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Exhibit 4.2
ACCREDO HEALTH,
INCORPORATED
1999 LONG-TERM INCENTIVE
PLAN
ARTICLE I
PURPOSE
1.1. GENERAL . The
purpose of the Accredo Health, Incorporated 1999 Long-Term
Incentive Plan (the “Plan”) is to promote the success,
and enhance the value, of Accredo Health, Incorporated (the
“Corporation”), by linking the personal interests of
its employees, officers, consultants and directors to those of
Corporation stockholders and by providing such persons with an
incentive for outstanding performance. The Plan is further intended
to provide flexibility to the Corporation in its ability to
motivate, attract, and retain the services of employees, officers,
consultants and directors upon whose judgment, interest, and
special effort the successful conduct of the Corporation’s
operation is largely dependent. Accordingly, the Plan permits the
grant of incentive awards from time to time to selected employees,
officers, directors, and consultants; provided, however, to the
extent necessary to preserve the employee benefits plan exemption
under applicable state blue sky laws, no non-employee director or
consultant of the Corporation will be eligible to receive Awards
under the Plan until such time, if any, as the Corporation’s
common stock shall be traded on a national securities exchange or
on the Nasdaq National Market.
ARTICLE 2
EFFECTIVE
DATE
2.1. EFFECTIVE DATE .
The Plan shall be effective as of the date upon which it shall be
approved by the Board. However, the Plan shall be submitted to the
stockholders of the Corporation for approval within 12 months of
the Board’s approval thereof. No Incentive Stock Options
granted under the Plan may be exercised prior to approval of the
Plan by the stockholders and if the stockholders fail to approve
the Plan within 12 months of the Board’s approval thereof,
any Incentive Stock Options previously granted hereunder shall be
automatically converted to Non-Qualified Stock Options without any
further act. In the discretion of the Committee, Awards may be made
to Covered Employees which are intended to constitute qualified
performance-based compensation under Code Section 162(m). Any such
Awards shall be contingent upon the stockholders having approved
the Plan.
ARTICLE 3
DEFINITIONS
3.1. DEFINITIONS .
When a word or phrase appears in this Plan with the initial letter
capitalized, and the word or phrase does not commence a sentence,
the word or phrase shall generally be given the meaning ascribed to
it in this Section or in Section
1.1 unless a clearly different meaning
is required by the context. The following words and phrases shall
have the following meanings:
(a) “Award” means
any Option, Stock Appreciation Right, Restricted Stock Award,
Performance Unit Award, Dividend Equivalent Award, or Other
Stock-Based Award, or any other right or interest relating to Stock
or cash, granted to a Participant under the Plan.
(b) “Award
Agreement” means any written agreement, contract, or other
instrument or document evidencing an Award.
(c) “Board” means
the Board of Directors of the Corporation.
(d) “Change in
Control” means and includes each of the following:
(1) The acquisition by any
individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the 1934 Act) (a “Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
1934 Act) of 25% or more of the combined voting power of the then
outstanding voting securities of the Corporation entitled to vote
generally in the election of directors (the “Outstanding
Corporation Voting Securities”); provided, however, that for
purposes of this subsection (1), the following acquisitions shall
not constitute a Change of Control: (i) any acquisition by a Person
who is on the Effective Date the beneficial owner of 25% or more of
the Outstanding Corporation Voting Securities, (ii) any acquisition
directly from the Corporation, (iii) any acquisition by the
Corporation, (iv) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Corporation or any
corporation controlled by the Corporation, or (v) any acquisition
by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (3) of this definition;
or
(2) Individuals who, as of
the Effective Date, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual
becoming a director subsequent to the Effective Date whose
election, or nomination for election by the Corporation’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 were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result 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 Board;
or
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(3) Consummation of a
reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Corporation (a “Business Combination”), in each case,
unless, following such Business Combination, (i) all or
substantially all of the individuals and entities who were the
beneficial owners of the Outstanding Corporation Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of the combined voting power
of the then outstanding voting securities entitled to vote
generally in the election of directors of the corporation resulting
from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the
Corporation or all or substantially all of the Corporation’s
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately
prior to such Business Combination of the Outstanding Corporation
Voting Securities, and (ii) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit
plan (or related trust) of the Corporation or such corporation
resulting from such Business Combination) beneficially owns,
directly or indirectly, 25% or more of the combined voting power of
the then outstanding voting securities of such corporation except
to the extent that such ownership existed prior to 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 Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(4) Approval by the
stockholders of the Corporation of a complete liquidation or
dissolution of the Corporation.
