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EXHIBIT 10(b)
PERRIGO COMPANY EMPLOYEE INCENTIVE STOCK OPTION PLAN
AS ADOPTED ON AUGUST 24, 1988
AS AMENDED AND RESTATED AS OF AUGUST 15, 1995 AND AUGUST 28, 1997
AS AMENDED APRIL 14, 1999 AND AUGUST 25, 2000
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PERRIGO COMPANY EMPLOYEE INCENTIVE STOCK OPTION PLAN
1. Name and Purpose.
This plan shall be known as the Perrigo Company Employee Incentive
Stock Option Plan (hereinafter called the "Plan"). The Plan is intended as an
incentive to certain officers and key employees (hereinafter called
"Participant" or "Participants") of Perrigo Company (hereinafter called the
"Company") and its Subsidiaries to remain in the employ of the Company and its
Subsidiaries, as the case may be, and to encourage stock ownership by the
Participants in the Company, in order that they may acquire a proprietary
interest in the business of the Company. Stock options granted under the Plan
may be of two types, incentive stock options ("Incentive Stock Options") and
non-qualified stock options. It is intended that Incentive Stock Options granted
under the Plan shall constitute "incentive stock options" within the meaning of
Section 422(b) of the Internal Revenue Code of 1986 as now in effect or as later
amended (the "Code") and shall be subject to the tax treatment described in
Section 421 of the Code. As used herein and in any option granted hereunder,
"Subsidiary" or "Subsidiaries" shall mean the same as those terms are defined in
Section 424(f) of the Code.
2. Stock.
All stock subject to options under the Plan shall be authorized but
unissued or reacquired common stock, without par value, of the Company
(hereinafter called "Common Stock"). The aggregate number of shares of Common
Stock which may be issued to all Participants under options granted under this
Plan shall not exceed 12,420,000 shares.(*) In the event that any outstanding
option under the Plan expires for any reason, including failure to satisfy any
vesting requirement imposed pursuant to Section 7 of the Plan, the shares of
Common Stock allocable to the unexercised portion of such option may again be
subjected by the Company to an option under the Plan.
3. Administration.
The Plan shall be administered by a committee appointed by the Board of
Directors of the Company (the "Committee") to whom administration of the Plan
has been duly delegated. The Committee shall consist of three or more directors
of the Company. To the extent required to comply with Rule 16b-3 under the
Securities Exchange Act of 1934 (the "Exchange Act"), each member of the
Committee shall qualify as a "non-employee director," as defined therein. To the
extent required to comply with Code Section 162(m) and the related regulations,
each member of the Committee shall qualify as an "outside director," as defined
therein.
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* Adjusted for the three and one-half-for-one common stock split, effective
November, 1991 and the two-for-one common stock split, effective August,
1993. Amended August, 1991, November, 1991, August, 1995, and August, 1997
to increase the shares of Common Stock which may be issued under the Plan.
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The Committee in its discretion shall determine whether and to what
extent options granted under the Plan shall be designated as Incentive Stock
Options. With respect to the granting of options pursuant to this Plan, the
Committee shall hold meetings at such times and places as it may determine, and
all action with respect to this Plan shall be taken by a majority of its
members. The management of the Company shall, if requested by the Committee,
make recommendations to the Committee with respect to the Participants whom the
management believes should be granted options and the amount of Common Stock to
be subject to the options granted to each under the Plan, but the Committee
shall have the full right and responsibility to determine from time to time
which officers and employees of the Company and its Subsidiaries shall be
granted options under the Plan, the time or times at which options shall be
granted, the number of shares of Common Stock to be covered by each option and
the terms and conditions of each option granted. In making such determinations,
the Committee may take into account the nature of the services rendered by such
individuals, their present and potential contributions to the success of the
Company and such other factors as the Committee in its discretion shall deem
relevant.
