Exhibit 10.14
FORM OF CHALLENGE AWARD OPTION AGREEMENT GRANTED TO SENIOR MANAGEMENT
IN FISCAL 2005
IEC ELECTRONICS CORP.
OPTION AWARD AGREEMENT PURSUANT TO
2001 STOCK OPTION AND INCENTIVE PLAN
(Incentive Stock Option)
OPTION AWARD AGREEMENT, executed in duplicate as of the ___ day of ____,
2005, between IEC Electronics Corp., a Delaware corporation (the "Company"), and
____________________, _________________________of the Company (the "Optionee").
RECITALS:
A. On May 11, 2005, the Board of Directors of the Company adopted a Long
Term Incentive Plan (the "LTIP") pursuant to which senior management employees
of the Company will be granted Challenge Awards in the form of stock options
that vest on the attainment of certain performance goals.
B. In accordance with the provisions of the LTIP and the 2001 Stock Option
and Incentive Plan of the Company (the "Plan") and pursuant to a resolution duly
adopted by the Board of Directors of the Company on ______________, 2005, the
Company is authorized to execute and deliver this Agreement on the terms and
conditions herein set forth.
C. All capitalized terms in this Agreement shall have the meaning assigned
to them in the Plan.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereto agree as
follows:
1. Grant of Option. Subject to all the terms and conditions of the LTIP,
the Plan and this Agreement, the Company hereby grants to the Optionee as of
______, 2005 (the "Date of Grant") an Incentive Stock Option (the "Option") to
purchase up to ______ shares of common stock of the Company (such number being
subject to adjustment as provided in Section 10), $.01 par value, on the terms
and conditions herein set forth. The Option shall be exercisable from time to
time during the option term specified in Section 3 at the Option Exercise Price
specified in Section 2.
2. Option Exercise Price. The option exercise price per share of common
stock covered by this Option shall be $______.
3. Option Term. This Option shall have a term of six (6) years measured
from the Date of Grant and shall accordingly expire at 5:00 p.m. (Eastern Time)
on ______, 2011 (the "Expiration Date"), unless all or a portion of this Option
is sooner terminated or forfeited in accordance with Sections 4 and 9.
4. Vesting and Exercise.
(a) This Option shall vest and be exercisable as follows:
______shares, if, and only if, the Company's Net Sales for the fiscal year
ending September 30, 2006 equal or exceed $______;
______shares, if, and only if, the Company's Net Sales for the fiscal year
ending September 30, 2007 equal or exceed $______;
______shares, if the Company's Net Income for any fiscal year ending on or prior
to September 30, 2010 equals or exceeds $______;
______shares, if the Company's Net Income for any fiscal year ending on or prior
to September 30, 2010 equals or exceeds $______.
(b) If the performance goals set forth in Sections 4(a)(i) and (ii) above are
not achieved in the respective fiscal years, the shares provided for in Sections
4(a)(i) or (ii) or both, as the case may be, will be automatically forfeited at
the end of such fiscal years. If the performance goals set forth in Sections 4
(a)(iii) and (iv) above are not achieved by September 30, 2010, the shares
provided for in Sections 4(a)(iii) or (iv), or both, as the case may be, will
automatically be forfeited as of September 30, 2010.
(c) For purposes of this Section 4, Net Sales and Net Income shall be as stated
in the Company's audited financial statements for each of the fiscal years ended
September 30, 2006, September 30, 2007, September 30, 2008, September 30, 2009,
and September 30, 2010, without any adjustments.
(d) No portion of this Option shall be deemed vested and exercisable unless and
until the Compensation Committee (the "Committee") of the Board of Directors
certifies in writing that the applicable performance goal has been satisfied.
5. Limitations on Sale. Shares received upon each exercise of all or any
portion of this Option (the "Option Shares") may not be sold, transferred,
assigned, pledged or otherwise disposed of (collectively "sold") except as
follows:
(a) No Option Shares acquired upon a given exercise may be sold until one year
after the date of the respective exercise of the Option.
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(b) Thereafter, (i) all or any part of 50% of the respective Option Shares may
be sold at any time on or after one year after the date of the respective
exercise of the Option; (ii) all or any part of 75% of the respective Option
Shares may be sold at any time on or after two years after the date of the
respective exercise of the Option; and (iii) all or any part of 100% of the
respective Option Shares may be sold at any time on or after three years after
the date of the respective exercise of the Option.
