Exhibit 10
Schering-Plough Corporation
1997 STOCK INCENTIVE PLAN
1. PURPOSE OF PLAN
The purpose of the Schering-Plough Corporation 1997 Stock
Incentive Plan (hereinafter called the "Plan") is to aid
Schering-Plough Corporation (hereinafter called the "Company")
and its subsidiaries and affiliates (whether incorporated or
unincorporated) in securing and retaining employees of
outstanding ability and to provide additional motivation to such
employees to exert their best efforts on behalf of the Company
and its subsidiaries and affiliates. The Company expects that it
will benefit from the added interest which such employees will
have in the welfare of the Company as a result of their ownership
or increased ownership of the Company's Common Shares ("Common
Stock").
2. STOCK SUBJECT TO THE PLAN
Subject to adjustment as provided in Paragraph 12, the total
number of shares of Common Stock of the Company that may be
awarded or optioned under the Plan is 18,000,000; provided that
the maximum number of such shares which may be awarded in the
form of Deferred Stock Units (hereinafter sometimes called
"Units") is 7,500,000. The shares may consist, in whole or in
part, of unissued shares or treasury shares. Any shares subject
to an award hereunder that shall not be issued because of the
forfeiture of such award and any shares optioned hereunder that
shall cease to be subject to the option may again be awarded or
optioned under the Plan. In addition to the foregoing
limitations, no participant may be granted awards or options
covering in excess of 750,000 shares of Common Stock in any
fiscal year, subject to changes in capital as described in
Paragraph 12.
3. ADMINISTRATION
The Executive Compensation and Organization Committee of the
Board of Directors (hereinafter called the "Committee")
consisting of two or more members of the Board of Directors,
shall administer the Plan. Each member of the Committee shall be
a "non-employee director" within the meaning of Rule 16b-3(b)(3)
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or any successor definition adopted by the
Securities and Exchange Commission, and an "outside director" for
purposes of Section 162(m)(4) of the Internal Revenue Code of
1986, as amended (the "Code"). The Committee shall have the
authority, consistent with the Plan, to determine the provisions
and timing of the awards or options to be granted, to interpret
the Plan and the awards and options granted under the Plan, to
adopt, amend and rescind rules and regulations for the
administration of the Plan and the awards and options, including
rules with respect to limitations on the utilization of shares of
Common Stock of the Company in full or part payment of the option
price under Paragraph 6(d) of the Plan, and generally to conduct
and administer the Plan and to make all determinations in
connection therewith which may be necessary or advisable.
Committee decisions and selections shall be made by a majority of
its members present at a meeting at which a quorum is present,
and shall be final. Any decision or selection reduced to writing
and signed by all of the members of the Committee shall be as
fully effective as if it had been made at a meeting duly held.
The Committee may delegate some or all of its authority under the
Plan as the Committee deems appropriate; provided, however, that
no such delegation may be made that would (i) cause options or
awards under the Plan to cease to be exempt from Section 16(b) of
the Exchange Act or (ii) cause a Performance Award (as defined in
Paragraph 8) to cease to qualify for exemption from the deduction
limitations under Section 162(m) of the Code.
4. ELIGIBILITY
Employees, including officers of the Company and its
subsidiaries and affiliates, who are from time to time
responsible for the performance, growth and protection of the
business of the Company or its subsidiaries and affiliates are
eligible to be granted awards and options under the Plan. The
employees who shall receive awards or options under the Plan
shall be selected from time to time by the Committee, in its sole
discretion, from among those eligible, and the Committee shall
determine, in its sole discretion, the number of shares to be
covered by the award or awards and by the option or options
granted to each such employee selected.
5. LIMITATIONS
No award or option may be granted under the Plan after
December 31, 2002, but awards or options theretofore granted may
extend beyond that date.
6. TERMS AND CONDITIONS OF STOCK OPTIONS
All options granted under this Plan shall be subject to all
the applicable provisions of the Plan, including the following
terms and conditions, and to such other terms and conditions not
inconsistent therewith as the Committee shall determine.
(a) The option price per share shall be determined by the
Committee but shall not be less than 100% of the fair market
value at the time the option is granted. The fair market value
shall be the closing price at which shares of such stock are
traded on the New York Stock Exchange on the day on which the
option is granted. If there is no sale of the shares on such
Exchange on the date the option is granted, the mean between the
bid and asked prices on such Exchange at the close of the market
on such date shall be deemed to be the fair market value of the
shares. In the event that the method for determining the fair
market value of the shares provided for in this Paragraph 6(a)
shall not be practicable, then the fair market value per share
shall be determined by such other reasonable method as the
Committee shall, in its discretion, select and apply at the time
of grant of the option concerned.
