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EXHIBIT 10.6
BIOMET, INC.
1998 QUALIFIED AND NON-QUALIFIED
STOCK OPTION PLAN
1. DEFINITIONS. The following terms, when capitalized herein,
shall have the meanings specified in this Section:
(a) "Board of Directors" or "Board" means the Board of Directors
of Biomet, Inc.
(b) "Code" means the Internal Revenue Code of 1986, as amended
and in effect from time to time.
(c) "Committee" means the committee appointed by the Board of
Directors, pursuant to Section 3(a), to administer this Plan.
(d) "Common Shares" means the Common Shares of the Company.
(e) "Company" means Biomet, Inc., an Indiana corporation.
(f) "Director" means a member of the Board of Directors of the
Company.
(g) "Distributor" means a Person engaged in the sale or
distribution of products of the Company or a Subsidiary.
(h) "Employee" means an individual employed by the Company or any
Subsidiary. A Director of the Company shall not be deemed to be
employed by the Company solely as a result of his or her position as
a Director.
(i) "Employer" means, collectively, or where the context is appropriate,
individually, the Company and/or any of its Subsidiaries.
(j) "Expiration Date" means June 30, 2008, the last date on which Options
may be granted pursuant to this Plan.
(k) "Fair Market Value" means the closing price of the Common Shares as
reported by the Nasdaq Stock Market or by any national securities
exchange on which Common Shares may be traded.
(l) "Notice of Option" means a written communication by the Company or a
Subsidiary to an Optionee confirming the grant of an Option pursuant
to this Plan.
(m) "Non-Employee Director" means a Director of the Company who is a
"non-employee director" within the meaning of Rule 16b-3.
(n) "Option" means a right to purchase Common Shares granted pursuant to
this Plan. Options may be either "Qualified Options," which are
defined as Options intended to meet the
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requirements of Section 422 of the Code, or "Non-Qualified
Options," which are defined as Options not intended to meet the
requirements of Section 422 of the Code.
(o) "Optionee" means a Person to whom an Option is granted under this
Plan.
(p) "Person" means an individual, partnership, joint venture,
association, trust, corporation or other entity that is not a
wholly-owned Subsidiary.
(q) "Plan" means this Biomet, Inc. 1998 Qualified and Non-Qualified Stock
Option Plan.
(r) "Retirement" means, with respect to:
(i) an Employee, retirement from the Employer pursuant to the
early or normal retirement provisions of any applicable
retirement plan;
(ii) a Non-Employee Director, termination of service as a
Director; and
(iii) a non-Employee Distributor who is a natural person,
Separation from Service after the Distributor has
attained age 55 and has served the Company or any
Subsidiary for at least 10 years.
(s) "Rule 16b-3" means Rule 16b-3 of the Securities and Exchange
Commission or any successor rule.
(t) "Separation from Service" or "Separates from Service" means with
respect to:
(i) an Employee, any voluntary or involuntary termination of
the Employee's employment with the Employer for any
reason, including, but not limited to, death, disability
or Retirement; provided, however, the term shall not
include the transfer of an Employee's employment from the
Company to any Subsidiary, from a Subsidiary to the
Company or between Subsidiaries;
(ii) a Non-Employee Director, termination of service as a
Director; and
(iii) a non-Employee Distributor, any voluntary or involuntary
termination of the non-Employee Distributor's independent
contractor relationship with the Company or any
Subsidiary for any reason, including, but not limited to,
death, disability or Retirement, but shall not include
termination of the relationship by reason of a
non-Employee Distributor becoming an Employee.
(u) "Subsidiary" means a company (whether or not incorporated) 80% or
more of the total combined voting power and 80% or more of the total
value of which is owned directly or indirectly by the Company.
(v) "10% Shareholder" means an individual possessing more than 10% of the
total combined voting power of all classes of shares of the Company
or any Subsidiary. An individual shall be considered as owning any
shares owned, directly or indirectly, by or for his or her brothers
or sisters (whether by whole or half blood), spouse, ancestors and
lineal descendants. Shares owned, directly or indirectly, by or for
a corporation, partnership, estate or trust shall be considered as
being owned proportionately by or for its shareholders, partners or
beneficiaries.
