EMS TECHNOLOGIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 28, 2000
Notice is hereby given that the Annual Meeting of Shareholders
of EMS Technologies, Inc. (the 'Company') will be held at 4:00 p.m.
local Atlanta time on April 28, 2000 at the Atlanta Marriott
Norcross, 475 Technology Parkway, N.W., Norcross, Georgia, for the
following purposes:
1. To elect six members of the Board of Directors to serve
during the ensuing year;
2. To consider an amendment to the Company's 1997 Stock
Incentive Plan to increase the number of shares available
thereunder; and
3. To transact such other business as may properly come
before the Meeting or any adjournment thereof.
Only holders of record of common stock of the Company at the
close of business on March 10, 2000, will be entitled to notice of
and to vote at the Meeting or any adjournment thereof.
By Order of the Board of Directors,
WILLIAM S. JACOBS, Secretary
Norcross, Georgia
March 24, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING OF
SHAREHOLDERS, YOU ARE REQUESTED TO FILL IN AND SIGN THE ENCLOSED
FORM OF PROXY AND MAIL IT IN THE ENCLOSED RETURN ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IT IS
IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. IF YOU DO ATTEND THE
MEETING AND DECIDE THAT YOU WISH TO VOTE IN PERSON, YOU MAY
WITHDRAW YOUR PROXY.
EMS TECHNOLOGIES, INC.
660 Engineering Drive,
Technology Park/Atlanta, Norcross, Georgia 30092
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 28, 2000
GENERAL INFORMATION
Shareholders' Meeting
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of EMS Technologies, Inc.
(the 'Company') of proxies to be used at the Annual Meeting of
Shareholders to be held at 4:00 p.m. local Atlanta time on April
28, 2000, at the Atlanta Marriott Norcross, Norcross, Georgia.
This Proxy Statement is being mailed to shareholders on
approximately March 30, 2000.
Matters to be Acted Upon
The following matters will be acted upon at the Annual Meeting
of Shareholders:
1. The election of six members of the Board of Directors,
each to serve a term of one year and thereafter until his successor
is duly elected and qualified;
2. To consider an amendment to the Company's 1997 Stock
Incentive Plan to increase the number of shares available
thereunder; and
3. The transaction of such other business as may properly
come before the Meeting or any adjournment thereof.
Revocation of Proxies
A proxy form is enclosed herewith. Any shareholder who
executes and delivers a proxy may revoke it at any time prior to
its use by giving written notice of such revocation to the
Secretary of the Company at 660 Engineering Drive, Technology
Park/Atlanta, Norcross, Georgia 30092, or by executing and
delivering to the Secretary of the Company a proxy bearing a later
date. A proxy may also be revoked at the Annual Meeting by any
shareholder present at the Annual Meeting who elects to vote in
person.
Voting of Proxies
When the enclosed proxy is properly executed and returned, the
shares that it represents will be voted at the Annual Meeting in
accordance with the instructions noted thereon. In the absence of
such instructions, the shares represented thereby will be voted in
favor of the six nominees for election to the Board of Directors,
and for approval of the proposed amendment to the 1997 Stock
Incentive Plan. The Board of Directors does not know of any other
business to be brought before the Meeting, and has not received
notice of any such matter within the time periods specified in the
Company's Bylaws or in rules of the Securities and Exchange
Commission governing discretionary voting authority; it is intended
that as to such other business, if any, a vote may be cast pursuant
to the proxy in accordance with the judgment of the person or
persons acting thereunder.
Only holders of record of issued and outstanding shares of
common stock of the Company at the close of business on March 10,
2000, are entitled to notice of, or to vote at, the Annual Meeting.
Each holder is entitled to one vote for each share of common stock
held on the record date. On March 10, 2000, there were 8,751,581
shares of common stock outstanding and entitled to vote.
Cost of Solicitation
The cost of soliciting proxies will be borne by the Company.
Officers, directors and employees of the Company may solicit
proxies by telephone, telegraph or personal interview.
Shareholder Proposals for the 2001 Annual Meeting
Any proposals by shareholders intended to be included in the
proxy materials for the 2001 Annual Meeting must be received by the
Company at its principal executive offices, attention of the
Secretary, no later than December 4, 2000.
In addition, for any proposal or nomination that a shareholder
wishes to present at the Meeting but is not seeking to have
included in the Company's proxy materials, notice as required by
the Company's Bylaws (including the information specified in the
Bylaws), must be received by the Secretary no later than March 1,
2001; if such notice is not timely received, the matter or
nomination will not be considered at the 2001 Annual Meeting.
ELECTION OF DIRECTORS
The Company's Bylaws provide that the number of members of the
Board of Directors shall be determined by the Board, which has set
that number at six. Unless otherwise directed, it is the intention
of the persons named in the enclosed form of proxy to vote such
proxy in favor of the election of the six persons named below as
directors of the Company. Each such person will serve until the
next Annual Meeting of Shareholders and thereafter until his
successor is elected and has qualified. In case any named nominee
should become unable to serve, or for good cause will not serve,
the persons named in the proxy will have the right to use their
discretion to vote for a substitute or substitutes or to vote only
for the remaining nominees.
Assuming the presence of a quorum at the Meeting, the nominees
will be elected by favorable vote of a plurality of the shares
actually voted. Abstentions and broker non-vote shares will be
considered as present for the purposes of determining the presence
of a quorum, but will not otherwise be considered in determining
the outcome of the vote. Shares for which authority to cast a
favorable vote is affirmatively withheld will be treated as voting
shares in determining whether the requisite plurality has been
achieved.
The following table lists the nominees and their ages, their
other positions with the Company, their principal occupations at
present and during the past five years, and the year each was first
elected as a director. All nominees are currently directors of the
Company and were elected by the shareholders at the last Annual
Meeting.
Year First
Name and Principal Occupations Elected
for the Last Five Years Age Director
----------------------- --- --------
Alfred G. Hansen 66 1999
Beginning in January 2000, President
and Chief Operating Officer of the
Company. From 1998 through 1999,
Mr. Hansen was President of A.G.
Hansen Associates, Inc., Marietta,
Georgia, an aerospace marketing and
manufacturing consultant. From 1995
to 1998, Mr. Hansen served as Executive
Vice President of Lockheed Martin
Aeronautical Systems, with broad
operational responsibilities for
its aerospace business, and as a Vice
President of its parent company, Lockheed
Martin Corporation. Mr. Hansen retired
from the U.S. Air Force in 1989 as a
four-star general, serving in his last
assignment as Commander of the Air Force
Logistics Command.
Jerry H. Lassiter 69 1978
Private investor organizing and managing
Interests in finance and real estate.
John B. Mowell 65 1984
President, Mowell Financial Group, Inc.,
Tallahassee, Florida, an investment
counseling firm.
Don T. Scartz 57 1995
Senior Vice President and Chief
Financial Officer, Treasurer of the Company.
Thomas E. Sharon, Ph.D. 54 1984
Chairman (since 1998), Chief Executive
Officer (since 1994) and President
(until 2000) of the Company
Norman E. Thagard, M.D. 56 1998
Since 1996, Professor, Bernard F.
Sliger Eminent Scholar Chair, Florida
State University, Director of College
Relations, College of Engineering, Florida
A&M University - Florida State University,
and aerospace consultant. From 1978
until 1996, Dr. Thagard served as a
NASA astronaut, participating in four
Shuttle missions and one mission
aboard the Russian Mir Space Station,
for a total of 140 days in space.
Committees and Meetings of the Board of Directors
The Board of Directors has designated a Compensation
Committee, which during the past year comprised Messrs. Lassiter
and Mowell and, during the portion of the year prior to his death,
Elvie L. Smith. This committee reviews and recommends to the Board
compensation and benefits for the Company's executive officers,
administers the Company's stock option plans with respect to the
participation of employees who are officers and directors, and is
responsible for reviewing and approving any related party
transactions involving the Company. The Compensation Committee met
three times during the last fiscal year. The Board has also
designated an Audit Committee composed during the past year of Mr.
Lassiter and, during a portion of the year, Mr. Smith; the
principal functions of this committee are to meet with the
Company's independent auditors, to review the Company's
consolidated fiscal year financial statements, to review the
independence, qualifications and activities of the independent
auditors, and to recommend to the Board of Directors the
appointment of the independent auditors. This Committee met twice
during 1999, and Mr. Lassiter also consulted on various occasions
during the year with members of the accounting staff and the
independent auditors. During 1999, the Stock Incentive Plan
Committee of the Board consisted of Dr. Sharon and Messrs. Mowell
and Scartz; this committee, which met three times during the last
fiscal year, is generally responsible for administering the
Company's stock option plans with respect to the participation of
employees who are not officers or directors. The Board does not
maintain a standing nominating committee, but has recently formed
an Executive Committee consisting of Messrs. Mowell and Hansen, and
Dr. Sharon; the duties of this committee include that of serving as
a nominating committee. Shareholders who wish to recommend Board
nominees for consideration by the Executive Committee may do so by
letter to the attention of the Secretary, at the Company's
principal executive office.
During the last fiscal year, there were eight meetings of the
Company's Board of Directors. No director attended fewer than 75%
of the aggregate of all meetings of the Board and of all committees
on which he served.
Compensation and Other Arrangements with Directors
Each director who is not an employee of the Company is paid
$1,000 per meeting attended (excluding telephonic meetings) plus
$4,000 per quarter served. Each director who is also an employee
of the Company is paid $500 per meeting attended (excluding
telephonic meetings) and $500 per quarter served. Committee
meetings that are not held in conjunction with a full Board meeting
are separately compensated at the rate of $500 per meeting, or
$1,000 if participation requires substantially a full day's
commitment. Travel expenses are paid to out-of-town directors.
The Company grants to its non-employee directors options to
acquire shares of its common stock. The option grants cover an
initial grant of 15,000 shares, vesting 3,000 shares per year for
the first five years of participation, and subsequent grants of
3,000 shares per year, beginning in the sixth year of
participation. All options are granted at the fair market value of
the common stock on the date of grant (which automatically occurs
at the date of election). The exercise price (together with any
applicable taxes) may be paid in cash, by delivery of shares of
common stock (valued at their fair market value at the time of
exercise), or by a combination of cash and stock. Upon the
optionee ceasing to be a director for any reason, these options
terminate and are forfeited to the extent that they are not
exercisable at that time. Once exercisable, these options are non-
forfeitable and remain exercisable until the tenth anniversary of
the date of grant.
