Exhibit 4.3
EXPRESS SCRIPTS, INC.
2000 LONG-TERM INCENTIVE PLAN
1. Purpose. The purpose of this 2000 Long-Term Incentive Plan (the "Plan")
is to motivate key personnel to produce a superior return to the stockholders of
the Company and its Affiliates by offering such individuals an opportunity to
realize stock appreciation, by facilitating stock ownership, and by rewarding
them for achieving a high level of corporate performance. This Plan is also
intended to facilitate recruiting and retaining key personnel of outstanding
ability.
2. Definitions. The capitalized terms used in this Plan have the meanings
set forth below.
(a) "Affiliate" means any corporation that is a Subsidiary of
the Company and, for purposes other than the grant of Incentive Stock
Options, any limited liability company, partnership, corporation, joint
venture, or any other entity in which the Company or any such
Subsidiary owns an equity interest.
(b) "Agreement" means a written contract entered into between
the Company or an Affiliate and a Participant or, in the discretion of
the Committee, a written certificate issued by the Company or an
Affiliate to a Participant, in either case, containing or incorporating
the terms and conditions of an Award in such form (not inconsistent
with this Plan) as the Committee approves from time to time, together
with all amendments thereof, which amendments may be made unilaterally
by the Company (with the approval of the Committee) unless such
amendments are deemed by the Committee to be materially adverse to the
Participant and are not required as a matter of law.
(c) "Associate" means any full-time or part-time employee
(including an officer or director who is also an employee) of the
Company or an Affiliate. Except with respect to grants of Incentive
Stock Options, "Associate" shall also include any Non-Employee Director
serving on the Company's Board of Directors. References in this Plan to
"employment" and related terms (except for references to "employee" in
this definition of "Associate" or in Section 7(a)(i)) shall include the
providing of services as a Non-Employee Director.
(d) "Award" means a grant made under this Plan in the form of
Options, Stock Appreciation Rights, Restricted Stock, Performance
Shares or any Other Stock-Based Award, whether singly, in combination
or in tandem.
(e) "Board" means the Board of Directors of the Company.
(f) "Cause" shall mean the willful failure by a Participant to
perform his duties with the Company, a Parent or a Subsidiary or the
willful engaging in conduct which is injurious to the Company, a Parent
or any Subsidiary, monetarily or otherwise, as determined by the
Committee in its sole discretion.
(g) "Change in Control" shall mean the following:
(i) The first date on which both of the following
conditions shall exist: (A) New York Life Insurance Company
("New York Life") shall have ceased to be a Parent, and (B) a
"person" (as such term is used in Section 13(d) and 14(d) of
the Exchange Act), other than a "person" that was a Related
Party immediately preceding such date, becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the combined
voting power for the election of directors of the Company's
then outstanding securities; or
(ii) The stockholders of the Company approve and the
Company undertakes a plan of complete liquidation of the
Company; or
(iii) The stockholders of the Company approve, and
the Company consummates, an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets or any transaction having a similar effect.
(h) "Change in Control Date" shall mean, in the case of a
Change in Control defined in clause (i) or (ii) of the definition
thereof, the date on which the event occurs, and in the case of a
Change in Control defined in clause (iii) of the definition thereof,
the date on which the transaction closes.
(i) "Change in Control Price" shall mean the value, expressed
in dollars, as of the date of receipt of the per share consideration
received by the Company's stockholders whose stock is acquired in a
transaction constituting a Change in Control.
(j) "Code" means the Internal Revenue Code of 1986, as amended
and in effect from time to time, or any successor statute.
(k) "Committee" means the Committee appointed by the Board to
administer this Plan. In the absence of a specific appointment,
"Committee" shall mean the Compensation Committee of the Board.
(l) "Company" means Express Scripts, Inc., a Delaware
corporation, or any successor to all or substantially all of its
businesses by merger, consolidation, purchase of assets or otherwise.
(m) "Comparable Employment" shall mean employment with the
Company or any successor to the Company's business following a Change
in Control pursuant to which:
(i) the responsibilities and duties of the
Participant are substantially the same as before the Change in
Control (such changes as are a necessary consequence of the
fact that the securities of the Company are no longer publicly
traded if the Company's securities cease to be publicly traded
as a consequence of the Change in Control shall not be
considered a change in responsibilities or duties), and the
other terms and conditions of employment following the Change
in Control do not impose on the Participant obligations
materially more burdensome than those to which the Participant
was subject prior to the Change in Control;
(ii) the aggregate compensation (including salary,
bonus and other benefit plans, including option plans) of such
Participant is substantially economically equivalent to or
greater than such Participant's aggregate compensation
immediately prior to the Change in Control Date. In making
such determination (A) there shall be taken into account all
contingent or unvested compensation, under performance-based
compensation plans or otherwise, with appropriate adjustment
for rights of forfeiture, vesting rules and other
contingencies to payment, and (B) any compensation payable by
reason of the Change in Control shall be disregarded; and
(iii) the Participant remains employed in the
metropolitan area in which he was employed immediately
preceding the Change in Control.
(n) "Disability" means that the Participant has suffered
physical or mental incapacity of such nature as to prevent him from
engaging in or performing the principal duties of his customary
employment or occupation on a continuing or sustained basis, provided
that, if a Participant has entered into an employment agreement with
the Company, the Committee, in its sole discretion, may determine to
substitute the definition set forth in such agreement. All
determinations as to the date and extent of disability of any
Participant shall be made by the Committee upon the basis of such
evidence as it deems necessary or desirable.
(o) "Exchange Act" means the Securities Exchange Act of 1934,
as amended; "Exchange Act Rule 16b-3" means Rule 16b-3 promulgated by
the Securities and Exchange Commission under the Exchange Act or any
successor regulation.
(p) "Fair Market Value" as of any date means, unless
otherwise expressly provided in this Plan:
(i) (A) the closing sales price of a Share on the
composite tape for New York Stock Exchange ("NYSE") listed
shares, or if Shares are not quoted on the composite tape for
NYSE listed shares, on the Nasdaq National Market or any
similar system then in use or, (B) if clause (i)(A) is not
applicable, the mean between the closing "bid" and the closing
"asked" quotation of a Share on the Nasdaq National Market or
any similar system then in use, or (C) if the Shares are not
quoted on the NYSE composite tape or the Nasdaq National
Market or any similar system then in use, the closing sale
price of a Share on the principal United States securities
exchange registered under the Exchange Act on which the Shares
are listed, in any case on the date the Award is granted, or,
if no sale of Shares shall have occurred on that date, on the
next preceding day on which a sale of Shares occurred, or
(ii) if clause (i) is not applicable, what the
Committee determines in good faith to be 100% of the fair
market value of a Share on that date.
