1
1999 STOCK INCENTIVE PLAN
OF
MAGNETEK, INC.
SECTION 1. PURPOSE OF PLAN
The purpose of this 1999 Stock Incentive Plan of MagneTek, Inc. (this
"Plan") is to enable MagneTek, Inc., a Delaware corporation (the "Company"), to
attract, retain and motivate its officers and other key employees, and to
further align the interests of such persons with those of the stockholders of
the Company by providing for or increasing the proprietary interest of such
persons in the Company.
SECTION 2. ADMINISTRATION OF PLAN
2.1 COMPOSITION OF COMMITTEE. Subject to Section 2.4, this Plan shall
be administered by the Compensation Committee of the Board of Directors (the
"Committee"), as appointed from time to time by the Board of Directors,
provided, however, that (a) with respect to any Award (as defined in Section
5.1) that is intended to satisfy the conditions of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") the term
"Committee" shall refer to a committee of two or more "non-employee directors"
as determined for purposes of applying Exchange Act Rule 16b-3; and (b) with
respect to any Award that is intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code"), the term "Committee" shall refer to a
committee of two or more "outside directors" as determined for purposes of
applying Code Section 162(m). The Board of Directors shall fill vacancies on and
from time to time may remove or add members to the Committee. The Committee
shall act pursuant to a majority vote or unanimous written consent. The
Committee may designate the Secretary of the Company or other Company employees
to assist the Committee in the administration of this Plan, and may grant
authority to such persons to execute agreements or other documents evidencing
Awards made under this Plan or other documents entered into under this Plan on
behalf of the Committee or the Company.
2.2 POWERS OF THE COMMITTEE. Subject to the express provisions of this
Plan, the Committee shall be authorized and empowered to do all things necessary
or desirable, in its sole discretion, in connection with the administration of
this Plan, including, without limitation, the following:
(a) to prescribe, amend and rescind rules and regulations
relating to this Plan and to define terms not otherwise defined herein;
provided that, unless the Committee shall specify otherwise, for
purposes of this Plan (i) the term "fair market value" shall mean, as
of any date, the closing price for a Share (as defined in Section 3.1)
reported for that date by the New York Stock Exchange (or such other
stock exchange or quotation system on which Shares are then listed or
quoted) or, if no Shares are traded on the New York Stock Exchange (or
such other stock exchange or quotation system) on the date in question,
then for the next preceding date for which Shares traded on the New
York Stock Exchange (or such other stock exchange or quotation system);
and (ii) the term "Company" shall mean the Company and its subsidiaries
and affiliates, unless the context otherwise requires;
(b) to determine which persons are Eligible Persons (as
defined in Section 4), to which of such Eligible Persons, if any,
Awards shall be granted hereunder and the timing of any such Awards,
and to grant Awards;
(c) to determine the number of Shares subject to Awards and
the exercise or purchase price of such Shares;
(d) to establish and verify the extent of satisfaction of any
performance goals applicable to Awards;
2
(e) to prescribe and amend the terms of the agreements or
other documents evidencing Awards made under this Plan (which need not
be identical);
(f) to determine whether, and the extent to which, adjustments
are required pursuant to Section 10;
(g) to interpret and construe this Plan, any rules and
regulations under this Plan and the terms and conditions of any Award
granted hereunder, and to make exceptions to any such provisions in
good faith and for the benefit of the Company; and
(h) to make all other determinations deemed necessary or
advisable for the administration of this Plan.
2.3 DETERMINATIONS OF THE COMMITTEE. All decisions, determinations and
interpretations by the Committee regarding this Plan shall be final and binding
on all Eligible Persons and Participants. The Committee shall consider such
factors as it deems relevant to making such decisions, determinations and
interpretations including, without limitation, the recommendations or advice of
any director, officer or employee of the Company and such attorneys, consultants
and accountants as it may select.
2.4. AUTHORITY OF THE BOARD OF DIRECTORS. The Board of Directors, in
its sole discretion, may exercise any authority of the Committee under this Plan
in lieu of the Committee's exercise thereof.
