EQUITY INCENTIVE COMPENSATION PLAN
ESTABLISHMENT, OBJECTIVES AND DURATION
1.1. ESTABLISHMENT. Subject to the approval of the stockholders of Littelfuse,
Inc. (the "Corporation"), the Corporation has established the Littelfuse, Inc.
Equity Incentive Compensation Plan (the "Plan"), as set forth herein, effective
as of March 1, 2006. The Plan supercedes and replaces (subject to the last
sentence of Section 1.4) the Stock Plan for Employees and Directors of
Littelfuse, Inc., adopted effective December 16, 1991, and the 1993 Stock Plan
for Employees and Directors of Littelfuse, Inc., adopted effective February 12,
1993 (the "Prior Plans"), except that the Prior Plans shall remain in effect
with respect to awards granted under such Prior Plans until such awards have
been exercised, forfeited, canceled, expired or otherwise terminated in
accordance with the terms of such awards.
1.2. PURPOSE. The purpose of the Plan is to enhance stockholder value by linking
long-term incentive compensation to the financial performance of the Corporation
and to further align employees' financial rewards with the financial rewards
realized by the Corporation and its stockholders. The Plan is also a vehicle to
attract and retain key personnel. To accomplish the foregoing, the Plan provides
that the Corporation may grant Incentive Stock Options, Nonqualified Stock
Options, Stock Appreciation Rights, Restricted Stock, Performance Shares or
1.3. DURATION. The Plan shall remain in effect, subject to the right of the
Corporation's Board of Directors to amend or terminate the Plan at any time
pursuant to Section 15, until all Shares subject to the Plan shall have been
purchased or granted according to the Plan's provisions.
1.4. APPROVAL BY STOCKHOLDERS. The Plan has been adopted by the Board of
Directors subject to approval by the stockholders of the Corporation at the
first annual meeting of stockholders held following the adoption by the Board,
or any special meeting of the stockholders duly called. Awards may be granted
prior to stockholder approval, but no Award may be exercised or settled until
the Plan is approved by the stockholders, and if the Plan is not so approved by
December 31, 2006, the Plan, and all Awards granted under the Plan, shall be
null and void; provided, however, that to the extent any Award could have been
granted under one of the Prior Plans., it shall not be void, but shall be
treated as having been granted under such Plan.
Whenever used in the Plan, the following capitalized terms shall have the
meanings set forth below:
2.1. "AWARD" means, individually or collectively, a grant under the Plan of
Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights,
Restricted Stock, Performance Shares or Performance Units.
2.2. "AWARD AGREEMENT" means a written agreement between the Corporation and
each Participant that sets forth the terms and provisions applicable to an Award
granted to the Participant under the Plan, and is a condition to the grant of an
2.3. "BOARD" means the Board of Directors of the Corporation.
2.4. "CHANGE IN CONTROL" means, unless the Committee otherwise determines, the
occurrence of any of the following events:
(a) a business combination, including a merger or consolidation, of the
Corporation and the stockholders of the Corporation prior to the combination do
not continue to own, directly or indirectly, more than fifty-one percent (51%)
of the equity of the combined entity;
(b) a sale, transfer, or other disposition in one or more transactions (other
than in transactions in the ordinary course of business or in the nature of a
financing) of the assets or earning power aggregating more than forty-five
percent (45%) of the assets or operating revenues of the Corporation to any
person or affiliated or associated group of persons (as defined by Rule 12b-2 of
the Exchange Act in effect as of the date hereof);
(c) the liquidation of the Corporation;
(d) one or more transactions which result in the acquisition by any person or
associated group of persons (other than the Corporation, any employee benefit
plan whose beneficiaries are Employees of the Corporation or any of its
Subsidiaries, or TCW Special Credits or any of its affiliates) of the beneficial
ownership (as defined in Rule 13d-3 of the Exchange Act, in effect as of the
date hereof) of forty percent (40%) or more of the Common Stock of the
Corporation, securities representing forty percent (40%) or more of the combined
voting power of the voting securities of the Corporation which affiliated
persons owned less than forty percent (40%) prior to such transaction or
(e) the election or appointment, within a twelve (12) month period, of any
person or affiliated or associated group, or its or their nominees, to the
Board, such that such persons or nominees, when elected or appointed, constitute
a majority of the Board and whose appointment or election was not approved by a
majority of those persons who were directors at the beginning of such period or
whose election or appointment was made at the request of an Acquiring Person.
(f) Any occurrence of any transaction or event, or series of transactions or
events, designated by the Committee in the Award Agreement. For purposes of this
definition, an "Acquiring Person" is any person who, or which, together with all
affiliates or associates of such person, is the beneficial owner of twenty
percent (20%) or more of the Common Stock of the Corporation then outstanding,
except that an Acquiring Person does not include the Corporation or any employee
benefit plan of the Corporation or any of its Subsidiaries or any person holding
Common Stock of the Corporation for or pursuant to such plan. For the purpose of
determining who is an Acquiring Person, the percentage of the outstanding shares
of the Common Stock of which a person is a beneficial owner shall be calculated
in accordance with Rule 13d-e of the Exchange Act.
2.5. "CODE" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation thereto.
2.6. "COMMITTEE" means the Committee appointed to administer the Plan, as
provided in Section 3.
2.7. "CORPORATION" means Littelfuse, Inc., a Delaware corporation, and any
successor to such entity as provided in Section 18.
2.8. "DIRECTOR". means any individual who is a member of the Board.
2.9. "DISABILITY". means, unless otherwise provided for in the Award Agreement
or an employment, change of control or similar agreement in effect between the
Participant and the Corporation or a Subsidiary, (i) the Employee qualifying for
long-term disability benefits under any long-term disability program sponsored
by the Corporation or Subsidiary in which the Employee participates, and (ii) in
the case of an Employee who does not participate in a long-term disability plan,
the inability of the Employee to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment that can be
expected to result in death, or which has lasted or can be expected to last for
a continuous period of not less than 12 months, as determined by the Committee,
based upon medical evidence.
2.10. "EFFECTIVE DATE" means March 1, 2006.
2.11. "ELIGIBLE RETIREMENT" the date upon which an Employee, having attained an
age of not less than sixty-two, terminates his employment with the Corporation
and its Subsidiaries, provided that such Employee has been employed by the
Corporation or any of its Subsidiaries or any corporation of which the
Corporation or any of its Subsidiaries is the successor for a period of not less
than five (5) years prior to such termination.
2.12. "EMPLOYEE" means any employee of the Corporation or any Subsidiary.
2.13. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from
time to time, or any successor act thereto.
2.14. "FAIR MARKET VALUE" means if the Shares are duly listed on a national
securities exchange or on The Nasdaq National Stock Market, the closing price of
the Common Stock for the date on which the option is granted, or, if there are
no sales on such date, on the next preceding day on which there were sales, or
if the Shares or not so listed, the fair market value of the Shares for the date
on which the option is granted, as determined by the Committee in good faith.
Such price shall be subject to adjustment as provided in Section 4.3.