However, if the applicable securities exchange or system has closed for
the day at the time the event occurs that triggers a determination of
Fair Market Value, all references in this paragraph to the "date
immediately preceding that date" shall be deemed to be references to
"that date." In the case of an Incentive Stock Option, if such
determination of Fair Market Value is not consistent with the then
current regulations of the Secretary of the Treasury, Fair Market Value
shall be determined in accordance with said regulations. The
determination of Fair Market Value shall be subject to adjustment as
provided in Section 12(f) hereof.
(q) "Fundamental Change" means a dissolution or liquidation of
the Company, a sale of substantially all of the assets of the Company,
a merger or consolidation of the Company with or into any other
corporation, regardless of whether the Company is the surviving
corporation, or a statutory share exchange involving capital stock of
the Company.
(r) "Incentive Stock Option" means any Option designated as
such and granted in accordance with the requirements of Section 422 of
the Code or any successor to such section.
(s) "Non-Employee Director" means a director of the Company
who is not an employee of the Company, a Parent or a Subsidiary and has
not, within one year immediately preceding the determination of such
director's eligibility, received any award under any plan of the
Company, a Parent or a Subsidiary that entitles the participants
therein to acquire stock, stock options or stock appreciation rights of
any such company (other than any other plan under which participants'
entitlements are governed by provisions meeting the requirements of
Rule 16b-3(c)(2)(ii) promulgated under the Exchange Act).
(t) "Non-Qualified Stock Option" means an Option other
than an Incentive Stock Option.
(u) "Other Stock-Based Award" means an Award of Stock or an
Award based on Stock other than Options, Stock Appreciation Rights,
Restricted Stock or Performance Shares.
(v) "Option" means a right to purchase Stock (or, if the
Committee so provides in an applicable Agreement, Restricted Stock),
including both Non-Qualified Stock Options and Incentive Stock Options.
(w) "Parent" means a "parent corporation," as that term
is defined in Section 424(e) of the Code, or any successor provision.
(x) "Participant" means an Associate to whom an Award is
made.
(y) "Performance Period" means the period of time as
specified in an Agreement over which Performance Shares are to be
earned.
(z) "Performance Shares" means a contingent award of a
specified number of Performance Shares, with each Performance Share
equivalent to one or more Shares or a fractional Share or a Unit
expressed in terms of one or more Shares or a fractional Share, as
specified in the applicable Agreement, a variable percentage of which
may vest depending upon the extent of achievement of specified
performance objectives during the applicable Performance Period.
(aa) "Plan" means this 2000 Long-Term Incentive Plan, as
amended and in effect from time to time.
(bb) "Related Entity" shall mean a Parent, a Subsidiary, or
any employee benefit plan (including a trust forming a part of such
plan) maintained by the Company, a Parent or a Subsidiary.
(cc) "Restricted Stock" means Stock granted under Section 10
hereof so long as such Stock remains subject to one or more
restrictions.
(dd) "Retirement" shall mean, except as otherwise provided in
an Agreement, termination of employment after either (i) attainment of
age 65, or (ii) the normal retirement age specified in the provisions
of a retirement plan maintained by the Company for its employees
generally.
(ee) "Senior Executive" means any Associate who is an employee
of the Company and whose base salary is determined by reference to
Salary Grades M3 through and including M5 (as such salary grades are in
effect on the effective date of this Plan), or, if the Company modifies
its salary grades after such effective date, in the most nearly
comparable salary grades for senior executives of the Company under
such modified system as determined by the Committee in its sole
discretion.
(ff) "Share" means a share of Stock.
(gg) "Stock" means the Company's Class A common stock, $0.01
par value per share (as such par value may be adjusted from time to
time) or any securities issued in respect thereof by the Company or any
successor to the Company as a result of an event described in Section
12(f).
(hh) "Stock Appreciation Right" means a right, the value of
which is determined relative to appreciation in value of Shares
pursuant to an Award granted under Section 8 hereof.
(ii) "Subsidiary" means a "subsidiary corporation," as that
term is defined in Section 424(f) of the Code, or any successor
provision.
(jj) "Successor" with respect to a Participant means the legal
representative of an incompetent Participant and, if the Participant is
deceased, the legal representative of the estate of the Participant or
the person or persons who may, by bequest or inheritance, or under the
terms of an Award or of forms submitted by the Participant to the
Committee under Section 12(h) hereof, acquire the right to exercise an
Option or Stock Appreciation Right or receive cash and/or Shares
issuable in satisfaction of an Award in the event of a Participant's
death.
(kk) "Term" means the period during which an Option or Stock
Appreciation Right may be exercised or the period during which the
restrictions placed on Restricted Stock or any other Award are in
effect.
(ll) "Unit" means a bookkeeping entry that may be used by the
Company to record and account for the grant of Stock, Stock
Appreciation Rights and Performance Shares expressed in terms of Units
of Stock until such time as the Award is paid, canceled, forfeited or
terminated.
(mm) "Vice President" means any Associate who is an employee
of the Company and whose base salary is determined by reference to
Salary Grades M1 through and including M2 (as such salary grades are in
effect on the effective date of this Plan), or, if the Company modifies
its salary grades after such effective date, in the most nearly
comparable salary grades for vice presidents of the Company under such
modified system as determined by the Committee in its sole discretion.
Except when otherwise indicated by the context, reference to
the masculine gender shall include, when used, the feminine gender and
any term used in the singular shall also include the plural.
3. Administration.
(a) Authority of Committee. The Committee shall administer
this Plan or delegate its authority to do so as provided in Section
3(b) hereof. The Committee shall have exclusive power (acting alone or,
to the extent the Committee deems appropriate for purposes of Exchange
Act Rule 16b-3, in conjunction with the full Board), subject to the
limitations contained in this Plan, to make Awards and to determine
when and to whom Awards will be granted, and the form, amount and other
terms and conditions of each Award, subject to the provisions of this
Plan. The Committee, subject to the limitations contained in this Plan,
may determine whether, to what extent and under what circumstances
Awards may be settled, paid or exercised in cash, Shares or other
Awards or other property, or canceled, forfeited or suspended. The
Committee shall have the authority to interpret this Plan and any Award
or Agreement made under this Plan, to establish, amend, waive and
rescind any rules and regulations relating to the administration of
this Plan, to determine the terms and provisions of any Agreement
entered into hereunder (not inconsistent with this Plan), and to make
all other determinations necessary or advisable for the administration
of this Plan. The Committee may correct any defect, supply any omission
or reconcile any inconsistency in this Plan or in any Award in the
manner and to the extent it shall deem desirable. All determinations of
the Committee in the administration of this Plan, as described herein,
shall be final, binding and conclusive, including, without limitation,
as to any adjustments pursuant to Section 12(f). A majority of the
members of the Committee shall constitute a quorum for any meeting of
the Committee. Notwithstanding the foregoing, in administering this
Plan with respect to Awards for Non-Employee Directors, the Board shall
exercise the powers of the Committee.
