SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
AMENDMENT NO. 2
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by
14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Under ss. 240.14(a)-12
VISX, INCORPORATED
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
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|_| Fee paid previously by written preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
[VISX LOGO]
VISX, Incorporated
3400 Central Expressway
Santa Clara, California 95051-0703
(408) 733-2020
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To our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
VISX, Incorporated to be held at [12:00] p.m., local time, on May[23], 2003, at
VISX's principal executive offices located at 3400 Central Expressway, Santa
Clara, California 95051. The Notice of and Proxy Statement for the 2003 Annual
Meeting of Stockholders follow. The 2003 Annual Report is enclosed.
At the Annual Meeting, stockholders will elect seven persons to serve as
directors until the next Annual Meeting and until their successors have been
elected and qualified (Item 1 on your Proxy). The Proxy Statement contains
information regarding the Company's nominees for election to the Board of
Directors. Stockholders will also vote to approve an amendment to the 1995
Director Option Plan (Item 2 on your Proxy) and also vote to approve an
amendment to the 2000 Stock Plan (Item 3 on your Proxy) Stockholders will also
vote to ratify the Audit Committee's appointment of KPMG LLP as the Company's
independent public accountants for the year ending December 31, 2003 (Item 4 on
your Proxy). Your Board of Directors recommends that you vote FOR the Company's
slate of nominees named in this Proxy Statement and all 3 proposals.
Your vote is important. Whether or not you plan to attend the Annual
Meeting, we request that you complete, date, sign and return the enclosed gold
proxy card promptly in the enclosed pre-addressed envelope. No postage is
necessary if you mail your proxy in the United States. You may revoke your proxy
at any time prior to the Annual Meeting.
If you attend the Annual Meeting and wish to change your proxy vote, you
may do so automatically by voting in person at the Annual Meeting. For
assistance in voting your shares, please call MacKenzie Partners at (800)
322-2285 or (212) 929-5500 (Call Collect).
As discussed under the caption "Other Matters--Stockholder Solicitation" in
the enclosed Proxy Statement, a group affiliated with Carl C. Icahn has provided
notice to the Company of its intention to nominate an employee of an Icahn
affiliate for election as a director at the Annual Meeting. In the event that
you receive proxy materials from Mr. Icahn and his affiliates, please do not
sign or return the Icahn group's proxy card.
We appreciate your continued support and interest in VISX, Incorporated.
On Behalf of your Board of Directors
Sincerely,
Elizabeth H. Davila
Chairman of the Board, President
and Chief Executive Officer
Santa Clara, California
April , 2003
[VISX LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May [23], 2003
To the Stockholders:
The Annual Meeting of Stockholders of VISX, Incorporated (the "Company")
will be held on May [23], 2003 at [12:00] p.m., local time, at the principal
executive offices of the Company, located at 3400 Central Expressway, Santa
Clara, California 95051 for the following purposes:
1. To elect seven directors to serve until the next Annual Meeting and until
their successors have been elected and qualified;
2. To approve an amendment to the Company's 1995 Director Option Plan;
3. To approve an amendment to the Company's 2000 Stock Plan;
4. To ratify the appointment of KPMG LLP as the Company's independent auditors
for the year ending December 31, 2003; and
To act upon such other matters as may properly come before the meeting or any
adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. Only stockholders of record at the close of
business on April 1, 2003 are entitled to notice of, and to attend and vote at,
the Annual Meeting and at any postponement or adjournment thereof. A list of
stockholders entitled to vote at the Annual Meeting will be available for
inspection at the offices of the Company located at 3400 Central Expressway,
Santa Clara, California 95051.
For the Board of Directors
John F. Runkel, Jr.
Secretary
Santa Clara, California
April , 2003
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YOUR VOTE IS IMPORTANT
It is important that all stockholders be represented at the Annual Meeting.
Therefore, in order to assure your representation whether or not you plan to
attend the meeting, please complete, date, sign, and return the enclosed gold
proxy card promptly in the accompanying reply envelope. No postage is necessary
if mailed in the United States. You may revoke your proxy at any time prior to
the Annual Meeting. If you attend the Annual Meeting and wish to change your
proxy vote, you may do so automatically by voting in person at the Annual
Meeting.
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VISX, INCORPORATED
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PROXY STATEMENT
2003 ANNUAL MEETING OF STOCKHOLDERS
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INFORMATION CONCERNING VOTING AND PROXY SOLICITATION
General
These proxy materials are furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of VISX, Incorporated (the
"Company") for the Annual Meeting of Stockholders to be held on May [23], 2003
at [12:00] p.m., local time, and at any adjournment or postponement of the
Annual Meeting. The Annual Meeting will be held at the principal executive
offices of the Company, located at 3400 Central Expressway, Santa Clara,
California 95051. The telephone number at the meeting location is (408)
733-2020. This Proxy Statement, Notice of Annual Meeting and the accompanying
gold proxy card will be mailed to stockholders on or about April [ ], 2003.
A copy of the Company's Annual Report for the year ended December 31, 2002,
including financial statements, accompanies this Proxy Statement. The Annual
Report is not to be regarded as proxy soliciting material or as a communication
by means of which any solicitation is to be made.
The specific proposals to be considered and acted upon at the Annual
Meeting are summarized in the accompanying Notice of Annual Meeting of
Stockholders. Each proposal is described in more detail in this Proxy Statement.
Record Date; Shares Outstanding
The Company's Common Stock is the only class of security entitled to vote
at the Annual Meeting. Only stockholders of record at the close of business on
April 1, 2003 (the "Record Date") will be entitled to vote on all matters to
come before the meeting. Each outstanding share of Common Stock entitles its
holder to cast one vote for each matter to be voted upon. As of April 1, 2003
there were approximately 51,350,833 shares of Common Stock outstanding and
entitled to vote at the Annual Meeting.
Quorum and Vote Required
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the Inspector of Elections, EquiServe, L.P. (the "Inspector"), the Company's
Transfer Agent. The Inspector will also determine whether or not a quorum is
present. The presence at the Annual Meeting, in person or by proxy, of the
holders of a majority of the shares of Common Stock outstanding on the Record
Date will constitute a quorum. All proxies representing shares that are entitled
to vote at the meeting, including abstentions and broker non-votes, will be
counted toward establishing a quorum.
Directors will be elected by a plurality vote. The seven nominees for
director receiving the highest number of affirmative votes of the shares
entitled to be voted for them shall be elected as directors. Broker non-votes,
if any, will be disregarded and will have no effect on the outcome of such vote.
With respect to proposals two through four, the affirmative vote of a
majority of the shares of Common Stock of the Company represented in person or
by proxy at the Annual Meeting and entitled to vote will be required to approve
such proposals. With respect proposals two through four, abstentions from voting
will have the same effect as voting against such matter and broker non-votes, if
any, will be disregarded and have no effect on the outcome of such vote.
Whether or not you are able to attend the Annual Meeting, you are urged to
complete and return the enclosed gold proxy card and return it in the enclosed
self-addressed, prepaid envelope. All valid proxy cards received prior to the
meeting will be voted. If you specify a choice with respect to any item by
marking the appropriate box on the proxy, the shares will be voted in accordance
with that specification. If no specification is made, the shares will be voted
FOR Proposals 1, 2, 3, and 4 and, in the proxy holders' discretion, as to other
matters that may properly come before the Annual Meeting.
Revocability of Proxies
You may revoke or change your proxy at any time before the Annual Meeting.
To do this, send a written notice of revocation or another signed proxy with a
later date to the Secretary of the Company, John F. Runkel, Jr., at the
Company's principal executive offices located at 3400 Central Expressway, Santa
Clara, California 95051-0703, by 8:00 a.m., local time, on May [23], 2003. In
addition, you may automatically change your proxy vote by voting in person at
the Annual Meeting.
Solicitation
Proxies are being solicited by and on behalf of the Company's Board of
Directors. The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement. The Company
will also reimburse brokerage firms and other persons representing beneficial
owners of shares for their expense in forwarding solicitation material to such
beneficial owners. The Company has retained MacKenzie Partners, Inc., 105
Madison Avenue, New York, NY 10016, to assist the Company in the solicitation of
proxies for a fee of [$25,000], plus reimbursement of reasonable out-of-pocket
expenses. The Company anticipates that if the Icahn group proceeds with a
contested solicitation, expenses in excess of those normally paid would be at
least [$300,000], of which less than [$10,000] has been spent to date. MacKenzie
Partners will employ approximately [75] people to solicit the Company's
stockholders. In addition, directors, officers, and other employees of the
Company may solicit proxies without additional compensation therefor. The
methods by which MacKenzie Partners and the directors, officers and other
employees of the Company may solicit proxies are by mail, telephone, telegram,
facsimile, other electronic communication, or personal communications.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Nominees
A board of seven directors is to be elected at the Annual Meeting.
Currently the Board of Directors is comprised of the seven nominees. Unless
otherwise instructed, the proxy holder will vote the proxies received for the
Company's seven nominees named below. If any nominee of the Company is unable or
declines to serve as a director at the time of the Annual Meeting, the proxies
will be voted for any substitute nominee designated by the current Board of
Directors to fill the vacancy. The Company does not expect that any nominee
listed below will be unable or will decline to serve as a director. The term of
office of each person elected as a director will continue until the next Annual
Meeting of Stockholders or until his or her successor has been elected and
qualified.
The names of the nominees, and certain information about them, are set
forth below:
Elizabeth H. Davila Director Since 1995
Ms. Davila, 58, has served as Chairman of the Board of Directors since May
2001, President and Chief Executive Officer of the Company since February 2001,
President and Chief Operating Officer from February 1999 to February 2001,
Executive Vice President and Chief Operating Officer from May 1995 to March
1999, and as a director since December 1995. From 1977 to 1994, Ms. Davila held
senior management positions with Syntex Corporation in its medical device,
medical diagnostics, and pharmaceutical divisions. Ms. Davila serves on the
Board of Directors of Nugen Technologies, Inc. She holds M.S. in Chemistry from
the University of Notre Dame and an M.B.A. from Stanford University.
Laureen De Buono Director Since 2003
Ms. De Buono, 45, has been a director of the Company since March 2003. From
September 2001 to March 2003, she served as Executive Vice President and Chief
Financial Officer of Critical Path. She acted as a management and financial
consultant from November 2000 to September 2001 for various public and private
companies. From November 1999 to October 2000, she served as Chief Financial and
Operating Officer of More.com. From June 1998 to October 1999, she served as
Executive Vice President, Chief Operating Officer and Chief Financial Officer of
Resound Corporation. From 1992 to 1998, she held several executive and corporate
level positions at Nellcor Puritan Bennett, and served as Division and Corporate
Counsel of the Clorox Company from 1987 to 1992. Ms. De Buono currently serves
as a director of INVIVO Corporation. She holds a J.D. from New York University,
an M.A. from Stanford University, and a B.A. from Duke University.
Glendon E. French Director Since 1995
Mr. French, 69, has been a director of the Company since May 1995. He
served as Chairman and Chief Executive Officer of Imagyn Medical, Inc. from
February 1992 until his retirement as Chief Executive Officer in December 1994.
He continued to serve as Chairman of Imagyn until April 1995. From 1989 until he
joined Imagyn in February 1992, Mr. French was Chairman, Chief Executive Officer
and a director of Applied Immune Sciences, Inc. From 1982 to 1988, Mr. French
was President of the Health and Education Services Sector of ARA Services, Inc.,
and from 1972 to 1982, he was President of American Critical Care (formerly a
division of American Hospital Supply Corp., now known as Dupont Critical Care).
John W. Galiardo Director Since 1996
Mr. Galiardo, 69, has been a director of the Company since May 1996. He
served as Vice Chairman of the Board of Directors of Becton Dickinson & Company
from 1994 until his retirement in December 1999. Prior to 1994, he served as
Vice President and General Counsel of Becton Dickinson. Mr. Galiardo joined
Becton Dickinson in 1977 and was responsible for the Law and Patent Departments,
Medical Affairs, Corporate Regulatory and Quality Affairs, the Environment and
Safety Departments, and Government, Investor, and Public Affairs. Prior to
joining Becton Dickinson, Mr. Galiardo was Assistant General Counsel of E.R.
Squibb & Sons, and before that he was associated with the law firm of Dewey,
Ballantine, Bushby, Palmer & Wood in New York City. Mr. Galiardo is the past
Chairman of the Health Industry Manufacturers Association. He serves on the
Board of Directors of MedSource Technologies, Inc.
Jay T. Holmes Director Since 1999
Mr. Holmes, 60, has been a director of the Company since March 1999. He has
been an attorney and business consultant since mid-1996. From 1981 until
mid-1996, Mr. Holmes held several senior management positions at Bausch & Lomb
Incorporated, the most recent being Executive Vice President and Chief
Administrative Officer from 1995 to 1996 and Senior Vice President and Chief
Administrative Officer from 1993 to 1995. From 1983 to 1993, Mr. Holmes was
Senior Vice President, Corporate Affairs, and from 1981 to 1983 Vice President
and General Counsel at Bausch & Lomb. Mr. Holmes was a member of the Board of
Directors of Bausch & Lomb from 1986 until 1996. Mr. Holmes also serves on the
Advisory Board of Directors of Rochester Energy Group.
Gary S. Petersmeyer Director Since 2001
Mr. Petersmeyer, 56, has been a director of the Company since December
2001. From October 2001 to January 2002, he acted as a consultant to Pherin
Pharmacueticals Inc., where he previously served as President, Chief Operating
Officer, and director from August 2000 to October 2001. From September 1999 to
August 2000 he acted as a consultant to several companies, including Inamed
Corp, which was acquired by Collagen Corporation. From 1997 to 1999, Mr.
Petersmeyer served as President, Chief Executive Officer and director and from
1995 to 1997 as Chief Operating Officer and director of Collagen Aesthetics Inc
and Collagen Corporation. From 1990 to 1995, Mr. Petersmeyer held several senior
management positions at Syntex Corporation, including Vice President of Managed
Health Care. Mr. Petersmeyer served as President, Chief Executive Officer, and
director of Beta Phase Inc. from 1986 to 1990. From 1982 to 1986, Mr.
Petersmeyer served as President of the Optics Division of CooperVision and as
the General Manager of its Ophthalmic Products Division. From 1976 to 1982, Mr.
Petersmeyer held a series of positions in corporate development, market
research, and marketing for Syntex Corporation. Mr. Petersmeyer also serves as
an advisor to Eunoe Corporation where he served as interim CEO in the fall of
2002, as an advisor to Roxro Pharmaceuticals Inc., and as Chairman of the Board
for the Positive Coaching Alliance formed originally at Stanford University.
Richard B. Sayford Director Since 1995
Mr. Sayford, 72, has been a director of the Company since May 1995. He has
been President of Strategic Enterprises, Inc., a private business consulting
firm specializing in providing services to high technology and venture firms,
since 1979. He is a founding investor of MCI Communications Co., and served as a
member of the Board of Directors of MCI from 1980 until 1998. He is Chairman of
the Board of Directors of HCA -- HealthOne, L.L.C. Mr. Sayford is former
President of Amdahl International, Ltd. and Corporate Vice President of Amdahl
Corporation and he previously held various management positions with IBM
Corporation.
Vote Required and Board of Directors' Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED IN THIS
PROXY STATEMENT. The seven nominees receiving the highest number of affirmative
votes of the shares of Common Stock of the Company present or represented and
entitled to be voted for them shall be elected as directors. Votes withheld from
any director will be counted for purposes of determining the presence or absence
of a quorum for the transaction of business at the meeting, but have no other
legal effect upon election of directors under Delaware law.
FURTHER INFORMATION CONCERNING THE BOARD OF DIRECTORS
Board Committees and Meetings
The Board of Directors of the Company held seven meetings during 2002. All
current directors and nominees attended greater than 75% of the meetings of the
Board of Directors and committees upon which such director served. The Board of
Directors has standing Audit, Compensation and Governance Committees.
Non-Employee Directors. The only member of the Company's management serving
on the Board of Directors is Elizabeth H. Davila, Chairman of the Board,
President and Chief Executive Officer. The non-employee directors met without
the presence of management three times in 2002. The Company's Corporate
Governance Principles adopted in 2003 provide for non-employee directors to meet
without management present at each Board of Directors meeting.
Audit Committee. From January 1, 2002 through December 31, 2002, the Audit
Committee consisted of Directors Falberg, French (chair), Galiardo and Sayford.
In March 2003, Director Falberg resigned her position as a director and resigned
from her committee appointments including her appointment to the Audit
Committee, and Director De Buono joined the Audit Committee. The Audit Committee
oversees engagement of the Company's independent auditors, reviews the
arrangements for and scope of the audit by the Company's independent auditors,
and reviews and evaluates the Company's accounting practices and its systems of
internal accounting controls. The Audit Committee held five meetings during
2002. The Company's Board of Directors has adopted a charter for the Audit
Committee, and this charter is set forth as Appendix B hereto. All of the
members of the Audit Committee qualify as independent directors under the
listing standards of the New York Stock Exchange.
Compensation Committee. The Compensation Committee of the Board of
Directors is composed entirely of non-employee directors. From January 1, 2002
through June 30, 2002, the Compensation Committee was comprised of Directors
French, Holmes, Petersmeyer and Sayford (chair). On July 1, 2002, Directors
Falberg and Galiardo joined the Compensation Committee. In March 2003,
Director Falberg, and effective February 2003, Director Petersmeyer, resigned
from the Compensation Committee. Director De Buono joined the Compensation
Committee. The Compensation Committee sets the compensation of the Company's
executive officers, including salary and bonuses, and administers the
Company's stock option plans. The Compensation Committee held five meetings
during 2002. The Company's Board of Directors has adopted a charter for the
Compensation Committee, and this charter is set forth as Appendix C hereto.
Governance Committee. From January 1, 2002 through June 30, 2002, the
Governance Committee was comprised of Directors Falberg, Galiardo (chair/lead
director), Holmes and Petersmeyer. On July 1, 2002, Directors French and Sayford
joined the Governance Committee. In March 2003, Director Falberg resigned from
the Governance Committee and Director De Buono joined the Governance Committee.
The Governance Committee considers and reports on all matters relating to
corporate governance, including the nomination and duties of members of the
Board, and recommendations regarding good corporate practices and ethics. The
Governance Committee held five meetings during 2002. The Company's Board of
Directors has adopted a charter for the Governance Committee, and this charter
is set forth as Appendix D hereto. The Company's Board of Directors has also
adopted Governance Principles. These Governance Principles are set forth as
Appendix E hereto. Any stockholder desiring to submit a candidate for
consideration by the Governance Committee with respect to the election of
directors at the Company's 2004 Annual Meeting should send the name and
background information of such proposed candidate to the Office of the Secretary
at 3400 Central Expressway, Santa Clara, California 95051-0703.
Director Compensation
The annual retainer for non-employee directors ($20,000), fees for each
Board of Directors meeting the non-employee director attended ($2,000), and fees
for attendance at a Board of Directors meeting by telephone ($250) and for each
Committee meeting attended ($500) remained the same in 2002 as the fees paid in
2001. In December 2002, the Board of Directors approved an increase in the
annual retainer for the year 2003 from $20,000 to $30,000. The compensation for
any non-employee chairperson of each Committee continued at the same rate ($750)
as the rate paid in 2001. Non-employee directors receive automatic annual grants
of options to purchase 6,000 shares of the Company's Common Stock. Non-employee
directors also receive a one-time grant of options to purchase 45,000 shares of
the Company's Common Stock upon initial election to the Board of Directors. In
addition, non-employee directors are reimbursed for out-of-pocket travel
expenses associated with their attendance at Board of Directors and Committee
meetings. Certain aspects of this compensation will change if the Company's
stockholders approve Proposal 2. For further information regarding these
changes, please see the discussion regarding Proposal 2 at page 16 of this Proxy
Statement.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors and persons who own more than ten percent of
the Company's Common Stock (collectively, "Reporting Persons") to file reports
of ownership and changes in ownership of the Company's Common Stock with the
Securities and Exchange Commission (the "SEC"). Reporting Persons are required
by SEC regulations to furnish the Company with copies of all Section 16(a) forms
that they file. Based solely on a review of the copies of reporting forms
furnished to the Company or written representations from certain Reporting
Persons that no annual forms were required, the Company believes that, except
for a Section 16(a) form relating to the purchase of the Company's Common Stock
that was filed late for Donald L. Fagen, all filing requirements were complied
with during 2002.
