Exhibit 10.17

 

AMENDED AND RESTATED

 

CAREMARK RX, INC. INCENTIVE COMPENSATION PLAN

 

The Amended and Restated Caremark Rx, Inc. Incentive Compensation Plan (the
“Incentive Compensation Plan”) is the result of the assumption and adoption by
Caremark Rx, Inc., a Delaware corporation, of the Caremark International Inc.
1992 Incentive Compensation Plan (the “Caremark Plan”), pursuant to the
provisions of that certain Plan and Agreement of Merger, dated as of May 13,
1996, by and among Caremark Rx, Inc., PPM Merger Corporation and Caremark
International Inc.

 

1. PURPOSE

 

The purpose of this Incentive Compensation Plan is to increase stockholder value
and to advance the interests of Caremark Rx, Inc. and its subsidiaries
(collectively, “Caremark Rx” or the “Company”) by awarding equity and
performance based incentives designed to attract, retain and motivate employees.
As used in this Incentive Compensation Plan, the term “subsidiary” means any
business, whether or not incorporated, in which Caremark Rx has an ownership
interest.

 

2. ADMINISTRATION

 

2.1 Administration by the Committee.

 

The Incentive Compensation Plan shall be administered by the Compensation
Committee of the Board of Directors of Caremark Rx or by any other committee
appointed by the Board of Directors of Caremark Rx (the “Committee”), which
Committee shall consist solely of two or more Non- Employee Directors
(“Non-Employee Directors”) as such are defined in Rule 16b-3 promulgated
pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), or any successor provision.

 

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2.2 Authority.

 

Subject to the provisions of this Incentive Compensation Plan, the Committee
shall have the authority to:

 

(a) manage and control the operation of this Incentive Compensation Plan;

 

(b) interpret and construe any provision of this Incentive Compensation Plan and
any Award Agreement granted under it;

 

(c) prescribe, amend and rescind rules and regulations relating to this
Incentive Compensation Plan;

 

(d) make awards under this Incentive Compensation Plan, in such forms and
amounts and subject to such restrictions, limitations and conditions as it deems
appropriate, including, without limitation, awards which are made in combination
with or in tandem with other awards (whether or not contemporaneously granted)
or compensation in lieu of current or deferred compensation;

 

(e) modify the terms of, cancel and reissue, or repurchase outstanding awards;

 

(f) prescribe the form of agreement, certificate, or other instrument evidencing
any award under this Incentive Compensation Plan (an “Award Agreement”),
provided that any such Award Agreement shall incorporate by reference all of the
terms and provisions of this Incentive Compensation Plan as in effect at the
time of grant and shall include such other terms and provisions not contrary to
the Incentive Compensation Plan as shall be approved and adopted by the
Committee;

 

(g) correct any defect or omission and reconcile any inconsistency in this
Incentive Compensation Plan or in any award hereunder; and

 

(h) make all other determinations and take all other actions as it deems
necessary or desirable for the implementation and administration of this
Incentive Compensation Plan.

 

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The determination of the Committee on matters within its authority shall be
conclusive and binding on Caremark Rx and all other persons.

 

3. PARTICIPATION

 

Subject to the terms and conditions of this Incentive Compensation Plan, the
Committee shall determine and designate from time to time the employees,
directors and consultants of Caremark Rx who shall receive awards under this
Incentive Compensation Plan (“Participants”).

 

4. SHARES SUBJECT TO THE INCENTIVE COMPENSATION PLAN

 

4.1 Number of Shares Reserved.

 

Shares of common stock, $.001 par value per share, of Caremark Rx (“Common
Stock”) shall be available for awards under this Incentive Compensation Plan. To
the extent provided by resolution of the Committee, such shares may be
uncertificated. Subject to adjustment in accordance with Sections 4.2 and 4.3,
the aggregate number of shares of Common Stock available for awards under this
Incentive Compensation Plan shall be 13,771,964 shares.