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(w) "1934 Act" means the Securities Exchange Act of 1934, as amended.
2. PURPOSE. This Plan is intended to advance the interests of
the Company by providing to Non-Employee Directors, key Employees
and certain Distributors an opportunity to acquire or increase a
proprietary interest in the Company, and thereby to create in these
Persons a stronger incentive to expend their maximum efforts for the
growth and success of the Company and its Subsidiaries, and to
encourage these Persons to remain in the employ or service of the
Company or its Subsidiaries.
3. ADMINISTRATION.
(a) COMMITTEE. This Plan shall be administered by a Committee appointed
by the Board of Directors, consisting of two or more Directors, at
least two of whom are at all times Non-Employee Directors.
(b) POWER AND AUTHORITY. The Committee shall have the full power and
authority to take all actions and make all determinations required or
provided for under this Plan; to interpret and construe the
provisions of this Plan or any Notice of Option, which interpretation
or construction shall be final, conclusive and binding on the
Company, the Employer and the Optionee; and to take any and all other
actions and make any and all other determinations not inconsistent
with the specific terms and provisions of this Plan which the
Committee deems necessary or appropriate in the administration of
this Plan. The Committee may from time to time prescribe, amend and
rescind rules and regulations applicable to this Plan.
(c) ACTIONS AND DETERMINATIONS. A majority of the Committee shall
constitute a quorum for purposes of any action or determination by
the Committee. Each member may be counted in determining the
existence of a quorum at any meeting of the Committee. All actions
and determinations of the Committee shall be made by an affirmative
vote of not less than a majority of its members, or by unanimous
written consent. Each member of the Committee shall be entitled to
vote on any matters affecting the administration of this Plan or the
grant of any Options pursuant to this Plan; however, no member shall
act upon the granting of an Option to himself or herself except
pursuant to action taken by unanimous written consent.
(d) RULE 16b-3 COMPLIANCE. Notwithstanding the other provisions of this
Section 3, each member of the Committee who is not, at the time any
action is taken, a Non-Employee Director shall abstain or recuse
himself or herself from any action to be taken with respect to the
grant of Options to which the provisions of Rule 16b-3 are intended
to apply, and the members of the Committee who are Non- Employee
Directors shall have full power to act independently with respect
thereto.
4. ELIGIBILITY. The Persons eligible to receive grants of Options
pursuant to this Plan, and the bases on which Options may be granted,
are as follows:
(a) KEY EMPLOYEES. Those individuals who are "key Employees," as
determined from time to time by the Committee. In determining the
key Employees and the extent of their participation, the Committee
shall take into account such factors as are deemed relevant by the
Committee in its sole and absolute discretion in furtherance of the
purposes of this Plan. Options granted to key Employees may be
designated as Qualified Options or Non-Qualified Options.
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(b) NON-EMPLOYEE DIRECTORS. Effective as of the date of the mid-year
meeting of the Board of Directors for calendar year 1999 ("Mid-1999
Meeting"), each Non-Employee Director shall be granted an Option to
purchase 5,000 Common Shares at a price and upon the other terms and
conditions specified in this Plan. Thereafter, on each three-year
anniversary of the Mid-1999 Meeting, each Non-Employee Director shall
be granted an Option to purchase 5,000 Common Shares at the price and
upon the other terms and conditions specified in this Plan; provided,
that the number of Options that may be granted to all Non-Employee
Directors shall not exceed 10% of the Common Shares subject to this
Plan. A Non-Employee Director shall not be eligible to receive or
exercise any Option if the exercise of that Option would result in
that Non-Employee Director owning, directly or indirectly, Common
Shares possessing more than 10% of the total combined voting power
of all classes of shares of the Company. Options granted to
Non-Employee Directors shall be Non-Qualified Options. No Option
shall be granted to any Director serving on the Committee who is not
a Non-Employee Director.