SECURITY OWNERSHIP
The following table sets forth certain information concerning
shares of the Company's common stock beneficially owned as of March
10, 2000 by the Company's directors and named officers, and as of
December 31, 1999, by persons who beneficially own more than 5% of
the common stock. Except as otherwise indicated, each person
possessed sole voting and investment power with respect to the
shares shown.
Amount of Approximate
Name Beneficial Ownership Percent of Class
---- ------------------- ----------------
Kopp Investment Advisors, Inc. 900,522 (1) 10.3%
6500 Wedgewood Road
Maple Grove, MN 55311
Dimensional Fund Advisors, Inc. 742,124 (2) 8.5%
1299 Ocean Avenue
Santa Monica, CA 90401
Wellington Management Company LLP 627,900 7.2%
75 State Street
Boston, MA 02109
Brinson Partners, Inc. 617,360 (3) 7.1%
209 South LaSalle
Chicago, IL 60604-1295
Alfred G. Hansen 17,000 (4) *
Jerry H. Lassiter 22,337 (4) *
John B. Mowell 45,425 (4) *
Don T. Scartz 56,432 (4) *
Thomas E. Sharon 155,286 (4) 1.7%
Norman E. Thagard 9,000 (4) *
John J. Farrell 53,683 (4) *
William S. Jacobs 37,371 (4) *
Gerald S. Bush - (4) *
All directors and executive officers
as a group (13 persons) 425,568 4.8%
- ----------------------------------
* Percentage of shares beneficially owned does not exceed 1%
(1) Kopp Investment Advisors, Inc. has advised that, as to
625,522 shares, it exercises investment discretion, but does not
vote the shares nor is it the owner of record.
(2) Dimensional Fund Advisors, Inc. (Dimensional) has advised
that the shares of which it is deemed to have beneficial ownership
are owned by investment companies advised by Dimensional and
investment vehicles managed by Dimensional. Dimensional disclaims
beneficial ownership of all such shares.
(3) Brinson Partners, Inc. disclaims beneficial ownership of
such shares.
(4) Includes shares that are subject to currently exercisable
options in the amounts of 15,000 for Mr. Hansen, 18,000 for Mr.
Lassiter, 35,925 for Mr. Mowell, 24,000 for Mr. Scartz, 87,000 for
Dr. Sharon, 8,000 for Dr. Thagard, 34,500 for Mr. Farrell, 10,000
for Mr. Jacobs, and 259,675 for all directors and officers as a
group. For Mr. Mowell and Mr. Jacobs, these totals also include
6,000 and 8,900 shares, respectively, as to which each person
shares voting and investment power with family members but
disclaims beneficial interest.
<TABLE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table discloses, for the years ended December 31, 1999, 1998 and 1997,
the cash compensation paid by the Company and its subsidiaries, as well as certain other
compensation paid, accrued or granted for those years, to the Chief Executive Officer and to
each of the other four most highly compensated executive officers.
Summary Compensation Table
Long-Term Compensation All Other,
Annual Compensation Awards Compensation(1)
--------------------------------------- --------------------
Securities
Name and Principal Underlying
Position Restricted Options/SAR's
During Period Year Salary Bonus Other(2) Stock (No. Of Shares)
- ------------- ---- ------ ----- ----- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas E. Sharon 1999 $323,846 $ - $ - $ - 30,000 $ 23,539
President, Chief 1998 294,238 - - - 50,000 23,777
Executive Officer 1997 273,863 100,000 - - 15,000 22,856
Chairman
Don T. Scartz 1999 195,830 - - - 15,000 30,689
SR Vice President 1998 179,619 - - - 22,000 28,972
Chief Financial 1997 169,634 55,000 - - 8,000 29,571
Officer, Treasurer
John J. Farrell 1999 234,200 - - - 18,000 22,860
SR Vice President 1998 214,240 15,000 - - 30,000 22,833
And 1997 194,539 50,000 - - 8,000 22,977
President-Wireless
Products Group
William S. Jacobs 1999 169,558 - - - 8,000 30,112
Vice President 1998 157,710 10,000 - - 7,000 30,033
General Counsel 1997 149,856 30,000 - - 5,000 28,368
and Secretary
Gerald S. Bush(3) 1999 134,289 41,200 - - 13,000 -
President-Space and
Technology Group
</TABLE>
Footnotes to Summary Compensation Table:
(1) For 1999, includes, in the case of Dr. Sharon, $2,500 in
matching contributions under the 401(k) plan, $6,296 in benefits
associated with split-dollar life insurance arrangements, and
$14,743 under the defined contribution retirement plan; in the case
of Mr. Scartz, $3,472 in matching contributions under the 401(k)
plan and Employee Stock Purchase Plan, $7,884 under split-dollar
life insurance arrangements, and $19,333 under the defined
contribution retirement plan; in the case of Mr. Farrell, $5,428 in
matching contributions under the 401(k) and stock purchase plans,
$8,303 under split-dollar life insurance arrangements, and $9,129
under the defined contribution retirement plan; in the case of Mr.
Jacobs, $4,619 in matching contributions under the 401(k) and stock
purchase plans, $10,726 under split-dollar life insurance
arrangements, and $14,767 under the defined contribution retirement
plan. In each case, the split-dollar life insurance arrangement
benefit is the sum of (i) the premiums paid by the Company
attributable to the term insurance portion of the policy, plus (ii)
the implicit value of the balance of the premium, treating such
balance as an interest-free loan to the scheduled termination date
of the arrangement, based on interest and discount rates of 8%.
(2) Does not include personal benefits that do not exceed the
applicable reporting threshold for any officer.
(3) Mr. Bush commenced employment with the Company upon the
Company's acquisition of the Space Systems and Products Division of
Spar Aerospace Limited in January, 1999.
Option Exercises During Last Fiscal Year and Year-End Option Values
The following chart sets forth certain information with
respect to the named executives concerning the exercise in 1999 of
options in the Company's common stock, and unexercised options in
the Company's stock held as of December 31, 1999:
<TABLE>
Number of Shares Underlying Value of Unexercised
Year Ended Unexercised Options In-the-Money Options at
December 31, 1999 Held at December 31, 1999 December 31, 1999
----------------- ------------------------- -----------------
Shares Acquired Value
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Thomas E. Sharon $ - $ - 67,000 115,000 $198,125 $ -
Don T. Scartz 10,000 103,750 14,000 69,906 45,500 62,650
John J. Farrell - - 25,000 57,500 - -
William S. Jacobs 4,000 32,000 4,000 26,000 - -
Gerald S. Bush, - - - 13,000 - -
</TABLE>
Option Grants During the Last Fiscal Year
<TABLE>
Number of Percentage of
Shares Total Options Exercise
Underlying Granted to or
Options Employee in Base Price Expiration Grant Date
Name Granted Fiscal 1999 Per Share Date Present Value(1)
- ---- ------- ----------- --------- ---- -------------
<S> <C> <C> <C> <C> <C>
Thomas E. Sharon 30,000 9.6% $12.63 4/30/05 $233,040
Don T. Scartz 15,000 4.8 12.63 4/30/05 116,520
John J. Farrell 18,000 5.8 12.63 4/30/05 139,824
William S. Jacobs 8,000 2.6 12.63 4/30/05 62,144
Gerald S. Bush 13,000 4.2 12.63 4/30/05 100,984
</TABLE>
(1)Based upon the Black-Scholes option pricing model, assuming 0.58
expected volatility, a 6.7% weighted average risk-free rate of
return, no dividend yield, and 6 years to exercise.
Employment Agreements
The Company has an employment agreement with Dr. Sharon for
services as an executive officer. As amended during 1998, this
agreement expires on December 31, 2000, and specifies a minimum
annual salary of $295,000. In addition, Dr. Sharon is entitled to
bonuses in amounts determined by the Board of Directors. In the
event of disability, the salary would be continued at 100% less the
amount of any other Company-sponsored disability benefits. In the
event of death, 50% of the salary amount would be paid to Dr.
Sharon's estate for the remainder of the contract term. In the
event of a change in control of the Company after which Dr. Sharon
resigned or his employment was terminated other than for cause or
breach of the agreement, or due to death or disability, the Company
would be obligated to pay to Dr. Sharon three times the greater of
(i) his aggregate taxable compensation for the calendar year
preceding the calendar year in which his employment expires, or
(ii) his annualized salary for the calendar year in which his
employment expires plus the greater of his aggregate bonus paid
during either such year or the prior calendar year. However, the
amount payable to Dr. Sharon in connection with a change in control
may not exceed the maximum amount that the Company would be
entitled to deduct as compensation expense for federal income tax
purposes.
During 1998, the Company entered into employment agreements
with each of Messrs. Farrell and Scartz. These agreements are
substantially identical to that with Dr. Sharon, except that the
specified minimum annual salaries are $215,000 and $180,000,
respectively.
Other Transactions
During 1998, the Compensation Committee and Board extended
full-recourse loans to Dr. Sharon and Mr. Jacobs (in the amounts of
$100,000 each), and to Mr. Farrell (in the amount of $79,400), to
be used for open-market purchases of the Company's common stock.
The objective of these loans was to enable these officers to
increase their personal financial commitments to the Company and to
demonstrate their personal confidence in the Company's future. The
loans bear interest at 8%, and initially mature at the end of five
years or upon earlier termination of employment, with annual
payments of interest and a portion of principal.
During 1999, and in view of the continued decline in the
market price of the Company's common stock, the Compensation
Committee and Board extended the maturity of the loans by one year,
subject to each individual paying the interest accrued during the
first year. The purpose of this extension was to avoid imposing a
financial obligation that could result in officer sales of the
common stock into a weak market. The Compensation Committee and
Board also approved an additional $75,000 loan (of which $72,041
has been advanced) to Dr. Sharon, on identical terms, to enable him
to meet certain financial commitments without making significant
sales of the Company's common stock, under pricing conditions that
made margin financing impractical.
For 1999, interest payments on these loans were made in the
amounts of $10,365 by Dr. Sharon, $7,998 by Mr. Jacobs, and $8,109
by Mr. Farrell.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors has furnished
the following report with respect to certain aspects of executive
compensation:
The Compensation Committee believes the Company's
compensation policies should attract and retain experienced and
well-qualified executive officers, and provide significant
incentives for financial and business achievements that benefit
the Company's shareholders. As a result, the Compensation
Committee seeks to maintain the salary component of each
officer's compensation at a moderate level, provides bonuses
based heavily on financial performance, and also provides stock
options whose value depends on long-term appreciation in the
market value of the Company's common stock.
