Stock Option does not qualify as an
Incentive Stock Option, it shall constitute a separate Non-Qualified Stock
Option.
Stock Options shall be evidenced by option
agreements, the terms and provisions of which may differ. An option agreement
shall indicate on its face whether it is an agreement for Incentive Stock
Options or NonQualified Stock Options. The grant of a Stock Option shall occur
on the date the Committee by resolution selects an employee as a participant in
any grant of Stock Options, determines the number of Stock Options to be granted
to such employee and specifies the terms and provisions of the option agreement.
The Company shall notify a participant of any grant of Stock Options, and a
written option agreement or agreements shall be duly executed and delivered by
the Company.
Anything in the Plan to the contrary notwithstanding,
no term of the Plan relating to Incentive Stock Options shall be interpreted,
amended or altered nor shall any discretion or authority granted under the Plan
be exercised so as to disqualify the Plan under
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Section 422 of the Code or, without the consent of the optionee affected, to
disqualify any Incentive Stock Option under such Section 422.
Options granted under the Plan shall be subject to
the following terms and conditions and shall contain such additional terms and
conditions as the Committee shall deem desirable:
(a) Option Price. The option price per share of
Stock purchasable under a Stock Option shall be equal to the Fair Market Value
of the Stock at time of grant or such higher price as shall be determined by the
Committee at grant.
(b) Option Term. The term of each Stock Option
shall be fixed by the Committee, but no Incentive Stock Option shall be
exercisable more than 10 years after the date the Option is granted, and no
Non-Qualified Stock Option shall be exercisable more than 10 years and one day
after the date the Option is granted.
(c) Exercisability. Stock Options shall be
exercisable at such time or times and subject to such terms and conditions as
shall be determined by the Committee. If the Committee provides that any Stock
Option is exercisable only in installments, the Committee may at any time waive
such installment exercise provisions, in whole or in part, based on such factors
as the Committee may determine.
(d) Method of Exercise. Subject to the
provisions of this Section 5, Stock Options may be exercised, in whole or in
part, at any time during the option period by giving written notice of exercise
to the Company specifying the number of shares to be purchased.
Such notice shall be accompanied by the
payment in full of the purchase price for such shares or, to the extent
authorized by the Committee, by irrevocable instructions to a broker to promptly
pay to the Company in full the purchase price for such shares. Such payment
shall be made in cash, outstanding shares of Stock, in combinations thereof, or
any other method of payment approved by the Committee; provided, however, that
the deposit of any withholding tax shall be made in accordance with applicable
law. If shares of Stock are being used in part or full payment for the shares to
be acquired upon exercise of the Stock Option, such shares shall be valued for
the purpose of such exchange as of the date of exercise of the Stock Option at
the Fair Market Value of the shares. Any certificates evidencing shares of Stock
used to pay the purchase price shall be accompanied by stock powers duly
endorsed in blank by the registered holder of the certificate (with signatures
thereon guaranteed). In the event the certificates tendered by the holder in
such payment cover more shares than are required for such payment, the
certificate shall also be accompanied by instructions from the holder to the
Company's transfer agent with regard to the disposition of the balance of the
shares covered thereby.
No shares of Stock shall be issued until
full payment therefor has been made. An optionee shall have all of the rights of
a stockholder of the Company, including the right to vote the shares and the
right to receive dividends, with respect to shares subject to the
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Stock Option when the optionee has given written notice of exercise, has paid in
full for such shares and, if requested, has given the representation described
in Section 11(a).
(e) Non-transferability of Options. No Stock
Option shall be transferable by the optionee other than by will or by laws of
descent and distribution, and all Stock Options 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.
(f) Termination by Death. Subject to Section
5(j), if an optionee's employment terminates by reason of death, any Stock
Option held by such optionee may thereafter be exercised, to the extent then
exercisable or on such accelerated basis as the Committee may determine, for a
period of one year (or such other period as the Committee may specify) from the
date of such death or until the expiration of the stated term of such Stock
Option, whichever period is the shorter.
