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EXHIBIT 10.7
1998 IMS HEALTH INCORPORATED
EMPLOYEES' STOCK INCENTIVE PLAN
(As amended and restated effective October 16, 2001)
1. PURPOSE OF THE PLAN
The purpose of the Plan is to aid the Company and its Subsidiaries
in securing and retaining employees of outstanding ability and to motivate such
employees to exert their best efforts on behalf of the Company and its
Subsidiaries by providing incentives through the granting of Awards. 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 proprietary interest in
the Company's success.
2. DEFINITIONS
The following capitalized terms used in the Plan have the respective
meanings set forth in this Section:
(a) ACT: The Securities Exchange Act of 1934, as amended, or any
successor thereto.
(b) ANNUAL LIMIT: The limitation on the amount of certain Awards
intended to qualify as "performance-based compensation" that
may be granted to a given Participant each year.
(c) AWARD: An Option, Stock Appreciation Right or Other
Stock-Based Award granted pursuant to the Plan.
(d) BENEFICIAL OWNER: As such term is defined in Rule 13d-3 under
the Act (or any successor rule thereto).
(e) BOARD: The Board of Directors of the Company.
(f) CHANGE IN CONTROL: The occurrence of any of the following
events after Effective Date:
(i) any Person (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit
plan of the Company, or any company owned, directly or
indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of
stock of the Company), becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of
the Company's then-outstanding securities;
(ii) during any period of twenty-four months (not including
any period prior to the Effective Date), individuals who
at the beginning of such period constitute the Board,
and any new director (other than (A) a director
nominated by a Person who has entered into an agreement
with the Company to effect a transaction described in
Sections 2(f) (i), (iii) or (iv) of the
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Plan, (B) a director nominated by any Person (including
the Company) who publicly announces an intention to take
or to consider taking actions (including, but not
limited to, an actual or threatened proxy contest) which
if consummated would constitute a Change in Control or
(C) a director nominated by any Person who is the
Beneficial Owner, directly or indirectly, of securities
of the Company representing 10% or more of the combined
voting power of the Company's securities) whose election
by the Board or nomination for election by the Company's
stockholders was approved in advance by a vote of at
least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the
period or whose election or nomination for election was
previously so approved, cease for any reason to
constitute at least a majority thereof;
(iii) the stockholders of the Company approve any transaction
or series of transactions under which the Company is
merged or consolidated with any other company, other
than a merger or consolidation (A) which would result in
the voting securities of the Company outstanding
immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted
into voting securities of the surviving entity) more
than 66 2/3% of the combined voting power of the voting
securities of the Company or such surviving entity
outstanding immediately after such merger or
consolidation and (B) after which no Person holds 20% or
more of the combined voting power of the
then-outstanding securities of the Company or such
surviving entity;
(iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or
substantially all of the Company's assets; or
(v) the Board determines that a Change in Control shall be
deemed to have occurred for purposes of the Plan,
provided that the Board may impose limitations on the
effects of a Change in Control on any Award or otherwise
if the Change in Control has occurred under this Section
2(f)(v) and not under other subsections of this Section
2(f).
(g) CODE: The Internal Revenue Code of 1986, as amended, or any
successor thereto.
(h) COGNIZANT: Cognizant Corporation, a Delaware corporation.
(i) COMMITTEE: The Compensation and Benefits Committee of the
Board.
(j) COMPANY: IMS Health Incorporated, a Delaware corporation.
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(k) DISABILITY: Inability of a Participant to perform the services
for the Company and its Subsidiaries required by his or her
employment with the Company due to any medically determinable
physical and/or mental incapacity or disability which is
permanent. The determination whether a Participant has
suffered a Disability shall be made by the Committee based
upon such evidence as it deems necessary and appropriate. A
Participant shall not be considered disabled unless he or she
furnishes such medical or other evidence of the existence of
the Disability as the Committee, in its sole discretion, may
require.
(l) EFFECTIVE DATE: The date on which the Plan takes effect, as
defined pursuant to Section 17 of the Plan.