(b) Except as otherwise provided in Paragraphs 6(f), 6(g),
and 6(h), each option shall be exercisable during and over such
period ending not later than ten years from the date it was
granted, as may be determined by the Committee and stated in the
option.
(c) Except as provided in Paragraphs 6(f), 6(g), 6(h), and
13, no option shall be exercisable during the year ending on the
first anniversary date of the granting of the option or if the
Committee so determines at the time of grant or subsequent
thereto, during such lesser period not less than six months and
one day from the date of grant.
(d) Each option may be exercised by giving written notice
to the Company specifying the number of shares to be purchased,
which shall be accompanied by payment in full including
applicable taxes, if any. Payment for taxes shall be in cash, in
shares of Common Stock or in shares of Common Stock withheld by
the Company from shares issuable upon exercise of the option, or
such other consideration as shall be approved by the Committee.
Payment of the option price shall be in cash, or in shares of
Common Stock of the Company already owned by the optionee for at
least six months before the date of payment, or by a combination
of cash and shares of Common Stock of the Company already owned
by the optionee for at least six months before the date of
payment. (When payment of taxes or the option price is made in
Common Stock, the Common Stock shall be valued at the closing
price at which the shares are traded on the New York Stock
Exchange on the last business day before the day on which the
option is exercised.) No option shall be exercised for less than
the lesser of 100 shares or the full number of shares for which
the option is then exercisable. No optionee shall have any
rights to dividends or other rights of a shareholder with respect
to shares subject to his option until he has given written notice
of exercise of his option, paid in full for such shares
(including taxes) and, if requested, given the representation
described in Paragraph 9.
(e) Notwithstanding the foregoing Paragraph 6(d), each
option granted hereunder may, at the time of grant or subsequent
thereto, provide the right either (i) to exercise such option in
whole or in part without any payment of the option price, or
(ii) to request the Committee to permit, in its sole discretion,
such exercise without any payment of the option price. If an
option is exercised without a payment of the option price, the
optionee shall be entitled to receive that number of whole shares
as is determined by dividing (a) an amount equal to the fair
market value per share on the date of exercise into (b) an amount
equal to the excess of the total fair market value of the shares
on such date with respect to which the option is being exercised
over the total cash purchase price of such shares as set forth in
the option. Fractional shares will be rounded to the next lowest
whole number. At the sole discretion of the Committee, or as
specified in the option, the settlement of all or part of an
optionee's rights under this Paragraph 6(e) may be made in cash
in an amount equal to the fair market value of the shares
otherwise payable hereunder. The number of shares with respect
to which any option is exercised under this Paragraph 6(e) shall
reduce the number of shares thereafter available for exercise
under the option, and such shares thereafter may not again be
optioned under the Plan. In no event may an option be exercised
under this Paragraph 6(e) at a time when the option price per
share of Common Stock of the Company equals or exceeds the fair
market value per share of such Common Stock.
(f) If an optionee's employment by the Company or a
subsidiary terminates by reason of his retirement, his option may
thereafter be exercised to the extent to which it was exercisable
at the time of his retirement (unless the Committee, in its
discretion, determines otherwise), and may be exercised at any
time during the stated period of the option. If the optionee
dies prior to such expiration of the option, any unexercised
option, to the extent to which it was exercisable at the time of
his death, may thereafter be exercised by his designated
beneficiary or, if none by the legal representative of his estate
or by the legatee of the option under his last will for the
stated period of the option, except that in no event shall such
period expire less than one year from the date of his death in
the case of a non-qualified option.
(g) If an optionee's employment by the Company or a
subsidiary terminates by reason of permanent disability, his
option may thereafter be exercised in full, and may be exercised
at any time during the stated period of the option. If the
optionee dies prior to such expiration of the option, any
unexercised option may thereafter be exercised by his designated
beneficiary or, if none, by the legal representative of his
estate or by the legatee of the option under his last will for
the stated period of the option, except that in no event shall
such period expire less than one year from the date of his death
in the case of a non-qualified option.
(h) If an optionee's employment by the Company or a
subsidiary terminates by reason of his death, his option may
thereafter be immediately exercised in full by his designated
beneficiary or, if none, by the legal representative of his
estate or by the legatee of the option under his last will, and
for the stated period of the option, except that in no event
shall such period expire less than one year from the date of his
death in the case of a non-qualified option.
