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EXHIBIT 10.12
NORTHWESTERN STEEL AND WIRE COMPANY
2000 STOCK INCENTIVE PLAN
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NORTHWESTERN STEEL AND WIRE COMPANY
2000 STOCK INCENTIVE PLAN
1. ESTABLISHMENT AND PURPOSE.
The Northwestern Steel and Wire Company 2000 Stock Incentive Plan (the
"Plan") is established by Northwestern Steel and Wire Company (the "Company") to
attract and retain persons eligible to participate in the Plan; motivate
Participants to achieve long-term Company goals; and further align Participants'
interests with those of the Company's other stockholders. The Plan is adopted as
of November 18, 1999, subject to approval by the Company's stockholders within
12 months after such adoption date.
Certain terms used herein are defined as set forth in SECTION 10.
2. ADMINISTRATION; ELIGIBILITY.
The Plan shall be administered by a Committee; provided, however, that, if
at any time no Committee shall be in office, the Plan shall be administered by
the Board. The Plan may be administered by different Committees with respect to
different groups of Eligible Individuals. As used herein, the term
"Administrator" means the Board or any of its Committees as shall be
administering the Plan.
The Administrator shall have plenary authority to grant Awards pursuant to
the terms of the Plan to Eligible Individuals. Participation shall be limited to
such persons as are selected by the Administrator. Awards may be granted as
alternatives to, in exchange or substitution for, or replacement of, awards
outstanding under the Plan or any other plan or arrangement of the Company or a
Subsidiary (including a plan or arrangement of a business or entity, all or a
portion of which is acquired by the Company or a Subsidiary). The provisions of
Awards need not be the same with respect to each Participant.
Among other things, the Administrator shall have the authority, subject to
the terms of the Plan:
(a) to select the Eligible Individuals to whom Awards may from time to
time be granted;
(b) to determine whether and to what extent Stock Options, Stock
Appreciation Rights, Stock Awards or any combination thereof are to be
granted hereunder;
(c) to determine the number of shares of Stock to be covered by each
Award granted hereunder;
(d) to approve forms of agreement for use under the Plan;
(e) to determine the terms and conditions, not inconsistent with the
terms of this Plan, of any Award granted hereunder (including, but not
limited to, the option price, any vesting restriction or limitation, any
vesting acceleration or forfeiture waiver and any right of repurchase,
right of first refusal or other transfer restriction regarding any Award
and the shares of Stock relating thereto, based on such factors or criteria
as the Administrator shall determine);
(f) subject to SECTION 8(a), to modify, amend or adjust the terms and
conditions of any Award, at any time or from time to time, including, but
not limited to, with respect to (i) performance goals and targets
applicable to performance-based Awards pursuant to the terms of the Plan
and (ii) extension of the post-termination exercisability period of Stock
Options;
(g) to determine to what extent and under what circumstances Stock and
other amounts payable with respect to an Award shall be deferred;
(h) to determine the Fair Market Value; and
(i) to determine the type and amount of consideration to be received
by the Company for any Stock Award issued under SECTION 6.
The Administrator shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and
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provisions of the Plan and any Award issued under the Plan (and any agreement
relating thereto) and to otherwise supervise the administration of the Plan.
Except to the extent prohibited by applicable law, the Administrator may
allocate all or any portion of its responsibilities and powers to any one or
more of its members and may delegate all or any portion of its responsibilities
and powers to any other person or persons selected by it. Any such allocation or
delegation may be revoked by the Administrator at any time. The Administrator
may authorize any one or more of their members or any officer of the Company to
execute and deliver documents on behalf of the Administrator.
Any determination made by the Administrator or pursuant to delegated
authority pursuant to the provisions of the Plan with respect to any Award shall
be made in the sole discretion of the Administrator or such delegate at the time
of the grant of the Award or, unless in contravention of any express term of the
Plan, at any time thereafter. All decisions made by the Administrator or any
appropriately delegated officer pursuant to the provisions of the Plan shall be
final and binding on all persons, including the Company and Participants.
No member of the Administrator, and no officer of the Company, shall be
liable for any action taken or omitted to be taken by such individual or by any
other member of the Administrator or officer of the Company in connection with
the performance of duties under this Plan, except for such individual's own
willful misconduct or as expressly provided by law.
3. STOCK SUBJECT TO PLAN.
Subject to adjustment as provided in this SECTION 3, the aggregate number
of shares of Stock which may be delivered under the Plan shall not exceed
9,068,453 shares of stock, which number shall be reduced, on any given date, by
the number of common shares that are subject to options which have been granted
pursuant to our Existing Stock Option Plans and are outstanding on such date and
by the number of common shares acquired upon the exercise of options granted
pursuant to our Existing Stock Option Plans, which exercise was subsequent to
the date this Plan was adopted.
