<PAGE> 1
As filed with the Securities and Exchange Commission on May 29, 1998
Registration No. 333-___
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------
SAUER INC.
(Exact name of Registrant as specified in its charter)
------------
Delaware 36-3482074
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2800 EAST 13TH STREET
AMES, IOWA 50010
(515) 239-6000
(Address, including zip code, and telephone number, including area
code, of Registrant's principal executive offices)
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SAUER INC. NON-EMPLOYEE DIRECTOR STOCK
OPTION AND RESTRICTED STOCK PLAN
SAUER INC. 1998 LONG-TERM INCENTIVE PLAN
(Full Title of the Plans)
------------
KENNETH D. MCCUSKEY
TREASURER AND SECRETARY
SAUER INC.
2800 EAST 13TH STREET
AMES, IOWA 50010
(515) 239-6364
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------
COPY TO:
JAMES W. KAPP, JR., ESQ.
SPENCER FANE BRITT & BROWNE LLP
1000 WALNUT STREET, SUITE 1400
KANSAS CITY, MISSOURI 64106
(816) 292-8141
------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED TO BE REGISTERED(1)(2) PER SHARE(3) OFFERING PRICE(3) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $.01 par 2,650,000 $16.6875 $44,221,875.00 $13,045.46
value per share
</TABLE>
(1) 250,000 shares of Sauer Inc. Common Stock, par value $.01 per share
(the "Shares"), are being registered pursuant to the Sauer Inc. Non-
Employee Director Stock Option and Restricted Stock Plan and 2,400,000
Shares are being registered pursuant to the Sauer Inc. 1998 Long-Term
Incentive Plan
(2) This Registration Statement also covers such additional shares of
Common Stock as may be issuable pursuant to antidilution provisions.
(3) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(c), based on the average of the high and low
prices per share of the Shares as reported by the New York Stock
Exchange on May 26, 1998.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
Sauer Inc. (the "Registrant") hereby incorporates by reference into
this Registration Statement the following documents filed by it with the
Commission:
(a) The Registrant's final prospectus dated May 11, 1998, as filed
with the Commission pursuant to Rule 424(b) of the Securities
Act, which contains audited financials for the fiscal year
ended December 31, 1997;
(b) The description of the Registrant's Common Stock, par value
$.01 per share (the "Common Stock"), contained in the
Registrant's Registration Statement on Form 8-A filed with the
Commission on May 7, 1998.
In addition, all documents and reports filed by the Registrant
subsequent to the date hereof pursuant to Sections 13(a), 13(c), 14, or 15(d) of
the Securities Exchange Act of 1934 (the "Exchange Act"), prior to the filing of
a post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be part hereof
from the date of filing of such documents or reports.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable. (The Common Stock is registered under Section 12 of the
Exchange Act.)
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102(b)(7) of the Delaware General Corporation Law (the "DGCL")
permits a provision in the certificate of incorporation of each corporation
organized thereunder, eliminating or limiting, with certain exceptions, the
personal liability of a director to the corporation or its
<PAGE> 3
stockholders for monetary damages for certain breaches of fiduciary duty as a
director. The Certificate of Incorporation of the Company eliminates the
personal liability of directors to the fullest extent permitted by Delaware law.
Section 145 of the DGCL ("Section 145"), in summary, empowers a
Delaware corporation, within certain limitations, to indemnify its officers,
directors, employees and agents against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by them in connection with any suit or proceeding other than by or on
behalf of the corporation, if they acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interest of the
corporation, and, with respect to a criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful.
With respect to a actions by or on behalf of the corporation, Section
145 permits a corporation to indemnify its officers, directors, employees and
agents against expenses (including attorneys' fees) actually and reasonably
incurred in connection with the defense or settlement of such action or suit,
provided such person meets the standard of conduct described in the preceding
paragraph, except that no indemnification is permitted in respect of any claim
where such person has been found liable to the corporation, unless the Court of
Chancery or the court in which such action or suit was brought approves such
indemnification and determines that such person is fairly and reasonably
entitled to be indemnified.
Article Ninth of the Restated Certificate of Incorporation of the
Company provides for the indemnification of officers and directors and certain
other parties of the Company to the fullest extent permitted by law. In
addition, the Company has entered into Indemnification Agreements with its
directors and certain officers pursuant to which the Company generally is
obligated to indemnify its directors and officers to the maximum extent
permitted by law. The Company also maintains directors and officers liability
insurance.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
Reference is made to the Exhibit Index filed herewith.
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of
1933;
<PAGE> 4
(ii) To reflect in the prospectus any facts or
events arising after the effective date of
the registration statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the registration
statement. Notwithstanding the foregoing,
any increase or decrease in volume of
securities offered (if the total dollar
value of securities offered would not exceed
that which was registered) and any deviation
from the low or high end of the estimated
maximum offering range may be reflected in
the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and
price represent no more than a 20% change in
the maximum aggregate offering price set
forth in the "Calculation of Registration
Fee" table in the effective registration
statement; and
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the registration
statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the registration statement
is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports
filed by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be
a new registration statement relating to the securities
offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof.
<PAGE> 5
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors,
officers, and controlling persons of the registrant pursuant
to the foregoing provisions, or otherwise, the registrant has
been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Ames, State of Iowa, on the 29th day of May, 1998.
SAUER INC.
By: /s/ Kenneth D. McCuskey
------------------------------
Name: Kenneth D. McCuskey
Title: Treasurer and Secretary
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby severally constitutes and appoints Tonio P. Barlage and
Kenneth D. McCuskey, and each of them, as his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities (until revoked in writing),
to sign any and all amendments, including post-effective amendments and
supplements, to this Registration Statement on Form S-8, and to file the same,
with exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or his or their substitute may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signatures Title Date
- --------------------------------------------------------------------------------
/s/ Klaus H. Murmann
- ------------------------- Chairman and Chief 5/29/98
Klaus H. Murmann Executive Officer and
Director (Principal
Executive Officer)
/s/ Tonio P. Barlage
- ------------------------- President and Chief 5/25/98
Tonio P. Barlage Operating Officer and
Director
/s/ David L. Pfeifle
- ------------------------- Executive Vice President 5/28/98
David L. Pfeifle and Director
/s/ Nicola Keim 5/27/98
- ------------------------- Director
Nicola Keim
/s/ Johannes F. Kirchhoff
- ------------------------- Director 5/29/98
Johannes F. Kirchhoff
/s/ Sven Murmann
- ------------------------- Director 5/28/98
Sven Murmann
<PAGE> 7
/s/ Agustin A. Ramirez
- ------------------------ Director 5/26/98
Agustin A. Ramirez
/s/ Richard M. Schilling
- ------------------------ Director 5/28/98
Richard M. Schilling
/s/ Kenneth D. McCuskey
- ------------------------ Treasurer and Secretary 5/29/98
Kenneth D. McCuskey (Principal Accounting
Officer)
<PAGE> 8
SAUER INC.
EXHIBIT INDEX
Exhibit
Number Description
4.1 Restated Certificate of Incorporation of the Registrant (incorporated
herein by reference to Exhibit 3.1(c) to Amendment No. 1 to the
Registrant's Registration Statement on Form S-1 (File No. 333-48299)
filed with the Commission on April 23, 1998).
4.2 Restated By-laws of the Registrant (incorporated herein by reference to
Exhibit 3.2 to the Registrant's Registration Statement on Form S-1
(File No. 333-48299) filed with the Commission on March 20, 1998).
4.3 Form of Certificate of the Common Stock of the Registrant (incorporated
herein by reference to Exhibit 4.1 to Amendment No. 1 to the
Registrant's Registration Statement on Form S-1 (File No. 333-48299)
filed with the Commission on April 23, 1998).
4.4 Sauer Inc. 1998 Long-Term Incentive Plan.
4.5 Sauer Inc. Non-Employee Director Stock Option and Restricted Stock
Plan.
5.1 Opinion of Spencer Fane Britt & Browne LLP regarding the validity of
the Common Stock.
23.1 Consent of Arthur Anderson LLP.
23.3 Consent of Spencer Fane Britt & Browne LLP (included in Exhibit 5.1).
24.1 Power of Attorney (included in Signature Page).
<PAGE> 1
Exhibit 4.4
SAUER INC.
1998 LONG-TERM INCENTIVE PLAN
(Effective April 22, 1998)
<PAGE> 2
CONTENTS
Article 1. Establishment, Objectives, and Duration 1
Article 2. Definitions 1
Article 3. Administration 5
Article 4. Shares Subject to the Plan and Maximum Awards 6
Article 5. Eligibility and Participation 7
Article 6. Stock Options 7
Article 7. Stock Appreciation Rights 9
Article 8. Restricted Stock 11
Article 9. Performance Units and Performance Shares 12
Article 10. Other Incentive Awards 14
Article 11. Performance Measures 14
Article 12. Beneficiary Designation 15
Article 13. Deferrals 15
Article 14. Rights of Employees 16
Article 15. Change in Control 16
Article 16. Amendment, Modification, and Termination 17
Article 17. Withholding 17
Article 18. Indemnification 18
Article 19. Successors 18
Article 20. Legal Construction 18
<PAGE> 3
SAUER INC.