(c) DISTRIBUTORS. Those Persons who are Distributors and who are
determined by the Committee to be eligible to participate in this
Plan. In determining the Distributors eligible to participate and
the extent of their participation, the Committee shall take into
account such factors as are deemed relevant by the Committee in its
sole and absolute discretion in furtherance of the purposes of this
Plan. Options granted to Distributors shall be designated as
Non-Qualified Options, unless the Distributor is an Employee, in
which case the Options may be designated as Qualified Options or
Non-Qualified Options.
No Qualified Option shall be granted to any Employee (whether a
key Employee or a Distributor) who, at the time the Option is
granted, is a 10% Shareholder unless, at the time the Option is
granted, the Option price is at least 110% of the Fair Market Value
of the Common Shares as of the date of grant of the Option and the
Option by its terms is not exercisable after the expiration of five
years from the date of grant of the Option.
5. SHARES. Options may be granted for the purchase of authorized but
unissued, or reacquired, Common Shares. The total number of Common
Shares with respect to which Options may be granted shall not exceed
in the aggregate 7,000,000 Common Shares, except as adjusted in
accordance with the provisions set forth in Section 7(g). In the
event any outstanding Option expires or is terminated in whole or in
part for any reason prior to the Expiration Date, any Common Shares
as to which the Option was not exercised may again be subject to an
Option granted under this Plan. During the period that any Options
granted under this Plan are outstanding, the Company shall reserve
and keep available that number of Common Shares sufficient to satisfy
all outstanding, unexercised Options.
6. MAXIMUM EXERCISE. The aggregate Fair Market Value (determined at the
time the Option(s) is granted) of the Common Shares with respect to
which Qualified Options are exercisable for the first time by an
Employee during any calendar year (under all option plans of the
Company within the meaning of Code Section 422(d)) shall not exceed
$100,000 (as may be adjusted from time to time by applicable law)
(the "Cap"). In the event the Fair Market Value of Common Shares
subject to a Qualified Option exceeds the Cap, the Option in excess
of the Cap shall be deemed to be a Non-Qualified Option. The
character of all Options as Qualified or Non-Qualified under this
Section 6 shall be determined with reference to the order in which
Options were granted.
7. TERMS AND CONDITIONS OF OPTIONS. Subject to the terms and conditions
set forth in this Plan, the Committee may grant Options to eligible
individuals upon such terms and
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conditions as the Committee shall determine. The date on
which the Committee approves the grant of an Option shall be
considered the date on which the Option is granted. Options granted
pursuant to this Plan shall be evidenced by a Notice of Option in
such form, consistent with this Plan, as the Committee shall
prescribe from time to time. The Notice of Option shall state
whether the Option evidenced thereby is a Qualified Option or a
Non-Qualified Option. Any provision of this Plan or of a Notice of
Option with respect to a Qualified Option that is not consistent
with the requirements of Code Section 422 shall be inoperative and
the Plan or Notice of Option shall be deemed to incorporate any term
necessary to conform it to Code Section 422. The grant and exercise
of Options also shall comply with and be subject to the following
terms and conditions:
(a) MEDIUM AND TIME OF PAYMENT.
(i) In Gene1ral. An Option may be exercised by delivery of
payment for the Common Shares subject to the Option
accompanied by a properly executed written notice of
exercise in a form prescribed by the Committee. The notice
of exercise shall specify the number of Common Shares with
respect to which the Option is being exercised. The
Committee may prescribe in the Notice of Option a minimum
number of Common Shares with respect to which an Option may
be exercised. Except as provided in Section 7(a)(ii),
payment in full of the purchase price of the Common Shares
for which an Option is exercised shall be made either (A)
in cash or in cash equivalents; (B) if the Optionee can do
so without violating Rule 16b-3 or Section 16(b) of the
1934 Act, through the tender to the Company of Common
Shares or the withholding of Common Shares subject to the
Option, which Common Shares shall be valued, for purposes
of determining the extent to which the purchase price has
been paid, at their Fair Market Value on the date of
exercise; or (C) by a combination of the methods prescribed
in (A) and (B); provided, however, that the Committee may
in its discretion impose and set forth in the Notice of
Option such limitations or prohibitions on the use of
Common Shares to exercise Options as it deems appropriate.