2.15. "INCENTIVE STOCK OPTION" OR "ISO" means the right to purchase Shares
pursuant terms and conditions that provide that such right will be treated as an
incentive stock option within the meaning of Code Section 422, as described in
2.16. "NAMED EXECUTIVE OFFICER" means a Participant who is one of the group of
covered employees as defined in the regulations promulgated under Code Section
162(m), or any successor provision or statute.
2.17. "NONQUALIFIED STOCK OPTION" OR "NQSO" means the right to purchase Shares
pursuant to terms and conditions that provide that such right will not be
treated as an Incentive Stock Option, as described in Section 6.
2.18. "OPTION" means an Incentive Stock Option or a Nonqualified Stock Option,
as described in Section 6.
2.19. "OPTION PRICE" means the per share purchase price of a Share purchased
pursuant to an Option.
2.20. "PARTICIPANT" means an Employee or prospective Employee who has
outstanding an Award granted under the Plan, and includes those former Employees
who have certain post-termination rights under the terms of an Award granted
under the Plan.
2.21. "PERFORMANCE-BASED EXCEPTION" means the exception for performance-based
compensation from the tax deductibility limitations of Code Section 162(m).
2.22. "PERFORMANCE PERIOD" means the time period during which performance
goals must be achieved with respect to an Award, as determined by the Committee.
2.23. "PERFORMANCE SHARE" means an Award granted to a Participant, as described
in Section 9.
2.24. "PERFORMANCE UNIT" means an Award granted to a Participant, as described
in Section 9.
2.25. "PERIOD OF RESTRICTION" means the period during which the transfer of
Shares of Restricted Stock is limited in some way, and the Shares are subject to
a substantial risk of forfeiture, as provided in Section 8.
2.26. "PLAN" means the Littelfuse, Inc. Equity Incentive Compensation Plan, as
set forth herein.
2.27. "RESTRICTED STOCK" means an Award granted to a Participant pursuant to
2.28. "SHARE" OR "SHARES" means shares of common stock of the Corporation.
2.29. "STOCK APPRECIATION RIGHT" OR "SAR" means an Award, granted alone or in
connection with a related Option, designated as an SAR, pursuant to the terms of
2.30. "SUBSIDIARY" means any corporation, partnership, joint venture, affiliate,
or other entity in which the Corporation is at least a majority-owner of all
issued and outstanding equity interests or has a controlling interest.
2.31. "TANDEM SAR" means an SAR that is granted in connection with a related
Option pursuant to Section 7, the exercise of which shall require forfeiture of
the right to purchase a Share under the related Option (and when a Share is
purchased under the Option, the Tandem SAR shall similarly be forfeited).
2.32. "NON-TANDEM SAR" means an SAR that is granted independently of any
Options, as described in Section 7.
3.1. PLAN ADMINISTRATION. The Compensation Committee, or any other committee
appointed by the Board, shall administer the Plan. The Committee or other
committee appointed to administer the Plan shall consist of not fewer than two
Directors who are both non-Employee Directors of the Corporation, within the
meaning of Rule 16b-3 of the Exchange Act, and "outside directors", as defined
in IRS Regulations Section 1.162-26; provided, however, that if at any time any
member of the Committee is not an outside director, as so defined, the Committee
may establish a subcommittee, consisting of all members who are outside
directors, for all purposes of any Award to a Named Executive Officer, unless
the Committee determines that such an Award is not intended to qualify for the
Exception. The Board may, from time to time, remove members from, or add members
to, the Committee. Any vacancies on the Committee shall be filled by members of
If and to the extent that no committee exists that has the authority to
administer the Plan, the Board shall administer the Plan. Acts of a majority of
the Committee (or the Board, if applicable) at which a quorum is present, or
acts reduced to or approved in writing by unanimous consent of the members of
the Committee (or the Board, as the case may be), shall be valid acts of the
Committee (or the Board, as the case may be).
3.2. AUTHORITY OF THE COMMITTEE. Except as limited by law or by the Certificate
of Incorporation or Bylaws of the Corporation, and subject to the provisions
herein, the Committee shall have full power to select Employees who shall
participate in the Plan; determine the sizes and types of Awards; determine the
terms and conditions of Awards in a manner consistent with the Plan; construe
and interpret the Plan and any agreement or instrument entered into under the
Plan; establish, amend, or waive rules and regulations consistent with the terms
of the Plan for the Plan's administration; and amend the terms and conditions of
any outstanding Award to the extent such terms and conditions are within the
sole discretion of the Committee as provided in the Plan and subject to Section
15; provided that the Committee shall not have the authority to amend any Option
or SAR to reduce its exercise price except pursuant to Section 4.3. Further, the
Committee shall make all other determinations, which may be necessary or
advisable for the administration of the Plan. The Committee's determinations,
interpretations and actions under the Plan need not be uniform and may be made
selectively among Employees and their beneficiaries. As permitted by law, the
Committee may delegate the authority granted to it herein.
3.3. DECISIONS BINDING. All determinations and decisions made by the Committee
pursuant to the provisions of the Plan and all related orders and resolutions of
the Board shall be final, conclusive and binding on all persons, including the
Corporation, its stockholders, Employees, Participants, and their estates and
SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS
4.1. SHARES AVAILABLE FOR AWARDS.
(a) The Shares available for Awards may be either authorized and unissued
Shares or Shares held in or acquired for the treasury of the Corporation. The
aggregate number of Shares that may be issued or used for reference purposes
under the Plan or with respect to which Awards may be granted shall not exceed
1,250,000 Shares, subject to adjustment as provided in Section 4.3. The number
of Shares reserved for issuance under this Plan as set forth above shall include
all reserved but unissued shares under the Prior Plans, and no additional awards
shall be granted under the Prior Plans.
(i) a payout of a SAR or Performance Share award in the form of cash;
(ii) a cancellation, termination, expiration without exercise,
forfeiture, or lapse for any reason (with the exception of the
termination of a Tandem SAR upon exercise of the related Options,
or the termination of a related Option upon exercise of the
corresponding Tandem SAR) of any Award, or any award granted
under either of the Prior Plans;
the number of Shares underlying any such Award (or Prior Plan award) that were
not issued as a result of any of the foregoing actions shall again be available
for the purposes of Awards under the Plan. In addition, in the case of any Award
granted in substitution for an award of a company or business acquired by the
Corporation or a Subsidiary, Shares issued or issuable in connection with such
substitute Award shall not be counted against the number of Shares reserved
under the Plan, but shall be available under the Plan by virtue of the
Corporation's assumption of the plan or arrangement of the acquired company or
All Restricted Shares which vest, and all Shares issued in settlement of an
Option, SAR, Performance Share Award or Performance Unit Award, or withheld for
payment of the exercise price or any tax imposed upon the exercise or settlement
of the Award, shall reduce the total number of Shares available under the Plan
and shall not again be available for the grant of any Award hereunder.
When a stock settled SAR is exercised, the number of Shares available for
issuance shall be reduced by the total number of Shares subject to the SAR,
regardless of the number of Shares used the settle the SAR.
