Registration of Securities to be Offered to Employees Pursuant to an Employee Benefit Plan — Form S-8
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-8 Sparton Corporation S-8 4 13K
2: EX-4.1 Instrument Defining the Rights of Security Holders 12 62K
3: EX-5.1 Opinion re: Legality 1 8K
4: EX-23.1 Consent of Experts or Counsel 1 6K
5: EX-24.1 Power of Attorney 2± 9K
EX-4.1 — Instrument Defining the Rights of Security Holders
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Exhibit 4.1
AMENDED AND RESTATED
SPARTON CORPORATION STOCK INCENTIVE PLAN
DATED OCTOBER 24, 2001
ARTICLE 1
ESTABLISHMENT AND PURPOSE OF THE PLAN
1.1 Establishment of the Plan. Sparton Corporation, an Ohio corporation
(the "Company"), established an incentive compensation plan known as the
"Sparton Corporation Stock Incentive Plan" (the "Plan") pursuant to the approval
of the shareholders at the annual meeting of shareholders on October 27, 1999.
The Plan permits the granting of stock options, stock appreciation rights,
restricted stock and other stock-based awards to key employees of the Company
and its subsidiaries.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the
long-term success of the Company for the benefit of the Company's shareholders,
through stock-based compensation, by aligning the personal interests of the
Company's key employees with those of its shareholders. The Plan is also
designed to allow key employees to participate in the Company's future, as well
as to enable the Company to attract, retain and reward such individuals. The
proposed amendments to the Plan will allow nonemployee directors to participate
in the Company's future and assist the Company in attracting quality individuals
to act in such capacity.
1.3 Amendment and Restatement. Subject to ratification by the
affirmative vote of holders of a majority of shares of the Company's Common
Stock present and entitled to vote at the 2001 Annual Meeting of Shareholders,
the Amended and Restated Plan shall be effective as of the date of that meeting
(the "Effective Date")
1.4 Term of Plan. No Awards shall be granted pursuant to the Plan on or
after the tenth anniversary of the Effective Date ( "Termination Date") ,
provided that Awards granted prior to the Termination Date may extend beyond
that date, and Cash Payment Rights and Reload Options may be effected pursuant
to the terms of Awards granted prior to the Termination Date.
ARTICLE 2
DEFINITIONS
For purposes of this Plan, the following terms shall have the meanings
set forth below:
2.1 "Award" shall mean any award under this Plan of any Options, Stock
Appreciation Rights, Restricted Stock and Performance Shares.
2.2 "Award Agreement" shall mean an agreement evidencing the grant of
an Award under this Plan. Awards under the Plan shall be evidenced by Award
Agreements that set forth the details, conditions and limitations for each
Award, as established by the Committee and shall be subject to the terms and
conditions of the Plan.
2.3 "Award Date" shall mean the date that an Award is made, as
specified in an Award Agreement.
2.4 "Board" shall mean the Board of Directors of the Company.
2.5 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.6 "Committee" shall mean the Committee as specified in Article 3, if
appointed by the Board to administer the Plan. If no Committee is appointed,
"Committee" shall mean the Board. The Board shall be responsible for the
administration of the Plan for the benefit of the Nonemployee Directors.
References to the Committee concerning the administration of the Plan shall
refer to the Board if the Participant or proposed Participant is a Nonemployee
Director.
2.7 "Common Stock" shall mean the Common Stock, $1.25 par value per
share, of the Company.
2.8 "Disability" shall mean permanent and total disability as
determined under the rules and guidelines established by the Committee for
purposes of the Plan.
2.9 "Employee Participant" shall mean an employee of the Company or its
Subsidiaries who holds an outstanding Award granted under the Plan.
2.10 "Fair Market Value" shall mean the closing price per share of the
Common Stock for such date on the New York Stock Exchange ( "NYSE" ) . If no
sale of shares of Common Stock is reflected on the NYSE on a date, "Fair Market
Value" shall be determined on the next preceding day on which there was a sale
of shares of Common Stock reported by the NYSE.
2.11 "Incentive Stock Option" or "ISO" shall mean an option to purchase
shares of Common Stock granted under Article 6, which is designated as an
Incentive Stock Option and is intended to meet the requirements of Section 422
of the Code.
2.12 "Insider" shall mean an employee who is an officer (as defined in
Rule 16a-1(f) of the Exchange Act) or director of the Company, or holder of more
than ten percent (10%) of its outstanding shares of Common Stock.
2.13 "Nonemployee Director" shall mean a person who satisfies (1) the
definition of "Nonemployee Director" within the meaning set forth in Rule
16b-3(b) (3), as promulgated by the Securities and Exchange Commission (the
"SEC") under the Securities Exchange Act of 1934 (the "Exchange Act") , or any
successor definition adopted by the SEC, and (2) the definition of "outside
director" within the meaning of Section 162(m) of the Code.