Notwithstanding the foregoing limitations on sale, at any time after all or any
portion of this Option is vested and exercisable, Optionee may elect to exercise
that portion of this Option that is vested and exercisable by selling that
number of Option Shares necessary to utilize the "cashless exercise" procedure
provided for in Section 8(a)(ii)(C) below, in which case the number of Option
Shares that may be sold under Section 5(b) above will be reduced by the number
of Option Shares used to facilitate the "cashless exercise".
6. Legend on Certificates. The Certificates for the Option Shares shall
bear the following legend:
"The Shares of Stock represented by this Certificate are subject to and
transferable, only in accordance with the terms and conditions of an Option
Award Agreement entered into as of May 11, 2005 by and between
____________________and IEC Electronics Corp., a copy of which is on file in the
office of the Secretary of the Corporation."
7. Non-Transferability of Option. This Option shall be exercisable during
Optionee's lifetime only by Optionee and may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by Optionee's will
or by the laws of descent and distribution. Any attempted assignment, transfer,
pledge, hypothecation, or other disposition of the Option contrary to the
provisions hereof, and the levy of any execution, attachment, or similar process
upon the Option, shall be null and void and without effect.
8. Manner of Exercising Option.
(a) In order to exercise this Option with respect to all or any part of
the shares of Stock for which this Option is at the time exercisable, Optionee
(or any other person or persons exercising the Option) must take the following
actions:
(i) Execute and deliver to the Company a Notice of Exercise
("Notice") (in the form attached to this Agreement) for the shares of Stock for
which the Option is exercised, which Notice may require the Optionee to certify
in a manner acceptable to the Company that Optionee is in compliance with the
terms and conditions of the Plan and this Agreement; and
(ii) Pay the aggregate Option Exercise Price for the purchased
shares in one or more of the following forms:
(A) by cash, wire transfer or check made payable to the
Company;
(B) in shares of Stock held by Optionee (or any other person
or persons exercising the Option) for at least six (6) months and valued at Fair
Market Value on the date of exercise; or
(C) through a special sale and remittance procedure pursuant
to which Optionee shall concurrently provide irrevocable instructions (I) to the
approved brokerage firms to effect the immediate sale of the purchased shares
and remit to the Company, out of the sale proceeds available on the settlement
date, sufficient funds to cover the aggregate Option Exercise Price payable for
the purchased shares plus all applicable federal, state and local income and
employment taxes required to be withheld by the Company by reason of such
exercise and (II) to the Company to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the sales
transaction.
Except to the extent the sale and remittance procedure is
utilized in connection with the Option exercise, payment of the Option Exercise
Price must accompany the Notice delivered to the Company in connection with the
Option exercise.
In the event this Option is exercised by any person or persons
other than the Optionee, the Notice shall be accompanied by appropriate proof of
the right of such person or persons to exercise the Option.
(iii) Make appropriate arrangements with the Company for the
satisfaction of all federal, state and local income and employment tax
withholding requirements applicable to the Option exercise.
(b) As soon as practical after the date of exercise, the Company
shall issue to or on behalf of Optionee (or any other person or persons
exercising this Option) a certificate for the purchased shares of Stock, with
the appropriate legends, if any, affixed thereto.
(c) In no event may this Option be exercised for any fractional
shares.
9. Termination of Employment.
If the Optionee has a Termination of Employment (as defined in the Plan),
the following provisions shall apply:
(a) Death. If the Optionee's Termination of Employment is on account of death,
then unvested Options shall be forfeited, and Options, to the extent they are
vested on the date of Termination of Employment, may be exercised, in whole or
in part, by the Optionee's Designated Beneficiary (as defined in the Plan) at
any time on or before the earlier to occur of (x) the Expiration Date of the
Option and (y) the first anniversary of the date of such Termination of
Employment.
(b) Disability. If the Optionee's Termination of Employment is on account of
Disability, unvested Options shall be forfeited, and Options, to the extent they
are vested on the date of Termination of Employment, may be exercised, in whole
or in part, by the Optionee at any time on or before the earlier to occur of (x)
the Expiration Date of the Option and (y) the first anniversary of the date of
such Termination of Employment.
