MEADE INSTRUMENTS CORP.

                           1997 STOCK INCENTIVE PLAN,

                                   AS AMENDED

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                                                                   Exhibit 10.63

 

                                TABLE OF CONTENTS

 

<TABLE>

<S>   <C>         <C>                                                              <C>

1.    THE PLAN.......................................................................1

      1.1         Purpose............................................................1

      1.2         Administration and Authorization; Power and Procedure..............1

      1.3         Participation......................................................2

      1.4         Shares Available for Awards; Share Limits..........................3

      1.5         Grant of Awards....................................................3

      1.6         Award Period.......................................................4

      1.7         Limitations on Exercise and Vesting of Awards......................4

      1.8         Acceptance of Notes to Finance Exercise............................4

      1.9         No Transferability; Limited Exception to Transfer Restrictions.....5

 

2.    OPTIONS........................................................................6

      2.1         Grants.............................................................6

      2.2         Option Price.......................................................6

      2.3         Limitations on Grant and Terms of Incentive Stock Options..........7

      2.4         Limits on 10% Holders..............................................7

      2.5         Option Repricing/Cancellation and Regrant/Waiver of Restrictions...8

      2.6         Options and Rights in Substitution for Stock Options Granted by

                  Other Corporations.................................................8

 

3.    STOCK APPRECIATION RIGHTS (INCLUDING LIMITED STOCK APPRECIATION RIGHTS)........8

      3.1         Grants.............................................................8

      3.2         Exercise of Stock Appreciation Rights..............................8

      3.3         Payment............................................................9

      3.4         Limited Stock Appreciation Rights..................................9

 

4.    RESTRICTED STOCK AWARDS.......................................................10

      4.1         Grants............................................................10

      4.2         Restrictions......................................................10

      4.3         Return to the Corporation.........................................11

 

5.    PERFORMANCE SHARE AWARDS AND STOCK BONUSES....................................11

      5.1         Grants of Performance Share Awards................................11

      5.2         Special Performance-Based Share Awards............................11

      5.3         Grants of Stock Bonuses...........................................13

      5.4         Deferred Payments.................................................13

 

6.    OTHER PROVISIONS..............................................................13

      6.1         Rights of Eligible Persons, Participants and Beneficiaries........13

      6.2         Adjustments; Acceleration.........................................14

      6.3         Effect of Termination of Employment...............................15

      6.4         Compliance with Laws..............................................16

</TABLE>

 

 

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                                                                   Exhibit 10.63

 

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      6.5         Tax Withholding...................................................16

      6.6         Plan Amendment, Termination and Suspension........................17

      6.7         Privileges of Stock Ownership.....................................18

      6.8         Effective Date of the Plan........................................18

      6.9         Term of the Plan..................................................18

      6.10        Governing Law/Construction/Severability...........................18

      6.11        Captions..........................................................19

      6.12        Effect of Change of Subsidiary Status.............................19

      6.13        Non-Exclusivity of Plan...........................................19

 

7.    DEFINITIONS ..................................................................19

      7.1         Definitions.......................................................19

 

8.    NON-EMPLOYEE DIRECTOR OPTIONS.................................................24

      8.1         Participation.....................................................24

      8.2         Annual Option Grants..............................................25

      8.3         Option Price......................................................25

      8.4         Option Period and Exercisability..................................25

      8.5         Termination of Directorship.......................................25

      8.6         Adjustments.......................................................26

      8.7         Acceleration Upon a Change in Control Event.......................26

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                                       ii

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                                                                   Exhibit 10.63

 

                             MEADE INSTRUMENTS CORP.

                           1997 STOCK INCENTIVE PLAN,

                                   AS AMENDED

 

1.    THE PLAN

 

      1.1   Purpose

 

            The purpose of this Plan is to promote the success of the Company by

providing an additional means through the grant of Awards to attract, motivate,

retain and reward key employees, including officers, whether or not directors,

of the Company with awards and incentives for high levels of individual

performance and improved financial performance of the Company and to attract,

motivate and retain experienced and knowledgeable independent directors through

the benefits provided under Article 8. "Corporation" means Meade Instruments

Corp., a California corporation, and "Company" means the Corporation and its

Subsidiaries, collectively. These terms and other capitalized terms are defined

in Article 7.

 

      1.2   Administration and Authorization; Power and Procedure.

 

 

            (a)   Committee. This Plan shall be administered by and all Awards

to Eligible Persons shall be authorized by the Committee. Action of the

Committee with respect to the administration of this Plan shall be taken

pursuant to a majority vote or by written consent of its members.

 

            (b) Plan Awards; Interpretation; Powers of Committee. Subject to the

express provisions of this Plan, the Committee shall have the authority:

 

 

            (i) to determine from among those persons eligible the particular

      Eligible Persons who will receive any Awards;

 

            (ii) to grant Awards to Eligible Persons, determine the price at

      which securities will be offered or awarded and the amount of securities

      to be offered or awarded to any of such persons, and determine the other

      specific terms and conditions of such Awards consistent with the express

      limits of this Plan, and establish the installments (if any) in which such

      Awards shall become exercisable or shall vest, or determine that no

      delayed exercisability or vesting is required, and establish the events of

      termination or reversion of such Awards;

 

            (iii) to approve the forms of Award Agreements (which need not be

      identical either as to type of award or among Participants);

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                                                                   Exhibit 10.63

 

            (iv) to construe and interpret this Plan and any agreements defining

      the rights and obligations of the Company and Participants under this

      Plan, further define the terms used in this Plan, and prescribe, amend and

      rescind rules and regulations relating to the administration of this Plan;

 

            (v) to cancel, modify, or waive the Corporation's rights with

      respect to, or modify, discontinue, suspend, or terminate any or all

      outstanding Awards held by Eligible Persons, subject to any required

      consent under Section 6.6;

 

            (vi) to accelerate or extend the exercisability or extend the term

      of any or all such outstanding Awards within the maximum ten-year term of

      Awards under Section 1.6; and

 

            (vii) to make all other determinations and take such other action as

      contemplated by this Plan or as may be necessary or advisable for the

      administration of this Plan and the effectuation of its purposes.

 

Notwithstanding the foregoing, the provisions of Article 8 relating to

Non-Employee Director Awards shall be automatic and, to the maximum extent

possible, self-effectuating.

 

            (c)   Binding Determinations. Any action taken by, or inaction of,

the Corporation, any Subsidiary, the Board or the Committee relating or pursuant

to this Plan shall be within the absolute discretion of that entity or body and

shall be conclusive and binding upon all persons. No member of the Board or

Committee, or officer of the Corporation or any Subsidiary, shall be liable for

any such action or inaction of the entity or body, of another person or, except

in circumstances involving bad faith, of himself or herself. Subject only to

compliance with the express provisions hereof, the Board and Committee may act

in their absolute discretion in matters within their authority related to this

Plan.

 

            (d)   Reliance on Experts. In making any determination or in taking

or not taking any action under this Plan, the Committee or the Board, as the

case may be, may obtain and may rely upon the advice of experts, including

professional advisors to the Corporation. No director, officer or agent of the

Company shall be liable for any such action or determination taken or made or

omitted in good faith.

 

            (e)   Delegation. The Committee may delegate ministerial,

non-discretionary functions to individuals who are officers or employees of the

Company.

 

      1.3   Participation.

 

            Awards may be granted by the Committee only to those persons that

the Committee determines to be Eligible Persons. An Eligible Person who has been

granted an Award may, if otherwise eligible, be granted additional Awards if the

Committee shall so determine.

 

 

                                       2

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                                                                   Exhibit 10.63

 

      1.4   Shares Available for Awards; Share Limits.

 

            (a)   Shares Available. Subject to the provisions of Section 6.2,

the capital stock that may be delivered under this Plan shall be shares of the

Corporation's authorized but unissued Common Stock and any shares of its Common

Stock held as treasury shares. The shares may be delivered for any lawful

consideration.

