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Exhibit 10.1
LITTON INDUSTRIES, INC.
2000 LONG-TERM STOCK INCENTIVE PLAN
SECTION 1. Purpose
The purpose of the Program is to promote the continued growth and
success of the Corporation by providing, or increasing, through the Incentive
Awards described herein, the proprietary interests of its Employees who are in a
position to contribute materially to the future accomplishments of the
Corporation. The Program is intended to enable the Corporation through these
incentives to attract and retain experienced Employees of exceptional talent and
industry and align their interest with that of the stockholders to the economic
advantage of the Corporation.
SECTION 2. Definitions
Unless the context clearly indicates otherwise, the following terms,
when used in this Program, shall have the meanings set forth in this Section 2.
(a) "Board" shall mean the Board of Directors of Litton Industries,
Inc.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean the Compensation and Selection Committee
of the Board or such other committee as may be designated by the
Board. The Committee shall consist of two or more members of the
Board who are Disinterested Persons.
(d) "Commission" shall mean the Securities and Exchange Commission
or any successor agency.
(e) "Corporation" shall mean Litton Industries, Inc., and its
subsidiaries.
(f) "Disinterested Person" shall mean a member of the Board who
qualifies as a disinterested person as defined in Rule 16b-3, as
promulgated by the Commission under the Exchange Act or any
successor definition adopted by the Commission and also
qualifies as an "outside director" for purposes of Section
162(m) of the Code.
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(g) "Employee" shall mean any common law employee, including
officers, of the Corporation, as determined in the Code and the
Treasury Regulations thereunder.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(i) "Fair Market Value" shall mean (1) the average between the
highest and lowest selling prices of the Stock on a particular
day or (2) if there are no sales on such date, then the average
of the highest and lowest prices of the first preceding day and
the first succeeding day on which sales were made. Such prices
shall be those reported in the New York Stock Exchange-Composite
Transactions of The Wall Street Journal or such other
publication as the Committee designates from time to time.
(j) "Grantee" shall mean an Employee granted an Incentive Award.
(k) "Incentive Award" shall mean a Stock Option, a Stock
Appreciation Right or Restricted Stock granted pursuant to the
Program.
(I) "Incentive Stock Option" shall mean a Stock Option intended to
qualify under Section 422 of the Code and the Treasury
Regulations thereunder.
(m) "Nonstatutory Stock Option" shall mean any Stock Option that is
not intended to qualify as an Incentive Stock Option under
Section 422 of the Code and the Treasury Regulations thereunder.
(n) "Performance Objectives" shall mean the goals, if any, upon
which the Committee may condition the exercisability of one or
more Incentive Awards which goals may relate to profits, profit
growth, profit-related return ratios, cash flow or total
shareholder return; where such goals may be stated in absolute
terms or relative to peer performance.
(o) "Program" shall mean the Litton Industries, Inc., 2000 Long-Term
Stock Incentive Plan as set forth herein and as amended from
time to time.
(p) "Restricted Stock" shall mean an Incentive Award granted under
Section 9.
(q) "Rule 16b-3" shall mean Rule 16b-3, as promulgated by the
Commission under Section 16(b) of the Exchange Act.
(r) "Stock" shall mean shares of the Common Stock of Litton
Industries, Inc.
(s) "Stock Appreciation Right" shall mean a right granted under
Section 8.
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(t) "Stock Option" shall mean either an Incentive Stock Option or a
Nonstatutory Stock Option.
(u) "Subsidiary" shall mean any subsidiary corporation of the
Corporation as defined in Section 424 of the Code.
(v) "Totally Disabled" shall mean the condition when an Employee is
wholly prevented by occupational or non-occupational injury or
sickness from performing any and every duty pertaining to his or
her regular occupation or employment.
(w) "Treasury Regulations" shall mean the regulations under the
Code.
