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EXHIBIT 10.18
ANDREW CORPORATION
MANAGEMENT INCENTIVE PROGRAM
As approved by the Board of Directors on November 18, 1999
and by the Stockholders on February 8, 2000
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1. Purposes of the Program...................................................1
2. Definitions...............................................................1
3. Administration............................................................2
3.1. Committee............................................................2
3.2. Committee Authority..................................................3
4. Common Stock Subject to the Program; Adjustments..........................3
4.1. Shares Authorized....................................................3
4.2. Adjustments..........................................................3
5. Long-Term Incentives......................................................3
5.1. Grants of Long-Term Incentives.......................................3
5.2. Stock Awards.........................................................4
5.3. Options..............................................................4
5.4. Performance Units....................................................5
5.5. Termination of Employment............................................5
6. Change-in-Control.........................................................6
7. General Provisions........................................................6
7.1. No Employment Rights Conferred.......................................6
7.2. Acceptance of Program................................................6
7.3. Withholding..........................................................6
7.4. Non-Transferability; Exceptions......................................7
7.5. No Segregation; No Property Interest.................................7
7.6. Certain Forfeitures..................................................7
7.7. Governing Law........................................................7
8. Amendment or Termination of Program.......................................7
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ANDREW CORPORATION
MANAGEMENT INCENTIVE PROGRAM
1. PURPOSES OF THE PROGRAM
The purposes of the Management Incentive Program are to assist the Company
in attracting and retaining individuals of outstanding competence, and to
provide performance incentives for officers, executives and other key personnel.
2. DEFINITIONS
"Beneficiary": A person or entity (including a trust or the estate of the
Key Employee) designated by the Key Employee to succeed to any rights that he or
she may have in Long-Term Incentives at the time of death. No such designation,
or any revocation or change thereof, shall be effective unless made in writing
by the Key Employee on a form provided by the Company and delivered to the
Company prior to the Key Employee's death. If, on the death of a Key Employee,
there is no living person or entity in existence so designated, the term
"Beneficiary" shall mean the legal representative of the Key Employee's estate.
"Board": The Board of Directors of the Company.
"Change-in-Control": Any of the following: (i) the merger or consolidation
of the Company with any other corporation following which the holders of Common
Stock immediately prior thereto hold less than 60% of the outstanding common
stock of the surviving or resulting entity; (ii) the sale of all or
substantially all of the assets of the Company to any person or entity other
than a wholly owned subsidiary; (iii) any person or group of persons acting in
concert, or any entity, becomes the beneficial owner, directly or indirectly, of
more than 20% of the outstanding Common Stock; or (iv) those individuals who, as
of the close of the most recent annual meeting of the Company's stockholders,
are members of the Board (the "Existing Directors") cease for any reason to
constitute more than 50% of the Board. For purposes of the foregoing, a new
director will be considered an Existing Director if the election, or nomination
for election by the Company's stockholders, of such new director was approved by
a vote of a majority of the Existing Directors. No individual shall be
considered an Existing Director if such individual initially assumed office as a
result of either an actual or threatened election contest subject to Rule 14a-11
under the Securities Exchange Act of 1934 or other actual or threatened
solicitation of proxies by or on behalf of anyone other than the Board,
including by reason of any agreement intended to avoid or settle any election
proxy contest.
"Committee": The Compensation Committee of the Board or such other
committee designated by the Board to administer the Program pursuant to the
provisions of Section 3.1.
"Code": The Internal Revenue Code of 1986, as amended.
"Common Stock": The common stock, $.01 par value, of the Company or such
other class of shares or other securities as may be applicable pursuant to the
provisions of Section 4.
"Company": Andrew Corporation, a Delaware corporation, and its successors
and assigns.
"Disability": Eligible for Social Security disability benefits or
disability benefits under the Company's long-term disability plan, based upon a
determination by the Committee that the condition arose prior to termination of
employment.
"Incentive Stock Option": A form of stock option that is defined in Code
Section 422.
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"Key Employee": An employee of the Company or of a subsidiary thereof
regularly employed on a full-time basis, including an officer or director if he
or she is such an employee, who, in the opinion of the Committee, is in a
position to make significant contributions to the earnings of the Company.
"Long-Term Incentive": An award in one of the forms provided for in Section
5.