 

            (b)   Share Limits. The maximum number of shares of Common Stock

that may be delivered pursuant to Awards (including Incentive Stock Options)

granted to Eligible Persons under this Plan shall not exceed 5,500,000 shares

(the `Share Limit'). The maximum number of shares of Common Stock that may be

delivered under the provisions of Article 8 shall not exceed 250,000 shares. The

maximum number of shares subject to those Options and Stock Appreciation Rights

that are granted during any calendar year to any individual shall be limited to

500,000 shares. Each of the three foregoing numerical limits shall be subject to

adjustment as contemplated by this Section 1.4 and Section 6.2.

 

            (b)   Share Reservation; Replenishment and Reissue of Unvested

Awards. No Award may be granted under this Plan unless, on the date of grant,

the sum of (i) the maximum number of shares issuable at any time pursuant to

such Award, plus (ii) the number of shares that have previously been issued

pursuant to Awards granted under this Plan, other than reacquired shares

available for reissue consistent with any applicable legal limitations, plus

(iii) the maximum number of shares that may be issued at any time after such

date of grant pursuant to Awards that are outstanding on such date, does not

exceed the Share Limit. Shares that are subject to or underlie Awards which

expire or for any reason are cancelled or terminated, are forfeited, fail to

vest, or for any other reason are not paid or delivered under this Plan, as well

as reacquired shares, shall again, except to the extent prohibited by law, be

available for subsequent Awards under the Plan. Except as limited by law, if an

Award is or may be settled only in cash, such Award need not be counted against

any of the limits under this Section 1.4.

 

      1.5   Grant of Awards.

 

            Subject to the express provisions of this Plan, the Committee shall

determine the number of shares of Common Stock subject to each Award, the price

(if any) to be paid for the shares or the Award and, in the case of Performance

Share Awards, in addition to matters addressed in Section 1.2(b), the specific

objectives, goals and performance criteria (such as an increase in sales, market

value, earnings or book value over a base period, the years of service before

vesting, the relevant job classification or level of responsibility or other

factors) that further define the terms of the Performance Share Award. Each

Award shall be evidenced by an Award Agreement signed by the Corporation and, if

required by the Committee, by the Participant.

 

 

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                                                                   Exhibit 10.63

 

      1.6   Award Period.

 

            Each Award and all executory rights or obligations under the related

Award Agreement shall expire on such date (if any) as shall be determined by the

Committee, but in the case of Options or other rights to acquire Common Stock

not later than ten (10) years after the Award Date.

 

      1.7   Limitations on Exercise and Vesting of Awards.

 

            (a)   Provisions for Exercise. Unless the Committee otherwise

expressly provides, no Award shall be exercisable or shall vest until at least

six months after the initial Award Date, and once exercisable an Award shall

remain exercisable until the expiration or earlier termination of the Award.

 

            (b)   Procedure. Any exercisable Award shall be deemed to be

exercised when the Secretary of the Corporation receives written notice of such

exercise from the Participant, together with any required payment made in

accordance with Section 2.2(a) or 8.4, as the case may be.

 

            (c)   Fractional Shares/Minimum Issue. Fractional share interests

shall be disregarded, but may be accumulated. The Committee, however, may

determine in the case of Eligible Persons that cash, other securities, or other

property will be paid or transferred in lieu of any fractional share interests.

No fewer than 100 shares may be purchased on exercise of any Award at one time

unless the number purchased is the total number at the time available for

purchase under the Award.

 

      1.8   Acceptance of Notes to Finance Exercise.

 

            The Corporation may, with the Committee's approval, accept one or

more notes from any Eligible Person in connection with the exercise or receipt

of any outstanding Award; provided that any such note shall be subject to the

following terms and conditions:

 

            (a)   The principal of the note shall not exceed the amount required

to be paid to the Corporation upon the exercise or receipt of one or more Awards

under the Plan and the note shall be delivered directly to the Corporation in

consideration of such exercise or receipt.

 

            (b)   The initial term of the note shall be determined by the

Committee; provided that the term of the note, including extensions, shall not

exceed a period of five years.

 

            (c)   The note shall provide for full recourse to the Participant

and shall bear interest at a rate determined by the Committee but not less than

the interest rate necessary to avoid the imputation of interest under the Code.

 

 

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                                                                   Exhibit 10.63

 

            (d)   If the employment of the Participant terminates, the unpaid

principal balance of the note shall become due and payable on the 10th business

day after such termination; provided, however, that if a sale of such shares

would cause such Participant to incur liability under Section 16(b) of the

Exchange Act, the unpaid balance shall become due and payable on the 10th

business day after the first day on which a sale of such shares could have been

made without incurring such liability assuming for these purposes that there are

no other transactions (or deemed transactions in securities of this Corporation)

by the Participant subsequent to such termination.

 

            (e)   If required by the Committee or by applicable law, the note

shall be secured by a pledge of any shares or rights financed thereby in

compliance with applicable law.

 

            (f)   The terms, repayment provisions, and collateral release

provisions of the note and the pledge securing the note shall conform with

applicable rules and regulations of the Federal Reserve Board as then in effect.

 

      1.9   No Transferability; Limited Exception to Transfer Restrictions.

 

            (a)   Limit On Exercise and Transfer. Unless otherwise expressly

provided in (or pursuant to) this Section 1.9, by applicable law and by the

Award Agreement, as the same may be amended, (i) all Awards are non-transferable

and shall not be subject in any manner to sale, transfer, anticipation,

alienation, assignment, pledge, encumbrance or charge; Awards shall be exercised

only by the Participant; and (ii) amounts payable or shares issuable pursuant to

an Award shall be delivered only to (or for the account of) the Participant.

 

            (b)   Exceptions. The Committee may permit Awards to be exercised by

and paid only to certain persons or entities related to the Participant,

including but not limited to members of the Participant's family, charitable

institutions, or trusts or other entities whose beneficiaries or beneficial

owners are members of the Participant's family and/or charitable institutions,

or to such other persons or entities as may be approved by the Committee,

pursuant to such conditions and procedures as the Committee may establish. Any

permitted transfer shall be subject to the condition that the Committee receive

evidence satisfactory to it that the transfer is being made for estate and/or

tax planning purposes on a gratuitous or donative basis and without

consideration (other than nominal consideration). Notwithstanding the foregoing,

Incentive Stock Options and Restricted Stock Awards shall be subject to any and

all additional transfer restrictions under the Code.

 

            (c)   Further Exceptions to Limits On Transfer. The exercise and

transfer restrictions in Section 1.9(a) shall not apply to:

 

            (i)   transfers to the Corporation,

 

            (ii)  the designation of a beneficiary to receive benefits in the

                  event of the Participant's death or, if the Participant has

                  died, transfers to or exercise by

 

 

                                       5

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                                                                   Exhibit 10.63

 

                  the Participant's beneficiary, or, in the absence of a validly

                  designated beneficiary, transfers by will or the laws of

                  descent and distribution,

 

            (iii) transfers pursuant to a QDRO order if approved or ratified by

                  the Committee,

 

            (iv)  if the Participant has suffered a disability, permitted

                  transfers or exercises on behalf of the Participant by his or

                  her legal representative, or

 

            (v)   the authorization by the Committee of "cashless exercise"

                  procedures with third parties who provide financing for the

                  purpose of (or who otherwise facilitate) the exercise of

                  Awards consistent with applicable laws and the express

                  authorization of the Committee.

 

Notwithstanding the foregoing, Incentive Stock Options and Restricted Stock

Awards shall be subject to any and all additional transfer restrictions under

the Code.

 

2.    OPTIONS.

 

      2.1   Grants.

 

            One or more Options may be granted under this Article to any

Eligible Person. Each Option granted shall be designated in the applicable Award

Agreement, by the Committee as either an Incentive Stock Option, subject to

Section 2.3, or a Non-Qualified Stock Option; provided, however, that Incentive

Stock Options may only be granted to Eligible Persons who are employees of the

Company.

 

      2.2   Option Price.

 

            (a) Pricing Limits. The purchase price per share of the Common Stock

covered by each Option shall be determined by the Committee at the time of the

Award, but in the case of Incentive Stock Options shall not be less than 100%

(110% in the case of a Participant described in Section 2.4) of the Fair Market

Value of the Common Stock on the date of grant.

