EXHIBIT 10.34
CRYOLIFE, INC.
1998 Long-Term Incentive Plan
TABLE OF CONTENTS
Page
SECTION 1 GENERAL........................................................ 1
1.1 Purpose.................................................... 1
1.2 Participation.............................................. 1
SECTION 2 OPTIONS AND SARS............................................... 1
2.1 Definitions of Options and SARS............................ 1
2.2 Exercise Price............................................. 2
2.3 Exercise................................................... 2
2.4 Payment of Option Exercise Price........................... 2
2.5 Expiration Date............................................ 3
2.6 Settlement of Award........................................ 3
SECTION 3 OTHER STOCK AWARDS.............................................. 3
3.1 Definition................................................. 3
3.2 Restrictions on Stock Awards............................... 3
SECTION 4 OPERATION AND ADMINISTRATION................................... 4
4.1 Effective Date............................................. 4
4.2 Shares Subject to Plan..................................... 4
4.3 Limit on Distribution...................................... 6
4.4 Tax Withholding............................................ 6
4.5 Payment in Shares.......................................... 6
4.6 Dividends and Dividend Equivalents......................... 6
4.7 Payments................................................... 6
4.8 Transferability............................................ 7
4.9 Form and Time of Elections................................. 7
4.10 Agreement With Company..................................... 7
4.11 Limitation of Implied Rights............................... 7
4.12 Evidence................................................... 7
4.13 Action by Company or Related Company....................... 8
4.14 Gender and Number.......................................... 8
4.15 Change of Control.......................................... 8
4.16 Liability for Cash Payment................................. 8
4.17 Governing Law.............................................. 8
i
SECTION 5 COMMITTEE...................................................... 9
5.1 Administration............................................. 9
5.2 Selection of Committee..................................... 9
5.3 Powers of Committee........................................ 9
5.4 Delegation by Committee.................................... 10
5.5 Information to be Furnished to Committee................... 10
SECTION 6 AMENDMENT AND TERMINATION...................................... 10
6.1 Board of Directors......................................... 10
6.2 Committee.................................................. 11
SECTION 7 DEFINED TERMS.................................................. 11
SECTION 8 UNFUNDED STATUS OF THE PLAN..................................... 12
ii
CRYOLIFE, INC.
1998 LONG-TERM INCENTIVE PLAN
SECTION 1
GENERAL
1.1 Purpose. The CryoLife, Inc. 1998 Long-Term Incentive Plan (the
"Plan") has been established by CryoLife, Inc. (the "Company") to (i) attract
and retain persons eligible to participate in the Plan; (ii) motivate
Participants, by means of appropriate incentives, to achieve long-range goals;
(iii) provide incentive compensation opportunities that are competitive with
those of other similar companies; and (iv) further identify Participants'
interests with those of the Company's other stockholders through compensation
that is based on the Company's common stock; and thereby promote the long-term
financial interest of the Company and the Related Companies, including the
growth in value of the Company's equity and enhancement of long-term stockholder
return.
1.2 Participation. Subject to the terms and conditions of the Plan, the
Committee shall determine and designate, from time to time, from among the
Eligible Persons, those persons who will be granted one or more Awards under the
Plan, and thereby become "Participants" in the Plan. In the discretion of the
Committee, a Participant may be granted any Award permitted under the provisions
of the Plan, and more than one Award may be granted to a Participant. Awards may
be granted as alternatives to or replacement of awards outstanding under the
Plan, or any other plan or arrangement of the Company or a Related Company
(including a plan or arrangement of a business or entity, all or a portion of
which is acquired by the Company or a Related Company).
1.3 Operation, Administration, and Definitions. The operation and
administration of the Plan, including the Awards made under the Plan, shall be
subject to the provisions of Section 4 (relating to operation and
administration). Capitalized terms in the Plan shall be defined as set forth in
the Plan (including the definition provisions of Section 7 of the Plan).