4.2. INDIVIDUAL PARTICIPANT LIMITATIONS. Unless and until the Committee
determines that an Award to a Named Executive Officer shall not be designed to
comply with the Performance-Based Exception, the following rules shall apply to
grants of such Awards under the Plan:
(a) Subject to adjustment as provided in Section 4.3, the maximum aggregate
number of Shares (including Options, Non-Tandem SARs, Restricted Stock, and
Performance Shares) that may be granted to a Named Executive Officer in any year
shall be 100,000 Shares.
(b) The maximum aggregate cash payout with respect to Performance Units to
any Named Executive Officer in any year shall be $2,000,000.
4.3. ADJUSTMENTS. Notwithstanding any other provision of the Plan, the Committee
may at any time make or provide for such adjustments to the Plan, to the number
and class of Shares available thereunder or to any outstanding Awards as it
shall deem appropriate to prevent dilution or enlargement of rights, including
adjustments in the event of distributions to holders of Shares other than a
normal cash dividend, changes in the outstanding Shares by reason of stock
dividends, split-ups, recapitalizations, mergers, consolidations, combinations,
or exchanges of shares, separations, reorganizations, liquidations, and the
like. In the event of any offer to holders of Shares generally relating to the
acquisition of their shares, the Committee may make such adjustment as it deems
equitable in respect of outstanding options, rights, and restricted units
including in the Committee's discretion revision of outstanding options, rights,
and restricted units so that they may be exercisable for or payable in the
consideration payable in the acquisition transaction. Any such determination by
the Committee shall be conclusive. No adjustment shall be made in the minimum
number of shares with respect to which an option may be exercised at any time.
Any fractional shares resulting from such adjustments to options, rights,
limited rights, or restricted units shall be eliminated.
4.4. PROHIBITION ON REPRICING. Anything else contained herein to the contrary
notwithstanding, except as provided in Section 4.3, the Committee shall not
amend any Option or SAR to reduce its exercise price, and shall not issue to any
Employee a new Award in exchange for the surrender and cancellation of any other
Award, if such new Award has an exercise price lower than that of the Award for
which it is exchanged, or take any other action that would have the effect of
reducing the exercise price of an Option or SAR.
ELIGIBILITY AND PARTICIPATION
5.1. ELIGIBILITY. Persons eligible to participate in the Plan include current
and future Employees (including officers), persons who have been offered
employment by the Corporation or a Subsidiary (provided that such prospective
Employee may not receive any payment or exercise any right relating to an Award
until such person begins employment with the Corporation or Subsidiary), of the
Corporation and its Subsidiaries, as determined by the Committee, including
Employees who are also Directors and Employees who reside in countries other
than the United States of America.
5.2. PARTICIPATION. Subject to the provisions of the Plan, the Committee shall
determine and designate, from time to time, the Employees, prospective Employees
of the Corporation and any Subsidiary to whom Awards shall be granted, the terms
of such Awards, and the number of Shares subject to such Award.
6.1. GRANT OF OPTIONS AND AWARD AGREEMENT.
(a) Option Grant. Subject to the terms and provisions of the Plan, Options
may be granted to one or more Participants in such number, upon such terms and
provisions, and at any time and from time to time, as determined by the
Committee, in its sole discretion. The Committee may grant either Nonqualified
Stock Options or Incentive Stock Options, and shall have complete discretion in
determining the number of Options of each granted to each Participant, subject
to the limitations of Section 4. Each Option grant shall be evidenced by a
resolution of the Committee approving the Option grant.
(b) Award Agreement. The Corporation and each Participant to whom an Option
is granted shall execute an Award Agreement, effective as of the grant date,
which shall specify the Option Price, the term of the Option, the number of
Shares subject to the Option, and such other provisions as the Committee shall
determine, and which are not inconsistent with the terms and provisions of the
Plan. The Award Agreement shall also specify whether the Option is to be treated
as an ISO within the meaning of Code Section 422. If such Option is not
designated as an ISO, such Option shall be deemed a NQSO. No ISO may be granted
to any person more than 10 years after the Effective Date of the Plan.
6.2. OPTION PRICE. The Committee shall designate the Option Price for each Share
subject to an Option under the Plan, provided that such Option Price shall not
be less than 100% of the Fair Market Value of Shares subject to an Option on the
date the Option is granted, and which Option Price may not be subsequently
decreased by the Committee except pursuant to Section 4.3. With respect to a
Participant who owns, directly or indirectly, more than 10% of the total
combined voting power of all classes of the stock of the Corporation or any
Subsidiary, the Option Price of Shares subject to an ISO shall be at least 110%
of the Fair Market Value of such Shares on the ISO's grant date.
6.3. TERM OF OPTIONS. Each Option granted to a Participant shall expire at such
time as the Committee shall determine at the time of grant, but in no event
shall be exercisable later than the 10th anniversary of the grant date.
Notwithstanding the foregoing, with respect to ISOs, in the case of a
Participant who owns, directly or indirectly, more than 10% of the total
combined voting power of all classes of the stock of the Corporation or any
Subsidiary, no such ISO shall be exercisable later than the fifth anniversary of
the grant date.
6.4. EXERCISE OF OPTIONS. Options granted under this Section 6 shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for
each grant or for each Participant, and shall be set forth in the applicable
Award Agreement, subject to Section 11. Notwithstanding the preceding sentence,
the Fair Market Value of Shares to which ISOs are exercisable for the first time
by any Participant during any calendar year may not exceed $100,000. Any ISOs
that become exercisable in excess of such amount shall be deemed NQSOs to the
extent of such excess.
6.5. EXERCISE AND PAYMENT. Options granted under this Section 6 shall be
exercised by the delivery of a written notice of exercise to the Corporation,
setting forth the number of Shares with respect to which the Option is to be
exercised, accompanied by full payment for the Shares. The Option Price upon
exercise of any Option shall be payable to the Corporation in full either:
(a) in cash or its equivalent,
(b) by tendering previously acquired Shares that have been held for at
least six months (or such longer period to avoid a charge to earnings for
financial reporting purpose) and having an aggregate Fair Market Value at the
time of exercise equal to the total Option Price, or
(c) a combination (i) and (ii).
In addition, payment of the Option Price may be payable by one or more of the
following methods either upon written consent from the Committee or if one or
more of the following methods will not result in a charge to earnings for
financial reporting purposes:
(d) by withholding Shares that otherwise would be acquired on exercise
having an aggregate Fair Market Value at the time of exercise equal to the total
(e) by tendering other Awards payable under the Plan, or
(f) by cashless exercise through delivery of irrevocable instructions to a
broker to promptly deliver to the Corporation the amount of proceeds from a sale
of shares having a Fair Market Value equal to the purchase price.