 

            (b) Payment Provisions. The purchase price of any shares purchased

on exercise of an Option granted under this Article shall be paid in full at the

time of each purchase in one or a combination of the following methods: (i) in

cash or by electronic funds transfer; (ii) by check payable to the order of the

Corporation; (iii) if authorized by the Committee or specified in the applicable

Award Agreement, by a promissory note of the Participant consistent with the

requirements of Section 1.8; (iv) by notice and third party payment in such

manner as may be authorized by the Committee; or (v) by the delivery of shares

of Common Stock of the Corporation already owned by the Participant, provided,

however, that the Committee may in its absolute discretion limit the

Participant's ability to exercise an Award by delivering such shares,

 

 

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                                                                   Exhibit 10.63

 

and provided further that any shares delivered which were initially acquired

upon exercise of a stock option must have been owned by the Participant at least

six months as of the date of delivery. Shares of Common Stock used to satisfy

the exercise price of an Option shall be valued at their Fair Market Value on

the date of exercise.

 

      2.3   Limitations on Grant and Terms of Incentive Stock Options.

 

            (a) $100,000 Limit. To the extent that the aggregate "Fair Market

Value" of stock with respect to which incentive stock options first become

exercisable by a Participant in any calendar year exceeds $100,000, taking into

account both Common Stock subject to Incentive Stock Options under this Plan and

stock subject to incentive stock options under all other plans of the Company,

such options shall be treated as Nonqualified Stock Options. For this purpose,

the "Fair Market Value" of the stock subject to options shall be determined as

of the date the options were awarded. In reducing the number of options treated

as incentive stock options to meet the $100,000 limit, the most recently granted

options shall be reduced first. To the extent a reduction of simultaneously

granted options is necessary to meet the $100,000 limit, the Committee may, in

the manner and to the extent permitted by law, designate which shares of Common

Stock are to be treated as shares acquired pursuant to the exercise of an

Incentive Stock Option.

 

            (b) Option Period. Each Option and all rights thereunder shall

expire no later than 10 years after the Award Date.

 

            (c) Other Code Limits. Incentive Stock Options may only be granted

to Eligible Employees of the Corporation or a Subsidiary that satisfies the

other eligibility requirements of the Code. There shall be imposed in any Award

Agreement relating to Incentive Stock Options such other terms and conditions as

from time to time are required in order that the Option be an "incentive stock

option" as that term is defined in Section 422 of the Code.

 

      2.4   Limits on 10% Holders.

 

            No Incentive Stock Option may be granted to any person who, at the

time the Option is granted, owns (or is deemed to own under Section 424(d) of

the Code) shares of outstanding Common Stock possessing more than 10% of the

total combined voting power of all classes of stock of the Corporation, unless

the exercise price of such Option is at least 110% of the Fair Market Value of

the stock subject to the Option and such Option by its terms is not exercisable

after the expiration of five years from the date such Option is granted.

 

 

                                       7

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                                                                   Exhibit 10.63

 

      2.5   Option Repricing/Cancellation and Regrant/Waiver of Restrictions.

 

            Subject to Section 1.4 and Section 6.6 and the specific limitations

on Awards contained in this Plan, the Committee from time to time may authorize,

generally or in specific cases only, for the benefit of any Eligible Person any

adjustment in the exercise or purchase price, the vesting schedule, the number

of shares subject to, the restrictions upon or the term of, an Award granted

under this Article by cancellation of an outstanding Award and a subsequent

regranting of an Award, by amendment, by substitution of an outstanding Award,

by waiver or by other legally valid means. Such amendment or other action may

result among other changes in an exercise or purchase price which is higher or

lower than the exercise or purchase price of the original or prior Award,

provide for a greater or lesser number of shares subject to the Award, or

provide for a longer or shorter vesting or exercise period.

 

      2.6 Options and Rights in Substitution for Stock Options Granted by Other

Corporations. Options and Stock Appreciation Rights may be granted to Eligible

Persons under this Plan in substitution for employee stock options granted by

other entities to persons who are or who will become Eligible Persons in respect

of the Company, in connection with a distribution, merger or reorganization by

or with the granting entity or an affiliated entity, or the acquisition by the

Company, directly or indirectly, of all or a substantial part of the stock or

assets of the other entity.

 

3.    STOCK APPRECIATION RIGHTS (INCLUDING LIMITED STOCK APPRECIATION RIGHTS).

 

      3.1   Grants.

 

            In its discretion, the Committee may grant Stock Appreciation Rights

to any Eligible Person either concurrently with the grant of another Award or in

respect of an outstanding Award, in whole or in part, or independently of any

other Award. Any Stock Appreciation Right granted in connection with an

Incentive Stock Option shall contain such terms as may be required to comply

with the provisions of Section 422 of the Code and the regulations promulgated

thereunder, unless the holder otherwise agrees.

 

      3.2   Exercise of Stock Appreciation Rights.

 

            (a) Exercisability. Unless the Award Agreement or the Committee

otherwise provides, a Stock Appreciation Right related to another Award shall be

exercisable at such time or times, and to the extent, that the related Award

shall be exercisable.

 

            (b) Effect on Available Shares. To the extent that a Stock

Appreciation Right is exercised, only the actual number of delivered shares of

Common Stock shall be charged against the maximum amount of Common Stock that

may be delivered pursuant to Awards under this Plan. The number of shares

subject to the Stock Appreciation Right and the related Option

 

 

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                                                                   Exhibit 10.63

 

of the Participant shall, however, be reduced by the number of underlying shares

as to which the exercise related, unless the Award Agreement otherwise provides.

 

            (c) Stand-Alone SARs. A Stock Appreciation Right granted

independently of any other Award shall be exercisable pursuant to the terms of

the Award Agreement but in no event earlier than six months after the Award

Date, except in the case of death or Total Disability.

 

      3.3   Payment.

 

            (a) Amount. Unless the Committee otherwise provides, upon exercise

of a Stock Appreciation Right and the attendant surrender of an exercisable

portion of any related Award, the Participant shall be entitled to receive

payment of an amount determined by multiplying

 

                  (i) the difference obtained by subtracting the exercise price

      per share of Common Stock under the related Award (if applicable) or the

      initial share value specified in the Award from the Fair Market Value of a

      share of Common Stock on the date of exercise of the Stock Appreciation

      Right, by

 

                  (ii) the number of shares with respect to which the Stock

      Appreciation Right shall have been exercised.

 

            (b) Form of Payment. The Committee, in its sole discretion, shall

determine the form in which payment shall be made of the amount determined under

paragraph (a) above, either solely in cash, solely in shares of Common Stock

(valued at Fair Market Value on the date of exercise of the Stock Appreciation

Right), or partly in such shares and partly in cash, provided that the Committee

shall have determined that such exercise and payment are consistent with

applicable law. If the Committee permits the Participant to elect to receive

cash or shares (or a combination thereof) on such exercise, any such election

shall be subject to such conditions as the Committee may impose.

 

      3.4   Limited Stock Appreciation Rights.

 

            The Committee may grant to any Eligible Person Stock Appreciation

Rights exercisable only upon or in respect of a change in control or any other

specified event ("Limited SARs") and such Limited SARs may relate to or operate

in tandem or combination with or substitution for Options, other Stock

Appreciation Rights or other Awards (or any combination thereof), and may be

payable in cash or shares based on the spread between the base price of the

Stock Appreciation Right and a price based upon the Fair Market Value of the

Shares during a specified period or at a specified time within a specified

period before, after or including the date of such event.