SECTION 3. STOCK SUBJECT TO PLAN
3.1 AGGREGATE LIMITS. At any time, the aggregate number of shares of
the Company's Common Stock, $.01 par value ("Shares"), issued and issuable
pursuant to all Awards (including all ISOs (as defined in Section 5.1(a)))
granted under this Plan shall not exceed 1,500,000, plus the number of shares
subject to options granted under the second Amended and Restated 1989 Incentive
Stock Compensation Plan of MagneTek, Inc. but which shares are not issued as of
the cancellation, expiration or forfeiture of such options; provided that no
more than 350,000 of such Shares may be issued pursuant to all Incentive Bonuses
and Incentive Stock Awards granted under this Plan, and provided further that,
notwithstanding Section 3.3, the aggregate number of Shares that may be issued
pursuant to the exercise of ISOs granted under this Plan shall not exceed
1,500,000. Such limits shall be subject to adjustment as provided in Section 10.
The Shares subject to this Plan may be either reacquired by the Company,
including Shares purchased in the open market, or authorized but unissued
Shares.
3.2 CODE SECTION 162(M) LIMITS. The aggregate number of Shares subject
to Options granted under this Plan during any calendar year to any one Employee
shall not exceed 500,000. The aggregate number of Shares issued or issuable
under all Awards granted under this Plan, other than Options, during any
calendar year to any one Employee shall not exceed 100,000. Notwithstanding
anything to the contrary in this Plan, the foregoing limitations shall be
subject to adjustment under Section 10 only to the extent that such adjustment
will not affect the status of any Award intended to qualify as "performance
based compensation" under Code Section 162(m). The foregoing limitations shall
not apply to the extent that they are no longer required in order for
compensation in connection with grants under this Plan to be treated as
"performance-based compensation" under Code Section 162(m).
3.3 ISSUANCE OF SHARES. For purposes of Section 3.1, the aggregate
number of Shares issued under this Plan at any time shall equal only the number
of Shares actually issued upon exercise or settlement of an Award and shall not
include Shares subject to Awards that have been canceled, expired or forfeited
or Shares subject to Awards that have been used in payment or satisfaction of
the purchase price, exercise price or tax withholding obligation of an Award.
SECTION 4. PERSONS ELIGIBLE UNDER PLAN
Any person who is an officer or other key employee of the Company as
determined, in its discretion and for purposes only of this Plan, by the
Committee (an "Eligible Person"), shall be eligible to be considered for the
2
3
grant of Awards hereunder. A "Participant" is any current or former Eligible
Person to whom an Award has been made and any person (including any estate) to
whom an Award has been assigned or transferred pursuant to Section 9.1.
SECTION 5. PLAN AWARDS
5.1 AWARD TYPES. The Committee, on behalf of the Company, is authorized
under this Plan to enter into certain types of arrangements with Employees and
to confer certain benefits on them. The following arrangements or benefits are
authorized under this Plan if their terms and conditions are not inconsistent
with the provisions of this Plan: Options, Incentive Bonuses and Incentive
Stock. Such arrangements and benefits are sometimes referred to herein as
"Awards." The authorized types of arrangements and benefits for which Awards may
be granted are defined as follows:
(a) Options: An Option is a right granted under Section 6 to
purchase a number of Shares at such exercise price, at such times, and
on such other terms and conditions as are specified in the agreement or
terms and conditions or other document evidencing the Award (the
"Option Document "). Options intended to qualify as Incentive Stock
Options ("ISOs") pursuant to Code Section 422 and Options not intended
to qualify as ISOs ("Nonqualified Options") may be granted under
Section 6.
(b) Incentive Bonus: An Incentive Bonus is a bonus opportunity
awarded under Section 7 pursuant to which a Participant may become
entitled to receive an amount based on satisfaction of such performance
criteria as are specified in the agreement or other document evidencing
the Award (the "Incentive Bonus Document").
