EXHIBIT 10.2
MENTOR CORPORATION
AMENDED AND RESTATED 2005
LONG-TERM INCENTIVE PLAN
1.
PURPOSE OF PLAN
The purpose of this Mentor
Corporation Amended and Restated 2005 Long-Term Incentive Plan
(this " Plan ") of Mentor Corporation, a Minnesota
corporation (the " Corporation "), is to promote the success
of the Corporation and to increase shareholder value by providing
an additional means through the grant of awards to attract,
motivate, retain and reward selected employees and other eligible
persons.
2.
ELIGIBILITY
The Administrator (as such term
is defined in Section 3.1) may grant awards under this Plan only to
those persons that the Administrator determines to be Eligible
Persons. An "Eligible Person" is any person who is either: (a) an
officer (whether or not a director) or employee of the Corporation
or one of its Subsidiaries; (b) a director of the Corporation or
one of its Subsidiaries; or (c) an individual consultant or advisor
who renders or has rendered bona fide services (other than services
in connection with the offering or sale of securities of the
Corporation or one of its Subsidiaries in a capital-raising
transaction or as a market maker or promoter of securities of the
Corporation or one of its Subsidiaries) to the Corporation or one
of its Subsidiaries and who is selected to participate in this Plan
by the Administrator; provided, however, that a person who is
otherwise an Eligible Person under clause (c) above may participate
in this Plan only if such participation would not adversely affect
either the Corporation's eligibility to use Form S-8 to register
under the Securities Act of 1933, as amended (the " Securities
Act "), the offering and sale of shares issuable under this
Plan by the Corporation or the Corporation's compliance with any
other applicable laws. An Eligible Person who has been granted an
award (a " participant ") may, if otherwise eligible, be
granted additional awards if the Administrator shall so determine.
As used herein, "Subsidiary" means any corporation or other entity
a majority of whose outstanding voting stock or voting power is
beneficially owned directly or indirectly by the Corporation; and
"Board" means the Board of Directors of the Corporation.
3.
PLAN ADMINISTRATION
3.1
The Administrator . This Plan shall be administered by and
all awards under this Plan shall be authorized by the
Administrator. The "Administrator" means the Board or one or more
committees appointed by the Board or another committee (within its
delegated authority) to administer all or certain aspects of this
Plan. Any such committee shall be comprised solely of one or more
directors or such number of directors as may be required under
applicable law. A committee may delegate some or all of its
authority to another committee so constituted. The Board or a
committee comprised solely of directors may also delegate, to the
extent permitted by applicable law, to one or more officers of the
Corporation, its powers under this Plan (a) to designate the
officers and employees of the Corporation and its Subsidiaries who
will receive grants of awards under this Plan, and (b) to determine
the number of shares subject to, and the other terms and conditions
of, such awards. The Board may delegate different levels of
authority to different committees with administrative and grant
authority under this Plan. Unless otherwise provided in the Bylaws
of the Corporation or the applicable charter of any Administrator:
(a) a majority of the members of the acting Administrator shall
constitute a quorum, and (b) the vote of a majority of the members
present assuming the presence of a quorum or the unanimous written
consent of the members of the Administrator shall constitute action
by the acting Administrator.
With
respect to awards intended to satisfy the requirements for
performance-based compensation under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the " Code "), this Plan
shall be administered by a committee consisting solely of two or
more outside directors (as this requirement is applied under
Section 162(m) of the Code); provided, however, that the failure to
satisfy such requirement shall not affect the validity of the
action of any committee otherwise duly authorized and acting in the
matter. Award grants, and transactions in or involving awards,
intended to be exempt under Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the " Exchange Act "),
must be duly and timely authorized by the Board or a committee
consisting solely of two or more non-employee directors (as this
requirement is applied under Rule 16b-3 promulgated under the
Exchange Act). To the extent required by any applicable listing
agency, this Plan shall be administered by a committee composed
entirely of independent directors (within the meaning of the
applicable listing agency).