 

4.2 Reusage of Shares.

 

(a) In the event of the exercise or termination (by reason of forfeiture,
expiration, cancellation, surrender or otherwise) of any award under this
Incentive Compensation Plan, that number of shares of Common Stock that was
subject to the award but not delivered to the Participant shall again be
available for awards under this Incentive Compensation Plan.

 

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(b) In the event that shares of Common Stock are delivered under this Incentive
Compensation Plan as Restricted Stock, as described in Section 6 hereof, or
pursuant to a stock award and are thereafter forfeited or reacquired by the
Company pursuant to rights reserved upon the award thereof, such forfeited or
reacquired shares shall again be available for awards under this Incentive
Compensation Plan.

 

(c) Notwithstanding the provisions of paragraphs (a) or (b) of this Section 4.2,
the following shares shall not be available for reissuance under this Incentive
Compensation Plan: (i) shares with respect to which the Participant has received
the benefits of ownership (other than voting rights), either in the form of
dividends or otherwise; (ii) shares which are withheld from any award or payment
under this Incentive Compensation Plan to satisfy tax withholding obligations
(as described in Section 7.5(e)); (iii) shares which are surrendered to fulfill
tax obligations (as described in Section 7.5(e)); and (iv) shares which are
surrendered in payment of the Option Price (as defined in Section 5.2) upon the
exercise of a Stock Option, as described in Section 5 hereof.

 

4.3 Adjustments to Shares Reserved.

 

In the event of any merger, consolidation, reorganization, recapitalization,
spin-off, stock dividend, stock split, reverse stock split, exchange or other
distribution with respect to shares of Common Stock or other change in the
corporate structure or capitalization affecting the Common Stock, the type and
number of shares of stock which are or may be subject to awards under this
Incentive Compensation Plan and the terms of any outstanding awards (including
the price at which shares of stock may be issued pursuant to an outstanding
award) shall be equitably adjusted by the Committee, in its sole discretion, to
preserve the value of benefits awarded or to be awarded to Participants under
this Incentive Compensation Plan.

 

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5. STOCK OPTIONS

 

5.1 Awards.

 

Subject to the terms and conditions of this Incentive Compensation Plan, the
Committee shall designate the employees to whom options to purchase shares of
Common Stock (“Stock Options”) are to be awarded under this Incentive
Compensation Plan and shall determine the number, type and terms of the Stock
Options to be awarded to each of them; provided, however, that each Stock Option
designated as an “Incentive Stock Option” (as defined below) shall expire on the
earlier of the date provided by the option terms or the date which is ten years
after the date of grant. In addition, each Stock Option awarded to any person
who owns, directly or indirectly (or is treated as owning by reason of
attribution rules, currently set forth in Section 424 of the Internal Revenue
Code of 1986, as amended (the “Code”)), stock of the Company constituting more
than 10% of the total combined voting power of the Company’s outstanding stock,
or the stock of any of its corporate subsidiaries, shall expire on the earlier
of the date provided by the option terms or the date which is five years after
the date of the grant. Each Stock Option awarded under this Incentive
Compensation Plan shall be a “nonqualified stock option” for tax purposes,
unless the Stock Option satisfies all of the requirements of Section 422 of the
Code and the Committee designates such Stock Option as an “Incentive Stock
Option”.

 

5.2 Manner of Exercise.

 

A Stock Option may be exercised, in whole or in part, by giving proper
notification to the Corporate Secretary of Caremark Rx prior to the date on
which the Stock Option expires; provided, however, that a Stock Option may only
be exercised with respect to whole shares of Common Stock. Such notice shall
specify the number of shares of Common Stock to be purchased and shall be
accompanied by payment of the Option Price for such shares (the “Option Price”).
The Option Price of a Stock Option shall be determined in accordance with the
applicable provisions of the Code and shall in no event be less than the Fair
Market Value (as defined in Section 7.12) of the stock covered by the Stock
Option at the date of the grant; provided, however, that the Option Price of a
Stock Option granted to any person who owns, directly or indirectly (or is
treated as owning by reason of attribution rules, currently set forth in
Section 424 of the Code), stock of the Company constituting more than 10% of the
total combined voting power of all classes of outstanding stock of the Company
or of any affiliate of the Company, shall in no event be less than 110% of such
Fair Market Value.