To the extent any shares of Stock covered by an Award are not delivered to
a Participant or beneficiary thereof because the Award expires, is forfeited,
canceled or otherwise terminated, or the shares of Stock are not delivered
because the Award is settled in cash or used to satisfy the applicable tax
withholding obligation, such shares shall not be deemed to have been delivered
for purposes of determining the maximum number of shares of Stock available for
delivery under the Plan. If the exercise price of any Stock Option is satisfied
by tendering shares of Stock to the Company (by either actual delivery or by
attestation), only the number of shares of Stock issued, net of the shares of
Stock tendered, shall be deemed delivered for purposes of determining the
maximum number of shares of Stock available for delivery under the Plan. In the
event that shares of Stock issued under the Plan are reacquired by the Company
pursuant to any forfeiture provision, right of repurchase or right of first
refusal (or other similar right), such shares shall not be deemed to have been
delivered for purposes of determining the maximum number of shares of Stock
available for delivery under the Plan.
Subject to adjustment as provided in this SECTION 3, the maximum number of
shares that may be covered by Stock Options, Stock Appreciation Rights and Stock
Awards, in the aggregate, granted to any one Participant during any calendar
year shall be 400,000 shares.
In the event of any Company stock dividend, stock split, combination or
exchange of shares, recapitalization or other change in the capital structure of
the Company, corporate separation or division of the Company (including, but not
limited to, a split-up, spin-off, split-off or distribution to Company
stockholders other than a normal cash dividend), sale by the Company of all or a
substantial portion of its assets (measured on either a stand-alone or
consolidated basis), reorganization, rights offering, partial or complete
liquidation, or any other corporate transaction, Company share offering or other
event involving the Company and having an effect similar to any of the
foregoing, the Administrator may make such substitution or adjustments in the
(A) number and kind of shares that may be delivered under the Plan, (B)
additional maximums imposed in the immediately preceding paragraph, (C) number
and kind of shares subject to outstanding Awards, (D) exercise price of
outstanding Stock Options and Stock Appreciation Rights and (E) other
characteristics
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or terms of the Awards as it may determine appropriate in its sole discretion to
equitably reflect such corporate transaction, share offering or other event;
provided, however, that the number of shares subject to any Award shall always
be a whole number.
4. STOCK OPTIONS.
Stock Options may be granted alone or in addition to other Awards granted
under the Plan and may be of two types: Incentive Stock Options and
Non-Qualified Stock Options. Any Stock Option granted under the Plan shall be in
such form as the Administrator may from time to time approve.
The Administrator shall have the authority to grant any Participant
Incentive Stock Options, Non-Qualified Stock Options or both types of Stock
Options (in each case with or without Stock Appreciation Rights). Incentive
Stock Options may be granted only to employees of the Company and its
subsidiaries (within the meaning of Section 424(f) of the Code). To the extent
that any Stock Option is not designated as an Incentive Stock Option or, even if
so designated, does not qualify as an Incentive Stock Option, it shall
constitute a Non-Qualified Stock Option.
Stock Options shall be evidenced by option agreements, each in a form
approved by the Administrator. An option agreement shall indicate on its face
whether it is intended to be an agreement for an Incentive Stock Option or a
Non-Qualified Stock Option. The grant of a Stock Option shall occur as of the
date the Administrator determines.
Anything in the Plan to the contrary notwithstanding, no term of the Plan
relating to Incentive Stock Options shall be interpreted, amended or altered,
nor shall any discretion or authority granted under the Plan be exercised, so as
to disqualify the Plan under Section 422 of the Code or, without the consent of
the Optionee affected, to disqualify any Incentive Stock Option under Section
422 of the Code.
Stock Options granted under this SECTION 4 shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions as the Administrator shall deem desirable:
(a) Exercise Price. The exercise price per share of Stock purchasable
under a Stock Option shall be determined by the Administrator. If the Stock
Option is intended to qualify as an Incentive Stock Option, the exercise
price per share shall be not less than the Fair Market Value per share on
the date the Stock Option is granted, or if granted to an individual who is
a Ten Percent Holder, not less than 110% of such Fair Market Value per
share.
(b) Option Term. The term of each Stock Option shall be fixed by the
Administrator, but no Incentive Stock Option shall be exercisable more than
10 years (or five years in the case of an individual who is a Ten Percent
Holder) after the date the Incentive Stock Option is granted. No Option
which is intended to be an Incentive Stock Option shall be granted more
than ten (10) years from the date the Plan is adopted by the Company or the
date the Plan is approved by the stockholders of the Company, whichever is
earlier.
(c) Exercisability. Except as otherwise provided herein, Stock Options
shall be exercisable at such time or times, and subject to such terms and
conditions, as shall be determined by the Administrator. If the
Administrator provides that any Stock Option is exercisable only in
installments, the Administrator may at any time waive such installment
exercise provisions, in whole or in part, based on such factors as the
Administrator may determine. In addition, the Administrator may at any
time, in whole or in part, accelerate the exercisability of any Stock
Option.