2.14 "Nonemployee Director Participant" shall mean a person who
satisfies the definition described in Paragraph 2.13 above and holds an
outstanding Award granted under the Plan.
2.15 "Nonqualified Stock Option " or "NQSO" shall mean an option to
purchase shares of Common Stock, granted under Article 6, which is not an
Incentive Stock Option.
2.16 "Option" means an Incentive Stock Option, a Nonqualified Stock
Option, or a Reload Option.
2.17 "Option Price" shall mean the price at which a share of Common
Stock may be purchased by a Participant pursuant to an Option, as determined by
the Committee.
2.18 "Participant" shall mean, alternatively, an employee of the
Company or a Subsidiary, or a Nonemployee Director who holds an outstanding
Award granted under the Plan.
2.19 "Performance Shares" shall mean an Award granted under Article 9
of this Plan evidencing the right to receive Common Stock or cash of an
equivalent value at the end of a specified performance period.
2.20 "Permitted Transferee" means (i) the spouse, children or
grandchildren of a Participant (each an "Immediate Family Member"), (ii) a trust
or trusts for the exclusive benefit of the Participant and/or one or more
Immediate Family Members, or (iii) a partnership or limited liability company
whose only partners or members are the Participant and/or one or more Immediate
Family Members.
2.21 "Reload Option" shall mean an Option that is awarded under the
conditions of Section 6.5 of the Plan.
2.22 "Retirement" shall mean the termination of a Participant's
employment with the Company or a Subsidiary after the Participant attains
retirement age as established by the Committee at the time an Award is made.
2.23 "Restricted Stock" shall mean an Award granted to a Participant
under Article 8 of this Plan.
2.24 "Stock Appreciation Right" or "SAR" shall mean an Award granted to
a Participant under Article 7 of this Plan.
2.25 "Subsidiary" shall mean any corporation in which the Company owns
directly, or indirectly through subsidiaries, at least fifty percent (50%) of
the total combined voting power of all classes of stock, or any other entity
(including, but not limited to, partnerships and joint ventures) in which the
Company owns at least fifty percent (50%) of the combined equity thereof.
2.26 "Termination of Employment" shall mean the termination of an
Employee Participant's employment with the Company or a Subsidiary. An Employee
Participant employed by a Subsidiary shall also be deemed to incur a Termination
of Employment if the Subsidiary ceases to be a Subsidiary and the Participant
does not immediately thereafter become an employee of the Company or another
Subsidiary.
2.27 "Termination of Directorship" shall mean the termination of the
Nonemployee Director's status as a member of the Board of Directors of the
Company, as a result of the resignation from office by the Nonemployee Director,
the death of the Nonemployee Director during an unexpired term of office, the
removal of the Nonemployee Director by action of the Board of Directors, or the
expiration of a term of office.
ARTICLE 3
ADMINISTRATION
3.1 The Committee. The Plan shall be administered by the Board or, if
appointed by the Board to administer the Plan, a Committee designated by the
Board consisting of not less than three (3) directors who shall be appointed
from time to time by the Board, each of whom shall qualify as a Nonemployee
Director. If a Committee is not appointed to administer the Plan, the Board
shall be substituted for the Committee wherever the Committee is referred to in
the Plan. Notwithstanding the appointment of a Committee under the terms of the
Plan, only the Board shall have the authority to grant an Award to a Nonemployee
Director.
3.2 Board and Committee Authority. Subject to the Company's Code of
Regulations, Bylaws and the provisions of this Plan, the Board and the Committee
shall have full authority to grant Awards to Nonemployee Directors and/or key
employees, respectively, of the Company or a Subsidiary:
(a) To select the key employees and/or Nonemployee Directors
of the Company or a Subsidiary to whom Awards may be granted under the
Plan;
(b) To determine whether and to what extent Options, Stock
Appreciation Rights, Restricted Stock, and Performance Shares, or any
combination thereof are to be granted under the Plan;
(c) To determine the number of shares of Common Stock to be
covered by each Award;
(d) To determine the terms and conditions of any Award
Agreement, including, but not limited to, the Option Price, any vesting
restriction or limitation, any vesting schedule or acceleration
thereof, or any forfeiture restrictions or waiver thereof, regarding
any Award and the shares of Common Stock relating thereto, based on
such factors as the Committee shall determine in its sole discretion;
(e) To determine whether, to what extent and under what
circumstances grants of Awards are to operate on a tandem basis and/or
in conjunction with or apart from other cash compensation arrangement
made by the Company other than under the terms of this Plan;
(f) To determine under what circumstances an Award may be
settled in cash, Common Stock, or a combination thereof; and
(g) To determine to what extent and under what circumstances
shares of Common Stock and other amounts payable with respect to an
Award shall be deferred.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (including any Award Agreement) and to
otherwise supervise the administration of the Plan. A majority of the Committee
shall constitute a quorum, and the acts of a majority of a quorum at any
meeting, or acts reduced to or approved in writing by a majority of the members
of the Committee, shall be the valid acts of the Committee. The interpretation
and construction by the Committee of any provisions of the Plan or any Award
granted under the Plan shall be final and binding upon the Company, the Board
and Participants, including their respective heirs, executors and assigns. No
member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or an Award granted
hereunder. Notwithstanding the foregoing, without the prior approval of the
Company's shareholders, neither the Committee nor the Board of Directors shall
have the authority to lower the exercise price of an option previously granted,
whether by means of the amendment of previously granted Awards or the
replacement or regrant, through cancellation, of previously granted Awards.