(m) FAIR MARKET VALUE: With respect to Shares, unless otherwise
determined by the Committee, on a given date, the arithmetic
mean of the high and low prices of the Shares as reported on
such date on the Composite Tape of the principal national
securities exchange on which such Shares are listed or
admitted to trading, or, if no Composite Tape exists for such
national securities exchange on such date, then on the
principal national securities exchange on which such Shares
are listed or admitted to trading, or, if the Shares are not
listed or admitted on a national securities exchange, the
arithmetic mean of the per Share closing bid price and per
Share closing asked price on such date as quoted on the Nasdaq
System (or such market in which such prices are regularly
quoted), or, if there is no market on which the Shares are
regularly quoted, the Fair Market Value shall be the value
established by the Committee in good faith. If no sale of
Shares shall have been reported on such Composite Tape or such
national securities exchange on such date or quoted on the
Nasdaq System on such date, then the immediately preceding
date on which sales of the Shares have been so reported or
quoted shall be used.
(n) LSAR: A limited stock appreciation right granted pursuant to
Section 8(d) of the Plan.
(o) OTHER STOCK-BASED AWARDS: Awards granted pursuant to Section 9
of the Plan.
(p) OPTION: A stock option granted pursuant to Section 7 of the
Plan.
(q) OPTION PRICE: The purchase price per Share of an Option, as
determined pursuant to Section 7(a) of the Plan.
(r) PARTICIPANT: An individual who is selected by the Committee to
participate in the Plan pursuant to Section 5 of the Plan.
(s) PERFORMANCE-BASED AWARDS: Certain Other Stock-Based Awards
granted pursuant to Section 9(b) of the Plan.
(t) PERSON: As such term is used for purposes of Section 13(d) or
14(d) of the Act (or any successor section thereto).
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(u) PLAN: The 1998 IMS Health Incorporated Employees' Stock
Incentive Plan.
(v) RETIREMENT: Termination of employment with the Company or a
Subsidiary after such Participant has attained age 65 or age
55 and five years of service with the Company. The foregoing
notwithstanding, the term "Retirement" shall mean any
termination of employment with the prior written consent of
the Committee that the termination be treated as a Retirement.
(w) SHARES: Shares of common stock, par value $0.01 per Share, of
the Company.
(x) SPINOFF DATE: The date on which the Shares that are owned by
Cognizant are distributed to the holders of record of shares
of Cognizant.
(y) STOCK APPRECIATION RIGHT: A stock appreciation right granted
pursuant to Section 8 of the Plan.
(z) SUBSIDIARY: A subsidiary corporation, as defined in Section
424(f) of the Code (or any successor section thereto).
3. SHARES SUBJECT TO THE PLAN
(a) AGGREGATE SHARE LIMITATIONS. Subject to adjustment as provided
in Section 10(a), the total number of Shares which may be issued and/or
delivered under the Plan is 29,783,765 plus the number of Shares reserved for
awards under the IMS Health Incorporated Replacement Plan for Certain Employees
Holding Cognizant Corporation Equity-Based Awards (the "Replacement Plan") that
are not in fact issued or delivered in connection with such awards; provided
however, that in no event may more than 1,000,000 shares be issued as restricted
stock or similar Awards. The Shares may consist, in whole or in part, of
authorized and unissued Shares or treasury Shares. Shares subject to an Award
under the Plan that is canceled, expired, forfeited, settled in cash, or
otherwise terminated without a delivery of Shares to the Participant (or a
Beneficiary), including the number of Shares withheld or surrendered in payment
of any exercise or purchase price of an Award or taxes relating to an Award,
will become available for Awards under the Plan, and Shares shall be counted as
issued or delivered under the Replacement Plan in a manner consistent with the
counting of Shares under this Section 3. In addition, in the case of any Award
granted in substitution for awards of a company or business acquired by the
Company or a Subsidiary, Shares issued or issuable in connection with such
substitute Award shall not be counted against the number of Shares reserved
under the Plan, but shall be deemed to be available under the Plan by virtue of
the Company's assumption of the plan or arrangement of the acquired company or
business.
(b) ANNUAL PER-PERSON LIMITATIONS. In each calendar year during any
part of which the Plan is in effect, a Participant may be granted Awards under
each of Section 7, Section 8, and Section 9(b) relating to up to the
Participant's Annual Limit (such Annual Limit to apply separately to each
Section). A Participant's Annual Limit, in any year during any part of which the
Participant is then eligible under the Plan, shall equal 1,000,000 shares plus
the amount of the Participant's unused Annual Limit as of the close of the
previous year, subject to adjustment as provided in Section 10(a).
