INTEGRA LIFESCIENCES HOLDINGS CORPORATION
2000 EQUITY INCENTIVE PLAN
(AMENDED AND RESTATED AS OF JULY 26, 2005)
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
2000 EQUITY INCENTIVE PLAN
(AMENDED AND RESTATED AS OF JULY 26, 2005)
1. PURPOSE.................................................................1
2. DEFINITIONS.............................................................1
3. ADMINISTRATION..........................................................3
4. EFFECTIVE DATE AND TERM OF PLAN.........................................4
5. SHARES SUBJECT TO THE PLAN..............................................4
6. ELIGIBILITY.............................................................5
7. TYPES OF AWARDS.........................................................5
7.1 Options........................................................5
7.2 Stock Appreciation Rights......................................6
7.3 Restricted Stock...............................................7
7.4 Performance Stock; Performance Goals...........................8
7.5 Dividend Equivalent Rights.....................................8
7.6 Loans..........................................................8
8. EVENTS AFFECTING OUTSTANDING AWARDS........................................8
8.1 Termination of Service (Other Than by Death or Disability) ....8
8.2 Death or Disability............................................9
8.3 Capital Adjustments...........................................10
8.4 Certain Corporate Transactions................................10
8.5 Exercise Upon Change in Control...............................12
9. AMENDMENT OR TERMINATION OF THE PLAN......................................12
10. MISCELLANEOUS.............................................................12
10.1 Documentation of Awards.......................................12
10.2 Rights as a Stockholder.......................................12
10.3 Conditions on Delivery of Shares..............................12
10.4 Investment Purpose............................................13
10.5 Registration and Listing of Shares ..........................13
10.6 Compliance with Rule 16b-3....................................13
10.7 Tax Withholding...............................................13
10.8 Nontransferability of Awards..................................14
10.9 Registration..................................................14
10.10 Acquisitions..................................................14
10.11 Amendment or Replacement of Outstanding Options...............14
10.12 Employment Rights.............................................14
10.13 Indemnification of Board and Committee........................14
10.14 Application of Funds..........................................15
10.15 Governing Law.................................................15
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INTEGRA LIFESCIENCES HOLDINGS CORPORATION
2000 EQUITY INCENTIVE PLAN
(AMENDED AND RESTATED AS OF JULY 26, 2005)
WHEREAS, Integra LifeSciences Holdings Corporation (the "Company") desires
to have the ability to award certain equity-based benefits and/or loans to
certain Key Employees and Associates;
NOW, THEREFORE, the Integra LifeSciences Holdings Corporation 2000 Equity
Incentive Plan is hereby adopted under the following terms and conditions:
1. Purpose. The Plan is intended to provide a means whereby the Company may
grant ISOs to Key Employees and may grant NQSOs, Restricted Stock, Stock
Appreciation Rights, Performance Stock, Dividend Equivalent Rights, and/or Loans
to Key Employees and Associates. Thereby, the Company expects to attract and
retain such Key Employees and Associates and to motivate them to exercise their
best efforts on behalf of the Company and its Related Corporations and any
affiliates of the Company or its Related Corporations.
2. Definitions
(a) "Associate" shall mean a designated non-employee director, consultant,
or other person providing services to the Company, a Related Corporation, or an
affiliate of the Company or a Related Corporation.
(b) "Award" shall mean ISOs, NQSOs, Restricted Stock, Stock Appreciation
Rights, Performance Stock, Dividend Equivalent Rights, and/or Loans awarded by
the Committee to a Participant.
(c) "Award Agreement" shall mean a written document evidencing the grant of
an Award, as described in Section 10.1.
(d) "Board" shall mean the Board of Directors of the Company.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(f) "Committee" shall mean the Compensation Committee of the Board, which
shall consist solely of not fewer than two directors of the Company who shall be
appointed by, and serve at the pleasure of, the Board (taking into consideration
the rules under section 16(b) of the Exchange Act and the requirements of
section 162(m) of the Code).
(g) "Company" shall mean Integra LifeSciences Holdings Corporation, a
Delaware corporation.
(h) "Disability" shall mean separation from service as a result of
"permanent and total disability," as defined in section 22(e)(3) of the Code.
(i) "Dividend Equivalent Right" shall mean an Award that entitles the
recipient to receive a benefit in lieu of cash dividends that would have been
payable on any or all Shares subject to another Award granted to the Participant
had such Shares been outstanding.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(k) "Fair Market Value" shall mean the following, arrived at by a good
faith determination of the Committee:
(i) if there are sales of Shares on a national securities exchange or
in an over-the-counter market on the date of grant (or on such other date as
value must be determined), then the quoted closing price on such date; or
(ii) if there are no such sales of Shares on the date of grant (or on
such other date as value must be determined) but there are such sales on dates
within a reasonable period both before and after such date, the weighted average
of the quoted closing price on the nearest date before and the nearest date
after such date on which there were such sales; or
(iii) if actual sales are not available during a reasonable period
beginning before and ending after the date of grant (or on such other date as
value must be determined), then the mean between the bid and asked price on such
date as reported by the National Quotation Bureau; or
(iv) if (i) through (iii) are not applicable, then such other method
of determining fair market value as shall be adopted by the Committee.