3.2
Powers of the Administrator . Subject to the express
provisions of this Plan, the Administrator is authorized and
empowered to do all things necessary or desirable in connection
with the authorization of awards and the administration of this
Plan (in the case of a committee or delegation to one or more
officers, within the authority delegated to that committee or
person(s)), including, without limitation, the authority
to:
(a)
determine eligibility and, from among those persons determined to
be eligible, the particular Eligible Persons who will receive an
award under this Plan;
(b)
grant awards to Eligible Persons, determine the price at which
securities will be offered or awarded and the number of securities
to be offered or awarded to any of such persons, determine the
other specific terms and conditions of such awards consistent with
the express limits of this Plan, establish the installments (if
any) in which such awards shall become exercisable or shall vest
(which may include, without limitation, performance and/or
time-based schedules), or determine that no delayed exercisability
or vesting is required, establish any applicable performance
targets, and establish the events of termination or reversion of
such awards;
(c)
approve the forms of award agreements (which need not be identical
either as to type of award or among participants);
(d)
construe and interpret this Plan and any agreements defining the
rights and obligations of the Corporation, its Subsidiaries, and
participants under this Plan, further define the terms used in this
Plan, and prescribe, amend and rescind rules and regulations
relating to the administration of this Plan or the awards granted
under this Plan;
(e)
cancel, modify, or waive the Corporation's rights with respect to,
or modify, discontinue, suspend, or terminate any or all
outstanding awards, subject to any required consent under Section
8.6.5;
(f)
accelerate or extend the vesting or exercisability or extend the
term of any or all such outstanding awards (in the case of options,
within the maximum ten-year term of such awards) in such
circumstances as the Administrator may deem appropriate (including,
without limitation, in connection with a termination of employment
or services or other events of a personal nature) subject to any
required consent under Section 8.6.5;
(g)
adjust the number of shares of Common Stock subject to any award,
adjust the price of any or all outstanding awards or otherwise
change previously imposed terms and conditions, in such
circumstances as the Administrator may deem appropriate, in each
case subject to Sections 4 and 8.6, and provided that in no case
(except due to an adjustment contemplated by Section 7 or any
repricing that may be approved by shareholders) shall such an
adjustment constitute a repricing (by amendment, cancellation and
regrant, exchange or other means) of the per share exercise price
of any option;
(h)
determine the date of grant of an award, which may be a designated
date after but not before the date of the Administrator's action
(unless otherwise designated by the Administrator, the date of
grant of an award shall be the date upon which the Administrator
took the action granting an award);
(i)
determine whether, and the extent to which, adjustments are
required pursuant to Section 7 hereof and authorize the
termination, conversion, substitution or succession of awards upon
the occurrence of an event of the type described in Section
7;
(j)
acquire or settle (subject to Sections 7 and 8.6) rights under
awards in cash, stock of equivalent value, or other consideration;
and
(k)
determine the fair market value of the Common Stock or awards under
this Plan from time to time and/or the manner in which such value
will be determined.
3.3
Binding Determinations . Any action taken by, or inaction
of, the Corporation, any Subsidiary, or the Administrator relating
or pursuant to this Plan and within its authority hereunder or
under applicable law shall be within the absolute discretion of
that entity or body and shall be conclusive and binding upon all
persons. Neither the Board nor any Board committee, nor any member
thereof or person acting at the direction thereof, shall be liable
for any act, omission, interpretation, construction or
determination made in good faith in connection with this Plan (or
any award made under this Plan), and all such persons shall be
entitled to indemnification and reimbursement by the Corporation in
respect of any claim, loss, damage or expense (including, without
limitation, attorneys' fees) arising or resulting therefrom to the
fullest extent permitted by law and/or under any directors and
officers liability insurance coverage that may be in effect from
time to time.
3.4
Reliance on Experts . In making any determination or in
taking or not taking any action under this Plan, the Board or a
committee, as the case may be, may obtain and may rely upon the
advice of experts, including employees and professional advisors to
the Corporation. No director, officer or agent of the Corporation
or any of its Subsidiaries shall be liable for any such action or
determination taken or made or omitted in good faith.
3.5
Delegation . The Administrator may delegate ministerial,
non-discretionary functions to individuals who are officers or
employees of the Corporation or any of its Subsidiaries or to third
parties.
4.
SHARES OF COMMON STOCK SUBJECT TO THE PLAN; SHARE LIMITS
4.1
Shares Available . Subject to the provisions of Section 7.1,
the capital stock that may be delivered under this Plan shall be
shares of the Corporation's authorized but unissued Common Stock
and any shares of its Common Stock held as treasury shares. For
purposes of this Plan, "Common Stock" shall mean the common stock
of the Corporation and such other securities or property as may
become the subject of awards under this Plan, or may become subject
to such awards, pursuant to an adjustment made under Section
7.1.
4.2
Share Limits . The maximum number of shares of Common Stock
that may be delivered pursuant to awards granted to Eligible
Persons under this Plan is 10,100,000 shares (the " Share
Limit "). The following limits also apply with respect to
awards granted under this Plan:
(a)
The maximum number of shares of Common Stock that may be delivered
pursuant to options qualified as incentive stock options granted
under this Plan is 8,500,000 shares.
