LABORATORY CORPORATION OF AMERICA HOLDINGS
1997 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I. PURPOSES:
This Laboratory Corporation of America Holdings 1997 Employee Stock
Purchase Plan (hereinafter called the "Plan") is intended to be an employment
incentive and to encourage stock ownership by all eligible employees, including
officers, of Laboratory Corporation of America Holdings (hereinafter called the
"Corporation") and its subsidiary corporations (the "Subsidiaries"), as that
term is defined in (section mark)424(f) of the Internal Revenue Code of 1986, as
now in force or hereafter amended (the "Code"), in order to increase their
proprietary interest in the Corporation's success and to encourage them to
remain in the employ of the Corporation or a Subsidiary. It is further intended
that options issued pursuant to this Plan (hereinafter called "Options") shall
constitute options issued pursuant to an "employee stock purchase plan" within
the meaning of (section mark)423 of the Code and that the Plan shall satisfy the
requirements of Rule 16b-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
ARTICLE II. ADMINISTRATION:
The Plan shall be operated by the Employee Benefits Committee of the Board
of Directors of the Corporation (the "Committee"), who may appoint a third-party
administrator to maintain the Plan (the "Administrator"). No member of the Board
of Directors who is not otherwise employed by the Corporation shall be eligible
to receive an Option. The Committee shall at all times be composed of
"disinterested persons" within the meaning of Rule 16b-3 of the Exchange Act.
Subject to the provisions of the Plan, the Committee may, from time to time,
prescribe rules and regulations for the administration of the Plan and may
decide questions which may arise with respect to the interpretation or
application of said Plan.
ARTICLE III. ELIGIBILITY:
Each employee who has been employed by the Corporation or a Subsidiary for
at least six (6) months (including officers) as of the first day of any Offering
Period (an "Offering Date"), shall have an Option under this Plan to purchase
the Corporation's authorized but unissued par value $.01 Common Stock (herein
called "Common Stock") during an Offering Period, except that there shall be
excluded: (i) employees whose customary employment is under twenty (20) hours
per week; (ii) employees whose customary employment is for not more than five
(5) months in any calendar year; and (iii) any employee who, if having received
an Option hereunder, would own, immediately after the Option was granted, stock
possessing five percent (5%) or more of the total combined voting power or value
of any classes of stock of the Corporation, or of any of its Subsidiaries. For
purposes of determining stock ownership of an employee under (iii) hereof, the
rules of (section mark)424(d) of the Code and (section mark)1.423-2(d) of the
Treasury Regulations thereunder shall apply, and Common Stock which the employee
may purchase under any outstanding options shall be treated as owned by the
employee.
If an Optionee goes on a leave of absence, such Optionee shall have the
right to elect (a) to withdraw the balance in such Optionee's Purchase Account,
(b) to discontinue contributions to the Plan but remain a participant in the
Plan until the next following Exercise Date, or (c) remain a participant in the
Plan during such leave of absence until the next following Exercise Date,
authorizing the deductions made pursuant to Article V(c) hereof to be made from
payments made by the Corporation to the Optionee during such leave of absence
and undertaking to make such cash payments to the Plan at the end of each
payroll period to the extent that amounts payable by the Corporation to such
Optionee are insufficient to meet such Optionee's authorized deductions to the
Optionee's Purchase Account. However, the Corporation shall not advance funds to
an Optionee if the Optionee's deductions and cash payments during the Optionee's
leave of absence are insufficient to fund the Optionee's Purchase Account. An
Optionee who has been on leave of absence for more than 30 days and who
thereafter ceases to be an employee of the Corporation for the purpose of the
Plan shall not be entitled to participate in the Plan and such Optionee shall be
deemed to have withdrawn from the Plan, and all funds then on deposit in the
Optionee's Purchase Account will be paid to the Optionee under Article V(g)
hereof.
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ARTICLE IV. STOCK:
The stock subject to the Options to be issued hereunder shall be Common
Stock. The maximum number of such shares to be issued upon the exercise of the
Options hereby granted shall be an aggregate of three million five hundred
thousand (3,500,000) shares of Common Stock (the "Available Shares").
For each Offering Period hereunder, an eligible employee (hereinafter
called "Optionee") shall have an option to purchase up to the largest number of
whole and fractional shares available at the Option Price (as described in
Article V(a)) obtained by having deducted from such Optionee's Compensation for
each payroll period during an Offering Period an amount not less than one
percent (1%) or more than ten percent (10%) of such Optionee's Compensation for
the payroll period. The term " Compensation" as used herein includes regular
base pay (including any shift differentials) at the rate in effect on the
Offering Date, but excludes any bonus, overtime payment, sales commission,
contribution to any Code (section mark)125 or 401(k) plan or other form of extra
compensation.
