<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
POWER-ONE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
POWER-ONE, INC.
740 CALLE PLANO
CAMARILLO, CALIFORNIA 93012
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Power-One, Inc. which will be held at the Radisson Hotel, located at 30100
Agoura Road, Agoura Hills, California on Tuesday, May 4, 1999, at 10:00 a.m.
(local time).
At the Annual Meeting, holders of common stock will elect one Class II
Director. In addition, we will ask all stockholders to approve our Amended and
Restated 1996 Stock Incentive Plan and to ratify the appointment of Deloitte &
Touche LLP as our independent accountants for the 1999 fiscal year. The attached
Proxy Statement contains information about these matters.
Whether or not you plan to attend, please promptly execute and return your
proxy card to assure that your shares are represented at the meeting.
I hope you will be able to attend the Annual Meeting and look forward to
seeing you on May 4, 1999.
Sincerely,
/s/ Steven J. Goldman
Steven J. Goldman
CHAIRMAN OF THE BOARD, CHIEF
EXECUTIVE OFFICER AND PRESIDENT
April 6, 1999
<PAGE>
[LOGO]
740 CALLE PLANO
CAMARILLO, CALIFORNIA 93012
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 4, 1999
------------------------
Power-One, Inc. will hold its Annual Meeting of Stockholders on Tuesday, May
4, 1999 at the Radisson Hotel, 30100 Agoura Road, Agoura Hills, California at
10:00 a.m. local time for the following purposes:
1. To elect one Class II Director for a three year term;
2. To approve our Amended and Restated 1996 Stock Incentive Plan;
3. To ratify the appointment of Deloitte & Touche LLP as our independent
accountants for the 1999 fiscal year; and
4. To transact such other business as may properly come before the meeting.
Only stockholders who owned stock at the close of business on March 25, 1999
can vote at this meeting or any adjournments that may take place. Even though
you may presently plan to attend the meeting, we ask that you sign and date the
enclosed proxy card, and return it without delay in the enclosed postage-paid
envelope. If you are present at the Annual Meeting, we ask that you withdraw
your proxy card and vote in person on each matter properly brought before the
Annual Meeting.
Please sign, date and mail the enclosed proxy card promptly in the enclosed
envelope so that your shares of stock may be present at the meeting.
By Order of the Board of Directors
/s/ Eddie K. Schnopp
Eddie K. Schnopp
SECRETARY
April 6, 1999
<PAGE>
[LOGO]
740 CALLE PLANO
CAMARILLO, CALIFORNIA 93012
------------------------
PROXY STATEMENT
GENERAL
Power-One, Inc.'s Board of Directors is soliciting the enclosed proxy for
use at its Annual Meeting of Stockholders to be held on Tuesday, May 4, 1999 at
the Radisson Hotel in Agoura Hills, California at 10:00 a.m. local time and at
any adjournment thereof.
We will vote all valid and properly executed proxies that we receive before
the Annual Meeting in accordance with the instructions specified in the proxy.
If proxies do not give any instructions, we will vote shares FOR: (1) the
election of the named nominee for director, (2) ratification of Deloitte &
Touche, LLP's appointment as independent accountants; and (3) approval of our
Amended and Restated 1996 Stock Incentive Plan.
You may revoke your proxy at any time before it is actually voted at the
Annual Meeting by delivering a written notice of revocation to our corporate
Secretary or attending the meeting and withdrawing your proxy.
We will pay the cost of this proxy solicitation. Brokers and nominees should
forward soliciting materials to the beneficial owners of the stock such brokers
and nominees hold of record. We will reimburse such persons for their reasonable
forwarding expenses. Our directors, officers and regular employees, without
extra compensation, may solicit proxies personally, by telephone, by mail or by
other means of communication.
VOTING SECURITIES
Each share of common stock has one vote on all matters submitted to our
stockholders at the Annual Meeting. Stockholders of record at the close of
business on March 25, 1999 are entitled to vote at the Annual Meeting. On March
25, 1999, our issued and outstanding voting securities consisted of 17,100,107
shares of common stock.
The presence at the Annual Meeting, in person or by proxy, of the holders of
a majority of the outstanding shares of our common stock will constitute a
quorum for the meeting. Assuming such a quorum is present, the affirmative votes
of a majority of votes cast is necessary to approve the proposals presented to
our stockholders at the Annual Meeting.
The inspector of elections that we appoint will count all votes cast in
person or by proxy at the Annual Meeting. We will treat abstentions as shares
that are present and entitled to vote to determine the presence of a quorum, but
not as votes cast to determine the approval of any matter submitted to a vote of
the stockholders.
<PAGE>
BOARD OF DIRECTORS
ELECTION OF DIRECTORS
The nominee proposed for election as a Class II Director is Dr. Hanspeter
Brandli who is currently serving as a director. Dr. Brandli will serve until the
annual meeting of stockholders in 2002 or until his successor is elected and
qualified.
Proxies in the enclosed form will be voted, unless authority is withheld,
for Dr. Brandli. Dr. Brandli has indicated his willingness to serve if elected,
but if Dr. Brandli should become unable to serve, we will vote the proxies
solicited hereby for the election of such other person as our directors shall
select. Background information on Dr. Brandli appears below.
NOMINEE FOR ELECTION AS CLASS II DIRECTOR
<TABLE>
<CAPTION>
NAME OF NOMINEE AGE(1) PRINCIPAL OCCUPATION CLASS FIRST YEAR ELECTED
- -------------------------------------- ----------- -------------------------------------- ----- -------------------
<S> <C> <C> <C> <C>
Dr. Hanspeter Brandli................. 60 Chairman of the Board of Danzas II 1998
Holding Ltd.
</TABLE>
DR. HANSPETER BRANDLI. Dr. Brandli, who became a director in 1998, is
Chairman of the Board of Danzas Holding Ltd. Since 1993, Dr. Brandli has owned
and operated HPB Management Services, a management services company. He received
a Diploma in physics in 1963 from the Federal Institute of Technology (ETH) in
Zurich, Switzerland and a Ph.D. in physics from the University of
Berne/Switzerland in 1968. Dr. Brandli is also President of the Board of
Directors of Melcher Ltd., Uster, Domenic Melcher Ltd., Uster, Melcher Holding
Ltd., Cham, and Melcher Produktion Ltd., Cham, which are all subsidiaries of the
Company's subsidiary, Melcher Holding AG.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE CLASS II
DIRECTOR LISTED ABOVE. WE WILL VOTE PROXIES RECEIVED BY US IN FAVOR OF THE ABOVE
NOMINEE UNLESS A CONTRARY CHOICE IS INDICATED.
CLASS I AND III DIRECTORS
The following directors are currently directors of the Company, and their
terms have not expired. We expect these directors to continue to serve until
their terms expire. We will put the Class III and Class I directors up for
re-election at the Annual Meeting in 2000 and 2001, respectively.
<TABLE>
<CAPTION>
NAME OF DIRECTOR AGE(2) PRINCIPAL OCCUPATION CLASS FIRST YEAR ELECTED
- -------------------------------------- ----------- -------------------------------------- ----- -------------------
<S> <C> <C> <C> <C>
Jon E.M. Jacoby....................... 61 Director and Executive Vice President III 1995
of Stephens Group, Inc.
Steven J. Goldman..................... 41 Chairman of the Board, Chief Executive I 1988
Officer and President of Power-One,
Inc.
Albert Y.C. Yu........................ 58 Senior Vice President, Intel I 1997
Corporation
</TABLE>
JON E.M. JACOBY. Mr. Jacoby is a director and an Executive Vice President
of Stephens Group, Inc. Mr. Jacoby is a Senior Executive Vice President of
Stephens Inc., an affiliate of Stephens Group, Inc., where he has been employed
since 1963. He received his B.S. degree from the University of Notre Dame and
his M.B.A. from Harvard Business School. He is a director of Delta & Pine Land
Company and Beverly Enterprises, Inc.
2
<PAGE>
STEVEN J. GOLDMAN. Mr. Goldman, who joined the Company in 1982, became our
President and Chief Executive Officer in 1990 and was named Chairman of the
Board in February 1997. He received his B.S. degree in electrical engineering
from the University of Bridgeport and his M.B.A. degree from Pepperdine
University's Executive program. Mr. Goldman is a contributing member and
co-membership chairman of the San Fernando Valley Chapter of the Young
President's Organization.
DR. ALBERT Y.C. YU. Dr. Yu, who became a director in October 1997, is a
Senior Vice President of Intel Corporation. In his twenty-two years with Intel,
Dr. Yu has held a number of senior management positions in manufacturing,
technology development, product planning and general management. Before joining
Intel, Dr. Yu was Director of Device Physics at Fairchild Semiconductor. Dr. Yu
received his Ph.D. and M.S. from Stanford University and his B.S. from
California Institute of Technology, all in Electrical Engineering.
DIRECTORS' COMPENSATION
In consideration for acting as a director of the Company, we pay each
non-employee director $5,000 per year, as well as $3,000 per quarter for all
Board of Directors, Compensation Committee and Audit Committee meetings
attended. Our non-employee directors have also received, and are expected to
continue to receive, options to purchase our common stock.
BOARD OF DIRECTORS MEETINGS
The Board of Directors acted by the unanimous written consent of the board
members on four occasions during 1998. The Board of Directors met four times
during fiscal 1998. Each director attended all of the total number of meetings
of the Board and Committees on which he served.
BOARD COMMITTEES
AUDIT COMMITTEE
Our Audit Committee, comprised of Mr. Jacoby and Dr. Brandli, recommends the
engagement of independent public accountants, reviews with the independent
public accountants the plans and results of such audit engagement, approves
professional services provided by the independent public accountants, reviews
independence of the independent public accountants, considers the range of audit
and non-audit fees and reviews the adequacy of our internal accounting controls.
The Audit Committee met two times in fiscal 1998 and did not take any action by
written consent.
COMPENSATION COMMITTEE
Our Compensation Committee, comprised of Mr. Jacoby and Dr. Brandli,
determines compensation of our executive officers and administers our 1996 Stock
Incentive Plan, as amended. The Compensation Committee has also established a
plan setting forth the criteria for bonuses, which is summarized in the
"Compensation Committee Report." The Compensation Committee met one time in
fiscal 1998 and took action by written consent two times.
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of our outstanding
common stock as of March 15, 1999 by (1) persons or entities who beneficially
own more than 5% of our outstanding common stock and (2) each of our directors
and executive officers, individually and together as a group:
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENTAGE OF ALL
OWNED COMMON STOCK
NAME OF BENEFICIAL OWNER(1) NUMBER(2) OUTSTANDING
- ------------------------------------------------------------------------------------ ----------- -------------------
<S> <C> <C>
Stephens Group, Inc.(3)............................................................. 3,704,050 21.7%
Steven J. Goldman(4)................................................................ 1,827,647 10.7
Eddie K. Schnopp(5)................................................................. 400,684 2.3
Dennis R. Roark..................................................................... 523,275 3.1
David J. Hage....................................................................... 530,011 3.0
Brad W. Godfrey(6).................................................................. 285,438 1.7
Jon E.M. Jacoby(3)(7)............................................................... 1,447,385 8.5
Albert Y.C. Yu...................................................................... 30,300 *
Hanspeter Brandli................................................................... -- --
All executive officers and directors as a group (8 persons)......................... 5,033,740 29.4
</TABLE>
- ------------------------
* Less than one percent.
(1) The address for each stockholder listed above is c/o the Company, 740 Calle
Plano, Camarillo, California 93012, except for Stephens Group, Inc. and Jon
E.M. Jacoby, whose address is 111 Center Street, Little Rock, Arkansas
72201.
(2) Gives effect to options exercisable within 60 days of March 15, 1999.
(3) Stephens Group, Inc. has contributed its shares to a voting trust pursuant
to which the voting trust has sole voting power over such shares. The voting
trust is required to vote such shares "for" or "against" proposals submitted
to our stockholders in the same proportion as the votes cast "for" and
"against" such proposals by all other stockholders, excluding abstentions.
Based on a report on Schedule 13D that the voting trust filed on June 10,
1998, certain shareholders, directors, officers and related entities of
Stephens Group, Inc. own an additional 3,717,327 shares, of which 3,089,498
have been contributed to the voting trust. Mr. Jacoby is a director and an
officer of Stephens Group, Inc. and its subsidiary, Stephens Inc.
(4) Includes 750 shares owned by Mr. Goldman's wife's mother. Mr. Goldman
disclaims beneficial ownership of such shares.
(5) Includes 154,849 shares owned by Ms. Koep, who is married to Mr. Schnopp,
and 3,800 shares owned by a trust for the benefit of Mr. Schnopp's children.
Mr. Schnopp disclaims beneficial ownership of such shares.
(6) Includes 1,750 shares owned by Mr. Godfrey's brother. Mr. Godfrey disclaims
beneficial ownership of such shares.
(7) Includes 52,272 shares owned by J & J Partners, 209,088 shares owned by
Jacoby Enterprises, Inc., 143,748 shares owned by Coral Two Corporation and
94,089 shares owned by Coral Partners, which have all been contributed to
the voting trust and as to which Mr. Jacoby has sole power of disposition,
subject to certain transfer restrictions in the voting trust agreement, and
the voting trust has sole
4
<PAGE>
power to vote; also includes 23,522 shares owned by Delaware Charter
Guarantee & Trust F/B/O Jon E.M. Jacoby Keogh as to which Mr. Jacoby has
sole power of disposition and sole power to vote; also includes the
following shares as to which Mr. Jacoby disclaims beneficial ownership:
130,679 shares owned by Warren and Harriet Stephens Children's Trust UID
9/30/87 and 492,289 shares owned by Jackson T. Stephens Grandchildren's
Trust AAAA UID 1/26/96, which have been contributed to the voting trust and
as to which Mr. Jacoby, as sole trustee, has sole power of disposition,
subject to certain transfer restrictions in the voting trust agreement, and
the voting trust has sole power to vote; and includes 39,203 shares owned by
Grandchild's Trust One UID 12/16/85, 39,203 shares owned by Grandchild's
Trust Two UID 12/16/85, 39,203 shares owned by Grandchild's Trust Three UID
12/89, 30,000 shares owned by Susan Stephens Campbell 1995 Trust UID
12/4/95, 30,000 shares owned by Craig D. Campbell, Jr. 1995 Trust UID
12/4/95 and 30,000 shares owned by Elizabeth Chisum Campbell 1995 Trust UID
12/4/95, as to which Mr. Jacoby, as a co-trustee, has shared power to vote
and shared power of disposition. Does not include shares owned by Stephens
Group, Inc. or other of its related persons or entities, except as mentioned
in this footnote.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION(*)
The Compensation Committee consists of Mr. Jacoby and Dr. Brandli, both of
whom are independent, non-employee directors. The Compensation Committee
determines the compensation levels of our senior officers. The Compensation
Committee also administers our stock incentive plan and determines awards to be
made under the plan to our officers and all other eligible individuals.
