Exhibit (10)-u
THE
BAUSCH & LOMB INCORPORATED
1990 STOCK INCENTIVE PLAN
AND
RELATED INFORMATION
This document constitutes part of a prospectus covering
securities that have been registered
under the Securities Act of 1933
Plan Approved April 24, 1990
Amended by the Committee on Management July 22, 1991
Amended by the Committee on Management December 9, 1996
Amended by the shareholders on April 28, 1998
Amended by the Committee on Management July 26, 1999
INTRODUCTION
The 1990 Stock Incentive Plan (the "Plan") was adopted by
the Company's Board of Directors on February 27, 1990, and
subsequently was approved by the Company's shareholders at the
1990 Annual Meeting, which was held on April 24, 1990. Under the
Plan, shares of the Company's Class B stock, as well as options
to purchase such stock, may be awarded to directors, officers and
other key employees. The Plan is intended to advance the
interests of the Company and its shareholders by providing to
those individuals upon whose judgment, initiative and efforts the
conduct of the Company's business largely depends an incentive to
continue their service with the Company and/or its subsidiaries.
In recognition of your contributions to the Company, you have
been selected to receive an award under the Plan. To enable you
to better understand how the Plan works, we have attached a copy
of the Plan, as well as certain supplemental information
concerning the Plan and the awards made thereunder. Please read
all parts of this document carefully.
As explained in Section 3 of the Plan, the Plan is administered
by the Compensation Committee of the Board of Directors, which is
now called the Committee on Management ("Committee"). The
Committee consists of at least three directors, and is elected
annually by the entire Board of Directors. In addition to its
specific authority with respect to implementation of the Plan,
the Committee has the general responsibility for recommending to
the Board remuneration for the Chairman of the Board, the
President and directors, and determining the remuneration of
other corporate officers. The Plan is not subject to the
provisions of the Employee Retirement Income Security Act of 1974
and is not a qualified plan under Section 401(a) of the Internal
Revenue Code.
To obtain more information about the Plan and its administrators,
contact Robert B. Stiles, Senior Vice President and General
Counsel, Bausch & Lomb Incorporated, One Bausch & Lomb Place,
Rochester, New York 14601-0054 (telephone (716) 338-6000).
BAUSCH & LOMB INCORPORATED
1990 STOCK INCENTIVE PLAN
1. Purpose. The purpose of this Stock Incentive Plan (the
"Plan") is to advance the interests of Bausch & Lomb
Incorporated, a New York corporation (referred to herein as the
"Company"), and its shareholders by providing an incentive for
its directors, officers and other key employees who are primarily
responsible for the management of the business to continue
service with the Company and its subsidiaries. By encouraging
such directors, officers and other key employees to become owners
of Common Stock of the Company, the Company seeks to attract and
retain people of experience, ability and training and to furnish
additional incentive to directors, officers and other key
employees upon whose judgment, initiative and efforts the
successful conduct of its business largely depends. It is
intended that this purpose will be effected through the granting
of stock options and stock awards (sometimes collectively
referred to as "grants")) as provided herein. It is intended
that awards granted under the Plan will comply with the
requirements of Code Section 162(m) as it relates to allowing for
deduction by the Company of compensation paid to executives,
unless otherwise designated by the Committee in accordance with
Section 11 herein.
2. Effective Date. The effective date of the Plan shall
be the date the Plan is approved by the shareholders of the
Company.
3. Administration of the Plan. The Plan shall be
administered by the Compensation Committee of the Board of
Directors of the Company (referred to herein as the "Committee"),
which shall consist of at least three directors, none of whom,
while serving on such Committee, shall be, or within one year
prior thereto have been, eligible to receive any grants
hereunder, except as specifically authorized under Section 16 of
the Plan. The Committee shall have authority to adopt rules and
regulations for carrying out the Plan, select the employees to
whom grants will be made, determine the number of shares to be
optioned or awarded to each such employee and interpret, construe
and implement the provisions of the Plan. Decisions of the
Committee shall be binding on the Company and on all persons
eligible to participate in the Plan.
4. Stock Subject to the Plan.
(a) Subject to adjustment as provided in Sections 9
and 10, the total number of shares of the $.08 par value
Class B Stock of the Company available for grant under the
Plan in each calendar year (including partial calendar
years) during which the Plan is in effect shall be equal to
three percent (3%) of the total number of shares of Common
Stock of the Company outstanding as of the first day of
each such year for which the Plan is in effect; provided
that any shares available for grant in a particular
calendar year (or partial calendar year) which are not, in
fact, granted in such year shall not be added to the shares
available for grant in any subsequent calendar year. In
addition to the limitation set forth above with respect to
the number of shares available for grant in any single
calendar year, no more than three million (3,000,000)
shares of Class B Stock shall be cumulatively available for
the grant of incentive options over the life of the Plan.
Shares subject to an option or award under the Plan may be
authorized and unissued shares or may be "treasury shares"
as defined in Section 102(a)(14) of the New York Business
Corporation Law. Approval by a majority vote of the
shareholders of the Company shall constitute authorization
to use such Class B shares for the purposes of the Plan.
Any shares subject to an option or award which for any
reason expires or is terminated unexercised as to such
shares may again be subject to an option or award under the
Plan.
(b) Subject to adjustment as provided in Sections 9
and 10, unless and until the Committee determines that an
award under the Plan to an officer who, as of the date of
vesting and/or payout of the award, as applicable, is, or
reasonably may be expected to be, one of the group of
"covered employees," as defined in the regulations
promulgated under Code Section 162(m), or any successor
statute (a "Covered Employee") shall not be designed to
comply with the performance-based exception from the tax
deductibility limitations of Code Section 162(m) (the
"Performance Based Exception"), the following rules shall
apply to grants of such awards under the Plan:
(1) Stock Options: The maximum aggregate
number of shares of Class B stock that may be granted
in the form of options, pursuant to any award granted
in any one fiscal year to any one single participant
shall be five hundred thousand (500,000).
(2) Alternate Rights: The maximum aggregate
number of shares of Class B stock that may be granted
in the form of stock appreciation rights or accelerated
rights pursuant to any award granted in any one fiscal
year to any one single participant shall be five
hundred thousand (500,000).
