1
EXHIBIT 10.6
W. R. GRACE & CO.
____________
1994 STOCK INCENTIVE PLAN
(AS AMENDED THROUGH SEPTEMBER 28, 1996)
THIS DOCUMENT CONSTITUTES PART OF A
PROSPECTUS COVERING SECURITIES THAT
HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933.
2
W. R. GRACE & CO.
_____________
1994 STOCK INCENTIVE PLAN
1. PURPOSES: THE PURPOSES OF THIS PLAN ARE (A) TO ENABLE KEY PERSONS TO
HAVE INCENTIVES RELATED TO COMMON STOCK, (B) TO ENCOURAGE KEY PERSONS TO
INCREASE THEIR INTEREST IN THE GROWTH AND PROSPERITY OF THE COMPANY AND TO
STIMULATE AND SUSTAIN CONSTRUCTIVE AND IMAGINATIVE THINKING BY KEY PERSONS, (C)
TO FURTHER THE IDENTITY OF INTERESTS OF KEY PERSONS WITH THE INTERESTS OF THE
COMPANY'S SHAREHOLDERS, AND (D) TO INDUCE THE SERVICE OR CONTINUED SERVICE OF
KEY PERSONS AND TO ENABLE THE COMPANY TO COMPETE WITH OTHER ORGANIZATIONS
OFFERING SIMILAR OR OTHER INCENTIVES IN OBTAINING AND RETAINING THE SERVICES OF
THE MOST HIGHLY QUALIFIED INDIVIDUALS.
2. DEFINITIONS: WHEN USED IN THIS PLAN, THE FOLLOWING TERMS SHALL HAVE
THE MEANINGS SET FORTH IN THIS SECTION 2.
BOARD OF DIRECTORS: THE BOARD OF DIRECTORS OF THE COMPANY.
CESSATION OF SERVICE (OR WORDS OF SIMILAR IMPORT): WHEN A PERSON CEASES
TO BE AN EMPLOYEE OF, OR CONSULTANT TO, THE COMPANY OR A SUBSIDIARY; PROVIDED,
HOWEVER, IN THE CASE OF AN INCENTIVE STOCK OPTION, "CESSATION OF SERVICE" (OR
WORDS OF SIMILAR IMPORT) SHALL MEAN WHEN A PERSON CEASES TO BE AN EMPLOYEE OF
THE COMPANY OR A SUBSIDIARY.
CODE: THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
COMMITTEE: THE COMPENSATION, EMPLOYEE BENEFITS AND STOCK INCENTIVE
COMMITTEE OF THE BOARD OF DIRECTORS OF THE COMPANY OR ANY OTHER COMMITTEE
DESIGNATED BY SUCH BOARD OF DIRECTORS TO ADMINISTER STOCK INCENTIVE AND STOCK
OPTION PLANS OF THE COMPANY AND ITS SUBSIDIARIES GENERALLY OR THIS PLAN
SPECIFICALLY.
COMMON STOCK: THE COMMON STOCK OF THE COMPANY, PAR VALUE $0.01 PER SHARE,
OR SUCH OTHER CLASS OF SHARES OR OTHER SECURITIES OR PROPERTY AS MAY BE
APPLICABLE PURSUANT TO THE PROVISIONS OF SECTION 8.
COMPANY: W. R. GRACE & CO., A DELAWARE CORPORATION.
FAIR MARKET VALUE: (A) THE MEAN BETWEEN THE HIGH AND LOW SALES PRICES OF
A SHARE OF COMMON STOCK IN NEW YORK STOCK EXCHANGE COMPOSITE TRANSACTIONS ON
THE APPLICABLE DATE, AS REPORTED IN THE WALL STREET JOURNAL OR ANOTHER
NEWSPAPER OF GENERAL CIRCULATION, OR, IF NO SALES OF SHARES OF COMMON STOCK
WERE REPORTED FOR SUCH DATE, FOR THE NEXT PRECEDING DATE FOR WHICH SUCH SALES
WERE SO REPORTED, OR (B) THE FAIR MARKET
3
VALUE OF A SHARE OF COMMON STOCK DETERMINED IN ACCORDANCE WITH ANY
OTHER REASONABLE METHOD APPROVED BY THE COMMITTEE.
GRACE-NEW YORK: FRESENIUS NATIONAL MEDICAL CARE HOLDINGS, INC., A NEW
YORK CORPORATION WHICH WAS FORMERLY THE SOLE SHAREHOLDER OF THE COMPANY AND WAS
FORMERLY KNOWN AS "W. R. GRACE & CO."
INCENTIVE STOCK OPTION: A STOCK OPTION THAT STATES THAT IT IS AN
INCENTIVE STOCK OPTION AND THAT IS INTENDED TO MEET THE REQUIREMENTS OF SECTION
422A OF THE CODE AND THE REGULATIONS THEREUNDER APPLICABLE TO INCENTIVE STOCK
OPTIONS, AS IN EFFECT FROM TIME TO TIME.
ISSUANCE (OR WORDS OF SIMILAR IMPORT): THE ISSUANCE OF AUTHORIZED BUT
UNISSUED COMMON STOCK OR THE TRANSFER OF ISSUED COMMON STOCK HELD BY THE
COMPANY OR A SUBSIDIARY.
KEY EMPLOYEE: AN EMPLOYEE OF THE COMPANY OR A SUBSIDIARY WHO IS A KEY
PERSON.
KEY PERSON: AN EMPLOYEE OF, OR CONSULTANT TO, THE COMPANY OR A SUBSIDIARY
WHO, IN THE OPINION OF THE COMMITTEE, HAS CONTRIBUTED OR CAN CONTRIBUTE
SIGNIFICANTLY TO THE GROWTH AND SUCCESSFUL OPERATIONS OF THE COMPANY OR ONE OR
MORE SUBSIDIARIES. THE GRANT OF A STOCK INCENTIVE TO AN EMPLOYEE OR CONSULTANT
SHALL BE DEEMED A DETERMINATION BY THE COMMITTEE THAT SUCH PERSON IS A KEY
PERSON.
