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EXHIBIT 5
TALBERT MEDICAL MANAGEMENT HOLDINGS CORPORATION
1996 STOCK INCENTIVE PLAN
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TABLE OF CONTENTS
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1. THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Administration and Authorization; Power and Procedure . . . . . . . . . . . . . . . . . 1
1.3 Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Shares Available for Awards; Share Limits . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Grant of Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.6 Award Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.7 Limitations on Exercise and Vesting of Awards . . . . . . . . . . . . . . . . . . . . . 4
1.8 No Transferability; Limited Exception to Transfer
Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2. OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Option Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3 Limitations on Grant and Terms of Incentive Stock Options . . . . . . . . . . . . . . . 6
2.4 Limits on 10% Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.5 Cancellation and Regrant/Waiver of Restrictions . . . . . . . . . . . . . . . . . . . . 7
2.6 Options and Rights in Substitution for Stock Options
Granted by Other Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3. STOCK APPRECIATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.1 Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Exercise of Stock Appreciation Rights . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4. RESTRICTED STOCK AWARDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.1 Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.2 Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.3 Return to the Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5. PERFORMANCE SHARE AWARDS AND STOCK BONUSES . . . . . . . . . . . . . . . . . . . . . . . 10
5.1 Grants of Performance Share Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.2 Special Performance-Based Share Awards . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.3 Grants of Stock Bonuses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.4 Deferred Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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6. OTHER PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.1 Rights of Eligible Persons, Participants and
Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.2 Adjustments; Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.3 Effect of Termination of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.4 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.5 Tax Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.6 Plan Amendment, Termination and Suspension . . . . . . . . . . . . . . . . . . . . . . . 16
6.7 Privileges of Stock Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.8 Effective Date of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.9 Term of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.10 Governing Law/Construction/Severability . . . . . . . . . . . . . . . . . . . . . . . . 17
6.11 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.12 Effect of Change of Subsidiary Status . . . . . . . . . . . . . . . . . . . . . . . . . 18
7. NON-EMPLOYEE DIRECTOR OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.1 Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.2 Annual Option Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.3 Option Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.4 Option Period and Exercisability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.5 Termination of Directorship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.6 Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.7 Acceleration Upon a Change in Control Event . . . . . . . . . . . . . . . . . . . . . . 21
8. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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TALBERT MEDICAL MANAGEMENT HOLDINGS CORPORATION
1996 STOCK INCENTIVE PLAN
1. THE PLAN.
1.1 Purpose.
The purpose of this Plan is to promote the success of the
Company by providing an additional means through the grant of Awards to attract,
motivate, retain and reward key employees, including officers, whether or not
directors, of the Company with awards and incentives for high levels of
individual performance and improved financial performance of the Company and to
attract, motivate and retain experienced and knowledgeable independent directors
through the benefits provided under Article 7. "Corporation" means Talbert
Medical Management Holdings Corporation, and "Company" means the Corporation and
its Subsidiaries, collectively. These terms and other capitalized terms are
defined in Article 8.
1.2 Administration and Authorization; Power and Procedure.
(a) Committee. This Plan shall be administered by and all
Awards to Eligible Persons shall be authorized by the Committee. Action of the
Committee with respect to the administration of this Plan shall be taken
pursuant to a majority vote or by unanimous written consent of its members.
(b) Plan Awards; Interpretation; Powers of Committee.
Subject to the express provisions of this Plan, the Committee shall have the
authority:
(i) to determine from among those persons eligible
the particular Eligible Persons who will receive any Awards;
(ii) to grant Awards to Eligible Persons, determine
the price at which securities will be offered or awarded and the amount
of securities to be offered or awarded to any of such persons, and
determine the other specific terms and conditions of such Awards
consistent with the express limits of this Plan, and establish the
installments (if any) in which such Awards shall become exercisable or
shall vest, or determine that no delayed exercisability or vesting is
required, and establish the events of termination or reversion of such
Awards;
(iii) to approve the forms of Award Agreements
(which need not be identical either as to type of award or among
Participants);
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(iv) to construe and interpret this Plan and any
agreements defining the rights and obligations of the Company and
Participants who are granted Awards under Articles 2, 3, 4 or 5 of this
Plan, further define the terms used in this Plan, and prescribe, amend
and rescind rules and regulations relating to the administration of this
Plan;
(v) to cancel, modify, or waive the Corporation's
rights with respect to, or modify, discontinue, suspend, or terminate any
or all outstanding Awards held by Eligible Persons, subject to any
required consent under Section 6.6;
(vi) to accelerate or extend the exercisability or
extend the term of any or all such outstanding Awards within the maximum
ten-year term of Awards under Section 1.6; and
(vii) to make all other determinations and take
such other action as contemplated by this Plan or as may be necessary or
advisable for the administration of this Plan and the effectuation of its
purposes.
Notwithstanding the foregoing, the provisions of Article 7 relating to
Non-Employee Director Awards shall be automatic and, to the maximum extent
possible, self-effectuating.
(c) Binding Determinations. Any action taken by, or
inaction of, the Corporation, any Subsidiary, the Board or the Committee
relating or pursuant to this Plan shall be within the absolute discretion of
that entity or body and shall be conclusive and binding upon all persons. No
member of the Board or Committee, or officer of the Corporation or any
Subsidiary, shall be liable for any such action or inaction of the entity or
body, of another person or, except in circumstances involving bad faith, of
himself or herself. Subject only to compliance with the express provisions
hereof, the Board and Committee may act in their absolute discretion in matters
within their authority related to this Plan.
(d) Reliance on Experts. In making any determination or
in taking or not taking any action under this Plan, the Committee or the Board,
as the case may be, may obtain and may rely upon the advice of experts,
including professional advisors to the Corporation. No director, officer or
agent of the Company shall be liable for any such action or determination taken
or made or omitted in good faith.
(e) Delegation. The Committee may delegate ministerial,
non-discretionary functions to a third-party administrator or to individuals who
are officers or employees of the Company.
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1.3 Participation.
Awards may be granted by the Committee only to those persons
that the Committee determines to be Eligible Persons. An Eligible Person who
has been granted an Award may, if otherwise eligible, be granted additional
Awards if the Committee shall so determine.
1.4 Shares Available for Awards; Share Limits.
(a) Shares Available. Subject to the provisions of Section
6.2, the capital stock that may be delivered under this Plan shall be shares of
the Corporation's authorized but unissued Common Stock and any shares of its
Common Stock held as treasury shares. The shares may be delivered for any
lawful consideration.
(b) Share Limits. The maximum number of shares of Common
Stock that may be delivered pursuant to all Awards granted under this Plan shall
not exceed 180,000 shares (the "Share Limit"). The maximum number of shares of
Common Stock that may be delivered pursuant to Options qualified as Incentive
Stock Options granted under Article 2 of this Plan is 50,000 shares. The
maximum number of shares of Common Stock that may be delivered to Non-Employee
Directors under the provisions of Article 7 shall not exceed 60,000 shares. The
maximum number of shares subject to Options and Stock Appreciation Rights that
are granted during any calendar year to any individual shall be limited to
50,000. Each of the four foregoing numerical limits shall be subject to
adjustment as contemplated by this Section 1.4 and Section 6.2.
(c) Share Reservation; Replenishment and Reissue of Unvested
Awards. No Award may be granted under this Plan unless, on the date of grant,
the sum of (i) the maximum number of shares issuable at any time pursuant to
such Award, plus (ii) the number of shares that have previously been issued
pursuant to Awards granted under this Plan, other than reacquired shares
available for reissue consistent with any applicable legal limitations, plus
(iii) the maximum number of shares that may be issued at any time after such
date of grant pursuant to Awards that are outstanding on such date, does not
exceed the Share Limit. Shares that are subject to or underlie Awards which
expire or for any reason are cancelled or terminated, are forfeited, fail to
vest, or for any other reason are not paid or delivered under this Plan, as well
as reacquired shares, shall again, except to the extent prohibited by law, be
available for subsequent Awards under the Plan. Except as limited by law, if an
Award is or may be settled only in cash, such Award need not be counted against
any of the limits under this Section 1.4.