The interpretation and construction by the Committee of any provisions
of the Plan or of any option granted under the Plan shall be final. No member of
the Committee or officer of the Company shall be liable for any action or
determination made in good faith with respect to the Plan or any option granted
under it. All actions taken by the Committee with respect to any option granted
pursuant to the Plan shall be conclusively binding on the Company and the
Participant.
4. Eligibility.
The Participants eligible to receive options shall be such key
employees, including officers, of the Company and its Subsidiaries as the
Committee may select from time to time. No non-employee director of the Company
may participate under the Plan. An employee who has been granted an option or
options at any time may be granted an additional option or options at a later
time or times if the Committee shall so determine.
5. Option Price.
Each option shall state the option price, which shall not be less than
one hundred percent (100%) of the fair market value of the shares of Common
Stock of the Company on the date of the granting of the option; provided,
however, the option price for any Incentive Stock Option granted to a
Participant who then owns (or is deemed to own under the applicable provisions
of the Code and rules and regulations promulgated thereunder) stock of the
Company or its Subsidiaries possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of any
Subsidiary shall not be less than one hundred and ten percent (110%) of the fair
market value of the shares of Common Stock of the Company on the date of
granting of the option. For purposes of the Plan, "fair market value" shall be
the average of the highest price and the lowest price at which the Common Stock
is traded on the date of determination, or on the most recent date on which the
Common Stock is traded prior to that date, as reported on the NASDAQ National
Market. Subject to the foregoing, the Committee
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shall have full authority and discretion in fixing the option price, and shall
be fully protected in so doing.
6. General Limitation on Incentive Stock Options.
The aggregate fair market value (determined as of the date on which the
option is granted) of stock with respect to which options designated as
Incentive Stock Options, together with incentive stock options under any other
plan of the Company (and any parent or subsidiary corporation within the meaning
of Sections 424(e) and (f) of the Code), are exercisable for the first time by
any employee in any calendar year shall not exceed $100,000. In addition, no
option designated as an Incentive Stock Option may be granted under the Plan if
such grant, together with any other applicable grant of Incentive Stock Options
under the Plan or incentive stock options under any other plan of the Company
(and any parent corporation within the meaning of Section 424(e) of the Code or
any subsidiary), would exceed any other applicable maximum established under
Section 422 of the Code for incentive stock options. If an option granted under
the Plan which is designated as an Incentive Stock Option exceeds such
limitations, such option, to the extent of such excess, shall be a separate
non-qualified option.
7. Terms and Conditions of Options.
All options granted pursuant to the Plan shall be authorized by the
Committee and shall be issued in the form approved by the Committee from time to
time; provided, however, that any such options granted shall be subject to the
following terms and conditions:
(a) Number of Shares and Option Price. Each option shall state the
number of shares of Common Stock to which it pertains and the option price per
share.
(b) Continued Employment. Each Participant shall agree to remain in the
employment of and to render to the Company or its Subsidiary, as the case may
be, his or her services for such time period as may be determined by the
Committee at the time of granting the option, and such option shall not vest or
be exercisable during said time period; provided, however, that the Committee
may, at its discretion, provide for no vesting or may provide for staggered
vesting, in which event the option for those shares of Common Stock for which
the required staggered vesting period has been met shall vest and may thereafter
be exercised even though the option as to other shares of stock in the same
grant or any subsequent grant has not then vested.
(c) Term and Vesting of Options. Each option shall vest and may only be
exercised, if at all, between the original exercise date and the expiration date
determined pursuant to the provisions of this Plan or, as otherwise may be
determined from time to time by the Committee, provided that an option intended
to qualify as an Incentive Stock Option shall have a term of not more than ten
years, and provided further that if an optionee owns (or is deemed to own under
applicable provisions of the Code and the rules and regulations promulgated
thereunder) stock of the Company or its Subsidiaries possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company, and an option granted to such optionee is
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intended to qualify as an Incentive Stock Option, the term of such option shall
be no more than five years. Wherever in this Section 7 reference is made to the
"respective terms of the options," such reference shall, in the case of
Incentive Stock Options, mean the term determined pursuant to this Section 7(c)
and shall, in all other cases, mean the term specified by the Committee at the
time of granting of the option.
