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EXHIBIT 10.6
CAREMARK RX, INC.
1994 STOCK INCENTIVE PLAN
The Caremark Rx, Inc. 1994 Stock Incentive Plan is the result
of the assumption and adoption by Caremark Rx, Inc., a Delaware corporation, of
the 1994 Stock Incentive Plan of InPhyNet Medical Management Inc., pursuant to
the provisions of that certain Plan and Agreement of Merger, dated as of June
26, 1997, by and among Caremark Rx Inc. and InPhyNet Medical Management Inc.
1. PURPOSE.
The purpose of the Caremark Rx, Inc. 1994 Stock Incentive Plan
(the "Plan") is to provide a means through which the Company and its
Subsidiaries and Affiliates may attract able persons to enter and remain in the
employ of the Company and its Subsidiaries and Affiliates, and to provide a
means whereby those key persons upon whom the responsibilities of the successful
administration and management of the Company rest, and whose present and
potential contributions to the welfare of the Company are of importance, can
acquire and maintain stock ownership, thereby strengthening their commitment to
the welfare of the Company and promoting an identity of interest between
stockholders and these key persons.
A further purpose of the Plan is to provide such key
persons with additional incentive and reward opportunities designed to enhance
the profitable growth of the Company. So that the appropriate incentive can be
provided, the Plan provides for granting Incentive Stock Options, Nonqualified
Stock Options, Restricted Stock Awards, or any combination of the foregoing.
2. DEFINITIONS.
The following definitions shall be applicable throughout the
Plan.
"Affiliate" means any affiliate of the Company within the
meaning of 17 CFR ss. 230.405.
"Award" means, individually or collectively, any Incentive
Stock Option, Nonqualified Stock Option or Restricted Stock Award.
"Beneficial Owner" or "Beneficial Ownership" shall have the
meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations
under the Exchange Act.
"Board" means the Board of Directors of the Company.
"Cause" means the Company, a Subsidiary or an Affiliate having
cause to terminate a Participant's employment under any existing employment
agreement between the Participant and the Company, a Subsidiary or an Affiliate
or, in the absence of such
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an employment agreement, upon (i) the determination by the Committee that the
Participant has ceased to perform his duties to the Company, or a Subsidiary or
an Affiliate (other than as a result of his incapacity due to physical or mental
illness or injury), which failure amounts to an intentional and extended neglect
of his duties to such party, (ii) the Committee's determination that the
Participant has engaged or is about to engage in conduct materially injurious to
the Company, or a Subsidiary or an Affiliate, or (iii) the Participant having
been convicted of a felony.
"Change in Control" a Change in Control of the Company shall
be deemed to have occurred as of the first day that any one or more of the
following conditions shall have been satisfied:
(a) The acquisition by any Person of Beneficial
Ownership of 20% or more of either (i) the then outstanding shares of
Common Stock of the Company, or (ii) the combined voting power of the
outstanding voting securities of the Company entitled to vote generally
in the selection of Directors; provided, however, that for purposes of
this subsection, the following transactions shall not constitute a
Change of Control: (A) any acquisition directly from the Company
through a public offering of shares of Common Stock of the Company, (B)
any acquisition by the Company, (C) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company, or (D) any acquisition by
any corporation pursuant to a transaction which complies with clauses
(i), (ii) and (iii) of subsection (c) below;
(b) The cessation, for any reason, of the
individuals who constitute the Company's Board of Directors as of the
date hereof ("Incumbent Board") to constitute at least a majority of
the Company's Board of Directors; provided, however, that any
individual becoming a Director following the date hereof whose
election, or nomination for election by the Company's stockholders, was
approved by a vote of at least a majority of the Directors then
comprising the Incumbent Board shall be considered as though such
individual was a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs
because of an actual or threatened election contest with respect to the
election or removal of Directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Company's Board of Directors;
(c) The consummation of a reorganization, merger
or consolidation or sale or other disposition of all or substantially
all of the assets of the Company ("Business Combination") unless,
following such Business Combination, (i) all or substantially all of
the individuals and entities who were the Beneficial Owners,
respectively, of the outstanding shares of Common Stock of the Company
and the outstanding voting securities of the Company immediately before
such Business Combination beneficially own, directly or indirectly,
more than 50% of, respectively, the then outstanding shares of Common
Stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of Directors, as
the case may be, of the Company resulting from such Business
Combination (including, without limitation, a corporation which as a
result of such transaction owns the Company or all or substantially all
of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership
immediately before such Business Combination of the outstanding shares
of Common Stock and the outstanding voting
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securities of the Company, as the case may be; (ii) no party (excluding
any corporation resulting from such Business Combination or any
employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from
such Business Combination or the combined voting power of the then
outstanding voting securities of such corporation except to the extent
that such ownership existed before the Business Combination; and (iii)
at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of
the Company's Board of Directors at the time of the execution of the
initial agreement, or of the action of the Company's Board of
Directors, providing for such Business Combination;
(d) The approval by the stockholders of the
Company of a complete liquidation or dissolution of the Company; or
(e) Any other condition or event (i) that the
Committee determines to be a "Change in Control" within the meaning of
this Section 2 and (ii) that is set forth as a supplement to this
Section 2 in the Stock Option Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
Reference in the Plan to any section of the Code shall be deemed to include any
amendments or successor provisions to such section and any regulations under
such section.
