SECTION 1. PURPOSE: The purpose of the Andrew Corporation Management Incentive Plan is to advance the interests of Andrew Corporation and its shareholders by providing performance-based incentives to certain employees of Andrew Corporation and its Affiliates (as hereinafter defined).
SECTION 2. EFFECTIVE DATE: This Plan will become effective as of November 17, 2004, subject to the approval of the shareholders at the Annual Meeting to be held on February 8, 2005. The Plan shall remain in effect until terminated pursuant to Section 17 of the Plan.
SECTION 3. DEFINITIONS: As used in this Plan, unless the context otherwise requires, each of the following terms shall have the meaning set forth below.
"Affiliate" shall mean any entity that, directly or indirectly, controls, is controlled by, or is under common control with, the Company.
"Award" shall mean, for any Performance Period, an award entitling a Participant to receive incentive compensation subject to the terms and conditions of the Plan.
"Board of Directors" or "Board" shall mean the board of directors of the Company.
"CEO" shall mean the Chief Executive Officer of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, and any references to a particular section of the Code shall be deemed to include any successor provision thereto.
"Committee" shall mean the Compensation Committee or such other committee of the Board of Directors, which shall consist solely of two or more "outside directors" within the meaning of Section 162(m) of the Code.
"Common Stock" shall mean the common stock, $0.01 par value, of the Company.
"Company" shall mean
Andrew Corporation, a
"Covered Employee" shall mean the CEO and each other executive of the Company who the Committee determines, in its discretion, is or may be a "covered employee" within the meaning of Section 162(m) of the Code for the fiscal year at issue.
"Eligible Employee" shall mean all officers and other key employees of the Company and its Affiliates.
"Maximum Amount" shall mean $3,000,000 for any Participant for a Performance Period.
"Participant" shall mean an Eligible Employee selected by the Committee to participate in the Plan for a Performance Period pursuant to Section 5.
"Performance Goal(s)" shall mean the goal or goals established for a Participant for a Performance Period by the Committee pursuant to Section 6.
"Performance Measures" shall mean any of the following performance criteria, either alone or in any combination, which may be expressed with respect to the Company or one or more operating units or groups, as the Committee may determine: cash flow; cash flow from operations; total earnings; earnings per share, diluted or basic; earnings per share from continuing operations, diluted or basic; earnings before interest and taxes; earnings before interest, taxes, depreciation, and amortization; earnings from operations; net asset turnover; inventory turnover; capital expenditures; net earnings; operating earnings; gross or operating
margin; debt; working capital; return on equity; return on net assets; return on total assets; return on capital; return on investment; return on sales; net or gross sales; market share; economic value added; cost of capital; change in assets; expense reduction levels; debt reduction; productivity; delivery performance; safety record; stock price; and total shareholder return. Performance Measures may be determined on an absolute basis or relative to internal goals or relative to levels attained in prior years or related to other companies or indices or as ratios expressing relationships between two or more Performance Measures. The Committee shall provide how any Performance Measure shall be adjusted to the extent necessary to prevent dilution or enlargement of any Award as a result of extraordinary events or circumstances, as determined by the Committee, or to exclude the effects of extraordinary, unusual, or non-recurring items; changes in applicable laws, regulations, or accounting principles; currency fluctuations; discontinued operations; non-cash items, such as amortization, depreciation, or reserves; asset impairment; or any recapitalization, restructuring, reorganization, merger, acquisition, divestiture, consolidation, spin-off, split-up, combination, liquidation, dissolution, sale of assets, or other similar corporate transaction; provided, however, that no such adjustment will be made if the effect of such adjustment would cause the Award to fail to qualify as "performance based compensation" within the meaning of Section 162(m) of the Code.
"Performance Period" shall mean the Company's fiscal year or such other period (which may be longer or shorter than a fiscal year) as determined by the Committee.
"Plan" shall mean the Andrew Corporation Management Incentive Plan, as amended and restated from time to time.
SECTION 4. ADMINISTRATION: Subject to the express provisions of this Plan, the Committee shall have authority to interpret the Plan, to prescribe, amend, and rescind rules and regulations relating to it, and to make all other determinations deemed necessary or advisable for the administration of the Plan. In exercising its discretion, the Committee may use such objective or subjective factors as it determines to be appropriate in its sole discretion. The determinations of the Committee pursuant to its authority under the Plan shall be conclusive and binding. The Committee may delegate to one or more officers of the Company the authority, subject to the terms and conditions as the Committee shall determine, to grant and administer Awards to Participants who are not Covered Employees.
SECTION 5. ELIGIBILITY: The Committee shall designate which Eligible Employees will be Participants in the Plan for a particular Performance Period.
SECTION 6. AWARDS
The Committee may make Awards to Participants with respect to each Performance Period, subject to the terms and conditions set forth in the Plan.