Compensation Committee Interlocks and Insider Participation
The Company's Compensation Committee currently consists of Directors De
Buono, French, Galiardo, Holmes and Sayford, none of whom are employed by the
Company. There were no compensation committee interlocks or other relationships
during 2002 between the Company's Board of Directors or Compensation Committee
and the board of directors or compensation committee of any other company.
Certain Relationships and Related Transactions
On April 3, 2002, Director Petersmeyer entered into a Consulting Agreement
with the Company to assist in the development of consumer marketing strategies.
Pursuant to the Consulting Agreement, Director Petersmeyer was compensated at
the rate of $1,250 per day up to a maximum of $15,000 per month, plus reasonable
expenses. In 2002, the Company paid Director Petersmeyer $114,125 under the
Consulting Agreement. Director Petersmeyer's consulting arrangement with the
Company concluded in February 2003.
EXECUTIVE COMPENSATION
Report of the Compensation Committee on Executive Compensation
Compensation Philosophy. The goals of the Company's compensation program
are to provide a strong and direct link between the Company's financial
performance and executive pay. The Company aligns management compensation with
business objectives and stockholder interests by setting performance measures
and objectives, and tying those objectives to a cash bonus plan and the use of
stock-based incentives. The Committee retains the services of an independent
compensation consulting firm to provide appropriate market survey data as well
as to make specific recommendations to the Committee with respect to base
salaries, cash bonuses, and stock incentive awards. The Committee retained this
consulting firm because of the firm's expertise in evaluating and assessing
compensation requirements in the Company's geographic region for attracting and
retaining high caliber candidates for executive management positions.
Other key elements of the Company's compensation philosophy include
establishing compensation programs that provide competitive pay systems to help
the Company attract, retain and motivate its executive management. The Company
positions its executive base salaries at the mid-point of survey data, and in
years in which bonuses are earned, total cash compensation is targeted to be
above the average survey data. The decision to grant bonuses or additional stock
incentive awards is keyed to achievement of the annual business plan for
Company-wide goals and individual performance.
Compliance With Internal Revenue Code Section 162(m). The Company is
subject to Section 162(m) of the Internal Revenue Code adopted in 1993, which
limits the deductibility of certain compensation payments to its executive
officers. The Company does not have a policy requiring the Committee to qualify
all compensation for deductibility under this provision. The Committee's current
view is that any non-deductible amounts will be immaterial to the Company's
financial or tax position, and that the Company derives substantial benefits
from the flexibility provided by the current system, in which the selection and
quantification of performance targets are modified from year to year to reflect
changing conditions. However, the Committee takes into account the net cost to
the Company in making all compensation decisions and will continue to evaluate
the impact of this provision on its compensation programs.
2002 Executive Compensation Program. In 2002, the Company's executive
compensation program integrated the following components: base salary, cash
bonuses and stock option grants. The Committee reviews each component of
executive compensation annually. As an executive's level of responsibility
increases, a greater portion of his or her potential total compensation is based
on performance incentives and less on salary and employee benefits, causing
potentially greater variability in the individual's absolute compensation level
from year to year.
Base Salary. The Committee establishes annual base salary levels for
executives based on competitive survey data, level of experience, position and
responsibility, the prior year's corporate performance and individual
recommendations of executive management.
Incentive Compensation Plan. The Committee has approved a performance-based
executive compensation plan (the "Incentive Compensation Plan"). The Committee
awarded bonuses for 2002 using the criteria as set forth in that plan. The total
pool of monies available for bonuses was set based on the Committee's assessment
of 2002 performance. After reviewing the Company's 2002 performance, the
executives' individual performance and information provided by the independent
compensation consulting firm, the Committee approved grants of bonuses for the
executive officers.
Stock Awards. For 2002, the Committee approved stock option awards for the
executive officers, including the Named Officers (as defined below). These
awards were made in recognition of the performance of the Company and the
contributions made by the officers in achieving this level of performance.
2002 Chief Executive Officer Compensation. Ms. Davila, in her capacity as
Chief Executive Officer, participated in the same compensation programs as the
other Named Officers. The Committee has targeted Ms. Davila's total
compensation, including compensation derived from the Incentive Compensation
Plan and the stock option plan, at a level it believes is competitive with the
average amount paid by the Company's competitors and companies with which the
Company competes for executive talent. Ms. Davila's salary was increased to
$420,000 for 2002. Ms. Davila received an Incentive Compensation Plan award in
recognition of the achievements of the Company during 2002 and of her
contributions to those achievements.
Submitted by the Compensation Committee
of the Company's Board of Directors:
Glendon E. French
John W. Galiardo
Jay T. Holmes
Richard B. Sayford
Compensation of Named Executives
Summary Compensation Table. The following table summarizes the total
compensation earned by or paid to the Chief Executive Officer and the four other
most highly compensated executive officers having total cash compensation for
2002 in excess of $100,000 (collectively, the "Named Officers") for services
rendered to the Company during each of the last three fiscal years.
Long-Term
Compensation
Awards
Annual Number of
Compensation Shares All Other
Name and Principal Position Year Salary(1) Bonus(2) Underlying Options Compensation(3)
Elizabeth H. Davila........................ 2002 $420,000 $336,000 225,000 $9,456
Chairman of the Board, President and 2001 390,000 175,000 1,025,000 7,923
Chief Executive Officer 2000 300,000 60,000 100,000 7,923
Timothy R. Maier........................... 2002 250,000 125,000 62,500 9,385
Executive Vice President and 2001 240,000 80,000 60,000 7,234
Chief Financial Officer 2000 215,000 43,000 50,000 7,203
Douglas H. Post............................ 2002 250,000 125,000 62,500 9,385
Executive Vice President, Operations 2001 240,000 80,000 90,000 7,234
2000 195,000 39,000 30,000 6,912
John F. Runkel, Jr......................... 2002 250,000 100,000 30,000 9,385
Vice President, General Counsel 2001 213,000 160,000(4) 60,000 6,873
and Corporate Secretary 2000 N/A N/A N/A N/A
Carol F.H. Harner.......................... 2002 218,000 88,000 30,000 9,289
Vice President, Research 2001 210,000 55,600 40,000 7,923
and Development 2000 195,000 39,000 30,000 7,915
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(1) No compensation is paid to officers of the Company for services rendered
as directors.
(2) Includes bonuses earned in the designated year but paid the following
year.
(3) Represents premiums paid by the Company for Group Term Life Insurance and,
for fiscal year 2000, the Company's contribution of $6,375 under its
401(k) Plan matching program; for fiscal year 2001, the Company's
contribution of $6,375 under its 401(k) Plan matching program; and, for
fiscal year 2002, the Company's contribution of $7,500 under its 401(k)
Plan matching program.
(4) Includes signing bonus paid in 2001.
Option Grants in Last Fiscal Year. The table below provides details
regarding stock options granted to the Named Officers in 2002, and the potential
realizable value of those options. The values do not take into account risk
factors such as non-transferability and limits on exercisability. In assessing
these values it should be kept in mind that no matter what theoretical value is
placed on a stock option on the date of grant, its ultimate value will depend on
the market value of the Company's stock at a future date.
Percent of Market
Number of Total Price
Shares Options on the
Underlying Granted to Date of Exercise Expiration Grant Date
Options Employees in Grant Price Date Present
Name Granted(1) Fiscal Year per Share Value(2)
Elizabeth H. Davila...................225,000 18% $15.14 $15.14 02/12/12 $2,067,889.70
Timothy R. Maier.......................62,500 5% 15.14 15.14 02/12/12 574,415.01
Douglas H. Post........................62,500 5% 15.14 15.14 02/12/12 574,415.02
John F. Runkel, Jr.....................30,000 2.4% 15.14 15.14 02/12/12 275,718.63
Carol F.H. Harner......................30,000 2.4% 15.14 15.14 02/12/12 275,718.63
----------
(1) Options granted in 2002 have a ten-year term and vest 25% on the first
anniversary of the grant date, and ratably thereafter at the rate of 1/48
of the total grant per month for three years. The exercisability of the
options is automatically accelerated upon a change in control of the
Company.
(2) The fair value of each stock option is estimated on the date of grant
using the Black-Scholes option pricing model in accordance with Statement
of Financial Accounting Standards No. 123. The following weighted average
assumptions were used to value stock options granted in 2002: risk-free
interest rate of 3.6%, expected volatility of 75%, no expected dividends,
and an expected life of 1.38 years beyond the vesting date for each year's
vesting increment of an option.
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Values.
The following table provides information with respect to option exercises in
2002 by the Named Officers and the value of such officers' unexercised options
as of December 31, 2002. The values for "in-the-money" options represent the
spread between the exercise price of any such existing stock options and the
year-end price of Common Stock.
Number of Shares Value of Unexercised
Shares Underlying Unexercised In-the-Money Options at
Acquired on Value Options at Fiscal Year-End Fiscal Year-End(2)
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
Elizabeth H. Davila............ -- -- 1,170,732 809,376 $1,462,705 --
Timothy R. Maier............... -- -- 539,982 109,584 945,821 --
Douglas H. Post................ -- -- 155,416 118,543 204,367 --
John F. Runkel, Jr............. -- -- 28,750 61,250 -0- --
Carol F.H. Harner.............. -- -- 112,664 60,417 93,200 --
----------
(1) Market value of underlying shares at the exercise date minus the exercise
price.
(2) Value of unexercised options is based on the price of the last reported
sale of the Company's Common Stock on the New York Stock Exchange of $9.58
per share on December 31, 2002 (the last trading day for fiscal 2002),
minus the exercise price.
Employment Arrangements and Change of Control Severance Agreements
The Company has entered into Change of Control Severance Agreements (the
"Severance Agreements") with each of the Named Officers. The Severance
Agreements provide, among other things, that if the Named Officer's employment
is terminated other than for cause within two years after a change of control of
the Company, the Named Officer is entitled to receive a lump sum severance
payment equal to three times the Named Officer's annual base salary and bonus.
In addition, pursuant to the terms of the documents governing the grants of
options under the Company's option plans, all outstanding unvested options as of
the date of a change of control, including options held by the Named Officers,
become fully vested and exercisable upon the occurrence of a change of control.
PERFORMANCE GRAPH
The SEC requires the Company to include in this Proxy Statement a
line-graph presentation comparing cumulative, five-year stockholder returns on
an indexed basis with a broad equity market index and either a nationally
recognized industry standard or an index of peer companies selected by the
Company. The following graph assumes that $100 was invested on December 31, 1997
(the last trading day of that year) in the Company's Common Stock and each of
the comparative markets, and that all dividends were reinvested. The stock price
performance shown on the graph is not necessarily indicative of future price
performance.
The following graph compares the performance of the Company's Common Stock
with the performance of the Standard & Poor's Health Care Equipment Index
(previously known as the Standard & Poor's Biotechnical and Medical Products
Group Index) and the New York Stock Exchange (U.S. Composite) Index. The
Company's stock began trading on the New York Stock Exchange on September 7,
2000.
[LINE GRAPH OMITTED]
------------------------------------------------------------------------------------------------------------------------------
Total Return Analysis
12/31/1997 12/31/1998 12/31/1999 12/31/2000 12/31/2001 12/31/2002
------------------------------------------------------------------------------------------------------------------------------
VISX, Inc. $ 100.00 $ 395.30 $ 935.80 $ 188.79 $ 239.60 $ 173.16
------------------------------------------------------------------------------------------------------------------------------
S&P Health Care Equipment Index $ 100.00 $ 144.12 $ 228.77 $ 330.00 $ 311.60 $ 312.18
------------------------------------------------------------------------------------------------------------------------------
NYSE Composite $ 100.00 $ 118.53 $ 131.51 $ 134.95 $ 121.17 $ 97.15
------------------------------------------------------------------------------------------------------------------------------
Source: CTA Public Relations www.ctapr.com (303) 665-4200. Data from BRIDGE
Information Systems, Inc.
Due to the reconfiguration of all S&P Indices in January 2002, the S&P
Biotechnical and Medical Products Group Index is now called the S&P Health Care
Equipment Index.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
regarding the beneficial ownership of the Company's Common Stock as of April 11,
2003 by (1) each person known to the Company to own more than 5% of the issued
and outstanding Common Stock, (2) each of the Company's directors, (3) each of
the Named Officers, and (4) all directors, nominees and officers as a group.
Except as otherwise indicated, each person has sole voting and investment power
with respect to all shares shown as beneficially owned, subject to community
property laws where applicable.
Common Approximate
Stock Percent
Beneficially Beneficially
Beneficial Owner Owned Owned
Carl C. Icahn............................................................. 6,020,005(1) 11.67%
c/o Icahn Associates Corp.
767 Fifth Avenue
47th Floor
New York, New York 10153
Waddell & Reed Investment Management Company.............................. 4,719,300(2) 9.2%
6300 Lamar Avenue
Overland Park, Kansas 66202
Royce & Associates, LLC................................................... 4,089,000(3) 7.93%
1414 Avenue of the Americas
New York, New York 10019
Elizabeth H. Davila....................................................... 1,389,376(4) 2.71%
Laureen De Buono.......................................................... -0- NA
Glendon E. French......................................................... 45,000(5) +
John W. Galiardo.......................................................... 75,000(6) +
Carol F.H. Harner......................................................... 136,652(7) +
Jay T. Holmes............................................................. 97,480(8) +
Timothy R. Maier.......................................................... 601,178(9) +
Gary S. Petersmeyer....................................................... 18,437(10) +
Douglas H. Post........................................................... 200,218(11) +
John F. Runkel, Jr........................................................ 45,688(12) +
Richard B. Sayford........................................................ 73,800(13) +
All directors and officers as a group (16 persons)........................ 3,119,633(14) 6.08%
----------
+ Represents less than 1% of the Company's outstanding Common Stock.
(1) As reported on Amendment No. 10 to the Schedule 13D filed with the SEC on
December 2, 2002. The persons covered by the Schedule 13D are High River
Limited Partnership ("High River"), Barberry Corp. ("Barberry"), Carl C.
Icahn ("Icahn") and Gail Golden ("Golden"). High River reported sole voting
power and sole dispositive power with respect to 3,245,505 shares. Barberry
has sole voting power and sole dispositive power with respect to 2,774,500
shares and shared voting power and shared dispositive power with respect to
3,245,505 shares. Icahn has shared voting power and shared dispositive
power with respect to 6,020,005 shares. Golden has sole voting power and
sole dispositive power with respect to 1,800 shares.
(2) As reported on the Schedule 13G filed with the SEC on or about February 14,
2003. Waddell & Reed Investment Management Company reported sole voting
power and sole dispositive power with respect to 4,719,300 shares.
(3) As reported on the Schedule 13G filed with the SEC on or about February 6,
2003. Royce & Associates, LLC reported sole voting power and sole
dispositive power with respect to 4,089,900 shares.
(4) Ms. Davila's total includes options to purchase 1,358,231 shares that will
be exercisable by May 31, 2003.
(5) Mr. French's total includes options to purchase 45,000 shares that will be
exercisable by May 31, 2003.
(6) Mr. Galiardo's total includes options to purchase 71,000 shares that will
be exercisable by May 31, 2003.
(7) Dr. Harner's total includes options to purchase 129,329 shares that will be
exercisable by May 31, 2003.
(8) Mr. Holmes' total includes options to purchase 94,000 shares that will be
exercisable by May 31, 2003.
(9) Mr. Maier's total includes options to purchase 570,971 shares that will be
exercisable by May 31, 2003.
(10) Mr. Petersmeyer's total includes options to purchase 15,937 shares that
will be exercisable by May 31, 2003.
(11) Mr. Post's total includes options to purchase 187,445 shares that will be
exercisable by May 31, 2003.
(12) Mr. Runkel's total includes options to purchase 44,375 shares that will be
exercisable by May 31, 2003.
(13) Mr. Sayford's total includes options to purchase 73,000 shares that will be
exercisable by May 31, 2003.
(14) The total includes options to purchase an aggregate of 2,995,413 shares
held by non-employee directors and officers that will be exercisable by May
31, 2003.
EQUITY COMPENSATION PLAN INFORMATION
The following table gives information about the Company's common stock that
may be issued upon the exercise of options, warrants and rights under all of the
Company's existing equity compensation plans as of December 31, 2002.
(a)
(b)
(c)
Number
of
securities
remaining available for
future issuance under
Number of securities to Weighted average equity compensation
be issued upon exercise exercise price of plans (excluding
of outstanding options, outstanding options, securities reflected in
Plan Category warrants and rights warrants and rights column(a))
Equity compensation plans approved by
security holders(1)................. 7,195,596 $18.82 1,094,125
Equity compensation plans not approved by
security holders(2)................. 1,182,361 $15.18 1,817,639
Total(3).......................... 8,377,957 $18.30 2,911,764
----------
-------------------------------------------------------------------------------
(1) These plans include the 1995 Director Option Plan and 2000 Stock Plan.
(2) The 2001 Nonstatutory Stock Option Plan (the "2001 Stock Plan ") was
adopted by the Company's Board of Directors on January 23, 2001. The 2001
Stock Plan permits the grant of nonstatutory stock options to employees
and consultants who are not officers of the Company. The Board of
Directors, or a committee appointed by the Board of Directors, administers
the 2001 Stock Plan. The Board of Directors may amend or terminate the
2001 Stock Plan at any time, but any such action may not adversely affect
any option then outstanding under the 2001 Stock Plan without the consent
of the holder of the option. The 2001 Stock Plan will terminate on January
23, 2011, unless earlier terminated as described above.
(3) Included in these amounts are stock options that remain outstanding and
that were granted under five terminated stock option plans.
PROPOSAL NO. 2
AMENDMENTS TO 1995 DIRECTOR OPTION PLAN
General
The Visx, Incorporated 1995 Director Option Plan (the "1995 Director Plan")
currently provides for the automatic grant of nonstatutory stock options to
non-employee directors of the Company. A total of one million shares of the
Company's Common Stock are reserved for issuance under the 1995 Director Plan.
As of March 18, 2003, a total of 535,000 shares of Common Stock remained
available for future grant.
Proposal
The Board of Directors considered current trends in non-employee director
compensation that are intended to foster increased non-employee director
independence. The Board of Directors also considered appropriate ranges of
non-employee director compensation compared to the Company's peer group of
companies. Following this consideration, the Board of Directors adopted, subject
to stockholder approval of this proposal, an amendment to the 1995 Director Plan
to:
o Reduce the number of shares under the 1995 Director Plan from
1,000,000 to 775,000, thereby decreasing the number of shares
currently available for the issuance of awards to 310,000,
o provide that upon leaving the Board of Directors after five full terms
of Board of Directors membership and attaining age 62 or after ten
full terms of Board of Directors membership, retiring Board of
Directors members shall have up to five years (or if less, the
original term of their option) to exercise 1995 Director Plan options,
o decrease the initial option grant for new non-employee directors by
20,000 shares, from 45,000 shares to 25,000 shares and increase the
annual option grant for incumbent directors by 4,000 shares, from
6,000 to 10,000 shares,
o change the vesting schedule for new grants from four year (1/4th after
one year, 1/48th of the originally covered shares each month
thereafter) to three year vesting (1/3 on each anniversary of the
grant date) for initial grants and to immediate vesting for annual
grants,
o provide non-employee directors with the choice to convert their annual
retainer into options or deferred phantom stock,
o Rename the 1995 Director Plan the "1995 Director Option and Stock
Deferral Plan," and
o prohibit option repricings or exchanges unless stockholder approval is
obtained.
Summary of the 1995 Director Plan
The following summary of the 1995 Director Plan as amended and restated
(subject to stockholder approval of this proposal) is qualified in its entirety
by the specific language of the 1995 Director Plan, a copy of which is attached
as Appendix F to this Proxy Statement.
