SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY - PERIOD ENDED
April 3, 1999 OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
______ TO ______
Commission file number 0-20388
LITTELFUSE, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-3795742
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
800 East Northwest Highway
Des Plaines, Illinois 60016
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(847) 824-1188
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No
As of April 3, 1999, 19,471,420 shares of common stock, $.01 par value,
of the Registrant and warrants to purchase 2,474,615 shares of common stock,
$.01 par value, of the Registrant were outstanding.
<PAGE>
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
PAGE
Item 1. Financial Statements
Consolidated Condensed Statements of Income for the period ended April 3,
1999 and April 4, 1998 (unaudited).........................................1
Consolidated Condensed Balance Sheets for the period ended April 3, 1999
(unaudited) and April 4, 1998............................................. 2
Consolidated Condensed Statements of Cash Flows for the period ended
April 3, 1999 and April 4, 1998 (unaudited)............................... 3
Notes to the Consolidated Financial Statements ........................... 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations .................. 6
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ................................. 9
<PAGE>
<TABLE>
CONSOLIDATED CONDENSED
STATEMENTS OF INCOME
(In thousands, except per share data)
(unaudited)
For the Three
Months Ended
April 3, April 4,
1999 1998
<S> <C> <C>
Net sales $ 68,971 $ 69,331
Cost of sales 43,184 42,739
--------------- --------------
Gross profit 25,787 26,592
Selling, general and administrative expenses 12,596 13,362
Research and development expenses 2,387 2,171
Amortization of intangibles 1,742 1,888
---------------- ---------------
Operating income 9,062 9,171
Interest expense 1,342
843
Other (income) /expense (382) 636
Income before income taxes 8,102 7,692
Income taxes 3,079 1,866
Net income $ 5,023 $ 5,826
================ ============
Net income per share - Basic $ 0.25 $ 0.29
================ ============
- Diluted $ 0.23 $ 0.25
================ ============
Weighted-average shares
and equivalent shares outstanding
- Basic 19,806 20,187
=============== ===========
- Diluted 21,913 23,611
=============== ===========
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED CONDENSED
BALANCE SHEETS
(In thousands)
(unaudited)
April 3, January 2,
1999 1999
-------------------- ---------------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 17,446 $ 27,961
Receivables 47,020 41,382
Inventories 36,405 36,209
Other current assets 5,546
6,192
Total current assets 107,063 111,098
Property, plant, and equipment, net 78,142 77,788
Reorganization value, net 36,946 37,814
Other intangible assets, net 21,266 22,149
Other assets 1,677 1,695
------------- -------------
$ 245,094 $250,544
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities 52,828 51,967
Long-term debt 69,909 70,061
Deferred liabilities 3,952 3,951
Other long-term liabilities 39 41
Shareholders' Equity 118,366 124,524
-------------- ------------
$ 245,094 $250,544
============== ============
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED CONDENSED
STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
For the Three
Months Ended
April 3, April 4,
1999 1998
Operating activities:
<S> <C> <C>
Net income $ 5,023 $ 5,826
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 4,268 3,324
Amortization 1,742 1,888
Changes in operating assets and liabilities:
Accounts receivable (6,409) (5,389)
Inventories (682) 1,017
Accounts payable and accrued expenses 1,398 668
Other, net (836) (409)
---------------- --------------
Net cash provided by operating activities 4,504 6,925
Cash used in investing activities:
Purchases of property, plant, and
equipment, net (5,003) (5,713)
--------------- --------------
(5,003) (5,713)
Cash provided by (used in) financing activities:
Payments of long-term debt, net (121) (4,939)
Proceeds from exercise of stock options and warrants 68 4,705
Purchase of common stock and warrants (9,833) (1,639)
--------------- --------------
(9,886) (1,873)
Effect of exchange rate changes on cash (130) (51)
--------------- --------------
Decrease in cash and cash equivalents (10,515) (712)
Cash and cash equivalents at
beginning of period 27,961 755
Cash and cash equivalents at end of period $ 17,446 $ 43
=============== ==============
</TABLE>
<PAGE>
Notes to Consolidated Condensed Financial Statements
(Unaudited)
April 3, 1999
1. Basis of Presentation
Littelfuse, Inc. and its subsidiaries ("Littelfuse" or the "Company") are the
successors in interest to the components business previously conducted by
subsidiaries of Tracor Holdings, Inc. ("Predecessor"). The Company acquired its
business as a result of the Predecessor's reorganization activities concluded on
December 27, 1991.
The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments, consisting
of normal recurring accruals, considered necessary for a fair presentation have
been included. Operating results for the period ended April 3, 1999, are not
necessarily indicative of the results that may be expected for the year ending
January 1, 2000. For further information, refer to the Company's consolidated
financial statements and the notes thereto incorporated by reference in the
Company's Annual Report on Form 10-K for the year ended January 2, 1999.
2. Inventories
<TABLE>
The components of inventories are as follows (in thousands):
April 3, January 2,
1999 1999
<S> <C> <C>
Raw material $ 10,175 $ 9,800
Work in process 7,074 5,338
Finished goods 19,156 21,071
------- ------
Total $ 36,405 $36,209
======== ========
</TABLE>
3. Per Share Data
Net income per share amounts for the three months ended April 3, 1999, and April
4, 1998, are based on the weighted average number of common and common
equivalent shares outstanding during the periods as follows (in thousands,
except per share data):
<PAGE>
<TABLE>
Three months ended
April 3, April 4,
1999 1998
----- -----
<S> <C> <C>
Average shares outstanding 19,806 20,187
Net effect of dilutive stock options,
warrants and restricted shares
- Basic - -
---------- ----------
- Diluted 2,107 3,424
------ -----
Average shares outstanding
- Basic 19,806 20,187
====== ======
- Diluted 21,913 23,611
====== ======
Net income $ 5,023 $ 5,826
======= =======
Net income per share
- Basic $ .25 $ .29
========= =========
- Diluted $ .23 $ .25
========= =========
</TABLE>
4. Comprehensive Income
In accordance with Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income," total comprehensive income for the three
months ended April 3, 1999, and April 4, 1998, was approximately $3.6 million
and $6.1 million, respectively. The adjustment for comprehensive income is
related to the Company's foreign currency translation.
<PAGE>
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Results of Operations
Sales decreased 1 % to $69.0 million in the first quarter this year compared to
$69.3 million in the first quarter of 1998. Gross margin was 37.4 % this year
compared to 38.4 % in the same period of the prior year. Operating income
decreased to 13.1 % of sales in the first quarter of 1999 compared to 13.2 % in
the prior year. Net income decreased 14 % to $5.0 million in the first quarter
this year compared to $5.8 million in the first quarter of last year and diluted
earnings per share decreased 8 % to $0.23 in the first quarter this year
compared to $0.25 per diluted share in the same quarter last year.
First quarter 1999 sales declined $0.3 million compared to the same quarter in
the prior year. Lower domestic electronic and automotive sales resulted in a
decline in North America sales of 10 %. Sales grew 16 % in constant currency and
20 % in dollars in Europe due primarily to strong automotive sales. Increased
Korean electronics sales contributed to a 10 % sales increase in the
Asia-Pacific region. In constant currency, sales increased 4 % in the
Asia-Pacific region.