SECTION 3. Shares of Stock Subject to Grants
Subject to the adjustments required under the provisions of Section 10
hereof, the shares of Stock which may be issued or transferred pursuant to
Incentive Awards shall consist of 4,000,000 shares of Stock authorized and
reserved for issuance under the Program. 200,000 of such shares of Stock shall
be available for the grant of Restricted Stock. Shares of Stock which have been
previously authorized to be granted as Incentive Awards, but which were not
granted, or, if granted, expired without having been exercised in full or shares
of Stock which are reacquired in any way by the Corporation shall be available
for the grant of Incentive Awards at any time prior to the termination of the
Program. In instances where an Incentive Award is settled in cash, the shares of
Stock, if any, covered by such Incentive Award shall remain available for
issuance under the Program. Likewise, the payment of cash dividends and dividend
equivalents paid in cash in conjunction with any outstanding Incentive Awards
shall not be counted against the shares of Stock available for issuance under
the Program. Any shares of Stock that are issued by the Corporation, and any
Incentive Awards that are granted through the assumption of, or in substitution
for, any outstanding Incentive Awards previously granted by an acquired entity
shall not be counted against the shares of Stock available for issuance under
the Program.
SECTION 4. Administration of the Program
The Program shall be administered by the Committee. Subject to the
express provisions of the Program, the Committee shall have plenary authority to
interpret the Program; to prescribe, amend, and rescind rules and regulations
relating to it; to determine the terms and provisions of Incentive Award
agreements and amendments thereto; and to make any and all other determinations
necessary or advisable for the administration of the Program. The Committee may
modify, amend or adjust the terms and conditions of any Incentive Award at any
time, including, but not limited to, the Performance Objectives or measurements
applicable to performance-based Incentive Awards pursuant to the terms of the
Program; provided, however, that the Committee
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shall not have the authority to reduce the exercise price of any outstanding
Stock Option, other than pursuant to Section 10 hereof, and further provided,
that no such modification or amendment may be made if it could, in the best
judgment of the Committee, prevent any Incentive Award held by any Grantee who
may be subject to the limits on deductibility of compensation provided in
Section 162(m) of the Code from qualifying for the performance-based
compensation exemption under Section 162(m) of the Code. Any controversy or
claim arising out of or related to this Program shall be determined unilaterally
by and at the sole discretion of the Committee.
The Committee may act only by a majority of its members. The Committee
may (i) delegate to one or more executive officers of the Corporation the
authority to make decisions pursuant to paragraphs (b), (c), (e) and (f) of
Section 5 (provided that no such delegation may be made that would cause
Incentive Awards or other transactions under the Program to cease to be exempt
from Section 16(b) of the Exchange Act or Section 162(m) of the Code) and (ii)
authorize any one or more of their members or an officer of the Corporation to
execute and deliver documents on behalf of the Committee.
SECTION 5. Granting of Incentive Awards
(a) Any Employee of the Corporation shall be eligible to receive
Incentive Awards under the Program.
(b) The Committee shall determine and designate from time to time those
Employees who are to be granted Incentive Awards, the type of Incentive Award to
be granted, and the amount subject to each Incentive Award, provided, that in
any one fiscal year, no Grantee may be granted Incentive Awards covering more
than 250,000 shares of Stock.
(c) The Committee shall determine whether any particular Stock Option
shall become exercisable in one or more installments and the date or dates upon
which any such installments first become exercisable. Further, the Committee may
make such other provisions, including, but not limited to, Performance
Objectives.
(d) No Stock Option shall be exercisable more than ten years from the
date the Stock Option was granted.
(e) Upon the exercise of any Stock Option, the Grantee shall pay the
option exercise price provided in the particular Stock Option agreement. The
Committee may permit payment to be in Stock. To the extent Stock is tendered as
payment, it shall be valued at its then Fair Market Value.
(f) The Committee may at any time grant new Incentive Awards to an
Employee who has previously received Incentive Awards or other grants (including
other Stock Options) whether such prior Incentive Awards or such other grants
are still outstanding, or have previously been exercised in whole or in part.
The purchase price of
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the Incentive Awards may be established by the Committee without regard to the
existing Incentive Awards or such other grants. Further, the Committee may, with
the consent of the Grantee, amend the terms of any existing Incentive Award
previously granted to include any provisions which could be incorporated in such
Incentive Award at the time of such amendment. Solely to illustrate the
foregoing power, but without limiting its scope, such amendments may accelerate
the period of exercise or the vesting period of any Incentive Award, or
installment thereof, either absolutely or conditionally for whatever reasons the
Committee deems appropriate, including without limitation, compensatory
considerations, events which would result in the delisting of the Stock,
significant changes in the management or control of the Corporation, or the
occurrence of any attempt to effect such changes.
SECTION 6. Nonstatutory Stock Options
(a) There shall be available for the grant of Incentive Awards in the
form of Nonstatutory Stock Options the number of shares of Stock specified in
Section 3 of the Program, less the number of shares of Stock utilized for the
grant of Incentive Stock Options and Restricted Stock pursuant to Sections 7 and
9 of the Program.
