Exhibit 10.6
ATRIA COMMUNITIES, INC.
NON-EMPLOYEE DIRECTORS
1996 STOCK INCENTIVE PLAN
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ARTICLE 1. PURPOSE
The purpose of this 1996 Non-Employee Directors Stock Incentive Plan is to
promote the interests of Atria Communities, Inc., its subsidiaries and
stockholders, by having non-employee directors of the Company acquire a
proprietary interest in the Company. Such investments should increase the
personal interest and the special effort of such persons in providing for the
continued success and progress of the business of the Company and should enhance
the Company's efforts to attract and retain competent non-employee directors.
ARTICLE 2. DEFINITIONS AND CONSTRUCTION
2.1 Definitions. As used in the Plan, terms defined parenthetically
immediately after their use shall have the respective meanings provided by such
definitions, and the terms set forth below shall have the following meanings (in
either case, such terms shall apply equally to both the singular and plural
forms of the terms defined):
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Cause" shall mean, unless otherwise defined in an Option Agreement or
Restricted Stock Agreement, a felony conviction of a Non-Employee Director or
the failure of a Non-Employee Director to contest prosecution for a felony, or a
Non-Employee Director's willful misconduct or dishonesty, any of which is
determined by the Committee to be directly and materially harmful to the
business or reputation of the Company or its Subsidiaries.
(c) "Change in Control" shall mean any of the following events:
(1) An acquisition (other than directly from the Company) of any
voting securities of the Company ("Voting Securities") by any Person immediately
after which such Person has Beneficial Ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of more than 25% of the combined
voting power of the Company's then outstanding Voting Securities if Vencor, Inc.
then beneficially owns less than 25% of the combined voting power of the
Company's then outstanding Voting Securities; provided, however, that in
determining whether a Change in Control has occurred, Voting Securities which
are acquired in a Non-Control Acquisition (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in Control. A Non-Control
Acquisition shall mean an acquisition by (i) the Company or any Subsidiary, (ii)
an employee benefit plan (or a trust forming a part thereof) maintained by the
Company or any Subsidiary, (iii) Vencor, Inc. or any Subsidiary or (iv) any
Person in connection with a Non-Control Transaction (as hereinafter defined).
(2) The individuals who, as of December 31, 1996, are members of the
Board ("Incumbent Board"), cease for any reason to constitute at least a
majority of the
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Board; provided, however, that if the election, or nomination for election by
the Company's stockholders, of any new director was approved by a vote of at
least a majority of the Incumbent Board, such new director shall, for purposes
of the Plan, be considered as a member of the Incumbent Board; provided,
further, however, that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened Election Contest (as described in Rule 14a-11
promulgated under the Exchange Act) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board ("Proxy
Contest") including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
(3) Approval by stockholders of the Company of:
(A) A merger, consolidation or reorganization involving the Company,
unless such is a Non-Control Transaction. For purposes of the Plan, the term
"Non-Control Transaction" shall mean a merger consolidation or reorganization of
the Corporation in which:
(i) the stockholders of the Company, immediately before such
merger, consolidation or reorganization, own, directly or indirectly immediately
following such merger, consolidation or reorganization, at least a majority of
the combined voting power of the outstanding voting securities of the
corporation resulting from such merger or consolidation or reorganization
("Surviving Corporation") in substantially the same proportion as their
ownership of the Voting Securities immediately before such merger, consolidation
or reorganization;
(ii) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing for such merger,
consolidation or reorganization constitute at least a majority of the members of
the board of directors of the Surviving Corporation; and
(iii) no Person (other than the Company, any Subsidiary, any
employee benefit plan (or any trust forming a part thereof) maintained by the
Company, the Surviving Corporation or any Subsidiary, or any Person who,
immediately prior to such merger, consolidation or reorganization had Beneficial
Ownership of 20% or more of the then outstanding Voting Securities) has
Beneficial Ownership of 20% or more of the combined voting power of the
Surviving Corporation's then outstanding voting securities;
(B) A complete liquidation or dissolution of the Company; or
(C) An agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any Person (other than a
transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person ("Subject Person") acquired Beneficial Ownership of
more than the
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permitted amount of the outstanding Voting Securities as a result of the
acquisition of Voting Securities by the Company which, by reducing the number of
Voting Securities outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Person; provided, however, that if a Change in
Control would occur (but for the operation of this sentence) as a result of the
acquisition of Voting Securities by the Company, and after such share
acquisition by the Company the Subject Person becomes the Beneficial Owner of
any additional Voting Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person, then a
Change in Control shall occur.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.