(b) Delegation of Authority. The Committee may delegate all or
any part of its authority under this Plan to the Chief Executive
Officer of the Company for purposes of determining Awards of Options
solely to Associates who are employees who are not Vice Presidents or
Senior Executives and who are not then subject to the reporting
requirements of Section 16 of the Exchange Act. In delegating such
authority the Committee shall specify the maximum number of shares that
may be awarded to any single employee. The authority so delegated to
the Chief Executive Officer may not be subdelegated.
4. Shares Available; Maximum Payouts.
(a) Shares Available. The number of Shares available for
distribution under this Plan shall be 485,000 Shares. Such number of
Shares shall increase annually, effective as of each January 1,
commencing January 1, 2001 and ending on January 1, 2004, by an amount
equal to one percent (1.0%) of the Company's total outstanding Class A
and Class B Common Stock on each such date. Such number of Shares shall
also be increased by the number of Shares made available as a result of
forfeitures under the Express Scripts, Inc. Amended and Restated 1992
and 1994 Stock Option Plans and the Express Scripts, Inc. Amended and
Restated 1992 Stock Option Plan for Outside Directors (the "1992 and
1994 Plans") (all of which Shares shall be subject to adjustment under
Section 12(f) hereof). On and after the effective date of this Plan, no
further awards may be made under the 1992 and 1994 Plans. Shares issued
under this Plan may be authorized and unissued shares or issued shares
held as treasury shares.
(b) Shares Again Available. Any Shares subject to an Award
under this Plan which are not used because the Award expires without
all Shares subject to such Award having been issued or because the
terms and conditions of the Award are not met may again be used for an
Award under this Plan. Any Shares that are the subject of Awards which
are subsequently forfeited to the Company pursuant to the restrictions
applicable to such Award may again be used for an Award under this
Plan. If a Participant exercises a Stock Appreciation Right, any Shares
covered by the Stock Appreciation Right in excess of the number of
Shares issued (or, in the case of a settlement in cash or any other
form of property, in excess of the number of Shares equal in value to
the amount of such settlement, based on the Fair Market Value of such
Shares on the date of such exercise) may again be used for an Award
under this Plan. If, in accordance with the Plan, a Participant uses
Shares to (i) pay a purchase or exercise price, including an Option
exercise price, or (ii) satisfy tax withholdings, such Shares may again
be used for an Award under this Plan.
(c) Unexercised Awards. Any unexercised or undistributed
portion of any terminated, expired, exchanged, or forfeited Award or
any Award settled in cash in lieu of Shares (except as provided in
Section 4(b) hereof) shall be available for further Awards.
(d) No Fractional Shares. No fractional Shares may be
issued under this Plan; fractional Shares will be rounded down to the
nearest whole Share.
5. Eligibility. Awards may be granted under this Plan to any
Associate at the discretion of the Committee.
6. General Terms of Awards.
(a) Awards. Awards under this Plan may consist of Options
(either Incentive Stock Options or Non-Qualified Stock Options), Stock
Appreciation Rights, Performance Shares, Restricted Stock or Other
Stock-Based Awards. Awards of Restricted Stock may, in the discretion
of the Committee, provide the Participant with dividends or dividend
equivalents and voting rights prior to vesting (whether vesting is
based on a period of time, the attainment of specified performance
conditions or otherwise).
(b) Amount of Awards. Each Agreement shall set forth the
number of Shares of Restricted Stock, Stock or Performance Shares
subject to such Agreement, or the number of Shares to which the Option
applies or with respect to which payment upon the exercise of the Stock
Appreciation Right is to be determined, as the case may be, together
with such other terms and conditions applicable to the Award (not
inconsistent with this Plan) as determined by the Committee in its sole
discretion.
(c) Term. Each Agreement, other than those relating solely to
Awards of Stock without restrictions, shall set forth the Term of the
Award and any applicable Performance Period for Performance Shares, as
the case may be, but in no event shall the Term of an Award or the
Performance Period be longer than ten years after the date of grant. An
Agreement with a Participant may permit acceleration of vesting
requirements and of the expiration of the applicable Term upon such
terms and conditions as shall be set forth in the Agreement, which may,
but, unless otherwise specifically provided in this Plan, need not,
include, without limitation, acceleration resulting from the occurrence
of the Participant's death or Disability. Acceleration of the
Performance Period of Performance Shares shall be subject to Section
9(b) hereof.
(d) Agreements. Each Award under this Plan shall be evidenced
by an Agreement setting forth the terms and conditions, as determined
by the Committee, that shall apply to such Award, in addition to the
terms and conditions specified in this Plan.
(e) Transferability. During the lifetime of a Participant to
whom an Award is granted, only such Participant (or such Participant's
legal representative) may exercise an Option or Stock Appreciation
Right or receive payment with respect to Performance Shares or any
other Award. No Award of Restricted Stock (prior to the expiration of
the restrictions), Options, Stock Appreciation Rights, Performance
Shares or other Award (other than an award of Stock without
restrictions) may be sold, assigned, transferred, exchanged, or
otherwise encumbered, and any attempt to do so (including pursuant to a
decree of divorce or any judicial declaration of property division)
shall be of no effect. Notwithstanding the immediately preceding
sentence, an Agreement may provide that an Award shall be transferable
to a Successor in the event of a Participant's death.
(f) Termination of Employment Generally. Except as otherwise
determined by the Committee or provided by the Committee in an
applicable Agreement (which may, without limitation, in the sole
discretion of the Committee, provide for an extension of the
exercisability of Options and Stock Appreciation Rights beyond the
periods set forth in paragraphs (i)(A) through (E) below, subject in
all events to paragraph (i)(F) below), in the case of a Participant's
termination of employment, the following provisions shall apply:
(i) Options and Stock Appreciation Rights.
(A) Death. If a Participant's employment
terminates because of his or her death, then any
Option or Stock Appreciation Right that has not
expired or been terminated shall become exercisable
in full, and may be exercised by the Participant's
Successor at any time, or from time to time, within
one year after the date of the Participant's death.
(B) Disability. If a Participant's
employment terminates because of Disability, then any
Option or Stock Appreciation Right that has not
expired or been terminated shall become exercisable
in full, and the Participant or the Participant's
Successor may exercise such Option or Stock
Appreciation Right at any time, or from time to time,
within one year after the date of the Participant's
Disability.
(C) Retirement. Upon a Participant's
Retirement, any Option or Stock Appreciation Right
that has not expired or been terminated shall become
exercisable in full, and the Participant may exercise
such Option or Stock Appreciation Right at any time,
or from time to time, within one year after the date
of the Participant's retirement.
(D) Termination for Cause. Upon termination
of a Participant's employment by the Company for
Cause, all Awards, to the extent not previously
exercised, shall immediately terminate.
(E) Reasons other than Termination for
Cause, Death, Retirement or Disability. If a
Participant's employment terminates for any reason
other than death, Disability, Retirement or by the
Company for Cause, then any Option or Stock
Appreciation Right that has not expired or been
terminated shall remain exercisable for one month
after termination of the Participant's employment,
but only to the extent that such Option or Stock
Appreciation Right was exercisable immediately prior
to such Participant's termination of employment.