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4. ADMINISTRATION
(a) The Plan shall be administered by the Committee, which may
delegate its duties and powers in whole or in part to any subcommittee thereof
consisting solely of at least two individuals who are each "non-employee
directors" within the meaning of Rule 16b-3 under the Act (or any successor rule
thereto) and "outside directors" within the meaning of Section 162(m) of the
Code (or any successor section thereto). The Committee is authorized to
interpret the Plan, to establish, amend and rescind any rules and regulations
relating to the Plan, and to make any other determinations that it deems
necessary or desirable for the administration of the Plan. The Committee may
correct any defect or supply any omission or reconcile any inconsistency in the
Plan in the manner and to the extent the Committee deems necessary or desirable.
Any decision of the Committee in the interpretation and administration of the
Plan, as described herein, shall lie within its sole and absolute discretion and
shall be final, conclusive and binding on all parties concerned (including, but
not limited to, Participants and their beneficiaries or successors). The
Committee shall require payment of any amount it may determine to be necessary
to withhold for minimum statutory withholding requirements for federal, state,
local or other taxes as a result of the exercise or settlement of an Award.
Unless the Committee specifies otherwise, the Participant may elect to pay a
portion or all of such withholding taxes by (a) delivery in shares or (b) having
shares withheld by the Company from any shares that would have otherwise been
received by the Participant. No authority to withhold shares is conferred under
the Plan to the extent that, solely due to such authority, an Award would be
accounted for as a "variable" award under APB 25. The Committee may, in its
discretion, grant Awards either alone or in addition to, in tandem with, or in
substitution or exchange for, any other Award or any award granted under another
plan of the Company, any subsidiary, or any business entity to be acquired by
the Company or a subsidiary, or any other right of a Participant to receive
payment from the Company or any subsidiary. The Committee may delegate to
officers of the Company, or committees thereof, the authority to grant awards to
the fullest extent permitted by Section 157 and other applicable provisions of
the Delaware General Corporation Law, subject to such rules as the Committee may
specify. In furtherance of this delegation of authority, if the chief executive
officer of the Company is a member of the Board, the chief executive officer
shall have the authority to grant Awards of up to an aggregate of 50,000 Shares
(or such other amount as may be specified by the Committee) in each calendar
year to each Participant who is not subject to the rules promulgated under
Section 16 of the Act (or any successor section thereto); PROVIDED, HOWEVER,
that such chief executive officer shall notify the Committee of any such grants
made pursuant to delegated authority under this Section 4(a).
(b) Without the prior approval of the Company's stockholders,
Options granted under the Plan will not be repriced, replaced or regranted
through cancellation, or by lowering the Option exercise price of a previously
granted Option.
5. ELIGIBILITY
Employees (but not members of the Committee or any person who serves
only as a director) of the Company and its Subsidiaries are eligible to be
granted Awards. In addition, any person who has been offered employment by the
Company or a Subsidiary is eligible to be granted Awards, provided that no such
person may receive any payment or exercise any right relating to an Award until
such person has commenced such employment. Participants 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 Awards granted to each Participant.
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6. LIMITATIONS
(a) In addition to any per-Participant limitation on the number of
shares to be subject to awards that may be applicable under the 1998 ESIP or
2000 SIP or may otherwise be specified by this Committee, the maximum number of
options or other awards that may be granted by all officers to whom authority
has been delegated shall be 1 million shares in any one fiscal year under each
such Plan plus the number of shares specifically approved for awards to be
granted under delegated authority in that year, as specified in separate
resolutions from time to time adopted by this Committee.
(b) Only employees of the Corporation or a subsidiary of the
Corporation may be granted awards pursuant to delegated authority, and other
limitations on the persons to whom awards may be granted shall apply as
specified by the Plan or the Committee. For this purpose, however, a person who,
at the time of commencement of employment will become a director or executive
officer of the Corporation and who will be granted awards at that time shall not
be deemed to be subject to Section 16 for purposes of the delegation of
authority under Section 4(a) of the 1998 ESIP.
(c) Subject to the limitations specified in the Plans and any
resolutions of the Committee, the officers to whom authority to grant awards
under the Plans is delegated may determine the persons to receive the awards,
the type of awards, the number of awards, and the date of grant of the awards.