The Compensation Committee may consider other forms of compensation, both
short and long-term, in addition to those described below, designated to link
compensation with achieving financial targets.
BASE SALARY. The Compensation Committee set Mr. Goldman's salary for 1998
and authorized Mr. Goldman to increase our other executive officers' salaries by
4% to 10% in his discretion.
MANAGEMENT BONUS PLAN. Under the Company's Management Bonus Plan, the
Company's executive officers can earn bonuses based on the Company's attaining
specified EBITDA objectives during a particular fiscal year. For more
information on this bonus plan, please see the description provided in the
"Employment Arrangements and Agreements" section of this Proxy Statement under
"Management Bonus Plan." Our executive officers did not earn any bonuses under
the Management Bonus Plan in 1998.
DISCRETIONARY BONUS PLAN. In March 1998, the Compensation Committee adopted
a discretionary Executive Incentive Bonus Plan (the "Discretionary Bonus Plan").
Under the Discretionary Bonus Plan, our executive officers can receive, at the
sole discretion of the Compensation Committee, a bonus of up to 50% of the
executive's base salary, (but total bonus compensation paid under all plans to
an executive may not exceed 100% of such executive's base salary). This bonus is
based upon the Compensation Committee's determination of an individual's
contribution to the Company in conjunction with the Company's (i) significantly
exceeding projected earnings per share, (ii) having accelerated sales growth,
(iii) executing acquisitions in an efficient manner, and (iv) achieving such
other goals as the Board of Directors or the Compensation Committee may
determine. The Compensation Committee did not award our executive officers any
bonuses under the Discretionary Bonus Plan in 1998.
- ------------------------
* This section of the Proxy Statement shall not be deemed to be incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filings of the Company pursuant to the Securities Act of 1933
or the Securities Exchange Act of 1934, as amended, except to the extent the
Company specifically incorporates the section by reference therein, and shall
not be deemed soliciting material or otherwise deemed filed under either such
Acts.
5
<PAGE>
EQUITY BASED COMPENSATION. The Compensation Committee will provide
long-term incentives linked to an increase in stock value by awarding, in
amounts, to persons, and at times it believes appropriate, stock options at the
fair market value on the date of grant. Outstanding stock options of our
executive officers, which were granted in 1996 and 1998, are exercisable in
various increments on the third through seventh anniversaries of the date of
grant, but such options may be exercisable on earlier dates if we meet certain
financial goals. In 1997, we reached these financial targets, and 20% of each
officer's outstanding options became exercisable. For a description of options
that the Compensation Committee granted our executive officers in 1998, see the
section in this proxy statement entitled "Employment Agreements and
Arrangements--Option Grants in Last Fiscal Year." For a detailed discussion of
our stock incentive plan, please see the discussion in the "Employment
Agreements and Arrangements" section of this proxy.
REPORT ON REPRICING OF OPTIONS. To realign the exercise price of
outstanding stock options more closely with the market price of our common
stock, our Compensation Committee on October 23, 1998 authorized an amendment to
reduce the exercise price of these options. Messrs. Schnopp, Roark, Godfrey and
Hage participated in this repricing with respect to options that the
Compensation Committee awarded them on June 16, 1998. For more information, see
the table captioned "Ten-Year Option/SAR Repricing" in the section of this proxy
statement entitled "Employment Agreement and Arrangements." The Board's action
did not affect the vesting schedule and expiration dates of these options. Any
employee who chose to have his or her option amended, agreed, however, not to
exercise the amended option until November 6, 1999 except in very limited
circumstances, and the shares subject to the option were reduced by ten percent.
The Compensation Committee and the Board believe that stock options only work as
an incentive to employees, including senior executives, if the exercise prices
are not materially in excess of the market price of our common stock.
Consequently, the Compensation Committee repriced these options in order to
reflect more accurately the market value of our common stock, determined by
referring to the closing price of the stock as reported by the Nasdaq Stock
Market on October 23, 1998, the date of the repricing.
THE DEDUCTIBILITY OF EXECUTIVE COMPENSATION. Section 162(m) of the Internal
Revenue Code does not permit us to deduct cash compensation in excess of $1
million paid to the chief executive officer and the four highest compensated
executive officers during any taxable year, unless such compensation meets
certain requirements. We believe that our stock incentive plans (as previously
described) comply with the rules under Section 162(m) for treatment as
performance-based compensation, allowing us to deduct fully compensation paid to
executives under this plan.
THE COMPENSATION COMMITTEE
JON E.M. JACOBY
DR. HANSPETER BRANDLI
6
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION
The following table provides information regarding all compensation paid to
or earned by our Chief Executive Officer and the four other most highly
compensated executive officers (together, the "Named Executive Officers") for
our last three fiscal years:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING OPTIONS
--------------------------------- TO PURCHASE ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMMON STOCK COMPENSATION(1)
- -------------------------------------------- --------- ---------- ---------- ------------------ ----------------
<S> <C> <C> <C> <C> <C>
Steven J. Goldman........................... 1998 $ 313,008 -- 65,000 *
President and Chief Executive 1997 $ 302,536 $ 189,785 $ 3,659,541
Officer 1996 $ 302,536 $ 189,085 82,000 *
Eddie K. Schnopp............................ 1998 $ 135,725 -- 75,000(3)(4) *
Senior Vice President--Finance, 1997 $ 130,104 $ 81,619 -- $ 468,650
Chief Financial Officer 1996 $ 110,084 $ 81,315 45,000 $ 11,641
and Secretary
Dennis R. Roark............................. 1998 $ 158,612 -- 40,000(3) *
Executive Vice President and 1997 $ 146,692 $ 92,023 -- $ 925,349
Chief Technology Officer 1996 $ 141,024 $ 91,682 55,000 *
David J. Hage............................... 1998 $ 140,158 -- 40,000(3) *
Senior Vice President--Sales 1997 $ 132,548 $ 90,789 -- $ 922,752
and Marketing 1996 $ 125,008 $ 95,473 55,000 *
Brad W. Godfrey............................. 1998 $ 115,327 -- 40,000(3) $ 40,149(2)
Senior Vice President-- 1997 $ 114,109 $ 62,700 -- $ 500,922
Worldwide Manufacturing 1996 $ 107,640 $ 62,700 45,000 $ 36,013
</TABLE>
- ------------------------
* Less than $50,000 or 10% of the total salary and bonus for said year.
(1) These figures for 1997 include the following payments of cash and stock
(based on the stock price on the date of issuance) pursuant to the terms of
employment and compensation agreements that provided for such payment upon,
among other things, an initial public offering: for Mr. Goldman, $3,385,379
in cash and $254,800 of stock; Mr. Schnopp, $365,673 in cash and $91,406 of
stock; Mr. Roark, $813,906 in cash and $100,590 in stock; Mr. Hage, $685,159
in cash and $228,368 in stock; and for Mr. Godfrey, $356,531 in cash and
$100,548 of stock.
(2) Includes car allowance of $7,584, 401K matching contribution of 4,500 and
living expenses of $31,065.
(3) Reduced by 10% to 36,000 in connection with our October 1998 option
repricing.
(4) Includes 35,000 shares underlying options granted in 1998 to Ms. Koep, who
is married to Mr. Schnopp. Shares underlying options granted to Ms. Koep in
1998 were reduced by 10% to 31,500 in connection with the repricing. Mr.
Schnopp disclaims beneficial ownership of such shares.
7
<PAGE>
EMPLOYMENT ARRANGEMENTS AND AGREEMENTS
EMPLOYMENT CONTRACTS
We are not currently a party to any employment agreements with our executive
officers.
STOCK OPTION PLAN
GENERAL; PURPOSE. Our Amended and Restated 1996 Stock Incentive Plan (the
"Plan") provides a means to attract, motivate, retain and reward key employees
of the Company and its subsidiaries and promote our success. The following
briefly summarizes the Plan, as modified by amendments to the Plan that our
Board of Directors approved in 1998 and January of 1999. This summary is
qualified in all respects by the text of the Plan, which is attached as an
exhibit.
NUMBER OF SHARES. The number of shares of common stock that may be subject
to outstanding grants and awards under the Plan is 2,000,000 shares plus 20% of
any increase in outstanding shares that occurs beginning on December 31, 1997
(as measured on each December 31). The maximum number of shares that may be
subject to all awards granted to any individual in any calendar year is limited
to 500,000 shares.
ADMINISTRATION. Our Compensation Committee administers the Plan. Among
other things, it is responsible to interpret the Plan and award our officers and
key employees with options, stock appreciation rights, shares of restricted
stock, performance shares and other awards valued by reference to our common
stock. In deciding whether or not to grant these awards, the Compensation
Committee considers our performance and the individual's performance and any
other factors that it deems appropriate. To date, the Compensation Committee has
awarded only non-qualified stock options under the Plan.
TRANSFERABILITY. Generally speaking, options may be (i) transferred only by
will or the laws of descent and distribution, (ii) exercised only by the holder
and (iii) paid only to the holder or its beneficiary or representatives. The
Compensation Committee may, however, establish exceptions to these rules,
subject to applicable law.
PAYMENT. Option holders may pay the exercise price in cash, common stock or
a combination of the two. We utilize the cash that we receive when options are
exercised as general funds, and we restore common stock we receive to the status
of authorized but unissued shares.
TERMS AND EXERCISE PERIOD OF OPTIONS. The Compensation Committee determines
the term of options, which cannot exceed ten years. Although the Plan does not
provide for a minimum vesting period, post-termination exercise period or
pricing requirement, the Committee commonly imposes such restrictions. Options
are typically exercisable during an optionee's employment, and those that have
vested remain exercisable for 90 days after an optionee's employment is
terminated (180 days when the optionee becomes disabled or dies). The
Compensation Committee can accelerate the vesting of options and extend the
exercisability periods.
NON-EMPLOYEE DIRECTORS. Each director who is not an employee and is a
citizen and resident of the United States (a "Non-Employee Director") is
automatically granted options to purchase 40,000 shares of common stock upon
becoming a director. At the close of trading on the day of the annual
stockholders meeting four years after the initial grant, each Non-Employee
Director is automatically granted options to purchase 10,000 shares of common
stock. All grants are at an exercise price equal to the market price of the
common stock on the grant date. All Non-Employee Director options have a 10-year
term and vest in equal annual installments over a four-year period beginning on
the first anniversary of the grant date. If a Non-Employee Director's services
are terminated for any reason other than the director's death, disability or
retirement, any portion of stock options held by such director that are
exercisable will remain exercisable for three months after such termination of
services or until the term of the option expires, whichever occurs first. If the
Non-Employee Director dies, becomes disabled or retires, stock options held by
such director will become exercisable immediately and remain exercisable for one
year after the date of such termination of services or until the term of the
option expires, whichever occurs first.
8
<PAGE>
NON-CITIZEN NON-EMPLOYEE DIRECTORS. Option grants to directors who are not
employees and are not citizens or residents of the United States ("Non-Citizen
Non-Employee Directors") are not automatic. The Compensation Committee may grant
the same options to Non-Citizen Non-Employee Directors as it grants to
Non-Employee Directors, or the Compensation Committee or Board of Directors may
authorize one of our subsidiaries to grant Non-Citizen Non-Employee Directors
options on substantially similar terms as options granted to Non-Employee
Directors. In September 1998 in connection with our acquisition of Melcher
Holding AG, Melcher granted Dr. Brandli an option to purchase 40,000 shares of
our common stock. The option granted to Dr. Brandli, as amended, vests 25% per
year beginning on the first anniversary of the grant date and has an exercise
price of $7.00 per share, the market price of our common stock on the grant
date.
TERMINATION, AMENDMENT AND ADJUSTMENT. The Compensation Committee or the
Board of Directors may terminate the Plan at any time. In addition, the
Compensation Committee or the Board may amend the Plan from time to time,
without approval of the Company's Stockholders, unless any law, agreement or
Nasdaq rule requires stockholder approval. The Plan does not permit the
Compensation Committee or the Board to grant any options after February 22,
2006, but options granted previously may thereafter be amended consistent with
the terms of the Plan.
CHANGE IN CONTROL. When a Change in Control Event (as defined in the Plan)
occurs, vesting accelerates, and the number and the terms of an option (E.G.,
number and type of shares and exercise price) may be adjusted to prevent
dilution or enlargement of rights under options.
MISCELLANEOUS. The Compensation Committee may amend individual awards in
any manner consistent with the Plan, including amendments that effectively
reprice options without changing other terms. The Plan requires, however, that
an option holder consent to any amendments that adversely affect his or her
option. The Plan is not exclusive and does not limit the Board's or Compensation
Committee's authority to grant other awards, in stock or cash, or to authorize
other compensation, under any other Plan or authority.
MANAGEMENT BONUS PLAN
Under our Management Bonus Plan, which covers certain key employees, the
Named Executive Officers can earn bonuses of up to 62.5% of their salaries,
except that Mr. Hage can earn a bonus of up to $100,000 under this plan and the
sales bonus plan described below and Mr. Godfrey's bonus cannot exceed 50% of
his salary. Bonuses are based on actual EBITDA realized by the Company during
any fiscal year as a percentage of planned EBITDA. Mr. Hage, who is Senior Vice
President--Sales and Marketing, also participates in the Company's sales bonus
plan. Bonuses under the sales bonus plan are based on increases in net sales
over the prior year.
