**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 andadoption 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 ofMay 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 committeeappointed 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 pursuantto the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any successor provision. 

 

1 

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 IncentiveCompensation Plan; 

 

(b) interpret and construeany 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, insuch 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 contemporaneouslygranted) 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 andprovisions 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 takeall other actions as it deems necessary or desirable for the implementation and administration of this Incentive Compensation Plan. 

 

2 

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

 

3.PARTICIPATION 

 

Subject to the terms and conditions of thisIncentive 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 INCENTIVECOMPENSATION 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 awardunder 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. 

 

3 

(b) In the event that shares of Common Stock are delivered under this IncentiveCompensation 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 reacquiredshares 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 beavailable 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) shareswhich 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 inSection 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 sharesof 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 adjustedby the Committee, in its sole discretion, to preserve the value of benefits awarded or to be awarded to Participants under this Incentive Compensation Plan. 

 

4 

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 ofCommon 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 designatedas 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 thetotal 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 Committeedesignates such Stock Option as an “Incentive Stock Option”. 

 

5.2 Manner of Exercise. 

 

A Stock Option may beexercised, 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 ofCommon 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 bedetermined 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, thatthe 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. 

 

5 

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 electto 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 tobe 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 ofthe 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 asdetermined 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 dateshall 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 theCommittee 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 vestimmediately at the end of such 20th day. 

 

6 

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 “RestrictedStock” 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 theextent 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 theterms 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, withoutlimitation, 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 fora 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 employmentduring any period in which such shares are subject to restrictions; and 

 

7 

(d) a prohibition against employment of the holder of such Restricted Stock by anycompetitor 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 Committeeshall specify. 

 

6.3 Registration of Shares. 

 

Shares of Restricted Stock awarded pursuant to this Incentive CompensationPlan 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 powerendorsed 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 RestrictedStock 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 otherwiseprovided 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 sameterms 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 

 

8 

Restricted Stock are subject to forfeiture or restrictions on transfer, such shares will be delivered free of allrestrictions 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 dateof 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 corporationof Caremark International Inc. 

 

7.2 Duration. 

 

This Incentive Compensation Plan shall remain in force and effect until allawards 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 untilall 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 theCaremark 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 

 

9 

required to recognize any attempted assignment of such rights by any Participant. During aParticipant’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 duringhis or her lifetime only by such Participant. 

 

(2) NonqualifiedStock 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 theCommon 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 suchParticipant 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 whichsuch 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 theCommittee, 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 anddistribution. 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, theterm “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 

 

10 

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 thenonqualified 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 asprovided 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 theCompany 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 permanentdisability. 

 

(b) Except as otherwise providedin 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 theSecondary 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) theexpiration 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

 

11 

means the Company, subsidiary or an affiliate having cause to terminate a Participant’s status as anemployee, 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 failureamounts 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 anaffiliate, 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 originalterm 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 wouldviolate 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 awritten 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 of1933. 

 

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

 

12 

conditions and limitations to any award under this Incentive Compensation Plan that it deems necessary ordesirable 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 issuablepursuant 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 connectionwith, 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 suchrestrictions 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 IncentiveCompensation 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 CompensationPlan, 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 tosurrender 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 Planwill 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 

 

13 

the Company or any right or claim to any benefit under this Incentive Compensation Plan unless such right or claim hasspecifically 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 untilshares of Common Stock are registered in the name of the Participant. 

 

7.8 Deferral Permitted. 

 

Payment of cash to aParticipant 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 theaward. 

 

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, agreementor 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 Participantswith respect to awards previously made under this Incentive Compensation Plan without the consent of the holder thereof; or 

 

14 

(c) make any change that would disqualify any provision of this Incentive CompensationPlan, 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 lapseimmediately 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 asof 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 votingsecurities 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 fromthe 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 anycorporation 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 Boardof 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, ornomination 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, butexcluding, for this purpose, any such individual whose 

 

15 

initial assumption of office occurs because of an actual or threatened election contest with respect to the election orremoval 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 ofthe 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 ofthe 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 combinedvoting 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 aresult 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 BusinessCombination 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 (orrelated 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 suchBusiness 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 ofthe 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 ofDirectors, providing for such Business Combination; or 

 

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

 

16 

(5) Any other condition or event (i) that the Committee determines to be a “Change in Control” within themeaning 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 inRule 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 Sections13(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 maynot 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 saidParticipant’s outstanding awards. 

 

7.11 Sale of BusinessUnit of Company. 

 

The Committee, in connection with the saleof 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 underStock 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 thisSection 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 

 

17 

Market Value” of a share of Common Stock as of any date shall be equal to the closing sale price of a share ofCommon 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 whichit 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 thedate the Common Stock was last reported on the Composite Tape (or such other exchange or automated quotation system, if applicable). 

 

18