(F) Expiration of Term. Notwithstanding any
provision of this Plan to the contrary, in no event
shall an Option or a Stock Appreciation Right be
exercisable after expiration of the Term of such
Award. Any Option or Stock Appreciation Right that is
not exercised within the periods set forth in the
foregoing paragraphs (A)-(E), except as otherwise
provided by the Company in the applicable Agreement,
shall terminate as of the end of the periods
described in such paragraphs.
(ii) Performance Shares. If a Participant's
employment with the Company or any of its Affiliates
terminates during a Performance Period because of death,
Disability or Retirement, or under other circumstances
provided by the Committee in its discretion in the applicable
Agreement or otherwise, the Participant, unless the Committee
shall otherwise provide in the applicable Agreement, shall be
entitled to a payment of Performance Shares at the end of the
Performance Period based upon the extent to which achievement
of performance targets was satisfied at the end of such period
(as determined at the end of the Performance Period) and
prorated for the portion of the Performance Period during
which the Participant was employed by the Company or any
Affiliate. Except as provided in this Section 6(f)(ii) or in
the applicable Agreement, if a Participant's employment
terminates with the Company or any of its Affiliates during a
Performance Period, then such Participant shall not be
entitled to any payment with respect to that Performance
Period.
(iii) Restricted Stock. Unless otherwise provided in
the applicable Agreement, in case of a Participant's death,
Disability or Retirement, the Participant shall be entitled to
receive a number of shares of Restricted Stock under
outstanding Awards that has been pro-rated for the portion of
the Term of the Awards during which the Participant was
employed by the Company or any Affiliate, and with respect to
such Shares all restrictions shall lapse. Any shares of
Restricted Stock as to which restrictions do not lapse under
the preceding sentence shall terminate at the date of the
Participant's termination of employment for any other reason
and such shares of Restricted Stock shall be forfeited to the
Company.
(g) Acceleration of Vesting Upon Change in Control - No
Public Market for Company or Exchange Stock
(i) Except as may be otherwise specified in the terms
of any Award, upon the occurrence of a Change in Control after
which there will be no generally recognized U.S. public market
for the Company's Class A Common Stock or any common stock for
which the Company's Class A Common Stock is exchanged, (I) any
Option or Stock Appreciation Right that has not expired or
been terminated shall, to the extent not yet exercisable,
become exercisable in full, and (II) any restrictions still
applicable to any Award of Restricted Shares, Performance
Shares, or Other Stock-Based Award held by a Participant shall
lapse; provided, however, that in the case of Performance
Shares the Participant shall be entitled to receive a number
of Performance Shares on the Change in Control Date based upon
the extent to which achievement of performance targets was
satisfied as of such date, as determined by the Committee in
its sole discretion. Notwithstanding the foregoing, any amount
(in stock or otherwise) payable to a Participant pursuant to
this Section 6(g) shall be subject to, and modified in
accordance with, the provisions of any employment or other
agreement between the Company and the Participant that has
been approved by the Board or the Committee.
(ii) Upon the occurrence of a Change in Control
Transaction described in clause (g)(i) above, on the Change in
Control Date the Company will repurchase, and each Participant
shall sell to the Company, any Option, Stock Appreciation
Right, Restricted Stock, Performance Shares, or Other
Stock-Based Award held by such Participant as follows:
(A) Any Option or Stock Appreciation Right will
be repurchased at a per share price equal to
the excess (if any) of the Change in Control
Price over the exercise price of the Option
or the specified price of the Stock
Appreciation Right, as the case may be;
(B) Any Restricted Stock or Performance Shares
will be repurchased at a per share price
equal to the Change in Control Price; and
(C) Any Other Stock-Based Award will be
repurchased at a price determined by the
Committee in its sole discretion to be
consistent with the treatment of Options,
Stock Appreciation Rights, Restricted Stock
or Performance Shares.
(h) Acceleration of Vesting Upon Other Change in Control
Transactions. Except as may be otherwise specified in the terms of any
Award, upon the occurrence of a Change in Control after which there
remains a generally recognized U.S. public market for the Company's
Class A Common Stock or for any common stock for which the Company's
Class A Common Stock is exchanged, outstanding Awards shall be treated
as follows:
(i) Comparable Employment Not Offered. Upon the
occurrence of a Change in Control transaction described in
clause (h) above, if a Participant who is a Vice President or
Senior Executive is not offered Comparable Employment with the
Company or any successor to the Company's business on or
before the Change in Control Date, then (I) any Option or
Stock Appreciation Right that has not expired or been
terminated shall, to the extent not yet exercisable, become
exercisable in full, and (II) any restrictions still
applicable to any Award of Restricted Shares, Performance
Shares, or Other Stock-Based Award shall lapse; provided,
however, that in the case of Performance Shares the
Participant shall be entitled to receive a number of
Performance Shares (or payment therefor) on the Change in
Control Date based upon the extent to which achievement of
performance targets was satisfied as of such date, as
determined by the Committee in its sole discretion.
Notwithstanding the foregoing, any amount (in stock or
otherwise) payable to a Participant pursuant to this Section
6(h) shall be subject to, and modified in accordance with, the
provisions of any employment or other agreement between the
Company and the Participant that has been approved by the
Board or the Committee.
(ii) Market for ESI Stock Exists; Comparable
Employment Offered and Accepted. Upon the occurrence of a
Change in Control transaction after which there remains a
generally recognized U.S. public market for the Company's
Class A Common Stock, if a Participant who is a Vice President
or Senior Executive is offered and accepts Comparable
Employment with the Company or any successor to the Company's
business on or before the Change in Control Date, then
(A) on the Change in Control Date one-third
of the unvested portion of each Award of Options or
Stock Appreciation Rights held by a Senior Executive
or a Vice President shall vest and become immediately
exercisable, and to the extent that restrictions
remain in effect with respect to each Award of
Restricted Shares, Performance Shares, or Other
Stock-Based Award held by a Senior Executive or a
Vice President, such restrictions shall lapse with
respect to one-third of such shares;
(B) on the first anniversary date of the
Change in Control Transaction one-half of the then
remaining unvested portion of each Award of Options
or Stock Appreciation Rights held by a Senior
Executive that was granted prior to the Change in
Control Date shall vest and become immediately
exercisable, and to the extent that restrictions
remain in effect with respect to each Award of
Restricted Shares, Performance Shares, or Other
Stock-Based Award held by a Senior Executive that was
granted prior to the Change in Control Date, such
restrictions shall lapse with respect to the then
remaining one-half of such shares; and
(C) on the second anniversary date of the
Change in Control Transaction the remaining unvested
portion of each Award of Options or Stock
Appreciation Rights held by a Senior Executive that
was granted prior to the Change in Control Date shall
vest and become immediately exercisable, and to the
extent that restrictions remain in effect with
respect to each Award of Restricted Shares,
Performance Shares, or Other Stock-Based Award held
by a Senior Executive that was granted prior to the
Change in Control Date, such restrictions shall
lapse.