DISCRETIONARY BONUS PLAN
Under the Discretionary Bonus Plan, our executive officers can receive, at
the sole discretion of the Compensation Committee, a bonus of up to 50% of the
executive's base salary (provided that total bonus compensation paid under all
plans to an executive may not exceed 100% of such executive's base salary). This
bonus is based upon the Compensation Committee's determination of an
individual's contribution to the Company in conjunction with the Company's (i)
significantly exceeding projected earnings per share, (ii) having accelerated
sales growth, (iii) executing acquisitions in an efficient manner, and (iv)
achieving such other goals as the Board of Directors or the Compensation
Committee may determine.
401(K) SAVINGS AND THRIFT PLAN
We have a defined contribution 401(k) plan that covers substantially all
full-time Camarillo employees who have been employed during an open enrollment
period. The 401(k) plan allows all such employees to defer amounts up to the
statutory limit each year. We have a discretionary matching program under which,
in 1998, we matched 50% of the first 3% and 25% of the next 3% of employee
contributions.
9
<PAGE>
EMPLOYEE STOCK PURCHASE PLAN
Effective January 1, 1998, we adopted the Employee Stock Purchase Plan (the
"Purchase Plan"), which is designed to furnish eligible employees an incentive
to advance our best interests by providing a formal program whereby they may
voluntarily purchase shares of our common stock at a favorable price and upon
favorable terms. Generally speaking, all employees who work in the United States
and are scheduled to work an average of at least 20 hours per week are eligible
to participate in the Purchase Plan.
Under the Purchase Plan, employees may designate between two and eight
percent of their base compensation to purchase common stock. The exercise price
of the common stock is 85% of the fair market value of the common stock at the
beginning or end of each six month period, whichever is lower. Generally
speaking, participants pay for the common stock through payroll deductions. The
Compensation Committee administers the Purchase Plan.
OPTION GRANTS IN 1998
The following table provides details regarding stock options granted to the
Named Executive Officers in 1998:
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS(1)
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED ANNUAL
SECURITIES % OF TOTAL RATES OF STOCK PRICE
UNDERLYING OPTIONS APPRECIATION FOR OPTION
OPTIONS GRANTED TO EXERCISE OR TERM(2)
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION ------------------------
NAME (#)(1) FISCAL YEAR ($/SH) DATE 5% 10%
- --------------------------------- ----------------- ----------------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Steven J. Goldman................ 65,000 5.5% $ 14.00 6/15/08 $ 572,294 $ 1,450,306
Eddie K. Schnopp................. 75,000(3)(4) 6.3% $ 6.125 6/15/08 $ 288,898 $ 732,125
Dennis R. Roark.................. 40,000(3) 3.4% $ 6.125 6/15/08 $ 154,079 $ 390,467
David J. Hage.................... 40,000(3) 3.4% $ 6.125 6/15/08 $ 154,079 $ 390,467
Brad W. Godfrey.................. 40,000(3) 3.4% $ 6.125 6/15/08 $ 154,079 $ 390,467
</TABLE>
- ------------------------
(1) The stock options listed above were granted on June 16, 1998 pursuant to our
1996 Stock Incentive Plan. The options become exercisable beginning in the
third year after the grant, at a rate of 10% in each year for years three
and four, 20% in year five, and 30% in years six and seven (or at an
accelerated rate if we meet certain financial goals) as long as the optionee
remains an employee of the Company. The maximum term of each option granted
is 10 years from the date of grant. The exercise price equals the market
value of the stock on the grant date.
(2) Potential gains are net of the exercise price but before taxes associated
with the exercise and assume that the options are exercised on the latest
possible date. The 5% and 10% assumed annual rates of compounded stock
appreciation are pursuant to the rules of the Securities and Exchange
Commission and do not represent our estimate or projection of the future
common stock price. Actual gains, if any, on stock option exercises depend
on our future financial performance, overall market conditions and the
option holders' continued employment through the vesting period.
(3) The number of shares underlying these options was reduced by 10% to 36,000,
and the exercise price of the options was reduced from $14.00 per share to
$6.125 per share, in connection with our October 1998 option repricing.
(4) Includes 35,000 shares underlying options granted in 1998 to Ms. Koep, who
is married to Mr. Schnopp, which were also reduced by 10% to 31,500 in
connection with the repricing. Mr. Schnopp disclaims beneficial ownership of
such shares.
10
<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1998 AND FISCAL YEAR-END OPTION VALUE
The following table sets forth information with respect to exercisable and
non-exercisable stock options held by the Named Executive Officers and the end
of the 1998 fiscal year:
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF UNEXERCISED
UNDERLYING OPTIONS IN-THE-MONEY OPTIONS
AT FY-END(1) AT FY-END
------------------ ----------------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED(2) UNEXERCISABLE UNEXERCISABLE(3)
- --------------------------------------- --------------- ----------- ------------------ ----------------------
<S> <C> <C> <C> <C>
Steven J. Goldman...................... 0 0 16,400/130,600 $88,068/$352,272
Eddie K. Schnopp....................... 16,000(4) $ 126,000 0/131,500(5) 0/$360,217
Dennis R. Roark........................ 0 0 11,000/80,000 $59,070/$245,100
David J. Hage.......................... 0 0 11,000/80,000 $59,070/$245,100
Brad W. Godfrey........................ 9,000 $ 74,250 0/72,000 0/$202,140
</TABLE>
- ------------------------
(1) The stock options listed were granted on February 23, 1996 and June 16, 1998
pursuant to our 1996 Stock Incentive Plan. The options become exercisable
beginning in the third year after the grant, at a rate of 10% in each year
for years three and four, 20% in year five, and 30% in each year for years
six and seven as long as the optionee remains an employee of the Company,
but such options may be exercisable on earlier dates if we meet certain
financial goals. In 1997, we reached these financial goals, and 20% of each
of the above officers' outstanding options that were granted on February 23,
1996 became exercisable as of April 1, 1998. The maximum term of each option
granted is 10 years from the date of grant. The exercise price of the
options granted on February 23, 1996 is $1.00 per share, and the exercise
price of the options granted on June 16, 1998 is $14.00 per share for the
options held by Mr. Goldman and $6.125 per share for the other Named
Executive Officers, all of whom participated in the October 1998 options
repricing.
(2) Value realized is equal to the difference between the option exercise price
and the fair market value of our common stock at the date of exercise
multiplied by the number of options exercised.
(3) This amount represents solely the difference in the market price ($6.37) on
the last trading day of the fiscal year, December 24, 1998, of those
unexercised options which had an exercise price below such market price
(i.e., "in-the-money options") and the respective exercise prices of the
options. No assumptions or representations regarding the value of such
options are made or intended.
(4) Includes 7,000 shares acquired pursuant to exercise of options held by Ms.
Donna Koep, who is married to Mr. Schnopp. Mr. Schnopp disclaims beneficial
ownership of such shares.
(5) Includes 59,500 shares underlying options held by Ms. Koep. Mr. Schnopp
disclaims beneficial ownership of these shares.
11
<PAGE>
TEN-YEAR OPTION/SAR REPRICING
The table below sets forth information concerning the repricing on October
23, 1998 of options awarded to the Named Executive Officers on June 16, 1998.
See "Compensation Committee Report on Executive Compensation" for further
information.
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF MARKET ORIGINAL
SECURITIES VALUE AT EXERCISE OPTION TERM
UNDERLYING TIME OF PRICE AT REMAINING AT
OPTIONS/ REPRICING TIME OF NEW DATE OF
SARS REPRICED OR REPRICING OR EXERCISE REPRICING OR
NAME DATE OR AMENDED(1) AMENDMENT AMENDMENT PRICE AMENDMENT
- ------------------------------------ --------- --------------- ----------- ------------- ----------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Eddie K. Schnopp.................... 10/23/98 40,000 $ 6.125 $ 14.00 $ 6.125 9 years, 236 days
Dennis R. Roark..................... 10/23/98 40,000 $ 6.125 $ 14.00 $ 6.125 9 years, 236 days
David J. Hage....................... 10/23/98 40,000 $ 6.125 $ 14.00 $ 6.125 9 years, 236 days
Brad W. Godfrey..................... 10/23/98 40,000 $ 6.125 $ 14.00 $ 6.125 9 years, 236 days
</TABLE>
- ------------------------
(1) The number of shares underlying these options was reduced by 10% to 36,000
in connection with the repricing.
12
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURNS
The following compares the cumulative total stockholder return on a $100
investment in our common stock with the cumulative total return of a $100
investment in the Russell 2000 Index and the Nasdaq Stock Market, each for the
period from September 30, 1997 (the day the common stock commenced trading)
through December 31, 1998. The total return on the common stock is measured by
dividing the difference between the common stock price at the end and the
beginning of the measurement period by the common stock price at the beginning
of the measurement period.
The Russell 2000 Index and the Nasdaq Stock Market are intended to provide a
relevant comparison of total annual return in the time period (through December
31, 1998) in which our common stock has been publicly traded.
POWER-ONE, INC.
COMPARISON OF CUMULATIVE TOTAL RETURN
SEPTEMBER 30, 1997 TO DECEMBER 31, 1998(*)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
POWER-ONE RUSSELL 2000 NASDAQ
<S> <C> <C> <C>
9/30/97 100.00 100.00 100.00
10/1/97 129.91 100.19 100.27
10/2/97 128.57 100.69 100.99
10/3/97 129.46 101.26 101.79
10/6/97 140.18 101.74 102.15
10/7/97 135.71 102.19 103.06
10/8/97 136.61 102.17 103.33
10/9/97 132.14 102.36 103.57
10/10/97 133.93 102.47 103.16
10/13/97 135.71 102.51 103.35
10/14/97 133.04 102.24 102.79
10/15/97 133.93 101.97 102.24
10/16/97 132.59 100.74 100.83
10/17/97 133.48 99.00 98.88
10/20/97 132.59 100.01 99.99
10/21/97 134.82 101.13 101.59
10/22/97 137.50 100.98 101.33
10/23/97 135.71 99.02 99.14
10/24/97 135.71 98.61 97.94
10/27/97 125.00 92.58 91.07
10/28/97 137.50 94.73 95.10
10/29/97 133.04 95.82 95.08
10/30/97 130.36 94.46 93.16
10/31/97 133.04 95.47 94.54
11/3/97 130.36 97.17 96.70
11/4/97 130.80 97.46 96.76
11/5/97 135.71 98.00 97.13
11/6/97 131.25 97.58 96.31
11/7/97 132.14 95.90 95.06
11/10/97 133.04 95.94 94.37
11/11/97 133.93 95.51 94.02
11/12/97 131.25 93.31 91.46
11/13/97 124.11 93.29 92.41
11/14/97 120.54 94.40 93.94
11/17/97 123.21 96.00 95.75
11/18/97 124.11 95.22 94.94
11/19/97 125.00 94.90 94.99
11/20/97 125.45 96.01 96.49
11/21/97 123.21 95.86 96.15
11/24/97 125.00 94.27 94.14
11/25/97 125.00 94.07 94.27
11/26/97 117.86 94.35 94.59
11/28/97 116.96 94.73 94.95
12/1/97 116.96 95.67 96.74
12/2/97 112.50 95.30 95.29
12/3/97 108.04 95.59 95.81
12/4/97 109.82 95.83 95.71
12/5/97 104.91 96.53 96.93
12/8/97 103.57 97.40 97.97
12/9/97 107.14 96.55 96.14
12/10/97 109.82 95.37 94.72
12/11/97 108.04 93.58 92.46
12/12/97 107.59 93.13 91.15
12/15/97 108.04 92.72 91.15
12/16/97 105.36 93.72 92.13
12/17/97 102.23 93.97 91.79
12/18/97 100.89 92.62 90.36
12/19/97 100.89 92.55 90.45
12/22/97 100.89 93.18 90.89
12/23/97 99.11 93.00 89.57
12/24/97 100.00 92.78 88.96
12/26/97 100.00 92.88 89.66
12/29/97 100.00 94.02 91.21
12/30/97 100.00 95.63 92.84
12/31/97 98.21 96.30 93.16
1/2/98 98.21 96.19 93.82
1/5/98 101.79 96.31 94.57
1/6/98 101.79 95.43 93.74
1/7/98 101.79 94.70 92.64
1/8/98 101.79 93.81 92.28
1/9/98 92.86 90.99 89.18
1/12/98 92.86 90.54 89.43
1/13/98 100.89 92.20 91.45
1/14/98 109.82 92.97 91.88
1/15/98 108.93 92.93 91.78
1/16/98 109.82 93.92 92.71
1/20/98 116.07 95.04 94.33
1/21/98 113.39 94.73 94.20
1/22/98 113.39 93.91 93.52
1/23/98 110.71 93.61 93.49
1/26/98 101.79 92.77 92.63
1/27/98 107.14 93.11 93.66
1/28/98 107.14 94.44 95.56
1/29/98 112.50 95.19 96.07
1/30/98 110.71 94.76 96.07
2/2/98 110.71 95.73 98.05
2/3/98 109.82 96.47 98.85
2/4/98 114.29 97.36 99.69
2/5/98 112.95 97.85 99.48
2/6/98 109.82 98.17 100.51
2/9/98 114.29 98.56 100.28