 

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5.3 Payment of Option Price.

 

No shares of Common Stock shall be issued on the exercise of an Option unless
paid for in full at the time of exercise. Payment shall be made in cash, which
may be paid by check or other instrument acceptable to the Company. In addition,
subject to compliance with applicable laws and regulations and such conditions
as the Committee may impose, the Committee may elect to accept payment in shares
of Common Stock of the Company which are already owned by the optionee, valued
at the Fair Market Value thereof on the date of exercise. The Committee may also
allow an optionee to exercise an Option by use of proceeds to be received from
the sale of Common Stock issuable pursuant to the Option being exercised.

 

5.4 Vesting of Stock Options.

 

Except as provided by the Committee in the applicable Award Agreement, Stock
Options shall vest and become exercisable as follows:

 

(a) 34% of the Stock Options granted shall vest on the Stock Option grant date;

 

(b) 33% of the Stock Options granted shall vest on each of the first anniversary
and second anniversary of the Stock Option grant date; provided, however, that
if during the first year after the Stock Option grant date, the stock price of
the Common Stock closes at or above $12.00 (or such other price as determined by
the Committee and set forth in the applicable Award Agreement) for any twenty
(20) out of thirty (30) consecutive trading days, the 33% of the Stock Options
due to vest on the first anniversary of the Stock Option grant date shall vest
immediately at the end of such 20th day, and provided, however, that if during
the second year after the Stock Option grant date, the stock price of the Common
Stock closes at or above $18.00 (or such other price as determined by the
Committee and set forth in the applicable Award Agreement) for any twenty
(20) out of thirty (30) consecutive trading days, the 33% of the Stock Options
due to vest on the second anniversary of the Stock Option grant date shall vest
immediately at the end of such 20th day.

 

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6. RESTRICTED STOCK

 

6.1 Awards.

 

Subject to the terms and conditions of this Incentive Compensation Plan, the
Committee shall designate the Participants to whom shares of “Restricted Stock”
shall be awarded under this Incentive Compensation Plan and determine the number
of shares and the terms and conditions of each such award; provided, however,
that newly issued shares shall be issued as Restricted Stock only to the extent
that the Committee determines that past services of the Participant constitute
adequate consideration for at least the par value thereof. Each Restricted Stock
award shall entitle the Participant to receive shares of Common Stock upon the
terms and conditions specified by the Committee and subject to the following
provisions of this Section 6.

 

6.2 Restrictions.

 

All shares of Restricted Stock transferred or sold hereunder shall be subject to
such restrictions as the Committee may determine, including, without limitation,
any or all of the following:

 

(a) a required period of employment with the Company, as determined by the
Committee, prior to the vesting of the shares of Restricted Stock;

 

(b) a prohibition against the sale, assignment, transfer, pledge, hypothecation
or other encumbrance of the shares of Restricted Stock for a specified period as
determined by the Committee;

 

(c) a requirement that the holder of shares of Restricted Stock forfeit (or in
the case of shares sold to a Participant, resell back to the Company at his
cost) all or a part of such shares in the event of termination of his employment
during any period in which such shares are subject to restrictions; and

 

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(d) a prohibition against employment of the holder of such Restricted Stock by
any competitor of the Company or against such holder’s dissemination of any
secret or confidential information belonging to the Company.

 

All restrictions on shares of Restricted Stock awarded pursuant to this
Incentive Compensation Plan shall expire at such time or times as the Committee
shall specify.

 

6.3 Registration of Shares.

 

Shares of Restricted Stock awarded pursuant to this Incentive Compensation Plan
shall be registered in the name of the Participant and, if such shares are
certificated, at the discretion of the Committee, may be deposited in a bank
designated by the Committee or with Caremark Rx. The Committee may require a
stock power endorsed in blank with respect to shares of Restricted Stock whether
or not certificated.