(c) Incentive Stock: Incentive Stock is an award or issuance
of Shares made under Section 8, the grant, issuance, retention, vesting
and/or transferability of which is subject during specified periods of
time to such conditions (including continued employment or performance
conditions) and terms as are expressed in the agreement or other
document evidencing the Award (the "Incentive Stock Document").
5.2 GRANTS OF AWARDS. An Award may consist of one such arrangement or
benefit or two or more of them in tandem or in the alternative.
SECTION 6. OPTIONS
The Committee may grant an Option or provide for the grant of an
Option, either from time to time in the discretion of the Committee or
automatically upon the occurrence of specified events, including, without
limitation, the achievement of performance goals, the satisfaction of an event
or condition within the control of the recipient of the Award or within the
control of others.
6.1 OPTION DOCUMENT. Each Option Document shall contain provisions
regarding (a) the number of Shares that may be issued upon exercise of the
Option, (b) the purchase price of the Shares and the means of payment for the
Shares, (c) the term of the Option, (d) such terms and conditions of
exercisability as may be determined from time to time by the Committee, (e)
restrictions on the transfer of the Option and forfeiture provisions and (f)
such further terms and conditions, in each case not inconsistent with this Plan
as may be determined from time to time by the Committee. Option Documents
evidencing ISOs shall contain such terms and conditions as may be necessary to
qualify, to the extent determined desirable by the Committee, with the
applicable provisions of Section 422 of the Code.
6.2 OPTION PRICE. The purchase price per share of the Shares subject to
each Option granted under this Plan shall equal or exceed 100% of the fair
market value of such Stock on the date the Option is granted, except that (a)
the exercise price of an Option may be higher or lower in the case of Options
granted to an employee of a company acquired by the Company in assumption and
substitution of options held by such employee at the time such company is
acquired, and (b) in the event an Employee is required to pay or forego the
receipt of any cash
3
4
amount in consideration of receipt of an Option, the exercise price plus such
cash amount shall equal or exceed 100% of the fair market value of such Stock on
the date the Option is granted.
6.3 OPTION TERM. The "Term" of each Option granted under this Plan,
including any ISOs, shall be 10 years from the date of its grant, unless the
Committee provides otherwise.
6.4 OPTION VESTING. Options granted under this Plan shall be
exercisable at such time and in such installments during the period prior to the
expiration of the Option's Term as determined by the Committee. The Committee
shall have the right to make the timing of the ability to exercise any Option
granted under this Plan subject to such performance requirements as deemed
appropriate by the Committee. At any time after the grant of an Option the
Committee may reduce or eliminate any restrictions surrounding any Participant's
right to exercise all or part of the Option.
6.5 TERMINATION OF EMPLOYMENT. Subject to Section 11, upon a
termination of employment by a Participant prior to the full exercise of an
Option, the unexercised portion of the Option shall be subject to such
procedures as the Committee may establish.
6.6 PAYMENT OF EXERCISE PRICE. The exercise price of an Option shall be
paid in the form of one of more of the following, as the Committee shall
specify, either through the terms of the Option Document or at the time of
exercise of an Option: (a) cash or certified or cashiers' check, (b) shares of
capital stock of the Company that have been held by the Participant for such
period of time as the Committee may specify, (c) other property deemed
acceptable by the Committee, (d) a reduction in the number of Shares or other
property otherwise issuable pursuant to such Option or (e) any combination of
(a) through (d).
6.7 NO OPTION REPRICING; NO RELOAD OPTIONS. Without the approval of
stockholders, the Company shall not (a) reprice any Options or (b) provide for
"reload options," which means that unless approved by stockholders the Company
shall not provide for Options to be granted automatically in connection with and
to the extent of the exercise of other Options. For purposes of this Plan, the
term "reprice" means amending, canceling or replacing Options within the meaning
of Item 402(i) under Securities and Exchange Commission Regulation S-K including
by (i) reducing the exercise price of outstanding Options and (ii) canceling
outstanding Options and granting new Options to the holders of canceled Options.