ARTICLE 4
COMMON STOCK SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 12.1, the maximum
aggregate number of shares of Common Stock which may be issued under this Plan
shall not exceed 760,000 shares, which may be either unauthorized and unissued
Common Stock or issued Common Stock reacquired by the Company ("Plan Shares").
Determinations as to the number of Plan Shares that remain available for
issuance under the Plan shall be made in accordance with such rules and
procedures as the Committee shall determine from time to time. If an Award
expires unexercised or is forfeited, canceled, terminated or settled in cash in
lieu of Common Stock, the shares of Common Stock that were theretofore subject
(or potentially subject) to such Award may again be made subject to an Award
Agreement; provided, however, that any such shares subject to a forfeited or
canceled Award shall not again be made subject to an Award Agreement to any
Participant who received, directly or indirectly, any of the benefits of
ownership of the securities underlying such Award, excluding the right to vote
such shares. In addition, Shares from the following sources shall be added to
the number of Plan Shares available for issuance under the Plan:
(1) Any Shares of the Company's Common Stock surrendered in
payment of the exercise price of Options or to pay the tax withholding
obligations incurred upon the exercise of Options; and
(2) Shares withheld to pay the Option Price or tax withholding
obligations.
ARTICLE 5
ELIGIBILITY
The persons who shall be eligible to receive Awards under the Plan
shall be such key employees or Nonemployee Directors of the Company or a
Subsidiary as the Committee or, in the case of the Nonemployee Directors, the
Board shall select from time to time. In making such selections, the Committee
shall consider the nature of the services rendered by the proposed participants,
their present and potential contribution to the Company's success and the
success of the particular Subsidiary or division of the Company by which they
are employed, and such other factors as the Board and/or Committee in its
discretion shall deem relevant. Participants may hold more than one Award, but
only on the terms and subject to the restrictions set forth in the Plan and
their respective Award Agreements.
ARTICLE 6
STOCK OPTIONS
6.1 Options. Options may be granted alone or in addition to other
Awards granted under this Plan. Each Option granted under this Plan shall be
either an Incentive Stock Option (ISO) or a Nonqualified Stock Option (NQSO) .
6.2 Grants. The Committee shall have the authority to grant to any
Participant one or more Incentive Stock Options, Nonqualified Stock Options, or
both types of Options. To the extent that any Option does not qualify as an
Incentive Stock Option (whether because of its provisions or the time or manner
of its exercise or otherwise), such Option or the portion thereof which does not
qualify shall constitute a separate Nonqualified Stock Option.
6.3 Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422 of the Code, or, without the consent of the Participants affected,
to disqualify any Incentive Stock Option under such Section 422. An Incentive
Stock Option shall not be granted to an individual who, on the date of grant,
owns stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or to a Nonemployee Director. The
aggregate Fair Market Value, determined on the Award Date of the shares of
Common Stock with respect to which one or more Incentive Stock Options (or other
incentive stock options within the meaning of Section 422 of the Code, under all
other option plans of the Company) granted on or after January 1, 1987, that are
exercisable for the first time by a Participant during any calendar year shall
not exceed the $100,000 limitation imposed by Section 422(d) of the Code.
6.4 Terms of Options. Options granted under the Plan shall be evidenced
by Award Agreements in such form as the Committee shall, from time to time
approve, which Agreement shall comply with and be subject to the following terms
and conditions:
(a) Employee Participant's Agreement. Each Employee
Participant shall agree to remain in the continuous employ of the
Company for a period of at least twelve (12) months from the Award Date
or until Retirement, if Retirement occurs prior to twelve (12) months
from the date of the Option. Such Agreement shall not impose upon the
Company any obligation to retain the Participant in its employ for any
period.