"Market Value": As of any date, the average of the high and low sale prices
of the Common Stock on such date as reported on the Nasdaq National Market
system or, if no such sales were reported for such date, on the next preceding
date for which such sales were reported.
"Option": An option to purchase shares of Common Stock granted under
Section 5.3.
"Performance Unit": A contingent right granted pursuant to Section 5.4 to
receive a cash award or shares of Common Stock.
"Program": This Management Incentive Program, as from time to time amended.
"Restricted Stock": Shares of Common Stock subject to restrictions.
"Retirement": The termination of a Key Employee's employment with the
Company and its subsidiaries for retirement purposes if such termination (i)
occurs on or after his or her sixty-fifth birthday; or (ii) occurs on or after
his or her fifty-fifth birthday with the written consent of the Chief Executive
Officer of the Company or, in the case of the Chief Executive Officer's
retirement, with the consent of the Committee.
"Stock Award": An award granted pursuant to Section 5.2.
3. ADMINISTRATION
3.1. Committee. The Program shall be administered by a committee of three
or more persons selected by the Board from its own membership, which shall be
the Compensation Committee of the Board unless the Board designates another
committee. No person shall be appointed to or shall serve as a member of the
Committee unless at the time of such appointment and service he or she shall be
a "non-employee director," as defined in Rule 16b-3 under the Securities
Exchange Act of 1934. To the extent required to comply with Code Section 162(m)
and the related regulations, each member of the Committee shall qualify as an
"outside director" as defined therein.
3.2. Committee Authority. The Committee shall have full power and authority
to (i) interpret and administer the Program, (ii) adopt rules and regulations
for its administration, (iii) designate the Key Employees to receive grants
under the Program, (iv) determine the amount to be granted to each Key Employee
and (v) determine the conditions, form, manner, time and terms of payment or
grants of Long-Term Incentives. All action taken by the Committee shall be
final, binding and conclusive on the Company, all Key Employees and other
employees, their Beneficiaries, successors and assigns, and on all other persons
claiming under or through any of them.
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4. COMMON STOCK SUBJECT TO THE PROGRAM; ADJUSTMENTS
4.1. Shares Authorized. Subject to Section 4.2, the shares of Common Stock
that may be issued or transferred under the Program shall not exceed 4,000,000.
Such shares may be authorized but unissued shares of Common Stock, shares of
treasury stock or shares purchased for the Program. Any shares of Common Stock
withheld or surrendered to pay withholding taxes pursuant to Section 7.3 or
surrendered in full or partial payment of the exercise price of an Option
pursuant to Section 5.3 shall be added to the shares of Common Stock available
for issuance or transfer. If any shares of Common Stock subject to Long-Term
Incentives are not issued or transferred for any reason, or if any such shares
are issued or transferred and are subsequently reacquired by the Company because
of a Key Employee's failure to comply with the terms of such Long-Term
Incentive, the shares not so issued or transferred or reacquired shall not be
charged against the maximum limitation set forth above and may again be made
subject to Long-Term Incentives.
4.2. Adjustments. The Committee shall make or provide for appropriate
adjustments in the number and type of shares to be made available, the number of
shares allotted to an individual and the option price per share, to give effect
to any changes in capitalization or classification, including stock splits,
stock dividends, offering of rights to subscribe or convert to shares of Common
Stock, or any merger, consolidation or other reorganization.
5. LONG-TERM INCENTIVES
5.1. Grants of Long-Term Incentives.
(a) Long-Term Incentives may be granted, in whole or in part, in one or
more of the following forms:
(i) A Stock Award in accordance with Section 5.2;
(ii) An Option in accordance with Section 5.3; or
(iii) A Performance Unit in accordance with Section 5.4.
(b) The terms of any grant of Long-Term Incentives and the number of
shares of Common Stock or Performance Units subject to such grant
shall be determined by the Committee; provided that, the maximum
annual amount payable in cash to any Key Employee for his or her
Performance Units shall not exceed 200% of the Key Employee's average
base salary over the applicable performance period, and the maximum
annual number of shares of Common Stock that may be issued or
transferred to any Key Employee pursuant to Long-Term Incentives shall
not exceed 20% of the total shares authorized to be issued or
transferred pursuant to Section 4.1.
(c) The aggregate Market Value (determined on the date the Option is
granted) of the Common Stock for which any Key Employee may be granted
Incentive Stock Options in the calendar year in which such Options are
first exercisable shall not exceed $100,000.