Any attempt to exercise an Option other than as set forth
in this Section 7(a) shall be invalid and of no force or
effect.
(ii) Use of Brokers. The Committee may provide, by inclusion of
appropriate language in a Notice of Option, that payment in
full of the purchase price need not accompany notice of
exercise provided the notice of exercise directs that the
certificate or certificates for the Common Shares for which
the Option is exercised shall be delivered to a licensed
broker acceptable to the Company as the agent for the
individual exercising the Option and, at the time such
certificate or certificates are delivered, the broker
tenders to the Company cash or cash equivalents acceptable
to the Company in an amount equal to the purchase price for
the Common Shares purchased plus the amount (if any) of
federal and other taxes that the Company may, in its sole
judgment, determine to be required to be withheld with
respect to the exercise of the Option.
(iii) Issuance of Certificates. Subject to Section 7(j),
promptly after the exercise of an Option and the payment in
full of the purchase price for the Common Shares, the
individual exercising the Option shall be entitled to the
issuance of a certificate or certificates evidencing
ownership of the Common Shares purchased.
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(b) NUMBER OF SHARES. The Notice of Option shall state the total number
of Common Shares which may be purchased pursuant to the grant of the
Option.
(c) OPTION PRICE. The purchase price of each Common Share subject to an
Option shall be fixed by the Committee at an amount not less than the
Fair Market Value of a Common Share as of the close of business on
the date of grant of the Option. The Notice of Option shall state
the purchase price of the Common Shares subject to the Option.
(d) TERM OF OPTIONS. Each Option granted under this Plan shall expire
within the period prescribed in the Notice of Option relating to that
Option, which shall not be more than five years from the date the
Option is granted if the Optionee is a 10% Shareholder and not more
than ten years from the date the Option is granted if the Optionee is
not a 10% Shareholder. The Notice of Option shall state the date of
the grant of the Option.
(e) TIME OF EXERCISE. The Committee may, in its discretion, provide in a
Notice of Option that an Option granted under this Plan may not be
exercised in whole or in part until the expiration of such period or
periods of time, or the attainment of such objectives, as may be
specified by the Committee; provided, however, that any limitation on
the exercise of an Option may be rescinded, modified or waived by the
Committee, in its sole discretion, at any time and from time to time
after the date of grant of such Option so as to accelerate the time
in which the Option may be exercised to the extent permitted under
Code Section 424(h). Except as specifically restricted by the
provisions of this Section 7(e) or by the Committee, any Option may
be exercised in whole or in part at any time and from time to time
during the period commencing with the date of grant and ending upon
the expiration or termination of the Option.
(f) SEPARATION FROM SERVICE.
(i) In General. Except as otherwise provided herein, in the
event an Optionee Separates from Service, all Options
outstanding in the hands of the Optionee shall terminate
immediately as to any unexercised portion thereof; provided
however, that the Committee, in its discretion, subject to
the provisions of Section 7(d), may permit an Optionee who
has Separated from Service to exercise any unexercised
Options at any time within three months after the effective
date of the Optionee's Separation from Service with respect
to the Common Shares for which such Options could have been
exercised (i) on the effective date of the Separation from
Service, or (ii) during the three month period following
that effective date. following that effective date. If an
Optionee Separates from Service due to Retirement or
permanent and total disability (as defined in Code Section
22(e)(3)), the Optionee shall have the right, subject to
the provisions of Section 7(d), to exercise the Option with
respect to the Common Shares for which it could have been
exercised on the effective date of the Separation from
Service at any time within three months after a Separation
from Service due to Retirement or at any time within twelve
months after a Separation from Service due to permanent and
total disability.
(ii) Death. In the event of the death of an Optionee while the
Option remains exercisable under this Section 7(f) or other
provisions of this Plan, the Optionee's personal
representative shall have the right, subject to the
provisions of Section 7(d), to exercise the Option with
respect to the Common Shares for which it could have been
exercised on the date of death, at any time within twelve
months after the date of death.