 

 

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                                                                   Exhibit 10.63

 

4.    RESTRICTED STOCK AWARDS.

 

      4.1   Grants.

 

            The Committee may, in its discretion, grant one or more Restricted

Stock Awards to any Eligible Person. Each Restricted Stock Award Agreement shall

specify the number of shares of Common Stock to be issued to the Participant,

the date of such issuance, the consideration for such shares (but not less than

the minimum lawful consideration under applicable state law) by the Participant,

the extent (if any) to which and the time (if ever) at which the Participant

shall be entitled to dividends, voting and other rights in respect of the shares

prior to vesting, and the restrictions (which may be based on performance

criteria, passage of time or other factors or any combination thereof) imposed

on such shares and the conditions of release or lapse of such restrictions. Such

restrictions shall not lapse earlier than six months after the Award Date,

except to the extent the Committee may otherwise provide. Stock certificates

evidencing shares of Restricted Stock pending the lapse of the restrictions

("Restricted Shares") shall bear a legend making appropriate reference to the

restrictions imposed hereunder and shall be held by the Corporation or by a

third party designated by the Committee until the restrictions on such shares

shall have lapsed and the shares shall have vested in accordance with the

provisions of the Award and Section 1.7. Upon issuance of the Restricted Stock

Award, the Participant may be required to provide such further assurance and

documents as the Committee may require to enforce the restrictions.

 

      4.2   Restrictions.

 

            (a) Pre-Vesting Restraints. Except as provided in Section 4.1 and

1.9, restricted shares comprising any Restricted Stock Award may not be sold,

assigned, transferred, pledged or otherwise disposed of or encumbered, either

voluntarily or involuntarily, until the restrictions on such shares have lapsed

and the shares have become vested.

 

            (b) Dividend and Voting Rights. Unless otherwise provided in the

applicable Award Agreement, a Participant receiving a Restricted Stock Award

shall be entitled to vote such shares but shall not be entitled to dividends on

any of the shares until the shares have vested. Such dividends shall be retained

in a restricted account until the shares have vested and shall revert to the

Corporation if they fail to vest.

 

            (c) Cash Payments. If the Participant shall have paid or received

cash (including any dividends) in connection with the Restricted Stock Award,

the Award Agreement shall specify whether and to what extent such cash shall be

returned (with or without an earnings factor) as to any restricted shares which

cease to be eligible for vesting.

 

 

                                       10

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                                                                   Exhibit 10.63

 

      4.3   Return to the Corporation.

 

            Unless the Committee otherwise expressly provides, Restricted Shares

that remain subject to restrictions at the time of termination of employment or

are subject to other conditions to vesting that have not been satisfied by the

time specified in the applicable Award Agreement shall not vest and shall be

returned to the Corporation in such manner and on such terms as the Committee

shall therein provide.

 

5.    PERFORMANCE SHARE AWARDS AND STOCK BONUSES.

 

      5.1   Grants of Performance Share Awards.

 

            The Committee may, in its discretion, grant Performance Share Awards

to Eligible Persons based upon such factors as the Committee shall deem relevant

in light of the specific type and terms of the award. An Award Agreement shall

specify the maximum number of shares of Common Stock (if any) subject to the

Performance Share Award, the consideration (but not less than the minimum lawful

consideration) to be paid for any such shares as may be issuable to the

Participant, the duration of the Award and the conditions upon which delivery of

any shares or cash to the Participant shall be based. The amount of cash or

shares or other property that may be deliverable pursuant to such Award shall be

based upon the degree of attainment over a specified period of not more than 10

years (a "performance cycle") as may be established by the Committee of such

measure(s) of the performance of the Company (or any part thereof) or the

Participant as may be established by the Committee. The Committee may provide

for full or partial credit, prior to completion of such performance cycle or the

attainment of the performance achievement specified in the Award, in the event

of the Participant's death, Retirement, or Total Disability, a Change in Control

Event or in such other circumstances as the Committee may specify.

 

      5.2   Special Performance-Based Share Awards.

 

            Without limiting the generality of the foregoing, and in addition to

Options and Stock Appreciation Rights granted under other provisions of this

Plan which are intended to satisfy the exception for "performance-based

compensation" under Section 162(m) of the Code (with such Awards hereinafter

referred to as a "Qualifying Option" or a "Qualifying Stock Appreciation Right,"

respectively), other performance-based awards within the meaning of Section

162(m) of the Code ("Performance-Based Awards"), whether in the form of

restricted stock, performance stock, phantom stock or other rights, the grant,

vesting, exercisability or payment of which depends on the degree of achievement

of the Performance Goals relative to preestablished targeted levels for the

Corporation or the Corporation and one or more of its Subsidiaries, may be

granted under this Plan. Any Qualifying Option or Qualifying Stock Appreciation

Right shall be subject only to the requirements of subsections (a) and (c) below

in order for such Awards to satisfy the requirements for Performance-Based

Awards under this Section 5.2. With the exception of any Qualifying Option or

Qualifying Stock Appreciation

 

 

                                       11

<PAGE>

                                                                   Exhibit 10.63

 

Right, an Award that is intended to satisfy the requirements of this Section 5.2

shall be designated as a Performance-Based Award at the time of grant.

 

            (a) Eligible Class. The eligible class of persons for

Performance-Based Awards under this Section shall be the executive officers of

the Corporation.

 

            (b) Performance Goal Alternatives. The specific performance goals

for Performance-Based Awards granted under this Section (other than Qualifying

Options and Qualifying Stock Appreciation Rights) shall be, on an absolute or

relative basis, one or more of the Performance Goals, as selected by the

Committee in its sole discretion. The Committee shall establish in the

applicable Award Agreement the specific performance target(s) relative to the

Performance Goal(s) which must be attained before the compensation under the

Performance-Based Award becomes payable. The specific targets shall be

determined within the time period permitted under Section 162(m) of the Code

(and any regulations issued thereunder) so that such targets are considered to

be preestablished and so that the attainment of such targets is substantially

uncertain at the time of their establishment. The applicable performance

measurement period may not be less than one nor more than 10 years.

 

            (c) Maximum Performance-Based Award. Notwithstanding any other

provision of the Plan to the contrary, the maximum number of shares of Common

Stock which may be delivered pursuant to options, stock appreciation rights,

restricted stock or other share-based awards that are granted as

Performance-Based Awards to any Participant in any calendar year shall not

exceed 350,000 shares, either individually or in the aggregate, subject to

adjustment as provided in Section 6.2. Awards that are cancelled during the year

shall be counted against this limit to the extent required by Section 162(m) of

the Code. In addition, the aggregate amount of compensation to be paid to any

Participant in respect of any Cash-Based Awards that are granted during any

calendar year as Performance-Based Awards shall not exceed $1,000,000.

 

            (d) Committee Certification. Before any Performance-Based Award

under this Section 5.2 (other than Qualifying Options or Qualifying Stock

Appreciation Rights) is paid, the Committee must certify in writing that the

Performance Goal(s) and any other material terms of the Performance-Based Award

were satisfied; provided, however, that a Performance-Based Award may be paid

without regard to the satisfaction of the applicable Performance Goal in the

event of a Change in Control Event in accordance with Section 6.2(d).

 

            (e) Terms and Conditions of Awards. The Committee will have the

discretion to determine the restrictions or other limitations of the individual

Awards granted under this Section 5.2 including the authority to reduce Awards,

payouts or vesting or to pay no Awards, in its sole discretion, if the Committee

preserves such authority at the time of grant by language to this effect in its

authorizing resolutions or otherwise.

 

            (f) Adjustments for Changes in Capitalization and other Material

Changes. In the event of a change in corporate capitalization, such as a stock

split or stock dividend, or a corporate transaction, such as a merger,

consolidation, spinoff, reorganization or similar event, or

 

 

                                       12

<PAGE>

                                                                   Exhibit 10.63

 

any partial or complete liquidation of the Corporation, or any similar event

consistent with regulations issued under Section 162(m) of the Code including,

without limitation, any material change in accounting policies or practices

affecting the Corporation and/or the Performance Goals or targets, then the

Committee may make adjustments to the Performance Goals and targets relating to

outstanding Performance-Based Awards to the extent such adjustments are made to

reflect the occurrence of such an event; provided, however, that adjustments

described in this subsection may be made only to the extent that the occurrence

of an event described herein was unforeseen at the time the targets for a

Performance-Based Award were established by the Committee.

 

      5.3   Grants of Stock Bonuses.

 

            The Committee may grant a Stock Bonus to any Eligible Person to

reward exceptional or special services, contributions or achievements in the

manner and on such terms and conditions (including any restrictions on such

shares) as determined from time to time by the Committee. The number of shares

so awarded shall be determined by the Committee. The Award may be granted

independently or in lieu of a cash bonus.