1998 LONG-TERM INCENTIVE PLAN
ARTICLE 1. ESTABLISHMENT, OBJECTIVES, AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. Sauer Inc., a Delaware corporation
(hereinafter referred to as the "Company"), hereby establishes an incentive
compensation plan to be known as the "Sauer Inc. 1998 Long-Term Incentive Plan"
(hereinafter referred to as the "Plan"), as set forth in this document. The Plan
permits the grant of Non-qualified Stock Options, Incentive Stock Options, Stock
Appreciation Rights, Restricted Stock, Performance Shares and Performance Units,
and Other Incentive Awards.
Subject to approval by the Company's stockholders, the Plan shall be
effective as of April 22, 1998 (the "Effective Date") and shall remain in effect
as provided in Section 1.3 hereof.
1.2 OBJECTIVES OF THE PLAN. The objectives of the Plan are to optimize the
profitability and growth of the Company through incentives which are consistent
with the Company's goals and which link and align the personal interests of
Participants to those of the Company's stockholders; to provide Participants
with an incentive for excellence in individual performance; and to promote
teamwork among Participants.
The Plan is further intended to provide flexibility to the Company in its
ability to motivate, attract, and retain the services of Participants who make
significant contributions to the Company's success and to allow Participants to
share in the success of the Company.
1.3 DURATION OF THE PLAN. The Plan shall commence on the Effective Date, as
described in Section 1.1 hereof, and shall remain in effect, subject to the
right of the Board of Directors to amend or terminate the Plan at any time
pursuant to Article 16 hereof, until all Shares subject to it shall have been
purchased or acquired according to the Plan's provisions. However, in no event
may an Award be granted under the Plan on or after April 21, 2008.
ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings set
forth below, and when the meaning is intended, the initial letter of the word
shall be capitalized:
2.1 "AWARD" means, individually or collectively, a grant under this
Plan of Non-qualified Stock Options, Incentive Stock Options,
Stock Appreciation Rights, Restricted Stock, Performance Shares or
Performance Units, or Other Incentive Awards.
2.2 "AWARD AGREEMENT" means an agreement entered into by the Company
and a Participant evidencing and setting forth the terms and
provisions applicable to an Award granted under this Plan, in such
form as the Committee may, from time to time, approve.
2.3 "BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP" shall have the
meaning ascribed to such term in Rule 13d-3 of the General Rules
and Regulations under the Exchange Act.
<PAGE> 4
2.4 "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of the
Company.
2.5 "CHANGE IN CONTROL" of the Company means, and shall be deemed to
have occurred upon, any of the following events:
(a) Any Person (other than those Persons in control of the Company
as of the Effective Date, or other than a trustee or other
fiduciary holding securities under an employee benefit plan of
the Company, or a corporation owned directly or indirectly by
the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company)
becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing thirty percent (30%) or
more of the combined voting power of the Company's then
outstanding securities; or
(b) During any period of two (2) consecutive years (not including
any period prior to the Effective Date), individuals who at
the beginning of such period constitute the Board (and any new
Director, whose election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the
Directors then still in office who either were Directors at
the beginning of the period or whose election or nomination
for election was so approved), cease for any reason to
constitute a majority thereof; or
(c) The stockholders of the Company approve: (i) a plan of
complete liquidation of the Company; or (ii) an agreement for
the sale or disposition of all or substantially all the
Company's assets; or (iii) a merger, consolidation, or
reorganization of the Company with or involving any other
corporation, other than a merger, consolidation, or
reorganization that would result in the voting securities of
the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at
least fifty percent (50%) of the combined voting power of the
voting securities of the Company (or such surviving entity)
outstanding immediately after such merger, consolidation, or
reorganization.
However, in no event shall a "Change in Control" be deemed to
have occurred, with respect to a Participant, if the Participant is
part of a purchasing group which consummates the Change-in-Control
transaction. A Participant shall be deemed "part of a purchasing
group" for purposes of the preceding sentence if the Participant is
an equity participant in the purchasing company or group (except for
(i) passive ownership of less than one percent (1%) of the stock of
the purchasing company; or (ii) ownership of equity participation in
the purchasing company or group which is otherwise not significant,
as determined prior to the Change in Control by a majority of the
nonemployee continuing Directors).
2.6 "CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
2.7 "COMMITTEE" means the Compensation Committee of the Board, or such
other
<PAGE> 5
committee appointed by the Board to administer the Plan, as
described in Article 3 herein.
2.8 "COMPANY" means Sauer Inc., a Delaware corporation, as well as any
successor to the Company as provided in Article 19 herein.
2.9 "DIRECTOR" means any individual who is a member of the Board of
Directors of the Company.
2.10 "DISABILITY" shall have the meaning ascribed to such term in the
Participant's governing long-term disability plan.
2.11 "EFFECTIVE DATE" shall have the meaning ascribed to such term in
Section 1.1 hereof.
2.12 "EMPLOYEE" means any employee of the Company or its Subsidiaries.
Nonemployee Directors shall not be considered Employees under this
Plan unless specifically designated otherwise.
2.13 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor Act thereto.
2.14 "FAIR MARKET VALUE" shall be determined on the basis of the
closing sale price on the New York Stock Exchange or, if there is
no such sale on the relevant date, then on the last previous day
on which a sale was reported. If the Shares are not traded on the
New York Stock Exchange, Fair Market Value shall be determined by
the Committee in its absolute discretion, such amount to be
calculated pursuant to the formula established under the Sauer
Inc. 1996 Phantom Share Plan, which formula is hereby incorporated
by reference and made a part hereof.
2.15 "FREESTANDING SAR" means an SAR that is granted independently of
any Options, as described in Article 7 herein.
2.16 "INCENTIVE STOCK OPTION" or "ISO" means an option to purchase
Shares granted under Article 6 herein and which is designated as
an Incentive Stock Option and which is intended to meet the
requirements of Code Section 422.
2.17 "INSIDER" shall mean an individual who is, on the relevant date,
an officer, director, or ten percent (10%) beneficial owner of any
class of the Company's equity securities that is registered
pursuant to Section 12 of the Exchange Act, all as defined under
Section 16 of the Exchange Act.
2.18 "NAMED EXECUTIVE OFFICER" means a Participant who, as of the date
of vesting and/or payout of an Award, as applicable, is one of the
group of "covered employees," as defined in the regulations
promulgated under Code Section 162(m), or any successor statute.
2.19 "NONEMPLOYEE DIRECTOR" means a Director who is not also an
Employee.
2.20 "NON-QUALIFIED STOCK OPTION" or "NQSO" means an option to purchase
Shares
<PAGE> 6
granted under Article 6 herein and which is not intended to meet
the requirements of Code Section 422.
2.21 "OPTION" means an Incentive Stock Option or a Non-qualified Stock
Option, as described in Article 6 herein.
2.22 "OPTION PRICE" means the price at which a Share may be purchased
by a Participant pursuant to an Option.
2.23 "OTHER INCENTIVE AWARD" means an award granted pursuant to Article
10 hereof.
2.24 "PARTICIPANT" means any individual selected to receive an Award by
the Committee in accordance with Article 5 and who has an
outstanding Award granted under the Plan.
2.25 "PERFORMANCE-BASED EXCEPTION" means the performance-based
exception from the tax deductibility limitations of Code Section
162(m).
2.26 "PERFORMANCE PERIOD" means the time period during which
performance goals must be achieved with respect to an Award, as
determined by the Committee.
2.27 "PERFORMANCE SHARE" means an Award granted to a Participant, as
described in Article 9 herein.
2.28 "PERFORMANCE UNIT" means an Award granted to a Participant, as
described in Article 9 herein.
2.29 "PERIOD OF RESTRICTION" means the period during which the transfer
of Shares of Restricted Stock is limited in some way (based on the
passage of time, the achievement of performance goals, or upon the
occurrence of other events as determined by the Committee, at its
discretion), and the Shares are subject to a substantial risk of
forfeiture, as provided in Article 8 herein.
2.30 "PERSON" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d) thereof.
2.31 "RESTRICTED STOCK" means an Award granted to a Participant
pursuant to Article 8 herein.
2.32 "RETIREMENT" means the normal retirement date on which a
Participant qualifies for full retirement benefits under the
Company's qualified retirement plan, as identified by the
Committee.
2.33 "SHARES" means the shares of Common Stock of the Company.
2.34 "STOCK APPRECIATION RIGHT" or "SAR" means an Award, granted alone
or in connection with a related Option, designated as an SAR,
pursuant to the terms of
<PAGE> 7
Article 7 herein.
2.35 "SUBSIDIARY" means any corporation, limited liability company,
partnership, joint venture, affiliate, or other entity in which
the Company has a majority voting interest.
2.36 "TANDEM SAR" means an SAR that is granted in connection with a
related Option pursuant to Article 7 herein, the exercise of which
shall require forfeiture of the right to purchase a Share under
the related Option (and when a Share is purchased under the
Option, the Tandem SAR shall similarly be canceled).
ARTICLE 3. ADMINISTRATION
3.1 THE COMMITTEE. The Plan shall be administered by the Board, the
Committee, or by any other committee appointed by the Board. The Board may
delegate to the Committee any or all of the administration of the Plan. Any such
Committee shall be comprised entirely of Nonemployee Directors who meet the
applicable requirements of a "nonemployee director" under Rule 16b-3 of the
General Rules and Regulations under the Exchange Act and of an "outside
director" under Section 162(m) of the Code. To the extent that the Board has
delegated to the Committee any authority and responsibility under the Plan, all
applicable references to the Board in the Plan shall be to the Committee. To the
extent that the Board has not delegated to the Committee any authority and
responsibility under the Plan or has delegated such authority and responsibility
to any other committee appointed by the Board, all applicable references to the
Committee in the Plan shall be to the Board or other committee, as applicable.