Where the Fair Market Value of Shares is determined under (ii) above, the
average of the quoted closing prices on the nearest date before and the nearest
date after the last business day prior to the specified date shall be weighted
inversely by the respective numbers of trading days between the dates of
reported sales and such date (i.e., the valuation date), in accordance with
Treas. Reg. ss.20.2031-2(b)(1), or any successor thereto.
(l) "ISO" shall mean an Option which, at the time such Option is granted
under the Plan, qualifies as an incentive stock option within the meaning of
section 422 of the Code, unless the Award Agreement states that the Option will
not be treated as an ISO.
(m) "Key Employee" shall mean an officer, executive, or managerial or
non-managerial employee of the Company, a Related Corporation, or an affiliate
of the Company or a Related Corporation.
(n) "NQSO" shall mean an Option that, at the time such Option is granted to
a Participant does not meet the definition of an ISO, whether or not it is
designated as a nonqualified stock option in the Award Agreement.
(o) "Option" is an Award entitling the Participant on exercise thereof to
purchase Shares at a specified exercise price.
(p) "Participant" shall mean a Key Employee or Associate who has been
granted an Award under the Plan.
(q) "Performance Stock" shall mean an Award that entitles the recipient to
receive Shares, without payment, following the attainment of designated
Performance Goals.
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(r) "Performance Goals" shall mean goals deemed by the Committee to be
important to the success of the Company or any of its Related Corporations. The
Committee shall establish the specific measures for each such goal at the time
an Award of Performance Stock is granted. In creating these measures, the
Committee may use one or more of the following business criteria: return on
assets, return on net assets, asset turnover, return on equity, return on
capital, market price appreciation of Shares, economic value added, total
stockholder return, net income, pre-tax income, earnings per share, operating
profit margin, net income margin, sales margin, cash flow, market share,
inventory turnover, sales growth, capacity utilization, increase in customer
base, environmental health and safety, diversity, and/or quality. The business
criteria may be expressed in absolute terms or relative to the performance of
other companies or an index.
(s) "Plan" shall mean the Integra LifeSciences Holdings Corporation 2000
Equity Incentive Plan, as set forth herein and as it may be amended from time to
time.
(t) "Related Corporation" shall mean either a "subsidiary corporation" of
the Company, as defined in section 424(f) of the Code, or the "parent
corporation" of the Company (if any), as defined in section 424(e) of the Code.
(u) "Restricted Stock" shall mean an Award that grants the recipient at no
cost (or entitles the recipient to acquire, for a purchase price to be specified
by the Committee, but in no event less than par value) Shares subject to
whatever restrictions are determined by the Committee.
(v) "Securities Act" shall mean the Securities Act of 1933, as amended.
(w) "Shares" shall mean shares of common stock of the Company, par value
$0.01 per share.
(x) "Stock Appreciation Right" shall mean an Award entitling the recipient
on exercise to receive an amount, in cash or Shares or a combination thereof
(such form to be determined by the Committee), determined in whole or in part by
reference to appreciation in Share value.
3. Administration
(a) The Plan shall be administered by the Committee. Each member of the
Committee, while serving as such, shall be deemed to be acting in his or her
capacity as a director of the Company. Acts approved by a majority of the
members of the Committee at which a quorum is present, or acts without a meeting
reduced to or approved in writing by a majority of the members of the Committee,
shall be the valid acts of the Committee. Any authority of the Committee may be
delegated either by the Committee or the Board to a committee of the Board or
any other Plan administrator, but only to the extent such delegation complies
with the requirements of Section 162(m) of the Code, Rule 16b-3 promulgated
under the Exchange Act or as required by any other applicable rule or
regulation.
(b) The Committee shall have the authority:
(i) to select the Key Employees and Associates to be granted Awards
under the Plan and to grant such Awards at such time or times as it may choose;
(ii) to determine the type and size of each Award, including the
number of Shares subject to the Award;
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(iii) to determine the terms and conditions of each Award;
(iv) to amend an existing Award in whole or in part (including the
extension of the exercise period for any NQSO), except that the Committee may
not (i) lower the exercise price of any Option or the purchase price of any
Restricted Stock, or (ii) without the consent of the Participant holding the
Award, take any action under this clause if such action would adversely affect
the rights of such Participant;
(v) to adopt, amend, and rescind rules and regulations for the
administration of the Plan;
(vi) to interpret the Plan and decide any questions and settle any
controversies that may arise in connection with it; and
(vii) to adopt such modifications, amendments, procedures, sub-plans,
and the like, which may be inconsistent with the provisions of the Plan, as may
be necessary to comply with the laws and regulations of other countries in which
the Company, Related Corporations, and affiliates operate in order to assure the
viability of Awards granted under the Plan to individuals in such other
countries.