(b) When granting a Nonstatutory Stock Option to a key Employee, the
Committee shall determine the purchase price of the Stock subject thereto. Such
price shall not be less than 100% of the Fair Market Value of such Stock on the
date the Nonstatutory Stock Option is granted.
(c) All provisions of this Program except Sections 7, 8 and 9 shall
apply to Nonstatutory Stock.
SECTION 7. Incentive Stock Options
An Incentive Award in the form of an Incentive Stock Option shall be
subject to the following provisions:
(a) Subject to subsections (c) and (d) hereof, there shall be available
for the grant of Incentive Awards in the form of Incentive Stock Options the
number of shares of Stock specified in Section 3 of the Program, less the number
of shares of Stock utilized for the grant of Nonstatutory Stock Options and
Restricted Stock pursuant to Sections 6 and 9 of the Program.
(b) When granting an Incentive Stock Option to a key Employee, the price
of an Incentive Stock Option shall not be less than 100% of the Fair Market
Value of the Stock subject thereto on the date Incentive Stock Option is
granted.
(c) Notwithstanding any other provisions hereof, in the case of
Incentive Stock Options, the aggregate Fair Market Value (determined at the time
the Incentive
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Stock Option is granted) of the Stock with respect to which Incentive Stock
Options are exercisable for the first time by the Grantee during any calendar
year (under all incentive stock option plans of the Grantee's employer
corporation and its parent and subsidiary corporations) shall not exceed
$100,000.
(d) All provisions of this Program except Sections 6, 8, 9 and 12(d)(ii)
and (iii) shall apply to Incentive Stock Options.
SECTION 8. Stock Appreciation Rights
Stock Appreciation Rights may be granted independently of or in
conjunction with all or part of any Stock Option granted under the Program. In
the case of an Incentive Stock Option, such rights may be granted only at the
time of grant of such Incentive Stock Option. In the case of a Stock
Appreciation Right granted with a related Stock Option, a Stock Appreciation
Right shall terminate and no longer be exercisable upon the termination or
exercise of the related Stock Option.
A Stock Appreciation Right may be exercised by a Grantee in accordance
with procedures established by the Committee and, in the case of a Stock
Appreciation Right granted with a related Stock Option, by surrendering the
applicable portion of the Stock Option in accordance with such procedures. Upon
the exercise of a Stock Appreciation Right, a Grantee shall be entitled to
receive an amount in cash, shares of Stock or both, equal in value to the excess
of the Fair Market Value of one share of Stock over the price per share
specified in the grant of the Stock Appreciation Right, which shall be not less
than the Fair Market Value of the Stock on the date of grant or in the related
Stock Option multiplied by the number of shares in respect of which the Stock
Appreciation Right shall have been exercised, with the Committee having the
right to determine the form of payment.
In the case of Stock Appreciation Rights not granted in conjunction with
Stock Options, the Committee may, prior to the grant, condition the vesting of
any such Stock Appreciation Right upon the attainment of Performance Objectives
and upon the continued service of the Grantee.
SECTION 9. Performance Based Restricted Stock
(a) The Committee shall, prior to grant, condition the vesting of
Restricted Stock upon the attainment of Performance Objectives and upon the
continued service of the Grantee.
To the extent required by Section 162(m) of the Code or otherwise deemed
advisable by the Committee, it shall be a condition precedent to the vesting of
Restricted Stock, or any installment thereof, that the Committee certify in
writing that any Performance Objectives relative to such vesting has or have in
fact been satisfied.
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(b) Shares of Restricted Stock shall be evidenced in such manner as the
Committee may deem appropriate, including book-entry registration or issuance of
one or more Stock certificates. Any certificate issued in respect of shares of
Restricted Stock shall be registered in the name of such Grantee and shall bear
an appropriate legend referring to the terms, conditions, and restrictions
applicable to such Restricted Stock, substantially in the following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the Litton Industries, Inc. 2000 Long-Term Stock
Incentive Plan and a Restricted Stock Agreement. Copies of such Plan and
Agreement are on file at the offices of Litton Industries, Inc., 21240
Burbank Boulevard, Woodland Hills, California 91367."