(b) Option Price. The Option Price per share of Common Stock
purchasable under an Option shall be determined by the Committee at the
time of grant but shall be not less than one hundred percent (100%) of
the Fair Market Value of the Common Stock at the Award Date.
(c) Option Term. The term of each Option shall be fixed by the
Committee, but no Option shall be exercisable more than ten (10) years
after the date the Option is granted.
(d) Exercisability. Except as provided in Section 12.2, no
Option shall be exercisable either in whole or in part prior to the
first anniversary of the Award Date. Thereafter, an Option shall be
exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee and set forth in the
Award Agreement. If the Committee provides that any Option is
exercisable only in installments, the Committee may at any time waive
such installment exercise provisions, in whole or in part, based on
such factors as the Committee may determine.
(e) Method of Exercise. Subject to whatever installment
exercise and waiting period provisions apply under subsection (d)
above, Options may be exercised in whole or in part at any time during
the term of the Option, by giving written notice of exercise to the
Company specifying the number of shares to be purchased. Such notice
shall be accompanied by payment in full of the purchase price in such
form as the Committee may accept. Notwithstanding the foregoing, an
Option shall not be exercisable with respect to less than 100 shares of
Common Stock unless the remaining shares covered by an Option are fewer
than 100 shares. If and to the extent determined by the Committee in
its sole discretion at or after grant, payment in full or in part may
also be made in the form of Common Stock owned by the Participant (and
for which the Participant has good title free and clear of any liens
and encumbrances, and with respect to any shares of Common Stock
acquired upon the exercise of an Option, has been held by the Optionee
for a period of at least six (6)
consecutive months) or Restricted Stock, or by reduction in the number
of shares issuable upon such exercise based, in each case, on the Fair
Market Value of the Common Stock on the last trading date preceding
payment as determined by the Committee (without regard to any
forfeiture restrictions applicable to Restricted Stock). No shares of
stock shall be issued until payment has been made. A Participant shall
generally have the right to dividends or other rights of a shareholder
with respect to shares subject to the Option when the person exercising
such option has given written notice of exercise, has paid for such
shares as provided herein, and, if requested, has given the
representation described in Section 13.1 of the Plan. Notwithstanding
the foregoing, if payment in full or in part has been made in the form
of Restricted Stock, an equivalent number of shares of Common Stock
issued on exercise of the Option shall be subject to the same
restrictions and conditions, and during the remainder of the
Restriction Period [as defined in Section 8.3(a)], applicable to the
shares of Restricted Stock surrendered therefor.
(f) Transferability of Options. No Option may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution,
provided, however, the Committee may, in its discretion, authorize all
or a portion of a Nonqualified Stock Option to be granted to an
optionee to be on terms which permit transfer by such optionee to a
Permitted Transferee, provided that (i) there may be no consideration
for any such transfer (other than the receipt of or interest in a
family partnership or limited liability company), (ii) the stock option
agreement pursuant to which such options are granted must be approved
by the Committee, and must expressly provide for transferability in a
manner consistent with this Section 6.4(f), and (iii) subsequent
transfers of transferred options shall be prohibited except those in
accordance with Section 6.4(i). Following transfer, any such options
shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer. The events of termination of
service of Sections 6.4(g), (h), and (i) hereof, and the tax
withholding obligations of Section 13.3 shall continue to be applied
with respect to the original optionee, following which the options
shall be exercisable by the Permitted Transferee only to the extent,
and for the periods specified in Sections 6(g), (h), and (i). The
Company shall not be obligated to notify Permitted Transferee(s) of the
expiration or termination of any option. Further, all Options shall be
exercisable during the Participant's lifetime only by such Participant
and, in the case of a Nonqualified Stock Option, by a Permitted
Transferee. The designation of a person entitled to exercise an Option
after a person's death will not be deemed a transfer.
(g) Termination of Employment for Reasons other than
Retirement, Disability, or Death. Upon Termination of Employment for
any reason other than Retirement or on account of Disability or death,
each Option held by the Employee Participant shall, to the extent
rights to purchase shares under such Option have accrued at the date of
such Termination of Employment and shall not have been fully exercised,
be exercisable, in whole or in part, at any time within a period of not
more than thirty (30) days following Termination of Employment, as
specified in the Award Agreement, subject, however, to prior expiration
of the term of such Options and any other limitations on the exercise
of such Options in effect at the date of exercise. Whether an
authorized leave of absence or absence because of military or
governmental service shall constitute Termination of Employment for
such purposes shall be determined by the Committee, which determination
shall be final and conclusive.
