INTEGRA LIFESCIENCES HOLDINGS CORPORATION
2003 EQUITY INCENTIVE PLAN
(AMENDED AND RESTATED AS OF JULY 26, 2005)
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
2003 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...........................................................4
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.........................7
7.5 Contract Stock...............................................7
7.6 Dividend Equivalent Rights...................................8
8. Events Affecting Outstanding Awards...................................8
8.1 Termination of Service (Other Than by Death or Disability)...8
8.2 Death or Disability..........................................8
8.3 Capital Adjustments..........................................9
8.4 Certain Corporate Transactions...............................9
8.5 Exercise Upon Change in Control.............................10
9. Amendment or Termination of the Plan.................................11
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 Registration and Listing of Shares..........................12
10.5 Compliance with Rule 16b-3..................................12
10.6 Tax Withholding.............................................12
10.7 Transferability of Awards...................................13
10.8 Registration................................................13
10.9 Acquisitions................................................13
10.10 Employment Rights...........................................13
10.11 Indemnification of Board and Committee......................13
10.12 Application of Funds........................................14
10.13 Governing Law...............................................14
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INTEGRA LIFESCIENCES HOLDINGS CORPORATION
2003 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 to
certain "Key Employees" and "Associates" (as defined below);
NOW, THEREFORE, the Integra LifeSciences Holdings Corporation
2003 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, Contract Stock and Dividend
Equivalent Rights 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
any Related Corporations and Affiliates.
2. Definitions
a) "Affiliate" shall mean an entity in which the Company or a Related
Corporation has a 50 percent or greater equity interest.
b) "Associate" shall mean a designated nonemployee director, consultant or
other person providing services to the Company, a Related Corporation or an
Affiliate.
c) "Award" shall mean ISOs, NQSOs, Restricted Stock, Stock Appreciation
Rights, Performance Stock, Contract Stock and/or Dividend Equivalent Rights
awarded by the Committee to a Participant.
d) "Award Agreement" shall mean a written document evidencing the grant of
an Award, as described in Section 10.1.
e) "Board" shall mean the Board of Directors of the Company. f) "Code"
shall mean the Internal Revenue Code of 1986, as amended.
g) "Committee" shall mean the Company's 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).
h) "Company" shall mean Integra LifeSciences Holdings Corporation, a
Delaware corporation.
i) "Contract Date" shall mean the date specified in the Award Agreement on
which a Participant is entitled to receive Contract Stock, provided he or
she is still providing services to the Company, a Related Corporation, or
an Affiliate on such date.
j) "Contract Stock" shall mean an Award that entitles the recipient to
receive unrestricted Shares, without payment, if the recipient is still
providing services to the Company or a Related Corporation as of a future
date specified in the Award Agreement.
k) "Disability" shall mean separation from service as a result of
"permanent and total disability," as defined in section 22(e)(3) of the
Code.
l) "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.
m) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
n) "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 paragraphs (i) through (iii) above 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 paragraph (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.
o) "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.
p) "Key Employee" shall mean an officer, executive, or managerial or
nonmanagerial employee of the Company, a Related Corporation, or an
Affiliate.
q) "More-Than-10-Percent Stockholder" shall mean 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.
r) "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.
s) "Option" is an Award entitling the Participant on exercise thereof to
purchase Shares at a specified exercise price.
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t) "Participant" shall mean a Key Employee or Associate who has been
granted an Award under the Plan.
u) "Performance Stock" shall mean an Award that entitles the recipient to
receive Shares, without payment, following the attainment of designated
Performance Goals.
v) "Performance Goals" shall mean goals deemed by the Committee to be
important to the success of the Company or any of its Related Corporations
or Affiliates. 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 shall 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.
w) "Plan" shall mean the Integra LifeSciences Holdings Corporation 2003
Equity Incentive Plan, as set forth herein and as it may be amended from
time to time.
x) "Related Corporation" shall mean either a "subsidiary corporation" of
the Company (if any), 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.
y) "Restricted Stock" shall mean an Award that grants the recipient Shares
at no cost but subject to whatever restrictions are determined by the
Committee.
z) "Securities Act" shall mean the Securities Act of 1933, as amended.
aa)"Shares" shall mean shares of common stock of the Company, par value
$0.01 per share.
bb) "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 (A) lower the exercise price of any Option, or (B)
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 and its 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 February
2, 2003, 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
February 23, 2013, 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 4,000,000. 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. Any Shares still subject to an Option which expires or otherwise
terminates for any reason whatever (including, without limitation, the
surrender thereof) without having been exercised in full, any Shares that
are still subject to an Award that is forfeited, any Shares withheld for the
payment of taxes with respect to an Award, and the Shares subject to an
Award which is payable in Shares or cash and that is satisfied in cash
rather than in Shares shall continue to be available for Awards under the
Plan.
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.
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7. Types of Awards
7.1 Options
a) Kinds of Options. Both ISOs and NQSOs may be granted by the Committee
under the Plan. However, ISOs may only be granted to Key Employees of the
Company or of a Related Corporation. NQSOs may be granted to both Key
Employees and Associates. 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 the greater of
(A) 100 percent (110 percent in the case of an ISO granted to a
More-Than-10-Percent Stockholder) of the Fair Market Value of the
Shares subject to the Option, determined as of the time the Option is
granted, or (B) the par value per Share.
ii) The exercise price of an NQSO shall not be less than the greater
of (A) 100 percent of the Fair Market Value of the Shares subject to
the Option, determined as of the time the Option is granted, or (B)
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 More-Than-10-Percent
Stockholder) 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 (except that, in the case of an
exercise arrangement approved by the Committee and described in subsection
(f)(iii) 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;
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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) 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
iv) 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 the Shares surrendered in payment of such
Option price.
