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EXHIBIT 4
EXECUTION ORIGINAL
NON-QUALIFIED STOCK OPTION AGREEMENT
This Option Agreement (the "Agreement") is made and entered into as of
the 13th day of November, 1996, by and between Scientific-Atlanta, Inc., a
Georgia corporation (the "Company"), and Xxxxx X. XxXxxxxx (the "Optionee").
R E C I T A L S:
WHEREAS, the Company desires to grant the Optionee an Option (as
defined below); and
WHEREAS, the parties hereto desire to set forth herein the terms and
conditions applicable to such Option;
NOW, THEREFORE, the parties hereto do hereby agree as follows:
1. Definitions. Each capitalized term used herein which is not
otherwise defined herein shall have the meaning ascribed to such term in
Schedule 1 attached hereto.
2. Grant. The Company hereby grants to the Optionee an option (the
"Option") to purchase from the Company 100,000 shares of the $0.50 par value
common stock of the Company ("Common Stock") at an exercise price of $17 - 7/8
per share, which exercise price is subject to adjustment as provided in
Paragraph 11 hereof. The Option is intended to be treated as a non-qualified
stock option for all purposes and is not intended to qualify as an incentive
stock option for purposes of the Code.
3. Term. The term of the Option shall commence on the date hereof
("Date of Grant") and shall terminate and expire, to the extent not previously
exercised, on November 12, 2006.
4. Vesting; Limitation on Right to Exercise. Except as otherwise set
out in this Agreement, the Optionee shall have the right to exercise the Option
on and after May 13, 2001, but the Optionee shall have the right to earlier
exercise the Option on and after November 13, 1998, in the following
percentages, provided that the specified events have been satisfied:
(a) fifty percent (50%) of the shares subject to the Option shall
be exercisable if the closing price of the Common Stock of the
Company, as reported by the New York Stock Exchange, has been
$27.00 per share or more for twenty (20) consecutive business
days at any time after the Date of Grant of the Option; or
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(b) one hundred percent (100%) of the shares subject to the Option
shall be exercisable if the closing price of the Common Stock
of the Company, as reported by the New York Stock Exchange,
has been $35.00 per share or more for more than twenty (20)
consecutive business days at any time after the Date of Grant
of the Option.
The targeted per share closing prices set forth in Subparagraphs (a)
and (b) above shall be appropriately adjusted in the event of any change of the
type described in Paragraph 11 of this Agreement.
Notwithstanding that the Optionee may have the right, pursuant to the
above provisions, to exercise the Option as to some or all of the shares subject
to the Option, Optionee agrees that he will not exercise the Option as to any
shares subject to the Option until such time as (i) Optionee is no longer an
employee of the Company and (ii) such exercise will not cause the Company to
lose, pursuant to the terms of Section 162 (m) of the Code, the right to deduct
from the Company's income, for federal income tax purposes, the compensation to
the Optionee resulting from such exercise.
5. Manner of Exercise of the Option. The Option may be exercised from
time to time, in whole or in part, by delivering a written notice of exercise to
the Corporate Secretary of the Company. Such notice is irrevocable and must be
accompanied by full payment of the purchase price (i) in cash, (ii) by delivery
of shares of Common Stock at the Fair Market Value of such shares determined as
of the exercise date, or a combination of (i) and (ii).
6. Cessation of Employment; etc. After the Optionee ceases to be an
employee, his rights to exercise any unexercised Option then held by him shall
be determined as provided in this Paragraph 6. The Option may not be exercised
after the term set forth in Paragraph 3 expires or after the Option is otherwise
canceled.
(a) Retirement. If the Optionee ceases to be an employee because
of Retirement (and not on account of termination for "cause"
(as hereinafter defined)),the Optionee shall have the right to
exercise the Option at any time within two (2) years following
the date of his Retirement but, except as otherwise provided
in this Agreement, only to the extent that, as of the date of
his Retirement, the Optionee's right to exercise such Option
had accrued pursuant to the terms of this Agreement and had
not previously been exercised. To the extent unexercised, the
Option shall expire two (2) years after the date of Retirement
or the date of expiration of the term of the Option as set
forth in Paragraph 3, whichever shall occur first.