(3) Stock Grants: The maximum aggregate
grant with respect to awards of Stock Grants granted in
any one fiscal year to any one participant shall be two
hundred fifty thousand (250,000) shares.
5. Eligible Persons. Options and awards may be granted
only to directors, officers and other key employees of the
Company or any subsidiary corporation of the Company. Except as
expressly authorized by Section 16 of the Plan, however, no grant
shall be made to a director who is not an officer or salaried
employee. Further, no grant shall be made to an individual who
as a result of such grant would own stock possessing more than
10% of the total combined voting power or value of all classes of
stock of the Company or a subsidiary. Stock which such
individual may purchase under outstanding options, whether
incentive or nonqualified, shall be treated as stock owned by
such individual for purposes of this Section.
6. Stock Options. It is intended that options granted
hereunder to officers and other employees of the Company shall
be, at the discretion of the Committee, either "incentive
options," under the provisions of Section 422A of the Internal
Revenue Code of 1986 and the regulations thereunder or
corresponding provisions of subsequent revenue laws and
regulations in effect at the time such options are granted
hereunder, or nonqualified options.
Incentive options shall be granted within ten (10) years
from the effective date of the Plan and shall be evidenced by
stock option agreements in such form as the Committee shall
approve from time to time, which agreements shall conform with
the Plan and shall contain in substance the following terms and
conditions:
(a) Number of Shares. The option agreement shall
specify the number of shares to which it pertains.
(b) Purchase Price. The purchase price per share of
stock under each option shall be 100% of the fair market
value of such stock on the day the option is granted, which
shall be deemed to be the mean between the highest and
lowest quoted selling prices of the Company's Common Stock
on the New York Stock Exchange (or other composite quoted
market) on that day (or, if there were no such sales on such
day, on the next preceding day on which there were such
sales). The purchase price of an option shall not be
reduced during its term (except as provided in Section 9 or
10 hereof).
(c) Exercise. No option shall be exercisable after
the expiration of ten (10) years from the date such option
is granted.
Except as provided in Section 16 of the Plan, each such
option may be exercised at such time and in such manner as
specified by the Committee, which may, among other things,
provide that options may become subject to exercise in
installments. Except as provided in Section 15 hereof, no
option may be exercised at any time unless the holder
thereof is then an employee or director, as applicable, of
the Company or one of its subsidiaries. An individual
electing to exercise an option under the Plan shall give
written notice of such election to the Company.
(d) Payment; Loans. The purchase price of any stock
purchased pursuant to the exercise of an option granted
hereunder shall be payable in full on the exercise date in
cash or by check or by surrender of shares of Class B Stock
or Common Stock of the Company registered in the name of the
optionee duly assigned to the Company with the assignment
guaranteed by a bank, trust company or member firm of the
New York Stock Exchange, or by a combination of the
foregoing. Any such shares so surrendered shall be deemed
to have a value per share equal to the fair market value of
a share of Common Stock on such date. Notwithstanding any
other provision of this Plan, the exercise price of an
option (or any portion thereof) shall not be payable by
surrender of Class B Stock or Common Stock of the Company
registered in the name of the optionee unless the shares to
be so surrendered have been held for such period of time and
in such manner as may be required by generally accepted
accounting principles in order to prevent the exercise of
such option to be deemed additional cash compensation to the
optionee chargeable against the earnings of the Company.
Subject to the approval of the Committee, or of
such person to whom the Committee may delegate such
authority (its "designee"), the Company may loan to the
optionee a sum equal to an amount which is not in excess of
100% of the purchase price of the shares so purchased, such
loan to be evidenced by the execution and delivery of a
promissory note; provided, however, that a designee shall
have no authority to approve loans to himself. Approval of
the Plan by a majority vote of the shareholders of the
Company shall constitute authorization under Section 714 of
the New York Business Corporation Law for any loan made
hereunder (including loans made pursuant to Section 16(d) of
the Plan) to any director of the Company.
Interest shall be paid on the unpaid balance of the
promissory note at such times and at such rate as shall be
determined by the Committee. Such promissory note shall be
secured by the pledge to the Company of shares having an
aggregate purchase price on the date of purchase equal to or
greater than the amount of such note. An optionee shall
have, as to such pledged shares, all rights of ownership
including the right to vote such shares and to receive
dividends paid on such shares, subject to the security
interest of the Company. Such shares shall not be released
by the Company from the pledge unless the proportionate
amount of the note secured thereby has been repaid to the
Company; provided, however, that shares subject to a pledge
may be used to pay all or part of the purchase price of any
other option granted hereunder or under any other stock
incentive plan of the Company under the terms of which the
purchase price of an option may be paid by the surrender of
shares, subject to the terms and conditions of this Plan
relating to the surrender of shares in payment of the
exercise price of an option. In such event, that number of
the newly purchased shares equal to the shares previously
pledged shall be immediately pledged as substitute security
for the pre-existing debt of the optionee to the Company,
and thereupon shall be subject to the provisions hereof
relating to pledged shares. All notes executed hereunder
shall be payable at such times and in such amounts and shall
contain such other terms as shall be specified by the
Committee or its designee or stated in the option agreement;
provided, however, that such terms shall conform to
requirements contained in any applicable regulations which
are issued by any governmental authority.
If employment of the optionee terminates for any reason
other than death, disability or retirement, any unpaid
balance remaining on any such promissory note shall become
due and payable upon not less than three months' notice from
the Company, which notice may be given at any time after
such termination; provided, however, that such unpaid
balance shall without notice, demand or presentation become
due and payable in any event five years following the date
of such termination. Notwithstanding any other provision of
this section, in the event that an optionee's employment is
terminated within two years after a Change in Control (as
defined in Section 7(b)(3)), any unpaid balance remaining on
any such promissory note shall be due and payable five years
from the date of the Change in Control.
In the case of termination of employment due to
disability or retirement, any unpaid balance on such
promissory note shall become due and payable five years from
the date of such termination. Notwithstanding the above, in
the case of death, at any time, of an employee who has
delivered a promissory note to the Company hereunder, any
unpaid balance remaining on such note on the date of his
death shall without notice, demand or presentation become
due and payable one year from such date. "Retirement" as
used herein shall mean early or normal retirement as defined
in the Company's retirement program.