(g) Termination by Reason of Disability. Subject
to Section 5(j), if an optionee's employment terminates by reason of Disability,
any Stock Option held by such optionee may thereafter be exercised by the
optionee, to the extent it was exercisable at the time of termination or on such
accelerated basis as the Committee may determine, for a period of three years
(or such shorter period as the Committee may specify at grant) from the date of
such termination of employment or until the expiration of the stated term of
such Stock Option, whichever period is the shorter; provided, however, that, if
the optionee dies within such three-year period (or such shorter period), any
unexercised Stock Option 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 12 months from the date of such death or until the expiration of the
stated term of such Stock Option, whichever period is the shorter. In the event
of termination of employment by reason of Disability, if an Incentive Stock
Option is exercised after the expiration of the exercise periods that apply for
purposes of Section 422 of the Code, such Stock Option will thereafter be
treated as a Non-Qualified Stock Option.
(h) Termination by Reason of Retirement. Subject
to Section 5(j), if an optionee's employment terminates by reason of Retirement,
any Stock Option 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 Committee may determine, for a period of three
years (or such shorter period as the Committee may specify at grant) from the
date of such termination of employment or until the expiration of the stated
term of such Stock Option, whichever period is the shorter, provided, however,
that, if the optionee dies within such three-year (or such shorter) period any
unexercised Stock option 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 12 months from the date of such death or until the expiration of the
stated term of such Stock Option, whichever period is the shorter. In the event
of termination of employment by reason of
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Retirement, if an Incentive Stock Option is exercised after the expiration of
the exercise periods that apply for purposes of Section 422 of the Code, such
Stock Option will thereafter be treated as a Non-Qualified Stock Option.
(i) Other Termination. Unless otherwise
determined by the Committee, if an optionee's employment terminates for any
reason other than death, Disability or Retirement, the Stock Option shall
thereupon terminate, except that such Stock Option, to the extent then
exercisable, may be exercised for the lesser of three months or the balance of
such Stock Option's term if the optionee is involuntarily terminated by the
Company, a subsidiary or affiliate without cause. Notwithstanding the foregoing,
if an optionee's employment terminates at or after a Change in Control (as
defined in Section 7(b)), other than by reason of death, Disability or
Retirement, any Stock Option held by such optionee shall be exercisable for the
lesser of (x) six months and one day, and (y) the balance of such Stock Option's
term pursuant to Section 5(b).
(j) Incentive Stock Option Limitations. To the
extent required for "incentive stock option" status under Section 422 of the
Code, the aggregate Fair Market Value (determined as of the time of grant) of
the Stock with respect to which Incentive Stock Options granted after 1986 are
exercisable for the first time by the optionee during any calendar year under
the Plan and any other stock option plan of any subsidiary or parent corporation
(within the meaning of Section 425 of the Code) after 1986 shall not exceed
$100,000.
The Committee is authorized to provide at
grant that, to the extent permitted under Section 422 of the Code, if a
participant's employment with the Company and its subsidiaries is terminated by
reason of death, Disability or Retirement and the portion of any Incentive Stock
Option that is otherwise exercisable during the post-termination period
specified under Sections 5(f), (g), or (h), applied without regard to this
Section 5(j), is greater than the portion of such option that is exercisable as
an "incentive stock option" during such post-termination period under Section
422, such post-termination period shall automatically be extended (but not
beyond the original option term) to the extent necessary to permit the optionee
to exercise such Incentive Stock Option (either as an Incentive Stock Option or,
if exercised after the expiration periods that apply for the purposes of Section
422, as a Non-Qualified Stock Option).
(k) Cashing Out of Option. On receipt of written
notice of exercise, the Committee may elect to cash out all or part of the
portion of any Stock Option to be exercised by paying the optionee an amount, in
cash or Stock, equal to the excess of the Fair Market Value of the Stock over
the option price (the "Spread Value") on the effective date of such cash out.
Cash outs relating to options held by
optionees who are actually or potentially subject to Section 16(b) of the
Exchange Act shall comply with the provisions of Rule 16b-3, to the extent
applicable, and, in the case of cash outs of Non-Qualified Stock Options held by
such optionees, the Committee may determine Fair Market Value under the pricing
rule set forth in Section 6(b)(ii).
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(l) Leveraged Stock Options. Any of the shares
of Stock reserved and available for distribution under the Plan may be used for
grants of "Leveraged Stock Options" pursuant to the Company's Leveraged Stock
Option Program described below (the "LSO Program").