2/10/98 114.29 99.42 101.39
2/11/98 110.71 99.60 101.36
2/12/98 112.95 99.69 101.70
2/13/98 112.95 100.10 101.47
2/17/98 112.95 99.86 101.05
2/18/98 112.50 100.19 101.78
2/19/98 112.50 100.09 102.45
2/20/98 113.39 100.04 102.52
2/23/98 113.84 100.54 103.92
2/24/98 117.86 100.11 103.15
2/25/98 116.96 101.03 104.79
2/26/98 120.54 101.71 105.42
2/27/98 123.21 101.77 105.03
3/2/98 117.86 101.70 104.32
3/3/98 114.29 101.90 104.24
3/4/98 110.71 101.83 104.39
3/5/98 108.04 100.66 101.56
3/6/98 111.61 102.18 104.02
3/9/98 109.82 101.61 102.34
3/10/98 110.71 102.38 103.73
3/11/98 109.82 102.93 104.22
3/12/98 109.82 103.07 104.65
3/13/98 109.82 103.29 105.10
3/16/98 108.93 103.95 106.08
3/17/98 107.14 103.81 105.55
3/18/98 106.70 104.05 106.09
3/19/98 112.50 104.51 106.78
3/20/98 110.71 104.50 106.14
3/23/98 114.73 104.44 106.34
3/24/98 121.43 104.94 107.52
3/25/98 116.96 105.14 108.24
3/26/98 119.64 105.29 108.47
3/27/98 116.96 105.14 108.18
3/30/98 119.64 104.94 107.89
3/31/98 121.43 105.92 108.90
4/1/98 118.75 106.86 109.61
4/2/98 120.09 107.19 109.92
4/3/98 121.43 107.04 110.07
4/6/98 121.43 106.18 108.51
4/7/98 120.54 104.70 106.70
4/8/98 120.54 104.74 107.20
4/9/98 118.75 105.78 107.98
4/13/98 121.43 105.67 108.26
4/14/98 117.86 106.84 109.33
4/15/98 120.54 107.34 110.53
4/16/98 117.86 106.74 110.24
4/17/98 113.39 107.31 110.73
4/20/98 100.00 107.71 111.95
4/21/98 100.00 108.28 112.94
4/22/98 97.32 108.22 113.76
4/23/98 92.86 106.86 111.61
4/24/98 94.64 105.84 110.87
4/27/98 95.54 103.23 107.99
4/28/98 90.18 104.12 108.67
4/29/98 89.73 105.10 109.84
4/30/98 89.73 106.41 110.84
5/1/98 89.29 106.86 111.14
5/4/98 89.29 106.97 111.46
5/5/98 86.61 106.15 110.63
5/6/98 83.93 105.63 110.14
5/7/98 86.61 104.88 108.87
5/8/98 86.61 105.66 110.60
5/11/98 86.16 105.09 109.63
5/12/98 84.82 104.92 110.35
5/13/98 83.48 105.21 110.71
5/14/98 84.82 104.79 110.66
5/15/98 84.82 104.10 109.56
5/18/98 82.14 103.04 108.66
5/19/98 82.14 103.75 109.50
5/20/98 79.46 103.24 108.66
5/21/98 71.43 102.95 108.03
5/22/98 71.43 102.02 107.08
5/26/98 70.54 100.28 105.48
5/27/98 69.64 99.22 105.66
5/28/98 70.09 100.44 106.46
5/29/98 70.54 100.62 105.53
6/1/98 68.75 99.42 103.63
6/2/98 69.64 99.09 104.51
6/3/98 58.48 98.97 103.36
6/4/98 55.36 99.54 105.00
6/5/98 55.36 100.09 105.77
6/8/98 55.80 100.56 106.06
6/9/98 58.93 100.64 106.83
6/10/98 63.39 99.40 105.19
6/11/98 59.82 97.91 103.80
6/12/98 57.59 97.31 103.52
6/15/98 56.25 95.60 101.78
6/16/98 56.25 96.60 104.00
6/17/98 58.93 97.85 105.38
6/18/98 57.14 96.91 105.16
6/19/98 58.93 96.62 105.67
6/22/98 58.93 97.32 107.13
6/23/98 57.59 98.59 109.43
6/24/98 57.59 99.45 111.39
6/25/98 63.39 99.19 110.53
6/26/98 64.29 99.22 110.91
6/29/98 64.29 100.00 112.18
6/30/98 67.41 100.79 112.40
7/1/98 71.43 101.33 113.57
7/2/98 67.86 100.99 112.36
7/6/98 68.75 101.36 113.28
7/7/98 69.20 101.15 113.19
7/8/98 67.86 101.36 114.81
7/9/98 64.29 101.36 115.08
7/10/98 64.29 101.02 115.27
7/13/98 62.05 101.09 116.60
7/14/98 66.07 101.24 116.77
7/15/98 68.30 101.80 118.32
7/16/98 67.41 102.16 118.68
7/17/98 62.95 101.88 119.17
7/20/98 64.29 101.78 119.49
7/21/98 67.41 100.51 117.41
7/22/98 66.07 99.36 116.85
7/23/98 64.29 97.47 114.80
7/24/98 62.50 96.64 114.55
7/27/98 59.82 95.45 114.69
7/28/98 57.14 94.21 112.51
7/29/98 52.68 93.91 111.62
7/30/98 55.36 94.64 113.88
7/31/98 51.79 92.49 111.08
8/3/98 50.89 91.08 109.81
8/4/98 53.57 88.50 105.93
8/5/98 54.46 87.85 106.08
8/6/98 53.57 89.60 108.53
8/7/98 54.02 91.62 109.56
8/10/98 54.02 90.71 109.11
8/11/98 50.89 88.27 106.35
8/12/98 56.25 90.02 108.30
8/13/98 54.46 88.98 106.93
8/14/98 55.36 88.76 106.20
8/17/98 54.46 89.01 107.85
8/18/98 54.46 90.63 110.05
8/19/98 53.57 89.43 109.31
8/20/98 50.89 88.52 108.71
8/21/98 50.89 87.18 106.64
8/24/98 55.36 86.75 106.24
8/25/98 54.46 85.88 106.67
8/26/98 53.57 83.83 104.89
8/27/98 50.89 80.67 100.04
8/28/98 50.89 79.00 97.27
8/31/98 49.55 74.47 88.94
9/1/98 50.89 76.70 93.44
9/2/98 53.35 77.71 94.49
9/3/98 50.89 76.31 93.25
9/4/98 52.68 76.48 92.93
9/8/98 52.68 79.75 98.53
9/9/98 51.79 77.72 96.37
9/10/98 50.00 76.01 94.05
9/11/98 50.00 77.92 97.39
9/14/98 50.00 78.82 98.81
9/15/98 51.34 78.83 99.55
9/16/98 50.00 79.29 100.25
9/17/98 50.00 78.29 97.66
9/18/98 48.21 80.04 98.70
9/21/98 48.21 79.91 99.69
9/22/98 48.21 81.14 100.72
9/23/98 47.77 82.85 104.42
9/24/98 47.32 81.59 102.06
9/25/98 45.98 81.31 103.43
9/28/98 46.88 81.09 103.18
9/29/98 50.00 80.60 102.87
9/30/98 52.68 80.12 100.48
10/1/98 46.43 77.13 95.65
10/2/98 51.79 77.06 95.81
10/5/98 50.00 74.21 91.16
10/6/98 47.32 73.28 89.63
10/7/98 42.86 71.00 86.77
10/8/98 42.86 68.37 84.19
10/9/98 41.07 70.16 88.54
10/12/98 42.86 71.75 91.72
10/13/98 42.86 70.59 89.54
10/14/98 44.64 71.61 91.41
10/15/98 50.00 73.78 95.57
10/16/98 50.89 75.55 96.16
10/19/98 46.43 77.66 97.81
10/20/98 48.21 78.95 97.24
10/21/98 50.89 79.31 99.35
10/22/98 53.57 80.74 101.01
10/23/98 43.75 80.88 100.48
10/26/98 39.29 81.99 102.33
10/27/98 43.75 81.86 101.89
10/28/98 41.07 81.85 103.06
10/29/98 41.07 82.52 104.24
10/30/98 40.18 83.33 105.08
11/2/98 41.96 85.24 106.84
11/3/98 41.96 85.40 106.09
11/4/98 44.64 86.59 108.18
11/5/98 44.20 87.43 108.98
11/6/98 45.54 88.21 110.14
11/9/98 46.43 87.79 110.40
11/10/98 46.43 87.45 110.67
11/11/98 46.43 86.70 110.47
11/12/98 44.64 86.42 109.81
11/13/98 46.43 85.80 109.63
11/16/98 46.43 86.03 110.44
11/17/98 45.54 85.81 111.44
11/18/98 44.64 86.40 112.56
11/19/98 44.64 86.90 113.88
11/20/98 44.64 86.88 114.39
11/23/98 43.30 87.73 117.31
11/24/98 42.86 87.39 116.62
11/25/98 42.86 87.99 117.77
11/27/98 42.86 88.60 119.62
11/30/98 41.52 87.64 115.65
12/1/98 42.86 87.86 118.87
12/2/98 42.86 87.59 118.36
12/3/98 44.64 87.04 115.94
12/4/98 46.43 87.78 118.83
12/7/98 44.64 88.40 121.06
12/8/98 43.75 88.47 120.71
12/9/98 44.64 88.57 121.64
12/10/98 43.75 87.37 119.59
12/11/98 45.54 87.12 120.38
12/14/98 44.64 85.48 116.68
12/15/98 44.64 85.84 119.39
12/16/98 44.64 85.90 119.20
12/17/98 44.64 86.77 121.25
12/18/98 45.54 87.57 123.76
12/21/98 44.64 88.54 126.83
12/22/98 46.43 88.19 125.82
12/23/98 45.54 89.20 128.88
12/24/98 45.54 89.37 128.32
12/28/98 44.64 89.97 129.34
12/29/98 45.09 90.43 129.43
12/30/98 44.64 90.77 128.55
12/31/98 50.00 92.98 130.08
</TABLE>
- ------------------------
* This section of the Proxy Statement shall not be deemed to be incorporated
by reference by any general statement incorporating by reference this Proxy
Statement into any of our filings of pursuant to the Securities Act of 1933
or the Securities Exchange Act of 1934, as amended, except to the extent we
specifically incorporate the section by reference therein, and shall not be
deemed soliciting material or otherwise deemed filed under either such Acts.
13
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our officers and directors and
persons who own more than 10% of a registered class of our equity securities to
file reports of ownership and changes in ownership with the SEC and NASDAQ.
These persons are required by regulation of the SEC to furnish us with copies of
all Section 16(a) forms they file.
Based solely on our review of the copies of such forms that we received, or
written representations from certain reporting persons, we believe that during
the fiscal year ended December 31, 1998, our officers, directors and greater
than 10% beneficial owners complied with all applicable Section 16(a) filing
requirements, except that Messrs. Schnopp and Godfrey each inadvertently failed
to make a required filing reporting one transaction on a timely basis.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Jacoby, who is a member of the Compensation Committee, serves as an
officer of Stephens Group, Inc., our largest stockholder, and Stephens Inc., a
financial advisor to us and an affiliate of Stephens Group, Inc. During the
fiscal year, we paid Stephens Inc. approximately $785,000 for financial advisory
services, which includes fees for assisting us in our acquisition of Melcher
Holding AG. Stephens paid approximately two-thirds of this amount to another
investment bank. We expect to pay Stephens Inc. for additional financial
advisory services that it may perform for us during fiscal 1999. All
compensation paid to Stephens Inc. has been on terms that we believe to be fair
and reasonable for the services performed.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
STEPHENS INC. TRANSACTIONS
See "Compensation Committee Interlocks and Insider Participation" above for
a description of transactions in 1998 between the Company and Stephens Inc.
APPROVAL OF AMENDED AND RESTATED 1996 STOCK INCENTIVE PLAN
The Plan, as modified by amendments to the Plan approved by the Board of
Directors in 1998 and January of 1999, provides that the number of shares of
common stock that may be subject to outstanding grants and awards under the Plan
equals 2,000,000 shares plus 20% of any increase in outstanding shares that
occurs beginning on December 31, 1997 (as measured on each December 31). The
maximum number of shares that may be subject to all awards granted to any
individual in any calendar year is limited to 500,000 shares. The terms of the
Plan are described above under "Employment Arrangements and Agreements--Stock
Option Plan." That description is qualified by reference to the full text of the
Plan, which is attached as Exhibit A.
Approval of the Plan will require the affirmative vote of a majority in
voting shares of common stock represented in person or by proxy at the Annual
Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDED AND
RESTATED 1996 STOCK INCENTIVE PLAN. PROXIES THAT WE RECEIVE WILL BE VOTED IN
FAVOR OF APPROVAL OF THE PLAN UNLESS A CONTRARY CHOICE IS INDICATED.
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INDEPENDENT PUBLIC ACCOUNTANTS
Upon recommendation of the Audit Committee, our Board of Directors has
appointed Deloitte & Touche LLP as our independent public accountants for the
1999 fiscal year. Deloitte & Touche LLP has served as our independent public
accountants since 1993. Services provided to us and our subsidiaries by Deloitte
& Touche LLP in fiscal 1998 included the examination of our financial statements
for the fiscal year ended December 27, 1998, limited reviews of quarterly
reports, services related to filings with the Securities and Exchange Commission
consultations on various tax matters, and services provided in connection with
our acquisitions of Melcher Holding AG and International Power Devices, Inc.
We expect representatives of Deloitte & Touche LLP to be at the Annual
Meeting and to be available to respond to appropriate questions from
stockholders. We will give the Deloitte & Touche LLP representatives an
opportunity to make a statement if they desire.
Ratification of the appointment of Deloitte & Touche LLP as our independent
public accountants for fiscal 1999 will require the affirmative vote of a
majority of voting shares of the common stock represented in person or by proxy
at the Annual Meeting. If the stockholders do not make such ratification, the
Audit Committee and the Board of Directors will reconsider the appointment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT
OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT ACCOUNTANTS FOR 1999. PROXIES THAT
WE RECEIVE WILL BE VOTED IN FAVOR OF THE RATIFICATION OF DELOITTE & TOUCHE LLP
FOR 1999 UNLESS A CONTRARY CHOICE IS INDICATED.
FINANCIAL AND OTHER INFORMATION
Our Annual Report for the fiscal year ended December 27, 1998, including
financial statements, is being sent to stockholders of record as of the close of
business on March 25, 1999 together with this Proxy Statement. We will furnish,
without charge, a copy of our Annual Report on Form 10-K for the fiscal year
ended December 27, 1998, as filed with the Securities and Exchange Commission,
to any stockholder who submits a written request to our corporate Secretary at
our offices, 740 Calle Plano, Camarillo, California 93012.
STOCKHOLDER PROPOSALS
Any stockholder who intends to present a proposal at our 2000 annual meeting
of stockholders must deliver the proposal to us at our principal executive
offices not later than December 4, 1999 for inclusion in our proxy statement and
form of proxy relating to the meeting.
OTHER MATTERS
The Board of Directors knows of no matters to be presented for action by the
stockholders at the Annual Meeting other than those described in this Proxy
Statement. Unless otherwise indicated, if any other matter is properly brought
before the meeting and may be properly acted upon, the persons named in the
accompanying form of proxy will be authorized by such proxy to vote the proxies
thereon in accordance with their best judgment.