(b) Death. If the Human Resources and Compensation Committee (the
"Committee") does not determine otherwise with respect to the
Option, upon the death of the Optionee, the Option shall be
exercisable immediately (by the executor or the administrator
of the deceased Optionee's estate or by a person who acquired
the right
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to exercise the option by bequest or inheritance or by reason
of such death) with respect to only the shares as to which the
deceased Optionee had the right to exercise the Option at the
time of his death. To the extent unexercised, the Option shall
expire (i) one (1) year after the date of such death, or (ii)
in the event of death following termination of employment by
reason of Retirement as described in Paragraph 6(a)
immediately above, the expiration date of the Option after
Retirement, whichever occurs last. Notwithstanding the
foregoing, the Committee may, in a special case, permit a
longer period for exercise of an Option after the death of the
Optionee, but in no event shall such period extend beyond the
date of expiration of the Option as set forth in this
Agreement.
(c) Disability. If the Optionee ceases active service as an
employee by reason of Disability, he shall have the right to
exercise the Option at any time within one (1) year after such
cessation of employment, but except as provided in this
Agreement, only to the extent that, at the date of such
cessation of employment, the Optionee's right to exercise such
Option had accrued pursuant to the terms of this Agreement and
had not previously been exercised.
(d) Termination for Cause. If the Optionee's employment is
terminated for "cause" (as hereinafter defined), this Option
shall expire immediately upon the giving to him of the notice
of such termination. "Cause," for purposes of this Paragraph
6(d), shall mean dishonest or fraudulent conduct which would
normally be considered as sufficient basis for discharging an
employee from a management and/or a supervisory position, or
negligence, inaction or misconduct which constitutes failure
by the Optionee to meet such Optionee's obligations and
perform such Optionee's duties of employment.
(e) Other Reasons. If the Optionee ceases to be an employee for
any reason other than those mentioned above in Subparagraphs
(a), (b), (c) or (d), the Optionee shall have the right to
exercise the Option at any time within thirty (30) days
following such cessation, discharge or termination, but,
except as otherwise provided in this Agreement, only to the
extent that, at the date of cessation, discharge or
termination, the Optionee's right to exercise such Option had
accrued pursuant to the terms of this Agreement and had not
previously been exercised.
7. Exercise of Options upon a Change of Control of the Company. In the
event of a Change of Control of the Company, this Option, whether or not vested
at such time, shall automatically vest and be immediately exercisable in full,
without regard to the years which have elapsed or events which have occurred
since the Date of Grant.
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8. Termination of Employment Following Change in Control. If the
Optionee's employment terminates following a Change in Control other than for
"cause" (as defined in Paragraph 6(d)), the applicable provisions of Paragraph 6
of this Agreement shall apply, except that as of and after the date of the
Change in Control, neither the Committee nor the Board shall make any
determination or take any action in connection with the Optionee's termination
of employment which would cause the Option either (i) to not be exercisable in
full or (ii) to expire earlier than the latest date allowable under Paragraph 6
as applicable.
9. Amendment or Termination.
(a) Paragraphs 7 and 8 of this Agreement shall not be amended or
terminated at any time.
(b) Any amendment or termination of this Agreement prior to a
Change in Control which (i) was at the request of a third
party who has indicated an intention or taken steps reasonably
calculated to effect a Change in Control, or (ii) otherwise
arose in connection with or in anticipation of a Change in
Control, shall be null and void and shall have no effect
whatsoever.
(c) Except as provided in subparagraphs (a) and (b) above, the
Board shall have the authority and right to amend this
Agreement at any time upon ten (10) days' prior written notice
to Optionee, provided that such amendment does not adversely
affect Optionee's rights under this Agreement.
10. Rights of a Shareholder; Non-Transferability. No one shall have
rights as a shareholder with respect to any shares covered by this Option until
the date of issuance of a stock certificate for such shares. Nothing in this
Option confers on Optionee any right to continue in the employ of the Company or
to continue to perform services for the Company or interferes in any way with
the right of the Company to terminate his services as an officer or other
employee at any time.
Unless the Committee passes a resolution granting Optionee the right to
transfer the Option or a portion of the Option to others, no Option shall be
transferable by the Optionee other than by will or the laws of descent and
distribution and may only be exercised during his lifetime by the Optionee, or
by a guardian or legal representative.
11. Recapitalizations. In the event of any change in the outstanding
shares of Common Stock by reason of any stock dividend or split,
recapitalization, merger, consolidation, spin-off, reorganization, combination
or exchange of shares, or other similar corporate change, or other increase or
decrease in such shares without receipt or payment of consideration by the
Company,
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the Company will make such adjustments to the Option, to prevent dilution or
enlargement of the rights of Optionee, including any or all of the following:
(a) adjustments in the aggregate number or kind of shares of
Common Stock which may be issued upon exercise of the Option;
(b) adjustments in the purchase price of the Common Stock covered
by the Options.