Such officers shall exercise no discretion over other terms of the awards. The
exercise price of any option granted pursuant to delegated authority shall be
100% of Fair Market Value of the underlying shares at the date of grant, unless
otherwise determined by this Committee. No cash consideration shall be payable
for the grant or exercise of any restricted stock units or similar awards,
except to the extent required by law or as otherwise determined by this
Committee. Vesting terms, forfeiture terms, expiration dates, and other terms
and conditions of any option or award granted pursuant to delegated authority
shall be as specified in the applicable Plan and the form of option or award
agreement in current use under the applicable Plan for an employee of the same
employment or compensation level, unless otherwise determined by the Committee.
(d) No grant of restricted stock may be made pursuant to delegated
authority (restricted stock units may be granted, however).
(e) No officer to whom authority has been delegated may participate
in the grant of an option or award to himself or herself.
(f) All other applicable limitations on delegated authority under
Section 157(c) and other provisions of the DGCL shall apply to officers acting
pursuant to delegated authority under the Plans.
(g) No Award may be granted under the Plan after the tenth
anniversary of the Effective Date, but Awards theretofore granted may extend
beyond that date.
7. TERMS AND CONDITIONS OF OPTIONS
Options granted under the Plan shall be, as determined by the
Committee, non-qualified, incentive or other stock options for federal income
tax purposes, as evidenced by the related Award agreements, and shall be subject
to the foregoing and the following
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terms and conditions and to such other terms and conditions, not inconsistent
therewith, as the Committee shall determine:
(a) OPTION PRICE. The Option Price per Share shall be determined by
the Committee, but shall not be less than 100% of the Fair Market Value of the
Shares on the date an Option is granted. The Committee may require the
Participant to pay a portion of the Option Price at the time of grant of the
option, with the remainder of the Option Price payable upon exercise of the
Option. Such prepayment of the Option Price shall be non-refundable except to
the extent set forth in a Participant's original option agreement.
(b) EXERCISABILITY. Options granted under the Plan shall be
exercisable at such time and upon such terms and conditions as may be determined
by the Committee, but in no event shall an Option be exercisable more than ten
years after the date it is granted.
(c) EXERCISE OF OPTIONS. Except as otherwise provided in the Plan or
in an Award agreement, an Option may be exercised for all, or from time to time
any part, of the Shares for which it is then exercisable. For purposes of
Section 7 of the Plan, the exercise date of an Option shall be the later of the
date a notice of exercise is received by the Company and, if applicable, (A) the
date payment is received by the Company pursuant to clauses (i), (ii) or (iii)
in the following sentence, or (B) the date of sale by a broker of all or a
portion of the Shares being purchased pursuant to clause (iv) in the following
sentence. Unless otherwise determined by the Committee, the Option Price for the
Shares as to which an Option is exercised shall be paid to the Company in full
not later than the time of exercise at the election of the Participant (i) in
cash, (ii) in Shares having a Fair Market Value equal to the aggregate unpaid
Option Price for the Shares being purchased and satisfying such other
requirements as may be imposed by the Committee, (iii) partly in cash and partly
in such Shares, or (iv) through the delivery of irrevocable instructions to a
broker to deliver promptly to the Company an amount equal to the aggregate
Option Price for the Shares being purchased. The Award agreement shall, unless
otherwise provided by the Committee, permit the Participant to elect, subject to
such terms and conditions as the Committee shall determine, to have the number
of Shares deliverable to the Participant as a result of the exercise reduced by
a number sufficient to pay the amount the Company determines to be necessary to
withhold for federal, state, local or other taxes as a result of the exercise of
the Option. No Participant shall have any rights to dividends or other rights of
a stockholder with respect to Shares subject to an Option until the Participant
has given written notice of exercise of the Option, paid in full for such Shares
and, if applicable, has satisfied any other conditions imposed by the Committee
pursuant to the Plan.
(d) RESTRICTIONS ON SHARES ISSUED UPON EXERCISE; OTHER CONDITIONS.
If and to the extent so determined by the Committee, Shares issued upon exercise
of an Option may be subject to limitations on transferability, risks of
forfeiture, deferral of delivery, or such other terms and conditions as the
Committee may impose, subject to Section 14(b). Such terms and conditions may
include required forfeiture of Options or gains realized upon exercise thereof,
for a specified period after exercise, in the event the Participant fails to
comply with conditions relating to non-competition, non-disclosure,
non-solicitation or non-interference with employees, suppliers, or customers,
and non-disparagement and other conditions specified by the Committee.