For the Board of Directors
/s/ Eddie K. Schnopp
Eddie K. Schnopp
SECRETARY
April 6, 1999
15
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POWER-ONE, INC
AMENDED AND RESTATED
1996 STOCK INCENTIVE PLAN
(AS AMENDED AND RESTATED MAY 4, 1999)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<C> <S> <C>
1. THE PLAN............................................................................................ 1
1.1 Purpose............................................................................................. 1
1.2 Administration...................................................................................... 1
1.3 Participation....................................................................................... 2
1.4 Shares Subject to the Plan.......................................................................... 2
1.5 Grant of Awards..................................................................................... 3
1.6 Exercise of Awards.................................................................................. 3
1.7 Payment Forms....................................................................................... 3
1.8 Cashless Exercises.................................................................................. 3
1.9 Award Period........................................................................................ 4
1.10 No Transferability; Limited Exception to Transfer Restrictions...................................... 4
1.11 Options Granted by Subsidiaries..................................................................... 4
2. OPTIONS............................................................................................. 4
2.1 Grants.............................................................................................. 4
2.2 Option Price........................................................................................ 5
2.3 Option Period....................................................................................... 5
2.4 Exercise of Options................................................................................. 5
2.5 Limitations on Grant of ISOs........................................................................ 5
2.6 Limits on 10% Holders............................................................................... 5
2.7 Option Repricing/Cancellation and Regrant/Waiver.................................................... 5
2.8 Options and Rights in Substitution for Stock Options Granted by Other Corporations.................. 6
3. STOCK APPRECIATION RIGHTS........................................................................... 6
3.1 Grants.............................................................................................. 6
3.2 Exercise of Stock Appreciation Rights............................................................... 6
3.3 Payment............................................................................................. 6
3.4 Limited Stock Appreciation Rights................................................................... 7
4. RESTRICTED STOCK AWARDS............................................................................. 7
4.1 Grants.............................................................................................. 7
4.2 Restrictions and Rights............................................................................. 7
4.3 Return to the Corporation........................................................................... 7
5. STOCK BONUSES, OTHER CASH OR STOCK PERFORMANCE-BASED AWARDS, DEFERRED PAYMENTS AND DIVIDEND
EQUIVALENT RIGHTS................................................................................... 8
5.1 Grants of Stock Bonuses............................................................................. 8
5.2 Other Performance-Based Awards...................................................................... 8
5.3 Deferred Payments................................................................................... 9
5.4 Dividend Equivalent Rights.......................................................................... 9
6. STOCK UNITS......................................................................................... 9
6.1 Grants.............................................................................................. 9
6.2 Other Provisions.................................................................................... 9
</TABLE>
i
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<TABLE>
<CAPTION>
PAGE
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<C> <S> <C>
7. NON-EMPLOYEE DIRECTOR OPTIONS....................................................................... 10
7.1 Participation....................................................................................... 10
7.2 Option Grants....................................................................................... 10
7.3 Option Price........................................................................................ 10
7.4 Option Period and Exercisability.................................................................... 10
7.5 Termination of Directorship......................................................................... 11
7.6 Adjustments; Acceleration; Termination.............................................................. 11
7.7 [Intentionally Omitted]............................................................................. 11
7.8 [Intentionally Omitted]............................................................................. 11
7.9 Non-Citizen Non-Employee Directors.................................................................. 11
8. OTHER PROVISIONS.................................................................................... 11
8.1 Rights of Eligible Persons, Participants and Beneficiaries.......................................... 11
8.2 Adjustments; Acceleration; Possible Early Termination of Awards..................................... 11
8.3 Termination of Employment........................................................................... 13
8.4 Compliance With Laws................................................................................ 14
8.5 Tax Withholding..................................................................................... 14
8.6 Amendment, Termination and Suspension............................................................... 14
8.7 Privileges of Stock Ownership....................................................................... 15
8.8 Effective Date of the Plan.......................................................................... 15
8.9 Term of the Plan.................................................................................... 15
8.10 Governing Law/Construction/Severability............................................................. 15
8.11 Captions............................................................................................ 16
8.12 Non-Exclusivity of Plan............................................................................. 16
9. DEFINITIONS......................................................................................... 16
9.1 Definitions......................................................................................... 16
</TABLE>
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POWER-ONE, INC.
AMENDED AND RESTATED
1996 STOCK INCENTIVE PLAN
(As Amended and Restated May 4, 1999)
1. THE PLAN.
1.1 PURPOSE. The purpose of this Power-One, Inc. Amended and Restated 1996
Stock Incentive Plan (referred to herein as the "Plan" and formerly known as the
Power-One, Inc. 1996 Stock Incentive Plan) is to promote the success of the
Company by providing equity incentives to attract, motivate and retain key
personnel and to attract, motivate and retain experienced and knowledgeable
non-employee directors. Capitalized terms are defined in Article 9.
1.2 ADMINISTRATION.
1.2.1 COMMITTEE. This Plan shall be administered by and all awards to
Eligible Persons shall be authorized by the Committee, acting by a majority
vote or by written consent of its members. The Committee may delegate
ministerial, non-discretionary functions to third parties, including
officers or employees of the Company, except as specifically provided in
this Plan. Further, the Committee may delegate (i) to the Chief Executive
Officer, for so long as such officer is a director, the ability to grant
options of limited amount and in specific circumstances, as set forth in
this Plan, or (ii) to the Board of Directors of any Subsidiary the ability
to grant Options to a Non-Citizen Non-Employee Director in accordance with
Section 7.9 of the Plan.
1.2.2 POWERS OF COMMITTEE. Subject to the express provisions of this
Plan, the Committee shall have the authority:
(a) to determine from among those persons eligible the particular
Eligible Persons who will receive Awards; provided that with respect to
the grant of an option for not more than 10,000 shares to an individual
who is not an officer or director, upon his or her first becoming an
employee of the Company and in other extraordinary circumstances, the
determination of an Eligible Employee may be made by the Chief Executive
Officer of the Corporation, so long as such officer is serving as a
director of the Corporation, and provided further that (i) the maximum
number of shares that may be granted under stock options by such Chief
Executive Officer is limited to 50,000 shares in every four month period,
(ii) options granted by such officer only be granted pursuant to the
standard and appropriate grant agreements of the Company, (iii) no grant
be issued below Fair Market Value, and (iv) no grant be made
retroactively.
(b) 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; provided that with respect to
the grant of an option for not more than 10,000 shares to an Eligible
Employee who is not an officer or director upon his or her becoming an
employee of the Company and in other extraordinary circumstances, all of
the actions described in this paragraph may be exercised by the Chief
Executive Officer of the Corporation, so long as such officer is serving
as a director of the Corporation; and provided further that (i) the
maximum number of shares that may be granted under stock options by such
Chief Executive Officer is limited to 50,000 shares in every four month
period, (ii) options granted by such officer only be granted pursuant to
the standard and appropriate grant agreements of the Company, (iii) no
grant be issued below Fair Market Value, and (iv) no grant be made
retroactively. If such grants are made, such officer shall place a
memorandum in the records of the Compensation Committee setting forth the
names of the
1
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person being granted options, the number of options, and the date of
grant. All such grants shall be communicated in writing to the
Compensation Committee on a monthly basis.
(c) to approve the forms of Award Agreements (which need not be
identical either as to type of award or among Participants);
(d) to construe and interpret this Plan and any agreements defining
the rights and obligations of the Corporation 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;
(e) 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 8.6;
(f) to accelerate or extend the exercisability or extend the term of
any or all such outstanding Awards within the maximum term of Awards
under Section 1.9;
(g) to determine the effect, in any, on a Participant's rights during
or following a leave of absence; and
(h) 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 7 relating to
Non-Employee Director Awards shall be automatic (except as provided
therein) and, to the maximum extent possible, self-effectuating.
1.2.3 BINDING DETERMINATIONS; RELIANCE. Any action taken by, or
inaction of, the Corporation, the Board or the Committee relating to 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. In making any determination
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 counsel, accountants
and other experts or professional advisors to the Company and such
determination shall be conclusive.
1.2.4 COMMITTEE MEMBERSHIP. Subject to the requirements of the
definition of Committee contained in Article 9, the Board may, at any time
(a) change the number of members of the Committee, (b) remove from
membership on the Committee all or any of its members, (c) fill any vacancy
existing on the Committee, whether caused by removal, resignation or
otherwise, or (d) change or assume the administration of this Plan.
1.2.5 AWARDS TO COMMITTEE MEMBERS. Any Award issued to a member of the
Committee (other than under Article 7) shall be subject to approval or
ratification by the Board.
1.3 PARTICIPATION. Awards other than under Article 7 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.
1.4 SHARES SUBJECT TO THE PLAN.
1.4.1 SHARES. Subject to the provisions of Section 8.2, 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.
(a) AGGREGATE LIMIT. The maximum number of Shares subject to
outstanding Awards granted to Eligible Persons under this Plan and
available for additional Awards under this Plan shall
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<PAGE>
equal 2,000,000 plus 20% of the difference between (i) the number of
Shares outstanding on each December 31 beginning on December 31, 1997 and
(ii) the largest number of Shares outstanding on any previous December
31; provided, however, that the above equation shall never result in a
decrease in the maximum number of shares available under this Plan.
(b) ISO LIMIT. The maximum number of Shares that may be delivered
pursuant to ISOs granted to Eligible Persons under this Plan shall not
exceed 1,000,000 Shares.
(c) INDIVIDUAL LIMIT. The maximum number of Shares subject to those
Options, Stock Appreciation Rights and other Awards payable in Shares or
alternatively in Shares or cash that are granted during any calendar year
to any one individual shall be limited to 500,000.
(d) ADJUSTMENT. Each of the foregoing specific Share limits in this
Section 1.4.1 shall be subject to adjustment as contemplated by Section
1.4.2 and Section 8.2.
1.4.2 CALCULATION OF AVAILABLE SHARES AND REPLENISHMENT. If any
Option, Stock Appreciation Right, or other right to acquire Shares under or
receive cash or Shares in respect of an Award lapses or terminates without
having been exercised in full, or any Shares subject to a Restricted Stock
Award or other Award do not vest or are not delivered, the unpurchased,
unvested or undelivered Shares will again be available for purposes of this
Plan. The foregoing sentence does not apply to any Shares withheld under
Section 8.5.
1.5 GRANT OF AWARDS. Subject to the express provisions of this Plan, the
Committee, and only to the extent permitted by Section 1.2.2, the Chief
Executive Officer of the Corporation, will determine the Eligible Persons to
whom Awards will be granted, the number of Shares subject to each Award, the
price (if any) to be paid for the Shares or the Award and, in addition to
matters addressed in Section 1.2.2, the specific objectives, goals and
performance criteria that further define the terms of any performance-based
award. Each Award shall be evidenced by an Award Agreement signed by the
Corporation and, if required by the Committee, by the Participant. The Award
Agreement shall set forth or may incorporate by reference the material terms and
conditions of the Award established by the Committee consistent with the
specific provisions of this Plan. Unless a later date is specified by the
Committee in the applicable Award Agreement, the grant of an Award is made on
the Award Date.
1.6 EXERCISE OF AWARDS. An exercisable Award will be deemed to be
exercised when the Secretary of the Corporation receives an executed Exercise
Agreement from the Participant, together with payment of any required Purchase
Price in accordance with Section 1.7, 1.8, or 7.3, as the case may be. Awards of
Shares are exercisable only for and payable only in whole shares. Fractional
shares will be disregarded for all purposes under this Plan.
1.7 PAYMENT FORMS. The Purchase Price of each Award (if any) must be paid
in full at the time of each purchase in one or a combination of the following
methods, to the extent authorized by the Committee or set forth in the Award
Agreement: (a) cash or cashier's check payable to the Corporation, (b) if the
Committee approves, a Note, or (c) by Shares already owned by the Participant,
subject to any conditions (including holding periods) that the Committee may
impose. Any Shares delivered that were initially acquired upon exercise of an
Award must have been owned by the Participant at least six months as of the date
of delivery. Shares used to satisfy the Purchase Price or (if authorized by the
Committee) applicable tax withholding will be valued at their Fair Market Value
on the exercise or purchase date.
1.8 CASHLESS EXERCISES. Award Agreements may also provide that an Option
or similar right may be exercised and payment can be made by delivering a
properly executed exercise notice to the Corporation, together with irrevocable
instructions to a bank or broker to promptly deliver to the Corporation the
amount of sale proceeds necessary to pay the Purchase Price and, unless
otherwise provided by the Committee, any applicable tax withholding under
Section 8.5. The date of exercise will be deemed to be the date the Corporation
receives the proceeds.
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<PAGE>
1.9 AWARD PERIOD. Any Option, Stock Appreciation Right, or similar right
shall expire and other Awards shall either vest or be forfeited not more than 10
years after the date of grant; provided, however, that any right to payment of
cash or delivery of stock that has vested pursuant to an Award may be delayed
until a future date if specifically authorized by the Committee in writing.
1.10 NO TRANSFERABILITY; LIMITED EXCEPTION TO TRANSFER RESTRICTIONS.
1.10.1 LIMIT ON EXERCISE AND TRANSFER. Unless otherwise expressly
provided in (or pursuant to) this Section 1.10, 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.
1.10.2 EXCEPTIONS. The Committee may permit Awards to be exercised by
and paid 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 immediate 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, ISOs and Restricted Stock Awards shall be
subject to any and all additional transfer restrictions under the Code.
1.10.3 FURTHER EXCEPTIONS TO LIMITS ON TRANSFER. The exercise and
transfer restrictions in Section 1.10.1 shall not apply to:
(a) transfers to the Corporation,
(b) 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,
(c) transfers pursuant to a QDRO order if approved or ratified by the
Committee,
(d) if the Participant has suffered a disability, permitted transfers
or exercises on behalf of the Participant by his or her legal
representative, or
(e) 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.