(iii) Market for Exchange Stock Exists; Comparable
Employment Offered and Accepted. Upon the occurrence of a
Change in Control transaction after which there remains a
generally recognized U.S. public market for the common stock
for which the Company's Class A Common Stock is exchanged, if
a Participant who is a Vice President or Senior Executive is
offered and accepts Comparable Employment with the Company or
any successor to the Company's business on or before the
Change in Control Date, then
(A) on the Change in Control Date two-thirds
of the unvested portion of each Award of Options or
Stock Appreciation Rights held by a Senior Executive
or a Vice President shall vest and become immediately
exercisable, and to the extent that restrictions
remain in effect with respect to each Award of
Restricted Shares, Performance Shares, or Other
Stock-Based Award held by a Senior Executive or a
Vice President, such restrictions shall lapse with
respect to two-thirds of such shares; and
(B) on the first anniversary date of the
Change in Control Transaction the remaining unvested
portion of each Award of Options or Stock
Appreciation Rights held by a Senior Executive that
was granted prior to the Change in Control Date shall
vest and become immediately exercisable, and to the
extent that restrictions remain in effect with
respect to each Award of Restricted Shares,
Performance Shares, or Other Stock-Based Award held
by a Senior Executive that was granted prior to the
Change in Control Date, such restrictions shall
lapse.
If a Senior Executive or a Vice President to whom
clause (A) above applies voluntarily terminates his or her
employment with the Company or any successor to the Company's
business within one year of the Change in Control Date other
than by reason of his or her death, Disability or Retirement
or as described in subsection 6(h)(v) below, then such
Participant shall surrender 50% of that portion of the Award
that vested or became immediately exercisable or as to which
restrictions lapsed pursuant to clause (A) to the extent such
Award is then held by the Participant and the Award required
to be surrendered shall be cancelled. If a Senior Executive or
a Vice President to whom clause (B) above applies voluntarily
terminates his or her employment with the Company or any
successor to the Company's business within one year of the
first anniversary of the Change in Control Date other than by
reason of his or her death, Disability or Retirement or as
described in subsection 6(h)(v) below, then such Participant
shall surrender 100% of that portion of the Award that vested
or became immediately exercisable or as to which restrictions
lapsed pursuant to clause (B) to the extent such Award is then
held by the Participant and the Award required to be
surrendered shall be cancelled. This paragraph shall not apply
to any portion of an Award that would have vested, or with
respect to which restrictions would have lapsed, prior to the
Participant's termination of employment if the Change in
Control had not occurred.
To the extent that the preceding paragraph applies to
an Award and such Award is not then held by the Participant,
the Participant shall pay to the Company
(x) in the case of an Option or Stock Appreciation
Right, an amount per share equal to the excess (if
any) of the Change in Control Price over the exercise
price of the Option or the specified price of the
Stock Appreciation Right, as the case may be,
(y) in the case of Restricted Stock or Performance
Shares, an amount per share equal to the Change in
Control Price, and
(z) in the case of any other Stock-Based Award, an
amount determined by the Committee in its sole
discretion to be consistent with the treatment of
Options, Stock Appreciation Rights, Restricted Stock
or Performance Shares,
less, in each such case, an amount equal to the product of (I)
the excess, if any, of the sum of the amounts described in
clauses (x), (y) and (z) above over the amount of the
deduction for Federal income tax purposes to which the
Participant will be entitled by reason of the payment required
by this paragraph, multiplied by (II) a percentage that is
equal to the highest marginal combined Federal and state
income tax rate applicable to a single person living in the
state of the Participant's residence at the time of the
occurrence of the Change in Control.
(iv) Partial Vesting Rule. For purposes of the
preceding clauses (ii) and (iii), if an Award provides for
vesting or lapse of restrictions in two or more increments,
then the portion of such Award that will vest on an
accelerated basis due to the Change in Control will be the
stated fraction of each such vesting increment.
(v) Termination of Employment Prior to Vesting. If
the employment of any Participant on the Change in Control
Date shall be involuntarily terminated without Cause during
the period of eighteen (18) months commencing on the Change in
Control Date, or shall be voluntarily terminated during such
18-month period by the Participant who is a Senior Executive
or a Vice President due to a change in employment conditions
that results in such Participant not continuing to have
Comparable Employment relative to the Participant's employment
immediately preceding the Change in Control Transaction, then,
notwithstanding the provisions of this subsection (h), any
Option or Stock Appreciation Right held by such Participant
that was granted prior to the Change in Control Date and has
not expired or been terminated shall become exercisable in
full and shall remain exercisable for one month after
termination of the Participant's employment, after which such
Option or Stock Appreciation Right shall terminate; and any
restrictions still applicable to any Award of Restricted
Shares, Performance Shares, or Other Stock-Based Award held by
such Participant that was granted prior to the Change in
Control Date shall lapse; provided, however, that in the case
of Performance Shares the Participant shall be entitled to
receive a number of Performance Shares (or payment therefor)
based upon the extent to which achievement of performance
targets was satisfied as of the date of termination of
employment, as determined by the Committee in its sole
discretion. If no public market for the Company's Class A
Common Stock (or any stock for which the Company's Class A
Common Stock has been exchanged) exists at the time of
termination of employment, then the Company shall repurchase,
and the Participant shall sell, any such Option, Stock
Appreciation Right, Restricted Stock, Performance Shares, or
Other Stock-Based Award held by such Participant at the price
provided for in the preceding subsection 6(g). This subsection
6(h)(v) shall not apply to Awards made after the Change in
Control Date unless otherwise provided in such Award.
(vi) Comparable Employment Not Accepted. If a
Participant (other than a Non-Employee Director) is offered
Comparable Employment with the Company or any successor to the
Company's business on or before the Change in Control Date and
declines such employment, then the provisions of subsection
6(f) shall apply to any Awards held by the Participant at the
Change in Control Date.
(vii) Non-Employee Directors. Upon the occurrence of
a Change in Control described in clause (h) above, any Option
or Stock Appreciation Right held by a Non-Employee Director
that has not expired or been terminated shall, to the extent
not yet exercisable, become exercisable in full, and any
restrictions still applicable to any Award of Restricted
Shares, Performance Shares, or Other Stock-Based Award held by
a Non-Employee Director shall lapse.
(i) Rights as Stockholder. A Participant shall have no right
as a stockholder with respect to any securities covered by an Award
until the date the Participant becomes the holder of record.
(j) Maximum Annual Awards Per Participant. No Participant may
receive any combination of Awards relating to more than 250,000 Shares
in the aggregate in any fiscal year of the Company under this Plan
(subject to adjustment under Section 12(f) hereof).
7. Stock Options.
(a) Terms of All Options.