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1.5 Grant of Awards.
Subject to the express provisions of this Plan, the Committee
shall determine the number of shares of Common Stock subject to each Award, the
price (if any) to be paid for the shares or the Award and, in the case of
Performance Share Awards, in addition to matters addressed in Section 1.2(b),
the specific objectives, goals and performance criteria (such as an increase in
sales, market value, earnings or book value over a base period, the years of
service before vesting, the relevant job classification or level of
responsibility or other factors) that further define the terms of the
Performance Share Award. Each Award shall be evidenced by an Award Agreement
signed by the Corporation and, if required by the Committee, by the Participant.
The Award Agreement shall set forth the material terms and conditions of the
Award established by the Committee consistent with the specific provisions of
this Plan.
1.6 Award Period.
Each Award and all executory rights or obligations under the
related Award Agreement shall expire on such date (if any) as shall be
determined by the Committee, but in the case of Options or other rights to
acquire Common Stock not later than ten (10) years after the Award Date.
1.7 Limitations on Exercise and Vesting of Awards.
(a) Provisions for Exercise. Unless the Committee
otherwise expressly provides, no Award shall be exercisable or shall vest until
at least 12 months after the initial Award Date, and once exercisable an Award
shall remain exercisable until the expiration or earlier termination of the
Award.
(b) Procedure. Any exercisable Award shall be deemed to be
exercised when the Secretary of the Corporation receives written notice of such
exercise from the Participant, together with any required payment made in
accordance with Section 2.2(a) or 7.4, as the case may be.
(c) Fractional Shares/Minimum Issue. Fractional share
interests shall be disregarded, but may be accumulated. The Committee, however,
may determine in the case of Eligible Persons that cash, other securities, or
other property will be paid or transferred in lieu of any fractional share
interests. No fewer than 100 shares may be purchased on exercise of any Award at
one time unless the number purchased is the total number at the time available
for purchase under the Award.
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1.8 No Transferability; Limited Exception to Transfer
Restrictions.
(a) Limit on Exercise and Transfer. Unless otherwise
expressly provided in (or pursuant to) this Section 1.8, by applicable law and
by the Award Agreement, as the same may be amended, (i) all Awards are
non-transferable and shall not be subject in any manner to sale, transfer,
anticipation, alienation, assignment, pledge, encumbrance or charge; Awards
shall be exercised only by the Participant; and (ii) amounts payable or shares
issuable pursuant to an Award shall be delivered only to (or for the account of)
the Participant.
(b) Exceptions. The Committee may permit Awards to be
exercised by and paid to certain persons or entities related to the Participant
pursuant to such conditions and procedures as the Committee may establish. Any
permitted transfer shall be subject to the condition that the Committee receive
evidence satisfactory to it that the transfer is being made for estate and/or
tax planning purposes or a gratuitous or donative basis and without
consideration (other than nominal consideration). Notwithstanding the
foregoing, Incentive Stock Options and Restricted Stock Awards shall be subject
to any and all applicable transfer restrictions under the Code.
(c) Further Exceptions to Limits On Transfer. The exercise
and transfer restrictions in Section 1.8(a) shall not apply to:
(i) transfers to the Corporation,
(ii) the designation of a beneficiary to receive
benefits in the event of the Participant's death or, if the Participant
has died, transfers to or exercise by the Participant's beneficiary, or,
in the absence of a validly designated beneficiary, transfers by will or
the laws of descent and distribution,
(iii) transfers pursuant to a QDRO order,
(iv) if the Participant has suffered a disability,
permitted transfers or exercises on behalf of the Participant by his or
her legal representative, or
(v) the authorization by the Committee of
"cashless exercise" procedures with third parties who provide financing
for the purpose of (or who otherwise facilitate) the exercise of Awards
consistent with applicable laws and the express authorization of the
Committee.
Notwithstanding the foregoing, Incentive Stock Options and Restricted Stock
Awards shall be subject to all applicable transfer restrictions under the Code.
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2. OPTIONS.
2.1 Grants.
One or more Options may be granted under this Article to any
Eligible Person. Each Option granted shall be designated in the applicable
Award Agreement by the Committee as either an Incentive Stock Option subject to
Section 2.3, or a Non-Qualified Stock Option.
2.2 Option Price.
(a) Pricing Limits. The purchase price per share of the
Common Stock covered by each Option shall be determined by the Committee at the
time of the Award, but in the case of Incentive Stock Options shall not be less
than 100% (110% in the case of a Participant described in Section 2.4) of the
Fair Market Value of the Common Stock on the date of grant.
(b) Payment Provisions. The purchase price of any shares
purchased on exercise of an Option granted under this Article shall be paid in
full at the time of each purchase in one or a combination of the following
methods: (i) in cash or by electronic funds transfer; (ii) by check payable to
the order of the Corporation; (iii) by notice and third party payment in such
manner as may be authorized by the Committee; or (iv) by the delivery of shares
of Common Stock of the Corporation already owned by the Participant, provided,
however, that the Committee may in its absolute discretion limit the
Participant's ability to exercise an Award by delivering such shares. Shares of
Common Stock used to satisfy the exercise price of an Option shall be valued at
their Fair Market Value on the date of exercise.
2.3 Limitations on Grant and Terms of Incentive Stock Options.
(a) $100,000 Limit. To the extent that the aggregate Fair
Market Value of stock with respect to which incentive stock options first become
exercisable by a Participant in any calendar year exceeds $100,000, taking into
account both Common Stock subject to Incentive Stock Options under this Plan and
stock subject to incentive stock options under all other plans of the Company or
any parent corporation, such options shall be treated as Nonqualified Stock
Options. For this purpose, the Fair Market Value of the stock subject to
options shall be determined as of the date the options were awarded. In
reducing the number of options treated as incentive stock options to meet the
$100,000 limit, the most recently granted options shall be reduced first. To
the extent a reduction of simultaneously granted options is necessary to meet
the $100,000 limit, the Committee may, in the manner and to the extent permitted
by law, designate which shares of Common Stock are to be treated as shares
acquired pursuant to the exercise of an Incentive Stock Option.
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(b) Option Period. Each Option and all rights thereunder
shall expire no later than ten years after the Award Date.
(c) Other Code Limits. Incentive Stock Options may only be
granted to Eligible Employees who are actually employed by the Corporation or a
Subsidiary and that satisfy the other eligibility requirements of the Code.
There shall be imposed in any Award Agreement relating to Incentive Stock
Options such other terms and conditions as from time to time are required in
order that the Option be an "incentive stock option" as that term is defined in
Section 422 of the Code.
2.4 Limits on 10% Holders.
No Incentive Stock Option may be granted to any person who, at
the time the Option is granted, owns (or is deemed to own under Section 424(d)
of the Code) shares of outstanding Common Stock possessing more than 10% of the
total combined voting power of all classes of stock of the Corporation, unless
the exercise price of such Option is at least 110% of the Fair Market Value of
the stock subject to the Option and such Option by its terms is not exercisable
after the expiration of five years from the date such Option is granted.