1.11 OPTIONS GRANTED BY SUBSIDIARIES. Notwithstanding anything in this
Article 1 to the contrary, with respect to Options granted to a Non-Citizen
Non-Employee Director by any Subsidiary pursuant to Section 7.9, the Board of
Directors of such Subsidiary shall have all of the powers of the Committee
specified in Section 1.2.2, and the Subsidiary and the Secretary thereof shall
perform the responsibilities required to be performed by the Corporation and the
Secretary of the Corporation contained in this Article 1.
2. OPTIONS.
2.1 GRANTS. One or more Options may be granted under this Section 2 to any
Eligible Person. Each Option granted shall be designated by the Committee as
either a NQSO or an ISO, and such intent will be indicated in the Award
Agreement. ISOs may be granted only to Eligible Persons who are employed by the
4
<PAGE>
Corporation or a corporation that is a "parent" or "subsidiary" corporation
within the meaning of Sections 424(e) and 424(f) of the Code, respectively.
2.2 OPTION PRICE. The Purchase Price per Share covered by each Option
shall be determined by the Committee at the time of the Award. In the case of
ISOs the Purchase Price per Share must be at least 100% (110% in the case of
persons described in Section 2.6) of the Fair Market Value of the Shares on the
Award Date and in all cases shall not be less than the minimum consideration
required under applicable law.
2.3 OPTION PERIOD. Subject to Section 1.9, each Option will expire on a
date determined by the Committee, but not later than 10 years after the Award
Date, and will be subject to earlier termination as set forth in this Plan or
the Award Agreement.
2.4 EXERCISE OF OPTIONS. An Option may become exercisable, in whole or in
part, on the date or dates specified in the Award Agreement and thereafter will
remain exercisable until the earlier of the expiration or termination of the
Option, or as otherwise set forth in this Plan or the related Award Agreement.
At least 100 Shares must be purchased at one time unless the number purchased is
the total number at the time available for purchase under the Option.
2.5 LIMITATIONS ON GRANT OF ISOS.
2.5.1 $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 ISOs under this Plan and stock
subject to incentive stock options under all other plans of the Company,
such options shall be treated as NQSOs. 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 are to be treated as shares acquired pursuant to the exercise
of an ISO.
2.5.2 OTHER CODE LIMITS. ISOs may only be granted to employees of the
Corporation or a Subsidiary that satisfies the other eligibility
requirements of the Code and shall include such other terms and conditions
as from time to time are required in order that the Option be an "incentive
stock option" as defined in Section 422 of the Code.
2.6 LIMITS ON 10% HOLDERS. No ISO 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 possessing more than 10% of the total combined voting power of
all classes of stock of the Corporation, unless the Purchase 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.
2.7 OPTION REPRICING/CANCELLATION AND REGRANT/WAIVER. Subject to Section
1.4 and Section 8.6 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 2
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.
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2.8 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.
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. A Stock Appreciation Right granted
concurrently with the grant of another Award may extend to all or a portion of
the Shares covered by the related Award. A Stock Appreciation Right will entitle
the Participant to holds the related Award, upon exercise of the Stock
Appreciation Right and surrender of the related Award, or portion thereof, to
receive payment of an amount determined pursuant to Section 3.3. Any Stock
Appreciation Right granted in connection with an ISO 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.
3.2.1 EXERCISABILITY. Unless the Award Agreement or the Committee
provides otherwise, a Stock Appreciation Right related to another Award
shall be exercisable only at such time or times, and to the extent, that the
related Award is exercisable.
3.2.2 EFFECT ON AVAILABLE SHARES. Unless the Committee otherwise
provides, to the extent that a Stock Appreciation Right is exercised, the
number of Shares theretofore subject to a related Award shall be charged
against the maximum number of Shares that may be issued pursuant to Awards.
The number of Shares subject to the Stock Appreciation Right and the related
Award will also be reduced by such number of shares. If a Stock Appreciation
Right granted concurrently with an Award extends to fewer than all the
Shares covered by the related Award, and if a portion of the related Award
is subsequently exercised, the number of Shares subject to the unexercised
Stock Appreciation Right will be reduced only to the extent that the
remaining number of Shares covered by such related Award is less than the
remaining number of Shares subject to the Stock Appreciation Right.
3.2.3 INDEPENDENT STOCK APPRECIATION RIGHT. A Stock Appreciation Right
granted independently of any other Award shall be exercisable pursuant to
the terms of the applicable Award Agreement.
3.3 PAYMENT.
3.3.1 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:
(a) the difference obtained by subtracting the Purchase Price per
share of Common Stock under the related Award (if applicable) or the
initial base price or 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
(b) the number of Shares with respect to which the Stock Appreciation
Right shall have been exercised.
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3.3.2 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 (valued
at Fair Market Value on the date of exercise of the Stock Appreciation
Right), or partly in Shares and partly in cash, on a current or deferred
basis as may be authorized by the Committee, consistent with the terms of
this Plan. If the Committee permits the Participant to elect to receive cash
or Shares (or a combination thereof) on such exercise, or to use Shares to
pay any applicable withholding taxes payable, 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.
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 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 1.9. 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 AND RIGHTS.
4.2.1 PRE-VESTING RESTRAINTS. Except as provided in Sections 4.1 and
1.10, 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.
4.2.2 DIVIDEND AND VOTING RIGHTS. Unless otherwise provided in the
applicable Award Agreement, a Participant receiving a Restricted Stock Award
shall be entitled to cash dividends and voting rights for all Shares issued
even though they are not vested, provided that such rights shall terminate
immediately as to any Restricted Shares that cease to be eligible for
vesting.
4.2.3 CASH PAYMENTS. If the Participant shall have paid cash or other
property in respect of the Restricted Stock Award, the Award Agreement shall
specify whether and to what extent such cash or other property shall be
returned (with or without an earnings factor) as to any restricted Shares
that 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
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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 as therein provided.
5. STOCK BONUSES, OTHER CASH OR STOCK PERFORMANCE-BASED AWARDS, DEFERRED
PAYMENTS AND DIVIDEND EQUIVALENT RIGHTS.
5.1 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. Notwithstanding Section
1.9 and anything contained in Section 5.2 to the contrary, Awards pursuant to
this Section 5.1 for past service need not include any minimum vesting
requirement.
5.2 OTHER PERFORMANCE-BASED AWARDS.
5.2.1 GENERAL PROVISIONS. Without limiting the generality of the
foregoing, and in addition to qualifying awards granted under other
provisions of this Plan (i.e., Options or Stock Appreciation Rights granted
with an exercise price not less than Fair Market Value at the applicable
date of grant for Section 162(m) purposes to Eligible Persons who are either
salaried employees or officers ("Presumptively Qualifying Awards")), other
cash or stock-related performance-based awards, including
"performance-based" awards within the meaning of Section 162(m)
("Performance-Based Awards"), whether in the form of restricted stock,
performance stock, phantom stock, stock units, or Dividend Equivalent
Rights, or other rights, whether or not related to stock values or
appreciation, and whether payable in cash, Common Stock, or a combination
thereof, may be granted under this Plan. If the Award (other than a
Presumptively Qualifying Award) is intended as performance-based
compensation under Section 162(m) and is not entitled to the benefits of
Section 1.162-27(f) of the regulations thereunder, the vesting or payment
thereof shall be based on the performance of the Company on a consolidated,
segment, subsidiary, or division basis with reference to one or more of the
following business criteria (the "criterion"): funds from operations,
EBITDA, stock appreciation, total stockholder return, net earnings (before
or after taxes), cash flow, return on equity or on assets or on net
investment, or cost containment or reduction. To the extent so defined,
these terms are used as applied under generally accepted accounting
principles and in the Company's financial reporting. To qualify Awards as
performance-based under Section 162(m), the applicable business criteria and
specific performance goal or goals ("targets") must be established and
approved by the Committee during the first 90 days of the year (or before
one-quarter of the performance measurement period has elapsed, if such
period exceeds one year) and while the performance relating to such targets
remains substantially uncertain within the meaning thereof. The applicable
performance measurement period may not be less than one nor (except as
provided in Section 1.9) more than 10 years. The Committee is not, however,
limited to the grant of this type of performance-based awards.
5.2.2 MAXIMUM AWARD. Grants or awards under this Section 5.2 may be
paid in cash or Shares or any combination thereof. In no event shall grants
of stock-related Awards made in any calendar year to any Eligible Employee
under this Plan relate to more than 500,000 Shares. In no event shall grants
to any Eligible Employee under this Plan of Awards payable only in cash and
not related to stock provide for payment of more than $5,000,000.
5.2.3 COMMITTEE CERTIFICATION. Except as otherwise permitted to
qualify as performance-based compensation under Section 162(m), before any
Performance-Based Award under this Section 5.2 is paid, the Committee must
certify that the performance standard, target(s), and the other material
terms of the Performance-Based Award were in fact satisfied.
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5.2.4 TERMS AND CONDITIONS OF AWARDS. The Committee will have
discretion to determine the restrictions or other limitations of the
individual Awards under this Section 5.2, including the authority to reduce
Awards, to determine payout schedules and the extent of 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. The Committee may provide that in the event a Participant
terminates employment or service for any one or more reasons during any
year, the Participant shall forfeit all rights to any Award for that year.
5.2.5 ADJUSTMENTS FOR MATERIAL CHANGES. Performance goals or other
features of an Award under this Section 5.2 may provide that they (a) shall
be adjusted to reflect a change in corporate capitalization, a corporate
transaction (such as a reorganization, combination, separation, or merger)
or a complete or partial corporate liquidation, or (b) shall be calculated
either without regard for or to reflect any change in accounting policies or
practices affecting the Company and/or the business criteria or performance
goals or targets, or (c) shall be adjusted for any other circumstances or
event, or (d) any combination of (a) through (c), but only to the extent in
each case that such adjustment or determination in respect of
Performance-Based Awards would be consistent with the requirements of
Section 162(m) to qualify as performance-based compensation.
5.3 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 the crediting
of 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.
5.4 DIVIDEND EQUIVALENT RIGHTS. In its discretion, the Committee may grant
to any Eligible Person Dividend Equivalent Rights concurrently with the grant of
any Option, Restricted Stock, Stock Unit, or other stock-based Award, on such
terms as set forth by the Committee in the Award Agreement. Dividend Equivalent
Rights shall be based on all or part of the amount of dividends declared on
Shares and shall be credited as of the dividend payment dates, during the period
between the date of grant (or such later date as the Committee may set) and the
date the stock-based Award is exercised or expires (or such earlier date as the
Committee may set), as determined by the Committee. Dividend Equivalent Rights
shall be payable in cash or Shares, or (to the extent permitted by law) may be
subject to such conditions, not inconsistent with Section 162(m) (in the case of
Options or Stock Appreciation Rights, or other Awards intended to satisfy its
conditions with respect to deductibility), as may be determined by the
Committee.
6. STOCK UNITS.
6.1 GRANTS. Subject to such rules and procedures as the Committee may
establish from time to time, the Committee may, in its discretion, authorize a
Stock Unit Award or the crediting of Stock Units pursuant to the terms of this
Plan and any applicable deferred compensation plan maintained by the
Corporation, permit an Eligible Person to irrevocably elect to defer or receive
in Stock Units all or a portion of any Award hereunder, or may grant Stock Units
in lieu of, in exchange for, in respect of, or in addition to any other Award
under this Plan or any other stock option plan or deferred compensation plan of
the Corporation. The specific terms, conditions and provisions relating to each
Stock Unit grant or election, including the form of payment to be made at or
following the vesting thereof, shall be set forth in or pursuant to the
applicable deferred stock Award Agreement and the applicable deferred
compensation plan of the Company, in form substantially as approved by the
Committee.
6.2 OTHER PROVISIONS. The Committee shall determine, among other terms of
a Stock Unit grant or Award, the form of payment of Stock Units, whether in
cash, Shares, or other consideration (including any other Award) or any
combination thereof, the valuation of the Stock Units or any non-cash payment
for the purpose of the Award, and the applicable vesting and payout provisions
of the Stock Units. The
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Committee in the applicable Award Agreement or the relevant deferred
compensation plan of the Company may permit the Participant to elect the form
and time of payout of the vested Stock Units on such conditions or subject to
such procedures as the Committee may impose, and may permit Stock Unit offsets
or other provision for payment of any applicable taxes that may be due on the
crediting, vesting or payment in respect of the Stock Units.
7. NON-EMPLOYEE DIRECTOR OPTIONS.
7.1 PARTICIPATION. Awards under this Article 7 shall be made only to
Non-Employee Directors and shall be evidenced by Award Agreements substantially
in the form of Exhibit A hereto.
7.2 OPTION GRANTS.
7.2.1 TIME OF INITIAL AWARD. Persons who are Non-Employee Directors in
office at or immediately after a registration statement relating to the
initial underwritten public offering of the Corporation's Common Stock is
declared effective shall be granted without further action a NQSO to
purchase 40,000 shares of Common Stock at an exercise price equal to the
price to the public in such offering (the "Initial Options"). Thereafter,
subject to Section 7.2.3, if any person who is not, immediately prior to his
or her appointment or election, an officer or employee of the Company shall
become a Non-Employee Director of the Corporation, there shall be granted
automatically to such person (without any action by the Board or Committee)
a NQSO, the Award Date of which shall be the date such person takes office,
to purchase 40,000 shares of Common Stock, unless the Board otherwise
provides in advance of such appointment or election; PROVIDED HOWEVER, that
grants of Options to Non-Employee Directors who are non-citizens and
non-residents of the United States (a "Non-Citizen Non-Employee Director")
shall not be automatic and shall be made in accordance with Section 7.9.
7.2.2 SUBSEQUENT ANNUAL AWARDS. Subject to Section 7.2.3 and provided
that the Non-Employee Director is then continuing in office, each
Non-Employee Director shall be granted automatically (without any action by
the Committee or the Board) a NQSO to purchase 10,000 shares of Common Stock
immediately following each annual stockholders meeting during the term of
this Plan commencing with the later of (i) the year 2001 or (ii) in the year
in which the fourth anniversary of the Non-Employee Director's initial
election or appointment to the Board occurs. The Award Date of each such
NQSO shall be the date of the related annual stockholders meeting; PROVIDED
HOWEVER, that grants of Options to Non-Citizen Non-Employee Directors shall
not be automatic and shall be made in accordance with Section 7.9.