SECTION 2
OPTIONS AND SARS
2.1 Definitions of Options and SARS.
(a) The grant of an "Option" entitles the Participant to purchase
shares of Stock at an Exercise Price established by the
Committee. Options granted under this Section 2 may be either
Incentive Stock Options or Non-Qualified Stock Options, as
determined in the discretion of the Committee. An "Incentive
Stock Option" is an Option that is intended to satisfy the
requirements applicable to an "incentive stock option"
described in section 422(b) of the Code. A "Non-
Qualified Option" is an Option that is not intended to be an
"incentive stock option" as that term is described in section
422(b) of the Code.
(b) To the extent that the aggregate fair market value of Stock
with respect to which Incentive Stock Options are exercisable
for the first time by the Participant during any calendar year
(under all plans of the Company and all Related Companies)
exceeds $100,000, such options shall be treated as Non-
Qualified Stock Options, to the extent required by section 422
of the Code.
(c) A stock appreciation right (an "SAR") entitles the Participant
to receive, in cash or Stock (as determined in accordance with
subsection 2.6), value equal to all or a portion of the excess
of: (a) the Fair Market Value of a specified number of shares
of Stock at the time of exercise; over (b) an Exercise Price
established by the Committee.
2.2 Exercise Price. The "Exercise Price" of each Option and SAR granted
under this Section 2 shall be established by the Committee or shall be
determined by a method established by the Committee at the time the Option or
SAR is granted; except that the Exercise Price shall not be less than the
greater of 100% of the Fair Market Value or the par value of a share of Stock as
of the Pricing Date. However, if the Participant owns more than 10% of the total
combined voting power of all classes of capital stock of the Company or any of
its subsidiary or parent corporations, the Exercise Price of an Incentive Stock
Option granted to such Participant shall not be less than 110% of the Fair
Market Value of a share of Stock as of the Pricing Date. For purposes of the
preceding sentences, the "Pricing Date" shall be the date on which the Option or
SAR is granted, except that the Committee may provide that: (i) the Pricing Date
is the date on which the recipient is hired or promoted (or similar event), if
the grant of the Option or SAR occurs not more than 90 days after the date of
such hiring, promotion or other event; and (ii) if an Option or SAR is granted
in tandem with, or in substitution for, an outstanding Award, the Pricing Date
is the date of grant of such outstanding Award.
2.3 Exercise. An Option and an SAR shall be exercisable in accordance
with such terms and conditions and during such periods as may be established by
the Committee.
2.4 Payment of Option Exercise Price. The payment of the Exercise Price
of an Option granted under this Section 2 shall be subject to the following:
(a) Subject to the following provisions of this subsection 2.4,
the full Exercise Price for shares of Stock purchased upon the
exercise of any Option shall be paid at the time of such
exercise (except that, in the case of an exercise arrangement
approved by the Committee and described in paragraph 2.4(c),
payment may be made as soon as practicable after the
exercise).
(b) The Exercise Price shall be payable in cash or by tendering
shares of Stock (by either actual delivery of shares or by
attestation, with such shares valued at Fair
2
Market Value as of the day of exercise), or in any combination
thereof, as determined by the Committee.
(c) The Committee may permit a Participant to elect to pay the
Exercise Price upon the exercise of an Option by authorizing a
third party to sell shares of Stock (or a sufficient portion
of the shares) acquired upon exercise of the Option and remit
to the Company a sufficient portion of the sale proceeds to
pay the entire Exercise Price and any tax withholding
resulting from such exercise, or the Company may choose to
retain such shares in satisfaction of the Exercise Price and
any tax withholding.
2.5 Expiration Date. The "Expiration Date" with respect to an Option
means the date established as the Expiration Date by the Committee at the time
of the grant; provided, however, that unless otherwise established by Committees
at the time of grant, the Expiration Date with respect to any Option shall not
be later than the earliest to occur of:
(a) the ten-year anniversary of the date on which the Option is
granted;
(b) if the Participant's Date of Termination occurs for Cause, the
Date of Termination; or
(c) if the Participant's Date of Termination occurs for reasons
other than Cause, Retirement, Early Retirement, death or
Disability, the 30-day anniversary of such Date of
Termination.