(d) No more than 10% of the shares of Common Stock authorized to be issued
or transferred pursuant to Section 4.1 may be used for grants of Stock
Awards.
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5.2. Stock Awards. Long-Term Incentives granted as Stock Awards may be in
the form of Restricted Stock or a commitment to issue or transfer Common Stock
and shall contain such terms and conditions as the Committee determines,
including forfeiture provisions and restrictions on transfer. Upon the issuance
or transfer of Common Stock pursuant to a Stock Award, the Key Employee shall be
entitled to receive dividends, to vote and to exercise all other rights of a
stockholder as to such Common Stock except to the extent otherwise specifically
provided in the Stock Award. If the Committee intends the Restricted Stock
granted to any Key Employee to satisfy the performance-based compensation
exemption under Code Section 162(m) ("Qualifying Restricted Stock"), the extent
to which the Qualifying Restricted Stock will vest shall be based on the
attainment of performance goals established in writing prior to commencement of
the performance period by the Committee from the list in Section 5.4(b). The
level of attainment of such performance goals and the corresponding number of
shares of vested Qualifying Restricted Stock shall be certified by the Committee
in writing pursuant to Code Section 162(m) and the related regulations.
5.3. Options. Long-Term Incentives granted as Options shall be subject to
the following provisions:
(a) The Option price per share of Common Stock shall be determined by the
Committee, but shall not be less than the Market Value of a share of
Common Stock on the date the Option is granted. The Option price may
not be changed after the grant date.
(b) The expiration date of each Option shall be established by the
Committee at the time the Option is granted. Incentive Stock Options
may not be granted after November 17, 2009 and must expire not later
than ten years from their grant date.
(c) An Option shall be considered exercised on the date written notice is
mailed (postage prepaid) or delivered to the Secretary of the Company
advising of the exercise of a particular Option and transmitting
payment of the Option price for the shares involved. Payment may be
made in cash or by the surrender of Common Stock that has a Market
Value equal to the exercise price, or by a combination thereof;
provided that, Common Stock previously acquired from the Company may
not be surrendered unless it has been held for at least six months. No
Common Stock shall be issued or transferred upon exercise of an Option
until full payment therefor has been made.
5.4. Performance Units. Long-Term Incentives granted as Performance Units
shall be subject to the following provisions:
(a) The performance period for the attainment of performance goals shall
be determined by the Committee.
(b) Prior to the commencement of the performance period, the Committee
shall establish in writing an initial target value or number of shares
of Common Stock for the Performance Units to be granted to a Key
Employee, the duration of the performance period, and the specific
performance goals to be attained, including performance levels at
which various percentages of Performance Units will be earned and the
minimum level of attainment to be met to earn any portion of the
Performance Units. If the Committee intends the Performance Units
granted to any Key Employee to satisfy the performance-based
compensation exemption under Code Section 162(m) ("Qualifying
Performance Units"), the performance goals shall be based on one or
more of the following objective criteria: generation of free cash,
earnings per share, revenue, market share, stock price, cash flow,
earnings, operating expense ratios, return on sales, return on
capital, return on assets, return on investment, productivity,
delivery performance, quality, or level of improvement in any of the
foregoing. After the end of a performance period, the Committee shall
certify in writing the extent to which performance goals have been met
and shall compute the payout to be received by each Key Employee. The
Committee may not adjust upward the amount payable under Qualifying
Performance Units to any Key Employee who is a covered employee under
Code Section 162(m).
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5.5. TERMINATION OF EMPLOYMENT
(a) Unless determined otherwise by the Committee, and subject to Section 6
below, all unvested Options and Stock Awards and all unpaid
Performance Units shall be forfeited upon termination of employment
for reasons other than Retirement, Disability or death.
(b) Subject to Section 7.6, upon termination of employment by reason of
Retirement, Disability or death, all unvested Options and Stock Awards
shall become fully vested and any Performance Units shall become
payable to the extent determined by the Committee.
(c) Upon termination by reason of Retirement or Disability, Options shall
be exercisable until not later than the earlier of three years after
the termination date or the expiration of their term. Upon the death
of a Key Employee, while employed by the Company or after terminating
by reason of Retirement or Disability, Options shall be exercisable by
the Key Employee's Beneficiary not later than the earliest of one year
after the date of death, three years after the date of termination due
to Retirement or Disability, or the expiration of their term.