"Committee" means the Compensation Committee of the Board or
such other committee as the Board may appoint to administer the Plan.
"Common Stock" means the common stock, par value $.001 per
share, of the Company.
"Company" means Caremark Rx, Inc.
"Date of Grant" means the date on which the granting of an
Award is authorized or such other date as may be specified in such
authorization.
"Disability" means the complete and permanent inability by
reason of illness or accident to perform the duties of the occupation at which a
Participant was employed when such disability commenced or, if the Participant
was retired when such disability commenced, the inability to engage in any
substantial gainful activity, as determined by the Committee based upon medical
evidence acceptable to it.
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"Eligible Employee" means any person regularly employed by the
Company or a Subsidiary or Affiliate on a full-time salaried basis, and any
independent contractor of the Company or a Subsidiary or Affiliate, who
satisfies all of the requirements of Section 6.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" means, except as otherwise determined by
the Committee, an amount equal to the closing sale price of a share of Common
Stock as reported on The National Association of Securities Dealers' New York
Stock Exchange Composite Reporting Tape (or if the Common Stock is not traded on
The New York Stock Exchange, the closing sale price on the exchange on which it
is traded or as reported by an applicable automated quotation system) (the
"Composite Tape"), on the applicable date or, if no sales of Common Stock are
reported on such date, the closing sale price of a share of Common Stock on the
date the Common Stock was last reported on the Composite Tape (or such other
exchange or automated quotation system, if applicable).
"Holder" means a Participant who has been granted an Option or
a Restricted Stock Award.
"Incentive Stock Option" means an Option granted by the
Committee to a Participant under the Plan which is designated by the Committee
as an Incentive Stock Option pursuant to Section 422 of the Code.
"Non-Employee Director" means a Director of the Company who
(i) is not currently an officer or employee of the Company or any Subsidiary of
the Company; (ii) does not directly or indirectly receive any compensation from
the Company or any Subsidiary for services rendered as a consultant or in any
other non-director capacity that would exceed the $60,000 threshold for which
disclosure would be required under Item 404(a) of Regulation S-K; (iii) does not
possess an interest in any other transaction for which disclosure would be
required under Item 404(a) of Regulation S-K; and (iv) is not engaged in a
business relationship with the Company which would be disclosable under Item
404(b) of Regulation S-K.
"Nonqualified Stock Option" means an Option granted by the
Committee to a Participant under the Plan which is not designated by the
Committee as an Incentive Stock Option.
"Normal Termination" means termination:
(i) with respect to the Company or a Subsidiary,
at retirement (excluding early retirement) pursuant to the
Company retirement plan then in effect;
(ii) with respect to an Affiliate, at retirement
(excluding early retirement) pursuant to the retirement plan
of such Affiliate then in effect
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or, if the Affiliate has no such plan, at retirement upon or
after the attainment of age 65;
(iii) on account of Disability;
(iv) with the written approval of the Committee;
or
(v) by the Company, a Subsidiary or Affiliate
without Cause
(vi) voluntarily by the Holder for any reason
other than Cause or death.
"Option" means an Award granted under Section 7 of the Plan.
"Option Period" means the period described in Section 7(c).
"Participant" means an Eligible Employee who has been selected
to participate in the Plan and to receive an Award pursuant to Section 6.
"Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d) thereof.
"Plan" means the Caremark Rx, Inc. 1994 Stock Incentive Plan.
"Reporting Company" means the Company.
"Restricted Period" means, with respect to any share of
Restricted Stock, the period of time determined by the Committee during which
such share of Restricted Stock is subject to the restrictions set forth in
Section 8.
"Restricted Stock" means shares of Common Stock issued or
transferred to a Participant subject to the restrictions set forth in Section 8
and any new, additional or different securities a Participant may become
entitled to receive as a result of adjustments made pursuant to Section 10.
"Restricted Stock Award" means an Award granted under Section
8 of the Plan.
"Securities Act" means the Securities Act of 1933, as amended.