2.5 Cancellation and Regrant/Waiver of Restrictions.
Subject to Section 1.4 and Section 6.6 and the specific
limitations on Awards contained in this Plan, the Committee from time to time
may authorize, generally or in specific cases only, for the benefit of any
Eligible Person any adjustment in the exercise or purchase price, the vesting
schedule, the number of shares subject to, the restrictions upon or the term of,
an Award granted under this Article by cancellation of an outstanding Award and
a subsequent regranting of an Award, by amendment, by substitution of an
outstanding Award, by waiver or by other legally valid means. Such amendment or
other action may result among other changes in an exercise or purchase price
which is higher or lower than the exercise or purchase price of the original
Award or prior Award, provide for a greater or lesser number of shares subject
to the Award, or provide for a longer or shorter vesting or exercise period.
2.6 Options and Rights in Substitution for Stock Options Granted
by Other Corporations. Options and Stock Appreciation Rights may be granted to
Eligible Persons under this Plan in substitution for employee stock options
granted by other entities to persons who are or who will become Eligible
Persons in respect of the Company, in connection with a distribution, merger or
reorganization by or with the granting entity or an affiliated entity, or the
acquisition by the Company, directly or indirectly, of all or a substantial
part of the stock or assets of the other entity.
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3. STOCK APPRECIATION RIGHTS.
3.1 Grants.
In its discretion, the Committee may grant a Stock Appreciation
Right to any Eligible Person either concurrently with the grant of another Award
or in respect of an outstanding Award, in whole or in part, or independently of
any other Award. Any Stock Appreciation Right granted in connection with an
Incentive Stock Option shall contain such terms as may be required to comply
with the provisions of Section 422 of the Code and the regulations promulgated
thereunder, unless the holder otherwise agrees.
3.2 Exercise of Stock Appreciation Rights.
(a) Exercisability. Unless the Award Agreement or the
Committee otherwise provides, a Stock Appreciation Right related to another
Award shall be exercisable at such time or times, and to the extent, that the
related Award shall be exercisable.
(b) Effect on Available Shares. To the extent that a Stock
Appreciation Right is exercised, the number of underlying shares of Common Stock
theretofore subject to a related Award shall be charged against the maximum
amount of Common Stock that may be delivered pursuant to Awards under this Plan.
The number of shares subject to the Stock Appreciation Right and the related
Option of the Participant shall be reduced by the number of underlying shares as
to which the exercise related, unless the Award Agreement otherwise provides.
(c) Stand-Alone SARs. A Stock Appreciation Right granted
independently of any other Award shall be exercisable pursuant to the terms of
the Award Agreement but in no event earlier than six months after the Award
Date, except in the case of death or Total Disability.
3.3 Payment.
(a) Amount. Unless the Committee otherwise provides, upon
exercise of a Stock Appreciation Right and the attendant surrender of an
exercisable portion of any related Award, the Participant shall be entitled to
receive payment of an amount determined by multiplying
(i) the difference obtained by subtracting the
exercise price per share of Common Stock under the related Award (if
applicable) or the initial share value specified in the Award from the
Fair Market Value of a share of Common Stock on the date of exercise of
the Stock Appreciation Right, by
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(ii) the number of shares with respect to which the
Stock Appreciation Right shall have been exercised.
(b) Form of Payment. The Committee, in its sole
discretion, shall determine the form in which payment shall be made of the
amount determined under paragraph (a) above, either solely in cash, solely in
shares of Common Stock (valued at Fair Market Value on the date of exercise of
the Stock Appreciation Right), or partly in such shares and partly in cash,
provided that the Committee shall have determined that such exercise and payment
are consistent with applicable law. If the Committee permits the Participant to
elect to receive cash or shares (or a combination thereof) on such exercise, any
such election shall be subject to such conditions as the Committee may impose.
4. RESTRICTED STOCK AWARDS.
4.1 Grants.
The Committee may, in its discretion, grant one or more
Restricted Stock Awards to any Eligible Person. Each Restricted Stock Award
Agreement shall specify the number of shares of Common Stock to be issued to the
Participant, the date of such issuance, the consideration for such shares (but
not less than the minimum lawful consideration under applicable state law) by
the Participant, the extent to which the Participant shall be entitled to
dividends, voting and other rights in respect of the shares prior to vesting and
the restrictions imposed on such shares and the conditions of release or lapse
of such restrictions. Such restrictions shall not lapse earlier than 12 months
after the Award Date, except to the extent the Committee may otherwise provide.
Stock certificates evidencing shares of Restricted Stock pending the lapse of
the restrictions ("restricted shares") shall bear a legend making appropriate
reference to the restrictions imposed hereunder and shall be held by the
Corporation or by a third party designated by the Committee until the
restrictions on such shares shall have lapsed and the shares shall have vested
in accordance with the provisions of the Award and Section 1.7. Upon issuance
of the Restricted Stock Award, the Participant may be required to provide such
further assurance and documents as the Committee may require to enforce the
restrictions.
4.2 Restrictions.
(a) Pre-Vesting Restraints. Except as provided in Section
4.1 and 1.8, restricted shares comprising any Restricted Stock Award may not be
sold, assigned, transferred, pledged or otherwise disposed of or encumbered,
either voluntarily or involuntarily, until the restrictions on such shares have
lapsed and the shares have become vested.
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(b) Dividend and Voting Rights. Unless otherwise provided
in the applicable Award Agreement, a Participant receiving a Restricted Stock
Award shall be entitled to cash dividend and voting rights for all shares issued
even though they are not vested, provided that such rights shall terminate
immediately as to any restricted shares which cease to be eligible for vesting.
(c) Cash Payments. If the Participant shall have paid or
received cash (including any dividends) in connection with the Restricted Stock
Award, the Award Agreement shall specify whether and to what extent such cash
shall be returned (with or without an earnings factor) as to any restricted
shares which cease to be eligible for vesting.
4.3 Return to the Corporation.
Unless the Committee otherwise expressly provides, restricted
shares that remain subject to restrictions at the time of termination of
employment or are subject to other conditions to vesting that have not been
satisfied by the time specified in the applicable Award Agreement shall not vest
and shall be returned to the Corporation in such manner and on such terms as the
Committee shall therein provide.
5. PERFORMANCE SHARE AWARDS AND STOCK BONUSES.
5.1 Grants of Performance Share Awards.
The Committee may, in its discretion, grant Performance Share
Awards to Eligible Persons based upon such factors as the Committee shall deem
relevant in light of the specific type and terms of the award. An Award
Agreement shall specify the maximum number of shares of Common Stock (if any)
subject to the Performance Share Award, the consideration (but not less than the
minimum lawful consideration) to be paid for any such shares as may be issuable
to the Participant, the duration of the Award and the conditions upon which
delivery of any shares or cash to the Participant shall be based. The amount of
cash or shares or other property that may be deliverable pursuant to such Award
shall be based upon the degree of attainment over a specified period (a
"performance cycle") as may be established by the Committee of such measure(s)
of the performance of the Company (or any part thereof) or the Participant as
may be established by the Committee. The Committee may provide for full or
partial credit, prior to completion of such performance cycle or the attainment
of the performance achievement specified in the Award, in the event of the
Participant's death, or Total Disability, a Change in Control Event or in such
other circumstances as the Committee consistent with Section 6.10(c)(2), if
applicable, may determine.
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5.2 Special Performance-Based Share Awards.