(e) Rights as a Shareholder. The individual shall
have no rights as a shareholder with respect to any shares
covered by his grant until the date of issuance to him of
such shares. No adjustment shall be made for dividends or
other rights for which the record date is prior to the date
such stock is issued.
(f) Maximum Value of Shares. The aggregate fair
market value of stock (determined at the time the option is
granted) with respect to which incentive stock options are
exercisable for the first time by an employee during any
calendar year, under this or any other incentive stock
option plan of the Company or its subsidiaries, shall not
exceed $100,000.
(g) Non-Transferability of Rights. No grant shall be
transferable by the individual except by will or the laws of
descent or distribution. During the life of an individual,
the grant shall be exercisable only by him or his guardian
or legal representative.
Nonqualified options shall be evidenced by stock option
agreements in such form as the Committee shall approve from time
to time, which agreements shall indicate that the options are not
incentive options, shall conform with the Plan and shall contain
in substance the terms and conditions specified in parts (a),
(c), (d), (e), and (g) of this Section 6, plus such other terms
and conditions as the Committee shall designate. Except as
provided in Section 16 of the Plan, the purchase price per share
of stock under a nonqualified option shall be determined by the
Committee, in its discretion; provided, however, that the
purchase price shall in no case be less than the par value of the
shares subject to the option. Notwithstanding the provisions of
Section 6(g) the individual may also transfer grants of non-
qualified stock options to members of the individual's immediate
family, charitable institutions, or trusts or other entities
whose beneficiaries or beneficial owners are members of the
individual's immediate family and/or charitable institutions
pursuant to such conditions and procedures as the Committee may
establish. Any transfer permitted hereunder shall be subject to
the condition that the Committee receive evidence satisfactory to
it that the transfer is being made on a gratuitous or donative
basis and without consideration (other than nominal
consideration).
Without in any way limiting the authority of the Committee
to make grants hereunder, and in order to induce officers and
other key employees to retain ownership of shares in the Company,
the Committee shall have the authority (but not an obligation) to
include within any option agreement a provision entitling the
optionee to a further option (a "Re-load Option) in the event
the optionee exercises the option evidenced by the option
agreement, in whole or in part, by surrendering other shares of
the Company in accordance with this Plan and the terms and
conditions of the option agreement. Any such Re-load Option
shall be for a number of shares equal to the number of
surrendered shares, shall become exercisable in the event the
purchased shares are held for a minimum period of time not less
than three years, and shall be subject to such other terms and
conditions as the Committee may determine.
7. Alternate Rights. The Committee may, in its
discretion, award alternate rights to any officer or director who
is also an employee of the Company who is subject to Section
16(b) of the Securities Exchange Act of 1934, in conjunction with
incentive stock options or nonqualified stock options then being
granted to him or her, or to be attached to one or more such
options theretofore granted and at the time held unexercised by
such officer or director, which shall entitle such individual to
receive payment from the Company in accordance with the terms of
the alternate right so awarded. The alternate rights set forth
in Subsections (a) and (b) herein shall be subject to such terms
and conditions as the Committee shall determine from time to
time.
(a) Stock Appreciation Rights
(1) An alternate right granted under this
Subsection (a) (an "SAR") may be made part of an option
at the time of its grant or at any time thereafter up
to six months prior to the expiration of the option.
(2) An SAR will entitle the holder to elect to
receive, in lieu of exercising the option to which it
relates, an amount (in cash or in Common Stock, or a
combination thereof, all in the sole discretion of the
Committee) equal to 100% of the excess of:
(A) the fair market value per share of the
Company's Common Stock on the date of exercise of
such SAR, multiplied by the number of shares with
respect to which the SAR is being exercised, over
(B) the aggregate option price for such
number of shares.
(3) An SAR will be exercisable only to the extent
that it has a positive value and the option to which it
relates is exercisable.
(4) Notwithstanding the foregoing, no SAR shall
be exercisable (i) during the first six months after
the date of its grant, or (ii) if any related stock
option was exercised during the first six months after
the date of its grant; provided, however, that the
limitations contained in this paragraph (4) shall not
apply in the event death or disability of the grantee
occurs prior to the expiration of the six-month period.
(5) Upon exercise of an SAR, the option (or
portion thereof) with respect to which such SAR is
exercised shall be surrendered and shall not thereafter
be exercisable.
(6) Exercise of an SAR will reduce the number of
shares purchasable pursuant to the related option and
available under the Plan to the extent of the number of
shares with respect to which the SAR is exercised.
(b) Accelerated Rights.
(1) An alternate right granted under this
Subsection (b) (an "Accelerated Right") may be made
part of an option at the time of its grant or at any
time up to six months prior to its expiration, and
shall provide the optionee with the rights specified in
Subsection (b) (2) below.
(2) Upon the occurrence of a Change in Control
(as defined in Subsection (b) (3) below), all options
to which an Accelerated Right is attached (i) shall
become immediately and fully exercisable and (ii)
unless the Committee shall determine otherwise at the
time of grant, will entitle the holder, in lieu of
exercising the option, to elect to surrender all or
part of the option to the Company, provided that
written notice of the election (the "Election") is
given to the Company within the sixty (60) day period
from and after the Change in Control (the "Election
Period"). Upon making such an Election, the holder
shall be entitled to receive in cash, within thirty
(30) days of such Election, an amount equal to the
amount by which the Change in Control Price (as defined
in Subsection (b) (4) below) per share of the Company's
Common Stock on the date of such Election shall exceed
the exercise price per share of stock under the option,
multiplied by the number of shares of stock granted
under the option as to which the Accelerated Right
shall have been exercised (such excess referred to
herein as the "Aggregate Spread"); provided, however,
that if the option to which the Accelerated Right is
attached is held by an individual subject to Section 16
of the Securities Exchange Act of 1934 (the "Exchange
Act"), the Election provided for herein shall not be
made prior to six months from the date of grant of the
Accelerated Right. Notwithstanding any other provision
of the Plan, if the end of the Election Period is
within six months of the date of grant of an
Accelerated Right held by an individual subject to
Section 16 of the Exchange Act, the option to which the
Accelerated Right is attached shall be canceled in
exchange for a cash payment equal to the Aggregate
Spread on the day which is six months and one day after
the date of grant of such Accelerated Right.