The Committee shall have the authority to delegate administrative duties to
officers or Directors of the Company.
3.2 AUTHORITY OF THE COMMITTEE. Except as limited by law or by the
Certificate of Incorporation or Bylaws of the Company, and subject to the
provisions herein, the Committee shall have full power to select from eligible
persons as described in Section 5.1, those persons who shall participate in the
Plan; determine the sizes and types of Awards; determine the terms and
conditions of Awards in a manner consistent with the Plan; construe and
interpret the Plan and any agreement or instrument entered into under the Plan;
establish, amend, or waive rules and regulations for the Plan's administration;
and (subject to the provisions of Article 16 herein) amend the terms and
conditions of any outstanding Award to the extent such terms and conditions are
within the discretion of the Committee as provided in the Plan. Further, the
Committee shall make all other determinations which may be necessary or
advisable for the administration of the Plan. As permitted by law, the Committee
may delegate its authority as identified herein.
3.3 DECISIONS BINDING. All determinations and decisions made by the Committee
pursuant to the provisions of the Plan and all related orders and resolutions of
the Committee shall be final, conclusive, and binding on all persons, including
the Company, its stockholders, Employees, Participants, and their estates and
beneficiaries.
ARTICLE 4. SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS
4.1 NUMBER OF SHARES AVAILABLE FOR GRANTS. Subject to adjustment as provided
in Section 4.3 herein, the number of Shares hereby reserved for issuance under
the Plan shall be two million four hundred thousand (2,400,000). However, the
aggregate maximum number of Shares of Restricted Stock which may be granted
pursuant to Article 8 shall be
<PAGE> 8
one million two hundred thousand (1,200,000). Shares issued pursuant to the Plan
may be either authorized and unissued Shares or issued Shares which have been
reacquired by the Company, or any combination thereof.
Unless and until the Committee determines that an Award to a Named Executive
Officer shall not be designed to comply with the Performance-Based Exception,
the following rules shall apply to grants of such Awards under the Plan:
(a) STOCK OPTIONS. The maximum aggregate number of Shares that may
be granted in the form of Stock Options, pursuant to Awards
granted in any one fiscal year to any one Participant shall be
two hundred thousand (200,000).
(b) SARS. The maximum aggregate number of Shares that may be
granted in the form of Stock Appreciation Rights, pursuant to
Awards granted in any one fiscal year to any one Participant
shall be two hundred thousand (200,000).
(c) RESTRICTED STOCK. The maximum aggregate number of Shares that
may be granted in the form of Restricted Stock, pursuant to
Awards granted in any one fiscal year to any one Participant
shall be fifty thousand (50,000).
(d) PERFORMANCE SHARES/PERFORMANCE UNITS/OTHER INCENTIVE AWARDS.
The maximum aggregate payout (determined as of the end of the
applicable Performance Period) with respect to Awards of
Performance Shares, Performance Units, or Other Incentive
Awards granted in any one fiscal year to any one Participant
shall not exceed the value of fifty thousand (50,000) Shares.
4.2 LAPSED AWARDS. If any Award granted under this Plan is canceled,
terminates, expires, or lapses for any reason, any Shares subject to such Award
again shall be available for the grant of an Award under the Plan.
4.3 ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any change in corporate
capitalization, such as a stock split, or a corporate transaction, such as any
merger, consolidation, separation, including a spin-off, or other distribution
of stock or property of the Company, any reorganization (whether or not such
reorganization comes within the definition of such term in Code Section 368) or
any partial or complete liquidation of the Company, such adjustment shall be
made in the number and class of Shares which may be delivered under Section 4.1
herein, in the number and class of and/or price of Shares subject to outstanding
Awards granted under the Plan, and in the Award Limits set forth in subsections
4.1(a) through (d) herein, as may be determined to be appropriate and equitable
by the Committee, in its sole discretion, to prevent dilution or enlargement of
rights; provided, however, that the number of Shares subject to any Award shall
always be a whole number.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1 ELIGIBILITY. Persons eligible to participate in this Plan include all
Employees and officers of the Company or its Subsidiaries, including Employees
who reside in countries other than the United States of America, provided,
however, that ISOs shall be granted only to Employees.
<PAGE> 9
5.2 ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the
Committee from time to time, shall, in its discretion, select from all eligible
persons those to whom Awards shall be granted and shall determine the nature and
amount and other terms and conditions of each Award. In making such
determinations, the Committee may consider the position and responsibilities of
the Participant, the nature and value to the Company of his or her services and
accomplishments, his or her present and potential contribution to the Company,
and such other factors as the Committee may deem relevant.
ARTICLE 6. STOCK OPTIONS
6.1 GRANT OF OPTIONS. Subject to the terms and provisions of the Plan,
Options may be granted to Participants in such number, and upon such terms, and
at any time and from time to time, as shall be determined by the Committee in
its absolute discretion. No Employee may be granted ISOs under the Plan which
would result in Shares with an aggregate Fair Market Value (measured on the date
of grant) of more than $100,000 first becoming exercisable in any one calendar
year.
6.2 AWARD AGREEMENT. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as the
Committee shall determine. The Option Agreement also shall specify whether the
Option is intended to be an ISO within the meaning of Code Section 422, or an
NQSO whose grant is intended not to fall under the provisions of Code Section
422.
6.3 OPTION PRICE. Unless otherwise designated by the Committee at the time of
grant, the Option Price for each grant of an NQSO under this Plan shall be at
least equal to one hundred percent (100%) of the Fair Market Value of a Share on
the date the NQSO is granted. The Option Price for each grant of an ISO under
this Plan shall be at least equal to one hundred percent of the Fair Market
Value of a Share on the date the ISO is granted, provided, however, in the event
that an ISO is granted to an Employee who possesses more than 10% of the total
combined voting power of all classes of stock of the Company, taking into
account the attribution rules of Code Section 422(d), the Option price for each
grant of such an ISO shall be determined by the Committee on the date of grant
and shall not be less than 110% of the Fair Market Value of a Share on the date
of grant.
6.4 DURATION OF OPTIONS. Each Option granted to a Participant shall expire at
such time as the Committee shall determine at the time of grant; provided,
however, that: (a) no ISO shall be exercisable later than the tenth anniversary
date of its grant, and (b) unless otherwise designated by the Committee at the
time of grant, no NQSO shall be exercisable later than the tenth anniversary
date of its grant. Any Option not exercised within these time periods shall
automatically terminate at the expiration of such period.
6.5 EXERCISE OF OPTIONS. Subject to the other provisions of this Article 6,
options granted under this Article 6 shall be exercisable at such times and be
subject to such restrictions and conditions as the Committee shall in each
instance approve, which need not be the same for each grant or for each
Participant, provided, however, that in the event ISOs are granted to an
Employee who possesses more than 10% of the total combined voting power of all
classes of stock of the Company, taking into account the attribution rules of
Code Section 422(d), such ISOs shall not be exercisable later than the fifth
anniversary
<PAGE> 10
of their grant.
6.6 PAYMENT. Options granted under this Article 6 shall be exercised by the
delivery of a written notice of exercise to the Company, setting forth the
number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares.
The Option Price upon exercise of any Option shall be payable to the Company
in full either: (a) in cash or its equivalent, or (b) by tendering previously
acquired Shares having an aggregate Fair Market Value at the time of exercise
equal to the total Option Price (provided that the Shares which are tendered
must have been held by the Participant for at least six (6) months prior to
their tender to satisfy the Option Price), or (c) by a combination of (a) and
(b).
The Committee also may allow cashless exercise as permitted under Federal
Reserve Board's Regulation T, subject to applicable securities law restrictions,
or by any other means which the Committee determines to be consistent with the
Plan's purpose and applicable law.
As soon as practicable after receipt of a written notification of exercise
and full payment, the Company shall deliver to the Participant, in the
Participant's name, Share certificates in an appropriate amount based upon the
number of Shares purchased under the Option(s).
6.7 RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 6 as it may deem advisable, including, without
limitation, restrictions under applicable federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws applicable
to such Shares.
6.8 TERMINATION OF EMPLOYMENT. Each Participant's Option Award Agreement
shall set forth the extent to which the Participant shall have the right to
exercise the Option following termination of the Participant's employment with
the Company and/or its Subsidiaries, provided, however, that an ISO shall not be
exercisable later than three months following the termination of the Employee's
employment with the Company and/or its Subsidiaries, or later than one year if
the termination is due to disability. Such provisions shall be determined in the
sole discretion of the Committee, shall be included in the Award Agreement
entered into with each Participant, need not be uniform among all Options issued
pursuant to this Article 6, and may reflect distinctions based on the reasons
for termination of employment.
6.9 NONTRANSFERABILITY OF OPTIONS.
(a) INCENTIVE STOCK OPTIONS. No ISO granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Further, all ISOs granted to a Participant under the Plan
shall be exercisable during his or her lifetime only by such Participant.