If in any Offering Period the total number of shares of Common Stock for
which Options are exercised exceeds the number of Available Shares remaining
under the Plan, the Administrator shall make a pro rata allocation of the
Available Shares in as nearly a uniform manner as shall be practicable and as it
shall deem to be equitable, and the balance of payroll deductions credited to
the Purchase Account of each Optionee shall be returned to each Optionee as
promptly as possible.
Except as expressly provided otherwise in Article III hereof, payment for
Common Stock purchased under the Option shall be made only by payroll deductions
over a designated Offering Period.
Notwithstanding the foregoing provisions of this Plan, no Option shall
permit an Optionee to purchase in any single calendar year a number of shares
which, together with all other shares in the Corporation and any Subsidiaries
which such Optionee may be entitled to purchase in such year pursuant to Options
issued under any employee stock purchase plan, has an aggregate fair market
value (determined in each case as of the date such options are granted) in
excess of $25,000. This limitation applies only to Options granted under
"employee stock purchase plans" as defined by (section mark)423 of the Code, and
does not limit the amount of stock which an Optionee may purchase under any
other stock option or bonus plans then in effect.
ARTICLE V. TERMS AND CONDITIONS OF OPTIONS:
Options granted hereunder shall be evidenced by a notice to each Optionee
from the Administrator, which notice shall: (i) be in such form as the Committee
shall determine; (ii) incorporate, by reference, the terms and provisions of
this Plan; (iii) be issued to each Optionee on or about the first Offering Date
following the date an employee becomes an Optionee; and (iv) continue in effect
for subsequent Offering Periods unless revoked by the Optionee.
Subject always to the requirement that, except as otherwise specified in
Article IV hereof, all Optionees shall have the same rights and privileges, such
Options shall be subject to the following terms and conditions:
(a) OPTION PRICE: The price of shares purchased during each Offering
Period hereunder (an "Option Price") shall be an amount equal to the lesser
of (i) eighty-five (85%) percent of the fair market value of a share of
Common Stock on the Offering Date or (ii) eighty-five (85%) percent of the
fair market value of a share of Common Stock on the Exercise Date. For so
long as shares of the Common Stock of the Corporation are listed on the New
York Stock Exchange ("NYSE"), "fair market value" as of a given date shall
mean, for purposes of this Plan, the mean between the high and low sales
prices of the Common Stock on that date, said mean to be based on the sale
of a minimum of 100 shares of said stock; or if less than 100 shares of
said stock are sold on such date or if no sales prices are quoted, "fair
market value" shall mean the average of the closing bid and asked prices
for the Common Stock on the NYSE.
(b) OFFERING PERIODS: Each Option shall extend for a period of six
(6) months commencing on an Offering Date of January 1 or July 1 and
concluding with the "Exercise Date" of June 30 or December 31 which is six
(6) months thereafter, the said period being hereinafter called an
"Offering Period."
(c) PURCHASE ACCOUNT: Each Optionee shall notify the Corporation, on
such forms as shall be provided by the Corporation, within seven (7) days
following actual receipt by the Optionee of such forms, of the
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percentage of Compensation which the Optionee wishes to have withheld from
the Optionee's Compensation by the Exercise Date for the Offering Period.
Except as provided in subsection (g) of this Article V, each Optionee shall
authorize the Corporation and its Subsidiaries to withhold from the Optionee's
after-tax compensation, beginning as soon as practicable following the making of
the election described above and continuing throughout the duration of the
Offering Period. Such withheld amounts may be used by the Corporation for
general corporate purposes, but the Corporation or, if designated by the
Committee, the Administrator, shall maintain a record of each Optionee's funds
as a "Purchase Account." Such funds so accumulated within said Purchase Account
may be returned to an Optionee or applied toward the Purchase Price of Common
Stock only pursuant to the provisions contained in this Plan.
(d) DATES ON WHICH OPTION SHALL BE EXERCISED: Except as provided in
subsections (f), (g) and (h) of this Article V, each Option which is
exercised shall be exercised as of each Exercise Date.
(e) EXERCISE OF OPTION: Unless an Optionee withdraws from the Plan as
provided in subsection (f) of this Article V, each Optionee's Option shall
be exercised automatically on the Exercise Date of each Offering Period,
and the maximum number of full and fractional shares of Common Stock will
be purchased for each Optionee with the entire proceeds of each Optionee's
Purchase Account. As promptly as practical after the Exercise Date of each
Offering Period, the Corporation shall arrange the delivery to the
Administrator of a certificate representing the shares of Common Stock
purchased upon the exercise of such Option, and the Administrator shall
deliver (or cause to deliver) such certificate to each Optionee.