NON-STATUTORY STOCK OPTION: AN OPTION THAT IS NOT AN INCENTIVE STOCK
OPTION OR ANOTHER FORM OF STATUTORY STOCK OPTION (WITHIN THE MEANINGS OF
SECTIONS 422, 423 AND 424 OF THE CODE AND THE REGULATIONS THEREUNDER, AS IN
EFFECT FROM TIME TO TIME).
OPTION: AN OPTION GRANTED UNDER THIS PLAN TO PURCHASE SHARES OF COMMON
STOCK.
PLAN: THE 1994 STOCK INCENTIVE PLAN OF THE COMPANY HEREIN SET FORTH, AS
THE SAME MAY FROM TIME TO TIME BE AMENDED.
RULE 16B-3: RULE 16B-3 OF THE SECURITIES AND EXCHANGE COMMISSION (OR ANY
SUCCESSOR PROVISION IN EFFECT AT THE APPLICABLE TIME).
SERVICE: SERVICE TO THE COMPANY OR A SUBSIDIARY AS AN EMPLOYEE OR
CONSULTANT. "TO SERVE" HAS A CORRELATIVE MEANING.
STOCK AWARD: AN ISSUANCE OF SHARES OF COMMON STOCK OR AN UNDERTAKING
(OTHER THAN AN OPTION) TO ISSUE SUCH SHARES IN THE FUTURE.
- 2 -
4
STOCK INCENTIVE: A STOCK INCENTIVE GRANTED UNDER THIS PLAN IN ONE OF THE
FORMS PROVIDED FOR IN SECTION 3.
SUBSIDIARY: A CORPORATION (OR OTHER FORM OF BUSINESS ASSOCIATION) OF
WHICH SHARES (OR OTHER OWNERSHIP INTERESTS) HAVING 50% OR MORE OF THE VOTING
POWER REGULARLY ENTITLED TO VOTE FOR DIRECTORS (OR EQUIVALENT MANAGEMENT
RIGHTS) ARE OWNED, DIRECTLY OR INDIRECTLY, BY THE COMPANY; PROVIDED, HOWEVER,
THAT IN THE CASE OF AN INCENTIVE STOCK OPTION, THE TERM "SUBSIDIARY" SHALL MEAN
A SUBSIDIARY (AS DEFINED BY THE PRECEDING CLAUSE) THAT IS ALSO A "SUBSIDIARY
CORPORATION" AS DEFINED IN SECTION 425(F) OF THE CODE AND THE REGULATIONS
THEREUNDER, AS IN EFFECT FROM TIME TO TIME.
3. GRANTS OF STOCK INCENTIVES:
(A) SUBJECT TO THE PROVISIONS OF THIS PLAN, THE COMMITTEE MAY AT ANY TIME
AND FROM TIME TO TIME GRANT STOCK INCENTIVES UNDER THIS PLAN TO, AND ONLY TO,
KEY PERSONS; PROVIDED, HOWEVER, THAT INCENTIVE STOCK OPTIONS MAY BE GRANTED TO,
AND ONLY TO, KEY EMPLOYEES.
(B) THE COMMITTEE MAY GRANT A STOCK INCENTIVE TO BE EFFECTIVE AT A
SPECIFIED FUTURE DATE OR UPON THE FUTURE OCCURRENCE OF A SPECIFIED EVENT. FOR
THE PURPOSES OF THIS PLAN, ANY SUCH STOCK INCENTIVE SHALL BE DEEMED GRANTED ON
THE DATE IT BECOMES EFFECTIVE. AN AGREEMENT OR OTHER COMMITMENT TO GRANT A
STOCK INCENTIVE THAT IS TO BE EFFECTIVE IN THE FUTURE SHALL NOT BE DEEMED THE
GRANT OF A STOCK INCENTIVE UNTIL THE DATE ON WHICH SUCH STOCK INCENTIVE BECOMES
EFFECTIVE.
(C) STOCK INCENTIVES MAY BE GRANTED IN THE FORM OF:
(I) A STOCK AWARD, OR
(II) AN OPTION, OR
(III) A COMBINATION OF A STOCK AWARD AND AN OPTION.
4. STOCK SUBJECT TO THIS PLAN:
(A) SUBJECT TO THE PROVISIONS OF PARAGRAPH (C) AND (E) OF THIS SECTION 4
AND THE PROVISIONS OF SECTION 8, THE MAXIMUM NUMBER OF SHARES OF COMMON STOCK
THAT MAY BE ISSUED PURSUANT TO STOCK INCENTIVES GRANTED UNDER THIS PLAN SHALL
NOT EXCEED 3,000,000 SHARES OF COMMON STOCK.
(B) AUTHORIZED BUT UNISSUED SHARES OF COMMON STOCK AND ISSUED SHARES OF
COMMON STOCK HELD BY THE COMPANY OR A SUBSIDIARY, WHETHER ACQUIRED SPECIFICALLY
FOR USE UNDER THIS PLAN OR OTHERWISE, MAY BE USED FOR PURPOSES OF THIS PLAN.
- 3 -
5
(C) IF ANY SHARES OF COMMON STOCK SUBJECT TO A STOCK INCENTIVE SHALL
NOT BE ISSUED AND SHALL CEASE TO BE ISSUABLE BECAUSE OF THE TERMINATION, IN
WHOLE OR IN PART, OF SUCH STOCK INCENTIVE OR FOR ANY OTHER REASON, OR IF ANY
SUCH SHARES SHALL, AFTER ISSUANCE, BE REACQUIRED BY THE COMPANY OR A SUBSIDIARY
FOR ANY REASON, SUCH SHARES SHALL NO LONGER BE CHARGED AGAINST THE LIMITATION
PROVIDED FOR IN PARAGRAPH (A) OF THIS SECTION 4 AND MAY AGAIN BE MADE SUBJECT
TO STOCK INCENTIVES.