(b) NON-QUALIFIED STOCK OPTIONS. Except as otherwise determined by
the Committee and provided in a Participant's Award Agreement, no NQSO
granted under this Article 6 may be sold, transferred, pledged, assigned,
or otherwise alienated or
<PAGE> 11
hypothecated, other than by will or by the laws of descent and
distribution. Further, except as otherwise determined by the Committee
and provided in a Participant's Award Agreement, all NQSOs granted to a
Participant under this Article 6 shall be exercisable during his or her
lifetime only by such Participant.
ARTICLE 7. STOCK APPRECIATION RIGHTS
7.1 GRANT OF SARS. Subject to the terms and conditions of the Plan, SARs may
be granted to Participants at any time and from time to time as shall be
determined by the Committee. The Committee may grant Freestanding SARs, Tandem
SARs, or any combination of these forms of SAR.
Subject to the terms and provisions of the Plan, the Committee shall have
absolute discretion in determining the number of SARs granted to each
Participant (subject to Article 4 herein) and in determining the terms and
conditions pertaining to such SARs.
Unless otherwise designated by the Committee at the time of grant, the grant
price of a Freestanding SAR shall be at least equal to one hundred percent
(100%) of the Fair Market Value of a Share on the date of grant of the SAR. The
grant price of Tandem SARs shall equal the Option Price of the related Option.
7.2 EXERCISE OF TANDEM SARS. Tandem SARs may be exercised for all or part of
the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.
Notwithstanding any other provision of this Plan to the contrary, with
respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR
will expire no later than the expiration of the underlying ISO; (ii) the value
of the payout with respect to the Tandem SAR may be for no more than one hundred
percent (100%) of the difference between the Option Price of the underlying ISO
and the Fair Market Value of the Shares subject to the underlying ISO at the
time the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only
when the Fair Market Value of the Shares subject to the ISO exceeds the Option
Price of the ISO.
7.3 EXERCISE OF FREESTANDING SARS. Freestanding SARs may be exercised upon
whatever terms and conditions the Committee, in its sole discretion, imposes
upon them.
7.4 SAR AGREEMENT. Each SAR grant shall be evidenced by an Award Agreement
that shall specify the grant price, the term of the SAR, and such other
provisions as the Committee shall determine, subject to the terms and provisions
of the Plan.
7.5 TERM OF SARS. The term of an SAR granted under the Plan shall be
determined by the Committee, in its sole discretion; provided, however, that
unless otherwise designated by the Committee, such term shall not exceed ten
(10) years.
7.6 PAYMENT OF SAR AMOUNT. Upon exercise of an SAR, a Participant shall be
entitled to receive payment from the Company in an amount determined by
multiplying:
(a) The difference between the Fair Market Value of a Share on
the date of
<PAGE> 12
exercise less the grant price; by
(b) The number of Shares with respect to which the SAR is
exercised.
At the discretion of the Committee, the payment upon SAR exercise may be in
cash, in Shares of equivalent value, or in some combination thereof.
7.7 TERMINATION OF EMPLOYMENT. Each SAR Award Agreement shall set forth the
extent to which the Participant shall have the right to exercise the SAR
following termination of the Participant's employment with the Company and/or
its Subsidiaries. Such provisions shall be determined in the sole discretion of
the Committee, shall be included in the Award Agreement entered into with
Participants, need not be uniform among all SARs issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination of employment.
7.8 NONTRANSFERABILITY OF SARS. Except as otherwise determined by the
Committee and provided in a Participant's Award Agreement, no SAR granted under
the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution.
Further, except as otherwise determined by the Committee and provided in a
Participant's Award Agreement, all SARs granted to a Participant under the Plan
shall be exercisable during his or her lifetime only by such Participant.
ARTICLE 8. RESTRICTED STOCK
8.1 GRANT OF RESTRICTED STOCK. Subject to the terms and provisions of
the Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to Participants in such amounts as the Committee shall
determine.
8.2 RESTRICTED STOCK AGREEMENT. Each Restricted Stock grant shall be
evidenced by an Award Agreement that shall specify the Period(s) of Restriction,
the number of Shares of Restricted Stock granted, and such other provisions as
the Committee shall determine, subject to the terms and provisions of the Plan.
8.3 TRANSFERABILITY. Except as provided in this Article 8, the Shares of
Restricted Stock granted herein may not be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated until the end of the applicable Period of
Restriction established by the Committee and specified in the Restricted Stock
Award Agreement, or upon earlier satisfaction of any other conditions, as
specified by the Committee in its sole discretion and set forth in the
Restricted Stock Agreement. All rights with respect to the Restricted Stock
granted to a Participant under the Plan shall be available during his or her
lifetime only to such Participant.
8.4 OTHER RESTRICTIONS. Subject to Article 11 herein, the Committee may
impose such other conditions and/or restrictions on any Shares of Restricted
Stock granted pursuant to the Plan as it may deem advisable including, without
limitation, a requirement that Participants pay a stipulated purchase price for
each Share of Restricted Stock, restrictions based upon the achievement of
specific performance goals (Company-wide, divisional, and/or individual),
time-based restrictions on vesting following the attainment of the performance
goals, and/or restrictions under applicable federal or state securities laws.
<PAGE> 13
The Committee may in its absolute discretion terminate, shorten, or
accelerate any period of restriction or waive any terms or conditions applicable
to all or any portion of a Restricted Stock Award.
The Company shall retain the certificates representing Shares of Restricted
Stock in the Company's possession until such time as all conditions and/or
restrictions applicable to such Shares have been satisfied and such certificates
shall bear an appropriate legend referring to the restrictions applicable
thereto.
If and to the extent that the restrictions and other terms and conditions
applicable to Shares of Restricted Stock are not satisfied, such Shares and any
dividends or other rights applicable thereto shall be forfeited and reacquired
by the Company, and all rights of the Participant shall terminate to the extent
of the forfeiture without further obligation on the part of the Company.
Except as otherwise provided in this Article 8, Shares of Restricted Stock
covered by each Restricted Stock grant made under the Plan shall become freely
transferable by the Participant after the last day of the applicable Period of
Restriction.
8.5 VOTING RIGHTS. Unless otherwise designated by the Committee at the time
of grant, Participants holding Shares of Restricted Stock granted hereunder may
exercise full voting rights with respect to those Shares during the Period of
Restriction.
8.6 DIVIDENDS AND OTHER DISTRIBUTIONS. Unless otherwise designated by the
Committee at the time of grant, Participants holding Shares of Restricted Stock
granted hereunder shall be credited with regular cash dividends paid with
respect to the underlying Shares while they are so held during the Period of
Restriction. The Committee may apply any restrictions to the dividends that the
Committee deems appropriate.
8.7 TERMINATION OF EMPLOYMENT. Each Restricted Stock Award Agreement shall
set forth the extent to which the Participant shall have the right to receive
unvested Restricted Shares following termination of the Participant's employment
with the Company and/or its Subsidiaries. Such provisions shall be determined in
the sole discretion of the Committee, shall be included in the Award Agreement
entered into with each Participant, need not be uniform among all Shares of
Restricted Stock issued pursuant to the Plan, and may reflect distinctions based
on the reasons for termination of employment; provided, however, that except in
the cases of terminations connected with a Change in Control and terminations by
reason of death or Disability, the vesting of Shares of Restricted Stock which
qualify for the Performance-Based Exception and which are held by Named
Executive Officers shall occur at the time they otherwise would have, but for
the employment termination.
ARTICLE 9. PERFORMANCE UNITS AND PERFORMANCE SHARES
9.1 GRANT OF PERFORMANCE UNITS/SHARES. Subject to the terms of the Plan,
Performance Units and/or Performance Shares may be granted to Participants in
such amounts and upon such terms, and at any time and from time to time, as
shall be determined by the Committee. The Committee shall establish at the time
of grant the Performance Period and the performance measures, as described in
Article 11, for each Award.
<PAGE> 14
9.2 VALUE OF PERFORMANCE UNITS/SHARES. Each Performance Unit shall have an
initial value that is established by the Committee at the time of grant. Each
Performance Share shall have an initial value equal to the Fair Market Value of
a Share on the date of grant. The Committee shall set performance goals in its
absolute discretion which, depending on the extent to which they are met, will
determine the number and/or value of Performance Units/Shares that will be paid
out to the Participant.
9.3 EARNING OF PERFORMANCE UNITS/SHARES. Subject to the terms of this Plan
and the Award Agreement, after the applicable Performance Period has ended, the
holder of Performance Units/Shares shall be entitled to receive payout on the
number and value of Performance Units/Shares earned by the Participant over the
Performance Period, to be determined as a function of the extent to which the
corresponding performance goals have been achieved.
9.4 FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/ SHARES. Payment of
earned Performance Units/Shares shall be made in a single lump sum within
seventy-five (75) calendar days following the close of the applicable
Performance Period. Subject to the terms of this Plan, the Committee, in its
sole discretion, may pay earned Performance Units/Shares in the form of cash or
in Shares (or in a combination thereof) which have an aggregate Fair Market
Value equal to the value of the earned Performance Units/Shares at the close of
the applicable Performance Period. Such Shares may be granted subject to any
restrictions deemed appropriate by the Committee.
Prior to the beginning of each Performance Period, Participants may elect to
defer the receipt of Performance Unit/Share payout upon such terms as the
Committee deems appropriate.
At the discretion of the Committee, Participants may be entitled to receive
any dividends declared with respect to Shares which have been earned in
connection with grants of Performance Units and/or Performance Shares which have
been earned, but not yet distributed to Participants. In addition, Participants
may, at the discretion of the Committee, be entitled to exercise their voting
rights with respect to such Shares.