Base Salary. In determining 1999 base salaries, the
Committee reviewed executive salary data for comparably sized
companies in similar industries and information provided through
the American Electronics Association annual compensation survey,
particularly data for companies having revenues similar to those
of the Company. In exercising its judgment with respect to base
salary adjustments, the Committee has not used these survey
materials in any pre-determined mathematical manner. However,
the Committee has sought to maintain executive officer base
salaries at levels near the median for comparable positions in
comparable companies, with modest deviations based on evaluations
of the experience, qualifications and contributions of individual
officers.
Annual Incentive Compensation. Under the Company's
Executive Annual Incentive Compensation Plan, which was first
implemented in 1997, a target bonus is designated, as a
percentage of base salary, for each executive officer at the
beginning of each calendar year. The target bonus is factored,
up or down, based on the Company's (or in the case of divisional
officers, the Company's and division's) financial performance
against predetermined targets, and also based on an individual
performance evaluation prepared by the CEO or COO. The
Committee retains the right to modify, either up or down, the
incentive compensation otherwise payable based on the factoring
process, to take into account individual or Company/division
performance on non-financial objectives and, in the event of
unusual circumstances as determined by the Committee, based on
financial performance.
The 1999 incentive compensation awards to executive
officers, as set forth in the Summary Compensation Table, were
determined under the Executive Annual Incentive Compensation
Plan, reflecting that during 1999 the Company fell short of its
financial performance objectives, and failed to achieve threshold
target levels of profitability. As a result, the only cash
bonuses were based on divisional financial performance above
threshold or target levels.
Long-Term Incentives -- Stock Options. In order to
provide long-term incentive compensation directly linked to
growth in shareholder value, the Company grants stock options to
the CEO and other executive officers. Following its 1997 review
of executive compensation practices, the Committee has been
seeking to grant options annually and on a systematic basis at
levels determined to be competitively appropriate. However, the
Committee has not adopted a formal program for automatically
granting options, and annual grants remain in the Committee's
discretion. In general, the Committee believes that early in
each year options should be granted having a calculated value,
based on the Black-Scholes model, equal to a substantial
percentage of each officer's base salary. All options would be
granted at exercise prices equal to market value on the date of
grant, and would require a substantial period of service before
they could be exercised. The Committee also believes that the
percentage of base salary that should be used in determining
annual stock option awards should increase with an officer's
level of responsibility and his or her potential to affect
shareholder value. The option awards included in the Summary
Compensation Table reflect the Committee's approach to annual
option grants.
Compensation of the Chief Executive Officer. For 1999,
Dr. Sharon's base salary was increased from $295,000 to $325,000
per year. This increase occurred following review by the
Committee of compensation data for other public companies engaged
in similar businesses, and for companies included in the American
Electronics Association's 1998 executive compensation survey. In
each case, the data was analyzed based on company revenues. The
Committee also reviewed and considered the Company's progress in
its transition away from government contracting and towards a
focus on commercial products. The Committee based Dr. Sharon's
salary increase on the available comparative data, on the
Company's larger size following its acquisition of substantial
operations in Montreal, and on the Committee's favorable view of
Dr. Sharon's role in the Montreal acquisition and in the
Company's continuing efforts to develop commercial markets for
its technological capabilities. Following the increase, Dr.
Sharon's base salary was at approximately the midpoint for CEO's
of similar-sized companies included in the AEA survey.
Dr. Sharon did not receive bonus compensation for 1999,
due to the Company's failure to attain the threshold earnings
target in effect for that year under the Executive Annual
Incentive Compensation Plan.
As was the case in 1997 and 1998, for 1999 the
Committee concluded that a grant of stock options, having a
Black-Scholes valuation of approximately 90% of base salary,
constituted an appropriate level of long-term incentive
compensation for the CEO. The stock options included in the
Summary Compensation Table were granted based on this approach.
Submitted by the members of the Compensation Committee:
John B. Mowell, Chairman
Jerry H. Lassiter
Norman E. Thagard
Shareholder Return
The annual changes for the five-year period shown in the
following graph are based on the assumption that $100 had been
invested in the common stock of EMS Technologies, Inc. and each
index on December 31, 1994
Comparison of Five-Year Cumulative Total Return
EMS Technologies, Inc. Common Stock (ELMG)
S&P Composite-500 and S&P High Technology Composite Indices
1994 1995 1996 1997 1998 1999 2000(1)
ELMG 100 90.72 158.76 167.01 115.46 96.91 222.68
S&P 500 100 137.58 169.17 225.60 290.08 351.12 330.93
S&P High 100 144.04 204.35 257.68 445.72 780.60 863.26
(1) Supplemental data as of March 10, 2000.
AMENDMENT OF THE 1997 STOCK INCENTIVE PLAN
The Board of Directors is seeking shareholder approval for an
amendment to the EMS Technologies, Inc. 1997 Stock Incentive Plan
(the '1997 Plan'). The amendment would increase the number of
available shares from 825,000 to 1,250,000.
Background and Description
The 1997 Plan was adopted by the Board in January 1997, and
approved by the shareholders at the 1997 Annual Meeting. It
provides for the grant of options to purchase common stock
('Options'), and for the issuance of shares of common stock
('Awards') that are subject to restrictions, including the
possibility of forfeiture under certain circumstances. The Plan
will expire on January 24, 2007, but Options or awards granted
prior to that date will remain in effect according to their terms.
As originally adopted and thereafter amended in 1999, the
Incentive Plan provided for the issuance of up to 825,000 shares of
common stock upon exercise of Options or grant of Awards, subject
to adjustment upon changes in capitalization. Of these available
shares, up to 80,000 may be granted as restricted stock Awards, and
no more than 50,000 may be optioned to a single participant during
a single calendar year. For the purpose of calculating the shares
remaining available for issue under the 1997 Plan, shares that have
been optioned or awarded but thereafter forfeited, and shares
either withheld or surrendered in payment of the exercise price of
Options or of withholding taxes related to an Option or Award, will
not be considered as having been optioned or awarded and will be
available for future Options or Awards.
As is discussed in the Report of the Compensation Committee
included in this Proxy Statement, the Committee believes that
regular annual Option grants, in amounts related to an officer's
base salary and level of responsibility, constitute a competitively
appropriate and effective method of long-term incentive
compensation. The Committee's approach is reflected in the Option
grants reported in the Summary Compensation Table for 1997, 1998
and 1999, except that approximately half of the 1998 Options
granted to Dr. Sharon and Messrs. Farrell and Scartz were one-time
grants based on other considerations. For 2000, the Compensation
Committee continued to use this methodology and has granted Options
under the Plan for 25,000 shares to Dr. Sharon, 18,000 to Mr.
Farrell, 15,000 to Mr. Scartz, 12,000 to Dr. Bush, 8,000 to Mr.
Jacobs, and 91,000 to seven executive officers as a group.
Following the increase in 1999 of shares available under the
1997 Plan, from 400,000 to 825,000 shares, Options for 173,175
shares were granted under the Plan to non-executive personnel,
Options were granted to executive officers for both 1999 and 2000
as described above, and 29,000 shares were automatically optioned
to non-employee directors upon their election at the 1999 Annual
Meeting, under the program described below at Options for Non-
Employee Directors. As a result, and after taking into account
forfeitures due to employment terminations, as of March 10, 2000,
795,825 shares are subject to outstanding Options under the 1997
Plan, 50,550 of which are currently exercisable by their holders.
Because the Board believes the remaining number of shares is
insufficient to maintain the annual Option grants to executive
officers and non-employee directors, the Board has further amended
the 1997 Plan to increase the number of available shares from
825,000 to 1,250,000; however, this amendment is not effective as
to the participation of directors or executive officers without
further shareholder approval.
In order to reduce the frequency with which the Company
solicits shareholder approval of amendments to increase shares
available for executive and director option grants, the Board has
established a separate option plan to be used only for grants to
non-executive employees. This new plan (the 2000 Stock Incentive
Plan) is substantively identical to the 1997 Plan, except that the
number of shares currently authorized is 500,000, and it contains
no provisions for option grants to the non-employee directors. So
long as grants under the 2000 Plan are restricted to non-executive
personnel, it will not require shareholder approval. The Board's
intention is that all future grants to non-executives be under the
2000 Plan, and that the 1997 Plan be used only for grants to
executive officers and for the automatic grants to non-employee
directors.
The Compensation Committee administers the participation of
directors and executive officers under the 1997 Plan. This
Committee consists solely of directors who are 'non-employee
directors' for the purposes of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended. Under this Rule as currently in
effect, such directors are those who are not currently officers or
employees of the Company or its subsidiaries, and who do not
receive compensation for services (except as a director), or
otherwise have an interest in business transactions or
relationships, requiring proxy statement disclosure. The Committee
has the authority to determine the terms of Options and Awards to
the extent not inconsistent with requirements of the 1997 Plan, to
interpret the Plan, to adopt and amend rules relating to it, and to
amend or replace outstanding Options and Awards, subject to grantee
approval and Plan requirements. The 1997 Plan provides that
Committee members shall not be liable to any person for any actions
taken in good faith.
The Board of Directors has the right at any time to terminate
or amend the 1997 Plan, but without the holder's consent no such
action may terminate Options already granted or otherwise affect
the rights of any holder of an outstanding Option or of shares
issued pursuant to an Award. Except with shareholder approval, the
Board may not amend the 1997 Plan to materially increase the total
number of shares available to directors or executive officers. In
addition, the provisions governing automatic grants of Options to
non-employee directors, as described below, may not be amended more
frequently than once every six months.
Stock Options. The Company receives no consideration upon the
granting of an Option. Options may be granted either as incentive
stock options (which qualify for certain favorable tax
consequences, as discussed below) or as non-qualified stock
options. The Committee determines the number of shares, exercise
price, term, any conditions on exercise, consequences of any
termination of employment, and other terms of each Option. In the
case of an Option intended to be an incentive stock option, the
term may not exceed ten years from the date of grant and the
exercise price may not be less than 100% of the fair market value
of the common stock on the date of grant. With respect to non-
qualified stock options, there is no limit on the term, but the
exercise price may not be less than 100% of fair market value on
the date of grant. Under applicable accounting rules as currently
in effect, no compensation expense is incurred by the Company,
either at the time of grant or upon exercise, with respect to an
Option granted to an employee at an exercise price equal to or
exceeding the fair market value of the common stock on the date of
grant.