(b)
The maximum number of shares of Common Stock subject to options
that are granted during any fiscal year to any individual under
this Plan is 500,000 shares.
(c)
The maximum number of shares of Common Stock subject to all awards
that are granted during any fiscal year to any individual under
this Plan is 500,000 shares. This limit does not apply, however, to
shares delivered in respect of compensation earned but
deferred.
(d)
In no event will greater than ten percent (10%) of the total shares
of Common Stock available for award grant purposes under this Plan
be used for purposes of granting certain "Special Full-Value
Awards" referred to in Section 5.1.4.
(e)
Additional limits with respect to Performance-Based Awards are set
forth in Section 5.2.3.
(f)
In no event will greater than thirty-five percent (35%) of the
2,500,000 increase in the total shares of Common Stock available
for award grant purposes under this Plan effected pursuant to this
amendment and restatement of the Plan be used for purposes of
granting awards other than options and stock appreciation
rights.
Each of the foregoing numerical limits is
subject to adjustment as contemplated by Section 4.3, Section 7.1,
and Section 8.10.
4.3
Awards Settled in Cash, Reissue of Awards and Shares . To
the extent that an award is settled in cash or a form other than
shares of Common Stock, the shares that would have been delivered
had there been no such cash or other settlement shall not be
counted against the shares available for issuance under this Plan.
In the event that shares of Common Stock are delivered in respect
of a dividend equivalent right, only the actual number of shares
delivered with respect to the award shall be counted against the
share limits of this Plan. To the extent that shares of Common
Stock are delivered pursuant to the exercise of a stock option, the
number of underlying shares as to which the exercise related shall
be counted against the applicable share limits under Section 4.2,
as opposed to only counting the shares actually issued. Shares that
are subject to or underlie awards which expire or for any reason
are cancelled or terminated, are forfeited, fail to vest, or for
any other reason are not paid or delivered under this Plan shall
again be available for subsequent awards under this Plan. Refer to
Section 8.10 for application of the foregoing share limits with
respect to assumed awards. The foregoing adjustments to the share
limits of this Plan are subject to any applicable limitations under
Section 162(m) of the Code with respect to awards intended as
performance-based compensation thereunder.
4.4
Reservation of Shares; No Fractional Shares; Minimum Issue .
The Corporation shall at all times reserve a number of shares of
Common Stock sufficient to cover the Corporation's obligations and
contingent obligations to deliver shares with respect to awards
then outstanding under this Plan (exclusive of any dividend
equivalent obligations to the extent the Corporation has the right
to settle such rights in cash). No fractional shares shall be
delivered under this Plan. The Administrator may pay cash in lieu
of any fractional shares in settlements of awards under this Plan.
No fewer than 100 shares may be purchased on exercise of any award
(or, in the case of stock purchase rights, no fewer than 100 rights
may be exercised at any one time) unless the total number purchased
or exercised is the total number at the time available for purchase
or exercise under the award.
5.
AWARDS
5.1
Type and Form of Awards . The Administrator shall determine
the type or types of award(s) to be made to each selected Eligible
Person. Awards may be granted singly, in combination or in tandem.
Awards also may be made in combination or in tandem with, in
replacement of, as alternatives to, or as the payment form for
grants or rights under any other employee or compensation plan of
the Corporation or one of its Subsidiaries. The types of awards
that may be granted under this Plan are:
5.1.1
Stock Options . A stock option is the grant of a right to
purchase a specified number of shares of Common Stock during a
specified period as determined by the Administrator. An option may
be intended as an incentive stock option within the meaning of
Section 422 of the Code (an " ISO ") or a nonqualified stock
option (an option not intended to be an ISO). The award agreement
for an option will indicate if the option is intended as an ISO;
otherwise it will be deemed to be a nonqualified stock option. The
maximum term of each option (ISO or nonqualified) shall be ten (10)
years. The per share exercise price for each option shall be not
less than 100% of the fair market value of a share of Common Stock
on the date of grant of the option, except in the case of a stock
option granted retroactively in tandem with or as a substitution
for another award, the per share exercise price may be no lower
than the fair market value of a share of Common Stock on the date
such other award was granted (to the extent consistent with
Sections 422 and 424 of the Code in the case of options intended as
incentive stock options). When an option is exercised, the exercise
price for the shares to be purchased shall be paid in full in cash
or such other method permitted by the Administrator consistent with
Section 5.5.
