SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |X| Definitive Proxy Statement
|_| Definitive Additional Materials |_| Soliciting Materials Pursuant to
|_| Confidential, for use of the Commission 240.14a-11(c) or 240.14a-12
Only (as permitted by Rule 14a-6(e)(2))
Comtech Telecommunications Corp.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:_____
2) Aggregate number of securities to which transaction applies:________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth amount on which the
filing fee is calculated and state how it was determined):
____________________________________________________________________
4) Proposed maximum aggregate value of transaction:____________________
5) Total fee paid:_____________________________________________________
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:_____________________________________________
2) Form, Schedule or Registration Statement No:________________________
3) Filing Party:_______________________________________________________
4) Date Filed:_________________________________________________________
<PAGE>
COMTECH
TELECOMMUNICATIONS CORP.
105 Baylis Road
Melville, New York 11747
November 8, 1999
To Our Stockholders:
On behalf of the Board of Directors and management, I cordially invite you to
attend the Annual Meeting of Stockholders of Comtech Telecommunications Corp.
The meeting will be held at 10:00 a.m. on December 14, 1999 at the Mariott
Hotel, 1350 Old Walt Whitman Road, Melville, New York 11747. Copies of the
Notice of Annual Meeting of Stockholders, Proxy Statement and proxy card are
enclosed.
I believe that the annual meeting provides an excellent opportunity for
stockholders to become better acquainted with Comtech and its directors and
officers. I hope that you will be able to attend.
It is important that your shares are voted at this meeting. Whether or not you
are able to attend in person, the prompt execution and return of your enclosed
proxy card in the envelope provided will both assure that your shares are
represented at the meeting and minimize the cost of proxy solicitations.
Sincerely,
FRED KORNBERG
Chairman, Chief
Executive Officer
and President
<PAGE>
COMTECH
TELECOMMUNICATIONS CORP.
105 Baylis Road
Melville, New York 11747
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 14, 1999
The annual meeting of Stockholders of COMTECH TELECOMMUNICATIONS CORP. (the
"Company") will be held at the Mariott Hotel, 1350 Old Walt Whitman Road,
Melville, New York 11747, on Tuesday, December 14, 1999 at 10:00 a.m., local
time, for the following purposes:
1. To elect two directors;
2. To approve an amendment to the Company's Certificate of
Incorporation increasing the number of authorized shares of Common
Stock;
3. To approve the 2000 Stock Option Plan;
4. To ratify the selection of auditors for the current fiscal year; and
5. To transact such other business as may properly come before the
meeting.
All shareholders are invited to attend the meeting. Stockholders of record at
the close of business on October 15, 1999, the record date fixed by the Board of
Directors, are entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
Gail Segui
Secretary
November 8, 1999
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. ACCORDINGLY,
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE PROXY CARD IN THE STAMPED AND ADDRESSED ENVELOPE ENCLOSED FOR YOU
CONVENIENCE.
<PAGE>
COMTECH
TELECOMMUNICATIONS CORP.
105 Baylis Road
Melville, New York 11747
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Comtech
Telecommunications Corp. (the "Company") for use at the Annual Meeting of
Stockholders to be held on December 14, 1999, and at any adjournment thereof
(the "Annual Meeting"). It may be revoked at any time before exercise by
delivering a written notice of revocation to the Secretary of the Company, by
executing a subsequent proxy and presenting it to the Secretary of the Company,
or by attending the Annual Meeting and voting in person. All proxies will be
voted in accordance with the stockholders' instructions. If no directions are
specified, the proxies will be voted for the nominees for election as directors
and in favor of the matters set forth in the accompanying Notice of Annual
Meeting. A stockholder may choose to strike the names of the proxy holders named
in the enclosed proxy and may insert other names.
Only holders of record of the Company's Common Stock, par value $.10 (the
"Common Stock"), at the close of business on October 15, 1999 (the "Record
Date") are entitled to notice of and to vote at the Annual Meeting, with each
holder having one vote per share. As of the Record Date, approximately 4,484,141
shares of Common Stock were outstanding. It is anticipated that the mailing to
Stockholders of this Proxy Statement and the enclosed proxy will commence by
November 8, 1999.
The presence, in person or by proxy, of the holders of record at the close of
business on the Record Date of a majority of the outstanding shares of Common
Stock will constitute a quorum at the Annual Meeting. Directors will be elected
by a plurality of the votes cast (i.e., the two nominees receiving the greatest
number of votes will be elected as directors). Stockholder approval of the
Company's 2000 Incentive Stock Option Plan and the ratification of the selection
of auditors will require the affirmative vote of a majority of the shares
present at the Annual Meeting and entitled to vote on such proposal. Stockholder
adoption of the proposed amendment to the Company's Certificate of Incorporation
increasing the number of authorized shares of the Company's Common Stock will
require the affirmative vote of a majority of the shares of Common Stock
outstanding as of the Record Date.
Abstentions and broker non-votes with respect to any proposal (which occur when
a nominee holding shares for a beneficial owner does not vote on a particular
proposal because the nominee does not have discretionary voting power with
respect to that item and has not received instructions from the beneficial
owner) will be counted for purposes of determining the presence or absence of a
quorum. Abstentions also will be counted in determining the number of shares
present and entitled to vote on such proposal, but broker non-votes are not
counted as entitled to vote thereon.
1
<PAGE>
PRINCIPAL STOCKHOLDERS OF COMTECH TELECOMMUNICATIONS CORP.
To the Company's knowledge, the following persons individually, or as a group,
beneficially own more than 5% of the Company's outstanding Common Stock (its
only outstanding class of voting securities) as of October 15, 1999. Unless
otherwise indicated, each person has sole voting and investment power with
respect to such person's shares.
Amount of
Name of Beneficial Owner Beneficial Ownership Percent of Class
------------------------ -------------------- ----------------
Fred Kornberg (1) 322,500 7.1
105 Baylis Road
Melville, New York 11747
Gary Gelman 242,302 5.4
c/o American Claims
Evaluation, Inc.
One Jericho Plaza
Jericho, NY 11753
- -------------------------
(1) Includes 75,000 shares that Mr. Kornberg may acquire by the exercise of
vested stock options. Does not include the unvested portion of options
described elsewhere in this proxy statement. Does not include 3,000 shares
held in a Family Limited Partnership for which Mr. Kornberg is a General
Partner, and has a 1% ownership in, and for which he disclaims beneficial
ownership.
(2) The information presented in the table for Mr. Gelman is based upon a
Schedule 13D, as amended, filed by him with the Securities and Exchange
Commission.
ELECTION OF DIRECTORS
Comtech's Board of Directors is divided into three classes, with each class
having two members. Members of the Board are elected for three year terms, with
the term of office of one class expiring at each Annual Meeting of Comtech's
stockholders. Mr. Nocita and Dr. Payne are in the class whose term of office
expires in 1999. Dr. Bugliarello and Mr. Goldberg are in the class whose term of
office expires in 2000 and Mr. Kornberg and Mr. Weiner are in the class whose
term expires in 2001.
Certain information concerning the directors who are being nominated for
reelection at the meeting and the incumbent directors whose terms of office
continue after the Annual Meeting and executive officers of the Company named in
the section "Executive Compensation" and all directors and executive officers as
a group, is set forth below.
While the Board of Directors has no reason to believe that either Mr. Nocita or
Dr. Payne will not be available as a candidate for election, should such a
situation arise, the enclosed proxy may be voted for the election of another
nominee or nominees in the discretion of the persons acting pursuant to the
proxy.
2
<PAGE>
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
<TABLE>
<CAPTION>
Shares
For Term Served As Beneficially Percent
Expiring Director Owned October 15, of
Name Principal Occupation Age In Since 1999 Class
---- -------------------- --- -- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Gerard R. Nocita (3)(4)(5) Private Investor 63 3 years 1993 7,187 *
John B. Payne (1)(2)(3) President and CEO 64 3 years 1993 41,550 *
of Nucomm, Inc.
(Footnotes on next page)
</TABLE>
INCUMBENT DIRECTORS WHOSE TERMS OF OFFICE CONTINUE AFTER THE ANNUAL
MEETING AND CERTAIN EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Shares
Beneficially
Term Served As Owned Percent
Expires Director October 15, of
Name Principal Occupation Age In Since 1999 Class
---- -------------------- --- -- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Fred Kornberg (1)(2) Chairman, Chief 63 2 years 1971 322,500 7.1
Executive Officer
and President of the
Company
Sol S. Weiner (1)(3)(4) President, Sol S. 80 2 years 1980 46,500 1.0
Weiner Investments,
Inc.
Richard L. Goldberg (1)(2)(5) Partner, Proskauer 63 1 year 1983 26,677 *
Rose LLP
George Bugliarello (1)(4)(5) Chancellor, 72 1 year 1977 29,100 *
Polytechnic
University of N.Y.
Richard L. Burt (1) Senior Vice 58 -- -- 88,408 1.9
President; President
of Comtech Systems,
Inc.
J. Preston Windus, Jr. (1) Senior Vice 56 -- -- 84,000 1.8
President, Chief
Financial Officer;
President of Comtech
PST Corp.
Robert L.McCollum Vice President; 50 -- -- 76,500 1.7
President of Comtech
Communications Corp.
Gail Segui (1) Secretary and 53 -- -- 8,250 *
Treasurer of the
Company
All directors and executive 730,672 15.4
officers as a group (10 persons)
</TABLE>
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* Less than one percent (Footnotes on next page)
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<PAGE>
(1) Includes the following shares of Common Stock with respect to which such
persons have the right to acquire beneficial ownership within sixty days
from such date: Mr. Kornberg 75,000 shares; Mr. Weiner 7,500 shares; Mr.
Goldberg 7,500 shares; Dr. Bugliarello 7,500 shares; Dr. Payne 10,500
shares; Mr. Burt 71,952 shares; Ms. Segui 4,500 shares; Mr. Windus 81,000
shares; and all directors and officers as a group 265,452 shares. These
respective shares were deemed to be outstanding for purposes of
calculating the respective percentages owned.
(2) Member of Executive Committee
(3) Member of Audit Committee
(4) Member of Executive Compensation Committee
(5) Member of Nominating Committee
Mr. Nocita has been a director of the Company since 1993. He is a private
investor. He was Treasurer of the Incorporated Village of Patchogue from 1993 to
1996. He was affiliated with the Company from our inception in 1967 until 1993.
Dr. Payne has been a director of the Company since 1993. He has also been
the President and Chief Executive Officer of Nucomm, Inc. since 1990. Nucomm,
Inc. produces products for satellite news gathering services. From 1973 through
1990 he was President and Chief Executive Officer of Communications
Technologies, Inc.
Mr. Kornberg has been Chief Executive Officer and President of the Company
since 1976. Prior to that, he was the Executive Vice President of the Company
from 1971 to 1976 and the General Manager of the telecommunications transmission
segment. He is also a senior member of the IEEE and the AFCEA.
Mr. Weiner has been a director of the Company since 1980. He is President
of Sol S. Weiner Investments, Inc. Previously he was Managing Director of
Stenhouse, Weiner, Sherman, Ltd., commodity pool managers, from 1982 to 1994. He
is also a director of Universal Automotive Industries, Inc.
Mr. Goldberg has been a director of the Company since 1983. He has also
been a partner since 1990 in the law firm of Proskauer Rose LLP, which renders
legal services to the Company. Prior to 1990, Mr. Goldberg was a partner since
1966 of the firm Botein Hays & Sklar. He is also a director of Schein
Pharmaceutical, Inc.
Dr. Bugliarello has been a director of the Company since 1977. He has also
been Chancellor of the Polytechnic University since 1994 and was President of
the University from 1973 to 1994. He is also a director of KeySpan Energy, The
Lord Corporation, and Symbol Technologies Inc.
Mr. Burt has been President of Comtech Systems since 1989 and Vice
President since its founding in 1984. He became a Senior Vice President of
Comtech Telecommunications in 1998 and had been a Vice President since 1992. Mr.
Burt first joined Comtech in 1979 as Director of Marketing.
Mr. Windus has been a Senior Vice President since 1998. He has served as
Chief Financial Officer of Comtech Telecommunications since 1993. From 1993 to
1998, he also served as a Vice President of Comtech Telecommunications. He
became President of Comtech PST in 1995. Mr. Windus was President of Fairchild
Data Corp., a satellite modem manufacturer, from 1989 to 1993. He was affiliated
with Comtech from 1972 to 1989.
Mr. McCollum was appointed Vice President of Comtech Telecommunications in
August 1996. He founded Comtech Communications Corp. in 1994 and has been its
President since its formation.
4
<PAGE>
Ms. Segui has been the Secretary and Treasurer of Comtech since 1998 and
the Corporate Controller of Comtech since 1990. She joined Comtech in 1987 as
Accounting Manager. Prior to joining Comtech, Ms. Segui served as Accounting
Manager of Photronics from 1984 to 1987.
During the past fiscal year, the Audit Committee of the Board of Directors held
three meetings. The functions of the Committee include recommending to the Board
the engagement of independent auditors, directing investigations into matters
relating to audit functions, reviewing the plan and results of audits with the
Company's auditors, reviewing the Company's internal accounting controls and
approving services to be performed by the Company's auditors and related fees.
The Executive Compensation Committee of the Board of Directors considers and
authorizes remuneration arrangements for senior management; the Committee also
constitutes the Stock Option Committee of the Board of Directors, which
administers the Company's stock option plans. The Committee held four meetings
during the past fiscal year.
The Executive Committee of the Board of Directors did not hold any meetings
during the past fiscal year. Except as limited by law, the Executive Committee
has the authority to act upon all matters requiring Board approval.
The Nominating Committee identifies and evaluates candidates for election as
members of the Board of Directors and reports its findings to the full Board.
The Nominating committee did not hold any meetings during the past fiscal year.
The Board of Directors held six meetings during the past fiscal year.
The Board of Directors recommends a vote FOR the reelection of Gerard R. Nocita
and John B. Payne to the Board of Directors.
PROPOSAL TO INCREASE THE AUTHORIZED SHARES OF COMMON STOCK
On October 19, 1999, the Board of Directors unanimously approved an amendment to
the Company's Certificate of Incorporation, increasing the number of authorized
shares of the Company's Common Stock from 15 million to 30 million, and
authorized the submission of the amendment for approval at the Annual Meeting of
Stockholders. Under the proposed amendment, paragraph (a) of Article Fourth of
the Company's Certificate of Incorporation would be amended to read in its
entirety as follows:
"Fourth: (a) The aggregate number of shares which the Corporation shall
have authority to issue is Thirty Two Million (32,000,000) shares, of which
Thirty Million (30,000,000) shares shall be Common Stock, par value ten cents
($.10) ("Common Stock"), and Two Million (2,000,000) shares shall be Preferred
Stock, par value ten cents ($.10) ("Preferred Stock")."
As of October 19, 1999, an aggregate of 4,486,541 shares of Common Stock were
issued and outstanding, and an additional 1,120,030 shares were reserved for
issuance pursuant to the exercise of outstanding options or warrants, leaving
9,393,429 authorized shares available for other issuances.
The Board of Directors considers the proposed increase in the number of
authorized shares of Common Stock desirable because it would give the Board the
necessary flexibility to issue Common Stock, if it so determined, in connection
with stock dividends and splits, acquisitions, financings, employee benefits and
other appropriate corporate purposes without the expense and delay that could
arise if there were insufficient authorized shares for a specific issuance,
thereby requiring stockholder approval before such issuance could proceed.
The Company reviews and evaluates potential corporate actions on an ongoing
basis to determine if such actions would be in the best interests of the Company
and its stockholders. The Company is currently evaluating the potential need for
additional financings to fund the expansion of the Company's business. These
financings could
5
<PAGE>
include an issuance of Common Stock. Depending on the nature of any future
issuance of Common Stock, further stockholder authorization may be required
under Delaware law or the rules of the Nasdaq National Market or any stock
exchange on which the Common Stock may then be listed.
If the proposed amendment to the Company's Certificate of Incorporation is
approved by the Company's stockholders, it would become effective upon the
filing of a Certificate of Amendment with the Delaware Secretary of State, which
filing would occur promptly after the Annual Meeting. The affirmative vote of
the holders of record at the close of business on the Record Date of a majority
of the outstanding shares of Common Stock will be required to approve the
amendment.
The Board of Directors recommends a vote FOR the proposed amendment to the
Company's Certificate of Incorporation.
APPROVAL OF THE COMPANY'S 2000 INCENTIVE STOCK OPTION PLAN
On October 19, 1999, the Company's Board of Directors approved the 2000 Stock
Incentive Plan (the "Plan"). The Company believes that the Plan is appropriate
and in the best interests of the Company and its stockholders. The Plan is
intended to enhance the profitability and value of the Company for the benefit
of its stockholders by enabling the Company (i) to offer employees of and
consultants stock based incentives and other equity interests in order to
attract, retain and reward such individuals and strengthen the mutuality of
interests between such individuals and the stockholders and (ii) to grant
nondiscretionary, nonqualified stock options to non-employee directors (on the
same basis as done in the past) in order to attract, retain and reward such
non-employee directors and strengthen the mutuality of interests between
non-employee directors and the stockholders.