9.5 TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, OR RETIREMENT. In the
event the employment of a Participant is terminated by reason of death,
Disability, or Retirement during a Performance Period, the Participant shall
receive a prorated payout of the Performance Units/Shares. The prorated payout
shall be determined by the Committee, in its absolute discretion, shall be based
upon the length of time that the Participant held the Performance Units/Shares
during the Performance Period, and shall further be adjusted based on the
achievement of the pre-established performance goals.
Payment of earned Performance Units/Shares shall be made at the time
specified by the Committee in its sole discretion as set forth in the
Participant's Award Agreement. Notwithstanding the foregoing, with respect to
Employees who retire during the Performance Period, payments shall be made at
the same time as payments are made to Participants who did not terminate
employment during the applicable Performance Period.
9.6 TERMINATION OF EMPLOYMENT FOR OTHER REASONS. In the event that a
Participant's employment terminates for any reason other than those reasons set
forth in Section 9.5 herein, all Performance Units/Shares shall be forfeited by
the Participant to the
<PAGE> 15
Company unless determined otherwise by the Committee in its sole discretion as
set forth in the Participant's Award Agreement.
9.7 NONTRANSFERABILITY. Except as otherwise determined by the Committee
and provided in a Participant's Award Agreement, Performance Units/Shares may
not be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution.
Further, except as otherwise determined by the Committee and provided in a
Participant's Award Agreement, a Participant's rights under the Plan shall be
exercisable during the Participant's lifetime only by the Participant or the
Participant's legal representative.
ARTICLE 10. OTHER INCENTIVE AWARDS
10.1 GRANT OF OTHER INCENTIVE AWARDS. Subject to the terms and provisions
of the Plan, Other Incentive Awards may be granted to Participants in such
amount, upon such terms, and at any time and from time to time as shall be
determined by the Committee.
10.2 OTHER INCENTIVE AWARD AGREEMENT. Each Other Incentive Award grant shall
be evidenced by an Award Agreement that shall specify the amount of the Other
Incentive Award granted, the terms and conditions applicable to such Other
Incentive Award, the applicable Performance Period and performance goals, and
such other provisions as the Committee shall determine, subject to the terms and
provisions of the Plan.
10.3 NONTRANSFERABILITY. Except as otherwise determined by the Committee and
provided in a Participant's Award Agreement, Other Incentive Awards may not be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution.
10.4 FORM AND TIMING OF PAYMENT OF OTHER INCENTIVE AWARDS. Payment of Other
Incentive Awards shall be made at such times and in such form, either in cash or
in Shares (or a combination thereof) as established by the Committee subject to
the terms of the Plan. Such Shares may be granted subject to any restrictions
deemed appropriate by the Committee. Without limiting the generality of the
foregoing, annual incentive awards may be paid in the form of Other Incentive
Awards (which may or may not be subject to restrictions, at the discretion of
the Committee).
ARTICLE 11. PERFORMANCE MEASURES
Unless and until the Committee proposes for stockholder vote and stockholders
approve a change in the general performance measures set forth in this Article
11, the attainment of which may determine the degree of payout and/or vesting
with respect to Awards to Named Executive Officers which are designed to qualify
for the Performance-Based Exception, the performance measure(s) to be used for
purposes of granting performance-based Awards shall be chosen from among the
following alternatives:
(a) Return on Assets ("ROA");
(b) Cash Flow Return on Investment ("CFROI");
(c) Earnings Before Interest and Taxes ("EBIT");
<PAGE> 16
(d) Net Earnings;
(e) Total Shareholder Return;
(f) Return on Sales ("ROS");
(g) Return on Equity ("ROE);
(h) Economic Value Added;
(i) Division Operating Income; or
(j) Return on Net Assets.
The Committee shall have the discretion to adjust the determinations of the
degree of attainment of the pre-established performance goals; provided,
however, that Awards which are designed to qualify for the Performance-Based
Exception, and which are held by Named Executive Officers, may not be adjusted
upward (the Committee shall retain the discretion to adjust such Awards
downward).
In the event that applicable tax and/or securities laws change to permit
Committee discretion to alter the governing performance measures without
obtaining stockholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining stockholder approval. In
addition, in the event that the Committee determines that it is advisable to
grant Awards which shall not qualify for the Performance-Based Exception, the
Committee may make such grants without satisfying the requirements of Code
Section 162(m).
ARTICLE 12. BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any beneficiary
or beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his or her death before he or
she receives any or all of such benefit. Each such designation shall revoke all
prior designations by the same Participant, shall be in a form prescribed by the
Company, and will be effective only when filed by the Participant in writing
with the Company during the Participant's lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall be paid
to the Participant's estate.
ARTICLE 13. DEFERRALS
The Committee may permit a Participant to defer such Participant's receipt of
the payment of cash or the delivery of Shares that would otherwise be due to
such Participant by virtue of the exercise of an Option or SAR, the lapse or
waiver of restrictions with respect to Restricted Stock, or the satis faction of
any requirements or goals with respect to Performance Units/Shares, Cash Bonus
Awards, or Other Incentive Awards. If any such deferral election is required or
permitted, the Committee shall, in its sole discretion, establish rules and
procedures for such payment deferrals.
ARTICLE 14. RIGHTS OF EMPLOYEES
14.1 EMPLOYMENT. Nothing in the Plan shall interfere with or limit in any way
the right
<PAGE> 17
of the Company to terminate any Participant's employment at any time, nor confer
upon any Participant any right to continue in the employ of the Company.
For purposes of this Plan, a transfer of a Participant's employment between
the Company and a Subsidiary, or between Subsidiaries, shall not be deemed to be
a termination of employment. Upon such a transfer, the Committee may make such
adjustments to outstanding Awards as it deems appropriate to reflect the changed
reporting relationships.
14.2 PARTICIPATION. No Employee or officer of the Company or its Subsidiaries
shall have the right to be selected to receive an Award under this Plan, or,
having been so selected, to be selected to receive a future Award.
ARTICLE 15. CHANGE IN CONTROL
15.1 TREATMENT OF OUTSTANDING AWARDS. Upon the occurrence of a Change in
Control, unless otherwise specifically prohibited under applicable laws, or by
the rules and regulations of any governing governmental agencies or national
securities exchanges:
(a) Any and all Options and SARs granted hereunder shall become
immediately exercisable, and shall remain exercisable
throughout their entire term.
(b) Any restriction periods and restrictions imposed on
Restricted Shares shall lapse.
(c) The target payout opportunities attainable under all
outstanding Awards of Performance Units and Performance
Shares and Other Incentive Awards shall be deemed to have
been fully earned for the entire Performance Period(s) as
of the effective date of the Change in Control.
The vesting of all Awards denominated in Shares shall be accelerated as of the
effective date of the Change in Control, and there shall be paid out to
Participants within thirty (30) days following the effective date of the Change
in Control a pro rata number of shares based upon an assumed achievement of all
relevant targeted performance goals and upon the length of time within the
Performance Period which has elapsed prior to the Change in Control. Awards
denominated in cash shall be paid pro rata to Participants in cash within thirty
(30) days following the effective date of the Change in Control, with the
pro-ration determined as a function of the length of time within the Performance
Period which has elapsed prior to the Change in Control, and based on an assumed
achievement of all relevant targeted performance goals.
(d) Subject to Article 16 herein, the Committee shall have the authority to
make any modifications to the Awards as determined by the Committee to be
appropriate before the effective date of the Change in Control.
15.2 TERMINATION, AMENDMENT, AND MODIFICATION OF CHANGE-IN-CONTROL
PROVISIONS. Notwithstanding any other provision of this Plan or any Award
Agreement provision, the provisions of this Article 15 may not be terminated,
amended, or modified to affect adversely any Award theretofore granted under the
Plan without the prior written consent of the Participant with respect to said
Participant's outstanding Awards; provided, however, that the Board, upon
recommendation of the Committee, may terminate, amend,
<PAGE> 18
or modify this Article 15 at any time and from time to time prior to the date of
a Change in Control to affect Awards not yet granted under the Plan.
ARTICLE 16. AMENDMENT, MODIFICATION, AND TERMINATION
16.1 AMENDMENT, MODIFICATION, AND TERMINATION. The Board may at any time and
from time to time, alter, amend, suspend or terminate the Plan in whole or in
part; provided, however, that unless the Board specifically provides otherwise,
any revision or amendment that would cause the Plan to fail to comply with any
requirement of applicable law, regulation, or rule if such amendment were not
approved by stockholders, shall not be effective unless and until such approval
of stockholders of the Company is obtained.
16.2 AWARDS PREVIOUSLY GRANTED. No termination, amendment, or modification of
the Plan shall adversely affect in any material way any Award previously granted
under the Plan, without the written consent of the Participant holding such
Award.
16.3 COMPLIANCE WITH CODE SECTION 162(M). At all times when Code Section
162(m) is applicable, all Awards granted under this Plan shall comply with the
requirements of Code Section 162(m); provided, however, that in the event the
Committee determines that such compliance is not desired with respect to any
Award or Awards available for grant under the Plan, then compliance with Code
Section 162(m) will not be required. In addition, in the event that changes are
made to Code Section 162(m) to permit greater flexibility with respect to any
Award or Awards available under the Plan, the Committee may, subject to this
Article 16, make any adjustments it deems appropriate.
