MEADE INSTRUMENTS CORP.
1997 STOCK INCENTIVE PLAN,
TABLE OF CONTENTS
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1. THE PLAN.......................................................................1
1.2 Administration and Authorization; Power and Procedure..............1
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
2.2 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
3. STOCK APPRECIATION RIGHTS (INCLUDING LIMITED STOCK APPRECIATION RIGHTS)........8
3.2 Exercise of Stock Appreciation Rights..............................8
3.4 Limited Stock Appreciation Rights..................................9
4. RESTRICTED STOCK AWARDS.......................................................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
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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
6.12 Effect of Change of Subsidiary Status.............................19
6.13 Non-Exclusivity of Plan...........................................19
7. DEFINITIONS ..................................................................19
8. NON-EMPLOYEE DIRECTOR OPTIONS.................................................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
8.7 Acceleration Upon a Change in Control Event.......................26
MEADE INSTRUMENTS CORP.
1997 STOCK INCENTIVE PLAN,
1. THE PLAN
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
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);
(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
(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
(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
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.
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
(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.
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.
(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
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
(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
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
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,
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.
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).
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
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.
(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
(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.
4. RESTRICTED STOCK AWARDS.
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.
(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.
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
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
(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
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.
(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.
(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.
(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
(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
(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
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
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
(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
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
(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
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.
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.
(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.
(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
(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
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
(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
(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
(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).
(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
(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
(x) "Non-Employee Director Participant" shall mean a
Non-Employee Director who holds an outstanding Award under the provisions of
(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.
(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.
(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
(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
(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
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.
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
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
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
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.
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.