2.6 Settlement of Award. Distribution following exercise of an Option
or SAR, and shares of Stock distributed pursuant to such exercise, shall be
subject to such conditions, restrictions and contingencies as the Committee may
establish. Settlement of SARs may be made in shares of Stock (valued at their
Fair Market Value at the time of exercise), in cash, or in a combination
thereof, as determined in the discretion of the Committee. The Committee, in its
discretion, may impose such conditions, restrictions and contingencies with
respect to shares of Stock acquired pursuant to the exercise of an Option or an
SAR as the Committee determines to be desirable.
SECTION 3
OTHER STOCK AWARDS
3.1 Definition. A Stock Award is a grant of shares of Stock or of a
right to receive shares of Stock (or their cash equivalent or a combination of
both) in the future.
3.2 Restrictions on Stock Awards. Each Stock Award shall be subject to
such conditions, restrictions and contingencies as the Committee shall
determine. These may include continuous service and/or the achievement of
Performance Measures. The Performance
3
Measures that may be used by the Committee for such Awards shall be measured by
revenues, income, or such other criteria as the Committee may specify. The
Committee may designate a single goal criterion or multiple goal criteria for
performance measurement purposes, with the measurement based on absolute Company
or business unit performance and/or on performance as compared with that of
other publicly-traded companies. If the right to become vested in a Stock Award
granted under this Section 3 is conditioned on the completion of a specified
period of service with the Company and the Related Companies, without
achievement of Performance Measures or other objectives being required as a
condition of vesting, then the required period of service for vesting shall be
not less than three years (subject to acceleration of vesting, to the extent
permitted by the Committee, in the event of the Participant's death, disability,
or involuntary termination or a Change in Control of the Company).
SECTION 4
OPERATION AND ADMINISTRATION
4.1 Effective Date. The Plan is subject to the approval of the
stockholders of the Company at the Company's next annual meeting of its
stockholders; therefore the Plan shall be effective as of the date such approval
is obtained (the "Effective Date"). The Plan shall be unlimited in duration and,
in the event of Plan termination, shall remain in effect as long as any Awards
under it are outstanding; provided, however, that, to the extent required by the
Code, no Incentive Stock Options may be granted under the Plan on a date that is
more than ten years from the date the Plan is approved by stockholders.
4.2 Shares Subject to Plan.
(a) (i) Subject to the following provisions of this subsection
4.2, the maximum number of shares of Stock that may be
delivered to Participants and their beneficiaries under
the Plan shall be 300,000.
(ii) Anyshares of Stock granted under the Plan that are
forfeited because of the failure to meet an Award
contingency or condition shall again be available for
delivery pursuant to new Awards granted under the Plan.
To the extent any shares of Stock covered by an Award
are not delivered to a Participant or beneficiary
because the Award is forfeited or cancelled, or the
shares of Stock are not delivered because the Award is
settled in cash, such shares shall not be deemed to
have been delivered for purposes of determining the
maximum number of shares of Stock available for
delivery under the Plan.
(iii) If the Exercise Price of any stock option granted under
the Plan or any Prior Plan is satisfied by tendering
shares of Stock to the Company (by either actual
delivery or by attestation), only the number of shares
of Stock issued net of the shares of Stock tendered
shall be deemed delivered
4
for purposes of determining the maximum number of
shares of Stock available for delivery under the Plan.
(iv) Shares of Stock delivered under the Plan in settlement,
assumption or substitution of outstanding awards (or
obligations to grant future awards) under the plans or
arrangements of another entity shall not reduce the
maximum number of shares of Stock available for
delivery under the Plan, to the extent that such
settlement, assumption or substitution is a result of
the Company or a Related Company acquiring another
entity (or an interest in another entity).
(b) Subject to paragraph 4.2(c), the following additional maximums
are imposed under the Plan.
(i) The maximum number of shares of Stock that may be
issued by Options intended to be Incentive Stock
Options shall be 300,000 shares.