Purpose. The Company's Board of Directors adopted the 1995 Director Plan to
attract and retain the best available personnel for service as non-employee
directors, to provide additional incentive to such non-employee directors, and
to encourage their continued service on the Board of Directors.
Shares reserved for issuance under the Plan. The number of shares reserved
for issuance under the 1995 Director Plan is currently 1,000,000 shares. If this
proposal is approved, 225,000 of these currently approved shares will be removed
from the 1995 Director Plan. This will have the effect of reducing to 310,000
the number of shares available for the issuance of awards under the 1995
Director Plan. The shares issuable under the 1995 Director Plan may be
authorized but unissued or reacquired shares. The Company will adjust the number
of shares available for grant under the 1995 Director Plan (and any outstanding
options) as appropriate to reflect any stock splits, stock dividends,
recapitalizations or other changes to the Company's capital structure.
Plan Administration. The Company's 1995 Director Plan is administered by
the Board of Directors or a committee appointed by the Board of Directors. The
interpretation and construction of any provision of the 1995 Director Plan by
the Board of Directors is final and conclusive. The 1995 Director Plan prohibits
the Board of Directors from repricing stock options, including by means of
exchange, unless stockholder approval is obtained.
Eligibility. Only members of the Board of Directors who are not employees
are eligible to participate in the 1995 Director Plan.
Description of Initial and Subsequent Options. The 1995 Director Plan
provides for the grant of nonstatutory stock options to the Company's
non-employee directors. The 1995 Director Plan provides that each new director
who joins the Board of Directors on or after the date of the annual stockholder
meeting in 2003 (if this proposal is approved at such meeting) shall be granted
an initial option to purchase 25,000 shares of the Company's Common Stock on the
date on which such person first becomes an eligible director (an "Initial
Option"). Commencing with the annual stockholder meeting in 2003 (if this
proposal is approved at such meeting), each eligible director who is re-elected
on the date of the annual stockholder meeting shall be granted an option to
purchase 10,000 additional shares of Common Stock on August 1 of each year if,
on such date, the eligible director shall have served on the Company's Board of
Directors for at least six months (a "Subsequent Option"). All options are
granted with an exercise price equal to the fair market value of the Company's
common stock on the date of grant.
Initial Options vest as to 1/3 of the covered shares on each anniversary of
the date of grant, subject to the Board of Directors member remaining on the
Board of Directors. Subsequent Options are 100% vested on the date of grant.
Following termination of service with the Board of Directors, former
non-employee directors have 3 months to exercise their vested options. The
post-termination exercise period extends to 12 months if the termination of
service with the Board of Directors is due to the non-employee director's death
or disability. However, if the non-employee director terminates service with the
Board of Directors following either 10 full terms of such service or 5 full
terms of such service and attaining age 62, the post-termination exercise period
is extended to 5 years (but never more than the original term of the option).
Description of Election to Receive Annual Retainer in Stock Options or
Deferred Phantom Stock. Prior to each annual stockholders meeting, non-employee
directors may make an irrevocable election to receive half or all of their
annual cash retainer for the upcoming year in the form of stock options or
deferred phantom stock (e.g., a non-employee director may elect to receive half
of his or her retainer in stock options and half in deferred phantom stock).
On the date of the first Board of Directors meeting of each quarter, a
non-employee director who irrevocably elects to receive stock options in lieu of
his or her cash annual retainer will be granted an option covering a number of
shares of Common Stock with a total fair market value equal to 3 multiplied by
the amount that would otherwise have been paid to the non-employee director.
Apart from the number of shares subject to the options, retainer option grants
will have the same terms as Subsequent Options, including 100% vesting on the
date of grant.
A non-employee director who irrevocably elects to receive deferred phantom
stock in lieu of his or her cash annual retainer will have phantom stock
credited to his or her account on the date of the first meeting of the Board of
Directors of each quarter. The number of phantom shares credited to the
non-employee director's account will be equal to the amount that otherwise would
have been paid to the non-employee director divided by the fair market value of
a share of the Company's Common Stock on such date. Distributions of these
accounts will be made upon termination of a non-employee director's service in
the form of the Company's Common Stock and in accordance with the election
agreement made by the non-employee director. However, if a non-employee
director's account has a value of less than $25,000, then the account will be
distributed in a lump-sum following such non-employee director's termination of
service with the Board of Directors.
Effect of Dissolution or Liquidation. In the event of the Company's
proposed dissolution or liquidation, all outstanding options under the 1995
Director Plan will automatically terminate immediately prior to the consummation
of the dissolution or liquidation.
Effect of Merger or Asset Sale. If there is a proposed sale of all or
substantially all of the Company's assets, or a merger with or into another
corporation, the successor corporation (or a parent or subsidiary of the
successor corporation) may assume or substitute each outstanding option under
the 1995 Director Plan. In the event that the successor corporation does not
agree to assume or substitute such outstanding options, the options will become
fully vested and exercisable.
Effect of a Change of Control. In the event of a change of control, each
outstanding option under the 1995 Director Plan will become fully vested and
exercisable.
Termination and Amendment. The Board of Directors may amend or terminate
the 1995 Director Plan at any time, provided that the Board of Directors may not
amend the 1995 Plan to permit the repricing of any option without stockholder
approval or in any manner that impairs the rights of the holder of an
outstanding option or deferred phantom stock unit.
U.S. FEDERAL INCOME TAX
CONSEQUENCES
Nonstatutory Stock Options. An optionee generally does not recognize any
taxable income at the time he or she is granted a nonstatutory stock option.
Upon exercise, the optionee generally recognizes taxable income equal to the
excess of the then fair market value of the shares over the exercise price. The
Company is generally entitled to a deduction in the same amount as the ordinary
income recognized by the optionee. Upon a disposition of such shares by the
optionee, any difference between the sale price and the optionee's exercise
price, to the extent not recognized as taxable income as provided above, is
treated as long-term or short-term capital gain or loss, depending on the
holding period.
Deferred Phantom Stock. Upon distribution, a non-employee director will
have ordinary income equal to the value of Common Stock distributed to him or
her. The Company should generally be able to take a corresponding federal income
tax deduction when a participant recognizes such income.
The foregoing is only a summary of the effect of federal income taxation
upon participants and the Company with respect to the grant and exercise of
options under the 1995 Director Plan. Reference should be made to the applicable
provisions of the Code. In addition, the summary does not purport to be
complete, and does not discuss the tax consequences of the non-employee
director's death or the provisions of the income tax laws of any municipality,
state or foreign country in which the non-employee director may reside.
PARTICIPATION IN THE 1995 DIRECTOR PLAN
The extent of option grants and deferred phantom stock crediting under the
1995 Director Plan to non-employee directors depends on whether this proposal is
approved and the extent to which non-employee directors elect to receive stock
options or deferred phantom stock in lieu of their annual cash retainer. The
following table sets forth information with respect to the grant of options to
the Company's non-employee directors during fiscal 2002 pursuant to the 1995
Director Plan. The closing price of one share of the Company's Common Stock on
the New York Stock Exchange as of April 3, 2003 was $11.46.
Number of
Securities
Underlying Exercise Price
Name of Individual and Position Options ($ per Share)
Glendon E. French 6,000 16.12
John W. Galiardo 6,000 16.12
Jay T. Holmes 6,000 16.12
Richard B. Sayford 6,000 16.12
All non-employee directors as a group........... 24,000 16.12(1)
(4 persons)
-------------------------------------------------------------------------------
(1) Represents a weighted average per share exercise or purchase price.
Vote Required and Board of Directors' Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL NUMBER 2. The
affirmative vote of a majority of the shares of Common Stock of the Company
represented in person or represented by proxy at the Annual Meeting and entitled
to vote with respect to this proposal will be required to approve the amendment
to the 1995 Director Option Plan.
PROPOSAL NO. 3
AMENDMENTS TO 2000 STOCK PLAN
General
The Visx, Incorporated 2000 Stock Plan (the "2000 Stock Plan") provides for
the grant of incentive stock options (within the meaning of Section 422 of the
Code) and nonstatutory stock options. A total of three million shares of the
Company's Common Stock are reserved for issuance under the 2000 Stock Plan (the
"Plan Shares"). As of March 31, 2003, a total of 7,253 Plan Shares remained
available for future grant.
Proposal
The Board of Directors adopted, subject to stockholder approval, an
amendment to the 2000 Stock Plan to:
o increase the Plan Shares by 2,500,000 shares (as discussed below this
will result in a decrease of approximately 1,300,000 shares to the
number of shares under the Company's 2001 Nonstatutory Stock Option
Plan),
o permit the award of stock appreciation rights ("SARs") and restricted
stock awards; provided that no more than 10% of the Plan Shares may be
granted pursuant to discount stock options or SARs and no more than
10% of the Plan Shares may be granted pursuant to restricted stock
awards, and
o prohibit option, SAR or restricted stock repricings or exchanges
unless stockholder approval is obtained.
The Company's 2001 Nonstatutory Stock Option Plan may be amended by the Board
of Directors at any time. The Board of Directors has adopted a resolution to
amend the 2001 Nonstatutory Stock Option Plan which provides that, upon
stockholder approval of this proposal, all remaining shares available for
issuance under the 2001 Nonstatutory Stock Option Plan will be automatically
removed from (and no further shares will be added to) that plan. As of March
31, 2003, a total of 1,288,669 shares remained available for issuance under
the 2001 Nonstatutory Stock Option Plan. The Board of Directors elected to
amend the 2001 Nonstatutory Stock Option Plan in this manner because it would
prefer for the Company to make future grants of options pursuant to a plan
that is approved by the stockholders of the Company.
Restricted Stock Awards and SARs. The Company believes that its future
success and its ability to remain competitive depends on its continuing to
recruit, retain and motivate highly skilled management, sales, marketing and
engineering personnel. Competition for these people in the technology industries
is intense. Traditionally, a key to the Company's method of attracting and
retaining top caliber employees has been its equity-based compensation programs,
including the grant of stock options under its 2000 Stock Plan. Allowing
employees to participate in owning shares of the Company's Common Stock helps
align the objectives of the Company's stockholders and employees, and is
important in attracting, motivating and retaining the highly skilled personnel
that are essential to its success.
Given the Company's continuing desire to remain competitive in the labor
market, the Company's Board of Directors has determined that its 2000 Stock Plan
should provide for equity-based awards that will continue to align stockholder
and employee interests but will be less sensitive to changes in its stock price.
Because restricted stock awards and discount SARs will continue to have value
even if the Company's stock price declines, the Company's Board of Directors
believes that such awards will provide it with an effective incentive to attract
and retain employees in a period of market volatility. However, in order to
address anticipated concerns of the Company's institutional investors related to
discount awards, the amended plan would limit such awards to no more than 10% of
the shares available for issuance on the date of obtaining shareholder approval
as discount restricted stock awards and no more than 10% of the shares available
for issuance on the date of obtaining shareholder approval as discount stock
options or SARs. Please note that the 2000 Stock Plan as currently in effect
contains no limitation on the number of shares that may be granted subject to
discount stock options.
The Company is also aware that the Financial Accounting Standards Board
("FASB") is considering various proposals that would change the way companies
are required to account for the grant of stock options. Under current accounting
rules, companies are generally not required to record any expense in connection
with the grant of a stock option to an employee so long as its exercise price is
equal to the fair market value of the underlying stock on the date of grant.
Under the proposals being considered by FASB, the value of an option would
generally be calculated and "expensed," or charged against earnings, in the
quarter in which the option was granted. This less favorable accounting
treatment, if required, may reduce the attractiveness to the Company of
traditional stock options relative to other forms of equity compensation,
including discount restricted stock awards, SARs and options.
Moreover, granting SARs and restricted stock awards may be more economical
from a stockholder dilution standpoint than granting options and will provide
the Company with more flexibility to structure performance-based awards.
Summary of the 2000 Stock Plan
The following summary of the 2000 Stock Plan as amended and restated
(subject to stockholder approval of this proposal) is qualified in its entirety
by the specific language of 2000 Stock Plan, a copy of which is attached as
Appendix G to this Proxy Statement.
Purpose. The Company's Board of Directors adopted the 2000 Stock Plan to
enable its employees, consultants and members of its Board of Directors to own
shares and take advantage of the tax benefits allowed to employer stock plans
under the Code.
Shares reserved for issuance under the Plan. The number of shares of Common
Stock reserved for issuance under the 2000 Stock Plan is currently 3,000,000
shares. If this proposal is approved, an additional 2,500,000 shares will become
available for issuance under the 2000 Stock Plan. The shares issuable under the
2000 Stock Plan may be authorized but unissued or reacquired shares. The Company
will adjust the number of shares available for grant under the 2000 Stock Plan
(and any outstanding options and the per-person numerical limits on options and
SARs) as appropriate to reflect any stock splits, stock dividends,
recapitalizations or other changes to its capital structure. In the event that
any award, or any shares subject to an award, under the 2000 Stock Plan become
unexercisable or is forfeited, the shares so forfeited would become available
for future grants under the 2000 Stock Plan.
No single participant may receive options or SARs with exercise prices
equal to at least 100% of fair market value on the date of grant that cover more
than a total of 500,000 shares during any fiscal year, except that the
Administrator may grant a participant, in connection with his or her initial
service, fair market value options or SARs to purchase up to an additional
500,000 shares.
Plan Administration. The Board of Directors or a committee appointed by the
Board of Directors administers the 2000 Stock Plan (the "Administrator"). The
Administrator has final authority to interpret any provision of the 2000 Stock
Plan or any grant made under the 2000 Stock Plan.
Eligibility. Employees, consultants and members of the Board of Directors,
as well as the employees and consultants of the Company's parent or
subsidiaries, are eligible to receive nonstatutory stock options, restricted
stock awards and SARs. Only employees of the Company or any parent or subsidiary
are eligible to receive incentive stock options. The Administrator selects the
employees, consultants and Board of Directors members who receive awards under
the 2000 Stock Plan.
Description of Options. The Administrator has discretion to determine the
terms of each option granted pursuant to the 2000 Stock Plan, including the
number of shares subject to the option and the vesting schedule, exercise price
and expiration of such option. The exercise price for nonstatutory stock options
may be less than the fair market value of the shares on the date of grant, and
there is currently no limit as to how many Plan Shares may be granted as
discount nonstatutory stock options. Incentive stock options may not have an
exercise prices that is less than the fair market value of the shares on the
date of grant. The Administrator will determine the fair market value as
provided in the 2000 Stock Plan, but fair market value generally is the closing
sale price of a share of Common Stock on the applicable grant date. Each option
is exercisable at the time or times and under the restrictions and conditions,
including method of payment, that the Administrator determines in its
discretion. The Administrator determines all expiration provisions that apply to
options. In the case of an incentive stock option, the term may not exceed ten
years from the date of grant.
Upon the termination of an optionholder's employment, consulting or service
with the Board of Directors, he or she may exercise his or her option to the
extent it was exercisable at the date of termination for a period of time the
Administrator determines, but in no event after the expiration of the original
term of the option. In the case of an incentive stock option, the period for
exercise following termination may not exceed 90 days (or one year if the
termination is the result of death or disability). An employment, consulting or
Board of Directors member relationship will not be considered terminated in the
event of certain leaves of absence or transfers between the Company's affiliated
entities and the Company. In addition, if an employee's status with the Company
changes from employee to consultant or Board of Directors member, any
unexercised incentive stock option held automatically converts to an
nonstatutory stock option on the 91st day after the change of status.
Description of Restricted Stock Awards. The Administrator will have the
discretion to grant restricted stock awards to any participant in the 2000 Stock
Plan. The Administrator will determine the terms and conditions of each
restricted stock award, including the number of shares subject to such award and
the vesting and forfeiture provisions of such award. The grant or vesting of a
restricted stock award may be subject to the attainment of performance-based
milestones, as determined by the Administrator.
Description of Stock Appreciation Rights. The Administrator will have the
discretion to grant SARs to any participant in the 2000 Stock Plan. The
Administrator will determine the terms and conditions of each SAR, including the
number of shares subject to the SAR, the exercise price, conditions to exercise
and expiration provisions of such SAR. Upon exercise of a SAR, the Company may
pay the participant in either cash or in shares of Common Stock. The exercise of
a SAR, whether paid in cash or stock, will result in the net amount distributed
(or, in the event of a cash payout, its share equivalent) being reduced from the
number of shares thereafter issuable under the 2000 Stock Plan.
Term of Plan. The Plan is scheduled to expire in 2010.
Effect of Dissolution or Liquidation. In the event of a proposed
dissolution or liquidation, all outstanding options and SARs will automatically
terminate immediately prior to the consummation of the dissolution or
liquidation. The Administrator may in its discretion, however, accelerate the
exercisability of any option or SAR under the 2000 Stock Plan in such event.
Effect of Merger or Asset Sale. If there is a proposed sale of all or
substantially all of the Company's assets, or a merger with or into another
corporation, the successor corporation (or a parent or subsidiary of the
successor corporation) may assume or substitute each outstanding award. In the
event that the successor corporation does not agree to assume or substitute the
outstanding award, the award will become fully vested and exercisable.
Effect of a Change of Control. In the event of a change of control, as
defined in the 2000 Stock Plan, each outstanding award shall become fully vested
and exercisable.
Termination and Amendment. The Board of Directors may amend or terminate
the 2000 Stock Plan at any time, provided that the Board of Directors may not
amend the 2000 Stock Plan to permit the repricing of any award without
stockholder approval or in any manner that impairs the rights of the holder of
an outstanding award.
U.S. Federal Income Tax Consequences
Incentive Stock Options. An optionee who is granted an incentive stock
option does not recognize taxable income at the time the option is granted or
upon its exercise, although the exercise may subject the optionee to the
alternative minimum tax. Upon a disposition of the shares more than two years
after grant of the option and one year after exercise of the option, any gain or
loss is treated as long-term capital gain or loss. If these holding periods are
not satisfied, the optionee recognizes ordinary income at the time of
disposition equal to the difference between the exercise price and the lower of
(i) the fair market value of the shares at the date of the option exercise or
(ii) the sale price of the shares. Any gain or loss recognized on such a
premature disposition of the shares in excess of the amount treated as ordinary
income is treated as long-term or short-term capital gain or loss, depending on
the holding period. Subject to certain exceptions, an option generally will not
be treated as an incentive stock option if it is exercised more than three
months following termination of employment. If an incentive stock option is
exercised at a time when it no longer qualifies as an incentive stock option,
such option will be treated as an nonstatutory stock option as discussed below.
The Company is generally entitled to a deduction in the same amount as the
ordinary income recognized by the optionee.
Nonstatutory Stock Options. An optionee generally does not recognize any
taxable income at the time he or she is granted a nonstatutory stock option.
Upon exercise, the optionee generally recognizes taxable income measured by the
excess of the then fair market value of the shares over the exercise price. The
Company is generally entitled to a deduction in the same amount as the ordinary
income recognized by the optionee. Upon a disposition of such shares by the
optionee, any difference between the sale price and the optionee's exercise
price, to the extent not recognized as taxable income as provided above, is
treated as long-term or short-term capital gain or loss, depending on the
holding period.
Exercise with Shares. A participant who pays the option price upon exercise
of an option, in whole or in part, by delivering already-owned shares of stock
will generally not recognize gain or loss on the shares surrendered at the time
of such delivery, except under certain circumstances. Rather, recognition of
that gain or loss will generally occur upon disposition of the shares acquired
in substitution for the shares surrendered.
Stock Appreciation Rights. The recipient of a grant of SARs will not
realize taxable income and the Company will not be entitled to a deduction with
respect to such grant on the date of such grant. Upon the exercise of an SAR,
the recipient will realize ordinary income equal to the amount of cash
(including the amount of any taxes withheld) and the fair market value of any
shares received at the time of exercise. In general, the Company will be
entitled to a corresponding deduction, equal to the amount of income realized.