SECTION 7. INCENTIVE BONUSES
Each Incentive Bonus Award will confer upon the Employee the
opportunity to earn a future payment tied to the level of achievement with
respect to one or more performance criteria established for a performance period
of not less than one year.
7.1 INCENTIVE BONUS DOCUMENT. Each Incentive Bonus Document shall
contain provisions regarding (a) the target and maximum amount payable to the
Participant as an Incentive Bonus, (b) the performance criteria and level of
achievement versus these criteria that shall determine the amount of such
payment, (c) the term of the performance period as to which performance shall be
measured for determining the amount of any payment, (d) the timing of any
payment earned by virtue of performance, (e) restrictions on the alienation or
transfer of the Incentive Bonus prior to actual payment, (f) forfeiture
provisions and (g) such further terms and conditions, in each case not
inconsistent with this Plan as may be determined from time to time by the
Committee. The maximum amount payable as an Incentive Bonus may be a multiple of
the target amount payable, but the maximum amount payable pursuant to that
portion of an Incentive Bonus Award granted under this Plan for any fiscal year
to any Participant that is intended to satisfy the requirements for "performance
based compensation" under Code Section 162(m) shall not exceed $1,000,000.
7.2 PERFORMANCE CRITERIA. The Committee shall establish the performance
criteria and level of achievement versus these criteria that shall determine the
target and maximum amount payable under an Incentive Bonus Award, which criteria
may be based on financial performance and/or personal performance evaluations.
The Committee may specify the percentage of the target Incentive Bonus that is
intended to satisfy the requirements for
4
5
"performance-based compensation" under Code Section 162(m). Notwithstanding
anything to the contrary herein, the performance criteria for any portion of an
Incentive Bonus that is intended by the Committee to satisfy the requirements
for "performance-based compensation" under Code Section 162(m) shall be a
measure based on one or more Qualifying Performance Criteria (as defined in
Section 9.2) selected by the Committee and specified at the time the Incentive
Bonus Award is granted. The Committee shall certify the extent to which any
Qualifying Performance Criteria has been satisfied, and the amount payable as a
result thereof, prior to payment of any Incentive Bonus that is intended to
satisfy the requirements for "performance-based compensation" under Code Section
162(m).
7.3 TIMING AND FORM OF PAYMENT. The Committee shall determine the
timing of payment of any Incentive Bonus. The Committee may provide for or,
subject to such terms and conditions as the Committee may specify, may permit a
Participant to elect for the payment of any Incentive Bonus to be deferred to a
specified date or event.
7.4 DISCRETIONARY ADJUSTMENTS. Notwithstanding satisfaction of any
performance goals, the amount paid under an Incentive Bonus Award on account of
either financial performance or personal performance evaluations may be reduced
by the Committee on the basis of such further considerations as the Committee
shall determine.
SECTION 8. INCENTIVE STOCK
Incentive Stock is an award or issuance of Shares the grant, issuance,
retention, vesting and/or transferability of which is subject during specified
periods of time to such conditions (including continued employment or
performance conditions) and terms as the Committee deems appropriate.
8.1 INCENTIVE STOCK DOCUMENT. Each Incentive Stock Document shall
contain provisions regarding (a) the number of Shares subject to such Award or a
formula for determining such, (b) the performance criteria, if any, and level of
achievement versus these criteria that shall determine the number of Shares
granted, issued, retainable and/or vested, (c) the period, if any, as to which
performance shall be measured for determining achievement of performance or, if
not subject to performance criteria, the period of continued employment upon
which vesting of the Shares is subject, which period in any case (except in the
event of death or disability of the Participant or upon a Change of Control (as
defined in Section 11.2)) shall be not less than one year, (d) forfeiture, (e)
transferability and (f) such further terms and conditions not inconsistent with
this Plan as may be determined from time to time by the Committee.