(3) "Change in Control" shall mean (i) the
acquisition by any individual, partnership, firm,
corporation, association, trust, unincorporated
organization or other entity, or any syndicate or group
deemed to be a person under Section 14(d)(2) of the
Exchange Act (a "person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 30% or more of the Company's
outstanding shares of stock having general voting
rights, or (ii) individuals who currently constitute
the Board (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board,
provided, however, that any individual becoming a
director subsequent to the date hereof whose election
or nomination was approved by a vote of at least a
majority of the directors then comprising the Incumbent
Board shall be deemed a member of the Incumbent Board.
(4) In the event of a Change in Control under
Subsection (b) (3) (ii) above, "Change in Control
Price" shall mean the highest reported sales price of a
share of Common Stock on the Composite Tape for New
York Stock Exchange Listed Stocks (the "Market High")
during the sixty (60) day period prior to and ending on
the date of the Change in Control. If the Change of
Control is the result of a transaction or series of
transactions described in Subsection (b) (3) (i) above,
the "Change in Control Price" shall mean the higher of
(i) the highest price per share of the Common Stock
paid in such transaction or series of transactions by
the person having made the acquisition, and (ii) the
Market High as determined above. Notwithstanding the
foregoing, with respect to any incentive option, the
Change in Control Price shall not exceed the market
price of a share of Common Stock (to the extent
required by Section 422A of the Internal Revenue Code
of 1986, as amended) on the date of surrender thereof.
8. Stock Grants. The Committee may make a grant,
evidenced by such written agreement as the Committee shall, from
time to time, prescribe, to any officer or other key employee
consisting of a specified number of shares of the Company's Class
B stock, as defined in Section 4 ("Stock Grants"). A Stock Grant
shall be neither an option nor a sale. The Committee, in its
discretion, shall decide whether any Stock Grant shall be subject
to certain conditions and restrictions, such conditions and
restrictions designated by the Committee. In such a case,
appropriate written notice of the conditions and restrictions
shall be set forth in the document effecting the grant
("Restricted Stock"). Restricted Stock shall be subject to, but
not limited to, the following conditions and restrictions:
(a) Restricted Stock may not be sold or otherwise
transferred by the employee until ownership vests at such
time and in such manner as specified by the Committee.
(b) Restricted Stock may be offered for sale to the
Company after all conditions are fulfilled and all
restrictions lapse, and the Company shall be obligated to
purchase all shares so offered at the then fair market value
of the Company's Common Stock or, at the Company's sole
discretion, to issue in exchange for any or all such
Restricted Stock the equivalent number of shares of the
Company's Common Stock.
(c) The Company may at any time exchange any shares of
Class B Stock held as Restricted Stock for an equivalent
number of shares of its Common Stock encumbered by the same
restrictions as those shares exchanged, in which case an
appropriate restrictive legend shall be affixed to the
Common Stock certificate(s).
(d) If the holder of Restricted Stock shall die while
still in the employ of the Company or a subsidiary prior to
the lapse of restrictions, the Company shall be obligated to
purchase all such shares at the then fair market value of
its Common Stock if and as offered by the employee's
executor.
(e) Except as provided in Section 8(d) or as otherwise
determined by the Committee, all rights and title to
Restricted Stock granted to a participant under the Plan
shall terminate and be forfeited upon termination of the
participant's employment with the Company or other failure
to fulfill all conditions and restrictions applicable to
such Restricted Stock.
(f) Except for the restrictions set forth herein and
those specified by the Committee, a holder of Restricted
Stock shall possess all the rights of a holder of the
Company's Class B Stock.
All other provisions of the Plan not inconsistent with
this Section shall apply to Stock Grants or the holder
thereof, as appropriate, unless otherwise determined by the
Committee. In addition, a grantee may elect to have a
portion of the stock otherwise issuable to him or her
pursuant to a Stock Grant withheld in order to satisfy
applicable Federal, state and local withholding tax
requirements, provided that such election complies with the
following:
(1) The election shall be submitted to the
Company in writing and shall be irrevocable;
(2) The value of the shares subject to the
withholding election shall not exceed the maximum
marginal tax rate to which the grantee is subject in
connection with the Stock Grant; and
(3) If made by an individual subject to Section
16 of the Exchange Act, the election shall be made
during the 10-day period beginning on the third
business day following the date of release of the
Company's quarterly or annual summary statements of
sales and earnings and ending on the twelfth business
day following such date or, as an alternative in the
case of a Restricted Stock Grant, at least six months
prior to the lapse of the restrictions.
For purposes of the foregoing, the shares withheld
shall be deemed to have a value per share equal to the fair
market value of the shares on the date the tax liability
arises, and any balance due on the liability shall be
payable in cash or by delivery of a check.
9. Recapitalization. In the event there is any
recapitalization in the form of a stock dividend, distribution,
split, subdivision or combination of shares of Common stock of
the Company, resulting in an increase or decrease in the number
of Common shares outstanding, and there is not a corresponding
recapitalization in the Class B shares, the number of Class B
shares then available for grants or options under the Plan or
covered by then outstanding grants or options or authorized
pursuant to Section 16 of the Plan shall not change. In such a
case, the award limits set forth in Section 4(b) hereof shall
also not change. However, a proportionate adjustment shall be
made in the number of shares of Common stock the aggregate value
of which will determine the purchase price of a Class B share or
which are exchangeable by the Company for a Class B share. In the
event there is a recapitalization resulting in an increase or
decrease in the number of Common shares outstanding and there is
a corresponding increase or decrease in the number of Class B
shares outstanding, the number of Class B shares available or
authorized under the Plan, the number of shares covered by
outstanding grants or options and the price per share thereof in
each such grant or option, and the award limits set forth in
Section 4(b) of the Plan shall be increased or decreased
proportionately, as the case may be, without change in the
aggregate purchase price.