The Board recommends approval of the Plan. The following description of the Plan
is a summary and is qualified in its entirety by reference to the Plan, a copy
of which is attached hereto as Appendix A to this proxy statement.
Administration
The Plan will be administered and interpreted by a committee or subcommittee of
the Board appointed from time to time by the Board, consisting of two or more
non-employee directors, each of whom is intended to be a non-employee director
as defined in Rule 16b-3 under the Exchange Act ("Rule 16b-3") and an outside
director as defined under Section 162(m) of the Code (the "Committee").
Currently, the Stock Option Committee will serve as the Committee for the Plan.
With respect to awards to non-employee directors, the Plan will be administered
by the Board of Directors and all references to the Committee are deemed to
refer to the Board of Directors for this purpose.
The Committee will have the full authority to administer and interpret the Plan
to grant discretionary awards under the Plan, to determine the persons to whom
awards will be granted, to determine the types of awards to be granted, to
determine the terms and conditions of each award, to determine the number of
shares of Common Stock to be covered by each award and to make all other
determinations in connection with the Plan and the awards thereunder as the
Committee, in its sole discretion, deems necessary or desirable.
The terms and conditions of individual awards will be set forth in written
agreements which will be consistent with the terms of the Plan. Awards under the
Plan may not be made on or after the tenth anniversary of the earlier of the
adoption of the Plan or the date of stockholder approval, but awards granted
prior to such date may extend beyond that date.
6
<PAGE>
Eligibility and Types of Awards
All employees and consultants of the Company and its affiliates (including
prospective employees and consultants) are eligible to be granted nonqualified
stock options, stock appreciation rights, restricted stock, performance shares,
performance units, other stock-based awards and awards providing benefits
similar to those listed above which are designed to meet the requirements of non
U.S. jurisdictions under the Plan. In addition, employees of the Company and its
affiliates that qualify as subsidiaries or parent corporations (within the
meaning of Section 424 of the Code) are eligible to be granted incentive stock
options ("ISOs") under the Plan. Non-employee directors of the Company are
eligible to receive nondiscretionary grants of nonqualified stock options.
Available Shares
The aggregate number of shares of Common Stock which may be issued or used for
reference purposes under the Plan or with respect to which awards may be granted
may not exceed 500,000 shares of Common Stock plus 882,935 shares of Common
Stock relating to outstanding awards that were previously granted under the 1982
Incentive Stock Option Plan and the 1993 Incentive Stock Option Plan, as amended
(the "Existing Option Plans") which have been transferred to the Plan, for a
total share limit of 1,382,935 shares of Common Stock. The terms applicable to
these awards in effect prior to the Plan's assumption of these awards continue
to apply. If the stockholders approve the Plan, an aggregate of 500,000 shares
of Common Stock will be available for grant (after taking into account the
transfer of shares subject to outstanding awards granted under the Existing
Plans).
The maximum number of shares of Common Stock with respect to which any option,
stock appreciation right or award of performance shares or award or restricted
stock for which the grant of such award or lapse of the relevant restriction
period is subject to attainment of pre-established performance goals (in
accordance with Code Section 162 (m)) which may be granted under the Plan during
any fiscal year of the Company to any individual will be 100,000 shares per type
of award, provided that the maximum number of shares of Common Stock for all
types of awards does not exceed 100,000 during any fiscal year. The maximum
value at grant of performance units which may be granted under the Plan during
any fiscal year of the Company to any individual will be $100,000. To the extent
that shares of Common Stock for which awards are permitted to be granted to an
individual during a fiscal year are not covered by an award in a fiscal year,
the number of shares of Common Stock available for awards to such individual
will automatically increase in subsequent fiscal years until used.
The aggregate number of shares of Common Stock available under the Plan as well
as the maximum number of shares that may be granted are subject to appropriate
adjustment by the Committee in the event of changes in the Company's capital
structure or business by reason of certain corporate transactions or events.
Awards Under the Plan
Stock Options. The Committee may grant nonqualified stock options and ISOs to
purchase shares of Common Stock. The Committee will determine the number of
shares of Common Stock subject to each option, the term of each option (which
may not exceed 10 years (or five years in the case of an ISO granted to a 10%
shareholder)), the exercise price, the vesting schedule (if any), and the other
material terms of each option. No ISO or nonqualified stock option which is
intended to be performance based for purposes of Code Section 162(m) may have an
exercise price less than the fair market value of the Common Stock at the time
of grant (or, in the case of an ISO granted to a 10% shareholder, 110% of fair
market value).
Options will be exercisable at such time or times and subject to such terms and
conditions as determined by the Committee at grant and the exercisability of
such options may be accelerated by the Committee in its sole discretion. Payment
of an option's exercise price may be made: (i) in cash or by check, bank draft
or money order, (ii) through a "cashless exercise" procedure whereby the
recipient delivers irrevocable instructions to a broker to deliver promptly to
an amount equal to the purchase price, or (iii) on such other terms and
conditions as may be acceptable to the Committee.
7
<PAGE>
Stock Appreciation Rights. The Committee may grant stock appreciation rights
("SARs") either with a stock option which may be exercised only at such times
and to the extent the related option is exercisable ("Tandem SAR") or
independent of a stock option ("Non-Tandem SARs"). An SAR is a right to receive
a payment either in cash or common stock, as the Committee may determine, equal
in value to the excess of the fair market value of one share of Common Stock on
the date of exercise over the exercise price per share established in connection
with the grant of the SAR. The exercise price per share covered by a SAR will be
the exercise price per share of the related option in the case of a Tandem SAR
and will be the fair market value of the Common Stock on the date of grant in
the case of a Non-Tandem SAR.
Restricted Stock. The Committee may award "restricted" shares of Common Stock.
Upon the award of restricted stock, the recipient has all rights of a
stockholder with respect to the shares, including the right to receive
dividends, the right to vote the shares of restricted stock and, conditioned
upon full vesting of shares of restricted stock, the right to tender such
shares, subject to the conditions and restrictions generally applicable to
restricted stock or specifically set forth in the recipient's restricted stock
agreement. The Committee may, in its sole discretion, determine at grant, that
the payment of dividends, if any, shall be deferred until the expiration of the
applicable restriction period. Recipients of restricted stock are required to
enter into a restricted stock agreement with the Company which states the
restrictions to which the shares are subject and the criteria or date or dates
on which such restrictions will lapse.
If the grant of restricted stock or the lapse of the relevant restriction is
based on the attainment of objective performance goals, the Committee shall
establish the performance goals, formulae or standards and the applicable
vesting percentage for the restricted stock award applicable to each recipient
while the outcome of the performance goals are substantially uncertain. Such
performance goals may incorporate provisions for disregarding (or adjusting for)
changes in accounting methods, corporate transactions (including, without
limitation, dispositions and acquisitions) and other similar events or
circumstances. Section 162(m) of the Code requires that performance awards be
based upon objective performance measures. The performance goals will be based
on one or more of the following criteria ("Performance Criteria"): (i) revenues,
income before income taxes and extraordinary income, net income, earnings before
income tax, earnings before interest, taxes, depreciation and amortization or a
combination of any or all of the foregoing; (ii) after-tax or pre-tax profits;
(iii) operational cash flow; (iv) level of, reduction of, or other specified
objectives with regard to the Company's bank debt or other long-term or
short-term public or private debt or other similar financial obligations; (v)
earnings per share or earnings per share from continuing operations; (vi) return
on capital employed or return on invested capital; (vii) after-tax or pre-tax
return on stockholders' equity; (viii) economic value added targets; (ix) fair
market value of the shares of Common Stock; and (x) the growth in the value of
an investment in Common Stock assuming the reinvestment of dividends. In
addition, such performance goals may be based upon the attainment of specified
levels of Company (or a subsidiary, division or other operational unit of the
Company) performance under one or more of the measures described relative to the
performance of other corporations. To the extent permitted under the Code, the
Committee may: (i) designate additional business criteria on which the
performance goals may be based; or (ii) adjust, modify or amend the
aforementioned business criteria.
Performance Units and Performance Shares. The Committee may grant performance
shares entitling recipients to receive a fixed number of shares of Common Stock
or the cash equivalent thereof, as determined by the Committee in its sole
discretion, upon the attainment of performance goals established by the
Committee (based on the Performance Criteria), based on a specified performance
period. The Committee may also grant performance units entitling recipients to
receive a value payable in cash or shares of Common Stock, as determined by the
Committee, upon the attainment of performance goals established by the Committee
(based on the Performance Criteria), for a specified performance cycle. The
Committee may subject such grants of performance shares and performance units to
such vesting and forfeiture conditions as it deems appropriate.
Other Stock-Based Awards. The Committee may grant awards of Common Stock and
other awards that are valued in whole or in part by reference to, or are payable
in or otherwise based on, Common Stock and may be granted either alone or in
addition to or in tandem with stock options, stock appreciation rights,
restricted stock, performance shares or performance units.
8
<PAGE>
The Committee also determines the purchase price to be paid, if any, by a
recipient to purchase other stock-based awards (including, without limitation,
shares of Common Stock). The purchase of shares of Common Stock or other
stock-based awards may be made on either an after-tax or pre-tax basis, as
determined by the Committee; provided, however, that if the purchase is made on
a pre-tax basis, such purchase will be made pursuant to a deferred compensation
program established by the Committee, which will be deemed to be part of the
Plan.
Change in Control
Unless determined otherwise by the Committee at the time of grant, and except to
the extent provided in the applicable award agreement, the recipient's
employment agreement or other agreement approved by the Committee, accelerated
vesting or lapsing of restrictions of awards will occur upon a change in control
of the Company (as defined in the Plan). Upon a change in control of the
Company, options granted to non-employee directors will be subject to the rules
described below.
Non-Employee Director Stock Option Grants
The Plan authorizes the automatic grant of nonqualified stock options to each
non-employee director, without further action by the Board or the stockholders,
as follows: (i) options to purchase 3,000 shares of Common Stock will be granted
to each non-employee director as of the date he or she begins service as a
non-employee director on the Board, provided that such service begins after the
Plan's effective date; and (ii) options to purchase 1,500 shares of Common Stock
will be granted to each non-employee director as of each August 1, provided that
the non-employee director has served as a director for at least 6 months.
However, no non-employee director may receive options under the Plan to purchase
more than an aggregate of 15,000 shares of Common Stock (including any options
awarded to the non-employee director under the 1993 Incentive Stock Option Plan,
as amended). The exercise price per share of such options will be the fair
market value of the Common Stock at the time of grant. The term of each such
option will be 10 years. Options granted to non-employee directors will vest and
become exercisable one year after the date of grant, provided that the option
may be vested only during the continuance of his or her service as a director of
the Company. All options granted to non-employee directors and not previously
exercisable will become fully exercisable immediately upon a change in control
of the Company (as defined in the Plan).
Amendment and Termination
The Board or Committee may at any time, amend any or all of the provisions of
the Plan, or suspend or terminate it entirely, retroactively or otherwise.
However, no amendment may be made without the approval of the Company's
stockholders in accordance with the laws of the State of Delaware, to the extent
required under Section 162(m) of the Code, or to the extent applicable to ISOs,
Section 422 of the Code, which would: (i) increase the aggregate number of
shares of Common Stock that may be issued; (ii) increase the maximum individual
participant share limitations for a fiscal year; (iii) change the classification
of employees or consultants eligible to receive awards; (iv) decrease the
minimum exercise price of any stock option or SAR; (v) extend the maximum option
term; (vi) materially alter the Performance Criteria; or (vii) require
stockholder approval in order for the Plan to continue to comply with the
applicable provisions of Section 162(m) of the Code or, to the extent applicable
to ISOs, Section 422 of the Code.
Miscellaneous
Awards granted under the Plan are generally nontransferable, except that the
Committee may provide for the transferability of nonqualified stock options to a
recipient's family member (as defined in the Plan) at the time of grant or
thereafter.
The Plan is not subject to any of the requirements of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"). The Plan is not, nor is it
intended to be, qualified under Section 401(a) of the Code.
9
<PAGE>
Certain Federal Income Tax Consequences Relating to the Plan
The following discussion of the principal U.S. federal income tax consequences
with respect to options under the Plan is based on statutory authority and
judicial and administrative interpretations as of the date of this proxy
statement, which are subject to change at any time (possibly with retroactive
effect) and may vary in individual circumstances. Therefore, the following is
designed to provide only a general understanding of the material federal income
tax consequences (state, local, estate and social security tax consequences are
not addressed below). This discussion is limited to the U.S. federal income tax
consequences to individuals who are citizens or residents of the U.S., other
than those individuals who are taxed on a residence basis in a foreign country.
Incentive Stock Options. In general, an employee will not realize taxable income
upon either the grant or the exercise of an ISO and the Company will not realize
an income tax deduction at either time. If the employee does not sell the Common
Stock received pursuant to the exercise of an ISO within either (1) two years
after the date of the grant of the ISO or (2) one year after the date of
exercise, a subsequent sale of the Common Stock will result in long-term capital
gain or loss to the employee and will not result in a tax deduction to the
Company. Capital gains rates may be reduced in the case of a longer holding
period.
If the employee disposes of the Common Stock acquired upon exercise of the ISO
within either of the above-mentioned time periods, the employee will generally
realize as ordinary income an amount equal to the lesser of: (1) the fair market
value of the Common Stock on the date of exercise over the option's exercise
price, or (2) the amount realized upon disposition over the exercise price.
In this event, the Company generally will be entitled to an income tax deduction
equal to the amount recognized as ordinary income. Any gain in excess of the
amount realized by the employee as ordinary income will be taxed at the rates
applicable to short-term or long-term capital gains, depending on the holding
period.
Nonqualified Stock Options. A recipient (i.e., an employee, consultant or
director) will not realize any taxable income upon the grant of a nonqualified
stock option and the Company will not receive a deduction at the time of grant
unless the option has a readily ascertainable fair market value (as determined
under applicable tax law) at the time of grant. Upon the exercise of a
nonqualified stock option, the recipient generally will realize ordinary income
in an amount equal to the excess of the fair market value of the Common Stock on
the date of exercise over the option's exercise price. Upon a subsequent sale of
the Common Stock by the recipient, the recipient will recognize short-term or
long-term capital gain or loss depending upon his or her holding period for the
Common Stock. The Company will generally be allowed a deduction equal to the
amount recognized by the recipient as ordinary income.
Other Tax Consequences. In addition, (i) any officers and directors of the
Company subject to Section 16(b) of the Exchange Act may also be subject to
special tax rules regarding the income tax consequences concerning their
options, (ii) any entitlement to a tax deduction on the part of the Company is
subject to the applicable tax rules (including, without limitation, Section
162(m) of the Code regarding a $1,000,000 limitation on deductible
compensation), (iii) the exercise of an ISO may have implications in the
computation of alternative minimum taxable income, and (iv) in the event that
the exercisability or vesting of any option is accelerated because of a change
of control, payments relating to the option, either alone or together with
certain other payments, may constitute parachute payments under Section 280G of
the Code, which excess amounts may be subject to excise taxes.
In general, Section 162(m) of the Code denies a publicly held corporation a
deduction for federal income tax purposes for compensation in excess of
$1,000,000 per year per person to its chief executive officer and four other
officers whose compensation is disclosed in its proxy statement, subject to
certain exceptions. Options will generally qualify under one of these exceptions
if they are granted under a plan that states the maximum number of shares with
respect to which options may be granted to any recipient during a specified
period and the plan under which the options are granted is approved by
stockholders and is administered by a Committee comprised of outside directors.
The Plan is intended to satisfy these requirements with respect to options.
10
<PAGE>
Vote Required and Board Recommendation
The affirmative vote of the holders of a majority of the outstanding shares of
Common Stock present in person or represented by proxy at the Annual Meeting of
Stockholders and entitled to vote on the Plan will be required for approval of
the Plan.
The Board of Directors recommends that the stockholders vote FOR approval of the
Plan.
SELECTION OF AUDITORS
The Board of Directors has selected KPMG LLP as the Company's auditors for the
current fiscal year, subject to ratification by the stockholders. If the
stockholders do not ratify such selection, it will be reconsidered by the Board.
Representatives of KPMG LLP are expected to be present at the Annual Meeting of
Stockholders, with the opportunity to make a statement, should they so desire,
and to be available to respond to appropriate questions.
The affirmative vote of a majority of the shares present in person or
represented by proxy at the Annual Meeting and entitled to vote thereon will be
required to ratify the selection of KPMG LLP as the Company's auditors for the
current fiscal year.