As soon as practicable after receipt of a written notification of exercise
and full payment, the Corporation shall deliver to the Participant, in the
Participant's name, Share certificates in an appropriate amount based upon the
number of Shares purchased under the Option(s). No Outside Director shall have
any rights of shareholder with respect to Shares subject to an Option, including
any right to receive dividends, to vote, or to participate in the equity of the
Company, until such Option has been exercised and payment made in full as
STOCK APPRECIATION RIGHTS
7.1. GRANT OF SARS AND AWARD AGREEMENT.
(a) SAR Grant. Subject to the terms and conditions of the Plan, SARs may be
granted to Participants at any time and from time to time as shall be determined
by the Committee. The Committee may grant Non-Tandem SARs, Tandem SARs, or any
combination of these forms of SARs. The Committee shall have complete discretion
in determining the number of SARs granted to each Participant (subject to
Section 4) and, consistent with the provisions of the Plan, in determining the
conditions pertaining to such SARs. The Committee shall designate, at the time
of grant, the grant price of a Non-Tandem SAR, which grant price shall be at
least equal to the Fair Market Value of a Share on the grant date of the SAR.
Grant prices of SARs shall not subsequently be decreased by the Committee,
except pursuant to Section 4.3.
(b) Award Agreement. The Corporation and each Participant to whom an SAR is
granted shall execute an Award Agreement that shall specify the grant price, the
term of the SAR, and such other provisions as the Committee shall determine, and
which are not inconsistent with the terms and provisions of the Plan.
7.2. TERM OF SARS. The term of a SAR granted under the Plan shall be determined
by the Committee, in its sole discretion; provided, however, that unless
otherwise designated by the Committee, such term shall not exceed ten years from
the grant date.
7.3. EXERCISE OF TANDEM SARS. Tandem SARs may be exercised for all or part of
the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable. Notwithstanding any other provision of the Plan to the contrary,
with respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem
SAR will expire no later than the expiration of the underlying ISO; (ii) the
value of the payout with respect to the Tandem SAR may be for no more than one
hundred percent (100%) of the difference between the Option Price of the
underlying ISO and the Fair Market Value of the Shares subject to the underlying
ISO at the time the Tandem SAR is exercise; and (iii) the Tandem SAR may be
exercised only when the Fair Market Value of the Shares subject to the ISO
exceeds the Option Price of the ISO.
7.4. EXERCISE OF NON-TANDEM SARS. SARs may be exercised upon whatever terms and
conditions the Committee, in its sole discretion, imposes upon them, subject to
7.5. PAYMENT OF SAR AMOUNT. Upon exercise of a SAR, a Participant shall be
entitled to receive payment from the Corporation in an amount determined by
(a) The excess of the Fair Market Value of a Share on the date of exercise
over the grant price; by
(b) The number of Shares with respect to which the SAR is exercised. At the
sole discretion of the Committee, the payment upon SAR exercise may be in cash,
in Shares of equivalent value, or in some combination thereof.
8.1. GRANT OF RESTRICTED STOCK AND AWARD AGREEMENT.
(a) Grant of Restricted Stock. Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to Participants in such amounts as the Committee shall
(b) Award Agreement. The Corporation and each Participant to whom an award
of Restricted Stock is granted shall execute an Award Agreement that shall
specify the Period or Periods of Restriction, the number of Shares of Restricted
Stock granted, and such other provisions as the Committee shall
determine pursuant to Section 8.3 or otherwise, and which shall not be
inconsistent with the terms and provisions of the Plan.
8.2. TRANSFERABILITY. Except as provided in this Section 8, the Shares of
Restricted Stock granted herein may not be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated, voluntarily or involuntarily, until the
end of the applicable Period of Restriction established by the Committee
(subject to Section 11) and specified in the Award Agreement, or upon earlier
satisfaction of any other conditions, as specified by the Committee in its sole
discretion (subject to Section 11) and set forth in the Award Agreement. All
rights with respect to the Restricted Stock granted to a Participant under the
Plan shall be available during his or her lifetime only to such Participant.
8.3. TRANSFER RESTRICTIONS. The Corporation shall retain the certificates
representing Shares of Restricted Stock in the Corporation's possession until
such time as all conditions and/or restrictions applicable to such Shares have
been satisfied. Except as otherwise provided in Section 18.8 or in any Award
Agreement, Shares of Restricted Stock covered by each Restricted Stock grant
made under the Plan shall become freely transferable by the Participant after
the last day of the applicable Period of Restriction.
8.4. VOTING RIGHTS. Unless otherwise designated by the Committee at the time of
grant, Participants to whom Shares of Restricted Stock have been granted
hereunder may exercise full voting rights with respect to those Shares during
the Period of Restriction.
8.5. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless otherwise designated by the
Committee at the time of grant, Participants holding Shares of Restricted Stock
granted hereunder shall be credited with regular cash dividends paid with
respect to the underlying Shares while they are so held during the Period of
Restriction. The Committee may apply any restrictions to the dividends that the
Committee deems appropriate. Without limiting the generality of the preceding
sentence, if the grant or vesting of Shares of Restricted Stock granted to a
Named Executive Officer is designed to comply with the requirements of the
Performance-Based Exception, the Committee may apply any restrictions it deems
appropriate to the payment of dividends declared with respect to such Shares of
Restricted Stock, such that the dividends and/or the Shares of Restricted Stock
maintain eligibility for the Performance-Based Exception. In the event that any
dividend constitutes a derivative security or an equity security pursuant to the
rules under Section 16 of the Exchange Act, such dividend shall be subject to a
vesting period equal to the remaining vesting period of the Shares of Restricted
Stock with respect to which the dividend is paid.
PERFORMANCE UNITS AND PERFORMANCE SHARES
9.1. GRANT OF PERFORMANCE UNITS/SHARES AND AWARD AGREEMENT.
(a) Grant of Performance Unit/Shares. Subject to the terms of the Plan,
Performance Units and/or Performance Shares may be granted to Participants in
such amounts and upon such terms, and at any time and from time to time, as
shall be determined by the Committee, which shall not be inconsistent with the
terms and provisions of the Plan and shall be set forth in an Award Agreement.
(b) Award Agreement. The Corporation and each Participant to whom
Performance Units and/or Performance Shares is granted shall execute an Award
Agreement that shall specify the initial value of the Award, the performance
goals and the Performance Period, as the Committee shall determine, and which
are not inconsistent with the terms and provisions of the Plan.
9.2. VALUE OF PERFORMANCE UNITS/SHARES. Each Performance Share shall represent
the Participant's right to receive a Share (subject to Section 9.4), upon
satisfaction of performance goals established by the Committee. Each Performance
Unit shall represent the Participant's right to receive a cash payment equal to
the value of the Performance Unit (as determined by the Committee on the Grant
Date, and subject to Section 9.4), upon satisfaction of the performance goals
established by the Committee. The Committee shall set performance goals in its
sole discretion which, depending on the extent to which they are met will
determine the number and/or value of Performance Shares and/or Performance Units
that will be paid out to the Participant. For purposes of this Section 9, the
time period during which the performance goals must be met shall be called a
9.3. EARNING OF PERFORMANCE UNITS/SHARES. Subject to the terms of the Plan,
after the applicable Performance Period has ended, the holder of Performance
Units and/or Performance Shares shall be entitled to receive payout on the
number and value of Performance Units and/or Performance Shares earned by the
Participant over the Performance Period, to be determined as a function of the
extent to which the corresponding performance goals have been achieved, as
established by the Committee.