Electronic sales declined to $33.2 million in the first quarter of 1999 from
$34.5 million in the same quarter of last year for a decrease of $1.3 million or
4 %. Decreased domestic electronic demand, particularly in the distribution
channel, was partially offset by increased Korean electronic sales. Automotive
sales grew to $26.3 million in the first quarter 1999 from $25.0 million the
same quarter last year for an increase of $1.3 million or 5 %. Automotive sales
increases were led by strong European demand, partially offset by lower domestic
automotive sales due to the continued phase-out of electro-mechanical products
and the delayed rollout of new automotive aftermarket products. Power fuse sales
declined to $9.5 million in the first quarter 1999 from $9.8 million the same
quarter last year for a decrease of $0.3 million or 3 %.
Gross profit was $25.8 million or 37.4 % of sales for the first quarter of 1999
compared to $26.6 million or 38.4 % in the same quarter last year, as lower
average selling prices were offset by the effects of worldwide cost reduction
programs.
Operating expenses were $15.0 million or 21.7 % of sales for the first quarter
1999, compared to $15.5 million or 22.4 % of sales for the same quarter in the
prior year, reflecting the Company's expense control efforts. The amortization
of the reorganization value and other intangibles was 2.5 % of sales for the
first quarter of 1999, compared to 2.7 % of sales in the first quarter of 1998.
Total operating expenses, including intangibles amortization, were 24.2 % of
sales in the first quarter 1999 compared to 25.1 % for the same quarter last
year.
Operating income was $9.1 million or 13.1 % of sales for the first quarter 1999
compared to $9.2 million or 13.2 % of sales for the same quarter of last year.
Interest expense was $1.3 million in the first quarter of this year compared to
$0.8 million in the first quarter last year reflecting higher debt levels. Other
income was $0.4 million for the first quarter of 1999 compared to $0.6 million
of other expense in the first quarter of the prior year. Included in other
expense in 1998 was a $0.8 million charge related to consolidation of the
Company's Korean operations.
Income before income taxes was $8.1 million for the first quarter 1999 compared
to $7.7 million for the first quarter of 1998. Income taxes were $3.1 million
with an effective tax rate of 38 % for the first quarter 1999 compared to $1.9
million with an effective tax rate of 24 % in the first quarter of last year.
The first quarter of 1998 income tax expense was favorably impacted by a
one-time benefit related to the consolidation of the Company's Korean
operations.
Net income for the first quarter 1999 was $5.0 million or $0.23 per diluted
share compared to $5.8 million or $0.25 per diluted share for the same quarter
of last year.
Liquidity and Capital Resources
Assuming no material adverse changes in market conditions or interest rates,
management expects that the Company will have sufficient cash from operations to
support both its operations and its current debt obligations for the foreseeable
future.
Littelfuse started the 1999 year with $28.0 million of cash. Net cash provided
by operations was $4.5 million for the first three months. Cash used to invest
in property, plant and equipment was $5.0 million. Cash used to repay long term
debt and to repurchase stock was $10.0 million. In addition, proceeds from
warrant and stock option exercises were $0.1 million, resulting in net financing
activities use of cash of $9.9 million. The net of cash provided, less investing
activities and financing activities, resulted in a decrease in cash of $10.5
million. This left the Company with a cash balance of approximately $17.4
million at April 3, 1999.
The ratio of current assets to current liabilities was 2.0 to 1 at the end of
the first quarter 1999 compared to 2.1 to 1 at year end 1998 and 1.7 to 1 at the
end of the first quarter 1998. The days sales in receivables was approximately
59 days at the end of the first quarter 1999 compared to 62 days at year end
1998 and 55 days at first quarter end 1998. The days inventory outstanding was
approximately 77 days at first quarter end 1999 compared to 81 days at year end
1998 and first quarter end 1998.
The Company's capital expenditures were $5.0 million for the first quarter 1998.
The Company expects that capital expenditures, which will be primarily for new
machinery, equipment and information systems, will be approximately $20-22
million in 1999.
The long-term debt at the end of the first quarter 1999 consisted of four types
totaling $85.2 million. They are as follows: (1) private placement notes
totaling $78.0 million, (2) foreign revolver borrowings totaling $3.9 million,
(3) notes payable relating to mortgages totaling $0.6 million, and (4) other
long-term debt, including capital leases, totaling $2.7 million. These four
items include $15.3 million of senior notes, tax notes and mortgage notes, which
are considered to be current. This leaves net long-term debt totaling $69.9
million at April 3, 1999. The private placement notes carry interest rates of
6.31% and 6.16%. The Company has in place a $55.0 million revolving credit
facility, none of which was drawn on April 3, 1999. The Company also has a $8.0
million letter of credit facility, of which approximately $1.9 million was being
used at April 3, 1998
Year 2000
The Company utilizes software, hardware and related computer technologies
essential to its operations that use two digits rather than four to specify the
applicable year, which could result in a date recognition problem with the
transition to the year 2000. The Company presently believes that with
modifications or replacements of existing software and certain hardware, date
recognition problems associated with the year 2000 can be mitigated. However, if
such modifications and replacement are not made, or are not completed timely,
the year 2000 transition could have a material adverse effect on the company's
consolidated results of operations.
To date, the Company has fully completed its assessment of all mission-critical
systems. Assessments of other systems, including operating equipment systems,
which could be significantly affected by the year 2000 are underway. The
completed assessments have indicated that most of the Company's significant
information technology systems could be affected, particularly the order entry,
billing, and inventory systems. In addition, the Company has gathered
information about the year 2000 compliance status of its significant customers,
suppliers and subcontractors and continues to monitor their compliance.
As of April 3, 1999, the Company had completed approximately 65% of the
remediation phase for its information technology, operating equipment systems
and external interface exposures. All remediated systems are expected to be
fully tested and implemented by June 30, 1999.
The Company has queried its significant suppliers and subcontractors, none of
which share information systems with the Company ("external agents"). To date,
the Company is not aware of any external agent with a year 2000 issue that would
materially impact the Company's results of operations, liquidity or capital
resources. However, the Company has no means of ensuring that external agents
will be year 2000 ready. The inability of external agents to complete their year
2000 resolution process in a timely fashion could materially impact the Company.
The Company will utilize both internal and external resources to reprogram or
replace, test, and implement the software, operating equipment and external
interfaces for year 2000 modifications. The total cost of projects that relate
to year 2000 compliance is estimated at $12.0 million and is being funded
through operating cash flows. Through January 2, 1999, the Company has incurred
costs totaling approximately $6.8 million, $0.7 of which has been expensed and
$6.1 of which has been capitalized, related to all phases of the year 2000
project.
Management of the company believes it has an effective program in place to
become year 2000 compliant in a timely manner. As noted above, the company has
not yet completed all necessary phases of the year 2000 program. In the event
that the company does not complete any additional phases, the company would be
unable to use its electronic systems to take customer orders, manufacture and
ship products, invoice customers or collect payments. In addition, disruptions
in the economy generally resulting from year 2000 issues could also materially
adversely affect the
company. The company could be subject to litigation for computer systems
failure, for example, equipment shutdown or failure to properly date business
records.
The company currently has no contingency plans in place in the event it does not
complete all phases of the year 2000 program. The company has evaluated the need
for a contingency plan and does not believe that it is necessary to prepare such
a plan at this time due to the successful completion of remediation phase
milestones.
The company believes that the foregoing statements are in conformity with the
Year 2000 Information and Readiness Disclosure Act (Public Law 105-271, 112
Stat. 2386), and all of the foregoing statements are designated as Year 2000
Readiness Disclosures thereunder. The protection of this act does not apply to
federal securities fraud.