7.2. Stock Appreciation Rights
a) Grant of Stock Appreciation Rights. Stock Appreciation Rights may be
granted to a Key Employee or Associate by the Committee. 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.
b) 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.
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 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.
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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 to a
Key Employee or Associate (for no consideration).
b) Rights as a Stockholder. Unless the Committee determines otherwise, a
Key Employee or Associate 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 and its Related Corporations and
Affiliates for any reason, must be forfeited to the Company. 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, the 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
an 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.
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.
7.5. Contract Stock
a) Grant. The Committee may grant Contract Stock to any Key Employee or
Associate, conditioned upon the Participant's continued provision of
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services to the Company and its Related Corporations and Affiliates through
the date specified in the Award Agreement. The Committee shall determine
the number of Shares of Contract Stock to be granted.
b) Contract Date. When Contract Stock is granted, the Committee shall
establish the Contract Date on which the Contract Stock shall be delivered
to the Participant, provided the Participant is still providing services to
the Company and its Related Corporations and Affiliates on such date.
c) Delivery of Contract Stock. If the Participant is still providing
services to the Company and its Related Corporations and Affiliates as of
the Contract Date, the Committee shall cause the Contract Stock to be
delivered to the Participant in accordance with the terms of the Award
Agreement.
7.6. Dividend Equivalent Rights. The Committee may provide for payment to a Key
Employee or Associate of Dividend Equivalent Rights, either currently or in
the future, or for the investment of such Dividend Equivalent Rights on
behalf of the Participant.
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 and Affiliates 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 six 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 or for
termination in less than six months 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.
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,
Contract Stock, and Dividend Equivalent Rights to which the Participant was
not irrevocably entitled prior to the termination of service shall be
forfeited and the Awards canceled as of the date of such termination of
service.
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 or by the Participant's legal representative
(in the case of Disability), or by the Participant's executor or
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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,
Contract Stock, and 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 Awards canceled as of the date of death or
Disability.
8.3. Capital Adjustments. The maximum number of Shares that may be delivered
under the Plan, and the maximum number of Shares with respect to which
Options or Stock Appreciation Rights may be granted to any Key Employee or
Associate under the Plan, both 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 outstanding Restricted
Stock, (iii) cause the delivery of any Performance Stock, even if the
associated Performance Goals have not been met, (iv) cause the delivery of
any Contract Stock, even if the Contract Date has not been reached; and/or
(v) cause the payment of any Dividend Equivalent Rights. 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.
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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 all Stock Appreciation Rights shall become fully vested and
exercisable, all Performance Stock and all Dividend Equivalent Rights shall
become fully vested, all Contract Stock shall become immediately payable,
and all restrictions shall be removed from any outstanding Restricted
Stock, upon a Change in Control.
b) "Change in Control" shall mean:
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 percent 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 paragraph (iii)(A) and (B) below shall not be a Change in Control
under this paragraph (i);
ii) The individuals who, as of March 1, 2003, 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 stockholders, 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, 2003, 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: (A) more than 50 percent of the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of (I) the
corporation resulting from such Business Combination (the "Surviving
Corporation"), or (II) if applicable, a corporation which as a result
of such transaction owns the Company or all or substantially all of
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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 (B) 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 stockholders of the Company of a complete
liquidation or dissolution of the Company; or v) acceptance by the
stockholders of the Company of shares in a share exchange if the
stockholders of the Company immediately before such share exchange do
not own, directly or indirectly, immediately following such share
exchange more than 50 percent of the combined voting power of the
outstanding Voting 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
a) 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)(iv), 7.1(a), and 8.4(a), the Committee may amend any
outstanding Awards in any respect whatsoever; except that, without the
approval of the stockholders (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;
(C) extend the duration of the Plan under Section 4(b) with
respect to any ISOs granted hereunder; or
(D) reprice or regrant through cancellation, or modify (except in
connection with a change in the Company's capitalization) any
award, if the effect would be to reduce the exercise price for
the shares underlying such award.
ii) no amendment may be made that would constitute a modification of
the material terms of the "performance goal(s)" 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, termination or amendment
shall materially impair the rights of any Participant holding an outstanding
Award without the consent of such Participant.
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b) Manner of Stockholder Approval. The approval of stockholders 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 stockholders' meeting at which a quorum
representing a majority of all outstanding voting stock 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
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. 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.
10.5. 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.
10.6. 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 the Withholding
Requirements, prior to the delivery of any Shares.
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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 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 Withholding Requirements, 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 Section.
10.7. Transferability of Awards. No ISO may be transferred other than by will
or by the laws of descent and distribution. No other Award may be
transferred, except to the extent permitted in the applicable Award
Agreement. 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).
10.8. 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.
10.9. 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 or (in the case of Awards other than
ISOs) an Affiliate. 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.
10.10. 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 Affiliates or affect in
any way the right of any of the foregoing to terminate an employment
relationship at any time.
10.11. 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 or Affiliates, 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 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 or her 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.
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10.12. 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.
10.13. Governing Law. The Plan shall be governed by the applicable Code
provisions to the maximum extent possible. Otherwise, except as provided
in Section 10.12, the laws of the State of Delaware (without reference to
the principles of conflict of laws) shall govern the operation of, and
the rights of Participants under, the Plan and Awards granted hereunder.
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