9.4. FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/SHARES. Except as provided
below, payment of earned Performance Units and/or Performance Shares shall be
made in a single lump sum as soon as reasonably practicable following the close
of the applicable Performance Period. Subject to the terms of the Plan, the
Committee, in its sole discretion, may pay earned Performance Units and/or
Performance Shares in the form of cash or in Shares (or in a combination
thereof) which have an aggregate Fair Market Value equal to the value of the
earned Performance Units and/or Performance Shares at the close of the
applicable Performance Period. Such Shares may be granted subject to any
restrictions deemed appropriate by the Committee.
At the sole discretion of the Committee, Participants may be entitled to
receive any dividends declared with respect to Shares which have been earned in
connection with grants of Performance Shares which have been earned, but not yet
distributed to Participants (such dividends shall be subject to the same
accrual, forfeiture, and payout restrictions as apply to dividends earned with
respect to Shares of Restricted Stock, as set forth in Section 8.5 herein).
Participants shall not be entitled to exercise their voting rights with respect
to such Shares.
Unless and until the Committee proposes for stockholder vote and
stockholders approve a change in the general performance measures set forth in
this Section 10, the attainment of which may determine the degree of payout
and/or vesting with respect to Awards to Named Executive Officers that are
designed to qualify for the Performance-Based Exception, the performance goals
to be used for purposes of such grants shall be established by the Committee in
writing and stated in terms of the attainment of specified levels of or
percentage changes in any one or more of the following measurements: revenue;
primary or fully-diluted earnings per Share; earnings before interest, taxes,
depreciation, and/or amortization; pretax income; cash flow from operations;
total cash flow; return on equity; return on capital; return on assets; net
operating profits after taxes; economic value added; total stockholder return or
return on sales; or any individual performance objective which is measured
solely in terms of quantitative targets related to the Corporation or the
Corporation's business; or any combination thereof. In addition, such
performance goals may be based in whole or in part upon the performance of the
Corporation, a Subsidiary, division and/or other operational unit under one or
more of such measures.
The degree of payout and/or vesting of such Awards designed to qualify for
the Performance-Based Exception shall be determined based upon the written
certification of the Committee as to the extent to which the performance goals
and any other material terms and conditions precedent to such payment and/or
vesting have been satisfied. The Committee shall have the sole discretion to
adjust the determinations of the degree of attainment of the preestablished
performance goals; provided, however, that the performance goals applicable to
Awards which are designed to qualify for the Performance-Based Exception, and
which are held by Named Executive Officers, may not be adjusted so as to
increase the payment under the Award (the Committee shall retain the sole
discretion to adjust such performance goals upward, or to otherwise reduce the
amount of the payment and/or vesting of the Award relative to the preestablished
In the event that applicable tax and/or securities laws change to permit
Committee sole discretion to alter the governing performance measures without
obtaining stockholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining stockholder approval. In
addition, in the event that the Committee determines that it is advisable to
grant Awards which shall not qualify for the Performance-Based Exception, the
Committee may make such grants without satisfying the requirements of Code
Section 162(m) and, thus, which use performance measures other than those
VESTING AND FORFEITURES
11.1. Vesting. As part of making any Award, the Committee may determine the
time and conditions under which the Award will vest. Vesting may, in the
Committee's discretion, be based solely upon continued employment for a
specified period of time, or may be based upon the achievement of specific
performance goals (Corporation-wide, Subsidiary-wide, divisional, and/or
individual) which are established by the Committee in its discretion, subject to
Section 10. For all purposes of this Plan, "vesting" of an Award shall mean:
(a) In the case of an Option or SAR, the time at which the Participant has
the right to exercise the Award. The minimum vesting period for an Option or a
Non-Tandem SAR shall be one year, except as otherwise provided in Section 11.2.
A Tandem SAR shall vest only at the same time, and under the same conditions, as
the underlying Option.
(b) In the case of Restricted Stock, the end of the Restriction Period. The
minimum Restriction Period for Restricted Stock that vests solely on the basis
of continued employment shall be three years, except as otherwise provided in
Section 11.2; provided that the Committee may, in limited circumstances
including but not limited to special recruitment or retention awards, specify a
shorter Restriction Period. The minimum Restriction Period for Restricted Stock
that vests on the basis of the achievement of performance goals during the
Restriction Period shall be one year, except as otherwise provided in Section
(c) In the case of Performance Shares or Performance Units, the time at
which the Participant has satisfied the requirements to receive payment of such
Shares of Units, which shall not be less than one year from the grant date,
except as otherwise provided in Section 11.2.
Vesting provisions need not be uniform among Awards granted at the same time or
to persons similarly situated. Vesting requirements shall be set forth in the
applicable Award Agreement. If an Award Agreement does not specify a vesting
period, the vesting period shall be the minimum period set forth above.
11.2. VESTING ON TERMINATION OF EMPLOYMENT. The Committee, in its sole
discretion, shall set forth in the applicable Award Agreement the extent to
which an Award shall vest upon termination of employment and, in the case of an
Option or SAR, be exercisable following termination of employment. Such
provisions need not be uniform among all Awards issued pursuant to the Plan, and
may reflect distinctions based on the reasons for such termination. Subject to
Section 11.3, in the event that a Participant's Award Agreement does not set
forth such provisions, the following provisions shall apply:
(a) Death, Disability, or Change in Control. In the event that the
Participant's employment with the Corporation and/or any Subsidiary terminates
by reason of death or Disability or following a Change in Control, all Shares
covered by his or her Awards shall immediately become fully vested and, in the
case of an Option or SAR, shall remain exercisable until the earlier of (i) the
remainder of the term of the Award, or (ii) three months (or twelve months in
the case of death) from the date of such termination. In the case of the
Participant's death, the Participant's beneficiary or estate may exercise the
Option or SAR.
(b) Eligible Retirement. In the event that the Participant's employment
with the Corporation and/or any Subsidiary terminates by reason of Eligible
Retirement, all Options or SARs held by the Participant shall vest on the same
dates, and shall remain exercisable for the same periods, as if the Participant
were still employed.
(c) Other Termination. In the event that each of the Participant's
employment terminates prior to a Change in Control for any reason other than
death, Disability, or Eligible Retirement, the Award shall vest only to the
extent it was vested on the date of the termination. To the extent an Option or
SAR was vested on the date of termination, it shall remain exercisable until the
earlier of (i) the remainder of the term of the Award, or (ii) three months from
the date of such termination. In such circumstance, the Option or SAR shall only
be exercisable to the extent that it was exercisable as of such termination date
and shall not be exercisable with respect to any additional Shares.