 

      5.4   Deferred Payments.

 

            The Committee may authorize for the benefit of any Eligible Person

the deferral of any payment of cash or shares that may become due or of cash

otherwise payable under this Plan, and provide for accredited benefits thereon

based upon such deferment, at the election or at the request of such

Participant, subject to the other terms of this Plan. Such deferral shall be

subject to such further conditions, restrictions or requirements as the

Committee may impose, subject to any then vested rights of Participants.

 

6.    OTHER PROVISIONS.

 

      6.1   Rights of Eligible Persons, Participants and Beneficiaries.

 

            (a) Employment Status. Status as an Eligible Person shall not be

construed as a commitment that any Award will be made under this Plan to an

Eligible Person or to Eligible Persons generally.

 

            (b) No Employment Contract. Nothing contained in this Plan (or in

any other documents related to this Plan or to any Award) shall confer upon any

Eligible Person or other Participant any right to continue in the employ or

other service of the Company or constitute any contract or agreement of

employment or other service, nor shall interfere in any way with the right of

the Company to change such person's compensation or other benefits or to

terminate the employment of such person, with or without cause, but nothing

contained in this Plan or any document related hereto shall adversely affect any

independent contractual right of such person without his or her consent thereto.

 

 

                                       13

<PAGE>

                                                                   Exhibit 10.63

 

                  (c) Plan Not Funded. Awards payable under this Plan shall be

payable in shares or from the general assets of the Corporation, and (except as

provided in Section 1.4) no special or separate reserve, fund or deposit shall

be made to assure payment of such Awards. No Participant, Beneficiary or other

person shall have any right, title or interest in any fund or in any specific

asset (including shares of Common Stock, except as expressly otherwise provided)

of the Company by reason of any Award hereunder. Neither the provisions of this

Plan (or of any related documents), nor the creation or adoption of this Plan,

nor any action taken pursuant to the provisions of this Plan shall create, or be

construed to create, a trust of any kind or a fiduciary relationship between the

Company and any Participant, Beneficiary or other person. To the extent that a

Participant, Beneficiary or other person acquires a right to receive payment

pursuant to any Award hereunder, such right shall be no greater than the right

of any unsecured general creditor of the Company.

 

         6.2      Adjustments; Acceleration.

 

                  (a) Adjustments. If there shall occur any extraordinary

dividend or other extraordinary distribution in respect of the Common Stock

(whether in the form of cash, Common Stock, other securities, or other

property), or any reclassification, recapitalization, stock split (including a

stock split in the form of a stock dividend), reverse stock split,

reorganization, merger, combination, consolidation, split-up, spin-off,

combination, repurchase, or exchange of Common Stock or other securities of the

Corporation, or there shall occur any similar, unusual or extraordinary

corporate transaction or event in respect of the Common Stock or a sale of

substantially all the assets of the Corporation as an entirety, then the

Committee shall, in such manner and to such extent (if any) as it deems

appropriate and equitable (1) proportionately adjust any or all of (a) the

number and type of shares of Common Stock (or other securities) which thereafter

may be made the subject of Awards (including the specific maxima and numbers of

shares set forth elsewhere in this Plan), (b) the number, amount and type of

shares of Common Stock (or other securities or property) subject to any or all

outstanding Awards, (c) the grant, purchase, or exercise price of any or all

outstanding Awards, (d) the securities, cash or other property deliverable upon

exercise of any outstanding Awards, or (e) the performance standards appropriate

to any outstanding Awards, or (2) in the case of an extraordinary dividend or

other distribution, recapitalization, reclassification, merger, reorganization,

consolidation, combination, sale of assets, split up, exchange, or spin off,

make provision for a cash payment or for the substitution or exchange of any or

all outstanding Awards or the cash, securities or property deliverable to the

holder of any or all outstanding Awards based upon the distribution or

consideration payable to holders of the Common Stock of the Corporation upon or

in respect of such event; provided, however, in each case, that with respect to

Awards of Incentive Stock Options, no such adjustment shall be made which would

cause the Plan to violate Section 424(a) of the Code or any successor provisions

thereto without the written consent of holders materially adversely affected

thereby. In any of such events, the Committee may take such action sufficiently

prior to such event if necessary to permit the Participant to realize the

benefits intended to be conveyed with respect to the underlying shares in the

same manner as is available to shareholders generally.

 

 

                                       14

<PAGE>

                                                                   Exhibit 10.63

 

                  (b) Acceleration of Awards Upon Change in Control. As to any

Participant, unless prior to a Change in Control Event the Board determines

that, upon its occurrence, there shall be no acceleration of benefits under

Awards or determines that only certain or limited benefits under Awards shall be

accelerated and the extent to which they shall be accelerated, and/or

establishes a different time in respect of such Event for such acceleration,

then upon the occurrence of a Change in Control Event: (i) each Option and Stock

Appreciation Right shall become immediately exercisable, (ii) Restricted Stock

shall immediately vest free of restrictions, and (iii) each Performance Share

Award shall become payable to the Participant. The Committee may override the

limitations on acceleration in this Section 6.2(b) by express provision in the

Award Agreement and may accord any Eligible Person a right to refuse any

acceleration, whether pursuant to the Award Agreement or otherwise, in such

circumstances as the Committee may approve. Any acceleration of Awards shall

comply with applicable regulatory requirements, including without limitation

Section 422 of the Code.

 

                  (c) Possible Early Termination of Accelerated Awards. If any

Option or other right to acquire Common Stock under this Plan (other than under

Article 8) has been fully accelerated as permitted by Section 6.2(b) but is not

exercised prior to (i) a dissolution of the Corporation, or (ii) an event

described in Section 6.2(a) that the Corporation does not survive, or (iii) the

consummation of an event described in Section 6.2(a) that results in a Change of

Control approved by the Board, such Option or right shall thereupon terminate,

subject to any provision that has been expressly made by the Committee for the

survival, substitution, exchange or other settlement of such Option or right.

 

         6.3      Effect of Termination of Employment.

 

                  (a) Options - Resignation or Dismissal. If the Participant's

employment by (or other service specified in the Award Agreement to) the Company

terminates for any reason (the date of such termination being referred to as the

"Severance Date") other than Retirement, Total Disability or death, or "for

cause" (as determined in the discretion of the Committee), the Participant shall

have, unless otherwise provided in the Award Agreement and subject to earlier

termination pursuant to or as contemplated by Section 1.6 or 6.2, three months

after the Severance Date to exercise any Option to the extent it shall have

become exercisable on the Severance Date. In the case of a termination "for

cause", the Option shall terminate on the Severance Date. In other cases, the

Option, to the extent not exercisable on the Severance Date, shall terminate.

 

                  (b) Options - Death or Disability. If the Participant's

employment by (or specified service to) the Company terminates as a result of

Total Disability or death, the Participant, Participant's Personal

Representative or his or her Beneficiary, as the case may be, shall have, unless

otherwise provided in the Award Agreement and subject to earlier termination

pursuant to or as contemplated by Section 1.6 or 6.2, until 12 months after the

Severance Date to exercise any Option to the extent it shall have become

exercisable by the Severance Date. Any Option to the extent not exercisable on

the Severance Date shall terminate.

 

 

                                       15

<PAGE>

                                                                   Exhibit 10.63

 

                  (c) Options - Retirement. If the Participant's employment by

(or specified service to) the Company terminates as a result of Retirement, the

Participant, Participant's Personal Representative or his or her Beneficiary, as

the case may be, shall have, unless otherwise provided in the Award Agreement

and subject to earlier termination pursuant to or as contemplated by Section 1.6

or 6.2, until 12 months after the Severance Date to exercise any Nonqualified

Stock Option (three months after the Severance Date in the case of an Incentive

Stock Option) to the extent it shall have become exercisable by the Severance

Date. The Option, to the extent not exercisable on the Severance Date, shall

terminate.

 

                  (d) Certain SARs. Any SAR granted concurrently or in tandem

with an Option shall have the same post-termination provisions and

exercisability periods as the Option to which it relates, unless the Committee

otherwise provides.