(D) OF THE TOTAL NUMBER OF SHARES SPECIFIED IN PARAGRAPH (A) OF THIS
SECTION 4 (SUBJECT TO ADJUSTMENT AS SPECIFIED THEREIN), DURING THE TERM OF THIS
PLAN AS DEFINED IN SECTION 9, (I) NO MORE THAN 10% MAY BE SUBJECT TO OPTIONS
GRANTED TO ANY ONE KEY PERSON, (II) NO MORE THAN 15% MAY BE SUBJECT TO STOCK
INCENTIVES GRANTED TO ANY ONE KEY PERSON, AND (III) NO MORE THAN 3% IN THE
AGGREGATE MAY BE SUBJECT TO STOCK INCENTIVES GRANTED TO ALL KEY PERSONS WHO ARE
CONSULTANTS TO THE COMPANY AND/OR ONE OR MORE SUBSIDIARIES AT THE DATE THE
RELEVANT STOCK INCENTIVE IS GRANTED.
(E) FOR PURPOSES OF THIS SECTION 4, COMMON STOCK SHALL INCLUDE SHARES OF
COMMON STOCK, PAR VALUE $1.00 PER SHARE, OF GRACE-NEW YORK ISSUED OR
TRANSFERRED PURSUANT TO STOCK INCENTIVES GRANTED UNDER THIS PLAN AS IN EFFECT
PRIOR TO ITS ASSUMPTION BY THE COMPANY; PROVIDED THAT THE NUMBER OF SHARES OF
COMMON STOCK THAT MAY BE ISSUED OR TRANSFERRED FOLLOWING THE EFFECTIVE DATE OF
THE ADOPTION AND ASSUMPTION OF THIS PLAN BY THE COMPANY (AS SPECIFIED IN
SECTION 9) PURSUANT TO STOCK INCENTIVES GRANTED UNDER THIS PLAN SHALL NOT
EXCEED 2,791,121 SHARES.
5. STOCK AWARDS:
EXCEPT AS OTHERWISE PROVIDED IN SECTION 12, STOCK INCENTIVES IN THE FORM
OF STOCK AWARDS SHALL BE SUBJECT TO THE FOLLOWING PROVISIONS:
(A) FOR PURPOSES OF THIS PLAN, ALL SHARES OF COMMON STOCK SUBJECT TO A
STOCK AWARD SHALL BE VALUED AT NOT LESS THAN 100% OF THE FAIR MARKET VALUE OF
SUCH SHARES ON THE DATE SUCH STOCK AWARD IS GRANTED, REGARDLESS OF WHETHER OR
WHEN SUCH SHARES ARE ISSUED PURSUANT TO SUCH STOCK AWARD AND WHETHER OR NOT
SUCH SHARES ARE SUBJECT TO RESTRICTIONS AFFECTING THEIR VALUE.
(B) SHARES OF COMMON STOCK SUBJECT TO A STOCK AWARD MAY BE ISSUED TO A KEY
PERSON AT THE TIME THE STOCK AWARD IS GRANTED, OR AT ANY TIME SUBSEQUENT
THERETO, OR IN INSTALLMENTS FROM TIME TO TIME. IN THE EVENT THAT ANY SUCH
ISSUANCE SHALL NOT BE MADE AT THE TIME THE STOCK AWARD IS GRANTED, THE STOCK
AWARD MAY PROVIDE FOR THE PAYMENT TO SUCH KEY PERSON, EITHER IN CASH OR SHARES
OF COMMON STOCK, OF AMOUNTS NOT EXCEEDING THE DIVIDENDS THAT WOULD HAVE BEEN
PAYABLE TO SUCH KEY PERSON IN RESPECT OF THE NUMBER OF SHARES OF COMMON STOCK
SUBJECT TO SUCH STOCK AWARD (AS ADJUSTED UNDER SECTION 8) IF SUCH SHARES HAD
BEEN ISSUED TO SUCH KEY PERSON AT THE TIME SUCH STOCK AWARD WAS GRANTED. ANY
STOCK AWARD MAY PROVIDE THAT THE VALUE OF ANY SHARES OF COMMON STOCK SUBJECT TO
SUCH STOCK AWARD MAY BE PAID IN CASH, ON EACH DATE ON WHICH SHARES WOULD
- 4 -
6
OTHERWISE HAVE BEEN ISSUED, IN AN AMOUNT EQUAL TO THE FAIR MARKET VALUE ON SUCH
DATE OF THE SHARES THAT WOULD OTHERWISE HAVE BEEN ISSUED.
(C) THE MATERIAL TERMS OF EACH STOCK AWARD SHALL BE DETERMINED BY THE
COMMITTEE. EACH STOCK AWARD MAY BE EVIDENCED BY A WRITTEN INSTRUMENT
CONSISTENT WITH THIS PLAN. IT IS INTENDED THAT A STOCK AWARD WOULD BE (I)
MADE CONTINGENT UPON THE ATTAINMENT OF ONE OR MORE SPECIFIED PERFORMANCE
OBJECTIVES AND/OR (II) SUBJECT TO RESTRICTIONS ON THE SALE OR OTHER DISPOSITION
FOR A PERIOD OF THREE OR MORE YEARS OF THE STOCK AWARD OR THE SHARES SUBJECT
THERETO; PROVIDED THAT (X) A STOCK AWARD MAY INCLUDE RESTRICTIONS AND
LIMITATIONS IN ADDITION TO THOSE PROVIDED FOR HEREIN AND (Y) OF THE TOTAL
NUMBER OF SHARES SPECIFIED IN PARAGRAPH (A) OF SECTION 4 (SUBJECT TO ADJUSTMENT
AS SPECIFIED THEREIN), UP TO 3% MAY BE SUBJECT TO STOCK AWARDS NOT SUBJECT TO
CLAUSE (I) OR CLAUSE (II) OF THIS SENTENCE.
(D) A STOCK AWARD SHALL BE GRANTED FOR SUCH LAWFUL CONSIDERATION AS MAY BE
PROVIDED FOR THEREIN.