11.3. ADDITIONAL FORFEITURE EVENTS. Unless otherwise determined by the
Committee, each Award granted hereunder shall be subject to the following
additional forfeiture conditions, to which the Participant, by accepting an
Award hereunder, agrees. If any of the events specified in Section 11.4 occurs
(a "Forfeiture Event"), all of the following forfeitures will result:
(a) The unexercised portion of any Option, whether or not vested, and any
other Award not then settled will be immediately forfeited and canceled upon the
occurrence of the Forfeiture Event; and
(b) The Participant will be obligated to repay to the Corporation, in cash,
within five business days after demand is made therefor by the Corporation, the
total amount of Award Gain (as defined herein) realized by the Participant upon
each exercise of an Option or settlement of an Award that occurred on or after
(i) the date that is six months before the occurrence of the Forfeiture Event,
if the Forfeiture Event occurred while the Participant was employed by the
Corporation or a Subsidiary, or (ii) the date that is six months before the date
the Participant's employment by, service as a Director with, or consulting
arrangement with the Corporation or a Subsidiary terminated, if the Forfeiture
Event occurred after the Participant ceased to be so employed. In the event the
Employee shall fail to immediately pay the Corporation the amount of Award Gain,
the Employee shall be liable to the Corporation for all cost, expenses and
attorneys' fees incurred by the Employee in connection with collecting the Award
Gain, plus interest at a per annum rate equal to the lower of 12% or the
highest rate permitted by applicable law. For purposes of this Section 11.3, the
term "Award Gain" shall mean (A) with respect to a given Option exercise, the
product of (X) the Fair Market Value per Share at the date of such exercise
(without regard to any subsequent change in the market price of shares) minus
the Option Price times (Y) the number of shares as to which the Option was
exercised at that date, and (B) with respect to any other settlement of an Award
granted to the Participant, the Fair Market Value of the cash or Shares paid or
payable to the Participant less any cash or the Fair Market Value of any Shares
or property (other than an Award or award that would have itself then been
forfeitable hereunder and excluding any payment of tax withholding) paid by the
Participant to the Corporation as a condition of or in connection such
11.4. EVENTS TRIGGERING FORFEITURE. The forfeitures specified in Section 11.3
will be triggered upon the occurrence of any one of the following Forfeiture
Events at any time during the Participant's employment by or during the one-year
period following termination of such employment:
(a) Noncompetition. The Employee accepts employment with, or retention by,
any person or entity, or any affiliate of any person or entity, which
manufactures or sells circuit protection products in competition with the
Corporation or any of its Subsidiaries, as an officer, employee, consultant,
agent, representative, or otherwise, or obtains any interest in any such person
or entity, other than the ownership (individually or together with a group of
persons acting in concert, as defined in the Exchange Act) or not more than 5%
of the outstanding common stock of a publicly traded entity.
(b) Non-Solicitation. The Participant, for his or her own benefit or for
the benefit of any other person, company or entity, directly or indirectly, (i)
induces or attempts to induce or hires or otherwise counsels, induces or
attempts to induce or hire or otherwise counsel, advise, encourage or solicit
any person to leave the employment of or the service for the Corporation or any
Subsidiary, (ii) hires or in any manner employs or retains the services of any
individual employed by or providing services to the Corporation or any
Subsidiary as of the date of his or her termination of employment, or employed
by or providing services to the Corporation or any Subsidiary subsequent to such
termination, (iii) solicits, pursues, calls upon or takes away, any of the
customers of the Corporation or any Subsidiary, (iv) solicits, pursues, calls
upon or takes away, any potential customer of the Corporation or any Subsidiary
that has been the subject of a bid, offer or proposal by the Corporation or any
Subsidiary, or of substantial preparation with a view to making such a bid,
proposal or offer, within six months before such Participant's termination of
employment with the Corporation or any Subsidiary, or (v) otherwise interferes
with the business or accounts of the Corporation or any Subsidiary.
(c) Confidential Information. The Participant discloses to any person or
entity or makes use of any "confidential or proprietary information" (as defined
below in this subparagraph (b)) for his or her own purpose or for the benefit of
any person or entity, except as may be necessary in the ordinary course of
employment with or other service to the Corporation or any Subsidiary. Such
"confidential or proprietary information" of the Corporation or any Subsidiary,
includes, but is not limited to, the design, development, operation, building or
manufacturing of automotive and truck interior and exterior components,
lighting, bumper systems or other products manufactured and supplied by the
Corporation and its Subsidiaries, the identity of the Corporation's or any
Subsidiary's customers, the identity of representatives of customers with whom
the Corporation or any Subsidiary has dealt, the kinds of services provided by
the Corporation or any Subsidiary to customers and offered to be performed for
potential customers, the manner in which such services are performed or offered
to be performed, the service needs of actual or prospective customers, pricing
information, information concerning the creation, acquisition or disposition of
products and services, customer maintenance listings, computer software and
hardware applications and other programs, personnel information, information
identifying, relating to or concerning investors in the Corporation or any
Subsidiary, joint venture partners of the Corporation or any Subsidiary,
business partners of the Corporation or any Subsidiary or other entities
providing financing to the Corporation or any Subsidiary, real estate and
leasing opportunities, communications and telecommunications operations and
processes, zoning and licensing matters, relationships with, or matters
involving, landlords and/or property owners, and other trade secrets.
11.5. AGREEMENT DOES NOT PROHIBIT COMPETITION OR OTHER PARTICIPANT ACTIVITIES.
Although the conditions set forth in this Section 11 shall be deemed to be
incorporated into an Award, the Plan does not thereby prohibit the Participant
from engaging in any activity, including but not limited to competition with the
Corporation and its Subsidiaries. Rather, the non-occurrence of the Forfeiture
Events set forth in
Section 11.2 is a condition to the Participant's right to realize and retain
value from his or her compensatory Awards, and the consequence under the Plan if
the Participant engages in an activity giving rise to any such Forfeiture Event
are the forfeitures specified herein. This provision shall not preclude the
Corporation and the Participant from entering into other written agreements
concerning the subject matter of Sections 11.1 and 11.2 and, to the extent any
terms of this Section 11 are inconsistent with any express terms of such
agreement, this Section 11 shall not be deemed to modify or amend such terms.
11.6. COMMITTEE DISCRETION. The Committee may, in its sole discretion, waive in
whole or in part the Corporation's right to forfeiture under this Section 11,
but no such waiver shall be effective unless evidenced by a writing signed by a
duly authorized officer of the Corporation. In addition, the Committee may
impose additional conditions on Awards, by inclusion of appropriate provisions
in the document evidencing or governing any such Award. The Committee, in its
sole discretion, may require an Employee, as a condition to his or her exercise
of an Award or the settlement of an Award, to acknowledge in writing that he or
she has not engaged, and is not in the process of engaging, in any of the
activities described in Section 11.4.
TRANSFERABILITY OF AWARDS;
12.1. LIMITS ON TRANSFERABILITY OF AWARDS.
(a) Except as otherwise provided below, Awards may be exercisable only by
the Participant during the Participant's lifetime, and Awards shall not be
transferable other than by will or the laws of descent and distribution. Any
purported transfer of any Award or any interest therein that does not comply
with the terms of this Plan shall be null and void and confer no rights of any
kind upon the purported transferee.
(b) The Committee may, in its discretion, permit a Participant to transfer
any Award other than an ISO to any family member of such Participant, subject to
such restrictions and limitations as the Committee may provide; provided,
however, that any such Award shall remain subject to all vesting, forfeiture,
and other restrictions provided herein and in the Award Agreement to the same
extent as if it had not been transferred; and provided further that in no event
shall any transfer for value be permitted. For purposes of this Section 12.1(b),
the terms "family member" and "transfer for value" have the same meaning as in
the General Instructions to SEC Form S-8, or such other form as the SEC may
promulgate in replacement thereof.