(f) TERMINATION OF OPTION: An Optionee may at any time on or before
an Exercise Date terminate the Option in its entirety by written notice of
such termination delivered in the manner set forth in Article XI hereof.
Such termination shall become effective upon receipt of such notice by the
Corporation or Administrator. As soon as practical following such notice,
all funds then in the Optionee's Purchase Account shall be paid to the
Optionee and the Optionee's Purchase Account closed, and all rights and
privileges of the Optionee granted pursuant to this Plan and the Option
granted hereunder shall be terminated until the next available Option Date
at which such Optionee again elects to participate in the Plan pursuant to
this Article V.
(g) TERMINATION OF EMPLOYMENT: In the event that an Optionee's
employment by the Corporation or a Subsidiary is terminated, all rights and
privileges of Optionee granted pursuant to the Plan and of the Option
granted hereunder shall terminate, and all funds then on deposit on the
Optionee's Purchase Account shall be paid to the Optionee (or to such
Optionee's personal representative or beneficiary, in the case of such
Optionee's death) and the Optionee's Purchase Account closed.
(h) ADJUSTMENT OF OPTIONS; EXERCISABILITY UPON CERTAIN EVENTS: In the
event of reorganization, recapitalization, stock split, stock dividend,
combination of shares, merger, consolidation, offering of rights or any
other change in the structure of shares of Common Stock of the Corporation,
the total amount of shares on which options may be granted under the Plan
and options rights (both as to the number of shares and the option price)
shall be appropriately adjusted for any increase or decrease in the number
of outstanding shares of Common Stock.
In the event of (i) the adoption of a plan of merger, consolidation, share
exchange or similar transaction of the Corporation with any other corporation as
a result of which the holders of the Common Stock of the Corporation in the
aggregate would receive less than 50% of the voting capital stock of the
surviving or resulting corporation; (ii) the approval by the Board of Directors
of an agreement providing for the sale or transfer (other than as security for
obligations of the Corporation) by the Corporation of a majority of the stock of
a significant subsidiary of the Corporation or substantially all of the assets
of the Corporation or of a significant subsidiary of the Corporation; (iii) the
acquisition of more than 20% of the Corporation's voting capital stock by any
person within the meaning of Section 13(d)(3) of the Exchange Act, other than a
person, or group including a person, who beneficially owned, as of the most
recent Offering Date, more than 5% of the Corporation's securities, in the
absence of a prior expression of approval of the Board of Directors of the
Corporation; (iv) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors of the
Corporation cease for any reason to constitute at least a majority thereof
unless the election, or the nomination for election by the Corporation's
shareholders, of each new director was approved by the vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of the period; or (v) any other change in
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control of the Corporation of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A under the Exchange Act,
then any Option granted hereunder during the then-current Option Period shall
become immediately exercisable as to the Optionee and shall remain exercisable
until the Exercise Date of the then-current Option Period, subject to all of the
terms hereof not inconsistent with subsection (i) of this Article V.
Anything contained herein to the contrary notwithstanding, upon the
dissolution or liquidation of the Corporation or the consummation of a merger or
consolidation in which the shareholders of the Corporation receive less than 50%
of the voting capital stock of the surviving or resulting corporation, each
Option granted under the Plan shall terminate, but the Optionee shall have the
right, following the adoption of a plan of dissolution or liquidation or a plan
of merger or consolidation and in any event prior to such dissolution,
liquidation, merger or consolidation, to exercise his Option to purchase Common
Stock on the Exercise Date of the then-current Option Period, subject to all of
the other terms hereof not inconsistent with this Article V.
The grant of an Option pursuant to this Plan shall not affect in any way
the right or power of the Corporation to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure, or to merge or
consolidate, or to dissolve, liquidate or sell, or transfer all or any part of
the business or assets.
(i) ASSIGNABILITY: No Option granted hereunder may be pledged nor
shall any Option be assignable or transferable except by will or by the
laws of descent and distribution and shall be exercisable, during the
lifetime of Optionee, only by said Optionee.
(j) DESIGNATION OF BENEFICIARY: Each Optionee may file a written
designation of beneficiary who is to receive any stock or cash in the event
that such Optionee dies after the end of an Offering Period but before the
issuance of the shares or during an Offering Period but before the
respective Exercise Date.
(k) RIGHTS AS A SHAREHOLDER: No Optionee shall have any rights as a
shareholder with respect to shares purchased pursuant to the Options to be
granted hereunder until full payment has been made for such shares and a
stock certificate for such shares has been actually issued to said
Optionee. No adjustment will be made for dividends or other rights for
which the record date is prior to the date of such issuance. Stock to be
delivered to an Optionee under the Plan will be registered in the name of
the Optionee.
