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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
NATIONAL INSTRUMENTS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
NATIONAL INSTRUMENTS CORPORATION
Notice of Annual Meeting of Stockholders
May 9, 2000
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Stockholders of
National Instruments Corporation, a Delaware corporation (the "Company"), will
be held on May 9, 2000, at 9:00 a.m. local time, at the Company's principal
executive offices located at 11500 North Mopac Expressway, Building B, Austin,
Texas, for the following purposes as more fully described in the Proxy Statement
accompanying this Notice:
1. To elect three directors to the Board of Directors for a term of three
years;
2. To reapprove the 1994 Amended and Restated Incentive Plan;
3. To ratify the appointment of PricewaterhouseCoopers LLP as the Company's
independent public accountants for the fiscal year ending December 31,
2000; and
4. To transact such other business as may properly come before the meeting or
any adjournment thereof.
Only stockholders of record at the close of business on March 20, 2000, are
entitled to receive notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed Proxy Card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Stockholders attending the
meeting may vote in person even if they have returned a Proxy. However, if you
have returned a Proxy and wish to vote at the meeting, you must notify the
inspector of election of your intention to revoke the Proxy you previously
returned and instead vote in person at the meeting. If your shares are held in
the name of a broker, trustee, bank or other nominee, please bring a proxy from
the broker, trustee, bank or other nominee with you to confirm you are entitled
to vote the shares.
Sincerely,
David G. Hugley
Secretary
Austin, Texas
April 3, 2000
NATIONAL INSTRUMENTS CORPORATION
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of National Instruments Corporation,
a Delaware corporation (the "Company"), for use at its 2000 Annual Meeting of
Stockholders (the "Annual Meeting") to be held on May 9, 2000, at 9:00 a.m.,
local time, or at any adjournments or postponements thereof, for the purposes
set forth in this Proxy Statement and in the accompanying Notice of Annual
Meeting of Stockholders. The Annual Meeting will be held at the Company's
principal executive offices at 11500 North Mopac Expressway, Building B, Austin,
Texas 78759. The Company's telephone number is (512) 338-9119.
These proxy solicitation materials were mailed on or about April 3, 2000 to
all stockholders entitled to vote at the meeting.
RECORD DATE; OUTSTANDING SHARES
Stockholders of record at the close of business on March 20, 2000 (the "Record
Date"), are entitled to receive notice of and vote at the meeting. On the Record
Date, 50,144,794 shares of the Company's Common Stock, $.01 par value, were
issued and outstanding. For information regarding holders of more than five
percent of the outstanding Common Stock, see "Election of Directors -- Security
Ownership."
REVOCABILITY OF PROXIES
Proxies given pursuant to this solicitation may be revoked at any time before
they have been used. Revocation will occur by delivering a written notice of
revocation to the Company or by duly executing a proxy bearing a later date.
Revocation will also occur if the individual attends the meeting, notifies the
inspector of elections of his or her intention to revoke the proxy and votes in
person at the meeting.
VOTING AND SOLICITATION
Every stockholder of record on the Record Date is entitled, for each share
held, to one vote on each proposal or item that comes before the meeting. In the
election of directors, each stockholder will be entitled to vote for three
nominees and the three nominees with the greatest number of votes will be
elected.
The cost of this solicitation will be borne by the Company. The Company may
reimburse expenses incurred by brokerage firms and other persons representing
beneficial owners of shares in forwarding solicitation material to beneficial
owners. Proxies may be solicited by certain of the Company's directors, officers
and regular employees, without additional compensation, personally, by telephone
or by telefax.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Stockholder proposals or director nominations which are intended to be
presented at the Company's 2001 Annual Meeting must be received by the Company
no later than December 16, 2000 in order to be included in the proxy statement
and form of proxy for that meeting.
ELECTION OF DIRECTORS
General
The Company's Board of Directors is divided into three classes, with the term
of office of one class expiring each year. The Company currently has seven
directors with two directors in two classes and three directors in one class.
The terms of office of Class III directors Jeffrey L. Kodosky, Ben G. Streetman
and R. Gary Daniels will expire at the 2000 Annual Meeting. Mr. Kodosky, Dr.
Streetman and Mr. Daniels will stand for re-election to the Board of Directors
at the 2000 Annual Meeting. The terms of office of Class I directors James J.
Truchard and William C. Nowlin will expire at the 2001 Annual Meeting and the
terms of office of Class II directors L. Wayne Ashby and Donald M. Carlton will
expire at the 2002 Annual Meeting. At the 2000 Annual Meeting, stockholders
will elect three directors for a term of three years.
VOTE REQUIRED
The three nominees receiving the highest number of affirmative votes of the
shares present in person or represented by proxy at the Annual Meeting and
entitled to vote on the election of directors shall be elected to the Board of
Directors. Votes withheld from any director are counted for purposes of
determining the presence or absence of a quorum, but have no legal effect under
Delaware law. While there is no definitive statutory or case law authority in
Delaware as to the proper treatment of abstentions and broker non-votes in the
election of directors, the Company believes that both abstentions and broker
non-votes should be counted for purposes of whether a quorum is present at the
Annual Meeting. In the absence of precedent to the contrary, the Company intends
to treat abstentions and broker non-votes with respect to the election of
directors in this manner. Cumulative voting is not permitted by the Company's
Certificate of Incorporation.
Unless otherwise instructed, the proxy holders will vote the proxies received
by them for the Company's three nominees named below. If any nominee of the
Company is unable or declines to serve as a director at the time of the Meeting,
the proxies will be voted for any nominee who is designated by the present Board
of Directors to fill the vacancy. It is not expected that any nominee will be
unable or will decline to serve as a director. THE BOARD OF DIRECTORS RECOMMENDS
THAT STOCKHOLDERS VOTE FOR THE NOMINEES LISTED BELOW.
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
The following sets forth information concerning the nominees for election as
directors at the Annual Meeting, including information as to each nominee's age
as of the Record Date, position with the Company and business experience.
Director
Name of Nominee Age Position/Principal Occupation Since
- ---------------------------------------- ------- ------------------------------------------------ ---------
Jeffrey L. Kodosky (1).................. 50 Director; Vice President, Research and 1976
Development of the Company
Ben G. Streetman (1) (2) (3)............ 60 Director; Dean, College of Engineering at The 1997
University of Texas at Austin
R. Gary Daniels......................... 62 Director; Former Senior Vice President and 1999
General Manager of the Microcontroller
Technologies Group, Motorola
__________
(1) Member of Nominating and Governance Committee
(2) Member of Compensation Committee
(3) Member of Audit Committee
2
Jeffrey L. Kodosky co-founded the Company in 1976 and has been a director
since that time. He was appointed Vice President of the Company in 1978 and has
served as Vice President, Research and Development since 1980. Prior to 1976, he
was employed at Applied Research Laboratories ("ARL"), The University of Texas
("UT Austin"). Mr. Kodosky received his BS in Physics from Rensselaer
Polytechnic Institute.
Ben G. Streetman, PhD, has been a member of the Company's Board of Directors
since 1997 and is the Dean of the College of Engineering at UT Austin, as well
as Professor of Electrical and Computer Engineering, Dula D. Cockrell Centennial
Chair in Engineering, and Henry E. Singleton Research Fellow at IC2 Institute.
From 1984 to 1996, Dr. Streetman served as Director of the Microelectronics
Research Center at UT Austin. Dr. Streetman received his BS, MS, and PhD in
Electrical Engineering, all from UT Austin. Dr. Streetman is currently a
director of the following publicly traded companies: Global Marine, Inc. and
ZixIt Corporation (formerly CustomTracks Corporation).
R. Gary Daniels was elected as a director by the Board of Directors effective
July 22, 1999. He was elected into Class III as provided in the Company's
Certificate of Incorporation and, therefore, he stands for election with the
other Class III directors at the 2000 Annual Meeting of Stockholders. Mr.
Daniels retired in 1997 from his position as Senior Vice President and General
Manager of the Microcontroller Technologies Group of Motorola, Inc. after a
thirty-two year career with Motorola.
INCUMBENT DIRECTORS WHOSE TERMS OF OFFICE CONTINUE AFTER THE ANNUAL MEETING
The following sets forth information concerning the directors whose terms of
office continue after the Annual Meeting, including information as to each
director's age as of the Record Date, position with the Company and business
experience.
Director
Name of Director Age Position/Principal Occupation Since
- -------------------------------------------- ----- ---------------------------------------------- ---------
James J. Truchard........................... 56 Chairman of the Board of Directors and 1976
President of the Company
William C. Nowlin, Jr.(1)(2)(3)............. 51 Director 1976
L. Wayne Ashby (2).......................... 60 Director 1977
Donald M. Carlton (1)(3).................... 62 Director; Past President and Chief Executive 1994
Officer of Radian International LLC
__________
(1) Member of Nominating and Governance Committee
(2) Member of Compensation Committee
(3) Member of Audit Committee
James J. Truchard, PhD, co-founded the Company in 1976 and has served as its
President and Chairman of the Board of Directors since inception. From 1963 to
1976 Dr. Truchard was the Managing Director of the Acoustical Measurements
Division at ARL, UT Austin. Dr. Truchard received his PhD in Electrical
Engineering, his MS in Physics and his BS in Physics, all from UT Austin.
William C. Nowlin, Jr., co-founded the Company in 1976 and has served as a
director since inception. Mr. Nowlin served as the Company's Chief Quality
Officer and Secretary until January 1996. Prior to that time, his positions with
the Company included Treasurer, Vice President of Engineering, Sales Manager and
Vice President of Special Projects. Mr. Nowlin received his MS in Electrical
Engineering and his BS in Electrical Engineering, both from UT Austin.
L. Wayne Ashby has been a member of the Company's Board of Directors since
1977. From January 1983 until August 1995, Mr. Ashby served as Program Manager
and as Division Head of the U.S. Navy's Electronic Warfare Programs at ARL, UT
Austin. From 1964 to 1980, Mr. Ashby worked at ARL in various positions
including Research Engineer, Project Leader and Division Head. Mr. Ashby was
Vice President, Special Projects at the Company from 1980 to 1983. Mr. Ashby
received his BS in Electrical Engineering and his MS in Electrical Engineering,
both from UT Austin.
3
Donald M. Carlton, PhD, has been a member of the Company's Board of Directors
since 1994. From February 1996 until December 1998, Dr. Carlton served as the
President and Chief Executive Officer of Radian International LLC, and from 1969
until January 1996, Dr. Carlton served as President and Chairman of the Board of
Radian Corporation, both of which are environmental engineering firms. Dr.
Carlton received his BS in Chemistry from the University of St. Thomas and his
PhD in Chemistry from UT Austin. Dr. Carlton is currently a director of the
following publicly traded companies: Central & Southwest Corporation, Concert
Investment Series Fund, and Valero Energy Corporation.
There is no family relationship between any director of the Company.
SECURITY OWNERSHIP
The following table sets forth the beneficial ownership of the Company's
Common Stock as of the Record Date (i) by all persons known to the Company,
based on statements filed by such persons pursuant to Section 13(d) or 13(g) of
the Securities Exchange Act of 1934, as amended, to be the beneficial owners of
more than 5% of the Company's Common Stock, (ii) by each of the executive
officers named in the table under "Executive Compensation -- Summary
Compensation Table," (iii) by each director and nominee, and (iv) by all current
directors and executive officers as a group:
Approximate
NUMBER OF PERCENTAGE OF TOTAL
Name of Person or Entity Shares (1) Voting Power
- ----------------------------------------------------- ---------------------- --------------------------
James J. Truchard.................................... 13,080,711 (2) 26.1%
11500 North Mopac Expressway
Austin, Texas 78759
Jeffrey L. Kodosky................................... 4,998,136 (3) 10.0%
11500 North Mopac Expressway
Austin, Texas 78759
Gail T. Kodosky...................................... 3,894,161 (4) 7.8%
11500 North Mopac Expressway
Austin, Texas 78759
L. Wayne Ashby....................................... 2,627,203 (5) 5.2%
5512 Cuesta Verde Drive
Austin, Texas 78746
William C. Nowlin, Jr................................ 1,560,725 (6) 3.1%
R. Gary Daniels...................................... 4,063 (7) *
Ben G. Streetman..................................... 30,625 (8) *
Donald M. Carlton.................................... 28,862 (9) *
Peter Zogas, Jr...................................... 86,963(10) *
Timothy R. Dehne..................................... 81,920(11) *
Ruben Reynoso-Mangin................................. 15,940(12) *
All executive officers and directors as a group
(14 persons)....................................... 22,643,900(13) 45.2%
__________
* Represents less than 1% of the outstanding shares of Common Stock.
(1) Except as indicated in the footnotes to this table, the persons named in the
table have sole voting and investment power with respect to all shares of
Common Stock shown as beneficially owned by them, subject to community
property laws where applicable.
(2) Includes 1,188,500 shares held by a trust for which Dr. Truchard is the
trustee and 128,350 shares held by a corporation of which Dr. Truchard is
president.
(3) Includes an aggregate of 1,076,900 shares held in two trusts for the benefit
of Mr. Kodosky's daughters for which Mr. Kodosky is the trustee; includes an
aggregate of 431,400 shares held by a non-profit corporation of which Mr.
Kodosky is president and his wife, Gail T. Kodosky is secretary; includes
112,500 shares held by a trust for the benefit of Mr. Kodosky and his wife;
includes 16,075 shares held in a charitable remainder trust for the benefit
of Mr. Kodosky's brother of which Mr. Kodosky is the sole trustee with
dispositive power over the securities held
4
therein; includes 11,000 shares held in 16 trusts for non-immediate family
members of Mr. Kodosky of which Mr. Kodosky is the sole trustee with
dispositve power over the securities held therein; and includes 1,731,880
shares owned by his wife. Mr. Kodosky disclaims beneficial ownership of the
shares owned by his wife. (Cumulatively, Jeffrey and Gail Kodosky control
and/or beneficially own a total of 4,998,136 shares.)
(4) Includes 431,400 shares held by a non-profit corporation of which Mrs.
Kodosky is secretary and her husband, Jeffrey L. Kodosky is president;
includes 112,500 shares held by a trust for the benefit of Mrs. Kodosky and
her husband; and includes 1,730,881 shares owned by her husband. Mrs.
Kodosky disclaims beneficial ownership of the shares owned by her husband.
(Cumulatively, Jeffrey and Gail Kodosky control and/or beneficially own a
total of 4,998,136 shares.)
(5) Includes 1,787 shares subject to options exercisable on or before May 19,
2000, and 958 shares held by Mr. Ashby's wife.
(6) Includes 792 shares subject to options exercisable on or before May 19,
2000.
(7) Includes 3,750 shares subject to options exercisable on or before May 19,
2000.
(8) Includes 29,500 shares subject to options exercisable on or before May 19,
2000.
(9) Includes 22,062 shares subject to options exercisable on or before May 19,
2000.
(10) Includes 52,790 shares subject to options exercisable on or before May 19,
2000.
(11) Includes 52,832 shares subject to options exercisable on or before May 19,
2000.
(12) Includes 15,105 shares subject to options exercisable on or before May 19,
2000.
(13) Includes 280,729 shares subject to options exercisable on or before May 19,
2000.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of ten meetings during
1999. During 1999, the Board of Directors had a standing Audit Committee,
Compensation Committee, and Nominating and Governance Committee.
The Audit Committee, which currently consists of directors Donald M. Carlton,
William C. Nowlin, Jr., and Ben G. Streetman, met three times during 1999. The
Audit Committee recommends to the Board of Directors the engagement of the
Company's independent accountants, reviews with such accountants the plan, scope
and results of their examination of the consolidated financial statements and
determines the independence of such accountants. The Audit Committee inquires
about any significant risks or exposures and assesses the steps management has
taken to minimize such risk to the Company, including adequacy of insurance
coverage and the strategy for management of foreign currency risk. The Audit
Committee also reviews the Company's compliance with matters relating to
antitrust, environmental, EEOC and SEC regulations.