The Board of Directors recommends that the stockholders vote FOR the
ratification of the selection of KPMG LLP as the Company's auditors.
EXECUTIVE COMPENSATION
Summary Compensation Table for the Fiscal Years
Ended July 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation
------------ ------------
Fiscal Options Restricted
Name and Principal Position Year Salary Bonus Other No. Of Shares Stock Awards
--------------------------- ---- ------ ----- ----- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Fred Kornberg (1) 1999 $265,000 $95,445 * 30,000 --
Chairman, Chief Executive 1998 240,000 44,940 * 150,000(4) --
Officer and President 1997 210,000 5,400 * -- --
J. Preston Windus, Jr. (2) 1999 170,000 29,200 * 15,000 --
Senior Vice President, Chief 1998 150,000 56,700 * 60,000(4) --
Financial Officer and 1997 130,000 16,300 * -- --
President of
Comtech PST Corp.
Richard L. Burt (2) 1999 160,000 69,600 15,000 --
Senior Vice President; President 1998 150,000 19,600 * 60,000(4) --
of Comtech Systems, Inc. 1997 130,000 -- * -- --
</TABLE>
(Continued on next page)
11
<PAGE>
<TABLE>
<CAPTION>
Fiscal Options Restricted
Name and Principal Position Year Salary Bonus Other No. Of Shares Stock Awards
--------------------------- ---- ------ ----- ----- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Mc Collum (2) 1999 135,000 -- -- --
Vice President; President 1998 135,000 -- * 60,000(4) --
Comtech Communications 1997 110,000 9,800 * -- --
Corp.
Gail Segui (3) 1999 80,000 6,300 * -- --
Secretary and Treasurer
</TABLE>
- ---------------------
* Less than 10% of the total salary and bonus reported for such officer.
(1) Mr. Kornberg is employed pursuant to an agreement which was amended and
restated in January 1998 and which provides, among other things, for his
employment until 2003; provided, however, that the employment period shall
be automatically extended for successive two year periods unless either
party gives notice of non- extension to the other at least six months in
advance of the then scheduled termination date; at a current basic
compensation of $295,000 per annum plus such additional amounts, if any,
as the Board of Directors may from time to time determine and incentive
compensation, not to exceed his basic compensation, equal to 3.5% of the
Company's pre-tax income plus such additional amounts as the Board of
Directors may from time to time determine. Fifty percent of any such
incentive compensation is payable to Mr. Kornberg in the November
following the fiscal year to which such compensation relates, the balance
is payable on the first anniversary of the initial 50% payment. If Mr.
Kornberg voluntarily terminates his employment with the Company other than
after a Change in Control (as defined in his employment agreement), or if
the Company terminates his employment due to disability or for cause, he
will forfeit his right to receive accrued but unpaid incentive
compensation. If a Change in Control of the Company occurs, Mr. Kornberg
is entitled to terminate his employment and receive a lump sum payment
(subject to possible adjustments to avoid the characterization of the
payment as excess parachute payments and the consequent imposition of
taxes under Section 280G of the Internal Revenue Code of 1986) equal to
the sum of (i) his then basic compensation for the balance of the
employment period or three times his basic compensation, whichever is
greater, (ii) accrued but unpaid incentive compensation with respect to
prior fiscal years and (iii) if he so elects, the market value less the
applicable exercise price, of any stock option then held by him. The
aggregate of (i), (ii) and (iii), as of October 15, 1999, would have been
$2,759,000. Mr. Kornberg would also be entitled to receive benefits under
the Company's benefit plans, or substantially equal benefits, for the
remainder of the employment period.
(2) Mr. Windus, Mr. Burt, and Mr. McCollum are eligible to receive, in
addition to their respective base compensation amounts, a percentage of
the relevant subsidiary's pre-tax profits based principally upon the
attainment of various goals. These goals, which may include target levels
of sales, pre-tax profits, customer orders or cash flow, are developed by
senior management and submitted to the Executive Compensation Committee
for annual approval.
(3) Ms. Segui is eligible to receive incentive compensation based upon the
attainment of certain corporate goals and personal performance targets
that are developed by senior management and submitted to the Executive
Compensation Committee for annual approval.
(4) On January 14, 1998, the Company granted Mr. Kornberg, Mr. Windus, Mr.
Burt, Mr. McCollum and Ms. Segui options of 150,000; 60,000; 60,000;
60,000 and 9,000 respectively. The options granted to Mr. Kornberg and Ms.
Segui will expire on January 14, 2008, subject to earlier expiration in
the event their employment with the Company terminates, and may not be
exercised unless they have vested. The options will vest on December 15,
2007, subject to accelerated vesting, in 37,500 and 2,250 share
increments, respectively, if prior to March 31, 2001, the market value of
the Company's Common Stock for any 20
12
<PAGE>
consecutive day trading period exceeds successive thresholds of $6.34,
$6.67, $13.33 and $20. The options granted to each of Mr. Windus, Mr.
Burt, and Mr. McCollum will expire on January 14, 2008, subject to earlier
expiration in the event an individual's employment with the Company
terminates, and may not be exercised unless they have vested. These
options will vest on December 15, 2007, subject to accelerated vesting
based upon the achievement of net income and cash flow targets for the
subsidiary headed by the recipient during 1998, 1999 and 2000 fiscal
years. Pursuant to such accelerated vesting, 75,000 of the options granted
to Mr. Kornberg, 4,500 of the options granted to Ms. Segui, 36,000 of the
options granted to Mr. Windus and 33,000 of the options granted to Mr.
Burt have vested to date.
OPTION GRANTS IN THE FISCAL YEAR ENDED JULY 31, 1999
<TABLE>
<CAPTION>
% of Total
Number of Options Potential Realizable
Securities Granted to Value at Assumed
Underlying Employees Exercise Annual Rates of Stock
Options in Fiscal Price Expiration Price Appreciation For
Granted Year ($/Share)(1) Date Option Term (2)
------- ---- ------------ ---- ----------------------
5% 10%
-- ---
<S> <C> <C> <C> <C> <C> <C>
Fred Kornberg 30,000 22.10% $ 7.50 6/29/09 $159,825 $358,593
J. Preston Windus, Jr 15,000 11.05% $ 7.50 6/29/09 79,912 179,296
Richard L. Burt 15,000 11.05% $ 7.50 6/29/09 79,912 179,296
</TABLE>
(1) The exercise price is the market price on the date the options were
granted.
(2) In accordance with SEC rules, these columns show gains that might exist
for the respective options, assuming the market price of Comtech's Common
Stock appreciates from the date of grant over a period of ten years at the
annualized rates of five and ten percent, respectively. If the stock price
does not increase above the exercise price at the time of exercise, the
realized value to the named executives from these options will be zero.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR ENDED JULY 31, 1999
AND OPTION VALUES AS OF JULY 31, 1999
<TABLE>
<CAPTION>
Shares Value of Unexercised
Acquired Value Number of Unexercised In-the-Money Options at
Name on Exercise Realized (1) Options at July 31, 1999 July 31, 1999(2)
----------- ------------ ------------------------ ----------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Fred Kornberg -- $ -- 75,000 105,000 $665,250 $796,350
J. Preston Windus, Jr. -- -- 81,000 46,500 732,940 390,135
Richard L. Burt -- -- 71,952 46,488 637,224 348,396
Robert L. McCollum -- -- -- 60,000 -- 532,200
Gail Segui 4,200 45,061 4,500 6,300 39,915 57,343
</TABLE>
- -------------------------
(1) "Value Realized" is calculated by determining the difference between the
fair market value of the Common Stock on the date the options are
exercised and the exercise price of the options.
(2) "In-the-Money Options" would be options outstanding at the end of July 31,
1999 for which the fair market value of the Common Stock on such date
($11.87) exceeded the exercise price of the options.
13
<PAGE>
Executive Compensation Committee Report
Compensation Policies. The principal goal of the Company's compensation program
as administered by the Executive Compensation Committee is to help the Company
attract, motivate and retain the executive talent required to develop and
achieve the Company's strategic and operating goals with a view to maximizing
shareholder value. The key elements of this program and the objectives of each
element are as follows:
Base Salary. Base salaries paid to the Company's executive officers are intended
to be competitive with those paid to executives holding comparable positions in
the marketplace. Individual performance and the performance of the Company or
the applicable operating subsidiary are considered when setting salaries within
the range for each position. Annual reviews are held and adjustments are made
based on attainment of individual goals in a manner consistent with operating
and financial performance.
Bonuses. Annual cash bonuses are intended to motivate performance by creating
the potential to earn annual incentive awards that are contingent upon personal
and business performance. Excluding the Chief Executive Officer, bonuses are
paid to the Company's executive officers pursuant to the Company's Incentive
Compensation Plan for Subsidiary Presidents and Key Employees (the "Incentive
Compensation Plan"). Each of the Company's executive officers other than the
Chief Executive Officer and the Secretary,Treasurer is a President of one of the
Company's operating subsidiaries. Under the Incentive Compensation Plan, the
President of each of these subsidiaries is entitled to receive a bonus of up to
a fixed percentage of each subsidiary's pre-tax profit each year, subject to the
attainment of subsidiary pre-tax profit, new order, and cash flow targets and
personal performance targets that are proposed by senior management and
established by the Executive Compensation Committee. The Secretary and
Treasurer's incentive compensation is subject to attainment of certain corporate
goals and personal performance targets that are proposed by senior management
and established by the Executive Compensation Committee.
Long Term Incentives. The Company provides its executive officers with long-term
incentive compensation through grants of stock options under the Company's stock
option plan. The grant of stock options aligns the executive's interests with
those of the Company's stockholders by providing the executive with an
opportunity to purchase and maintain an equity interest in the Company and to
share in the appreciation of the value of the Company's Common Stock. In fiscal
1999, options to purchase an aggregate of 30,000 shares of the Company's Common
Stock were granted to the Company's four executive officers other than the Chief
Executive Officer. One fifth of the options vest each year for five years
commencing one year after the date of grant. The options expire on the tenth
anniversary of the date of grant.
CEO's Compensation. As discussed in Note (1) to the Summary Compensation Table
in "Executive Compensation", the Company and Mr. Kornberg amended and restated
his employment agreement in January 1998. Pursuant to such agreement, Mr.
Kornberg received a base salary of $265,000 for fiscal 1999 and bonus of $95,445
equal to 3.5% of the Company's pre-tax income required under the agreement. In
addition, on June 29, 1999, Mr. Kornberg was awarded an option to purchase an
aggregate of 30,000 shares of the Company's Common Stock, one fifth of which
vest each year for five years. The options expire on the tenth anniversary of
the date of grant.
The Executive Compensation Committee
George Bugliarello, Chairman
Gerard R. Nocita
Sol S. Weiner
14
<PAGE>
COMPENSATION OF DIRECTORS
Each Director who is not a salaried employee of the Company receives an annual
retainer of $10,000, plus $1,250 for each Board meeting attended by them (up to
an additional $5,000 per annum). Under the Company's 1993 Incentive Stock Option
Plan, each director who is not already an employee of the Company receives an
option grant to purchase 1,500 shares of Common Stock on each August 1st during
the term of the Plan. The options are exercisable one year after the date of
grant. The exercise price of all such options is equal to the stock's fair
market value on such date.
Stock Performance Graph
[GRAPHIC OMITTED]
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases its facilities in Melville, New York from a partnership
controlled by the Company's Chairman and Chief Executive Officer. The lease, as
amended, provides for the Company's exclusive use of the premises as they now
exist for an initial term of ten years. The Company has the option to extend the
term of the lease for an additional ten-year period, and a right of first
refusal in the event of a sale of the facility. The annual rental under the
lease ($448,000 in fiscal 1999) is subject to adjustments.
The Company leases its St. Cloud, Florida facility from a partnership in which
J. Preston Windus, Jr., Senior Vice President and Chief Financial Officer of the
Company, is a general partner. The annual rental under the lease ($207,000 in
fiscal 1999) is subject to adjustments.
15
<PAGE>
VOTING OF PROXIES AND OTHER MATTERS
The Board of Directors does not know of any other matters to be presented at the
meeting. If other matters do come before the meeting, the persons acting
pursuant to the proxy will vote on them in their discretion.
Proxies may be solicited by mail, telephone, telegram, and personally by
directors, officers and other employees of the Company. The cost of soliciting
proxies will be borne by the Company. A complete list of stockholders entitled
to vote at the Annual Meeting will be available for inspection beginning
November 22, 1999 at the Company's headquarters located at 105 Baylis Road,
Melville, New York 11747.
SECTION 16(a) BENEFICIAL OWNERSHIP VOTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, if any, to file with the
Securities and Exchange Commission ("SEC") reports of ownership, and reports of
changes in ownership, of equity securities of the Company. Such persons are also
required to furnish the Company with copies of all such reports that they file.
Based solely on such reports and written representations of the Company's
directors and executive officers, the Company believes that during the two
fiscal year period ended July 31, 1999, the Company's executive officers and
directors complied with all applicable Section 16(a) filing requirements.
STOCKHOLDER PROPOSALS AND NOMINATIONS
Eligible stockholders wishing to have a proposal for action by the
stockholders at the 2000 Annual Meeting included in the Company's proxy
statement must submit such proposal at the principal offices of the Company not
later than July 4, 2000. It is suggested that any such proposals be submitted by
certified mail, return receipt requested. Under the Company's By-Laws, a
stockholder nomination for election to the Board of Directors may not be made at
the 2000 Annual Meeting unless notice (including all information that would be
required in connection with such nomination under the Securities and Exchange
Commission's proxy rules if such nomination were the subject of a proxy
solicitation and the written consent of each nominee for election to the Board
of Directors named therein to serve if elected) and the name, address and number
of shares of Common Stock held of record or beneficially by the person proposing
to make such nomination is delivered in person or mailed to the Company and
received by it not earlier than August 16, 2000 or later than September 15,
2000; provided, however, that such notice must be received not more than 90 days
prior to the 2000 Annual Meeting or less than 60 days prior to the 2000 Annual
Meeting if the 2000 Annual Meeting is not held within 30 days before or after
the anniversary date of the 1999 Annual Meeting. Under the Securities and
Exchange Commission's proxy rules, proxies solicited by the Board of Directors
for the 2000 Annual Meeting may be voted at the discretion of the persons named
in such proxies (or their substitutes) with respect to any shareholder proposal
not included in the Company's proxy statement if the Company does not receive
notice of such proposal on or before September 25, 2000, unless the 2000 Annual
Meeting is not held within 30 days before or after the anniversary date of the
1999 Annual Meeting.
By order of the Board of Directors
Gail Segui
Secretary
Date: November 8, 1999
16
<PAGE>
APPENDIX - A
COMTECH TELECOMMUNICATIONS CORP.
__________________________
2000 STOCK INCENTIVE PLAN
__________________________
ARTICLE I
PURPOSE
The purpose of The Comtech Telecommunications Corp. 2000 Stock
Incentive Plan is to enhance the profitability and value of the Company for the
benefit of its stockholders by enabling the Company: (i) to offer employees of
and Consultants to the Company and its Affiliates stock-based incentives and
other equity interests in the Company, thereby creating a means to raise the
level of stock ownership by employees and Consultants in order to attract,
retain and reward such individuals and strengthen the mutuality of interests
between such individuals and the Company's stockholders; and (ii) to make
equity-based awards to Non-Employee Directors, thereby creating a means to
attract, retain and reward such Non-Employee Directors and strengthen the
mutuality of interests between Non-Employee Directors and the Company's
stockholders.
ARTICLE II
DEFINITIONS
For purposes of this Plan, the following terms shall have the
following meanings:
2.1 "Acquisition Event" has the meaning set forth in Section
4.2(d).
2.2 "Affiliate" means each of the following: (i) any Subsidiary;
(ii) any Parent; (iii) any corporation, trade or business (including, without
limitation, a partnership or limited liability company) which is directly or
indirectly controlled 50% or more (whether by ownership of stock, assets or an
equivalent ownership interest or voting interest) by the Company or one of its
Affiliates; and (iv) any other entity in which the Company or any of its
Affiliates has a material equity interest and which is designated as an
"Affiliate" by resolution of the Committee.
2.3 "Award" means any award under this Plan of any: (i) Stock
Option; (ii) Stock Appreciation Right; (iii) Restricted Stock; (iv) Performance
Share; (v) Performance Unit; (vi) Other Stock-Based Award; or (vii) other award
providing benefits similar to (i) through (vi) designed to meet the requirements
of a Foreign Jurisdiction.
2.4 "Board" means the Board of Directors of the Company.
