EXHIBIT 10.32.1
ARROW INTERNATIONAL, INC.
1999 STOCK INCENTIVE PLAN
(AS AMENDED ON OCTOBER 27, 2004)
1. PURPOSE
The purpose of this 1999 Stock Incentive Plan (the "Plan") is to advance
the interests of Arrow International, Inc. (the "Company") and its shareholders
by granting the Company's directors, officers and other eligible key employees
stock options, stock appreciation rights ("SARs") and/or restricted stock
(collectively referred to as "grants") as provided herein. The Company seeks to
attract and retain people of experience, ability and training and to furnish
additional incentive to directors, officers and other key employees upon whose
judgment, initiative and efforts the successful conduct of the Company's
business largely depends.
2. ADMINISTRATION
The Plan shall be administered by a Committee of the Board of Directors
of the Company (the "Committee") consisting of two or more members of the Board
of Directors, as determined from time to time by the Board, each of whom shall,
unless the Board determines otherwise, be (a) an "Independent Director" as this
term is defined in Rule 4200(a)(15) of the Nasdaq Stock Market, Inc., (b) a
"Non-Employee Director" as this term is defined in Rule 15b-3(B)(3) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and (c) an
"outside directors" as this term is defined in Internal Revenue Code Section
162(m). The Board shall fill any vacancy on the Committee.
Subject to the provisions of the Plan, the Committee shall possess the
authority, in its discretion, (a) to determine the directors, officers and other
key employees of the Company to whom, and the time or times at which, restricted
stock, SARs and options shall be granted, whether such grants will be awarded
singly or in combination to each eligible employee, the price, if any, at which
such grants shall be offered and the number of shares to be subject to each such
grant and any other terms and conditions that may apply to each grant; (b) in
the case of options, the price at which an option may be purchased, to determine
whether the options shall be incentive or nonqualified options and the number of
shares included within an option that may be purchased by the optionee during
any annual (or other stated) period; (c) to interpret the Plan; (d) to make and
amend rules and regulations relating thereto; (e) to prescribe the form and
conditions of the grant agreements and any appropriate terms and conditions
applicable to the awards and to make any amendments to such agreements or
awards; and (f) to make all other determinations necessary or advisable for the
administration of the Plan. The Committee's determinations shall be conclusive
and binding upon the Company, the eligible employees and all other persons.
3. ELIGIBLE EMPLOYEES
Grants may be awarded under the Plan only to directors, officers and key
employees of the Company and its subsidiaries (which shall include all
corporations of which at least fifty percent of the voting stock is owned by the
Company directly or through one or more corporations at least fifty percent
(50%) of the voting stock of which is so owned). The members of the Committee
shall not be eligible to receive any grant under the Plan during such period of
time as they serve on the Committee.
4. SHARES AVAILABLE IN THE AGGREGATE AND INDIVIDUALLY
The total of the issued or issuable shares of the Company's Common
Stock, no par value per share (the "Common Stock"), available for grants under
this Plan during any fiscal year of the Company shall not exceed three percent
(3%) of the number of issued shares of Common Stock, including treasury shares,
determined as of the first day of such fiscal year. The number of shares of
Common Stock available for incentive options during the term of this Plan shall
not exceed 14,000,000 shares (as adjusted for the two-for-one split of the
Common Stock effected on August 15, 2003 and subject to substitution or further
adjustment as provided in Section 10). Shares used for Plan grants may be
authorized and unissued shares or may be treasury shares. If a restricted stock
grant is forfeited or if an option expires, terminates or is canceled without
being exercised, new restricted stock grants or options may be thereafter
granted covering such shares. Notwithstanding the foregoing, shares attributable
to the cancellation of an option because of the exercise of a related SAR shall
continue to be treated as outstanding and shall not be available for subsequent
grants under the Plan. No grant may be awarded more than ten years after the
effective date of the Plan.
The aggregate number of (1) shares with respect to which options are
granted, (2) restricted stock awards and (3) SARs that may be granted to any one
participant may not exceed 700,000 per fiscal year (as adjusted for the August
15, 2003 two-for-one split of the Common Stock and subject to substitution or
further adjustment as provided in Section 10).
5. TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS
Incentive stock options may be granted to officers and employees but not
to directors. Each incentive stock option granted under the Plan shall be
designated as such and shall be evidenced by a stock option agreement in such
form as the Committee shall approve from time to time, which agreement shall
conform with this Plan and which shall contain the following terms and
conditions:
(a) NUMBER OF SHARES. The option agreement shall specify the
number of shares to which it pertains.
(b) PURCHASE PRICE. The purchase price for each option shall
be not less than the fair market value of the stock at the time such
option is granted. The Committee shall determine the purchase price. If
an option is granted to a director, officer or employee who at the time
of grant owns stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company (a
"10-percent
Shareholder"), the purchase price shall be at least 110 percent (110%)
of the fair market value of the stock subject to the option.
(c) DURATION OF OPTION. Each option by its terms shall not
be exercisable after the expiration of ten years from the date such
option is granted. In the case of an incentive stock option granted to a
10-percent Shareholder, the option by its terms shall not be exercisable
after the expiration of five years from the date such option is granted.
(d) OPTIONS NONTRANSFERABLE. Each option by its terms shall
be not transferable by the optionee otherwise than by will or the laws
of descent and distribution, and shall be exercisable during his
lifetime, only by the optionee, the optionee's guardian or the
optionee's legal representative.
(e) EXERCISE PERIOD. Subject to the provisions of this Plan,
the exercise of each option shall be subject to such conditions as may
be imposed by the Committee and specified in the option agreement. The
Committee may, among other things, specify a minimum length of
employment and may stagger the period of exercise by providing that only
a certain percentage of options may be exercised each year.
(f) PAYMENT OF OPTION PRICE. An option shall be exercised by
the delivery of a written, electronic or telephonic notice of exercise
to the Company or its designated agent, setting forth the number of
shares with respect to which the option is to be exercised, accompanied
by full payment of the option price for the shares.
Upon the exercise of any option, the option price for the shares
of Common Stock being purchased pursuant to the option shall be payable
to the Company in full either: (1) in cash or its equivalent; or (2)
subject to the Committee's approval, by delivery of previously acquired
shares of Common Stock having an aggregate fair market value at the time
of exercise equal to the total option price (provided that the shares
that are delivered must have been held by the optionee for at least six
(6) months prior to their delivery to satisfy the option price); or (3)
by a combination of (1) and (2); or (4) by any other method approved by
the Committee in its sole discretion. Unless otherwise determined by the
Committee, the delivery of previously acquired shares of Common Stock
may be done through attestation. No fractional shares may be tendered or
accepted in payment of the option price.
Unless otherwise determined by the Committee, cashless exercises
are permitted pursuant to Federal Reserve Board's Regulation T, subject
to applicable securities law restrictions, or by any other means which
the Committee determines to be consistent with the Plan's purpose and
applicable law.
Subject to any governing rules or regulations, as soon as
practicable after receipt of notification of exercise and full payment,
the Company shall deliver to the optionee, in the optionee's name, share
certificates in an appropriate amount based upon the number of shares
purchased pursuant to the option(s).
Unless otherwise determined by the Committee, all payments under
all of the methods indicated above shall be paid in United States
dollars.
(g) MAXIMUM VALUE OF SHARES. No incentive stock option shall
be granted to an officer or employee under this Plan or any other
incentive stock option plan of the Company or its subsidiaries to
purchase shares as to which the aggregate fair market value (determined
as of the date of grant) of the Common Stock which first become
exercisable by the employee in any calendar year exceeds $100,000.
(h) RIGHTS AS A SHAREHOLDER. The optionee shall have no
rights as a shareholder with respect to any shares for which he is
granted an option until the date of issuance to him of a stock
certificate for such shares and no adjustment shall be made for any
dividends or other rights the record date for which is prior to the date
such stock certificate is issued.
(i) GENERAL RESTRICTION. Each option shall be subject to the
requirement that, if at any time the Board of Directors shall determine,
in its discretion, that the listing, registration or qualification of
the shares subject to such option upon any securities exchange or under
any state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in
connection with, the granting of such option or the issuance or purchase
of shares thereunder, such option may not be exercised in whole or in
part unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Board of Directors.
6. TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTIONS
Options other than incentive stock options may also be granted under
this Plan. Each such nonqualified option shall be evidenced by a nonqualified
stock option agreement, shall be designated as such and shall conform to the
foregoing provisions of Section 5 except the option price requirements of
Section 5(b), the 10-percent Shareholder restriction of Section 5(c) and the
maximum value of grants of Section 5(g). In addition, nonqualified options may
be granted to directors as well as officers and employees. The Committee may
include, in its discretion, any terms or conditions in addition to those
specified in Section 5. To the extent an option exceeds the limitations of
Section 5(g), it shall be deemed a nonqualified option and shall otherwise
remain in full force and effect. A nonqualified option may have a duration of 10
years and one day from the date such option is granted.
7. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS
The Committee may, in its discretion, award stock appreciation rights to
any director, officer or other eligible employee of the Company who is subject
to Section 16(b) of the Exchange Act in conjunction with incentive stock options
or nonqualified stock options then being granted to him, or to be attached to
one or more such options theretofore granted and at the time held unexercised by
such employee which shall entitle him to receive payment from the Company in
accordance with the following provisions and such terms and conditions as the
Committee shall determine from time to time:
(a) An SAR granted hereunder may be made part of an option
at the time of grant of the option or at any time thereafter up to six
months prior to the expiration of the option.
(b) Such SAR will entitle the holder to elect to receive, in
lieu of exercising the option to which it relates, an amount (in cash or
in Common Stock, or a combination thereof, all in the sole discretion of
the Committee) equal to 100% of the excess of:
(1) the fair market value per share of the Common
Stock on the date of exercise of such right, multiplied by the
number of shares with respect to which the right is being
exercised, over
(2) the aggregate option exercise price for such
number of shares.
(c) Such SAR will be exercisable only to the extent that it
has a positive value and the option to which it relates is exercisable,
except that no SAR shall be exercisable during the first six (6) months
after the date of its grant.
(d) Upon exercise of an SAR, the option (or portion thereof)
with respect to which such right is exercised shall be surrendered and
shall not thereafter be exercisable.
(e) The exercise of an SAR will reduce the number of shares
purchasable pursuant to the related option and available under the Plan
to the extent of the number of shares with respect to which the right is
exercised.
8. TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS
The Committee may, evidenced by such written agreement as the Committee
shall from time to time prescribe, grant a specified number of shares of Common
Stock with an appropriate restrictive legend affixed thereto ("restricted
stock"). Such award shall be neither an option nor a sale, but shall be subject
to the following conditions and restrictions:
(a) Restricted stock may not be sold or otherwise
transferred by the participant until ownership vests at such time and in
such manner as specified by the Committee. Ownership shall vest only
following satisfaction of one or more of the following criteria as the
Committee may prescribe:
(1) the passage of such period of time as the
Committee in its discretion may provide, from the date of grant.
(2) the attainment of performance-based goals
established by the Committee as of the date of grant. If the
participant's compensation is subject to the $1 million cap of
Internal Revenue Code Section 162(m), the Committee may
establish such performance goals based on one or more of the
following targets:
i. total shareholder return
ii. earnings per share growth
iii. cash flow growth and/or
iv. return on equity
If the participant's compensation is not subject
to the $1 million cap of Internal Revenue Code
Section 162(m), the Committee may establish the
performance goal on the basis of the preceding
four targets or any other target it may from
time to time deem appropriate in its discretion.
(3) any other conditions the Committee may
prescribe, including a non-compete requirement.
(b) Unless the Committee shall determine otherwise with
respect to participants whose compensation is not governed by Internal
Revenue Code Section 162(m), the Committee shall grant and administer
all performance-based awards under (a)(2) above with the intent of
meeting the criteria of Internal Revenue Code Section 162(m) for
performance-based compensation. To this end, the outcome of all targeted
goals shall be substantially uncertain on the date of grant; the goals
shall be established no later than 90 days following the commencement of
service to which the goals relate; the minimum period for attaining each
performance goal shall be one year; and the Committee shall certify at
the conclusion of the performance period whether the performance-based
goals have been attained. Such certification may be made by noting the
attainment of the goals in the minutes of the Committee's meetings.
(c) Except as otherwise determined by the Committee, all
rights and title to restricted stock granted to a participant under the
Plan shall terminate and be forfeited to the Company upon failure to
fulfill all conditions and restrictions applicable to such restricted
stock.