(i) Except as set forth in Paragraph 11(d), if an
optionee's employment terminates for any reason other than death,
retirement, or permanent disability, his option shall be
exercisable, to the extent that it was exercisable at the time of
termination, for three months after his termination of
employment, or if earlier, upon the expiration of the stated
period of the option.
(j) Except as permitted under Paragraph 6(k), no option
granted pursuant to this Plan may be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of, except by will or
the laws of descent and distribution and, during the lifetime of
the optionee, may be exercised only by such optionee. The
optionee may designate in writing a beneficiary of the option in
the event of his death.
(k) The Committee may grant options that are transferable,
or amend outstanding options to make them transferable, by the
optionee (any such option so granted or amended a "Transferable
Option") to one or more members of the optionee's immediate
family, to a partnership of which the only partners are members
of the optionee's immediate family, or to a trust established by
the optionee for the benefit of one or more members of the
optionee's immediate family and the Committee may in its
discretion permit transfers to other persons or entities. For
this purpose the term "immediate family" means the optionee's
spouse, children and grandchildren. Consideration may not be
paid for the transfer of a Transferable Option. A transferee
described in this Paragraph 6(k) shall be subject to all terms
and conditions applicable to the Transferable Option prior to its
transfer. The stock option agreement with respect to a
Transferable Option shall set forth its transfer restrictions,
and only options granted pursuant to a stock option agreement
expressly permitting transfer pursuant to this Paragraph 6(k)
shall be so transferable.
(l) Notwithstanding any intent to grant incentive stock
options, an option will not be considered an incentive stock
option to the extent that it together with any earlier incentive
stock options granted to any optionee permits the exercise for
the first time by such optionee in any calendar year of more than
$100,000 in value of stock of the Company (determined at the time
of grant).
(m) The Committee may from time to time establish option
exercise procedures for purposes of permitting an optionee to
defer compensation. Such procedures may permit an optionee to
elect to have all or a portion of the shares issuable by the
Company on exercise of an option transferred to a trust
established by the Company. Notwithstanding Paragraph 6(d)
above, an optionee who elects to follow any such procedures shall
not have any rights as a stockholder with respect to shares
issued on exercise of options under such procedures.
7. TERMS AND CONDITIONS OF DEFERRED STOCK UNIT AWARDS
All awards of Units under the Plan shall be subject to all
the applicable provisions thereof, including the following terms
and conditions, and to such other terms and conditions not
inconsistent therewith, as the Committee shall determine.
(a) Awards of Units may be in addition to or in lieu of
option grants.
(b) The number of Units allotted to an employee shall be
credited to a memorandum account maintained by the Company for
the employee. No employee shall be a shareholder with respect to
any Units credited to his account, nor shall he (or any
beneficiary) have any right to or interest in any specific asset
of the Company or its subsidiaries, including any shares of
Common Stock which may be purchased or held by the Company or its
subsidiaries to provide the benefits payable under the Plan,
until such shares are actually distributed under the Plan.
(c) When dividends other than stock dividends are paid from
time to time by the Company with respect to its Common Stock, the
Company shall calculate the amount which would have been payable
in cash or other property on the total undistributed Units in
each employee's memorandum account on each dividend record date
as if each such Unit represented one share of issued and
outstanding Common Stock of the Company held by the employee. An
amount equivalent to each such dividend shall thereupon be paid
to the employee on the dividend payment date in cash or other
property, as the case may be, as additional compensation to the
employee.
(d) With respect to each award of Units to an employee, and
except as provided in Paragraphs 7(e), 8, and 13 of the Plan,
shares of Common Stock of the Company equal in number to the
number of Units so awarded to the employee shall be distributed
to such employee in a single lump sum on the second, third,
fourth or fifth anniversary of the date on which such award of
Units was made or in two, three, four or five equal annual
installments commencing on a date not earlier than six months
after such award date and on each anniversary thereafter for the
duration of the installment period, all as specified in the award
of such Units; provided, however, that the Committee may, in its
sole discretion, accelerate the payment of any lump sum or
installment in the event of the retirement or permanent
disability of an employee or for any other reason decided by the
Committee.