5.1.2
Additional Rules Applicable to ISOs . To the extent that the
aggregate fair market value (determined at the time of grant of the
applicable option) of stock with respect to which ISOs first become
exercisable by a participant in any calendar year exceeds $100,000,
taking into account both Common Stock subject to ISOs under this
Plan and stock subject to ISOs under all other plans of the
Corporation or one of its Subsidiaries (or any parent or
predecessor corporation to the extent required by and within the
meaning of Section 422 of the Code and the regulations promulgated
thereunder), such options shall be treated as nonqualified stock
options. In reducing the number of options treated as ISOs to meet
the $100,000 limit, the most recently granted options shall be
reduced first. To the extent a reduction of simultaneously granted
options is necessary to meet the $100,000 limit, the Administrator
may, in the manner and to the extent permitted by law, designate
which shares of Common Stock are to be treated as shares acquired
pursuant to the exercise of an ISO. ISOs may only be granted to
employees of the Corporation or one of its subsidiaries (for this
purpose, the term "subsidiary" is used as defined in Section 424(f)
of the Code, which generally requires an unbroken chain of
ownership of at least 50% of the total combined voting power of all
classes of stock of each subsidiary in the chain beginning with the
Corporation and ending with the subsidiary in question). There
shall be imposed in any award agreement relating to ISOs such other
terms and conditions as from time to time are required in order
that the option be an "incentive stock option" as that term is
defined in Section 422 of the Code. No ISO may be granted to any
person who, at the time the option is granted, owns (or is deemed
to own under Section 424(d) of the Code) shares of outstanding
Common Stock possessing more than 10% of the total combined voting
power of all classes of stock of the Corporation, unless the
exercise price of such option is at least 110% of the fair market
value of the stock subject to the option and such option by its
terms is not exercisable after the expiration of five years from
the date such option is granted.
5.1.3
Other Awards . The other types of awards that may be granted
under this Plan include: (a) stock bonuses, restricted stock,
performance stock, stock units, phantom stock, dividend
equivalents, or similar rights to purchase or acquire shares,
whether at a fixed or variable price or ratio related to the Common
Stock, upon the passage of time, the occurrence of one or more
events, or the satisfaction of performance criteria or other
conditions, or any combination thereof; (b) any similar securities
with a value derived from the value of or related to the Common
Stock and/or returns thereon; or (c) cash awards granted consistent
with Section 5.2 below.
5.1.4
Minimum Vesting Requirements . Except for any accelerated
vesting required or permitted pursuant to Section 7 and except as
otherwise provided in the following provisions of this Section
5.1.4, and subject to such additional vesting requirements or
conditions as the Administrator may establish with respect to the
award, each award granted under this Plan that is a Full-Value
Award (as defined below) and payable in shares of Common Stock
shall be subject to the following minimum vesting requirements: (a)
if the award includes a performance-based vesting condition, the
award shall not vest earlier than the first anniversary of the date
of grant of the award and vesting shall occur only if the award
holder is employed by, a director of, or otherwise providing
services to the Corporation or one of its Subsidiaries on such
vesting date; and (b) if the award does not include a
performance-based vesting condition, the award shall not vest more
rapidly than in monthly installments over the three-year period
immediately following the date of grant of the award and vesting of
any vesting installment of the award shall occur only if the award
holder is employed by, a director of, or otherwise providing
services to the Corporation or one of its Subsidiaries on the date
such installment is scheduled to vest; provided that the
Administrator may accelerate or provide in the applicable award
agreement for the accelerated vesting of any Full-Value Award in
connection with (i) a change in control of the award holder's
employer (or a parent thereof) or of the reportable segment of the
Corporation that employs the award holder, (ii) subject to the
provisions of Section 7.2, the termination of the award holder's
employment (but not including a termination of employment by the
award holder's employer for cause), or (iii) as consideration or
partial consideration for a release by the award holder of pending
or threatened claims against the Corporation, the award holder's
employer, or any of their respective officers, directors or other
affiliates (regardless of whether the release is given in
connection with a termination of employment by the award holder's
employer for cause or other circumstances). The Administrator may,
however, accelerate or provide in the applicable award agreement
for the accelerated vesting of any Full-Value Award in
circumstances not contemplated by the preceding sentence, and/or
provide for a vesting schedule that is shorter than the minimum
schedule contemplated by the preceding sentence, in such
circumstances as the Administrator may deem appropriate; provided,
however, that the portion of any such Full-Value Award that vests
earlier than the minimum vesting dates that would be applicable
pursuant to the minimum vesting requirements of the preceding
sentence (or, as to any accelerated vesting, provides for
accelerated vesting other than in the circumstances contemplated by
the preceding sentence) shall count against the applicable share
limits of Section 4.2 as a Special Full-Value Award. For
purposes of this Plan, a " Full-Value Award " means any
award under this Plan that is neither: (1) a delivery of shares in
respect of compensation earned but deferred nor (2) a stock
option.