"Stock" means the Common Stock or such other authorized shares
of stock of the Company as the Committee may from time to time authorize for use
under the Plan.
"Subsidiary" means any subsidiary of the Company as defined in
Section 424(f) of the Code.
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3. EFFECTIVE DATE, DURATION AND STOCKHOLDER APPROVAL.
The Plan became effective on May 7, 1994, and no further
Awards may be made after May 7, 2004.
The Plan shall continue in effect until all matters relating
to the payment of Awards and administration of the Plan have been settled.
4. ADMINISTRATION.
The Committee shall administer the Plan. Each member of the
Committee shall, at the time he takes any action with respect to an Award under
the Plan, be a Non-Employee Director. The acts of a majority of the members
present at any meeting at which a quorum is present or acts approved in writing
by a majority of the Committee shall be deemed the acts of the Committee.
Subject to the provisions of the Plan, the Committee shall
have exclusive power to:
(a) Select the Eligible Employees to participate
in the Plan;
(b) Determine the nature and extent of the
Awards to be made to each Participant;
(c) Determine the time or times when Awards will
be made;
(d) Determine the conditions to which the
payment of Awards may be subject;
(e) Prescribe the form or forms evidencing
Awards;
(f) Interpret and construe the terms and
provisions of the Plan and any form or forms evidencing Awards granted
under the Plan; and
(g) Cause records to be established in which
there shall be entered, from time to time, as Awards are made to
Participants, the date of each Award, the number of Incentive Stock
Options, Nonqualified Stock Options, and shares of Restricted Stock
awarded by the Committee to each Participant, the expiration date, and
the duration of any applicable Restricted Period.
The Committee shall have the authority, subject to the
provisions of the Plan, to establish, adopt, or revise such rules and
regulations and to make all such determinations relating to the Plan as it may
deem necessary or advisable for the administration of the Plan. The Committee's
interpretation of the Plan or any form or forms evidencing Awards granted
pursuant thereto and all decisions and determinations by the Committee with
respect to the Plan shall be final, binding, and conclusive on all parties
unless otherwise determined by the Board.
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5. GRANT OF OPTIONS AND RESTRICTED STOCK AWARDS; SHARES
SUBJECT TO THE PLAN.
The Committee may, from time to time, grant Awards of Options
and/or Restricted Stock to one or more Participants; provided, however, that:
(a) Subject to Section 10, the aggregate number
of shares of Stock made subject to Awards may not exceed 2,950,000;
(b) Such shares shall be deemed to have been
used in payment of Awards whether they are actually delivered or the
Fair Market Value equivalent of such shares is paid in cash. In the
event any Option or Restricted Stock shall be surrendered, terminate,
expire, or be forfeited, the number of shares of Stock no longer
subject thereto shall thereupon be released and shall thereafter be
available for new Awards under the Plan to the fullest extent permitted
by Rule 16b-3 under the Exchange Act (if applicable at the time); and
(c) Stock delivered by the Company in settlement
of Awards under the Plan may be authorized and unissued Stock or Stock
held in the treasury of the Company or may be purchased on the open
market or by private purchase at prices no higher than the Fair Market
Value at the time of purchase.
6. ELIGIBILITY.
Participants shall be limited to officers, key
employees and independent contractors of the Company and its Subsidiaries and
Affiliates who have received written notification from the Committee or from a
person designated by the Committee, that they have been selected to participate
in the Plan.
7. STOCK OPTIONS.
One or more Incentive Stock Options or Nonqualified Stock
Options may be granted to any Participant; provided, however, that Incentive
Stock Options may be granted only to employees of the Company or a Subsidiary.
Each Option so granted shall be subject to the following conditions:
(a) Option Price. The Option Price ("Option
Price") per share of Common Stock shall be set by the Committee at the
time of grant but shall not be less than (i) in the case of an
Incentive Stock Option, the Fair Market Value of a share of Stock at
the Date of Grant, and (ii) in the case of a Nonqualified Stock
Option, the par value per share of Stock.
(b) Manner of Exercise and Form of Payment.
Options which have become exercisable may be exercised by delivery of
proper notification of exercise to the Committee. No shares of Common
Stock shall be issued on the exercise of an Option unless the Option
Price is paid in full at the time of the exercise. Payment shall be
made in cash, which may be paid by check or other instrument acceptable
to the Company. In addition, subject to compliance with
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applicable laws and regulations and such conditions as the Committee
may impose, the Committee may elect to accept payment of the Option
Price in shares of Common Stock of the Company which are already owned
by the Holder, valued at the Fair Market Value thereof on the date of
exercise. The Committee may also allow a Holder to exercise an Option
by the use of proceeds to be received from the sale of Common Stock
issuable pursuant to the Option being exercised.