10. Reorganization. If, pursuant to any reorganization,
sale or exchange of assets, consolidation or merger, outstanding
Class B Stock is or would be exchanged for other securities of
the Company or of another company which is a party to such
transaction, or for property, any option or other award under the
Plan theretofore granted shall apply to the securities or
property into which the Class B Stock covered thereby would have
been changed or for which such Class B Stock would have been
exchanged had such Class B Stock been outstanding at the time. In
any of such events, the total number and class of shares then
remaining available for issuance under the Plan (including shares
reserved for outstanding options and awards and shares available
for future grant of options or other award under the Plan or
authorized under Section 16 hereof) shall likewise be adjusted so
that the Plan shall thereafter cover the number and class of
shares equivalent to the shares covered by the Plan immediately
prior to such event. The award limits designated in Section 4(b)
shall also be adjusted in such a case so that the Plan shall
thereafter cover the number and class of shares equivalent to the
shares covered by the Plan immediately prior to such event.
11. Compliance with Code Section 162(m). At all times when
Code Section 162(m) is applicable, all awards granted under this
Plan shall comply with the requirements of Code Section 162(m);
provided, however, that in the event the Committee determines
that such compliance is not desired with respect to any award or
awards available for grant under the Plan, then compliance with
Code Section 162(m) will not be required. In addition, in the
event that changes are made to Code Section 162(m) to permit
greater flexibility with respect to any award or awards available
under the Plan, the Committee may, subject to the terms of the
Plan, make any adjustments it deems appropriate.
12. Performance-Based Awards. The performance measure(s) to
be used for purposes of grants to Covered Employees which are
designed to qualify for the Performance-Based Exception, the
attainment of which may determine the degree of payout and/or
vesting with respect to such awards, shall be chosen from among:
(a) Earnings per share;
(b) Net income (before or after taxes);
(c) Return on assets, return on equity, and
return on sales;
(d) Cash flow return on investments which equals net
cash flow divided by shareholders' equity;
(e) Share price, growth in share price, and total
shareholder return; and
(f) Changes in Economic Value Added.
The Committee shall have the discretion to adjust the
determinations of the degree of attainment of the preestablished
performance goals; provided, however, that awards which are
designed to qualify for the Performance-Based Exception, and
which are held by a Covered Employee, may not be adjusted upward
(the Committee shall retain the discretion to adjust such awards
downward).
In the event that applicable tax and/or securities laws
change to permit Committee discretion to alter the governing
performance measures without obtaining shareholder approval of
such changes, the Committee shall have sole discretion to make
such changes without obtaining shareholder approval. In addition,
in the event that the Committee determines that it is advisable
to grant awards which shall not qualify for the Performance-Based
Exception, the Committee may make such grants without satisfying
the requirements of Code Section 162(m).
13. Transfer of Certain Shares. In addition to any other
restrictions hereunder, Class B shares issued pursuant to this
Plan may not be conveyed, transferred, or encumbered, except as
follows:
(a) Such shares may be pledged to the Company under
Section 6(d) of the Plan.
(b) Subject to any security interest of the Company in
such shares as established under Section 6(d) of the Plan,
such shares may be transferred by will or by the laws of
descent or distribution, or may be transferred by gift to
members of an employee's family or their descendants or to
trusts solely for their benefit.
(c) Such shares may be offered for sale to the Company
at any time by a grantee, his legal representative or
transferee or such other person who acquires such shares by
bequest or inheritance. The Company shall be obligated to
purchase all shares so offered at the current fair market
value of the Company's Common Stock on the date of such
offer, provided, however, that the Company may, in its
discretion, issue in exchange for any or all Class B shares
so offered an equivalent number of shares of the Company's
Common Stock and provided further that the portion of any
loan secured by such shares under Section 6(d) has been
fully paid on the date of such offer or is paid forthwith.
Upon demand by the Company at any time, the Company may
exchange any shares of Class B Stock outstanding which are in the
possession of the Company as collateral security for a note
executed under Section 6(d) of the Plan for an equivalent number
of shares of its Common Stock, which Common Stock shall be held
by the Company as collateral security on the same basis as the
Class B Stock was held.
14. General Restriction. Each grant shall be subject to
the requirement that if at any time the Board of Directors shall
determine, in its reasonable discretion, that the listing,
registration or qualification of the shares subject to such grant
upon any securities exchange or under any state or federal law,
or that the consent or approval of any government regulatory
body, is necessary or advisable as a condition of, or in
connection with, such grant or the issue or purchase of shares
thereunder, such grant shall be subject to the condition that
such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not
reasonably acceptable to the Board of Directors.
15. Termination of Employment or Director Status.
(a) Incentive Stock Options. Incentive stock options,
to the extent exercisable as of the termination date, may be
exercised within three months of the date of termination
unless such termination results from disability (as defined
in Section 105(d) (4) of the Internal Revenue Code, as
amended) or death, in which case such options shall be
exercisable by the optionee or his legal representative,
heir or devisee, as appropriate, within one year from the
date of disability or death.
(b) Nonqualified Stock Options. Nonqualified stock
options, to the extent exercisable as of the date of
termination, may be exercised within three months of the
date of termination unless such termination results from
death, disability (as defined in Section 105(d)(4) of the
Internal Revenue Code, as amended) or retirement (as defined
in the Company's retirement plan or age 65), in which case
such options may be exercised by the optionee, his legal
representative, heir or devisee, as appropriate, within five
years from the earliest of the dates of death, disability or
retirement.
(c) Exercise Period Not Extended. Nothing contained
in this Section 15 shall under any circumstances be
interpreted as or have the effect of extending the period
during which an option may be exercised beyond the terms or
the expiration date provided in such option agreement or
established by law or regulation. Death of an optionee
subsequent to termination shall not extend such periods.
Whether leave of absence shall constitute a termination of
employment for purposes of the Plan shall be determined by
the Committee.
(d) Work in Competing Capacity.
(1) Notwithstanding anything to the contrary
contained in the Plan, the Committee, in its
discretion, may include as a term of any employee's
option agreement a proviso that, if the employee
voluntarily terminates his or her employment with the
Company or is terminated for misconduct or failure or
refusal to perform his or her duties of employment (as
determined by the Committee), and within a period of
one year after such termination shall, directly or
indirectly, engage in a competing activity (as defined
below), the employee shall be required to remit to the
Company, with respect to the exercise of any option by
the employee on or after the date six months prior to
such termination1 an amount in cash or a certified or
bank check equal to 100% of the excess of:
(A) the fair market value per share of the
Company's Common Stock on the date of exercise of
such option, multiplied by the number of shares
with respect to which the option is exercised,
over
(B) the aggregate option price for such
number of shares.