(i) Grants. Each Option shall be granted pursuant to
an Agreement as either an Incentive Stock Option or a
Non-Qualified Stock Option. Only Non-Qualified Stock Options
may be granted to Associates who are not employees of the
Company or an Affiliate.
(ii) Purchase Price. The purchase price of each Share
subject to an Option shall be determined by the Committee and
set forth in the applicable Agreement, but shall not be less
than 100% of the Fair Market Value of a Share as of the date
the Option is granted. Options, once issued, may not be
repriced. The purchase price of the Shares with respect to
which an Option is exercised shall be payable in full at the
time of exercise, provided that, to the extent permitted by
law and in accordance with rules adopted by the Committee,
Participants may simultaneously exercise Options and sell the
Shares thereby acquired pursuant to a brokerage or similar
relationship and use the proceeds from such sale to pay the
purchase price of such Shares. The purchase price may be paid
in cash or, if the Committee so permits, through delivery or
tender to the Company of Shares held, either actually or by
attestation, by such Participant for at least six months (in
each case, such Shares having a Fair Market Value as of the
date the Option is exercised equal to the purchase price of
the Shares being purchased pursuant to the Option), or, if the
Committee so permits, a combination thereof, unless otherwise
provided in the Agreement; provided that, no Shares may be
tendered in exercise of an Incentive Stock Option if such
shares were acquired by the optionee through the exercise of
an Incentive Stock Option unless (i) such shares have been
held by the optionee for at least one year and (ii) at least
two years have elapsed since such Incentive Stock Option was
granted. Further, the Committee, in its discretion, may
approve other methods or forms of payment of the purchase
price, and establish rules and procedures therefor.
(iii) Exercisability. Each Option shall be
exercisable in whole or in part on the terms provided in the
Agreement. In no event shall any Option be exercisable at any
time after its Term. When an Option is no longer exercisable,
it shall be deemed to have lapsed or terminated.
(b) Incentive Stock Options. In addition to the other
terms and conditions applicable to all Options:
(i) the aggregate Fair Market Value (determined as of
the date the Option is granted) of the Shares with respect to
which Incentive Stock Options held by an individual first
become exercisable in any calendar year (under this Plan and
all other incentive stock options plans of the Company and its
Affiliates) shall not exceed $100,000 (or such other limit as
may be required by the Code), if such limitation is necessary
to qualify the Option as an Incentive Stock Option, and to the
extent an Option or Options granted to a Participant exceed
such limit such Option or Options shall be treated as
Non-Qualified Stock Options;
(ii) an Incentive Stock Option shall not be
exercisable and the Term of the Award shall not be more than
ten years after the date of grant (or such other limit as may
be required by the Code) if such limitation is necessary to
qualify the Option as an Incentive Stock Option;
(iii) the agreement covering an Incentive Stock
Option shall contain such other terms and provisions which the
Committee determines necessary to qualify such Option as an
Incentive Stock Option; and
(iv) notwithstanding any other provision of this Plan
if, at the time an Incentive Stock Option is granted, the
Participant owns (after application of the rules contained in
Section 424(d) of the Code, or its successor provision) Shares
possessing more than ten percent of the total combined voting
power of all classes of stock of the Company or its
subsidiaries, (A) the option price for such Incentive Stock
Option shall be at least 110% of the Fair Market Value of the
Shares subject to such Incentive Stock Option on the date of
grant and (B) such Option shall not be exercisable after the
date five years from the date such Incentive Stock Option is
granted.
(c) Option Grant for Non-Employee Directors. Each individual
who is elected or appointed to the office of director as a Non-Employee
Director after the effective date of this Plan shall receive a
Non-Qualified Option to purchase 48,000 Shares as of the date of the
first meeting of the Board which such individual attends in such
capacity. Such Option shall have the following terms and conditions:
(i) Price. The purchase price for the Shares subject
to such Option shall be one hundred percent (100%) of the Fair
Market Value of a Share as of the date the Option is granted.
(ii) Term. The term of such Option shall be ten
years from the date that it is granted.
(iii) Vesting. Subject to the provisions of
subsections 6(g), 6(h) and the following clause (iv), such
Option shall become exercisable in installments on a
cumulative basis at a rate of one-fifth (1/5) each year,
beginning on the first anniversary of the date of grant and on
each successive anniversary thereafter, until the date such
Option expires or is terminated.
(iv) Termination of Service as Non-Employee Director.
Except as provided in this subsection (iv), all outstanding
Options held by a Non-Employee Director terminate immediately
if such individual ceases to be a Non-Employee Director for
any reason other than death or Disability, provided that, if
the Optionee has attained age sixty-five (65) at the time of
such cessation, the portion of his outstanding Options that
have not become exercisable as of such date shall terminate
immediately, and the remaining portion, if any, shall remain
exercisable for a period of three months following such
cessation, and shall thereafter terminate. If an Optionee
ceases to be a Non-Employee Director due to his death or
Disability, all outstanding Options held by such Optionee
shall immediately become fully exercisable to the extent not
so exercisable, shall remain exercisable for a period of three
months following such cessation, and shall thereafter
terminate. Notwithstanding the foregoing, no provision in this
subsection (iv) shall extend the exercise period of an Option
beyond its original term.
The Board, in its discretion, may make other Awards from time to time
to Non-Employee Directors, upon such terms and conditions, consistent
with the provisions of this Plan, as the Board may determine.
8. Stock Appreciation Rights. An Award of a Stock Appreciation Right
shall entitle the Participant, subject to terms and conditions determined by the
Committee, to receive upon exercise of the Stock Appreciation Right all or a
portion of the excess of (i) the Fair Market Value of a specified number of
Shares as of the date of exercise of the Stock Appreciation Right over (ii) a
specified price which shall not be less than 100% of the Fair Market Value of
such Shares as of the date of grant of the Stock Appreciation Right (referred to
in Section 12(f) and Section 13(b) as the "purchase price"). A Stock
Appreciation Right may be granted in connection with a previously or
contemporaneously granted Option, or independent of any Option. If issued in
connection with an Option, the Committee may impose a condition that exercise of
a Stock Appreciation Right cancels the Option with which it is connected and
exercise of the connected Options cancels the Stock Appreciation Right. Each
Stock Appreciation Right may be exercisable in whole or in part on the terms
provided in the applicable Agreement. No Stock Appreciation Right shall be
exercisable at any time after its Term. When a Stock Appreciation Right is no
longer exercisable, it shall be deemed to have lapsed or terminated. Except as
otherwise provided in the applicable Agreement, upon exercise of a Stock
Appreciation Right, payment to the Participant (or to his or her Successor)
shall be made in the form of cash, Stock or a combination of cash and Stock (as
determined by the Committee if not otherwise specified in the Award) as promptly
as practicable after such exercise. The Agreement may provide for a limitation
upon the amount or percentage of the total appreciation on which payment
(whether in cash and/or Stock) may be made in the event of the exercise of a
Stock Appreciation Right.