Business Segment Information
The Company designs, manufactures, and sells circuit protection devices
throughout the world. The Company has three reportable geographic segments: The
Americas, Europe and Asia-Pacific. The circuit protection market in these
geographical segments is categorized into three major product areas: electronic,
automotive and power fuses.
The Company evaluates the performance of each geographic segment based on its
net income or loss. The Company also accounts for intersegment sales as if the
sales were to third parties.
The Company's reportable segments are the business units where the revenue is
earned and expenses are incurred. The Company has subsidiaries in The Americas,
Europe, and Asia-Pacific where each region is measured based on its sales and
operating income or loss.
Information concerning the operations in these geographic segments for the
period ended April 3, 1999 and April 4, 1998, is as follows (in thousands):
<TABLE>
Revenues April 3, April 4,
1999 1998
<S> <C> <C>
The Americas 39,047 43,503
Europe 13,836 11,086
Asia-Pacific 16,088 14,742
------ ------
Combined Total 68,971 69,331
Corporate
Reconciliation
Consolidated Total 68,971 69,331
====== ======
</TABLE>
<PAGE>
<TABLE>
Intersegment Revenues April 3, April 4, 1998
1999
<S> <C> <C>
The Americas 8,085 7,474
Europe 2,656 3,281
Asia-Pacific 773 51
--- --
Combined Total 11,514 10,806
Corporate
Reconciliation (11,514) (10,806)
Consolidated Total 0 0
= =
</TABLE>
<TABLE>
Interest Expense April 3, April 4,
1999 1998
<S> <C> <C>
The Americas 1,281 812
Europe 0 4
Asia-Pacific 61 27
-- --
Combined Total 1,342 843
Corporate
Reconciliation
Consolidated Total 1,342 843
===== ===
</TABLE>
<TABLE>
Depreciation and Amortization April 3, April 4,
1999 1998
<S> <C> <C>
The Americas 2,527 1,803
Europe 330 285
Asia-Pacific 899 916
--- ---
Combined Total 3,756 3,004
Corporate 2,254 2,208
----- -----
Reconciliation
Consolidated Total 6,010 5,212
===== =====
</TABLE>
<TABLE>
Other income (loss) April 3, April 4,
1999 1998
<S> <C> <C>
The Americas 291 (76)
Europe 111 45
Asia-Pacific (20) (605)
---- -----
Combined Total 382 (636)
Corporate
Reconciliation
Consolidated Total 382 (636)
=== =====
</TABLE>
<TABLE>
Income Tax Expense April 3, April 4,
1999 1998
<S> <C> <C>
The Americas 891 598
Europe 1,319 977
Asia-Pacific 869 291
--- ---
Combined Total 3,079 1,866
Corporate
Reconciliation
Consolidated Total 3,079 1,866
===== =====
</TABLE>
<TABLE>
Net Income April 3, April 4,
1999 1998
<S> <C> <C>
The Americas 3,960 6,013
Europe 2,362 2,151
Asia-Pacific 955 (130)
--- -----
Combined Total 7,277 8,034
Corporate (2,254) (2,208)
------- -------
Reconciliation
Consolidated Total 5,023 5,826
===== =====
</TABLE>
<TABLE>
Revenues April 3, 1999 April 4, 1998
<S> <C> <C>
Electronic 33,198 34,605
Automotive 26,287 25,220
Power 9,486 9,506
----- -----
Consolidated Total 68,971 69,331
====== ======
</TABLE>
Revenues from no single customer of the Company amount to 10% or more for the
quarter ended April 3, 1999.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995.
The preceding commentary presents management's discussion and analysis of the
Company's financial condition and results of operations for the periods
presented. Certain of the statements included above, including those regarding
future financial performance or results or those that are not historical facts,
are or contain "forward-looking" information as that term is defined in the
Securities Exchange Act of 1934, as amended. The words "expect," "believe,"
"anticipate," "project," "estimate," and similar expressions are intended to
identify forward-looking statements. The Company cautions readers that any such
statements are not guarantees of future performance or events and such
statements involve risks, uncertainties and assumption, including, but not
limited to, product demand and market acceptance risks, the effect of economic
conditions, the impact of competitive products and pricing, product development
and patent protection, commercialization and technological difficulties,
capacity and supply constraints or difficulties, actual purchases under
agreements, the effect of the Company's accounting policies, and other factors
discussed above and in the Company's Annual Report on Form 10-K for the year
ended January 2, 1999. Should one or more of these risks or uncertainties
materialize or should the underlying assumptions prove incorrect, actual results
and outcomes may differ materially from those indicated or implied in the
forward-looking statements. This review should be read in conjunction with
information provided in the financial statements appearing in the Company's
Annual Report on Form 10-K for the year ended January 2, 1999.
PART II - OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibit Description
Exhibit No. 27 Financial Data Schedule
Exhibit No. 10.1 1993 Stock Plan for Employees
and Directors of Littelfuse,Inc.,
as amended
(b) There were no reports on Form 8-K during the quarter ended April 3, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report on Form 10-Q for the quarter
ended April 3, 1999, to be signed on its behalf by the undersigned thereunto
duly authorized.
Littelfuse, Inc.
Date: May 18, 1999 By /s/ Philip G. Franklin
--------------------------------
Philip G. Franklin Vice
President, Treasurer, and
Chief Financial Officer (As
duly authorized officer and
as the principal financial
and accounting officer)
<PAGE>
EXHIBIT 10.1
1993 STOCK PLAN FOR EMPLOYEES AND DIRECTORS OF
LITTELFUSE, INC.
1. Purpose. Littelfuse, Inc. (the "Corporation") desires to attract and
retain Employees and directors of outstanding talent. The 1993 Stock Plan for
Employees and Directors of Littelfuse, Inc. (the "Plan") affords eligible
Employees and directors the opportunity to acquire proprietary interests in the
Corporation and thereby encourages their highest levels of performance and
interest.
2. Scope and Duration.
a. Awards under the Plan may be granted in the following forms:
(1) incentive stock options ("incentive stock
options"), as provided in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), and non-qualified stock
options ("non-qualified options"; the term "options" includes
incentive stock options and non-qualified options);
(2) shares of Common Stock of the Corporation (the
"Common Stock") which are restricted as provided in
paragraph 10. ("restricted shares"); or
(3) rights to acquire shares of Common Stock which are
restricted as provided in paragraph 10. ("units" or
"restricted units").
Options may be accompanied by stock appreciation rights ("rights").
b. The maximum aggregate number of shares of Common Stock as
to which awards of options, restricted shares, units, or rights may be
made from time to time under the Plan is 1,800,000 shares. Shares
issued pursuant to this Plan may be in whole or in part, as the Board
of Directors of the Corporation (the "Board of Directors") shall from
time to time determine, authorized but unissued shares or issued shares
reacquired by the Corporation. The maximum aggregate number of shares
of Common Stock as to which awards of options, restricted shares,
units, or rights may be made to any one individual during any calendar
year shall be 100,000. If for any reason any shares as to which an
option has been granted cease to be subject to purchase thereunder or
any restricted shares or restricted units are forfeited to the
Corporation, or to the extent that any awards under the Plan
denominated in shares or units are paid or settled in cash or are
surrendered upon the exercise of an option, then (unless the Plan shall
have been terminated) such shares or units, and any shares surrendered
to the Corporation upon such exercise, shall become available for
subsequent awards under the Plan; provided, however, that shares
surrendered by the Corporation upon the exercise of an incentive stock
option and shares subject to an incentive stock option surrendered upon
the exercise of a right shall not be available for subsequent award of
additional stock options under the Plan.
c. No incentive stock option shall be granted hereunder
after February 11, 2003.
