EXHIBIT 10.11(a)
ADOPTED COPY
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HARBORSIDE HEALTHCARE CORPORATION
STOCK INCENTIVE PLAN
l. Establishment and Purpose of the Plan. This Management Stock
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Incentive Plan (the "Plan") is established by Harborside Healthcare Corporation,
a Delaware corporation (the "Company"), as of August 11, 1998. The Plan is
designed to enable the Company to attract, retain and motivate directors,
members of the management and certain other officers and key employees the
Company, and its subsidiaries, by providing for or increasing their proprietary
interest in the Company. The Plan provides for the grant of options ("Options")
that qualify as incentive stock options ("Incentive Stock Options") under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), as
well as Options that do not so qualify ("Non-Qualified Options"), for the grant
of stock appreciation rights ("Stock Appreciation Rights") and for the sale or
grant of restricted stock ("Restricted Stock").
2. Stock Subject to Plan. The number of shares of stock that may be
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subject to Options or Stock Appreciation Rights granted hereunder plus the
number of shares of stock that may be granted or sold as Restricted Stock
hereunder shall not in the aggregate exceed 806,815 shares of the Company's
Class C Common Stock (the "Shares"), subject to adjustment under Section 13
hereof; provided further that the number of Shares that a Participant (as
hereinafter defined) may receive pursuant to the Plan shall in no event exceed
400,000 in any year. The Shares that may be subject to Options granted and
Restricted Stock sold or granted under the Plan may be authorized and unissued
Shares or Shares reacquired by the Company and held as treasury stock.
Shares that are subject to the unexercised portions of any Options
that expire, terminate or are canceled, and Shares that are subject to any Stock
Appreciation Rights that expire, terminate or are canceled, and Shares of
Restricted Stock that are reacquired by the Company pursuant to the restrictions
thereon, shall again be available for the grant of Options or Stock Appreciation
Rights and the sale or grant of Restricted Stock under the Plan. If a Stock
Appreciation Right is exercised, any Option or portion thereof that is
surrendered in connection with such exercise shall terminate and the Shares
theretofore subject to the Option or portion thereof shall not be available for
further use under the Plan.
3. Shares Subject to Certificate of Incorporation. All Shares
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issuable under Options or Stock Appreciation Rights and all Shares of Restricted
Stock sold or granted pursuant to this Plan shall be subject to the terms and
restrictions contained in the Certificate of Incorporation of the Company. A
copy of the Certificate of Incorporation shall be delivered to the recipient of
an Option, Stock Appreciation Right or Restricted Stock at the time of grant or
issuance.
4. Administration of the Plan. The Plan shall be administered by a
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committee (the "Committee") appointed by the Board of Directors (the "Board") of
the
Company. If no persons are designated by the Board to serve on the Committee,
the Plan shall be administered by the Board and all references herein to the
Committee shall refer to the Board. The Board shall have the discretion to add,
remove or replace members of the Committee, and shall have the sole authority to
fill vacancies on the Committee.
All actions of the Committee shall be authorized by a majority vote
thereof at a duly called meeting. The Committee shall have the sole authority,
in its absolute discretion, to adopt, amend, and rescind such rules and
regulations as, in its opinion, may be advisable in the administration of the
Plan, to construe and interpret the Plan, the rules and regulations, and the
agreements and other instruments evidencing Options and Stock Appreciation
Rights granted and Restricted Stock sold or granted under the Plan, and to make
all other determinations deemed necessary or advisable for the administration of
the Plan. All decisions, determinations, and interpretations of the Committee
shall be final and conclusive upon the Participants, as hereinafter defined.
Notwithstanding the foregoing, any dispute arising under any Agreement (as
defined below) shall be resolved pursuant to the dispute resolution mechanism
set forth in such Agreement.
Subject to the express provisions of the Plan, the Committee shall
determine the number of Shares subject to grants or sales and the terms thereof,
including the provisions relating to the exercisability of Options and Stock
Appreciation Rights, lapse and non-lapse restrictions upon the Shares obtained
or obtainable under the Plan and the termination and/or forfeiture of Options
and Stock Appreciation Rights and Restricted Stock under the Plan. The terms
upon which Options and Stock Appreciation Rights are granted and Restricted
Stock is sold or granted shall be evidenced by a written agreement, executed by
the Company and the Participant (each, an "Agreement"), containing such terms
and conditions as may be approved by the Committee; provided that such terms and
conditions are not inconsistent with the express conditions of the Plan.