(l) REGISTRATION: Each Option under the Plan shall be granted on the
condition that a registration statement under the Securities Act of 1933,
as amended (the "Securities Act"), with respect to the Common Stock subject
to such Option has become effective and a copy of the Prospectus has been
delivered to the Optionee.
ARTICLE VI. TERM OF PLAN:
The term of said Plan shall be for a period of ten (10) years commencing on
January 1, 1997, and ending on December 31, 2006, unless terminated earlier by
the exhaustion of the Available Shares or pursuant to Article VIII.
ARTICLE VII. CONDITIONS UPON ISSUANCE OF SHARES OF COMMON STOCK
Shares of Common Stock shall not be issued with respect to an Option unless
the exercise of such Option and the issuance and deliverance of such shares
pursuant thereto shall comply with all applicable provisions of law, domestic or
foreign, including without limitation, the Exchange Act, the Securities Act (and
the rules and regulations promulgated thereunder), and the requirement of any
stock exchange upon which the shares of Common Stock may then be listed, and
shall further be subject to the approval of counsel for the Corporation with
respect to such compliance.
As a condition to the exercise of an Option, the Corporation may require
the person exercising such Option to represent that, at the time of any such
exercise, the shares are being purchased only for an investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Corporation, such representation is required by any of the
aforementioned applicable provisions of law.
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ARTICLE VIII. AMENDMENT AND TERMINATION BY THE COMMITTEE:
The Committee may, from time to time, alter, amend, suspend or discontinue
the Plan at any time without notice, including the right to revoke future
Offering Periods, provided that no Optionee's existing rights in the
then-current Offering Period are adversely affected thereby; provided further,
upon any such amendment or modification, all Optionees shall continue to have
the same rights and privileges as other Optionees (except as otherwise provided
for in Article IV hereof); and provided further, that no such amendment of the
Plan shall, except as provided in subsection (h) of Article V hereof: (a)
increase above three million five hundred thousand (3,500,000) the Available
Shares which may be offered under the Plan; (b) change the formula by which the
price for which the Common Stock shall be sold is determined; or (c) increase
the maximum number of shares which any Optionee may purchase. The Board of
Directors shall submit any amendments to the shareholders of the Corporation for
approval to the extent necessary to maintain compliance with the requirements of
Rule 16b-3 of the Exchange Act.
ARTICLE IX. APPLICATION OF FUNDS:
The proceeds received by the Corporation from the sale of its Common Stock
pursuant to Options granted under this Plan, except as otherwise provided
herein, will be used for general corporate purposes.
ARTICLE X. OBLIGATION TO PURCHASE SHARES:
The granting of an Option pursuant to this Plan shall impose no obligation
upon the Optionee to purchase any shares covered by such Option until the
Exercise Date for each Offering Period.
ARTICLE XI. NOTICES:
Any notice which the Corporation or Optionee may be required or permitted
to give to each other shall be in writing and shall be deemed given when
delivered personally or deposited in the U.S. Mail, first class postage prepaid,
addressed as follows: Chief Financial Officer, Laboratory Corporation of America
Holdings, 358 South Main Street, Burlington, North Carolina 27215, with a copy
to General Counsel, Laboratory Corporation of America Holdings, 358 South Main
Street, Burlington, North Carolina 27215, and at such other address, including
that of the Administrator, as the Corporation, by notice to the Optionee, may
designate in writing from time to time; and to the Optionee, at the address
shown on the records of the Corporation, or at such other address as the
Optionee, by notice to the Corporation or the Administrator, may designate in
writing from time to time.
ARTICLE XII. CLOSING OF PURCHASE ACCOUNT:
In the event that under any provision hereof an Optionee's Purchase Account
is to be closed and any balance not applied to the purchase of Common Stock,
payment to such Optionee shall be made within thirty (30) days following the
date that the right to such payment accrues.
ARTICLE XIII. THE RIGHT OF THE COMPANY TO TERMINATE EMPLOYMENT:
Nothing contained in the Plan or in any Option granted pursuant to the Plan
shall confer upon any Optionee any right to be continued in the employment of
the Company or one of its Subsidiaries, or shall interfere in any way with the
right of the Company or any of its Subsidiaries, as the case may be, to
terminate his or her employment at any time for any reason.
ARTICLE XIV. GOVERNING LAW.
The law of the State of Delaware will govern all matters relating to this
Plan except to the extent it is superseded by the laws of the United States of
America.
ARTICLE XV. EFFECTIVENESS OF THE PLAN:
The Plan shall become effective only if:
(a) The Plan shall have been adopted by the Board of Directors of the
Corporation; and
(b) The Plan shall have been approved within twelve (12) months after the
Plan is adopted under subsection (a) by the affirmative vote of the holders of
at least a majority of shares of Common Stock present, or represented, and
entitled to vote at the shareholders' meeting at which the Plan is considered.
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