 

6.4 Stockholder Rights.

 

Subject to the terms and conditions of this Incentive Compensation Plan, during
any period in which shares of Restricted Stock are subject to forfeiture or
restrictions on transfer, each Participant who has been awarded shares of
Restricted Stock shall have such rights of a stockholder with respect to such
shares as the Committee may designate at the time of the award, including the
right to vote such shares and the right to receive all dividends paid on such
shares. Unless otherwise provided by the Committee, stock dividends or dividends
in kind and, except as otherwise provided by Section 7.10, any other securities
distributed with respect to Restricted Stock shall be restricted to the same
extent and subject to the same terms and conditions as the Restricted Stock to
which they are attributable.

 

6.5 Lapse of Restrictions.

 

Subject to the terms and conditions of this Incentive Compensation Plan, at the
end of any time period during which the shares of

 

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Restricted Stock are subject to forfeiture or restrictions on transfer, such
shares will be delivered free of all restrictions to the Participant (or to the
Participant’s legal representative, beneficiary or heir).

 

6.6 Substitution of Cash.

 

The Committee may, in its sole discretion, substitute cash equal to the Fair
Market Value (as described in Section 7.11) (determined as of the date of the
distribution) of shares of Common Stock otherwise required to be distributed to
a Participant in accordance with this Section 6.

 

7. GENERAL

 

7.1 Effective Date.

 

This Incentive Compensation Plan became effective the date that the Caremark
Plan was adopted by the Board of Directors of the former parent corporation of
Caremark International Inc.

 

7.2 Duration.

 

This Incentive Compensation Plan shall remain in force and effect until all
awards made under this Incentive Compensation Plan have either been satisfied by
the issuance of shares of Common Stock or the payment of cash or been terminated
in accordance with the terms of this Incentive Compensation Plan or the award
and until all restrictions imposed on shares of Common Stock issued under this
Incentive Compensation Plan have lapsed. No Incentive Stock Option award may be
made under this Incentive Compensation Plan after the tenth anniversary of the
date that the Caremark Plan was adopted by the Board of Directors of the former
parent corporation of Caremark International Inc.

 

7.3 Non-Transferability of Incentives.

 

(a) No share of Restricted Stock under this Incentive Compensation Plan may be
transferred, pledged or assigned by the holder thereof (except, in the event of
the holder’s death, by will or the laws of descent and distribution), and the
Company shall not be

 

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required to recognize any attempted assignment of such rights by any
Participant. During a Participant’s lifetime, awards may be exercised only by
him or by his guardian or legal representative.

 

(b) (1) Incentive Stock Options. No incentive stock option granted under the
Incentive Compensation Plan may be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution. Further, all incentive stock options granted to a
Participant under the Incentive Compensation Plan shall be exercisable during
his or her lifetime only by such Participant.

 

(2) Nonqualified Stock Options. No nonqualified stock option granted under the
Incentive Compensation Plan may be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution. Notwithstanding the foregoing, to the extent not
prohibited by any statute, rule or regulation applicable to the Incentive
Compensation Plan, the nonqualified stock options or the registration with the
Securities and Exchange Commission of the Common Stock to be issued upon
exercise of the nonqualified stock options, the Committee may, in its
discretion, authorize all or a portion of nonqualified stock options granted to
a Participant to be on terms which permit transfer by such Participant to
(i) the spouse, children or grandchildren of the Participant (“Immediate Family
Members”), (ii) a trust or trusts for the exclusive benefit of such Immediate
Family Members, or (iii) a partnership in which such Immediate Family Members
are the only partners, provided that (x) there may be no consideration for any
such transfer, (y) the Award Agreement pursuant to which such nonqualified stock
options are granted must be approved by the Committee, and must expressly
provide for transferability in a manner consistent with this Section, and
(z) subsequent transfers of transferred nonqualified stock options shall be
prohibited except those by will or the laws of descent and distribution.
Following transfer, any such nonqualified stock options shall continue to be
subject to the same terms and conditions as were applicable immediately prior to
transfer, provided that for purposes of this Incentive Compensation Plan, the
term “Participant” shall be deemed to refer to the transferee. The events of
termination of employment shall continue to be applied with respect to the
original Participant, following which the nonqualified stock