8.2 SALE PRICE. Subject to the requirements of applicable law, the
Committee shall determine the price, if any, at which Shares of Incentive Stock
shall be sold or awarded to an Eligible Person, which may vary from time to time
and among Eligible Persons and which may be below the fair market value of such
Shares at the date of grant or issuance.
8.3 PERFORMANCE CRITERIA. The grant, issuance, retention and/or vesting
of each Incentive Share may but need not be subject to such performance criteria
and level of achievement versus these criteria as the Committee shall determine,
which criteria may be based on financial performance and/or personal performance
evaluations. Notwithstanding anything to the contrary herein, the performance
criteria for any Incentive Stock that is intended to satisfy the requirements
for "performance-based compensation" under Code Section 162(m) shall be a
measure based on one or more Qualifying Performance Criteria selected by the
Committee and specified at the time the Incentive Stock Award is granted.
8.4 DISCRETIONARY ADJUSTMENTS. Notwithstanding satisfaction of any
performance goals, the number of Shares granted, issued, retainable and/or
vested under an Incentive Stock Award on account of either financial performance
or personal performance evaluations may be reduced by the Committee on the basis
of such further considerations as the Committee shall determine.
5
6
8.5 TERMINATION OF EMPLOYMENT. Subject to Section 11, upon a
termination of employment by a Participant prior to the vesting of or the
lapsing of restrictions on Incentive Stock, the Incentive Stock Awards granted
to such Participant shall be subject to such procedures as determined by the
Committee.
SECTION 9. OTHER PROVISIONS APPLICABLE TO AWARDS
9.1 TRANSFERABILITY. Unless the agreement or other document evidencing
an Award (or an amendment thereto authorized by the Committee) expressly states
that the Award is transferable as provided hereunder, no Award granted under
this Plan, nor any interest in such Award, may be sold, assigned, conveyed,
gifted, pledged, hypothecated or otherwise transferred in any manner prior to
the vesting or lapse of any and all restrictions applicable thereto, other than
by will or the laws of descent and distribution or pursuant to a "domestic
relations order," as defined in the Code. The Committee may grant an Award or
amend an outstanding Award to provide that the Award is transferable or
assignable to a member or members of the Participant's "immediate family," as
such term is defined in Rule 16a-1(e) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or to a trust for the benefit solely of a
member or members of the Participant's immediate family, or to a partnership or
other entity whose only owners are members of the Participant's immediate
family, provided that following any such transfer or assignment the Award will
remain subject to substantially the same terms applicable to the Award while
held by the Participant, as modified as the Committee shall determine
appropriate, and the transferee shall execute an agreement agreeing to be bound
by such terms.
9.2 QUALIFYING PERFORMANCE CRITERIA. For purposes of this Plan, the
term "Qualifying Performance Criteria" shall mean any one or more of the
following performance criteria, either individually, alternatively or in any
combination, applied to either the Company as a whole or to a business unit or
subsidiary, either individually, alternatively or in any combination, and
measured either annually or cumulatively over a period of years, on an absolute
basis or relative to a pre-established target, to previous years' results or to
a designated comparison group, in each case as specified by the Committee in the
Award: (a) cash flow, (b) earnings per share, (c) earnings before interest,
taxes and amortization), (d) return on equity, (e) total stockholder return, (f)
return on capital, (g) return on assets or net assets, (h) revenue, (i) income
or net income, (j) operating income or net operating income, (k) operating
profit or net operating profit, (l) operating margin, (m) return on operating
revenue, (n) market share and (o) overhead or other expense reduction. The
Committee shall appropriately adjust any evaluation of performance under a
Qualifying Performance Criteria to exclude any of the following events that
occurs during a performance period: (i) asset write-downs, (ii) litigation or
claim judgments or settlements, (iii) the effect of changes in tax law,
accounting principles or other such laws or provisions affecting reported
results, (iv) accruals for reorganization and restructuring programs and (v) any
extraordinary non-recurring items as described in Accounting Principles Board
Opinion No. 30 and/or in management's discussion and analysis of financial
condition and results of operations appearing in the Company's annual report to
stockholders for the applicable year.