Without limiting the generality of the foregoing, and in
addition to Options and Stock Appreciation Rights granted under other provisions
of this Plan which are intended to satisfy the exception for "performance-based
compensation" under Section 162(m) of the Code (with such Awards hereinafter
referred to as a "Qualifying Option" or a "Qualifying Stock Appreciation Right,"
respectively), other performance-based awards within the meaning of Section
162(m) of the Code ("Performance-Based Awards"), whether in the form of
restricted stock, performance stock, phantom stock, Cash-Based Awards, or other
rights, the grant, vesting, exercisability or payment of which depends on the
degree of achievement of the Performance Goals relative to preestablished
targeted levels for the Corporation or the Corporation and one or more of its
Subsidiaries, may be granted under this Plan. Any Qualifying Option or
Qualifying Stock Appreciation Right shall be subject only to the requirements of
subsections (a) and (c) below in order for such Awards to satisfy the
requirements for Performance-Based Awards under this Section 5.2. With the
exception of any Qualifying Option or Qualifying Stock Appreciation Right, an
Award that is intended to satisfy the requirements of this Section 5.2 shall be
designated as a Performance-Based Award at the time of grant.
(a) Eligible Class. The eligible class of persons for
Performance-Based Awards under this Section shall be the executive officers of
the Corporation.
(b) Performance Goal Alternatives. The specific
performance goals for Performance-Based Awards granted under this Section (other
than Qualifying Options and Qualifying Stock Appreciation Rights) shall be, on
an absolute or relative basis, one or more of the Performance Goals, as selected
by the Committee in its sole discretion. The Committee shall establish in the
applicable Award Agreement the specific performance target(s) relative to the
Performance Goal(s) which must be attained before the compensation under the
Performance-Based Award becomes payable. The specific targets shall be
determined within the time period permitted under Section 162(m) of the Code
(and any regulations issued thereunder) so that such targets are considered to
be preestablished and so that the attainment of such targets is substantially
uncertain at the time of their establishment. The applicable performance
measurement period may not be less than one nor more than 10 years.
(c) Maximum Performance-Based Award. Notwithstanding any
other provision of the Plan to the contrary, the maximum number of shares of
Common Stock which may be delivered pursuant to options, stock appreciation
rights, restricted stock or other share-based awards that are granted as
Performance-Based Awards to any Participant in any calendar year shall not
exceed 100,000 shares, either individually or in the aggregate, subject to
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adjustment as provided in Section 6.2. Awards that are cancelled during the
year shall be counted against this limit to the extent required by Section
162(m) of the Code. In addition, the aggregate amount of compensation to be
paid to any Participant in respect of any Cash-Based Awards that are granted
during any calendar year as Performance-Based Awards shall not exceed
$1,000,000.
(d) Committee Certification. Before any Performance-Based
Award under this Section 5.2 (other than Qualifying Options or Qualifying Stock
Appreciation Rights) is paid, the Committee must certify in writing that the
Performance Goal(s) and any other material terms of the Performance-Based Award
were satisfied; provided, however, that a Performance-Based Award may be paid
without regard to the satisfaction of the applicable Performance Goal in the
event of a Change in Control Event in accordance with Section 6.2(d).
(e) Terms and Conditions of Awards. The Committee will
have the discretion to determine the restrictions or other limitations of the
individual Awards granted under this Section 5.2 including the authority to
reduce Awards, payouts or vesting or to pay no Awards, in its sole discretion,
if the Committee preserves such authority at the time of grant by language to
this effect in its authorizing resolutions or otherwise.
(f) Adjustments for Changes in Capitalization and other
Material Changes. In the event of a change in corporate capitalization, such
as a stock split or stock dividend, or a corporate transaction, such as a
merger, consolidation, spinoff, reorganization or similar event, or any partial
or complete liquidation of the Corporation, or any similar event consistent with
regulations issued under Section 162(m) of the Code including, without
limitation, any material change in accounting policies or practices affecting
the Corporation and/or the Performance Goals or targets, then the Committee may
make adjustments to the Performance Goals and targets relating to outstanding
Performance-Based Awards to the extent such adjustments are made to reflect the
occurrence of such an event; provided, however, that adjustments described in
this subsection may be made only to the extent that the occurrence of an event
described herein was unforeseen at the time the targets for a Performance-Based
Award were established by the Committee.
5.3 Grants of Stock Bonuses.
The Committee may grant a Stock Bonus to any Eligible Person to
reward exceptional or special services, contributions or achievements in the
manner and on such terms and conditions (including any restrictions on such
shares) as determined from time to time by the Committee. The number of shares
so awarded shall be determined by the Committee. The Award may be granted
independently or in lieu of a cash bonus.
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5.4 Deferred Payments.
The Committee may authorize for the benefit of any Eligible
Person the deferral of any payment of cash or shares that may become due or of
cash otherwise payable under this Plan, and provide for accredited benefits
thereon based upon such deferment, at the election or at the request of such
Participant, subject to the other terms of this Plan. Such deferral shall be
subject to such further conditions, restrictions or requirements as the
Committee may impose, subject to any then vested rights of Participants.
6. OTHER PROVISIONS.
6.1 Rights of Eligible Persons, Participants and
Beneficiaries.
(a) Employment Status. Status as an Eligible Person shall
not be construed as a commitment that any Award will be made under this Plan to
an Eligible Person or to Eligible Persons generally.
(b) No Employment Contract. Nothing contained in this Plan
(or in any other documents related to this Plan or to any Award) shall confer
upon any Eligible Person or other Participant any right to continue in the
employ or other service of the Company or constitute any contract or agreement
of employment or other service, nor shall interfere in any way with the right of
the Company to change such person's compensation or other benefits or to
terminate the employment of such person, with or without cause, but nothing
contained in this Plan or any document related hereto shall adversely affect any
independent contractual right of such person without his or her consent thereto.
(c) Plan Not Funded. Awards payable under this Plan shall
be payable in shares or from the general assets of the Corporation, and no
special or separate reserve, fund or deposit shall be made to assure payment of
such Awards. No Participant, Beneficiary or other person shall have any right,
title or interest in any fund or in any specific asset (including shares of
Common Stock, except as expressly otherwise provided) of the Company by reason
of any Award hereunder. Neither the provisions of this Plan (or of any related
documents), nor the creation or adoption of this Plan, nor any action taken
pursuant to the provisions of this Plan shall create, or be construed to create,
a trust of any kind or a fiduciary relationship between the Company and any
Participant, Beneficiary or other person. To the extent that a Participant,
Beneficiary or other person acquires a right to receive payment pursuant to any
Award hereunder, such right shall be no greater than the right of any unsecured
general creditor of the Company.
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6.2 Adjustments; Acceleration.
(a) Adjustments. If there shall occur any extraordinary
dividend or other extraordinary distribution in respect of the Common Stock
(whether in the form of cash, Common Stock, other securities, or other
property), or any reclassification, recapitalization, stock split (including a
stock split in the form of a stock dividend), reverse stock split,
reorganization, merger, combination, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Common Stock or other securities of the
Corporation, or there shall occur any other like corporate transaction or event
in respect of the Common Stock or a sale of substantially all the assets of the
Corporation as an entirety, then the Committee shall, in such manner and to such
extent (if any) as it deems appropriate and equitable (1) proportionately adjust
any or all of (i) the number and type of shares of Common Stock (or other
securities) which thereafter may be made the subject of Awards (including the
specific numbers of shares set forth elsewhere in this Plan), (ii) the number,
amount and type of shares of Common Stock (or other securities or property)
subject to any or all outstanding Awards, (iii) the grant, purchase, or exercise
price of any or all outstanding Awards, (iv) the securities, cash or other
property deliverable upon exercise of any outstanding Awards, or (v) the
performance standards appropriate to any outstanding Awards, or (2) in the case
of an extraordinary dividend or other distribution, recapitalization,
reclassification, merger, reorganization, consolidation, combination, sale of
assets, split up, exchange, or spin off, make provision for a cash payment or
for the substitution or exchange of any or all outstanding Awards or the cash,
securities or property deliverable to the holder of any or all outstanding
Awards based upon the distribution or consideration payable to holders of the
Common Stock of the Corporation upon or in respect of such event; provided,
however, in each case, that with respect to Awards of Incentive Stock Options,
no such adjustment shall be made which would cause the Plan to violate Section
424(a) of the Code or any successor provisions thereto without the written
consent of holders materially adversely affected thereby. In any of such
events, the Committee may take such action sufficiently prior to such event if
necessary to permit the Participant to realize the benefits intended to be
conveyed with respect to the underlying shares in the same manner as is
available to shareholders generally.