The Compensation Committee, which currently consists of directors William C.
Nowlin Jr., L. Wayne Ashby, and Ben G. Streetman, met nine times during 1999.
The Compensation Committee sets the level of compensation of executive officers
and advises management with respect to compensation levels for key employees.
The Compensation Committee also administers the Company's 1994 Incentive Plan
and Employee Stock Purchase Plan.
The Nominating and Governance Committee, which currently consists of directors
Donald M. Carlton, Jeffrey L. Kodosky, Ben G. Streetman and William C. Nowlin,
Jr., met one time during 1999. The Nominating and Governance Committee
recommends to the Board of Directors the selection criteria for board members,
compensation of outside directors, appointment of board committee members and
committee chairmen and develops board governance principles.
5
No director attended fewer than 75% of the total number of meetings of the
Board of Directors or the total number of meetings held by all committees of the
Board of Directors on which he served.
BOARD COMPENSATION
Non-employee directors are paid a $10,000 annual retainer ($12,000 for
committee chairs), $1,000 for each Board meeting attended in person, $750
($1,000 for committee chairs) for each committee meeting attended in person,
$150 for each Board or committee meeting attended telephonically, and
reimbursement of out-of-town travel expenses. Prior to March 1997, non-employee
directors were also entitled to receive options (exercisable at fair market
value on the date of grant) to purchase 2,025 shares of Common Stock upon
joining the Board, and 1,012 shares on June 1st of each year. Non-employee
directors no longer receive automatic option grants although they may still
exercise options previously granted to them and are currently eligible to
receive discretionary option grants under the terms of the Company's Amended and
Restated 1994 Incentive Plan. Employee directors of the Company do not receive
any additional compensation for services provided as a director.
EXECUTIVE OFFICERS
The following sets forth information concerning the persons currently serving
as executive officers of the Company, including information as to each executive
officer's age as of the Record Date, position with the Company and business
experience.
NAME OF EXECUTIVE OFFICER Age Position
- -------------------------------------- ----- --------------------------------------------------------
James J. Truchard..................... 56 Chairman of the Board of Directors and President
Jeffrey L. Kodosky.................... 50 Vice President, Research and Development and Director
Timothy R. Dehne...................... 34 Vice President, Engineering
Peter Zogas, Jr....................... 39 Vice President, Sales
Mark A. Finger........................ 42 Vice President, Human Resources
Ruben Reynoso-Mangin.................. 52 Vice President, Manufacturing
John M. Graff......................... 35 Vice President, Marketing
Alexander M. Davern................... 33 Chief Financial Officer and Treasurer
David G. Hugley....................... 36 Secretary, General Counsel
See "Election of Directors" for additional information with respect to Dr.
Truchard and Mr. Kodosky.
Timothy R. Dehne joined the Company in 1987 and is currently Vice President,
Engineering. He previously served as the Company's Vice President, Marketing;
Vice President, Strategic Marketing; Strategic Marketing Manager; GPIB Marketing
Manager; GPIB Product Manager and as an Applications Engineer. Mr. Dehne
received his BS in Electrical Engineering from Rice University.
Peter Zogas, Jr., joined the Company in 1985 and is currently Vice President,
Sales. He served as the Company's National Sales Manager from July 1992 until
his appointment as Vice President, Sales in July 1996. Earlier positions with
the Company include Business Development Manager, Regional Sales Manager, and
Sales Engineer. Prior to joining the Company, Mr. Zogas worked as an engineer at
Texas Instruments and, prior to that, at AT&T. Mr. Zogas received his BS in
Electrical Engineering from Drexel University. He is co-holder of one patent on
multichip packaging issued in 1986.
Mark A. Finger joined the Company in August 1995 as Director of Human
Resources and became Vice President, Human Resources in December 1996. Prior to
joining the Company, Mr. Finger was employed by Rosemount Inc. and Fisher
Rosemount Systems Inc., from 1981 to 1995. Positions held at Rosemount include
Human Resources Manager, Staffing Manager, Senior Human Resources
Representative, Compensation and Benefits Specialist and Staffing Specialist.
Mr. Finger received his BS in Marketing from St. Cloud University.
Ruben Reynoso-Mangin joined the Company in February 1997 as Vice President,
Manufacturing. Prior to joining the Company, Mr. Reynoso-Mangin was employed by
3M Corporation
6
from 1972 to 1997. Positions held at 3M Corporation include Plant Manager, Plant
Quality Manager, Technology Manager, and Product Manager. Mr. Reynoso-Mangin
received his BS in BSIE from the California State Polytechnic University.
John M. Graff joined the Company in June 1987 and is currently Vice President,
Marketing. He previously served as the Company's Acting Vice President,
Marketing; Director, Corporate Marketing; Corporate Marketing Manager; Product
Marketing Manager and as an Applications Engineer. Mr. Graff received his BS in
Electrical Engineering from UT Austin.
Alexander M. Davern joined the Company in February 1994 and is currently Chief
Financial Officer and Treasurer. He previously served as Corporate Controller
and International Controller. Prior to joining the Company, Mr. Davern worked
both in Europe and in the United States for the international accounting firm of
Price Waterhouse, LLP. Mr. Davern received his BBA and a master's degree in
professional accounting from University College in Dublin, Ireland.
David G. Hugley joined the Company in 1991 as General Counsel and currently
also serves as Secretary of the Company. Mr. Hugley received his BBA and JD from
UT Austin and is a licensed attorney in Texas.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table shows the compensation paid by
the Company during the years ended December 31, 1999, 1998, and 1997 to the
Company's Chief Executive Officer and the four other most highly compensated
executive officers of the Company whose total salary and bonus exceeded $100,000
(collectively, the "Named Executive Officers"):
LONG-TERM
COMPENSATION
AWARDS
ANNUAL SECURITIES
COMPENSATION UNDERLYING
---------------------------- OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) (# OF SHARES)(4) COMPENSATION(2)
- ---------------------------------------------------- ---- ------------ ------------- ---------------- ---------------
Dr. James J. Truchard............................... 1999 $195,797 $41,117 -- $5,470
Chairman of the Board and President 1998 195,797 27,020 __ 5,470
1997 195,797 39,159 __ 5,050
Jeffrey L. Kodosky.................................. 1999 $147,008 $30,872 -- $ 354
Vice President, Research 1998 143,803 19,845 -- 346
and Development 1997 140,411 28,082 __ 300
Peter Zogas, Jr..................................... 1999 $154,002 $33,840 6,000 $5,239
Vice President, Sales 1998 145,561 20,087 17,250 5,071
1997 143,121 28,624 25,425 5,050
Timothy R. Dehne.................................... 1999 $149,750 $32,948 6,000 $4,853
Vice President, Engineering 1998 138,500 19,113 16,950 4,847
1997 127,250 26,450 (3) 25,200 4,118
Ruben Reynoso-Mangin................................ 1999 $137,625 $30,401 6,000 $4,319
Vice President, Manufacturing 1998 132,063 18,225 16,950 3,295
1997 109,375 21,874 25,200 263
__________
(1) Bonus amounts for 1999, 1998, and 1997 include bonus amounts paid in fiscal
year 2000, 1999, and 1998, respectively, for services rendered in fiscal
1999, 1998, and 1997, respectively.
7
(2) Represents Company contributions to the Company's 401(k) plan on behalf of
the Named Executive Officers and the full dollar value of premiums paid by
the Company for term life insurance on behalf of the Named Executive
Officers for 1999, 1998, and 1997. Mr. Kodosky did not participate in the
Company's 401(k) plan in 1999, 1998, or 1997. Mr. Reynoso-Mangin did not
participate in the Company's 401(k) plan in 1997.
(3) Includes an award of $1,000 paid to Mr. Dehne upon his completion of ten
years of service with the Company.
(4) These shares reflect a post-split adjustment pursuant to the Company's 3-
for-2 Common Stock split on August 20, 1999.
Option Grants in Last Fiscal Year. The following table sets forth each grant
of stock options made during the fiscal year ended December 31, 1999 to each
Named Executive Officer.
POTENTIAL
REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
--------------------------------------- ANNUAL RATES OF
% OF TOTAL STOCK PRICE
OPTIONS APPRECIATION
GRANTED TO EXERCISE FOR OPTION TERM(1)
OPTIONS EMPLOYEES OR BASE EXPIRATION ---------------------
NAME GRANTED IN FY99 PRICE DATE 5% ($) 10% ($)
- ------------------------------------------ ------- --------------- -------- ---------- ------- --------
Dr. James J. Truchard..................... -- -- -- -- -- --
Jeffrey L. Kodosky........................ -- -- -- -- -- --
Peter Zogas, Jr........................... 6,000(2) * $18.3333 3/24/09 $69,178 $175,311
Timothy R. Dehne.......................... 6,000(2) * $18.3333 3/24/09 $69,178 $175,311
Ruben Reynoso-Mangin...................... 6,000(2) * $18.3333 3/24/09 $69,178 $175,311
__________
* Represents less than 1% of the total number of options granted in 1999.
(1) The dollar amounts under these columns are the result of calculations at
the 5% and 10% rates set by the Securities and Exchange Commission ("SEC")
and therefore are not intended to forecast possible future appreciation, if
any, of the Company's stock price. The Company did not use an alternative
formula for a grant date valuation, as the Company does not believe that
any formula will determine with reasonable accuracy a present value based
on future unknown or volatile factors.
(2) These options vest as to 1/120th of the shares per month after the date of
grant, subject to acceleration based upon Company financial performance.
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Values. The
following table sets forth, for each of the Named Executive Officers, the year-
end value of unexercised options. No stock options were exercised by any Named
Executive Officer during the fiscal year ended December 31, 1999.
VALUE (1) OF
UNEXERCISED
NUMBER OF UNEXERCISED IN-THE MONEY
OPTIONS AT YEAR-END: OPTIONS AT YEAR-END:
------------------------------------------ ------------------------------------------
NAME EXERCISABLE(#) UNEXERCISABLE(#) EXERCISABLE($) UNEXERCISABLE($)
- --------------------------------------- ---------------------- ---------------- ----------------------- ----------------
Dr. James J. Truchard -- -- -- --
Jeffrey L. Kodosky -- -- -- --
Peter Zogas, Jr........................ 44,261 53,464 $1,226,742 $1,260,256
Timothy R. Dehne....................... 44,338 53,087 $1,232,706 $1,252,599
Ruben Reynoso-Mangin................... 10,847 34,303 $ 295,337 $ 683,257
__________
(1) Based on a fair market value of $38.25, which was the closing price of the
Company's Common Stock on December 31, 1999, as reported on the NASDAQ Stock
Market.
8
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 1999, the Compensation Committee consisted of Directors William C. Nowlin,
Jr., Ben G. Streetman and L. Wayne Ashby. Dr. Truchard may participate in the
deliberations of the Compensation Committee with respect to the compensation of
the Company's executive officers, changes in the incentive plan and in other
compensation matters.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities, to file reports of ownership on Form 3 and
changes in ownership on Form 4 or Form 5 with the SEC. Such officers, directors
and 10% stockholders are also required by SEC rules to furnish the Company with
copies of all Section 16(a) forms they file. Based solely on its review of the
copies of such forms received by it, the Company believes that, during the
fiscal year ended December 31, 1999, all Section 16(a) filing requirements
applicable to its officers, directors and 10% stockholders were satisfied.
PERFORMANCE GRAPH
The following line graph compares the cumulative total return to stockholders
of the Company's Common Stock from March 13, 1995 (the date of the Company's
initial public offering) to December 31, 1999 to the cumulative total return
over such period of (i) Nasdaq Composite Index and (ii) Russell 2000 Index. The
graph assumes that $100 was invested on March 13, 1995 in the Company's common
stock at its initial public offering price of $6.44 per share and in each of the
other two indices and the reinvestment of all dividends, if any.
The information contained in the Performance Graph shall not be deemed to be
"soliciting material" or to be "filed" with the SEC, nor shall such information
be incorporated by reference into any future filing under the Securities Act of
1933, as amended (the "Securities Act"), or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), except to the extent that the Company
specifically incorporates it by reference into any such filing. The graph is
presented in accordance with SEC requirements. Stockholders are cautioned
against drawing any conclusions from the data contained therein, as past results
are not necessarily indicative of future performance.
[CHART APPEARS HERE]
3/13/95 12/29/95 12/31/96 12/31/97 12/31/98 12/31/99
- ---------------------------------------------------------------------------------------------------------------
National Instruments 100 140 221 300 353 594
- ---------------------------------------------------------------------------------------------------------------
Nasdaq 100 132 161 199 270 507
- ---------------------------------------------------------------------------------------------------------------
Russell 2000 100 123 142 171 161 197
- ---------------------------------------------------------------------------------------------------------------
9
PROPOSAL TO REAPPROVE THE 1994 AMENDED AND RESTATED INCENTIVE PLAN OF NATIONAL
INSTRUMENTS CORPORATION
The Stockholders approved the 1994 Incentive Plan (the "Plan") in May 1994,
and initially reserved a total of 2,700,000 shares of Common Stock for issuance
thereunder. In March 1997, the Board of Directors amended and restated the Plan
to increase the number of shares of Common Stock reserved for the Plan by
2,100,000 for a total of 4,800,000 shares of Common Stock. The Stockholders
approved the amendment at the 1997 Annual Meeting of the Stockholders. Due to
stock splits since that time, the total number of shares for issuance under the
Plan is now 10,800,000 shares of Common Stock. The Board of Directors believes
that the Plan is an important factor in attracting and retaining personnel. The
Plan provides for the grant to eligible employees of (i) incentive stock
options, (ii) nonstatutory options, (iii) restricted stock awards and (iv) stock
appreciation rights. The Company utilizes stock options to align executive
compensation with increases in stockholder value.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
and the regulations thereunder, generally limit the corporate income tax
deduction for publicly held companies to $1,000,000 in an tax year for
compensation paid to certain executive officers. Deductions are, however,
permitted if certain conditions are met, including a requirement that the plan
under which such compensation is paid be reapproved by stockholders every five
years.
The following is a brief summary of the terms of the Plan. The full text of
the Plan is attached to this Proxy Statement as Appendix A.
The Plan provides for administration by the Board of Directors or by a
committee of the Board. The Plan is currently being administered by the
Compensation Committee of the Board of Directors. No member of the Board who is
eligible to participate in the Plan may vote on any award to be granted to
himself. The interpretation and construction of any provisions of the Plan by
the Compensation Committee shall be final and conclusive. Members of the
Compensation Committee receive no compensation for their services in connection
with the administration of the Plan.
All employees, including officers and directors, and non-employee directors or
any designated subsidiaries are eligible to be granted awards under the Plan.
The Compensation Committee selects the award recipients and determines the
number of shares to be subject to each award. In making such determination, the
Compensation Committee takes into account the duties and responsibilities of the
employee, the value of the employee's services, the employee's present and
potential contribution to the Company's success, the anticipated number of years
of future service and other relevant factors. There is a $100,000 limit on the
aggregate market value of shares subject to all incentive stock options which
are exercisable for the first time in any one calendar year.
The Board or its designated committee determines the terms of the options
granted under the Plan. Each option granted under the Incentive Plan is
evidenced by a stock option agreement between the Company and the employee or
non-employee director to whom such option is granted and is subject to the
following additional terms and conditions: Exercise of the Option. The
----------------------
Compensation Committee determines when options granted under the Plan may be
exercised pursuant to certain time in service requirements being met or the
accomplishment of certain performance criteria which may be measured by Earnings
Attainment or Sales Attainment, as each of those terms is defined in the Plan.