Restricted Stock Awards. A participant who receives a grant of restricted
stock will not recognize any taxable income at the time of the award, provided
the shares are subject to restrictions (that is, they are nontransferable and
subject to a substantial risk of forfeiture). A participant's rights in
restricted stock awarded under the plan are subject to a substantial risk of
forfeiture if the rights to full enjoyment of the shares are conditioned,
directly or indirectly, upon the future performance of substantial services by
the participant. However, the participant may elect under section 83(b) of the
Code to recognize compensation income in the year of the award in an amount
equal to the fair market value of the shares on the date of the award,
determined without regard to the restrictions. If the participant does not make
a section 83(b) election within 30 days of receipt of the restricted shares, the
fair market value of the shares on the date the restrictions lapse, less any
amount paid by the participant for such shares, will be treated as compensation
income to the participant and will be taxable in the year the restrictions
lapse. Generally, the Company will be entitled to a compensation deduction for
the amount of compensation income the participant recognizes.
The foregoing is only a summary of the effect of federal income taxation
upon participants and the Company with respect to the grant and exercise of
options and SARs and the grant of restricted stock awards under the 2000 Stock
Plan. Reference should be made to the applicable provisions of the Code. In
addition, the summary does not purport to be complete, and does not discuss the
tax consequences of the employee's or consultant's death or the provisions of
the income tax laws of any municipality, state or foreign country in which the
employee or consultant may reside.
Participation in the 2000 Stock Plan
The grant of options under the 2000 Stock Plan to employees, including the
Company's Named Executive Officers, is subject to the discretion of the
Administrator. As of the date of this proxy statement, there has been no
determination by the Administrator with respect to future awards under the 2000
Stock Plan. Non-employee directors are eligible to participate in the 2000 Stock
Plan but to date no awards to non-employee directors have been made under the
2000 Stock Plan. The following table sets forth information with respect to the
grant of options to the Named Executive Officers, all current executive officers
as a group and all other employees as a group during fiscal year 2002, each
pursuant to the 2000 Stock Plan. The closing price of one share of the Company's
common stock on the New York Stock Exchange as of April 3, 2003 was $11.46.
Number of
Securities
Underlying Exercise Price
Name of Individual and Position Options ($ per Share)
Elizabeth H. Davila....................................... 225,000 15.14
Timothy R. Maier.......................................... 62,500 15.14
Douglas H. Post........................................... 62,500 15.14
John F. Runkel, Jr........................................ 30,000 15.14
Carol F.H. Harner......................................... 30,000 15.14
Executive Group........................................... 567,500 15.14(1)
(10 persons)
Non-Executive Director Group.............................. -0- NA
(6 persons)
Non-Executive Officer Employee Group...................... -0- NA
(0 persons)
---------------------
(1) Represents a weighted average per share exercise or purchase price.
Vote Required and Board of Directors' Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL NUMBER 3. The
affirmative vote of a majority of the shares of Common Stock of the Company
represented in person or represented by proxy at the Annual Meeting and entitled
to vote with respect to this proposal will be required to approve the amendment
to the 2000 Stock Plan.
PROPOSAL NO. 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Company is asking the stockholders to ratify the appointment of KPMG
LLP as the Company's independent auditors for the year ending December 31, 2003.
KPMG LLP has audited the Company's financial statements since June 7, 2002.
Between January 1, 2002 and June 7, 2002, Arthur Andersen LLP audited the
Company's financial statements. Representatives of KPMG LLP are expected to
attend the Annual Meeting and will have the opportunity to make a statement if
they desire to do so and to answer appropriate questions.
Fees billed to the Company by its Auditors during 2002
o Arthur Andersen LLP Audit Fees:
Audit fees billed to the Company by Arthur Andersen LLP during 2002 for
review of those financial statements included in the Company's quarterly reports
on Form 10-Q totaled $75,400.
o KPMG LLP Audit Fees:
Audit fees billed to the Company by KPMG LLP during 2002 for review of the
Company's annual financial statements and those financial statements included in
the Company's quarterly reports on Form 10-Q totaled $191,000.
o Financial Information Systems Design and Implementation Fees:
The Company did not engage either Arthur Andersen LLP or KPMG LLP to
provide advice to the Company regarding financial information systems design and
implementation during 2002.
o All Other Fees:
Fees billed to the Company by Arthur Andersen LLP during 2002 for all other
non-audit services rendered to the Company, including tax-related services,
totaled $90,700. Fees billed to the Company by KPMG LLP during 2002 for all
other non-audit services rendered to the Company, including tax-related
services, totaled $227,850.
Independence and Stockholders' Ratification of the Selection of KPMG LLP
The Audit Committee has also considered whether the provision of non-audit
services by KPMG LLP was compatible with maintaining the independence of KPMG
LLP, and determined that the performance of such non-audit services did not
impair the independence of KPMG LLP.
Stockholder ratification of the selection of KPMG LLP as the Company's
independent public accountants is not required by the Company's Bylaws or other
applicable legal requirement. However, the Audit Committee has determined to
retain KPMG LLP subject to stockholder approval and has asked the Board of
Directors to submit the selection of KPMG LLP to the stockholders for
ratification as a matter of good corporate practice. If the stockholders fail to
ratify the selection, the Audit Committee and Board of Directors will consider
whether or not to retain that firm. Even if the selection is ratified, the Board
of Directors at its discretion may direct the appointment of a different
independent auditing firm at any time during the year.
Vote Required and Board of Directors' Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL NUMBER 4.
Ratification of the appointment of KPMG LLP as the Company's independent
auditors for the year ending December 31, 2003 will require the affirmative vote
of a majority of the shares of Common Stock represented in person or by proxy
and entitled to vote with respect to this proposal.
Change of Independent Auditors
On June 7, 2002, the Company dismissed Arthur Andersen LLP as its
independent auditors. This action was approved by the Board of Directors and the
Audit Committee of the Board of Directors. The audit reports of Arthur Andersen
LLP on the consolidated financial statements of the Company and its subsidiaries
as of and for the years ended December 31, 2000 and 2001, did not contain any
adverse opinion, disclaimer of opinion or qualification as to uncertainty, audit
scope or accounting principles. During the two years ended December 31, 2000 and
2001, and the subsequent interim period through May 20, 2002, there were no
disagreements with Arthur Andersen LLP on any matter of accounting principle or
practice, financial statement disclosure or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Arthur Andersen LLP, would
have caused them to make a reference to the subject matter of the disagreement
in connection with their reports; and there were no reportable events as defined
in Item 304(a)(1)(v) of Regulation S-K.
On June 7, 2002 the Company engaged KPMG LLP as its new independent
auditors. The decision to change accounting firms was approved by the Company's
Board of Directors and the Audit Committee of the Board of Directors. During the
years ended December 31, 2000 and 2001, and the subsequent interim period
through June 7, 2002, the Company did not consult with KPMG LLP regarding (1)
the application of accounting principles to any specified transaction, either
completed or proposed, (2) the type of audit opinion that might be rendered on
the Company's financial statements and neither a written report was provided to
the Company nor was oral advice provided that KPMG LLP concluded was an
important factor considered by the Company in reaching a decision as to the
accounting, auditing or financial reporting issue, or (3) any other matters or
reportable events that were either the subject of disagreement, as that term is
defined in Item 304(a)(1)(iv) of Regulation S-K and the related instruction of
Item 304 of Regulation S-K, or a reportable event, as that term is defined in
Item 304(a)(1)(v) of Regulation S-K as set forth in Items 304(a)(2)(i) and (ii)
of Regulation S-K.
The Company requested that Arthur Andersen LLP furnish it with a letter
addressed to the Securities and Exchange Commission stating that it agreed with
the statements set forth above. A copy of such letter dated June 7, 2002 was
filed as Exhibit 16.1 to the Company's Current Report on Form 8-K filed on June
7, 2002.
REPORT OF AUDIT COMMITTEE
The Audit Committee is comprised entirely of independent non-employee
directors. The Audit Committee oversees engagement of the Company's independent
auditors, reviews the arrangements for and scope of the audit by the Company's
independent auditors, and reviews and evaluates the Company's accounting
practices and its systems of internal accounting controls. The Audit Committee
has reviewed and discussed the Company's audited financial statements for 2002
with the Company's management and with the independent auditors. The Audit
Committee has also discussed with the independent auditors the matters required
to be considered with the auditors by Statement of Auditing Standards No. 61.
The Audit Committee has received written communication and the letter from the
independent auditors required by Independence Standards Board Standard No. 1 and
has discussed with the independent auditors their independence from the Company.
Based on the foregoing activities, the Audit Committee has recommended to the
Board of Directors that the Company's audited financial statements for the year
2002 be included in the Company's report on Form 10-K for such year, which was
filed with the Securities and Exchange Commission on March 31, 2003.
Submitted by the Audit Committee
of the Company's Board of Directors:
Laureen De Buono*
Glendon E. French
John W. Galiardo
Richard B. Sayford
* Ms. De Buono became a director of the Company and a member of the
Committee in March 2003 and, accordingly, did not participate as a member of the
Committee with respect to matters covered by the report of the audit committee.
ITEMS NOT CONSTITUTING SOLICITING MATERIAL
The Compensation Committee and Audit Committee reports included herein
shall not constitute "soliciting material" or be deemed to be "filed" with the
SEC under the Securities Exchange Act of 1934, as amended, and the applicable
rules and regulations thereunder.
OTHER MATTERS
Other Matters to be Presented
The Board of Directors knows of no matters other than the election of
directors and ratification of the Company's independent auditors to be presented
for stockholder action at the Annual Meeting. However, if other matters do
properly come before the Annual Meeting or any adjournment or postponement
thereof, the Board of Directors intends that the persons named in the proxies
will vote upon such matters in accordance with their best judgment.
Participants in the Solicitation
Under applicable regulations of the Securities and Exchange Commission
("SEC"), each member of the Board of Directors, certain executive officers of
the Company and certain other corporate officers of the Company may be deemed to
be "participants" in the Company's solicitation of proxies. The principal
occupation and business address of each person who may be deemed a participant
are set forth in Appendix A hereto. Certain information relating to the
directors, executive officers and other participants of the Company, including
certain information regarding their transactions with respect to the Company's
securities, is listed in Appendix A.
Stockholder Solicitation
On November 27, 2002, Barberry Corp. ("Barberry"), an entity affiliated
with Carl C. Icahn, provided notice to the Company of its intention to nominate
one person for election as a director to the Company's Board of Directors at the
Annual Meeting. The notice stated that Barberry and its affiliates, including
Mr. Icahn, High River Limited Partnership and Gail Golden, beneficially own
approximately 11.67% of the outstanding Common Stock of the Company. On April
10, 2003, Barberry filed a preliminary proxy statement with the SEC in
connection with the solicitation of proxies to elect the Icahn group's board
nominee. The Icahn group has nominated Keith Meister, a thirty year old employee
of an Icahn affiliate.
The Company does not know if the Icahn group will pursue such a nomination.
In connection with the Company's 2002 Annual Meeting of Stockholders, the Icahn
group submitted a notice to the Company stating that Barberry intended to
nominate a slate of directors to the Company's Board of Directors; however, the
Icahn group did not solicit proxies and did not proceed to make such a
nomination. In connection with the Company's 2001 Annual Meeting, the Icahn
group did not proceed to nominate directors at the Annual Meeting
notwithstanding the fact that it had provided notice to the Company and had
solicited proxies to elect directors.
In the event that stockholders receive proxy materials from Mr. Icahn and
his affiliates, the Company urges stockholders not to sign or return the Icahn
group's proxy card.
Stockholder Proposals for 2004 Annual Meeting
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934 (the
"Exchange Act"), stockholder proposals that are intended to be included in the
Company's proxy materials for the 2004 Annual Meeting of Stockholders and
presented at that meeting must be received at the executive offices of the
Company (3400 Central Expressway, Santa Clara, California 95051-0703, Attention:
Office of the Secretary) on or before December [ ], 2003, which is 120 calendar
days prior to the one-year anniversary of the mailing date of this proxy
statement and proxy.
In addition, stockholder proposals to be considered at the 2004 Annual
Meeting of Stockholders outside the processes of Rule 14a-8 (which are not
intended to be included in the proxy materials for the 2004 Annual Meeting of
Stockholders) must be delivered to or mailed and received at the executive
offices of the Company in accordance with, and by the date specified in, the
advance notice provisions of the Company's Bylaws, which is December [ ] , 2003
(120 calendar days prior to the one-year anniversary of the mailing date of this
proxy statement and proxy). Therefore, in order for stockholder proposals made
outside of the processes of Rule 14a-8 to be considered "timely" within the
meaning of Rule 14a-4(c) under the Exchange Act, such proposals must be
delivered to or mailed and received at the executive offices of the Company on
or before December [ ], 2003.
* * * *
If you have any questions or require assistance, please contact:
McKenzie Partners, Inc.
105 Madison Avenue
New York, NY 10016
(800) 322-2885
APPENDIX A
INFORMATION CONCERNING THE DIRECTORS AND CERTAIN OFFICERS OF THE
COMPANY WHO MAY ALSO SOLICIT PROXIES
The following table sets forth the name, principal business and address of
any corporation or other organization in which their employment is carried on,
of the directors and certain officers of the Company ("Participants") who may
also solicit proxies from stockholders of the Company. Unless otherwise
indicated, the principal occupation of the officers refers to their position
with the Company and the business address is VISX, Incorporated, 3400 Central
Expressway, Santa Clara, California 95051-0703.
Directors
The principal occupations of the Company's directors who are deemed
Participants in the solicitation are set forth on pages 6 through 8 of this
Proxy Statement. The name and business address of the other
director-Participants' organization of employment are as follows:
Name Address
Laureen De Buono......................................... VISX, Incorporated
3400 Central Expressway
Santa Clara, California 95051-0703
Glendon E. French........................................ VISX, Incorporated
3400 Central Expressway
Santa Clara, California 95051-0703
John W. Galiardo......................................... VISX, Incorporated
3400 Central Expressway
Santa Clara, California 95051-0703
Jay T. Holmes............................................ VISX, Incorporated
3400 Central Expressway
Santa Clara, California 95051-0703
Gary S. Petersmeyer...................................... VISX, Incorporated
3400 Central Expressway
Santa Clara, California 95051-0703
Richard B. Sayford....................................... VISX, Incorporated
3400 Central Expressway
Santa Clara, California 95051-0703
Executive Officers and Certain Corporate Officers
Name Principal Occupation
Elizabeth H. Davila....................................... Chairman of the Board, President and Chief
Executive Officer
Timothy R. Maier.......................................... Executive Vice President, Chief
Financial Officer and Treasurer
Douglas H. Post........................................... Executive Vice President, Operations
Carol F.H. Harner, Ph.D................................... Vice President, Research and Development
John F. Runkel, Jr........................................ Vice President, General Counsel and
Secretary
Information Regarding Ownership of the Company's Securities by Participants
The number of shares of common stock of the Company held by directors and
the named executive officers is set forth on pages 14 and 15 of this Proxy
Statement. This information includes shares that may be acquired by the exercise
of stock options as of May 31, 2003.
Information Regarding Transactions in the Company's Securities by Participants
The following table sets forth purchases and sales of the Company's
securities by the Participants listed below during the past two years. Unless
otherwise indicated, all transactions are in the public market.
Number of Shares of Common
Stock Purchased ("P") or Sold
Name Date ("S")
Elizabeth H. Davila...................................... 05/31/01 471 P (2)
Glendon E. French........................................ 05/10/01 8,000 S (1)
09/06/01 6,000 S (1)
Gary S. Petersmeyer...................................... 07/19/02 2,500 P (4)
Carol F.H. Harner........................................ 05/15/01 20,000 S (1)
05/16/01 20,000 S (1)
05/25/01 16,600 S (1)
06/01/01 929 S (3)
12/03/01 699 S (3)
06/03/02 970 S (3)
12/02/02 936 S (3)
Timothy R. Maier......................................... 05/31/01 765 P (2)
11/30/01 625 P (2)
05/31/02 1,108 P (2)
11/29/02 797 P (2)
Douglas H. Post.......................................... 05/31/01 150 P (2)
11/30/01 534 P (2)
05/31/02 554 P (2)
11/29/02 802 P (2)
John F. Runkel, Jr....................................... 05/31/02 332 P (2)
11/29/02 481 P (2)
Laureen De Buono......................................... -0-
John W. Galiardo................................................ -0-
Jay T. Holmes.................................................... -0-
Richard B. Sayford.............................................. -0-
----------
(1) Transaction effected through a same-day sale.
(2) Transaction effected through an Employee Stock Purchase Plan purchase.
(3) Transaction effected through an Employee Stock Purchase Plan sale.
(4) Transaction effected through an open-market purchase.
Miscellaneous Information Concerning Participants
Except as described in this Appendix A or in the Proxy Statement, none of
the Participants nor any of their respective affiliates or associates (together,
the "Participant Affiliates"), (i) directly beneficially owns any shares of
Common Stock of the Company or any securities of any subsidiary of the Company
or (ii) has had any relationship with the Company in any capacity other than as
a stockholder, employee, officer or director. Furthermore, except as described
in this Appendix A or in the Proxy Statement, no Participant or Participant
Affiliate is either a party to any transaction or series of transactions since
January 1, 2003, or has knowledge of any currently proposed transaction or
series of transactions, (i) to which the Company or any of its subsidiaries was
or is to be a party, (ii) in which the amount involved exceeds $60,000, and
(iii) in which any Participant or Participant Affiliate had or will have, a
direct or indirect material interest.
Except for the employment, severance or consulting arrangements described
in the Proxy Statement, no Participant or Participant Affiliate has entered into
any agreement or understanding with any person respecting any future employment
by the Company or its affiliates or any future transactions to which the Company
or any of its affiliates will or may be a party. Except as described in this
Appendix A or in the Proxy Statement, there are no contracts, arrangements or
understandings by any Participant or Participant Affiliate within the past year
with any person with respect to the Company's Common Stock.
SIGN, DATE AND MAIL YOUR PROXY TODAY
|X| PLEASE MARK VOTES AS IN THIS EXAMPLE
STOCKHOLDERS ARE URGED TO DATE, SIGN AND RETURN THIS PROXY IN THE ENVELOPE
PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED STATES.
YOUR VOTE IS VERY IMPORTANT TO US.
WE RECOMMEND A VOTE "FOR" THE ELECTION OF DIRECTORS AND EACH OF THE
FOLLOWING PROPOSALS
1. To elect the following seven Directors:
Nominees:
(01) Elizabeth H. Davila For |_| Withheld |_|
(02) Laureen De Buono
(03) Glendon E. French
(04) John W. Galiardo
(05) Jay T. Holmes
(06) Gary S. Petersmeyer
(07) Richard B. Sayford
---------------------------------------
For all nominees except as noted above
2. To approve an amendment to the 1995 Director
Option Plan For|_| Against|_| Abstain|_|
3. To approve an amendment to the 2000 Stock Plan
For|_| Against|_| Abstain|_|
4. To ratify the appointment of
independent public accountants For|_| Against|_| Abstain|_|
|_| MARK HERE IF YOU PLAN TO ATTEND THE MEETING
|_| MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW
Please sign exactly as your name(s) appear on your stock certificate. If shares
are issued in the name of two or more persons, all such persons should sign the
proxy. A proxy executed by a corporation should be signed in its name by its
authorized officers. Executors, administrators, trustees and partners should
indicate their positions when signing.
REGISTRATION
Signature: ______________ Date: ______ Signature:____________ Date: _____
Proxy Solicited on Behalf of Board of Directors
The undersigned hereby appoints Elizabeth H. Davila and John F. Runkel, Jr.
as proxies, each with the power of substitution, to vote at the Annual Meeting
of Stockholders of VISX, Incorporated (the "Company") to be held on May , 2003
at 8:00 a.m. local time, and at any adjournment or postponement thereof, hereby
revoking any proxies previously given, to vote all shares of Common Stock of the
Company held or owned by the undersigned as directed below, and in their
discretion upon such other matters as may come before the meeting.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR EACH NOMINEE FOR
DIRECTOR, FOR PROPOSALS 2, 3, AND 4, AND AT THE DISCRETION OF THE PROXY HOLDERS
UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. IF ANY NOMINEE
FOR DIRECTOR IS UNABLE OR DECLINES TO SERVE AS DIRECTOR, THIS PROXY WILL BE
VOTED FOR ANY NOMINEE THAT THE PRESENT BOARD OF DIRECTORS DESIGNATES.