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(iii) Determinations. For purposes of this Plan, whether a
termination of employment or service due to permanent and
total disability, and whether an authorized leave of
absence or absence on military or government service,
shall be deemed to constitute Separation from Service
shall be determined by the Committee, which determination
shall be final, conclusive and binding.
(g) RECAPITALIZATION. The aggregate number of Common Shares as
to which Options may be granted under this Plan, the number of
Common Shares covered by each outstanding Option, and the price per
Common Share with respect to each outstanding Option, all shall be
proportionately adjusted for any increase or decrease in the number
of issued Common Shares resulting from a subdivision or
consolidation of shares or any other capital adjustment, the payment
of a share dividend or other increase or decrease in the Common
Shares effected without receipt of consideration by the Company. In
the event that there shall be a capital reorganization or
reclassification of the shares of the Company resulting in a
substitution of other shares for the Common Shares, each outstanding
Option shall be deemed to represent the right to acquire the number
of substitute shares that would have been issued in exchange for the
Common Shares then remaining under the Option if those Common Shares
had been then issued and outstanding.
(h) CHANGE OF CONTROL, DISSOLUTION AND LIQUIDATION.
(i) Change of Control. For purposes of this Plan, "change of
control event" shall be deemed to have occurred if:
(1) The Committee determines in its sole discretion
that, by reason of an agreement of merger,
consolidation or other reorganization to which
the Company has become a party, the Company will
not be in control of the surviving or resulting
corporation;
(2) The Company shall become a party to an agreement
providing for the sale by the Company of all or
substantially all of the Company's assets to any
Person;
(3) The Committee determines in its sole discretion
that any Person has become or is anticipated to
become the beneficial owner, directly or
indirectly, of securities of the Company
representing 50% or more of the total combined
voting power of the Company's then outstanding
securities, the effect of which (as determined by
the Committee in its sole discretion) is the
acquisition of control of the Company; or
(4) During any period of two consecutive years,
individuals who, at the beginning of such period,
constituted the Board of Directors cease, for any
reason, to constitute at least a majority
thereof, unless the election or nomination of
election for each new Director was approved by
the vote of at least two-thirds of the Directors
in office at the beginning of the period.
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(ii) Effect of a Change of Control Event. Upon the occurrence
of a change of control event, the Company shall provide
written notice thereof (the "Change of Control Notice") to
the Optionees. The Company shall have the right, but not
the obligation, to terminate all outstanding Options as of
the date described in the Change in Control Notice by
including a statement to such effect in the Change of
Control Notice. Upon delivery of the Change of Control
Notice and regardless of whether the Company elects to
terminate the outstanding Options, the Optionees shall
have the right to immediately exercise all outstanding
Options in full notwithstanding the terms and conditions
set forth in this Plan or in any Notice of Option.
(iii) Dissolution and Liquidation. In the event the Company
adopts all necessary resolutions approving a plan to
dissolve or liquidate the Company, the Company shall
provide written notice thereof (the "Dissolution Notice")
to the Optionees. Upon delivery of the Dissolution
Notice, and subject to Section 7(d), the Optionees shall
have the right to immediately exercise all outstanding
Options notwithstanding the terms and conditions set forth
in this Plan or in any Notice of Option. All unexercised
Options outstanding immediately following the time
specified for exercise in the Dissolution Notice shall
terminate.
(i) ASSIGNABILITY. No Option shall be assignable or transferable, except
to the extent provided in Section 7(f) in the event of the death of
an Optionee. During the lifetime of an Optionee, the Option shall be
exercisable only by the individual to whom the Option was granted
(or, in the event of the legal incapacity or incompetency of the
Optionee, the Optionee's legal guardian or legal representative on
behalf of the Optionee).
(j) ISSUANCE OF SHARES AND COMPLIANCE WITH SECURITIES LAWS.