(d) Except for the restrictions set forth in this Plan and
those specified by the Committee in any restricted stock agreement, a
holder of restricted stock shall possess all the rights of a holder of
Common Stock (including voting and dividend rights); provided, however,
that prior to vesting the certificates representing such shares of
restricted stock (and the amount of any dividends issued with respect
thereto) shall be held by the Company for the benefit of the participant
and the participant shall deliver to the Company a stock power executed
in blank covering such shares. As the shares vest, certificates
representing such shares shall be released to the participant. Until
such time as the restricted shares vest, all dividends payable on such
shares shall be reinvested in Common Stock, treated as restricted stock
until the underlying restricted shares vest, and, upon such vesting,
released to the participant. If the underlying shares do not vest, all
shares purchased with the reinvested dividends shall be forfeited.
(e) All other provisions of the Plan not inconsistent with
this section shall apply to restricted stock or the holder thereof, as
appropriate, unless otherwise determined by the Committee.
9. TERMINATION OF EMPLOYMENT
If the employment of a participant holding an incentive stock option
terminates for any reason other than death or disability, any incentive stock
option may be exercised by him at any time prior to the earlier of the
expiration date of the option or the expiration of three months after the date
of termination, but only if, and to the extent that, he was entitled to exercise
the option at the date of such termination. Notwithstanding the foregoing, an
incentive stock option may not be exercised after termination of employment if
the Committee determines that the termination of employment of such optionee
resulted from willful acts, or failure to act, by the optionee detrimental to
the Company or any of its subsidiaries.
Unless otherwise determined by the Committee, an authorized leave of
absence pursuant to a written agreement or other leave entitling a participant
to re-employment in a comparable position by law or rule shall not constitute a
termination of employment for purposes of the Plan unless the participant does
not return at or before the end of the authorized leave or within the period for
which re-employment is guaranteed by law or rule. For purposes of this section,
a "termination" includes an event which causes a participant to lose his
eligibility to participate in the Plan (e.g., an individual is employed by a
company that ceases to be a subsidiary of the Company).
If the employment of a participant holding an incentive stock option
terminates by reason of disability (within the meaning of Section 105(d)(4) of
the Internal Revenue Code) or death, his incentive stock option may be exercised
at any time prior to the earlier of the expiration of the option or the
expiration of one year following the date employment terminated due to
disability or death, but only if, and to the extent that, he was entitled to
exercise the option at the time of such termination. If after termination of
employment but before the expiration of the earlier of the option period or the
three-month period, a participant holding an incentive stock option dies, the
incentive stock option shall continue to be exercisable only for the remainder
of either such period (whichever is shorter) and the one-year period shall not
be applicable.
Except as required by law, the Committee shall determine the terms and
conditions under which a nonqualified option may be exercised if the employment
of a participant holding a nonqualified option terminates for any reason.
If a participant terminates employment while holding an unexercised SAR,
the participant, or his legal representative in the event of his death, may
exercise the SAR to the same extent as the option to which it is related may be
exercised following termination of employment.
Unless otherwise provided in a restricted stock agreement, all unvested
restricted stock shall be forfeited upon a participant's termination of
employment for any reason.
10. ADJUSTMENT OF SHARES
In the event of any change in the Common Stock by reason of any stock
dividend, recapitalization, reorganization, merger, consolidation, split-up,
combination, or exchange of shares, or rights offering to purchase Common Stock
at a price substantially below fair market value, or of any similar change
affecting the Common Stock, the number and kind of shares
which thereafter may be granted, optioned and sold under the Plan and the number
and kind of shares subject to grant or option in outstanding restricted stock,
SAR or option agreements and, in the case of an option, the purchase price per
share thereof shall be appropriately adjusted consistent with such change in
such manner as the Committee may deem equitable to prevent substantial dilution
or enlargement of the rights granted to, or available for, participants in the
Plan.
11. NO EMPLOYMENT RIGHTS
Neither the Plan nor any grants under the Plan shall confer upon any
recipient any right with respect to continuance of employment by the Company or
any subsidiary, nor shall they interfere in any way with the right of the
Company or any subsidiary by which a recipient is employed to terminate his
employment at any time.