(See Reverse Side)
(To be Signed on Reverse Side)
APPENDIX B
CHARTER FOR THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF
VISX, INCORPORATED
PURPOSE:
The purpose of the Audit Committee of the Board of Directors (the
"Board") of VISX, Incorporated (the "Company") shall be to:
o Oversee the accounting and financial reporting processes of the
Company and audits of the financial statements of the Company;
o Assist the Board in oversight and monitoring of (i) the integrity
of the Company's financial statements, (ii) the Company's
compliance with legal and regulatory requirements, (iii) the
independent auditor's qualifications and independence, and (iv) the
performance of the Company's internal audit function and of its
independent auditors;
o Prepare the report that the rules of the Securities and Exchange
Commission (the "SEC") require be included in the Company's annual
proxy statement;
o Provide the Company's Board with the results of its monitoring and
recommendations derived therefrom; and
o Provide to the Board such additional information and materials as
it may deem necessary to make the Board aware of significant
financial matters that require the attention of the Board.
The Audit Committee will undertake those specific duties and
responsibilities listed below and such other duties as the Board
of Directors may from time to time prescribe.
MEMBERSHIP:
The Audit Committee members will be appointed by, and will serve at the
discretion of, the Board. The Audit Committee will consist of at least three
members of the Board. Members of the Audit Committee must meet the following
criteria (as well as any criteria required by the SEC):
o Each member will be "independent", in accordance with the Corporate
Governance Standards of the New York Stock Exchange, the rules of
the SEC and applicable law, as in effect from time to time;
o Each member will be financially literate, as such qualification is
interpreted by the Company's Board in its business judgment; and
o At least one member of the Audit Committee must have accounting or
related financial management expertise.
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DUTIES AND RESPONSIBILITIES:
The duties and responsibilities of the Audit Committee shall include:
o Reviewing on a continuing basis the adequacy of the Company's
system of internal controls, including meeting periodically with
the Company's management and the independent auditors to review the
adequacy of such controls and to review before release the
disclosure regarding such system of internal controls required
under SEC rules to be contained in the Company's periodic filings
and the attestations or reports by the independent auditors
relating to such disclosure;
o Appointing, compensating and overseeing the work of the independent
auditors (including resolving disagreements between management and
the independent auditors regarding financial reporting) for the
purpose of preparing or issuing an audit report or related work;
o Pre-approving audit and non-audit services provided to the Company
by the independent auditors (or subsequently approving non-audit
services in those circumstances where a subsequent approval is
necessary and permissible) and retaining and terminating the
Company's independent auditors; in this regard, the Audit Committee
shall have the sole authority to approve the hiring and firing of
the independent auditors, all audit engagement fees and terms and
all non-audit engagements, as may be permissible, with the
independent auditors;
o At least annually, obtaining and reviewing a report by the
independent auditor describing: the audit firm's internal
quality-control procedures; any material issues raised by the most
recent internal quality-control review, or peer review, of the
audit firm, or by any inquiry or investigation by governmental or
professional authorities, within the preceding five years,
respecting one or more independent audits carried out by the audit
firm, and any steps taken to deal with any such issues; and, in
order to assess the auditor's independence, all relationships
between the independent auditor and the Company;
o Discussing the annual audited financial statements and quarterly
unaudited financial statements with management and the independent
auditors, including the Company's disclosures under "Management's
Discussion and Analysis of Financial Condition and Results of
Operations," prior to filing the Company's Annual Report on Form
10-K and Quarterly Reports on Form 10-Q, respectively, with the
SEC;
o Discussing earnings press releases, as well as financial
information and earnings guidance provided to analysts and rating
agencies, prior to public disclosure;
o As appropriate, obtaining advice and assistance from outside legal,
accounting or other advisors;
o Discussing policies with respect to risk assessment and risk
management, including the Company's major financial risk exposures
and the steps management has taken to monitor and control such
exposures;
o Reviewing with the independent auditors any audit problems or
difficulties and management's response;
o Setting clear hiring policies with respect to employees or former
employees of the independent auditors;
o Reporting regularly to the Board;
o Reviewing the independent auditors' proposed audit scope, approach
and independence;
o Requesting from the independent auditors on a periodic basis a
formal written statement delineating all relationships between the
auditors and the Company, engaging in a dialogue with the auditors
with respect to any disclosed relationships or services that may
impact the objectivity and independence of the auditors, and
recommending that the Board take appropriate action, if necessary,
to ensure the independence of the outside auditors;
-2-
o Directing the Company's independent auditors to review before
filing with the SEC the Company's interim financial statements
included in Quarterly Reports on Form 10-Q, using professional
standards and procedures for conducting such reviews;
o Discussing with the Company's independent auditors the matters
required to be discussed by Statement on Accounting Standard No.
61, as it may be modified or supplemented;
o Reviewing reports submitted to the audit committee by the
independent auditors in accordance with the applicable SEC
requirements;
o Providing a report in the Company's proxy statement in accordance
with the requirements of Item 306 of Regulation S-K and Item
7(e)(3) of Schedule 14A;
o Reviewing the Audit Committee's own charter, structure, processes
and membership requirements from time to time;
o Overseeing compliance with the requirements of the SEC for
disclosure of auditor's services and audit committee members,
member qualifications and activities;
o Reviewing, approving and monitoring the Company's code of ethics
for its senior financial officers;
o Establishing procedures for receiving, retaining and treating
complaints received by the Company regarding accounting, internal
accounting controls or auditing matters and procedures for the
confidential, anonymous submission by employees of concerns
regarding questionable accounting or auditing matters;
o Providing a report to the Board at least annually presenting its
conclusions with respect to the independent auditors; and
o Performing such other duties as may be requested by the Board.
COMPENSATION:
Members of the Audit Committee shall receive such fees, if any, for their
service as Audit Committee members as may be determined by the Board in its
sole discretion. Such fees may include retainers, per meeting fees and special
fees for service as Chair of the Audit Committee. Fees may be paid in such
form of consideration as is determined by the Board, which may include cash,
deferred payment, stock, stock options, phantom stock, and common stock
equivalents.
Members of the Audit Committee may not receive any compensation from the
Company except the fees that they receive for service as a director or Board
Committee member.
VOTING:
Each member of the Audit Committee shall have one vote on any matter requiring
action by the Audit Committee.
MEETINGS:
The Audit Committee will meet at least quarterly. The Audit Committee may
establish its own schedule, which it will provide to the Board in advance.
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The Audit Committee will meet separately, at least quarterly, with (i)
management, (ii) internal auditors (or other personnel responsible for the
internal audit function), and (iii) independent auditors.
MINUTES:
The Audit Committee will maintain written minutes of its meetings, which
minutes will be filed with the minutes of the meetings of the Board.
REPORTS:
Apart from the report prepared pursuant to Item 306 of Regulation S-K and Item
7(e)(3) of Schedule 14A, the Audit Committee will summarize its examinations
and recommendations to the Board from time to time as may be appropriate,
consistent with the Committee's charter. Such reports may be made orally or in
writing.
PERFORMANCE EVALUATION:
At least annually, the Board and the Audit Committee shall conduct a
performance evaluation of the Audit Committee.
DELEGATION OF AUTHORITY:
The Audit Committee may delegate to one or more designated members of the
Audit Committee the authority to pre-approve audit and permissible non-audit
services, provided such pre-approval decision is presented to the full Audit
Committee at its scheduled meetings.
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APPENDIX C
CHARTER FOR THE
COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
OF
VISX, INCORPORATED
(as adopted by the Committee on February 21, 2003)
PURPOSE:
The purpose of the Compensation Committee of the Board of Directors (the
"Board") of VISX, Incorporated, a Delaware corporation (the "Company"), shall
be to discharge the Board's responsibilities relating to compensation of the
Company's executive officers. The Committee has overall responsibility for
evaluating and approving the executive officer compensation plans, policies
and programs of the Company. The Committee is also responsible for producing
an annual report on executive compensation for inclusion in the Company's
proxy statement.
COMMITTEE MEMBERSHIP AND ORGANIZATION:
The Compensation Committee will consist of no fewer than three members.
The members of the Committee will be appointed by the Board following receipt
of the recommendation of the Governance Committee, and will serve at the
discretion of the Board. The members of the Compensation Committee shall meet
the (i) independence requirements of the listing standards of the New York
Stock Exchange, (ii) non-employee director definition of Rule 16b-3
promulgated under Section 16 of the Securities Exchange Act of 1934, as
amended, and (iii) the outside director definition of Section 162(m) of the
Internal Revenue Code of 1986, as amended.
COMMITTEE RESPONSIBILITIES AND AUTHORITY:
o The Compensation Committee shall annually review and approve the
Company's overall compensation plan, including corporate goals and
objectives relevant to the compensation of the CEO and the
executive officers ("executive officers" includes the Company's
executive vice-presidents and the vice presidents); shall evaluate
the performance of the CEO and the executive officers in light of
those goals and objectives; and based upon such evaluation, shall
determine for the CEO and the executive officers of the Company (a)
the annual base salary, (b) the annual incentive bonus, including
the specific goals and amount, (c) equity compensation, (d)
severance arrangements and change in control agreements/provisions,
and (e) any other benefits, compensation or arrangements.
o The Compensation Committee shall review and approve all equity or
incentive compensation to be granted to the Company's employees
pursuant to the Company's equity or incentive compensation plans.
-1-
o The Compensation Committee may form and delegate authority to
subcommittees when appropriate.
o The Compensation Committee shall review and reassess the adequacy
of this Charter annually.
o The Compensation Committee shall review its own performance
annually.
o The Compensation Committee shall have the sole authority to retain
and terminate any compensation consultant to be used by the Company
to assist in the evaluation of CEO or executive officer
compensation and shall have sole authority to approve the
consultant's fees and other retention terms. The Compensation
Committee shall also have authority to obtain advice and assistance
from internal or external legal, accounting or other advisors.
MEETINGS:
The Compensation Committee will meet at least four times each year. The
Compensation Committee may establish its own schedule, which it will provide
to the Board of Directors in advance.
MINUTES:
The Compensation Committee will maintain written minutes of its
meetings, which minutes will be filed with the minutes of the meetings of the
Board of Directors.
REPORTS:
In addition to preparing the report in the Company's proxy statement in
accordance with the rules and regulations of the SEC, the Compensation
Committee will summarize its examinations and recommendations to the Board of
Directors as may be appropriate, consistent with the Compensation Committee's
charter.
COMPENSATION:
Compensation, if any, for members of the Compensation Committee shall be
determined by the Board of Directors in its sole discretion. Such fees may
include retainers, per meeting fees and special fees for service as Chair of
the Compensation Committee. Fees may be paid in such form of consideration as
is determined by the Board of Directors.
-2-
APPENDIX D
CHARTER FOR THE
GOVERNANCE COMMITTEE
OF THE BOARD OF DIRECTORS
OF
VISX, INCORPORATED
(as adopted by the Committee on February 21, 2003)
PURPOSE:
The purpose of the Governance Committee (the "Committee") of the Board
of Directors of VISX, Incorporated, a Delaware corporation (the "Company"), is
to assist the Board of Directors in meeting appropriate governance standards.
To carry out this purpose, the Committee shall: (1) assist the Board by
identifying prospective director nominees and recommending the director
nominees for the next annual meeting of stockholders; (2) develop and
recommend to the Board the governance principles applicable to the Company;
(3) oversee the evaluation of the Board and management; and (4) recommend to
the Board director nominees for each committee. The Committee shall also be
responsible for recommending compensation and benefits for the Company's
non-employee directors to the Board.
NOMINATION AND APPOINTMENT POLICY:
The Committee believes that it is in the best interests of the Company
and its stockholders to obtain highly qualified candidates to serve as members
of the Board. The Committee shall seek candidates for nomination and
appointment with excellent decision-making ability, business experience,
personal integrity and reputation.
COMMITTEE MEMBERSHIP AND ORGANIZATION:
The Governance Committee shall consist of no fewer than three members.
The members of the Committee will be appointed by and will serve at the
discretion of the Board, and will meet the independence requirements of the
New York Stock Exchange. The chairman of the Governance Committee shall also
serve as the Lead Director of the Board.
COMMITTEE RESPONSIBILITIES AND AUTHORITY:
o Evaluate the current composition, organization and governance of
the Board and its committees, determine future Board and committee
requirements and make recommendations regarding the foregoing to
the Board for approval.
o Evaluate and make recommendations to the Board concerning the
appointment of directors to Board committees, the selection of
Board committee chairs, and proposal of the Board slate for
election. Consider stockholder nominees for election to the Board.
-1-
o Determine desired Board qualifications, expertise and
characteristics, and as necessary, conduct searches for potential
Board members with corresponding attributes. Evaluate and propose
nominees for election to the Board. In performing these tasks the
Committee shall have the sole authority to retain and terminate any
search firm to be used to identify director candidates.
o Evaluate the performance of the Board and individual directors,
and, if necessary, recommend termination of individual directors in
accordance with the Board's governance principles, for cause or for
other appropriate reasons. Oversee the annual Board performance
evaluation process including conducting surveys of director
observations, suggestions and preferences, and reviewing the
self-evaluation of each director.
o Conduct an annual review on CEO succession planning, report its
findings and recommendations to the Board, and work with the Board
in evaluating potential successors to executive management
positions.
o Evaluate and recommend compensation and benefits for the Company's
non-employee directors to the Board.
o Coordinate and approve Board and committee meeting schedules and
content.
o Develop and recommend to the Board the governance principles and
codes of ethics applicable to the Company.
o Review and re-examine this Charter as necessary.
o Form and delegate authority to subcommittees when appropriate.
o Annually review and evaluate Committee performance.
In performing its responsibilities, the Committee shall have the
authority to obtain advice, reports or opinions from internal or external
counsel and expert advisors.
MEETINGS:
The Committee will meet at least two times each year. The Committee may
establish its own schedule, which it will provide to the Board in advance.
MINUTES:
The Committee will maintain written minutes of its meetings, which
minutes will be filed with the minutes of the meetings of the Board of
Directors.
REPORTS:
The Committee shall report to the Board regarding its recommendations
for director nominees for the next annual meeting of stockholders and
regarding its examinations and recommendations with respect to corporate
governance.
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COMPENSATION:
Compensation, if any, for members of the Governance Committee shall be
determined by the Board of Directors in its sole discretion. Such fees may
include retainers, per meeting fees and special fees for service as Chair of
the Committee. Fees may be paid in such form of consideration as is determined
by the Board of Directors.
-3-
APPENDIX E
VISX Governance Principles
The following principles have been approved by the Board of
Directors ("the Board") and, along with the charters of the various
Board committees, provide the framework for the governance of VISX.
This structure is designed to be a working structure for principled
actions, effective decision-making and appropriate monitoring of
both compliance and performance. The Board recognizes that there is
an on-going and energetic debate about corporate governance, and
will review these principles and other aspects of governance
annually, or more often if deemed necessary.
1. Role of Board and Management. VISX's business is conducted by its
----------------------------
employees, managers and officers, under the direction of the chief
executive officer (CEO) and the oversight of the Board. The primary
focus of these groups is the enhancement of the long-term value of
the company for its stockholders.
The Board is elected by the stockholders to oversee management and
to assure that the long-term interests of the stockholders are
served.
VISX's Board and management are committed to achieving business
success through maintenance of the highest standards of
responsibility and ethics.
2. Functions of the Board. The Board has five scheduled meetings a
----------------------
year at which it reviews and discusses reports by management on the
performance of the Company, its plans and prospects, as well as
immediate issues facing the Company.
In addition to its general oversight of management, the Board
performs a number of specific functions, including:
a. selecting, evaluating and compensating the CEO and
overseeing CEO succession planning;
b. evaluating and compensating the executive officers of the
company;
c. reviewing, approving and monitoring fundamental financial
and business strategies and major corporate actions;
d. assessing major risks facing the Company - and reviewing
options for their mitigation; and
e. ensuring processes are in place for maintaining the
integrity of the Company - including but not limited to the
integrity of the financial statements, the integrity of
compliance with law and ethics, the integrity of
relationships with customers and suppliers, and the
integrity of relationships with stockholders.
3. Director Responsibilities. The fundamental role of the directors is
-------------------------
to exercise their business judgment to act in what they reasonably
believe to be the best interests of VISX. To satisfy this duty, the
directors will take an active, focused approach to their position.
The directors' job requires them to ask probing questions of
management and to obtain accurate and honest answers. Directors
rely on the advice, reports and opinions of management, counsel and
expert advisors. They shall have the benefit of directors' and
officers' insurance, paid by VISX, will receive indemnification to
the fullest extent allowed under VISX's charter and Delaware law,
and will receive exculpation as provided by VISX's charter and
Delaware law.
Directors are expected to rigorously prepare for, attend and
participate in all Board meetings, and to spend the time needed and
meet as often as necessary to properly discharge their obligations.
Information that is important to the understanding of the business
to be conducted at such meetings
should generally be distributed in writing to the directors prior
to the meeting, although sensitive subjects may be discussed
without advance distribution of written materials.
4. Director Qualifications. Directors should possess high personal and
-----------------------
professional ethics, integrity and values, and be committed to
representing the long-term interests of the stockholders. They must
also have an inquisitive and objective perspective, practical
wisdom and mature judgment.
Directors must be willing to devote sufficient time to carrying out
their duties and responsibilities effectively, and should be
committed to serve on the Board for an extended period of time.
Directors should offer their resignation in the event of any
significant change in their personal circumstances that could
affect their ability to act in the best interests of the Company,
including a change in their principal job responsibilities, so the
Board may review the continued appropriateness of their Board
membership under the circumstances.
The Board does not believe that arbitrary term limits on directors'
service are appropriate, nor does it believe that directors should
expect to be renominated annually until they reach the mandatory
retirement age. The Governance Committee shall be responsible for
reviewing with the Board, on an annual basis, the appropriate
skills and characteristics required of directors and the
composition of the Board. This assessment will include an
evaluation of directors' qualifications as independent, as well as
consideration of character, diversity, skills, judgment and
experience in such areas as operations, technology, finance,
marketing, manufacturing and the general needs of the Board. This
process will be an important determinant for Board tenure.
Directors will not be nominated for election to the Board after
their 72nd birthday, although this limitation does not apply to
non-employee directors serving as of December 12, 2002. Directors
shall not serve on more than three other boards of public companies
in addition to the VISX Board.
5. Independence of Directors. A majority of the directors will be
-------------------------
independent under the proposed criteria established by the New York
Stock Exchange (NYSE). To be considered independent under the
proposed NYSE rules, the Board must determine that a director does
not have any direct or indirect material relationship with VISX.
Independence determinations will be made each December in
connection with the Board`s annual self-evaluation process.
The company will not make extensions of credit in the form of
personal loans to directors or executive officers.
6. Selection Process and Size of Board. The directors are elected each
year by the stockholders at the annual meeting of stockholders.
Directors will be nominated by the Governance Committee of the
Board, in accordance with the charter of that committee. The Board
will review such nominations and will finalize the slate of
nominees to be presented to stockholders.
Between annual stockholder meetings, the Board may elect directors
to serve until the next annual meeting. The Board believes that,
given the size and breadth of VISX and the need for diversity of
Board views, the size of the Board should be up to seven directors.
The Board may amend the corporate by-laws to modify the size of the
Board should it determine such a change is appropriate.