(ii) The maximum number of shares of Stock that may be
issued in conjunction with Awards granted pursuant to
Section 3 (relating to Stock Awards) shall be 100,000
shares.
(iii) The maximum number of shares that may be covered by
Awards granted to any one individual pursuant to
Section 2 (relating to Options and SARs) shall be
100,000 shares during any consecutive 12 month period.
(iv) The maximum payment that can be made for awards granted
to any one individual pursuant to Section 3 (relating
to Stock Awards) shall be $50,000 for any single or
combined performance goals established for any fiscal
year. If an Award granted under Section 3 is, at the
time of grant, denominated in shares, the value of the
shares of Stock for determining this maximum individual
payment amount will be the Fair Market Value of a share
of Stock on the first day of the applicable performance
period.
(c) In the event of a corporate transaction involving the Company
(including, without limitation, any stock dividend, stock
split, extraordinary cash dividend, recapitalization,
reorganization, merger, consolidation, split-up, spin-off,
combination or exchange of shares), the Committee may adjust
Awards to preserve the benefits or potential benefits of the
Awards. Action by the Committee may include adjustment of: (i)
the number and kind of shares which may be delivered under the
Plan; (ii) the number and kind of shares subject to
outstanding Awards; and (iii) the Exercise Price of
outstanding Options and SARs; as well as any other adjustments
that the Committee determines to be equitable.
5
4.3 Limit on Distribution. Distribution of shares of Stock or other
amounts under the Plan shall be subject to the following:
(a) Notwithstanding any other provision of the Plan, the Company
shall have no liability to deliver any shares of Stock under
the Plan or make any other distribution of benefits under the
Plan unless such delivery or distribution would comply with
all applicable laws (including, without limitation, the
requirements of the Securities Act of 1933), and the
applicable requirements of any securities exchange or similar
entity.
(b) To the extent that the Plan provides for issuance of stock
certificates to reflect the issuance of shares of Stock, the
issuance may be effected on a non-certificated basis, to the
extent not prohibited by applicable law or the applicable
rules of any stock exchange.
4.4 Tax Withholding. Whenever the Company proposes, or is required, to
distribute Stock under the Plan, the Company may require the recipient to remit
to the Company an amount sufficient to satisfy any Federal, state and local tax
withholding requirements prior to the delivery of any certificate for such
shares or, in the discretion of the Committee, the Company may withhold from the
shares to be delivered shares sufficient to satisfy all or a portion of such tax
withholding requirements. Whenever under the Plan payments are to be made in
cash, such payments may be net of an amount sufficient to satisfy any Federal,
state and local tax withholding requirements.
4.5 Payment in Shares. Subject to the overall limitation on the number
of shares of Stock that may be delivered under the Plan, the Committee may use
available shares of Stock as the form of payment for compensation, grants or
rights earned or due under any other compensation plans or arrangements of the
Company or a Related Company, including the plans and arrangements of the
Company or a Related Company acquiring another entity (or an interest in another
entity).
4.6 Dividends and Dividend Equivalents. An Award may provide the
Participant with the right to receive dividends or dividend equivalent payments
with respect to Stock which may be either paid currently or credited to an
account for the Participant, and may be settled in cash or Stock as determined
by the Committee. Any such settlements, and any such crediting of dividends or
dividend equivalents or reinvestment in shares of Stock, may be subject to such
conditions, restrictions and contingencies as the Committee shall establish,
including the reinvestment of such credited amounts in Stock equivalents.
4.7 Payments. Awards may be settled through cash payments, the delivery
of shares of Stock, the granting of replacement Awards, or any combination
thereof as the Committee shall determine. Any Award settlement, including
payment deferrals, may be subject to such rules and procedures as it may
establish, which may include provisions for the payment or
6
crediting of interest, or dividend equivalents, including converting such
credits into deferred Stock equivalents.
4.8 Transferability. Except as otherwise provided by the Committee,
Awards under the Plan are not transferable except as designated by the
Participant by will or by the laws of descent and distribution.