No such adjustments, however, may change materially the value of benefits
available to Optionee under the Option.
12. Taxes; Withholding. In the event the Company determines that
it is required to withhold state or federal taxes as a result of the exercise
of an Option, as a condition to the exercise thereof, the Optionee must make
arrangements satisfactory to the Corporate Secretary to enable the Company to
satisfy such withholding requirements. Payment of such withholding requirements
may be made (i) in cash, (ii) by delivery of shares registered in the name of
Optionee, which shares have a Fair Market Value at the time of exercise equal
to the amount to be withheld, (iii) by the Company withholding shares subject
to the Option, which shares have a Fair Market Value at the time of exercise
equal to the amount to be withheld, or (iv) any combination of (i), (ii) and
(iii) above.
13. Securities Law Requirements.
(a) Securities Act Requirements. No Option granted pursuant to
this Agreement shall be exercisable in whole or in part, and
the Company shall not be obligated to sell any shares subject
to any such Option, if such exercise and sale would, in the
opinion of the Corporate Secretary, violate the Securities Act
of 1933 (or other federal or state statutes having similar
requirements) as it may be in effect at that time.
As a condition to the issuance of any shares upon exercise of
an Option under this Agreement, the Corporate Secretary may
require the Optionee to furnish a written representation that
he is acquiring the shares for investment and not with a view
to distribution to the public. Such representations shall be
required in cases where, in the opinion of the Corporate
Secretary, they are necessary to enable the Company to comply
with the provisions of the Securities Act of 1933, and any
shareholder who gives such representation shall be released
from it at such a time as the shares to which it applies are
registered pursuant to the Securities Act of 1933.
(b) Listing and Regulatory Requirements. Each Option shall be
subject to the further requirements that if at any time the
Committee shall determine in its discretion that the listing
or qualification of the shares of stock subject to such Option
under any securities exchange requirements or under any
applicable law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a
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condition of, or in connection with, the granting of such
Option or the issue of Shares thereunder, such Option may not
be exercised in whole or in part unless and until such
listing, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to
the Committee.
14. Notices. Any notice, payment or communication required or permitted
to be given by any provision of this Agreement shall be in writing and shall be
delivered personally or sent by certified mail, return receipt requested,
addressed as follows: if to the Company at Xxx Xxxxxxxxxx Xxxxxxx Xxxxx,
Xxxxxxxx, Xxxxxxx 00000, Attention: Corporate Secretary, if to Optionee, at the
address set forth on the signature page hereto. Each party may, from time to
time, by notice to the other party hereto, specify a new address for delivery of
notices to such party hereunder. Any such notice shall be deemed to be
delivered, given, and received for all purposes as of the date such notice is
received or properly mailed.
15. Binding Effect. Except as otherwise provided in this Agreement,
every covenant, term, and provision of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs, legatees,
legal representatives, successors, transferees, and assigns.
16. Headings. Section and other headings contained in this Agreement
are for reference purposes only and are not intended to describe, interpret,
define or limit the scope, event or intent of this Agreement or any provision
hereof.
17. Severability. Every provision of this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the validity or
legality of the remainder of this Agreement.
18. Governing Law. The laws of the state of Georgia shall govern the
validity of this Agreement, the construction of its terms, and the
interpretation of the rights and duties of the parties hereto.
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IN WITNESS WHEREOF, this Agreement is executed as of the 14th day of
November, 1996.
COMPANY:
SCIENTIFIC-ATLANTA, INC.
By: /s/ Xxxxx X. Xxxxxx
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Its: Senior Vice President, Human Resources
OPTIONEE:
/s/ Xxxxx X. XxXxxxxx
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Xxxxx X. XxXxxxxx
OPTIONEE'S ADDRESS:
0000 Xxxxx Xxxxx Xxxxx, X.X.
#0000
Xxxxxxx, Xxxxxxx 00000
OPTIONEE'S SSN:
###-##-####
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SCHEDULE 1
TO
NON-QUALIFIED STOCK OPTION AGREEMENT
"BOARD" means the Board of Directors of the Company.