ARTICLE 17. WITHHOLDING
17.1 TAX WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state, and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any taxable event
arising as a result of this Plan.
17.2 SHARE WITHHOLDING. With respect to withholding required upon the
exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock,
or upon any other taxable event arising as a result of Awards granted hereunder,
Participants may elect, subject to the approval of the Committee, to satisfy the
withholding requirement, in whole or in part, by having the Company withhold
Shares having a Fair Market Value on the date the tax is to be determined equal
to the minimum statutory total tax which could be imposed on the transaction.
All such elections shall be irrevocable, made in writing, signed by the
Participant, and shall be subject to any restrictions or limitations that the
Committee, in its sole discretion, deems appropriate.
ARTICLE 18. INDEMNIFICATION
Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit, or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company's approval, or paid by him or her in satisfaction of any
judgment in any such action, suit, or proceeding against him or her, provided he
or she shall give the
<PAGE> 19
Company an opportunity, at its own expense, to handle and defend the same before
he or she undertakes to handle and defend it on his or her own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company's
Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any
power that the Company may have to indemnify them or hold them harmless.
ARTICLE 19. SUCCESSORS
All obligations of the Company under the Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
ARTICLE 20. LEGAL CONSTRUCTION
20.1 GENDER AND NUMBER. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.
20.2 SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
20.3 REQUIREMENTS OF LAW. The granting of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required.
20.4 SECURITIES LAW AND TAX LAW COMPLIANCE. With respect to Insiders,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent any
provision of the plan or action by the Committee fails to so comply, it shall be
deemed null and void, to the extent permitted by law and deemed advisable by the
Committee.
20.5 GOVERNING LAW. To the extent not preempted by federal law, the Plan, and
all agreements hereunder, shall be construed in accordance with and governed by
the laws of the state of Delaware.
<PAGE> 1
Exhibit 4.5
SAUER INC.
NON-EMPLOYEE DIRECTOR
STOCK OPTION AND
RESTRICTED STOCK PLAN
Effective April 22, 1998
<PAGE> 2
CONTENTS
Article 1. Establishment, Purpose, and Duration 1
Article 2. Definitions 1
Article 3. Administration 4
Article 4. Shares Subject to the Plan 4
Article 5. Eligibility and Participation 5
Article 6. Non-qualified Stock Options 5
Article 7. Restricted Stock 7
Article 8. Change in Control 8
Article 9. Amendment, Modification, and Termination 9
Article 10. Withholding 9
Article 11. Miscellaneous 9
<PAGE> 3
SAUER INC.
NON-EMPLOYEE DIRECTOR STOCK OPTION AND RESTRICTED STOCK PLAN
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. Sauer Inc., a Delaware corporation (the
"Company"), hereby establishes an incentive compensation plan to be known as the
"Sauer Inc. Non-employee Director Stock Option and Restricted Stock Plan" (the
"Plan"), as set forth in this document. The Plan permits the grant of
Non-qualified Stock Options and Shares of Restricted Stock, subject to the terms
and provisions set forth herein.
Subject to approval by the Company's stockholders, the Plan shall become
effective as of April 22, 1998 (the "Effective Date"), and shall remain in
effect as provided in Section 1.3 hereof.
1.2 PURPOSE OF THE PLAN. The purpose of the Plan is to promote the
achievement of long-term objectives of the Company by linking the personal
interests of Non-employee Directors to those of Company shareholders, and to
attract and retain Non-employee Directors of outstanding competence.
1.3 DURATION OF THE PLAN. The Plan shall commence on the Effective Date, and
shall remain in effect, subject to the right of the Board of Directors to
terminate the Plan at any time pursuant to Article 9 herein, until all Shares
subject to it shall have been purchased or acquired according to the Plan's
provisions. However, in no event may Stock Options or Restricted Stock be
granted under the Plan on or after April 21, 2008.
ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings set
forth below and, when the meaning is intended, the initial letter of the word is
capitalized:
(a) "AWARD" means the grant of a Stock Option and/or the grant of
Restricted Stock hereunder.
(b) "AWARD AGREEMENT" means an agreement entered into by and between the
Company and a Non-employee Director, setting forth the terms and
provisions applicable to an Option and/or Restricted Stock grant
under the Plan.
(c) "BENEFICIAL OWNER" shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the Exchange
Act.
(d) "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of the
Company.
(e) "CHANGE IN CONTROL" of the Company means, and shall be deemed to
have occurred upon, any of the following events:
(i) Any Person (other than those Persons in control of the Company
as of the Effective Date, or other than a trustee or other
fiduciary holding securities
<PAGE> 4
under an employee benefit plan of the Company, or a
corporation owned directly or indirectly by the stockholders
of the Company in substantially the same proportions as their
ownership of stock of the Company) becomes the Beneficial
Owner, directly or indirectly, of securities of the Company
representing thirty percent (30%) or more of the combined
voting power of the Company's then outstanding securities; or
(ii) During any period of two (2) consecutive years (not including
any period prior to the Effective Date), individuals who at
the beginning of such period constitute the Board (and any new
Director, whose election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the
Directors then still in office who either were Directors at
the beginning of the period or whose election or nomination
for election was so approved), cease for any reason to
constitute a majority thereof; or
(iii) The stockholders of the Company approve: (i) a plan of
complete liquidation of the Company; or (ii) an agreement for
the sale or disposition of all or substantially all the
Company's assets; or (iii) a merger, consolidation, or
reorganization of the Company with or involving any other
corporation, other than a merger, consolidation, or
reorganization that would result in the voting securities of
the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at
least fifty percent (50%) of the combined voting power of the
voting securities of the Company (or such surviving entity)
outstanding immediately after such merger, consolidation, or
reorganization.
However, in no event shall a "Change in Control" be deemed to have
occurred, with respect to a Participant, if the Participant is
part of a purchasing group which consummates the Change-in-Control
transaction. A Participant shall be deemed "part of a purchasing
group" for purposes of the preceding sentence if the Participant
is an equity participant in the purchasing company or group
(except for (i) passive ownership of less than one percent (1%) of
the stock of the purchasing company; or (ii) ownership of equity
participation in the purchasing company or group which is
otherwise not significant, as determined prior to the Change in
Control by a majority of the non-employee continuing Directors).
(f) "CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
(g) "COMPANY" means Sauer Inc., a Delaware corporation.
(h) "DIRECTOR" means any individual who is a member of the Board of
Directors of the Company.
(i) "DISABILITY" shall have the meaning ascribed to it in the Company's
governing long-term disability plan.
(j) "EMPLOYEE" means any employee of the Company or of the Company's
Subsidiaries. For purposes of the Plan, an individual whose only
employment
<PAGE> 5
relationship with the Company is as a Director or Chairman of the
Board shall not be deemed to be an Employee.
(k) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.
(l) "FAIR MARKET VALUE" shall be determined on the basis of the closing
sale price on the New York Stock Exchange, or, if there is no such
sale on the relevant date, then on the last previous day on which a
sale was reported. If the shares are not traded on the New York
Stock Exchange, Fair Market Value shall be determined by the
Committee in its absolute discretion, such amount to be calculated
pursuant to the formula established under the Sauer, Inc. 1996
Phantom Stock Plan, which Formula is hereby incorporated by
reference and made a part hereof.
(m) "1998 INITIAL PUBLIC OFFERING" means the initial public offering of
Common Stock of the Company in the United States, Europe, and
elsewhere as described in the Form S-1 filed with the Securities and
Exchange Commission on March 20, 1998.
(n) "NON-EMPLOYEE DIRECTOR" means a Director who is not also an
Employee.
(o) "NON-QUALIFIED STOCK OPTION," "NQSO," or "OPTION" means an option to
purchase Shares, granted under Article 6 herein.
(p) "OPTION PRICE" means the price at which a Share may be purchased
pursuant to an Option.
(q) "PARTICIPANT" means a Non-employee Director of the Company, who has
an outstanding Option and/or Restricted Stock grant under the Plan.
(r) "RESTRICTED STOCK" means a grant of Shares that is subject to
certain restrictions, as provided in Article 7 herein.
(s) "SHARES" means the shares of Common Stock of the Company.
(t) "SUBSIDIARY" means any corporation, limited liability company,
partnership, joint venture, affiliate, or other entity in which the
Company has a majority voting interest.
ARTICLE 3. ADMINISTRATION
3.1 THE BOARD OF DIRECTORS. The Plan shall be administered by the Board
(excluding those Directors who are eligible to be Participants under the Plan),
subject to the restrictions set forth in the Plan. The Board shall have the
authority to delegate its authority to any committee appointed by the Board. To
the extent that the Board has delegated any authority and responsibility under
the Plan to such a committee, all applicable references to the Board in the Plan
shall be to such committee.
ADMINISTRATION BY THE BOARD. The Board shall have the full power,
discretion, and authority to interpret and administer the Plan in a
manner which is consistent with
<PAGE> 6
the Plan's provisions. In addition, the Board shall have the power
to determine Plan eligibility, to determine the number, the value,
the vesting period, the timing, and other terms and conditions of
Options and Restricted Stock to be granted under the Plan. The Board
shall also have full power to construe and interpret the Plan and
any agreement or instrument entered into under the Plan, including
but not limited to Award Agreements; establish, amend, or waive
rules and regulations for the Plan's administration; and (subject to
the provisions of Article 9 herein) amend the terms and conditions
of any Option and Restricted Stock granted hereunder. Further, the
Board shall make all other determinations which may be necessary or
advisable for the administration of the Plan.