2.5 "Cause" means, with respect to a Participant's Termination of
Employment or Termination of Consultancy: (i) in the case where there is no
employment agreement, consulting agreement, change in control agreement or
similar agreement in effect between the Company or an Affiliate and the
Participant at the time of the grant of the Award (or where there is such an
agreement but it does not define "cause" (or words of like import)), termination
due to a Participant's commission of a fraud or a felony in connection with his
or her duties as an employee of the Company or an Affiliate, willful misconduct
or any act of disloyalty, dishonesty, fraud, breach
A-1
<PAGE>
of trust or confidentiality as to the Company or an Affiliate or any other act
which is intended to cause or may reasonably be expected to cause economic or
reputational injury to the Company or an Affiliate; or (ii) in the case where
there is an employment agreement, consulting agreement, change in control
agreement or similar agreement in effect between the Company or an Affiliate and
the Participant at the time of the grant of the Award that defines "cause" (or
words of like import), as defined under such agreement; provided, however, that
with regard to any agreement that conditions "cause" on occurrence of a change
in control, such definition of "cause" shall not apply until a change in control
actually takes place and then only with regard to a termination thereafter. With
respect to a Participant's Termination of Directorship, "cause" shall mean an
act or failure to act that constitutes cause for removal of a director under
applicable Delaware law.
2.6 "Change in Control" has the meaning set forth in Article XIII
or Article XIV, as applicable.
2.7 "Code" means the Internal Revenue Code of 1986, as amended.
Any reference to any section of the Code shall also be a reference to any
successor provision.
2.8 "Committee" means: (a) with respect to the application of this
Plan to Eligible Employees and Consultants, a committee or subcommittee of the
Board appointed from time to time by the Board, which committee or subcommittee
shall consist of two or more non-employee directors, each of whom is intended to
be, to the extent required by Rule 16b-3, a "non-employee director" as defined
in Rule 16b-3 and, to the extent required by Section 162(m) of the Code and any
regulations thereunder, an "outside director" as defined under Section 162(m) of
the Code; provided, however, that if and to the extent that no Committee exists
which has the authority to administer this Plan, the functions of the Committee
shall be exercised by the Board and all references herein to the Committee shall
be deemed to be references to the Board; and (b) with respect to the application
of this Plan to Non-Employee Directors, the Board.
2.9 "Common Stock" means the common stock, $.10 par value per
share, of the Company.
2.10 "Company" means Comtech Telecommunications Corp., a Delaware
corporation, and its successors by operation of law.
2.11 "Consultant" means any advisor or consultant to the Company
or its Affiliates.
2.12 "Disability" means, with respect to an Eligible Employee,
Consultant or Non-Employee Director, a permanent and total disability, as
determined by the Committee in its sole discretion, provided that in no event
shall any disability that is not a permanent and total disability, as defined in
Section 22(e)(3) of the Code, be treated as a Disability. A Disability shall
only be deemed to occur at the time of the determination by the Committee of the
Disability.
2.13 "Effective Date" means the effective date of this Plan as
defined in Article XVIII.
2.14 "Eligible Employee" means each employee of the Company or an
Affiliate.
2.15 "Exchange Act" means the Securities Exchange Act of 1934, as
amended. Any references to any section of the Exchange Act shall also be a
reference to any successor provision.
2.16 "Family Member" shall mean any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in- law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the
employee's household (other than a tenant or employee), a trust in which these
persons have more than 50% of the beneficial interest, a foundation in which
these persons (or the employee) control the management of assets, and any other
entity in which these persons (or the employee) own more than 50% of the voting
interests.
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2.17 "Fair Market Value" means, unless otherwise required by any
applicable provision of the Code or any regulations issued thereunder, as of any
date, the last sales price for the Common Stock on the applicable date: (i) as
reported on the principal national securities exchange on which it is then
traded or the Nasdaq Stock Market, Inc. or (ii) if not traded on any such
national securities exchange or the Nasdaq Stock Market, Inc. as quoted on an
automated quotation system sponsored by the National Association of Securities
Dealers, Inc. If the Common Stock is not readily tradable on a national
securities exchange, the Nasdaq Stock Market, Inc. or any automated quotation
system sponsored by the National Association of Securities Dealers, Inc., its
Fair Market Value shall be set in good faith by the Committee. Notwithstanding
anything herein to the contrary, "Fair Market Value" means the price for Common
Stock set by the Committee in good faith based on reasonable methods set forth
under Section 422 of the Code and the regulations thereunder including, without
limitation, a method utilizing the average of prices of the Common Stock
reported on the principal national securities exchange on which it is then
traded during a reasonable period designated by the Committee. For purposes of
the grant of any Stock Option, the applicable date shall be the date for which
the last sales price is available at the time of grant. For purposes of the
conversion of a Performance Unit to shares of Common Stock for reference
purposes, the applicable date shall be the date determined by the Committee in
accordance with Section 10.1. For purposes of the exercise of any Stock
Appreciation Right, the applicable date shall be the date a notice of exercise
is received by the Committee or, if not a day on which the applicable market is
open, the next day that it is open.
2.18 "Foreign Jurisdiction" means any jurisdiction outside of the
United States including, without limitation, countries, states, provinces and
localities.
2.19 "Incentive Stock Option" means any Stock Option awarded to an
Eligible Employee under this Plan intended to be and designated as an "Incentive
Stock Option" within the meaning of Section 422 of the Code.
2.20 "Limited Stock Appreciation Right" means an Award of a
limited Tandem Stock Appreciation Right or a Non-Tandem Stock Appreciation Right
made pursuant to Section 7.5 of this Plan.
2.21 "Non-Employee Director" means a director of the Company who
is not an active employee of the Company or an Affiliate and who is not an
officer, director or employee of the Company or any Affiliate.
2.22 "Non-Qualified Stock Option" means any Stock Option awarded
under this Plan that is not an Incentive Stock Option.
2.23 "Non-Tandem Stock Appreciation Right" means a Stock
Appreciation Right entitling a Participant to receive an amount in cash or
Common Stock (as determined by the Committee in its sole discretion) equal to
the excess of: (i) the Fair Market Value of a share of Common Stock as of the
date such right is exercised, over (ii) the aggregate exercise price of such
right.
2.24 "Other Stock-Based Award" means an Award of Common Stock and
other Awards made pursuant to Article XI that are valued in whole or in part by
reference to, or are payable in or otherwise based on, Common Stock, including,
without limitation, an Award valued by reference to performance of an Affiliate.
2.25 "Parent" means any parent corporation of the Company within
the meaning of Section 424(e) of the Code.
2.26 "Participant" means any Eligible Employee or Consultant to
whom an Award has been made under this Plan and each Non-Employee Director of
the Company; provided, however, that a Non-Employee Director shall be a
Participant for purposes of the Plan solely with respect to awards of Stock
Options pursuant to Article XIII.
2.27 "Performance Criteria" has the meaning set forth in Exhibit
A.
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2.28 "Performance Cycle" has the meaning set forth in Section
10.1.
2.29 "Performance Goal" means the objective performance goals
established by the Committee in accordance with Section 162(m) of the Code and
based on one or more Performance Criteria.
2.30 "Performance Period" has the meaning set forth in Section
9.1.
2.31 "Performance Share" means an Award made pursuant to Article
IX of this Plan of the right to receive Common Stock or, as determined by the
Committee in its sole discretion, cash of an equivalent value at the end of the
Performance Period or thereafter.
2.32 "Performance Unit" means an Award made pursuant to Article X
of this Plan of the right to receive a fixed dollar amount, payable in cash or
Common Stock (or a combination of both) as determined by the Committee in its
sole discretion, at the end of a specified Performance Cycle or thereafter.
2.33 "Plan" means The Comtech Telecommunications Corp. 2000 Stock
Incentive Plan.
2.34 "Reference Stock Option" has the meaning set forth in Section
7.1.
2.35 "Restricted Stock" means an Award of shares of Common Stock
under this Plan that is subject to restrictions under Article VIII.
2.36 "Restriction Period" has the meaning set forth in
Section 8.3(a) with respect to Restricted Stock.
2.37 "Retirement" means a Termination of Employment or Termination
of Consultancy without Cause by a Participant at or after age 65 or such earlier
date after age 50 as may be approved by the Committee with regard to such
Participant. With respect to a Participant's Termination of Directorship,
Retirement shall mean the failure to stand for reelection or the failure to be
reelected at or after a Participant has attained age 65 or, with the consent of
the Board, before age 65 but after age 50.
2.38 "Rule 16b-3" means Rule 16b-3 under Section 16(b) of the
Exchange Act as then in effect or any successor provisions.
2.39 "Section 162(m) of the Code" means Section 162(m) of the Code
and any Treasury regulations thereunder.
2.40 "Securities Act" means the Securities Act of 1933, as
amended. Any reference to any section of the Securities Act shall also be a
reference to any successor provision.
2.41 "Stock Appreciation Right" or "SAR" means the right pursuant
to an Award granted under Article VII.
2.42 "Stock Option" or "Option" means any option to purchase
shares of Common Stock granted to Eligible Employees or Consultants under
Article VI or to Non-Employee Directors under Article XIII.
2.43 "Subsidiary" means any subsidiary corporation of the Company
within the meaning of Section 424(f) of the Code.
2.44 "Tandem Stock Appreciation Right" means a Stock Appreciation
Right entitling the holder to surrender to the Company all (or a portion) of a
Stock Option in exchange for an amount in cash or Common Stock (as determined by
the Committee in its sole discretion) equal to the excess of: (i) the Fair
Market
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Value, on the date such Stock Option (or such portion thereof) is surrendered,
of the Common Stock covered by such Stock Option (or such portion thereof), over
(ii) the aggregate exercise price of such Stock Option (or such portion
thereof).
2.45 "Ten Percent Stockholder" means a person owning stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company, its Subsidiaries or its Parent.
2.46 "Termination of Consultancy" means, with respect to a
Consultant, that the Consultant is no longer acting as a consultant to the
Company or an Affiliate. In the event an entity shall cease to be an Affiliate,
there shall be deemed a Termination of Consultancy of any individual who is not
otherwise a Consultant to the Company or another Affiliate at the time the
entity ceases to be an Affiliate. In the event that a Consultant becomes an
Eligible Employee upon the termination of his consultancy, the Committee, in its
sole and absolute discretion, may determine that no Termination of Consultancy
shall be deemed to occur until such time as such Consultant is no longer a
Consultant or an Eligible Employee.
2.47 "Termination of Directorship" means, with respect to a
Non-Employee Director, that the Non-Employee Director has ceased to be a
director of the Company.
2.48 "Termination of Employment" means: (i) a termination of
employment (for reasons other than a military or personal leave of absence
granted by the Company) of a Participant from the Company and its Affiliates; or
(ii) when an entity which is employing a Participant ceases to be an Affiliate,
unless the Participant otherwise is, or thereupon becomes, employed by the
Company or another Affiliate. In the event that an Eligible Employee becomes a
Consultant upon the termination of his employment, the Committee, in its sole
and absolute discretion, may determine that no Termination of Employment shall
be deemed to occur until such time as such Eligible Employee is no longer an
Eligible Employee or a Consultant.
2.49 "Transfer" means anticipate, alienate, attach, sell, assign,
pledge, encumber, charge, hypothecate or otherwise transfer and "Transferred"
has a correlative meaning.
ARTICLE III
ADMINISTRATION
3.1 The Committee. The Plan shall be administered and interpreted
by the Committee. If for any reason the appointed Committee does not meet the
requirements of Rule 16b-3 or Section 162(m) of the Code, such noncompliance
with the requirements of Rule 16b-3 and Section 162(m) of the Code shall not
affect the validity of Awards, grants, interpretations or other actions of the
Committee.
3.2 Grants of Awards. The Committee shall have full authority to
grant to Eligible Employees and Consultants, pursuant to the terms of this Plan:
(i) Stock Options; (ii) Tandem Stock Appreciation Rights and Non-Tandem Stock
Appreciation Rights; (iii) Restricted Stock; (iv) Performance Shares; (v)
Performance Units; (vi) Other Stock-Based Awards; and (vii) other awards
providing benefits similar to (i) through (vi) designed to meet the requirements
of Foreign Jurisdictions. All Awards shall be granted by, confirmed by, and
subject to the terms of, a written agreement executed by the Company and the
Participant. In particular, the Committee shall have the authority:
(a) to select the Eligible Employees and Consultants to whom
Awards may from time to time be granted hereunder;
(b) to determine whether and to what extent Awards, including any
combination of two or more Awards, are to be granted hereunder to one or more
Eligible Employees or Consultants;
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(c) to determine, in accordance with the terms of this Plan, the
number of shares of Common Stock to be covered by each Award granted hereunder;
(d) to determine the terms and conditions, not inconsistent with
the terms of this Plan, of any Award granted hereunder (including, but not
limited to, the exercise or purchase price (if any), any restriction or
limitation, any vesting schedule or acceleration thereof and any forfeiture
restrictions or waiver thereof, regarding any Award and the shares of Common
Stock relating thereto, based on such factors, if any, as the Committee shall
determine, in its sole discretion);
(e) to determine whether and under what circumstances a Stock
Option may be settled in cash, Common Stock and/or Restricted Stock under
Section 6.3(d) or, with respect to Stock Options granted to Non- Employee
Directors, Section 13.4(d);
(f) to determine whether, to what extent and under what
circumstances to provide loans (which shall bear interest at the rate the
Committee shall provide) to Eligible Employees and Consultants in order to
exercise Stock Options under this Plan or to purchase Awards under this Plan
(including shares of Common Stock);
(g) to determine whether a Stock Option is an Incentive Stock
Option or Non-Qualified Stock Option, whether a Stock Appreciation Right is a
Tandem Stock Appreciation Right or Non-Tandem Stock Appreciation Right or
whether an Award is intended to satisfy Section 162(m) of the Code;
(h) to determine whether to require an Eligible Employee or
Consultant, as a condition of the granting of any Award, not to sell or
otherwise dispose of shares of Common Stock acquired pursuant to the exercise of
an Option or an Award for a period of time as determined by the Committee, in
its sole discretion, following the date of the acquisition of such Option or
Award;
(i) to modify, extend or renew an Award, subject to Article XV
herein, provided, however, that if an Award is modified, extended or renewed and
thereby deemed to be the issuance of a new Award under the Code or the
applicable accounting rules, the exercise price of an Award may continue to be
the original exercise price even if less than the Fair Market Value of the
Common Stock at the time of such modification, extension or renewal; and
(j) to offer to buy out an Option previously granted, based on
such terms and conditions as the Committee shall establish and communicate to
the Participant at the time such offer is made.
3.3 Guidelines. Subject to Article XV hereof, the Committee shall
have the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing this Plan and perform all acts, including the
delegation of its administrative responsibilities, as it shall, from time to
time, deem advisable; to construe and interpret the terms and provisions of this
Plan and any Award issued under this Plan (and any agreements relating thereto);
and to otherwise supervise the administration of this Plan. The Committee may
correct any defect, supply any omission or reconcile any inconsistency in this
Plan or in any agreement relating thereto in the manner and to the extent it
shall deem necessary to effectuate the purpose and intent of this Plan. The
Committee may adopt special guidelines and provisions for persons who are
residing in, or subject the taxes of, Foreign Jurisdictions to comply with
applicable tax and securities laws and may impose any limitations and
restrictions that it deems necessary to comply with the applicable tax and
securities laws of such Foreign Jurisdictions. To the extent applicable, this
Plan is intended to comply with Section 162(m) of the Code and the applicable
requirements of Rule 16b-3 and shall be limited, construed and interpreted in a
manner so as to comply therewith.
3.4 Decisions Final. Any decision, interpretation or other action
made or taken in good faith by or at the direction of the Company, the Board or
the Committee (or any of its members) arising out of or in connection with this
Plan shall be within the absolute discretion of all and each of them, as the
case may be, and
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shall be final, binding and conclusive on the Company and all employees and
Participants and their respective heirs, executors, administrators, successors
and assigns.
3.5 Reliance on Counsel. The Company, the Board or the Committee
may consult with legal counsel, who may be counsel for the Company or other
counsel, with respect to its obligations or duties hereunder, or with respect to
any action or proceeding or any question of law, and shall not be liable with
respect to any action taken or omitted by it in good faith pursuant to the
advice of such counsel.
3.6 Procedures. If the Committee is appointed, the Board shall
designate one of the members of the Committee as chairman and the Committee
shall hold meetings, subject to the By-Laws of the Company, at such times and
places as it shall deem advisable. A majority of the Committee members shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination reduced to writing and
signed by all the Committee members in accordance with the By-Laws of the
Company shall be fully as effective as if it had been made by a vote at a
meeting duly called and held. The Committee shall keep minutes of its meetings
and shall make such rules and regulations for the conduct of its business as it
shall deem advisable.
3.7 Designation of Consultants/Liability.
(a) The Committee may designate employees of the Company and
professional advisors to assist the Committee in the administration of this Plan
and may grant authority to officers to execute agreements or other documents on
behalf of the Committee.