Such determinations and actions of the Committee, and all other determinations
and actions of the Committee made or taken under authority granted by any
provision of the Plan, shall be conclusive and shall bind all parties. Nothing
in this subsection (b) shall be construed as limiting the power of the Board or
the Committee to make the adjustments described in Sections 8.3 and 8.4.
4. Effective Date and Term of Plan
(a) Effective Date. The Plan, having been adopted by the Board on April 11,
2000, shall become effective on that date, but subject to the approval of the
stockholders of the Company pursuant to Section 9(b). Awards may be granted
under the Plan prior to such stockholder approval (but after the Board's
adoption of the Plan), subject to such stockholder approval.
(b) Term of Plan for ISOS. No ISO may be granted under the Plan after April
10, 2010, but ISOs previously granted may extend beyond that date. Awards other
than ISOs may be granted after that date.
5. Shares Subject to the Plan. The aggregate number of Shares that may be
delivered under the Plan is 2,000,000. Further, no Key Employee shall receive
Options and/or Stock Appreciation Rights for more than 1,000,000 Shares during
any calendar year under the Plan. However, the limits in the preceding two
sentences shall be subject to the adjustment described in Section 8.3. Shares
delivered under the Plan may be authorized but unissued Shares or reacquired
Shares, and the Company may purchase Shares required for this purpose, from time
to time, if it deems such purchase to be advisable. If any Award that requires
the Participant to exercise it in order for Shares to be delivered terminates
without having been exercised in full, or if any Award that is payable in Shares
or cash is satisfied in cash rather than in Shares, the number of Shares as to
which such Award was not exercised or for which cash was substituted shall
continue to be available for future Awards granted under the Plan.
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6. Eligibility. The class of individuals who shall be eligible to receive
Awards under the Plan shall be the Key Employees (including any directors of the
Company who are also officers or Key Employees) and the Associates. More than
one Award may be granted to a Key Employee or Associate under the Plan.
7. Types of Awards
7.1 Options
(a) Kinds of Options. Both ISOs and NQSOs may be granted under the Plan.
However, ISOs may only be granted to Key Employees of the Company or of a
Related Corporation. Once an ISO has been granted, no action by the Committee
that would cause the Option to lose its status as an ISO under the Code will be
effective without the consent of the Participant holding the Option.
(b) $100,000 Limit. The aggregate Fair Market Value of the Shares with
respect to which ISOs are exercisable for the first time by a Key Employee
during any calendar year (counting ISOs under this Plan and under any other
stock option plan of the Company or a Related Corporation) shall not exceed
$100,000. If an Option intended as an ISO is granted to a Key Employee and the
Option may not be treated in whole or in part as an ISO pursuant to the $100,000
limit, the Option shall be treated as an ISO to the extent it may be so treated
under the limit and as an NQSO as to the remainder. For purposes of determining
whether an ISO would cause the limit to be exceeded, ISOs shall be taken into
account in the order granted. The annual limits set forth above for ISOs shall
not apply to NQSOs.
(c) Exercise Price. The exercise price of an Option shall be determined by
the Committee, subject to the following:
(i) The exercise price of an ISO shall not be less than 100 percent
(110 percent in the case of an ISO granted to a 10-percent shareholder) of the
Fair Market Value of the Shares subject to the Option, determined as of the time
the Option is granted. A "10-percent shareholder" is any person who at the time
of grant owns, directly or indirectly, or is deemed to own by reason of the
attribution rules of section 424(d) of the Code, Shares possessing more than 10
percent of the total combined voting power of all classes of Shares of the
Company or of a Related Corporation.
(ii) In no case may the exercise price paid for Shares be less than
the par value per Share.
(d) Term of Options. The term of each Option may not be more than 10 years
(five years, in the case of an ISO granted to a "10-percent shareholder," as
defined in subsection (c) above) from the date the Option was granted, or such
earlier date as may be specified in the Award Agreement.
(e) Exercise of Options. An Option shall become exercisable at such time or
times (but not less than three months from the date of grant), and on such
conditions, as the Committee may specify. The Committee may at any time and from
time to time accelerate the time at which all or any part of the Option may be
exercised. Any exercise of an Option must be in writing, signed by the proper
person, and delivered or mailed to the Company, accompanied by (i) any other
documents required by the Committee and (ii) payment in full in accordance with
subsection (f) below for the number of Shares for which the Option is exercised
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(except that, in the case of an exercise arrangement approved by the Committee
and described in subsection (f)(iv) below, payment may be made as soon as
practicable after the exercise). Only full shares shall be issued under the
Plan, and any fractional share that might otherwise be issuable upon exercise of
an Option granted hereunder shall be forfeited.