3. Administration.
a. The Plan shall be administered by the Stock Option
Committee or any successor thereto of the Board of Directors of the
Corporation or by such other committee (the "Committee") as shall be
determined by the Board of Directors. The Committee shall consist of
not less than two members of the Board of Directors, each of whom shall
qualify as a "disinterested person" to administer the Plan as
contemplated by Rule 16b-3, as amended, or other applicable rules under
Section 16(b) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
b. The Committee shall have plenary authority in its sole
discretion, subject to and not inconsistent with the express provisions
of this Plan:
(1) to grant options, to determine the purchase
price of the Common Stock covered by each option, the term of
each option, the persons to whom, and the time or times at
which, options shall be granted and the number of shares to be
covered by each option;
(2) to designate options as incentive stock options
or non-qualified options and to determine which options shall
be accompanied by rights;
(3) to grant rights and to determine the purchase
price of the Common Stock covered by each right or related
option, the term of each right or related option, the
Employees and Eligible Directors (as such terms are defined
below) to whom, and the time or times at which, rights or
related options shall be granted and the number of shares to
be covered by each right or related option;
(4) to grant restricted shares and restricted units
and to determine the term of the Restricted Period (as defined
in paragraph 10.) and other conditions applicable to such
shares or units, the Employees to whom, and the time or times
at which, restricted shares or restricted units shall be
granted and the number of shares or units to be covered by
each grant;
(5) to interpret the Plan;
(6) to prescribe, amend and rescind rules and regulations
relating to the Plan;
(7) to determine the terms and provisions of the option and
rights agreements (which need not be identical) and the
restricted share and restricted unit agreements (which
need not be identical) entered into in connection with
awards under the Plan;
and to make all other determinations deemed necessary or
advisable for the administration of the Plan.
Without limiting the foregoing, the Committee shall have
plenary authority in its sole discretion, subject to, and not
inconsistent with, the express provisions of the Plan, to:
(1) select Participants (as defined below) for
participation in the Plan;
(2) determine the timing, price, and amount of any grant or
award under the Plan to any Participant; and
(3) either
(a) determine the form in which payment of
any right granted or awarded under the Plan will be
made (i.e., cash, securities, or any combination
thereof), or
(b) approve the election of the Participant
to receive cash in whole or in part in settlement of
any right granted or awarded under the Plan.
As used in the Plan, the following terms shall have the
following meanings: the term "Littelfuse Officer" shall mean an officer
(other than an assistant officer) of the Corporation or any of its
Subsidiaries and any other person who may be designated as any
executive officer by the Board of Directors of the Corporation; the
term "Participant" shall mean an Employee or Eligible Director; the
term "Employee" shall mean a full-time, non-union, salaried employee of
the Corporation or any of its Subsidiaries; the term "Eligible
Director" shall mean any individual who is a member of the Board of
Directors of the Corporation who is not then an Employee or a
beneficial owner, either directly or indirectly, of more than ten
percent (10%) of the Common Stock of the Corporation; and the term
"Subsidiaries" shall mean all corporations in which the Corporation
owns, directly or indirectly, more than fifty percent (50%) of the
total voting power of all classes of stock.
c. The Committee may delegate to one or more of its members
or to one or more agents such administrative duties as it may deem
advisable, and the Committee or any person to whom it has delegated
duties as aforesaid may employ one or more persons to render advice
with respect to any responsibility the Committee or such person may
have under the Plan; provided, that the Committee may not delegate any
duties to a member of the Board of Directors who, if elected to serve
on the Committee, would not qualify as a "disinterested person" to
administer the Plan as contemplated by Rule 16b-3, as amended, or other
applicable rules under the Exchange Act. The Committee may employ
attorneys, consultants, accountants, or other persons, and the
Committee, the Corporation, its Subsidiaries, and their respective
officers and directors shall be entitled to rely upon the advice,
opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee in good faith
shall be final and binding upon all Participants, the Corporation, its
Subsidiaries, and all other interested persons. No member or agent of
the Committee shall be personally liable for any action, determination,
or interpretation made in good faith with respect to the Plan or awards
made hereunder, and all members and agents of the Committee shall be
fully protected by the Corporation in respect of any such action,
determination, or interpretation.
4. Eligibility; Factors to Be Considered in Making Awards.
a. Persons eligible to participate in this Plan shall
include all Employees of the Corporation and all Eligible Directors;
provided, however, that Eligible Directors shall only be eligible to
receive grants of options pursuant to subparagraph 4.e.
b. In determining the Employees to whom awards shall be
granted and the number of shares or units to be covered by each award,
the Committee shall take into account the nature of the Employee's
duties, his or her present and potential contributions to the success
of the Corporation or any of its Subsidiaries and such other factors as
it shall deem relevant in connection with accomplishing the purposes of
the Plan.
c. Awards may be granted singly, in combination, or in
tandem and may be made in combination or in tandem with or in
replacement of, or as alternatives to, awards or grants under any other
employee plan maintained by the Corporation or any of its Subsidiaries.
An award made in the form of a unit or a right may provide, in the
discretion of the Committee, for
(1) the crediting to the account of, or the current
payment to, each Employee who has such an award of an amount
equal to the cash dividends and stock dividends paid by the
Corporation upon one share of Common Stock for each restricted
unit or share of Common Stock subject to a right included in
such award ("Dividend Equivalents"), or
(2) the deemed reinvestment of such Dividend
Equivalents and stock dividends in shares of Common Stock,
which deemed reinvestment shall be deemed to be made in
accordance with the provisions of paragraph 10., and credited
to the Employee's account ("Additional Deemed Shares").
Such Additional Deemed Shares shall be subject to the same restrictions
(including but not limited to provisions regarding forfeitures)
applicable with respect to the unit or right with respect to which such
credit is made. Dividend Equivalents not deemed reinvested as stock
dividends shall not be subject to forfeiture, and may bear amounts
equivalent to interest or cash dividends as the Committee may
determine.
d. The Committee, in its sole discretion, may grant to an
Employee who has been granted an award under the Plan or any other
employee plan maintained by the Corporation or any of its Subsidiaries,
or any successor thereto, in exchange for the surrender and
cancellation of such award, a new award in the same or a different form
and containing such terms, including, without limitation, a price which
is different (either higher or lower) than any price provided in the
award so surrendered and cancelled, as the Committee may deem
appropriate.
e. Each Eligible Director shall be automatically granted a
non-qualified option to purchase 2,000 shares of Common Stock, which
option shall be granted on the effective date of the Plan (hereinafter
referred to as the "Initial Eligible Director Stock Options").