 

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options shall be exercisable by the transferee only to the extent, and for the
periods specified in Section 7.4. Notwithstanding the foregoing, should the
Committee provide that nonqualified stock options granted be transferable, the
Company by such action incurs no obligation to notify or otherwise provide
notice to a transferee of early termination of the nonqualified stock option. In
the event of a transfer, as set forth above, the original Participant is and
will remain subject to and responsible for any applicable withholding taxes upon
the exercise of such nonqualified stock options.

 

7.4 Effect of Termination of Employment or Death.

 

(a) Except as otherwise provided in an Award Agreement or as provided in
paragraphs (b) and (c) below, each Stock Option, to the extent it has not been
previously exercised, shall terminate upon the earliest to occur of: (a) the
expiration of the period set forth in the Award Agreement; (b) the expiration of
12 months following the Participant’s death or permanent disability;
(c) immediately upon the date the Participant ceases to be an employee, officer,
consultant or director or otherwise affiliated with the Company for cause; or
(d) the expiration of 90 days following the date the Participant ceases to be an
employee, officer, consultant or director or otherwise affiliated with the
Company for any reason other than cause, death or permanent disability.

 

(b) Except as otherwise provided in an Award Agreement, any Stock Option granted
after September 21, 1998 (a “Secondary Option”), to the extent it has not been
previously exercised, shall terminate upon the earliest to occur of: (a) the
expiration of the Secondary Option period set forth in the Award Agreement;
(b) the expiration of 12 months following the Participant’s death or permanent
disability; (c) immediately upon termination for Cause (as defined below); or
(d) the expiration of 90 days following the Participant’s termination of
employment for any reason other than Cause (as defined below), Change in Control
(as defined in Section 7.10), death or permanent disability.

 

For purposes of the preceding sentence only, Cause

 

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means the Company, subsidiary or an affiliate having cause to terminate a
Participant’s status as an employee, officer, consultant or director or other
affiliation with the Company under any existing employment agreement between the
Participant and the Company, a subsidiary or an affiliate or, in the absence of
such an employment agreement, upon (i) the determination by the Committee that
the Participant has ceased to perform his duties to the Company, a subsidiary or
an affiliate (other than as a result of his incapacity due to physical or mental
illness or injury), which failure amounts to an intentional and extended neglect
of his duties to such party, (ii) the Committee’s determination that the
Participant has engaged or is about to engage in conduct materially injurious to
the Company, a subsidiary or an affiliate, or (iii) the Participant having been
convicted of a felony.

 

(c) Notwithstanding the foregoing, any Secondary Option, to the extent it has
not been previously exercised prior to a Change in Control (as defined in
Section 7.10) shall remain exercisable for its full original term upon and
following such Change in Control.

 

7.5 Compliance with Applicable Law and Withholding.

 

(a) Notwithstanding any other provision of this Incentive Compensation Plan,
Caremark Rx shall have no obligation to issue any shares of Common Stock under
this Incentive Compensation Plan if such issuance would violate any applicable
law or any applicable regulation or requirement of any securities exchange or
similar entity.

 

(b) Prior to the issuance of any shares of Common Stock under this Incentive
Compensation Plan, Caremark Rx or the Company may require a written statement
that the recipient is acquiring the shares for investment and not for the
purpose or with the intention of distributing the shares and will not dispose of
them in violation of the registration requirements of the Securities Act of
1933.

 

(c) With respect to any person who is subject to Section 16(a) of the Exchange
Act, the Committee may, at any time, add such

 

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conditions and limitations to any award under this Incentive Compensation Plan
that it deems necessary or desirable to comply with the requirements of Rule
16b-3.