(d) Method of Exercise. Subject to the provisions of this SECTION 4,
Stock Options may be exercised, in whole or in part, at any time during the
option term by giving written notice of exercise to the Company specifying
the number of shares of Stock subject to the Stock Option to be purchased.
The option price of any Stock Option shall be paid in full in cash (by
certified or bank check or such other instrument as the Company may accept)
or, unless otherwise provided in the applicable option agreement, by one or
more of the following: (i) in the form of unrestricted Stock already owned
by the Optionee (or, in the case of the exercise of a Non-Qualified Stock
Option, Restricted Stock subject to a
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Stock Award hereunder) based in any such instance on the Fair Market Value
of the Stock on the date the Stock Option is exercised; (ii) by certifying
ownership of shares of Stock owned by the Optionee to the satisfaction of
the Administrator for later delivery to the Company as specified by the
Company; (iii) by irrevocably authorizing a third party to sell shares of
Stock (or a sufficient portion of the shares) acquired upon exercise of the
Stock Option and remit to the Company a sufficient portion of the sale
proceeds to pay the entire exercise price and any tax withholding resulting
from such exercise; or (iv) by any combination of cash and/or any one or
more of the methods specified in clauses (i), (ii) and (iii).
Notwithstanding the foregoing, a form of payment shall not be permitted to
the extent it would cause the Company to recognize a compensation expense
(or additional compensation expense) with respect to the Stock Option for
financial reporting purposes.
If payment of the option exercise price of a Non-Qualified Stock Option is
made in whole or in part in the form of Restricted Stock, the number of
shares of Stock to be received upon such exercise equal to the number of
shares of Restricted Stock used for payment of the option exercise price
shall be subject to the same forfeiture restrictions to which such
Restricted Stock was subject, unless otherwise determined by the
Administrator.
No shares of Stock shall be issued upon exercise of a Stock Option until
full payment therefor has been made. Upon exercise of a Stock Option (or a
portion thereof), the Company shall have a reasonable time to issue the
Stock for which the Stock Option has been exercised, and the Optionee shall
not be treated as a stockholder for any purposes whatsoever prior to such
issuance. No adjustment shall be made for cash dividends or other rights
for which the record date is prior to the date such Stock is recorded as
issued and transferred in the Company's official stockholder records,
except as otherwise provided herein or in the applicable option agreement.
(e) Transferability of Stock Options. Except as otherwise provided in
the applicable option agreement, a Non-Qualified Stock Option (i) shall be
transferable by the Optionee to a Family Member of the Optionee, provided
that (A) any such transfer shall be by gift with no consideration and (B)
no subsequent transfer of such Stock Option shall be permitted other than
by will or the laws of descent and distribution, and (ii) shall not
otherwise be transferable except by will or the laws of descent and
distribution. An Incentive Stock Option shall not be transferable except by
will or the laws of descent and distribution. A Stock Option shall be
exercisable, during the Optionee's lifetime, only by the Optionee or by the
guardian or legal representative of the Optionee, it being understood that
the terms "holder" and "Optionee" include the guardian and legal
representative of the Optionee named in the applicable option agreement and
any person to whom the Stock Option is transferred (X) pursuant to the
first sentence of this SECTION 4(E) or pursuant to the applicable option
agreement or (Y) by will or the laws of descent and distribution.
Notwithstanding the foregoing, references herein to the termination of an
Optionee's employment or provision of services shall mean the termination
of employment or provision of services of the person to whom the Stock
Option was originally granted.
(f) Termination by Death. Unless otherwise provided in the applicable
option agreement, if an Optionee's employment or provision of services
terminates by reason of death, any Stock Option held by such Optionee may
thereafter be exercised, to the extent then exercisable, or on such
accelerated basis as the Administrator may determine, for a period of one
year from the date of such death or until the expiration of the stated term
of such Stock Option, whichever period is shorter. In the event of
termination of employment or provision of services due to death, if an
Incentive Stock Option is exercised after the expiration of the exercise
periods that apply for purposes of Section 422 of the Code, such Stock
Option will thereafter be treated as a Non-Qualified Stock Option.
(g) Termination by Reason of Disability. Unless otherwise provided in
the applicable option agreement, if an Optionee's employment or provision
of services terminates by reason of Disability, any Stock Option held by
such Optionee may thereafter be exercised by the Optionee, to the extent it
was exercisable at the time of termination, or on such accelerated basis as
the Administrator may determine, for a period of three years from the date
of such termination of employment or provision of services or until the
expiration of the stated term of such Stock Option, whichever period is
shorter; provided,
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however, that if the Optionee dies within such period, an unexercised Stock
Option held by such Optionee shall, notwithstanding the expiration of such
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 shorter. In the event of termination of employment or
provision of services by reason of Disability, if an Incentive Stock Option
is exercised after the expiration of the exercise periods that apply for
purposes of Section 422 of the Code, such Stock Option will thereafter be
treated as a Non-Qualified Stock Option.