"Commencing in 1995, each Eligible Director shall be automatically
granted a non-qualified option to purchase 2,200 shares of Common
Stock, commencing in 1997, each Eligible Director shall be
automatically granted a non-qualified option to purchase 2,500 shares
of Common Stock, and commencing in 1998, each Eligible Director shall
be automatically granted a non-qualified option to purchase 5,000
shares of Common Stock, which option shall be granted on the date of
the first meeting of the Board of Directors of the Corporation
following each annual meeting of the stockholders of the Corporation
(hereinafter sometimes referred to as the "Annual Eligible Director
Stock Options" and sometimes, together with the Initial Eligible
Director Stock Options, as the "Eligible Director Stock Options")." The
number of Annual Eligible Director Stock Options to be granted as of
the date of any such meeting of the Board of Directors shall be
proportionately adjusted to reflect any stock splits, stock dividends,
recapitalizations or similar transactions causing an increase or
decrease in the number of issued and outstanding shares of Common Stock
which have occurred since the date of the most recent grant of Annual
Eligible Director Stock Options. Any Eligible Director may waive his or
her right to be granted Eligible Director Stock Options. In the event
that the granting of any Annual Eligible Director Stock Options would
cause the 1,800,000 share limitation contained in Section 2.b. hereof
to be exceeded (after taking into account any waivers by Eligible
Directors to accept some or all of the Annual Eligible Director Stock
Options to which he or she would otherwise be entitled), the total
number of Annual Eligible Director Stock Options then to be granted
shall be reduced to a number which would cause said 1,800,000 share
limitation not to be exceeded and the amount of non-qualified options
to be granted to each Eligible Director who has not waived his or her
right to receive Annual Eligible Director Stock Options shall be
proportionately reduced. The purchase price for the Common Stock
covered by each Eligible Director Stock Option shall be the fair market
value (as defined below) of the Common Stock on the date the Eligible
Director Stock Option is granted, payable at the time and in the manner
provided in Section 5.b. below. Each Eligible Director Stock Option
granted to an Eligible Director shall be exercisable as follows: with
respect to twenty-percent (20%) of the Common Stock covered thereby
during the ten (10) year period commencing one (1) year following the
date of grant; with respect to an additional twenty percent (20%) of
the Common Stock covered thereby during the ten (10) year period
commencing two (2) years following the date of grant; with respect to
an additional twenty percent (20%) of the Common Stock covered thereby
during the ten (10) year period commencing three (3) years following
the date of grant; with respect to an additional twenty percent (20%)
of the Common Stock covered thereby during the ten (10) year period
commencing four (4) years following the date of grant; and with respect
to the remaining twenty percent (20%) of the Common Stock covered
thereby during the ten (10) year period commencing five (5) years
following the date of grant. The foregoing formula can only be amended
to the extent permitted by Rule 16b-3, as amended, under the Exchange
Act.
5. Option Price.
a. The purchase price of the Common Stock covered by each
option awarded to an Employee shall be determined by the Committee;
provided, however, that in the case of incentive stock options, the
purchase price shall not be less than 100% of the fair market value of
the Common Stock on the date the option is granted. Fair market value
shall mean,
(1) if the Common Stock is duly listed on a national
securities exchange or on the National Association of
Securities Dealers Automatic Quotation System/National Market
System ("NASDAQ") ("Duly Listed"), the closing price of the
Common Stock for the date on which the option is granted, or,
if there are no sales on such date, on the next preceding day
on which there were sales, or
(2) if the Common Stock is not Duly Listed, the fair
market value of the Common Stock for the date on which the
option is granted, as determined by the Committee in good
faith. Such price shall be subject to adjustment as provided
in paragraph 13.
The price so determined shall also be applicable in connection with the
exercise of any related right.
b. The purchase price of the shares as to which an option is
exercised shall be paid in full at the time of exercise; payment may be
made in cash, which may be paid by check or other instrument acceptable
to the Corporation, or, if permitted by the Committee, in shares of the
Common Stock, valued at the closing price of the Common Stock as
reported on either a national securities exchange or NASDAQ for the
date of exercise, or if there were no sales on such date, on the next
preceding day on which there were sales (or, if the Common Stock is not
Duly Listed, the fair market value of the Common Stock on the date of
exercise, as determined by the Committee in good faith), or, if
permitted by the Committee and subject to such terms and conditions as
it may determine, by surrender of outstanding awards under the Plan. In
addition, the Participant shall pay any amount necessary to satisfy
applicable federal, state, or local tax requirements promptly upon
notification of the amount due. The Committee may permit such amount to
be paid in shares of Common Stock previously owned by the Participant,
or a portion of the shares of Common Stock that otherwise would be
distributed to such Participant upon exercise of the option, or a
combination of cash and shares of such Common Stock.
6. Term of Options. The term of each incentive stock option granted
under the Plan shall be such period of time as the Committee shall determine,
but not more than ten years from the date of grant, subject to earlier
termination as provided in paragraphs 11. and 12. The term of each non-qualified
option granted under the Plan to Employees shall be such period of time as the
Committee shall determine, subject to earlier termination as provided in
paragraphs 11. and 12.
7. Exercise of Options.
a. Each option shall become exercisable, in whole or in
part, as the Committee shall determine; provided, however, that the
Committee may also, in its discretion, accelerate the exercisability of
any option in whole or in part at any time.
b. Subject to the provisions of the Plan and unless
otherwise provided in the option agreement, an option granted under the
Plan shall become exercisable in full at the earliest of the
Participant's death, Eligible Retirement (as defined below), Total
Disability, or a Change in Control (as defined in paragraph 12). For
purposes of this Plan, the term "Eligible Retirement" shall mean (1)
the date upon which an Employee, having attained an age of not less
than sixty-two, terminates his employment with the Corporation and its
Subsidiaries, provided that such Employee has been employed by the
Corporation or any of its Subsidiaries or any corporation of which the
Corporation or any of its Subsidiaries is the successor for a period of
not less than five (5) years prior to such termination, or (2) the date
upon which an Eligible Director, having attained the age of not less
than sixty-two, terminates his service as a director of the
Corporation.
c. An option may be exercised, at any time or from time to
time (subject, in the case of an incentive stock option, to such
restrictions as may be imposed by the Code), as to any or all full
shares as to which the option has become exercisable; provided,
however, that an option may not be exercised at any one time as to less
than 100 shares or less than the number of shares as to which the
option is then exercisable, if that number is less than 100 shares.
d. Subject to the provisions of paragraphs 11. and 12., in
the case of incentive stock options, no option may be exercised at any
time unless the holder thereof is then an Employee.
e. Upon the exercise of an option or portion thereof in
accordance with the Plan, the option agreement and such rules and
regulations as may be established by the Committee, the holder thereof
shall have the rights of a shareholder with respect to the shares
issued as a result of such exercise.
8. Award and Exercise of Rights.
a. A right may be awarded by the Committee in connection
with any option granted under the Plan, either at the time the option
is granted or thereafter at any time prior to the exercise, termination
or expiration of the option ("tandem right"), or separately
("freestanding right"). Each tandem right shall be subject to the same
terms and conditions as the related option and shall be exercisable
only to the extent the option is exercisable. No right shall be
exercisable for cash by a Littelfuse Officer within six (6) months from
the date the right is awarded (and then, as to a tandem right, only to
the extent the related option is exercisable) or, if the exercise price
of the right is not fixed on the date of the award, within six (6)
months from the date when the exercise price is so fixed, and in any
case only when the Littelfuse Officer's election to receive cash in
full or partial satisfaction of the right, as well as the Littelfuse
Officer's exercise of the right for cash, is made during a Quarterly
Window Period (as defined below); provided, that a right may be
exercised by a Littelfuse Officer for cash outside a Quarterly Window
Period if the date of exercise is automatic or has been fixed in
advance under the Plan and is outside the Littelfuse Officer's control.