5. Eligibility. Persons who shall be eligible for grants of Options
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or Stock Appreciation Rights or sales or grants of Restricted Stock hereunder
shall be those directors, officers and employees of the Company or a subsidiary
of the Company who are members of a select group of directors, management and
other key employees that the Committee may from time to time designate to
participate under the Plan ("Participants") through grants of Non-Qualified
Options, Incentive Stock Options and, if applicable, Stock Appreciation Rights,
and/or through sales or grants of Restricted Stock.
6. Terms and Conditions of Options. No Incentive Stock Option shall
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be granted for a term of more than ten years and no Non-Qualified Option shall
be granted for a term of more than ten years and thirty days. Options may, in
the discretion of the Committee, be granted with associated Stock Appreciation
Rights or be amended so as to provide for associated Stock Appreciation Rights.
The Agreement may contain such other terms, provisions, and conditions as may be
determined by the Committee as long as such terms, conditions and provisions are
not inconsistent with the Plan. The Committee shall designate as such those
Options intended to be eligible to qualify and be treated as Incentive Stock
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Options and, correspondingly, those Options not intended to be eligible to
qualify and be treated as Incentive Stock Options.
7. Exercise Price of Options. The exercise price for each Non-
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Qualified Option granted hereunder shall be set forth in the Agreement. For so
long as required under Section 422 of the Code and the regulations promulgated
thereunder (or any successor statute or rules), the exercise price of any Option
intended to be eligible to qualify and be treated as an Incentive Stock Option
shall not be less than the fair market value of the Shares on the date such
Incentive Stock Option is granted, except that if such Incentive Stock Option is
granted to a Participant who on the date of grant is treated under Section
424(d) of the Code as owning stock (not including stock purchasable under
outstanding options) possessing more than ten percent of the total combined
voting power of all classes of the Company's stock, the exercise price shall not
be less than one hundred ten percent (110%) of the fair market value of the
Shares on the date such Incentive Stock Option is granted.
The fair market value of Shares for the purposes of this Plan shall be
determined by the Board, whose valuation shall be binding upon each Optionee.
Payment for Shares purchased upon exercise of any Option granted
hereunder shall be in cash at the time of exercise, except that, if either the
Agreement so provides or the Committee so permits, and if the Company is not
then prohibited from doing so, such payment may be made in whole or in part with
surrendered or withheld shares of stock of the same class as the stock then
subject to the Option. The Committee also may on an individual basis permit
payment or agree to permit payment by such other alternative means as may be
lawful, including by delivery of an executed exercise notice together with
irrevocable instructions to a broker promptly to deliver to the Company the
amount of sale or loan proceeds required to pay the exercise price.
8. Non-transferability. Unless provided otherwise in the Agreement,
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any Option granted under this Plan shall by its terms be nontransferable by the
Participant other than by will or the laws of descent and distribution (in which
case such descendant or beneficiary shall be subject to all terms of the Plan
applicable to Participants) and is exercisable during the Participant's lifetime
only by the Participant or by the Participant's guardian or legal
representative.
9. Incentive Stock Options. The provisions of the Plan are intended
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to satisfy the requirements set forth in Section 422 of the Code and the
regulations promulgated thereunder (including the aggregate fair market value
limits set forth in Section 422(d) of the Code) with respect to Incentive Stock
Options granted under the Plan. For so long as required under Section 422 of
the Code and the regulations promulgated thereunder (or any successor statute or
rules), during the term of the Plan, the aggregate fair market value of the
Shares with respect to which Incentive Stock Options are first exercisable by a
Participant during any calendar year shall not exceed $100,000. For the purpose
of this Section 9, the fair market value of the Shares shall be determined at
the time the Incentive Stock Option is granted.
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10. Stock Appreciation Rights. The Committee may, under such terms
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and conditions as it deems appropriate, grant to any Participant selected by the
Committee Stock Appreciation Rights, which may or may not be associated with
Options. Upon exercise of a Stock Appreciation Right, the Participant shall be
entitled to receive payment of an amount equal to the excess of the fair market
value, as defined by the Committee, of the underlying Shares on the date of
exercise over the Stock Appreciation Right's exercise price. Such payment may
be made in additional Shares valued at their fair market value on the date of
exercise or in cash, or partly in Shares and partly in cash, as the Committee
may designate. The Committee may require that any Stock Appreciation Right
shall be subject to the condition that the Committee may at any time in its
absolute discretion not allow the exercise of such Stock Appreciation Right.