(b) The Committee may employ such legal counsel, consultants and
agents as it may deem desirable for the administration of this Plan and may rely
upon any opinion received from any such counsel or consultant and any
computation received from any such consultant or agent. Expenses incurred by the
Committee in the engagement of any such counsel, consultant or agent shall be
paid by the Company. The Committee, its members and any employee of the Company
designated pursuant to paragraph (a) above shall not be liable for any action or
determination made in good faith with respect to this Plan. To the maximum
extent permitted by applicable law, no officer of the Company or member or
former member of the Committee shall be liable for any action or determination
made in good faith with respect to this Plan or any Award granted under it. To
the maximum extent permitted by applicable law or the Certificate of
Incorporation or By-Laws of the Company and to the extent not covered by
insurance, each officer and member or former member of the Committee shall be
indemnified and held harmless by the Company against any cost or expense
(including reasonable fees of counsel reasonably acceptable to the Company) or
liability (including any sum paid in settlement of a claim with the approval of
the Company), and advanced amounts necessary to pay the foregoing at the
earliest time and to the fullest extent permitted, arising out of any act or
omission to act in connection with this Plan, except to the extent arising out
of such officer's, member's or former member's own fraud or bad faith. Such
indemnification shall be in addition to any rights of indemnification the
officers, directors or members or former officers, directors or members may have
under applicable law or under the Certificate of Incorporation or By-Laws of the
Company or any Affiliate. Notwithstanding anything else herein, this
indemnification will not apply to the actions or determinations made by an
individual with regard to Awards granted to him or her under this Plan.
ARTICLE IV
SHARE AND OTHER LIMITATIONS
4.1 Shares.
(a) General Limitation. The aggregate number of shares of Common
Stock which may be issued or used for reference purposes under this Plan or with
respect to which Awards may be granted shall not
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exceed 500,000 shares of Common Stock (subject to any increase or decrease
pursuant to Section 4.2) with respect to all types of Awards, plus 882,935
shares of Common Stock relating to outstanding awards assumed by this Plan under
Section 4.4 for a total of 1,382,935 shares of Common Stock. The shares of
Common Stock available under this Plan may be either authorized and unissued
Common Stock or Common Stock held in or acquired for the treasury of the
Company. If any Stock Option or Stock Appreciation Right granted under this Plan
expires, terminates or is canceled for any reason without having been exercised
in full or, with respect to Stock Options, the Company repurchases any Stock
Option, the number of shares of Common Stock underlying such unexercised or
repurchased Stock Option or any unexercised Stock Appreciation Right shall again
be available for the purposes of Awards under this Plan. If any shares of
Restricted Stock, Performance Shares or Performance Units awarded under this
Plan to a Participant are forfeited or repurchased by the Company for any
reason, the number of forfeited or repurchased shares of Restricted Stock,
Performance Shares or Performance Units shall again be available for the
purposes of Awards under this Plan. If a Tandem Stock Appreciation Right is
granted or a Limited Stock Appreciation Right is granted in tandem with a Stock
Option, such grant shall only apply once against the maximum number of shares of
Common Stock which may be issued under this Plan. In determining the number of
shares of Common Stock available for Awards other than Awards of Incentive Stock
Options, if Common Stock has been exchanged by a Participant as full or partial
payment of exercise price or withholding taxes, or if the number shares of
Common Stock otherwise deliverable has been reduced for the payment of exercise
price or withholding taxes, the number of shares of Common Stock exchanged as
payment for the payment of exercise price or withholding taxes, or reduced,
shall again be available for purposes of Awards under this Plan.
(b) Individual Participant Limitations. (i) The maximum number of
shares of Common Stock subject to any Award of Stock Options, Stock Appreciation
Rights, Performance Shares or shares of Restricted Stock for which the grant of
such Award or the lapse of the relevant Restriction Period is subject to the
attainment of Performance Goals in accordance with Section 8.3(a)(ii) herein
which may be granted under this Plan during any fiscal year of the Company to
each Eligible Employee or Consultant shall be 100,000 shares per type of Award
(subject to any increase or decrease pursuant to Section 4.2), provided that the
maximum number of shares of Common Stock for all types of Awards does not exceed
100,000 during any fiscal year of the Company. If a Tandem Stock Appreciation
Right is granted or a Limited Stock Appreciation Right is granted in tandem with
a Stock Option, it shall apply against the Eligible Employee's or Consultant's
individual share limitations for both Stock Appreciation Rights and Stock
Options.
(ii) There are no annual individual Eligible Employee or
Consultant share limitations on Restricted Stock for which the grant of such
Award or the lapse of the relevant Restriction Period is not subject to
attainment of Performance Goals in accordance with Section 8.3(a)(ii) hereof.
(iii) The maximum value at grant of Performance Units which may be
granted under this Plan during any fiscal year of the Company to each Eligible
Employee or Consultant shall be $100,000. Each Performance Unit shall be
referenced to one share of Common Stock and shall be charged against the
available shares under this Plan at the time the unit value measurement is
converted to a referenced number of shares of Common Stock in accordance with
Section 10.1.
(iv) The individual Participant limitations set forth in this
Section 4.1(b) shall be cumulative; that is, to the extent that shares of Common
Stock for which Awards are permitted to be granted to an Eligible Employee or a
Consultant during a fiscal year are not covered by an Award to such Eligible
Employee or Consultant in a fiscal year, the number of shares of Common Stock
available for Awards to such Eligible Employee or Consultant shall automatically
increase in the subsequent fiscal years during the term of the Plan until used.
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4.2 Changes.
(a) The existence of this Plan and the Awards granted hereunder
shall not affect in any way the right or power of the Board or the stockholders
of the Company to make or authorize any adjustment, recapitalization,
reorganization or other change in the Company's capital structure or its
business, any merger or consolidation of the Company or any Affiliate, any issue
of bonds, debentures, preferred or prior preference stock ahead of or affecting
Common Stock, the dissolution or liquidation of the Company or any Affiliate,
any sale or transfer of all or part of the assets or business of the Company or
any Affiliate or any other corporate act or proceeding.
(b) Subject to the provisions of Section 4.2(d), in the event of
any such change in the capital structure or business of the Company by reason of
any stock split, reverse stock split, stock dividend, combination or
reclassification of shares, recapitalization, or other change in the capital
structure of the Company, merger, consolidation, spin-off, reorganization,
partial or complete liquidation, issuance of rights or warrants to purchase any
Common Stock or securities convertible into Common Stock, or any other corporate
transaction or event having an effect similar to any of the foregoing and
effected without receipt of consideration by the Company, then the aggregate
number and kind of shares which thereafter may be issued under this Plan, the
number and kind of shares or other property (including cash) to be issued upon
exercise of an outstanding Stock Option or other Awards granted under this Plan
and the purchase price thereof shall be appropriately adjusted consistent with
such change in such manner as the Committee may deem equitable to prevent
substantial dilution or enlargement of the rights granted to, or available for,
Participants under this Plan, and any such adjustment determined by the
Committee in good faith shall be final, binding and conclusive on the Company
and all Participants and employees and their respective heirs, executors,
administrators, successors and assigns.
(c) Fractional shares of Common Stock resulting from any
adjustment in Options or Awards pursuant to Section 4.2(a) or (b) shall be
aggregated until, and eliminated at, the time of exercise by rounding-down for
fractions less than one-half and rounding-up for fractions equal to or greater
than one-half. No cash settlements shall be made with respect to fractional
shares eliminated by rounding. Notice of any adjustment shall be given by the
Committee to each Participant whose Award has been adjusted and such adjustment
(whether or not such notice is given) shall be effective and binding for all
purposes of this Plan.
(d) In the event of a merger or consolidation in which the Company
is not the surviving entity or in the event of any transaction that results in
the acquisition of substantially all of the Company's outstanding Common Stock
by a single person or entity or by a group of persons and/or entities acting in
concert, or in the event of the sale or transfer of all or substantially all of
the Company's assets (all of the foregoing being referred to as "Acquisition
Events"), then the Committee may, in its sole discretion, terminate all
outstanding Stock Options and Stock Appreciation Rights, effective as of the
date of the Acquisition Event, by delivering notice of termination to each
Participant at least 30 days prior to the date of consummation of the
Acquisition Event, in which case during the period from the date on which such
notice of termination is delivered to the consummation of the Acquisition Event,
each such Participant shall have the right to exercise in full all of his or her
Stock Options and Stock Appreciation Rights that are then outstanding (without
regard to any limitations on exercisability otherwise contained in the Stock
Option or Award Agreements), but any such exercise shall be contingent upon and
subject to the occurrence of the Acquisition Event, and, provided that, if the
Acquisition Event does not take place within a specified period after giving
such notice for any reason whatsoever, the notice and exercise pursuant thereto
shall be null and void.
If an Acquisition Event occurs but the Committee does not
terminate the outstanding Stock Options and Stock Appreciation Rights pursuant
to this Section 4.2(d), then the provisions of Section 4.2(b) shall apply.
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4.3 Minimum Purchase Price. Notwithstanding any provision of this
Plan to the contrary, if authorized but previously unissued shares of Common
Stock are issued under this Plan, such shares shall not be issued for a
consideration which is less than as permitted under applicable law.
4.4 Assumption of Awards. Awards that were granted prior to the
Effective Date under the (i) Comtech Telecommunications Corp. 1982 Incentive
Stock Option Plan (the "1982 Plan"), and (ii) Comtech Telecommunications Corp.
1993 Incentive Stock Option Plan, as amended (the "1993 Plan"), shall be
transferred and assumed by this Plan as of the Effective Date. Notwithstanding
the foregoing, such Awards shall continue to be governed by the terms of the
applicable agreement in effect prior to the Effective Date.
ARTICLE V
ELIGIBILITY
5.1 General Eligibility. All Eligible Employees and Consultants
and prospective employees of and Consultants to the Company and its Affiliates
are eligible to be granted Non-Qualified Stock Options, Stock Appreciation
Rights, Restricted Stock, Performance Shares, Performance Units, Other
Stock-Based Awards and awards providing benefits similar to each of the
foregoing designed to meet the requirements of Foreign Jurisdictions under this
Plan. Eligibility for the grant of an Award and actual participation in this
Plan shall be determined by the Committee in its sole discretion. The vesting
and exercise of Awards granted to a prospective employee or Consultant are
conditioned upon such individual actually becoming an Eligible Employee or
Consultant.
5.2 Incentive Stock Options. All Eligible Employees of the
Company, its Subsidiaries and its Parent (if any) are eligible to be granted
Incentive Stock Options under this Plan. Eligibility for the grant of an Award
and actual participation in this Plan shall be determined by the Committee in
its sole discretion.
5.3 Non-Employee Directors. Non-Employee Directors are only
eligible to receive an Award of Stock Options in accordance with Article XIII of
the Plan.
ARTICLE VI
STOCK OPTIONS
6.1 Stock Options. Each Stock Option granted hereunder shall be
one of two types: (i) an Incentive Stock Option intended to satisfy the
requirements of Section 422 of the Code; or (ii) a Non-Qualified Stock Option.
6.2 Grants. The Committee shall have the authority to grant to any
Eligible Employee one or more Incentive Stock Options, Non-Qualified Stock
Options or both types of Stock Options (in each case with or without Stock
Appreciation Rights). To the extent that any Stock Option does not qualify as an
Incentive Stock Option (whether because of its provisions or the time or manner
of its exercise or otherwise), such Stock Option or the portion thereof which
does not qualify, shall constitute a separate Non-Qualified Stock Option. The
Committee shall have the authority to grant any Consultant one or more
Non-Qualified Stock Options (with or without Stock Appreciation Rights).
Notwithstanding any other provision of this Plan to the contrary or any
provision in an agreement evidencing the grant of a Stock Option to the
contrary, any Stock Option granted to an Eligible Employee of an Affiliate
(other than an Affiliate which is a Parent or a Subsidiary) shall be a
Non-Qualified Stock Option.
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6.3 Terms of Stock Options. Stock Options granted under this Plan
shall be subject to the following terms and conditions, and shall be in such
form and contain such additional terms and conditions, not inconsistent with the
terms of this Plan, as the Committee shall deem desirable:
(a) Exercise Price. The exercise price per share of Common Stock
purchasable under an Incentive Stock Option or a Stock Option intended to be
"performance-based" for purposes of Section 162(m) of the Code shall be
determined by the Committee at the time of grant, but shall not be less than
100% of the Fair Market Value of the share of Common Stock at the time of grant;
provided, however, that if an Incentive Stock Option is granted to a Ten Percent
Stockholder, the exercise price shall be no less than 110% of the Fair Market
Value of the Common Stock. The exercise price per share of Common Stock
purchasable under a Non-Qualified Stock Option shall be determined by the
Committee.
(b) Stock Option Term. The term of each Stock Option shall be
fixed by the Committee; provided, however, that no Stock Option shall be
exercisable more than 10 years after the date such Stock Option is granted; and
further provided that the term of an Incentive Stock Option granted to a Ten
Percent Stockholder shall not exceed 5 years.
(c) Exercisability. Stock Options shall be exercisable at such
time or times and subject to such terms and conditions as shall be determined by
the Committee at grant. If the Committee provides, in its discretion, that any
Stock Option is exercisable subject to certain limitations (including, without
limitation, that such Stock Option is exercisable only in installments or within
certain time periods), the Committee may waive such limitations on the
exercisability at any time at or after grant in whole or in part (including,
without limitation, waiver of the installment exercise provisions or
acceleration of the time at which such Stock Option may be exercised), based on
such factors, if any, as the Committee shall determine, in its sole discretion.
(d) Method of Exercise. Subject to whatever installment exercise
and waiting period provisions apply under subsection (c) above, Stock Options
may be exercised in whole or in part at any time and from time to time during
the Stock Option term by giving written notice of exercise to the Committee
specifying the number of shares to be purchased. Such notice shall be
accompanied by payment in full of the purchase price as follows: (i) in cash or
by check, bank draft or money order payable to the order of the Company; (ii) if
the Common Stock is traded on a national securities exchange, the Nasdaq Stock
Market, Inc. or quoted on a national quotation system sponsored by the National
Association of Securities Dealers, through a "cashless exercise" procedure
whereby the Participant delivers irrevocable instructions to a broker to deliver
promptly to the Company an amount equal to the purchase price; or (iii) on such
other terms and conditions as may be acceptable to the Committee (including,
without limitation, the relinquishment of Stock Options or by payment in full or
in part in the form of Common Stock owned by the Participant for a period of at
least 6 months or such other period as may be required to avoid an accounting
charge against the Company's earnings (and for which the Participant has good
title free and clear of any liens and encumbrances) based on the Fair Market
Value of the Common Stock on the payment date as determined by the Committee).
No shares of Common Stock shall be issued until payment therefor, as provided
herein, has been made or provided for.
(e) Incentive Stock Option Limitations. To the extent that the
aggregate Fair Market Value (determined as of the time of grant) of the Common
Stock with respect to which Incentive Stock Options are exercisable for the
first time by an Eligible Employee during any calendar year under this Plan
and/or any other stock option plan of the Company, any Subsidiary or any Parent
exceeds $100,000, such Options shall be treated as Non-Qualified Stock Options.
In addition, if an Eligible Employee does not remain employed by the Company,
any Subsidiary or any Parent at all times from the time an Incentive Stock
Option is granted until 3 months prior to the date of exercise thereof (or such
other period as required by applicable law), such Stock Option shall be treated
as a Non-Qualified Stock Option. Should any provision of this Plan not be
necessary in order for the Stock Options to qualify as Incentive Stock Options,
or should any additional provisions be required, the Committee may amend this
Plan accordingly, without the necessity of obtaining the approval of the
stockholders of the Company.
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(f) Form, Modification, Extension and Renewal of Stock Options.
Subject to the terms and conditions and within the limitations of this Plan,
Stock Options shall be evidenced by such form of agreement or grant as is
approved by the Committee, and the Committee may (i) modify, extend or renew
outstanding Stock Options granted under this Plan (provided that the rights of a
Participant are not reduced without his consent), and (ii) accept the surrender
of outstanding Stock Options (up to the extent not theretofore exercised) and
authorize the granting of new Stock Options in substitution therefor (to the
extent not theretofore exercised).
(g) Other Terms and Conditions. Stock Options may contain such
other provisions, which shall not be inconsistent with any of the terms of this
Plan, as the Committee shall deem appropriate including, without limitation,
permitting "reloads" such that the same number of Stock Options are granted as
the number of Stock Options exercised, shares used to pay for the exercise price
of Stock Options or shares used to pay withholding taxes ("Reloads"). With
respect to Reloads, the exercise price of the new Stock Option shall be the Fair
Market Value on the date of the "reload" and the term of the Stock Option shall
be the same as the remaining term of the Stock Options that are exercised, if
applicable, or such other exercise price and term as determined by the
Committee.