In no event may any incentive stock option be exercised more than ten years
after the date of grant. An option is exercised by giving written notice of
exercise to us, specifying the full number of shares of Common Stock to be
purchased and by tendering payment of the exercise price. Payment of the
exercise price may consist of cash or an equivalent means acceptable to the
Board or its committee, exchange of shares of the Company's Common Stock, sale
or loan proceeds to be obtained from the Common Stock to be purchased or any
combination of the foregoing. Exercise Price. The exercise price of options
--------------
granted under the Plan is determined by the Compensation Committee and in all
cases has been 100% of the fair market value of the Common Stock on the date the
option is granted. The fair market value of the Common Stock is the closing
sales price on The NASDAQ Stock Market on the day before the date of grant.
Although no stock appreciation rights ("SARs") have ever been granted under
the Plan, the Board of Directors or its designated committee may also grant
SARs, either in connection with the grant of options or independent of the grant
of options. SARs granted in connection with an option shall be subject to the
terms of the award agreement governing the related option. Upon exercise of a
SAR granted in connection with an option, the holder is entitled to receive an
amount
10
of cash, Common Stock or any combination thereof (as determined by the Board of
Directors or its designated committee) equal in value to the excess of the fair
market value of the shares covered by the surrendered portion of the related
option on the date of exercise over the aggregate exercise price of the shares
covered by the surrendered portion of the related option.
Although no restricted stock awards have ever been granted under the Plan, the
Board of Directors or its committee may also grant restricted stock awards that
grant or permit the holder to purchase shares of restricted stock (i.e., stock
that is nontransferable or subject to substantial risk of forfeiture unless
specific conditions are met). The Board of Directors or its committee shall
determine the terms of each restricted stock award, including the number of
shares of Common Stock that the holder is granted or permitted to purchase
thereunder and the restriction on transferability of such shares. Shares of
restricted stock granted or sold pursuant to a restricted stock award may not be
sold, transferred or otherwise alienated or hypothecated until the restrictions
on transferability are removed or expire. Conditions to removal or expiration of
the restrictions may include, but are not required to be limited to, continuing
employment or service as a director, officer, or key employee or achievement of
performance objectives described in the restricted stock award agreement.
In the event of a Change in Control as defined in the Plan, all outstanding
SARs and options shall immediately become fully vested and exercisable in full
and the restriction period of any restricted stock award shall immediately be
accelerated and the restrictions expire. The Board of Directors or its committee
may, in its discretion, provide in individual option agreements that the holder
of such option shall immediately be granted corresponding SARs upon the
occurrence of a Change in Control. In the event of a Change in Control
involving a proposed sale of all or substantially all assets, or the merger of
the Company with or into another corporation, the holder of an award granted
under the Plan shall be entitled to receive in lieu of the shares of Common
Stock that such holder would otherwise be entitled to purchase or receive, as
appropriate for the form of award, the number of shares of Common Stock, other
securities, cash or property to which the number of shares underlying the award
would have been entitled in connection with such restructuring (and, for
options, at an aggregate exercise price equal to the exercise price that would
have been payable if the number of shares subject to such option had been
purchased on the exercise of the options immediately before the consummation of
the restructuring).
The Board of Directors may amend the Plan at any time or from time to time or
may terminate it without the approval of the stockholders; provided, however,
that stockholder approval is required for any amendment which increases the
number of shares which may be issued under the plan, materially changes the
standards of eligibility or materially increases the benefits which may accrue
to participants under the Plan. However, no action by the Board of Directors or
stockholders may alter or impair any award previously granted under the Plan
without the consent of the affected holder of the award. The Plan will
terminate in 2004.
The Revenue Reconciliation Act of 1993 added Section 162(m) to the Code.
Section 162(m) limits the corporate income tax deduction for publicly held
companies to $1,000,000 in any tax year for compensation paid to each of the
Chief Executive Officer and the four highest paid executive officers apart from
the Chief Executive Officer. This rule applies to all deductible compensation,
including the deduction arising from the payment of annual bonuses. Various
forms of compensation are exempted from this deduction limitation, including
payments that are (1) subject to the attainment of pre-established objective
performance goals, (2) established and administered by outside directors, and
(3) approved by the stockholders. The Board of Directors believes payments made
under the Plan qualify for exemption from the operation of Section 162(m) and,
therefore, qualify as deductible by the Company.
REAPPROVAL
Reapproval of the Plan requires the affirmative vote of the holders of a
majority of the shares of Common Stock represented and entitled to vote at the
2000 Annual Meeting. Broker non-votes will not be treated as shares present or
represented and entitled to vote. The Board of Directors believes that the
reapproval of the Plan is in the best interests of the Company because it will
facilitate the Company's attraction, motivation and retention of key executives
and employees, while maintaining Company's ability to fully deduct its
performance-based compensation under Section 162(m) of the Code.
11
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR REAPPROVAL OF THE NATIONAL
INSTRUMENTS CORPORATION 1994 AMENDED AND RESTATED INCENTIVE PLAN. Proxies
solicited by management will be voted FOR this proposal unless a vote against
this proposal or abstention is specifically indicated.
12
REPORT OF THE COMPENSATION COMMITTEE REGARDING EXECUTIVE COMPENSATION
The Compensation Committee, comprised of directors Nowlin, Streetman and
Ashby, is responsible for recommending to the Board of Directors the
compensation programs and levels of pay for executive officers. The Committee
also advises management on pay programs and levels for other employees. The
Committee regularly retains an independent compensation consulting firm to
provide analyses of competitive industry pay levels and practices, and to advise
the Committee on appropriate pay levels for the Company.
Compensation Philosophy and Objectives. The Company's basic philosophy is to
align executive compensation with increases in stockholder value through growth
in sales and operating profits. Primarily, this is accomplished through the use
of stock options, which provide compensation in direct proportion to increases
in stockholder value, and profit sharing. In addition, the Company believes it
is important to emphasize teamwork, entrepreneurship and active participation by
all employees. This is accomplished through providing options to a majority of
full-time, exempt domestic employees and similarly situated international
employees, and through cash incentives, through which both executives and
employees receive cash bonuses based on company-wide financial goals. Finally,
it is the Company's philosophy that no special perquisites should be provided to
senior executives.
Executive Compensation Programs. The Company's executive compensation programs
consist of three principal elements: base salary, cash bonus and stock options.
The Company emphasizes incentive compensation in the form of stock options and
bonuses, rather than base salary. The Compensation Committee has adopted a
guideline that executives should be paid competitive base salaries. The Board of
Directors sets the annual base salary for executives after consideration of the
recommendations of the Compensation Committee. Prior to making its
recommendations, the Compensation Committee reviews historical compensation
levels of the executives, evaluations of past performance, assessments of
expected future contributions of the executives, competitive pay levels and
programs provided by other comparable companies, and general industry pay
practices. In making its determinations, the Committee does not utilize any
particular indices or formulae to arrive at each executive's recommended pay
level.
For many years, the Company has maintained a cash bonus plan under which
executive officers participate. In recent years, this plan provided for a target
incentive to be paid based on achieving pre-determined levels of revenue growth
and profitability. For fiscal 1999, 1998 and 1997 these goals were 40% revenue
growth and 18% operating profit as a percent of revenue, the same goals as for
all other employees. At the end of each year, actual results for the Company are
compared to these targets and executive bonuses are based on actual Company
performance in relation to these factors. If there is no growth or no
profitability, no cash bonuses are payable to executive officers. Individual
performance is not considered in determining the bonus of individual for
officers for the cash bonus program. In 1999, the Company added a discretionary
cash bonus program for executive officers and employees which is paid based on
individual performance and achievement of the Company's minimum annual growth
goal. For fiscal 1999, the minimum annual growth goal was 20% revenue growth.
This program has been adjusted for 2000 to utilize a quarterly growth goal of
20% revenue growth over the same period in the prior year. As a result,
executives and employees will now be eligible for the discretionary company cash
bonus on a quarterly basis. If the Company meets its minimum quarterly revenue
growth goal for the quarter, a percentage of payroll will be available for
distribution to executives and employees. In addition, the Vice President,
Sales is eligible for a separate company sales commission program. The growth
and profitability performance measures were approved by the Board of Directors.
Total compensation for executive officers also includes long-term incentives
in the form of stock options, which are generally provided through initial stock
option grants at the date of hire and periodic additional stock option grants.
Stock options are instrumental in promoting the alignment of long-term interests
between the Company's executive officers and stockholders due to the fact that
executives realize gains only if the stock price increases over the fair market
value at the date of grant and the executives exercise their options. In
determining the amount of such grants, the Committee evaluates the job level of
the executive, responsibilities of the executive, and competitive practices in
the industry. All options are granted at 100% of fair market value at the date
of grant. Options vest over a period of five years to ten years, subject to
acceleration based on Company performance (in case of special option grants to
executives). The long-term value realized by executives through option exercises
can be directly linked to the enhancement of stockholder value.
13
Chief Executive Officer Compensation. While the Board was highly pleased with
Dr. Truchard's performance in 1999, at his request, the Chief Executive
Officer's base salary was not changed during the fiscal year and he received no
stock options. Based on the same formula applied to other executive officers,
Dr. Truchard's bonus for 1999 was $41,117.38 based on the Company's revenue
growth of 20% and its profit percentage of 19.1%. Dr. Truchard is the Company's
largest stockholder with an ownership of 26.23% of the Company's stock.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
imposes a limit on tax deductions for annual compensation in excess of one
million dollars paid by a corporation to its chief executive officer and the
other four most highly compensated executive officers of a corporation.
Deductions are, however, permitted if certain conditions are met, including a
requirement that the plan under which such compensation is paid be reapproved by
stockholders every five years. None of the compensation paid by the Company in
fiscal 1999 was subject to the limitation on deductibility. The Compensation
Committee will continue to assess the impact of Section 162(m) of the Code on
its compensation practices and determine what further action, if any, is
appropriate.
Respectfully Submitted,
William C. Nowlin, Jr.
Ben G. Streetman
L. Wayne Ashby
14
PROPOSAL TO RATIFY THE APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Management has selected PricewaterhouseCoopers LLP, independent accountants to
audit the books, records and accounts of the Company for the current fiscal year
ending December 31, 2000. PricewaterhouseCoopers LLP has audited the Company's
financial statements since the fiscal year ended December 31, 1993.
The affirmative vote of the holders of a majority of the Company's Common
Stock represented and voting at the meeting will be required to approve and
ratify the Board's selection of PricewaterhouseCoopers LLP. The Board of
Directors recommends voting "FOR" approval and ratification of such selection.
In the event of a negative vote on such ratification, the Board of Directors
will reconsider its selection.
A representative of PricewaterhouseCoopers LLP is expected to be available at
the Annual Meeting to make a statement if such representative desires to do so
and to respond to appropriate questions.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed proxy card to vote the shares they represent as
the Board of Directors may recommend.
BY ORDER OF THE BOARD OF DIRECTORS
David G. Hugley
Secretary
Austin, Texas
April 3, 2000
15
APPENDIX A
NATIONAL INSTRUMENTS CORPORATION
AMENDED AND RESTATED
1994 INCENTIVE PLAN
(as last amended on March 24, 1999)
SCOPE AND PURPOSE OF PLAN
National Instruments Corporation, a Delaware corporation (the
"Corporation"), has adopted this 1994 Incentive Plan (the "Plan") to provide for
the granting of:
(a) Incentive Options (hereafter defined) to certain Key Employees
(hereafter defined);
(b) Nonstatutory Options (hereafter defined) to certain Key Employees,
Non-Employee Directors (hereafter defined) and other persons;
(c) Restricted Stock Awards (hereafter defined) to certain Key Employees
and other persons; and
(d) Stock Appreciation Rights (hereafter defined) to certain Key Employees
and other persons.
The purpose of the Plan is to provide an incentive for Key Employees and
directors of the Corporation and its Subsidiaries (hereafter defined) to aid the
Corporation in attracting able persons to enter the service of the Corporation
and its Subsidiaries, to extend to them the opportunity to acquire a proprietary
interest in the Corporation so that they will apply their best efforts for the
benefit of the Corporation, and to remain in the service of the Corporation or
its Subsidiaries.
SECTION 1. DEFINITIONS
1.1 "Acquiring Person" means any Person, the Corporation, any Subsidiary
of the Corporation, any employee benefit plan of the Corporation or of a
Subsidiary of the Corporation or of a corporation owned directly or indirectly
by the stockholders of the Corporation in substantially the same proportions as
their ownership of Stock of the Corporation, or any trustee or other fiduciary
holding securities under an employee benefit plan of the Corporation or of a
Subsidiary of the Corporation or of a corporation owned directly or indirectly
by the stockholders of the Corporation in substantially the same proportions as
their ownership of Stock of the Corporation.
1.2 "Affiliate" means (a) any Person who is directly or indirectly the
beneficial owner of at least 10% of the voting power of the Voting Securities or
(b) any Person controlling, controlled by, or under common control with the
Corporation or any Person contemplated in clause (a) of this Subsection 1.2.
1.3 "Applicable Laws" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options are, or will be, granted under
the Plan.
1.4 "Award" means the grant of any form of Option, Restricted Stock Award,
or Stock Appreciation Right under the Plan, whether granted individually, in
combination, or in tandem, to a Holder pursuant to the terms, conditions, and
limitations that the Committee may establish in order to fulfill the objectives
of the Plan.
16
1.5 "Award Agreement" means the written agreement between the Corporation
and a Holder evidencing the terms, conditions, and limitations of the Award
granted to that Holder.
1.6 "Board of Directors" means the board of directors of the Corporation.
1.7 "Business Day" means any day that is a market trading day for the
National Association of Securities Dealers, Inc. Automated Quotation ("NASDAQ")
National Market System.
1.8 "Change in Control" means the event that is deemed to have occurred
if:
(a) any Acquiring Person is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation representing fifty percent or more of the
combined voting power of the then outstanding Voting Securities of the
Corporation; or
(b) members of the Incumbent Board cease for any reason to constitute
at least a majority of the Board of Directors; or
(c) a public announcement is made of a tender or exchange offer by any
Acquiring Person for fifty percent or more of the outstanding Voting
Securities of the Corporation, and the Board of Directors approves or fails
to oppose that tender or exchange offer in its statements in Schedule 14D-9
under the Exchange Act; or
(d) the stockholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation or partnership
(or, if no such approval is required, the consummation of such a merger or
consolidation of the Corporation), other than a merger or consolidation
that would result in the ownership of Voting Securities of the Corporation
outstanding immediately before the consummation thereof continuing to
represent (either by remaining outstanding or by being converted into
Voting Securities of the surviving entity or of a parent of the surviving
entity) a majority of the combined voting power of the Voting Securities of
the surviving entity (or its parent) outstanding immediately after that
merger or consolidation; or
(e) the stockholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or disposition
by the Corporation of all or substantially all the Corporation's assets
(or, if no such approval is required, the consummation of such a
liquidation, sale, or disposition in one transaction or series of related
transactions) other than a liquidation, sale, or disposition of all or
substantially all the Corporation's assets in one transaction or a series
of related transactions to a corporation owned directly or indirectly by
the stockholders of the Corporation in substantially the same proportions
as their ownership of Stock of the Corporation.
Notwithstanding the foregoing, the merger of the Corporation's predecessor
with and into the Corporation in June 1994 shall not constitute a Change in
Control.
1.9 "Code" means the Internal Revenue Code of 1986, as amended.
1.10 "Committee" means the Committee designated by the Board of Directors
to administer this Plan as described under Section 3.
1.11 "Convertible Securities" means evidences of indebtedness, shares of
capital stock, or other securities that are convertible into or exchangeable for
shares of Stock, either immediately or upon the arrival of a specified date or
the happening of a specified event.
1.12 "Corporation" has the meaning given to it in the second paragraph
under "Scope and Purpose of Plan."
1.13 "Date of Grant" has the meaning given it in Subsection 4.3.
17
1.14 "Disability" has the meaning given it in Subsection 10.3.