(b) Acceleration of Awards Upon Change in Control. As to
any Participant, unless prior to a Change in Control Event the Committee
determines that, upon its occurrence, there shall be no acceleration of benefits
under Awards or determines that only certain or limited benefits under Awards
shall be accelerated and the extent to which they shall be accelerated, and/or
establishes a different time in respect of such Change in Control Event for such
acceleration, then upon the occurrence of a Change in Control Event (i) each
Option and Stock Appreciation Right shall become immediately exercisable, (ii)
Restricted Stock shall immediately vest free of restrictions, and (iii) each
Performance Share Award shall become payable to the Participant; provided,
however, that in no
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event shall any Award be accelerated as to any Section 16 Person to a date
less than six months after the Award Date of such Award. The Committee may
override the limitations on acceleration in this Section 6.2(b) by express
provision in the Award Agreement and may accord any Eligible Person a right to
refuse any acceleration, whether pursuant to the Award Agreement or otherwise,
in such circumstances as the Committee may approve. Any acceleration of Awards
shall comply with applicable regulatory requirements, including without
limitation Section 422 of the Code.
(c) Possible Early Termination of Accelerated Awards. If
any Option or other right to acquire Common Stock under this Plan (other than
under Article 7) has been fully accelerated as permitted by Section 6.2(b) but
is not exercised prior to (i) a dissolution of the Corporation, or (ii) an event
described in Section 6.2(a) that the Corporation does not survive, or (iii) the
consummation of an event described in Section 6.2(a) that results in a Change in
Control Event approved by the Board, such Option or right shall thereupon
terminate, subject to any provision that has been expressly made by the
Committee for the survival, substitution, exchange or other settlement of such
Option or right.
6.3 Effect of Termination of Employment.
The Committee shall establish in respect of each Award granted
to an Eligible Person the effect of a termination of employment on the rights
and benefits thereunder and in so doing may make distinctions based upon the
cause of termination. In addition, in the event of, or in anticipation of, a
termination of employment with the Company for any reason, other than discharge
for cause, the Committee may, in its discretion, increase the portion of the
Participant's Award available to the Participant, or Participant's Beneficiary
or Personal Representative, as the case may be, or, subject to the provisions of
Section 1.6, extend the exercisability period upon such terms as the Committee
shall determine and expressly set forth in or by amendment to the Award
Agreement.
6.4 Compliance with Laws.
This Plan, the granting and vesting of Awards under this Plan
and the offer, issuance and delivery of shares of Common Stock and/or the
payment of money under this Plan or under Awards granted hereunder are subject
to compliance with all applicable federal and state laws, rules and regulations
(including but not limited to state and federal securities law and federal
margin requirements) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Corporation, be
necessary or advisable in connection therewith. Any securities delivered under
this Plan shall be subject to such restrictions, and the person acquiring such
securities shall, if requested by the Corporation, provide such assurances and
representations to the
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Corporation as the Corporation may deem necessary or desirable to assure
compliance with all applicable legal requirements.
6.5 Tax Withholding.
Upon any exercise, vesting, or payment of any Award or upon
the disposition of shares of Common Stock acquired pursuant to the exercise of
an Incentive Stock Option prior to satisfaction of the holding period
requirements of Section 422 of the Code, the Company shall have the right at its
option to (i) require the Participant (or Personal Representative or
Beneficiary, as the case may be) to pay or provide for payment of the amount of
any taxes which the Company may be required to withhold with respect to such
Award event or payment or (ii) deduct from any amount payable in cash the amount
of any taxes which the Company may be required to withhold with respect to such
cash payment. In any case where a tax is required to be withheld in connection
with the delivery of shares of Common Stock under this Plan, the Committee may
in its sole discretion grant (either at the time of the Award or thereafter) to
the Participant the right to elect, pursuant to such rules and subject to such
conditions as the Committee may establish, to have the Corporation reduce the
number of shares to be delivered by (or otherwise reacquire) the appropriate
number of shares valued at their then Fair Market Value, to satisfy such
withholding obligation.
6.6 Plan Amendment, Termination and Suspension.
(a) Board Authorization. The Board may, at any time,
terminate or, from time to time, amend, modify or suspend this Plan, in whole or
in part. No Awards may be granted during any suspension of this Plan or after
termination of this Plan, but the Committee shall retain jurisdiction as to
Awards then outstanding in accordance with the terms of this Plan.
(b) Shareholder Approval. Any amendment that would (i)
materially increase the benefits accruing to Participants under this Plan, (ii)
materially increase the aggregate number of securities that may be issued under
this Plan, or (iii) materially modify the requirements as to eligibility for
participation in this Plan, shall be subject to stockholder approval only to the
extent then required by Section 425 of the Code or applicable law, or deemed
necessary or advisable by the Board.
(c) Amendments to Awards. Without limiting any other
express authority of the Committee under but subject to the express limits of
this Plan, the Committee by agreement or resolution may waive conditions of or
limitations on Awards to Eligible Persons that the Committee in the prior
exercise of its discretion has imposed, without the consent of a Participant,
and may make other changes to the terms and conditions of Awards that do not
affect in any manner
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materially adverse to the Participant, his or her rights and benefits under an
Award.
(d) Limitations on Amendments to Plan and Awards. No
amendment, suspension or termination of the Plan or change of or affecting any
outstanding Award shall, without written consent of the Participant, affect in
any manner materially adverse to the Participant any rights or benefits of the
Participant or obligations of the Corporation under any Award granted under this
Plan prior to the effective date of such change. Changes contemplated by
Section 6.2 shall not be deemed to constitute changes or amendments for purposes
of this Section 6.6.
6.7 Privileges of Stock Ownership.
Except as otherwise expressly authorized by the Committee or
this Plan, a Participant shall not be entitled to any privilege of stock
ownership as to any shares of Common Stock not actually delivered to and held of
record by him or her. No adjustment will be made for dividends or other rights
as shareholders for which a record date is prior to such date of delivery.
6.8 Effective Date of the Plan.
This Plan shall be effective as of November 21, 1996, the date
of Board approval, subject to shareholder approval within 12 months thereafter.
6.9 Term of the Plan.
No Award shall be granted more than ten years after the
effective date of this Plan (the "termination date"). Unless otherwise
expressly provided in this Plan or in an applicable Award Agreement, any Award
granted prior to the termination date may extend beyond such date, and all
authority of the Committee with respect to Awards hereunder, including the
authority to amend an Award, shall continue during any suspension of this Plan
and in respect of outstanding Awards on the termination date.
6.10 Governing Law/Construction/Severability.
(a) Choice of Law. This Plan, the Awards, all documents
evidencing Awards and all other related documents shall be governed by, and
construed in accordance with the laws of the state of incorporation of the
Corporation.
(b) Severability. If any provision shall be held by a
court of competent jurisdiction to be invalid and unenforceable, the remaining
provisions of this Plan shall continue in effect.
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(c) Plan Construction.