The exercise price (together with any applicable taxes) is
payable in full upon exercise, and payment may be made in cash, by
delivery (or withholding in lieu of delivery) of shares of common
stock (valued at their fair market value at the time of exercise),
or by a combination of cash and stock. The market value per share
of the common stock on March 10, 2000, was $27.00, as determined by
reference to the closing sales price as reported in the National
Market System.
In the discretion of the Committee, Options under the 1997
Plan may include a 'reload option.' However, none of the options
that have been granted under the Plan have included this feature,
and the Committee has no current plans to issue reload options in
the future. A reload option, if included in the original Option,
would be triggered when an optionee paid the exercise price of, or
withholding taxes related to, all or a portion of the original
Option by delivering or authorizing the withholding of shares of
common stock. In that event, the optionee would automatically be
granted an additional Option to acquire the same number of shares
as had been so delivered or withheld. The reload option would be
subject to all of the terms and conditions of the original Option,
except that the exercise price per share would be equal to the fair
market value of the common stock on the date the original Option
was exercised, and except that the Committee could specify
additional conditions or contingencies, such as continued
employment by the Company or holding of the shares acquired upon
exercise of the original Option for a specified period of time.
Options granted under the 1997 Plan may not be transferred by
an optionee other than by will or by the laws of descent and
distribution, or pursuant to certain orders which may be issued in
connection with a divorce proceeding, or, in the discretion of the
Committee, to family members or family trusts or similar estate-
planning entities.
Options for Non-Employee Directors. Each current member of
the Board of Directors who is not an employee of the Company or any
subsidiary has previously been granted an Option for the purchase
of 15,000 shares of common stock. These Options have or will
become exercisable as to 3,000 shares on the date six months
following the date of grant and as to an additional 3,000 shares on
each of the first through fourth anniversaries of such six-month
date. Each non-employee director who has served five years from
the grant of this Option (and who thus may exercise the Option as
to all 15,000 shares) thereafter receives, upon each reelection to
a further annual term, a grant of Options for 3,000 shares, each of
which becomes exercisable 6 months after the date of grant.
The Options automatically granted to directors each have an
exercise price equal to the fair market value of the common stock
on the date of grant. They become immediately exercisable in the
event of a third-party tender or exchange offer for the Company's
common stock, or if any person becomes the beneficial owner of 50%
or more of the outstanding common stock. The exercise price
(together with any applicable taxes) may be paid in cash, by shares
of common stock (valued at their fair market value at the time of
exercise), or by a combination of cash and stock. Upon the
optionee ceasing to be a director for any reason, these Options
terminate and are forfeited to the extent that they are not
exercisable at that time. Once exercisable, these Options are non-
forfeitable and remain exercisable until the tenth anniversary of
the date of grant. No compensation expense is incurred by the
Company with respect to the automatic director Options.
If the Board's nominees are elected at the Annual Meeting,
each of Messrs. Lassiter and Mowell will automatically receive an
Option for 3,000 shares. Dr. Thagard is completing his second
year as a member of the Board, and thus is not yet eligible for the
automatic annual grants. The Board believes that additional non-
employee directors would be beneficial to the Company, and is
seeking to identify appropriate candidates. Upon the election of
any such new Board member, he or she would automatically receive an
Option for 15,000 shares on the terms described above.
Awards of Restricted Shares. The recipient of an Award would
be issued shares of common stock ('Restricted Shares') in
consideration of services performed or to be performed as a
condition to the lapse of specified restrictions, but would not
make any monetary payment to the Company. The Company believes
that Restricted Shares can be a valuable tool in particular
circumstances, but the Committee has not awarded Restricted Shares
under the 1997 Plan, and does not have either current plans to do
so or an intention of doing so on a frequent basis.
Each Award will be governed by a restriction agreement
containing such conditions and restrictions applicable to the
Restricted Shares as the Committee may determine. The restrictions
may include forfeiture of some or all of the Restricted Shares in
certain circumstances, such as termination of employment, and the
Committee may require that Restricted Shares be held by the Company
or in escrow pending the lapse of restrictions. Until any
restrictions have lapsed, the Restricted Shares are not
transferable except by the laws of descent and distribution or
pursuant to certain orders which may be issued in connection with a
divorce proceeding. Unless the Committee determines otherwise,
recipients of Restricted Shares will have the right to vote the
shares and to receive dividends or distributions made with respect
to them.
An Award of Restricted Shares would result in a compensation
expense to the Company in an amount equal to the fair market value
of the Restricted Shares (calculated without considering any
restrictions imposed in connection with the Award) at the time of
the Award. Such expense may be recognized ratably over the period
during which the restrictions continue in effect.
Federal Income Tax Consequences
Non-Qualified Stock Options. Generally, when a non-qualified
stock option is exercised, the optionee recognizes income in the
amount of the aggregate fair market value of the shares received
upon exercise, less the aggregate amount paid for those shares, and
the Company may deduct as an expense the amount of income so
recognized by the optionee, provided that the Company satisfies
certain tax withholding requirements. The holding period of the
acquired shares begins upon the exercise of the Option, and the
optionee's basis in the shares is equal to the fair market value of
the acquired shares on the date of the exercise.
If the optionee pays all or part of the purchase price by
delivering to the Company shares of common stock, there are no
federal income tax consequences to the optionee or the Company to
the extent of the number of shares so delivered. As to any
additional shares issued, the optionee recognizes income equal to
the aggregate fair market value of the additional shares received,
less any cash paid to the Company, and the Company is allowed to
deduct the amount of such income, provided that the Company
satisfies certain tax withholding requirements. The holding period
and basis of the new shares, to the extent of the number of old
shares delivered, is the same as for the old shares. The holding
period for the additional shares begins on the date the Option is
exercised, and the basis in those additional shares is equal to
their fair market value on the date of exercise.
Incentive Stock Options. There are no federal income tax
consequences to an optionee or to the Company on the granting of an
incentive stock option. When an optionee exercises an incentive
stock option, the optionee will not recognize any taxable income at
that time (although the exercise may impact the optionee's
alternative minimum tax calculation), and the Company will not be
entitled to a deduction. The optionee will recognize capital gain
or loss at the time of disposition of shares acquired through the
exercise of an incentive stock option if the shares have been held
for at least two years after the Option was granted and one year
after it was exercised. The Company will not be entitled to a tax
deduction if the optionee satisfies these holding-period
requirements. The federal income tax advantage to the holder of
incentive stock options who meets the holding-period requirements
is a deferral, until the acquired stock is sold, of taxation of any
increase in the stock's value from the time of grant of the Option
to the time of its exercise, and taxation of such gain, at the time
of sale, as capital gain rather than ordinary income.
If the holding period requirements are not met, then upon sale
of the shares the optionee generally recognizes as ordinary income
the excess of the fair market value of the shares at the date of
exercise over the option price; any increase in the value of the
optioned stock subsequent to exercise is long or short-term capital
gain to the optionee, depending on the optionee's holding period
for the stock. However, if the sale is for a price less than the
value of the shares on the date of exercise, the optionee may
recognize ordinary income only to the extent the sales price
exceeded the option price. In either case, the Company is entitled
to a deduction to the extent of ordinary income recognized by the
optionee.
For the purpose of calculating tax upon disposition where
stock is surrendered in payment of the option price, the capital
gains holding period and basis of the new shares, to the extent of
the old shares surrendered, is the same as for the old shares; the
holding period for the additional shares (that is, the shares
received on exercise in excess of the old shares surrendered)
begins on the date the Option is exercised, and such additional
shares have a basis equal to the amount, if any, of the price of
the optioned stock paid in cash.
Awards of Restricted Shares. At the time of an Award a
recipient may elect to recognize taxable income equal to the fair
market value of the Restricted Shares (computed without regard to
the adverse effect on market value of any restrictions) on the date
of issuance. If such an election is made by the recipient, the
Company will be entitled at that time to a deduction equal to the
amount of taxable income recognized by the recipient. In the
absence of such an election, a recipient of Restricted Shares will
not recognize taxable income until the restrictions imposed with
respect to the Award lapse. At that time, the recipient will
recognize income equal to the fair market value of the Restricted
Shares on the date the restrictions lapse and the Company will
obtain a corresponding deduction. The amount of income recognized
by a recipient of Restricted Shares will constitute the basis of
his or her shares for income tax purposes.
The grantee of an Award is required to provide for the payment
of withholding taxes at the time his or her Award results in
taxable income. In the discretion of the Committee, an award may
provide for a payment of taxes by delivering already-owned shares
of common stock, or by authorizing the Company to withhold and
cancel a portion of the Restricted Shares, in each case based on
the fair market value of the common stock at that time.
Vote Required and Recommendation of the Board
Shareholder approval of the 1997 Plan amendment is not
required by the Company's Articles of Incorporation or Bylaws, or
by Georgia law. The amendment is being submitted for shareholder
approval pursuant to the requirements of the National Association
of Securities Dealers for securities traded on the National Market
System, and of Sections 162(m) and 422 of the Internal Revenue
Code. Section 162(m) of the Internal Revenue Code limits the
Company's tax deduction for compensation expense for any one
executive officer to $1 million per year, except that compensation
under certain shareholder-approved incentive compensation plans is
not subject to this limit; the 1997 Plan is structured with respect
to option grants to conform with the exception to Section 162(m),
if the amendment receives shareholder approval. Section 422 of the
Internal Revenue Code requires shareholder approval in order for
Options under the 1997 Plan to be treated as incentive stock
options. See Federal Income Tax Consequences -- Incentive Stock
Options, above.
The affirmative vote of the holders of a majority of the
shares of common stock present at the Annual Meeting and voting on
the matter is required to approve the 1997 Plan amendment, assuming
the presence of a quorum. Abstentions and broker non-votes will be
considered as present for the purposes of determining the presence
of a quorum, but will not otherwise be considered in determining
the outcome of the vote. Until such time as the amendment is
approved by the shareholders, no shares in excess of the previously
approved 825,000 shares may be the subject of Options or Awards to
directors or executive officers, or of incentive stock options
granted to any participant. Otherwise, the grant of further
Options or Awards under the 1997 Plan is not subject to shareholder
approval.