9. Performance Shares.
(a) Initial Award. An Award of Performance Shares shall
entitle a Participant (or a Successor) to future payments based upon
the achievement of performance targets established in writing by the
Committee. Payment shall be made in Stock, or a combination of cash and
Stock, as determined by the Committee. Such performance targets shall
be determined by the Committee in its sole discretion and shall consist
of one or any combination of two or more of earnings or earnings per
share before income tax (profit before taxes), net earnings or net
earnings per share (profit after tax), inventory, total or net
operating asset turnover, operating income, total stockholder return,
return on equity, pre-tax and pre-interest expense return on average
invested capital, which may be expressed on a current value basis, or
sales growth, successful transition of the Company's clients to new
claim adjudication platforms, achievement of post-merger integration,
marketing, operating or workplan goals, and any such targets may relate
to one or any combination of two or more of corporate, group, unit,
division, Affiliate or individual performance. The Agreement may
establish that a portion of the maximum amount of a Participant's Award
will be paid for performance which exceeds the minimum target but falls
below the maximum target applicable to such Award. The Agreement shall
also provide for the timing of such payment. Following the conclusion
or acceleration of each Performance Period, the Committee shall
determine the extent to which (i) performance targets have been
attained, (ii) any other terms and conditions with respect to an Award
relating to such Performance Period have been satisfied, and (iii)
payment is due with respect to a Performance Share Award.
(b) Acceleration and Adjustment. The applicable Agreement may
permit an acceleration of the Performance Period and an adjustment of
performance targets and payments with respect to some or all of the
Performance Shares awarded to a Participant, upon such terms and
conditions as shall be set forth in the Agreement, upon the occurrence
of certain events, which may, but need not, include without limitation
a Fundamental Change, the Participant's death or Disability, a change
in accounting practices of the Company or its Affiliates, or, with
respect to payments in Stock for Performance Share Awards, a
reclassification, stock dividend, stock split or stock combination as
provided in Section 12(f) hereof.
(c) Valuation. To the extent that payment of a Performance
Share is made in cash, a Performance Share earned after conclusion of a
Performance Period shall have a value equal to the Fair Market Value of
a Share on the last day of such Performance Period.
10. Restricted Stock. Restricted Stock may be granted in the form of
Shares registered in the name of the Participant but held by the Company until
the restrictions on the Restricted Stock Award lapse, subject to forfeiture, as
provided in the applicable Agreement. Any employment conditions, performance
conditions, restrictions on transferability and the Term of the Award shall be
established by the Committee in its discretion and included in the applicable
Agreement. The Committee may provide in the applicable Agreement for the lapse
or waiver of any such restriction or condition based on such factors or criteria
as the Committee, in its sole discretion, may determine, which may, but need
not, include without limitation the Participant's death or Disability. The
Committee, in the applicable Agreement, may, in its sole discretion, award all
or any of the rights of a stockholder with respect to the Shares of Restricted
Stock during the period that they remain subject to restrictions, including,
without limitation, the right to vote the Shares and receive dividends. Any
performance conditions to the lapse of restrictions on restricted stock shall be
determined by the Committee in its sole discretion and shall be based on
performance targets that consist of one or any combination of two or more of
earnings or earnings per share before income tax (profit before taxes), net
earnings or net earnings per share (profit after tax), inventory, total or net
operating asset turnover, operating income, total stockholder return, return on
equity, pre-tax and pre-interest expense return on average invested capital,
which may be expressed on a current value basis, sales growth, successful
transition of the Company's clients to new claim adjudication platforms, or
achievement of post-merger integration, marketing, operating or workplan goals,
and any such targets may relate to one or any combination of two or more of
corporate, group, unit, division, Affiliate or individual performance.
11. Other Stock-Based Awards. The Committee may from time to time grant
Awards of Stock, and other Awards under this Plan (collectively herein defined
as "Other Stock-Based Awards"), including without limitation those Awards
pursuant to which Shares may be acquired in the future, such as Awards
denominated in Stock, Stock Units, securities convertible into Stock and phantom
securities. The Committee, in its sole discretion, shall determine, and provide
in the applicable Agreement for, the terms and conditions of such Awards
provided that such Awards shall not be inconsistent with the terms and purposes
of this Plan. The Committee may, in its sole discretion, direct the Company to
issue Shares subject to restrictive legends and/or stop transfer instructions
which are consistent with the terms and conditions of the Award to which such
Shares relate.
12. General Provisions.
(a) Effective Date of this Plan. This Plan shall become
effective as of August 9, 2000, provided that this Plan is approved and
ratified by the holders of the Company's common stock in accordance
with the Company's Certificate of Incorporation at a meeting of the
stockholders of the Company held no later than August 8, 2001. If this
Plan is not so approved, any Award granted under this Plan subject to
such approval shall be cancelled and be null and void.
(b) Duration of this Plan; Date of Grant. This Plan shall
remain in effect until all Stock subject to it shall be distributed or
all Awards have expired or lapsed, whichever is latest to occur, or
this Plan is terminated pursuant to Section 12(e) hereof. No Award of
an Incentive Stock Option shall be made more than ten years after the
effective date provided in Section 12(a) hereof (or such other limit as
may be required by the Code) if such limitation is necessary to qualify
the Option as an Incentive Stock Option. The date and time of approval
by the Committee of the granting of an Award shall be considered the
date and time at which such Award is made or granted, notwithstanding
the date of any Agreement with respect to such Award; provided,
however, that the Committee may grant Awards other than Incentive Stock
Options to Associates or to persons who are about to become Associates,
to be effective and deemed to be granted on the occurrence of certain
specified contingencies, provided that if the Award is granted to a
non-Associate who is about to become an Associate, such specified
contingencies shall include, without limitation, that such person
becomes an Associate.
(c) Right to Terminate Employment. Nothing in this Plan or in
any Agreement shall confer upon any Participant who is an employee of
the Company the right to continue in the employment of the Company or
any Affiliate or affect any right which the Company or any Affiliate
may have to terminate or modify the employment of the Participant with
or without cause.
(d) Tax Withholding. The Company shall withhold from any
payment of cash or Stock to a Participant or other person under this
Plan an amount sufficient to cover any required withholding taxes,
including the Participant's social security and Medicare taxes (FICA)
and federal, state and local income tax with respect to income arising
from payment of the Award. The Company shall have the right to require
the payment of any such taxes before issuing any Stock pursuant to the
Award. In lieu of all or any part of a cash payment from a person
receiving Stock under this Plan, the Committee may, in the applicable
Agreement or otherwise, permit a person to cover all or any part of the
required withholdings, and to cover any additional withholdings up to
the amount needed to cover the person's full FICA and federal, state
and local income tax with respect to income arising from payment of the
Award, through a reduction of the numbers of Shares delivered to such
person or a delivery or tender to the Company of Shares held by such
person, in each case valued in the same manner as used in computing the
withholding taxes under applicable laws.