(d) Nontransferability of Options. During the lifetime of the
Participant, the option shall be exercisable only by him or her while he or she
is employed by the Company or its Subsidiary or within the time period specified
in subsection (f), (g), (h) or (j) below, as the case may be, and shall not be
assignable or transferable by him or her and no other person shall acquire any
rights therein. On the death of the Participant, his or her option may only be
transferred or assigned by his or her will or by the laws of descent and
distribution and, in such event, may only be exercised within the time period
and in the manner specified in subsection (f) or (k) below.
(e) Vesting on Change of Control. Notwithstanding the vesting period
specified in any option granted under the Plan, each such option shall
immediately vest in full on the date on which (i) any Person (as that term is
defined in Section 2(2) of the Securities Act of 1933 and Section 13(d)(3) of
the Exchange Act, as hereafter amended from time to time) acquires or otherwise
becomes the owner of voting stock of the Company, which, together with all other
voting stock of the Company then owned or controlled by such Person, represents
fifty percent (50%) or more of the then issued and outstanding voting stock of
the Company or (ii) the composition of the Board of Directors of the Company is
changed such that a majority of the members of the Board of Directors is
comprised of individuals who are neither incumbent members nor nominated or
appointed by a majority of such incumbent members or their nominees, and each
such vested option may thereafter be exercised, in whole or in part, at any time
prior to the expiration of the respective terms of the options.
(f) Termination of Employment by Death or Disability. If the
Participant's employment with the Company or its Subsidiary is terminated by
death or disability (as defined in the Company's long-term disability insurance
plan under which such Participant is then covered), all of his or her options
shall immediately vest in full and may thereafter be exercised in whole or in
part by the duly appointed fiduciary of the deceased Participant's estate or the
person or persons to whom such option is transferred by his or her will or by
the laws of descent and distribution of the state in which Participant resided
at the time of his or her death (the "Beneficiary"), or, in the case of
disability by the disabled Participant or the conservator of his or her estate,
at any time prior to the expiration of the respective terms of the options.
(g) Termination of Employment by Retirement. If the Participant's
employment with the Company or its Subsidiary is terminated by his or her
retirement (i) pursuant to a voluntary early retirement program approved by the
Board of Directors of the Company or the Committee, (ii) after attaining age 65,
(iii) after attaining age 60 with ten or more years of service with the Company
or its Subsidiary, or (iv) as otherwise determined by the Board of Directors of
the Company or the Committee in accordance with the Company's then existing
policies and programs, all of his or her options shall immediately vest in full
and may be thereafter exercised
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in whole or in part by the Participant at any time prior to expiration of the
respective terms of the options.
(h) Involuntary Termination of Employment for Economic Reasons. If the
Participant's employment with the Company or its Subsidiary is terminated
involuntarily for economic reasons (including, without limitation,
restructurings, dispositions and layoffs) as determined by the Board of
Directors of the Company or the Committee, the Participant may thereafter
exercise his or her options, in whole or in part, at any time not later than the
earlier of (i) 24 months following termination of employment or (ii) the
expiration of the respective terms of the options. Vesting of options not fully
vested at employment termination shall not be accelerated, but the options shall
continue to vest during the post-termination exercise period according to the
vesting schedule in effect prior to employment termination as if the Participant
had remained employed by the Company or its Subsidiary during the
post-termination exercise period. Any options that do not vest during the
post-termination exercise period will be forfeited at the end of such period.