(c) To the maximum extent permitted by law, no Award shall be subject, in
whole or in part, to attachment, execution or levy of any kind; provided,
however, that nothing contained herein shall affect the right of setoff set
forth in Section 14.3.
(d) Nothing contained in this Section 12.1 shall preclude a Participant
from transferring Restricted Shares that have vested, or Shares that are issued
in settlement of an Option, SAR, or Award of Performance Shares or Performance
Units, subject to the remaining provisions of this Plan and applicable law.
12.2. DESIGNATION OF BENEFICIARY. Each Participant under the Plan may, from time
to time, name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan is to be paid in case of his or
her death before he or she receives any or all of such benefit. Each such
designation shall revoke all prior designations by the same Participant, shall
be in a form prescribed
by the Corporation, and will be effective only when filed by the Participant in
writing with the Secretary of the Corporation during the Participant's lifetime.
In the absence of any such designation, benefits remaining unpaid at the
Participant's death shall be paid to the Participant's estate.
DEFERRALS;COMPLIANCE WITH SECTION 409A
13.1. PROHIBITION ON DEFERRALS OF OPTIONS, SARS AND RESTRICTED STOCK. No
Participant shall have the right to defer the amount of Shares or cash payable
upon the exercise or settlement of any Option or SAR, or the transfer of any
Restricted Stock upon the vesting thereof.
13.2. DEFERRALS OF PERFORMANCE UNITS AND PERFORMANCE SHARES. The Committee may
permit a Participant to defer such Participant's receipt of the payment of cash
or the delivery of Shares that would otherwise be due to such Participant upon
the satisfaction of any requirements or goals with respect to Performance
Units/Shares. If any such deferral election is required or permitted, the
Committee shall, in its sole discretion, establish rules and procedures for such
payment deferrals, subject to the following:
(a) A deferral election may be made only at one of the following two times:
(i) In the case of an Award that cannot vest (other than by reason of
death, Disability, Eligible Retirement or a Change in Control)
earlier than the first anniversary of the date of grant, not
later than the earlier of thirty days after the date of grant or
one year prior to the earliest date on which the Award may vest.
(ii) In the case of an Award that is subject to a Performance Period
of not less than one year, and the vesting of which is subject to
the attainment of Performance Criteria that are established
within the first 90 days of the Performance Period and that are
not substantially certain of being achieved at the time of grant,
not later than six months prior to the end of the Performance
(b) A deferral election shall state the time and manner of payment. Payment
must either be on a specified date, at the time of the Participant's separation
from service with the Corporation and its Subsidiaries as defined in IRS
Proposed Regulations Section 1.409A-1(h), death, or Disability, or upon the
occurrence of a Change in Control that also meets the requirements of IRS
Proposed Regulations Section 1.409A-3(g)(5) (a "409A Change in Control.")
Notwithstanding the foregoing:
(i) An amount payable by reason of a separation from service to an
Employee who is a "key employee" of the Corporation, as defined
in IRS Proposed Regulations Section 1.409A-1(i), shall not be
paid until six months after the separation from service, and any
portion of such amount that would otherwise be payable during
such six month period shall be paid instead at the end of such
(ii) Payment of any amount that the Corporation reasonably determines
would not be deductible by reason of Code Section 162(m) shall be
deferred until the earlier of the earliest date on which the
Corporation reasonably determines that the deductibility of the
payment will not be so limited, or the year following the
termination of employment.
(iii) Any payment that the Corporation reasonably determines will
violate a term of a loan agreement to which the Corporation is a
party, or other similar contract to
which the Corporation is a party, and such violation will cause
material harm to the Corporation shall be deferred until the
earliest date at which the Corporation reasonably anticipates
that the making of the payment will not cause such violation, or
such violation will not cause material harm to the Corporation.
(iv) Any payment that the Corporation reasonably anticipates that will
violate Federal securities laws or other applicable law will be
deferred until the earliest date at which the Corporation
reasonably anticipates that the making of the payment will not
cause such violation.
(v) The Committee may permit Participants to elect to further defer
payments, provided that any such election is made not less than
one year prior to the date on which the payment would otherwise
be made, and that the deferral is for a period of at least five
(c) No payment that a Participant has elected to defer pursuant to this
Section 13.2 may be paid at any earlier date, except in accordance with
procedures adopted by the Committee in compliance with Code Section 409A.
13.3. COMPLIANCE WITH SECTION 409A. The provisions of this Plan, including but
not limited to this Section 13, are intended to comply with the restrictions of
Code Section 409A, including any final regulations issued pursuant thereto, and
the Committee reserves the right to amend any provision of this Plan, or any
outstanding Award, to the extent necessary to comply with Section 409A.
RIGHTS AND OBLIGATIONS OF PARTIES
14.1. NO GUARANTEE OF EMPLOYMENT OR SERVICE RIGHTS. Nothing in the Plan shall
interfere with or limit in any way the right of the Corporation to terminate any
Participant's employment or consulting arrangement at any time, nor confer upon
any Participant any right to continue in the employ of or consulting arrangement
with the Corporation or any Subsidiary.
For purposes of the Plan, temporary absence from employment because of
illness, vacation, approved leaves of absence, and transfers of employment among
the Corporation and its Subsidiaries, shall not be considered to terminate
employment or to interrupt continuous employment. Temporary cessation of the
provision of consulting services because of illness, vacation or any other
reason approved in advance by the Corporation shall not be considered a
termination of the consulting arrangement or an interruption of the continuity
thereof. Conversion of a Participant's employment relationship to a consulting
arrangement shall not result in termination of previously granted Awards.
14.2. PARTICIPATION. No Employee shall have the right to be selected to receive
an Award under the Plan, or, having been so selected, to be selected to receive
a future Award.
14.3. RIGHT OF SETOFF. The Corporation or any Subsidiary may, to the extent
permitted by applicable law, deduct from and set off against any amounts the
Corporation or Subsidiary may owe to the Participant from time to time,
including amounts payable in connection with any Award, owed as wages, fringe
benefits, or other compensation owed to the Participant, such amounts as may be
owed by the Participant to the Corporation, although the Participant shall
remain liable for any part of the Participant's payment obligation not satisfied
through such deduction and setoff. By accepting any Award granted hereunder, the
Participant agrees to any deduction or setoff under this Section 14.
14.4. SECTION 83(B) ELECTION. No election under Section 83(b) of the Code (to
include in gross income in the year of transfer the amounts specified in Code
Section 83(b)) or under a similar provision of the laws of a jurisdiction
outside the United States may be made, unless expressly permitted by the terms
of the Award Agreement or by action of the Committee in writing before the
making of such election. In any case in which a Participant is permitted to make
such an election in connection with an Award, the Participant shall notify the
Corporation of such election within ten days of filing notice of the election
with the Internal Revenue Service or other governmental authority, in addition
to any filing and notification required pursuant to regulations issued under
Code Section 83(b) or other applicable provision.