1.15 "Disinterested Person" has the meaning given it in Rule 16b-
3(c)(2)(i).
1.16 "Earnings" for any Fiscal Year shall mean the operating income of the
Corporation on a consolidated basis before taxes, interest, foreign currency
exchange gains or losses, other gains or losses and other extraordinary items
for such Fiscal Year. By way of example, Earnings for the Fiscal Year ended
December 31, 1993 were $17,300,000.
1.17 "Earnings Attainment" for any Fiscal Year means a fraction, the
numerator of which shall be the percentage which Earnings constitutes of Net
Sales for such Fiscal Year, and the denominator of which shall be 18%. In the
event that there shall be no Earnings for such Fiscal Year, the Earnings
Attainment for such Fiscal Year shall be zero. Notwithstanding the foregoing,
the Earnings Attainment for any Fiscal Year shall not exceed one. By way of
example, the Earnings Attainment for the Fiscal Year ended December 31, 1993 was
91/100.
1.18 "Effective Date" means May 9, 1994.
1.19 "Eligible Individuals" means (a) Key Employees, (b) Non-Employee
Directors, and (c) any other Person that the Committee designates as eligible
for an Award (other than for Incentive Options) because the Person performs, or
has performed, valuable services for the Corporation or any of its Subsidiaries
(other than services in connection with the offer or sale of securities in a
capital-raising transaction) and the Committee determines that the Person has a
direct and significant effect on the financial development of the Corporation or
any of its Subsidiaries.
1.20 "Employee" means any employee of the Corporation or of any of its
Subsidiaries, including officers and directors of the Corporation who are also
employees of the Corporation or of any of its Subsidiaries.
1.21 "Exchange Act" means the Securities Exchange Act of 1934 and the
rules and regulations promulgated thereunder, or any successor law, as it may be
amended from time to time.
1.22 "Exercise Notice" has the meaning given it in Subsection 5.5.
1.23 "Exercise Price" has the meaning given it in Subsection 5.4.
1.24 "Fair Market Value" means, for a particular day:
(a) If shares of Stock of the same class are listed or admitted to
unlisted trading privileges on any national or regional securities exchange
at the date of determining the Fair Market Value, then the last reported
sale price, regular way, on the composite tape of that exchange on the last
Business Day before the date in question or, if no such sale takes place on
that Business Day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to unlisted
trading privileges on that securities exchange; or
(b) If shares of Stock of the same class are not listed or admitted to
unlisted trading privileges as provided in Subsection 1.23(a) and sales
prices for shares of Stock of the same class in the over-the-counter market
are reported by the NASDAQ National Market System (or such other system
then in use) at the date of determining the Fair Market Value, then the
last reported sales price so reported on the last Business Day before the
date in question or, if no such sale takes place on that Business Day, the
average of the high bid and low asked prices so reported; or
(c) If shares of Stock of the same class are not listed or admitted to
unlisted trading privileges as provided in Subsection 1.23(a) and sales
prices for shares of Stock of the same class are not reported by the NASDAQ
National Market System (or a similar system then in use) as provided in
Subsection 1.23(b), and if bid and asked prices for shares of Stock of the
same class in the over-the-counter market are reported by NASDAQ (or, if
not so reported, by the National Quotation Bureau Incorporated) at the date
of determining the
18
Fair Market Value, then the average of the high bid and low asked prices on
the last Business Day before the date in question; or
(d) If shares of Stock of the same class are not listed or admitted to
unlisted trading privileges as provided in Subsection 1.23(a) and sales
prices or bid and asked prices therefor are not reported by NASDAQ (or the
National Quotation Bureau Incorporated) as provided in Subsection 1.23(b)
or Subsection 1.23(c) at the date of determining the Fair Market Value,
then the value determined in good faith by the Committee, which
determination shall be conclusive for all purposes; or
(e) If shares of Stock of the same class are listed or admitted to
unlisted trading privileges as provided in Subsection 1.23(a) or sales
prices or bid and asked prices therefor are reported by NASDAQ (or the
National Quotation Bureau Incorporated) as provided in Subsection 1.23(b)
or Subsection 1.23(c) at the date of determining the Fair Market Value, but
the volume of trading is so low that the Board of Directors determines in
good faith that such prices are not indicative of the fair value of the
Stock, then the value determined in good faith by the Committee, which
determination shall be conclusive for all purposes notwithstanding the
provisions of Subsections 1.23(a), (b), or (c).
For purposes of valuing Incentive Options, the Fair Market Value of Stock shall
be determined without regard to any restriction other than one that, by its
terms, will never lapse. For purposes of the redemption provided for in
Subsection 9.3(d)(v), Fair Market Value shall have the meaning and shall be
determined as set forth above; provided, however, that the Committee, with
respect to any such redemption, shall have the right to determine that the Fair
Market Value for purposes of the redemption should be an amount measured by the
value of the shares of Stock, other securities, cash, or property otherwise
being received by holders of shares of Stock in connection with the
Restructuring and upon that determination the Committee shall have the power and
authority to determine Fair Market Value for purposes of the redemption based
upon the value of such shares of stock, other securities, cash, or property.
Any such determination by the Committee, as evidenced by a resolution of the
Committee, shall be conclusive for all purposes.
1.25 "Fiscal Year" means the fiscal year of the Corporation ending on
December 31 of each year.
1.26 "Holder" means an Eligible Individual to whom an outstanding Award
has been granted.
1.27 "Incumbent Board" means the individuals who, as of the Effective
Date, constitute the Board of Directors and any other individual who becomes a
director of the Corporation after that date and whose election or appointment by
the Board of Directors or nomination for election by the Corporation's
stockholders was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board.
1.28 "Incentive Option" means an incentive stock option as defined under
Section 422 of the Code and regulations thereunder.
1.29 "Key Employee" means any Employee whom the Committee identifies as
having a direct and significant effect on the performance of the Corporation or
any of its Subsidiaries.
1.30 "Net Sales" for any Fiscal Year shall mean the net sales of the
Corporation on a consolidated basis for such Fiscal Year. By way of example,
the Net Sales for the Fiscal Years ended December 31, 1992 and 1993,
respectively, were $82,826,000 and $105,528,000.
1.31 "Non-Employee Director" means a director of the Corporation who while
a director is not an Employee.
1.32 "Nonstatutory Option" means a stock option that does not satisfy the
requirements of Section 422 of the Code or that is designated at the Date of
Grant or in the applicable Award Agreement to be an option other than an
Incentive Option.
19
1.33 "Non-Surviving Event" means an event of Restructuring as described in
either Subsection 1.39(b) or Subsection 1.39(c).
1.34 "Normal Retirement" means the separation of the Holder from
employment with the Corporation and its Subsidiaries with the right to receive
an immediate benefit under a retirement plan approved by the Corporation. If no
such plan exists, Normal Retirement shall mean separation of the Holder from
employment with the Corporation and its Subsidiaries at age 62 or later.
1.35 "Option" means either an Incentive Option or a Nonstatutory Option,
or both.
1.36 "Option Exchange Program" means a program whereby outstanding Options
are surrendered in exchange for Options with a lower exercise price.
1.37 "Person" means any person or entity of any nature whatsoever,
specifically including (but not limited to) an individual, a firm, a company, a
corporation, a partnership, a trust, or other entity. A Person, together with
that Person's affiliates and associates (as "affiliate" and "associate" are
defined in Rule 12b-2 under the Exchange Act for purposes of this definition
only), and any Persons acting as a partnership, limited partnership, joint
venture, association, syndicate, or other group (whether or not formally
organized), or otherwise acting jointly or in concert or in a coordinated or
consciously parallel manner (whether or not pursuant to any express agreement),
for the purpose of acquiring, holding, voting, or disposing of securities of the
Corporation with that Person, shall be deemed a single "Person."
1.38 "Plan" means the Corporation's 1994 Incentive Plan, as it may be
amended from time to time.
1.39 "Restricted Stock" means Stock that is nontransferable or subject to
substantial risk of forfeiture until specific conditions are met.
1.40 "Restricted Stock Award" means the grant or purchase, on the terms
and conditions of Section 7 or that the Committee otherwise determines, of
Restricted Stock.
1.41 "Restructuring" means the occurrence of any one or more of the
following:
(a) The merger or consolidation of the Corporation with any Person,
whether effected as a single transaction or a series of related
transactions, with the Corporation remaining the continuing or surviving
entity of that merger or consolidation and the Stock remaining outstanding
and not changed into or exchanged for stock or other securities of any
other Person or of the Corporation, cash, or other property;
(b) The merger or consolidation of the Corporation with any Person,
whether effected as a single transaction or a series of related
transactions, with (i) the Corporation not being the continuing or
surviving entity of that merger or consolidation or (ii) the Corporation
remaining the continuing or surviving entity of that merger or
consolidation but all or a part of the outstanding shares of Stock are
changed into or exchanged for stock or other securities of any other Person
or the Corporation, cash, or other property; or
(c) The transfer, directly or indirectly, of all or substantially all
of the assets of the Corporation (whether by sale, merger, consolidation,
liquidation, or otherwise) to any Person, whether effected as a single
transaction or a series of related transactions.
1.42 "Rule 16b-3" means Rule 16b-3 under Section 16(b) of the Exchange Act
as adopted in Exchange Act Release No. 34-29131 (April 26, 1991), or any
successor rule, as it may be amended from time to time.
1.43 "Sales Attainment" for any Fiscal Year means a fraction, the
numerator of which shall equal the percentage increase in Net Sales for such
Fiscal Year over the Net Sales for the immediately preceding Fiscal Year, and
the denominator of which shall be 40%. In the event that there shall be no
increase in the Net Sales for such Fiscal Year from that of the immediately
preceding Fiscal Year, the Sales Attainment for such Fiscal Year shall be zero.
20
Notwithstanding the foregoing, in no event shall the Sales Attainment for any
Fiscal Year exceed one. By way of example, the Sales Attainment for the Fiscal
Year ended December 31, 1993 was 69/100.
1.44 "Securities Act" means the Securities Act of 1933 and the rules and
regulations promulgated thereunder, or any successor law, as it may be amended
from time to time.
1.45 "Stock" means the common stock, par value $.01 per share, of the
Corporation or any other securities that are substituted for the Stock as
provided in Section 9.
1.46 "Stock Appreciation Right" means the right to receive an amount equal
to the excess of the Fair Market Value of a share of Stock (as determined on the
date of exercise) over, as appropriate, the Exercise Price of a related Option
or the Fair Market Value of the Stock on the Date of Grant of the Stock
Appreciation Right.
1.47 "Subsidiary" means, with respect to any Person, any corporation, or
other entity of which a majority of the Voting Securities is owned, directly or
indirectly, by that Person.
1.48 "Total Shares" has the meaning given it in Subsection 9.2.
1.49 "Voting Securities" means any securities that are entitled to vote
generally in the election of directors, in the admission of general partners or
in the selection of any other similar governing body.
SECTION 2. SHARES OF STOCK SUBJECT TO THE PLAN
2.1 Maximum Number of Shares. Subject to the provisions of Subsection
2.2 and Section 9, the aggregate number of shares of Stock that may be issued or
transferred pursuant to Awards under the Plan shall be 4,800,000 shares.
2.2 Limitation of Shares. For purposes of the limitations specified in
Subsection 2.1, the following principles shall apply:
(a) the following shall count against and decrease the number of
shares of Stock that may be issued for purposes of Subsection 2.1: (i)
shares of Stock subject to outstanding Options, outstanding shares of
Restricted Stock, and shares subject to outstanding Stock Appreciation
Rights granted independent of Options (based on a good faith estimate by
the Corporation or the Committee of the maximum number of shares for which
the Stock Appreciation Right may be settled (assuming payment in full in
shares of Stock)), and (ii) in the case of Options granted in tandem with
Stock Appreciation Rights, the greater of the number of shares of Stock
that would be counted if one or the other alone was outstanding (determined
as described in clause (i) above);
(b) the following shall be added back to the number of shares of Stock
that may be issued for purposes of Subsection 2.1: (i) shares of Stock
with respect to which Options, Stock Appreciation Rights granted
independent of Options, or Restricted Stock Awards expire, are cancelled,
or otherwise terminate without being exercised, converted, or vested, as
applicable, and (ii) in the case of Options granted in tandem with Stock
Appreciation Rights, shares of Stock as to which an Option has been
surrendered in connection with the exercise of a related ("tandem") Stock
Appreciation Right, to the extent the number surrendered exceeds the number
issued upon exercise of the Stock Appreciation Right;
(c) shares of Stock subject to Stock Appreciation Rights granted
independent of Options (calculated as provided in clause (a) above) that
are exercised and paid in cash shall be added back to the number of shares
of Stock that may be issued for purposes of Subsection 2.1;
(d) shares of Stock that are transferred by a Holder of an Award (or
withheld by the Corporation) as full or partial payment to the Corporation
of the purchase price of shares of Stock subject to an Option or the
Corporation's or any Subsidiary's tax withholding obligations shall not be
added back to the number of shares of Stock that may be issued for purposes
of Subsection 2.1 and shall not again be subject to Awards; and
21
(e) if the number of shares of Stock counted against the number of
shares that may be issued for purposes of Subsection 2.1 is based upon an
estimate made by the Corporation or the Committee as provided in clause (a)
above and the actual number of shares of Stock issued pursuant to the
applicable Award is greater or less than the estimated number, then, upon
such issuance, the number of shares of Stock that may be issued pursuant to
Subsection 2.1 shall be further reduced by the excess issuance or increased
by the shortfall, as applicable.
2.3 Description of Shares. The shares to be delivered under the Plan
shall be made available from (a) authorized but unissued shares of Stock, (b)
Stock held in the treasury of the Corporation, or (c) previously issued shares
of Stock reacquired by the Corporation, including shares purchased on the open
market, in each situation as the Board of Directors or the Committee may
determine from time to time at its sole option.
2.4 Registration and Listing of Shares. From time to time, the Board of
Directors and appropriate officers of the Corporation shall and are authorized
to take whatever actions are necessary to file required documents with
governmental authorities, stock exchanges, and other appropriate Persons to make
shares of Stock available for issuance pursuant to the exercise of Awards.
SECTION 3. ADMINISTRATION OF THE PLAN
3.1 Committee.
(a) Procedure.
(i) Multiple Administrative Bodies. The Plan may be administered
by different Committees with respect to different groups of Eligible
Individuals.
(ii) Section 162(m). To the extent that the Administrator
determines it to be desirable to qualify Awards granted hereunder as
"performance-based compensation" within the meaning of Section 162(m)
of the Code, the Plan shall be administered by a Committee of two or
more "outside directors" within the meaning of Section 162(m) of the
Code.
(iii) Rule 16b-3. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions
contemplated hereunder shall be structured to satisfy the requirements
for exemption under Rule 16b-3.
(iv) Other Administration. Other than as provided above, the
Plan shall be administered by (A) the Board or (B) a Committee, which
committee shall be constituted to satisfy Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties
delegated by the Board to such Committee, the Administrator shall have the
authority, in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Eligible Individuals to whom Awards may be
granted hereunder;
(iii) to determine the number of shares of Common Stock to be
covered by each Award granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any Award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the
time or times when Awards may be exercised (which may be based on
performance criteria),
22
any vesting acceleration or waiver of forfeiture restrictions, and any
restriction or limitation regarding any Award of the shares of Common
Stock relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;
(vi) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock
covered by such Option shall have declined since the date the Option
was granted;
(vii) to institute an Option Exchange Program;
(viii) to construe and interpret the terms of the Plan and
Awards granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-
plans established for the purpose of qualifying for preferred tax
treatment under foreign tax laws;
(x) to modify or amend each Award (subject to Section 11.2 of the
Plan), including the discretionary authority to extend the post-
termination exercisability period of Options longer than is otherwise
provided for in the Plan;
(xi) to allow Award recipients to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares
to be issued upon exercise of an Award that number of Shares having a
Fair Market Value equal to the amount required to be withheld. The
Fair Market Value of the Shares to be withheld shall be determined on
the date that the amount of tax to be withheld is to be determined.