The Board of Directors unanimously recommends a vote 'FOR'
approval of the amendment to the EMS Technologies, Inc. 1997 Stock
Incentive Plan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act, each
executive officer, director and beneficial owner of 10% or more of
the Company's common stock is required to file certain forms with
the Securities and Exchange Commission. A report of beneficial
ownership of the Company's common stock on Form 3 is due at the
time such person becomes subject to the reporting requirement and a
report on Form 4 or 5 must be filed to reflect changes in
beneficial ownership occurring thereafter. Based on written
statements and copies of forms provided to the Company during and
for 1999 by persons subject to the reporting requirements, the
Company believes that all Forms 3, 4 and 5 required to be filed by
such reporting persons during 1999 were filed on a timely basis.
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG LLP acted as the Company's independent public accountants
during the last fiscal year and, it is anticipated, will continue
to act as such during the current fiscal year. A representative of
KPMG LLP is expected to be present at the Annual Meeting to respond
to appropriate questions, and will have the opportunity to make a
statement if he desires to do so.
AVAILABLE INFORMATION
The Company files Annual Reports on Form 10-K with the
Securities and Exchange Commission. A copy of the Annual Report
(including exhibits) for the fiscal year ended December 31, 1999 is
available on the Company's website at www.ems-t.com. A printed
copy of the Annual Report (excluding exhibits) may be obtained,
free of charge, upon written request by any shareholder to EMS
Technologies, Inc., Attn: Don T. Scartz, Treasurer, 660
Engineering Drive, P. O. Box 7700, Norcross, Georgia 30091-7700.
Copies of all exhibits to the Annual Report are available upon a
similar request, subject to payment of a $.15 per page charge to
reimburse the Company for its expenses.
Norcross, Georgia
March 24, 2000
Proxy Card
EMS TECHNOLOGIES, INC.
The undersigned hereby appoints Thomas E. Sharon, Alfred G. Hansen
and William S. Jacobs, and each of them with individual power of
substitution, proxies to appear and vote all shares of the common
stock of EMS Technologies, Inc. that the undersigned may be
entitled to vote at the Annual Meeting of Shareholders to be held
on the 28the day of April, 2000, and at all adjournments thereof,
as indicated with respect to the following matters:
(1) To vote FOR [ ] or WITHHOLD AUTHORITY to vote for [ ] electing
the following six members of the Board of Directors, except as
marked to the contrary.
Alfred G. Hansen, Jerry H. Lassiter, John B. Mowell, Don T. Scartz,
Thomas E. Sharon, Norman E. Thagard.
INSTRUCTIONS: If he or she so chooses, any shareholder may
withhold authority to vote for any nominee by lining through or
otherwise striking out the name of such nominee. The above-named
proxies will vote for the election of any nominee whose name is not
deleted.
(2) Proposal to approve amendments to the EMS Technologies, Inc.
1997 Stock Incentive Plan that would increase the number of shares
available thereunder, as described in the Proxy Statement for the
Annual Meeting under the heading 'Amendment of the 1997 Stock
Incentive Plan. '
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THE BOARD OF DIRECTORS UNANMIOUSLY RECOMMENDS A VOTE 'FOR' THE
LISTED NOMINEES AND PROPOSAL.
(3) In accordance with their best judgment upon such other matters
as may properly come before the Annual Meeting or any adjournment
therof.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH ANY INSTRUCTIONS
INDICATED HEREON. IF NO INDICATION IS MADE, IT WILL BE VOTED 'FOR'
THE LISTED NOMINEES AND PROPOSAL.
PLEASE DATE AND SIGN THIS PROXY ON THE REVERSE SIDE.
EMS TECHNOLOGIES, INC.
The Board of Directors is not aware of any matters to be presented
for action at the Annual Meeting of Shareholders, other than the
election of Directors and the listed proposal.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
To Shareholders:
Please mark this proxy on the reverse side, date and sign this
proxy below, and return it to us promptly in the enclosed envelope,
which requires no postage. Please sign exactly as your name
appears below and indicate any change of address.
Date: , 1999
------------------
----------------------- (L.S.)
----------------------- (L.S.)
Signature(s) should correspond
with name(s) on reverse side.
When signing in a fiduciary or
Representative capacity, give
full title as such.
As adopted January 24, 1997,
amended through February 19, 1999,
and proposed to be amended at the
2000 Annual Meeting.
EMS TECHNOLOGIES, INC.
1997 STOCK INCENTIVE PLAN
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 1
(a)"Award" 1
(b)"Board" 1
(c)"Code" 1
(d)"Committee" 1
(e)"Company" 1
(f)"Director" 2
(g)"Disinterested Person" 2
(h)"Employee" 2
(i) "Employer" 2
(j)"Fair Market Value" 3
(k)"Grantee" 3
(l)"ISO" 3
(m)"1934 Act" 3
(n)"Officer" 3
(o)"Option" 3
(p)"Option Agreement" 4
(q)"Optionee" 4
(r)"Option Price" 4
(s)"Parent" 4
(t)"Plan" 4
(u)"Purchasable" 4
(v)"Qualified Domestic Relations Order" 4
(w)"Reload Option" 4
(x)"Restricted Stock" 5
(y)"Restriction Agreement" 5
(z)"Stock" 5
(aa)"Subsidiary" 5
ARTICLE II THE PLAN 5
Section 2.1 Name 5
Section 2.2 Purpose 5
Section 2.3 Effective Date 5
Section 2.4 Termination Date 5
ARTICLE III ELIGIBILITY 6
ARTICLE IV ADMINISTRATION 6
Section 4.1 Duties and Powers of the Committee 6
Section 4.2 Interpretation; Rules 6
Section 4.3 No Liability 7
Section 4.4 Majority Rule 7
Section 4.5 Company Assistance 7
ARTICLE V SHARES OF STOCK SUBJECT TO PLAN 7
Section 5.1 Limitations 7
Section 5.2 Antidilution 8
ARTICLE VI OPTIONS 9
Section 6.1 Types of Options Granted 9
Section 6.2 Option Grant and Agreement 10
Section 6.3 Optionee Limitations 10
Section 6.4 $100,000 Limitation 11
Section 6.5 Option Price 11
Section 6.6 Exercise Period 11
Section 6.7 Option Exercise 12
Section 6.8 Nontransferability of Option 13
Section 6.9 Termination of Employment 14
Section 6.10 Employment Rights 14
Section 6.11 Certain Successor Options 14
Section 6.12 Conditions to Issuing Option Stock 15
Section 6.13 Automatic Option Grants to
Certain Directors 15
ARTICLE VII RESTRICTED STOCK 17
Section 7.1 Awards of Restricted Stock 17
Section 7.2 Non-Transferability 18
Section 7.3 Lapse of Restrictions 18
Section 7.4 Termination of Employment 18
Section 7.5 Treatment of Dividends 18
Section 7.6 Delivery of Shares 18
Section 7.7 Payment of Withholding Taxes 19
ARTICLE VIII TERMINATION, AMENDMENT AND MODIFICATION OF PLAN 20
ARTICLE IX MISCELLANEOUS 20
Section 9.1 Replacement or Amended Grants 20
Section 9.2 Forfeiture for Competition 20
Section 9.3 Plan Binding on Successors 21
Section 9.4 Headings Not a Part of Plan 21
EMS TECHNOLOGIES, INC. 1997
STOCK INCENTIVE PLAN
ARTICLE I
DEFINITIONS
As used herein, the following terms have the meanings hereinafter
set forth unless the context clearly indicates to the contrary:
(a)"Award" shall mean a grant of Restricted Stock.
(b)"Board" shall mean the Board of Directors of the Company.
(c)"Code" shall mean the United States Internal Revenue Code
of 1986, as amended, including effective date and transition
rules (whether or not codified).
Any reference herein to a specific section or sections of the
Code shall be deemed to include a reference to any corresponding
provision of future law.
(d)"Committee" shall mean a committee of at least two
Directors appointed from time to time by the Board, having the
duties and authority set forth herein in addition to any other
authority granted by the Board; provided, however, that with
respect to any Options or Awards granted to an individual who is
also an Officer or Director, the Committee shall consist of at
least two Non-Employee Directors (who need not be members of the
Committee with respect to Options or Awards granted to any other
individuals), and all authority and discretion shall be exercised
by such Non-Employee Directors, and references herein to the
"Committee" shall mean such Non-Employee Directors insofar as any
actions or determinations of the Committee shall relate to or
affect Options or Awards made to or held by any Officer or
Director.
(e)"Company" shall mean EMS Technologies, Inc., a Georgia
corporation.
(f)"Director" shall mean a member of the Board.
(g)"Employee" shall mean any employee of the Company or any
Subsidiary of the Company.
(h)"Employer" shall mean the corporation that employs a
Grantee.
(i)"Fair Market Value" of the shares of Stock on any date
shall mean
(i) the closing sales price, regular way, or in the
absence thereof the mean of the last reported bid and asked
quotations, on such date on the exchange having the greatest
volume of trading in the shares during the thirty-day period
preceding such date (or if such exchange was not open for trading
on such date, the next preceding date on which it was open); or
(ii) if there is no price as specified in (i), the
final reported sales price, or if not reported in the following
manner, the mean of the closing high bid and low asked prices, in
the over-the-counter market for the shares as reported by the
National Association of Securities Dealers Automatic Quotation
System or, if not so reported, then as reported by the National
Quotation Bureau Incorporated, or if such organization is not in
existence, by an organization providing similar services, on such
date (or if such date is not a date for which such system or
organization generally provides reports, then on the next
preceding date for which it does so); or
(iii)if there also is no price as specified in (ii),
the price determined by the Committee by reference to bid-and-
asked quotations for the shares provided by members of an
association of brokers and dealers registered pursuant to
subsection 15(b) of the 1934 Act, which members make a market in
the shares, for such recent dates as the Committee shall
determine to be appropriate for fairly determining current market
value; or
(iv) if there also is no price as specified in (iii),
the amount determined in good faith by the Committee based on
such relevant facts, which may include opinions of independent
experts, as may be available to the Committee.
(j)"Grantee" shall mean an Employee, former employee or
other person who is an Optionee or who has received an Award of
Restricted Stock.
(k) "ISO" shall mean an Option that complies with and is
subject to the terms, limitations and conditions of Code section
422 and any regulations promulgated with respect thereto.
(l) "1934 Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
(m) "Non-Employee Director" shall have the meaning set forth
for such term or corresponding concept in Rule 16b-3 under the
1934 Act, as the same may be in effect from time to time, or in
any successor rule thereto, and shall be determined for all
purposes under the Plan according to interpretative or "no-
action" positions with respect thereto issued by the Securities
and Exchange Commission or its staff; provided, however, that to
the extent it is determined and intended that Options qualify as
"performance-based compensation" within the meaning of section
162(m) of the Code, a person shall be a "Non-Employee Director"
only if he or she is also an "outside director" within the
meaning of such section 162(m).