(f) Payment for Shares. Shares purchased on the exercise of an Option shall
be paid for as follows:
(i) in cash or by check (acceptable to the Committee), bank draft, or
money order payable to the order of the Company;
(ii) in Shares previously acquired by the Participant; provided,
however, that if such Shares were acquired through the exercise of an ISO and
are used to pay the Option price of an ISO, such Shares have been held by the
Participant for a period of not less than the holding period described in
section 422(a)(1) of the Code on the date of exercise, or if such Shares were
acquired through the exercise of an NQSO and are used to pay the option price of
an ISO, or if such Shares were acquired through the exercise of an ISO or an
NQSO and are used to pay the Option price of an NQSO, such Shares have been held
by the Participant for such period of time as required to be considered "mature"
Shares for purposes of accounting treatment;
(iii) in shares newly acquired by the Participant upon exercise of
such option (which shall constitute a disqualifying disposition in the case of
ISOs);
(iv) by delivering a properly executed notice of exercise of the
Option to the Company and a broker, with irrevocable instructions to the broker
promptly to deliver to the Company the amount of sale or loan proceeds necessary
to pay the exercise price of the Option; or
(v) by any combination of the above-listed forms of payment.
In the event the Option price is paid, in whole or in part, with Shares, the
portion of the Option price so paid shall be equal to the Fair Market Value on
the date of exercise of the Option of Shares surrendered in payment of such
Option price.
7.2 Stock Appreciation Rights
(a) Nature of Stock Appreciation Rights. A Stock Appreciation Right
entitles the Participant to receive, with respect to each Share as to which the
Stock Appreciation Right is exercised, the excess of the Share's Fair Market
Value on the date of exercise over its Fair Market Value on the date the Stock
Appreciation Right was granted. Such excess shall be paid in cash, Shares, or a
combination thereof, as determined by the Committee.
(b) Grant of Stock Appreciation Rights. Stock Appreciation Rights may be
granted in tandem with, or independently of, Options granted under the Plan. A
Stock Appreciation Right granted in tandem with an Option that is not an ISO may
be granted either at or after the time the Option is granted. A Stock
Appreciation Right granted in tandem with an ISO may be granted only at the time
the ISO is granted.
(c) Rules Applicable to Tandem Awards. When Stock Appreciation Rights are
granted in tandem with Options, the number of Stock Appreciation Rights granted
to a Participant that shall be exercisable during a specified period shall not
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exceed the number of Shares that the Participant may purchase upon the exercise
of the related Option during such period. Upon the exercise of an Option, the
Stock appreciation Right relating to the Shares covered by such Option will
terminate. Upon the exercise of a Stock Appreciation Right, the related Option
will terminate to the extent of an equal number of Shares. The Stock
Appreciation Right will be exercisable only at such time or times, and to the
extent, that the related Option is exercisable and will be exercisable in
accordance with the procedure required for exercise of the related Option. The
Stock Appreciation Right will be transferable only when the related Option is
transferable, and under the same conditions. A Stock Appreciation Right granted
in tandem with an ISO may be exercised only when the Fair Market Value of the
Shares subject to the ISO exceeds the exercise price of such ISO.
(d) Exercise of Independent Stock Appreciation Rights. A Stock Appreciation
Right not granted in tandem with an Option shall become exercisable at such time
or times, and on such conditions, as the Committee may specify in the Award
Agreement. The Committee may at any time accelerate the time at which all or any
part of the Stock Appreciation Right may be exercised. Any exercise of an
independent Stock Appreciation Right must be in writing, signed by the proper
person, and delivered or mailed to the Company, accompanied by any other
documents required by the Committee.
7.3 Restricted Stock
(a) General Requirements. Restricted Stock may be issued or transferred for
consideration or for no consideration, as determined by the Committee. If for
consideration, payment may be in cash or check (acceptable to the Committee),
bank draft, or money order payable to the order of the Company.
(b) Rights as a Stockholder. Unless the Committee determines otherwise, a
Participant who receives Restricted Stock shall have certain rights of a
stockholder with respect to the Restricted Stock, including voting and dividend
rights, subject to the restrictions described in subsection (c) below and any
other conditions imposed by the Committee at the time of grant. Unless the
Committee determines otherwise, certificates evidencing shares of Restricted
Stock will remain in the possession of the Company until such Shares are free of
all restrictions under the Plan.
(c) Restrictions. Except as otherwise specifically provided by the Plan,
Restricted Stock may not be sold, assigned, transferred, pledged, or otherwise
encumbered or disposed of, and if the Participant ceases to provide services to
any of the Company or its Related Corporations for any reason, must be offered
to the Company for purchase for the amount paid for the Shares, or forfeited to
the Company if nothing was so paid. These restrictions will lapse at such time
or times, and on such conditions, as the Committee may specify in the Award
Agreement. Upon the lapse of all restrictions, Shares will cease to be
Restricted Stock for purposes of the Plan. The Committee may at any time
accelerate the time at which the restrictions on all or any part of the Shares
will lapse.
(d) Notice of Tax Election. Any Participant making an election under
section 83(b) of the Code for the immediate recognition of income attributable
to the Award of Restricted Stock must provide a copy thereof to the Company
within 10 days of the filing of such election with the Internal Revenue Service.
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7.4 Performance Stock; Performance Goals
(a) Grant. The Committee may grant Performance Stock to any Key Employee or
Associate, conditioned upon the meeting of designated Performance Goals. The
Committee shall determine the number of Shares of Performance Stock to be
granted.