All elections by an Award recipient to have Shares withheld for this
purpose shall be made in such form and under such conditions as the
Administrator may deem necessary or advisable;
(xii) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Award
previously granted by the Administrator;
(xiii) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on
all Award recipients and any other holders of Awards.
3.2 Duration, Removal, Etc. The members of the Committee shall serve at
the discretion of the Board of Directors, which shall have the power, at any
time and from time to time, to remove members from or add members to the
Committee. Removal from the Committee may be with or without cause. Any
individual serving as a member of the Committee shall have the right to resign
from membership in the Committee by at least three days' written notice to the
Board of Directors. The Board of Directors, and not the remaining members of
the Committee, shall have the power and authority to fill all vacancies on the
Committee. The Board of Directors shall promptly fill any vacancy that causes
the number of members of the Committee to be below two or any other number that
Applicable Laws may require from time to time.
3.3 Meetings and Actions of Committee. The Board of Directors shall
designate which of the Committee members shall be the chairman of the Committee.
If the Board of Directors fails to designate a Committee chairman, the members
of the Committee shall elect one of the Committee members as chairman, who shall
act as chairman until he ceases to be a member of the Committee or until the
Board of Directors elects a new chairman. The Committee shall hold its meetings
at those times and places as the chairman of the Committee may determine. At
all meetings of the Committee, a quorum for the transaction of business shall be
required and a quorum shall be deemed present if at least a majority of the
members of the Committee are present. At any meeting of the Committee, each
member shall have one vote. All decisions and determinations of the Committee
shall be made by the majority vote or majority decision of all of
23
its members present at a meeting at which a quorum is present; provided,
however, that any decision or determination reduced to writing and signed by all
of the members of the Committee shall be as fully effective as if it had been
made at a meeting that was duly called and held. The Committee may make any
rules and regulations for the conduct of its business that are not inconsistent
with the provisions of the Plan, the Articles or Certificate of Incorporation of
the Corporation, and the by-laws of the Corporation, as the Committee may deem
advisable.
3.4 Committee's Powers. Subject to the express provisions of the Plan,
the Committee shall have the authority, in its sole and absolute discretion, to
(a) adopt, amend, and rescind administrative and interpretive rules and
regulations relating to the Plan; (b) determine the Eligible Individuals to
whom, and the time or times at which, Awards shall be granted; (c) determine the
amount of cash and the number of shares of Stock, Stock Appreciation Rights, or
Restricted Stock Awards, or any combination thereof, that shall be the subject
of each Award; (d) determine the terms and provisions of each Award Agreement
(which need not be identical), including provisions defining or otherwise
relating to (i) the term and the period or periods and extent of exercisability
of the Options, (ii) the extent to which the transferability of shares of Stock
issued or transferred pursuant to any Award is restricted, (iii) the effect of
termination of employment of the Holder on the Award, and (iv) the effect of
approved leaves of absence (consistent with any applicable regulations of the
Internal Revenue Service); (e) accelerate the time of exercisability of any
Option that has been granted; (f) construe the respective Award Agreements and
the Plan; (g) make determinations of the Fair Market Value of the Stock pursuant
to the Plan; (h) delegate its duties under the Plan to such agents as it may
appoint from time to time, provided that the Committee may not delegate its
duties with respect to making Awards to, or otherwise with respect to Awards
granted to, Eligible Individuals who are subject to Section 16(b) of the
Exchange Act; and (i) make all other determinations, perform all other acts, and
exercise all other powers and authority necessary or advisable for administering
the Plan, including the delegation of those ministerial acts and
responsibilities as the Committee deems appropriate. The Committee may correct
any defect, supply any omission, or reconcile any inconsistency in the Plan, in
any Award, or in any Award Agreement in the manner and to the extent it deems
necessary or desirable to carry the Plan into effect, and the Committee shall be
the sole and final judge of that necessity or desirability. The determinations
of the Committee on the matters referred to in this Subsection 3.4 shall be
final and conclusive.
SECTION 4. ELIGIBILITY AND PARTICIPATION
4.1 Eligible Individuals. Awards may be granted pursuant to the Plan
only to persons who are Eligible Individuals at the time of the grant thereof.
4.2 Grant of Awards. Subject to the express provisions of the Plan, the
Committee shall determine which Eligible Individuals shall be granted Awards
from time to time. In making grants, the Committee shall take into
consideration the contribution the potential Holder has made or may make to the
success of the Corporation or its Subsidiaries and such other considerations as
the Board of Directors may from time to time specify. The Committee shall also
determine the number of shares subject to each of the Awards and shall authorize
and cause the Corporation to grant Awards in accordance with those
determinations.
4.3 Date of Grant. The date on which the Committee completes all action
resolving to offer an Award to an individual, including the specification of the
number of shares of Stock to be subject to the Award, shall be the date on which
the Award covered by an Award Agreement is granted (the "Date of Grant"), even
though certain terms of the Award Agreement may not be determined at that time
and even though the Award Agreement may not be executed until a later time. In
no event shall a Holder gain any rights in addition to those specified by the
Committee in its grant, regardless of the time that may pass between the grant
of the Award and the actual execution of the Award Agreement by the Corporation
and the Holder.
4.4 Award Agreements. Each Award granted under the Plan shall be
evidenced by an Award Agreement that is executed by the Corporation and the
Eligible Individual to whom the Award is granted and incorporating those terms
that the Committee shall deem necessary or desirable. More than one Award may
be granted under the Plan to the same Eligible Individual and be outstanding
concurrently. In the event an Eligible Individual is granted both one or more
Incentive Options and one or more Nonstatutory Options, those grants shall be
evidenced by separate Award Agreements, one for each of the Incentive Option
grants and one for each of the Nonstatutory Option grants.
24
4.5 Limitation for Incentive Options. Notwithstanding any provision
contained herein to the contrary, (a) a person shall not be eligible to receive
an Incentive Option unless he is an Employee of the Corporation or a corporate
Subsidiary (but not a partnership Subsidiary) and (b) a person shall not be
eligible to receive an Incentive Option if, immediately before the time the
Option is granted, that person owns (within the meaning of Sections 422 and
424(d) of the Code) stock possessing more than ten percent of the total combined
voting power or value of all classes of outstanding stock of the Corporation or
a Subsidiary. Nevertheless, Subsection 4.5(b) shall not apply if, at the time
the Incentive Option is granted, the Exercise Price of the Incentive Option is
at least one hundred ten percent of Fair Market Value and the Incentive Option
is not, by its terms, exercisable after the expiration of five years from the
Date of Grant. An Employee shall not cease to be an Employee in the case of (i)
any leave of absence approved by the Company or (ii) transfers between locations
of the Company or between the Company, its Parent, any Subsidiary, or any
successor. For purposes of Incentive Stock Options, no such leave may exceed
ninety days, unless reemployment upon expiration of such leave is guaranteed by
statute or contract. If reemployment upon expiration of a leave of absence
approved by the Company is not so guaranteed, on the 181st day of such leave any
Incentive Stock Option held by the Optionee shall cease to be treated as an
Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory
Stock Option. Neither service as a Director nor payment of a director's fee by
the Company shall be sufficient to constitute "employment" by the Company.
4.6 No Right to Award. The adoption of the Plan shall not be deemed to
give any Person a right to be granted an Award.
4.7 Internal Revenue Code Section 162(m) Limitations. The following
limitations shall apply to grants of Options to Employees:
(a) No Employee shall be granted, in any fiscal year of the
Corporation, Options covering more than one hundred thousand (100,000) Shares.
(b) In connection with his or her initial employment, an Employee may
be granted Options to purchase up to three hundred thousand (300,000) Shares
which shall not count against the limit set forth in Subsection 4.7(a) above.
(c) The foregoing limitations shall be adjusted proportionately in
connection with any change in the Corporation's capitalization as described in
Subsections 9.1(a) and (b).
(d) If an Option is canceled in the same fiscal year of the
Corporation in which it was granted (other than in connection with a transaction
described in Section 9), the canceled Option will be counted against the limit
set forth in Subsection 4.7(a). For this purpose, if the exercise price of an
Option is reduced, the transaction will be treated as a cancellation of the
Option and the grant of a new Option.
25
SECTION 5. TERMS AND CONDITIONS OF OPTIONS
All Options granted under the Plan shall comply with, and the related Award
Agreements shall be deemed to include and be subject to, the terms and
conditions set forth in this Section 5 (to the extent each term and condition
applies to the form of Option) and also to the terms and conditions set forth in
Sections 9 and 10; provided, however, that the Committee may authorize an Award
Agreement that expressly contains terms and provisions that differ from the
terms and provisions set forth in Subsections 9.2, 9.3, and 9.4 and any of the
terms and provisions of Section 10 (other than Subsections 10.8 and 10.9).
5.1 Number of Shares. Each Award Agreement shall state the total number
of shares of Stock to which it relates.
5.2 Vesting. Each Award Agreement shall state the time or periods in
which, or the conditions upon satisfaction of which, the right to exercise the
Option or a portion thereof shall vest and the number of shares of Stock for
which the right to exercise the Option shall vest at each such time, period, or
fulfillment of condition; provided, that one-sixtieth of the Shares initially
subject to each Option granted to a Non-Employee Director (rounded up or down to
the nearest share) shall vest on the last day of each month during the sixty
month period commencing in the month during which such Option was granted;
provided that the Optionee continues to serve as a Director on such dates. The
term of each Option granted to a Non-Employee director shall be ten years.
5.3 Expiration of Options. No Option shall be exercised after the
expiration of a period of ten years commencing on the Date of Grant of the
Option; provided, however, that any portion of a Nonstatutory Option that
pursuant to the terms of the Award Agreement under which such Nonstatutory
Option is granted shall not become exercisable until the date which is the tenth
anniversary of the Date of Grant of such Nonstatutory Option may be exercisable
for a period of 30 days following the date on which such portion becomes
exercisable.
5.4 Exercise Price. Each Award Agreement shall state the exercise price
per share of Stock (the "Exercise Price"); provided, however, that (i) the
exercise price per share of Stock subject to an Incentive Option shall not be
less than the greater of (a) the par value per share of the Stock or (b) 100% of
the Fair Market Value per share of the Stock on the Date of Grant of the Option,
and (ii) the exercise price per share of Stock subject to an option intended to
qualify as "performance-based compensation" within the meaning of Section 162(m)
of the Code shall not be less than 100% of the Fair Market Value per share of
the Stock on the Date of Grant of the Option.
5.5 Method of Exercise. The Option shall be exercisable only by written
notice of exercise (the "Exercise Notice") delivered to the Corporation during
the term of the Option, which notice shall (a) state the number of shares of
Stock with respect to which the Option is being exercised, (b) be signed by the
Holder of the Option or, if the Holder is dead or becomes affected by a
Disability, by the person authorized to exercise the Option pursuant to
Subsections 10.2 and 10.3, (c) be accompanied by the Exercise Price (as
specified in the Award Agreement and under Section 5.7 hereof) for all shares of
Stock for which the Option is being exercised, and (d) include such other
information, instruments, and documents as may be required to satisfy any other
condition to exercise contained in the Award Agreement. The Option shall not be
deemed to have been exercised unless all of the requirements of the preceding
provisions of this Subsection 5.5 have been satisfied.
5.6 Incentive Option Exercises. Except as otherwise provided in
Subsection 10.3, during the Holder's lifetime, only the Holder may exercise an
Incentive Option.
5.7 Medium and Time of Payment. The Exercise Price of an Option shall
be payable in full upon the exercise of the Option (a) in cash or by an
equivalent means acceptable to the Committee, (b) on the Committee's prior
consent, with shares of Stock owned by the Holder (including shares received
upon exercise of the Option or restricted shares already held by the Holder) and
having a Fair Market Value at least equal to the aggregate Exercise Price
payable in connection with such exercise, (c) by delivery of a properly executed
Exercise Notice together with such other documentation as the Corporation and
the broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Corporation of the sale or loan proceeds required to pay the
Exercise Price, or (d) by any combination of clauses (a), (b) and (c). If the
Committee elects to accept shares of Stock in payment of all or any portion of
the Exercise
26
Price, then (for purposes of payment of the Exercise Price) those shares of
Stock shall be deemed to have a cash value equal to their aggregate Fair Market
Value determined as of the date the certificate for such shares is delivered to
the Corporation. If the Committee elects to accept shares of restricted Stock in
payment of all or any portion of the Exercise Price, then an equal number of
shares issued pursuant to the exercise shall be restricted on the same terms and
for the restriction period remaining on the shares used for payment.
5.8 Payment of Taxes. The Committee may, in its discretion, require a
Holder to pay to the Corporation (or the Corporation's Subsidiary if the Holder
is an employee of a Subsidiary of the Corporation), at the time of the exercise
of an Option or thereafter, the amount that the Committee deems necessary to
satisfy the Corporation's or its Subsidiary's current or future obligation to
withhold federal, state, or local income or other taxes that the Holder incurs
by exercising an Option. In connection with the exercise of an Option requiring
tax withholding, a Holder may (a) direct the Corporation to withhold from the
shares of Stock to be issued to the Holder the number of shares necessary to
satisfy the Corporation's obligation to withhold taxes, that determination to be
based on the shares' Fair Market Value as of the date of exercise; (b) deliver
to the Corporation sufficient shares of Stock (based upon the Fair Market Value
as of the date of such delivery) to satisfy the Corporation's tax withholding
obligations, which tax withholding obligation is based on the shares' Fair
Market Value as of the later of the date of exercise or the date as of which the
shares of Stock issued in connection with such exercise become includible in the
income of the Holder; or (c) deliver sufficient cash to the Corporation to
satisfy its tax withholding obligations. Holders who elect to use such a stock
withholding feature must make the election at the time and in the manner that
the Committee prescribes. The Committee may, at its sole option, deny any
Holder's request to satisfy withholding obligations through Stock instead of
cash. In the event the Committee subsequently determines that the aggregate
Fair Market Value (as determined above) of any shares of Stock withheld or
delivered as payment of any tax withholding obligation is insufficient to
discharge that tax withholding obligation, then the Holder shall pay to the
Corporation, immediately upon the Committee's request, the amount of that
deficiency in the form of payment requested by the Committee.
5.9 Limitation on Aggregate Value of Shares That May Become First
Exercisable During Any Calendar Year Under an Incentive Option. Except as is
otherwise provided in Subsection 9.3, with respect to any Incentive Option
granted under this Plan, the aggregate Fair Market Value of shares of Stock
subject to an Incentive Option and the aggregate Fair Market Value of shares of
Stock or stock of any Subsidiary (or a predecessor of the Corporation or a
Subsidiary) subject to any other incentive stock option (within the meaning of
Section 422 of the Code) of the Corporation or its Subsidiaries (or a
predecessor corporation of any such corporation) that first become purchasable
by a Holder in any calendar year may not (with respect to that Holder) exceed
$100,000, or such other amount as may be prescribed under Section 422 of the
Code or applicable regulations or rulings from time to time. As used in the
previous sentence, Fair Market Value shall be determined as of the Date of Grant
of the Incentive Option. For purposes of this Subsection 5.9, "predecessor
corporation" means (a) a corporation that was a party to a transaction described
in Section 424(a) of the Code (or which would be so described if a substitution
or assumption under that Section had been effected) with the Corporation, (b) a
corporation which, at the time the new incentive stock option (within the
meaning of Section 422 of the Code) is granted, is a Subsidiary of the
Corporation or a predecessor corporation of any such corporations, or (c) a
predecessor corporation of any such corporations. Failure to comply with this
provision shall not impair the enforceability or exercisability of any Option,
but shall cause the excess amount of shares to be reclassified in accordance
with the Code.