The term "Quarterly Window Period" shall mean the period beginning on
the third business day following the date of release of each of the
Corporation's quarterly and annual summary statements of sales and
earnings and ending on the twelfth business day following such release;
and the date of any such release shall be deemed to be the date it
either:
(1) appears on a wire service,
(2) appears on a financial news service,
(3) appears in a newspaper of general circulation, or
(4) is otherwise made publicly available, for example, by
press releases to a wire service, financial news
service, or newspapers or general circulation.
b. A right shall entitle the Employee upon exercise in
accordance with its terms (subject, in the case of a tandem right, to
the surrender unexercised of the related option or any portion or
portions thereof which the Employee from time to time determines to
surrender for this purpose) to receive, subject to the provisions of
the Plan and such rules and regulations as from time to time may be
established by the Committee, a payment having an aggregate value equal
to the product of
(1) the excess of
(a) the fair market value on the exercise date of one share of
Common Stock over
(b) the exercise price per share, in the case of a tandem right,
or the price per share specified in the terms of the right,
in the case of a freestanding right, multiplied by
(2) the number of shares with respect to which the
right shall have been exercised.
The payment may be made only in cash, subject to subparagraph
8.a. hereof.
c. The exercise price per share specified in a right shall
be as determined by the Committee, provided that, in the case of a
tandem right accompanying an incentive stock option, the exercise price
shall be not less than fair market value of the Common Stock subject to
such option on the date of grant.
d. If upon the exercise of a right the Employee is to
receive a portion of the payment in shares of Common Stock, the number
of shares shall be determined by dividing such portion by the fair
market value of a share on the exercise date. The number of shares
received may not exceed the number of shares covered by any option or
portion thereof surrendered. Cash will be paid in lieu of any
fractional share.
e. No payment will be required from an Employee upon
exercise of a right, except that any amount necessary to satisfy
applicable federal, state, or local tax requirements shall be withheld
or paid promptly by the Employee upon notification of the amount due
and prior to or concurrently with delivery of cash or a certificate
representing shares. The Committee may permit such amount to be paid in
shares of Common Stock previously owned by the Employee, or a portion
of the shares of Common Stock that otherwise would be distributed to
such Employee upon exercise of the right, or a combination of cash and
shares of such Common Stock.
f. The fair market value of a share shall mean the closing
price of the Common Stock as reported on either a national securities
exchange or NASDAQ for the date of exercise, or if there are no sales
on such date, on the next preceding day on which there were sales;
provided, however, that in the case of rights that relate to an
incentive stock option, the Committee may prescribe, by rules of
general application, such other measure of fair market value as the
Committee may in its discretion determine but not in excess of the
maximum amount that would be permissible under Section 422 of the Code
without disqualifying such option under Section 422.
g. Upon exercise of a tandem right, the number of shares
subject to exercise under the related option shall automatically be
reduced by the number of shares represented by the option or portion
thereof surrendered.
h. A right related to an incentive stock option may only be
exercised if the fair market value of a share of Common Stock on the
exercise date exceeds the option price.
9. Non-Transferability of Options, Rights, and Units; Holding
Periods for Littelfuse Officers and Eligible Directors.
a. Options, rights, and units granted under the Plan shall
not be transferable by the grantee thereof otherwise than by will or
the laws of descent and distribution; provided, however, that
(1) the designation of a beneficiary by a Participant shall not
constitute a transfer, and
(2) options and rights may be exercised during the lifetime of
the Participant only by the Participant or, unless such
exercise would disqualify an option as an incentive stock
option, by the Participant's guardian or legal
representative.
b. Notwithstanding anything contained in the Plan to the
contrary,
(1) any shares of Common Stock awarded hereunder to
a Littelfuse Officer may not be transferred or disposed of for
at least six (6) months from the date of award thereof,
(2) any option, right, or unit awarded hereunder to
a Littelfuse Officer or Eligible Director, or the shares of
Common Stock into which any such option, right or unit is
exercised or converted, may not be transferred or disposed of
for at least six (6) months following the date of acquisition
by the Littelfuse Officer or Eligible Director of such option,
right, or unit, and
(3) the Committee shall take no action whose effect
would cause a Littelfuse Officer or Eligible Director to be in
violation of clause (1) or (2) above.
c. Notwithstanding the foregoing and anything else contained
in the Plan to the contrary, up to 25% of the number of non-qualified
options (said percentage to be calculated using as the nominator the
sum of the amount of outstanding and unexercised non-qualified options
proposed to be transferred plus the number of non-qualified options
previously transferred by said Participant within the previous four
years and using as the denominator the aggregate number of
non-qualified options granted to said Participant within the previous
four years) may be transferred (but only on a gift basis) by a
Participant to an immediate family member of the Participant or a trust
which has as beneficiaries at the time of transfer only the Participant
and/or immediate family members of the Participant. As used herein, the
term "immediate family members" shall mean the spouse of the
Participant, children of the Participant and their spouses,
grandchildren of the Participant and their spouses and
great-grandchildren of the Participant and their spouses (hereinafter
referred to as a "Permitted Transferee"). All transferred non-qualified
options shall remain subject to all of the provisions of the Plan and
any agreement between the Participant and the Corporation pertaining
thereto, including, without limitation, all vesting, termination and
forfeiture provisions, and the rights and obligations of a transferee
with respect to a non-qualified option transferred thereto shall be
determined pursuant to the provisions of the Plan and any such
agreement as if the Participant remained the holder thereof. In no
event shall any transferee of a transferred non-qualified option be
entitled to transfer such non-qualified option except pursuant to the
laws of descent and distribution. Any transfer of non-qualified options
made pursuant to this subsection (c) must be made pursuant to legal
documentation provided by the Corporation, which legal documentation
may contain such terms and conditions as the Corporation, in its
discretion, deems appropriate, and shall be subject to verification by
the Corporation or its legal counsel that the proposed transferee is a
Permitted Transferee. Notwithstanding the foregoing, the Committee, in
its absolute discretion, may restrict or deny the transfer of
non-qualified options with respect to one or more Participants. The
provisions of this subsection (c) shall be deemed to override and
control over any provisions in any Non-Qualified Stock Option Agreement
between the Corporation and a Participant which is dated before January
1, 1998, to the extent such provisions would not allow a transfer of
non-qualified options pursuant to the provisions of this subsection
(c).
10. Award and Delivery of Restricted Shares or Restricted Units.
a. At the time an award of restricted shares or restricted
units is made, the Committee shall establish a period of time (the
"Restricted Period") applicable to such award. Each award of restricted
shares or restricted units may have a different Restricted Period. The
Committee may, in its sole discretion, at the time an award is made,
prescribe conditions for the incremental lapse of restrictions during
the Restricted Period and for the lapse or termination of restrictions
upon the satisfaction of other conditions in addition to or other than
the expiration of the Restricted Period with respect to all or any
portion of the restricted shares or restricted units. Subject to
paragraph 9., the Committee may also, in its sole discretion shorten,
or terminate the Restricted Period, or waive any conditions for the
lapse or termination of restrictions with respect to all or any portion
of the restricted shares or restricted units. Notwithstanding the
foregoing but subject to paragraph 9., all restrictions shall lapse or
terminate with respect to all restricted shares or restricted units
upon the earliest to occur of an Employee's Eligible Retirement, a
Change in Control, death, or Total Disability.