(1) Rule 16b-3. It is the intent of the Corporation
that transactions in and affecting Awards in the case of Participants who are or
may be subject to Section 16 of the Exchange Act satisfy any then applicable
requirements of Rule 16b-3 so that such persons (unless they otherwise agree)
will be entitled to the benefits of Rule 16b-3 or other exemptive rules under
Section 16 of the Exchange Act in respect of these transactions and will not be
subjected to avoidable liability thereunder. If any provision of this Plan or
of any Award would otherwise frustrate or conflict with the intent expressed
above, that provision to the extent possible shall be interpreted so as to avoid
such conflict. If the conflict remains irreconcilable, the Committee may
disregard the provision if it concludes that to do so furthers the interest of
the Corporation and is consistent with the purposes of this Plan as to such
persons in the circumstances.
(2) Section 162(m). It is the further intent of the
Company that Options or Stock Appreciation Rights with an exercise or base price
not less than Fair Market Value on the date of grant and Performance Share
Awards under Section 5.2 of this Plan that are granted to or held by a Section
16 Person shall qualify as performance-based compensation under Section 162(m)
of the Code, and this Plan shall be interpreted consistent with such intent.
6.11 Captions.
Captions and headings are given to the sections and subsections
of this Plan solely as a convenience to facilitate reference. Such headings
shall not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
6.12 Effect of Change of Subsidiary Status.
For purposes of this Plan and any Award hereunder, if an entity
ceases to be a Subsidiary a termination of employment and service shall be
deemed to have occurred with respect to each Eligible Person in respect of such
Subsidiary who does not continue as an Eligible Person in respect of another
entity within the Company.
6.13 Non-Exclusivity of Plan.
Nothing in this Plan shall limit or be deemed to limit the
authority of the Board or the Committee to grant awards or authorize any other
compensation, with or without reference to the Common Stock, under any other
plan or authority.
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7. NON-EMPLOYEE DIRECTOR OPTIONS.
7.1 Participation.
Awards under this Article 7 shall be made only to Non-Employee
Directors and shall be evidenced by Award Agreements substantially in the form
of Exhibit A hereto.
7.2 Annual Option Grants.
(a) Time of Initial Award. Subject to approval by the
stockholders of the Corporation, (i) the Chairman of the Board at the date of
the Plan's adoption on November 21, 1996 shall be granted without further action
a Nonqualified Stock Option dated as of September 17, 1996 to purchase 6,000
shares of Common Stock; (ii) each person who is the chairman of the Audit
Committee, Finance Committee or Compensation Committee of the Board at the date
of the Plan's adoption on November 21, 1996 shall be granted without further
action a Nonqualified Stock Option dated as of September 17, 1996 to purchase
5,000 shares of Common Stock and (iii) each person who is a Non-Employee
Director in office on November 21, 1996 and who is not described in clause (i)
or (ii) shall be granted without further action a Nonqualified Stock Option
dated as of September 17, 1996 to purchase 3,000 shares of Common Stock. After
approval of this Plan by the stockholders of the Corporation on November 21,
1996, if any person who is not then an officer or employee of the Company shall
become a director of the Corporation, there shall be granted automatically to
such person (without any action by the Board or Committee) a Nonqualified Stock
Option (the Award Date of which shall be the date such person takes office) to
purchase 3,000 shares of Common Stock.
(b) Subsequent Annual Awards. With respect to each
Non-Employee Director, as of each anniversary of the date of his or her initial
option grant under Section 7.2(a), there shall be granted automatically (without
any action by the Committee or the Board) a Nonqualified Stock Option (the Award
Date of which shall be such anniversary date) to purchase 1,000 shares of Common
Stock provided that the Non-Employee Director continues to serve in office on
such date.
(c) Maximum Number of Shares. Annual grants that would
otherwise exceed the maximum number of shares under Section 1.4(a) shall be
prorated within such limitation. A Non-Employee Director shall not receive more
than one Nonqualified Stock Option under this Section 7.2 in any calendar year.
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7.3 Option Price.
The purchase price per share of the Common Stock covered by
each Option granted pursuant to Section 7.2 hereof shall be 100 percent of the
Fair Market Value of the Common Stock on the Award Date. The exercise price of
any Option granted under this Article shall be paid in full at the time of each
purchase in cash or by check or in shares of Common Stock valued at their Fair
Market Value on the date of exercise of the Option, or partly in such shares and
partly in cash, provided that any such shares used in payment shall have been
owned by the Participant at least six months prior to the date of exercise.
7.4 Option Period and Exercisability.
Each Option granted under this Article 7 and all rights or
obligations thereunder shall expire ten years after the Award Date and shall be
subject to earlier termination as provided below. Each Option granted under the
first sentence of Section 7.2(a) shall become exercisable as follows: (i) at
the rate of 25% on the later of 90 days after the Award Date or 60 days after
the date of commencement of trading of the Common Stock on a national securities
exchange (the "Initial Award Date") and (ii) at the rate of 25% per annum
commencing on the first anniversary of the Initial Award Date and each of the
next two anniversaries thereof. Each other Option granted under Section 7.2
shall become exercisable at the rate of 25% per annum commencing on the first
anniversary of the Award Date and each of the next three anniversaries thereof.
7.5 Termination of Directorship.
If a Non-Employee Director's services as a member of the Board
of Directors terminate by reason of death or Total Disability, an Option granted
pursuant to this Article held by such Participant shall immediately become and
shall remain exercisable for two years after the date of such termination or
until the expiration of the stated term of such Option, whichever first occurs.
If a Non-Employee Director fails to be renominated or re-elected to the Board of
Directors, the Options granted pursuant to this Article shall immediately become
vested and shall remain exercisable for ninety (90) days from the date such
Non-Employee Director ceases to be renominated or re-elected as a member of the
Board of Directors. If a Non-Employee Director who has unvested Options ceases
to be a member of the Board by reason of resignation and such Non-Employee
Director is re-elected to the Board during the 180-day period following his
termination from service, the Non-Employee Director's Options will continue to
vest on the same schedule and with the same pricing that existed prior to the
Non-Employee Director's resignation. If a Non-Employee Director's services as a
member of the Board of Directors terminate for any other reason, any portion of
an Option granted pursuant to this Article which is not then exercisable shall
terminate and any portion of such Option which is then exercisable may be
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exercised for ninety (90) days after the date of such termination or until the
expiration of the stated term whichever first occurs.
7.6 Adjustments.
Options granted under this Article 7 shall be subject to
adjustment as provided in Section 6.2, but only to the extent that (a) such
adjustment and the Committee's actions in respect thereof satisfy any applicable
criteria under Rule 16, (b) such adjustment in the case of a Change in Control
Event is effected pursuant to the terms of a reorganization agreement approved
by shareholders of the Corporation, and (c) such adjustment is consistent with
adjustments to Options held by persons other than executive officers or
directors of the Corporation.
7.7 Acceleration Upon a Change in Control Event.
Upon the occurrence of a Change in Control Event, each Option
granted under Section 7.2 hereof shall become immediately exercisable in full;
provided, however, that none of the Options granted under Section 7.2 shall be
accelerated to a date less than six months after the Award Date of such Option.
To the extent that any Option granted under this Article 7 is not exercised
prior to (i) a dissolution of the Corporation or (ii) a merger or other
corporate event that the Corporation does not survive, and no provision is (or
consistent with the provisions of Section 7.7 can be) made for the assumption,
conversion, substitution or exchange of the Option, the Option shall terminate
upon the occurrence of such event.
8. DEFINITIONS.
8.1 Definitions.
(a) "Award" shall mean an award of any Option, Stock
Appreciation Right, Restricted Stock, Stock Bonus, Performance Share Award,
Performance-Based Award, Cash-Based Award, dividend equivalent or deferred
payment right or other right or security that would constitute a "derivative
security" under Rule 16a-1(c) of the Exchange Act, or any combination thereof,
whether alternative or cumulative, authorized by and granted under this Plan.