(d) Upon termination for any reason other than Retirement, Disability or
death, any Options vested prior to such termination may be exercised
during the three-month period commencing on the termination date, but
not later than the expiration of their term. If a Key Employee dies
during such post-employment period, such Key Employee's Beneficiary
may exercise the Options (to the extent they were vested and
exercisable on the date of employment termination), but not later than
the earlier of one year after the date of death or the expiration of
their term.
6. CHANGE-IN-CONTROL
In the event of a Change-in-Control, all Long-Term Incentives shall vest
and the maximum value of each Key Employee's Performance Units, prorated for the
number of full months of service completed by the Key Employee during the
applicable performance period, shall immediately be paid in cash to the Key
Employee. Options that become vested upon a Change-in-Control may be exercised
only during the 90 days immediately thereafter.
7. GENERAL PROVISIONS
7.1. No Employment Rights Conferred. Neither the adoption of this Program
nor its operation, nor any booklet or other document describing or referring to
this Program, or any part thereof, shall confer upon any employee any right to
continue in the employ of the Company or any subsidiary thereof or shall in any
way affect the right and power of the Company or any subsidiary to dismiss or
otherwise terminate the employment of any employee at any time for any reason
with or without cause.
7.2. Acceptance of Program. By accepting any benefits under the Program,
each Key Employee and each person claiming under or through a Key Employee shall
be conclusively deemed to have indicated his or her acceptance of all provisions
of the Program and his or her consent to any action or decision under the
Program by the Company, the Board or the Committee.
7.3. Withholding. The Company may withhold, or allow a Key Employee to
remit to the Company, any Federal, state or local taxes applicable to any grant,
exercise, vesting, distribution or other event giving rise to income tax
liability with respect to a Long-Term Incentive. In order to satisfy all or a
portion of the income tax liability that arises with respect to a Long-Term
Incentive, a Key Employee may elect to surrender Common Stock held by the Key
Employee or to have the Company withhold Common Stock that would otherwise be
issued pursuant to the exercise of an Option or in connection with any other
Long-Term Incentive, but any withheld Common Stock and any surrendered Common
Stock held by the Key Employee for less than six months, may be used only to
satisfy the minimum tax withholding required by law.
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7.4. Non-Transferability; Exceptions. Except as hereinafter provided, no
Long-Term Incentive may be assigned, transferred or subjected to any
encumbrance, pledge or charge of any nature; provided that a Key Employee may
designate a Beneficiary to receive a Long-Term Incentive in the event of the Key
Employee's death. Under such procedures as the Committee may establish,
Long-Term Incentives may be transferred by gift to members of a Key Employee's
immediate family (i.e., children, grandchildren and spouse) or to one or more
trusts for their benefit or to partnerships in which such family members and the
Key Employee are the only partners, provided that (i) any agreement governing
such Long-Term Incentives expressly so permits or is amended to so permit, (ii)
the Key Employee does not receive any consideration for such transfer, and (iii)
the Key Employee provides such documentation or information concerning any such
transfer or transferee as the Committee may reasonably request. Any transferred
Long-Term Incentives shall be subject to the same terms and conditions that
applied immediately prior to their transfer. In no event shall such transfer
rights apply to any Incentive Stock Option.
7.5. No Segregation; No Property Interest. Nothing in this Program shall
require the Company to segregate or set aside any funds or other property for
the purpose of paying a Long-Term Incentive. No Key Employee, Beneficiary or
other person shall have any right, title or interest in any amount awarded under
the Program prior to payment thereof, or in any property of the Company or any
affiliated corporation.
7.6. Certain Forfeitures. Except for a Long-Term Incentive that has vested
pursuant to Section 6, the Committee may declare a Long-Term Incentive, whether
vested or unvested, to be forfeited if the Key Employee or former Key Employee
competes with the Company or engages in conduct that, in the opinion of the
Committee, adversely affects the Company.
7.7. Governing Law. The Program, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Illinois.
8. AMENDMENT OR TERMINATION OF PROGRAM
This Program may be amended or terminated by the Board at any time,
provided that, without the approval of the stockholders of the Company, no
amendment that increases the maximum number of shares of Common Stock that may
be subject to Long-Term Incentives shall be effective. No amendment or
termination of the Program or any portion thereof shall, without the consent of
a Key Employee, adversely affect any award previously made or any other rights
previously granted to such Key Employee.
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