(h) Termination of Employment for Retirement or Disability.
Upon Termination of Employment by reason of Retirement or Disability,
each Option held by such Employee Participant shall, to the extent
rights to purchase shares under the Option have accrued at the date of
such Retirement or Disability and shall not have been fully exercised,
remain exercisable in whole or in part, for a period of not more than
three (3) years following such Termination of Employment, as specified
in the Award Agreement, subject, however, to prior expiration according
to its terms and other limitations imposed by the Plan. If the Employee
Participant dies after such Retirement or Disability, the Participant's
Options shall be exercisable in accordance with Section 6.4(i) below.
(i) Termination of Employment for Death. Upon Termination of
Employment due to death, each Option held by such Participant or
Permitted Transferee shall, to the extent rights to purchase shares
under the Options have accrued at the date of death and shall not have
been fully exercised, be exercisable, in whole or in part, by the
personal representative of the estate of the Participant or Permitted
Transferee or by any person or
persons who shall have acquired the Option directly from the
Participant or Permitted Transferee by bequest or inheritance only
under the following circumstances and during the following periods: (i)
if the Participant dies while employed by the Company or a Subsidiary,
at any time within six (6) months after his death, or (ii) if the
Participant dies during the extended exercise period following
Termination of Employment specified in Section 6.4(h), at any time
within the longer of such extended period or six (6) months after
death, subject, however, in any case, to the prior expiration of the
term of the Option and any other limitation on the exercise of such
Option in effect at the date of exercise.
(j) Termination of Directorship. Upon Termination of
Directorship, each Option held by such Nonemployee Director Participant
shall, to the extent rights to purchase shares under the Option have
accrued at the date of such termination and shall not have been fully
exercised, remain exercisable in whole or in part, for a period of not
more than three (3) years following such Termination of Directorship,
as specified in the Award Agreement, subject, however, to prior
expiration according to its terms and other limitations imposed by the
Plan. If the Nonemployee Director dies after the termination of his or
her Directorship and during the period described in the foregoing
sentence, to the extent rights to purchase shares under the Option have
accrued and have not been fully exercised as of the date of death, the
Nonemployee Director Participant's Options shall be exercisable in
accordance with Section 6.4(i) above.
(k) Termination of Options. Any Option that is not exercised
within whichever of the exercise periods specified in Sections 6.4(g),
(h), (i) or (j) is applicable shall terminate upon expiration of such
exercise period.
(l) Purchase and Settlement Provisions. The Committee may at
any time offer to purchase an Option previously granted, based on such
terms and conditions as the Committee shall establish and communicate
to the Participant at the time that such offer is made. In addition, if
an Award Agreement so provides at the Award Date or is thereafter
amended to so provide, the Committee may require that all or part of
the shares of Common Stock to be issued with respect to the exercise of
an Option, in an amount not greater than the Fair Market Value of the
shares that is in excess of the aggregate Option Price, take the form
of Performance Shares or Restricted Stock, which shall be valued on the
date of exercise on the basis of the Fair Market Value of such
Performance Shares or Restricted Stock determined without regard to the
deferral limitations and/or forfeiture restrictions involved.
6.5 Reload Options. Without in any way limiting the authority of the
Committee to make grants hereunder, and in order to induce employees to retain
ownership of shares of Common Stock, the Committee shall have the authority (but
not an obligation) to include within any Award Agreement a provision entitling
the Participant to a further Option (a "Reload Option") in the event the
Participant exercises the Option evidenced by the Award Agreement, in whole or
in part, by surrendering shares of Common Stock previously owned by the
Participant, in accordance with this Plan and the terms and conditions of the
Award Agreement. A Reload Option shall entitle a Participant to purchase a
number of shares of Common Stock equal to the number of such shares so delivered
upon exercise of the original Option and, in the discretion of the Committee,
the number of shares, if any, tendered to the Company to satisfy any withholding
tax liability arising in connection with the exercise of the original Option. A
Reload Option shall: (a) have an Option Price of not less than one hundred
percent (100%) of the per share Fair Market Value of the Common Stock on the
date of grant of such Reload Option; (b) have a term not longer than the
remaining term of the original Option at the time of exercise thereof; (c)
become exercisable in the event the shares acquired upon exercise of the
original Option are held for a minimum period of time established by, the
Committee; and (d) be subject to such other terms and conditions as the
Committee may determine.