(e) “Code” means
the Internal Revenue Code of 1986, as amended from time to
time.
(f) “Committee”
means the committee of the Board described in Article 4.
(g) “Corporation”
means Accredo Health, Incorporated, a Delaware
corporation.
(h) “Covered
Employee” means a covered employee as defined in Code Section
162(m)(3), provided that no employee shall be a Covered Employee
until the deduction limitation of Code Section 162(m) are
applicable to the Corporation and any reliance period under Code
Section 162(m) has expired, as described in Section 16.15
hereof.
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(i) “Disability”
shall mean any illness or other physical or mental condition of a
Participant that renders the Participant incapable of performing
his customary and usual duties for the Corporation, or any
medically determinable illness or other physical or mental
condition resulting from a bodily injury, disease or mental
disorder which, in the judgment of the Committee, is permanent and
continuous in nature. The Committee may require such medical or
other evidence as it deems necessary to judge the nature and
permanency of the Participant’s condition. Notwithstanding
the above, with respect to an Incentive Stock Option, Disability
shall mean Permanent and Total Disability as defined in Section
22(e)(3) of the Code.
(j) “Dividend
Equivalent” means a right granted to a Participant under
Article 11.
(k) “Effective
Date” has the meaning assigned such term in Section
2.1.
(l) “Fair Market
Value”, on any date, means (i) if the Stock is listed on a
securities exchange or is traded over the Nasdaq National Market,
the closing sales price on such exchange or over such system on
such date or, in the absence of reported sales on such date, the
closing sales price on the immediately preceding date on which
sales were reported, or (ii) if the Stock is not listed on a
securities exchange or traded over the Nasdaq National Market, the
mean between the bid and offered prices as quoted by Nasdaq for
such date, provided that if it is determined that the fair market
value is not properly reflected by such Nasdaq quotations, Fair
Market Value will be determined by such other method as the
Committee determines in good faith to be reasonable.
(m) “Incentive Stock
Option” means an Option that is intended to meet the
requirements of Section 422 of the Code or any successor provision
thereto.
(n) “Non-Qualified
Stock Option” means an Option that is not an Incentive Stock
Option.
(o) “Option”
means a right granted to a Participant under Article 7 of the Plan
to purchase Stock at a specified price during specified time
periods. An Option may be either an Incentive Stock Option or a
Non-Qualified Stock Option.
(p) “Other Stock-Based
Award” means a right, granted to a Participant under Article
12, that relates to or is valued by reference to Stock or other
Awards relating to Stock.
(q) “Parent”
means a corporation which owns or beneficially owns a majority of
the outstanding voting stock or voting power of the Corporation.
For Incentive Stock Options, the term shall have the same meaning
as set forth in Code Section 424(e).
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(r) “Participant”
means a person who, as an employee, officer, consultant or director
of the Corporation or any Subsidiary, has been granted an Award
under the Plan.
(s) “Performance
Unit” means a right granted to a Participant under Article 9,
to receive cash, Stock, or other Awards, the payment of which is
contingent upon achieving certain performance goals established by
the Committee.
(t) “Plan” means
the Accredo Health, Incorporated 1999 Long-Term Incentive Plan, as
amended from time to time.