(h) Termination by Reason of Retirement. Unless otherwise provided in
the applicable option agreement, if an Optionee's employment or provision
of services terminates by reason of Retirement, any Stock Option held by
such Optionee may thereafter be exercised by the Optionee, to the extent it
was exercisable at the time of such Retirement, or on such accelerated
basis as the Administrator may determine, for a period of three years from
the date of such termination of employment or provision of services or
until the expiration of the stated term of such Stock Option, whichever
period is shorter; provided, however, that if the Optionee dies within such
period, any unexercised Stock Option held by such Optionee shall,
notwithstanding the expiration of such 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 shorter. In the event
of termination of employment or provision of services by reason of
Retirement, if an Incentive Stock Option is exercised after the expiration
of the exercise periods that apply for purposes of Section 422 of the Code,
such Stock Option will thereafter be treated as a Non-Qualified Stock
Option.
(i) Other Termination. Unless otherwise provided in the applicable
option agreement, if an Optionee's employment or provision of services
terminates for any reason other than death, Disability or Retirement, any
Stock Option held by such Optionee shall thereupon terminate; provided,
however, that, if such termination of employment or provision of services
is involuntary on the part of the Optionee and without Cause, such Stock
Option, to the extent then exercisable, or on such accelerated basis as the
Administrator may determine, may be exercised for the lesser of 90 days
from the date of such termination of employment or provision of services or
the remainder of such Stock Option's term, and provided, further, that if
the Optionee dies within such period, any unexercised Stock Option held by
such Optionee shall, notwithstanding the expiration of such 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 shorter. In the event of termination of employment or provision
of services for any reason other than death, Disability or Retirement, if
an Incentive Stock Option is exercised after the expiration of the exercise
periods that apply for purposes of Section 422 of the Code, such Stock
Option will thereafter be treated as a Non-Qualified Stock Option.
(j) Participant Loans. The Administrator may in its discretion
authorize the Company to:
(i) lend to an Optionee an amount equal to such portion of the
exercise price of a Stock Option as the Administrator may determine; or
(ii) guarantee a loan obtained by an Optionee from a third-party
for the purpose of tendering such exercise price.
The terms and conditions of any loan or guarantee, including the term,
interest rate, whether the loan is with recourse against the Optionee
and any security interest thereunder, shall be determined by the
Administrator, except that no extension of credit or guarantee shall
obligate the Company for an amount to exceed the lesser of (i) the
aggregate Fair Market Value on the date of exercise, less the par value,
of the shares of Stock to be purchased upon the exercise of the Stock
Option, and (ii) the amount permitted under applicable laws or the
regulations and rules of the Federal Reserve Board and any other
governmental agency having jurisdiction.
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5. STOCK APPRECIATION RIGHTS.
Stock Appreciation Rights may be granted in conjunction with all or part of
any Stock Option granted under the Plan. In the case of a Non-Qualified Stock
Option, such rights may be granted either at or after the time of grant of such
Stock Option. In the case of an Incentive Stock Option, such rights may be
granted only at the time of grant of such 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 an Optionee in accordance
with this SECTION 5 by surrendering the applicable portion of the related Stock
Option in accordance with procedures established by the Administrator. Upon such
exercise and surrender, the Optionee shall be entitled to receive an amount
determined in the manner prescribed in this SECTION 5. Stock Options which have
been so surrendered shall no longer be exercisable to the extent the related
Stock Appreciation Rights have been exercised.
Stock Appreciation Rights shall be subject to such terms and conditions as
shall be determined by the Administrator, including the following:
(i) Stock Appreciation Rights shall be exercisable only at such time
or times and to the extent that the Stock Options to which they relate are
exercisable in accordance with the provisions of SECTION 4 and this SECTION
5.
(ii) Upon the exercise of a Stock Appreciation Right, an Optionee
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 exercise price per share specified 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 Administrator having
the right to determine the form of payment.
(iii) A Stock Appreciation Right shall be transferable only to, and
shall be exercisable only by, such persons permitted with respect to the
underlying Stock Option in accordance with SECTION 4(E).
6. STOCK AWARDS OTHER THAN OPTIONS.
Stock Awards may be directly issued under the Plan (without any intervening
options), subject to such terms, conditions, performance requirements,
restrictions, forfeiture provisions, contingencies and limitations as the
Administrator shall determine. Stock Awards may be issued which are fully and
immediately vested upon issuance or which vest in one or more installments over
the Participant's period of employment or other service to the Company or upon
the attainment of specified performance objectives, or the Company may issue
Stock Awards which entitle the Participant to receive a specified number of
vested shares of Stock upon the attainment of one or more performance goals or
service requirements established by the Administrator.
Shares representing a Stock Award shall be evidenced in such manner as the
Administrator may deem appropriate, including book-entry registration or
issuance of one or more certificates (which may bear appropriate legends
referring to the terms, conditions and restrictions applicable to such Award).