(e) EXERCISABILITY UPON TERMINATION OF EMPLOYMENT BY DEATH OR
DISABILITY. If a Participant's employment with the Company and its Subsidiaries
terminates by reason by death or Disability after the date of grant of an
Option, (i) the unexercised portion of such Option shall immediately vest in
full (i.e., become non-forfeitable) and (ii) such portion may
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thereafter be exercised during the shorter of (A) the remaining stated term of
the Option or (B) five years after the date of death or Disability.
(f) EXERCISABILITY UPON TERMINATION OF EMPLOYMENT BY RETIREMENT. If
a Participant's employment with the Company and its Subsidiaries terminates by
reason of Retirement after the date of grant of an Option, the Participant's
unexercised Option may thereafter be exercised only during the period ending at
the earlier of five years after such Retirement or the stated expiration date of
such Option (the "Post-Retirement Exercise Period"), provided that such Option
shall be exercisable during such Post-Retirement Exercise Period only to the
extent such Option was exercisable at the time of such Retirement. The foregoing
notwithstanding, (i) the Committee may, in its sole discretion, accelerate the
vesting of the unvested portion of such Option held by a Participant upon such
Participant's Retirement, in which case such Option shall not be forfeited as
provided herein but thereafter shall become exercisable to the extent and at
such times as such portion of the Option would have become both vested and
exercisable during the Post-Retirement Exercise Period had the Participant's
employment not been terminated, unless the Committee specifies otherwise; and
(ii), if a Participant dies within a period of five years after such Retirement,
the Participant's unexercised Option (to the extent not previously forfeited)
may thereafter be exercised during the shorter of (i) the remaining stated term
of the Option or (ii) the period that is the longer of (A) five years after the
date of such termination of employment or (B) one year after the date of death.
(g) EFFECT OF OTHER TERMINATION OF EMPLOYMENT. If a Participant's
employment with the Company and its Subsidiaries terminates for any reason other
than death, Disability or Retirement after the date of grant of an Option as
described above, the Participant's unexercised Option may thereafter be
exercised during the period ending 90 days after the date of such termination of
employment, but only to the extent such Option was exercisable at the time of
such termination of employment, and in no event may such Option be exercised
after its stated expiration date. The foregoing notwithstanding, the Committee
may, in its sole discretion, accelerate the vesting of unvested Options held by
a Participant or specify post-termination exercise periods longer than 90 days,
but not extending past the Option's stated expriation date, provided that this
authority shall not apply if such Participant is terminated from employment for
"cause" (as such term is defined by the Committee in its sole discretion) by the
Company.
8. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS
(a) GRANTS. The Committee also may grant (i) a Stock Appreciation
Right independent of an Option or (ii) a Stock Appreciation Right in connection
with an Option, or a portion thereof. A Stock Appreciation Right granted
pursuant to clause (ii) of the preceding sentence (A) may be granted at the time
the related Option is granted or at any time prior to the exercise or
cancellation of the related Option, (B) shall cover the same Shares covered by
an Option (or such lesser number of Shares as the Committee may determine) and
(C) shall be subject to the same terms and conditions as such Option except for
such additional limitations as are contemplated by this Section 8 (or such
additional limitations as may be included in an Award agreement).
(b) TERMS. The exercise price per Share of a Stock Appreciation
Right shall be an amount determined by the Committee but in no event shall such
amount be less than the greater of (i) the Fair Market Value of a Share on the
date the Stock Appreciation Right is granted or, in the case of a Stock
Appreciation Right granted in conjunction with an Option, or a portion thereof,
the Option Price of the related Option and (ii) an amount
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permitted by applicable laws, rules, by-laws or policies of regulatory
authorities or stock exchanges. Each Stock Appreciation Right granted
independent of an Option shall entitle a Participant upon exercise to an amount
equal to (i) the excess of (A) the Fair Market Value on the exercise date of one
Share over (B) the exercise price per Share, times (ii) the number of Shares
covered by the Stock Appreciation Right. Each Stock Appreciation Right granted
in conjunction with an Option, or a portion thereof, shall entitle a Participant
to surrender to the Company the unexercised Option, or any portion thereof, and
to receive from the Company in exchange therefor an amount equal to (i) the
excess of (A) the Fair Market Value on the exercise date of one Share over (B)
the Option Price per Share, times (ii) the number of Shares covered by the
Option, or portion thereof, which is surrendered. The date a notice of exercise
is received by the Company shall be the exercise date. Payment shall be made in
Shares or in cash, or partly in Shares and partly in cash, valued at such Fair
Market Value, all as shall be determined by the Committee. Stock Appreciation
Rights may be exercised from time to time upon actual receipt by the Company of
written notice of exercise stating the number of Shares subject to an
exercisable Option with respect to which the Stock Appreciation Right is being
exercised. No fractional Shares will be issued in payment for Stock Appreciation
Rights, but instead cash will be paid for a fraction or, if the Committee should
so determine, the number of Shares will be rounded downward to the next whole
Share.