9.3 DIVIDENDS. Unless otherwise provided by the Committee, no
adjustment shall be made in Shares issuable under Awards on account of cash
dividends that may be paid or other rights that may be issued to the holders of
Shares prior to their issuance under any Award. The Committee shall specify
whether dividends or dividend equivalent amounts shall be paid to any
Participant with respect to the Shares subject to any Award that have not vested
or been issued or that are subject to any restrictions or conditions on the
record date for dividends.
9.4 DOCUMENTS EVIDENCING AWARDS. The Committee shall, subject to
applicable law, determine the date an Award is deemed to be granted, which for
purposes of this Plan shall not be affected by the fact that an Award is
contingent on subsequent stockholder approval of this Plan. The Committee or,
except to the extent prohibited under applicable law, its delegate(s) may
establish the terms of agreements or other documents evidencing Awards under
this Plan and may, but need not, require as a condition to any such agreement's
or document's effectiveness that such agreement or document be executed by the
Participant and that such Participant agree to such further terms and conditions
as specified in such agreement or document. The grant of an Award under this
Plan shall not confer any rights upon the Participant holding such Award other
than such terms, and subject to such conditions, as are specified in this Plan
as being applicable to such type of Award (or to all Awards) or as are expressly
set forth in the agreement or other document evidencing such Award.
6
7
9.5 TANDEM STOCK OR CASH RIGHTS. Either at the time an Award is granted
or by subsequent action, the Committee may, but need not, provide that an Award
shall contain as a term thereof, a right, either in tandem with the other rights
under the Award or as an alternative thereto, of the Participant to receive,
without payment to the Company, a number of Shares, cash or a combination
thereof, the amount of which is determined by reference to the value of the
Award.
9.6 FINANCING. The Committee may not provide financing to a Participant
to pay the purchase price of any Award or to pay the amount of taxes required by
law to be withheld with respect to any Award.
9.7 SUB-COMMITTEES. The Board of Directors or the Committee may from
time to time appoint one or more Sub-Committees (as defined below) comprised of
one or more officers, directors or others, which Sub-Committee shall have the
powers of the Committee described in Section 6 of this Plan solely with respect
to the grant of Options (as defined in Section 5.1(a)) to employees who are not
then officers of the Company within the meaning of Rule 16a-1(f) promulgated
under the Exchange Act, if and as such Rule is then in effect. Each such
Sub-Committee may be subject to any such additional restrictions or limitation
as the Board of Directors or the Committee may impose at any time. Each
Sub-Committee so appointed may be disbanded by the Board of Directors or the
Committee at any time, provided that no such termination shall affect the
validity of any Option theretofore approved by any such Sub-Committee.
"Sub-Committee" shall mean any Sub-Committee, comprised of one or more
individuals, of the Committee appointed as provided in Section 2.1. The
aggregate number of Shares subject to Options granted by a Sub-Committee
hereunder during any calendar year to any one Employee shall not exceed 15,000.
SECTION 10. CHANGES IN CAPITAL STRUCTURE
If the outstanding securities of the class then subject to this Plan
are increased, decreased or exchanged for or converted into cash, property or a
different number or kind of shares or securities, or if cash, property or shares
or securities are distributed in respect of such outstanding securities, in
either case as a result of a reorganization, merger, consolidation,
recapitalization, restructuring, reclassification, dividend (other than a
regular, quarterly cash dividend) or other distribution, stock split, reverse
stock split, spin-off or the like, or if substantially all of the property and
assets of the Company are sold, then, unless the terms of such transaction shall
provide otherwise, the Committee shall make appropriate and proportionate
adjustments in (a) the number and type of shares or other securities or cash or
other property that may be acquired pursuant to Awards theretofore granted under
this Plan and the exercise or settlement price of such Awards, provided,
however, that such adjustment shall be made in such a manner that will not
affect the status of any Award intended to qualify as an ISO under Code Section
422 or as "performance based compensation" under Code Section 162(m) and (b) the
maximum number and type of shares or other securities that may be issued
pursuant to such Awards thereafter granted under this Plan.