(c) Other Terms and Conditions. If the Holder
has not died or terminated, the Option shall become exercisable in such
manner and within such period or periods ("Option Period"), not to
exceed 10 years from its Date of Grant, as set forth in the vesting
schedule set forth in Section 7(i) hereof, or as otherwise set forth in
the Stock Option Agreement to be entered into in connection therewith.
(d) Termination.
(i) Except as otherwise provided in a Stock
Option Agreement or as provided in paragraphs (ii) and (iii)
below, each Option to the extent it has not been previously
exercised, shall terminate upon the earliest to occur of: (a)
the expiration of the term of the Option set forth in the
Stock Option Agreement; (b) the expiration of 12 months
following the Holder's death (if the Holder dies within the
Option Period or within 3 months after a Normal Termination
(or such other period as may have been established by the
Committee)); (c) immediately upon the Holder ceasing to be an
employee, officer or consultant or otherwise affiliated with
the Company for Cause; or (d) 90 days following a Normal
Termination.
(ii) Except as otherwise provided in a Stock
Option Agreement, any Option granted after September 21, 1998
(a "Secondary Option"), to the extent it has not been
previously exercised, shall terminate upon the earliest to
occur of: (a) the expiration of the Secondary Option period
set forth in the Stock Option Agreement (as defined in
paragraph (e) heretofore); (b) the expiration of 12 months
following the Holder's death or Disability; (c) immediately
upon termination for Cause; or (d) the expiration of 90 days
following the Holder's termination of employment for any
reason other than Cause, Change in Control, death or
Disability.
(iii) Notwithstanding the foregoing, any Secondary
Option, to the extent it has not been previously exercised
prior to a Change in Control shall remain exercisable for its
full original term upon and following such Change in Control.
(e) Stock Option Agreement. Each Option granted
under the Plan shall be evidenced by a "Stock Option Agreement" between
the Company and the Holder of the Option. Each Stock Option Agreement
shall incorporate by reference the terms and provisions of the Plan as
in effect at the time of its
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execution and may contain such other provisions not contrary to the
Plan as may be determined by the Committee, subject to the following
terms and conditions:
(i) Each Option or portion thereof that is
exercisable shall be exercisable for the full amount or for
any part thereof, except as otherwise determined by the terms
of the Stock Option Agreement.
(ii) Each share of Stock purchased through the
exercise of an Option shall be paid for in full at the time of
the exercise. Each Option shall cease to be exercisable, as to
any share of Stock, when the Holder purchases the share or
when the Option lapses.
(iii) Options shall not be transferable by the
Holder except by will or the laws of descent and distribution
and shall be exercisable during the Holder's lifetime only by
him.
(iv) Each Option shall become exercisable by the
Holder in accordance with the vesting schedule set forth in
Section 7(i) hereof, or as otherwise established by the
Committee for the Award.
(v) Each Stock Option Agreement may contain an
agreement that, upon demand by the Committee for such a
representation, the Holder shall deliver to the Committee at
the time of any exercise of an Option a written representation
that the shares to be acquired upon such exercise are to be
acquired for investment and not for resale or with a view to
the distribution thereof.
Upon such demand, delivery of such representation prior to the
delivery of any shares issued upon exercise of an Option shall be a condition
precedent to the right of the Holder or such other person to purchase any
shares. In the event certificates for Stock are delivered under the Plan with
respect to which such investment representation has been obtained, the Committee
may cause a legend or legends to be placed on such certificates to make
appropriate reference to such representation and to restrict transfers in the
absence of compliance with applicable federal or state securities laws.
(f) Grants to 10% Holders of Company Voting
Stock. Notwithstanding Section 7(a), if an Incentive Stock Option is
granted to a Holder who owns stock representing more than 10% of the
voting power of all classes of stock of the Company or of the Company
and its Subsidiaries, the period specified in the Stock Option
Agreement for which the Option thereunder is granted and at the end of
which such Option shall expire shall not exceed five years from the
Date of Grant of such Option and the Option Price shall be at least
110% of the Fair Market Value (on the Date of Grant) of the Stock
subject to the Option.
(g) Limitation. To the extent the aggregate Fair
Market Value (as determined as of the Date of Grant) of Stock for which
Incentive Stock Options are exercisable for the first time by any
Participant during any calendar
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year (under all plans of the Company and its Subsidiaries) exceeds
$100,000, such excess Incentive Stock Options shall be treated as
Nonqualified Stock Options.
(h) Order of Exercise. Options granted under the
Plan may be exercised in any order, regardless of the Date of Grant or
the existence of any other outstanding Option.