(i) Registration of Shares. Options shall not be exercisable
unless the issuance of the Common Shares subject to the
Options is the subject of an effective registration
statement under the Securities Act of 1933, as amended, or
unless, in the opinion of counsel to the Company, the
issuance would be exempt from the registration
requirements of the Securities Act of 1933, as amended.
(ii) Compliance with Rule 16b-3. This Plan is intended to
qualify for the exemption from the short-swing profits
liability imposed by Section 16(b) under the 1934 Act
provided by Rule 16b-3. To the extent any provision of
this Plan or action by the Committee does not comply with
the requirements of Rule 16b-3, that provision or action
shall be deemed inoperative to the extent permitted by law
and deemed advisable by the Committee.
(k) RIGHTS AS A SHAREHOLDER. An Optionee shall have no rights as
a shareholder with respect to Common Shares subject to an Option
until the date of issuance of a certificate or certificates to the
Optionee and only after the Common Shares are fully paid. No
adjustment will be made for dividends or other rights for which the
record date is prior to the date a certificate is issued.
(l) OTHER PROVISIONS. A Notice of Option issued pursuant to this
Plan may contain such other provisions as the Committee shall deem
advisable, provided that those provisions are not inconsistent with
the terms of this Plan and Code Section 422.
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8. TERM OF PLAN. This Plan shall become effective upon the
approval by the holders of a majority of the Common Shares
represented at a duly convened shareholders' meeting; provided,
however, that this Plan shall become effective only if approved by
the shareholders prior to December 31, 1998. Unless terminated
earlier by the Board of Directors pursuant to Section 9, this Plan
shall terminate on the Expiration Date. No Option may be granted
under this Plan after the Expiration Date.
9. AMENDMENT OF THE PLAN. The Board of Directors may from
time to time, alter, amend, suspend or terminate this Plan with
respect to any Common Shares as to which Options have not been
granted; provided, however, that the Board of Directors may not,
without further approval by the holders of a majority of the Common
Shares represented at a duly convened shareholders' meeting:
(1) increase the maximum number of Common Shares as
to which Options may be granted under this Plan;
(2) change the class of shares for which Options may
be granted under this Plan;
(3) change the designation of the Employees or class
of Employees eligible to receive Options under
this Plan; or
(4) change the provisions of Section 7(c) concerning
the Option price.
10. APPLICATION OF FUNDS. The proceeds received by the Company
from the sale of Common Shares pursuant to Options granted under
this Plan will be used for general corporate purposes.
11. NO OBLIGATION TO EXERCISE OPTION. The granting of an Option
under this Plan shall impose no obligation upon the Optionee to
exercise any such Option.
12. NO OBLIGATION TO CONTINUE EMPLOYMENT OR SERVICE. Neither the
adoption of this Plan nor the granting of an Option under this Plan
shall impose any obligation on the Company to provide any specified
amount of compensation to, or to continue the employment of or
independent contractor relationship with, any Person.
13. APPLICABILITY OF AMENDMENTS. Without the express written
consent of the Company and the Optionee, no amendment, suspension or
termination of this Plan shall alter, impair or otherwise affect any
rights or obligations of the Company or an Optionee with respect to
any Option previously granted to the Optionee.
14. WITHHOLDINGS. The Committee shall have the right to require
an Optionee to remit to the Company amounts sufficient to satisfy
any federal, state or local income, employment or other tax
withholding requirements at such times as the Company deems
necessary or appropriate for compliance with law. The Committee may
provide in an Notice of Option that tax withholding requirements may
be satisfied by an election of the Optionee to (i) tender to the
Company of Common Shares, (ii) authorize the withholding of Common
Shares subject to the Option if the Optionee can do so without
violating Rule 16b-3 or Section 16(b) of the Securities Exchange Act
of 1934, as amended, or (iii) any other arrangement satisfactory to
the Committee with regard to such taxes; provided, however, that the
Committee may in its discretion impose and set forth in the Notice of
Option pertaining to an Option such limitations or prohibitions on
the use of Common Shares to exercise Options as it deems appropriate.