11. Restricted Stock. The Committee may sell or grant Restricted
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Stock under the Plan (either independently or in connection with the exercise of
Options or Stock Appreciation Rights under the Plan) to Participants selected by
the Committee. The Committee shall in each case determine the number of Shares
of Restricted Stock to be sold or granted, the price at which such Shares are
sold, if applicable, and the terms and duration of the restrictions to be
imposed upon those Shares.
12. Investment Representation. Each Agreement may contain an
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agreement that, upon demand by the Committee for such a representation, the
optionee shall deliver to the Committee at the time of any exercise of an Option
a written representation that the Shares to be acquired upon such exercise are
to be acquired for investment and not for resale or with a view to the
distribution thereof. Upon such demand, delivery of such representation prior
to the delivery of any Shares issued upon exercise of an Option and prior to the
expiration of the option period shall be a condition precedent to the right of
the optionee or such other person to purchase any Shares.
13. Adjustments. In the event of any one or more reorganizations,
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recapitalizations, stock splits, reverse stock splits, stock dividends,
extraordinary dividends, or distributions, or similar events, an appropriate
adjustment shall be made in the number, exercise or sale price and/or type of
shares or securities for which Options or Stock Appreciation Rights may
thereafter be granted and Restricted Stock may thereafter be sold or granted
under the Plan. The Committee also shall designate the appropriate changes that
shall be made in Options or Stock Appreciation Rights, or rights to purchase
Restricted Stock under the Plan, so as to preserve the value of any such
Options, Stock Appreciation Rights or Restricted Stock. Any such adjustment in
outstanding Options shall be made without changing the aggregate exercise price
applicable to the unexercised portions of such Options. Any such adjustments in
outstanding rights to purchase Restricted Stock shall be made without changing
the aggregate purchase price of such Restricted Stock.
14. Duration of Plan. Options may not be granted and Restricted
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Stock may not be sold or granted under the Plan after August 11, 2008.
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15. Amendment and Termination of the Plan. The Board may at any time
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amend, suspend or terminate the Plan. The Committee may amend the Plan or any
Agreement issued hereunder to the extent necessary for any Option or Stock
Appreciation Right granted or Restricted Stock sold or granted under the Plan to
comply with applicable tax or securities laws. If the Board determines that the
approval of such action by the stockholders of the Company is advisable or
necessary for compliance with applicable securities law, tax law, stock exchange
requirement or other applicable federal or state law, no such action of the
Board or the Committee shall be permitted unless taken with or ratified by such
approval.
No Option or Stock Appreciation Right may be granted or Restricted
Stock sold or granted during any suspension of the Plan or after the termination
of the Plan. No amendment, suspension or termination of the Plan or of any
Agreement issued hereunder shall, without the consent of the affected holder of
such Option or Stock Appreciation Right or Restricted Stock, adversely alter or
otherwise impair any rights or obligations in any Option or Stock Appreciation
Right or Restricted Stock theretofore granted or sold to such holder under the
Plan.
16. Nature of Plan. This Plan is intended to qualify as a
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compensatory benefit plan within the meaning of Rule 701 under the Act. This
Plan is intended to constitute an unfunded arrangement for a select group of
directors, management and other key employees.
17. Cancellation of Options. Any Option granted under the Plan may
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be canceled at any time with the consent of the holder and a new Option may be
granted to such holder in lieu thereof.
18. Withholding Taxes. Whenever Shares are to be issued with respect
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to the exercise of Options or amounts are to be paid or income earned with
respect to Stock Appreciation Rights or Restricted Stock under the Plan, the
Committee in its discretion may require the Participant to remit to the Company,
prior to the delivery of any certificate or certificates for such Shares or the
payment of any such amounts, all or any part of the amount determined in the
Committee's discretion to be sufficient to satisfy federal, state and local
withholding tax obligations (the "Withholding Obligation") that the Company or
its counsel determines may arise with respect to such exercise, issuance or
payment. Pursuant to a procedure established by the Committee or as set forth
in the Agreement, the Participant may (i) request the Company to withhold
delivery of a sufficient number of Shares or a sufficient amount of the
Participant's compensation or (ii) deliver a sufficient number of previously-
issued Shares, to satisfy the Withholding Obligation.
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