(i) Termination of Employment for Cause. If the Participant's
employment with the Company or its Subsidiary is terminated for cause, the
Participant's right to exercise his or her options shall terminate at the time
such notice of termination of employment is given by the Company or its
Subsidiary to the Participant. For purposes of this provision, a termination for
cause shall include any of the following reasons:
(1) The commission of an act which, if proven in a court of law,
would constitute a felony violation under applicable criminal
laws;
(2) A breach of any material duty or obligation imposed upon the
Participant by the Company or its Subsidiary;
(3) Divulging the Company's or its Subsidiary's confidential
information, or breaching or causing the breach of any
confidentiality agreement to which the Participant or the
Company or its Subsidiary is a party;
(4) Engaging or assisting others to engage in business in
competition with the Company or its Subsidiary;
(5) Refusal to follow a lawful order of the Participant's superior
or other conduct which the Board of Directors of the Company
or the Committee determines to represent insubordination on
the part of the Participant; or
(6) Other conduct by the Participant which the Board of Directors
of the Company or the Committee, in its discretion, deems to
be sufficiently injurious to the interests of the Company or
its Subsidiary.
(j) Other Terminations of Employment. With respect to any termination
of employment not covered by Sections 7(f), 7(g), 7(h) or 7(i), the Participant
shall have the right to
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exercise his or her options not later than the earlier of (i) three months
following termination of employment with the Company or its Subsidiary or (ii)
the expiration of the respective terms of the options, but only to the extent
that the Participant's right to exercise the options has vested prior to such
termination.
(k) Death Following Termination of Employment. If a Participant dies
following retirement and while his or her options remain exercisable pursuant to
Section 7(g), the duly appointed fiduciary of the deceased Participant's estate
or his or her Beneficiary may exercise the options at any time prior to the
expiration of the respective terms of the options. If a Participant dies
following termination of employment and while his or her options remain
exercisable pursuant to Section 7(h), the duly appointed fiduciary of the
deceased Participant's estate or his or her Beneficiary may exercise the options
(to the extent such options were vested and exercisable prior to death), at any
time prior to the later of 24 months after the Participant's termination of
employment or 12 months after the date of death, but in no event later than the
expiration of the respective terms of the options. If a Participant dies
following termination of employment and while his or her options remain
exercisable pursuant to Section 7(j), the duly appointed fiduciary of the
deceased Participant's estate or his or her Beneficiary may exercise the options
(to the extent such options were vested and exercisable prior to death), at any
time prior to the earlier of (i) 12 months after the date of death or (ii) the
expiration of the respective terms of the options.
(l) Lapse of Option. If the Participant's employment with the Company
or its Subsidiary is terminated for any reason prior to the earliest date on
which the Participant's option may be exercised pursuant to its terms, and if
such option does not become exercisable on the Participant's termination date
pursuant to this Section 7, then the option shall lapse effective as of the
Participant's termination of employment.
(m) Committee Discretion as to Non-Qualified Options. Notwithstanding
the foregoing provisions of this Section 7, the Committee, in its discretion,
may alter the terms and conditions respecting the time that an optionee has to
exercise any non-qualified option and may extend the time that an optionee has
to exercise any outstanding non-qualified option.
(n) Covered Employee Limitation. Options for more than 100,000 shares
of Common Stock may not be granted in any calendar year to any Participant who
is or is expected to be a "covered employee" within the meaning of Code Section
162(m) and the related regulations for the year in which such options are
taxable to such Participant.
8. Other Option Provisions.
Any option granted under the Plan may contain such provisions,
including, without limitation, restrictions upon the exercise of the option and
subsequent transfer of the underlying stock, as the Committee shall deem
advisable, provided that, with respect to an Incentive Stock Option, any such
limitations or restrictions do not violate the provisions of Section 422 of the
Code, or of any regulations promulgated thereunder.
9. Term of Plan.
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Options must be granted pursuant to the Plan, if at all, within a
period of ten (10) years from August 15, 1995, which is the date the original
term of the Plan was extended; provided that the Committee may revise or
discontinue the Plan at any time in accordance with Section 14.