(i) Vesting of Options. Except as otherwise
provided by the Committee in the applicable Stock Option Agreement,
Options granted under the Plan shall vest and become exercisable as
follows:
(i) 34% of the Options granted shall vest on the
Date of Grant;
(ii) 33% of the Options granted shall vest on
each of the first anniversary and second anniversary of the
Date of Grant; provided, however, that if during the first
year after the Date of Grant, the stock price of the Common
Stock closes at or above $12.00 (or such other price as
determined by the Committee and set forth in the applicable
Stock Option agreement) for any twenty (20) out of thirty (30)
consecutive trading days, the 33% of the Options due to vest
on the first anniversary of the Date of Grant shall vest
immediately at the end of such 20th day, and provided,
however, that if during the second year after the Date of
Grant, the stock price of the Common Stock closes at
or above $18.00 (or such other price as determined by the
Committee and set forth in the applicable Stock Option
agreement) for any twenty (20) out of thirty (30) consecutive
trading days, the 33% of the Options due to vest on the second
anniversary of the Date of Grant shall vest immediately at the
end of such 20th day.
8. RESTRICTED STOCK AWARDS.
(a) Award of Restricted Stock.
(i) The Committee shall have the authority (1)
to grant Restricted Stock, (2) to issue or transfer Restricted
Stock to Participants, and (3) to establish terms, conditions
and restrictions applicable to such Restricted Stock,
including the Restricted Period, which may differ with respect
to each grantee, the time or times at which Restricted Stock
shall be granted or become vested and the number of shares or
units to be covered by each grant.
(ii) The Holder of a Restricted Stock Award shall
execute and deliver to the Corporate Secretary of the Company
an agreement with respect to Restricted Stock and escrow
agreement satisfactory to the Committee and the appropriate
blank stock powers with respect to the Restricted Stock
covered by such agreements. If a Participant shall fail to
execute the agreement, escrow agreement and stock powers
within such period, the Award shall be null and void. Subject
to the restrictions set forth in Section 8(b), the Holder
shall generally have the rights and
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privileges of a stockholder as to such Restricted Stock,
including the right to vote such Restricted Stock. At the
discretion of the Committee, cash and stock dividends with
respect to the Restricted Stock may be either currently paid
or withheld by the Company for the Holder's account, and
interest may be paid on the amount of cash dividends withheld
at a rate and subject to such terms as determined by the
Committee. Cash or stock dividends so withheld by the
Committee shall not be subject to forfeiture.
(iii) In the case of a Restricted Stock Award, the
Committee shall then cause stock certificates registered in
the name of the Holder to be issued and deposited together
with the stock powers with an escrow agent to be designated by
the Committee. The Committee shall cause the escrow agent to
issue to the Holder a receipt evidencing any stock certificate
held by it registered in the name of the Holder.
(b) Restrictions.
(i) Restricted Stock awarded to a Participant
shall be subject to the following restrictions until the
expiration of the Restricted Period: (1) the Holder shall not
be entitled to delivery of the stock certificate; (2) the
shares shall be subject to the restrictions on transferability
set forth in the grant; (3) the shares shall be subject to
forfeiture to the extent provided in subparagraph (d) and, to
the extent such shares are forfeited, the stock certificates
shall be returned to the Company, and all rights of the Holder
to such shares and as a stockholder shall terminate without
further obligation on the part of the Company.
(ii) The Committee shall have the authority to
remove any or all of the restrictions on the Restricted Stock
whenever it may determine that, by reasons of changes in
applicable law or other changes in circumstances arising after
the date of the Restricted Stock Award such action is
appropriate.
(c) Restricted Period. The Restricted Period of
Restricted Stock shall commence on the Date of Grant and shall expire from time
to time as to that part of the Restricted Stock indicated in a schedule
established by the Committee in the Award agreement.
(d) Forfeiture Provisions. In the event a Holder
terminates employment during a Restricted Period, that portion of the Award with
respect to which restrictions have not expired ("Non-Vested Portion") shall be
treated as follows:
(i) Resignation or discharge: The Non-Vested
Portion of the Award shall be completely forfeited.
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(ii) Normal Termination: The Non-Vested Portion
of the Award shall be prorated for service during the
Restricted Period and shall be received as soon as practicable
following termination.
(iii) Death: The Non-Vested Portion of the Award
shall be prorated for service during the Restricted Period and
paid to the Participant's beneficiary as soon as practicable
following death.