(b) Performance Period and Performance Goals. When Performance Stock is
granted, the Committee shall establish the performance period during which
performance shall be measured, the Performance Goals, and such other conditions
of the Award as the Committee deems appropriate.
(c) Delivery of Performance Stock. At the end of each performance period,
the Committee shall determine to what extent the Performance Goals and other
conditions of the Award have been met and the number of Shares, if any, to be
delivered with respect to the Award.
(d) Maximum Payment. The maximum fair market value of Performance Stock
that may be delivered to a Participant in any one calendar year is $5,000,000.
7.5 Dividend Equivalent Rights. The Committee may provide for payment to
the Participant of Dividend Equivalent Rights, either currently or in the
future, or for the investment of such Dividend Equivalent Rights on behalf of
the Participant.
7.6 Loans. The Committee may authorize a Loan from the Company to a
Participant, either on the date of or after the grant of any Award to the
Participant (except that the ability of the Committee to authorize a Loan in
connection with an Award of ISOs must be included in the Participant's Award
Agreement at the time of the Award). A Loan may be made either in connection
with the purchase of Shares under the Award or with the payment of any Federal,
state, and local income tax with respect to income recognized as a result of the
Award. The Committee will have full authority to decide whether to make a Loan
and to determine the amount, terms, and conditions of the Loan, whether the Loan
is to be secured or unsecured, the terms on which the Loan is to be repaid, and
the conditions, if any, under which it may be forgiven. However, the Loan will
be made on the Participant's personal, negotiable, demand promissory note, and
will bear interest at a rate not lower than the lowest rate that will avoid the
imputation of interest under section 7872 of the Code.
8. Events Affecting Outstanding Awards
8.1 Termination of Service (Other Than by Death or Disability). If a
Participant ceases to provide services to the Company and its Related
Corporations for any reason other than death or Disability, as the case may be,
the following shall apply:
(a) Except as otherwise determined by the Committee, all Options and Stock
Appreciation Rights held by the Participant that were not exercisable
immediately prior to the Participant's termination of service shall terminate at
that time. Any Options or Stock Appreciation Rights that were exercisable
immediately prior to the termination of service will continue to be exercisable
for three months (or for such longer period as the Committee may determine), and
shall thereupon terminate, unless the Award Agreement provides by its terms for
immediate termination in the event of termination of service. In no event,
however, shall an Option or Stock Appreciation Right remain exercisable beyond
the latest date on which it could have been exercised without regard to this
Section. For purposes of this subsection (a), a termination of service shall not
be deemed to have resulted by reason of a sick leave or other bona fide leave of
absence approved for purposes of the Plan by the Committee.
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(b) Except as otherwise determined by the Committee, all Restricted Stock
held by the Participant at the time of the termination of service must be
transferred to the Company (and, in the event the certificates representing such
Restricted Stock are held by the Company, such Restricted Stock shall be so
transferred without any further action by the Participant), in accordance with
Section 7.3.
(c) Except as otherwise determined by the Committee, all Performance Stock
to which the Participant was not irrevocably entitled prior to the termination
of service shall be forfeited and the Award cancelled as of the date of such
termination of service.
(d) Except as otherwise determined by the Committee, all Dividend
Equivalent Rights to which the Participant was not irrevocably entitled prior to
the termination of service shall be forfeited and the Award cancelled as of the
date of such termination of service.
(e) Payment of any outstanding Loan upon a Participant's termination of
service shall be governed by the terms of the loan agreement entered into by the
Company and the Participant.
8.2 Death Or Disability. If a Participant dies or incurs a Disability, the
following shall apply:
(a) Except as otherwise determined by the Committee, all Options and Stock
Appreciation Rights held by the Participant immediately prior to death or
Disability, as the case may be, to the extent then exercisable, may be exercised
by the Participant's executor or administrator or by the person or persons to
whom the Option or Stock Appreciation Right is transferred by will or the laws
of descent and distribution, at any time within the one-year period ending with
the first anniversary of the Participant's death or Disability (or such shorter
or longer period as the Committee may determine), and shall thereupon terminate.
In no event, however, shall an Option or Stock Appreciation Right remain
exercisable beyond the latest date on which it could have been exercised without
regard to this Section. Except as otherwise determined by the Committee, all
Options and Stock Appreciation Rights held by a Participant immediately prior to
death or Disability that are not then exercisable shall terminate at the date of
death or Disability.
(b) Except as otherwise determined by the Committee, all Restricted Stock
held by the Participant at the date of death or Disability, as the case may be,
must be transferred to the Company (and, in the event the certificates
representing such Restricted Stock are held by the Company, such Restricted
Stock shall be so transferred without any further action by the Participant), in
accordance with Section 7.3.
(c) Except as otherwise determined by the Committee, all Performance Stock
to which the Participant was not irrevocably entitled prior to death or
Disability, as the case may be, shall be forfeited and the Award canceled as of
the date of death or Disability.
(d) Except as otherwise determined by the Committee, all Dividend
Equivalent Rights to which the Participant was not irrevocably entitled prior to
death or Disability, as the case may be, shall be forfeited and the Award
canceled as of the date of death or Disability.