14.5. DISQUALIFYING DISPOSITION NOTIFICATION. If any Participant shall make any
disposition of Shares delivered pursuant to the exercise of an Incentive Stock
Option under the circumstances described in Code Section 421(b) (relating to
certain disqualifying dispositions), such Participant shall notify the
Corporation of such disposition within ten days thereof.
AMENDMENT, MODIFICATION, AND TERMINATION
15.1. AMENDMENT, MODIFICATION, AND TERMINATION. The Board may amend, suspend or
terminate the Plan or the Committee's authority to grant Awards under the Plan
without the consent of stockholders or Participants; provided, however, that any
amendment to the Plan shall be submitted to the Corporation's stockholders for
approval not later than the earliest annual meeting for which the record date is
after the date of such Board action if such stockholder approval is required by
any federal or state law or regulation or the rules of any stock exchange or
automated quotation system on which the Shares may then be listed or quoted and
the Board may otherwise, in its sole discretion, determine to submit other
amendments to the Plan to stockholders for approval; and provided further, that,
without the consent of an affected Participant, no such Board action may
materially and adversely affect the rights of such Participant under any
outstanding Award. The Committee shall have no authority to waive or modify any
other Award term after the Award has been granted to the extent that the waived
or modified term was mandatory under the Plan.
15.2. AWARDS PREVIOUSLY GRANTED. No termination, amendment, or modification of
the Plan shall adversely affect in any material way any Award previously granted
under the Plan, without the written consent of the Participant holding such
SECTION 16. WITHHOLDING
16.1. TAX WITHHOLDING. The Corporation shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Corporation, an
amount sufficient to satisfy Federal, state, and local taxes, domestic or
foreign, required by law or regulation to be withheld with respect to any
taxable event arising as a result of the Plan.
16.2. SHARE WITHHOLDING. With respect to withholding required upon the exercise
of Options or SARs, upon the lapse of restrictions on Restricted Stock, or upon
any other taxable event arising as a result of Awards granted hereunder,
Participants may elect, subject to the approval of the Committee, to satisfy the
withholding requirement, in whole or in part, by having the Corporation withhold
Shares having a Fair Market Value on the date the tax is to be determined equal
to the minimum statutory total tax which would be imposed on the transaction.
All such elections shall be irrevocable, made in writing, signed by
the Participant, and shall be subject to any restrictions or limitations that
the Committee, in its sole discretion, deems appropriate.
All obligations of the Corporation under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Corporation, whether
the existence of such successor is the result of a direct or indirect merger,
consolidation, purchase of all or substantially all of the business and/or
assets of the Corporation or otherwise.
18.1. UNFUNDED PLAN. The Plan is intended to constitute an "unfunded" plan for
incentive and deferred compensation. With respect to any payments not yet made
to a Participant or obligation to deliver Shares pursuant to an Award, nothing
contained in the Plan or any Award shall give any such Participant any rights
that are greater than those of a general creditor of the Corporation; provided
that the Committee may authorize the creation of trusts and deposit therein
cash, Shares, other Awards or other property, or make other arrangements to meet
the Corporation's obligations under the Plan. Such trusts or other arrangements
shall be consistent with the "unfunded" status of the Plan unless the Committee
otherwise determines with the consent of each affected Participant.
18.2. FORFEITURES; FRACTIONAL SHARES. Unless otherwise determined by the
Committee, in the event of a forfeiture of an Award with respect to which a
Participant paid cash consideration, the Participant shall be repaid the amount
of such cash consideration. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award. The Committee shall determine whether cash,
other Awards or other property shall be issued or paid in lieu of such
fractional Shares or whether such fractional Shares or any rights thereto shall
be forfeited or otherwise eliminated.
18.3. COMPLIANCE WITH CODE SECTION 162(M). The Corporation intends that Options
and SARs granted to Named Executive Officers and other Awards designated as
Awards to Named Executive Officers shall constitute qualified "performance-based
compensation" within the meaning of Code Section 162(m) and regulations
thereunder, unless otherwise determined by the Committee at the time of
allocation of an Award. Accordingly, the terms of Sections 4.2, 6, 7, 8.5, 8.6,
9 and 10, including the definitions of Named Executive Officer and other terms
used therein, shall be interpreted in a manner consistent with Code Section
162(m) and regulations thereunder. The foregoing notwithstanding, because the
Committee cannot determine with certainty whether a given Participant will be a
Named Executive Officer with respect to a fiscal year that has not yet been
completed, the term Named Executive Officer as used herein shall mean only a
person designated by the Committee as likely to be a Named Executive Officer
with respect to a specified fiscal year. If any provision of the Plan or any
Award Agreement relating to a Performance Award that is designated as intended
to comply with Code Section 162(m) does not comply or is inconsistent with the
requirements of Code Section 162(m) or regulations thereunder, such provision
shall be construed or deemed amended to the extent necessary to conform to such
requirements, and no provision shall be deemed to confer upon the Committee or
any other person sole discretion to increase the amount of compensation
otherwise payable in connection with any such Award upon attainment of the
applicable performance objectives.
18.4. AWARDS TO PARTICIPANTS OUTSIDE THE UNITED STATES. The Committee may modify
the terms of any Award under the Plan made to or held by a Participant who is
then resident or primarily employed
outside of the United States in any manner deemed by the Committee to be
necessary or appropriate in order that such Award shall conform to laws,
regulations, and customs of the country in which the Participant is then
resident or primarily employed, or so that the value and other benefits of the
Award to the Participant, as affected by foreign tax laws and other
restrictions, applicable as a result of the Participant's residence or
employment abroad shall be comparable to the value of such an Award to a
Participant who is resident or primarily employed in the United States. An Award
may be modified under this Section 19.4 in a manner that is inconsistent with
the express terms of the Plan, so long as such modifications will not contravene
any applicable law or regulation or result in actual liability under Section
16(b) of the Exchange Act for the Participant whose Award is modified.
18.5. GENDER AND NUMBER; HEADINGS. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.
Headings are included for the convenience of reference only and shall not be
used in the interpretation or construction of any such provision contained in
18.6. SEVERABILITY. In the event any provision of the Plan shall be held illegal
or invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.
18.7. REQUIREMENTS OF LAW. The granting of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required.
18.8. ADDITIONAL RESTRICTIONS ON TRANSFERS. The Committee may impose such
restrictions on any Shares acquired pursuant to an Award, including Restricted
Shares, Performance Shares, or Shares received upon exercise of an Option or
SAR, as it may deem advisable. Such restrictions may include, without
limitation, restrictions under applicable Federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws applicable
to such Shares. As a condition of any issuance of Shares deliverable under the
Plan, the Corporation may place legends on the shares, issue stop-transfer
orders and require such agreements or undertakings from the Participant as the
Committee may deem necessary or advisable to assure compliance with any such
18.9. GOVERNING LAW. To the extent not preempted by Federal law, the Plan, and
all agreements hereunder, shall be construed in accordance with and governed by
the laws of the State of Delaware.