(n) "Officer" shall mean a person who constitutes an officer
of the Company for the purposes of Section 16 of the 1934 Act, as
determined by reference to such Section 16 and to the rules,
regulations, judicial decisions, and interpretative or "no-
action" positions with respect thereto of the Securities and
Exchange Commission or its staff, as the same may be in effect or
set forth from time to time.
(o) "Option" shall mean a contractual right to purchase
Stock granted pursuant to the provisions of Article VI hereof.
(p) "Option Agreement" shall mean an agreement between the
Company and an Optionee setting forth the terms of an Option.
(q) "Optionee" shall mean a person to whom an Option has
been granted hereunder.
(r) "Option Price" shall mean the price at which an Optionee
may purchase a share of Stock pursuant to an Option.
(s) "Parent", when used with respect to any subject
corporation, shall mean any other corporation that owns stock
possessing 50% or more of the total combined voting power of all
classes of stock of the subject corporation or that owns such
stock of another corporation in an unbroken chain of corporations
having such ownership of the stock of another corporation and
ending with the subject corporation.
(t) "Plan" shall mean the 1997 Stock Incentive Plan of the
Company.
(u) "Purchasable," when used to describe Stock, shall refer
to Stock that may be purchased by an Optionee under the terms of
this Plan on or after a certain date specified in the applicable
Option Agreement.
(v) "Qualified Domestic Relations Order" shall have the
meaning set forth in the Code or in the Employee Retirement
Income Security Act of 1974, as amended, or the rules and
regulations promulgated under the Code or such Act.
(w) "Reload Option" shall mean an Option that is granted,
without further action of the Committee,
(i) to an Optionee who surrenders or authorizes the
withholding of shares of Stock in payment of amounts specified in
paragraphs 6.7(c) or 6.7(d) hereof,
(ii) for the same number of shares as is so paid,
(iii) as of the date of such payment and at an Option
Price equal to the Fair Market Value of the Stock on such date,
and
(iv) otherwise on the same terms and conditions as the
Option whose exercise has occasioned such payment, subject to
such contingencies, conditions or other terms as the Committee
shall specify at the time such exercised Option is granted.
(x) "Restricted Stock" shall mean Stock issued, subject to
restrictions, to an Employee pursuant to Article VII hereof.
(y) "Restriction Agreement" shall mean the agreement setting
forth the terms of an Award, and executed by a Grantee as
provided in Section 7.1 hereof.
(z) "Stock" shall mean the $.10 par value common stock of
the Company or, in the event that the outstanding shares of such
stock are hereafter changed into or exchanged for shares of a
different class of stock or securities of the Company or some
other corporation, such other stock or securities.
(aa) "Subsidiary", when used with respect to any subject
corporation, shall mean any other corporation as to which the
subject corporation is a Parent.
ARTICLE II
THE PLAN
2.1 Name.
This plan shall be known as the "EMS Technologies, Inc. 1997
Stock Incentive Plan."
2.2 Purpose.
The purpose of the Plan is to advance the interests of the
Company, its shareholders, and any Subsidiary of the Company, by
offering certain Employees and Directors an opportunity to
acquire or increase their proprietary interests in the Company.
Options and Awards will promote the growth and profitability of
the Company and any Subsidiary of the Company, because Grantees
will be provided with an additional incentive to achieve the
Company's objectives through participation in its success and
growth.
2.3 Effective Date.
The Plan shall become effective on January 24, 1997.
2.4 Termination Date.
No further Options or Awards shall be granted hereunder on or
after January 24, 2007, but all Options or Awards granted prior
to that time shall remain in effect in accordance with their
terms.
ARTICLE III
ELIGIBILITY
The persons eligible to participate in this Plan shall consist
only of Directors and those Employees whose participation the
Committee determines is in the best interests of the Company.
However, no ISO's may be granted, and no Options or Awards may be
granted to any Director or Officer, prior to the approval of this
Plan by the Company's shareholders. Persons who are not Employees
but who serve as directors of any Subsidiary of the Company shall
also be eligible to participate in this Plan, and references
herein to "Employee" shall be deemed to include any such persons
to the extent appropriate for him or her to become a Grantee.
ARTICLE IV
ADMINISTRATION
4.1 Duties and Powers of the Committee.
The Plan shall be administered by the Committee. The Committee
shall select one of its members as its Chairman and shall hold
its meetings at such times and places as it may determine. The
Committee shall keep minutes of its meetings and shall make such
rules and regulations for the conduct of its business as it may
deem necessary. The Committee shall have the power to act by
unanimous written consent in lieu of a meeting, and shall have
the right to meet telephonically. In administering the Plan, the
Committee's actions and determinations shall be binding on all
interested parties. The Committee shall have the power to grant
Options or Awards in accordance with the provisions of the Plan.
Subject to the provisions of the Plan, the Committee shall have
the discretion and authority to determine those individuals to
whom Options or Awards will be granted and whether such Options
shall be accompanied by the right to receive Reload Options, the
number of shares of Stock subject to each Option or Award, such
other matters as are specified herein, and any other terms and
conditions of an Option Agreement or Restriction Agreement. To
the extent not inconsistent with the provisions of the Plan, the
Committee shall have the authority to amend or modify an
outstanding Option Agreement or Restriction Agreement, or to
waive any provision thereof, provided that the Grantee consents
to such action.
4.2 Interpretation; Rules.
Subject to the express provisions of the Plan, the Committee also
shall have complete authority to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to
it, and to make all other determinations necessary or advisable
in the administration of the Plan, including, without limitation,
the amending or altering of any Options or Awards granted
hereunder as may be required to comply with or to conform to any
federal, state or local laws or regulations.
4.3 No Liability.
Neither any member of the Board nor any member of the Committee
shall be liable to any person for any act or determination made
in good faith with respect to the Plan or any Option or Award
granted hereunder.
4.4 Majority Rule.
A majority of the members of the Committee shall constitute a
quorum, and any action taken by a majority at a meeting at which
a quorum is present, or any action taken without a meeting
evidenced y a writing executed by all the members of the
Committee, shall constitute the action of the Committee.
4.5 Company Assistance.
The Company shall supply full and timely information to the
Committee on all matters relating to eligible persons, their
employment, death, retirement, disability or other termination of
employment, and such other pertinent facts as the Committee may
require. The Company shall furnish the Committee with such
clerical and other assistance as is necessary in the performance
of its duties.
ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN
5.1 Limitations.
Shares subject to an Option or issued as an Award may be either
authorized and unissued shares or shares issued and later
acquired by the Company. Subject to any antidilution adjustment
pursuant to the provisions of Section 5.2 hereof, the maximum
number of shares of Stock that may be issued hereunder shall be
1,250,000 (of which a maximum of 80,000 shares may be issued as
Restricted Stock). Shares
(i) covered by any unexercised portion of an Option
that has terminated for any reason;
(ii) covered by any forfeited portion of an Award
(except any portion as to which the Grantee has received, and not
forfeited, dividends or other benefits of ownership other than
voting rights);
(iii) withheld in payment of the Option Price or
withholding taxes; or
(iv) issued hereunder but equal to the number of shares
surrendered in payment of the Option Price or withholding taxes
or purchased by the Company for an aggregate price not exceeding
the aggregate cash received from Grantees in payment of Option
Prices or withholding taxes, may each again be optioned or
awarded under the Plan, and such shares shall not be considered
as having been optioned or issued in computing the number of
shares of Stock remaining available for option or award
hereunder.
5.2 Antidilution.
(a) In the event that the outstanding shares of Stock are
changed into or exchanged for a different number or kind of
shares or other securities of the Company by reason of merger,
consolidation, reorganization, recapitalization,
reclassification, combination or exchange of shares, stock split
or stock dividend, or in the event that any spin-off, spin-out or
other distribution of assets materially affects the price of the
Company's stock:
(i) The aggregate number and kind of shares of Stock
for which Options or Awards may be granted hereunder shall be
adjusted proportionately by the Committee; and
(ii) The rights of Optionees (concerning the number of
shares subject to Options and the Option Price) under outstanding
Options and the rights of the holders of Awards (concerning the
terms and conditions of the lapse of any then-remaining
restrictions), shall be adjusted proportionately by the
Committee.
(b) If the Company shall be a party to any reorganization in
which it does not survive, involving merger, consolidation, or
acquisition of the stock or substantially all the assets of the
Company, the Committee, in its discretion, may:
(i) notwithstanding other provisions hereof, declare
that all Options granted under the Plan shall become exercisable
immediately notwithstanding the provisions of the respective
Option Agreements regarding exercisability, that all such Options
shall terminate a specified period of time after the Committee
gives written notice of the immediate right to exercise all such
Options and of the decision to terminate all Options not
exercised within such period, and that all then-remaining
restrictions pertaining to Awards under the Plan shall
immediately lapse; or
(ii) notify all Grantees that all Options or Awards
granted under the Plan shall be assumed by the successor
corporation or substituted on an equitable basis with options or
restricted stock issued by such successor corporation.
(c) If the Company is to be liquidated or dissolved in
connection with a reorganization described in paragraph 5.2(b),
the provisions of such paragraph shall apply. In all other
instances, the adoption of a plan of dissolution or liquidation
of the Company shall, notwithstanding other provisions hereof,
cause all then-remaining restrictions pertaining to Awards under
the Plan to lapse, and shall cause every Option outstanding under
the Plan to terminate to the extent not exercised prior to the
adoption of the plan of dissolution or liquidation by the
shareholders, provided that, notwithstanding other provisions
hereof, the Committee may declare all Options granted under the
Plan to be exercisable at any time on or before the fifth
business day following such adoption notwithstanding the
provisions of the respective Option Agreements regarding
exercisability.
(d) The adjustments described in paragraphs (a) through (c)
of this Section 5.2, and the manner of their application, shall
be determined solely by the Committee, and any such adjustment
may provide for the elimination of fractional share interests.
The adjustments required under this Article V shall apply to any
successors of the Company and shall be made regardless of the
number or type of successive events requiring such adjustments.
ARTICLE VI
OPTIONS
6.1 Types of Options Granted.
Within the limitations provided herein, Options may be granted to
one Employee at one or several times or to different Employees at
the same time or at different times, in either case under
different terms and conditions, as long as the terms and
conditions of each Option are consistent with the provisions of
the Plan. Without limitation of the foregoing, Options may be
granted subject to conditions based on the financial performance
of the Company or any other factor the Committee deems relevant.