(e) If an employee retires within one year from the date on
which an award of Units shall have been made to such employee,
the number of Units credited to his memorandum account as a
result of such award, other than Units paid or accelerated
pursuant to Paragraph 7(d), shall be forfeited as of the date of
his retirement (unless the Committee, in its sole discretion,
waives such forfeiture) and the number of Units remaining in his
memorandum account shall be distributed pursuant to
Paragraph 7(d). Notwithstanding the foregoing, an award of Units
may specify that such Units shall be forfeited if the employee
retires prior to the payment date or dates specified in the
award. In such case, the Units shall be forfeited in accordance
with the terms of the award, unless the Committee, in its sole
discretion, waives such forfeiture.
If an employee or former employee dies, such number of
shares of Common Stock of the Company as is equal to the total
number of Units credited to his memorandum account as of the date
of his death shall be distributed to his designated beneficiaries
as soon thereafter as practicable.
If an employee's employment with the Company or a subsidiary
or affiliate terminates by reason of his permanent disability,
such number of shares of Common Stock of the Company as is equal
to the total number of Units credited to his memorandum account
as of the date of his termination shall be distributed as
provided in Paragraph 7(d).
If an employee ceases to be an employee of the Company or a
subsidiary or affiliate for any reason other than retirement,
permanent disability, or death, the total number of Units
credited to his memorandum account shall be forfeited as of the
date of such termination of employment. In the case of
termination for cause, the provisions of Paragraph 11(d) shall
also apply.
(f) Designations of beneficiaries shall be made in writing
filed with the Company in such form and in such manner as the
Committee may from time to time prescribe. Beneficiaries may be
changed in the same manner at any time prior to the death of an
employee. If an employee dies without having designated any
surviving beneficiaries, his interest in Units under the Plan
shall be distributed to the legal representative of his estate.
(g) The Company may require any employee or other person
receiving Common Stock of the Company pursuant to an award under
the Plan to pay to the Company the amount of any taxes which the
Company or a subsidiary is required to withhold in connection
with the distribution of such Common Stock. Such tax payments
may be made to the Company in cash, in shares of Common Stock
(including shares of Common Stock withheld by the Company from
shares then distributable), with the value of such Common Stock
being the closing price at which the shares are traded on the New
York Stock Exchange on the last business day before the day on
which the distribution is made, or in such other consideration as
shall be approved by the Committee.
(h) The Committee may from time to time establish
procedures for the distribution of shares distributable pursuant
to Units for purposes of permitting an awardee to defer
compensation. Such procedures may permit an awardee to elect to
have all or a portion of the shares distributable pursuant to
Units transferred to a trust established by the Company. An
awardee who elects to follow any such procedures shall not have
any rights as a stockholder with respect to shares distributed
under such procedures.
8. PERFORMANCE AWARDS
The Committee may, prior to or at the time of grant,
designate an award of Units as a performance award (hereinafter
called a "Performance Award") in which event it shall condition
the grant or vesting, as applicable, of such Units upon the
attainment of Performance Goals (as defined in Paragraph 8(b)
below) and the provisions of Paragraph 8 shall control with
respect to such Performance Awards to the extent inconsistent
with Paragraph 7.
(a) All Performance Awards shall be designated as such by
the Committee prior to or at the time of grant, based upon a
determination that (i) the recipient is or may be a "covered
employee" within the meaning of Section 162(m)(3) of the Code
(sometimes referred to herein as a "Covered Employee") in the
fiscal year in which the Company would expect to be able to claim
a tax deduction with respect to such Performance Awards and
(ii) the Committee wishes such Performance Awards to qualify for
the exemption from the limitation on deductibility imposed by
Section 162(m) of the Code that is set forth in
Section 162(m)(4)(c) of the Code.
(b) "Performance Goals" means the performance goals
established by the Committee in connection with the grant of
Performance Awards. Such Performance Goals (i) shall be based on
the attainment by the Company of specified levels of one or more
of the following measures: earnings per share, return on equity,
or profit before taxes, and (ii) shall be set by the Committee
within the time period prescribed by Section 162(m) of the Code
and related regulations.
(c) Following the completion of each fiscal year, the
Committee shall certify in writing whether the applicable
Performance Goals have been achieved for such year and the extent
to which Performance Awards have been earned by each Covered
Employee for such fiscal year.
(d) Notwithstanding Paragraph 7 of the Plan, no Performance
Award shall vest or be paid out except (i) upon achievement of
the applicable Performance Goals, (ii) upon the death or
permanent disability of the employee, or (iii) upon a Change of
Control pursuant to Paragraph 13(b).