DECISION BINDING. All determinations and decisions made by the Board
pursuant to the provisions of the Plan, and all related orders or
resolutions of the Board shall be final, conclusive, and binding on
all persons, including the Company, its stockholders, employees,
Participants, and their estates and beneficiaries.
ARTICLE 4. SHARES SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES. Subject to adjustment as provided in Section 4.3
herein, the number of Shares hereby reserved for issuance under the Plan shall
be two hundred fifty thousand (250,000). The grant of an Award shall reduce the
Shares available for grant under the Plan by the number of Shares subject to
such Award.
4.2 LAPSED AWARDS. If any Award granted under the Plan is canceled,
terminates, expires, or lapses for any reason, any Share underlying such Award
again shall be available for grant under the Plan.
4.3 ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any change in corporate
capitalization, such as a stock split, or a corporate transaction, such as any
merger, consolidation, separation, including a spin-off, or other distribution
of stock or property of the Company, any reorganization (whether or not such
reorganization comes within the definition of such term in Code Section 368) or
any partial or complete liquidation of the Company, such adjustment shall be
made in the number and class of Shares which may be delivered under Section 4.1
herein and in the number and class of and/or price of Shares subject to
outstanding Awards granted under the Plan, as may be determined to be
appropriate and equitable by the Board, in its sole discretion, to prevent
dilution or enlargement of rights; provided, however, that the number of Shares
subject to any Award shall always be a whole number.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
Persons eligible to participate in the Plan are limited to Non-employee
Directors who are serving on the Board on the date of each scheduled grant under
the Plan.
ARTICLE 6. NON-QUALIFIED STOCK OPTIONS
6.1 GRANTS OF OPTIONS. During the time period beginning as of the Effective
Date and ending April 21, 2008, and subject to the limitation on the number of
Shares subject to the Plan, on the day following each annual meeting of the
Company's stockholders, beginning with the first annual meeting after
consummation of the Company's 1998 Initial Public Offering during which the
Board agrees that these automatic annual Stock Option grants should begin, each
Non-employee Director shall be granted a Non-qualified Stock
<PAGE> 7
Option to purchase such number of Shares as the Board shall determine in its
absolute discretion, effective as of each such day following the annual
stockholders' meeting. However, the Board has the absolute discretion to make
additional Non-qualified Stock Option grants to Non-employee Directors at any
time and to determine the number of shares to which each such Option pertains.
The grants of and number of Shares pertaining to Non-qualified Stock Options
need not be uniform amongst the Participants. The specific terms and provisions
of such Non-qualified Stock Options shall be incorporated in Award Agreements,
executed pursuant to Section 6.2 of the Plan.
6.2 AWARD AGREEMENT. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as the
Board shall determine.
6.3 OPTION PRICE. Unless otherwise designated by the Board at the time of
grant, the Option Price for each grant of an Option under this Plan shall be at
least equal to one hundred percent (100%) of the Fair Market Value of a Share on
the date the Option is granted.
6.4 DURATION OF OPTIONS. Each Option granted to a Participant shall expire at
such time as the Board shall determine at the time of grant; provided, however,
that unless otherwise designated by the Board at the time of grant, no Option
shall be exercisable later than the tenth anniversary date of its grant.
6.5 VESTING OF SHARES SUBJECT TO OPTION. Unless otherwise designated by the
Board, all Options granted under this Plan shall vest one hundred percent (100%)
and shall be exercisable in whole or in part on the date of grant, and shall
remain exercisable in whole or in part, at any time and from time to time, until
the tenth anniversary of their grant date.
6.6 TERMINATION OF DIRECTORSHIP. Unless otherwise designated by the Board,
all unvested Options will be forfeited upon termination of service from the
Board for any reason.
Unless otherwise designated by the Board, in the event of death or Disability
of a Participant, all vested Options held by such Participant shall remain
exercisable at any time prior to such Option's expiration date, or for one (1)
year after the date of death or the date of Disability as determined by the
Board, whichever period is shorter, by the Participant or such person or persons
that have acquired the Participant's rights under the Option by will or by the
laws of descent and distribution. For reasons other than death or Disability,
all vested Options shall remain exercisable for six (6) months following the
date the Director's service on the Board terminates or until their expiration
date, whichever period is shorter.
6.7 PAYMENT. Options shall be exercised by the delivery of a written notice
of exercise to the Company, setting forth the number of Shares with respect to
which the Option is to be exercised, accompanied by full payment for the Shares.
The Option Price upon exercise of any Option shall be payable to the Company
in full either: (a) in cash or its equivalent, or (b) by tendering previously
acquired Shares having a Fair Market Value at the time of exercise equal to the
total Option Price (provided that the Shares tendered upon Option exercise have
been held by the Participant for at least six (6)
<PAGE> 8
months prior to their tender to satisfy the Option Price), or (c) by a
combination of (a) and (b).
The Board also may allow cashless exercise as permitted under Federal Reserve
Board's Regulation T, subject to applicable securities law restrictions, or by
any other means which the Board determines to be consistent with the Plan's
purpose and applicable law.
As soon as practicable after receipt of a written notification of exercise
and full payment, the Company shall deliver to the Participant, in the
Participant's name, Share certificates in an appropriate amount based upon the
number of Shares purchased pursuant to the exercise of the Option.
6.8 RESTRICTIONS ON SHARE TRANSFERABILITY. The Board may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option under
the Plan as it may deem advisable, including, without limitation, restrictions
under applicable federal securities laws, under the requirements of any stock
exchange or market upon which such Shares are then listed and/or traded, and
under any blue sky or state securities laws applicable to such Shares.
6.9 NONTRANSFERABILITY OF OPTIONS. Except as otherwise determined by the
Board and provided in a Participant's Award Agreement, no Option granted under
the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution.
Further, except as otherwise determined by the Board and provided in a
Participant's Award Agreement, all Options granted to a Participant under the
Plan shall be exercisable during his or her lifetime only by such Participant,
or in the event of Disability, by his or her legal representative if one is
appointed.
6.10 RIGHTS WITH RESPECT TO SHARES. No Participant or beneficiary, as
applicable, shall have rights as a shareholder with respect to any Shares
issuable pursuant to an Option until the date of issuance of a stock certificate
to the Participant or beneficiary, as applicable, for such Shares. Except as
provided in Section 4.3, no adjustment shall be made for dividends,
distributions, or other rights for which a record date is prior to the date such
stock certificate is issued.
ARTICLE 7. RESTRICTED STOCK
7.1 GRANT OF RESTRICTED STOCK. Subject to the limitation on the number of
Shares subject to the Plan, beginning with the first meeting of the Board after
the consummation of the 1998 Initial Public Offering during which the Board
agrees that these automatic Restricted Stock grants should begin, upon first
being elected or appointed to the Board, newly elected or appointed Non-employee
Directors will each receive a one-time grant of such number of Shares of
Restricted Stock as the Board shall determine in its absolute discretion, on the
day following such election or appointment. Those persons who are currently
Non-employee Directors and who continue as Non-employee Directors will each also
receive a one-time grant of such number of Shares of Restricted Stock as the
Board shall determine in its absolute discretion, on the day following the first
meeting of the Board after the consummation of the 1998 Initial Public Offering.
However, the Board has the absolute discretion to provide additional grants of
Restricted Stock to Non-employee Directors at any time and to determine the
number of Shares pertaining to each such grant. The number of Shares pertaining
to grants of Restricted Stock need not be uniform
<PAGE> 9
amongst the Participants. The specific terms and provisions of such Restricted
Stock grants shall be incorporated in an Award Agreement, executed pursuant to
Section 7.2 of the Plan.
7.2 RESTRICTED STOCK AGREEMENT. Each Restricted Stock grant shall be
evidenced by an Award Agreement that shall specify the Period(s) of Restriction,
the number of Shares of Restricted Stock granted, and such other provisions as
the Board shall determine.
7.3 VESTING OF RESTRICTED STOCK. Unless otherwise designated by the Board,
all Shares of Restricted Stock granted under this Plan shall vest ratably over a
three (3) year period such that one-third (1/3) of the award vests on each
anniversary of the date of grant.
7.4 RESTRICTIONS ON SHARE TRANSFERABILITY. The Shares of Restricted Stock
granted herein may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until the end of the applicable vesting period
established by the Board and specified in the Restricted Stock Award Agreement,
or upon earlier satisfaction of any other conditions, as specified by the Board
in its sole discretion and set forth in the Restricted Stock Agreement. All
rights with respect to the Restricted Stock granted to a Participant under the
Plan shall be available during his or her lifetime only to such Participant.
7.5 OTHER RESTRICTIONS. The Board may impose other conditions and/or
restrictions on any Shares of Restricted Stock granted pursuant to the Plan as
it may deem advisable including, without limitation, a requirement that
Participants pay a stipulated purchase price for each Share of Restricted Stock,
restrictions based upon the achievement of specific performance goals
(Company-wide, divisional, and/or individual), time-based restrictions on
vesting following the attainment of the performance goals, and/or restrictions
under applicable federal or state securities laws or other statutes.
The Company shall retain the certificates representing Shares of Restricted
Stock in the Company's possession until such time as all conditions and/or
restrictions applicable to such Shares have been satisfied and such certificates
shall bear an appropriate legend referring to the restrictions applicable
thereto.