10. Exercise of Option and Payment of Option Price.
Subject to Sections 6 and 7 above, each option granted under the Plan
may be exercised in whole or in part, over the term of the option, by delivery
to the President, Secretary, Assistant Secretary or chief financial officer of
the Company of a duly executed notice of exercise in the form provided by the
Company. The exercise price of an option shall be paid in full at the time of
exercise either in cash, or through the surrender of previously-acquired shares
of Common Stock that have been held by the Participant for at least six months
and that have a value equal to the exercise price of the option, or by a
combination of the foregoing. The Company may withhold, or allow the Participant
to remit to the Company, any Federal, state or local taxes applicable to any
exercise or other event giving rise to income tax liability with respect to an
option. In order to satisfy all or a portion of such income tax liability, the
Participant may elect to surrender previously-acquired shares of Common Stock or
to have the Company withhold shares of Common Stock that would otherwise have
been issued pursuant to the exercise of the option; provided that any withheld
shares, or any surrendered shares previously acquired from the Company and held
by the Participant for less than six months, may only be used to satisfy the
minimum tax withholding required by law.
11. Adjustment Provisions.
In the event of changes in the outstanding Common Stock of the Company
by reason of stock dividends, split-ups, recapitalization, combination of
shares, exchange of shares, mergers, consolidations, separations,
reorganizations, liquidations, or otherwise, the number and class of shares
available for options under the Plan and the shares subject to any outstanding
options and the option price thereof shall be equitably adjusted by the
Committee.
12. Mergers or Consolidations.
In the event of the merger or consolidation of the Company into or with
another corporation in which the Company ceases to exist, the option shall be
transferred into options of the surviving corporation to purchase the same
comparable number of shares of the surviving corporation and on the same terms
and conditions as provided for and contained in the options granted under the
Plan, and the Company shall require, as a condition to such merger or
consolidation, that the surviving corporation adopt the Plan as its plan and
issue comparable options to purchase shares of its stock.
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13. Loans to Participants.
The Company may make loans to any one or more of the Participants as
authorized by the Committee, and on terms and conditions set by the Committee,
for the purpose of financing the exercise of options granted under the Plan;
provided, however, that the maximum aggregate amount of any such loan or loans
to a Participant may not exceed the amount of the Participant's current year
base salary, excluding bonuses.
14. Amendment or Termination of Plan.
The Committee may amend, suspend or terminate this Plan at any time and
from time to time. However, without the approval of a majority in interest of
the stockholders of the Company, no amendment shall be made which shall either
(i) increase the maximum number of shares of Common Stock which may be issued
under the options granted under the Plan, (ii) expand the classes of persons
eligible to be granted options under the Plan, (iii) change the provisions of
the Plan respecting the price at which options shall be granted, or (iv) extend
the term of the Plan. No amendment of the Plan shall adversely affect rights or
obligations under the Plan with respect to options granted prior to such
amendment. To the extent that any provision of the Plan or any terms or
conditions of any Incentive Stock Option issued under the Plan shall hereafter
be determined to be in conflict with the provisions of Code Section 422, as
amended from time to time, such provision, term or condition shall be amended by
the Committee to bring such option into conformity with said Section.
15. General Provisions.
(a) Nothing in the Plan nor in any instrument executed pursuant hereto
shall confer upon any employee any right to continue in the employ of the
Company or a Subsidiary or shall affect the right of the Company or of a
Subsidiary to terminate the employment of any employee at any time with or
without cause.
(b) No shares of Common Stock shall be issued or transferred pursuant
to an option granted under the Plan unless and until all legal requirements
applicable to the issuance or transfer of such shares have, in the opinion of
counsel to the Company, been met.
(c) No employee and no beneficiary or other person claiming under or
through him or her shall have any right, title or interest in or to any shares
of Common Stock allocated or reserved for the purposes of the Plan or subject to
any option except as to such shares of Common Stock, if any, as shall have been
issued pursuant to the exercise of such option.
(d) The proceeds received by the Company from the sale of Common Stock
pursuant to options granted under the Plan may be used for any general corporate
purposes.
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16. Effective Date and Termination Date of Plan.
The Plan was originally adopted by the Board of Directors of the
Company on August 24, 1988. The Plan was amended and restated effective as of
August 15, 1995 and again as of August 28, 1997. The Plan was amended on April
14, 1999 and on August 25, 2000.
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