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(e) Payment of any outstanding Loan upon a Participant's death or
Disability shall be governed by the terms of the loan agreement entered into by
the Company and the Participant.
8.3 Capital Adjustments. The number of Shares that may be delivered under
the Plan, the maximum number of Shares that may be made subject to ISOs, and the
maximum number of Shares with respect to which Options or Stock Appreciation
Rights may be granted to any Participant under the Plan, all as stated in
Section 5, and the number of Shares issuable upon the exercise or vesting of
outstanding Awards under the Plan (as well as the exercise price per Share under
outstanding Options) shall be proportionately adjusted, as may be deemed
appropriate by the Committee, to reflect any increase or decrease in the number
of issued Shares resulting from a subdivision (share-split), consolidation
(reverse split), stock dividend, or similar change in the capitalization of the
Company.
8.4 Certain Corporate Transactions
(a) In the event of a corporate transaction (as, for example, a merger,
consolidation, acquisition of property or stock, separation, reorganization, or
liquidation), each outstanding Award shall be assumed by the surviving or
successor entity; provided, however, that in the event of a proposed corporate
transaction, the Committee may terminate all or a portion of any outstanding
Award, effective upon the closing of the corporate transaction, if it determines
that such termination is in the best interests of the Company.
If the Committee decides to terminate outstanding Options or Stock
Appreciation Rights, the Committee shall give each Participant holding an Option
or Stock Appreciation Right to be terminated not less than seven days' notice
prior to any such termination, and any Option or Stock Appreciation Right that
is to be so terminated may be exercised (if and only to the extent that it is
then exercisable) up to, and including the date immediately preceding such
termination. Further, the Committee, in its discretion, may (i) accelerate, in
whole or in part, the date on which any or all Options and Stock Appreciation
Rights become exercisable, (ii) remove the restrictions from the outstanding
Shares of Restricted Stock, (iii) cause the delivery of any Performance Stock,
even if the associated Performance Goals have not been met, (iv) cause the
payment of any Dividend equivalent Rights, and/or (v) forgive all or any portion
of the principal of, or interest on, a Loan. The Committee also may, in its
discretion, change the terms of any outstanding Award to reflect any such
corporate transaction, provided that, in the case of ISOs, such change would not
constitute a "modification" under section 424(h) of the Code, unless the
Participant consents to the change.
(b) With respect to an outstanding Award held by a Participant who,
following the corporate transaction, will be employed by or otherwise providing
services to an entity which is a surviving or acquiring entity in such
transaction or an affiliate of such an entity, the Committee may, in lieu of the
action described in subsection (a) above, arrange to have such surviving or
acquiring entity or affiliate grant to the Participant a replacement award
which, in the judgment of the Committee, is substantially equivalent to the
Award.
8.5 Exercise Upon Change in Control
(a) Notwithstanding any other provision of this Plan, all outstanding
Options and any Stock Appreciation Rights in tandem with such Options shall
become fully vested and exercisable upon a Change in Control.
(b) "Change in Control" shall mean:
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(i) An acquisition (other than directly from the Company) of any
voting securities of the Company ("Voting Securities") by any "Person" (as such
term is used for purposes of section 13(d) or 14(d) of the Exchange Act)
immediately after which such Person has "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the
combined voting power of all the then outstanding Voting Securities, other than
the Company, any trustee or other fiduciary holding securities under any
employee benefit plan of the Company or an affiliate thereof, or any corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company;
provided, however, that any acquisition from the Company or any acquisition
pursuant to a transaction which complies with clauses (i), (ii) and (iii) of
subsection (c) of this Section shall not be a Change in Control under this
subsection (a);
(ii) The individuals who, as of March 1, 2000, are members of the
Board (the "Incumbent Board") cease for any reason to constitute at least
two-thirds of the Board; provided, however, that if the election, or nomination
for election by the shareholders, of any new director was approved by a vote of
at least two-thirds of the members of the Board who constitute Incumbent Board
members, such new directors shall for all purposes be considered as members of
the Incumbent Board as of March 1, 2000; provided further, however, that no
individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual or
threatened "Election Contest" (as described in Rule 14a-11 promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board of Directors (a "Proxy
Contest") including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest;
(iii) consummation by the Company of a reorganization, merger, or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company or the acquisition of assets or stock of another entity (a
"Business Combination"), unless immediately following such Business Combination:
(i) more than 50% of the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors of (x) the
corporation resulting from such Business Combination (the "Surviving
Corporation"), or (y) if applicable, 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 (the "Parent Corporation"),
is represented, directly or indirectly, by Company Voting Securities outstanding
immediately prior to such Business Combination (or, if applicable, is
represented by shares into which such Company Voting Securities were converted
pursuant to such Business Combination), and such voting power among the holders
thereof is in substantially the same proportions as their ownership, immediately
prior to such Business Combination, of the Company Voting Securities; and (ii)
at least a majority of the members of the board of directors of the Parent
Corporation (or, if there is no Parent Corporation, the Surviving Corporation)
were members of the Incumbent Board at the time of the execution of the initial
agreement, or the action of the Board, providing for such Business Combination;
(iv) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company; or
(v) acceptance by the shareholders of the Company of shares in a share
exchange if the shareholders of the Company immediately before such share
exchange do not own, directly or indirectly, immediately following such share
exchange more than 50% of the combined voting power of the outstanding Voting
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Securities of the corporation resulting from such share exchange in
substantially the same proportion as their ownership of the Voting Securities
outstanding immediately before such share exchange.