(e) Amendment, Modification and Termination of this Plan.
Except as provided in this Section 12(e), the Board may at any time
amend, modify, terminate or suspend this Plan. Except as provided in
this Section 12(e), the Committee may at any time alter or amend any or
all Agreements under this Plan to the extent permitted by law and
subject to the requirements of Section 2(b), in which event, as
provided in Section 2(b), the term "Agreement" shall mean the Agreement
as so amended. Amendments are subject to approval of the stockholders
of the Company only as required by applicable law or regulation, or if
the amendment increases the total number of shares available under this
Plan. No termination, suspension or modification of this Plan may
materially and adversely affect any right acquired by any Participant
(or a Participant's legal representative) or any Successor or permitted
transferee under an Award granted before the date of termination,
suspension or modification, unless otherwise provided in an Agreement
or otherwise or required as a matter of law. It is conclusively
presumed that any adjustment for changes in capitalization provided for
in Section 9(b) or 12(f) hereof does not adversely affect any right of
a Participant or other person under an Award.
(f) Adjustment for Changes in Capitalization. Appropriate
adjustments in the aggregate number and type of securities available
for Awards under this Plan, in the limitations on the number and type
of securities that may be issued to an individual Participant, in the
number and type of securities and amount of cash subject to Awards then
outstanding, in the Option purchase price as to any outstanding
Options, in the purchase price as to any outstanding Stock Appreciation
Rights, and, subject to Section 9(b) hereof, in outstanding Performance
Shares and payments with respect to outstanding Performance Shares, and
comparable adjustments, if applicable, to any outstanding Other
Stock-Based Award, shall be made by the Committee to give effect to
adjustments made in the number or type of Shares through a Fundamental
Change, reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split, stock combination, rights
offering, spin-off or other relevant change, provided that fractional
Shares shall be rounded to the nearest whole Share, for which purpose
one-half share shall be rounded down to the nearest whole Share.
(g) Other Benefit and Compensation Programs. Payments and
other benefits received by a participant under an Award shall not be
deemed a part of a Participant's regular, recurring compensation for
purposes of any termination, indemnity or severance pay laws and shall
not be included in, nor have any effect on, the determination of
benefits under any other employee benefit plan, contract or similar
arrangement provided by the Company or an Affiliate, unless expressly
so provided by such other plan, contract or arrangement or the
Committee determines that an Award or portion of an Award should be
included to reflect competitive compensation practices or to recognize
that an Award has been made in lieu of a portion of competitive cash
compensation.
(h) Beneficiary Upon Participant's Death. To the extent that
the transfer of a participant's Award at death is permitted by this
Plan or under an Agreement, (i) a Participant's Award shall be
transferable to the beneficiary, if any, designated on forms prescribed
by and filed with the Committee and (ii) upon the death of the
Participant, such beneficiary shall succeed to the rights of the
Participant to the extent permitted by law and this Plan. If no such
designation of a beneficiary has been made, the Participant's legal
representative shall succeed to the Awards, which shall be transferable
by will or pursuant to laws of descent and distribution to the extent
permitted by this Plan or under an Agreement.
(i) Unfunded Plan. This Plan shall be unfunded and the Company
shall not be required to segregate any assets that may at any time be
represented by Awards under this Plan. Neither the Company, its
Affiliates, the Committee, nor the Board shall be deemed to be a
trustee of any amounts to be paid under this Plan nor shall anything
contained in this Plan or any action taken pursuant to its provisions
create or be construed to create a fiduciary relationship between the
Company and/or its Affiliates, and a Participant or Successor. To the
extent any person acquires a right to receive an Award under this Plan,
such right shall be no greater than the right of an unsecured general
creditor of the Company.
(j) Limits of Liability.
(i) Any liability of the Company to any Participant
with respect to an Award shall be based solely upon
contractual obligations created by this Plan and the
Agreement.
(ii) Except as may be required by law, neither the
Company nor any member or former member of the Board or the
Committee, nor any other person participating (including
participation pursuant to a delegation of authority under
Section 3(b) hereof) in any determination of any question
under this Plan, or in the interpretation, administration or
application of this Plan, shall have any liability to any
party for any action taken, or not taken, in good faith under
this Plan.
(iii) To the full extent permitted by law, each
member and former member of the Committee and each person to
whom the Committee delegates or has delegated authority under
this Plan shall be entitled to indemnification by the Company
against any loss, liability, judgment, damage, cost and
reasonable expense incurred by such member, former member or
other person by reason of any action taken, failure to act or
determination made in good faith under or with respect to this
Plan.
(k) Compliance with Applicable Legal Requirements. The Company
shall not be required to issue or deliver a certificate for Shares
distributable pursuant to this Plan unless the issuance of such
certificate complies with all applicable legal requirements including,
without limitation, compliance with the provisions of applicable state
securities laws, the Securities Act of 1933, as amended and in effect
from time to time or any successor statute, the Exchange Act and the
requirements of the exchanges, if any, on which the Company's Shares
may, at the time, be listed.
(l) Deferrals and Settlements. The Committee may require or
permit Participants to elect to defer the issuance of Shares or the
settlement of Awards in cash under such rules and procedures as it may
establish under this Plan. It may also provide that deferred
settlements include the payment or crediting of interest on the
deferral amounts.
13. Substitute Awards. Awards may be granted under this Plan from time
to time in substitution for Awards held by employees of other corporations who
are about to become Associates, or whose employer is about to become a
Subsidiary of the Company, as the result of a merger or consolidation of the
Company or a Subsidiary of the Company with another corporation, the acquisition
by the Company or a Subsidiary of the Company of all or substantially all the
assets of another corporation or the acquisition by the Company or a Subsidiary
of the Company of at least 50% of the issued and outstanding stock of another
corporation. The terms and conditions of the substitute Awards so granted may
vary from the terms and conditions set forth in this Plan to such extent as the
Board at the time of the grant may deem appropriate to conform, in whole or in
part, to the provisions of the Awards in substitution for which they are
granted, but with respect to Awards which are Incentive Stock Options, no such
variation shall be permitted which affects the status of any such substitute
option as an Incentive Stock Option.
14. Governing Law. To the extent that federal laws do not otherwise
control, this Plan and all determinations made and actions taken pursuant to
this Plan shall be governed by the laws of Delaware, without giving effect to
principles of conflicts of laws, and construed accordingly.
15. Severability. In the event any provision of this Plan shall be
held illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of this Plan, and this Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
16. Prior Plans. Notwithstanding the adoption of this Plan by the Board
and approval of this Plan by the Company's stockholders as provided by Section
12(a) hereof, the Company's 1992 and 1994 Plans, as the same may have been
amended from time to time, shall remain in effect, but grants of stock options
pursuant to the 1992 and 1994 Plans shall not be made after the effective date
of this Plan. All grants and awards heretofore made under the 1992 and 1994
Plans shall be governed by the terms of the 1992 and 1994 Plans, respectively.