If and to the extent that the restrictions and other terms and conditions
applicable to Shares of Restricted Stock are not satisfied, such Shares and any
dividends or other rights applicable thereto shall be forfeited and reacquired
by the Company, and all rights of the Participant shall terminate to the extent
of the forfeiture without further obligation on the part of the Company.
Except as otherwise provided in this Article 7, Shares of Restricted Stock
covered by each Restricted Stock grant made under the Plan shall become freely
transferable by the Participant after the last day of the applicable vesting
period.
7.6 VOTING RIGHTS. Unless otherwise designated by the Board at the time of
grant, Participants holding Shares of Restricted Stock granted hereunder may
exercise full voting rights with respect to those Shares during the vesting
period.
7.7 DIVIDENDS AND OTHER DISTRIBUTIONS. Unless otherwise designated by the
Board at the time of grant, Participants holding Shares of Restricted Stock
granted hereunder shall be credited with regular cash dividends paid with
respect to the underlying Shares while
<PAGE> 10
they are so held during the vesting period. The Board may apply any restrictions
to the dividends that the Board deems appropriate.
7.8 TERMINATION OF DIRECTORSHIP. Unless otherwise designated by the Board,
all unvested Shares of Restricted Stock will be forfeited upon termination of
service from the Board for any reason.
ARTICLE 8. CHANGE IN CONTROL
8.1 TREATMENT OF OUTSTANDING AWARDS. Upon the occurrence of a Change in
Control, unless otherwise specifically prohibited under applicable laws, or by
the rules and regulations of any governing governmental agencies or national
securities exchanges:
(a) To the extent that any Options granted hereunder are not
already vested, any and all Options shall become
immediately exercisable, and shall remain exercisable
throughout their entire term.
(b) Any restriction periods and restrictions imposed on
outstanding Restricted Stock grants shall immediately
lapse.
8.2 TERMINATION, AMENDMENT, AND MODIFICATION OF CHANGE-IN-CONTROL PROVISIONS.
Notwithstanding any other provision of this Plan or any Award Agreement
provision, the provisions of this Article 8 may not be terminated, amended, or
modified to affect adversely any Award theretofore granted under the Plan
without the prior written consent of the Participant with respect to said
Participant's outstanding Awards; provided, however, that the Board may
terminate, amend, or modify this Article 8 at any time and from time to time
prior to the date of a Change in Control to affect Awards not yet granted under
the Plan.
ARTICLE 9. AMENDMENT, MODIFICATION, AND TERMINATION
9.1 AMENDMENT, MODIFICATION, AND TERMINATION. The Board may at any time and
from time to time, alter, amend, suspend, or terminate the Plan in whole or in
part; provided, however, that unless the Board specifically provides otherwise,
any revision or amendment that would cause the Plan to fail to comply with any
requirement of applicable law, regulation, or rule if such amendment were not
approved by stockholders, shall not be effective unless and until such approval
of stockholders of the Company is obtained.
9.2 AWARDS PREVIOUSLY GRANTED. Unless required by law, no termination,
amendment, or modification of the Plan shall in any material manner adversely
affect any Award previously granted under the Plan, without the written consent
of the Participant holding the Award.
ARTICLE 10. WITHHOLDING
10.1 TAX WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state, and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any taxable event
arising as a result of this Plan.
10.2 SHARE WITHHOLDING. With respect to withholding required upon the
exercise of Options or upon the lapse of restrictions on Restricted Stock, or
upon any other taxable
<PAGE> 11
event arising as a result of Awards granted hereunder, Participants may elect,
subject to the approval of the Board, to satisfy the withholding requirement, in
whole or in part, by having the Company withhold Shares having a Fair Market
Value on the date the tax is to be determined equal to the minimum statutory
total tax which could be imposed on the transaction. All such elections shall be
irrevocable, made in writing, signed by the Participant, and shall be subject to
any restrictions or limitations that the Board, in its sole discretion, deems
important.
ARTICLE 11. MISCELLANEOUS
11.1 GENDER AND NUMBER. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.
11.2 SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
11.3 BENEFICIARY DESIGNATION. Each Participant under the Plan may, from time
to time, name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan is to be paid in the event of
his or her death. Each designation will revoke all prior designations by the
same Participant, shall be in a form prescribed by the Board, and will be
effective only when filed by the Participant in writing with the Board during
his or her lifetime. In the absence of any such designation, benefits remaining
unpaid at the Participant's death shall be paid to the Participant's estate.
11.4 NO RIGHT OF NOMINATION. Nothing in the Plan shall be deemed to create
any obligation on the part of the Board to nominate any Director for reelection
by the Company's shareholders.
11.5 SHARES AVAILABLE. The Shares made available pursuant to the Plan may be
either authorized but unissued Shares, or Shares which have been or may be
reacquired by the Company, as determined from time to time by the Board.
11.6 SUCCESSORS. All obligations of the Company under the Plan with respect
to Awards granted hereunder shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of
the business and/or assets of the Company.
11.7 REQUIREMENTS OF LAW. The granting of Awards under the Plan shall be
subject to all applicable laws, rules, and regulations, and to such approvals by
any governmental agencies or national securities exchanges as may be required.
11.8 GOVERNING LAW. To the extent not preempted by federal law, the Plan, and
all agreements hereunder, shall be construed in accordance with and governed by
the laws of the state of Delaware.
<PAGE> 1
Exhibit 5.1
May 29, 1998
Board of Directors
Sauer Inc.
2800 East 13th Street
Ames, IA 50010
Gentlemen:
This firm has acted as counsel to Sauer Inc., a Delaware corporation
(the "Company"), in connection with its registration, pursuant to a registration
statement on Form S-8 filed on or about the date hereof (the "Registration
Statement"), of 2,650,000 shares (the "Shares") of Common Stock, par value $.01
per share of the Company, pursuant to the Sauer Inc. Non-Employee Director Stock
Option and Restricted Stock Plan and the Sauer Inc. 1998 Long-Term Incentive
Plan (collectively, the "Plans"). This letter is furnished to you pursuant to
the requirements of Item 601(b)(5) of Regulation S-K, 17 C.F.R. Section
229.601(b)(5), in connection with such registration.
For purposes of this opinion letter, we have examined copies of the
following documents:
1. An executed copy of the Registration Statement.
2. A copy of the Plans, as certified by the Secretary of the Company
on the date hereof as then being complete, accurate, and in effect.
3. The Restated Certificate of Incorporation of the Company, as
certified by the Secretary of State of the State of Delaware on May 27,
1998, and by the Secretary of the Company on the date hereof as then being
complete, accurate, and in effect.
4. The Restated By-Laws of the Company, as certified by the Secretary
of the Company on the date hereof as then being complete, accurate, and in
effect.
5. A unanimous consent of the Board of Directors of the Company dated
April 6, 1998, as certified by the Secretary of the Company on the date
hereof as then being complete, accurate, and in effect relating to, among
other things, approval of the Plans.
Page 1
<PAGE> 2
6. Resolutions of the stockholders of the Company adopted on April 22,
1998, as certified by the Secretary of the Company on the date hereof as
then being complete, accurate, and in effect relating to, among other
things, approval of the Plans.
We have not, except as specifically identified above, made any independent
review or investigation of factual or other matters, including the organization,
existence, good standing, assets, business or affairs of the Company or its
subsidiaries. In our examination of the aforesaid certificates, records, and
documents, we have assumed the genuineness of all signatures, the legal capacity
of natural persons, the authenticity, accuracy, and completeness of all
documents submitted to us as originals, and the authenticity, accuracy, and
completeness in conformity with the original documents of all documents
submitted to us as certified, telecopied, photostatic, or reproduced copies. We
have assumed the authenticity and accuracy of the foregoing certifications of
corporate officers, on which we are relying, and have made no independent
investigations thereof. This opinion is given in the context of the foregoing.
This opinion letter is based as to matters of law solely on the General
Corporation Law of the State of Delaware. We express no opinion herein as to any
other laws, statutes, regulations, or ordinances. Based upon, subject to, and
limited by the foregoing, we are of the opinion that the Shares, when issued and
delivered in the manner and on the terms contemplated in the Registration
Statement and the Plans (with the Company having received the consideration
therefore, the form of which is in accordance with applicable law), will be
validly issued, fully paid, and non-assessable by the Company.
We assume no obligation to advise you of any changes in the foregoing
subsequent to the delivery of this opinion letter. This opinion letter has been
prepared solely for your use in connection with the filing of the Registration
Statement on the date of this letter, and may not be quoted in whole or in part
or otherwise be referred to, nor be filed with or furnished to any governmental
agency or other person or entity, without the prior written consent of this
firm.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement. In giving this consent, we do not thereby admit that we
are an "expert" within the meaning of the Securities Act of 1933, as amended.
Very truly yours,
SPENCER FANE BRITT & BROWNE LLP
Page 2
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-8 of our report dated
February 27, 1998 (except with respect to matters discussed in Note 3 and Note
17, as to which the date is April 22, 1998), included in the final prospectus
of Sauer Inc. dated May 11, 1998, as filed with the Securities and Exchange
Commission pursuant to Rule 424(b) of the Securities Act of 1933.
/s/ ARTHUR ANDERSEN LLP
- ------------------------
Arthur Andersen LLP
Chicago, Illinois
May 29, 1998