5.10 No Fractional Shares. The Corporation shall not in any case be
required to sell, issue, or deliver a fractional share with respect to any
Option. In lieu of the issuance of any fractional share of Stock, the
Corporation shall pay to the Holder an amount in cash equal to the same fraction
(as the fractional Stock) of the Fair Market Value of a share of Stock
determined as of the date of the applicable Exercise Notice.
5.11 Modification, Extension, and Renewal of Options. Subject to the
terms and conditions of and within the limitations of the Plan, and any consent
required by the last sentence of this Subsection 5.11, the Committee may (a)
modify, extend, or renew outstanding Options granted under the Plan, (b) accept
the surrender of Options outstanding hereunder (to the extent not previously
exercised) and authorize the granting of new Options in substitution for
outstanding Options (to the extent not previously exercised), and (c) amend the
terms of an Incentive Option at any time to include provisions that have the
effect of changing the Incentive Option to a Nonstatutory Option. Nevertheless,
without the consent of the Holder, the Committee may not modify any outstanding
Options so as to specify a higher or
27
lower Exercise Price or accept the surrender of outstanding Incentive Options
and authorize the granting of new Options in substitution therefor specifying a
higher or lower Exercise Price. In addition, no modification of an Option
granted hereunder shall, without the consent of the Holder, alter or impair any
rights or obligations under any Option theretofore granted to such Holder under
the Plan except, with respect to Incentive Options, as may be necessary to
satisfy the requirements of Section 422 of the Code or as permitted in clause
(c) of this Subsection 5.11.
5.12 Other Agreement Provisions. The Award Agreements authorized under
--------------------------
the Plan shall contain such provisions in addition to those required by the Plan
(including without limitation restrictions or the removal of restrictions upon
the exercise of the Option and the retention or transfer of shares thereby
acquired) as the Committee may deem advisable. Each Award Agreement shall
identify the Option evidenced thereby as an Incentive Option or Nonstatutory
Option, as the case may be. Each Award Agreement relating to an Incentive
Option granted hereunder shall contain such limitations and restrictions upon
the exercise of the Incentive Option to which it relates as shall be necessary
for the Incentive Option to which such Award Agreement relates to constitute an
incentive stock option, as defined in Section 422 of the Code.
SECTION 6. STOCK APPRECIATION RIGHTS
All Stock Appreciation Rights granted under the Plan shall comply
with, and the related Award Agreements shall be deemed to include and be subject
to, the terms and conditions set forth in this Section 6 (to the extent each
term and condition applies to the form of Stock Appreciation Right) and also the
terms and conditions set forth in Sections 9 and 10; provided, however, that the
Committee may authorize an Award Agreement related to a Stock Appreciation Right
that expressly contains terms and provisions that differ from the terms and
provisions set forth in Subsections 9.2, 9.3, and 9.4 and any of the terms and
provisions of Section 10 (other than Subsection 10.9).
6.1 Form of Right. A Stock Appreciation Right may be granted to an
Eligible Individual (a) in connection with an Option, either at the time of
grant or at any time during the term of the Option, or (b) independent of an
Option.
6.2 Rights Related to Options. A Stock Appreciation Right granted in
tandem with an Option shall require the Holder, upon exercise of the Stock
Appreciation Right, to surrender the related Option. Upon such exercise, the
Optionee shall receive payment of an amount computed pursuant to Subsection
6.2(b). The related Option shall then cease to be exercisable to the extent
surrendered. Stock Appreciation Rights granted in tandem with an Option shall
be subject to the terms of the Award Agreement governing the Option, which shall
comply with the following provisions in addition to those applicable to Options:
(a) Exercise and Transfer. Subject to Subsection 10.8, a Stock
Appreciation Right granted in tandem with an Option shall be exercisable
only at such time or times and only to the extent that the related Option
is exercisable and shall not be transferable except to the extent that the
related Option is transferable.
(b) Value of Right. Upon the exercise of a Stock Appreciation Right
granted in tandem with an Option, the Holder shall be entitled to receive
payment from the Corporation of an amount determined by Multiplying:
(i) The difference obtained by subtracting the Exercise Price of
a share of Stock specified in the related Option from the Fair Market
Value of a share of Stock on the date of exercise of the Stock
Appreciation Right, by
(ii) The number of shares as to which that Stock Appreciation
Right has been exercised.
6.3 Right Without Option. A Stock Appreciation Right granted
independent of an Option shall be exercisable as determined by the Committee and
set forth in the Award Agreement governing the Stock Appreciation Right, which
Award Agreement shall comply with the following provisions:
(a) Number of Shares. Each Award Agreement shall state the total
number of shares of Stock to which the Stock Appreciation Right relates.
28
(b) Vesting. Each Award Agreement shall state the time or periods in
which the right to exercise the Stock Appreciation Right or a portion
thereof shall vest and the number of shares of Stock for which the right to
exercise the Stock Appreciation Right shall vest at each such time or
period.
(c) Expiration of Rights. Each Award Agreement shall state the date
at which the Stock Appreciation Rights shall expire if not previously
exercised.
(d) Value of Right. Each Stock Appreciation Right shall entitle the
Holder, upon exercise thereof, to receive payment of an amount determined
by multiplying:
(i) The difference obtained by subtracting the Fair Market Value
of a share of Stock on the Date of Grant of the Stock Appreciation
Right from the Fair Market Value of a share of Stock on the date of
exercise of that Stock Appreciation Right, by
(ii) The number of shares as to which the Stock Appreciation
Right has been exercised.
6.4 Limitations on Rights. Notwithstanding Subsections 6.2(b) and
6.3(d), the Committee may limit the amount payable upon exercise of a Stock
Appreciation Right. Any such limitation must be determined as of the Date of
Grant and be noted on the Award Agreement evidencing the Holder's Stock
Appreciation Right.
6.5 Payment of Rights. Payment of the amount determined under
Subsection 6.2(b) or 6.3(d) and Subsection 6.4 may be made, in the sole
discretion of the Committee unless specifically provided otherwise in the Award
Agreement, solely in whole shares of Stock valued at Fair Market Value on the
date of exercise of the Stock Appreciation Right, solely in cash, or in a
combination of cash and whole shares of Stock. If the Committee decides to make
full payment in shares of Stock and the amount payable results in a fractional
share, payment for the fractional share shall be made in cash.
6.6 Payment of Taxes. The Committee may, in its discretion, require a
Holder to pay to the Corporation (or the Corporation's Subsidiary if the Holder
is an employee of a Subsidiary of the Corporation), at the time of the exercise
of a Stock Appreciation Right or thereafter, the amount that the Committee deems
necessary to satisfy the Corporation's or its Subsidiary's current or future
obligation to withhold federal, state, or local income or other taxes that the
Holder incurs by exercising a Stock Appreciation Right. In connection with the
exercise of a Stock Appreciation Right requiring tax withholding, a Holder may
(a) direct the Corporation to withhold from the shares of Stock to be issued to
the Holder the number of shares necessary to satisfy the Corporation's
obligation to withhold taxes, that determination to be based on the shares' Fair
Market Value as of the date of exercise; (b) deliver to the Corporation
sufficient shares of Stock (based upon the Fair Market Value as of the date of
such delivery) to satisfy the Corporation's tax withholding obligations, which
tax withholding obligation is based on the shares' Fair Market Value as of the
later of the date of exercise or the date of which the shares of Stock issued in
connection with such exercise become includible in the income of the Holder; or
(c) deliver sufficient cash to the Corporation to satisfy its tax withholding
obligations. Holders who elect to have Stock withheld pursuant to (a) or (b)
above must make the election at the time and in the manner that the Committee
prescribes. The Committee may, in its sole discretion, deny any Holder's
request to satisfy withholding obligations through Stock instead of cash. In
the event the Committee subsequently determines that the aggregate Fair Market
Value (as determined above) of any shares of Stock withheld or delivered as
payment of any tax withholding obligation is insufficient to discharge that tax
withholding obligation, then the Holder shall pay to the Corporation,
immediately upon the Committee's request, the amount of that deficiency in the
form of payment requested by the Commission.
6.7 Other Agreement Provisions. The Award Agreements authorized
relating to Stock Appreciation Rights shall contain such provisions in addition
to those required by the Plan (including without limitation restrictions or the
removal of restrictions upon the exercise of the Stock Appreciation Right and
the retention or transfer of shares thereby acquired) as the Committee may deem
advisable.
29
SECTION 7. RESTRICTED STOCK AWARDS
All Restricted Stock Awards granted under the Plan shall comply with and be
subject to, and the related Award Agreements shall be deemed to include, the
terms and conditions set forth in this Section 7 and also to the terms and
conditions set forth in Sections 9 and 10; provided, however, that the Committee
may authorize an Award Agreement related to a Restricted Stock Award that
expressly contains terms and provisions that differ from the terms and
provisions set forth in Subsections 9.2, 9.3, and 9.4 and the terms and
provisions set forth in Section 10 (other than Subsections 10.8 and 10.9).
7.1 Restrictions. All shares of Restricted Stock Awards granted or sold
pursuant to the Plan shall be subject to the following conditions:
(a) Transferability. The shares may not be sold, transferred, or
otherwise alienated or hypothecated until the restrictions are removed or
expire.
(b) Conditions to Removal of Restrictions. Conditions to removal or
expiration of the restrictions may include, but are not required to be
limited to, continuing employment or service as a director, officer, or Key
Employee or achievement of performance objectives described in the Award
Agreement.
(c) Legend. Each certificate representing Restricted Stock Awards
granted pursuant to the Plan shall bear a legend making appropriate
reference to the restrictions imposed.
(d) Possession. The Committee may require the Corporation to retain
physical custody of the certificates representing Restricted Stock Awards
during the restriction period and may require the Holder of the Award to
execute stock powers in blank for those certificates and deliver those
stock powers to the Corporation, or the Committee may require the Holder to
enter into an escrow agreement providing that the certificates representing
Restricted Stock Awards granted or sold pursuant to the Plan shall remain
in the physical custody of an escrow holder until all restrictions are
removed or expire.
(e) Other Conditions. The Committee may impose other conditions on
any shares granted or sold as Restricted Stock Awards pursuant to the Plan
as it may deem advisable, including without limitation (i) restrictions
under the Securities Act or Exchange Act, (ii) the requirements of any
securities exchange upon which the shares or shares of the same class are
then listed, and (iii) any state securities law applicable to the shares.
7.2 Expiration of Restrictions. The restrictions imposed in Subsection
7.1 on Restricted Stock Awards shall lapse as determined by the Committee and
set forth in the applicable Award Agreement, and the Corporation shall promptly
deliver to the Holder of the Restricted Stock Award a certificate representing
the number of shares for which restrictions have lapsed, free of any restrictive
legend relating to the lapsed restrictions. Each Restricted Stock Award may
have a different restriction period as determined by the Committee in its sole
discretion. The Committee may, in its discretion, prospectively reduce the
restriction period applicable to a particular Restricted Stock Award.
7.3 Rights as Stockholder. Subject to the provisions of Subsections 7.1
and 10.9, the Committee may, in its discretion, determine what rights, if any,
the Holder shall have with respect to the Restricted Stock Awards granted or
sold, including the right to vote the shares and receive all dividends and other
distributions paid or made with respect thereto.
7.4 Payment of Taxes. The Committee may, in its discretion, require a
Holder to pay to the Corporation (or the Corporation's Subsidiary if the Holder
is an employee of a Subsidiary of the Corporation) the amount that the Committee
deems necessary to satisfy the Corporation's or its Subsidiary's current or
future obligation to withhold federal, state, or local income or other taxes
that the Holder incurs by reason of the Restricted Stock Award. The Holder may
(a) direct the Corporation to withhold from the shares of Stock to be issued to
the Holder the number of shares necessary to satisfy the Corporation's
obligation to withhold taxes, that determination to be based on the shares' Fair
Market Value as of the date on which tax withholding is to be made; (b) deliver
to the Corporation sufficient shares of Stock (based upon the Fair Market Value
as of the date of such delivery) to satisfy the Corporation's tax withholding
30
obligations, which tax withholding obligation is based on the shares' Fair
Market Value as of the later of the date of issuance or the date as of which the
shares of Stock issued become includible in the income of the Holder; or (c)
deliver sufficient cash to the Corporation to satisfy its tax withholding
obligations. Holders who elect to have Stock withheld pursuant to (a) or (b)
above must make the election at the time and in the manner that the Committee
prescribes. The Committee may, in its sole discretion, deny any Holder's
request to satisfy withholding obligations through Stock instead of cash. In
the event the Committee subsequently determines that the aggregate Fair Market
Value (as determined above) of any shares of Stock withheld or delivered as
payment of any tax withholding obligation is insufficient to discharge that tax
withholding obligation, then the Holder shall pay to the Corporation,
immediately upon the Committee's request, the amount of that deficiency.
7.5 Other Agreement Provisions. The Award Agreements relating to
Restricted Stock Awards shall contain such provisions in addition to those
required by the Plan as the Committee may deem advisable.
SECTION 8. [INTENTIONALLY OMITTED]
SECTION 9. ADJUSTMENT PROVISIONS
9.1 Adjustment of Awards and Authorized Stock. The terms of an Award
and the number of shares of Stock authorized pursuant to Subsection 2.1 for
issuance under the Plan shall be subject to adjustment from time to time, in
accordance with the following provisions, provided, however, that the terms of
such Subsection 2.1 already reflect the adjustment which would be required as a
result of the five-for-one stock dividend effected in January 1995 and, as a
consequence, no adjustment pursuant to this Section 9 as a result of such
dividend shall be required:
(a) If at any time, or from time to time, the Corporation shall
subdivide as a whole (by reclassification, by a Stock split, by the
issuance of a distribution on Stock payable in Stock, or otherwise) the
number of shares of Stock then outstanding into a greater number of shares
of Stock, then (i) the maximum number of shares of Stock available for the
Plan as provided in Subsection 2.1 shall be increased proportionately, and
the kind of shares or other securities available for the Plan shall be
appropriately adjusted, (ii) the number of shares of Stock (or other kind
of shares or securities) that may be acquired under any Award shall be
increased proportionately, and (iii) the price (including Exercise Price)
for each share of Stock (or other kind of shares or securities) subject to
then outstanding Awards shall be reduced proportionately, without changing
the aggregate purchase price or value as to which outstanding Awards remain
exercisable or subject to restrictions.
(b) If at any time, or from time to time, the Corporation shall
consolidate as a whole (by reclassification, reverse Stock split, or
otherwise) the number of shares of Stock then outstanding into a lesser
number of shares of Stock, then (i) the maximum number of shares of Stock
available for the Plan as provided in Subsection 2.1 shall be decreased
proportionately, and the kind of shares or other securities available for
the Plan shall be appropriately adjusted, (ii) the number of shares of
Stock (or other kind of shares or securities) that may be acquired under
any Award shall be decreased proportionately, and (iii) the price
(including Exercise Price) for each share of Stock (or other kind of shares
or securities) subject to then outstanding Awards shall be increased
proportionately, without changing the aggregate purchase price or value as
to which outstanding Awards remain exercisable or subject to restrictions.
(c) Whenever the number of shares of Stock subject to outstanding
Awards and the price for each share of Stock subject to outstanding Awards
are required to be adjusted as provided in this Subsection 9.1, the
Committee shall promptly prepare a notice setting forth, in reasonable
detail, the event requiring adjustment, the amount of the adjustment, the
method by which such adjustment was calculated, and the change in price and
the number of shares of Stock, other securities, cash, or property
purchasable subject to each Award after giving effect to the adjustments.
The Committee shall promptly give each Holder such a notice.
(d) Adjustments under Subsections 9.1(a) and (b) shall be made by the
Committee, and its determination as to what adjustments shall be made and
the extent thereof shall be final, binding, and conclusive. No fractional
interest shall be issued under the Plan on account of any such adjustments.