(b) "Award Agreement" shall mean any writing setting forth
the terms of an Award that has been authorized by the Committee.
(c) "Award Date" shall mean the date upon which the
Committee took the action granting an Award or such later date as the Committee
designates
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as the Award Date at the time of the Award or, in the case of Awards under
Article 7, the applicable dates set forth therein.
(d) "Award Period" shall mean the period beginning on an
Award Date and ending on the expiration date of such Award.
(e) "Beneficiary" shall mean the person, persons, trust or
trusts designated by a Participant or, in the absence of a designation, entitled
by will or the laws of descent and distribution, to receive the benefits
specified in the Award Agreement and under this Plan in the event of a
Participant's death, and shall mean the Participant's executor or administrator
if no other Beneficiary is designated and able to act under the circumstances.
(f) "Board" shall mean the Board of Directors of the
Corporation.
(g) "Cash-Based Awards" shall mean Awards that, if paid,
must be paid in cash and that are neither denominated in nor have a value
derived from the value of, nor an exercise or conversion privilege at a price
related to, shares of Common Stock.
(h) "Cash Flow" shall mean cash and cash equivalents
derived from either (i) net cash flow from operations or (ii) net cash flow from
operations, financings and investing activities, as determined by the Committee
at the time an Award is granted.
(i) "Change in Control Event" shall mean any of the
following:
(1) Approval by the shareholders of the
Corporation of the dissolution or liquidation of the Corporation;
(2) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act (a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of either (i)
the then outstanding shares of common stock of the Corporation (the
"Outstanding Corporation Common Stock") or (ii) the combined voting power
of the then outstanding voting securities of the Corporation entitled to
vote generally in the election of directors (the "Outstanding Corporation
Voting Securities"); provided, however, that for purposes of this
subsection (2), the following acquisitions shall not constitute a Change
in Control Event: (i) any acquisition directly from the Corporation,
(ii) any acquisition by the Corporation, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Corporation or any entity controlled by the Corporation or (iv) any
acquisition by any
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corporation pursuant to a transaction which complies with clauses (i),
(ii) and (iii) of subsection (4) below; or
(3) Individuals who, as of the effective date of
the Plan, constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Corporation's
stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption
of office occurs as a result of an actual or threatened election contest
with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
(4) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of
the assets of the Corporation (a "Business Combination"), in each case,
unless, following such Business Combination, (i) all or substantially all
of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Corporation Common Stock and Outstanding
Corporation Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 70% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled
to vote generally in the election of directors, as the case may be, of
the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction
owns the Corporation or all or substantially all of the Corporation's
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior
to such Business Combination of the Outstanding Corporation Common Stock
and Outstanding Corporation Voting Securities, as the case may be, (ii)
no Person (excluding any employee benefit plan (or related trust) of the
Corporation or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of, respectively,
the then outstanding shares of common stock of the corporation resulting
from such Business Combination or the combined voting power of the then
outstanding voting securities of such corporation except to the extent
that such ownership existed prior to the Business Combination and (iii)
at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or
of the action of the Board, providing for such Business Combination.
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(j) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(k) "Commission" shall mean the Securities and Exchange
Commission.
(l) "Committee" shall mean the Board or a committee
appointed by the Board to administer this Plan, which committee shall be
comprised only of two or more directors or such greater number of directors as
may be required under applicable law, each of whom, in respect of any decision
at a time when the Participant affected by the decision may be subject to
Section 162(m) of the Code, shall be an "outside" director within the meaning of
Section 162(m) of the Code.
(m) "Common Stock" shall mean the Common Stock of the
Corporation and such other securities or property as may become the subject of
Awards, or become subject to Awards, pursuant to an adjustment made under
Section 6.2 of this Plan.
(n) "Company" shall mean, collectively, the Corporation and
its Subsidiaries.
(o) "Corporation" shall mean Talbert Medical Management
Holdings Corporation, a Delaware corporation, and its successors.
(p) "Disinterested" shall mean disinterested within the
meaning of any applicable regulatory requirements, including Rule 16b-3.
(q) "Eligible Employee" shall mean an officer (whether or
not a director) or key employee of the Company, or, prior to the time that the
Corporation's Common Stock is registered on a Registration Statement on Form
S-8, any person who has agreed to commence serving in any such capacity within
120 days of the date of grant.
(r) "Eligible Person" means an Eligible Employee, or any
Other Eligible Person, as determined by the Committee in its discretion.
(s) "EPS" shall mean earnings per common share on a fully
diluted basis determined by dividing (i) net earnings, less dividends on
preferred stock of the Corporation by (ii) the weighted average number of common
shares and common shares equivalents outstanding.
(t) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
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(u) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended from time to time.
(v) "Fair Market Value" on any date shall mean (i) if the
stock is listed or admitted to trade on a national securities exchange, the
closing price of the stock on the Composite Tape, as published in the Western
Edition of The Wall Street Journal, of the principal national securities
exchange on which the stock is so listed or admitted to trade, on such date, or,
if there is no trading of the stock on such date, then the closing price of the
stock as quoted on such Composite Tape on the next preceding date on which there
was trading in such shares; (ii) if the stock is not listed or admitted to trade
on a national securities exchange, the last price for the stock on such date, as
furnished by the National Association of Securities Dealers, Inc. ("NASD")
through the NASDAQ National Market Reporting System or a similar organization if
the NASD is no longer reporting such information; (iii) if the stock is not
listed or admitted to trade on a national securities exchange and is not
reported on the National Market Reporting System, the mean between the bid and
asked price for the stock on such date, as furnished by the NASD or a similar
organization; or (iv) if the stock is not listed or admitted to trade on a
national securities exchange, is not reported on the National Market Reporting
System and if bid and asked prices for the stock are not furnished by the NASD
or a similar organization, the value as established by the Committee at such
time for purposes of this Plan.
(w) "Incentive Stock Option" shall mean an Option which is
intended, as evidenced by its designation, as an incentive stock option within
the meaning of Section 422 of the Code, the award of which contains such
provisions (including but not limited to the receipt of shareholder approval of
this Plan, if the Award is made prior to such approval) and is made under such
circumstances and to such persons as may be necessary to comply with that
section.
(x) "Nonqualified Stock Option" shall mean an Option that
is designated as a Nonqualified Stock Option and shall include any Option
intended as an Incentive Stock Option that fails to meet the applicable legal
requirements thereof. Any Option granted hereunder that is not designated as an
incentive stock option shall be deemed to be designated a nonqualified stock
option under this Plan and not an incentive stock option under the Code.
(y) "Non-Employee Director" shall mean a member of the
Board of Directors of the Corporation who is not an officer or employee of the
Company.
(z) "Non-Employee Director Participant" shall mean a
Non-Employee Director who holds an outstanding Award under the provisions of
Article 7.
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(aa) "Option" shall mean an option to purchase Common Stock
granted under this Plan. The Committee shall designate any Option granted to an
Eligible Person as a Nonqualified Stock Option or an Incentive Stock Option.
Options granted under Article 8 shall be Nonqualified Stock Options.
(ab) "Other Eligible Person" shall mean any Non-Employee
Director or any individual consultant or advisor who renders or has rendered
bona fide services (other than services in connection with the offering or sale
of securities of the Company in a capital raising transaction) to the Company,
and who is selected to participate in this Plan by the Committee. A
non-employee agent providing bona fide services to the Company (other than as an
eligible advisor or consultant) may also be selected as an Other Eligible Person
if such agent's participation in this Plan would not adversely affect (i) the
Corporation's eligibility to use Form S-8 to register under the Securities Act
of 1933, as amended, the offering of shares issuable under this Plan by the
Company or (ii) the Corporation's compliance with any other applicable laws.