 

                  (e) Other Awards. The Committee shall establish in respect of

each other Award granted hereunder the Participant's rights and benefits (if

any) in the event of a termination of employment and in so doing may make

distinctions based upon the cause of termination and the nature of the Award.

 

                  (f) Committee Discretion. Notwithstanding the foregoing

provisions of this Section 2.6, in the event of, or in anticipation of, a

termination of employment with the Company for any reason, other than discharge

for cause, the Committee may, in its discretion, increase the portion of the

Participant's Award available to the Participant, or Participant's Beneficiary

or Personal Representative, as the case may be, or, subject to the provisions of

Section 1.6, extend the exercisability period upon such terms as the Committee

shall determine and expressly set forth in or by amendment to the Award

Agreement.

 

         6.4      Compliance with Laws.

 

                  This Plan, the granting and vesting of Awards under this Plan

and the offer, issuance and delivery of shares of Common Stock and/or the

payment of money under this Plan or under Awards granted hereunder are subject

to compliance with all applicable federal and state laws, rules and regulations

(including but not limited to state and federal securities law and federal

margin requirements) and to such approvals by any listing, regulatory or

governmental authority as may, in the opinion of counsel for the Corporation, be

necessary or advisable in connection therewith. Any securities delivered under

this Plan shall be subject to such restrictions, and the person acquiring such

securities shall, if requested by the Corporation, provide such assurances and

representations to the Corporation as the Corporation may deem necessary or

desirable to assure compliance with all applicable legal requirements.

 

         6.5      Tax Withholding.

 

                  (a) Cash or Shares. Upon any exercise, vesting, or payment of

any Award or upon the disposition of shares of Common Stock acquired pursuant to

the exercise of an Incentive Stock Option prior to satisfaction of the holding

period requirements of Section 422 of the Code, the Company shall have the right

at its option to (i) require the Participant (or Personal

 

 

                                       16

<PAGE>

                                                                   Exhibit 10.63

 

Representative or Beneficiary, as the case may be) to pay or provide for payment

of the amount of any taxes which the Company may be required to withhold with

respect to such Award event or payment or (ii) deduct from any amount payable in

cash the amount of any taxes which the Company may be required to withhold with

respect to such cash payment. In any case where a tax is required to be withheld

in connection with the delivery of shares of Common Stock under this Plan, the

Committee may in its sole discretion grant (either at the time of the Award or

thereafter) to the Participant the right to elect, pursuant to such rules and

subject to such conditions as the Committee may establish, to have the

Corporation reduce the number of shares to be delivered by (or otherwise

reacquire) the appropriate number of shares valued at their then Fair Market

Value, to satisfy such withholding obligation.

 

                  (b) Tax Loans. If so provided in the Award Agreement, the

Company may, in its discretion and to the extent permitted by law, authorize a

loan to an Eligible Person in the amount of any taxes which the Company may be

required to withhold with respect to shares of Common Stock received (or

disposed of, as the case may be) pursuant to a transaction described in Section

6.5 (a). Such a loan shall be for a term, at a rate of interest and pursuant to

such other terms and conditions as the Company, under applicable law may

establish and such loan need not comply with the provisions of Section 1.8.

 

         6.6      Plan Amendment, Termination and Suspension.

 

                  (a) Board Authorization. The Board may, at any time, terminate

or, from time to time, amend, modify or suspend this Plan, in whole or in part.

No Awards may be granted during any suspension of this Plan or after termination

of this Plan, but the Committee shall retain jurisdiction as to Awards then

outstanding in accordance with the terms of this Plan.

 

                  (b) Shareholder Approval. Any amendment that would (i)

materially increase the benefits accruing to Participants under this Plan, (ii)

materially increase the aggregate number of securities that may be issued under

this Plan, or (iii) materially modify the requirements as to eligibility for

participation in this Plan, shall be subject to shareholder approval only to the

extent then required by Section 422 of the Code or applicable law, or deemed

necessary or advisable by the Board.

 

                  (c) Amendments to Awards. Without limiting any other express

authority of the Committee under but subject to the express limits of this Plan,

the Committee by agreement or resolution may waive conditions of or limitations

on Awards to Eligible Persons that the Committee in the prior exercise of its

discretion has imposed, without the consent of a Participant, and may make other

changes to the terms and conditions of Awards that do not affect in any manner

materially adverse to the Participant, his or her rights and benefits under an

Award.

 

                  (d) Limitations on Amendments to Plan and Awards. No

amendment, suspension or termination of this Plan or change of or affecting any

outstanding Award shall, without written consent of the Participant, affect in

any manner materially adverse to the Participant any rights or benefits of the

Participant or obligations of the Corporation under any

 

 

                                       17

<PAGE>

                                                                   Exhibit 10.63

 

Award granted under this Plan prior to the effective date of such change.

Changes contemplated by Section 6.2 shall not be deemed to constitute changes or

amendments for purposes of this Section 6.6.

 

         6.7      Privileges of Stock Ownership.

 

                  Except as otherwise expressly authorized by the Committee or

this Plan, a Participant shall not be entitled to any privilege of stock

ownership as to any shares of Common Stock not actually delivered to and held of

record by him or her. No adjustment will be made for dividends or other rights

as a shareholder for which a record date is prior to such date of delivery.

 

         6.8      Effective Date of the Plan.

 

                  This Plan shall be effective as of February 4, 1997, the date

of Board approval, subject to shareholder approval within 12 months thereafter.

 

         6.9      Term of the Plan.

 

                  No Award shall be granted under this Plan after more than ten

years after the effective date of this Plan (the "termination date"). Unless

otherwise expressly provided in this Plan or in an applicable Award Agreement,

any Award granted prior to the termination date may extend beyond such date, and

all authority of the Committee with respect to Awards hereunder, including the

authority to amend an Award, shall continue during any suspension of this Plan

and in respect of Awards outstanding on the termination date.

 

         6.10     Governing Law/Construction/Severability.

 

                  (a) Choice of Law. This Plan, the Awards, all documents

evidencing Awards and all other related documents shall be governed by, and

construed in accordance with the laws of the state of incorporation of the

Corporation.

 

                  (b) Severability. If any provision shall be held by a court of

competent jurisdiction to be invalid and unenforceable, the remaining provisions

of this Plan shall continue in effect.

 

                  (c) Plan Construction.

 

                      (1) Rule 16b-3. It is the intent of the Corporation that

transactions in and affecting Awards in the case of Participants who are or may

be subject to Section 16 of the Exchange Act satisfy any then applicable

requirements of Rule 16b-3 so that such persons (unless they otherwise agree)

will be entitled to the benefits of Rule 16b-3 or other exemptive rules under

Section 16 of the Exchange Act in respect of those transactions and will not be

subjected to avoidable liability thereunder. If any provision of this Plan or of

any Award would otherwise frustrate or conflict with the intent expressed above,

that provision to the extent possible shall be interpreted as to avoid such

conflict. If the conflict remains irreconcilable, the

 

 

                                       18

<PAGE>

                                                                   Exhibit 10.63

 

Committee may disregard the provision if it concludes that to do so furthers the

interest of the Corporation and is consistent with the purposes of this Plan as

to such persons in the circumstances.

 

                      (2) Section 162(m). It is the further intent of the

Company that Options or SARs with an exercise or base price not less than Fair

Market Value on the date of grant and performance awards under Section 5.2 of

this Plan that are granted to or held by a Section 16 Person shall qualify as

performance-based compensation under Section 162(m) of the Code, and this Plan

shall be interpreted consistent with such intent.

 

         6.11     Captions.

 

                  Captions and headings are given to the sections and

subsections of this 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 this Plan or any provision thereof.

 

         6.12     Effect of Change of Subsidiary Status.

 

                  For purposes of this Plan and any Award hereunder, if an

entity ceases to be a Subsidiary a termination of employment and service shall

be deemed to have occurred with respect to each Eligible Person in respect of

such Subsidiary who does not continue as an Eligible Person in respect of

another entity within the Company.

 

         6.13     Non-Exclusivity of Plan.

 

                  Nothing in this Plan shall limit or be deemed to limit the

authority of the Board or the Committee to grant awards or authorize any other

compensation, with or without reference to the Common Stock, under any other

plan or authority.