ARTICLE VII
STOCK APPRECIATION RIGHTS
7.1 Tandem Stock Appreciation Rights. Stock Appreciation Rights
may be granted in conjunction with all or part of any Stock Option (a "Reference
Stock Option") granted under this Plan ("Tandem Stock Appreciation Rights"). In
the case of a Non-Qualified Stock Option, such rights may be granted either at
or after the time of the grant of such Reference Stock Option. In the case of an
Incentive Stock Option, such rights may be granted only at the time of the grant
of such Reference Stock Option. Consultants shall not be eligible for a grant of
Tandem Stock Appreciation Rights granted in conjunction with all or part of an
Incentive Stock Option.
7.2 Terms and Conditions of Tandem Stock Appreciation Rights.
Tandem Stock Appreciation Rights shall be subject to such terms and conditions,
not inconsistent with the provisions of this Plan, as shall be determined from
time to time by the Committee, including Article XII and the following:
(a) Term. A Tandem Stock Appreciation Right or applicable portion
thereof granted with respect to a Reference Stock Option shall terminate and no
longer be exercisable upon the termination or exercise of the Reference Stock
Option, except that, unless otherwise determined by the Committee, in its sole
discretion, at the time of grant, a Tandem Stock Appreciation Right granted with
respect to less than the full number of shares covered by the Reference Stock
Option shall not be reduced until and then only to the extent the exercise or
termination of the Reference Stock Option causes the number of shares covered by
the Tandem Stock Appreciation Right to exceed the number of shares remaining
available and unexercised under the Reference Stock Option.
(b) Exercisability. Tandem Stock Appreciation Rights shall be
exercisable only at such time or times and to the extent that the Reference
Stock Options to which they relate shall be exercisable in accordance with the
provisions of Article VI and this Article VII.
(c) Method of Exercise. A Tandem Stock Appreciation Right may be
exercised by a Participant by surrendering the applicable portion of the
Reference Stock Option. Upon such exercise and surrender, the Participant shall
be entitled to receive an amount determined in the manner prescribed in this
Section 7.2. Stock Options which have been so surrendered, in whole or in part,
shall no longer be exercisable to the extent the related Tandem Stock
Appreciation Rights have been exercised.
(d) Payment. Upon the exercise of a Tandem Stock Appreciation
Right, a Participant shall be entitled to receive up to, but no more than, an
amount in cash and/or Common Stock (as chosen by the
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Committee in its sole discretion at grant, or thereafter if no rights of a
Participant are reduced) equal in value to the excess of the Fair Market Value
of one share of Common Stock over the option price per share specified in the
Reference Stock Option, multiplied by the number of shares in respect of which
the Tandem Stock Appreciation Right shall have been exercised.
(e) Deemed Exercise of Reference Stock Option. Upon the exercise
of a Tandem Stock Appreciation Right, the Reference Stock Option or part thereof
to which such Stock Appreciation Right is related shall be deemed to have been
exercised for the purpose of the limitation set forth in Article IV of this Plan
on the number of shares of Common Stock to be issued under this Plan.
7.3 Non-Tandem Stock Appreciation Rights. Non-Tandem Stock
Appreciation Rights may also be granted without reference to any Stock Option
granted under this Plan.
7.4 Terms and Conditions of Non-Tandem Stock Appreciation Rights.
Non-Tandem Stock Appreciation Rights shall be subject to such terms and
conditions, not inconsistent with the provisions of this Plan, as shall be
determined from time to time by the Committee, including Article XII and the
following:
(a) Term. The term of each Non-Tandem Stock Appreciation Right
shall be fixed by the Committee, but shall not be greater than ten (10) years
after the date the right is granted.
(b) Exercisability. Non-Tandem Stock Appreciation Rights shall be
exercisable at such time or times and subject to such terms and conditions as
shall be determined by the Committee at grant. If the Committee provides, in its
discretion, that any such right is exercisable subject to certain limitations
(including, without limitation, that it is exercisable only in installments or
within certain time periods), the Committee may waive such limitation on the
exercisability at any time at or after grant in whole or in part (including,
without limitation, waiver of the installment exercise provisions or
acceleration of the time at which rights may be exercised), based on such
factors, if any, as the Committee shall determine, in its sole discretion.
(c) Method of Exercise. Subject to whatever installment exercise
and waiting period provisions apply under subsection (b) above, Non-Tandem Stock
Appreciation Rights may be exercised in whole or in part at any time and from
time to time during the option term, by giving written notice of exercise to the
Company specifying the number of Non-Tandem Stock Appreciation Rights to be
exercised.
(d) Payment. Upon the exercise of a Non-Tandem Stock Appreciation
Right, a Participant shall be entitled to receive, for each right exercised, up
to, but no more than, an amount in cash and/or Common Stock (as chosen by the
Committee in its sole discretion at grant, or thereafter if no rights of a
Participant are reduced) equal in value to the excess of the Fair Market Value
of one share of Common Stock on the date the right is exercised over the Fair
Market Value of one share of Common Stock on the date the right was awarded to
the Participant.
7.5 Limited Stock Appreciation Rights. The Committee may, in its
sole discretion, grant a Tandem Stock Appreciation Right or a Non-Tandem Stock
Appreciation Right as a Limited Stock Appreciation Right. Limited Stock
Appreciation Rights may be exercised only upon the occurrence of a Change in
Control or such other event as the Committee may, in its sole discretion,
designate at the time of grant or thereafter. Upon the exercise of limited Stock
Appreciation Rights, except as otherwise provided in an Award agreement, the
Participant shall receive in cash or Common Stock, as determined by the
Committee, an amount equal to the amount (i) set forth in Section 7.2(d) with
respect to Tandem Stock Appreciation Rights, or (ii) set forth in Section 7.4(d)
with respect to Non-Tandem Stock Appreciation Rights, as applicable.
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ARTICLE VIII
RESTRICTED STOCK
8.1 Awards of Restricted Stock. Shares of Restricted Stock may be
issued to Eligible Employees or Consultants either alone or in addition to other
Awards granted under this Plan. The Committee shall determine the eligible
persons to whom, and the time or times at which, grants of Restricted Stock will
be made, the number of shares to be awarded, the price (if any) to be paid by
the recipient (subject to Section 8.2), the time or times within which such
Awards may be subject to forfeiture, the vesting schedule and rights to
acceleration thereof, and all other terms and conditions of the Awards. The
Committee may condition the grant or vesting of Restricted Stock upon the
attainment of specified performance goals, including established Performance
Goals in accordance with Section 162(m) of the Code, or such other factors as
the Committee may determine, in its sole discretion.
8.2 Awards and Certificates. An Eligible Employee or Consultant
selected to receive Restricted Stock shall not have any rights with respect to
such Award, unless and until such Participant has delivered to the Company a
fully executed copy of the applicable Award agreement relating thereto and has
otherwise complied with the applicable terms and conditions of such Award.
Further, such Award shall be subject to the following conditions:
(a) Purchase Price. The purchase price of Restricted Stock shall
be fixed by the Committee. Subject to Section 4.3, the purchase price for shares
of Restricted Stock may be zero to the extent permitted by applicable law, and,
to the extent not so permitted, such purchase price may not be less than par
value.
(b) Acceptance. Awards of Restricted Stock must be accepted within
a period of 90 days (or such shorter period as the Committee may specify at
grant) after the Award date by executing a Restricted Stock Award agreement and
by paying whatever price (if any) the Committee has designated thereunder.
(c) Legend. Each Participant receiving shares of Restricted Stock
shall be issued a stock certificate in respect of such shares of Restricted
Stock, unless the Committee elects to use another system, such as book entries
by the transfer agent, as evidencing ownership of shares of Restricted Stock.
Such certificate shall be registered in the name of such Participant, and shall
bear an appropriate legend referring to the terms, conditions, and restrictions
applicable to such Award, substantially in the following form:
"The anticipation, alienation, attachment, sale, transfer,
assignment, pledge, encumbrance or charge of the shares of stock represented
hereby are subject to the terms and conditions (including forfeiture) of The
Comtech Telecommunications Corp. 2000 Stock Incentive Plan (the "Plan") and an
Agreement entered into between the registered owner and the Company dated
_______. Copies of such Plan and Agreement are on file at the principal office
of the Company."
(d) Custody. The Committee may require that any stock certificates
evidencing such shares be held in custody by the Company until the restrictions
thereon shall have lapsed and that, as a condition to the grant of such Award of
Restricted Stock, the Participant shall have delivered a duly signed stock
power, endorsed in blank, relating to the Common Stock covered by such Award.
8.3 Restrictions and Conditions on Restricted Stock Awards. Shares
of Restricted Stock awarded pursuant to this Plan shall be subject to Article
XII and the following restrictions and conditions:
(a) Restriction Period; Vesting and Acceleration of Vesting. (i)
The Participant shall not be permitted to Transfer shares of Restricted Stock
awarded under this Plan during the period or periods set by the Committee (the
"Restriction Period") commencing on the date of such Award, as set forth in the
Restricted Stock Award agreement and such agreement shall set forth a vesting
schedule and any events which would accelerate vesting of the shares of
Restricted Stock. Within these limits, based on service, attainment of
Performance Goals
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pursuant to Section 8.3(a)(ii) below and/or such other factors or criteria as
the Committee may determine in its sole discretion, the Committee may provide
for the lapse of such restrictions in installments in whole or in part, or may
accelerate the vesting of all or any part of any Restricted Stock Award and/or
waive the deferral limitations for all or any part of any Restricted Stock
Award.
(ii) Objective Performance Goals, Formulae or Standards. If the
grant of shares of Restricted Stock or the lapse of restrictions is based on the
attainment of Performance Goals, the Committee shall establish the Performance
Goals and the applicable vesting percentage of the Restricted Stock Award
applicable to each Participant or class of Participants in writing prior to the
beginning of the applicable fiscal year or at such later date as otherwise
determined by the Committee and while the outcome of the Performance Goals are
substantially uncertain. Such Performance Goals may incorporate provisions for
disregarding (or adjusting for) changes in accounting methods, corporate
transactions (including, without limitation, dispositions and acquisitions) and
other similar type events or circumstances. With regard to a Restricted Stock
Award that is intended to comply with Section 162(m) of the Code, to the extent
any such provision would create impermissible discretion under Section 162(m) of
the Code or otherwise violate Section 162(m) of the Code, such provision shall
be of no force or effect. The applicable Performance Goals shall be based on one
or more of the Performance Criteria set forth in Exhibit A hereto.
(b) Rights as Stockholder. Except as provided in this subsection
(b) and subsection (a) above and as otherwise determined by the Committee, the
Participant shall have, with respect to the shares of Restricted Stock, all of
the rights of a holder of shares of Common Stock of the Company including,
without limitation, the right to receive any dividends, the right to vote such
shares and, subject to and conditioned upon the full vesting of shares of
Restricted Stock, the right to tender such shares. The Committee may, in its
sole discretion, determine at the time of grant that the payment of dividends
shall be deferred until, and conditioned upon, the expiration of the applicable
Restriction Period.
(c) Lapse of Restrictions. If and when the Restriction Period
expires without a prior forfeiture of the Restricted Stock subject to such
Restriction Period, the certificates for such shares shall be delivered to the
Participant. All legends shall be removed from said certificates at the time of
delivery to the Participant except as otherwise required by applicable law.
ARTICLE IX
PERFORMANCE SHARES
9.1 Award of Performance Shares. Performance Shares may be awarded
either alone or in addition to other Awards granted under this Plan. The
Committee shall, in its sole discretion, determine the Eligible Employees and
Consultants to whom and the time or times at which such Performance Shares shall
be awarded, the duration of the period (the "Performance Period") during which,
and the conditions under which, a Participant's right to Performance Shares will
be vested and the other terms and conditions of the Award in addition to those
set forth in Section 9.2.
Each Performance Share awarded shall be referenced to one share of
Common Stock. Except as otherwise provided herein, the Committee shall condition
the right to payment of any Performance Share Award upon the attainment of
objective Performance Goals established pursuant to Section 9.2(c) below and
such other non-performance based factors or criteria as the Committee may
determine in its sole discretion.
9.2 Terms and Conditions. A Participant selected to receive
Performance Shares shall not have any rights with respect to such Awards, unless
and until such Participant has delivered a fully executed copy of a Performance
Share Award agreement evidencing the Award to the Company and has otherwise
complied with the following terms and conditions:
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(a) Earning of Performance Share Award. At the expiration of the
applicable Performance Period, the Committee shall determine the extent to which
the Performance Goals established pursuant to Section 9.2(c) are achieved and
the percentage of each Performance Share Award that has been earned.
(b) Payment. Following the Committee's determination in accordance
with subsection (a) above, shares of Common Stock or, as determined by the
Committee in its sole discretion, the cash equivalent of such shares shall be
delivered to the Participant, in an amount equal to such Participant's earned
Performance Share Award. Notwithstanding the foregoing, except as may be set
forth in the agreement covering the Award, the Committee may, in its sole
discretion and in accordance with Section 162(m) of the Code, award an amount
less than the earned Performance Share Award and/or subject the payment of all
or part of any Performance Share Award to additional vesting and forfeiture
conditions as it deems appropriate.
(c) Objective Performance Goals, Formulae or Standards. The
Committee shall establish the objective Performance Goals for the earning of
Performance Shares based on a Performance Period applicable to each Participant
or class of Participants in writing prior to the beginning of the applicable
Performance Period or at such later date as permitted under Section 162(m) of
the Code and while the outcome of the Performance Goals are substantially
uncertain. Such Performance Goals may incorporate, if and only to the extent
permitted under Section 162(m) of the Code, provisions for disregarding (or
adjusting for) changes in accounting methods, corporate transactions (including,
without limitation, dispositions and acquisitions) and other similar type events
or circumstances. To the extent any such provision would create impermissible
discretion under Section 162(m) of the Code or otherwise violate Section 162(m)
of the Code, such provision shall be of no force or effect. The applicable
Performance Goals shall be based on one or more of the Performance Criteria set
forth in Exhibit A hereto.
(d) Dividends and Other Distributions. At the time of any Award of
Performance Shares, the Committee may, in its sole discretion, award an Eligible
Employee or Consultant the right to receive the cash value of any dividends and
other distributions that would have been received as though the Eligible
Employee or Consultant had held each share of Common Stock referenced by the
earned Performance Share Award from the last day of the first year of the
Performance Period until the actual distribution to such Participant of the
related share of Common Stock or cash value thereof. Such amounts, if awarded,
shall be paid to the Participant as and when the shares of Common Stock or cash
value thereof are distributed to such Participant and, at the discretion of the
Committee, may be paid with interest from the first day of the second year of
the Performance Period until such amounts and any earnings thereon are
distributed. The applicable rate of interest shall be determined by the
Committee in its sole discretion; provided, however, that for each fiscal year
or part thereof, the applicable interest rate shall not be greater than a rate
equal to the four-year U.S. Government Treasury rate on the first day of each
applicable fiscal year.
ARTICLE X
PERFORMANCE UNITS
10.1 Awards of Performance Units. Performance Units may be awarded
either alone or in addition to other Awards granted under this Plan. The
Committee shall, in its sole discretion, determine the Eligible Employees to
whom and the time or times at which such Performance Units shall be awarded, the
duration of the period (the "Performance Cycle") during which, and the
conditions under which, a Participant's right to Performance Units will be
vested and the other terms and conditions of the Award in addition to those set
forth in Section 10.2.
Performance Units shall be awarded in a dollar amount determined
by the Committee and shall be converted for purposes of calculating growth in
value to a referenced number of shares of Common Stock based on the Fair Market
Value of shares of Common Stock at the close of trading on the first business
day following the announcement of the annual financial results of the Company
for the fiscal year of the Company immediately
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preceding the fiscal year of the commencement of the relevant Performance Cycle,
provided that the Committee may provide that the minimum price for such
conversion shall be the Fair Market Value on the date of grant.
Each Performance Unit shall be referenced to one share of Common
Stock. Except as otherwise provided herein, the Committee shall condition the
right to payment of any Performance Unit Award upon the attainment of objective
Performance Goals established pursuant to Section 10.2(a) and such other
non-performance based factors or criteria as the Committee may determine in its
sole discretion. The cash value of any fractional Performance Unit Award
subsequent to conversion to shares of Common Stock shall be treated as a
dividend or other distribution under Section 10.2(e) to the extent any portion
of the Performance Unit Award is earned.