4.9 Form and Time of Elections. Unless otherwise specified herein, each
election required or permitted to be made by any Participant or other person
entitled to benefits under the Plan, and any permitted modification, or
revocation thereof, shall be in writing filed with the Committee at such times,
in such form, and subject to such restrictions and limitations, not inconsistent
with the terms of the Plan, as the Committee shall require.
4.10 Agreement With Company. At the time of an Award to a Participant
under the Plan, the Committee may require a Participant to enter into an
agreement with the Company (the "Agreement") in a form specified by the
Committee, agreeing to the terms and conditions of the Plan and to such
additional terms and conditions, not inconsistent with the Plan, as the
Committee may, in its sole discretion, prescribe.
4.11 Limitation of Implied Rights.
(a) Neither a Participant nor any other person shall, by reason of
the Plan, acquire any right in or title to any assets, funds
or property of the Company or any Related Company whatsoever,
including, without limitation, any specific funds, assets, or
other property which the Company or any Related Company, in
their sole discretion, may set aside in anticipation of a
liability under the Plan. A Participant shall have only a
contractual right to the stock or amounts, if any, payable
under the Plan, unsecured by any assets of the Company or any
Related Company. Nothing contained in the Plan shall
constitute a guarantee that the assets of such companies shall
be sufficient to pay any benefits to any person.
(b) The Plan does not constitute a contract of employment, and
selection as a Participant will not give any employee the
right to be retained in the employ of the Company or any
Related Company, nor any right or claim to any benefit under
the Plan, unless such right or claim has specifically accrued
under the terms of the Plan. Except as otherwise provided in
the Plan, no Award under the Plan shall confer upon the holder
thereof any right as a stockholder of the Company prior to the
date on which the individual fulfills all conditions for
receipt of such rights.
4.12 Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person acting on
it considers pertinent and reliable, and signed, made or presented by the proper
party or parties.
7
4.13 Action by Company or Related Company. Any action required or
permitted to be taken by the Company or any Related Company shall be by
resolution of its board of directors, or by action of one or more members of the
board (including a committee of the board) who are duly authorized to act for
the board, or (except to the extent prohibited by applicable law or applicable
rules of any stock exchange) by a duly authorized officer of the Company.
4.14 Gender and Number. Where the context admits, words in any gender
shall include any other gender, words in the singular shall include the plural
and the plural shall include the singular.
4.15 Change of Control. Unless otherwise determined by the Committee,
if the Company is merged into or consolidated with another corporation under
circumstances in which the Company is not the surviving corporation, or if the
Company is liquidated, or sells or otherwise disposes of substantially all of
its assets to another corporation (any such merger, consolidation, etc., being
hereinafter referred to as a "Change of Control Transaction") while unexercised
Options are outstanding under the Plan, after the effective date of a Change of
Control Transaction, each holder of an outstanding Option shall be entitled,
upon exercise of such Option, to receive such stock, or other securities as the
holders of the same class of stock as those shares subject to the Option shall
be entitled to receive in such Change of Control Transaction based upon the
agreed upon conversion ratio or per share distribution. Unless otherwise
determined by the Committee, any limitations on exercisability of Options owned
by executive officers or the Company shall be waived, and Options of non-
executive officers may be waived (in the discretion of the Committee), so that
all such Options, from and after a date prior to the effective date of such
Change of Control Transaction shall be exercisable in full. Furthermore, unless
otherwise determined by the Committee, the right to exercise shall, in the case
of executive officers, and may (in the discretion of the Committee), in the case
of other option holders, be given to each holder (by written notice) of an
Option during a 15-day period preceding the effective date of such Change of
Control Transaction. Any outstanding Options not exercised within such 15-day
period may be cancelled by the Committee as of the effective date of any such
Change of Control Transaction, as specified in the 15-day notice. To the extent
that the foregoing adjustments relate to stock or securities of the Company,
such adjustments shall be made by the Committee, whose determination in that
respect shall be final, binding and conclusive.