(c) LIMITATIONS. The Committee may impose, in its discretion, such
conditions upon the exercisability or transferability of Stock Appreciation
Rights as it may deem fit.
(d) LIMITED STOCK APPRECIATION RIGHTS. The Committee may grant LSARs
that are exercisable upon the occurrence of specified contingent events. Such
LSARs may provide for a different method of determining appreciation, may
specify that payment will be made only in cash and may provide that any related
Awards are not exercisable while such LSARs are exercisable. Unless the context
otherwise requires, whenever the term "Stock Appreciation Right" is used in the
Plan, such term shall include LSARs.
9. OTHER STOCK-BASED AWARDS
(a) GENERALLY. The Committee, in its sole discretion, may grant
Awards of Shares, Awards of restricted Shares and Awards that are valued in
whole or in part by reference to, or are otherwise based on the Fair Market
Value of, Shares ("Other Stock-Based Awards"). Such Other Stock-Based Awards
shall be in such form, and dependent on such conditions, as the Committee shall
determine, including, without limitation, the right to receive one or more
Shares (or the equivalent cash value of such Shares) as an outright bonus or
upon the completion of a specified period of service, the occurrence of an event
and/or the attainment of performance objectives. Other Stock-Based Awards may be
granted alone or in addition to any other Awards granted under the Plan. Subject
to the provisions of the Plan, the Committee shall determine to whom and when
Other Stock-Based Awards will be made, the number of Shares to be awarded under
(or otherwise related to) such Other Stock-Based Awards; whether such Other
Stock-Based Awards shall be settled in cash, Shares or a combination of cash and
Shares; and all other terms and conditions of such Awards (including, without
limitation, the vesting provisions thereof). Cash awards, as an element of or
supplement to any other Award under the Plan, may also be granted pursuant to
this Section 9(a). In addition, the Committee is authorized to grant dividend
equivalents to a Participant, entitling the Participant to receive cash, Shares,
other
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Awards, or other property equal in value to dividends paid with respect to a
specified number of Shares, or other periodic payments. Dividend equivalents may
be awarded on a free-standing basis or in connection with another Award. The
Committee may provide that Dividend Equivalents shall be paid or distributed
when accrued or shall be deemed to have been reinvested in additional Shares,
Awards, or other investment vehicles, subject to such restrictions on
transferability and risks of forfeiture as the Committee may specify.