10.2 Terms and Conditions. The Performance Units awarded pursuant
to this Article 10 shall be subject to the following terms and conditions:
(a) Performance Goals. The Committee shall establish the objective
Performance Goals for the earnings of Performance Units based on a Performance
Cycle applicable to each Participant or class of Participants in writing prior
to the beginning of the applicable Performance Cycle or at such later date as
permitted under Section 162(m) of the Code and while the outcome of the
Performance Goals are substantially uncertain. Such Performance Goals may
incorporate, if and only to the extent permitted under Section 162(m) of the
Code, provisions for disregarding (or adjusting for) changes in accounting
methods, corporate transactions (including, without limitation, dispositions and
acquisitions) and other similar type events or circumstances. To the extent any
such provision would create impermissible discretion under Section 162(m) of the
Code or otherwise violate Section 162(m) of the Code, such provision shall be of
no force or effect. The applicable Performance Goals shall be based on one or
more of the Performance Criteria set forth in Exhibit A hereto.
(b) Vesting. At the expiration of the Performance Cycle, the
Committee shall determine and certify in writing the extent to which the
Performance Goals have been achieved, and the percentage of the Performance
Units of each Participant that have vested.
(c) Payment. Subject to the applicable provisions of the Award
agreement and this Plan, at the expiration of the Performance Cycle, cash and/or
shares of Common Stock (as the Committee may determine in its sole discretion at
grant, or thereafter if no rights of a Participant are reduced) shall be
delivered to the Participant in payment of the vested Performance Units covered
by the Performance Unit Award. Notwithstanding the foregoing, except as may be
set forth in the agreement covering the Award, the Committee may, in its sole
discretion, and to the extent applicable and permitted under Section 162(m) of
the Code, award an amount less than the earned Performance Unit Award and/or
subject the payment of all or part of any Performance Unit Award to additional
vesting and forfeiture conditions as it deems appropriate.
(d) Accelerated Vesting. Based on service, performance and/or such
other factors or criteria, if any, as the Committee may determine, the Committee
may, at or after grant, accelerate the vesting of all or any part of any
Performance Unit Award and/or waive the deferral limitations for all or any part
of such Award.
(e) Dividends and Other Distributions. At the time of any Award of
Performance Units, the Committee may, in its sole discretion, award an Eligible
Employee or Consultant the right to receive the cash value of any dividends and
other distributions that would have been received as though the Eligible
Employee or Consultant had held each share of Common Stock referenced by the
earned Performance Unit Award from the last day of the first year of the
Performance Cycle until the actual distribution to such Participant of the
related share of Common Stock or cash value thereof. Such amounts, if awarded,
shall be paid to the Participant as and when the shares of Common Stock or cash
value thereof are distributed to such Participant and, at the discretion of the
Committee, may be paid with interest from the first day of the second year of
the Performance Cycle until such amounts and any earnings thereon are
distributed. The applicable rate of interest shall be determined by the
Committee in its sole discretion; provided, however, that for each fiscal year
or part thereof, the applicable interest
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rate shall not be greater than a rate equal to the four-year U.S. Government
Treasury rate on the first day of each applicable fiscal year.
ARTICLE XI
OTHER STOCK-BASED AWARDS
11.1 Other Awards. Other Stock-Based Awards may be granted either
alone or in addition to or in tandem with Stock Options, Stock Appreciation
Rights, Restricted Stock, Performance Shares or Performance Units.
Subject to the provisions of this Plan, the Committee shall have
authority to determine the persons to whom and the time or times at which such
Awards shall be made, the number of shares of Common Stock to be awarded
pursuant to such Awards, and all other conditions of the Awards. The Committee
may also provide for the grant of Common Stock under such Awards upon the
completion of a specified performance period.
11.2 Terms and Conditions. Other Stock-Based Awards made pursuant
to this Article XI shall be subject to the following terms and conditions:
(a) Non-Transferability. Subject to the applicable provisions of
the Award agreement and this Plan, shares of Common Stock subject to Awards made
under this Article XI may not be Transferred prior to the date on which the
shares are issued, or, if later, the date on which any applicable restriction,
performance or deferral period lapses.
(b) Dividends. Unless otherwise determined by the Committee at the
time of Award, subject to the provisions of the Award agreement and this Plan,
the recipient of an Award under this Article XI shall be entitled to receive,
currently or on a deferred basis, dividends or dividend equivalents with respect
to the number of shares of Common Stock covered by the Award, as determined at
the time of the Award by the Committee, in its sole discretion.
(c) Vesting. Any Award under this Article XI and any Common Stock
covered by any such Award shall vest or be forfeited to the extent so provided
in the Award agreement, as determined by the Committee, in its sole discretion.
(d) Waiver of Limitation. The Committee may, in its sole
discretion, waive in whole or in part any or all of the limitations imposed
hereunder (if any) with respect to any or all of an Award under this Article XI.
(e) Price. Common Stock or Other Stock-Based Awards issued on a
bonus basis under this Article XI may be issued for no cash consideration;
Common Stock or Other Stock-Based Awards purchased pursuant to a purchase right
awarded under this Article XI shall be priced as determined by the Committee.
Subject to Section 4.3, the purchase price of shares of Common Stock or Other
Stock-Based Awards may be zero to the extent permitted by applicable law, and,
to the extent not so permitted, such purchase price may not be less than par
value. The purchase of shares of Common Stock or Other Stock-Based Awards may be
made on either an after-tax or pre-tax basis, as determined by the Committee;
provided, however, that if the purchase is made on a pre-tax basis, such
purchase shall be made pursuant to a deferred compensation program established
by the Committee, which will be deemed a part of this Plan.
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ARTICLE XII
NON-TRANSFERABILITY AND TERMINATION OF
EMPLOYMENT/CONSULTANCY
12.1 Non-Transferability. No Stock Option, Stock Appreciation
Right, Performance Unit, Performance Share or Other Stock-Based Award shall be
Transferable by the Participant otherwise than by will or by the laws of descent
and distribution. All Stock Options and all Stock Appreciation Rights shall be
exercisable, during the Participant's lifetime, only by the Participant. Tandem
Stock Appreciation Rights shall be Transferable, to the extent permitted above,
only with the underlying Stock Option. Shares of Restricted Stock under
Article VIII may not be Transferred prior to the date on which shares are
issued, or, if later, the date on which any applicable restriction, performance
or deferral period lapses. No Award shall, except as otherwise specifically
provided by law or herein, be Transferable in any manner, and any attempt to
Transfer any such Award shall be void, and no such Award shall in any manner be
liable for or subject to the debts, contracts, liabilities, engagements or torts
of any person who shall be entitled to such Award, nor shall it be subject to
attachment or legal process for or against such person. Notwithstanding the
foregoing, the Committee may determine at the time of grant or thereafter, that
a Non-Qualified Stock Option that is otherwise not transferable pursuant to this
Section 12.1 is transferable to a Family Member in whole or in part and in such
circumstances, and under such conditions, as specified by the Committee. A
Non-Qualified Stock Option that is transferred to a Family Member pursuant to
the preceding sentence may not be subsequently transferred otherwise than by
will or by the laws of descent and distribution.
12.2 Termination of Employment or Termination of Consultancy. The
following rules apply with regard to the Termination of Employment or
Termination of Consultancy of a Participant:
(a) Rules Applicable to Stock Options and Stock Appreciation
Rights. Unless otherwise determined by the Committee at grant or, if no rights
of the Participant are reduced, thereafter:
(i) Termination by Reason of Death, Disability or Retirement. If a
Participant's Termination of Employment or Termination of Consultancy is by
reason of death, Disability or Retirement, all Stock Options and Stock
Appreciation Rights held by such Participant may be exercised, to the extent
exercisable at the Participant's Termination of Employment or Termination of
Consultancy, by the Participant (or, in the case of death, by the legal
representative of the Participant's estate) at any time within a period of one
year from the date of such Termination of Employment or Termination of
Consultancy, but in no event beyond the expiration of the stated terms of such
Stock Options and Stock Appreciation Rights; provided, however, that, in the
case of Retirement, if the Participant dies within such exercise period, all
unexercised Stock Options and Non-Tandem Stock Appreciation Rights held by such
Participant shall thereafter be exercisable, to the extent to which they were
exercisable at the time of death, for a period of one year from the date of such
death, but in no event beyond the expiration of the stated term of such Stock
Options and Non-Tandem Stock Appreciation Rights.
(ii) Involuntary Termination Without Cause. If a Participant's
Termination of Employment or Termination of Consultancy is by involuntary
termination without Cause, all Stock Options and Stock Appreciation Rights held
by such Participant may be exercised, to the extent exercisable at Termination
of Employment or Termination of Consultancy, by the Participant at any time
within a period of 90 days from the date of such Termination of Employment or
Termination of Consultancy, but in no event beyond the expiration of the stated
term of such Stock Options and Stock Appreciation Rights.
(iii) Voluntary Termination. If a Participant's Termination of
Employment or Termination of Consultancy is voluntary (other than a voluntary
termination described in Section 12.2(a)(iv)(B) below), all Stock Options and
Stock Appreciation Rights held by such Participant may be exercised, to the
extent exercisable at Termination of Employment or Termination of Consultancy,
by the Participant at any time within a period of 30 days from the date of such
Termination of Employment or Termination of Consultancy, but in no event beyond
the expiration of the stated terms of such Stock Options and Stock Appreciation
Rights.
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(iv) Termination for Cause. If a Participant's Termination of
Employment or Termination of Consultancy (A) is for Cause or (B) is a voluntary
termination (as provided in subsection (iii) above) within 90 days after an
event which would be grounds for a Termination of Employment or Termination of
Consultancy for Cause, all Stock Options and Stock Appreciation Rights held by
such Participant shall thereupon terminate and expire as of the date of such
Termination of Employment or Termination of Consultancy.
(b) Rules Applicable to Restricted Stock. Subject to the
applicable provisions of the Restricted Stock Award agreement and this Plan,
upon a Participant's Termination of Employment or Termination of Consultancy for
any reason during the relevant Restriction Period, all Restricted Stock still
subject to restriction will vest or be forfeited in accordance with the terms
and conditions established by the Committee at grant or thereafter.
(c) Rules Applicable to Performance Shares and Performance Units.
Subject to the applicable provisions of the Award agreement and this Plan, upon
a Participant's Termination of Employment or Termination of Consultancy for any
reason during the Performance Period, the Performance Cycle or other period or
restriction as may be applicable for a given Award, the Performance Shares or
Performance Units in question will vest (to the extent applicable and to the
extent permissible under Section 162(m) of the Code) or be forfeited in
accordance with the terms and conditions established by the Committee at grant
or thereafter.
(d) Rules Applicable to Other Stock-Based Awards. Subject to the
applicable provisions of the Award agreement and this Plan, upon a Participant's
Termination of Employment or Termination of Consultancy for any reason during
any period or restriction as may be applicable for a given Award, the Other
Stock-Based Awards in question will vest or be forfeited in accordance with the
terms and conditions established by the Committee at grant or thereafter.
ARTICLE XIII
NON-EMPLOYEE DIRECTOR STOCK OPTION GRANTS
13.1 Stock Options. The terms of this Article XIII shall apply
only to Stock Options granted to Non-Employee Directors.
13.2 Grants. Without further action by the Board or the
stockholders of the Company, each Non- Employee Director shall, subject to the
terms of the Plan, be granted:
(a) Stock Options to purchase 3,000 shares of Common Stock as of
the date the Non-Employee Director begins service as a Non-Employee Director on
the Board, provided that the Non-Employee Director began service on or after the
Effective Date; and
(b) In addition to Stock Options granted pursuant to (a) above,
Stock Options to purchase 1,500 shares of Common Stock as of the August 1 of
each year, provided he or she has not, as of such day, experienced a Termination
of Directorship and provided further that he or she has been a Non-Employee
Director for at least six months as of such August 1 date. Notwithstanding
anything herein to the contrary, no Non-Employee Director shall receive Stock
Options to purchase more than 15,000 shares of Common Stock under this Plan
including any Stock Options awarded to the Non-Employee Director under the 1993
Plan, as defined under Section 4.4).
13.3 Non-Qualified Stock Options. Stock Options granted under this
Article XIII shall be Non-Qualified Stock Options.
13.4 Terms of Stock Options. Stock Options granted under this
Article XIII shall be subject to the following terms and conditions, and shall
be in such form and contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Board shall deem desirable:
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(a) Stock Option Price. The Stock Option price per share of Common
Stock purchasable under a Stock Option shall equal 100% of the Fair Market Value
of the share of Common Stock at the time of grant.
(b) Stock Option Term. The term of each Stock Option shall be ten
(10) years.
(c) Exercisability. Stock Options granted to Non-Employee
Directors pursuant to Section 13.2 shall vest and become exercisable on the
first anniversary of date of grant, provided that the Stock Option may become
vested only during the continuance of his or her service as a director of the
Company.
(d) Method of Exercise. Subject to whatever waiting period
provisions apply under subsection (c) above, Stock Options may be exercised in
whole or in part at any time and from time to time during the Stock Option term,
by giving written notice of exercise to the Company specifying the number of
shares to be purchased. Such notice shall be accompanied by payment in full of
the purchase price as follows: (i) in cash or by check, bank draft or money
order payable to the Company; (ii) if the Common Stock is traded on a national
securities exchange, through a "cashless exercise" procedure whereby the
Participant delivers irrevocable instructions to a broker to deliver promptly to
the Company an amount equal to the purchase price; or (iii) such other
arrangement for the satisfaction of the purchase price, as the Board may accept.
If and to the extent determined by the Board in its sole discretion at or after
grant, payment in full or in part may also be made in the form of Common Stock
owned by the Participant for at least 6 months (or such other period as may be
required to avoid an accounting charge against the Company's earnings) (and for
which the Participant has good title free and clear of any liens and
encumbrances) based on the Fair Market Value of the Common Stock on the payment
date. No shares of Common Stock shall be issued until payment, as provided
herein, therefor has been made or provided for.
(e) Form, Modification, Extension and Renewal of Stock Options.
Subject to the terms and conditions and within the limitations of the Plan, a
Stock Option shall be evidenced by such form of agreement or grant as is
approved by the Board, and the Board may modify, extend or renew outstanding
Stock Options granted under the Plan (provided that the rights of a Participant
are not reduced without his consent).
13.5 Termination of Directorship. The following rules apply with
regard to Stock Options upon the Termination of Directorship:
(a) Termination of Directorship by Reason of Death, Disability or
Otherwise Ceasing to be a Director. Except as otherwise provided herein, upon
the Termination of Directorship by reason of death, disability, resignation,
failure to stand for reelection or failure to be reelected or otherwise, all
outstanding Stock Options exercisable and not exercised shall remain exercisable
to the extent exercisable on such date of Termination of Directorship by the
Participant or, in the case of death, by the Participant's estate or by the
person given authority to exercise such Stock Options by his or her will or by
operation of law, at any time within a period of one year from the date of such
Termination of Directorship, but in no event beyond the expiration of the stated
term of such Stock Option.
(b) Cancellation of Options. Except as provided in (a) above, no
Stock Options that were not exercisable as of the date of Termination of
Directorship shall thereafter become exercisable upon a Termination of
Directorship for any reason or no reason whatsoever, and such Stock Options
shall terminate and become null and void upon a Termination of Directorship. If
a Non-Employee Director's Termination of Directorship is for Cause, all Stock
Options held by the Non-Employee Director shall thereupon terminate and expire
as of the date of termination.
13.6 Acceleration of Exercisability. All Stock Options granted to
Non-Employee Directors and not previously exercisable shall become fully
exercisable immediately upon a Change in Control (as defined in Section 14.2).
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13.7 Changes.
(a) The Awards to a Non-Employee Director shall be subject to
Sections 4.2(a), (b) and (c) of the Plan and this Section 13.7, but shall not be
subject to Section 4.2(d).
(b) If the Company shall not be the surviving corporation in any
merger or consolidation, or if the Company is to be dissolved or liquidated,
then, unless the surviving corporation assumes the Stock Options or substitutes
new Stock Options which are determined by the Board in its sole discretion to be
substantially similar in nature and equivalent in terms and value for Stock
Options then outstanding, upon the effective date of such merger, consolidation,
liquidation or dissolution, any unexercised Stock Options shall expire without
additional compensation to the holder thereof; provided that, the Board shall
deliver notice to each Non-Employee Director at least 30 days prior to the date
of consummation of such merger, consolidation, dissolution or liquidation which
would result in the expiration of the Stock Options and during the period from
the date on which such notice of termination is delivered to the consummation of
the merger, consolidation, dissolution or liquidation, such Participant shall
have the right to exercise in full, effective as of such consummation, all Stock
Options that are then outstanding (without regard to limitations on exercise
otherwise contained in the Stock Options) but contingent on occurrence of the
merger, consolidation, dissolution or liquidation, and, provided that, if the
contemplated transaction does not take place within a 90 day period after giving
such notice for any reason whatsoever, the notice, accelerated vesting and
exercise shall be null and void and, if and when appropriate, new notice shall
be given as aforesaid.