(e) "Committee" shall mean the Committee provided for in Section 7.1.
(f) "Company" shall mean Atria Communities, Inc., a Delaware corporation.
(g) "Disability" shall mean the total disability as determined by the
Committee in accordance with standards and procedures similar to those under the
Company's long-term disability plan, or, if none, a physical or mental infirmity
which the Committee determines impairs the Participant's ability to perform
substantially his or her duties for a period of 180 consecutive days.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(i) "Fair Market Value" of the Shares shall mean, as of any applicable
date, the closing sale price of the Shares on the Nasdaq National Market System
or any national or regional stock exchange in which the Shares are traded, or if
no such reported sale of the Shares shall have occurred on such date, on the
next preceding date on which there was such a reported sale. If there shall be
any material alteration in the present system of reporting sale prices of the
Shares, or if the Shares shall no longer be listed on the Nasdaq National Market
System or a national or regional stock exchange, the fair market value of the
Shares as of a particular date shall be determined by such method as shall be
determined by the Committee.
(j) "Initial Grant Date" shall mean the date the Registration Statement
with respect to the Company's initial public offering becomes effective.
(k) "Non-Employee Director" shall mean a member of the Board who is not an
employee of the Company or any of its subsidiaries.
(l) "Option" shall mean an option granted to an Optionee pursuant to the
Plan.
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(m) "Option Agreement" shall mean a written agreement between the Company
and an Optionee evidencing the grant of an Option and containing terms and
conditions concerning the exercise of the Option.
(n) "Option Price" shall mean the price to be paid for Shares to be
purchased pursuant to the exercise of an Option.
(o) "Optionee" shall mean a Non-Employee Director who has been granted an
Option or the personal representative, heir or legatee of an Optionee who has
the right to exercise the Option upon the death of the Optionee.
(p) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and as used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d).
(q) "Plan" shall mean this 1996 Non-Employee Directors Stock Incentive
Plan, as the same may be amended from time to time.
(r) "Restriction Period" shall mean the period during which the transfer of
Shares is limited in some way or Shares are otherwise restricted or subject to
forfeiture as provided in Article 6.
(s) "Restricted Stock" shall mean Shares granted pursuant to Article 6 as
to which the restrictions have not expired.
(t) "Restricted Stock Agreement" shall mean an agreement evidencing a
Restricted Stock award, as described in Section 6.2.
(u) "Shares" shall mean the shares of the Company's common stock, par value
$.10 per share.
(v) "Subsidiary" shall mean, with respect to any company, any corporation
or other Person of which a majority of its voting power, equity securities or
equity interest is owned directly or indirectly by such company.
2.2 Gender and Number. Except where otherwise indicated by the context,
reference to the masculine gender shall include the feminine gender, the plural
shall include the singular and the singular shall include the plural.
2.3 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
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ARTICLE 3. GRANTING OF OPTIONS
3.1 Initial Grants. Each Non-Employee Director on the Initial Grant Date,
other than the Chairman of the Board of the Company, shall be granted on the
Initial Grant Date an Option to purchase 10,000 Shares. On the Initial Grant
Date, the Chairman of the Board of the Company shall be granted an Option to
purchase 80,000 Shares.
3.2 New Non-Employee Directors Grants. Each new Non-Employee Director who
is elected subsequent to the Initial Grant Date shall automatically be granted
an Option to purchase 10,000 Shares upon the initial date of election to the
Board, provided that the number of Shares available for grant under the Plan is
sufficient to permit such automatic grant.