6. OPTIONS: EXCEPT AS OTHERWISE PROVIDED IN SECTION 12, STOCK INCENTIVES
IN THE FORM OF OPTIONS SHALL BE SUBJECT TO THE FOLLOWING PROVISIONS:
(A) SUBJECT TO THE PROVISIONS OF PARAGRAPH (F) OF THIS SECTION 6, THE
PURCHASE PRICE PER SHARE OF COMMON STOCK SHALL BE NOT LESS THAN 100% OF THE
FAIR MARKET VALUE OF A SHARE OF COMMON STOCK ON THE DATE THE OPTION IS GRANTED.
THE OPTION MAY PROVIDE FOR THE PURCHASE PRICE TO BE PAID (I) IN CASH, OR (II)
IN SHARES OF COMMON STOCK (INCLUDING SHARES ISSUED PURSUANT TO A STOCK AWARD
GRANTED SUBJECT TO RESTRICTIONS AS PROVIDED FOR IN PARAGRAPH (C) OF SECTION 5),
OR (III) IN A COMBINATION OF CASH AND SUCH SHARES. ANY SHARES OF COMMON STOCK
DELIVERED TO THE COMPANY IN PAYMENT OF THE PURCHASE PRICE SHALL BE VALUED AT
THEIR FAIR MARKET VALUE ON THE DATE OF EXERCISE. NO CERTIFICATE FOR SHARES OF
COMMON STOCK SHALL BE ISSUED UPON THE EXERCISE OF AN OPTION UNTIL THE PURCHASE
PRICE FOR SUCH SHARES HAS BEEN PAID IN FULL.
(B) IF SO PROVIDED IN THE OPTION, THE COMPANY SHALL, UPON THE REQUEST OF
THE HOLDER OF THE OPTION AND AT ANY TIME AND FROM TIME TO TIME, CANCEL ALL OR A
PORTION OF THE OPTION THEN SUBJECT TO EXERCISE AND EITHER (I) PAY THE HOLDER AN
AMOUNT OF MONEY EQUAL TO THE EXCESS, IF ANY, OF THE FAIR MARKET VALUE, AT SUCH
TIME OR TIMES, OF THE SHARES SUBJECT TO THE PORTION OF THE OPTION SO CANCELED
OVER THE PURCHASE PRICE FOR SUCH SHARES, OR (II) ISSUE SHARES OF COMMON STOCK
TO THE HOLDER WITH A FAIR MARKET VALUE, AT SUCH TIME OR TIMES, EQUAL TO SUCH
EXCESS, OR (III) PAY SUCH EXCESS BY A COMBINATION OF MONEY AND SHARES.
(C) EACH OPTION MAY BE EXERCISABLE IN FULL AT THE TIME OF GRANT, OR MAY
BECOME EXERCISABLE IN ONE OR MORE INSTALLMENTS AND AT SUCH TIME OR TIMES OR
UPON THE OCCURRENCE OF SUCH EVENTS, AS MAY BE SPECIFIED IN THE OPTION, AS
DETERMINED BY THE COMMITTEE. UNLESS OTHERWISE PROVIDED IN THE WRITTEN
INSTRUMENT PROVIDED IN PARAGRAPH (G) OF THIS SECTION 6, AN OPTION, TO THE
EXTENT IT IS OR BECOMES EXERCISABLE, MAY BE
- 5 -
7
EXERCISED AT ANY TIME IN WHOLE OR IN PART UNTIL THE EXPIRATION OR
TERMINATION OF SUCH OPTION.
(D) EACH OPTION SHALL BE EXERCISABLE DURING THE LIFE OF THE HOLDER ONLY
BY HIM AND, AFTER HIS DEATH, ONLY BY HIS ESTATE OR BY A PERSON WHO ACQUIRES THE
RIGHT TO EXERCISE THE OPTION BY WILL OR THE LAWS OF DESCENT AND DISTRIBUTION.
AN OPTION, TO THE EXTENT THAT IT SHALL NOT HAVE BEEN EXERCISED OR CANCELED,
SHALL TERMINATE AS FOLLOWS AFTER THE HOLDER CEASES TO SERVE: (I) IF THE HOLDER
SHALL VOLUNTARILY CEASE TO SERVE WITHOUT THE CONSENT OF THE COMMITTEE OR SHALL
HAVE HIS SERVICE TERMINATED FOR CAUSE, THE OPTION SHALL TERMINATE IMMEDIATELY
UPON CESSATION OF SERVICE; (II) IF THE HOLDER SHALL CEASE TO SERVE BY REASON OF
DEATH, INCAPACITY OR RETIREMENT UNDER A RETIREMENT PLAN OF THE COMPANY OR A
SUBSIDIARY, THE OPTION SHALL TERMINATE THREE YEARS AFTER THE DATE ON WHICH HE
CEASED TO SERVE; AND (III) EXCEPT AS PROVIDED IN THE NEXT SENTENCE, IN ALL
OTHER CASES THE OPTION SHALL TERMINATE THREE MONTHS AFTER THE DATE ON WHICH THE
HOLDER CEASED TO SERVE UNLESS THE COMMITTEE SHALL APPROVE A LONGER PERIOD
(WHICH APPROVAL MAY BE GIVEN BEFORE OR AFTER CESSATION OF SERVICE) NOT TO
EXCEED THREE YEARS. IF THE HOLDER SHALL DIE OR BECOME INCAPACITATED DURING THE
THREE-MONTH PERIOD (OR SUCH LONGER PERIOD AS THE COMMITTEE MAY APPROVE)
REFERRED TO IN THE PRECEDING CLAUSE (III), THE OPTION SHALL TERMINATE THREE
YEARS AFTER THE DATE ON WHICH HE CEASED TO SERVE. A LEAVE OF ABSENCE FOR
MILITARY OR GOVERNMENTAL SERVICE OR OTHER PURPOSES SHALL NOT, IF APPROVED BY
THE COMMITTEE (WHICH APPROVAL MAY BE GIVEN BEFORE OR AFTER THE LEAVE OF ABSENCE
COMMENCES), BE DEEMED A CESSATION OF SERVICE WITHIN THE MEANING OF THIS
PARAGRAPH (D). NOTWITHSTANDING THE FOREGOING PROVISIONS OF THIS PARAGRAPH (D)
OR ANY OTHER PROVISION OF THIS PLAN, NO OPTION SHALL BE EXERCISABLE AFTER
EXPIRATION OF A PERIOD OF TEN YEARS AND ONE MONTH FROM THE DATE THE OPTION IS
GRANTED. WHERE A NON-STATUTORY STOCK OPTION IS GRANTED FOR A TERM OF LESS THAN
TEN YEARS AND ONE MONTH, THE COMMITTEE MAY, AT ANY TIME PRIOR TO THE EXPIRATION
OF THE OPTION, EXTEND ITS TERM FOR A PERIOD ENDING NOT LATER THAN TEN YEARS AND
ONE MONTH FROM THE DATE THE OPTION WAS GRANTED. SUCH AN EXTENSION SHALL NOT BE
DEEMED THE GRANT OF A NEW OPTION UNDER THIS PLAN.