6.2 Option Grant and Agreement. Each Option granted or modified
hereunder shall be evidenced
(a) by either minutes of a meeting or a written consent of
the Committee, and
(b) by a written Option Agreement executed by the Company
and the Optionee. The terms of the Option, including the Option's
duration, time or times of exercise, exercise price, whether the
Option is intended to be an ISO, whether the Option is
transferable under paragraph 6.8(b), and whether the Option is to
be accompanied by the right to receive a Reload Option, shall be
stated in the Option Agreement. Separate Option Agreements shall
be used for Options intended to be ISO's and those not so
intended, but any failure to use such separate Agreements shall
not invalidate, or otherwise adversely affect the Optionee's
rights under and interest in, the Options evidenced thereby.
6.3 Optionee Limitations.
The Committee shall not grant an ISO to any person who, at the
time the ISO would be granted:
(a) is not an Employee; or
(b) owns or is considered to own stock possessing more than
10% of the total combined voting power of all classes of stock of
the Employer, or any Parent or Subsidiary of the Employer;
provided, however, that this limitation shall not apply if at the
time an ISO is granted the Option Price is at least 110% of the
Fair Market Value of the Stock subject to such Option and such
Option by its terms would not be exercisable after the expiration
of five years from the date on which the Option is granted. For
the purpose of this paragraph (b), a person shall be considered
to own
(i) the stock owned, directly or indirectly, by or for
his brothers and sisters (whether by the whole or half blood),
spouse, ancestors and lineal descendants,
(ii) the stock owned, directly or indirectly, by or for
a corporation, partnership, estate, or trust in proportion to
such person's stock interest, partnership interest or beneficial
interest therein, and
(iii) the stock which such person may purchase under
any outstanding options of the Employer or of any Parent or
Subsidiary of the Employer.
6.4 Certain Limitations
(a) Limitation on Number of Shares. No Optionee shall be
granted, during any calendar year, Options to purchase in excess
of 50,000 shares of stock.
(b) $100,000 Limitation on ISO's. Except as provided below,
the Committee shall not grant an ISO to, or modify the exercise
provisions of outstanding ISO's held by, any person who, at the
time the ISO is granted (or modified), would thereby receive or
hold any incentive stock options (as described in Code section
422) of the Employer and any Parent or Subsidiary of the
Employer, such that the aggregate Fair Market Value (determined
as of the respective dates of grant or modification of each
option) of the stock with respect to which such incentive stock
options are exercisable for the first time during any calendar
year is in excess of $100,000; provided, that the foregoing
restriction on modification of outstanding ISO's shall not
preclude the Committee from modifying an outstanding ISO if, as a
result of such modification and with the consent of the Optionee,
such Option no longer constitutes an ISO; and provided that, if
the $100,000 limitation described in this Section 6.4 is
exceeded, an Option that otherwise qualifies as an ISO shall be
treated as an ISO up to the limitation and the excess shall be
treated as an Option not qualifying as an ISO. The preceding
sentence shall be applied by taking options intended to be ISO's
into account in the order in which they were granted.
6.5 Option Price.
The Option Price under each Option shall be determined by the
Committee. However, the Option Price shall not be less than the
Fair Market Value of the Stock on the date that the Option is
granted (or, in the case of an ISO that is subsequently modified,
on the date of such modification).
6.6 Exercise Period.
The period for the exercise of each Option granted hereunder
shall be determined by the Committee, but the Option Agreement
with respect to each Option intended to be an ISO shall provide
that such Option shall not be exercisable after a date not more
than ten years from the date of grant (or modification) of the
Option. In addition, no Option granted to an Employee who is also
an Officer or Director shall be exercisable prior to the
expiration of six months from the date such Option is granted,
other than in the case of the death or disability of such
Employee.
6.7 Option Exercise.
(a) Unless otherwise provided in the Option Agreement, an
Option may be exercised at any time or from time to time during
the term of the Option as to any or all whole shares that have
become Purchasable under the provisions of the Option, but not at
any time as to less than 100 shares unless the remaining shares
that have become so Purchasable are less than 100 shares. The
Committee shall have the authority to prescribe in any Option
Agreement that the Option may be exercised only in accordance
with a vesting schedule during the term of the Option.
(b) An Option shall be exercised by
(i) delivery to the Treasurer of the Company at its
principal office of written notice of exercise with respect to a
specified number of shares of Stock, and
(ii) payment to the Company at that office of the full
amount of the Option Price for such number of shares.
(c) The Option Price shall be paid in full upon the exercise
of the Option. The Committee may provide in an Option Agreement
that, in lieu of cash, all or any portion of the Option Price may
be paid by
(i) tendering to the Company shares of Stock duly
endorsed for transfer and owned by the Optionee, or
(ii) delivering to the Company an attestation of the
Optionee's then-current ownership of a number of shares equal to
the number thereby authorized to be withheld by the Company from
the shares otherwise deliverable upon exercise of the Option, in
each case to be credited against the Option Price at the Fair
Market Value of such shares on the date of exercise (however, no
fractional shares may be so transferred, and the Company shall
not be obligated to make any cash payments in consideration of
any excess of the aggregate Fair Market Value of shares
transferred over the aggregate Option Price).
(d) In addition to and at the time of payment of the Option
Price, the Optionee shall pay to the Company in cash the full
amount of any federal, state and local income, employment or
other taxes required to be withheld from the income of such
Optionee as a result of such exercise. However, in the discretion
of the Committee any Option Agreement may provide that all or any
portion of such tax obligations, together with additional taxes
not exceeding the actual additional taxes to be owed by the
Optionee as a result of such exercise, may, upon the irrevocable
election of the Optionee, be paid by
(i) tendering to the Company whole shares of Stock duly
endorsed for transfer and owned by the Optionee,
(ii) delivering to the Company an attestation of the
Optionee's then-current ownership of a number of shares equal to
the number thereby authorized to be withheld by the Company from
the shares otherwise deliverable upon exercise of the Option, or
(iii) authorizing the Company to withhold shares of
Stock otherwise issuable upon exercise of the Option, in either
case in that number of shares having a Fair Market Value on the
date of exercise equal to the amount of such taxes thereby being
paid, in all cases subject to such restrictions as the Committee
may from time to time determine, including any such restrictions
as may be necessary or appropriate to satisfy the conditions of
the exemption set forth in Rule 16b-3 under the 1934 Act.
(e) The holder of an Option shall not have any of the rights
of a shareholder with respect to the shares of Stock subject to
the Option until such shares have been issued upon exercise of
the Option.
6.8 Nontransferability of Option.
(a) Except as provided in paragraph 6.8(b), no Option or any
rights therein shall be transferable by an Optionee other than by
will or the laws of descent and distribution, or (except for an
ISO) pursuant to a Qualified Domestic Relations Order. During the
lifetime of an Optionee, an Option granted to that Optionee shall
be exercisable only by such Optionee, by such Optionee's guardian
or other legal representative, should one be appointed, or by
such Optionee's transferee permitted under paragraph 6.8(b).
(b) The Committee may, in its discretion, provide that all
or a portion of an Option (other than an ISO) may be transferred
by the Optionee to
(i) the spouse, children or grandchildren of the
Optionee ("Immediate Family Members"),
(ii) a trust or trusts for the exclusive benefit of
such Immediate Family Members, or
(iii) a partnership in which the Optionee and or such
Immediate Family Members are the only partners.
Following transfer, any such Option shall continue to be subject
to the same terms and conditions as were applicable immediately
prior to transfer, including those terms and conditions governing
transfer and the effect on such Option of the termination of
employment of the Optionee. The Company shall have no obligation
to any transferee to provide notice of any termination of an
Option as a result of termination of the Optionee's employment.
The Committee may specify as a condition of any such transfer the
manner in which the Optionee shall remain responsible for the
payment of taxes required to be withheld as a result of the
exercise of such transferred Option.
6.9 Termination of Employment.
The Committee shall have the power to specify, with respect to
the Options granted to any particular Optionee, the effect upon
such Optionee's right to exercise an Option of the termination of
such Optionee's employment under various circumstances, which
effect may include (but is not limited to) immediate or deferred
termination of such Optionee's rights under an Option, or
acceleration of the date at which an Option may be exercised in
full. With respect to an ISO, such effects shall be consistent
with applicable requirements for treatment as an ISO.
6.10 Employment Rights.
Options granted under the Plan shall not be affected by any
change of employment so long as the Optionee continues to be an
Employee. Nothing in the Plan or in any Option Agreement shall
confer on any person any right to continue in the employ of the
Company or any Subsidiary of the Company, or shall interfere in
any way with the right of the Company or any such Subsidiary to
terminate such person's employment at any time.
6.11 Certain Successor Options.
To the extent not inconsistent with the terms, limitations and
conditions of Code section 422, and any regulations promulgated
with respect thereto, an Option issued in respect of an option
held by an employee to acquire stock of any entity acquired, by
merger or otherwise, by the Company (or by any Subsidiary of the
Company) may contain terms that differ from those stated in this
Article VI, but solely to the extent necessary to preserve for
any such employee the rights and benefits contained in such
predecessor option, or to satisfy the requirements of Code
section 424(a).
6.12 Conditions to Issuing Option Stock.
The Company shall not be required to issue or deliver any Stock
upon the full or partial exercise of any Option prior to
fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock
exchanges on which the Stock is then listed;
(b) The completion of any registration or other
qualification of such shares that the Company shall determine to
be necessary or advisable under any federal or state law or under
the rulings or regulations of the Securities and Exchange
Commission or any other governmental regulatory body, or the
Company's determination that an exemption is available from such
registration or qualification;
(c) The obtaining of any approval or other clearance from
any federal or state governmental agency that the Company shall
determine to be necessary or advisable; and
(d) The lapse of such reasonable period of time following
exercise as shall be appropriate for reasons of administrative
convenience. Unless the shares of Stock covered by the Plan shall
be the subject of an effective registration statement under the
Securities Act of 1933, as amended, stock certificates issued and
delivered to Optionees shall bear such restrictive legends as the
Company shall deem necessary or advisable pursuant to applicable
federal and state securities laws.