Committee shall, in writing, select which Eligible Employees will be
Participants for such Performance Period and determine for each such
Performance Period, within 90 days after the commencement of each
Performance Period (or such other date as required by Section 162(m) of
the Code and the regulations promulgated thereunder)
in the case of Covered Employees, the following:
The Performance Goal or Performance Goals applicable to each Participant for the Performance Period, based on one or more Performance Measures in the case of Covered Employees; and
The payout schedule detailing the total amount which may be available for payout to each Participant based upon the relative level of attainment of the Performance Goal or Performance Goals.
completion of a Performance Period and any audit and certification
of the Company's financial results by the Company's
independent auditors, the Committee shall:
Certify, in writing, prior to payment of any Award, whether and to what extent the Performance Goal or Performance Goals for the Performance Period were satisfied:
Determine the amount available for each Participant's Award pursuant to the payout schedule established in Section 6(b)(ii);
Determine any increase or reduction in the amount of a Participant's available Award, as determined pursuant to Section 6(c)(ii), (including a reduction to zero) based on any subjective or objective factors that it determines to be appropriate in its sole discretion; provided, however, in the case of a Covered Employee, the Committee may reduce (including a reduction to zero) but may not increase the amount of an available Award or waive the achievement of the applicable Performance Goals, except as the Committee may provide for certain events, including but not limited to death, disability, or a change in ownership or control of the Company; and provided further, that the exercise of such discretion to reduce an Award with respect to any Participant shall not have the effect of increasing an Award that is payable to Covered Employee; and
Authorize payment subject to Section 7 of such amounts determined under Section 6(c)(iii).
Notwithstanding any other provision of this Plan, in no event shall the Award earned by any Participant for a Performance Period exceed the Maximum Amount.
SECTION 7. PAYMENT OF AWARDS: Payment under this Plan shall be made in a lump sum or installments in cash and/or Common Stock, as determined by the Committee (provided that the source of such Common Stock shall be an equity plan previously approved by shareholders of the Company), as soon as practicable after authorization of payment for a Participant, or to such deferred compensation plan that the Company may establish for such purpose. If all or any portion of the Award is to be paid in Common Stock, the Committee shall determine the basis on which the payment will be converted into Common Stock.
SECTION 8. WITHHOLDING: The Committee may make such provisions and take such steps as it may deem necessary and appropriate for the withholding of any taxes that the Company is required by law or regulation of any governmental authority, whether federal, state, local, domestic, or foreign, to withhold in connection with an Award, including, but not limited to, requiring the Participant to remit to the Company an amount sufficient to satisfy such withholding requirements in cash or Common Stock or withholding cash or Common Stock due or to become due with respect to an Award.
SECTION 9. NO RIGHT TO AWARDS: No employee shall have any claim to be granted any Award under the Plan, and there is no obligation for uniform treatment of employees under the Plan. The terms and conditions of Awards need not be the same with respect to different Participants.
SECTION 10. NO RIGHT TO EMPLOYMENT: The grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of the Company or an Affiliate. The Company may at any time terminate an employee's employment free from any liability or any claim under the Plan, unless otherwise provided in the Plan.
SECTION 11. SEVERABILITY: If any provision of the Plan or any Award is, becomes, or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the purpose or intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction or Award, and the remainder of the Plan or such Award shall remain in full force and effect.
SECTION 12. NO TRUST OR FUND CREATED: Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other person. To the extent any person acquires a right to receive payments from the Company or an Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate.
SECTION 13. HEADINGS: Headings are given to the Sections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provisions thereof.
SECTION 14. NONASSIGNABILITY: Unless otherwise determined by the Committee, no Participant or beneficiary may sell, assign, transfer, discount, or pledge as collateral for a loan, or otherwise anticipate any right to payment under the Plan other than by will or by the applicable laws of descent and distribution.
SECTION 15. INDEMNIFICATION: In addition to such other rights of indemnification as members of the Board or the Committee or officers or employees of the Company or an Affiliate to whom authority to act for the Board or Committee is delegated may have, such individuals shall be indemnified by the Company against all reasonable expenses, including attorneys' fees, incurred in connection with the defense of any action, suit, or proceeding, or in connection with any appeal thereof, to which any such individual may be a party by reason of any action taken or failure to act under or in connection with the Plan or any right granted hereunder and against all amounts paid by such individual in a settlement thereof that is approved by the Company's legal counsel or paid in satisfaction of a judgment in any such action, suit, or proceeding, except in relation to matters as to which it shall be adjudged that such person is liable for gross negligence, bad faith, or intentional misconduct; provided, however, that any such individual shall give the Company an opportunity, at its own expense, to defend the same before such individual undertakes to defend such action, suit, or proceeding.
SECTION 16. FOREIGN JURISDICTIONS: The Committee may adopt, amend, or terminate arrangements, not inconsistent with the intent of the Plan, to make available tax or other benefits under the laws of any foreign jurisdiction to Participants subject to such laws or to conform with the laws and regulations of any such foreign jurisdiction.
SECTION 17. TERMINATION
SECTION 18. INTERPRETATION: It is the intent of the Company that Awards made to Covered Employees shall constitute "qualified performance-based compensation" satisfying the requirements of Section 162(m) of the Code. Accordingly, the provisions of the Plan shall be interpreted in a manner consistent with Section 162(m) of the Code. If any provision of the Plan or an Award is intended to but does not comply or is inconsistent with the requirements of Section 162(m) of the Code, such provision shall be construed or deemed amended to the extent necessary to conform to and comply with such requirements.
SECTION 19. APPLICABLE LAW: This Plan shall be governed by
and construed in accordance with the laws of the State of