(E) NO OPTION NOR ANY RIGHT THEREUNDER MAY BE ASSIGNED OR TRANSFERRED
EXCEPT BY WILL OR THE LAWS OF DESCENT AND DISTRIBUTION, UNLESS OTHERWISE
PROVIDED IN THE OPTION.
(F) AN OPTION MAY, BUT NEED NOT, BE AN INCENTIVE STOCK OPTION. ALL SHARES
OF COMMON STOCK THAT MAY BE MADE SUBJECT TO STOCK INCENTIVES UNDER THIS PLAN
MAY BE MADE SUBJECT TO INCENTIVE STOCK OPTIONS; PROVIDED THAT (I) NO INCENTIVE
STOCK OPTION MAY BE GRANTED MORE THAN TEN YEARS AFTER THE EFFECTIVE DATE OF
THIS PLAN, AS PROVIDED IN SECTION 9, (II) THE PURCHASE PRICE PER SHARE OF
COMMON STOCK SUBJECT TO AN INCENTIVE STOCK OPTION SHALL BE NOT LESS THAN 100%
OF THE FAIR MARKET VALUE OF A SHARE OF COMMON STOCK ON THE DATE SUCH INCENTIVE
STOCK OPTION IS GRANTED, AND (III) THE AGGREGATE FAIR MARKET VALUE (DETERMINED
AS OF THE TIME AN INCENTIVE STOCK OPTION IS GRANTED) OF THE SHARES SUBJECT TO
EACH INSTALLMENT BECOMING EXERCISABLE FOR THE FIRST TIME IN ANY CALENDAR YEAR
UNDER INCENTIVE STOCK OPTIONS GRANTED, ON OR AFTER JANUARY 1, 1987 (UNDER ALL
PLANS, INCLUDING THIS PLAN, OF HIS EMPLOYER CORPORATION AND ITS PARENT AND
- 6 -
8
SUBSIDIARY CORPORATIONS), TO THE KEY EMPLOYEE TO WHOM SUCH INCENTIVE STOCK
OPTION IS GRANTED, SHALL NOT EXCEED $100,000.
(G) THE MATERIAL TERMS OF EACH OPTION SHALL BE DETERMINED BY THE
COMMITTEE. EACH OPTION SHALL BE EVIDENCED BY A WRITTEN INSTRUMENT CONSISTENT
WITH THIS PLAN. AN OPTION MAY INCLUDE RESTRICTIONS AND LIMITATIONS IN ADDITION
TO THOSE PROVIDED FOR IN THIS PLAN.
(H) OPTIONS SHALL BE GRANTED FOR SUCH LAWFUL CONSIDERATION AS MAY BE
PROVIDED FOR IN THE OPTION.
7. COMBINATION OF STOCK AWARDS AND OPTIONS: STOCK INCENTIVES AUTHORIZED
BY PARAGRAPH (C)(III) OF SECTION 3 IN THE FORM OF COMBINATIONS OF STOCK AWARDS
AND OPTIONS SHALL BE SUBJECT TO THE FOLLOWING PROVISIONS:
(A) A STOCK INCENTIVE MAY BE A COMBINATION OF ANY FORM OF STOCK AWARD AND
ANY FORM OF OPTION, PROVIDED, HOWEVER, THAT THE TERMS AND CONDITIONS OF SUCH
STOCK INCENTIVE PERTAINING TO A STOCK AWARD ARE CONSISTENT WITH SECTION 5 AND
THE TERMS AND CONDITIONS OF SUCH STOCK INCENTIVE PERTAINING TO AN OPTION ARE
CONSISTENT WITH SECTION 6.
(B) SUCH COMBINATION STOCK INCENTIVE SHALL BE SUBJECT TO SUCH OTHER TERMS
AND CONDITIONS AS MAY BE SPECIFIED THEREIN INCLUDING, WITHOUT LIMITATION, A
PROVISION TERMINATING IN WHOLE OR IN PART A PORTION THEREOF UPON THE EXERCISE
IN WHOLE OR IN PART OF ANOTHER PORTION THEREOF.
(C) THE MATERIAL TERMS OF EACH COMBINATION STOCK INCENTIVE SHALL BE
DETERMINED BY THE COMMITTEE. EACH COMBINATION STOCK INCENTIVE SHALL BE
EVIDENCED BY A WRITTEN INSTRUMENT CONSISTENT WITH THIS PLAN.