"CHANGE IN CONTROL" means any of the following events:
(a) The acquisition in one or more transactions by any "Person"
(as the term person is used for purposes of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (the
"1934 Act")), of "Beneficial Ownership" (within the meaning of
Rule 13d-3 promulgated under the 0000 Xxx) of twenty percent
(20%) or more of the combined voting power of the Company's
then outstanding voting securities (the "Voting Securities"),
provided, however, that for purposes of this Agreement, the
Voting Securities acquired directly from the Company by any
Person shall be excluded from the determination of such
Person's Beneficial Ownership of Voting Securities (but such
Voting Securities shall be included in the calculation of the
total number of Voting Securities then outstanding); or
(b) The individuals who are members of the Incumbent Board (as
hereinafter defined), cease for any reason to constitute at
least two-thirds of the Board for purposes of this Agreement.
The "Incumbent Board" shall include the individuals who as of
August 20, 1990 are members of the Board and any individual
becoming a director subsequent to August 20, 1990 whose
election, or nomination for election by the Company's
stockholders, was approved by a vote of at least two-thirds of
the directors then comprising the Incumbent Board; provided,
however, that any individual who is not a member of the
Incumbent Board at the time he or she becomes a member of the
Board shall become a member of the Incumbent Board upon the
completion of two full years as a member of the Board;
provided, further, however, that notwithstanding the
foregoing, no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office
(i) as a result of either an actual or threatened "election
contest" (within the meaning of Rule 14a-11 promulgated under
the 0000 Xxx) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Board (a "Proxy Contest"), or (ii) with the approval of the
other Board members, but by reason of any agreement intended
to avoid or settle a Proxy Contest; or
(c) Approval by stockholders of the Company of (i) a merger or
consolidation involving the Company if the stockholders of the
Company immediately before such merger or consolidation do not
own, directly or indirectly, immediately following such merger
or consolidation, more than eighty percent (80%) of the
combined voting
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power of the outstanding voting securities of the Company
resulting from such merger or consolidation in substantially
the same proportion as their ownership of the Voting
Securities immediately before such merger or consolidation, or
(ii) a complete liquidation or dissolution of the Company or
an agreement for the sale or other disposition of all or
substantially all of the assets of the Company.
Notwithstanding the foregoing, a Change in Control shall not
be deemed to occur solely because twenty percent (20%) or more
of the then outstanding Voting Securities is acquired by (i) a
trustee or other fiduciary holding securities under one or
more employee benefit plans maintained by the Company or any
of its subsidiaries, or (ii) any corporation which,
immediately prior to such acquisition, is owned directly or
indirectly by the stockholders of the Company in the same
proportion as their ownership of stock in the Company
immediately prior to such acquisition.
Moreover, notwithstanding the foregoing, a Change in Control
shall not be deemed to occur solely because any Person (the
"Subject Person") acquired Beneficial Ownership of more than
the permitted amount of the outstanding Voting Securities as a
result of the acquisition of Voting Securities by the Company
which, by reducing the number of Voting Securities
outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Person, provided, that if a
Change in Control would occur (but for the operation of this
sentence) as a result of the acquisition of Voting Securities
by the Company, and after such share acquisition by the
Company, the Subject Person becomes the Beneficial Owner of
any additional Voting Securities which increases the
percentage of the then outstanding Voting Securities
Beneficially Owned by the Subject Person, then a Change in
Control shall occur.
Notwithstanding anything contained in this Agreement to the
contrary, if a Change in Control takes place and the
Optionee's employment is terminated prior to the completed
Change in Control and the Optionee reasonably demonstrates
that such termination (i) was at the request of a third party
who has indicated an intention or taken steps reasonably
calculated to effect a Change in Control and who effectuates a
Change in Control or (ii) otherwise occurred in connection
with or in anticipation of a Change in Control which actually
occurs, then for all purposes of this Agreement, the date of a
Change in Control in respect of such Optionee shall mean the
date immediately prior to the date of termination of such
Optionee's employment.
"CODE" means the Internal Revenue Code of 1986, as amended.
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"DISABILITY" means the condition of an individual who is unable to
engage in any substantial gainful activity by reason of any physical or mental
impairment which is classified as a disability in the Company's Long Term
Disability Plan.
"FAIR MARKET VALUE" means the value of one (1) share of Common Stock,
and shall be equal to the closing sale price as reported on the New York Stock
Exchange on the date of valuation or, if no sale occurred on that date, then the
mean between the closing bid and asked prices on such exchange on such date. If
the date of valuation is not a business day, the price on the last business day
preceding the date of valuation shall be utilized.
"RETIREMENT" shall mean the Optionee's voluntary termination of his
employment with the Company after he has either (i) attained age sixty (60) or
(ii) attained age fifty-five (55) and attained the tenth (10th) anniversary of
his seniority date.