(e) Delivery of Restricted Stock. Upon the
expiration of the Restricted Period with respect to any shares
of Stock covered by a Restricted Stock Award, a stock
certificate evidencing the shares of Restricted Stock which
have not then been forfeited and with respect to which the
Restricted Period has expired (to the nearest full share)
shall be delivered without charge to the Holder, or his
beneficiary, free of all restrictions under the Plan.
(f) SEC Restrictions. Each certificate
representing Restricted Stock awarded under the Plan shall
bear the following legend:
"Transfer of this certificate and the shares represented
hereby is restricted pursuant to the terms of a Restricted
Stock Agreement, dated as of __________, between Caremark Rx,
Inc. and __________. A copy of such Agreement is on file at
the offices of the Company in Birmingham, Alabama."
Stop transfer orders shall be entered with the Company's
transfer agent and registrar against the transfer of legend securities except in
compliance with the Securities Act.
9. GENERAL.
(a) Additional Provisions of an Award. The award
of any benefit under the Plan may also be subject to such other
provisions (whether or not applicable to the benefit awarded to any
other Participant) as the Committee determines appropriate.
(b) Privileges of Stock Ownership. Except as
otherwise specifically provided in the Plan, no person shall be
entitled to the privileges of stock ownership in respect of shares of
Stock which are subject to Options or Restricted Stock Awards,
hereunder until such shares have been issued to that person upon
exercise of an Option according to its terms or upon sale or grant of
those shares in accordance with a Restricted Stock Award.
(c) Government and Other Regulations. The
obligation of the Company to make payment of Awards or otherwise shall
be subject to all applicable laws, rules, and regulations, and to such
approvals by governmental agencies as may be required. The Company
shall be under no obligation to register under the Securities Act any
of the shares of Stock paid under the Plan. If the shares paid under
the Plan may in certain circumstances be exempt from
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registration under the Securities Act, the Company may restrict the
transfer of such shares in such manner as it deems advisable to ensure
the availability of any such exemption.
(d) Withholding and Employment Taxes. At the
time of exercise of an Option, the optionee shall remit to the Company
in cash all applicable federal and state withholding and employment
taxes. If and to the extent authorized and approved by the Committee in
its sole discretion, an optionee may elect, by means of a form of
election to be prescribed by the Committee, to have shares which are
acquired upon exercise of an Option withheld by the Company or tender
other shares of Common Stock or other securities of the Company owned
by the optionee to the Company at the time the amount of such taxes is
determined in order to pay the amount of such tax obligations, subject
to the following limitations:
(1) each election shall be irrevocable; and
(2) such election shall be subject to the disapproval of the Committee at
any time;
Any Common Stock or other securities so withheld or tendered
will be valued by the Company as of the date they are withheld or tendered.
Unless the Committee otherwise determines, the optionee shall pay to the Company
in cash, promptly when the amount of such obligations become determinable, all
applicable federal and state withholding taxes resulting from the lapse of
restrictions imposed on exercise of an Option, from a transfer or other
disposition of shares acquired upon exercise of an Option or otherwise related
to the Option or the shares acquired upon exercise of the Option.
(e) Claim to Awards and Employment Rights. No
employee or other person shall have any claim or right to be granted an
Award under the Plan nor, having been selected for the grant of an
Award, to be selected for a grant of any other Award. Neither this Plan
nor any action taken hereunder shall be construed as giving any
Participant any right to be retained in the employ of the Company or a
Subsidiary or Affiliate.
(f) Designation and Change of Beneficiary. Each
Participant shall file with the Committee a written designation of one
or more persons as the beneficiary who shall be entitled to receive the
amounts payable with respect to an Award of Restricted Stock, if any,
due under the Plan upon his death. A Participant may, from time to
time, revoke or change his beneficiary designation without the consent
of any prior beneficiary by filing a new designation with the
Committee. The last such designation received by the Committee shall be
controlling; provided, however, that no designation, or change or
revocation thereof, shall be effective unless received by the Committee
prior to the Participant's death, and in no event shall it be effective
as of a date prior to such receipt.
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(g) Payments to Persons Other Than Participants.
If the Committee shall find that any person to whom any amount is
payable under the Plan is unable to care for his affairs because of
illness or accident, or is a minor, or has died, then any payment due
to such person or his estate (unless a prior claim therefor has been
made by a duly appointed legal representative), may, if the Committee
so directs the Company, be paid to his spouse, child, relative, an
institution maintaining or having custody of such person, or any other
person deemed by the Committee to be a proper recipient on behalf of
such person otherwise entitled to payment. Any such payment shall be a
complete discharge of the liability of the Committee and the Company
therefor.