(b) PERFORMANCE-BASED AWARDS. Notwithstanding anything to the
contrary herein, certain Other Stock-Based Awards granted under this Section 9
may be granted in a manner which is deductible by the Company without limitation
under Section 162(m) of the Code (or any successor section thereto)
("Performance-Based Awards"). A Participant's Performance-Based Award shall be
determined based on the attainment of written performance goals approved by the
Committee for a performance period established by the Committee (i) while the
outcome for that performance period is substantially uncertain and (ii) no more
than 90 days after the commencement of the performance period to which the
performance goal relates or, if less, the number of days which is equal to 25
percent of the relevant performance period. The performance goals, which must be
objective, shall be based upon one or more of the following criteria: (i)
consolidated earnings before or after taxes (including earnings before interest,
taxes, depreciation and amortization); (ii) net income; (iii) operating income;
(iv) earnings per share; (v) book value per share; (vi) return on stockholders'
equity; (vii) expense management; (viii) return on investment; (ix) improvements
in capital structure; (x) profitability of an identifiable business unit or
product; (xi) maintenance or improvement of profit margins; (xii) stock price;
(xiii) market share; (xiv) revenues or sales; (xv) costs; (xvi) cash flow;
(xvii) working capital; (xviii) economic value added; (xix) return on assets;
(xx) total stockholder return (stock price appreciation plus dividends and
distributions); (xxi) operating management goals; (xxii) and execution of
pre-approved corporate strategy. The foregoing criteria may relate to the
Company, one or more of its Subsidiaries or one or more of its divisions or
units, or any combination of the foregoing, and may be applied on an absolute
basis and/or be relative to one or more peer group companies or indices, or any
combination thereof, all as the Committee shall determine. In addition, to the
degree consistent with Section 162(m) of the Code (or any successor section
thereto), the performance goals may be calculated without regard to
extraordinary items. In the case of a Performance-Based Award which is not
valued in a way in which the limitation set forth in the final sentence of
Section 3 would operate as an effective limitation satisfying Treasury
Regulation 1.162-27(e)(4), the maximum amount of a Performance-Based Award to
any Participant with respect to performance in a single fiscal year of the
Company shall be $5,000,000. The Committee shall determine whether, with respect
to a performance period, the applicable performance goals have been met with
respect to a given Participant and, if they have, to so certify and ascertain
the amount of the applicable Performance-Based Award. No Performance-Based
Awards will be paid for such performance period until such certification is made
by the Committee. The amount of the Performance-Based Award actually paid to a
given Participant may be less than the amount determined by the applicable
performance goal formula, at the discretion of the Committee. The amount of the
Performance-Based Award determined by the Committee for a performance period
shall be paid to the Participant at such time as determined by the Committee in
its sole discretion after the end of such performance period; provided, HOWEVER,
that a Participant may, if and to the extent permitted by the Committee and
consistent with the provisions of Section 162(m) of the Code, elect to defer
payment of a Performance-Based Award.
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10. ADJUSTMENTS UPON CERTAIN EVENTS
Notwithstanding any other provisions in the Plan to the contrary,
the following provisions shall apply to all Awards granted under the Plan:
(a) GENERALLY. In the event of any change in the outstanding Shares
after the Effective Date by reason of any Share dividend or split,
reorganization, recapitalization, merger, consolidation, spin-off, combination
or exchange of Shares of other corporate exchange, or any large, special, and
non-recurring distribution to Stockholders, the Committee in its sole discretion
and without liability to any person may make such substitution or adjustment, if
any, as it deems to be equitable, as to (i) the number or kind of Shares or
other securities issued or reserved for issuance pursuant to the Plan or
pursuant to outstanding Awards, (ii) the Option Price, (iii) the number and kind
of Shares by which annual per-person Award limitations are measured under
Section 3 hereof and/or (iv) any other affected terms of such Awards (including
making provision for the payment of cash, other Awards or other property in
respect of any outstanding Award). In addition, the Committee is authorized to
make adjustments in the terms and conditions of, and the criteria included in,
Awards in recognition of unusual or nonrecurring events (including, without
limitation, events described in the preceding sentence, as well as acquisitions
and dispositions of businesses and assets) affecting the Company, any subsidiary
or any business unit, or the financial statements of the Company or any
subsidiary, or in response to changes in applicable laws, regulations,
accounting principles, tax rates and regulations or business conditions or in
view of the Committee's assessment of the business strategy of the Company, any
subsidiary or business unit thereof, performance of comparable organizations,
economic and business conditions, personal performance of a Participant, and any
other circumstances deemed relevant; provided that no such adjustment shall be
authorized to be made if and to the extent that such authority or the making of
such adjustment would cause Options, Stock Appreciation Rights, or Performance
Awards granted under Section 9(b) hereof intended to qualify as
"performance-based compensation" under Code Section 162(m) and regulations
thereunder to otherwise fail to so qualify.
(b) CHANGE IN CONTROL. Except as otherwise provided in an Award
agreement, in the event of a Change in Control, the Committee in its sole
discretion and without liability to any person may take such actions, if any, as
it deems necessary or desirable with respect to any Award (including, without
limitation, (i) the acceleration of an Award, (ii) the payment of a cash amount
in exchange for the cancellation of an Award and/or (iii) the requiring of the
issuance of substitute Awards that will substantially preserve the value, rights
and benefits of any affected Awards previously granted hereunder) as of the date
of the consummation of the Change in Control.
11. NO RIGHT TO EMPLOYMENT
The granting of an Award under the Plan shall impose no obligation
on the Company or any Subsidiary to continue the employment of a Participant and
shall not lessen or affect the Company's or Subsidiary's right to terminate the
employment of such Participant.