7. Board Committees. The Board has established the following three
committees to assist the Board in discharging its responsibilities:
(i) audit; (ii) compensation; and (iii) governance. Committee
members will be appointed by the Board following recommendation by
the Governance Committee, in accordance with the charter of that
committee. Committee chairs shall be appointed by the Board, and
shall be rotated, such that the chair of each committee shall serve
for no longer than three consecutive years at a time, commencing
December 12, 2002.
a. Independence of Committee Members. All committee members
must meet the criteria for independence established by the
NYSE, the Securities and Exchange Commission, and
applicable law.
b. Committee Charters. Each committee shall have its own
charter. Each charter will set forth the purposes,
policies and responsibilities of the committee in addition
to the qualifications for committee membership, procedures
for committee member nomination and removal, committee
organization and functioning and how the committee will
communicate with the Board. The charters will provide that
each committee will meet to review its performance once a
year. The current charters of each committee shall be
published on the VISX website, and will be mailed to
stockholders on written request.
c. Meeting Procedures. The chairman of each committee will,
in consultation with the appropriate committee members and
members of management, and in accordance with the
committee's charter, determine the frequency and length of
committee meetings and develop the committee's agenda. At
the beginning of the year, each committee will establish a
schedule of agenda subjects to be discussed during the
year (to the extent these can be foreseen). The schedule
for each committee will be furnished to the full Board.
d. Committee Responsibilities. The committees shall have the
following general responsibilities:
i. Audit Committee. The Audit Committee shall oversee
the company's financial reporting process. In
discharging its responsibilities, the Audit Committee
shall, among other things, monitor internal corporate
controls, review and evaluate independent auditors,
including the independence of such auditors, hire or
replace such auditors, and report to the Board the
results of such auditor examinations and
recommendations.
ii. Compensation Committee. The Compensation Committee
shall, among other things, evaluate and approve
compensation and benefits for VISX's CEO and other
executive officers and make recommendations to the
Board respecting incentive compensation plans. In
addition, the committee may grant equity compensation
to VISX's employees pursuant to VISX's equity
compensation plans.
iii. Governance Committee. The Governance Committee shall,
among other things, review, solicit and make
recommendations to the Board and stockholders
respecting candidates for election to the Board,
administer the Board self-evaluation process,
evaluate the current organization, governance and
composition of the Board, and review and make
recommendations to the Board about director
qualifications and Board committee appointments. The
committee shall also make recommendations to the
Board respecting compensation and benefits for
non-employee directors and succession planning for
the CEO.
8. Meetings of Non-Employee Directors. The Board will conduct an
independent Board session at each Board meeting without management
present. The chairman of the Governance Committee will preside at
such meetings, and will serve as the "Lead Director" in performing
such other functions as the Board may direct, including advising on
the selection of committee chairs and advising management on the
agenda for Board meetings. The Lead Director shall be identified in
the company's annual proxy materials.
The non-employee directors may meet without management present at
such other times as determined by the Lead Director.
9. Self-Evaluation. The Board and each of the committees will perform
an annual self-evaluation. These evaluations will review the
conduct and contributions of the Board and the committees as a
whole, and will specifically review areas in which the Board and
management believe improvements can be made. The Governance
Committee will oversee the evaluation process, and will organize
and
summarize the evaluations for discussion with the Board and the
committees at the December Board meeting.
10. Setting Board Agenda. The Board shall be responsible for its
agenda. At the December Board meeting, the CEO will propose for the
Board's approval key issues of strategy, risk and integrity to be
scheduled and discussed during the course of the next calendar
year. Before that meeting, the Board may offer its suggestions. As
a result of this process, a schedule of major discussion items for
the following year will be established. Prior to each Board
meeting, the CEO will discuss the other specific agenda items for
the meeting with the Lead Director. The CEO and the Lead Director,
or committee chair as appropriate, shall determine the information
that shall be provided regularly to the directors before each
scheduled Board or committee meeting. Directors are urged to make
suggestions for agenda items, or additional pre-meeting materials,
to the CEO, the Lead Director, or appropriate committee chair at
any time.
11. Ethics and Conflict of Interest. The Board expects directors, as
well as officers and employees, to act ethically at all times and
to acknowledge their adherence to the policies comprising VISX's
code of ethics. If an actual or potential conflict of interest
arises for a director, the director shall promptly inform the CEO
and the Lead Director. If a significant conflict exists and cannot
be resolved, the director should resign. All directors will recuse
themselves from any discussion or decision affecting their
personal, business or professional interests. The Board shall
resolve any conflict of interest question involving the CEO or
executive officers.
12. Reporting of Concerns to Non-Employee Directors or the Audit
Committee. Beginning January 1, 2003, anyone who has a concern
about VISX's conduct, or about the company's accounting, internal
accounting controls or auditing matters, may communicate that
concern directly to the Lead Director, to the non-employee
directors, or to the Audit Committee. Such communications may be
confidential or anonymous, and may be e-mailed, submitted in
writing, or reported by phone. All such concerns will be forwarded
to the appropriate directors for their review, and will be reviewed
and addressed in the same way that other concerns are addressed by
the company. The status of all outstanding concerns addressed to
the non-employee directors, the Lead Director, or the Audit
Committee will be reported to the directors on a quarterly basis.
The non-employee directors, the Lead Director, or the Audit
Committee may direct special treatment, including the retention of
outside advisors or counsel, for any concern addressed to them.
13. Compensation of Board. The Governance Committee shall review
non-employee director compensation and benefits on an annual basis.
Changes in non-employee director compensation, if any, shall be
recommended by the committee and discussed and voted upon by the
full Board. Director compensation shall be guided by three goals:
to compensate directors fairly for work required in a company of
VISX's size and scope; to align directors' interests with the
long-term interests of stockholders; and to structure director
compensation so it is simple, transparent and easy to understand.
14. Succession Plan. The Board shall approve and maintain a succession
plan for the CEO, based upon recommendations from the Governance
Committee.
15. Annual Compensation Review of Senior Management. The Compensation
Committee shall annually approve the goals and objectives for
compensating the CEO. That committee shall evaluate the CEO's
performance in light of these goals before setting the CEO's
salary, bonus and other incentive and equity compensation. The
committee shall also annually approve the compensation structure
for the company's executive officers, and shall evaluate the
performance of such officers before approving their salary, bonus
and other incentive and equity compensation.
16. Access to Senior Management. Non-employee directors have complete
access to all VISX officers and employees. Any meetings or contacts
that a director desires to initiate may be arranged privately by
the director or through the CEO or other VISX officer.
17. Access to Independent Advisors. The Board and its committees shall
have the right at any time to retain independent outside financial,
legal or other advisors at company expense.
18. Director Orientation. The general counsel and the chief financial
officer shall be responsible for providing an orientation for new
directors, and for periodically providing materials or briefing
sessions for all directors on subjects that would assist them in
discharging their duties. Each new director shall, within six
months of election to the Board, attend a certified director
education course, selected from a list of such courses approved by
the Governance Committee. Incumbent directors will also attend
certified director education courses, selected from a list of such
courses approved by the Governance Committee, from time to time.
APPENDIX F
VISX, INCORPORATED
1995 DIRECTOR OPTION AND STOCK DEFERRAL PLAN
AMENDED AND RESTATED EFFECTIVE AS OF THE DATE OF THE 2003 ANNUAL
STOCKHOLDERS' MEETING
1. PURPOSES OF THE PLAN. The purposes of this 1995 Director Option and
Stock Deferral Plan are to attract and retain the best available personnel for
service as Outside Directors (as defined herein) of the Company, to provide
additional incentive to the Outside Directors of the Company to serve as
Directors, and to encourage their continued service on the Board.
All options granted hereunder shall be nonstatutory stock options.
Outside Directors may also elect to convert their annual retainer into deferred
phantom stock hereunder.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "BOARD" means the Board of Directors of the Company.
(b) "CODE" means the Internal Revenue Code of 1986, as amended.
(c) "COMMON STOCK" means the Common Stock of the Company.
(d) "COMPANY" means VISX, Incorporated, a Delaware corporation.
(e) "CONTINUOUS STATUS AS A DIRECTOR" means the absence of any
interruption or termination of service as a Director.
(f) "DEFERRED PHANTOM STOCK" means phantom units of Company Common
Stock under the Outside Director Stock Deferral Plan.
(g) "DIRECTOR" means a member of the Board.
(h) "EMPLOYEE" means any person, including officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a Director's fee by the Company shall not be sufficient in and of itself to
constitute "employment" by the Company.
(i) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(j) "FAIR MARKET VALUE" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the New York
Stock Exchange, the Fair Market Value of a Share of Common Stock shall be the
closing sales price for such
stock (or the closing bid, if no sales were reported) as quoted on such system
or exchange (or the exchange with the greatest volume of trading in Common
Stock) on the day of determination, as reported in THE WALL STREET JOURNAL or
such other source as the Board deems reliable;
(ii) If the Common Stock is quoted on any established stock
exchange or regularly quoted by a recognized securities dealer but selling
prices are not reported, the Fair Market Value of a Share of Common Stock shall
be the mean between the high bid and low asked prices for the Common Stock on
the day of determination, as reported in THE WALL STREET JOURNAL or such other
source as the Board deems reliable, or;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board.
(k) "NEW OUTSIDE DIRECTOR" means an Outside Director who first
becomes a Director at or after the Company's 2003 annual meeting of
stockholders.
(l) "OPTION" means a stock option granted pursuant to the Plan.
(m) "OPTIONED STOCK" means the Common Stock subject to an Option.
(n) "OPTIONEE" means an Outside Director who receives an Option.
(o) "OUTSIDE DIRECTOR" means a Director who is not an Employee.
(p) "OUTSIDE DIRECTOR STOCK DEFERRAL PLAN" means the Outside Director
Stock Deferral Plan attached hereto as Appendix A.
(q) "PARENT" means a "parent corporation", whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(r) "PLAN" means this VISX, Incorporated 1995 Director Option and
Stock Deferral Plan, including the Outside Director Stock Deferral Plan attached
hereto as Appendix A.
(s) "QUALIFYING RETIREMENT" means an Outside Director's termination
from the Board, including pursuant to the Outside Director's death or disability
(as defined in Section 22(e)(3) of the Code), if such termination follows (i)
five full terms of Board membership and attainment of age 62 or greater, or (ii)
ten full terms of Board membership.
(t) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 10 of the Plan.
(u) "SUBSIDIARY" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 10 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan or deferred as Deferred Phantom Stock into the Outside Director
Stock Deferral Plan is seven hundred and seventy-five thousand (775,000) Shares
(the "Pool") of Common Stock. The Shares may be authorized but unissued, or
reacquired Common Stock.
If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan; provided, however, that Shares that have actually
been issued under the Plan shall not be returned to the Plan and shall not
become available for future distribution under the Plan.
4. ADMINISTRATION AND INITIAL AND ANNUAL GRANT OF OPTIONS UNDER THE PLAN.
2
(a) PROCEDURE FOR INITIAL AND ANNUAL GRANTS. Outside Directors shall
receive initial and annual grants as follows:
(i) No person shall have any discretion to select which
Outside Directors shall be granted Options or to determine the number of Shares.
(ii) Each New Outside Director shall be automatically granted
an Option to purchase Twenty-Five Thousand (25,000) Shares (a "First Option") on
the date on which such person first becomes a Director, whether through election
by the stockholders of the Company or appointment by the Board to fill a
vacancy; provided, however, that an Employee Director who ceases to be an
Employee but who remains a Director shall not receive a First Option.
(iii) Each Outside Director shall be automatically granted an
Option to purchase Ten Thousand (10,000) Shares (a "Subsequent Option") on the
date such Outside Director is re-elected to the Board commencing with the
Company's 2003 annual meeting of stockholders, if on such date he or she shall
have served on the Board for at least six (6) months.
(iv) The terms of a First Option granted hereunder shall be as
follows:
(A) the term of the First Option shall be ten (10)
years.
(B) the First Option shall be exercisable only while the
Outside Director remains a Director of the Company, except as set forth in
Section 9 hereof.
(C) the exercise price per Share shall be 100% of the
Fair Market Value per Share on the date of grant of the First Option. In the
event that the date of grant of the First Option is not a trading day, the
exercise price per Share shall be the Fair Market Value on the next trading day
immediately following the date of grant of the First Option.
(D) the First Option shall vest as to 1/3 of the Shares
subject to the First Option on each anniversary of the date of grant, so as to
be 100% vested on the third anniversary of the date of grant, subject to
continued service as an Outside Director.
(v) The terms of a Subsequent Option granted hereunder shall
be as follows:
(A) the term of the Subsequent Option shall be ten (10)
years.
(B) the Subsequent Option shall be exercisable only
while the Outside Director remains a Director of the Company, except as set
forth in Section 9 hereof.
(C) the exercise price per Share shall be 100% of the
Fair Market Value per Share on the date of grant of the Subsequent Option. In
the event that the date of grant of the Subsequent Option is not a trading day,
the exercise price per Share shall be the Fair Market Value on the next trading
day immediately following the date of grant of the Subsequent Option.
(D) the Subsequent Option shall be 100% vested upon the
date of grant.
(vi) In the event that any Option granted under the Plan would
cause the number of Shares subject to outstanding Options plus the number of
Shares previously purchased under Options to exceed the Pool, then the remaining
Shares available for Option grant shall be granted under Options to the Outside
Directors on a pro rata basis. No further grants shall be made until such time,
if any, as additional Shares become available for grant under the Plan
3
through action of the stockholders to increase the number of Shares which may be
issued under the Plan or through cancellation or expiration of Options
previously granted hereunder.
5. ELECTION TO RECEIVE ANNUAL RETAINER IN STOCK OPTIONS OR DEFERRED
PHANTOM STOCK.
(a) IRREVOCABLE ELECTION. On the date of each annual meeting of
stockholders of the Company during the term of this Plan, commencing with the
2003 annual stockholders meeting, each Outside Director may make an election to
receive (an "Election") (i) Options in lieu of 50% or 100% of his or her annual
cash retainer for the year following the meeting or (ii) Deferred Phantom Stock
in lieu of 50% or 100% of his or her annual cash retainer for the year following
the meeting. The Election must be in writing and delivered to the Secretary of
the Company prior to the date of such annual stockholders meeting. Any Election
made by an Outside Director pursuant to this Section 5 shall be irrevocable.
(b) RETAINER OPTION GRANTS. On the first Board meeting of each
quarter following the annual stockholders meeting, Outside Directors who have
elected to receive Options in lieu of 50% or 100% of their annual cash retainer
shall automatically receive a Option covering the number of Shares determined by
dividing (1) the product of (a) the amount of the cash retainer that would
otherwise have been paid on account of such quarter but for the Election,
multiplied by (b) 3, by (2) the Fair Market Value of a Share on that date,
rounded to the nearest whole Share, provided that on the date of grant of any
such Stock Option such person is an Outside Director; and provided further that
sufficient Shares are available under the Plan for the grant of such Stock
Option (the "Retainer Option").
The terms of a Retainer Option granted hereunder shall be as
follows:
(A) the term of the Retainer Option shall be ten (10)
years.
(B) the Retainer Option shall be exercisable only while
the Outside Director remains a Director of the Company, except as set forth in
Section 9 hereof.
(C) the exercise price per Share shall be 100% of the
Fair Market Value per Share on the date of grant of the Retainer Option. In the
event that the date of grant of the Retainer Option is not a trading day, the
exercise price per Share shall be the Fair Market Value on the next trading day
immediately following the date of grant of the Retainer Option.
(D) the Retainer Option shall be 100% vested on the date
of grant.
(c) DEFERRED PHANTOM STOCK. On the first Board meeting of
each quarter following the annual stockholders meeting, Outside Directors who
have elected to receive Deferred Phantom Stock in lieu of 50% or 100% of their
annual cash retainer shall automatically have their account under the Outside
Director Stock Deferral Plan credited with the number of Deferred Phantom Stock
units determined by dividing (i) the amount of the cash retainer that would
otherwise have been paid on account of such quarter but for the Election, by
(ii) the Fair Market Value of a Share on that date, rounded to the nearest whole
Share, provided that on the date such Board meeting such person is an Outside
Director; and provided further that sufficient Shares are available under the
Plan for the crediting of such Deferred Phantom Stock units. The Deferred
Phantom Stock units shall be held subject to the terms and conditions of the
Outside Director Stock Deferral Plan and the elections made thereunder.
6. ELIGIBILITY. Options and Deferred Phantom Stock may be granted only to
Outside Directors. An Outside Director who has been granted an Option or
Deferred Phantom Stock may, if he or she is otherwise eligible, be granted
additional Options or Deferred Phantom Stock in accordance with the provisions
of the Plan.
The Plan shall not confer upon any Outside Director any right with
respect to continuation of service as a Director or nomination to serve as a
Director, nor shall it interfere in any way with any rights which the Director
or the Company may have to terminate his or her directorship at any time.
4
7. TERM OF PLAN. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the stockholders of the
Company. It shall continue in effect for a term of ten (10) years unless sooner
terminated under Section 11 of the Plan.
8. FORM OF CONSIDERATION. The consideration to be paid for the Shares to
be issued upon exercise of an Option, including the method of payment, shall
consist of (i) cash, (ii) check, (iii) other shares which (x) in the case of
Shares acquired upon exercise of an Option, have been owned by the Optionee for
more than six (6) months on the date of surrender, and (y) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised, (iv) delivery of a properly
executed exercise notice together with such other documentation as the Company
and the broker, if applicable, shall require to effect an exercise of the Option
and delivery to the Company of the sale or loan proceeds required to pay the
exercise price, or (v) any combination of the foregoing methods of payment.
9. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option
granted hereunder shall be exercisable at such times as are set forth in
Sections 4 and 5 hereof.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 8 of the Plan. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate or electronic notice covering the number of Shares so
acquired shall be issued to the Optionee as soon as practicable after exercise
of the Option. No adjustment shall be made for a dividend or other right for
which the record date is prior to the date the stock certificate or electronic
notice is issued, except as provided in Section 11 of the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) RULE 16b-3. Options and Deferred Phantom Stock granted to Outside
Directors must comply with the applicable provisions of Rule 16b-3 promulgated
under the Exchange Act or any successor thereto and shall contain such
additional conditions or restrictions as may be required thereunder to qualify
Plan transactions, and other transactions by Outside Directors that otherwise
could be matched with Plan transactions, for the maximum exemption from
Section 16 of the Exchange Act.
(c) TERMINATION OF CONTINUOUS STATUS AS A DIRECTOR. In the event an
Optionee's Continuous Status as a Director terminates (other than upon the
Optionee's death or total and permanent disability (as defined in
Section 22(e)(3) of the Code) or Qualifying Retirement), the Optionee may
exercise his or her Option, but only within three (3) months from the date of
such termination, and only to the extent that the Optionee was entitled to
exercise it on the date of such termination (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option on the date of such termination, and to the
extent that the Optionee does not exercise such Option (to the extent otherwise
so entitled) within the time specified herein, the Option shall terminate.
(d) DISABILITY OF OPTIONEE. In the event Optionee's Continuous Status
as a Director terminates as a result of total and permanent disability (as
defined in Section 22(e)(3) of the Code), the Optionee may exercise his or her
5
Option, but only within twelve (12) months from the date of such termination,
and only to the extent that the Optionee was entitled to exercise it on the date
of such termination (but in no event later than the expiration of its ten (10)
year term). To the extent that the Optionee was not entitled to exercise an
Option on the date of termination, or if he or she does not exercise such Option
(to the extent otherwise so entitled) within the time specified herein, the
Option shall terminate.
(e) DEATH OF OPTIONEE. In the event of an Optionee's death, the
Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance may exercise the Option, but only within twelve (12)
months following the date of death, and only to the extent that the Optionee was
entitled to exercise it on the date of death (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option on the date of death, and to the extent that the
Optionee's estate or a person who acquired the right to exercise such Option
does not exercise such Option (to the extent otherwise so entitled) within the
time specified herein, the Option shall terminate.
(f) QUALIFYING RETIREMENT OF OPTIONEE. Notwithstanding the provisions
set forth in Section 9(d) of the Plan, in the event of an Optionee's Qualifying
Retirement, the Optionee may exercise his or her Option, but only within the
lesser of (i) five years from the date of the Qualifying Retirement, or (ii) the
original ten (10) year term of the Option following the date of termination, and
only to the extent that the Optionee was entitled to exercise it on the date of
termination. To the extent that the Optionee was not entitled to exercise an
Option on the date of termination, or if he or she does not exercise such Option
(to the extent otherwise so entitled) within the time specified herein, the
Option shall terminate.