12. WITHHOLDING TAXES
All grants are subject to Federal, state and local withholding
requirements to which grants of this type are normally subject. In the case of
any cash payment pursuant to the exercise of an SAR, the Company shall withhold
from such payment the appropriate amount of withholding taxes due. Prior to the
delivery of any certificate or certificates for shares acquired pursuant to the
exercise of an option or SAR or the vesting of restricted stock, the holder must
satisfy applicable Federal, state and local withholding tax obligations by
either (a) delivering to the Company shares of the same class as the shares as
to which the certificate is to be delivered, or (b) directing the Company to
withhold certain of such shares, or (c) remitting to the Company a sufficient
amount of cash to satisfy the withholding requirements. If withholding is to be
satisfied under either (a) or (b), the stock used for payment shall have a fair
market value (as determined by the Committee) equal to the amount of the taxes
to be withheld. Any election by the holder to satisfy withholding under (a) or
(b) in the case of the exercise of a stock option or SAR must be made prior to
the date the amount of the withholding tax is determined, is subject to
disapproval by the Committee, and, in the case of an officer of the Company
subject to the provisions of Section 16 of the Exchange Act must be made after
six months following the grant and must be made during the period beginning on
the third business day following the date of release for publication by the
Company of financial data specified under Rule 16b-3(e)(1)(ii) under the
Exchange Act and ending on the twelfth business day following such date. Any
such election shall be irrevocable. The portion of any withholding tax
represented by a fractional share must be paid in cash.
13. CHANGE IN CONTROL
Upon acquisition of thirty percent (30%) or more of the Company's
outstanding shares of stock having general voting rights by an unaffiliated
person, entity or group, the Committee shall notify, in writing, each holder of
an outstanding option, SAR or restricted stock of such change in control.
Notwithstanding any other provision of this Plan or any option or SAR agreement,
all options and SARs shall become fully exercisable on receipt of such notice
and all forfeiture conditions on restricted stock shall be removed. All
outstanding options shall expire if not exercised within 30 days of receipt of
the notice of a change of control.
14. AMENDMENT AND DISCONTINUANCE
This Plan may be amended, modified or terminated by the shareholders of
the Company or by the Board of Directors, except that the Board may not, without
approval of the shareholders, make any material amendment to the Plan,
including, without limitation, the following: (a) materially increase the
benefits accruing to participants under the Plan, including any material change
to (1) permit a repricing (or decrease in option price) of outstanding options,
(2) reduce the price at which options or restricted stock may be granted, or (3)
extend the duration of the Plan; (b) materially increase the maximum number of
shares as to which restricted stock or options may be granted under the Plan
(other than as provided in Section 10); (c) change the basis for making
performance-based awards for participants whose compensation is subject to
Internal Revenue Code Section 162(m); (d) modify the requirements as to
eligibility for participation in the Plan or change or otherwise materially
expand the class of participants eligible to participate in the Plan; (e) extend
the period for which options may be granted or exercised; (f) expand the types
of options or other grants that may be awarded under the Plan; or (g) modify the
Plan in any other manner that requires shareholder approval under applicable law
or the rules of any stock exchange or trading system on which the Common Stock
is listed. Notwithstanding the foregoing, to the extent permitted by law, the
Board may amend the Plan without the approval of shareholders, to the extent it
deems necessary to cause the Plan to comply with Securities and Exchange
Commission Rule 16b-3 or any successor rule, as it may be amended from time to
time. Except as required by law, no amendment, modification or termination of
the Plan may, without the written consent of a participant to whom any grant
shall theretofore have been awarded, adversely affect the rights of such
participant under such grant.
15. EFFECTIVE DATE
The effective date of the Plan is August 31, 1999, provided that the
Plan is adopted by the shareholders of the Company within twelve months of such
date.
16. GOVERNING LAW
To the extent not inconsistent with the provisions of the Internal
Revenue Code that relate to incentive stock options, nonqualified stock options,
SARs and restricted stock, this Plan and any agreements adopted pursuant to it
shall be construed under the laws of the Commonwealth of Pennsylvania without
reference to its principles of conflicts of law.
Dated as of August 31, 1999 ARROW INTERNATIONAL, INC.
By: /s/ Marlin Miller, Jr.
--------------------------------------
Marlin Miller, Jr.
Chairman and Chief Executive Officer
Date of Shareholder Approval of Plan: June 19, 2000
Date of Board of Directors' Approval of Non-Material Amendments to Plan:
October __, 2004