12. SUCCESSORS AND ASSIGNS
The Plan shall be binding on all successors and assigns of the
Company and a Participant, including without limitation, the estate of such
Participant and the executor, administrator or trustee of such estate, or any
receiver or trustee in bankruptcy or representative of the Participant's
creditors.
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13. NONTRANSFERABILITY OF AWARDS
An Award shall not be transferable or assignable by the Participant
otherwise than by will or by the laws of descent and distribution. During the
lifetime of a Participant, an Award shall be exercisable only by such
Participant. An Award exercisable after the death of a Participant may be
exercised by the legatees, personal representatives or distributees of the
Participant. Notwithstanding anything to the contrary herein, the Committee, in
its sole discretion, shall have the authority to waive this Section 13 (or any
part thereof) to the extent that this Section 13 (or any part thereof) is not
required under the rules promulgated under any law, rule or regulation
applicable to the Company.
14. AMENDMENTS OR TERMINATION
(a) CHANGES TO THE PLAN. The Board may amend, alter or discontinue
the Plan, except that (i) any amendment or alteration shall be subject to the
approval of the Company's stockholders at or before the next annual meeting of
stockholders for which the record date is after the date of such Board action if
(x) such stockholder approval is required by any federal or state law or
regulation or the rules of any stock exchange or automated quotation system on
which the Shares may then be listed or quoted, and the Board may otherwise, in
its discretion, determine to submit amendments or alterations to stockholders
for approval or (y) such amendment or alteration would materially increase the
number of shares reserved for the purposes of the Plan, materially broaden the
employees or class of employees eligible to receive Awards under the Plan or
materially increase benefits accruing to employees participating in the Plan;
(ii) without the consent of a Participant, no amendment or alteration shall
materially impair any of the Participant's rights under an Award theretofore
granted to such Participant; and (iii) the Committee may amend or alter the Plan
in such manner as it deems necessary to permit the granting of Awards meeting
requirements of the Code or other applicable laws. Notwithstanding anything to
the contrary herein, the Board may not amend, alter or discontinue the
provisions relating to Section 10(b) of the Plan after the occurrence of a
Change in Control.
(b) CHANGES TO OUTSTANDING AWARDS. The Committee may waive any
conditions or rights under, or amend, alter, suspend, discontinue, or terminate
any Award theretofore granted and any Award agreement relating thereto, except
as otherwise provided in the Plan and except that the Committee may not amend or
alter an Award theretofore granted if such action would result in an Award
having terms that would not have been authorized or permitted for a new grant or
Award under the Plan; provided that, without the consent of an affected
Participant, no such Committee action may materially and adversely affect the
rights of such Participant under such Award. Other provisions of the Plan
notwithstanding, if any right under this Plan would cause a transaction to be
ineligible for pooling of interest accounting that would, but for the right
hereunder, be eligible for such accounting treatment, the Committee may modify
or adjust the right so that pooling of interest accounting shall be available,
including the substitution of Shares having a Fair Market Value equal to the
cash otherwise payable hereunder for the right which caused the transaction to
be ineligible for pooling of interest accounting.
15. INTERNATIONAL PARTICIPANTS
With respect to Participants who reside or work outside the United
States of America and either who are not (and who are not expected to be)
"covered employees" within the meaning of Section 162(m) of the Code or who are
granted Awards not intended to qualify as "performance-based compensation" under
Section 162(m), the Committee may, in its sole discretion, amend the terms of
the Plan or Awards with respect to such Participants in order to conform such
terms with local laws, regulations, or customs or
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otherwise to meet the objectives of the Plan, and may, where appropriate,
establish one or more sub-plans to reflect such amended provisions.
16. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board nor any submission of
the Plan, specific Plan terms, or amendments thereto to a vote of stockholders
of the Company shall be construed as creating any limitations on the power of
the Board to adopt such other compensatory arrangements as it may deem
desirable, including, without limitation, the granting of awards otherwise than
under the Plan, and such other arrangements may be either applicable generally
or only in specific cases.
17. CHOICE OF LAW
The Plan shall be governed by and construed in accordance with the
laws of the State of New York.
18. EFFECTIVENESS OF THE PLAN
The Plan shall be effective as of the Spinoff Date.
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