(u) “Restricted Stock
Award” means Stock granted to a Participant under Article 10
that is subject to certain restrictions and to risk of
forfeiture.
(v) “Retirement”
means a Participant’s voluntary termination of employment
with the Corporation, Parent or Subsidiary after attaining age
55.
(w) “Stock” means
the $.01 par value common stock of the Corporation and such other
securities of the Corporation as may be substituted for Stock
pursuant to Article 14.
(x) “Stock Appreciation
Right” or “SAR” means a right granted to a
Participant under Article 8 to receive a payment equal to the
difference between the Fair Market Value of a share of Stock as of
the date of exercise of the SAR over the grant price of the SAR,
all as determined pursuant to Article 8.
(y) “Subsidiary”
means any corporation, limited liability company, partnership or
other entity of which a majority of the outstanding voting stock or
voting power is beneficially owned directly or indirectly by the
Corporation. For Incentive Stock Options, the term shall have the
meaning set forth in Code Section 424(f).
(z) “1933 Act”
means the Securities Act of 1933, as amended from time to
time.
(z) “1934 Act”
means the Securities Exchange Act of 1934, as amended from time to
time.
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ARTICLE 4
ADMINISTRATION
4.1. COMMITTEE . The
Plan shall be administered by the Compensation Committee of the
Board or, at the discretion of the Board from time to time, by the
Board. The Committee shall consist of two or more members of the
Board. It is intended that the directors appointed to serve on the
Committee shall be “non-employee directors” (within the
meaning of Rule 16b-3 promulgated under the 1934 Act) and
“outside directors” (within the meaning of Code Section
162(m) and the regulations thereunder) to the extent that Rule
16b-3 and, if necessary for relief from the limitation under Code
Section 162(m) and such relief is sought by the Corporation, Code
Section 162(m), respectively, are applicable. However, the mere
fact that a Committee member shall fail to qualify under either of
the foregoing requirements shall not invalidate any Award made by
the Committee which Award is otherwise validly made under the Plan.
The members of the Committee shall be appointed by, and may be
changed at any time and from time to time in the discretion of, the
Board. During any time that the Board is acting as administrator of
the Plan, it shall have all the powers of the Committee hereunder,
and any reference herein to the Committee (other than in this
Section 4.1) shall include the Board.
4.2. ACTION BY THE
COMMITTEE . For purposes of administering the Plan, the
following rules of procedure shall govern the Committee. A majority
of the Committee shall constitute a quorum. The acts of a majority
of the members present at any meeting at which a quorum is present,
and acts approved unanimously in writing by the members of the
Committee in lieu of a meeting, shall be deemed the acts of the
Committee. Each member of the Committee is entitled to, in good
faith, rely or act upon any report or other information furnished
to that member by any officer or other employee of the Corporation
or any Parent or Subsidiary, the Corporation’s independent
certified public accountants, or any executive compensation
consultant or other professional retained by the Corporation to
assist in the administration of the Plan.
4.3. AUTHORITY OF
COMMITTEE . The Committee has the exclusive power, authority
and discretion to:
(a) Designate
Participants;
(b) Determine the type or
types of Awards to be granted to each Participant;
(c) Determine the number of
Awards to be granted and the number of shares of Stock to which an
Award will relate;
(d) Determine the terms and
conditions of any Award granted under the Plan, including but not
limited to, the exercise price, grant price, or purchase price, any
restrictions or limitations on the Award, any schedule for lapse
of
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forfeiture restrictions or
restrictions on the exercisability of an Award, and accelerations
or waivers thereof, based in each case on such considerations as
the Committee in its sole discretion determines;
(e) Accelerate the vesting or
lapse of restrictions of any outstanding Award, based in each case
on such considerations as the Committee in its sole discretion
determines;
(f) Determine whether, to
what extent, and under what circumstances an Award may be settled
in, or the exercise price of an Award may be paid in, cash, Stock,
other Awards, or other property, or an Award may be canceled,
forfeited, or surrendered;
(g) Prescribe the form of
each Award Agreement, which need not be identical for each
Participant;
(h) Decide all other matters
that must be determined in connection with an Award;
(i) Establish, adopt or
revise any rules and regulations as it may deem necessary or
advisable to administer the Plan;
(j) Make all other decisions
and determinations that may be required under the Plan or as the
Committee deems necessary or advisable to administer the Plan;
and
(k) Amend the Plan or any
Award Agreement as provided herein.