 

7.       DEFINITIONS.

 

         7.1      Definitions.

 

                  (a) "Award" shall mean an award of any Option, Stock

Appreciation Right, Restricted Stock, Stock Bonus, Performance Share Award,

dividend equivalent or deferred payment right or other right or security that

would constitute a "derivative security" under Rule 16a-1(c) of the Exchange

Act, or any combination thereof, whether alternative or cumulative, authorized

by and granted under this Plan.

 

                  (b) "Award Agreement" shall mean any writing setting forth the

terms of an Award that has been authorized by the Committee.

 

 

                                       19

<PAGE>

                                                                   Exhibit 10.63

 

                  (c) "Award Date" shall mean the date upon which the Committee

took the action granting an Award or such later date as the Committee designates

as the Award Date at the time of the Award or, in the case of Awards under

Article 8, the applicable dates set forth therein.

 

                  (d) "Award Period" shall mean the period beginning on an Award

Date and ending on the expiration date of such Award.

 

                  (e) "Beneficiary" shall mean the person, persons, trust or

trusts designated by a Participant or, in the absence of a designation, entitled

by will or the laws of descent and distribution, to receive the benefits

specified in the Award Agreement and under this Plan in the event of a

Participant's death, and shall mean the Participant's executor or administrator

if no other Beneficiary is designated and able to act under the circumstances.

 

                  (f) "Board" shall mean the Board of Directors of the

Corporation.

 

                  (g) "Cash Flow" shall mean cash and cash equivalents derived

from either (i) net cash flow from operations or (ii) net cash flow from

operations, financings and investing activities, as determined by the Committee

at the time an Award is granted.

 

                  (h) "Change in Control Event" shall mean any of the following:

 

                        (1) Approval by the shareholders of the Corporation of

                  the dissolution or liquidation of the Corporation;

 

                        (2) Approval by the shareholders of the Corporation of

                  an agreement to merge or consolidate, or otherwise reorganize,

                  with or into one or more entities that are not Subsidiaries or

                  other affiliates, as a result of which less than 50% of the

                  outstanding voting securities of the surviving or resulting

                  entity immediately after the reorganization are, or will be,

                  owned, directly or indirectly, by shareholders of the

                  Corporation immediately before such reorganization (assuming

                  for purposes of such determination that there is no change in

                  the record ownership of the Corporation's securities from the

                  record date for such approval until such reorganization and

                  that such record owners hold no securities of the other

                  parties to such reorganization), but including in such

                  determination any securities of the other parties to such

                  reorganization held by affiliates of the Corporation);

 

                        (3) Approval by the shareholders of the Corporation of

                  the sale of substantially all of the Corporation's business

                  and/or assets to a person or entity which is not a Subsidiary

                  or other affiliate; or;

 

                        (4) Any `person' (as such term is used in Sections 13(d)

                  and 14(d) of the Exchange Act but excluding any person

                  described in and satisfying the conditions of Rule 13d-1(b)(1)

                  thereunder) becomes the beneficial owner (as defined in Rule

                  13d-3 under the Exchange Act), directly or indirectly, of

                  securities of the Corporation representing 30% or more of the

                  combined voting power of the Corporation's then

 

 

                                       20

<PAGE>

                                                                   Exhibit 10.63

 

                  outstanding securities entitled to then vote generally in the

                  election of directors of the Corporation; or

 

                        (5) During any period not longer than two consecutive

                  years, individuals who at the beginning of such period

                  constituted the Board cease to constitute at least a majority

                  thereof, unless the election, or the nomination for election

                  by the Corporation's shareholders, of each new Board member

                  was approved by a vote of at least three-fourths of the Board

                  members then still in office who were Board members at the

                  beginning of such period (including for these purposes, new

                  members whose election or nomination was so approved).

 

                  (i) "Code" shall mean the Internal Revenue Code of 1986, as

amended from time to time.

 

                  (j) "Commission" shall mean the Securities and Exchange

Commission.

 

                  (k) "Committee" shall mean the Board or a committee appointed

by the Board to administer this Plan, which committee shall be comprised only of

two or more directors or such greater number of directors as may be required

under applicable law, each of whom, (i) in respect of any decision at a time

when the Participant affected by the decision may be subject to Section 162(m)

of the Code, shall be an "outside director" within the meaning of Section 162(m)

of the Code, and/or (ii) in respect of any decision at a time when the

Participant affected by the decision may be subject to Section 16 of the

Exchange Act, shall be a "Non-Employee Director" within the meaning of Rule

16b-3(b)(3).

 

                  (l) "Common Stock" shall mean the Common Stock of the

Corporation and such other securities or property as may become the subject of

Awards, or become subject to Awards, pursuant to an adjustment made under

Section 6.2 of this Plan.

 

                  (m) "Company" shall mean, collectively, the Corporation and

its Subsidiaries.

 

                  (n) "Corporation" shall mean Meade Instruments Corp., a

California corporation, and its successors.

 

                  (o) "Eligible Employee" shall mean an officer (whether or not

a director) or key employee of the Company.

 

                  (p) "Eligible Person" means an Eligible Employee, or any Other

Eligible Person, as determined by the Committee in its discretion.

 

                  (q) "EPS" shall mean earnings per common share on a fully

diluted basis determined by dividing (i) net earnings, less dividends on

preferred stock of the Corporation by (ii) the weighted average number of common

shares and common shares equivalents outstanding (all as determined in

accordance with generally accepted accounting principles).

 

 

                                       21

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                                                                   Exhibit 10.63

 

                  (r) "ERISA" shall mean the Employee Retirement Income Security

Act of 1974, as amended.

 

                  (s) "Exchange Act" shall mean the Securities Exchange Act of

1934, as amended from time to time.

 

                  (t) "Fair Market Value" on any date shall mean (i) if the

stock is listed or admitted to trade on a national securities exchange, the

closing price of the stock on the Composite Tape, as published in the Western

Edition of The Wall Street Journal, of the principal national securities

exchange on which the stock is so listed or admitted to trade, on such date, or,

if there is no trading of the stock on such date, then the closing price of the

stock as quoted on such Composite Tape on the next preceding date on which there

was trading in such shares; (ii) if the stock is not listed or admitted to trade

on a national securities exchange, the last price for the stock on such date, as

furnished by the National Association of Securities Dealers, Inc. ("NASD")

through the NASDAQ National Market Reporting System or a similar organization if

the NASD is no longer reporting such information; (iii) if the stock is not

listed or admitted to trade on a national securities exchange and is not

reported on the National Market Reporting System, the mean between the bid and

asked price for the stock on such date, as furnished by the NASD or a similar

organization; or (iv) if the stock is not listed or admitted to trade on a

national securities exchange, is not reported on the National Market Reporting

System and if bid and asked prices for the stock are not furnished by the NASD

or a similar organization, the value as established by the Committee at such

time for purposes of this Plan.

 

                  (u) "Incentive Stock Option" shall mean an Option which is

intended, as evidenced by its designation, as an incentive stock option within

the meaning of Section 422 of the Code, the award of which contains such

provisions (including but not limited to the receipt of shareholder approval of

this Plan, if the Award is made prior to such approval) and is made under such

circumstances and to such persons as may be necessary to comply with that

section.

 

                  (v) "Nonqualified Stock Option" shall mean an Option that is

designated as a Nonqualified Stock Option and shall include any Option intended

as an Incentive Stock Option that fails to meet the applicable legal

requirements thereof. Any Option granted hereunder that is not designated as an

incentive stock option shall be deemed to be designated a nonqualified stock

option under this Plan and not an incentive stock option under the Code.

 

                  (w) "Non-Employee Director" shall mean a member of the Board

of Directors of the Corporation who is not an officer or employee of the

Company.

 

                  (x) "Non-Employee Director Participant" shall mean a

Non-Employee Director who holds an outstanding Award under the provisions of

Article 8.

 

                  (y) "Option" shall mean an option to purchase Common Stock

granted under this Plan. The Committee shall designate any Option granted to an

Eligible Person as a Nonqualified Stock Option or an Incentive Stock Option.