The Committee may require that the certificates evidencing such shares
of Stock be held in custody by the Corporation until the restrictions thereon
shall have lapsed and that, as a condition of any Incentive Award of Restricted
Stock, the Grantee shall have delivered a stock power, endorsed in blank,
relating to the Stock covered by such Incentive Award.
(c) The Committee shall determine the per share amount, if any, to be
paid by a Grantee for each Incentive Award in the form of Restricted Stock.
There shall be a minimum payment of the total par value of the Stock by the
Grantee to the Corporation as required by law. Each Incentive Award in the form
of Restricted Stock shall be confirmed by, and be subject to the terms of, a
Restricted Stock agreement.
SECTION 10. Adjustment Provisions
(a) If the shares of Stock outstanding are changed in number or class by
reason of a split-up, merger, consolidation, reorganization, reclassification,
recapitalization, or any capital adjustment, including a stock dividend, or if
any distribution is made to the holders of Stock other than a cash dividend,
then
(1) the aggregate number and class of shares of Stock or other
securities that may be issued or transferred pursuant to Sections 3, 6,
7, 8, or 9 and
(2) the number and class of shares or other securities which are
payable under outstanding Incentive Awards shall be adjusted as provided
hereinafter.
(b) Adjustments under this Section 10 shall be made in an equitable
manner by the Committee, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding, and conclusive. Such
adjustments may include (i) treating employment with a corporation the stock of
which was distributed to holders of
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Stock (or a subsidiary of such a corporation) as employment with the Corporation
for purposes of the Program and (ii) adjustments of the purchase price to be
paid per share of Stock under outstanding Incentive Awards.
(c) In the event of a corporate merger or consolidation, or the
acquisition by the Corporation of property or stock of an acquired corporation
or any reorganization or other transaction qualifying under Section 424 of the
Code, the Committee may, in accordance with the provisions of that Code section,
substitute Incentive Awards under this Program for incentive awards under the
plan of the acquired corporation provided (i) the excess of the aggregate Fair
Market Value of the outstanding Incentive Awards immediately after the
substitution over the aggregate price of such Incentive Awards is not more than
the similar excess immediately before such substitution and (ii) the new
Incentive Awards do not give the Employee additional benefits, including any
extension of the exercise period.
SECTION 11. Termination of Employment
(a) Unless otherwise determined by the Committee, if a Grantee incurs a
termination of employment, any Stock Option held by such Grantee shall thereupon
terminate, except that such Stock Option, to the extent then exercisable, or on
such accelerated basis as the Committee may determine, may be exercised for the
lesser of three months from the date of such termination of employment or the
balance of such Stock Option's term; provided, however, that if the Grantee dies
within such three-month period, any unexercised Stock Option held by such
Grantee shall notwithstanding the expiration of such three-month period,
continue to be exercisable to the extent to which it was exercisable at the time
of death for a period of 12 months from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter.
(b) If a Grantee incurs a termination of employment, he or she will be
considered to be an Employee for purposes of this Program so long as the
following conditions are met:
(i) The Grantee and the Corporation enter into a written
agreement, with the approval of the Secretary of the Committee, pursuant
to which the Grantee renders such advisory or consulting services to the
Corporation as may be required by said agreement from time to time;
(ii) The Grantee shall not, without prior written consent of the
Corporation, disclose or utilize confidential information or material
concerning the Corporation, its business and affairs, except in
furtherance of the Corporation's interests and at its request; and
(iii) The Grantee shall not engage in any activity which competes
or conflicts with, or is inimical to, the best interests of the
Corporation.
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SECTION 12. General Provisions
(a) Each Incentive Award shall be evidenced by a written instrument
containing such terms and conditions, not inconsistent with this Program, as the
Committee shall approve.
(b) The granting of an Incentive Award in any year shall not give the
Grantee any right to similar grants in future years or any right to be retained
in the employ of the Corporation, and all Employees shall remain subject to
discharge to the same extent as if the Program were not in effect.
(c) No Employee, and no beneficiary or other person claiming under or
through such Employee, shall have any right, title, or interest by reason of any
Incentive Award to any particular assets of the Corporation or any shares of
Stock allocated or reserved for the purposes of the Program or subject to any
Incentive Award except as set forth herein. The Corporation shall not be
required to establish any fund or make any other segregation of assets to assure
the payment of any Incentive Award.