9. INVESTMENT REPRESENTATION
Upon any distribution of shares of Common Stock of the
Company pursuant to any provision of the Plan, the distributee
may be required to represent in writing that he is acquiring such
shares for his own account for investment and not with a view to,
or for sale in connection with, the distribution of any part
thereof. The certificates for such shares may include any legend
which the Committee deems appropriate to reflect any restrictions
on transfers.
10. TRANSFER, LEAVE OF ABSENCE, ETC.
For the purpose of the Plan: (a) a transfer of an employee
between and among the Company, a subsidiary, or an affiliate, and
(b) a leave of absence, duly authorized in writing by the
Company, shall not be deemed a termination of employment.
11. RIGHTS OF EMPLOYEES AND OTHERS
(a) No person shall have any rights or claims under the
Plan except in accordance with the provisions of the Plan.
(b) Nothing contained in the Plan shall be deemed to give
any employee the right to be retained in the service of the
Company or its subsidiaries or affiliates.
(c) Except as specifically provided in the Plan, no person
shall have the right to assign, transfer, alienate, pledge,
encumber or subject to lien the benefits to which he is entitled
thereunder, and benefits under the Plan shall not be subject to
adverse legal process of any kind. No prohibited assignment,
transfer, alienation, pledge or encumbrance of benefits or
subjection of benefits to lien or adverse legal process of any
kind will be recognized by the Committee and in such case the
Committee may terminate the right of such person to such benefits
and direct that they be held or applied for the benefit of such
person, his spouse, children or other dependents in such manner
in such proportion as the Committee deems advisable. If a person
to whom benefits shall be due under the Plan shall be or become
incompetent, either physically or mentally, in the judgment of
the Committee, the Committee shall have the right to determine to
whom such benefits shall be paid for the benefit of such person.
(d) Notwithstanding any provision in the Plan to the
contrary, if an employee ceases to be an employee of the Company
or a subsidiary or affiliate by reason of termination for cause,
all options and Units (including Performance Awards) held by him
or for his account under the Plan shall be immediately forfeited
and he shall be liable to the Company for all profit realized by
him from options exercised or shares of Company Common Stock
distributed to him during the three months immediately preceding
such termination. Termination for cause shall include
termination initiated by the Company or by the employee incident
to or connected with a finding that the employee has engaged in
misappropriation, theft, embezzlement, kick-backs, bribery or
similar deliberate, gross or willful misconduct or dishonest acts
or omissions.
12. CHANGES IN CAPITAL
If the outstanding Common Stock of the Company subject to
the Plan shall at any time be changed or exchanged by declaration
of a stock dividend, stock split, combination of shares,
recapitalization, merger, consolidation or other corporate
reorganization in which the Company is the surviving corporation,
or if the Company shall pay an extraordinary dividend on its
Common Stock, the number and kind of shares subject to the Plan
and/or the number of Units or option values or prices shall be
appropriately and equitably adjusted so as to maintain the value
or option price thereof, as the case may be.
13. CHANGE IN CONTROL PROVISIONS
(a) Notwithstanding any other provision of the Plan, in the
event of a Change of Control, any stock option or related right
outstanding as of the date such Change in Control is determined
to have occurred, and which is not then exercisable and vested,
shall become fully exercisable and vested to the full extent of
the original grant. In addition, notwithstanding any other
provision of the Plan, during the 60-day period from and after a
Change of Control (the "Exercise Period"), an optionee shall have
the right, whether or not the option is fully exercisable and in
lieu of the payment of the exercise price for the shares of
Common Stock being purchased under the option and by giving
notice to the Company (or its successor, if applicable), to elect
(within the Exercise Period) to surrender all or part of the
option to the Company and to receive cash, within 30 days of such
notice, in an amount equal to the amount by which the Change of
Control Price per share of Common Stock on the date of such
election shall exceed the exercise price per share of Common
Stock under the option multiplied by the number of shares of
Common Stock granted under the option as to which the right
granted under this Paragraph 13(a) shall have been exercised.
Notwithstanding the foregoing, if any right granted pursuant to
this Paragraph 13(a) would make a Change of Control transaction
ineligible for pooling-of-interests accounting under APB No. 16
that but for the nature of such grant would otherwise be eligible
for such accounting treatment, the Committee shall have the
ability to substitute for the cash payable pursuant to such right
Common Stock with a fair market value equal to the cash that
would otherwise be payable hereunder.