(i) Objectives. The LSO Program is
designed to build upon the Company's Economic Value Added Incentive Compensation
Plan ("EVA Plan") by tying the interests of certain senior executives ("Senior
Executives") to the long term consolidated results of the Company. In this way,
the objectives of Senior Executives will be more closely aligned with the
Company's shareholders. Whereas the EVA Plan provides for near and intermediate
term rewards, the LSO Program provides a longer term focus by allowing Senior
Executives to participate in the long-term appreciation in the equity value of
the Company. In general, the LSO Program is structured such that each year an
amount equivalent to the Total Bonus Payout under the EVA Plan is invested on
behalf of Senior Executives in options on the Company's Stock ("LSOs"). These
LSOs become exercisable after they have been held for three years, and they
expire at the end of five years. The LSO Program is also structured so that a
fair return must be provided to the Company's shareholders before the options
become valuable.
(ii) Leveraged Stock Option Grant. For
fiscal 1995 and subsequent years, the dollar amount to be invested in LSOs for
each Senior Executive shall be equal to the amount of each Senior Executive's
Total Bonus Payout determined under the EVA Plan effective for the applicable
fiscal year. The number of LSOs awarded shall be determined by dividing (a) the
dollar amount of such LSO award by (b) 10% of the Fair Market Value of Company
stock on the date of the grant, as determined by the Committee, rounded (up or
down) to the nearest 10 shares.
(iii) Term. All LSOs shall be exercisable
beginning on the third anniversary of the date of grant, and shall terminate on
the fifth anniversary of the date of grant unless sooner exercised, unless the
Committee determines other dates.
(iv) Exercise Price. The exercise price
for LSOs shall be the product of 90% of the Fair Market Value per share as
determined above, times the sum taken to the fifth (5th) power of (a) 1, plus
(b) the Estimated Annual Growth Rate, but in no event may the exercise price be
less than Fair Market Value on the date of grant. The Estimated Annual Growth
Rate (intended to represent annual percentage stock appreciation at least in the
amount of the Company's cost of capital, with due consideration for dividends
paid, risk and illiquidity) is the average daily closing 10-year U.S. Treasury
bond yield rate for the month of April immediately preceding the relevant Plan
year, plus 2%. So,
Exercise Price = (.9 X FMV) X (1 + Estimated Annual Growth Rate)(5)
Example: $15 share price; 9.75% Estimated Annual Growth Rate (7.75%
10-year U.S. Treasury bond rate, plus 2%): $13.50 (90% FMV) X
(1.0975)(5) = $21.50
(v) Limitations on LSO Grants and
Carryover. Notwithstanding subsection (l)(ii), the maximum number of LSOs that
may be granted to all
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Senior Executives for any Plan year during the five (5) year term of this LSO
Program, shall be 80,000. In the event that the 80,000 limitation shall be in
effect for any Plan year, the dollar amount to be invested for each Senior
Executive shall be reduced by proration based on the aggregate Total Bonus
Payouts of all Senior Executives so that the limitation is not exceeded. The
amount of any such reduction shall be carried forward to subsequent years and
invested in LSOs to the extent the annual limitation is not exceeded in such
years.
(vi) The Plan. Except as modified
herein, LSOs are Incentive Stock Options to the extent they are eligible for
treatment as such under Section 422 of the Internal Revenue Code. If not
eligible for Incentive Stock Option treatment, the LSOs shall constitute
Non-Qualified Stock Options. Except as specifically modified herein, LSOs shall
be governed by the terms of the Plan.
6. Stock Appreciation Rights.
(a) Grant and Exercise. Stock Appreciation
Rights may be granted in conjunction with all or part of any Stock Option
granted under the Plan. In the case of a Non-Qualified Stock Option, such rights
may be granted either at or after the time of grant of such Stock Option. In the
case of an Incentive Stock Option, such rights may be granted only at the time
of grant of such Stock Option.