The Administrator may require that any such certificates be held in custody by
the Company until any restrictions thereon shall have lapsed and that the
Participant deliver a stock power, endorsed in blank, relating to the Stock
covered by such Award.
A Stock Award may be issued in exchange for any consideration which the
Administrator may deem appropriate in each individual instance, including,
without limitation:
(i) cash or cash equivalents;
(ii) past services rendered to the Company or any Affiliate; or
(iii) future services to be rendered to the Company or any Affiliate
(provided that, in such case, the par value of the stock subject to such
Stock Award shall be paid in cash or cash equivalents, unless the
Administrator provides otherwise).
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A Stock Award that is subject to restrictions on transfer and/or forfeiture
provisions may be referred to as an award of "Restricted Stock" or "Restricted
Stock Units."
7. CHANGE IN CONTROL PROVISIONS.
(a) Impact of Event. Notwithstanding any other provision of the Plan to the
contrary, in the event of a Change in Control:
(i) Any Stock Options and Stock Appreciation Rights outstanding as of
the date such Change in Control is determined to have occurred and not then
exercisable and vested shall become fully exercisable and vested to the
full extent of the original grant;
(ii) The restrictions applicable to any outstanding Stock Award shall
lapse, and the Stock relating to such Award shall become free of all
restrictions and become fully vested and transferable to the full extent of
the original grant;
(iii) All outstanding repurchase rights of the Company with respect to
any outstanding Awards shall terminate; and
(iv) Outstanding Awards shall be subject to any agreement of merger or
reorganization that effects such Change in Control, which agreement shall
provide for:
(a) The continuation of the outstanding Awards by the Company, if
the Company is a surviving corporation;
(b) The assumption of the outstanding awards by the surviving
corporation or its parent or subsidiary;
(c) The substitution by the surviving corporation or its parent or
subsidiary of equivalent awards for the outstanding Awards; or
(d) Settlement of each share of Stock subject to an outstanding
Award for the Change in Control Price (less, to the extent applicable,
the per share exercise price), or, if the per share exercise price
equals or exceeds the Change in Control Price, the outstanding Award
shall terminate and be canceled.
(v) In the absence of any agreement of merger or reorganization
effecting such Change in Control, each share of Stock subject to an
outstanding Award shall be settled for the Change in Control Price (less,
to the extent applicable, the per share exercise price).
(b) Definition of Change in Control. For purposes of this Plan, a "Change
in Control" shall be deemed to have occurred if:
(i) any corporation, person or other entity (other than the Company, a
majority-owned subsidiary of the Company or any of its subsidiaries, or an
employee benefit plan (or related trust) sponsored or maintained by the
Company), including a "group" as defined in Section 13(d)(3) of the
Exchange Act, becomes the beneficial owner of stock representing more than
thirty percent (30%) of the combined voting power of the Company's then
outstanding securities;
(ii) the stockholders of the Company approve a definitive agreement to
merge or consolidate the Company with or into another corporation other
than a majority-owned subsidiary of the Company, or to sell or otherwise
dispose of all or substantially all of the Company's assets, and the
persons who were the members of the Board of Directors of the Company prior
to such approval do not represent a majority of the directors of the
surviving, resulting or acquiring entity or the parent thereof;
(iii) the stockholders of the Company approve a plan of liquidation of
the Company; or
(iv) within any period of 24 consecutive months, persons who were
members of the Board of Directors of the Company immediately prior to such
24-month period, together with any persons who were first elected as
directors (other than as a result of any settlement of a proxy or consent
solicitation
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contest or any action taken to avoid such a contest) during such 24-month
period by or upon the recommendation of persons who were members of the
Board of Directors of the Company immediately prior to such 24-month period
and who constituted a majority of the Board of Directors of the Company at
the time of such election, cease to constitute a majority of the Board.
(c) Change in Control Price. For purposes of the Plan, "Change in Control
Price" means the higher of (i) the highest reported sales price, regular way, of
a share of Stock in any transaction reported on the New York Stock Exchange
Composite Tape or other national securities exchange on which such shares are
listed or on Nasdaq, as applicable, during the 60-day period prior to and
including the date of a Change in Control, and (ii) if the Change in Control is
the result of a tender or exchange offer or a Corporate Transaction, the highest
price per share of Stock paid in such tender or exchange offer or Corporate
Transaction. To the extent that the consideration paid in any such transaction
described above consists all or in part of securities or other non-cash
consideration, the value of such securities or other non-cash consideration
shall be determined in the sole discretion of the Board.
8. MISCELLANEOUS.
(a) Amendment. The Board may amend, alter, or discontinue the Plan, but no
amendment, alteration or discontinuation shall be made which would adversely
affect the rights of a Participant under an Award theretofore granted without
the Participant's consent, except such an amendment (i) made to avoid an expense
charge to the Company or an Affiliate, or (ii) made to permit the Company or an
Affiliate a deduction under the Code. No such amendment shall be made without
the approval of the Company's stockholders to the extent such approval is
required by law, agreement or the rules of any stock exchange or market on which
the Stock is listed.