 

(d) If, at any time, Caremark Rx, in its sole discretion, determines that the
listing, registration or qualification (or any updating of any such document) of
any type of award, or the shares of Common Stock issuable pursuant thereto, is
necessary on any securities exchange or under any federal or state securities or
blue sky law, or that the consent or approval of any governmental regulatory
body is necessary or desirable as a condition of, or in connection with, any
award, the issuance of shares of Common Stock pursuant to any award, or the
removal of any restrictions imposed on shares subject to an award, such award
shall not be made and the shares of Common Stock shall not be issued or such
restrictions shall not be removed, as the case may be, in whole or in part,
unless such listing, registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not acceptable to Caremark Rx.

 

(e) All awards and payments under this Incentive Compensation Plan are subject
to withholding of all applicable taxes and the Company shall have the right to
withhold from any award under this Incentive Compensation Plan or to collect as
a condition of any payment under this Incentive Compensation Plan, as
applicable, any taxes required by law to be withheld. To the extent provided by
the Committee, a Participant may elect to have any distribution otherwise
required to be made under this Incentive Compensation Plan to be withheld or to
surrender to the Company shares of Common Stock already owned by the Participant
to fulfill any tax withholding obligation.

 

7.6 No Continued Employment.

 

The Incentive Compensation Plan does not constitute a contract of employment or
continued service, and participation in this Incentive Compensation Plan will
not give any employee or Participant the right to be retained in the employ of
the Company or the right to continue as a director of

 

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the Company or any right or claim to any benefit under this Incentive
Compensation Plan unless such right or claim has specifically accrued under the
terms of this Incentive Compensation Plan or the terms of any award under this
Incentive Compensation Plan.

 

7.7 Treatment as a Stockholder.

 

Any award to a Participant under this Incentive Compensation Plan shall not
create any rights in such Participant as a stockholder of Caremark Rx until
shares of Common Stock are registered in the name of the Participant.

 

7.8 Deferral Permitted.

 

Payment of cash to a Participant or distribution of any shares of Common Stock
to which a Participant is entitled under any award shall be made as provided in
the terms of the award. Payment may be deferred at the option of the Participant
to the extent provided in the award.

 

7.9 Amendment of the Incentive Compensation Plan.

 

The Committee may, at any time and in any manner, amend, suspend, or terminate
this Incentive Compensation Plan or any award outstanding under this Incentive
Compensation Plan; provided, however, that no such amendment or discontinuance
shall:

 

(a) be made without stockholder approval: (1) to the extent such approval is
required by law, agreement or the rules of any exchange or automated quotation
system upon which the Common Stock is listed or quoted or (2) to the extent that
any outstanding Stock Option is canceled and regranted or repriced;

 

(b) adversely alter or impair the rights of Participants with respect to awards
previously made under this Incentive Compensation Plan without the consent of
the holder thereof; or

 

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(c) make any change that would disqualify any provision of this Incentive
Compensation Plan, intended to be so qualified, from the exemption provided by
Rule 16b-3.

 

7.10 Immediate Acceleration of Incentives.

 

(a) Notwithstanding any provision in this Incentive Compensation Plan to the
contrary or the normal terms of vesting under any award, (i) the restrictions on
all shares of Restricted Stock awarded shall lapse immediately and (ii) all
outstanding Stock Options will become exercisable immediately, if a Change in
Control (as defined below) occurs. For purposes of this Incentive Compensation
Plan, a “Change in Control” shall have occurred as of the first day that any one
or more of the following conditions shall have been satisfied:

 

(1) The acquisition by any Person of Beneficial Ownership of 20% or more of
either (i) the then outstanding shares of Common Stock of the Company, or
(ii) the combined voting power of the outstanding voting securities of the
Company entitled to vote generally in the selection of Directors; provided,
however, that for purposes of this subsection, the following transactions shall
not constitute a Change of Control: (A) any acquisition directly from the
Company through a public offering of shares of Common Stock of the Company,
(B) any acquisition by the Company, (C) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or (D) any acquisition by any corporation
pursuant to a transaction which complies with clauses (i), (ii) and (iii) of
subsection (3) below;