3.3 Additional Option Grants. On each anniversary of the date of the
grant of an Option to a Non-Employee Director pursuant to the terms of the Plan,
such Non-Employee Director shall automatically be granted an Option to purchase
1,000 Shares provided that (i) such Non-Employee Director shall have continually
served as a director of the Company since the date of such prior Option grant
and (ii) the number of Shares available for grant under the Plan is sufficient
to permit such automatic grant.
3.4 Proportionate Reduction. If as of any date on which there is to be a
grant of Options hereunder there are an insufficient number of Shares available
pursuant to Section 4 to make all of the grants then to be made, each Non-
Employee Director then entitled to be granted an Option shall receive an Option
to purchase a proportionately lesser number of Shares.
ARTICLE 4. SHARES SUBJECT TO THE PLAN
The stock to be offered under the Plan shall be the Shares, which Shares
may be unissued Shares or treasury Shares. Subject to the adjustments provided
for in Section 8, the aggregate number of Shares to be delivered upon exercise
of all Options granted under the Plan plus shares of Restricted Stock issued
under the Plan shall not exceed 250,000 Shares. Shares subject to, but not
delivered under, an Option terminating or expiring for any reason prior to its
exercise in full, and shares of Restricted Stock which are forfeited pursuant to
the terms of the Plan, shall be deemed available for Options to be granted
thereafter during the term of the Plan.
ARTICLE 5. TERMS AND CONDITIONS OF OPTIONS
All Options granted hereunder shall be subject to the following terms and
conditions which shall be set forth in the Option Agreement for all Options to
the extent applicable:
5.1. To Whom Options May Be Granted. Options shall be granted only to Non-
Employee Directors.
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5.2 Non-Transferability of Option. The Option shall not be transferable
by the Optionee otherwise than by bequest or the laws of descent and
distribution, and shall be exercisable during the Optionee's lifetime only by
the Optionee; provided, however, that the Optionee may, subject to any
restrictions under Section 16(b) of the Exchange Act, transfer the Options to
the Optionee's spouse, lineal descendants, trusts for their benefit or a
charitable remainder trust of which Optionee or such family members are a
beneficiary.
5.3 Termination of Option.
(a) If the Optionee ceases to be a director of the Company for any
reason other than death, Disability or removal for Cause, the Option shall
terminate three months after the Optionee ceases to be director of the Company
(unless the Optionee dies during such period), or on the Option's expiration
date, if earlier, and shall be exercisable during such period after the Optionee
ceases to be a director of the Company only with respect to the number of Shares
which the Optionee was entitled to purchase on the day preceding the day on
which the Optionee ceased to be a director.
(b) If the Optionee ceases to be a director of the Company because of
removal for Cause, the Option shall terminate on the date of the Optionee's
removal.
(c) In the event of the Optionee's death or Disability while a
director of the Company, or the Optionee's death within three months after the
Optionee ceases to be a director (other than by reason of removal for Cause),
the Option shall terminate upon the earlier to occur of (A) 12 months after the
date of the Optionee's death or Disability, or (B) the Option's expiration date.
The Option shall be exercisable during such period after the Optionee's death or
Disability with respect to the number of Shares as to which the Option shall
have been exercisable on the date preceding the Optionee's death or Disability,
as the case may be.
5.4 Number of Shares of Common Stock. The number of Shares to which the
Option pertains.
5.5 Exercise Price. The exercise price of the Option, which shall be
equal to 100% of the Fair Market Value of the Shares at the time of the grant of
the Option.
5.6 The Term of Option. The term of the Option, which shall be 10 years.
5.7 Exercisability. The time at which the Option becomes exercisable.
The Option shall be exercisable as follows:
(a) From the date the Option is granted until the first anniversary
thereof, the Option may not be exercised.