The Administrator may amend the terms of any Stock Option or other Award
theretofore granted, prospectively or retroactively, but no such amendment shall
adversely affect the rights of the holder thereof without the holder's consent.
Notwithstanding anything in the Plan to the contrary, if any right under
this Plan would cause a transaction to be ineligible for pooling of interests
accounting that would, but for the right hereunder, be eligible for such
accounting treatment, the Administrator may modify or adjust the right so that
pooling of interests accounting shall be available, including the substitution
of Common Stock having a Fair Market Value equal to the cash otherwise payable
hereunder for the right which caused the transaction to be ineligible for
pooling of interests accounting.
(b) Unfunded Status of Plan. It is intended that this Plan be an "unfunded"
plan for incentive and deferred compensation. The Administrator may authorize
the creation of trusts or other arrangements to meet the obligations created
under this Plan to deliver Common Stock or make payments, provided that, unless
the Administrator otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of this Plan.
(c) General Provisions.
(i) The Administrator may require each person purchasing or receiving
shares pursuant to an Award to represent to and agree with the Company in
writing that such person is acquiring the shares without a view to the
distribution thereof. The certificates for such shares may include any
legend which the Administrator deems appropriate to reflect any
restrictions on transfer.
All certificates for shares of Stock or other securities delivered under
the Plan shall be subject to such stock transfer orders and other
restrictions as the Administrator may deem advisable under the rules,
regulations and other requirements of the Commission, any stock exchange or
market on which the Stock is then listed and any applicable Federal or
state securities law, and the Administrator may cause a legend or legends
to be put on any such certificates to make appropriate reference to such
restrictions.
(ii) Nothing contained in the Plan shall prevent the Company or any
Affiliate from adopting other or additional compensation arrangements for
its employees.
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(iii) The adoption of the Plan shall not confer upon any employee,
director, consultant or advisor any right to continued employment,
directorship or service, nor shall it interfere in any way with the right
of the Company or any Subsidiary or Affiliate to terminate the employment
or service of any employee, consultant or advisor at any time.
(iv) No later than the date as of which an amount first becomes
includible in the gross income of the Participant for Federal income tax
purposes with respect to any Award under the Plan, the Participant shall
pay to the Company, or make arrangements satisfactory to the Company
regarding the payment of, any Federal, state, local or foreign taxes of any
kind required by law to be withheld with respect to such amount. Unless
otherwise determined by the Administrator, withholding obligations may be
settled with Stock, including Stock that is part of the Award that gives
rise to the withholding requirement. The obligations of the Company under
the Plan shall be conditional on such payment or arrangements, and the
Company, its Subsidiaries and its Affiliates shall, to the extent permitted
by law, have the right to deduct any such taxes from any payment otherwise
due to the Participant. The Administrator may establish such procedures as
it deems appropriate for the settlement of withholding obligations with
Stock.
(v) The Administrator shall establish such procedures as it deems
appropriate for a Participant to designate a beneficiary to whom any
amounts payable in the event of the Participant's death are to be paid.
(vi) Any amounts owed to the Company or an Affiliate by the
Participant of whatever nature may be offset by the Company from the value
of any shares of Common Stock, cash or other thing of value under this Plan
or an Agreement to be transferred to the Participant, and no shares of
Common Stock, cash or other thing of value under this Plan or an Agreement
shall be transferred unless and until all disputes between the Company and
the Participant have been fully and finally resolved and the Participant
has waived all claims to such against the Company or an Affiliate.
(vii) The grant of an Award shall in no way affect the right of the
Company to adjust, reclassify, reorganize or otherwise change its capital
or business structure or to merge, consolidate, dissolve, liquidate or sell
or transfer all or any part of its business or assets.
(viii) If any payment or right accruing to a Participant under this
Plan (without the application of this SECTION (8)(C)(VIII)), either alone
or together with other payments or rights accruing to the Participant from
the Company or an Affiliate ("Total Payments") would constitute a
"parachute payment" (as defined in Section 280G of the Code and regulations
thereunder), such payment or right shall be reduced to the largest amount
or greatest right that will result in no portion of the amount payable or
right accruing under this Plan being subject to an excise tax under Section
4999 of the Code or being disallowed as a deduction under Section 280G of
the Code; provided, however, that the foregoing shall not apply to the
extent provided otherwise in an Award or in the event the Participant is
party to an agreement with the Company or an Affiliate that explicitly
provides for an alternate treatment of payments or rights that would
constitute "parachute payments." The determination of whether any reduction
in the rights or payments under this Plan is to apply shall be made by the
Administrator in good faith after consultation with the Participant, and
such determination shall be conclusive and binding on the Participant. The
Participant shall cooperate in good faith with the Administrator in making
such determination and providing the necessary information for this
purpose. The foregoing provisions of this SECTION 8(C)(VIII) shall apply
with respect to any person only if, after reduction for any applicable
Federal excise tax imposed by Section 4999 of the Code and Federal income
tax imposed by the Code, the Total Payments accruing to such person would
be less than the amount of the Total Payments as reduced, if applicable,
under the foregoing provisions of this Plan and after reduction for only
Federal income taxes.