10. NON-TRANSFERABILITY OF OPTIONS. Options hereunder may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER, ASSET
SALE OR CHANGE OF CONTROL.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
stockholders of the Company, the number of Shares covered by each outstanding
Option or share of Deferred Phantom Stock, the number of Shares which have been
authorized for issuance under the Plan but as to which no Options or Deferred
Phantom Stock units have yet been granted or credited or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the price per Share covered by each such outstanding Option, and the number of
Shares issuable pursuant to the automatic grant provisions of Section 4 hereof
shall be proportionately adjusted for any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of Shares
subject to an Option or the number of Deferred Phantom Stock units credited to
an account.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it will terminate immediately prior to the
consummation of such proposed action.
(c) MERGER OR ASSET SALE. Subject to Section 11(d), in the event of a
merger of the Company with or into another corporation, or the sale of
substantially all of the assets of the Company, each outstanding Option shall be
assumed or an equivalent option shall be substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the event
that the successor corporation does not agree to assume the Option or to
substitute an equivalent option, each outstanding Option shall become fully
vested and exercisable, including as to Shares as to which it would not
otherwise be exercisable. If an Option becomes fully vested and exercisable in
the event of a merger or sale of assets, the Board shall notify the Optionee
that the Option shall be fully exercisable for a period of thirty (30) days from
6
the date of such notice, and the Option shall terminate upon the expiration of
such period. For the purposes of this paragraph, the Option shall be considered
assumed if, following the merger or sale of assets, the option or right confers
the right to purchase, for each Share of Optioned Stock subject to the Option
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares).
(d) CHANGE OF CONTROL. In the event of a Change of Control (as
defined below), the Optionee shall fully vest in and have the right to exercise
each Option as to all of the Optioned Stock, including Shares as to which it
would not otherwise be vested or exercisable. If an Option becomes fully vested
and exercisable in the event of a Change of Control, the Administrator shall
notify the Optionee in writing or electronically that the Option shall be fully
vested and exercisable for a period of fifteen (15) days from the date of such
notice, and the Option shall terminate upon the expiration of such period.
A "Change of Control" means the occurrence of any of the following
events:
(i) any "person," as such term is used in Sections 13(d) and
14(d) of the Exchange Act, other than the Company, a subsidiary of the Company
or a Company employee benefit plan, including any trustee of such plan acting as
trustee, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing twenty percent (20%) or more of the combined voting power of the
Company's then outstanding securities entitled to vote generally in the election
of directors; or
(ii) a merger or consolidation of the Company or any direct or
indirect subsidiary of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the stockholders
of the Company approve an agreement for the sale or disposition by the Company
of all or substantially all the Company's assets; or
(iii) a change in the composition of the Board, as a result of
which fewer than a majority of the directors are Incumbent Directors. "Incumbent
Directors" shall mean directors who either (A) are Directors as of the date this
amendment to the Plan is approved by the Board, or (B) are elected, or nominated
for election, to the Board with the affirmative votes of at least a majority of
the Incumbent Directors AND whose election or nomination was not in connection
with any transaction described in (i) or (ii) above or in connection with an
actual or threatened proxy contest relating to the election of directors of the
Company.
12. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. Except as set forth in Section 4, the
Board may at any time amend, alter, suspend, or discontinue the Plan, but no
amendment, alteration, suspension, or discontinuation shall be made which would
impair the rights of any Optionee or Outside Director Stock Deferral Plan
participant under any grant theretofore made, without his or her consent,
provided that the Board may not amend the Plan to permit the repricing,
including by way of exchange, of any Option without stockholder approval. In
addition, to the extent necessary and desirable to comply with Rule 16b-3 under
the Exchange Act (or any other applicable law or regulation), the Company shall
obtain stockholder approval of any Plan amendment in such a manner and to such a
degree as required.
(b) EFFECT OF AMENDMENT OR TERMINATION. Any such adverse amendment
without consent or termination of the Plan shall not affect Options or Deferred
Phantom Stock units already granted or credited and such Options and Deferred
Phantom Stock units shall remain in full force and effect as if this Plan had
not been amended or terminated.
7
13. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date determined in accordance with Section 4 hereof.
14. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares, if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.
15. RESERVATION OF SHARES. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
16. OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
8
APPENDIX A TO THE 1995 DIRECTOR PLAN
VISX, INCORPORATED
OUTSIDE DIRECTOR STOCK DEFERRAL PLAN
-i-
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS..........................................................1
1.1 "Board of Directors" ..............................................1
1.2 "Committee" .......................................................1
1.3 "Credited Investment Return (Loss)"................................1
1.4 "Deferral Account" ................................................1
1.5 "Deferral Amount" .................................................1
1.6 "Deferral Election" ...............................................1
1.8 "Participant" .....................................................1
1.9 "Plan" ............................................................1
ARTICLE II ELIGIBILITY.........................................................1
2.1 Eligible Persons...................................................1
2.2 Commencement of Participation......................................2
2.3 Termination of Participation.......................................2
ARTICLE III DEFERRED PHANTOM STOCK.............................................2
3.1 Phantom Stock Deferrals............................................2
3.2 No Withdrawal......................................................2
ARTICLE IV CREDITED INVESTMENT RETURN (LOSS) ON DEFERRAL ACCOUNTS..............2
4.1 Deferral Account...................................................2
4.2 Credited Investment Return (Loss)..................................2
ARTICLE V BENEFITS.............................................................2
5.1 Distribution of Benefits...........................................2
5.2 Change of Distribution Election....................................2
5.3 Payment to Estate..................................................3
5.4 Automatic Lump-Sum Distribution for Accounts below $25,000.........3
5.5 Tax Withholding....................................................3
ARTICLE VI OBLIGATION TO PAY SUPPLEMENTAL PARTICIPANT BENEFITS.................3
6.1 Benefits Paid From General Corporate Assets; Payment in Stock.....3
6.2 No Secured Interest................................................3
ARTICLE VII ADMINISTRATION.....................................................3
7.1 Administration of the Plan.........................................3
7.2 Indemnification....................................................3
ARTICLE VIII MISCELLANEOUS.....................................................3
8.1 Nontransferability.................................................3
8.2 Binding Effect.....................................................3
8.3 Reimbursement of Costs.............................................3
8.4 Arbitration........................................................4
8.5 Applicable Law.....................................................4
-ii-
8.6 Entire Agreement...................................................4
8.7 Termination or Amendment of Plan...................................4
-iii-
VISX, INCORPORATED
OUTSIDE DIRECTOR STOCK DEFERRAL PLAN
This VISX, Incorporated Outside Director Stock Deferral Plan is adopted
effective as of the date of the Company's 2003 annual meeting of stockholders.
ARTICLE I
DEFINITIONS
Whenever used herein, the masculine pronoun shall be deemed to include the
feminine, and the singular to include the plural, unless the context clearly
indicates otherwise, and the following definitions shall govern the Plan
(capitalized terms not defined below shall have the same defined meaning as
specified in the 1995 Director Option and Stock Deferral Plan):
1.1 "BOARD OF DIRECTORS" or "BOARD" means the Board of Directors of VISX,
Incorporated.
1.2 "COMMITTEE" means an independent Committee appointed by the Board to
administer this Plan and to take such other actions as may be specified herein.
1.3 "CREDITED INVESTMENT RETURN (LOSS)" means the hypothetical investment
return which shall be credited to a Participant's Deferral Account pursuant to
Article IV.
1.4 "DEFERRAL ACCOUNT" means the book entry account established under this
Plan for each Participant to which shall be credited (or debited) such
Participant's Deferral Amount and Credited Investment Return (Loss) and which
shall be reduced by any distributions made to such Participant and any charges
which may be imposed on such Deferral Account pursuant to the terms of this
Plan.
1.5 "DEFERRAL AMOUNT" means the Deferred Phantom Stock Amount which
Participant elects to contribute pursuant to Article III.
1.6 "DEFERRAL ELECTION" means the form of Deferred Phantom Stock Election
as prescribed by the Committee, as modified from time to time.
1.7 "PARTICIPANT" means a present or former Outside Director (or estate or
beneficiaries of an Outside Director) who has a Deferral Account under this
Plan.
1.8 "PLAN" shall mean this VISX, Incorporated Outside Director Stock
Deferral Plan, as it may be amended from time to time.
ARTICLE II
ELIGIBILITY
2.1 ELIGIBLE PERSONS. Eligibility for participation in this Plan shall be
limited to Outside Directors who have elected to receive Deferred Phantom Stock
in lieu of their annual retainer under the Company's 1995 Director Option and
Stock Deferral Plan and their estates and beneficiaries.
2.2 COMMENCEMENT OF PARTICIPATION. A Participant may begin participation
in this Plan immediately following the submission of an irrevocable Deferral
Election in accordance with the terms of the 1995 Director Option and Stock
Deferral Plan.
2.3 TERMINATION OF PARTICIPATION. Active participation in this Plan shall
end when a Participant's Board service terminates for any reason. No
contributions to this Plan shall be made with respect to a Participant's
Deferral Account after such termination date. Upon termination of Board service,
a Participant shall remain an inactive Participant in the Plan until all of the
benefits to which he or she is entitled hereunder have been paid in full.
ARTICLE III
DEFERRED PHANTOM STOCK
3.1 Phantom Stock Deferrals.
(a) Upon submitting a Deferral Election to the Company, in lieu of
his or her annual retainer, a Participant's Deferral Account under this Plan
shall be credited with a number of Deferred Phantom Stock shares determined in
accordance with Section 5(c) of the 1995 Director Option and Stock Deferral
Plan. The Participant shall satisfy the self-employment tax obligations arising
from the credit of Deferred Phantom Stock to his Deferral Account.
(b) A Participant's Deferral Election shall be irrevocable, except
as provided in Section 5.2 of this Plan.
3.2 NO WITHDRAWAL. Except as provided in Section 5.3 below, Deferral
Amounts may not be withdrawn by a Participant and shall be paid only in
accordance with the provisions of this Plan.
ARTICLE IV
CREDITED INVESTMENT RETURN (LOSS) ON DEFERRAL ACCOUNTS
4.1 Deferral Account.
(a) A Deferral Account shall be established and maintained for each
Participant.
4.2 CREDITED INVESTMENT RETURN (LOSS). Each Participant's Deferral Account
shall be credited (or debited) monthly with the Credited Investment Return
(Loss) attributable to his or her Deferral Account. The Credited Investment
Return (Loss) is the amount which the Participant's Deferral Account would have
earned if the amounts credited to the Deferral Account had, in fact, been
invested in the Common Stock, purchased at the closing sales price on the date
of the applicable Board meeting (as specified in Section 5(c) of the 1995
Director Option and Stock Deferral Plan), and assuming reinvestment of all
dividends back into such Common Stock at the Common Stock closing sales price on
the date of the dividend distribution.
ARTICLE V
BENEFITS
5.1 DISTRIBUTION OF BENEFITS. Benefits shall be distributed in accordance
with the elections specified within a Participant's Deferral Election.
5.2 CHANGE OF DISTRIBUTION ELECTION. A Participant may file an amended
election to change his distribution election at any time which is more than one
(1) year prior to the applicable specified fixed date at which payment of
benefits would otherwise commence. Any amended election which is filed within
one (1) year of the applicable specified date at which payment of benefits shall
commence shall be void and without effect and the most recently effective
election shall control instead.
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5.3 PAYMENT TO ESTATE. In the event a Participant dies after installment
payments have begun but before all of the installments are paid, the
undistributed installments shall be paid to his or her estate as they become
due.
5.4 AUTOMATIC LUMP-SUM DISTRIBUTION FOR ACCOUNTS BELOW $25,000.
Notwithstanding any other provisions of this Plan or the provisions of a
Participant's Deferral Election, in the event that a Participant has less than
twenty-five thousand dollars ($25,000) credited to his or her Deferral Account
as of the date of his or her termination of Board service, 100% of his or her
Deferral Account shall be distributed to him or her in a single lump-sum
distribution within a reasonable amount of time following the date of such
termination of service.
5.5 TAX WITHHOLDING. All distributions under this Plan shall be subject to
all applicable withholding for state and federal income tax and to any other
federal, state or local tax which may be applicable thereto.
ARTICLE VI
OBLIGATION TO PAY SUPPLEMENTAL PARTICIPANT BENEFITS
6.1 BENEFITS PAID FROM GENERAL CORPORATE ASSETS; PAYMENT IN STOCK. All
benefits payable to a Participant hereunder, shall be paid by the Company in
shares of Common Stock.
6.2 NO SECURED INTEREST. Deferral Accounts shall be subject to the claims
of creditors of the Company. Each Participant is a general unsecured creditor of
the Company with respect to the promises of the Company made herein.
ARTICLE VII
ADMINISTRATION
7.1 ADMINISTRATION OF THE PLAN. This Plan shall be administered by the
Committee. The Committee shall have full power and discretionary authority to
administer, construe and interpret the Plan, to establish procedures for
administering this Plan, to prescribe forms, and take any and all necessary or
desirable actions in connection with this Plan. The Committee's interpretation
and construction of this Plan shall be conclusive and binding on all persons.
The Committee may appoint a plan administrator or any other agent and delegate
to them such powers and duties in connection with the administration of this
Plan as the Committee may from time to time prescribe.
7.2 INDEMNIFICATION. The Committee and each of its members are indemnified
by the Company against any and all liabilities incurred by reason of any action
taken in good faith pursuant to the provisions of this Plan.
ARTICLE VIII
MISCELLANEOUS
8.1 NONTRANSFERABILITY. The right of each Participant or any other person
to the payment of any benefits under this Plan shall not be assigned,
transferred, pledged or encumbered.
8.2 BINDING EFFECT. This Plan shall be binding upon and inure to the
benefit of the Company, its successors and assigns and each Participant and his
heirs, executors, administrators and legal representatives.
8.3 REIMBURSEMENT OF COSTS. If the Company, a Participant or a successor
in interest to either of the foregoing, brings legal action to enforce any of
the provisions of this Plan, including an action described in Section 8.4 of
this Plan, the prevailing party in such legal action shall be reimbursed by the
other party for the prevailing party's costs of such legal action including,
without limitation, reasonable fees of attorneys, accountants and similar
advisors and expert witnesses.
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8.4 ARBITRATION. Any dispute or claim relating to or arising out of this
Plan shall be fully and finally resolved by binding arbitration conducted by the
American Arbitration Association in Santa Clara, California.
8.5 APPLICABLE LAW. This Plan shall be construed in accordance with and
governed by the laws of the State of California.
8.6 ENTIRE AGREEMENT. This Plan, 1995 Director Option and Stock Deferral
Plan and each applicable Deferral Election constitute the entire understanding
and agreement with respect to this Plan, and there are no agreements,
understandings, restrictions, representations or warranties among any
Participant and the Company other than those as set forth or provided for
therein.
8.7 Termination or Amendment of Plan.
(a) This Plan may be amended by the Company at any time in its sole
discretion by resolution by the Board; provided, however, that no amendment may
be made which would alter the irrevocable nature of a Deferral Election or which
would reduce the amount credited to an Participant's Deferral Account on the
date of such amendment.
(b) Notwithstanding the foregoing paragraph or any other provision
in this Plan to the contrary, the Company reserves the right to terminate the
Plan in its entirety at any time upon fifteen (15) days notice to Outside
Directors. If this Plan is terminated, all benefits shall be paid pursuant to
the provisions of Article 5 as if such Participant had voluntarily terminated
Board service on the date of Plan termination.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by a
duly authorized officer effective as of the Effective Date.
VISX, INCORPORATED
By:
-----------------------------
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APPENDIX G
VISX, INCORPORATED
2000 STOCK PLAN
AMENDED AND RESTATED EFFECTIVE AS OF THE DATE OF RECEIVING STOCKHOLDER APPROVAL
IN 2003
1. PURPOSES OF THE PLAN. The purposes of this 2000 Stock Plan are:
- to attract and retain the best available personnel for
positions of substantial responsibility,
- to provide additional incentive to Employees, Directors and
Consultants, and
- to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time
of grant. The Plan also provides for the grant of Restricted Stock Awards
and Stock Appreciation Rights; provided, however, that (i) in no event
shall more than 10% of the Shares issuable under the Plan be granted
pursuant to Stock Options or SARS with an exercise price that is less than
100% of Fair Market Value, and (ii) in no event shall more than 10% of the
Shares issuable under the Plan be granted as Restricted Stock Awards.
2. DEFINITIONS. As used herein, the following definitions shall
apply:
(a) "ADMINISTRATOR" means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4 of the Plan.
(b) "APPLICABLE LAWS" means the requirements relating to the
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options, Stock Awards or Stock
Appreciation Rights are, or will be, granted under the Plan.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CHANGE OF CONTROL" means the occurrence of any of the
following events:
(i) any "person," as such term is used in Sections 13(d)
and14(d) of the Exchange Act, other than the Company, a subsidiary of the
Company or a Company employee benefit plan, including any trustee of such plan
acting as trustee, is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing twenty percent (20%) or more of the combined voting power
of the Company's then outstanding securities entitled to vote generally in the
election of directors; or
(ii) a merger or consolidation of the Company or any
direct or indirect subsidiary of the Company with any other corporation, other
than a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the stockholders
of the Company approve an agreement for the sale or disposition by the Company
of all or substantially all the Company's assets; or
(iii) a change in the composition of the Board, as a
result of which fewer than a majority of the directors are Incumbent Directors.
"Incumbent Directors" shall mean directors who either (A) are Directors as of
the date this Plan is approved by the Board of Directors, or (B) are elected, or
nominated for election, to the Board with the affirmative votes of at least a
majority of the Incumbent Directors and whose election or nomination was not in
connection with any transaction described in (i) or (ii) above or in connection
with an actual or threatened proxy contest relating to the election of directors
of the Company.
(e) "CODE" means the Internal Revenue Code of 1986, as amended.
(f) "COMMITTEE" means a committee of Directors appointed by the
Board in accordance with Section 4 of the Plan.
(g) "COMMON STOCK" means the common stock of the Company.
(h) "COMPANY" means VISX, Incorporated, a Delaware corporation.
(i) "CONSULTANT" means any person, including an advisor, engaged
by the Company or a Parent or Subsidiary to render services to such entity.
(j) "DIRECTOR" means a member of the Board.
(k) "DISABILITY" means total and permanent disability as defined
in Section 22(e)(3) of the Code.
(l) "EMPLOYEE" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company. A
Service Provider shall not cease to be an Employee in the case of (i) any leave
of absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety (90)
days, unless reemployment upon expiration of such leave is guaranteed by statute
or contract. If reemployment upon expiration of a leave of absence approved by
the Company is not so guaranteed, then three (3) months following the
ninety-first (91st) day of such leave, any Incentive Stock Option held by the
Optionee shall cease to be treated as an Incentive Stock Option and shall be
treated for tax purposes as a Nonstatutory Stock Option. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(n) "FAIR MARKET VALUE" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the New
York Stock Exchange, the Fair Market Value of a Share of Common Stock shall be
the closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in Common Stock) on the day of determination, as
reported in THE WALL STREET JOURNAL or such other source as the Board deems
reliable;
(ii) If the Common Stock is quoted on any established
stock exchange or regularly quoted by a recognized securities dealer but selling
prices are not reported, the Fair Market Value of a Share of Common Stock shall
be the mean between the high bid and low asked prices for the Common Stock on
the day of determination, as reported in THE WALL STREET JOURNAL or such other
source as the Board deems reliable, or;
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Board.
(o) "INCENTIVE STOCK OPTION" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.
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(p) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.
(q) "NOTICE OF GRANT" means a written or electronic notice
evidencing certain terms and conditions of an individual Option grant. The
Notice of Grant is part of the Option Agreement.
(r) "OFFICER" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(s) "OPTION" means a stock option granted pursuant to the Plan.
(t) "OPTION AGREEMENT" means an agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the Plan.
(u) "OPTIONED STOCK" means the Common Stock subject to an
Option, SAR or Restricted Stock Award.
(v) "OPTIONEE" means the holder of an outstanding Option, SAR or
Restricted Stock Award granted under the Plan.
(w) "PARENT" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(x) "PLAN" means this 2000 Stock Plan.