 

 

                                       22

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                                                                   Exhibit 10.63

 

                  (z) "Other Eligible Person" shall mean any Non-Employee

Director or any individual consultant or advisor who renders or has rendered

bona fide services (other than services in connection with the offering or sale

of securities of the Company in a capital raising transaction) to the Company,

and who is selected to participate in this Plan by the Committee.

 

                  (aa) "Participant" shall mean an Eligible Person who has been

granted an Award under this Plan and a Non-Employee Director who has been

received an Award under Article 8 of this Plan.

 

                  (bb) "Performance Goals" shall mean Cash Flow, EPS, ROE, Total

Stockholder Return and any other criterion established by the Committee.

 

                  (cc) "Performance Share Award" shall mean an Award of a right

to receive shares of Common Stock or other compensation (including cash) under

Section 5.2, the issuance or payment of which is contingent upon, among other

conditions, the attainment of performance objectives specified by the Committee.

 

                  (dd) "Personal Representative" shall mean the person or

persons who, upon the disability or incompetence of a Participant, shall have

acquired on behalf of the Participant, by legal proceeding or otherwise, the

power to exercise the rights or receive benefits under this Plan and who shall

have become the legal representative of the Participant.

 

                  (ee) "Plan" shall mean this Stock Incentive Plan.

 

                  (ff) "QDRO" shall mean a qualified domestic relations order.

 

                  (gg) "Restricted Shares" or "Restricted Stock" shall mean

shares of Common Stock awarded to a Participant under this Plan, subject to

payment of such consideration, if any, and such conditions on vesting (which may

include, among others, the passage of time, specified performance objectives or

other factors) and such transfer and other restrictions as are established in or

pursuant to this Plan and the related Award Agreement, for so long as such

shares remain unvested under the terms of the applicable Award Agreement.

 

                  (hh) "Retirement" shall mean retirement with the consent of

the Company or, from active service as an employee or officer of the Company on

or after attaining age 55 with 10 or more years of service or after age 65.

 

                  (ii) "ROE" shall mean consolidated net income of the

Corporation (less preferred dividends), divided by the average consolidated

common shareholders equity.

 

                  (jj) "Rule 16b-3" shall mean Rule 16b-3 as promulgated by the

Commission pursuant to the Exchange Act, as amended from time to time.

 

                  (kk) "Section 16 Person" shall mean a person subject to

Section 16(a) of the Exchange Act.

 

 

                                       23

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                                                                   Exhibit 10.63

 

                  (ll) "Securities Act" shall mean the Securities Act of 1933,

as amended from time to time.

 

                  (mm) "Stock Appreciation Right" shall mean a right authorized

under this Plan to receive a number of shares of Common Stock or an amount of

cash, or a combination of shares and cash, the aggregate amount or value of

which is determined by reference to a change in the Fair Market Value of the

Common Stock.

 

                  (nn) "Stock Bonus" shall mean an Award of shares of Common

Stock granted under this Plan for no consideration other than past services and

without restriction other than such transfer or other restrictions as the

Committee may deem advisable to assure compliance with law.

 

                  (oo) "Subsidiary" shall mean any corporation or other entity a

majority of whose outstanding voting stock or voting power is beneficially owned

directly or indirectly by the Corporation.

 

                  (pp) "Total Disability" shall mean a "permanent and total

disability" within the meaning of Section 22(e)(3) of the Code and such other

disabilities, infirmities, afflictions or conditions as the Committee by rule

may include.

 

                  (qq) "Total Stockholder Return" shall mean with respect to the

Corporation or other entities (if measured on a relative basis), the (i) change

in the market price of its common stock (as quoted in the principal market on

which it is traded as of the beginning and ending of the period) plus dividends

and other distributions paid, divided by (ii) the beginning quoted market price,

all of which is adjusted for any changes in equity structure, including but not

limited to stock splits and stock dividends.

 

8.       NON-EMPLOYEE DIRECTOR OPTIONS

 

         8.1      Participation.

 

                  Awards under this Article 8 shall be made only to Non-Employee

Directors and shall be evidenced by Award Agreements substantially in the form

of Exhibit A hereto.

 

 

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                                                                   Exhibit 10.63

 

         8.2      Annual Option Grants.

 

                  (a) Time of Initial Award. Persons who are Non-Employee

Directors in office at the time this Plan is first approved by the shareholders

of the Corporation shall be granted without further action a Nonqualified Stock

Option to purchase 5,000 shares of Common Stock. After approval of this Plan by

the shareholders of the Corporation, if any person who is not then an officer or

employee of the Company shall become a director of the Corporation, there shall

be granted automatically to such person (without any action by the Board or

Committee) a Non-qualified Stock Option (the Award Date of which shall be the

date such person takes office) to purchase 5,000 shares of Common Stock.

 

                  (b) Subsequent Annual Awards. Immediately following the annual

shareholders meeting in each year during the term of the Plan commencing 1998,

there shall be granted automatically (without any action by the Committee or the

Board) a Nonqualified Stock Option (the Award Date of which shall be such date)

to each Non-Employee Director then continuing in office to purchase 5,000 shares

of Common Stock.

 

                  (c) Maximum Number of Shares. A Non-Employee Director shall

not receive more than one Nonqualified Stock Option under this Section 8.2 in

any calendar year, nor more than 75,000 shares on exercise of all Options

awarded under this Section 8.2.

 

         8.3      Option Price.

 

                  The purchase price per share of the Common Stock covered by

each Option granted pursuant to Section 8.2 hereof shall be 100 percent of the

Fair Market Value of the Common Stock on the Award Date (or the initial public

offering price for any grants made to Non-Employee Directors on or prior to the

closing date of the Corporation's initial public offering). The exercise price

of any Option granted under this Article shall be paid in full at the time of

each purchase in cash or by check or in shares of Common Stock valued at their

Fair Market Value on the date of exercise of the Option, or partly in such

shares and partly in cash, provided that any such shares used in payment shall

have been owned by the Participant at least six months prior to the date of

exercise.

 

         8.4      Option Period and Exercisability.

 

                  Each Option granted under this Article 8 and all rights or

obligations thereunder shall expire ten years after the Award Date and shall be

subject to earlier termination as provided below. Each Option granted under

Section 8.2 shall become exercisable at the rate of 33 1/3% per annum commencing

on the first anniversary of the Award Date and each of the next two

anniversaries thereof.

 

         8.5      Termination of Directorship.

 

                  If a Non-Employee Director's services as a member of the Board

of Directors terminate by reason of death, Disability or Retirement, an Option

granted pursuant to this Article

 

 

                                       25

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                                                                   Exhibit 10.63

 

held by such Participant shall immediately become and shall remain exercisable

for two years after the date of such termination or until the expiration of the

stated term of such Option, whichever first occurs. If a Non-Employee Director's

services as a member of the Board of Directors terminate for any other reason,

any portion of an Option granted pursuant to this Article which is not then

exercisable shall terminate and any portion of such Option which is then

exercisable may be exercised for three months after the date of such termination

or until the expiration of the stated term whichever first occurs.

 

         8.6      Adjustments.

 

                  Options granted under this Article 8 shall be subject to

adjustment as provided in Section 6.2, but only to the extent that (a) such

adjustment and the Committee's actions in respect thereof satisfy any applicable

criteria in respect of formula plans under Rule 16, (b) such adjustment in the

case of a Change in Control Event is effected pursuant to the terms of a

reorganization agreement approved by shareholders of the Corporation, and (c)

such adjustment is consistent with adjustments to Options held by persons other

than executive officers or directors of the Corporation.

 

         8.7      Acceleration Upon a Change in Control Event.

 

                  Upon the occurrence of a Change in Control Event, each Option

granted under Section 8.2 hereof shall become immediately exercisable in full.

To the extent that any Option granted under this Article 8 is not exercised

prior to (i) a dissolution of the Corporation or (ii) a merger or other

corporate event that the Corporation does not survive, and no provision is (or

consistent with the provisions of Section 8.7 can be) made for the assumption,

conversion, substitution or exchange of the Option, the Option shall terminate

upon the occurrence of such event.

 

 

                                       26

 

 

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