(ix) To the extent that the Administrator determines that the
restrictions imposed by the Plan preclude the achievement of the material
purposes of the Awards in jurisdictions outside the United States, the
Administrator in its discretion may modify those restrictions as it
determines to be necessary
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or appropriate to conform to applicable requirements or practices of
jurisdictions outside of the United States.
(x) The headings contained in this Plan are for reference purposes
only and shall not affect the meaning or interpretation of this Plan.
(xi) If any provision of this Plan shall for any reason be held to be
invalid or unenforceable, such invalidity or unenforceability shall not
effect any other provision hereby, and this Plan shall be construed as if
such invalid or unenforceable provision were omitted.
(xii) This Plan shall inure to the benefit of and be binding upon each
successor and assign of the Company. All obligations imposed upon a
Participant, and all rights granted to the Company hereunder, shall be
binding upon the Participant's heirs, legal representatives and successors.
(xiii) This Plan and each agreement granting an Award constitute the
entire agreement with respect to the subject matter hereof and thereof,
provided that in the event of any inconsistency between this Plan and such
agreement, the terms and conditions of the Plan shall control.
(xiv) In the event there is an effective registration statement under
the Securities Act pursuant to which shares of Stock shall be offered for
sale in an underwritten offering, a Participant shall not, during the
period requested by the underwriters managing the registered public
offering, effect any public sale or distribution of shares of Stock
received, directly or indirectly, as an Award or pursuant to the exercise
or settlement of an Award.
(xv) None of the Company, an Affiliate or the Administrator shall have
any duty or obligation to disclose affirmatively to a record or beneficial
holder of Stock or an Award, and such holder shall have no right to be
advised of, any material information regarding the Company or any Affiliate
at any time prior to, upon or in connection with receipt or the exercise of
an Award or the Company's purchase of Stock or an Award from such holder in
accordance with the terms hereof.
(xvi) This Plan, and all Awards, agreements and actions hereunder,
shall be governed by, and construed in accordance with, the laws of the
state of Delaware (other than its law respecting choice of law).
9. DEFERRAL OF AWARDS.
The Administrator (in its sole discretion) may permit a Participant to:
(a) have cash that otherwise would be paid to such Participant as a
result of the exercise of a Stock Appreciation Right or the settlement of a
Stock Award credited to a deferred compensation account established for
such Participant by the Administrator as an entry on the Company's books;
(b) have Stock that otherwise would be delivered to such Participant
as a result of the exercise of a Stock Option or a Stock Appreciation Right
converted into an equal number of Stock units; or
(c) have Stock that otherwise would be delivered to such Participant
as a result of the exercise of a Stock Option or Stock Appreciation Right
or the settlement of a Stock Award converted into amounts credited to a
deferred compensation account established for such Participant by the
Administrator as an entry on the Company's books. Such amounts shall be
determined by reference to the Fair Market Value of the Stock as of the
date on which they otherwise would have been delivered to such Participant.
A deferred compensation account established under this SECTION 9 may be
credited with interest or other forms of investment return, as determined by the
Administrator. A Participant for whom such an account is established shall have
no rights other than those of a general creditor of the Company. Such an account
shall represent an unfunded and unsecured obligation of the Company and shall be
subject to the terms and conditions of the applicable agreement between such
Participant and the Company. If the deferral or conversion of awards is
permitted or required, the Administrator (in its sole discretion) may establish
rules,
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procedures and forms pertaining to such awards, including (without limitation)
the settlement of deferred compensation accounts established under this SECTION
9.
10. DEFINITIONS.
For purposes of this Plan, the following terms are defined as set forth
below:
(a) "Affiliate" means a corporation or other entity controlled by the
Company and designated by the Administrator as such.
(b) "Award" means a Stock Appreciation Right, Stock Option or Stock
Award.
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" means (i) the conviction of the Participant for committing
a felony under Federal law or the law of the state in which such action
occurred, (ii) dishonesty in the course of fulfilling the Participant's
duties as an employee or director of, or consultant or advisor to, the
Company or (iii) willful and deliberate failure on the part of the
Participant to perform such duties in any material respect. Notwithstanding
the foregoing, if the Participant and the Company or the Affiliate have
entered into an employment or services agreement which defines the term
"Cause" (or a similar term), such definition shall govern for purposes of
determining whether such Participant has been terminated for Cause for
purposes of this Plan. The determination of Cause shall be made by the
Administrator, in its sole discretion.
(e) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.
(f) "Commission" means the Securities and Exchange Commission or any
successor agency.
(g) "Committee" means a committee of Directors appointed by the Board
to administer this Plan.