(b) Beginning on the day following the first anniversary of the date
the Option is granted, the Option may be exercised with respect to one-fourth of
the Shares subject to the Option.
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(c) Beginning on the day following the second anniversary of the date
the Option is granted, the Option may be exercised with respect to an additional
one-fourth of the Shares subject to the Option.
(d) Beginning on the day following the third anniversary of the date
the Option is granted, the Option may be exercised with respect to an additional
one-fourth of the Shares subject to the Option.
(e) Beginning on the day following the fourth anniversary of the date
the Option is granted, the Option may be exercised with respect to all of the
Shares subject to the Option.
Notwithstanding the provisions of this Section 5.7, upon a Change in Control,
the Optionee shall have the right to exercise the Option in full as to all
Shares subject to the Option.
5.8 Payment of Exercise Price. The Option Price shall be paid in cash at
the time of exercise, except that in lieu of all or part of the cash, the
Optionee may tender to the Company Shares owned by the Optionee having a Fair
Market Value equal to the exercise price, less any cash paid. The Fair Market
Value of such tendered Shares shall be determined as of the close of the
business day immediately preceding the day on which the Option is exercised.
ARTICLE 6. RESTRICTED STOCK
6.1 Grant of Restricted Stock. Each Non-Employee Director on the Initial
Grant Date, other than the Chairman of the Board of the Company, shall be
granted on the Initial Grant Date 5,000 shares of Restricted Stock. On the
Initial Grant Date, the Chairman of the Board of the Company shall be granted
20,000 shares of Restricted Stock.
6.2 Restricted Stock Agreement. Each Restricted Stock grant shall be
evidenced by a Restricted Stock Agreement which shall specify the Restriction
Period, the number of shares of Restricted Stock granted and such other
provisions as the Committee may determine and which are required by the Plan.
6.3 Restriction Period. Shares of Restricted Stock shall vest one-half on
the first anniversary of the Initial Grant Date, and the remaining one-half on
the second anniversary of the Initial Grant Date.
6.4 Non-Transferability of Restricted Stock. Except as provided in this
Article 6, shares of Restricted Stock may not be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated until the end of the applicable
Restriction Period with respect to such shares.
6.5 Forfeiture. Shares of Restricted Stock which do not vest prior to the
date the Non-Employee Director ceases to be a director of the Company shall be
forfeited. Any such forfeited shares of Restricted Stock shall be immediately
returned to the Company by
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the Non-Employee Director, and the Non-Employee Director shall not receive any
amount with respect to such Restricted Stock upon such forfeiture.
6.6 Certificate Legend. Each certificate representing shares of
Restricted Stock shall bear the following legend:
"The sale or other transfer of the shares represented by this
Certificate, whether voluntary, involuntary or by operation of law, is
subject to certain restrictions on transfer as set forth in the Atria
Communities, Inc. Non-Employee Directors 1996 Stock Incentive Plan,
and in the related Restricted Stock Agreement. A copy of the Plan and
such Restricted Stock Agreement may be obtained from the Secretary of
Atria Communities, Inc."
6.7 Lapse of Restrictions Generally. Except as otherwise provided in this
Article 6, shares of Restricted Stock shall become freely transferable by the
Participant and no longer subject to forfeiture after the last day of the
Restriction Period. Once the shares of Restricted Stock are released from their
restrictions, the Non-Employee Director shall be entitled to have the legend
required by Section 6.6 removed from the Non-Employee Director's Share
certificate, which certificate shall thereafter represent freely transferable
and nonforfeitable Shares free from any and all restrictions under the Plan.
6.8 Lapse of Restrictions Upon Change in Control. Upon a Change in
Control, any restrictions and other conditions pertaining to then outstanding
shares of Restricted Stock held by Non-Employee Directors shall lapse and such
Shares shall thereafter be immediately transferable and nonforfeitable.