4.16 Liability for Cash Payment. Each Related Company shall be liable
for payment of cash due under the Plan with respect to any Participant to the
extent that such benefits are attributable to the services rendered for that
Related Company by the Participant. Any disputes relating to liability of a
Related Company for cash payments shall be resolved by the Committee.
4.17 Governing Law. This Plan and all awards made and actions taken
hereunder shall be governed by and construed in accordance with (i) the laws of
the State of Georgia, excluding its conflict of law provisions and its General
Business Corporation Code, (ii) the applicable corporation law, which shall be
the general business corporation law of the State of Florida.
8
SECTION 5
COMMITTEE
5.1 Administration. The authority to control and manage the operation
and administration of the Plan shall be vested in a committee (the "Committee")
in accordance with this Section 5.
5.2 Selection of Committee. The Committee shall be selected by the
Board, and shall consist of two or more members of the Board.
5.3 Powers of Committee. The authority to manage and control the
operation and administration of the Plan shall be vested in the Committee,
subject to the following:
(a) Subject to the provisions of the Plan, the Committee will have
the authority and discretion to select from among the Eligible
Persons those persons who shall receive Awards, to determine
the time or times of receipt, to determine the types of Awards
and the number of shares covered by the Awards, to establish
the terms, conditions, performance criteria, restrictions, and
other provisions of such Awards, and (subject to the
restrictions imposed by Section 6) to cancel or suspend
Awards. In making such Award determinations, the Committee may
take into account the nature of services rendered by the
individual, the individual's present and potential
contribution to the Company's success and such other factors
as the Committee deems relevant.
(b) Subject to the provisions of the Plan, the Committee will have
the authority and discretion to determine the extent to which
Awards under the Plan will be structured to conform to the
requirements applicable to performance-based compensation as
described in Code section 162(m), and to take such action,
establish such procedures, and impose such restrictions at the
time such Awards are granted as the Committee determines to be
necessary or appropriate to conform to such requirements.
(c) The Committee will have the authority and discretion to
establish terms and conditions of awards as the Committee
determines to be necessary or appropriate to conform to
applicable requirements or practices of jurisdictions outside
of the United States.
(d) The Committee will have the authority and discretion to
interpret the Plan, to establish, amend, and rescind any rules
and regulations relating to the Plan, to determine the terms
and provisions of any agreements made pursuant to the Plan,
and to make all other determinations that may be necessary or
advisable for the administration of the Plan.
9
(e) Any interpretation of the Plan by the Committee and any
decision made by it under the Plan is final and binding.
(f) Except as otherwise expressly provided in the Plan, where the
Committee is authorized to make a determination with respect
to any Award, such determination shall be made at the time the
Award is made, except that the Committee may reserve the
authority to have such determination made by the Committee in
the future (but only if such reservation is made at the time
the Award is granted and is expressly stated in the Agreement
reflecting the Award).
(g) In controlling and managing the operation and administration
of the Plan, the Committee shall act by a majority of its then
members, by meeting or by writing filed without a meeting. The
Committee shall maintain and keep adequate records concerning
the Plan and concerning its proceedings and acts in such form
and detail as the Committee may decide.
5.4 Delegation by Committee. Except to the extent prohibited by
applicable law or the applicable rules of a stock exchange, the Committee may
allocate all or any portion of its responsibilities and powers to any one or
more of its members and may delegate all or any part of its responsibilities and
powers to any person or persons selected by it. Any such allocation or
delegation may be revoked by the Committee at any time.
5.5 Information to be Furnished to Committee. The Company and Related
Companies shall furnish the Committee with such data and information as may be
required for it to discharge its duties. The records of the Company and Related
Companies as to an employee's or Participant's employment (or other provision of
services), termination of employment (or cessation of the provision of
services), leave of absence, reemployment and compensation shall be conclusive
on all persons unless determined to be incorrect. Participants and other persons
entitled to benefits under the Plan must furnish the Committee such evidence,
data or information as the Committee considers desirable to carry out the terms
of the Plan.