(2) Notwithstanding anything to the contrary
contained in the Plan, the Committee may, in its
discretion, as a condition of any Stock Grant to an
employee, provide that, if the employee voluntarily
terminates his or her employment with the Company or is
terminated for misconduct or failure or refusal to
perform his or her duties of employment (as determined
by the Committee), and within a period of one year
after such termination shall, directly or indirectly,
engage in a competing activity (as defined below), the
employee shall be required to remit to the Company,
with respect to any unrestricted Stock Grant which was
made or any Restricted Stock Grant which became fully
vested on or after the date six months prior to such
termination, the fair market value of the shares
subject to such grant on the date of the grant (as to
unrestricted stock) or the date of vesting (as to
Restricted Stock). Such remittance shall be payable in
cash or by certified or bank check or by delivery of
shares of Class B Stock or Common Stock of the Company
registered in the name of the grantee duly assigned to
the Company with the assignment guaranteed by a bank,
trust company or member firm of the New York Stock
Exchange, or by a combination of the foregoing. Any
such shares so delivered shall be deemed to have a
value per share equal to the fair market value of the
shares on such date.
(3) For purposes of this Section 15(d), an
employee is deemed to be "engaged in a competing
activity" if he or she owns, manages, operates,
controls, is employed by, or otherwise engages in or
assists another to engage in any activity or business
which competes with any business or activity of the
Company in which the employee was engaged or involved,
or which, as of the time of the employee's termination,
was in a state of research or development by any such
business of the Company.
(4) No provision or condition implemented by the
Committee under subparagraphs (1) and (2) above shall
be interpreted as or deemed to constitute a waiver of,
or diminish or be in lieu of, any other rights the
Company may possess as a result of the employee's
direct or indirect involvement with a business
competing with the business of the Company.
(5) Notwithstanding the foregoing, a provision or
condition implemented by the Committee under
subparagraph (1) or (2) above shall become null and
void, and therefore automatically shall be deemed
waived by the Company, upon a Change in Control (as
defined in Section 7(b)(3) of this Plan), and the
Committee shall incorporate such a waiver into any
provision or condition implemented under subparagraph
(1) or (2) above.
16. Director Stock Options.
(a) Each director of the Company who is not an
employee of the Company or any subsidiary shall, on the
fourth Tuesday of July following the director's election at
the annual meeting of shareholders (commencing with July
1990)and on the fourth Tuesday of each July thereafter
during such director's term, automatically be granted
nonqualified options to purchase Class B Stock at a purchase
price per share determined in accordance with Subsection
6(b) of the Plan. The number of shares subject to each such
option shall be equal to (i) two times the average of all
compensation paid to non-employee directors, divided by (ii)
the fair market value per share of the Company's Common
Stock on the date of grant. The average of non-employee
director compensation shall be determined by dividing the
number of non-employee directors who were eligible for
director stock options throughout the entire twelve (12)
month period ending on the date of the Annual Meeting of the
Shareholders of the Company preceding the grant (the
"Calculation Year") into the aggregate compensation paid or
payable (including compensation which is deferred) to all
such directors with respect to services rendered to the
Company as directors during the Calculation Year. A
director's stock option granted hereunder shall be fully
vested on the date of grant.
(b) Transition grants of nonqualified options shall
automatically be made to non-employee directors who are not
up for election at the 1990 annual meeting of shareholders.
The transition grants shall be made at the times and shall
be based upon the formula set forth in Section 16(a) for the
number of years remaining in such director's term following
the 1990 shareholder meeting. A transition grant made
hereunder shall be fully vested upon the date of grant.
(c) The grants to directors provided for in this
Section 16 shall in all respects supersede, and be in lieu
of, any automatic grants to directors which would otherwise
be made pursuant to the Company's 1987 Stock Incentive Plan,
it being intended that the only options to be granted to
directors shall be made pursuant to this Plan. Approval of
this Plan by a majority vote of the shareholders of the
Company shall constitute approval by the shareholders of the
cessation of future grants to directors under the 1987 Stock
Incentive Plan.
(d) Automatic director stock option grants shall only
be made if, as of each date of grant, the director (i) is
not an employee of the Company or any subsidiary, and (ii)
has served on the Board of Directors continuously since the
commencement of his term.
(e) A director may, upon the exercise of director
stock options, request that the Company loan to him a sum
equal to an amount which is not in excess of 100% of the
exercise price of the shares so purchased, and the loan
shall be made to the director, and shall be subject to the
terms and conditions set forth in Section 6(d) of the Plan,
except that "retirement" shall be as defined in the
Company's policy for directors. No member of the Committee
shall participate in the approval of loans to himself.
(f) Director stock options, as grants to directors of
the Company who are subject to Section 16(b) of the Exchange
Act, shall automatically include Accelerated Rights as
provided for in Subsection 7(b) of the Plan.
(g) In the event that the number of shares of the
Company's Class B Stock available for future grant under the
Plan is insufficient to make all automatic grants required
to be made on such date, then all non-employee directors
entitled to a grant on such date shall share ratably in the
number of options on shares of the Company's Class B Stock
available for grant under the Plan.
(h) Except as expressly provided in this Section 16,
director stock options shall be subject to the terms and
conditions of Section 6 for nonqualified stock options and
in accordance with the Plan.
17. Definitions. Any terms or provisions used herein which
are defined in Sections 83, 421, 422A or 425 of the Internal
Revenue Code of 1986 or the regulations thereunder or
corresponding provisions of subsequent laws and regulations in
effect at the time grants or options are made hereunder shall
have the meanings as therein defined.
18. Amendment of the Plan. The Plan may at any time be
terminated, modified, or amended by a majority vote of the
outstanding shares of the Company having general voting power or,
to the extent authorized or permitted by applicable law, rule or
regulation, by the Board of Directors of the Company or the
Committee.
19. Duration of the Plan. The Plan shall remain in effect
until all shares subject to, or which may become subject to, the
Plan shall have been conveyed pursuant to the provisions of the
Plan.