A Stock Appreciation Right or applicable
portion thereof granted with respect to a given Stock Option shall terminate and
no longer be exercisable upon the termination or exercise of the related Stock
Option, except that, unless otherwise determined by the Committee at the time of
grant, a Stock Appreciation Right granted with respect to less than the full
number of shares covered by a related Stock Option shall not be reduced until
the number of shares covered by an exercise or termination of the related Stock
Option exceeds the number of shares not covered by the Stock Appreciation Right.
A Stock Appreciation Right may be exercised
by an optionee in accordance with Section 6(b) by surrendering the applicable
portion of the related Stock Option in accordance with procedures established by
the Committee. Upon such exercise and surrender, the optionee shall be entitled
to receive an amount determined in the manner prescribed in Section 6(b). Stock
Options which have been so surrendered shall no longer be exercisable to the
extent the related Stock Appreciation Rights have been exercised.
(b) Terms and Conditions. Stock Appreciation
Rights shall be subject to such terms and conditions as shall be determined by
the Committee, including the following:
(i) Stock Appreciation Rights shall be
exercisable only at such time or times and to the extent that the Stock Options
to which they relate are exercisable in accordance with the provisions of
Section 5 and this Section 6.
(ii) Upon the exercise of a Stock
Appreciation Right, an optionee shall be entitled to receive an amount in cash,
shares of Stock or both equal in value to the excess of the Fair Market Value of
one share of Stock over the option price per share
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specified in the related Stock Option multiplied by the number of shares in
respect of which the Stock Appreciation Right shall have been exercised, with
the Committee having the right to determine the form of payment.
In the case of Stock Appreciation Rights
relating to Stock Options held by optionees who are actually or potentially
subject to Section 16(b) of the Exchange Act, the Committee may require that
such Stock Appreciation Rights be exercised only in accordance with the
applicable provisions of Rule 16b-3.
(iii) Stock Appreciation Rights shall be
transferable only when and to the extent that the underlying Stock Option would
be transferable under Section 5(e).
(iv) Upon the exercise of a Stock
Appreciation Right, the Stock Option or part thereof to which such Stock
Appreciation Right is related shall be deemed to have been exercised for the
purpose of the limitation set forth in Section 3 on the number of shares of
Stock to be issued under the Plan, but only to the extent of the number of
shares issued under the Stock Appreciation Right at the time of exercise based
on the value of the Stock Appreciation Right at such time.
7. Change In Control Provisions.
(a) Impact of Event. Notwithstanding any other
provision of the Plan to the contrary, in the event of a Change in Control (as
defined in Section 7(b)), any Stock Appreciation Rights and Stock Options
outstanding as of the date such Change in Control is determined to have occurred
and not then exercisable and vested shall become fully exercisable and vested to
the full extent of the original grant.
(b) Definition of Change in Control. For
purposes of the Plan, a "Change in Control" shall mean the happening of any of
the following events:
(i) The acquisition by any individual,
entity or group (within the meaning of Section 13(d) (3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person")
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (i) the then outstanding shares of Stock
of the Company (the "outstanding Company Common Stock") or (ii) the combined
voting power of the then outstanding voting securities of the Company entitled
to vote generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that the following acquisitions shall not
constitute a Change in Control: (i) any acquisition directly from the Company,
(ii) any acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition by any corporation
pursuant to a transaction described in clauses (i), (ii) and (iii) of paragraph
(3) of this subsection (b) of this Section 7; or
(ii) Individuals who, as of February 27,
1995, constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to February 27,
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1995 whose election, or nomination for election by the Company's shareholders,
was approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
(iii) Approval by the shareholders of the
Company of a reorganization, merger or consolidation (a "Business Combination"),
in each case, unless, following such Business Combination, (i) all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result of
such transaction owns the Company through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (ii) no Person (excluding any
employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the
Business Combination and (iii) at least a majority of the members of the board
of directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or
(iv) Approval by the shareholders of the
Company of (i) a complete liquidation or dissolution of the Company or (ii) the
sale or other disposition of all or substantially all of the assets of the
Company, other than to a corporation, with respect to which following such sale
or other disposition, (A) more than 60% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such sale or other
disposition in substantially the same proportion as their ownership, immediately
prior to such sale or other disposition, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities, as the case may be, (B) less than 20%
of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by any Person
(excluding any employee benefit plan (or related trust) of the Company or such
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corporation), except to the extent that such Person owned 20% or more of the
Outstanding Company Common Stock or Outstanding Company Voting Securities prior
to the sale or disposition and (C) at least a majority of the members of the
board of directors of such corporation were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the action of the
Board, providing for such sale or other disposition of assets of the Company or
were elected, appointed or nominated by the Board.