b. (1) Unless such shares are issued as uncertificated
shares pursuant to subparagraph 10.b.(2)(a) below, a stock certificate
representing the number of restricted shares granted to an Employee
shall be registered in the Employee's name but shall be held in custody
by the Corporation or an agent therefor for the Employee's account. The
Employee shall generally have the rights and privileges of a
shareholder as to such restricted shares, including the right to vote
such restricted shares, except that, subject to the provisions of
paragraphs 11. and 12., the following restrictions shall apply:
(a) the Employee shall not be entitled to delivery
of the certificate until the expiration or termination of the
Restricted Period and the satisfaction of any other conditions
prescribed by the Committee;
(b) none of the restricted shares may be sold,
transferred, assigned, pledged, or otherwise encumbered or
disposed of during the Restricted Period and until the
satisfaction of any other conditions prescribed by the
Committee; and
(c) all of the restricted shares shall be forfeited
and all rights of the Employee to such restricted shares shall
terminate without further obligation on the part of the
Corporation unless the Employee has remained an Employee until
the expiration or termination of the Restricted Period and the
satisfaction of any other conditions prescribed by the
Committee applicable to such restricted shares. At the
discretion of the Committee,
(i) cash and stock dividends with respect
to the restricted shares may be either currently paid
or withheld by the Corporation for the Employee's
account, and interest may be paid on the amount of
cash dividends withheld at a rate and subject to such
terms as determined by the Committee, or
(ii) the Committee may require that all cash
dividends be applied to the purchase of additional
shares of Common Stock, and such purchased shares,
together with any stock dividends related to such
restricted shares (such purchased shares and stock
dividends are hereafter referred to as "Additional
Restricted Shares") shall be treated as Additional
Shares, subject to forfeiture on the same terms and
conditions as the original grant of the restricted
shares to the Employee.
(2) The purchase of any such Additional Restricted Shares shall
be made either
(a) through a dividend reinvestment plan that may be
established by the Corporation which satisfies the
requirements of Rule 16b-2 under the Exchange Act, in which
event the price of such shares so purchased through the
reinvestment of dividends shall be as determined in accordance
with the provisions of that plan and no stock certificate
representing such Additional Restricted Shares shall be in the
Employee's name, or
(b) in accordance with such alternative procedure as
is determined by the Committee in which event the price of
such purchased shares shall be
(i) if the Common Stock is Duly Listed, the
closing price of the Common Stock as reported on
either a national securities exchange or NASDAQ for
the date on which such purchase is made, or if there
were no sales on such date, the next preceding day on
which there were sales, or
(ii) if the Common Stock is not Duly Listed,
the fair market value of the Common Stock for the
date on which such purchase is made, as determined by
the Committee in good faith. In the event that the
Committee shall not require reinvestment, cash, or
stock dividends so withheld by the Committee shall
not be subject to forfeiture. Upon the forfeiture of
any restricted shares (including any Additional
Restricted Shares), such forfeited shares shall be
transferred to the Corporation without further action
by the Employee. The Employee shall have the same
rights and privileges, and be subject to the same
restrictions, with respect to any shares received
pursuant to paragraph 13.
c. Upon the expiration or termination of the Restricted
Period and the satisfaction of any other conditions prescribed by the
Committee or at such earlier time as provided for in paragraphs 11. and
12., the restrictions applicable to the restricted shares (including
Additional Restricted Shares) shall lapse and a stock certificate for
the number of restricted shares (including any Additional Restricted
Shares) with respect to which the restrictions have lapsed shall be
delivered, free of all such restrictions, except any that may be
imposed by law, to the Employee or the Employee's beneficiary or
estate, as the case may be. The Corporation shall not be required to
deliver any fractional share of Common Stock but will pay, in lieu
thereof, the fair market value (determined as of the date the
restrictions lapse) of such fractional share to the Employee or the
Employee's beneficiary or estate, as the case may be. No payment will
be required from the Employee upon the issuance or delivery of any
restricted shares, except that any amount necessary to satisfy
applicable federal, state, or local tax requirements shall be withheld
or paid promptly upon notification of the amount due and prior to or
concurrently with the issuance or delivery of a certificate
representing such shares. The Committee may permit such amount to be
paid in shares of Common Stock previously owned by the Employee, or a
portion of the shares of Common Stock that otherwise would be
distributed to such Employee upon the lapse of the restrictions
applicable to the restricted shares, or a combination of cash and
shares of such Common Stock.
d. In the case of an award of restricted units, no shares of
Common Stock shall be issued at the time the award is made, and the
Corporation shall not be required to set aside a fund for the payment
of any such award.
e. (1) Upon the expiration or termination of the Restricted
Period and the satisfaction of any other conditions prescribed by the
Committee or at such earlier time as provided in paragraphs 11. and
12., the Corporation shall deliver to the Employee or the Employee's
beneficiary or estate, as the case may be, one share of Common Stock
for each restricted unit with respect to which the restrictions have
lapsed ("vested unit").
(2) In addition, if the Committee has not required the deemed
reinvestment of such Dividend Equivalents pursuant to paragraph 4., at
such time the Corporation shall deliver to the Employee cash equal to
any Dividend Equivalents or stock dividends credited with respect to
each such vested unit and, to the extent determined by the Committee,
the interest thereupon. However, if the Committee has required such
deemed reinvestment in connection with such restricted unit, in
addition to the stock represented by such vested unit, the Corporation
shall deliver the number of Additional Deemed Shares credited to the
Employee with respect to such vested unit.
(3) Notwithstanding the foregoing, the Committee may, in its
sole discretion, elect to pay cash or part cash and part Common Stock
in lieu of delivering only Common Stock for the vested units and
related Additional Deemed Shares. If a cash payment is made in lieu of
delivering Common Stock, the amount of such cash payment shall be equal
to
(a) if the Common Stock is Duly Listed, the closing
price of the Common Stock as reported on either a national
securities exchange or NASDAQ for the date on which the
Restricted Period lapsed with respect to such vested unit and
related Additional Deemed Shares (the "Lapse Date") or, if
there are no sales on such date, on the next preceding day on
which there were sales, or
(b) if the Common Stock is not Duly Listed, the fair
market value of the Common Stock for the Lapse Date, as
determined by the Committee in good faith.
f. No payment will be required from the Employee upon the
award of any restricted units, the crediting or payment of any Dividend
Equivalents or Additional Deemed Shares, or the delivery of Common
Stock or the payment of cash in respect of vested units, except that
any amount necessary to satisfy applicable federal, state, or local tax
requirements shall be withheld or paid promptly upon notification of
the amount due. The Committee may permit such amount to be paid in
shares of Common Stock previously owned by the Employee, or a portion
of the shares of Common Stock that otherwise would be distributed to
such Employee in respect of vested units and Additional Deemed Shares,
or a combination of cash and shares of such Common Stock.
g. In addition, the Committee shall have the right, in its
absolute discretion, upon the vesting of any restricted shares
(including Additional Restricted Shares) and restricted units
(including Additional Deemed Shares) to award cash compensation to the
Employee for the purpose of aiding the Employee in the payment of any
and all federal, state, and local income taxes payable as a result of
such vesting, if the performance of the Corporation during the
Restricted Period meets such criteria as then or theretofore determined
by the Committee.
11. Termination of Employment or Service. In the event that the
employment of an Employee or the service as a director of an Eligible Director
to whom an option or right has been granted under the Plan shall be terminated
for any reason other than as set forth in paragraph 12., such option or right
may, subject to the provisions of the Plan, be exercised (but only to the extent
that the Employee or an Eligible Director was entitled to do so at the
termination of his employment or service as a director, as the case may be) at
any time within three (3) months after such termination, but in no case later
than the date on which the option or right terminates.