8. ADJUSTMENT PROVISIONS:
(A) IN THE EVENT THAT ANY RECLASSIFICATION, SPLIT-UP OR CONSOLIDATION OF
THE COMMON STOCK SHALL BE EFFECTED, OR THE OUTSTANDING SHARES OF COMMON STOCK
ARE, IN CONNECTION WITH A MERGER OR CONSOLIDATION OF THE COMPANY OR A SALE BY
THE COMPANY OF ALL OR A PART OF ITS ASSETS, EXCHANGED FOR A DIFFERENT NUMBER OR
CLASS OF SHARES OF STOCK OR OTHER SECURITIES OR PROPERTY OF THE COMPANY OR FOR
SHARES OF THE STOCK OR OTHER SECURITIES OR PROPERTY OF ANY OTHER CORPORATION OR
PERSON, OR A RECORD DATE FOR DETERMINATION OF HOLDERS OF COMMON STOCK ENTITLED
TO RECEIVE A DIVIDEND PAYABLE IN COMMON STOCK SHALL OCCUR, (I) THE NUMBER AND
CLASS OF SHARES OR OTHER SECURITIES OR PROPERTY THAT MAY BE ISSUED PURSUANT TO
STOCK INCENTIVES THEREAFTER GRANTED, (II) THE NUMBER AND CLASS OF SHARES OR
OTHER SECURITIES OR PROPERTY THAT HAVE NOT BEEN ISSUED UNDER OUTSTANDING STOCK
INCENTIVES, (III) THE PURCHASE PRICE TO BE PAID PER SHARE OR OTHER UNIT UNDER
OUTSTANDING STOCK INCENTIVES, AND (IV) THE PRICE TO BE PAID PER SHARE OR OTHER
UNIT BY THE COMPANY OR A SUBSIDIARY FOR SHARES OR OTHER SECURITIES OR PROPERTY
ISSUED PURSUANT TO STOCK INCENTIVES THAT ARE SUBJECT TO A RIGHT OF THE COMPANY
OR A SUBSIDIARY TO RE-ACQUIRE SUCH SHARES OR
- 7 -
9
OTHER SECURITIES OR PROPERTY, SHALL IN EACH CASE BE EQUITABLY ADJUSTED
AS DETERMINED BY THE COMMITTEE.
(B) IN THE EVENT THAT THERE SHALL OCCUR ANY SPIN-OFF OR OTHER
DISTRIBUTION OF ASSETS OF THE COMPANY TO ITS SHAREHOLDERS (INCLUDING WITHOUT
LIMITATION AN EXTRAORDINARY DIVIDEND), (I) THE NUMBER AND CLASS OF SHARES OR
OTHER SECURITIES OR PROPERTY THAT MAY BE ISSUED PURSUANT TO STOCK INCENTIVES
THEREAFTER GRANTED, (II) THE NUMBER AND CLASS OF SHARES OR OTHER SECURITIES OR
PROPERTY THAT HAVE NOT BEEN ISSUED UNDER OUTSTANDING STOCK INCENTIVES, (III)
THE PURCHASE PRICE TO BE PAID PER SHARE OR OTHER UNIT UNDER OUTSTANDING STOCK
INCENTIVES, AND (IV) THE PRICE TO BE PAID PER SHARE OR OTHER UNIT BY THE
COMPANY OR A SUBSIDIARY FOR SHARES OR OTHER SECURITIES OR PROPERTY ISSUED
PURSUANT TO STOCK INCENTIVES THAT ARE SUBJECT TO A RIGHT OF THE COMPANY OR A
SUBSIDIARY TO RE-ACQUIRE SUCH SHARES OR OTHER SECURITIES OR PROPERTY, SHALL IN
EACH CASE BE EQUITABLY ADJUSTED AS DETERMINED BY THE COMMITTEE.
(C) IN THE EVENT OF A MERGER OR CONSOLIDATION OF THE COMPANY IN WHICH THE
COMMON STOCK IS CONVERTED INTO THE RIGHT TO RECEIVE A SPECIFIED AMOUNT OF CASH
PER SHARE (THE "MERGER PRICE"), THEN EACH OPTION OUTSTANDING IMMEDIATELY PRIOR
TO THE EFFECTIVE TIME OF SUCH MERGER OR CONSOLIDATION (THE "EFFECTIVE TIME")
SHALL BE TREATED AS FOLLOWS: (I) EACH SUCH OPTION HAVING A PER SHARE PURCHASE
PRICE EQUAL TO OR GREATER THAN THE MERGER PRICE SHALL TERMINATE AT THE
EFFECTIVE TIME AND BE OF NO FURTHER FORCE AND EFFECT, WITHOUT THE MAKING OF ANY
PAYMENT TO THE HOLDER OF SUCH OPTION; AND (II) EACH SUCH OPTION HAVING A PER
SHARE PURCHASE PRICE LESS THAN THE MERGER PRICE SHALL TERMINATE AT THE
EFFECTIVE TIME AND BE OF NO FURTHER FORCE AND EFFECT, AND THE HOLDER OF SUCH
OPTION SHALL BE PAID IN CASH, AS PROMPTLY AS PRACTICABLE FOLLOWING THE
EFFECTIVE TIME, AN AMOUNT EQUAL TO THE PRODUCT OF (A) THE EXCESS OF THE MERGER
PRICE OVER THE PER SHARE PURCHASE PRICE OF SUCH OPTION TIMES (B) THE NUMBER OF
SHARES COVERED BY SUCH OPTION IMMEDIATELY PRIOR TO THE EFFECTIVE TIME.
9. TERM:
THIS PLAN WAS DEEMED ADOPTED AND BECAME EFFECTIVE ON THE DATE IT WAS
APPROVED BY THE SHAREHOLDERS OF GRACE-NEW YORK. THIS PLAN WAS DEEMED ADOPTED
AS TO THE COMPANY ON THE DATE OF THE ADOPTION AND ASSUMPTION THEREOF BY THE
BOARD OF DIRECTORS AND BECAME EFFECTIVE AS TO THE COMPANY ON SEPTEMBER 28, 1996
NO STOCK INCENTIVES SHALL BE GRANTED UNDER THIS PLAN AFTER THE EFFECTIVE DATE
OF THE ADOPTION AND ASSUMPTION THEREOF BY THE COMPANY.