(y) "RESTRICTED STOCK" means shares of Common Stock acquired
pursuant to the grant of a Restricted Stock Award under Section 11 below.
(z) "RESTRICTED STOCK AWARD" means shares of Common Stock
acquired pursuant to a grant of a Restricted Stock Award under Section 11 below.
(aa) "RESTRICTED STOCK AWARD AGREEMENT" means a written agreement
between the Company and the Employee evidencing the terms and restrictions
applying to stock granted under this Plan. The Restricted Stock Award Agreement
is subject to the terms and conditions of the Plan.
(bb) "STOCK APPRECIATION RIGHT or SAR" means an award issued
pursuant to Section 12 below.
(cc) "RULE 16B-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(dd) "SECTION 16(b) " means Section 16(b) of the Exchange Act.
(ee) "SERVICE PROVIDER" means an Employee, Director or
Consultant.
(ff) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 14 of the Plan.
(gg) "SUBSIDIARY" means a "subsidiary corporation", whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of
Section 14 of the Plan, the maximum aggregate number of Shares that may be
optioned and sold under the Plan is five million five hundred thousand
(5,500,000) Shares; provided, however, that (i) in no event shall more than 10%
of the Shares issuable under the Plan be granted pursuant to
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Stock Options or SARS with an exercise price that is less than 100% of Fair
Market Value, and (ii) in no event shall more than 10% of the Shares issuable
under the Plan be granted as Restricted Stock Awards. The Shares may be
authorized, but unissued, or reacquired Common Stock.
If an Option, SAR or Restricted Stock Award expires or becomes
unexercisable without having been exercised in full, or, with respect to a
Restricted Stock Award, is forfeited back to or repurchased by the Company, the
unpurchased Shares (or for Restricted Stock Awards, the forfeited or repurchased
shares) which were subject thereto shall become available for future grant or
sale under the Plan (unless the Plan has terminated). With respect to SARs, only
shares actually issued pursuant to an SAR (or in the event of a cash payout, the
share equivalent) shall cease to be available under the Plan; all remaining
shares under SARs shall remain available for future grant or sale under the Plan
(unless the Plan has terminated). However, Shares that have actually been issued
under the Plan, upon exercise of either an Option, SAR or Restricted Stock Award
shall not be returned to the Plan and shall not become available for future
distribution under the Plan, except that if Shares of Restricted Stock are
repurchased by the Company at their original purchase price or forfeited to the
Company, such Shares shall become available for future grant under the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE.
(i) MULTIPLE ADMINISTRATIVE BODIES. Different Committees
may administer the Plan with respect to different groups of Service Providers.
(ii) SECTION 162(m). To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.
(iii) RULE 16b-3. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption under
Rule 16b-3.
(iv) OTHER ADMINISTRATION. Other than as provided above,
the Plan shall be administered by (A) the Board or (B) a Committee, which
committee shall be constituted to satisfy Applicable Laws.
(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of
the Plan, and in the case of a Committee, subject to the specific duties
delegated by the Board to such Committee, the Administrator shall have the
authority, in its discretion:
(i) to determine the Fair Market Value in accordance
with Section 2(n) of the Plan;
(ii) to select the Service Providers to whom Options,
SARs and Restricted Stock Awards may from time to time be granted hereunder
(iii) to determine the number of shares of Common Stock to
be covered by each Option, SAR or Restricted Stock Award granted hereunder;
(iv) to approve forms of agreement for use under the
Plan;
(v) to determine the terms and conditions of any Option,
SAR or Restricted Stock Award granted hereunder. Such terms and conditions
include, but are not limited to, the exercise price, the time or times when
Options, SARs or Restricted Stock Awards may be exercised or granted (which may
be based on performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any other restriction or limitation regarding any
Option, SAR or Restricted Stock Award or the Common Stock relating thereto,
based in each case on such factors as the Administrator, in its sole discretion,
shall determine;
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(vi) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan;
(vii) to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of qualifying for preferred tax treatment
under foreign tax laws;
(viii) to allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option or SAR or the Shares of Restricted Stock that
vest that number of Shares having a Fair Market Value equal to the minimum
amount required to be withheld, and no more in any event. The Fair Market Value
of the Shares to be withheld shall be determined on the date that the amount of
tax to be withheld is to be determined. All elections by Optionees to have
Shares withheld for this purpose shall be made in such form and under such
conditions as the Administrator may deem necessary or advisable;
(ix) to modify or amend each Option (subject to Section
17(c) of the Plan), including the discretionary authority to extend the
post-termination exercisability period of Options longer than is otherwise
provided for in the Plan, provided that the Board may not amend any Option to
reduce the exercise price of the option below 100% of the Fair Market Value per
Share on the date of grant;
(x) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option, SAR or
Restricted Stock Award previously granted by the Administrator;
(xi) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees.
5. ELIGIBILITY. Nonstatutory Stock Options, SARs and Restricted
Stock Awards may be granted to Service Providers. Incentive Stock Options may be
granted only to Employees.
6. LIMITATIONS.
(a) Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(b) Neither the Plan nor any Option, SAR or Restricted Stock
Award shall confer upon any Optionee any right with respect to continuing the
Optionee's relationship as a Service Provider with the Company, nor shall it
interfere in any way with his or her right or the Company's right to terminate
such relationship at any time, with or without cause.
(c) The following limitations shall apply to grants of Options
and SARs with an exercise price equal to a minimum of 100% of Fair Market Value
on the date of grant:
(i) No Service Provider shall be granted, in any fiscal
year of the Company, Options or SARs to purchase more than 500,000 Shares.
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(ii) In connection with his or her initial service, a
Service Provider may be granted Options or SARs to purchase up to an additional
500,000 Shares, which shall not count against the limit set forth in subsection
(i) above.
(iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 14.
(iv) If an Option or SAR is cancelled in the same fiscal
year of the Company in which it was granted (other than in connection with a
transaction described in Section 14), the cancelled Option or SAR will be
counted against the limits set forth in subsections (i) and (ii) above. For this
purpose, if the exercise price of an Option is reduced, the transaction will be
treated as a cancellation of the Option and the grant of a new Option.
7. TERM OF PLAN. The Plan shall become effective upon its adoption
by the Board. It shall continue in effect for a term of ten (10) years unless
terminated earlier under Section 17 of the Plan.
8. TERM OF OPTION. The term of each Option shall be stated in the
Option Agreement. The term of each Option shall be ten (10) years from the date
of grant or such shorter term as may be provided in the Option Agreement.
Moreover, in the case of an Incentive Stock Option granted to an Optionee who,
at the time the Incentive Stock Option is granted, owns stock representing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Incentive
Stock Option shall be five (5) years from the date of grant or such shorter term
as may be provided in the Option Agreement.
9. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. The per share exercise price for the Shares
to be issued pursuant to exercise of an Option may be any price, including any
price below Fair Market Value, and shall be determined by the Administrator,
subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the
Incentive Stock Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of grant.
(B) granted to any Employee other than an Employee
described in paragraph (A) immediately above, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date of grant.
(b) WAITING PERIOD AND EXERCISE DATES. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions that must be satisfied before the
Option may be exercised.
(c) FORM OF CONSIDERATION. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist (but only to the extent permitted by Applicable Law);
entirely of:
(i) cash;
(ii) check;
(iii) promissory note
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(iv) other Shares which (A) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six months on the date of surrender, and (B) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised;
(v) consideration received by the Company under a
cashless exercise program implemented by the Company in connection with the
Plan;
(vi) a reduction in the amount of any Company liability
to the Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation program or
arrangement;
(vii) any combination of the foregoing methods of payment;
or
(viii) such other consideration and method of payment for
the issuance of Shares to the extent permitted by Applicable Laws.
10. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. An Option may not be exercised for a fraction of
a Share.
An Option shall be deemed exercised when the Company
receives: (i) written or electronic notice of exercise (in accordance with the
Option Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse or
a trust for the benefit therefore (so long as such trust may hold the option
under Applicable Laws). Until the Shares are issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company), no right to vote or receive dividends or any other rights
as a stockholder shall exist with respect to the Optioned Stock, notwithstanding
the exercise of the Option. The Company shall issue (or cause to be issued) such
Shares promptly after the Option is exercised. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the
Shares are issued, except as provided in Section 14 of the Plan.
Exercising an Option in any manner shall decrease the number
of Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.
(b) TERMINATION OF RELATIONSHIP AS A SERVICE PROVIDER. If an
Optionee ceases to be a Service Provider, other than upon the Optionee's death
or Disability, the Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement to the extent that the Option is
vested on the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). In the absence of
a specified time in the Option Agreement, the Option shall remain exercisable
for three (3) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified by the Administrator, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
(c) DISABILITY OF OPTIONEE. If an Optionee ceases to be a
Service Provider as a result of the Optionee's Disability, the Optionee may
exercise his or her Option within such period of time as is specified in the
Option Agreement to the extent the Option is vested on the date of termination
(but in no event later than the expiration of the term of such Option as set
forth in the Option Agreement). In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for twelve (12) months following
the Optionee's termination. If, on the date of termination, the Optionee is not
vested as to his or her entire Option, the Shares covered by the unvested
portion
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of the Option shall revert to the Plan. If, after termination, the Optionee does
not exercise his or her Option within the time specified herein, the Option
shall terminate, and the Shares covered by such Option shall revert to the Plan.
(d) DEATH OF OPTIONEE. If an Optionee dies while a Service
Provider, the Option may be exercised within such period of time as is specified
in the Option Agreement (but in no event later than the expiration of the term
of such Option as set forth in the Notice of Grant), by the Optionee's estate or
by a person who acquires the right to exercise the Option by bequest or
inheritance, but only to the extent that the Option is vested on the date of
death. In the absence of a specified time in the Option Agreement, the Option
shall remain exercisable for twelve (12) months following the Optionee's death.
If, at the time of death, the Optionee is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option shall
immediately revert to the Plan. The Option may be exercised by the executor or
administrator of the Optionee's estate or, if none, by the person(s) entitled to
exercise the Option under the Optionee's will or the laws of descent or
distribution. If the Option is not so exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
11. RESTRICTED STOCK AWARDS.
(a) GRANT OF RESTRICTED STOCK AWARDS. Subject to the terms and
conditions of the Plan, Restricted Stock Awards may be granted to Service
Providers at any time and from time to time as shall be determined by the
Administrator, in its sole discretion. The Administrator shall have complete
discretion to determine (i) the number of Shares subject to a Restricted Stock
Award granted to any Participant, and (ii) the conditions that must be
satisfied, including performance-based milestones, upon which is conditioned the
grant or vesting of a Restricted Stock Award.
(b) EXERCISE PRICE AND OTHER TERMS. The Administrator, subject
to the provisions of the Plan, shall have complete discretion to determine the
terms and conditions of Restricted Stock Awards granted under the Plan.
Restricted Stock Awards shall be subject to the terms, conditions, and
restrictions determined by the Administrator at the time the stock is awarded,
which may include such performance-based milestones as are determined
appropriate by the Administrator. The Administrator may require the recipient to
sign a Restricted Stock Award Agreement as a condition of the award. The
certificates representing the shares of Stock awarded shall bear such legends as
shall be determined by the Administrator.
(c) RESTRICTED STOCK AWARD AGREEMENT. Each Restricted Stock
Award grant shall be evidenced by an award agreement that shall specify the
purchase price (if any) and such other terms and conditions as the
Administrator, in its sole discretion, shall determine .
12. STOCK APPRECIATION RIGHTS.
(a) GRANT OF SARS. Subject to the terms and conditions of the
Plan, SARs may be granted to Service Providers at any time and from time to time
as shall be determined by the Administrator, in its sole discretion. The
Administrator shall have complete discretion to determine the number of SARs
granted to any Participant.
(b) EXERCISE PRICE AND OTHER TERMS. The Administrator, subject
to the provisions of the Plan, shall have complete discretion to determine the
terms and conditions of SARs granted under the Plan.
(c) PAYMENT OF SAR AMOUNT. Upon exercise of a SAR, a Participant
shall be entitled to receive payment from the Company in an amount determined by
multiplying:
(i) The difference between the Fair Market Value of a
Share on the date of exercise over the exercise price; times
(ii) The number of Shares with respect to which the SAR
is exercised.
(d) PAYMENT UPON EXERCISE OF SAR. At the discretion of the
Administrator, payment for a SAR may be in cash, Shares or a combination
thereof.
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(e) CASH SETTLEMENTS AND PLAN SHARE ALLOCATION. Cash payments of
Stock Appreciation Rights as well as Common Stock issued upon exercise of Stock
Appreciation Rights shall be applied against the maximum number of shares of
Common Stock that may be issued pursuant to the Plan. The number of shares to be
applied against such maximum number of shares in such circumstances shall be the
number of shares equal to the amount of the cash payment divided by the Fair
Market Value of a share of Common Stock on the date the Stock Appreciation Right
is granted.
(f) SAR AGREEMENT. Each SAR grant shall be evidenced by an award
agreement that shall specify the exercise price, the term of the SAR, the
conditions of exercise, and such other terms and conditions as the
Administrator, in its sole discretion, shall determine.
(g) EXPIRATION OF SARS. A SAR granted under the Plan shall
expire upon the date determined by the Administrator, in its sole discretion,
and set forth in the Award Agreement.
13. NON-TRANSFERABILITY OF OPTIONS, SARS AND RESTRICTED STOCK AWARDS.
Except as determined otherwise by the Administrator in its discretion, Options,
SARs and Restricted Stock Awards may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime of
the Optionee, only by the Optionee. If the Administrator makes an Option, SAR or
Restricted Stock Award transferable, such Option, SAR or Restricted Stock Award
shall contain such additional terms and conditions as the Administrator deems
appropriate.
14. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER,
ASSET SALE OR CHANGE OF CONTROL.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by
the stockholders of the Company, the number of shares of Stock covered by each
outstanding Option, SAR or Restricted Stock Award, and the number of shares of
Stock which have been authorized for issuance under the Plan but as to which no
Option, SARs or Restricted Stock Awards have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, SAR or
Restricted Stock Award, as well as the price per share of Stock covered by each
such outstanding Option, SAR or Restricted Stock Award, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Stock
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Stock, or any other increase or decrease in the
number of issued shares of Stock effected without receipt of consideration by
the Company. The conversion of any convertible securities of the Company shall
not be deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Board, whose determination in that respect shall
be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Stock subject to an Option, SAR or Restricted Stock Award.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option or SAR until ten (10) days prior to
such transaction as to all of the Optioned Stock covered thereby, including
Shares as to which the Option or SAR would not otherwise be exercisable. In
addition, the Administrator may provide that any Company repurchase option
applicable to any Shares purchased upon exercise of an Option, SAR or Restricted
Stock Award or forfeiture rights with respect to Restricted Stock shall lapse as
to all such Shares, provided the proposed dissolution or liquidation takes place
at the time and in the manner contemplated. To the extent it has not been
previously exercised, an Option or SAR will terminate immediately prior to the
consummation of such proposed action.
(c) MERGER OR ASSET SALE. In the event of a merger of the
Company with or into another corporation, or the sale of substantially all of
the assets of the Company, each outstanding Option, SAR, and Restricted Stock
Award shall be assumed or an equivalent option, right or agreement substituted
by the successor corporation or a Parent or Subsidiary of the successor
corporation. In the event that a Restricted Stock Award Agreement is not assumed
or substituted by the successor corporation or a Parent or Subsidiary thereof,
the Company's right to return or repurchase of forfeited shares, including as to
performance-based vesting, shall terminate as of the date of the closing of the
merger or asset sale and any performance-based grant requirements shall be
deemed to have been completely satisfied immediately prior to such date. In the
event that the successor corporation or a Parent or Subsidiary thereof refuses
to
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assume or substitute for an Option or SAR, the Optionee shall fully vest in and
have the right to exercise the Option or SAR as to all of the Optioned Stock,
including Shares as to which it would not otherwise be vested or exercisable and
including any performance-based vesting limitations. If an Option or SAR becomes
fully vested and exercisable in lieu of assumption or substitution in the event
of a merger or sale of assets, the Administrator shall notify the Optionee in
writing or electronically that the Option or SAR shall be fully exercisable for
a period of fifteen (15) days from the date of such notice, and the Option or
SAR shall terminate upon the expiration of such period. For the purposes of this
paragraph, the Option, SAR or Restricted Stock Award shall be considered assumed
if, following the merger or sale of assets, the option or right confers the
right to purchase or receive, for each Share of Optioned Stock subject to the
Option, SAR or Restricted Stock Award immediately prior to the merger or sale of
assets, the consideration (whether stock, cash, or other securities or property)
received in the merger or sale of assets by holders of Stock for each Share held
on the effective date of the transaction (and if holders were offered a choice
of consideration, the type of consideration chosen by the holders of a majority
of the outstanding Shares); provided, however, that if such consideration
received in the merger or sale of assets is not solely stock of the successor
corporation or its Parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received upon the
exercise of the Option, SAR or Restricted Stock Award, for each Share of
Optioned Stock subject to the Option, SAR or Restricted Stock Award, to be
solely Stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Shares in the merger
or sale of assets.
(d) CHANGE OF CONTROL. Notwithstanding Section 14(c), in the
event of a Change of Control, the Optionee shall fully vest in and have the
right to exercise his or her Option or SAR as to all of the Optioned Stock,
including Shares as to which it would not otherwise be vested or exercisable,
and any shares subject to a Restricted Stock Award shall vest 100%, including as
to any performance-based vesting or grant limitations. If an award hereunder
becomes fully vested and/or exercisable in the event of a Change of Control, the
Administrator shall notify the Optionee in writing or electronically that the
award is fully vested and/or exercisable.
15. LEAVES OF ABSENCE. In the event of a Service Provider's leave of
absence that is approved by the Company, vesting of Options, SARs and Restricted
Stock Awards shall continue during the first 90 days of such leave, but shall
cease thereafter until such time, as any, if such Service Provider resumes his
or her active duties with the Company or its Parent or Subsidiaries, unless
otherwise determined by the Administrator or as required by Applicable Laws. In
the event of a Service Provider's leave of absence that is not approved by the
Company, vesting of Options, SARs and Restricted Stock Awards shall cease
immediately upon the commencement of such leave until such time, as any, if such
Service Provider resumes his or her active duties with the Company or its Parent
or Subsidiaries, unless otherwise determined by the Administrator or as required
by Applicable Laws.
16. TIME OF GRANTING OPTIONS, SARS AND RESTRICTED STOCK AWARDS. The
date of grant of an Option, SAR or Restricted Stock Award shall, for all
purposes, be the date on which the Administrator makes the determination
granting such Option, SAR or Restricted Stock Award, or such other subsequent
date as is determined by the Administrator. Notice of the determination shall be
given to each Service Provider to whom an Option, SAR or Restricted Stock Award
is so granted within a reasonable time after the date of such grant.
17. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may at any time amend,
alter, suspend or terminate the Plan, provided that the Board may not amend the
Plan to permit the repricing, including by way of exchange, of any Option, SAR
or Restricted Stock Award without stockholder approval.
(b) STOCKHOLDER APPROVAL. The Company shall obtain stockholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
(c) EFFECT OF AMENDMENT OR TERMINATION. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee and
the Company. Termination of the Plan shall not affect the Administrator's
ability to exercise the powers granted to it hereunder with respect to Options,
SARs or Restricted Stock Awards granted under the Plan prior to the date of such
termination.
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18. CONDITIONS UPON ISSUANCE OF SHARES.
(a) LEGAL COMPLIANCE. Shares shall not be issued pursuant to the
exercise of an Option or SAR or the purchase or receipt of Restricted Stock
unless the exercise of such Option or SAR or the purchase or receipt of
Restricted Stock and the issuance and delivery of such Shares shall comply with
Applicable Laws and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
(b) INVESTMENT REPRESENTATIONS. As a condition to the exercise
of an Option or SAR or the purchase or receipt of Restricted Stock, the Company
may require the person exercising such award to represent and warrant at the
time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is
required.
19. INABILITY TO OBTAIN AUTHORITY. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
20. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
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