31
9.2 Changes in Control. Upon the occurrence of a Change in Control (a)
all outstanding Stock Appreciation Rights and Options shall immediately become
fully vested and exercisable in full, including that portion of any Stock
Appreciation Right or Option that pursuant to the terms and provisions of the
applicable Award Agreement had not yet become exercisable (the total number of
shares of Stock as to which a Stock Appreciation Right or Option is exercisable
upon the occurrence of a change in Control is referred to herein as the "Total
Shares"); and (b) the restriction period of any Restricted Stock Award shall
immediately be accelerated and the restrictions shall expire. Any Option
Agreement may (but need not) provide that, the Holder of such Option shall
immediately be granted corresponding Stock Appreciation Rights upon the
occurrence of a Change in Control. If a Change in Control involves a
Restructuring or occurs in connection with a series of related transactions
involving a Restructuring and if such Restructuring is in the form of a Non-
Surviving Event and as a part of such Restructuring shares of Stock, other
securities, cash, or property shall be issuable or deliverable in exchange for
Stock, then the Holder of an Award shall be entitled to purchase or receive (in
lieu of the Total Shares that the Holder would otherwise be entitled to purchase
or receive), as appropriate for the form of Award, the number of shares of
Stock, other securities, cash, or property to which that number of Total Shares
would have been entitled in connection with such Restructuring (and, for
Options, at an aggregate exercise price equal to the Exercise Price that would
have been payable if that number of Total Shares had been purchased on the
exercise of the Option immediately before the consummation of the
Restructuring). Nothing in this Subsection 9.2 shall impose on a Holder the
obligation to exercise any Award immediately before or upon the Change of
Control, or cause Holder to forfeit the right to exercise the Award during the
remainder of the original term of the Award because of a Change in Control.
9.3 Restructuring Without Change in Control. In the event a
Restructuring shall occur at any time while there is any outstanding Award
hereunder and that Restructuring does not occur in connection with a Change in
Control or a series of related transactions involving a Change in Control, then:
(a) no outstanding Option or Stock Appreciation Right shall
immediately become fully vested and exercisable in full merely because of
the occurrence of the Restructuring;
(b) no Holder of an Option shall automatically be granted
corresponding Stock Appreciation Rights;
(c) the restriction period of any Restricted Stock Award shall not
immediately be accelerated and the restrictions expire merely because of
the occurrence of the Restructuring; and
(d) at the option of the Committee, the Committee may (but shall not
be required to) cause the Corporation to take any one or more of the
following actions:
(i) accelerate in whole or in part the time of the vesting and
exercisability of any one or more of the outstanding Stock
Appreciation Rights and Options so as to provide that those Stock
Appreciation Rights and Options shall be exercisable before, upon, or
after the consummation of the Restructuring;
(ii) grant each Holder of an Option corresponding Stock
Appreciation Rights;
(iii) accelerate in whole or in part the expiration of some or
all of the restrictions on any Restricted Stock Award;
(iv) if the Restructuring is in the form of a Non-Surviving
Event, cause the surviving entity to assume in whole or in part any
one or more of the outstanding Awards upon such terms and provisions
as the Committee deems desirable; or
(v) redeem in whole or in part any one or more of the
outstanding Awards (whether or not then exercisable) in consideration
of a cash payment, as such payment may be reduced for tax
32
withholding obligations as contemplated in Subsections 5.8, 6.6, or
7.4, as applicable, in an amount equal to:
(A) for Options and Stock Appreciation Rights granted in
connection with Options, the excess of (1) the Fair Market Value,
determined as of the date immediately preceding the consummation
of the Restructuring, of the aggregate number of shares of Stock
subject to the Award and as to which the Award is being redeemed
over (2) the Exercise Price for that number of shares of Stock;
(B) for Stock Appreciation Rights not granted in connection
with an Option, the excess of (1) the Fair Market Value,
determined as of the date immediately preceding the consummation
of the Restructuring, of the aggregate number of shares of Stock
subject to the Award and as to which the Award is being redeemed
over (2) the Fair Market Value of that number of shares of Stock
on the Date of Grant; and
(C) for Restricted Stock Awards, the Fair Market Value,
determined as of the date immediately preceding the consummation
of the Restructuring, of the aggregate number of shares of Stock
subject to the Award and as to which the Award is being redeemed.
The Corporation shall promptly notify each Holder of any election or action
taken by the Corporation under this Subsection 9.3. In the event of any
election or action taken by the Corporation pursuant to this Subsection 9.3 that
requires the amendment or cancellation of any Award Agreement as may be
specified in any notice to the Holder thereof, that Holder shall promptly
deliver that Award Agreement to the Corporation in order for that amendment or
cancellation to be implemented by the Corporation and the Committee. The
failure of the Holder to deliver any such Award Agreement to the Corporation as
provided in the preceding sentence shall not in any manner affect the validity
or enforceability of any action taken by the Corporation and the Committee under
this Subsection 9.3, including without limitation any redemption of an Award as
of the consummation of a Restructuring. Any cash payment to be made by the
Corporation pursuant to this Subsection 9.3 in connection with the redemption of
any outstanding Awards shall be paid to the Holder thereof currently with the
delivery to the Corporation of the Award Agreement evidencing that Award;
provided, however, that any such redemption shall be effective upon the
consummation of the Restructuring notwithstanding that the payment of the
redemption price may occur subsequent to the consummation. If all or any
portion of an outstanding Award is to be exercised or accelerated upon or after
the consummation of a Restructuring that does not occur in connection with a
Change in Control and is in the form of a Non-Surviving Event, and as a part of
that Restructuring shares of stock, other securities, cash, or property shall be
issuable or deliverable in exchange for Stock, then the Holder of the Award
shall thereafter be entitled to purchase or receive (in lieu of the number of
shares of Stock that the Holder would otherwise be entitled to purchase or
receive) the number of shares of Stock, other securities, cash, or property to
which such number of shares of Stock would have been entitled in connection with
the Restructuring (and, for Options, upon payment of the aggregate exercise
price equal to the Exercise Price that would have been payable if that number of
Total Shares had been purchased on the exercise of the Option immediately before
the consummation of the Restructuring) and such Award shall be subject to
adjustments that shall be as nearly equivalent as may be practical to the
adjustments provided for in this Section 9.
9.4 Notice of Restructuring. The Corporation shall attempt to keep all
Holders informed with respect to any Restructuring or of any potential
Restructuring to the same extent that the Corporation's stockholders are
informed by the Corporation of any such event or potential event.
33
SECTION 10. ADDITIONAL PROVISIONS
10.1 Termination of Status. If a Holder's employment, Non-Employee
Director or consulting relationship with the Corporation or any of its
Subsidiaries is terminated for any reason other than (a) that Holder's death or
(b) that Holder's Disability (hereafter defined), then any and all Awards held
by such Holder as of the date of the termination that are not yet exercisable
(or for which restrictions have not lapsed) shall become null and void as of the
date of such termination; provided, however, that the portion, if any, of such
Awards that are exercisable as of the date of termination shall be exercisable
for a period of the lesser of (a) the remainder of the term of the Award or (b)
the date which is set forth in the Award (but in no event more than 90 days
after the date of termination with respect to any Incentive Option). Any
portion of an Award not exercised upon the expiration of the lesser of the
period specified above shall be null and void unless the Holder dies during such
period, in which case the provisions of Subsection 10.2 shall govern. For
purposes of this Plan, a Holder's employment, Non-Employee Director or
consulting relationship shall not be deemed terminated as a result of a change
in the Holder's status from that of employee, Non-Employee Director or
consultant to that of any other of such relationships with the Corporation or
any of its Subsidiaries, and any Awards outstanding at the time of any such
change of status shall continue to remain in full force and effect.
10.2 Death. Upon the death of a Holder, any and all Awards held by the
Holder that are not yet exercisable (or for which restrictions have not lapsed)
as of the date of the Holder's death shall become exercisable in full and any
restrictions shall immediately lapse as of the date of death; provided, however,
that the Awards held by the Holder as of the date of death shall be exercisable
by that Holder's legal representatives, heirs, legatees, or distributees for a
period of 6 months or such longer period as required by any Applicable Law
following the date of the Holder's death. Any portion of an Award not exercised
upon the expiration of such period shall be null and void. Except as expressly
provided in this Subsection 10.2, no Award held by a Holder shall be exercisable
after the death of that Holder.
10.3 Disability. If a Holder's employment, Non-Employee Director or
consulting relationship is terminated by reason of the Holder's Disability, then
the portion, if any, of any and all Awards held by the Holder not yet
exercisable (or for which restrictions have not lapsed) as of the date of that
termination for Disability shall become exercisable in full and any restrictions
shall immediately lapse as of the date of termination; provided, however, that
the Awards held by the Holder as of the date of that termination shall be
exercisable by the Holder, his guardian or his legal representative for a period
of 6 months or such longer period as required by any Applicable Law following
the date of such termination. Any portion of an Award not exercised upon the
expiration of such period shall be null and void unless the Holder dies during
such period, in which event the provisions of Subsection 10.2 shall govern.
"Disability" shall have the meaning given it in the employment agreement of the
Holder; provided, however, that if that Holder has no employment agreement,
"Disability" shall mean, as determined by the Board of Directors in the sole
discretion exercised in good faith of the Board of Directors, a physical or
mental impairment of sufficient severity that either the Holder is unable to
continue performing the duties he performed before such impairment or the
Holder's condition entitles him to disability benefits under any insurance or
employee benefit plan of the Corporation or its Subsidiaries and that impairment
or condition is cited by the Corporation as the reason for termination of the
Holder's employment, Non-Employee Director or consulting relationship.
10.4 Leave of Absence. With respect to an Award, a Holder shall not
cease to be an Employee in the case of (i) any leave of absence approved by the
Company or (ii) transfers between locations of the Company or between the
Company, its Parent, any Subsidiary, or any successor, for any or all purposes
of the Plan and the Award Agreement of such Holder.
10.5 Transferability of Awards. In addition to such other terms and
conditions as may be included in a particular Award Agreement, an Award
requiring exercise shall be exercisable during a Holder's lifetime only by that
Holder or by that Holder's guardian or legal representative. An Award requiring
exercise shall not be transferrable other than by will or the laws of descent
and distribution.
10.6 Forfeiture and Restrictions on Transfer. Each Award Agreement may
contain or otherwise provide for conditions giving rise to the forfeiture of the
Stock acquired pursuant to an Award or otherwise and may also provide for those
restrictions on the transferability of shares of the Stock acquired pursuant to
an Award or otherwise that the Committee in its sole and absolute discretion may
deem proper or advisable. The conditions giving rise to forfeiture may
34
include, but need not be limited to, the requirement that the Holder render
substantial services to the Corporation or its Subsidiaries for a specified
period of time. The restrictions on transferability may include, but need not be
limited to, options and rights of first refusal in favor of the Corporation and
stockholders of the Corporation other than the Holder of such shares of Stock
who is a party to the particular Award Agreement or a subsequent holder of the
shares of Stock who is bound by that Award Agreement.
10.7 Delivery of Certificates of Stock. Subject to Subsection 10.8, the
Corporation shall promptly issue and deliver a certificate representing the
number of shares of Stock as to which (a) an Option has been exercised after the
Corporation receives an Exercise Notice and upon receipt by the Corporation of
the Exercise Price and any tax withholding as may be requested, (b) a Stock
Appreciation Right has been exercised (to the extent the Committee determines to
pay such Stock Appreciation Right in shares of Stock pursuant to Subsection 6.5)
and upon receipt by the Corporation of any tax withholding as may be requested,
and (c) restrictions have lapsed with respect to a Restricted Stock Award and
upon receipt by the Corporation of any tax withholding as may be requested. The
value of the shares of Stock or cash transferable because of an Award under the
Plan shall not bear any interest owing to the passage of time, except as may be
otherwise provided in an Award Agreement. If a Holder is entitled to receive
certificates representing Stock received for more than one form of Award under
the Plan, separate Stock certificates shall be issued with respect to Incentive
Options and Nonstatutory Options.
10.8 Conditions to Delivery of Stock. Nothing herein or in any Award
granted hereunder or any Award Agreement shall require the Corporation to issue
any shares with respect to any Award if that issuance would, in the opinion of
counsel for the Corporation, constitute a violation of the Securities Act or any
similar or superseding statute or statutes, any other applicable statute or
regulation, or the rules of any applicable securities exchange or securities
association, as then in effect. At the time of any exercise of an Option or
Stock Appreciation Right, or at the time of any grant of a Restricted Stock
Award, the Corporation may, as a condition precedent to the exercise of such
Option or Stock Appreciation Right or vesting of any Restricted Stock Award,
require from the Holder of the Award (or in the event of his death, his legal
representatives, heirs, legatees, or distributees) such written representations,
if any, concerning the Holder's intentions with regard to the retention or
disposition of the shares of Stock being acquired pursuant to the Award and such
written covenants and agreements, if any, as to the manner of disposal of such
shares as, in the opinion of counsel to the Corporation, may be necessary to
ensure that any disposition by that Holder (or in the event of the Holder's
death, his legal representatives, heirs, legatees, or distributees) will not
involve a violation of the Securities Act or any similar or superseding statute
or statutes, any other applicable state or federal statute or regulation, or any
rule of any applicable securities exchange or securities association, as then in
effect.
10.9 [Intentionally Omitted]
10.10 Securities Act Legend. Certificates for shares of Stock, when
issued, may have the following legend, or statements of other applicable
restrictions (including, without limitation, restrictions required under any
Federal, state or foreign law), endorsed thereon and may not be immediately
transferable:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED,
TRANSFERRED, OR OTHERWISE DISPOSED OF UNTIL THE HOLDER HEREOF PROVIDES
EVIDENCE SATISFACTORY TO THE ISSUER (WHICH, IN THE DISCRETION OF THE
ISSUER, MAY INCLUDE AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER) THAT
SUCH OFFER, SALE, PLEDGE, TRANSFER, OR OTHER DISPOSITION WILL NOT VIOLATE
APPLICABLE FEDERAL OR STATE LAWS.
This legend shall not be required for shares of Stock issued pursuant to an
effective registration statement under the Securities Act.
10.11 Legend for Restrictions on Transfer. Each certificate
representing shares issued to a Holder pursuant to an Award granted under the
Plan shall, if such shares are subject to any transfer restriction, including a
right of first
35
refusal, provided for under this Plan or an Award Agreement, bear a legend that
complies with applicable law with respect to the restrictions on transferability
contained in this Subsection 10.11, such as:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY IMPOSED BY THAT CERTAIN INSTRUMENT ENTITLED
"NATIONAL INSTRUMENTS CORPORATION 1994 INCENTIVE PLAN" AS ADOPTED BY
NATIONAL INSTRUMENTS CORPORATION (THE "CORPORATION"), ON MAY 10, 1994, AND
AN AGREEMENT THEREUNDER BETWEEN THE CORPORATION AND THE INITIAL HOLDER
THEREOF DATED ________________, 199__, AND MAY NOT BE TRANSFERRED, SOLD, OR
OTHERWISE DISPOSED OF EXCEPT AS THEREIN PROVIDED. THE CORPORATION WILL
FURNISH A COPY OF SUCH INSAND AGREEMENT TO THE RECORD HOLDER OF
THIS CERTIFICATE WITHOUT CHARGE ON REQUEST TO THE CORPORATION AT ITS
PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE.
10.12 Rights as a Stockholder. A Holder shall have no right as a
stockholder with respect to any shares covered by his Award until a certificate
representing those shares is issued in his name. No adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash or other property) or
distributions or other rights for which the record date is before the date that
certificate is issued, except as contemplated by Section 9 hereof.
Nevertheless, dividends, dividend equivalent rights and voting rights may be
extended to and made part of any Award denominated in Stock or units of Stock,
subject to such terms, conditions and restrictions as the Committee may
establish. The Committee may also establish rules and procedures for the
crediting of interest on deferred cash payments and dividend equivalents for
deferred payment denominated in Stock or units of Stock.