9. Amendment Or Termination Of The Plan
9.1 In General. The Board, pursuant to a written resolution, may from time
to time suspend or terminate the Plan or amend it, and, except as provided in
Section 3(b)(4), the Committee may amend any outstanding Awards in any respect
whatsoever; except that, without the approval of the shareholders (given in the
manner set forth in subsection (b) below):
(i) no amendment may be made that would:
(A) change the class of employees eligible to participate in the Plan
with respect to ISOs;
(B) except as permitted under Section 8.3, increase the maximum number
of Shares with respect to which ISOs may be granted under the Plan; or
(C) extend the duration of the Plan under Section 4 with respect to
any ISOs granted hereunder; and
(ii) no amendment may be made that would constitute a modification of the
material terms of the "performance goal" within the meaning of Treas. Reg. ss.
1.162-27(e)(4)(vi) or any successor thereto (to the extent compliance with
section 162(m) of the Code is desired).
Notwithstanding the foregoing, no such suspension, discontinuance, or amendment
shall materially impair the rights of any Participant holding an outstanding
Award without the consent of such Participant.
(b) Manner Of Shareholder Approval. The approval of shareholders must be
effected by a majority of the votes cast (including abstentions, to the extent
abstentions are counted as voting under applicable state law), in a separate
vote at a duly held shareholders' meeting at which a quorum representing a
majority of all outstanding voting Shares is, either in person or by proxy,
present and voting on the Plan.
10. Miscellaneous
10.1 Documentation of Awards. Awards shall be evidenced by such written
Award Agreements, if any, as may be prescribed by the Committee from time to
time. Such instruments may be in the form of agreements to be executed by both
the Participant and the Company, or certificates, letters, or similar
instruments, which need not be executed by the Participant but acceptance of
which will evidence agreement to the terms thereof.
10.2 Rights as a Stockholder. Except as specifically provided by the Plan
or an Award Agreement, the receipt of an Award shall not give a Participant
rights as a stockholder; instead, the Participant shall obtain such rights,
subject to any limitations imposed by the Plan or the Award Agreement, upon the
actual receipt of Shares.
10.3 Conditions on Delivery of Shares. The Company shall not deliver any
Shares pursuant to the Plan or remove restrictions from Shares previously
delivered under the Plan (i) until all conditions of the Award have been
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satisfied or removed, (ii) until all applicable Federal and state laws and
regulations have been complied with, and (iii) if the outstanding Shares are at
the time of such delivery listed on any stock exchange, until the Shares to be
delivered have been listed or authorized to be listed on such exchange. If an
Award is exercised by the Participant's legal representative, the Company will
be under no obligation to deliver Shares pursuant to such exercise until the
Company is satisfied as to the authority of such representative.
10.4 Investment Purpose. Each Award shall be granted on the condition that
the purchase or grant of Shares thereunder shall be for investment purposes and
not with a view to resale or distribution, except that in the event the Shares
subject to such Award are registered under the Securities Act, or in the event a
resale of such Shares without such registration would otherwise be permissible,
such condition shall be inoperative if in the opinion of counsel for the Company
such condition is not required under the Securities Act or any other applicable
law, regulation, or rule of any governmental agency.
10.5 Registration and Listing of Shares. If the Company shall deem it
necessary to register under the Securities Act or any other applicable statute
any Shares purchased under this Plan, or to qualify any such Shares for an
exemption from any such statutes, the Company shall take such action at its own
expense. If Shares are listed on any national securities exchange at the time
any Shares are purchased hereunder, the Company shall make prompt application
for the listing on such national securities exchange of such Shares, at its own
expense. Purchases and grants of Shares hereunder shall be postponed as
necessary pending any such action.
10.6 Compliance with Rule 16b-3. All elections and transactions under this
Plan by persons subject to Rule 16b-3, promulgated under section 16(b) of the
Exchange Act, or any successor to such Rule, are intended to comply with at
least one of the exemptive conditions under such Rule. The Committee shall
establish such administrative guidelines to facilitate compliance with at least
one such exemptive condition under Rule 16b-3 as the Committee may deem
necessary or appropriate. If any provision of this Plan, any administrative
guideline, or any act or omission with respect to this Plan (including any act
or omission by a Participant) fails to satisfy such exemptive condition under
Rule 16b-3 or otherwise is inconsistent with such condition, such provision,
guideline, or act or omission shall be deemed null and void.
10.7 Tax Withholding
(a) Obligation to Withhold. The Company shall withhold from any cash
payment made pursuant to an Award an amount sufficient to satisfy all Federal,
state, and local withholding tax requirements (the "withholding requirements").