(c) Change in Control Price. For purposes of the
Plan, "Change in Control Price" means the highest price per share paid in any
transaction reported on the NASDAQ National Market System or paid or offered in
any bona fide transaction related to a potential or actual change in control of
the Company at any time during the preceding 60 day period as determined by the
Committee, except that, in the case of Incentive Stock Options and Stock
Appreciation Rights relating to Incentive Stock Options, such price shall be
based only on transactions reported for the date on which the Committee decides
to cash out such options.
8. Amendments and Termination. The Board may amend,
alter or discontinue the Plan but no amendment, alteration or discontinuation
shall be made (i) which would impair the rights of an optionee under a Stock
Option or a recipient of a Stock Appreciation Right theretofore granted without
the optionee's or recipient's consent or (ii) which, without the approval of the
Company's stockholders, would:
(a) except as expressly provided in the Plan,
increase the total number of shares reserved for the purpose of the Plan;
(b) except as expressly provided in the Plan,
decrease the option price of any Stock Option to less than the Fair Market Value
on the date of grant;
(c) change the class of employees eligible to
participate in the Plan;
(d) extend the maximum option period under
Section 5(b);
(e) otherwise materially increase the benefits
to participants in the Plan; or
(f) amend Section 9 or this Section 8.
The Committee may amend the terms of any Stock Option
or other award 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.
9. Repricing. Except for adjustments pursuant to Section
3, neither the per share option price for any Stock Option granted pursuant to
Section 5 or the per share grant price
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for any Stock Appreciation Right granted pursuant to Section 6 may be decreased
after the date of grant nor may an outstanding Stock Option or an outstanding
Stock Appreciation Right be surrendered to the Company as consideration for the
grant of a new Stock Option or new Stock Appreciation Right with a lower
exercise or grant price without the approval of the Company's stockholders.
10. Unfunded Status of Plan. It is presently intended
that the Plan constitute an "unfunded" plan for incentive and deferred
compensation. The Committee may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan to deliver Stock or
make payments; provided, however, that, unless the Committee otherwise
determines, the existence of such trusts or other arrangements is consistent
with the "unfunded" status of the Plan.
11. General Provisions.
(a) The Committee may require each person
purchasing shares pursuant to a Stock Option 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. The certificates for such shares may
include any legend which the Committee deems appropriate to reflect any
restrictions on transfer.
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 Committee may deem advisable under
the rules, regulations and other requirements of the Commission, any stock
exchange upon which the Stock is then listed and any applicable federal or state
securities law, and the Committee 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 employees.
(c) The adoption of the Plan shall not confer
upon any employee any right to continued employment nor shall it interfere in
any way with the right of the Company, a subsidiary or affiliate to terminate
the employment of any employee at any time.
(d) No later than the dates as of which an
amount first becomes includable in the gross income of the participant for
federal income tax purposes with respect to any award under the Plan, the
participant shall pay to the Company, or make arrangements satisfactory to the
Company regarding the payment of, any federal, state, local or foreign taxes of
any kind required by law to be withheld with respect to such amount. Unless
otherwise determined by the Company, withholding obligations may be settled with
Stock, including Stock that is part of the award that gives rise to the
withholding requirement. The obligations of the Company under the Plan shall be
conditional on such payment or arrangements, and the Company, its subsidiaries
and affiliates shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment otherwise due to the participant.
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(e) At the time of grant, the Committee may
provide in connection with any grant made under this Plan that the shares of
Stock received as a result of such grant shall be subject to a right of first
refusal pursuant to which the participant shall be required to offer to the
Company any shares that the participant wishes to sell at the then Fair Market
Value of the Stock, subject to such other terms and conditions as the Committee
may specify at the time of grant.
(f) The Committee shall establish such
procedures as it deems appropriate for a participant to designate a beneficiary
to whom any amounts payable in the event of the participant's death are to be
paid.
(g) 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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