ARTICLE 7
STOCK APPRECIATION RIGHTS
7.1 Grant of SARs. The Committee may approve the grant of Stock
Appreciation Rights ("SARs") that are related to Options only. A SAR may be
granted only at the time of grant of the related Option. A SAR will entitle the
holder of the related Option, upon exercise of the SAR, to surrender such
Option, or any portion thereof to the extent unexercised, with respect to the
number of shares as to which such SAR is exercised, and to receive payment of an
amount computed pursuant to Section 7.2. Such Option will, to the extent
surrendered, then cease to be exercisable. Subject to Section 6.4, a SAR granted
hereunder will be exercisable at such time or times, and only to the extent that
a related Option is exercisable, and will not be transferable except to the
extent that such related Option may be transferable.
7.2 Payment of SAR Amount. Upon the exercise of a SAR, a Participant
shall be entitled to receive payment from the Company in an amount determined by
multiplying (i) the difference between the Fair Market Value of a share of
Common Stock on the date of exercise over the Option Price, by (ii) the number
of shares of Common Stock 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 Common Stock of equivalent value, or in some combination thereof.
7.3 Nontransferability. No SAR 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 SARs shall be exercisable, during
the Participant's lifetime, only by such Participant.
ARTICLE 8
RESTRICTED STOCK
8.1 Awards of Restricted Stock. Shares of Restricted Stock may be
issued either alone or in addition to other Awards granted under the Plan. The
Committee shall determine the eligible persons to whom, and the time or times at
which, grants of Restricted Stock will be made, the number of shares to be
awarded, the price (if any) to be paid by the Participant, the time or times
within which such Awards may be subject to forfeiture, the vesting schedule and
rights to acceleration thereof, and all other terms and conditions of the
Awards. The Committee may condition the grant of Restricted Stock upon the
achievement of specific business objectives, measurements of individual or
business unit or Company performances, or such other factors as the Committee
may determine. The provisions of Restricted Stock awards need not be the same
with respect to each Participant, and such Awards to individual Participants
need not be the same in subsequent years.
8.2 Awards and Certificates. A prospective Participant selected to
receive a Restricted Stock shall not have any rights with respect to such Award,
unless and until such Participant has executed an Award Agreement evidencing the
Award and has delivered a fully executed copy thereof to the Company, and has
otherwise complied with the applicable terms and conditions of such Award.
Further, such Award shall be subject to the following conditions:
(a) Acceptance. Awards of Restricted Stock must be accepted
within a period of 20 days (or such shorter period as the Committee may
specify at grant) after the Award Date, by executing an Award Agreement
and by paying whatever price (if any) the Committee has designated for
such shares of Restricted Stock.
(b) Legend. Each Participant receiving a Restricted Stock
Award shall be issued a stock certificate in respect of such shares of
Restricted Stock. Such certificate shall be registered in the name of
such Participant, and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Award,
substantially in the following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the Sparton Corporation Stock Incentive Plan and related
Award Agreement entered into between the registered owner and the
Company, dated _________________. Copies of such Plan and Agreement are
on file in the offices of the Company."
(c) Custody. The Committee may require that the stock
certificates evidencing such shares be held in custody by the Company
until the restrictions thereon shall have lapsed, and that, as a
condition of any award of Restricted Stock, the Participant shall have
delivered a duly signed stock power, endorsed in blank, relating to the
Common Stock covered by such Award.
8.3 Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to this Plan shall be subject to the following restrictions and
conditions:
(a) Restriction Period. Subject to the provisions of this Plan
and the Award Agreement, during a period set by the Committee
commencing with the Award Date and expiring not less than four (4)
consecutive years thereafter (the "Restriction Period") , the
Participant shall not be permitted to sell, transfer, pledge, or assign
shares of Restricted Stock awarded under this Plan. Subject to these
limits, the Committee, in its sole discretion, may provide for the
lapse of such restrictions in installments and may accelerate or waive
such restrictions in whole or in part, based on service, performance
and/or such other factors or criteria as the Committee may determine.
(b) Rights as Shareholder. Except as provided in this
subsection (b) and subsection (a) above, the Participant shall have,
with respect to the shares of Restricted Stock, all of the rights of a
holder of shares of Common Stock of the Company including the right to
receive any dividends. The Committee, in its sole discretion, as
determined at the time of Award, may permit or require the payment of
dividends to be deferred. If any dividends or other distributions are
paid in shares of Common Stock, such shares shall be subject to the
same restrictions on transferability and forfeitability as the shares
of Restricted Stock with respect to which they were paid.
(c) Termination of Employment. Subject to the applicable
provisions of the Award Agreement and this Article 8, upon Termination
of Employment for any reason during the Restriction Period, all
Restricted Shares still subject to restriction will vest or be
forfeited in accordance with the terms and conditions established by
the Committee as specified in the Award Agreement.
(d) Lapse of Restrictions. If and when the Restriction Period
expires without a prior forfeiture of the Restricted Stock, the
certificates for such shares shall be delivered to the Participant.