5.2
Section 162(m) Performance-Based Awards . Without limiting
the generality of the foregoing, any of the types of awards listed
in Section 5.1.3 above may be, and options granted with an exercise
price not less than the fair market value of a share of Common
Stock at the date of grant (" Qualifying Options ")
typically will be, granted as awards intended to satisfy the
requirements for "performance-based compensation" within the
meaning of Section 162(m) of the Code (" Performance-Based
Awards "). The grant, vesting, exercisability or payment of
Performance-Based Awards may depend (or, in the case of Qualifying
Options, may also depend) on the degree of achievement of one or
more performance goals relative to a pre-established targeted level
or level using one or more of the Business Criteria set forth below
(on an absolute or relative basis) for the Corporation on a
consolidated basis or for one or more of the Corporation's
subsidiaries, segments, divisions or business units, or any
combination of the foregoing. Any Qualifying Option shall be
subject only to the requirements of Sections 5.2.1 and 5.2.3 in
order for such award to satisfy the requirements for
"performance-based compensation" under Section 162(m) of the Code.
Any other Performance-Based Award shall be subject to all of the
following provisions of this Section 5.2.
5.2.1
Class; Administrator . The eligible class of persons for
Performance-Based Awards under this Section 5.2 shall be officers
and employees of the Corporation or one of its Subsidiaries. The
Administrator approving Performance-Based Awards or making any
certification required pursuant to Section 5.2.4 must be
constituted as provided in Section 3.1 for awards that are intended
as performance-based compensation under Section 162(m) of the
Code.
5.2.2
Performance Goals . The specific performance goals for
Performance-Based Awards (other than Qualifying Options) shall be,
on an absolute or relative basis, established based on one or more
of the following business criteria (" Business Criteria ")
as selected by the Administrator in its sole discretion: earnings
per share, cash flow (which means cash and cash equivalents derived
from either net cash flow from operations or net cash flow from
operations, financing and investing activities), total shareholder
return, gross revenue, revenue growth, operating income (before or
after taxes), net earnings (before or after interest, taxes,
depreciation and/or amortization), return on equity or on assets or
on net investment, cost containment or reduction, or any
combination thereof. These terms are used as applied under
generally accepted accounting principles or in the financial
reporting of the Corporation or of its Subsidiaries. To qualify
awards as performance-based under Section 162(m), the applicable
Business Criterion (or Business Criteria, as the case may be) and
specific performance goal or goals (" targets ") must be
established and approved by the Administrator during the first 90
days of the performance period (and, in the case of performance
periods of less than one year, in no event after 25% or more of the
performance period has elapsed) and while performance relating to
such target(s) remains substantially uncertain within the meaning
of Section 162(m) of the Code. Performance targets shall be
adjusted to mitigate the unbudgeted impact of material, unusual or
nonrecurring gains and losses, accounting changes or other
extraordinary events not foreseen at the time the targets were set
unless the Administrator provides otherwise at the time of
establishing the targets. The applicable performance measurement
period may not be less than three months nor more than 10
years.
5.2.3
Form of Payment; Maximum Performance-Based Award . Grants or
awards under this Section 5.2 may be paid in cash or shares of
Common Stock or any combination thereof. Grants of Qualifying
Options to any one participant in any one fiscal year shall be
subject to the limit set forth in Section 4.2(b). The maximum
number of shares of Common Stock which may be delivered pursuant to
Performance-Based Awards (other than Qualifying Options and other
than cash awards covered by the following sentence) that are
granted to any one participant in any one fiscal year shall not
exceed 100,000 shares, either individually or in the aggregate,
subject to adjustment as provided in Section 7.1. In addition, the
aggregate amount of compensation to be paid to any one participant
in respect of all Performance-Based Awards payable only in cash and
not related to shares of Common Stock and granted to that
participant in any one fiscal year shall not exceed $1,000,000.
Awards that are cancelled during the year shall be counted against
these limits to the extent permitted by Section 162(m) of the
Code.
5.2.4
Certification of Payment . Before any Performance-Based
Award under this Section 5.2 (other than Qualifying Options) is
paid and to the extent required to qualify the award as
performance-based compensation within the meaning of Section 162(m)
of the Code, the Administrator must certify in writing that the
performance target(s) and any other material terms of the
Performance-Based Award were in fact timely satisfied.
5.2.5
Reservation of Discretion . The Administrator will have the
discretion to determine the restrictions or other limitations of
the individual awards grant