(ac) "Participant" shall mean an Eligible Person who has
been granted an Award under this Plan and a Non-Employee Director who has
received an Award under Article 7 of this Plan.
(ad) "Performance-Based Award" shall mean an Award of a
right to receive shares of Common Stock or other compensation (including cash)
under Section 5.2, the issuance or payment of which is contingent upon, among
other conditions, the attainment of performance objectives specified by the
Committee.
(ae) "Performance Goals" shall mean EPS or ROE or Cash Flow
or Total Stockholder Return, and "Performance Goals" means any combination
thereof.
(af) "Performance Share Award" shall mean an Award of a
right to receive shares of Common Stock made in accordance with Section 5.1, the
issuance or payment of which is contingent upon, among other conditions, the
attainment of performance objectives specified by the Committee.
(ag) "Personal Representative" shall mean the person or
persons who, upon the disability or incompetence of a Participant, shall have
acquired on behalf of the Participant, by legal proceeding or otherwise, the
power to exercise the rights or receive benefits under this Plan and who shall
have become the legal representative of the Participant.
(ah) "Plan" shall mean this 1996 Stock Incentive Plan.
(ai) "QDRO" shall mean a qualified domestic relations order
as defined in Section 414(p) of the Code or Title I, Section 206(d)(3) of ERISA
(to
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the same extent as if this Plan were subject thereto), or the applicable rules
thereunder.
(aj) "Restricted Stock Award" shall mean an award of a fixed
number of shares of Common Stock to the Participant subject, however, to payment
of such consideration, if any, and such forfeiture provisions, as are set forth
in the Award Agreement.
(ak) "Restricted Stock" shall mean shares of Common Stock
awarded to a Participant under this Plan, subject to payment of such
consideration, if any, and such conditions on vesting and such transfer and
other restrictions as are established in or pursuant to this Plan, for so long
as such shares remain unvested under the terms of the applicable Award
Agreement.
(al) "ROE" shall mean consolidated net income of the
Corporation (less preferred dividends), divided by the average consolidated
common shareholders equity.
(am) "Rule 16b-3" shall mean Rule 16b-3 as promulgated by
the Commission pursuant to the Exchange Act, as amended from time to time.
(an) "Section 16 Person" shall mean a person subject to
Section 16(a) of the Exchange Act.
(ao) "Securities Act" shall mean the Securities Act of 1933,
as amended from time to time.
(ap) "Stock Appreciation Right" shall mean a right to
receive a number of shares of Common Stock or an amount of cash, or a
combination of shares and cash, the aggregate amount or value of which is
determined by reference to a change in the Fair Market Value of the Common Stock
that is authorized under this Plan.
(aq) "Stock Bonus" shall mean an Award of shares of Common
Stock granted under this Plan for no consideration other than past services and
without restriction other than such transfer or other restrictions as the
Committee may deem advisable to assure compliance with law.
(ar) "Subsidiary" shall mean any corporation or other entity
a majority of whose outstanding voting stock or voting power is beneficially
owned directly or indirectly by the Corporation.
(as) "Total Disability" shall mean a "permanent and total
disability" within the meaning of Section 22(e)(3) of the Code and (except in
the
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case of a Non-Employee Director) such other disabilities, infirmities,
afflictions or conditions as the Committee by rule may include.
(at) "Total Stockholder Return" shall mean with respect to
the Corporation or other entities (if measures on a relative basis), the (i)
change in the market price of its common stock (as quoted in the principal
market on which it is traded as of the beginning and ending of the period) plus
dividends and other distributions paid, divided by (ii) the beginning quoted
market price, all of which is adjusted for any changes in equity structure,
including but not limited to stock splits and stock dividends.
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EXHIBIT A
TALBERT MEDICAL MANAGEMENT HOLDINGS CORPORATION
ELIGIBLE DIRECTOR
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT dated as of the _____ day of _____________, 19__,
between Talbert Medical Management Holdings Corporation, a Delaware corporation
(the "Corporation"), and ________________ (the "Director").
W I T N E S S E T H
WHEREAS, the Corporation has adopted and the shareholders of the
Corporation have approved a Talbert Medical Management Holdings Corporation
1996 Stock Incentive Plan (the "Plan").
WHEREAS, pursuant to Article 7 of the Plan, the Corporation has
granted an option (the "Option") to the Director upon the terms and conditions
evidenced hereby, as required by the Plan, which Option is not intended as and
shall not be deemed to be an incentive stock option within the meaning of
Section 422 of the Code.
NOW, THEREFORE, in consideration of the services rendered and to be
rendered by the Director, the Corporation and the Director agree to the terms
and conditions set forth herein as required by the terms of the Plan.
1. Option Grant. This Agreement evidences the grant to the
Director, as of ___________, ____ (the "Option Date"), of an Option to purchase
an aggregate of _____ shares of Common Stock, par value _____ per share, under
Article 7 of the Plan, subject to the terms and conditions and to adjustment as
set forth herein or in pursuant to the Plan.
2. Exercise Price. The Option entitles the Director to purchase
(subject to the terms of Sections 3 through 5 below) all or any part of the
Option shares at a price per share of $_______, which amount represents the
Fair Market Value of the shares on the Option Date.
3. Option Exercisability and Term. Subject to adjustment
pursuant to Section 7.6 of the Plan, the Option shall first become and remain
exercisable as to ______________ of the shares on ___________________ and as to
an additional _________ shares on each of the following dates: ______________,
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199_, __________, 199_ and _____________, 199_, in each case subject to
adjustments under Section ____ of the Plan and acceleration under Section 7.7
of the Plan. The Option shall terminate on ____________, 19__,* unless earlier
terminated in accordance with the terms of Sections 7.7 of the Plan.
4. Service and Effect of Termination of Service. The Director
agrees to serve as a director in accordance with the provisions of the
Corporation's Articles of Incorporation, bylaws and applicable law. If the
Director's services as a member of the Board shall terminate, this Option shall
terminate at the times and to the extent set forth in Section 7.5 of the Plan.
5. General Terms. The Option and this Agreement are subject to,
and the Corporation and the Director agree to be bound by, the provisions of
the Plan that apply to the Option. Such provisions are incorporated herein by
this reference. The Director acknowledges receiving a copy of the Plan and
reading its applicable provisions. Capitalized terms not otherwise defined
herein shall have the meaning assigned to such terms in the Plan.
6. Nontransferability. The grant of the Option is intended to
constitute an exempt transaction under Rule 16b-3. In furtherance thereof, the
Option shall be non-transferable to the fullest extent required by Rule
16b-3(a)(2) as in effect on the date of adoption of this Plan or during the
transition period by former Rule 16b-3(d)(1)(ii), incorporated herein by this
reference.
______________
*insert day before tenth anniversary of date of grant.
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34
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
TALBERT MEDICAL MANAGEMENT
HOLDINGS CORPORATION
(a Delaware corporation)
By:
-------------------------------------
Title:
-------------------------------------
Optionee Director
---------------------------------------------
(Signature)
---------------------------------------------
(Print Name)
---------------------------------------------
(Address)
---------------------------------------------
(City, State, Zip Code)
In consideration of the execution of the foregoing Stock Option
Agreement by Talbert Medical Management Holdings Corporation, I,
_________________, the spouse of the Director therein named, do hereby agree to
be bound by all of the terms and provisions thereof and of the Plan.
DATED: , 19 .
--------------- --
---------------------------------------------
Signature of Spouse
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