SECTION 6
AMENDMENT AND TERMINATION
6.1 Board of Directors. The Board may, at any time, amend or terminate
the Plan, provided that, subject to subsection 4.2 (relating to certain
adjustments to shares), no amendment or termination may, in the absence of
written consent to the change by the affected Participant (or, if the
Participant is not then living, the affected beneficiary), adversely affect the
rights of any Participant or beneficiary under any Award granted under the Plan
prior to the date such amendment is adopted by the Board; provided, however,
that the Board may not amend the provisions of Section 2.2 hereof to reduce the
minimum Exercise Price, nor may the Board increase the number of shares reserved
under the Plan, unless it obtains stockholder approval. Subject to the
foregoing, the Board shall have broad authority to amend the Plan to take into
10
account changes in applicable securities and tax laws and accounting rules, as
well as other developments.
6.2 Committee. The Committee may amend the terms of any Award
theretofore granted, prospectively or retroactively, but, subject to subsection
4.2 (relating to certain adjustments to shares) no amendment or termination may,
in the absence of written consent to the change by the affected Participant (or,
if the Participant is not then living, the affected beneficiary), adversely
affect the rights of any Participant or beneficiary under any Award granted
under the Plan prior to the date such amendment is adopted by the Committee.
SECTION 7
DEFINED TERMS
7.1 For purposes of the Plan, the terms listed below shall be defined
as follows:
(a) Award. The term "Award" shall mean any award or benefit
granted to any Participant under the Plan, including, without
limitation, the grant of Options, SARs, and Stock Awards.
(b) Board. The term "Board" shall mean the Board of Directors of
the Company.
(c) Cause. The term "Cause" means a felony conviction of a
Participant or the failure of a Participant to contest
prosecution for a felony, or a Participant's willful
misconduct or dishonesty, or other unauthorized activity
which, in the good faith opinion of the Committee, is directly
and materially harmful to the business or reputation of the
Company or a Related Company.
(d) Code. The term "Code" means the Internal Revenue Code of 1986,
as amended. A reference to any provision of the Code shall
include reference to any successor provision of the Code.
(e) Eligible Person. The term "Eligible Person" shall mean any
employee of the Company or a Related Company, any director of
the Company, and any consultant or other person providing key
services to the Company or a Related Company.
(f) Fair Market Value. For purposes of determining the "Fair
Market Value" of a share of Stock, the following rules shall
apply:
(i) If the Stock is at the time listed or admitted to
trading on any stock exchange (including the Nasdaq
National Stock Market), then the "Fair Market Value"
shall be the mean between the lowest and highest
reported sale prices of the Stock on the date in
question on the principal exchange
11
on which the Stock is then listed or admitted to
trading. If no reported sale of Stock takes place on
the date in question on the principal exchange, then
the reported closing asked price of the Stock on such
date on the principal exchange shall be determinative
of "Fair Market Value."
(ii) If the Stock is not at the time listed or admitted to
trading on a stock exchange, the "Fair Market Value"
shall be the mean between the lowest reported bid
price and highest reported asked price of the Stock
on the date in question in the over-the-counter
market, as such prices are reported in a publication
of general circulation selected by the Committee and
regularly reporting the market price of Stock in such
market.
(iii) If the Stock is not listed or admitted to trading on
any stock exchange or traded in the over-the-counter
market, the "Fair Market Value" shall be as
determined in good faith by the Committee.
(g) Related Company. The term "Related Company" means any
subsidiary of the Company, and any business venture in which
the Company has a significant interest, as determined in the
discretion of the Committee.
(h) Stock. The term "Stock" shall mean shares of common stock of
the Company.
SECTION 8
UNFUNDED STATUS OF THE PLAN
8.1 The Plan is intended to constitute an "unfunded" plan for incentive
and deferred compensation. With respect to any payments not yet made to a
Participant or optionee by the Company, nothing contained herein shall give any
such Participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Stock or payments in lieu of or with respect to awards
hereunder; provided, however, that, unless the Committee otherwise determines
with the consent of the affected Participant, the existence of such trusts or
other arrangements is consistent with the "unfunded" status of the Plan.
12