(h) "Company" means Northwestern Steel and Wire Company, a Illinois
corporation.
(i) "Director" means a member of the Company's Board of Directors.
(j) "Disability" means mental or physical illness that entitles the
Participant to receive benefits under the long-term disability plan of the
Company or an Affiliate, or if the Participant is not covered by such a
plan or the Participant is not an employee of the Company or an Affiliate,
a mental or physical illness that renders a Participant totally and
permanently incapable of performing the Participant's duties for the
Company or an Affiliate; provided, however, that a Disability shall not
qualify under this Plan if it is the result of (i) a willfully
self-inflicted injury or willfully self-induced sickness; or (ii) an injury
or disease contracted, suffered or incurred while participating in a
criminal offense. Notwithstanding the foregoing, if the Participant and the
Company or an Affiliate have entered into an employment or services
agreement which defines the term "Disability" (or a similar term), such
definition shall govern for purposes of determining whether such
Participant suffers a Disability for purposes of this Plan. The
determination of Disability shall be made by the Administrator, in its sole
discretion. The determination of Disability for purposes of this Plan shall
not be construed to be an admission of disability for any other purpose.
(k) "Eligible Individual" means any officer, employee or director of
the Company or a Subsidiary or Affiliate, or any consultant or advisor
providing services to the Company or a Subsidiary or Affiliate.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor thereto.
(m) "Existing Stock Option Plan" means (i) the 1992 Management Stock
Option Plan, (ii) the 1994 Long Term Incentive Plan, (iii) the 1994
Directors' Stock Option Plan, (iv) the 1998 Employee Incentive Compensation
Plan, (v) the 1998 Non-Employer Directors' Stock Option Plan and (vi) the
Employee Stock Purchase and Option Plan.
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(n) "Fair Market Value" means, as of any given date, the fair market
value of the Stock as determined by the Administrator or under procedures
established by the Administrator. Unless otherwise determined by the
Administrator, the Fair Market Value per share shall be the closing sales
price per share of the Stock on Nasdaq (or the principal stock exchange or
market on which the Stock is then traded) on the date as of which such
value is being determined or the last previous day on which a sale was
reported.
(o) "Family Member" means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law
or sister-in-law of a Participant (including adoptive relationships); any
person sharing the Participant's household (other than a tenant or
employee); any trust in which the Participant and any of these persons have
substantially all of the beneficial interest; any foundation in which the
Participant and any of these persons control the management of the assets;
any corporation, partnership, limited liability company or other entity in
which the Participant and any of these other persons are the direct and
beneficial owners of substantially all of the equity interests (provided
the Participant and these other persons agree in writing to remain the
direct and beneficial owners of all such equity interests); and any
personal representative of the Participant upon the Participant's death for
purposes of administration of the Participant's estate or upon the
Participant's incompetency for purposes of the protection and management of
the assets of the Participant.
(p) "Incentive Stock Option" means any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of Section 422
of the Code.
(q) "Nasdaq" means The Nasdaq Stock Market, including the Nasdaq
National Market and the Nasdaq SmallCap Market.
(r) "Non-Employee Director" means a Director who is not an officer or
employee of the Company.
(s) "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
(t) "Optionee" means a person who holds a Stock Option.
(u) "Participant" means a person granted an Award.
(v) "Representative" means (i) the person or entity acting as the
executor or administrator of a Participant's estate pursuant to the last
will and testament of a Participant or pursuant to the laws of the
jurisdiction in which the Participant had his or her primary residence at
the date of the Participant's death; (ii) the person or entity acting as
the guardian or temporary guardian of a Participant; (iii) the person or
entity which is the beneficiary of the Participant upon or following the
Participant's death; or (iv) any person to whom an Option has been
transferred with the permission of the Administrator or by operation of
law; provided that only one of the foregoing shall be the Representative at
any point in time as determined under applicable law and recognized by the
Administrator.
(w) "Retirement" means retirement from active employment under a
pension plan of the Company or any subsidiary or Affiliate, or under an
employment contract with any of them, or termination of employment or
provision of services at or after age 55 under circumstances which the
Administrator, in its sole discretion, deems equivalent to retirement.
(x) "Stock" means the Common Stock, par value $0.01 per share, of the
Company.
(y) "Stock Appreciation Right" means a right granted under SECTION 5.
(z) "Stock Award" means an Award, other than a Stock Option or Stock
Appreciation Right, made in Stock or denominated in shares of Stock.
(aa) "Stock Option" means an option granted under SECTION 4.
(bb) "Subsidiary" means any company during any period in which it is a
"subsidiary corporation" (as such term is defined in Section 424(f) of the
Code) with respect to the Company.
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<PAGE> 14
(bb) "Ten Percent Holder" means an individual who owns, or is deemed
to own, stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or of any parent or subsidiary
corporation of the Company, determined pursuant to the rules applicable to
Section 422(b)(6) of the Code.
In addition, certain other terms used herein have the definitions given to
them in the first places in which they are used.
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