SECTION 11. CHANGE OF CONTROL
11.1 EFFECT OF CHANGE OF CONTROL. The Committee may, through the terms
of the Award or otherwise, provide that any or all of the following shall occur,
in connection with a Change of Control or a Change of Control Transaction (as
defined in Section 11.2), or upon termination of the Participant's employment
following a Change of Control or a Change of Control Transaction: (a) in the
case of an Option, the acceleration of the Participant's ability to exercise any
portion of the Option not previously exercisable or the payment to the
Participant of cash equal to the difference between the exercise price and the
price being paid to the holders of Shares, (b) in the case of an Incentive
Bonus, the acceleration of the Participant's right to receive a payment equal to
the target amount payable or, if greater, a payment based on performance through
a date determined by the Committee prior to the Change of Control and (c) in the
case of Shares issued in payment of any Incentive Bonus, and/or in the case of
Incentive Stock, the lapse and expiration of any conditions to the grant,
issuance, retention, vesting or transferability of, or any other restrictions
applicable to, such Award. The Committee also may, through the terms of the
Award or otherwise, provide for an absolute or conditional exercise, payment or
lapse of conditions or restrictions on an Award that shall only be effective if,
upon the announcement of a Change of Control Transaction, no provision is made
in such Change of Control Transaction for the exercise, payment or lapse of
conditions or restrictions on the Award, or other procedure whereby the
Participant may realize the full benefit of the Award.
7
8
11.2 DEFINITIONS. Unless the Committee provides otherwise,
"Change of Control" means the first to occur of the following:
(a) the merger or consolidation of the Company with or into
another corporation;
(b) the acquisition by another corporation person or group of
all or substantially all of the Company's assets or 40% or more of the
Company's then outstanding voting stock;
(c) the liquidation or dissolution of the Company; or
(d) during any period of 12 consecutive months, individuals
who at the beginning of such 12-month period constituted the Board of
Directors (together with any new directors whose election by the Board
of Directors or whose nomination for election by the stockholders of
the Company was approved by a vote of a majority of the directors then
still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors then in office,
provided, however, that a Change of Control will not be deemed to have occurred
in respect of a merger in which (x) the Company is the surviving corporation,
(y) no person or group acquires 40% or more of the Company's outstanding voting
stock and (z) the Shares outstanding prior to the merger remain outstanding
thereafter; and provided further, that a merger or consolidation will not be
considered a Change of Control if such transaction results only in the
reincorporation of the Company in another jurisdiction or its restructuring into
holding company form.
"Change of Control Transaction" shall mean any tender offer, offer,
exchange offer, solicitation, merger, consolidation, reorganization or other
transaction that is intended to or reasonably expected to result in a Change of
Control.
SECTION 12. TAXES
12.1 WITHHOLDING REQUIREMENTS. The Committee may make such provisions
or impose such conditions as it may deem appropriate for the withholding or
payment by a Participant of any taxes that the Committee determines are required
in connection with any Award granted under this Plan, and a Participant's rights
in any Award are subject to satisfaction of such conditions.
12.2 PAYMENT OF WITHHOLDING TAXES. Notwithstanding the terms of Section
12.1, the Committee may provide in the agreement or other document evidencing an
Award or otherwise that all or any portion of the taxes required to be withheld
by the Company or, if permitted by the Committee, desired to be paid by the
Participant, in connection with the exercise of a Nonqualified Option or the
exercise, vesting, settlement or transfer of any other Award shall be paid or,
at the election of the Participant, may be paid by the Company by withholding
shares of the Company's capital stock otherwise issuable or subject to such
Award, or by the Participant delivering previously owned shares of the Company's
capital stock, in each case having a fair market value equal to the amount
required or elected to be withheld or paid. Any such election is subject to such
conditions or procedures as may be established by the Committee and may be
subject to disapproval by the Committee.