In the case of an Award pursuant to which Shares may be delivered, the Committee
may require that the Participant or other appropriate person remit to the
Company an amount sufficient to satisfy the withholding requirements, or make
other arrangements satisfactory to the Committee with regard to such
requirements, prior to the delivery of any Shares.
(b) Election to Withhold Shares. The Committee, in its discretion, may
permit or require the Participant to satisfy the federal, state, and/or local
withholding tax, in whole or in part, by electing to have the Company withhold
Shares (or by returning previously acquired Shares to the Company); provided,
however, that the Company may limit the number of Shares withheld to satisfy the
tax withholding requirements to the extent necessary to avoid adverse accounting
consequences. Shares shall be valued, for purposes of this subsection (b), at
their Fair Market Value determined as of the date an amount is includible in
income by the Participant (the "Determination Date"), rather than the date of
grant). If Shares acquired by the exercise of an ISO are used to satisfy the
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withholding requirement described above, such Shares must have been held by the
Participant for a period of not less than the holding period described in
section 422(a)(1) of the Code as of the Determination Date. The Committee shall
adopt such withholding rules as it deems necessary to carry out the provisions
of this subsection (b).
10.8 Nontransferability of Awards. No Award may be transferred other than
by will or by the laws of descent and distribution, and during a Participant's
lifetime an Award requiring exercise may be exercised only by the Participant
(or in the event of the Participant's incapacity, by the person or persons
legally appointed to act on the Participant's behalf).
10.9 Registration. If the Participant is married at the time Shares are
delivered and if the Participant so requests at such time, the certificate or
certificates for such Shares shall be registered in the name of the Participant
and the Participant's spouse, jointly, with right of survivorship.
10.10 Acquisitions. Notwithstanding any other provision of this Plan,
Awards may be granted hereunder in substitution for awards held by directors,
key employees, and associates of other corporations who are about to, or have,
become Key Employees or Associates as a result of a merger, consolidation,
acquisition of assets, or similar transaction by the Company or a Related
Corporation. The terms of the substitute Awards so granted may vary from the
terms set forth in this Plan to such extent as the Committee may deem
appropriate to conform, in whole or in part, to the provisions of the awards in
substitution for which they are granted.
10.11 Amendment or Replacement of Outstanding Options. The Committee shall
have the authority to effect, at any time and from time to time, with the
consent of the affected Participants, the cancellation of any or all outstanding
Options under the Plan and to grant in substitution therefor new Options under
the Plan covering the same or a different number of Shares but having a per
share purchase price not less than the greater of par value or 100 percent of
the Fair Market Value of a Share on the new date of the grant. The Committee may
permit the voluntary surrender of all or a portion of any Option to be
conditioned upon the granting to the Participant under the Plan of a new Option
for the same or a different number of Shares as the Option surrendered, or may
require such voluntary surrender as a condition precedent to a grant of a new
Option to such Participant. Any new Option shall be exercisable at the price,
during the period, and in accordance with any other terms and conditions
specified by the Committee at the time the new Option is granted, all determined
in accordance with the provisions of the Plan without regard to the price,
period of exercise, and any other terms or conditions of the Option surrendered.
10.12 Employment Rights. Neither the adoption of the Plan nor the grant of
Awards will confer upon any person any right to continued employment by the
Company or any of its Related Corporations or affect in any way the right of any
of the foregoing to terminate an employment relationship at any time.
10.13 Indemnification of Board and Committee. Without limiting any other
rights of indemnification that they may have from the Company or any of its
Related Corporations, the members of the Board and the members of the Committee
shall be indemnified by the Company against all costs and expenses reasonably
incurred by them in connection with any claim, action, suit, or proceeding to
which they or any of them may be a party by reason of any action taken or
failure to act under, or in connection with, the Plan or any Award granted
thereunder, and against all amounts paid by them in settlement thereof (provided
such settlement is approved by legal counsel selected by the Company) or paid by
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them in satisfaction of a judgment in any such action, suit, or proceeding,
except a judgment based upon a finding of willful misconduct or recklessness on
their part. Upon the making or institution of any such claim, action, suit, or
proceeding, the Board or Committee member shall notify the Company in writing,
giving the Company an opportunity, at its own expense, to handle and defend the
same before such Board or Committee member undertakes to handle it on his own
behalf. The provisions of this Section shall not give members of the Board or
the Committee greater rights than they would have under the Company's by-laws or
Delaware law.
10.14 Application of Funds. Any cash proceeds received by the Company from
the sale of Shares pursuant to Awards granted under the Plan shall be added to
the general funds of the Company. Any Shares received in payment for additional
Shares upon exercise of an Option shall become treasury stock.
10.15 Governing Law. The Plan shall be governed by the applicable Code
provisions to the maximum extent possible. Otherwise, the laws of the State of
New Jersey (without reference to the principles of conflict of laws) shall
govern the operation of, and the rights of Key Employees and Associates under,
the Plan and Awards granted hereunder.
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