(h) No Liability of Committee Members. No member
of the Committee shall be personally liable by reason of any contract
or other instrument executed by such member or on his behalf in his
capacity as a member of the Committee nor for any mistake of judgment
made in good faith, and the Company shall indemnify and hold harmless
each member of the Committee and each other employee, officer or
director of the Company to whom any duty or power relating to the
administration or interpretation of the Plan may be allocated or
delegated, against any cost or expense (including counsel fees) or
liability (including any sum paid in settlement of a claim) arising out
of any act or omission to act in connection with the Plan unless
arising out of such person's own fraud or bad faith; provided, however,
that approval of the Board shall be required for the payment of any
amount in settlement of a claim against any such person. The foregoing
right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the
Company's Certificate of Incorporation or ByLaws, as amended, as a
matter of law, or otherwise, or any power that the Company may have to
indemnify them or hold them harmless.
(i) Governing Law. The Plan shall be governed by
and construed in accordance with the internal laws of the State of
Delaware without reference to the principles of conflicts of law
thereof.
(j) Funding. Except as provided under Section 8,
no provision of the Plan shall require the Company, for the purpose of
satisfying any obligations under the Plan, to purchase assets or place
any assets in a trust or other entity to which contributions are made
or otherwise to segregate any assets, nor shall the Company maintain
separate bank accounts, books, records or other evidence of the
existence of a segregated or separately maintained or administered fund
for such purposes. Holders shall have no rights under the Plan other
than as unsecured general creditors of the Company, except that insofar
as they may become entitled to payment of additional compensation by
performance of services, they shall have the same rights as other
employees under general law.
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(k) Transferability.
(1) Incentive Stock Options. No Incentive Stock Option granted under the
Plan may be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution.
Further, all Incentive Stock Options granted to an Eligible Employee under the
Plan shall be exercisable during his or her lifetime only by such Eligible
Employee.
(2) Nonqualified Stock Options. No Nonqualified Stock Option granted under
the Plan may be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution.
Notwithstanding the foregoing, to the extent not prohibited by any statute, rule
or regulation applicable to the Plan, the Nonqualified Stock Options or the
registration with the Securities and Exchange Commission of the Common Stock to
be issued upon exercise of the Nonqualified Stock Options, the Committee may, in
its discretion, authorize all or a portion of Nonqualified Stock Options granted
to an Eligible Employee to be on terms which permit transfer by such Eligible
Employee to (i) the spouse, children or grandchildren of the Eligible Employee
("Immediate Family Members"), (ii) a trust or trusts for the exclusive benefit
of such Immediate Family Members, or (iii) a partnership in which such Immediate
Family Members are the only partners, provided that (x) there may be no
consideration for any such transfer, (y) the Stock Option Agreement pursuant to
which such Nonqualified Stock Options are granted must be approved by the
Committee, and must expressly provide for transferability in a manner consistent
with this Section, and (z) subsequent transfers of transferred Nonqualified
Stock Options shall be prohibited except those by will or the laws of descent
and distribution. Following transfer, any such Nonqualified Stock Options shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer, provided that for purposes of this Plan, the term
"Eligible Employee" shall be deemed to refer to the transferee. The events of
termination of employment shall continue to be applied with respect to the
original Eligible Employee following which the Nonqualified Stock Options shall
be exercisable by the transferee only to the extent, and for the periods
specified in Section 7(c). Notwithstanding the foregoing, should the Committee
provide that Options granted be transferable, the Company by such action incurs
no obligation to notify or otherwise provide notice to a transferee of early
termination of the Option. In the event of a transfer, as set forth above, the
original Eligible Employee is and will remain subject to and responsible for any
applicable withholding taxes upon the exercise of such Options.
(l) Reliance on Reports. Each member of the
Committee and each member of the Board shall be fully justified in
relying, acting or failing to act, and shall not be liable for having
so relied, acted or failed to act in good faith, upon any report made
by the independent public accountant of the Company and its
Subsidiaries or Affiliates and upon any other information furnished in
connection with the Plan by any person or persons other than himself.
(m) Relationship to Other Benefits. No payment
under the Plan shall be taken into account in determining any benefits
under any pension,
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retirement, profit sharing, group insurance or other benefit plan of
the Company or any Subsidiary or Affiliate except as otherwise
specifically provided.
(n) Expenses. The expenses of administering the
Plan shall be borne by the Company and its Subsidiaries and Affiliates.
(o) Pronouns. Masculine pronouns and other words
of masculine gender shall refer to both men and women.
(p) Titles and Headings. The titles and headings
of the sections in the Plan are for convenience of reference only, and
in the event of any conflict, the text of the Plan, rather than such
titles or headings shall control.