6.13 Automatic Option Grants to Certain Directors.
(a) Options for New Directors. Each person who is not an
Employee, or an employee of any Parent of the Company, shall
automatically, and without any action of the Board or the
Committee, be granted, on the first day on which such person
serves as a Director, an Option for the purchase of 10,000 shares
of Stock if such first day of service occurs prior to 1999, and
of 15,000 shares if such first day occurs in 1999 or thereafter
(subject in all cases to automatic proportionate adjustment for
stock splits or stock dividends, and otherwise to proportionate
adjustment by the Committee as provided in Section 5.2). Each
such Option shall become exercisable as to one-fifth of the
subject shares on the date that is six months after the date of
grant, and as to an additional one-fifth of the subject shares on
each of the first, second, third and fourth anniversaries of such
six-month date. Persons receiving such Option prior to 1999
shall also be granted, automatically and without further action
of the Board or the Committee, upon election in 1999 to a further
term of service as a Director, an Option for 1,000 shares for
each 2,000 shares of such original Option not yet exercisable as
of such 1999 election, which additional Option shall become
exercisable as to 1,000 shares on each date on which an
additional 2,000 shares of the original Option becomes
exercisable.
(b) Additional Options for Continuing Service. Each person
who is not at that time an Employee, or an employee of any Parent
of the Company, shall automatically and without any action of the
Board or the Committee, be granted, on the date on which such
person is elected to a new one-year term of service beginning
after such person has completed five one-year terms of service
following the grant (whether under this Plan or otherwise)to such
person of options for at least 10,000 shares that become
exercisable based on continued service as a Director, and on each
subsequent date on which such person is elected to a further term
of service as a Director, an Option for the purchase of 2,500
shares of Stock for elections arriving prior to 1999, and of
3,000 shares for elections occurring in 1999 and thereafter
(subject in all cases to automatic proportionate adjustment for
stock splits or stock dividends, and otherwise to proportionate
adjustment by the Committee as provided in Section 5.2). Each
such Option shall become exercisable on the date that is six
months after the date of grant.
(c) Other Terms of Automatic Options. Each Option
automatically granted under this Section 6.13 shall not be an
ISO, shall not include the right to receive a Reload Option, and
shall have an Option Price equal to the Fair Market Value of the
Stock on the date of grant. Each such Option shall become
immediately exercisable in the event a party other than the
Company or any Parent or Subsidiary of the Company purchases or
otherwise acquires shares of Stock pursuant to a tender offer or
exchange offer for such shares, or any person or group becomes
the beneficial owner (for the purposes of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) of 50% or more of
the outstanding shares of the Stock. To the extent such an Option
shall have become exercisable, it shall be non-forfeitable and
shall remain exercisable until the tenth anniversary of its date
of grant, but if the Grantee ceases to be a Director for any
reason, any portion of such Option that is not at that time
exercisable shall immediately terminate and shall not thereafter
become exercisable. The Option Price for each such Option may be
paid in cash or in the manners specified in the second sentence
of paragraph 6.7(c) hereof. In addition, any taxes related to the
exercise of each such Option may be paid in the manner
contemplated in the second sentence of paragraph 6.7(d) hereof.
ARTICLE VII
RESTRICTED STOCK
7.1 Awards of Restricted Stock.
The Committee may grant Awards of Restricted Stock upon
determination by the Committee, acting pursuant to the delegation
hereby of the Board's authority to make such determinations, that
the value or other benefit to the Company of the services of a
Grantee theretofore performed or to be performed as a condition
of the lapse of restrictions applicable to such Restricted Stock,
or the benefit to the Company of the incentives created by the
issuance thereof, is adequate consideration for the issuance of
such shares. Each such Award shall be governed by a Restriction
Agreement between the Company and the Grantee. Each Restriction
Agreement shall contain such restrictions, terms and conditions
as the Committee shall, in its discretion, determine, and may
require that an appropriate legend be placed on the certificates
evidencing the subject Restricted Stock. Shares of Restricted
Stock granted pursuant to an Award hereunder shall be issued in
the name of the Grantee as soon as reasonably practicable after
the Award is granted, provided that the Grantee has executed the
Restriction Agreement governing the Award, the appropriate blank
stock powers and, in the discretion of the Committee, an escrow
agreement and any other documents which the Committee may require
as a condition to the issuance of such shares. If a Grantee shall
fail to execute the foregoing documents, within any time period
prescribed by the Committee, the Award shall be null and void. At
the discretion of the Committee, shares of Restricted Stock
issued in connection with an Award shall be held by the Company
or deposited together with the stock powers with an escrow agent
designated by the Committee. Unless the Committee determines
otherwise and as set forth in the Restriction Agreement, upon
issuance of such shares, the Grantee shall have all of the rights
of a shareholder with respect to such shares, including the right
to vote the shares and to receive all dividends or other
distributions paid or made with respect to them.
7.2 Non-Transferability.
Until any restrictions upon Restricted Stock awarded to a Grantee
shall have lapsed in a manner set forth in Section 7.3, such
shares of Restricted Stock shall not be transferable other than
by will or the laws of descent and distribution, or pursuant to a
Qualified Domestic Relations Order, nor shall they be delivered
to the Grantee.
7.3 Lapse of Restrictions.
Restrictions upon Restricted Stock awarded hereunder shall lapse
at such time or times (but, with respect to any award to an
Employee who is also a Director or Officer, not less than six
months after the date of the Award) and on such terms and
conditions as the Committee shall, in its discretion, determine
at the time the Award is granted or thereafter.
7.4 Termination of Employment.
The Committee shall have the power to specify, with respect to
each Award granted to any particular Employee, the effect upon
such Grantee's rights with respect to such Restricted Stock of
the termination of such Grantee's employment under various
circumstances, which effect may include (but is not limited to)
immediate or deferred forfeiture of such Restricted Stock or
acceleration of the date at which any then-remaining restrictions
shall lapse.
7.5 Treatment of Dividends.
At the time an Award of Restricted Stock is made the Committee
may, in its discretion, determine that the payment to the Grantee
of any dividends, or a specified portion thereof, declared or
paid on such Restricted Stock shall be
(i) deferred until the lapsing of the relevant
restrictions, and
(ii) held by the Company for the account of the Grantee
until such time.
In the event of such deferral, there shall be credited at the end
of each year (or portion thereof) interest on the amount of the
account at the beginning of the year at a rate per annum
determined by the Committee. Payment of deferred dividends,
together with interest thereon, shall be made upon the lapsing of
restrictions imposed on such Restricted Stock, and any dividends
deferred (together with any interest thereon) in respect of
Restricted Stock shall be forfeited upon any forfeiture of such
Restricted Stock.
7.6 Delivery of Shares.
Within a reasonable period of time following the lapse of the
restrictions on shares of Restricted Stock, the Committee shall
cause a stock certificate or certificates to be delivered to the
Grantee with respect to such shares. Such shares shall be free of
all restrictions hereunder, except that if the shares of stock
covered by the Plan shall not be the subject of an effective
registration statement under the Securities Act of 1933, as
amended, such stock certificates shall bear such restrictive
legends as the Company shall deem necessary or advisable pursuant
to applicable federal and state securities laws.
7.7 Payment of Withholding Taxes.
(a) The Restriction Agreement may authorize the Company to
withhold from compensation otherwise due to the Grantee the full
amount of any federal, state and local income, employment or
other taxes required to be withheld from the income of such
Grantee as a result of the lapse of the restrictions on shares of
Restricted Stock, or otherwise as a result of the recognition of
taxable income with respect to an Award. At the time of and as a
condition to the delivery of a stock certificate or certificates
pursuant to Section 7.6, the Grantee shall pay to the Company in
cash any balance owed with respect to such withholding
requirements.
(b) In the discretion of the Committee, any Restriction
Agreement may provide that all or any portion of the tax
obligations otherwise payable in the manner set forth in
paragraph 7.7(a), together with additional taxes not exceeding
the actual additional taxes to be owed by the Grantee with
respect to the Award, may, upon the irrevocable election of the
Grantee, be paid by tendering to the Company whole shares of
Stock duly endorsed for transfer and owned by the Grantee, or by
authorizing the Company to withhold and cancel shares of Stock
otherwise deliverable pursuant to Section 7.6, in either case in
that number of shares having a Fair Market Value on the date that
taxable income is recognized equal to the amount of such taxes
thereby being paid, in all cases subject to such restrictions as
the Committee may from time to time determine.
ARTICLE VIII
TERMINATION, AMENDMENT AND MODIFICATION OF PLAN
The Board may at any time,
(i) cause the Committee to cease granting Options and
Awards,
(ii) terminate the Plan, or
(iii) in any respect amend or modify the Plan.
However, the Board (unless its actions are approved or ratified
by the shareholders of the Company within twelve months of the
date the Board amends the Plan) may not amend the Plan to
materially increase the number of shares of Stock available under
the Plan to Directors or Officers. No termination, amendment or
modification of the Plan shall affect adversely a Grantee's
rights under an Option Agreement or Restriction Agreement without
the consent of the Grantee or his or her legal representative.
From and after the first date on which an Option is automatically
granted pursuant to Section 6.13, the provisions of such Section
6.13 may not be amended in any manner more frequently than once
every six months, other than to comport with changes in the Code,
the Employee Retirement Income Security Act of 1974, as amended,
or the rules and regulations promulgated under the Code or such
Act.
ARTICLE IX
MISCELLANEOUS
9.1 Replacement or Amended Grants.
At the sole discretion of the Committee, and subject to the terms
of the Plan, the Committee may modify outstanding Options or
Awards or accept the surrender of outstanding Options or Awards
on terms specified by the Committee, which terms may include the
grant of new Options or Awards in substitution for them. However
no modification of an Option or Award shall adversely affect a
Grantee's rights under an Option Agreement or Restriction
Agreement without the consent of the Grantee or his or her legal
representative.
9.2 Forfeiture for Competition.
If a Grantee provides services to a competitor of the Company or
any of its Subsidiaries, whether as an employee, officer,
director, independent contractor, consultant, agent or otherwise,
such services being of a nature that can reasonably be expected
to involve the skills and experience used or developed by the
Grantee while a Director or an Employee, then that Grantee's
rights under any Options outstanding hereunder shall be forfeited
and terminated, and any shares of Restricted Stock held by such
Grantee subject to remaining restrictions shall be forfeited,
subject in each case to a determination to the contrary by the
Committee.
9.3 Plan Binding on Successors.
The Plan shall be binding upon the successors of the Company.
9.4 Headings Not a Part of Plan.
Headings of Articles and Sections hereof are inserted for
convenience and reference, and do not constitute a part of the
Plan.