(d) The Committee shall determine at the time an Incentive Award is
granted the extent to which such Incentive Award is transferable; provided,
however, that Incentive Awards granted under the Program shall not be
transferable or assignable other than:
(i) by will or the laws of descent and distribution;
(ii) by gift or other transfer of an award to any trust or estate
in which the original Incentive Award Grantee or such Grantee's spouse
or other immediate relative has a substantial beneficial interest, or to
a spouse or other immediate relative, provided that any such transfer is
permitted subject to Rule 16b-3 under the Exchange Act as in effect when
such transfer occurs and the Board does not rescind this provision prior
to such transfer; or
(iii) pursuant to a qualified domestic relations order (as
defined by the Code).
However, any Incentive Award so transferred shall continue to be subject to all
the terms and conditions contained in the instrument evidencing such Incentive
Award. Notwithstanding the foregoing, Incentive Awards granted as Incentive
Stock Options or as Stock Appreciation Rights granted in conjunction with
Incentive Stock Options shall (i) only be transferable pursuant to (i) above;
and (ii) shall be exercisable during the Grantee's lifetime only by the Grantee.
In the event that a Grantee terminates employment with the Corporation
to assume a position with a governmental, charitable, educational or non-profit
institution,
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the Committee may subsequently authorize a third party, including but not
limited to a "blind" trust, to act on behalf of and for the benefit of such
Grantee regarding any outstanding Incentive Awards held by the Grantee
subsequent to such termination of employment. If so permitted by the Committee,
a Grantee may designate a beneficiary or beneficiaries to exercise the rights of
the Grantee and receive any distribution under the Program upon the death of the
Grantee.
(e) Notwithstanding any other provision of this Program or agreements
made pursuant thereto, the Corporation shall not be required to issue or deliver
any certificate or certificates for shares of Stock under this Program prior to
fulfillment of all of the following conditions:
(1) The listing, or approval for listing upon notice of issuance,
of such shares on the New York Stock Exchange, Inc., or such other
securities exchange as may at the time be the principal market for the
Stock;
(2) Any registration or other qualification of such shares of the
Corporation under any state or federal law or regulation, or the
maintaining in effect of any such registration or other qualification
which the Committee shall, in its absolute discretion upon the advice of
counsel, deem necessary or advisable; and
(3) The obtaining of any other consent, approval, or permit from
any state or federal governmental agency which the Committee shall, in
its absolute discretion after receiving the advice of counsel, determine
to be necessary or advisable.
(f) All payments to Grantees or to their legal representatives shall be
subject to any applicable tax, community property, or other statutes or
regulations of the United States or of any state having jurisdiction thereof.
The Grantee may be required to pay to the Corporation the amount of any
withholding taxes which the Corporation is required to withhold with respect to
an Incentive Award or its exercise. In such instances, the Committee may, in its
discretion and subject to such rules as it may adopt, permit the Grantee to
satisfy such obligations, in whole or in part, by electing to have the
Corporation withhold shares of Stock, or by transferring to the Corporation
shares of Stock, having a then Fair Market Value which is equal to or more than
the amount of withholding tax required to be withheld.
(g) In the case of a grant of an Incentive Award to any Employee of a
Subsidiary, the Corporation, may, if the Committee so directs, issue or transfer
the shares, if any, covered by the Incentive Award to the Subsidiary, for such
lawful consideration as the Committee may specify, upon the condition or
understanding that the Subsidiary will transfer the shares of Stock to the
Employee in accordance with the terms of the Incentive Award specified by the
Committee pursuant to the provisions of the Program.
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SECTION 13. Amendment or Termination
The Board or the Committee with the approval of the Board, may, at any
time, alter, amend, suspend, discontinue, or terminate this Program; provided,
however, that such action shall not adversely affect the right of Grantees to
Incentive Awards previously granted. No amendment without the approval of the
stockholders of the Corporation may (i) increase the maximum number of shares of
Stock which may be awarded under the Program in the aggregate; (ii) materially
increase the benefits accruing to Grantees under the Program; (iii) change the
class of Employees eligible to receive Incentive Awards under the Program; or
(iv) materially modify the eligibility requirements for participation in the
Program.
SECTION 14. Effective Date and Duration of Program
The Program became effective September 21, 2000 upon its approval by the
Board. The Program, as so amended, shall terminate on September 20, 2010, the
day immediately preceding the tenth anniversary of the date of adoption of the
first of such amendments by the Board, and no Incentive Award may be granted
under the Program thereafter, but such termination shall not affect any
Incentive Award theretofore granted.
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