(b) Cause. If the Optionee's Termination of Employment is on account of
cause, all outstanding Options, vested and unvested, shall terminate and be
forfeited on the date of such Termination of Employment.
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(d) Other Reasons. If the Optionee's Termination of Employment is for any reason
other than those enumerated in Sections (a) through (c), unvested Options shall
be forfeited, and Options, to the extent they are vested on the date of
Termination of Employment, may be exercised, in whole or in part, by the
Optionee at any time on or before the earlier to occur of (x) the Expiration
Date of the Option and (y) three (3) months after the date of such Termination
of Employment.
(e) Death After Termination of Employment. If (i) the Optionee's Termination of
Employment is for any reason other than death and (ii) the Optionee dies after
such Termination of Employment but before the date the Options must be exercised
as set forth in the preceding subsections, unvested Options shall be forfeited,
and any Options, to the extent they are vested on the date of the Optionee's
death, may be exercised, in whole or in part, by the Optionee's Designated
Beneficiary at any time on or before the earlier to occur of (x) the Expiration
Date of the Option and (y) the first anniversary of the date of death.
10. Detrimental Activities.
(a) The Committee may cancel, rescind, suspend, withhold or otherwise
limit or restrict this Option at any time if Optionee is not in compliance with
all applicable provisions of this Agreement and the Plan, or if Optionee engages
in any "Detrimental Activity". For purposes of this Agreement, "Detrimental
Activity" includes: (i) the rendering of services for any organization or
engaging directly or indirectly in any business which is or becomes competitive
with the Company, or which organization of business, or the rendering of
services to such organization or business, is or becomes otherwise prejudicial
to in conflict with the interests of the Company; (ii) the disclosure to anyone
outside the Company, or the use in other than the Company's business, without
prior written authorization from the Company, of any confidential information or
material relating to the business of the Company, acquired by the Optionee
either during or after employment with the Company; (iii) activity that results
in termination of Optionee's employment for cause; (iv) a violation of any
rules, policies, procedures or guidelines of the Company, including, but not
limited to, the Company's Code of Conduct; (v) any attempt, directly or
indirectly, to induce any employee of the Company to be employed or perform
services elsewhere or any attempt, directly or indirectly, to solicit the trade
or business of any current or prospective customer, supplier or partner of the
Company or (vi) any other conduct or act determined by the Board to be
injurious, detrimental or prejudicial to any interest of the Company.
(b) Upon exercise of this Option, Optionee, if requested by the Company,
shall certify in a manner acceptable to the Company that Optionee is in
compliance with the terms and conditions of the Plan.
(c) In the event Optionee fails to comply with the provisions of (i)-(vi)
of Section 10(a) prior to, or during the six months after, any exercise of this
Option, such exercise may be rescinded within two years thereafter. In the event
of any such rescission, Optionee shall pay to the Company the amount of any gain
realized or payment received as a result of the rescinded exercise, in such
manner and on such terms and conditions as may be required, and the Company
shall be entitled to set-off against the amount of any such gain any amount
owned to Optionee by the Company.
11. General Restriction. This Option shall be subject to the requirement
that if at any time the Board of Directors in its discretion shall determine
that the listing, registration or qualification of the shares subject to such
Option on any securities exchange or under any state or federal law, or the
consent or approval of any government regulatory body, is necessary or desirable
as a condition of, or in connection with, the granting of such Option or the
issuance or purchase of shares thereunder, such Option may not be exercised in
whole or in part unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Board of Directors.
12. Option Adjustments. In the event of a stock dividend, stock split or
other change in corporate structure or capitalization affecting the common stock
or any other transaction (including, without limitation, an extraordinary cash
dividend) which, in the determination of the Committee affects the common stock
such that an adjustment is required in order to preserve the benefits or
potential benefits intended to be made available under the Plan, then the
Committee, in its sole discretion, shall equitably adjust any or all of (i) the
number and kind of shares of stock subject to this Option, and (ii) the exercise
price with respect to the foregoing, provided that the number of shares subject
to this Option shall always be a whole number.
13. Change in Control. In the event of a Change in Control (as defined in
the Plan) the performance goal relating to an incomplete fiscal year shall be
deemed to have been fully achieved, this Option shall immediately become vested
and exercisable, and, notwithstanding Section 5, the Option Shares may be sold
without any limitation.