6.9 Voting Rights; Dividends and Other Distributions. During the
Restriction Period, Non-Employee Directors holding shares of Restricted Stock
may exercise full voting rights, and shall be entitled to receive all dividends
and other distributions paid, with respect to such Restricted Stock. If any
dividends or distributions are paid in Shares, the Shares shall be subject to
the same restrictions as the shares of Restricted Stock with respect to which
they were paid.
6.10 Termination as Director. If a Non-Employee Director ceases to be a
director of the Company for any reason other than death or Disability prior to
the expiration of the Restriction Period applicable to any shares of Restricted
Stock then held by the Non-Employee Director, such shares shall thereupon be
forfeited immediately by the Non-Employee Director and returned to the Company,
and the Non-Employee Director shall not receive any amount with respect to such
Restricted Stock. If a Non-Employee Director ceases to be a director of the
Company as a result of death or Disability prior to the expiration of the
Restriction Period applicable to any shares of Restricted Stock then held by the
Non-Employee Director, all restrictions and other conditions pertaining to such
shares of Restricted Stock shall immediately lapse and such shares of Restricted
Stock shall thereafter be immediately transferable and nonforfeitable.
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ARTICLE 7. ADMINISTRATION
7.1. The Committee. The Plan is designed to operate automatically and not
require any significant administration. To the extent administration is
required, the Plan shall be administered by a Committee appointed by the Board
which shall include two or more directors of the Company or the entire Board of
the Company. The Committee shall meet at such times and places as it determines
and may meet through a telephone conference call. A majority of its members
shall constitute a quorum, and the decision of the majority of those present at
any meeting at which a quorum is present shall constitute the decision of the
Committee. Any decision reduced to writing and signed by a majority of the
members of the Committee shall be fully effective as if it had been made by a
majority at a meeting duly held. No discretion concerning decisions under the
Plan shall be afforded to a person who is not a "disinterested person." All
decisions, determinations and selections made by the Committee pursuant to the
provisions of the Plan shall be final. To the extent required by law and Rule
16b-3 promulgated under the Exchange Act, the Committee may delegate its
authority hereunder.
7.2 Section 16 Compliance. It is the intention of the Company that the
Plan and the administration of the Plan comply in all respects with Section
16(b) of the Exchange Act and the rules and regulations promulgated thereunder.
If any Plan provision, or any aspect of the administration of the Plan, is found
not to be in compliance with Section 16(b) of the Exchange Act, the provision or
administration shall be deemed null and void, and in all events the Plan shall
be construed in favor of its meeting the requirements of Rule 16b-3 promulgated
under the Exchange Act.
ARTICLE 8. ADJUSTMENTS UPON CHANGE IN CAPITALIZATION
Notwithstanding the limitations set forth in Section 4, in the event of a
merger, reorganization, consolidation, recapitalization, reclassification,
split-up, spin-off, separation, liquidation, stock dividend, stock split,
reverse stock split, property divided, share repurchase, share combination,
share exchange, issuance of warrants, rights or debentures or other change in
corporate structure of the Company affecting the Shares, the Committee shall
make an appropriate and equitable adjustment in the maximum number of Shares
available under the Plan or to any one individual and in the number, kind and
Option Price of Shares subject to Options granted under the Plan to prevent
dilution or enlargement of the rights of Non-Employee Directors under the Plan
and outstanding Options.
ARTICLE 9. AMENDMENTS AND DISCONTINUANCE
9.1 In General. Except as provided in Section 9.2, the Board may
discontinue, amend, modify or terminate the Plan at any time.
9.2 Section 16(b) Compliance. To the extent required to meet the
conditions for exemption from Section 16(b) of the Exchange Act or the
requirements of any national securities exchange or system on which the Shares
are then listed or reported or a regulatory
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body having jurisdiction with respect thereto, without the approval of the
stockholders of the Company, no amendment, modification or termination may:
(a) materially increase the benefits accruing to Non-Employee
Directors under the Plan;
(b) materially increase the total number of Shares which may be issued
under the Plan, except as provided in Section 8; or
(c) materially modify the eligibility requirements to receive an
Option or Restricted Stock under the Plan.