7.2.3 MAXIMUM NUMBER OF OPTIONS/SHARES. Grants pursuant to this
Section 7.2 that would otherwise exceed the maximum number of shares under
Section 1.4.1(a) shall be prorated within such limitation.
7.3 OPTION PRICE. The purchase price per share of the Common Stock covered
by each Option granted pursuant to Section 7.2 hereof shall be 100 percent of
the Fair Market Value of the Common Stock on the Award Date. The exercise price
of any Option granted under this Article 7 shall be paid in full at the time of
each purchase in cash or by check or in Shares 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 Shares used in payment shall have been owned by the
Participant at least six months prior to the date of exercise unless the Board
otherwise permits. In addition, an Option granted under this Article 7 may be
exercised and payment can be made in accordance with the cashless exercise
provisions contained in Section 1.8.
7.4 OPTION PERIOD AND EXERCISABILITY. Each Option granted under this
Article 7 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 7.2 shall first become exercisable at the
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rate of 25% per annum commencing on the first anniversary of the Award Date,
with the additional vesting only on each of the next three anniversaries
thereof, subject to Sections 7.5 and 7.6.
7.5 TERMINATION OF DIRECTORSHIP. If a Non-Employee Director's services as
a member of the Board terminate for any reason other than upon or because of an
Event, any portion of an Option granted pursuant to this Article 7 which is not
then exercisable shall terminate. Subject to Section 7.6, any portion of the
Option which is then exercisable may be exercised for one year after the
termination of service in the case of a termination because of death, Total
Disability, or Retirement, or for three months after the date of termination of
service in all other cases, and shall then terminate, but in no event may the
Option be exercised after the expiration of the stated ten-year term of the
Option. If a Non-Employee Director's services as a member of the Board terminate
upon or because of an Event, an Option granted pursuant to this Article 7 and
then held by such Participant may (as provided in or pursuant to Section 7.6)
immediately become and, subject to Section 7.6, remain exercisable for three
months after the date of such termination or until the expiration of the stated
term of the Option, whichever first occurs, and shall then terminate.
7.6 ADJUSTMENTS; ACCELERATION; TERMINATION. Options granted under this
Article 7 will be subject to adjustments, acceleration, and termination as
provided in Section 8.2, but only to the extent that such adjustment and any
Board or Committee action in respect thereof in the case of an Event is effected
pursuant to the terms of a reorganization agreement approved by the stockholders
of the Corporation or is otherwise consistent with adjustments to Options held
by persons other than executive officers or directors of the Corporation (or, if
there are none, consistent in respect of the underlying Shares, with the effect
on or rights offered to stockholders generally). To the extent that any Option
granted under this Article 7 is not exercised prior to a dissolution of the
Corporation or a merger or other corporate event that the Corporation does not
survive, and no provision is (or consistent with the provisions of this Plan can
be) made for the assumption, conversion, substitution or exchange of the Option,
the Option will terminate upon the occurrence of the event. The Participant,
however, shall be entitled to the benefits of any alternative settlement of the
Option in such circumstances, as contemplated by Section 8.2.
7.7 [INTENTIONALLY OMITTED]
7.8 [INTENTIONALLY OMITTED]
7.9 NON-CITIZEN NON-EMPLOYEE DIRECTORS. Any Non-Citizen Non-Employee
Director shall either be granted the same Options by the Committee as are
granted to Non-Employee Directors, or the Committee or the Board shall authorize
the Board of Directors of any Subsidiary to grant Options for the purpose and on
terms and conditions that are substantially equivalent to those provided in
Sections 7.2.1 and 7.2.2. If a
Subsidiary grants such Options, the Board of Directors of such Subsidiary shall
have the right to change the vesting schedule of any such Options; provided that
such Options shall not vest more quickly than 25% per year.
8. OTHER PROVISIONS.
8.1 RIGHTS OF ELIGIBLE PERSONS, PARTICIPANTS AND BENEFICIARIES.
8.1.1 NO BINDING COMMITMENT. Status as an Eligible Person shall not be
construed as a commitment that any Award will be made under this Plan to any
Eligible Person or to Eligible Persons generally.
8.1.2 NO EMPLOYMENT CONTRACT. Nothing contained in this Plan (or any
documents relating 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 services or employment of such person, with or
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without cause, but nothing in this Plan or any document related hereto shall
adversely affect any independent contractual right of such person without
his or her consent thereto.
8.1.3 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, except as expressly otherwise
provided) of the Company by reason of any Award. 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.
8.2 ADJUSTMENTS; ACCELERATION; POSSIBLE EARLY TERMINATION OF AWARDS.
8.2.1 ADJUSTMENTS. If the outstanding Shares are changed into or
exchanged for cash or a different number or kind of shares or securities of
the Corporation or of another issuer, or if additional Shares or new or
different securities are distributed with respect to the outstanding Shares,
through a reorganization or merger to which the Corporation is a party, or
through a combination, consolidation, spin off, recapitalization,
reclassification, stock split, stock dividend, reverse stock split, stock
consolidation or other capital change or adjustment, an appropriate
adjustment will be made in the number and kind of Shares or other
consideration that is subject to or may be delivered under this Plan and
pursuant to outstanding Awards, the Purchase Price of outstanding Awards,
performance criteria under outstanding Awards (subject to Section 5.2 and
8.10.3) and the numerical share limits set forth in Section 1.4, 5.2.2 and
Article 7. In any of such events, the Committee may take such action
sufficiently prior to such event if necessary or deemed appropriate to
permit the Participants to realize the benefits intended to be conveyed with
respect to the underlying shares on substantially the same terms as are
available to stockholders generally.
8.2.2 ACCELERATION OF AWARDS UPON CERTAIN EVENTS. Subject to the
exceptions noted below, (i) each Option and Stock Appreciation Right shall
become immediately exercisable, (ii) each Restricted Stock Award shall
immediately vest free of restrictions, (iii) each Award under Article 5
shall become payable to the Participant, and (iv) the number of Shares
covered by each Stock Unit Account shall be issued to the Participant:
(a) immediately prior to the occurrence of an Event, unless the
Committee determines prior to such Event 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; or
(b) immediately prior to the termination by the Company of a
Participant's employment or services for any reason other than for Cause
(1) within two years after the occurrence of an Event with respect to
which vesting has not been accelerated pursuant to Section 8.2.2(a), or
(2) within 90 days prior to an Event and in express contemplation of the
Event.
The Committee may override the limitations on acceleration in this Section 8.2.2
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. Any discretion with respect to these
events shall be limited to the extent required by applicable accounting
requirements in the case of a transaction intended to be accounted for as a
pooling of interests transaction.
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8.2.3 POSSIBLE EARLY TERMINATION OF AWARDS. If any Option or other
right to acquire Common Stock under this Plan (except as provided under
Article 7 with respect to Non-Employee Director Awards) has been fully
accelerated pursuant to Section 8.2.2 but is not exercised prior to (a) a
dissolution of the Corporation, or (b) an event described in Section 8.2.1
that the Corporation does not survive, or (c) the consummation of an event
described in Section 8.2.1 involving an Event approved by the Board, such
Option or right shall thereupon terminate, subject to any provision that has
been expressly made by the Committee or the Board (through a plan of
reorganization approved by the Board or otherwise) for the survival,
substitution, assumption, exchange or alternative settlement of the Option
or right.
8.3 TERMINATION OF EMPLOYMENT.
8.3.1 OPTIONS.
(a) Any Option, to the extent not exercised, will terminate and
become null and void upon a Participant's termination of employment or
services with the Company, except as set forth in this Section 8.3 or
otherwise expressly provided in the Award Agreement. All Options shall be
subject to earlier termination under Section 2.3, and any and all rights
under an Option, to the extent not exercised or vested, will expire
immediately upon a Participant's termination of employment or services
with the Company for Cause. The Committee shall be the sole judge of
Cause.
(b) Unless otherwise expressly provided in the Award Agreement, a
Participant will have the following time periods to exercise Options to
the extent they are exercisable on the date of the Participant's
termination of employment or services with the Company:
(1) If the Participant's employment or services with the Company
terminates by any reason other than death, Total Disability or Cause,
the Participant will have 90 days after the date of such termination
to exercise any Option;
(2) If the Participant's employment or services with the Company
is terminated for Cause, the Option shall lapse immediately upon such
termination.
(3) If the Participant's employment or services with the Company
terminates by reason of Total Disability, or if the Participant
suffers a Total Disability within 90 days after a termination of
service described in Section 8.3.1(b)(1), the Participant or the
Participant's Personal Representative, as the case may be, will have
180 days after the date of Total Disability (or, if earlier, date of
termination), to exercise any Option;
(4) If the Participant dies while employed by or while performing
services to the Company, or within 90 days after a termination of
service described in Section 8.3.1(b)(1) or 8.3.1(b)(3) above, the
Participant's Beneficiary may exercise, at any time within 180 days
after the date of the Participant's death (or, if earlier date of
termination) any Option.
8.3.2 STOCK APPRECIATION RIGHTS. Each Stock Appreciation Right granted
concurrently with an Award will have the same termination provisions and
exercisability periods as the related Award. The termination provisions and
exercisability periods of any Stock Appreciation Right granted independent
of an Award will be established by the Committee.
8.3.3 RESTRICTED STOCK AWARDS AND AWARDS UNDER ARTICLE 5. If a
Participant's employment or services terminates for any reason, (a) Shares
subject to the Participant's Restricted Stock Award will be terminated in
accordance with the related Award Agreement to the extent such Shares have
not become vested on the date of such termination; and (b) any Award granted
to the Participant under Article 5 will be terminated in accordance with the
related Award Agreement to the extent such Award has not become vested or
payable on the date of such termination.
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8.3.4 STOCK UNITS. Each Deferred Stock Alternative Exercise Agreement
or other Award Agreement in respect of Stock Units shall include the
applicable benefit distribution and termination provisions for the grant or
Award and shall specify the form of payment and may incorporate (to the
extent applicable) any terms of this Plan, another Award and/or any other
deferred compensation plan under which it is governed.
8.3.5 ADJUSTMENTS TO EXERCISABLE PORTION. Notwithstanding the
foregoing, if a Participant's employment or services with the Company
terminates for any reason other than for Cause, the Committee may increase
the portion of a Participant's Award exercisable to the Participant, or
Participant's Beneficiary or Personal Representative, as the case may be,
and extend the applicable periods of exercise, upon such terms as the
Committee determines.
8.3.6 EFFECT OF CESSATION OF SUBSIDIARY STATUS. If an entity ceases to
be a Subsidiary, such action will be deemed for purposes of this Plan to be
a termination of services or employment of each Eligible Person of that
entity who does not continue as an Eligible Person of the Corporation or
another Subsidiary.
8.4 COMPLIANCE WITH LAWS. This Plan, the granting and vesting of Awards
under this Plan and the offer, issuance and delivery of Shares and/or the
payment of money or other benefits 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 judgment of the Committee,
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.
8.5 TAX WITHHOLDING.
8.5.1 CASH OR SHARES. Upon any exercise, vesting, or payment of any
Award or upon the disposition of Shares acquired pursuant to the exercise of
an ISO prior to satisfaction of the holding period requirements of Section
422 of the Code, the Corporation 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 in cash or by cashier's check
payable to the Corporation 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 under this Plan, the Committee may, in its sole
discretion and at the time of the Award or thereafter, either require the
Participant or grant 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.
8.5.2 TAX LOANS. The Corporation 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 received (or disposed of, as the case may be) pursuant to
a transaction described in Section 8.5.1. Such a loan shall be for a term,
at a rate of interest and pursuant to such other terms and conditions as the
Corporation, under applicable law, may establish and such loan need not
comply with the provisions of a "Loan" defined in Section 9.1.
8.6 AMENDMENT, TERMINATION AND SUSPENSION.
8.6.1 AMENDMENT, TERMINATION AND SUSPENSION. 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
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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.
8.6.2 STOCKHOLDER 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 stockholder
approval to the extent then required by Section 422 of the Code or
applicable law, or deemed necessary or advisable by the Board.
8.6.3 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.
8.6.4 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 8.2 shall not be deemed to constitute changes or
amendments for purposes of this Section 8.6.
8.7 PRIVILEGES OF STOCK OWNERSHIP. A Participant will not be entitled to
the privilege of stock ownership as to any Shares not actually issued to the
Participant. No adjustment will be made for dividends or other rights as a
stockholder for which a record date is prior to the date of issue.
8.8 EFFECTIVE DATE OF THE PLAN. This Plan was originally effective as of
February 23, 1996 and was amended and restated as of May 4, 1999. The Plan was
originally approved by the stockholders of the Corporation on September 30,
1997.
8.9 TERM OF THE PLAN. Except as permitted by Section 1.9, no Award shall
be granted under this Plan after February 22, 2006 (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 or defer payment of a vested Award,
shall continue during any suspension of this Plan and in respect of Awards
outstanding on the termination date.
8.10 GOVERNING LAW/CONSTRUCTION/SEVERABILITY.
8.10.1 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.
8.10.2 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.
8.10.3 PLAN CONSTRUCTION.
(a) It is the intent of the Corporation that transactions in and
affecting Awards in the case of an Eligible Person or Participant who is
or may be subject to Section 16 of the Exchange Act (a "Section 16
Person") 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
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practicable shall be interpreted so 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.
(b) It is the further intent of the Company that Options or Stock
Appreciation Rights 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), and this
Plan shall be interpreted consistent with such intent.
8.11 CAPTIONS. Captions and headings are given to the sections and
subsections of this Plan solely as a convenience to facilitate reference.
8.12 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.
9. DEFINITIONS.
9.1 DEFINITIONS.
"AWARD" means an award of any Option (which may be designated as a NQSO
or an ISO and which may include as an incident thereto Stock Units), Stock
Appreciation Right, Stock Unit, Restricted Stock, Stock Bonus, Deferred
Stock Alternative, Performance-Based Award, Dividend Equivalent Rights, or
deferred payment right, or any combination thereof, whether alternative or
cumulative, authorized by and granted under this Plan.
"AWARD AGREEMENT" means a written agreement, approved by the Committee,
setting forth the terms of an Award.
"AWARD DATE" means the date upon which the Committee takes 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
7, the applicable date set forth therein.
"BENEFICIARY" means 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.