SECTION 13. AMENDMENTS OR TERMINATION
The Board may amend, alter or discontinue this Plan or any agreement or
other document evidencing an Award made under this Plan, but no such amendment
shall, without the approval of the stockholders of the Company:
(a) increase the maximum number of shares of Common Stock for
which Awards may be granted under this Plan;
8
9
(b) reduce the price at which Options may be granted below the
price provided for in Section 6.2;
(c) reduce the exercise price of outstanding Options;
(d) after any Change of Control, impair the rights of any
Award holder without such holder's consent;
(e) extend the term of this Plan;
(f) change the class of persons eligible to be Participants;
(g) provide for the automatic grant of Options based upon the
exercise of Options by holders of Options; or
(h) increase the number of shares that are eligible for
non-Option Awards.
SECTION 14. COMPLIANCE WITH OTHER LAWS AND REGULATIONS.
This Plan, the grant and exercise of Awards thereunder, and the
obligation of the Company to sell, issue or deliver Shares under such Awards,
shall be subject to all applicable federal, state and foreign laws, rules and
regulations and to such approvals by any governmental or regulatory agency as
may be required. The Company shall not be required to register in a
Participant's name or deliver any Shares prior to the completion of any
registration or qualification of such Shares under any federal, state or foreign
law or any ruling or regulation of any government body which the Committee shall
determine to be necessary or advisable. This Plan is intended to constitute an
unfunded arrangement for a select group of management or other key employees,
directors and consultants.
No Option shall be exercisable unless a registration statement with
respect to the Option is effective or the Company has determined that such
registration is unnecessary. Unless the Awards and Shares covered by this Plan
have been registered under the Securities Act of 1933, as amended, or the
Company has determined that such registration is unnecessary, each person
receiving an Award and/or Shares pursuant to any Award may be required by the
Company to give a representation in writing that such person is acquiring such
Shares for his or her own account for investment and not with a view to, or for
sale in connection with, the distribution of any part thereof.
SECTION 15. NO RIGHT TO COMPANY EMPLOYMENT
Nothing in this Plan or as a result of any Award granted pursuant to
this Plan shall confer on any individual any right to continue in the employ of
the Company or interfere in any way with the right of the Company to terminate
an individual's employment at any time. The agreements or other documents
evidencing Awards may contain such provisions as the Committee may approve with
reference to the effect of approved leaves of absence.
SECTION 16. EFFECTIVENESS AND EXPIRATION OF PLAN
This Plan shall be effective on the date the Company's stockholders
adopt this Plan. All Awards granted under this Plan are subject to, and may not
be exercised before, the approval of this Plan by the stockholders prior to the
first anniversary date of the effective date of this Plan, by the affirmative
vote of the holders of a majority of the outstanding shares of the Company
present, or represented by proxy, and entitled to vote, at a meeting of the
Company's stockholders or by written consent in accordance with the laws of the
State of Delaware; provided that if such approval by the stockholders of the
Company is not forthcoming, all Awards previously granted under this Plan shall
be void. No Awards shall be granted pursuant to this Plan more than 10 years
after the effective date of this Plan.
9
10
SECTION 17. NON-EXCLUSIVITY OF PLAN
Neither the adoption of this Plan by the Board nor the submission of
this Plan to the stockholders of the Company for approval shall be construed as
creating any limitations on the power of the Board or the Committee to adopt
such other incentive arrangements as either may deem desirable, including
without limitation, the granting of restricted stock or stock options otherwise
than under this Plan, and such arrangements may be either generally applicable
or applicable only in specific cases.
SECTION 18. GOVERNING LAW
This Plan and any agreements or other documents hereunder shall be
interpreted and construed in accordance with the laws of the State of Delaware
and applicable federal law. The Committee may provide that any dispute as to any
Award shall be presented and determined in such forum as the Committee may
specify, including through binding arbitration. Any reference in this Plan or in
the agreement or other document evidencing any Award to a provision of law or to
a rule or regulation shall be deemed to include any successor law, rule or
regulation of similar effect or applicability.
10