ARTICLE 9
PERFORMANCE SHARES
9.1 Award of Performance Shares. Performance Shares may be awarded
either alone or in addition to other Awards granted under this Plan. The
Committee shall determine the eligible persons to whom and the time or times at
which Performance Shares shall be awarded, the number of Performance Shares to
be awarded to any person, the duration of the period (the "Performance Period")
during which, and the conditions under which, receipt of the Performance Shares
will be deferred, and the other terms and conditions of the Award in addition to
those set forth in Section 9.2, as specified in the Award Agreement. The
Committee may condition the grant of Performance Shares upon the achievement of
specific business objectives, measurements of individual or business unit or
Company performance, or such other factors or criteria as the Committee shall
determine. The provisions of the award of Performance Shares need not be the
same with respect to each Participant, and such Awards to individual
Participants need not be the same in subsequent years.
9.2 Terms and Conditions. Performance Shares awarded pursuant to this
Article 9 shall be subject to the following terms and conditions:
(a) Nontransferability. Subject to the provisions of this Plan
and the related Award Agreement, Performance Shares may not be sold,
assigned, transferred, pledged or otherwise encumbered during the
Performance Period. At the expiration of the Performance Period, share
certificates or cash of an equivalent value (as the Committee may
determine in its sole discretion) shall be delivered to the
Participant, or his legal representative, in a number equal to the
shares covered by the Award Agreement.
(b) Dividends. Unless otherwise determined by the Committee at
the time of Award, amounts equal to any cash dividends declared during
the Performance Period with respect to the number of shares of Common
Stock covered by a Performance Share Award will not be paid to the
Participant.
(c) Termination of Employment. Subject to the provisions of
the Award Agreement and this Article 9, upon Termination of Employment
for any reason during the Performance Period for a given Award, the
Performance Shares in question will vest or be forfeited in accordance
with the terms and conditions established by the Committee at or after
grant.
(d) Accelerated Vesting. Based on service, performance and/or
such other factors or criteria as the Committee may determine and set
forth in the Award Agreement, the Committee may, at or after grant,
accelerate the vesting of all or any part of any award of Performance
Shares and/or waive the deferral limitations for all or any part of
such Award.
ARTICLE 10
TERMINATION OR AMENDMENT OF THE PLAN
The Board may at any time amend, discontinue or terminate this Plan or
any part thereof (including any amendment deemed necessary to ensure that the
Company may comply with any applicable regulatory requirement); provided,
however, that, unless otherwise required by law, the rights of a Participant
with respect to Awards granted prior to such amendment, discontinuance or
termination, may not be impaired without the consent of such Participant and,
provided further, without the approval of the Company's shareholders, no
amendment may be made which would (i) increase the aggregate number of shares of
Common Stock that may be issued under this Plan (except by operation of Section
12.1); (ii) change the definition of individuals eligible to receive Awards
under this Plan; (iii) decrease the option price of any Option to less than one
hundred percent (100%) of the Fair Market Value on the date of grant for an
Option; or (iv) extend the maximum option period under Section 6.4(c) of the
Plan. The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but, subject to Section 12.2, no such amendment
or other action by the Committee shall impair the rights of any Participant
without the Participant's consent. Awards may not be granted under the Plan
after the Termination Date, but Awards granted prior to such date shall remain
in effect or become exercisable pursuant to their respective terms and the terms
of this Plan.
ARTICLE 11
UNFUNDED PLAN
This Plan is intended to constitute an "unfunded" plan for incentive
and deferred compensation. With respect to any payment not yet made to a
Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company.
ARTICLE 12
ADJUSTMENT PROVISIONS
12.1 Antidilution. Subject to the provisions of this Article 12, if the
outstanding shares of Common Stock are increased, decreased, or exchanged for a
different number or kind of shares or other securities, or if additional shares
or new or different shares or other securities are distributed with respect to
such shares of Common Stock or other securities, through merger, consolidation,
sale of all or substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other distribution with respect to such shares of Common Stock or other
securities, an appropriate and proportionate adjustment may be made in (i) the
maximum number and kind of shares provided in Article 4 of the Plan, (ii) the
number and kind of shares or other securities subject to the then outstanding
Awards, and (iii) the price for each share or other unit of any other securities
subject to the then outstanding Awards.