4.4. DECISIONS BINDING
. The Committee’s interpretation of the Plan, any Awards
granted under the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan are final,
binding, and conclusive on all parties.
ARTICLE 5
SHARES SUBJECT TO THE
PLAN
5.1. NUMBER OF SHARES
. Subject to adjustment as provided in Section 14.1, the aggregate
number of shares of Stock reserved and available for Awards or
which may be used to provide a basis of measurement for or to
determine the value of an Award (such as with a Stock Appreciation
Right or Performance Unit Award) shall be 500,000, of which not
more than 10% may be granted as Awards of Restricted Stock or
unrestricted Stock Awards.
5.2. LAPSED AWARDS .
To the extent that an Award is canceled, terminates, expires or
lapses for any reason, any shares of Stock subject to the Award
will again be
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available for the grant of an Award
under the Plan and shares subject to SARs or other Awards settled
in cash will be available for the grant of an Award under the
Plan.
5.3. STOCK DISTRIBUTED
. Any Stock distributed pursuant to an Award may consist, in whole
or in part, of authorized and unissued Stock, treasury Stock or
Stock purchased on the open market.
5.4. LIMITATION ON
AWARDS . Notwithstanding any provision in the Plan to the
contrary (but subject to adjustment as provided in Section 14.1),
the maximum number of shares of Stock with respect to one or more
Options and/or SARs that may be granted during any one calendar
year under the Plan to any one Participant shall be 500,000. The
maximum fair market value (measured as of the date of grant) of any
Awards other than Options and SARs that may be received by any one
Participant (less any consideration paid by the Participant for
such Award) during any one calendar year under the Plan shall be
$2,000,000.
ARTICLE 6
ELIGIBILITY
6.1. GENERAL . Awards
may be granted only to individuals who are employees, officers,
consultants or directors of the Corporation or a Parent or
Subsidiary; provided, however, that to the extent necessary to
preserve the employee benefits plan exemption under applicable
state blue sky laws, no non-employee director or consultant of the
Corporation will be eligible to receive Awards under the Plan until
such time, if any, as the Corporation’s common stock shall be
traded on a national securities exchange or on the Nasdaq National
Market.
ARTICLE 7
STOCK
OPTIONS
7.1. GENERAL . The
Committee is authorized to grant Options to Participants on the
following terms and conditions:
(a) EXERCISE PRICE .
The exercise price per share of Stock under an Option shall be
determined by the Committee, provided that the exercise price for
any Option shall not be less than the Fair Market Value as of the
date of the grant.
(b) TIME AND CONDITIONS OF
EXERCISE . The Committee shall determine the time or times at
which an Option may be exercised in whole or in part. The Committee
also shall determine the performance or other conditions, if any,
that must be satisfied before all or part of an Option may be
exercised. The Committee may waive any exercise provisions at any
time in whole or in part based upon factors as the Committee may
determine in its sole discretion so that the Option becomes
exerciseable at an earlier date.
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(c) PAYMENT . The
Committee shall determine the methods by which the exercise price
of an Option may be paid, the form of payment, including, without
limitation, cash, shares of Stock, or other property (including
“cashless exercise” arrangements), and the methods by
which shares of Stock shall be delivered or deemed to be delivered
to Participants; provided that if shares of Stock surrendered in
payment of the exercise price were themselves acquired otherwise
than on the open
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