 

(2) The cessation, for any reason, of the individuals who constitute the
Company’s Board of Directors as of the date hereof (“Incumbent Board”) to
constitute at least a majority of the Company’s Board of Directors; provided,
however, that any individual becoming a Director following the date hereof whose
election, or nomination for election by the Company’s stockholders, was approved
by a vote of at least a majority of the Directors then comprising the Incumbent
Board shall be considered as though such individual was a member of the
Incumbent Board, but excluding, for this purpose, any such individual whose

 

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initial assumption of office occurs because of an actual or threatened election
contest with respect to the election or removal of Directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Company’s Board of Directors;

 

(3) The consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Company
(“Business Combination”) unless, following such Business Combination, (i) all or
substantially all of the individuals and entities who were the Beneficial
Owners, respectively, of the outstanding shares of Common Stock of the Company
and the outstanding voting securities of the Company immediately before such
Business Combination beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of Common Stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of Directors, as the case may be, of the Company
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership
immediately before such Business Combination of the outstanding shares of Common
Stock and the outstanding voting securities of the Company, as the case may be;
(ii) no party (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
before the Business Combination; and (iii) at least a majority of the members of
the board of directors of the corporation resulting from such Business
Combination were members of the Company’s Board of Directors at the time of the
execution of the initial agreement, or of the action of the Company’s Board of
Directors, providing for such Business Combination; or

 

(4) The approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.

 

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(5) Any other condition or event (i) that the Committee determines to be a
“Change in Control” within the meaning of this Section 7.10 and (ii) that is set
forth as a supplement to this Section 7.10 in the Option Agreement.

 

The term “Beneficial Owner” or “Beneficial Ownership”, as used in this
Section 7.10, has the meaning ascribed to such term in Rule 13d-3 of the General
Rules and Regulations under the Exchange Act. The term “Person”, as used in this
Section 7.10, shall have the meaning ascribed to such term in Section 3(a)(9) of
the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a
“group” as defined in Section 13(d) thereof.

 

(b) Notwithstanding any other provision of this Incentive Compensation Plan or
any Award Agreement provision, the provisions of this Section 7.10 may not be
terminated, amended, or modified on or after the date of a Change in Control to
affect adversely any award theretofore granted under the Incentive Compensation
Plan without the prior written consent of the Participant with respect to said
Participant’s outstanding awards.

 

7.11 Sale of Business Unit of Company.

 

The Committee, in connection with the sale of any subsidiary, affiliate,
division or other business unit of the Company, may within the Committee’s sole
and absolute discretion (1) cause any or all Stock Options granted hereunder to
Participants whose Stock Options or rights under Stock Options will be adversely
affected by such transaction (a) to become immediately exercisable, or (b) to
remain exercisable after such transaction for such period as the Committee deems
appropriate under the circumstances, or both (a) and (b), or (2) cause the
restrictions on any or all shares of Restricted Stock awarded hereunder to
Participants whose Restricted Stock will be adversely affected by such
transaction to lapse immediately. The provision of this Section 7.11 and the
actions of the Committee taken pursuant to this Section 7.11 shall be effective
upon action of the Committee alone without amendment to any Award Agreement or
the consent of any Participant.

 

7.12 Definition of Fair Market Value.

 

Except as otherwise determined by the Committee, the “Fair

 

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Market Value” of a share of Common Stock as of any date shall be equal to the
closing sale price of a share of Common Stock as reported on The National
Association of Securities Dealers’ New York Stock Exchange Composite Reporting
Tape (or if the Common Stock is not traded on The New York Stock Exchange, the
closing sale price on the exchange on which it is traded or as reported by an
applicable automated quotation system) (the “Composite Tape”), on the applicable
date or, if no sales of Common Stock are reported on such date, the closing sale
price of a share of Common Stock on the date the Common Stock was last reported
on the Composite Tape (or such other exchange or automated quotation system, if
applicable).

 

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