Unless otherwise determined by the Committee, if an Employee to whom
restricted shares or restricted units have been granted ceases to be an
Employee, for any reason other than as set forth in paragraph 12., prior to the
end of the Restricted Period and the satisfaction of any other conditions
prescribed by the Committee, the Employee shall immediately forfeit all
restricted shares and restricted units, including all Additional Restricted
Shares or Additional Deemed Shares related thereto.
Any option, right, restricted share or restricted unit agreement, or
any rules and regulations relating to the Plan, may contain such provisions as
the Committee shall approve with reference to the determination of the date
employment terminates and the effect of leaves of absence. Any such rules and
regulations with reference to any option agreement shall be consistent with the
provisions of the Code and any applicable rules and regulations thereunder.
Nothing in the Plan or in any award granted pursuant to the Plan shall confer
upon any Participant any right to continue in the employ or service of the
Corporation or any of its Subsidiaries or interfere in any way with the right of
the Corporation or its Subsidiaries to terminate such employment or service at
any time.
12. Eligible Retirement, Death, or Total Disability of Employee or
Eligible Director, Change in Control. If any Employee or Eligible Director to
whom an option, right, restricted share, or restricted unit has been granted
under the Plan shall die or suffer a Total Disability while employed by the
Corporation or in the service of the Corporation as a director, if any Employee
terminates his employment or any Eligible Director terminates his service as a
director pursuant to an Eligible Retirement, or if a Change in Control should
occur, such option or right may be exercised as set forth herein, or such
restricted shares or restricted unit shall be deemed to be vested, whether or
not the Participant was otherwise entitled at such time to exercise such option
or right, or be treated as vested in such share or unit. Subject to the
restrictions otherwise set forth in the Plan, such option or right shall be
exercisable by the Participant, a legatee or legatees of the Participant under
the Participant's last will, or by the Participant's personal representatives or
distributees, whichever is applicable, at the earlier of
a. the date on which the option or right terminates in
accordance with the term of grant, or
b. any time prior to the expiration of three (3) months
after the date of such Participant's Eligible Retirement, his
termination due to total disability, or the occurrence of a Change in
Control, or, if applicable, within one year of such Participant's
death.
For purposes of this paragraph 12., "Total Disability" is defined as the
permanent inability of a Participant, as a result of accident or sickness, to
perform any and every duty pertaining to such Participant's occupation or
employment for which the Participant is suited by reason of the Participant's
previous training, education, and experience.
A "Change in Control" shall be deemed to have occurred upon
a. a business combination, including a merger or
consolidation, of the Corporation and the shareholders of the
Corporation prior to the combination do not continue to own, directly
or indirectly, more than fifty-one percent (51%) of the equity of the
combined entity;
b. a sale, transfer, or other disposition in one or more
transactions (other than in transactions in the ordinary course of
business or in the nature of a financing) of the assets or earning
power aggregating more than forty-five percent (45%) of the assets or
operating revenues of the Corporation to any person or affiliated or
associated group of persons (as defined by Rule 12b-2 of the Exchange
Act in effect as of the date hereof);
c. the liquidation of the Corporation;
d. one or more transactions which result in the acquisition
by any person or associated group of persons (other than the
Corporation, any employee benefit plan whose beneficiaries are
Employees of the Corporation or any of its Subsidiaries, or TCW Special
Credits or any of its affiliates) of the beneficial ownership (as
defined in Rule 13d-3 of the Exchange Act, in effect as of the date
hereof) of forty percent (40%) or more of the Common Stock of the
Corporation, securities representing forty percent (40%) or more of the
combined voting power of the voting securities of the Corporation which
affiliated persons owned less than forty percent (40%) prior to such
transaction or transactions; or
e. the election or appointment, within a twelve (12) month
period, of any person or affiliated or associated group, or its or
their nominees, to the Board of Directors of the Corporation, such that
such persons or nominees, when elected or appointed, constitute a
majority of the Board of Directors of the Corporation and whose
appointment or election was not approved by a majority of those persons
who were directors at the beginning of such period or whose election or
appointment was made at the request of an Acquiring Person.
An "Acquiring Person" is any person who, or which, together with all
affiliates or associates of such person, is the beneficial owner of twenty
percent (20%) or more of the Common Stock of the Corporation then outstanding,
except that an Acquiring Person does not include the Corporation or any employee
benefit plan of the Corporation or any of its Subsidiaries or any person holding
Common Stock of the Corporation for or pursuant to such plan. For the purpose of
determining who is an Acquiring Person, the percentage of the outstanding shares
of the Common Stock of which a person is a beneficial owner shall be calculated
in accordance with Rule 13d-e of the Exchange Act.
13. Adjustments Upon Changes in Capitalization, etc. Notwithstanding
any other provision of the Plan, the Committee may at any time make or provide
for such adjustments to the Plan, to the number and class of shares available
thereunder or to any outstanding options, restricted shares, or restricted units
as it shall deem appropriate to prevent dilution or enlargement of rights,
including adjustments in the event of distributions to holders of Common Stock
other than a normal cash dividend, changes in the outstanding Common Stock by
reason of stock dividends, split-ups, recapitalizations, mergers,
consolidations, combinations, or exchanges of shares, separations,
reorganizations, liquidations, and the like. In the event of any offer to
holders of Common Stock generally relating to the acquisition of their shares,
the Committee may make such adjustment as it deems equitable in respect of
outstanding options, rights, and restricted units including in the Committee's
discretion revision of outstanding options, rights, and restricted units so that
they may be exercisable for or payable in the consideration payable in the
acquisition transaction. Any such determination by the Committee shall be
conclusive. No adjustment shall be made in the minimum number of shares with
respect to which an option may be exercised at any time. Any fractional shares
resulting from such adjustments to options, rights, limited rights, or
restricted units shall be eliminated.
14. Effective Date. The Plan as theretofore amended shall become
effective as of February 12, 1993, provided that the Plan shall be approved by
the Corporation's stockholders on or before February 11, 1994. The Committee
may, in its discretion, grant awards under the Plan, the grant, exercise, or
payment of which shall be expressly subject to the conditions that, to the
extent required at the time of grant, exercise, or payment,
a. the shares of Common Stock covered by such awards shall
be Duly Listed, upon official notice of issuance, and
b. if the Corporation deems it necessary or desirable, a
Registration Statement under the Securities Act of 1933 with respect to
such shares shall be effective.
15. Termination and Amendment. The Board of Directors of the
Corporation may suspend, terminate, modify, or amend the Plan, provided that if
any such amendment requires shareholder approval to meet the requirement of the
then applicable rules under Section 16(b) of the Exchange Act, such amendment
shall be subject to the approval of the Corporation's stockholders. If the Plan
is terminated, the terms of the Plan shall, notwithstanding such termination,
continue to apply to awards granted prior to such termination. In addition, no
suspension, termination, modification, or amendment of the Plan may, without the
consent of the Employee or Eligible Director to whom an award shall theretofore
have been granted, adversely affect the rights of such Employee or Eligible
Director under such award.
16. Written Agreements. Each award of options, rights, restricted
shares, or restricted units shall be evidenced by a written agreement, executed
by the Participant and the Corporation, which shall contain such restrictions,
terms and conditions as the Committee may require.
17. Effect on Other Stock Plans. The adoption of the Plan shall have no
effect on awards made, or to be made, pursuant to other stock plans covering
Employees or Eligible Directors of the Corporation or any successors thereto.
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