10. ADMINISTRATION:
(A) THIS PLAN SHALL BE ADMINISTERED BY THE COMMITTEE. NO DIRECTOR SHALL
BE DESIGNATED AS OR CONTINUE TO BE A MEMBER OF THE COMMITTEE UNLESS HE SHALL AT
THE TIME OF DESIGNATION AND AT ALL TIMES DURING SERVICE AS A MEMBER OF THE
COMMITTEE BE A "DISINTERESTED PERSON" WITHIN THE MEANING OF RULE 16B-3. THE
COMMITTEE SHALL HAVE FULL
- 8 -
10
AUTHORITY TO ACT IN THE MATTER OF SELECTION OF KEY PERSONS AND IN
GRANTING STOCK INCENTIVES TO THEM AND SUCH OTHER AUTHORITY AS IS GRANTED TO THE
COMMITTEE BY THIS PLAN.
(B) THE COMMITTEE MAY ESTABLISH SUCH RULES AND REGULATIONS, NOT
INCONSISTENT WITH THE PROVISIONS OF THIS PLAN, AS IT DEEMS NECESSARY TO
DETERMINE ELIGIBILITY TO BE GRANTED STOCK INCENTIVES UNDER THIS PLAN AND FOR
THE PROPER ADMINISTRATION OF THIS PLAN, AND MAY AMEND OR REVOKE ANY RULE OR
REGULATION SO ESTABLISHED. THE COMMITTEE MAY MAKE SUCH DETERMINATIONS AND
INTERPRETATIONS UNDER OR IN CONNECTION WITH THIS PLAN AS IT DEEMS NECESSARY OR
ADVISABLE. ALL SUCH RULES, REGULATIONS, DETERMINATIONS AND INTERPRETATIONS
SHALL BE BINDING AND CONCLUSIVE UPON THE COMPANY, THE SUBSIDIARIES, ITS
SHAREHOLDERS AND ITS DIRECTORS, OFFICERS, CONSULTANTS AND EMPLOYEES, AND UPON
THEIR RESPECTIVE LEGAL REPRESENTATIVES, BENEFICIARIES, SUCCESSORS AND ASSIGNS,
AND UPON ALL OTHER PERSONS CLAIMING UNDER OR THROUGH ANY OF THEM.
(C) MEMBERS OF THE BOARD OF DIRECTORS AND MEMBERS OF THE COMMITTEE ACTING
UNDER THIS PLAN SHALL BE FULLY PROTECTED IN RELYING IN GOOD FAITH UPON THE
ADVICE OF COUNSEL AND SHALL INCUR NO LIABILITY IN THE PERFORMANCE OF THEIR
DUTIES EXCEPT AS OTHERWISE PROVIDED BY APPLICABLE LAW.
11. GENERAL PROVISIONS:
(A) NOTHING IN THIS PLAN OR IN ANY INSTRUMENT EXECUTED PURSUANT HERETO
SHALL CONFER UPON ANY PERSON ANY RIGHT TO CONTINUE IN THE SERVICE OF THE
COMPANY OR A SUBSIDIARY, OR SHALL AFFECT THE RIGHT OF THE COMPANY OR OF A
SUBSIDIARY TO TERMINATE THE SERVICE OF ANY PERSON WITH OR WITHOUT CAUSE.
(B) NO SHARES OF COMMON STOCK SHALL BE ISSUED PURSUANT TO A STOCK
INCENTIVE UNLESS AND UNTIL ALL LEGAL REQUIREMENTS APPLICABLE TO THE ISSUANCE OF
SUCH SHARES HAVE, IN THE OPINION OF COUNSEL TO THE COMPANY, BEEN COMPLIED WITH.
IN CONNECTION WITH ANY SUCH ISSUANCE THE PERSON ACQUIRING THE SHARES SHALL, IF
REQUESTED BY THE COMPANY, GIVE ASSURANCES, SATISFACTORY TO COUNSEL TO THE
COMPANY, IN RESPECT OF SUCH MATTERS AS THE COMPANY OR A SUBSIDIARY MAY DEEM
DESIRABLE TO ASSURE COMPLIANCE WITH ALL APPLICABLE LEGAL REQUIREMENTS.
(C) NO PERSON (INDIVIDUALLY OR AS A MEMBER OF A GROUP), AND NO BENEFICIARY
OR OTHER PERSON CLAIMING UNDER OR THROUGH HIM, SHALL HAVE ANY RIGHT, TITLE OR
INTEREST IN OR TO ANY SHARES OF COMMON STOCK ALLOCATED OR RESERVED FOR THE
PURPOSES OF THIS PLAN OR SUBJECT TO ANY STOCK INCENTIVE EXCEPT AS TO SUCH
SHARES OF COMMON STOCK, IF ANY, AS SHALL HAVE BEEN ISSUED TO HIM.
(D) IN THE CASE OF A GRANT OF A STOCK INCENTIVE TO A KEY PERSON OF A
SUBSIDIARY, SUCH GRANT MAY PROVIDE FOR THE ISSUANCE OF THE SHARES COVERED BY
THE STOCK INCENTIVE TO THE SUBSIDIARY, FOR SUCH CONSIDERATION AS MAY BE
PROVIDED, UPON THE CONDITION OR UNDERSTANDING THAT THE SUBSIDIARY WILL TRANSFER
THE SHARES TO THE KEY PERSON IN ACCORDANCE WITH THE TERMS OF THE STOCK
INCENTIVE.
- 9 -
11
(E) IN THE EVENT THE LAWS OF A COUNTRY IN WHICH THE COMPANY OR A
SUBSIDIARY HAS EMPLOYEES PRESCRIBE CERTAIN REQUIREMENTS FOR STOCK INCENTIVES TO
QUALIFY FOR ADVANTAGEOUS TAX TREATMENT UNDER THE LAWS OF THAT COUNTRY
(INCLUDING, WITHOUT LIMITATION, LAWS ESTABLISHING OPTIONS ANALOGOUS TO
INCENTIVE STOCK OPTIONS), THE COMMITTEE, MAY, FOR THE BENEFIT OF SUCH
EMPLOYEES, AMEND, IN WHOLE OR IN PART, THIS PLAN AND MAY INCLUDE IN SUCH
AMENDMENT ADDITIONAL PROVISIONS FOR THE PURPOSES OF QUALIFYING THE AMENDED PLAN
AND STOCK INCENTIVES GRANTED THEREUNDER UNDER SUCH LAWS; PROVIDED, HOWEVER,
THAT (I) THE TERMS AND CONDITIONS OF A STOCK INCENTIVE GRANTED UNDER SUCH
AMENDED PLAN MAY NOT BE MORE FAVORABLE TO THE RECIPIENT THAN WOULD BE PERMITTED
IF SUCH STOCK INCENTIVE HAD BEEN GRANTED UNDER THIS PLAN AS HEREIN SET FORTH,
(II) ALL SHARES ALLOCATED TO OR UTILIZED FOR THE PURPOSES OF SUCH AMENDED PLAN
SHALL BE SUBJECT TO THE LIMITATIONS OF SECTION 4, AND (III) THE PROVISIONS OF
THE AMENDED PLAN MAY RESTRICT BUT MAY NOT EXTEND OR AMPLIFY THE PROVISIONS OF
SECTIONS 9 AND 13.
