<PAGE>
As filed with the Securities and Exchange Commission on September 27, 1999.
Registration No. 333-____________
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
___________________
POWER-ONE, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
___________________
DELAWARE 77-0420182
- ------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
740 CALLE PLANO, CAMARILLO, CALIFORNIA 93012 (805) 987-8741
-----------------------------------------------------------
(Address of principal executive offices)
POWER-ONE, INC. AMENDED AND RESTATED 1996 STOCK INCENTIVE PLAN
--------------------------------------------------------------
(Full title of the plan)
STEVEN J. GOLDMAN
CHAIRMAN, CHIEF EXECUTIVE OFFICER AND PRESIDENT
740 CALLE PLANO
CAMARILLO, CALIFORNIA 93012
-----------------------------------------------
(Name and address of agent for service)
___________________
Telephone number, including area code, of agent for service: (805) 987-8741
___________________
Copies to:
STEVEN J. GOLDMAN KENDALL R. BISHOP, ESQ.
740 CALLE PLANO O'MELVENY & MYERS LLP
CAMARILLO, CALIFORNIA 93012 1999 AVENUE OF THE STARS, SUITE 700
(805) 987-8741 LOS ANGELES, CALIFORNIA 90067-6035
(310) 553-6700
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Proposed Proposed
maximum maximum
Title of Amount offering aggregate Amount of
securities to be price offering registration
to be registered registered per share price fee
- ---------------- ---------- --------- ----------- ------------
<S> <C> <C> <C> <C>
Common Stock, 2,000,000(1) $ 25.375 $50,750,000 $ 14,108.50
par value $.001 shares
per share
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
</TABLE>
(1) This Registration Statement covers, in addition to the number of
shares of common stock stated above, options and other rights to
purchase or acquire shares of common stock covered by this prospectus
and, pursuant to Rule 416, an additional indeterminate number of
shares which by reason of certain events specified in the stock
incentive plan may become subject to the plan.
(2) Pursuant to Rule 457(h), the maximum offering price, per share and in
the aggregate, and the registration fee were calculated based upon
the average of the high and low prices of Power-One's common stock
reported on the Nasdaq National Market on September 24, 1999.
The exhibit index included in this Registration Statement is at page 8.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART I
INFORMATION REQUIRED IN THE
SECTION 10(a) PROSPECTUS
The documents containing the information specified in this Part I of
Form S-8 (plan information and registrant information) will be sent or given
to employees as specified by Rule 428(b)(1) of the Securities Act of 1933, as
amended (the "Securities Act"). Such documents need not be filed with the
Securities and Exchange Commission (the "Commission") either as part of this
Registration Statement or as prospectuses or prospectus supplements pursuant
to Rule 424. These documents, which include the statement of availability
required by Item 2 of Form S-8, and the documents incorporated by reference
in this Registration Statement pursuant to Item 3 of Form S-8 (Part II
hereof), taken together, constitute a prospectus that meets the requirements
of Section 10(a) of the Securities Act.
2
<PAGE>
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of Power-One, Inc. (the "Company") filed
with the Commission are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended December 27, 1998, as amended;
(b) The Company's Quarterly Reports on Form 10-Q for the Company's
fiscal quarters ended March 28, 1999 and June 27, 1999;
(c) The Company's Current Reports on Form 8-K and Form 8-K/A dated
January 29, 1999; and
(d) The description of the Company's common stock contained in its
Registration Statement on Form 8-A dated September 19, 1997.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") before the filing of a post-effective amendment, which
indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents. Copies of these documents
are not required to be filed with this Registration Statement. Any statement
contained herein or in a document, all or a portion of which is incorporated
or deemed to be incorporated by reference herein, shall be deemed to be
modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or amended, to
constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES
The Company's common stock, par value $.001 per share, is registered
pursuant to Section 12 of the Exchange Act, and, therefore, the description of
securities is omitted.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
3
<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of Delaware, the Company's
state of incorporation, allows Delaware companies to provide certain
indemnification rights for the benefit of their officers, directors,
employees and agents. The Company's Restated Certificate of Incorporation
("Certificate") and Amended and Restated Bylaws ("Bylaws") contain
indemnification provisions covering directors, employees and agents of the
Company.