"BOARD" means the Board of Directors of the Corporation.
"CAUSE" means a determination by the Committee that the Participant: (a)
has committed a material breach of the Participant's duties and
responsibilities (other than as a result of incapacity due to a Total
Disability); or (b) has been convicted of a felony, or entered a plea of
guilty or nolo contendre with respect to such a crime; or (c) has violated
any fiduciary duty or duty of loyalty owed to the Company; or (d) has been
generally incompetent or grossly negligent in the discharge of the
Participant's duties and responsibilities; or (e) has engaged or is engaging
in immoderate use of alcoholic beverages or narcotics or other substance
abuse; or (f) has violated in any material respect any of the Company's
established employment policies in effect from time to time.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COMMISSION" means the Securities and Exchange Commission.
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"COMMITTEE" means the Compensation Committee appointed by the Board and
consisting of two or more Board members or such greater number as may be
required under applicable law. In the absence of such appointment, the Board
shall be the Committee. Each of the members of the Committee, in respect of
any decision at a time when the Eligible Person affected by the decision may
be (or, in the Committee's judgment is likely to become) subject to Section
162(m), shall be an "outside director" within the meaning of Section 162(m)
if the subject Award is intended as a performance-based award for purposes
of that section. In acting on any transaction with or for the benefit of a
Section 16 Person, each acting member of the Committee shall be a
"non-employee director" within the meaning of Rule 16b-3(b)(3) promulgated
under the Exchange Act, unless the Committee's action is approved or
ratified by the Board in advance of the effective time of the action.
"COMMON STOCK" means the Common Stock of the Corporation.
"COMPANY" means, collectively, the Corporation and its Subsidiaries or
the Corporation or any Subsidiary, as the context requires.
"CORPORATION" means Power-One, Inc., a Delaware corporation, and its
successors.
"DEFERRED STOCK ALTERNATIVE" mean a deferred payment alternative payable
in Shares or cash or other consideration, as determined by the Committee,
based on the number of Stock Units credited to a Participant's Stock Unit
Account.
"DIVIDEND EQUIVALENT RIGHT" means a right authorized under Section 5.4
of this Plan.
"ELIGIBLE PERSON" means (subject to applicable limits under the Code in
the case of ISOs) (a) an officer, director, or key employee of the Company,
or (b) 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. A non-employee agent providing
bona fide services to the Company (other than as an eligible advisor or
consultant) may also be selected by the Committee as an Eligible Person if
such agent's participation in this Plan would not adversely affect (x) the
Corporation's eligibility to use Form S-8 to register under the Securities
Act the offer and sale of shares issuable under this Plan by the Corporation
or (y) the Corporation's compliance with any other applicable laws.
"EVENT" means any of the following:
(a) the dissolution or liquidation of the Corporation;
(b) approval by the stockholders of the Corporation of an agreement
to merge or consolidate, or otherwise reorganize, with or into one or
more entities that are not Subsidiaries, as a result of which 50% or more
of the outstanding voting securities of either the surviving or resulting
entity or its parent, as the case may be, immediately after the
reorganization are not and will not be, owned, directly or indirectly, by
stockholders 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);
(c) approval by the stockholders of the Corporation of the sale of
substantially all of the Corporation's business and/or assets as an
entirety to a person or entity that is not a Subsidiary;
(d) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act but excluding (1) any person described in and satisfying
the conditions of Rule 13d-1(b)(1) thereunder, and (2) any person or
entity (including any successor) that is a beneficial owner (as defined
in Rule 13d-3 under the Exchange Act) of more than 20% of the Corporation
as of August 31,
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1997), becomes the beneficial owner, directly or indirectly, of
securities of the Corporation representing more than 50% 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
(e) during any period not longer than two consecutive years,
individuals who at the beginning of such period constituted the Board and
(without duplication in the case of successors) persons whose election or
nomination for election by the Corporation's stockholders was approved by
a vote of at least three-fourths of the Board members then still in
office cease to constitute as least a majority of the Board.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time.
"EXERCISE AGREEMENT" means a written agreement, approved by the
Committee, setting forth the terms for the exercise of an Award.
"FAIR MARKET VALUE" on any date shall mean:
(a) if the Shares are publicly traded: (1) if the Shares are listed
or admitted to trade on a national securities exchange, the closing price
of the Shares on the Composite Tape, as published in the Western Edition
of The Wall Street Journal, of the principal national securities exchange
on which the Shares are so listed or admitted to trade, on such date, or,
if there is no trading of the Shares on such date, then the closing price
of the Shares as quoted on such Composite Tape on the next preceding date
on which there was trading in such Shares; (2) if the Shares are not
listed or admitted to trade on a national securities exchange, the last
price for the Shares 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; (3) if the Shares are not listed or
admitted to trade on a national securities exchange and are not reported
on the National Market Reporting System, the mean between the bid and
asked price for the Shares on such date, as furnished by the NASD or a
similar organization; or
(b) if the Shares are NOT publicly traded or the NASD or a similar
organization does not furnish the mean between the bid and asked prices
for the Shares on such date, the fair market value of a Share as
determined by the Committee in good faith. Any determination as to fair
market value made pursuant to this Plan shall be determined without
regard to any restriction other than a restriction which, by its terms,
will never lapse, and shall be conclusive and binding on all persons.
"ISO" means 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 and is made under
such circumstances and to such persons as may be necessary to comply with
that section.
"NQSO" means an Option that is designated as a nonqualified stock option
and shall include any Option intended to be an ISO 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.
"NON-EMPLOYEE DIRECTOR" means a member of the Board of Directors of the
Corporation who is not an officer or employee of the Company.
"NON-EMPLOYEE DIRECTOR PARTICIPANT" means a Non-Employee Director who
holds an outstanding Award under the provisions of Article 7.
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"NOTE" means a promissory note approved by the Committee evidencing a
loan from the Corporation to the Eligible Person of an amount equal to the
Purchase Price of an Award. Any Note shall be subject to the following
terms:
(a) The principal of the Note shall not exceed the amount required to
be paid to the Corporation upon the exercise or receipt of such Award,
and the note shall be delivered directly to the Corporation in
consideration of such exercise or receipt.
(b) The term of the Note, including extensions, shall not exceed ten
(10) years.
(c) The note shall provide for full recourse to the Participant.
(d) The Note 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.
(e) The unpaid balance of the Note shall become due and payable on
the tenth day after the termination of employment or service of a
Participant; 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.
(f) If required by the Committee or by applicable law, the Note shall
be secured by a pledge of any Shares or Awards financed thereby (and
other collateral if required by the Committee).
(g) 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 Commission and the Federal
Reserve Board, as then in effect.
"OPTION" means an option to purchase Shares granted under this Plan. The
Committee shall designate any Option granted to any Eligible Person as a
NQSO or an ISO.
"PARTICIPANT" means an Eligible Person who has been granted an Award
under this Plan and a Non-Employee Director Participant who has been granted
an Award under Article 7 of this Plan.
"PERSONAL REPRESENTATIVE" means 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 the benefits under this Plan and who shall have become
the legal representative of the Participant.
"PURCHASE PRICE" means the exercise or purchase price, if any, payable
by the Participant to the Corporation upon exercise of an Award in
accordance with the applicable Award Agreement, Exercise Agreement, and the
terms of this Plan; provided, however, that such exercise price shall not be
less than the minimum lawful consideration required under applicable state
law.
"RESTRICTED STOCK" means Shares 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.
"RESTRICTED STOCK AWARD" means an Award of Restricted Stock made
pursuant to Article 4.
"RETIREMENT" means retirement from employment by, or providing services
to, the Corporation or any Subsidiary which occurs, in the case of
employees, at or after the Company's normal retirement age and in accordance
with the retirement policies of the Company then in effect or, in the case
of a
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Non-Employee Director, a retirement or resignation as a director after age
65 or after at least 15 years of service as a director.
"RULE 16B-3" means Rule 16b-3 as promulgated by the Commission pursuant
to the Exchange Act, as amended from time to time.
"SECTION 16 PERSON" means a person subject to Section 16(a) of the
Exchange Act.
"SECTION 162(M)" means Section 162(m) of the Code.
"SECURITIES ACT" means the Securities Act of 1933, as amended form time
to time.
"SHARES" means shares of the Corporation's Common Stock.
"STOCK APPRECIATION RIGHT" means a right authorized under this Plan to
receive a number of Shares or an amount of cash, or a combination of Shares
and cash, the aggregate amount of or value of which is determined by
reference to a change in the Fair Market Value of the Common Stock.
"STOCK BONUS" means an Award of Shares 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.
"STOCK UNIT" means a non-voting unit of measurement which is deemed for
bookkeeping purposes to be equivalent to one outstanding share of the
Corporation's Common Stock (subject to adjustment) solely for purposes of
this Plan.
"STOCK UNIT ACCOUNT" means the bookkeeping account maintained by the
Corporation on behalf of each Participant who is credited with Stock Units
in accordance with Article 6, which account may be payable in cash, Shares
and/or other consideration, as the Committee may determine.
"SUBSIDIARY" means any corporation or other entity a majority or more of
whose outstanding voting stock or voting power is beneficially owned
directly or indirectly by the Corporation.
"TOTAL DISABILITY" means 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.
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EXHIBIT A
POWER-ONE, INC.
ELIGIBLE DIRECTOR
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT dated as of the day of , , between
Power-One, Inc., a Delaware corporation (the "Corporation"), and
(the "Director").
W I T N E S S E T H
WHEREAS, the Corporation has adopted and the stockholders of the Corporation
have approved the Power-One, Inc. Amended and Restated 1996 Stock Incentive
Plan, as amended (the "Plan").
WHEREAS, pursuant to Article 7 of the Plan, the Corporation has granted an
option (the "Option") to the Director upon the terms and conditions evidenced
hereby, as required by the Plan, which Option is not an incentive stock option
within the meaning of Section 422 of the Code.
NOW, THEREFORE, in consideration of the services rendered and to be rendered
by the Director, the Corporation and the Director agree to the terms and
conditions set forth herein as required by the terms of the Plan.
1. OPTION GRANT. This Agreement evidences the grant to the Director, as of
, (the "Option Date"), of an Option to purchase an aggregate
of shares of Common Stock, par value per share, under Section 7.2 of
the Plan, subject to the terms and conditions and to adjustment as set forth
herein or in the Plan.
2. EXERCISE PRICE. The Option entitles the Director to purchase (subject
to the terms of Sections 3 through 5 below and to the extent exercisable) all or
any part of the Option shares at a price per share of $ , which amount
represents the Fair Market Value of the shares on the Option Date.
3. OPTION EXERCISABILITY AND TERM. The Option shall first become and
remain exercisable as to 25% of the Option shares on the first anniversary of
the Option Date, and as to an additional 25% of the Option shares on each of the
next three anniversaries of that date, in each case subject to adjustment,
acceleration, and termination under Section 7.6 of the Plan. The Option shall
terminate , , unless earlier terminated in accordance with the
terms of the Plan.
4. SERVICE AND EFFECT OF TERMINATION OF SERVICE. The Director agrees to
serve as a director in accordance with the provisions of the Corporation's
Certificate of Incorporation, bylaws and applicable law. If the Director's
services as a member of the Board shall terminate, this Option shall terminate
at the times and to the extent set forth in Section 7.5 of the Plan.
5. GENERAL TERMS. The Option and this Agreement are subject to, and the
Corporation and the Director agree to be bound by, the provisions of the Plan
that apply to the Option. Such provisions are incorporated herein by this
reference. The Director acknowledges receiving a copy of the Plan and reading
its applicable provisions. Capitalized terms not otherwise defined herein shall
have the meaning assigned to such terms in the Plan.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
POWER-ONE, INC.
(a Delaware corporation)
By
--------------------------------------
Title
--------------------------------------
Optionee Director
--------------------------------------
(Signature)
--------------------------------------
(Print Name)
--------------------------------------
(Address)
--------------------------------------
(City, State, Zip Code)
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CONSENT OF SPOUSE
In consideration of the execution of the foregoing Stock Option Agreement by
Power-One, Inc., I, , the spouse of the Director therein named, do
hereby agree to be bound by all of the terms and provisions thereof and of the
Plan.
DATED: , 19 .
--------------------------------------
(Signature of Spouse)
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A /X/ PLEASE MARK YOUR
VOTES AS INDICATED
IN THIS EXAMPLE
1. Election of Director FOR / / WITHHOLD AUTHORITY / /
NOMINEES: Class II Director:
Hanspeter Brandli
For, except vote withheld for the following nominees:
_______________________________________________________
2. Proposal to ratify the Appointment of Deloitte & Touche LLP as the
Independent Auditors for the Company.
FOR / / AGAINST / / ABSTAIN / /
3. Proposal to approve the Company's Amended and Restated 1996 Stock Incentive
Plan.
FOR / / AGAINST / / ABSTAIN / /
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED ON
THE PROXY BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE NOMINEE TO THE BOARD LISTED IN PROPOSAL 1
AND FOR PROPOSALS 2,3 AND 4.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
RETURN ENVELOPE.
- -------------------------------------- --------------------------------------
(SIGNATURE) (SIGNATURE, IF HELD JOINTLY)
Dated _____________, 1999
NOTED: Please sign exactly as your name appears on this card. When shares
are held by joint tenants, both should sign. If signing as attorney,
guardian, executor, administrator or trustee, please give full title
as such. If a corporation, please sign in the corporate name by the
president or other authorized officer. If a partnership, please sign
in the partnership name by an authorized person.
<PAGE>
POWER-ONE, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned having duly received the Notice of Annual Meeting and the
Proxy Statement, hereby appoints the President and Chief Executive Officer,
Steven J. Goldman, and the Chief Financial Officer, Eddie K. Schnopp, as proxies
(each with the power to act alone and with the power of substitution and
revocation) to represent the undersigned and to vote, as designated on the
reverse, all common shares of Power-One, Inc. held of record by the undersigned
on March 25, 1999, at the Annual Meeting of Stockholders to be held on Tuesday,
May 4, 1999 at the Radisson Hotel, located at 30100 Agoura Road, Agoura Hills,
California at 10:00 a.m. Los Angeles time, and at any adjournment thereof.
(CONTINUED ON OTHER SIDE)