SUPPLEMENTAL INFORMATION CONCERNING THE
1990 STOCK INCENTIVE PLAN
FEDERAL INCOME TAX CONSEQUENCES
Incentive Stock Options
Neither the grant nor the exercise of an incentive option
will result in taxable income to the optionee. Provided that the
disposition of stock acquired pursuant to the exercise of an
incentive option occurs at least two years after the grant of the
option and one year after the transfer of the shares upon
exercise, the gain or loss realized on disposition would be
treated as a long-term capital gain or loss. The gain or loss
would be equal to the difference between the option price and the
amount realized from the disposition.
A "disqualifying disposition" occurs if stock acquired upon
the exercise of an incentive option is disposed of before the
expiration of either the one-year or two-year holding periods
referred to above. Any amount received upon a disqualifying
disposition generally will be taxable as ordinary income in the
year of disposition to the extent that the lesser of (a) the fair
market value of the shares on the date the option was exercised,
or (b) the amount realized from such disposition, exceeds the
option price.
Any amount realized from a disqualifying disposition in
excess of the fair market value of the shares on the date of
exercise will be treated as long- or short-term capital gain,
depending on the holding period of the shares. If the amount
realized is less than the option price, the loss will be treated
as long- or short-term capital loss, depending upon the holding
period of the shares.
No deduction will be allowed to the Company for federal
income tax purposes upon the grant or exercise of an incentive
option. At the time of a disqualifying disposition by an
optionee, the Company will be entitled to a deduction for the
amount taxable to the optionee as ordinary income.
While it is possible to pay the option price under an
incentive option with previously acquired stock of the Company,
it is not possible to do so by making a series of connected
option exercises. Optionees are urged to consult their own tax
advisors and the Company if they contemplate using stock to pay
the exercise price.
Since 1983, the excess of the fair market value of stock on
the date of exercise of an incentive option over the option price
has been an "item of tax preference." Items of tax preference
will be taken into account for purposes of the alternative
minimum tax. Beginning in 1987, this tax is imposed at the rate
of 21% of the alternative minimum tax base and is payable to the
extent that it exceeds the regular income tax. The alternative
minimum tax base is generally equal to adjusted gross income,
less certain itemized deductions, less an exemption amount, plus
items of tax preference.
Nonqualified Stock Options
No income will be recognized by an optionee at the time a
nonqualified option is granted.
The rules for recognizing income upon exercise of the option
depend on whether the optionee is an "insider" (i.e., is subject
to Section 16(b) of the Securities Exchange Act of 1934). In the
case of a non-insider, ordinary income will be recognized by the
optionee on the date he exercises a nonqualified stock option.
The amount of income will be equal to the excess of the fair
market value of the shares on the date of exercise over the
option price. The holding period for capital gain and loss
purposes will begin on the date of exercise.
In the case of an insider, ordinary income will be
recognized by the optionee on the first day on which a sale of
the stock at a profit would not expose the optionee to Section
16(b) liability (the "date of taxation"). The amount of income
will be equal to the excess of the fair market value of the
shares on the date of taxation over the option price. The
holding period for capital gain and loss purposes will begin on
the date of taxation. An insider may elect to be taxed according
to the rules applicable to non-insiders by filing an election
with the Internal Revenue Service within 30 days from the date of
exercise.
The Company will be entitled to a deduction at the time that
the optionee is required to recognize income from the option
exercise. The deduction will be equal to the amount which is
taxable to the optionee as ordinary income as a result of
exercise.
If the option price of a nonqualified stock option is paid
by surrendering stock of the Company, the optionee will recognize
no gain or loss on the shares that he surrenders to pay the
option price (the "surrendered shares"). The shares that he
receives upon exercise of the option in excess of the surrendered
shares will be called the "additional shares." The optionee will
recognize ordinary income upon the exercise equal to the fair
market value of the additional shares on the date of exercise,
less any cash paid toward the option price. The basis of the
additional shares will be equal to their fair market value on the
date of exercise, and their holding period will begin on that
date. The shares that the optionee receives upon exercise equal
to the surrendered shares will have a basis and holding period
equal to that of the surrendered shares.
Alternate Rights
No income will be recognized by a recipient at the time a
Stock Appreciation Right or Accelerated Right is granted. In the
case of a non-insider, ordinary income will be recognized by the
recipient on the date the non-insider exercises any such right.
The amount of income will be equal to the sum of (a) the amount
of cash received, and (b) the fair market value of the Company's
stock received, determined as of the date of exercise. The
holding period for capital gain and loss purposes will begin on
the date of exercise.
In the case of an insider, ordinary income attributable to
stock received upon the exercise of a Stock Appreciation Right or
Accelerated Right will be recognized on the first day on which a
sale of the stock at a profit would not expose the recipient to
Section 16(b) liability (the "date of taxation"). The amount of
income will be equal to the fair market value of the shares on
the date of taxation. The holding period for capital gain and
loss purposes will begin on the date of taxation. Any cash
received by an insider upon exercise of a Stock Appreciation
Right will be taxed as ordinary income upon receipt. An insider
may elect to be taxed according to the rules applicable to non-
insiders by filing an election with the Internal Revenue Service
within 30 days from the date of exercise.
The Company will be entitled to a deduction at the time that
the optionee is required to recognize income. The deduction will
be equal to the amount which is taxable as ordinary income as a
result of the exercise.
Cash received pursuant to the automatic payment on an
Accelerated Right due to a change in control will be taxed as
ordinary income on the date it is received.
Stock Awards
No income will be recognized by a recipient at the time that
a Restricted Stock award is made. Ordinary income will be
recognized on the day when an unrestricted stock award is made
or, as to Restricted Stock, when the conditions and restrictions
set forth in the grant with respect to any shares of stock are
fulfilled (the "date of taxation"). The amount of such income
will be equal to the fair market value of the shares on the date
of taxation. The holding period of the shares for capital gain
and loss purposes will begin on the date of taxation.
Dividend payments made with respect to a share of stock
prior to the date of taxation will constitute ordinary
compensation income.
The Company will be entitled to a deduction equal to the
amount of ordinary income recognized by the recipient of a stock
award, including income resulting from dividend payments or from
the fulfilling of the conditions and restrictions.
Subsequent Dispositions
The basis of a share acquired pursuant to the exercise of a
nonqualified option, Stock Appreciation Right, or Accelerated
Right, or pursuant to a stock award will be the amount included
in ordinary income due to receipt of that share.