Furthermore, to the extent required to meet the conditions for exemption from
Section 16(b) of the Exchange Act, no amendment which would change the amount,
price or timing of Option grants, other than to comply with changes in the Code
or the Employee Retirement Income Security Act of 1974, as amended (to which the
Plan is not currently subject), or the rules and regulations promulgated
thereunder, shall be made more than once every six months.
9.3 No Effect on Outstanding Options. Any Option which is outstanding
under the Plan at the time of its amendment or termination shall remain in
effect in accordance with its terms and conditions and those of the Plan as in
effect when the Option was granted.
ARTICLE 10. MERGER, CONSOLIDATION, ETC.
10.1 Conversion on Certain Mergers. In the event the Company merges or
consolidates with another corporation, or all or substantially all of the
Company's capital stock or assets are acquired by another corporation, and the
surviving or acquiring corporation issues shares of its stock to the Company's
shareholders in connection with the merger, consolidation or acquisition, the
surviving or acquiring corporation shall adopt the Plan and the following shall
apply:
(a) Upon the exercise of an Option, the Optionee shall, at no
additional cost (other than the Option Price), be entitled to receive, in lieu
of the number of Shares to which such Option is then exercisable, the number and
class of stock or other securities to which the Optionee would have been
entitled pursuant to the terms of the merger, consolidation or acquisition if
immediately prior thereto the Optionee had been the holder of record of a number
of Shares equal to the number of Shares as to which the Option shall then be
exercisable; and
(b) The shares of the surviving or acquiring corporation received in
exchange for shares of Restricted Stock shall be subject to the same restriction
as applied to such Restricted Stock.
10.2 No Conversion on Other Mergers. In the event that the Company
merges or consolidates with another corporation, or all or substantially all of
the Company's capital
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stock or assets are acquired by another corporation, and the surviving or
acquiring corporation does not issue shares of its stock to the Company's
shareholders in connection with the merger, consolidation or acquisition, then,
notwithstanding any other provision of the Plan to the contrary, no Option may
be exercised after the effective date of the merger, consolidation or
acquisition.
ARTICLE 11. EFFECTIVENESS AND TERMINATION OF THE PLAN
11.1 Effective Date. The Plan shall become effective upon adoption by
the Board. The Plan shall be rescinded and all Options and shares of Restricted
Stock granted hereunder shall be null and void unless within 12 months from the
date of the adoption of the Plan by the Board it shall have been approved by the
holders of a majority of the outstanding Shares present or represented and
entitled to vote on the Plan at a stockholders' meeting.
11.2 Termination Date. The Plan shall terminate on the earliest to occur
of (i) the date when all of the Shares available under the Plan shall have been
acquired through the exercise of Options granted under the Plan and the issuance
of Restricted Stock; (ii) 10 years after the date of adoption of the Plan by the
Board; or (iii) such other date as the Board may determine.
ARTICLE 12. NO RIGHT OF REELECTION
Neither the Plan, nor any action taken under the Plan, shall be construed
as conferring upon a Non-Employee Director any right to continue as a director
of the Company, to be renominated by the Board or reelected by the stockholders
of the Company.
ARTICLE 13. INDEMNIFICATION
No member of the Board or the Committee, nor any officer or employee acting
on behalf of the Board or the Committee, shall be personally liable for any
action, determination or interpretation taken or made with respect to the Plan,
and all members of the Board, the Committee and each officer or employee of the
Company acting on their behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any such action,
determination or interpretation.
ARTICLE 14. GOVERNING LAW
The provisions of the Plan shall be construed, administered and enforced
according to the laws of the State of Delaware without regard to its conflict of
laws rules.
IN WITNESS WHEREOF, this Non-Employee Directors 1996 Stock Incentive Plan
has been executed by the Company as of the ______ day of ______________, 1996,
being the
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date the Plan was adopted by the Board.
ATRIA COMMUNITIES, INC.
By: ____________________________________
Title: ________________________________
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