ARTICLE XIV
CHANGE IN CONTROL PROVISIONS
14.1 Benefits. In the event of a Change in Control of the Company,
except as otherwise provided by the Committee upon the grant of an Award, the
Participant shall be entitled to the following benefits:
(a) Except to the extent provided in the applicable Award
agreement, the Participant's employment agreement with the Company or an
Affiliate, as approved by the Committee, or other written agreement approved by
the Committee (as such agreement may be amended from time to time), (i) Awards
granted and not previously exercisable shall become exercisable upon a Change in
Control, (ii) restrictions to which any shares of Restricted Stock granted prior
to the Change in Control are subject shall lapse upon a Change in Control, and
(iii) the conditions required for vesting of any unvested Performance Units
and/or Performance Shares shall be deemed to be satisfied upon a Change in
Control.
(b) The Committee, in its sole discretion, may provide for the
purchase of any Stock Option by the Company or an Affiliate for an amount of
cash equal to the excess of the Change in Control Price (as defined below) of
the shares of Common Stock covered by such Stock Options, over the aggregate
exercise price of such Stock Options. For purposes of this Section 14.1, Change
in Control Price shall mean the higher of (i) the highest price per share of
Common Stock paid in any transaction related to a Change in Control of the
Company, or (ii) the highest Fair Market Value per share of Common Stock at any
time during the sixty (60) day period preceding a Change in Control.
(c) Notwithstanding anything to the contrary herein, unless the
Committee provides otherwise at the time a Stock Option is granted hereunder or
thereafter, no acceleration of exercisability shall occur with respect to such
Stock Options if the Committee reasonably determines in good faith, prior to the
occurrence of the Change in Control, that the Stock Options shall be honored or
assumed, or new rights substituted therefor (each such honored, assumed or
substituted stock option hereinafter called an "Alternative Option"), by a
Participant's employer (or the parent or a subsidiary of such employer)
immediately following the Change in Control, provided that any such Alternative
Option must meet the following criteria:
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(i) The Alternative Option must be based on stock which is traded
on an established securities market, or which will be so traded within 30 days
of the Change in Control;
(ii) The Alternative Option must provide such Participant with
rights and entitlements substantially equivalent to or better than the rights,
terms and conditions applicable under such Stock Option, including, but not
limited to, an identical or better exercise schedule; and
(iii) The Alternative Option must have economic value
substantially equivalent to the value of such Stock Option (determined at the
time of the Change in Control).
For purposes of Incentive Stock Options, any assumed or
substituted Stock Option shall comply with the requirements of Treasury
Regulation Section 1.425-1 (and any amendments thereto).
(d) Notwithstanding anything else herein, the Committee may, in
its sole discretion, provide for accelerated vesting of an Award or accelerated
lapsing of restrictions on shares of Restricted Stock at any time.
14.2 Change in Control. A "Change in Control" shall be deemed to
have occurred:
(a) Upon any "person" as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, any trustee or other
fiduciary holding securities under any employee benefit plan of the Company, or
any company owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of Common Stock of the
Company), becoming the owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 30% or more of
the combined voting power of the Company's then outstanding securities;
(b) During any period of two (2) consecutive years, individuals
who at the beginning of such period constitute the Board of Directors, and any
new director (other than a director designated by a person who has entered into
an agreement with the Company to effect a transaction described in paragraph
(a), (c), or (d) of this section) or a director whose initial assumption of
office occurs as a result of either an actual or threatened election contest (as
such term is used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a person other than the Board of Directors of the Company
whose election by the Board of Directors or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of the
two-year period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority of the Board of
Directors;
(c) Upon a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50% of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; provided, however,
that a merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no person (other than those covered by
the exceptions in (a) above) acquires more than 50% of the combined voting power
of the Company's then outstanding securities shall not constitute a Change in
Control of the Company; or
(d) Upon the stockholders of the Company approval of a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets other than
the sale or disposition of all or substantially all of the assets of the Company
to a person or persons who beneficially own, directly or indirectly, at least
50% or more of the combined voting power of the outstanding voting securities of
the Company at the time of the sale.
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ARTICLE XV
TERMINATION OR AMENDMENT OF PLAN
Notwithstanding any other provision of this Plan, the Board or the
Committee may at any time, and from time to time, amend, in whole or in part,
any or all of the provisions of this Plan (including any amendment deemed
necessary to ensure that the Company may comply with any regulatory requirement
referred to in Article XVII), or suspend or terminate it entirely, retroactively
or otherwise; provided, however, that, unless otherwise required by law or
specifically provided herein, the rights of a Participant with respect to Awards
granted prior to such amendment, suspension or termination, may not be impaired
without the consent of such Participant and, provided further, without the
approval of the shareholders of the Company in accordance with the laws of the
State of Delaware, to the extent required by the applicable provisions of Rule
16b-3 or Section 162(m) of the Code, or, to the extent applicable to Incentive
Stock Options, Section 422 of the Code, no amendment may be made which would
(i) increase the aggregate number of shares of Common Stock that may be issued
under this Plan; (ii) increase the maximum individual Participant limitations
for a fiscal year under Section 4.1(b); (iii) change the classification of
employees or Consultants eligible to receive Awards under this Plan;
(iv) decrease the minimum option price of any Stock Option or Stock Appreciation
Right; (v) extend the maximum option period under Section 6.3; (vi) materially
alter the Performance Criteria for the Award of Restricted Stock, Performance
Units or Performance Shares as set forth in Exhibit A; or (vii) require
stockholder approval in order for this Plan to continue to comply with the
applicable provisions of Section 162(m) of the Code or, to the extent applicable
to Incentive Stock Options, Section 422 of the Code. In no event may this Plan
be amended without the approval of the stockholders of the Company in accordance
with the applicable laws of the State of Delaware to increase the aggregate
number of shares of Common Stock that may be issued under this Plan, decrease
the minimum exercise price of any Stock Option or Stock Appreciation Right, or
to make any other amendment that would require stockholder approval under the
rules of any exchange or system on which the Company's securities are listed or
traded at the request of the Company.
The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but, subject to Article IV above or as otherwise
specifically provided herein, no such amendment or other action by the Committee
shall impair the rights of any holder without the holder's consent.
ARTICLE XVI
UNFUNDED PLAN
16.1 Unfunded Status of Plan. This Plan is intended to constitute
an "unfunded" plan for incentive and deferred compensation. With respect to any
payments as to which a Participant has a fixed and vested interest but which are
not yet made to a Participant by the Company, nothing contained herein shall
give any such Participant any rights that are greater than those of a general
creditor of the Company.
ARTICLE XVII
GENERAL PROVISIONS
17.1 Legend. The Committee may require each person receiving
shares pursuant to an Award under this Plan to represent to and agree with the
Company in writing that the Participant is acquiring the shares without a view
to distribution thereof. In addition to any legend required by this Plan, the
certificates for such shares may include any legend which the Committee deems
appropriate to reflect any restrictions on Transfer.
All certificates for shares of Common Stock delivered under this
Plan shall be subject to such stock transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations and other
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requirements of the Securities and Exchange Commission, any stock exchange upon
which the Stock is then listed or any national securities association system
upon whose system the Stock is then quoted, any applicable Federal or state
securities law, and any applicable corporate law, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
17.2 Other Plans. Nothing contained in this Plan shall prevent the
Board from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases.
17.3 No Right to Employment/Consultancy. Neither this Plan nor the
grant of any Award hereunder shall give any Participant or other employee or
Consultant any right with respect to continuance of employment or Consultancy by
the Company or any Affiliate, nor shall they be a limitation in any way on the
right of the Company or any Affiliate by which an employee is employed or a
Consultant is retained to terminate his employment or Consultancy at any time.
17.4 Withholding of Taxes. The Company shall have the right to
deduct from any payment to be made to a Participant, or to otherwise require,
prior to the issuance or delivery of any shares of Common Stock or the payment
of any cash hereunder, payment by the Participant of, any Federal, state or
local taxes required by law to be withheld. Upon the vesting of Restricted
Stock, or upon making an election under Code Section 83(b), a Participant shall
pay all required withholding to the Company.
Any such withholding obligation with regard to any Participant may
be satisfied, subject to the consent of the Committee, by reducing the number of
shares of Common Stock otherwise deliverable or by delivering shares of Common
Stock already owned. Any fraction of a share of Common Stock required to satisfy
such tax obligations shall be disregarded and the amount due shall be paid
instead in cash by the Participant.
17.5 Listing and Other Conditions.
(a) As long as the Common Stock is listed on a national securities
exchange or system sponsored by a national securities association, the issue of
any shares of Common Stock pursuant to an Award shall be conditioned upon such
shares being listed on such exchange or system. The Company shall have no
obligation to issue such shares unless and until such shares are so listed, and
the right to exercise any Stock Option with respect to such shares shall be
suspended until such listing has been effected.
(b) If at any time counsel to the Company shall be of the opinion
that any sale or delivery of shares of Common Stock pursuant to an Award is or
may in the circumstances be unlawful or result in the imposition of excise taxes
on the Company under the statutes, rules or regulations of any applicable
jurisdiction, the Company shall have no obligation to make such sale or
delivery, or to make any application or to effect or to maintain any
qualification or registration under the Securities Act or otherwise with respect
to shares of Common Stock or Awards, and the right to exercise any Stock Option
shall be suspended until, in the opinion of said counsel, such sale or delivery
shall be lawful or will not result in the imposition of excise taxes on the
Company.
(c) Upon termination of any period of suspension under this
Section 17.5, any Award affected by such suspension which shall not then have
expired or terminated shall be reinstated as to all shares available before such
suspension and as to shares which would otherwise have become available during
the period of such suspension, but no such suspension shall extend the term of
any Stock Option.
17.6 Governing Law. This Plan shall be governed and construed in
accordance with the laws of the State of Delaware (regardless of the law that
might otherwise govern under applicable Delaware principles of conflict of
laws).
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17.7 Construction. Wherever any words are used in this Plan in the
masculine gender they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and wherever any words
are used herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply.
17.8 Other Benefits. No Award payment under this Plan shall be
deemed compensation for purposes of computing benefits under any retirement plan
of the Company or its subsidiaries nor affect any benefits under any other
benefit plan now or subsequently in effect under which the availability or
amount of benefits is related to the level of compensation.
17.9 Costs. The Company shall bear all expenses included in
administering this Plan, including expenses of issuing Common Stock pursuant to
any Awards hereunder.
17.10 No Right to Same Benefits. The provisions of Awards need not
be the same with respect to each Participant, and such Awards to individual
Participants need not be the same in subsequent years.
17.11 Death/Disability. The Committee may in its discretion
require the transferee of a Participant to supply it with written notice of the
Participant's death or Disability and to supply it with a copy of the will (in
the case of the Participant's death) or such other evidence as the Committee
deems necessary to establish the validity of the transfer of an Award. The
Committee may also require that the agreement of the transferee to be bound by
all of the terms and conditions of this Plan.
17.12 Section 16(b) of the Exchange Act. All elections and
transactions under this Plan by persons subject to Section 16 of the Exchange
Act involving shares of Common Stock are intended to comply with any applicable
exemptive condition under Rule 16b-3. The Committee may establish and adopt
written administrative guidelines, designed to facilitate compliance with
Section 16(b) of the Exchange Act, as it may deem necessary or proper for the
administration and operation of this Plan and the transaction of business
thereunder.
17.13 Severability of Provisions. If any provision of this Plan
shall be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provisions hereof, and this Plan shall be construed
and enforced as if such provisions had not been included.
17.14 Headings and Captions. The headings and captions herein are
provided for reference and convenience only, shall not be considered part of
this Plan, and shall not be employed in the construction of this Plan.
ARTICLE XVIII
EFFECTIVE DATE OF PLAN
The Plan shall become effective upon adoption by the Board (i.e.,
October 19, 1999), subject to the approval of this Plan by the stockholders of
the Company in accordance with the requirements of the laws of the State of
Delaware or such later date as provided in the adopting resolution.
ARTICLE XIX
TERM OF PLAN
No Award shall be granted pursuant to this Plan on or after the
tenth anniversary of the earlier of the date this Plan is adopted or the date of
stockholder approval, but Awards granted prior to such tenth anniversary may
extend beyond that date.
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EXHIBIT A
PERFORMANCE CRITERIA
Performance Goals established for purposes of conditioning the grant of
an Award of Restricted Stock based on performance or the vesting of
performance-based Awards of Restricted Stock, Performance Units and/or
Performance Shares shall be based on one or more of the following performance
criteria ("Performance Criteria"): (i) the attainment of certain target levels
of, or a specified percentage increase in, revenues, income before income taxes
and extraordinary items, net income, earnings before income tax, earnings before
interest, taxes, depreciation and amortization or a combination of any or all of
the foregoing; (ii) the attainment of certain target levels of, or a percentage
increase in, after-tax or pre-tax profits including, without limitation, that
attributable to continuing and/or other operations; (iii) the attainment of
certain target levels of, or a specified increase in, operational cash flow;
(iv) the achievement of a certain level of, reduction of, or other specified
objectives with regard to limiting the level of increase in, all or a portion
of, the Company's bank debt or other long-term or short-term public or private
debt or other similar financial obligations of the Company, which may be
calculated net of such cash balances and/or other offsets and adjustments as may
be established by the Committee; (v) the attainment of a specified percentage
increase in earnings per share or earnings per share from continuing operations;
(vi) the attainment of certain target levels of, or a specified increase in
return on capital employed or return on invested capital; (vii) the attainment
of certain target levels of, or a percentage increase in, after-tax or pre-tax
return on stockholders' equity; (viii) the attainment of certain target levels
of, or a specified increase in, economic value added targets based on a cash
flow return on investment formula; (ix) the attainment of certain target levels
in the fair market value of the shares of the Company's common stock; and (x)
the growth in the value of an investment in the Company's common stock assuming
the reinvestment of dividends. For purposes of item (i) above, "extraordinary
items" shall mean all items of gain, loss or expense for the fiscal year
determined to be extraordinary or unusual in nature or infrequent in occurrence
or related to a corporate transaction (including, without limitation, a
disposition or acquisition) or related to a change in accounting principle, all
as determined in accordance with standards established by Opinion No. 30 of the
Accounting Principles Board.
In addition, such Performance Criteria may be based upon the attainment
of specified levels of Company (or subsidiary, division or other operational
unit of the Company) performance under one or more of the measures described
above relative to the performance of other corporations. To the extent permitted
under Code Section 162(m), but only to the extent permitted under Code Section
162(m) (including, without limitation, compliance with any requirements for
stockholder approval), the Committee may: (i) designate additional business
criteria on which the Performance Criteria may be based or (ii) adjust, modify
or amend the aforementioned business criteria.
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Please date, sign and mail yor
proxy card back as soon as possible!
Annual Meeting of Stockholders
COMTECH TELECOMMUNICATIONS CORP.
December 14, 1999
Please Detach and Mail in the Envelope Provided
A |X| Please mark your votes as in this example.
Proposal 1
FOR WITHHELD Nominees: Gerard R. Nocila
1. Election of Directors |_| |_| John B. Payne
For nominees listed at right (except as marked to the contrary below.)
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
Proposal 2.
2. Approval of amendment to increase |_| |_| |_|
authorized shares of Common Stock.
Proposal 3.
3. Approval of 2000 Stock Option Plan. |_| |_| |_|
Proposal 4.
4. Ratification of selection of KPMG LLP as |_| |_| |_|
auditors.
This proxy will be voted or withheld from being voted in accordance with the
instructions specified. WHERE NO CHOICE IS SPECIFIED, THIS PROXY WILL CONFER
DISCRETIONARY AUTHORITY AND WILL BE VOTED FOR THE NOMINEES LISTED AT LEFT
AND FOR APPROVAL OF PROPOSALS 2, 3 AND 4.
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
______________________ _________________________________ Dated: _________, 1999
Please SIGN HERE SIGNATURE (IF HELD JOINTLY)
NOTE: Please sign exactly as name appears hereon. When signing as executor,
administrator, attorney, trustee or guardian, please give your full title
as such. If a corporation, please sign in full corporation name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person. If a joint tenency, please have
both tenants sign.
<PAGE>
COMTECH TELECOMMUNICATIONS CORP.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints Fred Kornberg and J. Preston Windus, Jr.
and each of them with full power of substitution, proxies to vote at the Annual
Meeting of Stockholders of Comtech Telecommunications Corp. (the "Company") to
be held at the Marriot Hotel, 1350 Old Walt Whitman Road, Melville, New York
11747 on December 14, 1999 at 10:00 a.m., local time, and at any adjournment or
adjournments thereof, hereby revoking any proxies heretofore given, to vote all
shares of Common Stock of the Company held or owned by the undersigned as
directed on the reverse side of this proxy card, and in their discretion upon
such other matters as may come before the meeting.
This proxy will be voted as specified and, unless otherwise specified in the
spaces provided, this proxy will be voted FOR the election of directors and
FOR the proposals referred to in Items 2, 3 and 4 hereon.
(To be Signed on Reverse Side.)