When the recipient disposes of shares acquired pursuant to a
nonqualified stock option, a Stock Appreciation Right, an
Accelerated Right, or a stock award, any amount realized in
excess of the basis of the shares will be treated as a long- or
short-term capital gain, depending on the holding period of the
shares. If the amount realized is less than the basis of the
shares, the loss will be treated as long- or short-term capital
loss, depending on the holding period of the shares.
STATE INCOME TAX CONSEQUENCES
New York State Income Tax Consequences
The New York State income tax treatment of incentive and
nonqualified stock options, Stock Appreciation Rights,
Accelerated Rights and stock awards generally is the same for New
York State residents as the federal income tax treatment.
Ordinary income from the disqualifying disposition of incentive
stock option stock, from the exercise of a nonqualified stock
option, Stock Appreciation Right, or Accelerated Right, and from
a stock award will be eligible for the 9% New York State maximum
tax on personal service income. The item of tax preference
arising from the exercise of an incentive stock option will be
subject to the New York State minimum tax, and will also reduce,
dollar for dollar, the income eligible for the 9% maximum tax.
Other State Income Taxes
Participants in the Plan should consult their tax advisors
concerning the applicability of any other state law which may
impose income taxes in connection with Grants and Director Stock
Options under the Plan.
DESCRIPTION OF BAUSCH & LOMB
COMMON AND CLASS B STOCK
The Company's Certificate of Incorporation authorizes the
issuance of 100,000,000 shares of Common Stock, par value $.40
per share, 6,875,000 shares of Class B Stock, par value $.08 per
share, 10,000 shares of 4% Cumulative Preferred Stock, par value
$100 per share, and 25,000,000 shares of Class A Preferred Stock,
par value $1 per share.
The shares of Common Stock and of Class B Stock are equal in
all respects except that the par value of the Common Stock is
$.40 per share and the par value of the Class B Stock is $.08 per
share, and except as otherwise specified in this paragraph.
Shares of Class B Stock are issuable only under the Plan and the
Company's 1975, 1982 and 1987 stock option plans. All such
shares are subject to restrictions on transferability, as
described in the plans. The Company's Common Stock is listed on
the New York Stock Exchange, whereas the Class B Stock is not so
listed.
Subject to the prior payment, or declaration and setting
apart for payment, of dividends on any 4% Cumulative Preferred
Stock hereafter issued and to any preferred dividends to which
Class A Preferred Stock hereafter issued may be entitled, the
holders of the Common Stock and of the Class B Stock are entitled
to receive (equally per share) such dividends as the Board of
Directors may from time to time lawfully declare.
The Certificate of Incorporation of the Company provides
that, if any of its 4% Cumulative Preferred Stock is issued and
outstanding, there shall be certain limitations upon the amount
of dividends (other than stock dividends) which may be paid on
any class of stock junior to such 4% Cumulative Preferred Stock
(which would include both the Common Stock and the Class B
Stock).
The holders of Common Stock and of Class B Stock, voting
together as a single class (except on such matters as to which
they each may be required by law to vote separately as a class),
possess the full and exclusive voting power for the election of
directors and for all other purposes, except to the extent that
Class A Preferred Stock hereafter issued may be granted voting
rights, and subject to any rights of 4% Cumulative Preferred
Stock hereafter issued to vote as to certain matters as described
in the Company's Certificate of Incorporation. Each share of
Common Stock and each share of Class B Stock is entitled to one
vote. The shares of Common Stock and the shares of Class B Stock
do not have cumulative voting rights.
In the event that the Company is liquidated, dissolved or
wound up, the holders of Common Stock and of Class B Stock are
entitled to receive all assets available for distribution to
shareholders, after there shall have been paid or set apart for
the holders of any 4% Cumulative Preferred Stock and the holders
of any Class A Preferred Stock the full preferential amounts to
which they are entitled.
The holders of Common Stock and the holders of Class B Stock
have no pre-emptive rights. All such stock issued under the Plan
will, when paid for in cash, be fully paid and non-assessable.
Shares of Class B Stock, to the extent that they are pledged to
secure loans by the Company, are considered not to be fully paid
and to be assessable, but only to the extent of the amounts owed
on the promissory notes secured thereby.
Any amendments to or changes in the description of stock
reported on documents filed by the Company pursuant to Sections
13 and 15(d) of the Securities Exchange Act of 1934 made
subsequent to the date of these materials are incorporated herein
by reference.
RESTRICTIONS ON REOFFER OR RESALE OF COMMON STOCK
These materials may not be relied upon for reoffers or
resales by "affiliates" of the Company of shares of the Company's
Common Stock acquired by them in exchange for shares of Class B
Stock. According to the definition set forth in Rule 405 under
the Securities Act of 1933, an "affiliate" of the Company is "a
person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with" the Company. Affiliates must effect such reoffers
or resales either in accordance with Rule 144 under the
Securities Act of 1933 or pursuant to a separate prospectus
covering such reoffer or resale. Persons who are not affiliates
of the Company generally are entitled to make such reoffers or
resales without such restrictions.
In addition, every person who is directly or indirectly the
beneficial owner of more than 10% of the outstanding shares of
the Company's Common Stock and every person who is a director or
officer of the Company is subject to the provisions of Section
16(b) of the Securities Exchange Act of 1934, which restrict the
ability of such persons to sell and purchase or purchase and sell
any equity security of the Company within any period of less than
six months.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by Bausch &
Lomb Incorporated (the "Company") with the Securities and
Exchange Commission, are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal
year ended December 30, 1989.
2. The Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1990, and all other reports filed by the
Company pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 since December 30, 1989.
All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange
Act of 1934 prior to the filing of a post-effective amendment
which indicates that all securities offered have been sold or
which deregisters all securities then remaining unsold, also
shall be deemed to be incorporated by reference and to be a part
of these materials from the date of filing of such documents.
Upon request, the company will provide without charge to
each person to whom a copy of these materials has been delivered
a copy of any and all of the information that has been
incorporated by reference herein, except exhibits, as well as any
other document required to be delivered to participants in the
Plan pursuant to Rule 42B(b) under the Securities Act of 1933.
Requests should be directed to Robert B. Stiles, Senior Vice
President and General Counsel, Bausch & Lomb Incorporated, One
Bausch & Lomb Place, Rochester, New York 14604-2701 (telephone
(716) 338-6000).