(F) THE COMPANY OR A SUBSIDIARY MAY MAKE SUCH PROVISIONS AS IT MAY DEEM
APPROPRIATE FOR THE WITHHOLDING OF ANY TAXES THAT THE COMPANY OR A SUBSIDIARY
DETERMINES IT IS REQUIRED TO WITHHOLD IN CONNECTION WITH ANY STOCK INCENTIVE.
(G) NOTHING IN THIS PLAN IS INTENDED TO BE A SUBSTITUTE FOR, OR SHALL
PRECLUDE OR LIMIT THE ESTABLISHMENT OR CONTINUATION OF, ANY OTHER PLAN,
PRACTICE OR ARRANGEMENT FOR THE PAYMENT OF COMPENSATION OR BENEFITS TO
DIRECTORS, OFFICERS, EMPLOYEES OR CONSULTANTS GENERALLY, OR TO ANY CLASS OR
GROUP OF SUCH PERSONS, THAT THE COMPANY OR ANY SUBSIDIARY NOW HAS OR MAY
HEREAFTER PUT INTO EFFECT, INCLUDING, WITHOUT LIMITATION, ANY INCENTIVE
COMPENSATION, RETIREMENT, PENSION, GROUP INSURANCE, STOCK PURCHASE, STOCK BONUS
OR STOCK OPTION PLAN.
12. ACQUISITIONS: IF THE COMPANY OR ANY SUBSIDIARY SHOULD MERGE OR
CONSOLIDATE WITH, OR PURCHASE STOCK OR ASSETS OR OTHERWISE ACQUIRE THE WHOLE OR
PART OF THE BUSINESS OF, ANOTHER ENTITY, THE COMPANY, UPON THE APPROVAL OF THE
COMMITTEE, (A) MAY ASSUME, IN WHOLE OR IN PART AND WITH OR WITHOUT
MODIFICATIONS OR CONDITIONS, ANY STOCK INCENTIVES GRANTED BY THE ACQUIRED
ENTITY TO ITS DIRECTORS, OFFICERS, EMPLOYEES OR CONSULTANTS IN THEIR CAPACITIES
AS SUCH, OR (B) MAY GRANT NEW STOCK INCENTIVES IN SUBSTITUTION THEREFOR. SUCH
ASSUMED OR SUBSTITUTE STOCK INCENTIVES MAY CONTAIN TERMS AND CONDITIONS
INCONSISTENT WITH THE PROVISIONS OF THIS PLAN (INCLUDING THE LIMITATIONS SET
FORTH IN PARAGRAPH (D) OF SECTION 4), INCLUDING ADDITIONAL BENEFITS FOR THE
RECIPIENT, PROVIDED THAT, IF SUCH ASSUMED OR SUBSTITUTE STOCK INCENTIVES ARE
INCENTIVE STOCK OPTIONS, SUCH TERMS AND CONDITIONS ARE PERMITTED UNDER THE PLAN
OF THE ACQUIRED ENTITY. FOR THE PURPOSES OF ANY APPLICABLE PLAN PROVISION
INVOLVING TIME OR A DATE, A SUBSTITUTE STOCK INCENTIVE SHALL BE DEEMED GRANTED
AS OF THE DATE OF GRANT OF THE ORIGINAL STOCK INCENTIVE BY THE ACQUIRED
ENTITY.
- 10 -
12
13. AMENDMENTS AND TERMINATION:
(A) THIS PLAN MAY BE AMENDED OR TERMINATED BY THE BOARD OF DIRECTORS
UPON THE RECOMMENDATION OF THE COMMITTEE; PROVIDED THAT, WITHOUT THE APPROVAL
OF THE SHAREHOLDERS OF THE COMPANY, NO AMENDMENT SHALL BE MADE WHICH (I)
CAUSES THIS PLAN TO CEASE TO COMPLY WITH RULE 16B-3 OR APPLICABLE LAW, (II)
PERMITS ANY PERSON WHO IS NOT A KEY PERSON TO BE GRANTED A STOCK INCENTIVE
(EXCEPT AS OTHERWISE PROVIDED IN SECTION 12), (III) AMENDS THE PROVISIONS OF
PARAGRAPH (D) OF SECTION 4, PARAGRAPH (A) OF SECTION 5 OR PARAGRAPH (A) OR
PARAGRAPH (F) OF SECTION 6 TO PERMIT SHARES TO BE VALUED AT, OR TO HAVE A
PURCHASE PRICE OF, RESPECTIVELY, LESS THAN THE PERCENTAGE OF FAIR MARKET
VALUE SPECIFIED THEREIN, (IV) AMENDS SECTION 9 TO EXTEND THE DATE SET FORTH
THEREIN, OR (V) AMENDS THIS SECTION 13.
(B) NO AMENDMENT OR TERMINATION OF THIS PLAN SHALL ADVERSELY AFFECT ANY
STOCK INCENTIVE THERETOFORE GRANTED, AND NO AMENDMENT OF ANY STOCK INCENTIVE
GRANTED PURSUANT TO THIS PLAN SHALL ADVERSELY AFFECT SUCH STOCK INCENTIVE,
WITHOUT THE CONSENT OF THE HOLDER THEREOF.
- 11 -