The Certificate requires the Company to indemnify a person covered
by the indemnification provisions ("Indemnitee") to the fullest extent
permitted by applicable law. The indemnification is for expenses,
liabilities and losses (including, but not limited to, attorney's fees,
judgments, amounts paid in settlements, fines and penalties) (collectively,
the "Expenses") reasonably incurred by an Indemnitee named or involved in a
threatened, pending or completed proceeding whether civil, administrative or
criminal in nature.
An Indemnitee is not entitled to indemnification in the following
circumstances. The first is when a proceeding is initiated by him/her
without the Company's prior approval. The second is when an Indemnitee's
conduct (which is the subject of the proceeding) does not meet the standard
of conduct (see below) called for under the Delaware indemnification
statutes. Additionally, if an Indemnitee is found liable for negligence or
misconduct in the performance of his/her duty to the Company in the
proceeding for which indemnification is sought, he/she may be indemnified but
only if the court in which the proceeding was brought finds that the
Indemnitee is entitled to indemnification of expenses (and at an amount)
which the court deems appropriate.
A majority of the Board of Directors of the Company who are not a
party to the proceeding, the Company's legal counsel, if requested by the
Board, or the Company's stockholders may determine whether or not an
Indemnitee has met the necessary standard of conduct. An Indemnitee's
standard of conduct called for by the Delaware statute on civil disputes
requires that he/she acted in good faith and in a manner he/she reasonably
believed to be in, or not opposed to, the best interests of the Company. The
applicable standard on criminal matters requires that the Indemnitee have no
reasonable cause to believe that his/her conduct was unlawful.
The Company will reimburse Expenses incurred by an Indemnitee who is
an officer or director of the Company in defending a proceeding even if it
has not been finally resolved but only if the officer/director promises in
writing to reimburse the Company for amounts advanced in case it is
determined that the officer/director was not entitled to be indemnified by
the Company. In case an indemnity claim is not paid within 30 days of
written payment demand, the Company may be liable for the Indemnitee's costs
of enforcing his indemnity rights.
The indemnification provisions in the Certificate and Bylaws are not
intended to and do not supersede, diminish or replace any other indemnity
rights that an Indemnitee may presently have or acquire in the future due to,
but not limited to, statutory changes, contract(s) entered into, action by
the stockholders or the Board of Directors. Moreover, any repeal or
modification of the current indemnification provisions in the Certificate or
Bylaws will not diminish any indemnification rights that an Indemnitee may
have had with respect to proceedings that arose before the repeal or
modification of the indemnification provisions.
4
<PAGE>
In case some of the indemnification provisions in the Certificate or
Bylaws are legally invalidated, the Company will continue to be obligated to
indemnify an Indemnitee for Expenses for which indemnification is available
under the indemnification provisions that were not legally invalidated and to
the full extent permitted by applicable law.
The Company's Certificate eliminates personal liability of directors
to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for: (i) any breach of the duty of
loyalty to the Company or its stockholders; (ii) acts or omissions not in
good faith or that involve intentional misconduct or knowing violations of
law; (iii) liability under Section 174 of the Delaware General Corporation
Law relating to certain unlawful dividends and stock repurchases; or (iv) any
transaction from which the director derived an improper personal benefit.
The Company has entered into individual indemnification agreements
with its directors, executive officers, and certain other officers. The
indemnification agreements provide for indemnification to the fullest extent
permitted by law and provide contractual assurance to directors and officers
that indemnity and advancement of expenses will be available to them
regardless of any amendment or revocation of the Company's Bylaws.
The Bylaws permit the Company to purchase and maintain insurance on
behalf of any director, officer, employee or agent of the Company against
liability asserted against him or her in any such capacity, whether or not
the Company would have the power to indemnify him or her against such
liability under the provisions of the Bylaws.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
See the attached Exhibit Index.
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement; and
5
<PAGE>
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the Registration Statement is on Form S-3, Form S-8, or
Form F-3, and the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
BONA FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described in Item 6
above, or otherwise, the registrant has been advised that in the opinion of
the Commission such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Camarillo, State of California, on
September 27, 1999.
POWER-ONE, INC.