(b) Notwithstanding any other provision of the Plan, in the
event of a Change of Control, the Units (including Performance
Awards) credited to the participant's memorandum account but not
yet distributed pursuant to Paragraph 7(d) as of the date of the
Change of Control shall be paid out as soon thereafter as
practicable (but in no event more than 30 days after the Change
of Control) at a dollar value per Unit equal to the Change of
Control Price. Notwithstanding the foregoing, if any right
granted pursuant to this Paragraph 13(b) would make a Change of
Control transaction ineligible for pooling-of-interests
accounting under APB No. 16 that but for the nature of such
grant would otherwise be eligible for such accounting treatment,
the Committee shall have the ability to substitute for the cash
payable pursuant to such right Common Stock with a fair market
value equal to the cash that would otherwise be payable
hereunder.
(c) For purposes of the Plan, a "Change of Control" shall
be deemed to have taken place upon the occurrence of any of the
following events:
(1) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 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 securities of the Company where such acquisition
causes such Person to own 20% or more of either (i) the then
outstanding shares of Common Stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined
voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (1)
the following acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from the Company,
(ii) any acquisition by the Company, (iii) any acquisition
by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by
the Company or (iv) any acquisition by any corporation
pursuant to a transaction which complies with clauses (i),
(ii) and (iii) of subsection (3) below; and provided,
further, that if any Person's beneficial ownership of the
Outstanding Company Voting Securities reaches or exceeds 20%
as a result of a transaction described in clause (i) or
(ii) above, and such Person subsequently acquires beneficial
ownership of additional voting securities of the Company,
such subsequent acquisition shall be treated as an
acquisition that causes such Person to own 20% or more of
the Outstanding Company Voting Securities; or
(2) individuals who, as of the date hereof, 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 for
election by the Company's shareholders, was approved by a
vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual
or threatened election contest with respect to the election
or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
(3) approval by the shareholders of the Company of a
reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless,
following such Business Combination, (i) all or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding
Company Common Stock and the Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting
from such Business Combination (including, without
limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of
the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of
the Outstanding Company Common Stock and the Outstanding
Company Voting Securities, as the case may be, (ii) no
Person (excluding any employee benefit plan (or related
trust) of the Company or such corporation resulting from
such Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership
existed prior to the Business Combination and (iii) at least
a majority of the members of the board of directors of the
corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution
of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(4) approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
(d) For purposes of the Plan, "Change of Control Price"
means the higher of (i) the highest reported sales price, regular
way, of a share of Common Stock in any transaction reported on
the New York Stock Exchange Composite Tape or other national
exchange on which such shares may then be listed during the
60-day period prior to and including the date of a Change of
Control or (ii) if the Change of Control is the result of a
tender or exchange offer or a Business Combination, the highest
price per share of Common Stock paid in such tender or exchange
offer or Business Combination; provided, however, that in the
case of incentive stock options, the Change of Control Price
shall be in all cases the fair market value of the Common Stock
on the date such incentive stock option is exercised. To the
extent that the consideration paid in any such transaction
described above consists all or in part of securities or other
noncash consideration, the value of such securities or other
noncash consideration shall be determined in the sole discretion
of the Committee.
14. USE OF PROCEEDS
Proceeds from the sale of shares pursuant to options granted
under this Plan shall constitute general funds of the Company.
15. AMENDMENTS
The Board of Directors may amend, alter or discontinue the
Plan, including without limitation any amendment considered to be
advisable by reason of changes to the Code, but, no amendment,
alteration or discontinuation shall be made (i) which would
impair the rights of any holder of an award or option theretofore
granted, without his consent, (ii) which would cause a
Performance Award to cease to qualify for exemption under
Section 162(m) of the Code, or (iii) which, without the approval
of the shareholders, would:
(a) Except as is provided in Paragraph 12, increase
the total number of shares reserved for the purpose of the
Plan.
(b) Except as is provided in Paragraphs 6(e) and 12,
decrease the option price of an option to less than 100% of
the fair market value on the date of the granting of the
option.
(c) Extend the duration of the Plan.
Notwithstanding the foregoing, the Board of Directors may
amend the Plan and the Committee may amend any option or award,
either retroactively or prospectively and without the consent of
any optionee or award holder, so as to preserve or come within
any exemptions from liability under Section 16(b) of the Exchange
Act pursuant to rules and releases promulgated by the Securities
and Exchange Commission.
16. GOVERNING LAW
The Plan and all awards and options granted and actions
taken thereunder shall be governed by and construed in accordance
with the laws of the State of New Jersey.