12.2 Change in Control. Notwithstanding Section 12.1, upon dissolution
or liquidation of the Company, or upon a reorganization, merger, Change in
Control, or consolidation or merger of the Company with one or more corporations
as a result of which the Company is not the surviving corporation, or upon the
sale of all or substantially all the assets of the Company, all Awards then
outstanding under the Plan will be fully vested and exercisable and all
restrictions will immediately cease, unless provisions are made in connection
with such transaction for the continuance of the Plan and the assumption of or
the substitution for such Awards of new Awards covering the stock of a successor
employer corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices. A Change in Control
means the first to occur of any one of the following events:
(a) Any "person, " as such term is used in Sections 13 (d) and
14 (d) (2) of the Securities Exchange Act of 1934, as amended ("Act"),
other than the Company or a Subsidiary, or a trustee of an employee
benefit plan sponsored solely by the Company or a Subsidiary is or
becomes, other than by purchase from the Company, the "beneficial
owner" (as such term is defined in Rule 13d-3 under the Act), directly
or indirectly, of shares of Common Stock or other securities of the
Company representing twenty percent (20%) or more of the combined
voting power of the Company's then outstanding voting securities,
excluding any such beneficial holders as of the Effective Date of this
Plan;
(b) During any period of two (2) consecutive years,
individuals who at the beginning of such period were members of the
Board cease for any reason to constitute at least a majority of the
Board, unless each new director was nominated or elected by a vote of
at least two-thirds of the directors then still in office who were
directors at the beginning of the period; or
(c) Any other event or series of events which, notwithstanding
any other provision of this definition, is determined by the Board to
constitute a Change in Control of the Company for purposes of this
Plan.
12.3 Adjustments by Committee. Any adjustments pursuant to this Article
12 will be made by the Committee, whose determination as to what adjustments
will be made and the extent thereof will be final, binding, and conclusive. No
fractional interest will be issued under the Plan on account of any such
adjustments. Only cash payments will be made in lieu of fractional shares.
ARTICLE 13
GENERAL PROVISIONS
13.1 Legend. The Committee may require each person purchasing shares
pursuant to an Award under the Plan to represent to and agree with the Company
in writing that the Participant is acquiring the shares without a view to
distribution thereof. In addition to any legend required by this Plan, the
certificates for such shares may include any legend which the Committee deems
appropriate to reflect any restrictions on transfer.
All certificates for shares of Common Stock delivered under the Plan
shall be subject to such stock transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations and other requirements
of the Securities and Exchange Commission, any stock exchange upon which the
Stock is then listed, any applicable Federal or state securities law, and any
applicable corporate law, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such restrictions.
13.2 No Right to Employment. Neither this Plan nor the grant of any
Award hereunder shall give any Employee Participant or other employee any right
with respect to continuance of employment by the Company or any Subsidiary, nor
shall there be a limitation in any way on the right of the Company or any
Subsidiary by which an employee is employed to terminate his or her employment
at any time.
13.3 Withholding of Taxes. The Company shall have the right to deduct
from any payment to be made pursuant to this Plan, or to otherwise require,
prior to the issuance or delivery of any shares of Common Stock or the payment
of any cash hereunder, payment by the Participant of any Federal, state or local
taxes required by law to be withheld. Unless otherwise prohibited by the
Committee, each Participant may satisfy any such withholding tax
obligation by any of the following means or by a combination of such means: (a)
tendering a cash payment; (b) authorizing the Company to withhold from the
shares otherwise issuable to the Participant a number of shares having a Fair
Market Value as of the "Tax Date", less than or equal to the amount of the
withholding tax obligation; or (c) delivering to the Company unencumbered shares
owned by the Participant having a Fair Market Value, as of the Tax Date, less
than or equal to the amount of the withholding tax obligation. The "Tax Date"
shall be the date that the amount of tax to be withheld is determined.
13.4 No Assignment of Benefits. No Option, Award or other benefit
payable under this Plan shall be subject in any manner to anticipation,
alienation, attachment, sale, transfer, assignment, pledge, encumbrance or
charge, and any attempt to anticipate, alienate, attach, sell, transfer, assign,
pledge, encumber or charge, any such benefits shall be void, and any such
benefit shall not in any manner be liable for or subject to the debts,
contracts, liabilities, engagements or torts of any person who shall be entitled
to such benefit, nor shall it be subject to attachment or legal process for or
against such person.
13.5 Governing Law. This Plan and actions taken in connection herewith
shall be governed and construed in accordance with the laws and in the courts of
the state of Michigan.
13.6 Application of Funds. The proceeds received by the Company from
the sale of shares of Common Stock pursuant to Awards granted under this Plan
will be used for general corporate purposes.
13.7 Rights as a Shareholder. Except as otherwise provided in an Award
Agreement, a Participant shall have no rights as a shareholder of the Company
until he or she becomes the holder of record of Common Stock.
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Dates Referenced Herein and Documents Incorporated by Reference
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