14 Amendment to this Option Award Agreement. The Committee may modify or
amend this Option if it determines, in its sole discretion, that amendment is
necessary or advisable in the light of any addition to or change in the Internal
Revenue Code or in the regulations issued thereunder, or any federal or state
securities laws or other law or regulation, which change occurs after the date
of grant of this Option and by its terms applies to this Option. No amendment of
this Option, however, may, without the consent of the Optionee, make any changes
which would adversely affect the rights of such Optionee.
15. Notices. Notices hereunder shall be in writing and if to the Company
shall be delivered personally to the Secretary of the Company or mailed to its
principal office, 105 Norton Street, P.O. Box 271, Newark, New York 14513,
addressed to the attention of the Secretary and, if to the Optionee, shall be
delivered personally or mailed to the Optionee at Optionee's address as the same
appears on the records of the Company.
16. Stockholder Rights. This Option does not confer upon the holder
thereof any rights as a stockholder of the Company until such person shall have
exercised the Option, paid the Option Exercise Price and become a holder of
record of the purchased shares of Stock
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17. Interpretations of this Agreement. All decisions and interpretations
made by the Committee with regard to any question arising hereunder or under the
Plan shall be binding and conclusive on all persons having an interest in this
Option. The Option granted hereunder, and the common stock which may be issued
upon exercise thereof, are subject to the provisions of the Plan. In the event
there is any inconsistency between the provisions of this Agreement and those of
the Plan, the provisions of the Plan shall govern.
18. Successors and Assigns. This Agreement shall bind and inure to the
benefit of the parties hereto and the successors and assigns of the Company and,
to the extent provided in Section 9, to the personal representatives, legatees
and heirs of the Optionee.
IN WITNESS WHEREOF, the Company has caused this Option Award Agreement to
be executed on the day and year first above written.
IEC ELECTRONICS CORP.
By:
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W. Barry Gilbert
Its: Chief Executive Officer, President and
Chairman of the Board
ACCEPTANCE
I, ___________________, hereby certify that I have read and fully
understand the foregoing Option Award Agreement. I acknowledge that I have been
apprised that it is the intent of the Company that Optionees obtain and retain
an equity interest in the Company. I hereby execute this Option Award Agreement
to indicate my acceptance of this Option and my intent to comply with the terms
thereof.
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Optionee
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Street Address
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City State Zip Code
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EXHIBIT A
_________________, 20__
IEC Electronics Corp.
105 Norton Street
P. O. Box 271
Newark, NY 14513
Attention: Secretary
Dear Sir:
This is to notify you that I hereby elect to exercise my option rights to
_______________ shares of common stock of IEC Electronics Corp. (the "Company")
granted under the Option Award Agreement (the "Agreement"), dated
______________________________ , 20__, issued to me pursuant to the 2001 Stock
Option and Incentive Plan (the "Plan"). The option exercise price pursuant to
such Agreement, as adjusted, is $____________ per share or $__________ in the
aggregate.
In payment of the full option exercise price, I enclose (please complete
as appropriate):
(a) my check payable to IEC Electronics Corp. in the amount of $__________.
(b) __________ shares of common stock of the Company owned by me for at least
six months, free of any liens or encumbrances and having a fair market value of
$_________.
(c) an authorization letter which gives irrevocable instructions to the Company
to deliver the stock certificates representing the shares for which the option
is being exercised directly to ______________ (name and address of broker)
together with a copy of the instructions to _______________ (name of broker) to
sell such shares and promptly deliver to the Company the portion of the proceeds
equal to the total purchase price and withholding taxes due, if any.
I hereby certify that I am in compliance with the terms and conditions of
the Plan and the Agreement and, in particular, that I have not engaged in any
Detrimental Activity as defined in Section 10(a) of the Agreement. I understand,
acknowledge and agree that in the event I fail to comply with the provisions of
(i) - (vi) of Section 10(a) of the Agreement during the period specified in
Section 10(c) of the Agreement, the exercise of this Option may be rescinded by
the Company and I may become obligated to pay the Company the amount of any gain
realized or payment received as a result of the rescinded exercise, all as set
forth in Section 10(c) of the Agreement.
Very truly yours,
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Optionee's Signature
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