10. CHANGES IN CAPITAL STRUCTURE.
Options and Restricted Stock Awards and any agreements
evidencing such Awards shall be subject to adjustment or substitution, as
determined by the Committee in its sole discretion, as to the number, price or
kind of a share of Stock or other consideration subject to such Awards or as
otherwise determined by the Committee to be equitable (i) in the event of
changes in the outstanding Stock or in the capital structure of the Company by
reason of stock dividends, stock splits, recapitalizations, reorganizations,
mergers, consolidations, combinations, exchanges, or other relevant changes in
capitalization occurring after the Date of Grant of any such Award or (ii) in
the event of any change in applicable laws or any change in circumstances which
results in or would result in any substantial dilution or enlargement of the
rights granted to, or available for, Participants in the Plan, or which
otherwise warrants equitable adjustment because it interferes with the intended
operation of the Plan. In addition, in the event of any such adjustments or
substitution, the aggregate number of shares of Stock available under the Plan
shall be appropriately adjusted by the Committee, whose determination shall be
conclusive. Any adjustment in Incentive Stock Options under this Section 10
shall be made only to the extent not constituting a "modification" within the
meaning of Section 424(h)(3) of the Code, and any adjustments under this Section
10 shall be made in a manner which does not adversely affect the exemption
provided pursuant to Rule 16b-3 under the Exchange Act. The Company shall give
each Participant notice of an adjustment hereunder and, upon notice, such
adjustment shall be conclusive and binding for all purposes.
11. EFFECT OF CHANGE IN CONTROL.
(a) In the event of a Change in Control, notwithstanding
any vesting schedule provided for hereunder or by the Committee with
respect to an Award of Options or Restricted Stock, such Option shall
become immediately exercisable with respect to 100% of the shares
subject to such Option and the Restricted Period shall expire
immediately with respect to 100% of the Restricted Stock subject to
Restrictions; provided, however, to the extent that so accelerating the
time an Incentive Stock Option may first be exercised would cause the
limitation provided in Section 7(g) to be exceeded, such Options shall
instead first
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become exercisable in so many of the next following years as is
necessary to comply with such limitation.
(b) The obligations of the Company under the Plan shall
be binding upon any successor corporation or organization resulting
from the merger, consolidation or other reorganization of the Company,
or upon any successor corporation or organization succeeding to
substantially all of the assets and business of the Company. The
Company agrees that it will make appropriate provisions for the
preservation of Participant's rights under the Plan in any agreement or
plan which it may enter into or adopt to effect any such merger,
consolidation, reorganization or transfer of assets.
12. SALE OF BUSINESS UNIT OF COMPANY
The Committee, in connection with the sale of any Subsidiary,
Affiliate, division or other business unit of the Company, may within the
Committee's sole and absolute discretion (1) cause any or all Options granted
hereunder to Participants whose Options or rights under Options will be
adversely affected by such transaction (a) to become immediately exercisable, or
(b) to remain exercisable after such transaction for such period as the
Committee deems appropriate under the circumstances, or both (a) and (b), or (2)
cause the restrictions on any or all shares of Restricted Stock awarded
hereunder to Participants whose Restricted Stock will be adversely affected by
such transaction to lapse immediately. The provisions of this Section 12 and the
actions of the Committee taken pursuant to this Section 12 shall be effective
upon action of the Committee alone without amendment to any Award agreement or
the consent of any Participant.
13. NONEXCLUSIVITY OF THE PLAN.
Neither the adoption of this Plan by the Board nor the
submission of this Plan to the stockholders of the Company for approval shall be
construed as creating any limitations on the power of the Board to adopt such
other incentive arrangements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than under this Plan, and
such arrangements may be either applicable generally or only in specific cases.
14. AMENDMENTS AND TERMINATION.
The Committee may at any time terminate the Plan. With the
express written consent of an individual Participant, the Board may cancel or
reduce or otherwise alter the outstanding Awards thereunder if, in its judgment,
the tax, accounting, or other effects of the Plan or potential payouts
thereunder would not be in the best interest of the Company. The Committee may,
at any time, or from time to time, amend or suspend and, if suspended,
reinstate, the Plan in whole or in part; provided, however, that without further
stockholder approval, the Committee shall not:
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(a) Increase the maximum number of shares of Stock which
may be issued on exercise of Options or pursuant to Restricted Stock
Awards, except as provided in Section 10;
(b) Change the maximum Option Price;
(c) Extend the maximum Option term;
(d) Extend the termination date of the Plan;
(e) Cancel and regrant or reprice any outstanding Option,
except as provided in Section 10; or
(f) Change the class of persons eligible to receive
Awards under the Plan.
* * *
As originally adopted, as amended, by the Committee as of June
27, 1997 and as amended and restated as of August 17, 2000.
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