By: /s/ Steven J. Goldman
----------------------------------
Steven J. Goldman
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
Steven J. Goldman and Eddie K. Schnopp his true and lawful attorneys-in-fact
and agents, each acting alone, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Commission, granting unto said attorneys-in-fact and agents, each acting
alone, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, each
acting alone, or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities
and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Steven J. Goldman
- -------------------------- Chairman, Chief Executive September 27, 1999
Steven J. Goldman Officer and President
(Principal Executive Officer)
/s/ Eddie K. Schnopp
- -------------------------- Senior Vice President-Finance, September 27, 1999
Eddie K. Schnopp Chief Financial Officer and
Secretary (Principal Financial
and Accounting Officer)
/s/ Jon E.M. Jacoby
- -------------------------- Director September 27, 1999
Jon E.M. Jacoby
/s/ Dr. Hanspeter Brandli
- -------------------------- Director September 27, 1999
Dr. Hanspeter Brandli
</TABLE>
7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
4.1 Amended and Restated 1996 Stock Incentive Plan
4.2 Amendment to Amended and Restated 1996 Stock
Incentive Plan
4.3 Form of Employee Nonqualified Stock Option Agreement*
4.4 Form of Eligible Director Nonqualified Stock Option
Agreement
5.0 Opinion of O'Melveny & Myers LLP (opinion re legality)
23.1 Consent of Independent Accountants
23.2 Consent of O'Melveny & Myers LLP (included in Exhibit 5)
24.0 Power of Attorney (included in this Registration
Statement under "Signatures")
</TABLE>
- --------------
* Incorporated by reference to Registration Statement on Form S-8,
File No. 333-48197
8
<PAGE>
EXHIBIT 4.1
POWER-ONE, INC
AMENDED AND RESTATED
1996 STOCK INCENTIVE PLAN
(AS AMENDED AND RESTATED MAY 4, 1999)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<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
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
<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>
ii
<PAGE>
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
<PAGE>
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
2
<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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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
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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.
20
<PAGE>
EXHIBIT 4.2
POWER-ONE, INC. AMENDED AND RESTATED 1996 STOCK INCENTIVE PLAN
AMENDMENT TO PLAN
1. Section 1.2.2(a) shall be replaced by the following paragraph:
(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 20,000 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 100,000 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.
2. Section 1.2.2(b) shall be replaced by the following paragraph:
(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 20,000 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 100,000 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 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.
<PAGE>
EXHIBIT 4.4
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.
1
<PAGE>
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)
2
<PAGE>
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)
3
<PAGE>
EXHIBIT 5.0
September 27, 1999 OUR FILE NUMBER
681,331-013
VIA EDGAR
Power-One, Inc.
740 Calle Plano
Camarillo, California 93012
Ladies and Gentlemen:
In connection with the registration under the Securities Act of 1933, as
amended (the "Act") of up to 2,000,000 shares of Common Stock of Power-One,
Inc. (the "Company"), par value $0.001 per share (the "Shares"), to be sold
by the Company, pursuant to a Registration Statement on Form S-8 (the
"Registration Statement"), filed with the Securities and Exchange Commission
on September 27, 1999, you have requested our opinion set forth below.
We have considered such facts and examined such questions of law as we
have considered appropriate for purposes of rendering the opinion expressed
below. We are opining only as to the General Corporation Law of the State of
Delaware, and we express no opinion with respect to the applicability or the
effect of any other laws or as to any matters of municipal law or of any
other local agencies within any state.
Subject to the foregoing and in reliance thereon, in our opinion the
Shares have been duly authorized by all necessary corporate action on the
part of the Company, and upon payment for and delivery of the Shares as
contemplated in the Company's 1996 Amended and Restated Stock Incentive Plan,
as amended, and the countersigning of any certificates representing the
Shares by a duly authorized signatory of the registrar for the Company's
Common Stock, the Shares will be validly issued, fully paid and
non-assessable.
We consent to your filing this opinion as an exhibit to the Registration
Statement.
Respectfully submitted,
/s/ O'Melveny & Myers LLP
------------------------------
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Power-One, Inc. on Form S-8 of our report dated February 26, 1999
appearing in the Annual Report on Form 10-K of Power-One, Inc. for the year
ended December 31, 1998.
DELOITTE & TOUCHE LLP
Los Angeles, CA
September 27, 1999