10.13 Furnish Information. Each Holder shall furnish to the Corporation
all information requested by the Corporation to enable it to comply with any
reporting or other requirement imposed upon the Corporation by or under any
applicable statute or regulation.
10.14 Obligation to Exercise. The granting of an Award hereunder shall
impose no obligation upon the Holder to exercise the same or any part thereof.
10.15 Adjustments to Awards. Subject to the general limitations set
forth in Sections 5, 6, and 9, the Committee may make any adjustment in the
Exercise Price of, the number of shares subject to, or the terms of a
Nonstatutory Option or Stock Appreciation Right by canceling an outstanding
Nonstatutory Option or Stock Appreciation Right and regranting a Nonstatutory
Option or Stock Appreciation Right. Such adjustment shall be made by amending,
substituting, or regranting an outstanding Nonstatutory Option or Stock
Appreciation Right. Such amendment, substitution, or regrant may result in
terms and conditions that differ from the terms and conditions of the original
Nonstatutory Option or Stock Appreciation Right. The Committee may not,
however, impair the rights of any Holder of previously granted Nonstatutory
Options or Stock Appreciation Rights without that Holder's consent. If such
action is effected by amendment, such amendment shall be deemed effective as of
the Date of Grant of the amended Award.
10.16 Remedies. The Corporation shall be entitled to recover from a
Holder reasonable attorneys' fees incurred in connection with the enforcement of
the terms and provisions of the Plan and any Award Agreement whether by an
action to enforce specific performance or for damages for its breach or
otherwise.
10.17 Information Confidential. As partial consideration for the
granting of each Award hereunder, the Holder shall agree with the Corporation
that he will keep confidential all information and knowledge that he has
relating to the manner and amount of his participation in the Plan; provided,
however, that such information may be disclosed as required by law and may be
given in confidence to the Holder's spouse, tax or financial advisors, or to a
financial institution to the extent that such information is necessary to secure
a loan. In the event any breach of this promise comes to the attention of the
Committee, it shall take into consideration that breach in determining whether
to recommend the grant of any future Award to that Holder, as a factor
mitigating against the advisability of granting any such future Award to that
Person.
36
10.18 Consideration. No Option or Stock Appreciation Right shall be
exercisable and no restriction on any Restricted Stock Award shall lapse with
respect to a Holder unless and until the Holder thereof shall have paid cash or
property to, or performed services for, the Corporation or any of its
Subsidiaries that the Committee believes is equal to or greater in value than
the par value of the Stock subject to such Award.
SECTION 11. DURATION AND AMENDMENT OF PLAN
11.1 Duration. No Awards may be granted hereunder after the date that
is ten years from the earlier of (a) the date the Plan is adopted by the Board
of Directors and (b) the date the Plan is approved by the stockholders of the
Corporation.
11.2 Amendment. The Board of Directors may, insofar as permitted by
law, with respect to any shares which, at the time, are not subject to Awards,
suspend or discontinue the Plan or revise or amend it in any respect whatsoever
and may amend any provision of the Plan or any Award Agreement to make the Plan
or the Award Agreement, or both, comply with Section 16(b) of the Exchange Act
and the exemptions from that Section in the regulations thereunder. The Board
of Directors may also amend, modify, suspend, or terminate the Plan for the
purpose of meeting or addressing any changes in other legal requirements
applicable to the Corporation or the Plan or for any other purpose permitted by
law. The Plan may not be amended without the consent of the holders of a
majority of the shares of Stock then outstanding to (a) increase materially the
aggregate number of shares of Stock that may be issued under the Plan (except
for adjustments pursuant to Section 9 hereof), (b) increase materially the
benefits accruing to Eligible Individuals under the Plan, or (c) modify
materially the requirements about eligibility for participation in the Plan;
provided, however, that such amendments may be made without the consent of
stockholders of the Corporation if changes occur in law or other legal
requirements that would permit such changes.
SECTION 12. GENERAL
12.1 Application of Funds. The proceeds received by the Corporation
from the sale of shares pursuant to Awards may be used for any general corporate
purpose.
12.2 Right of the Corporation and Subsidiaries to Terminate Employment.
Nothing contained in the Plan, or in any Award Agreement, shall confer upon any
Holder the right to continue in the employ of the Corporation or any Subsidiary
or interfere in any way with the rights of the Corporation or any Subsidiary to
terminate the Holder's employment at any time.
12.3 No Liability for Good Faith Determinations. Neither the members of
the Board of Directors nor any member of the Committee shall be liable for any
act, omission or determination taken or made in good faith with respect to the
Plan or any Award granted under it; and members of the Board of Directors and
the Committee shall be entitled to indemnification and reimbursement by the
Corporation in respect of any claim, loss, damage, or expense (including
attorneys' fees, the costs of settling any suit, provided such settlement is
approved by independent legal counsel selected by the Corporation, and amounts
paid in satisfaction of a judgment, except a judgment based on a finding of bad
faith) arising therefrom to the full extent permitted by law and under any
directors' and officers' liability or similar insurance coverage that may from
time to time be in effect. This right to indemnification shall be in addition
to, and not a limitation on, any other indemnification rights any member of the
Board of Directors or the Committee may have.
12.4 Other Benefits. Participation in the Plan shall not preclude the
Holder from eligibility in any other stock or stock option plan of the
Corporation or any Subsidiary or any old age benefit, insurance, pension, profit
sharing retirement, bonus, or other extra compensation plans that the
Corporation or any Subsidiary has adopted, or may, at any time, adopt for the
benefit of its Employees. Neither the adoption of the Plan by the Board of
Directors nor the submission of the Plan to the stockholders of the Corporation
for approval shall be construed as creating any limitations on the power of the
Board of Directors to adopt such other incentive arrangements as it may deem
desirable, including, without limitation, the granting of stock options and the
awarding of stock and cash otherwise than under the Plan and such arrangements
may be either generally applicable or applicable only in specific cases.
37
12.5 Exclusion From Pension and Profit-Sharing Compensation. By
acceptance of an Award (regardless of form), as applicable, each Holder shall be
deemed to have agreed that the Award is special incentive compensation that will
not be taken into account in any manner as salary, compensation, or bonus in
determining the amount of any payment under any pension, retirement, or other
employee benefit plan of the Corporation or any Subsidiary, unless any pension,
retirement, or other employee benefit plan of the Corporation or Subsidiary
expressly provides that such Award shall be so considered for purposes of
determining the amount of any payment under any such plan. In addition, each
beneficiary of a deceased Holder shall be deemed to have agreed that the Award
will not affect the amount of any life insurance coverage, if any, provided by
the Corporation or a Subsidiary on the life of the Holder that is payable to the
beneficiary under any life insurance plan covering employees of the Corporation
or any Subsidiary.
12.6 Execution of Receipts and Releases. Any payment of cash or any
issuance or transfer of shares of Stock to the Holder, or to his legal
representative, heir, legatee, or distributee, in accordance with the provisions
hereof, shall, to the extent thereof, be in full satisfaction of all claims of
such persons hereunder. The Committee may require any Holder, legal
representative, heir, legatee, or distributee, as a condition precedent to such
payment, to execute a release and receipt therefor in such form as it shall
determine.
12.7 Unfunded Plan. Insofar as it provides for Awards of cash and
Stock, the Plan shall be unfunded. Although bookkeeping accounts may be
established with respect to Holders who are entitled to cash, Stock, or rights
thereto under the Plan, any such accounts shall be used merely as a bookkeeping
convenience. The Corporation shall not be required to segregate any assets that
may at any time be represented by cash, Stock, or rights thereto, nor shall the
Plan be construed as providing for such segregation, nor shall the Corporation
nor the Board of Directors nor the Committee be deemed to be a trustee of any
cash, Stock, or rights thereto to be granted under the Plan. Any liability of
the Corporation to any Holder with respect to a grant of cash, Stock, or rights
thereto under the Plan shall be based solely upon any contractual obligations
that may be created by the Plan and any Award Agreement; no such obligation of
the Corporation shall be deemed to be secured by any pledge or other encumbrance
on any property of the Corporation. Neither the Corporation nor the Board of
Directors nor the Committee shall be required to give any security or bond for
the performance of any obligation that may be created by the Plan.
12.8 No Guarantee of Interests. Neither the Committee nor the
Corporation guarantees the Stock of the Corporation from loss or depreciation.
12.9 Payment of Expenses. All expenses incident to the administration,
termination, or protection of the Plan, including, but not limited to, legal and
accounting fees, shall be paid by the Corporation or its Subsidiaries; provided,
however, the Corporation or a Subsidiary may recover any and all damages, fees,
expenses, and costs arising out of any actions taken by the Corporation to
enforce its right to purchase Stock under this Plan.
12.10 Corporation Records. Records of the Corporation or its
Subsidiaries regarding the Holder's period of employment, termination of
employment and the reason therefor, leaves of absence, re-employment, and other
matters shall be conclusive for all purposes hereunder, unless determined by the
Committee to be incorrect.
12.11 Information. The Corporation and its Subsidiaries shall, upon
request or as may be specifically required hereunder, furnish or cause to be
furnished all of the information or documentation which is necessary or required
by the Committee to perform its duties and functions under the Plan.
12.12 No Liability of Corporation. The Corporation assumes no
obligation or responsibility to the Holder or his legal representatives, heirs,
legatees, or distributees for any act of, or failure to act on the part of, the
Committee.
12.13 Corporation Action. Any action required of the Corporation shall
be by resolution of its Board of Directors or by a person authorized to act by
resolution of the Board of Directors.
12.14 Severability. In the event that any provision of this Plan, or
the application hereof to any Person or circumstance, is held by a court of
competent jurisdiction to be invalid, illegal, or unenforceable in any respect
under present or future laws effective during the effective term of any such
provision, such invalid, illegal, or
38
unenforceable provision shall be fully severable; and this Plan shall then be
construed and enforced as if such invalid, illegal, or unenforceable provision
had not been contained in this Plan; and the remaining provisions of this Plan
shall remain in full force and effect and shall not be affected by the illegal,
invalid, or unenforceable provision or by its severance from this Plan.
Furthermore, in lieu of each such illegal, invalid, or unenforceable provision,
there shall be added automatically as part of this Plan a provision as similar
in terms to such illegal, invalid, or unenforceable provision as may be possible
and be legal, valid, and enforceable. If any of the terms or provisions of this
Plan conflict with the requirements of Section 422 of the Code (with respect to
Incentive Options), then those conflicting terms or provisions shall be deemed
inoperative to the extent they so conflict with the requirements of Section 422
of the Code and, in lieu of such conflicting provision, there shall be added
automatically as part of this Plan a provision as similar in terms to such
conflicting provision as may be possible and not conflict with the requirements
of Section 422 of the Code. With respect to Incentive Options, if this Plan does
not contain any provision required to be included herein under Section 422 of
the Code, that provision shall be deemed to be incorporated herein with the same
force and effect as if that provision had been set out at length herein;
provided, however, that, to the extent any Option that is intended to qualify as
an Incentive Option cannot so qualify, that Option (to that extent) shall be
deemed a Nonstatutory Option for all purposes of the Plan.
12.15 Notices. Whenever any notice is required or permitted hereunder,
such notice must be in writing and personally delivered or sent by mail. Any
notice required or permitted to be delivered hereunder shall be deemed to be
delivered on the date on which it is actually received by the Corporation
addressed to the attention of the Corporate Secretary at the Corporation's
office as specified in the applicable Award Agreement. The Corporation or a
Holder may change, at any time and from time to time, by written notice to the
other, the address which it or he had previously specified for receiving
notices. Until changed in accordance herewith, the Corporation and each Holder
shall specify as its and his address for receiving notices the address set forth
in the Award Agreement pertaining to the shares to which such notice relates.
Any person entitled to notice hereunder may waive such notice.
12.16 Successors. The Plan shall be binding upon the Holder, his legal
representatives, heirs, legatees, and distributees, upon the Corporation, its
successors and assigns and upon the Committee and its successors.
12.17 Headings. The titles and headings of Sections and Subsections are
included for convenience of reference only and are not to be considered in
construction of the provisions hereof.
12.18 Governing Law. All questions arising with respect to the
provisions of the Plan shall be determined by application of the laws of the
State of Delaware, without giving effect to any conflict of law provisions
thereof, except to the extent Delaware law is preempted by federal law.
Questions arising with respect to the provisions of an Award Agreement that are
matters of contract law shall be governed by the laws of the state specified in
the Award Agreement, except to the extent that Delaware corporate law conflicts
with the contract law of such state, in which event Delaware corporate law shall
govern irrespective of any conflict of law laws. The obligation of the
Corporation to sell and deliver Stock hereunder is subject to applicable
federal, state and foreign laws and to the approval of any governmental
authority required in connection with the authorization, issuance, sale, or
delivery of such Stock.
12.19 Word Usage. Words used in the masculine shall apply to the
feminine where applicable, and wherever the context of this Plan dictates, the
plural shall be read as the singular and the singular as the plural.
39
|x| Please mark
votes as in
this example
1. ELECTION OF DIRECTORS: FOR AGAINST ABSTAIN
Nominees: (01) Jeffery L. Kodosky, (02) Ben G. Streetman, 2. PROPOSAL TO REAPPROVE THE | | | | | |
(03) R. Gary Daniels 1994 AMEND AND RESTATED | | | | | |
INCENTIVE PLAN. | | | | | |
FOR WITHHELD
| | | | 3. PROPOSAL TO RATIFY THE
| | APPOINTMENT OF PRICEWATER-
------------------------------------------------------------- HOUSECOOPERS LLP AS THE
(If you wish to withhold authority to vote for any individual INDEPENDENT ACCOUNTANTS OF
nominee, please write that nominee's name on the line above) THE COMPANY FOR FISCAL 2000.
4. PROPOSAL TO TRANSACT SUCH OTHER BUSINESS, IN
THEIR DISCRETION, AS MAY PROPERLY COME BEFORE
THE MEETING OR ANY ADJOURNMENTS THEREOF.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT | |
Either of such attorneys or substitutes shall have and may
exercise all of the powers of said attorneys-in-fact hereunder.
(This Proxy should be marked, dated and signed by the
shareholder(s) exactly as his, her or its name appears hereon,
and returned promptly in the enclosed envelope. Persons
signing in a fiduciary capacity should so indicate. If shares are
held by joint tenants or as community property, both should
sign.)
Signature: Date: Signature: Date:
-------------------------------- --------------- -------------------------------- -------------
PROXY
This Proxy is solicited on behalf of the Board of Directors
NATIONAL INSTRUMENTS CORPORATION
2000 ANNUAL MEETING OF STOCKHOLDERS
MAY 9, 2000
The undersigned stockholder of NATIONAL INSTRUMENTS CORPORATION, a Delaware
corporation, hereby acknowledges receipt of the Annual Meeting of Stockholders,
Proxy Statement, each dated April 3, 2000, and the 1999 Annual Report (Form
10-K), to Stockholders and hereby appoints Dr. James J. Truchard and William C.
Nowlin, Jr., and each of them, proxies and attorneys-in-fact, with full power of
substitution, on behalf and in the name of the undersigned, to represent the
undersigned at the 2000 Annual Meeting of Stockholders of NATIONAL INSTRUMENTS
CORPORATION to be held on May 9, 2000 at 9:00 a.m., local time, at the
Company's headquarters at 11500 North Mopac Expressway Building B, Austin, Texas
78759, and at any adjournments thereof, and to vote all shares of Common Stock
which the undersigned would be entitled to vote if then and there personally
present, on the matters set forth below.
THE PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF DIRECTORS, REAPPROVAL OF THE 1994 AMENDED AND
RESTATED INCENTIVE PLAN, FOR THE RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS, AND AS SAID PROXIES DEEM
ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
- ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ----------- -----------