As filed with the Securities and Exchange Commission on
May 19, 1997.
Registration No. 333-________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
___________________
TALBERT MEDICAL MANAGEMENT HOLDINGS CORPORATION
(Exact name of registrant as specified in its charter)
___________________
Delaware 33-0730363
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3540 Howard Way
Costa Mesa, California 92626-1417
(714) 436-4800
(Address of principal executive offices)
___________________
TALBERT MEDICAL MANAGEMENT HOLDINGS CORPORATION
1996 STOCK INCENTIVE PLAN
(Full title of the plan)
Jack D. Massimino
Talbert Medical Management Holdings Corporation
3540 Howard Way
Costa Mesa, California 92626-1417
(Name and address of agent for service)
Telephone number, including area code,
of agent for service:
(714) 436-4800
___________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
Proposed Proposed
maximum maximum
Title of Amount offering aggregate Amount of
securities to be price offering registration
to be registered registered per unit price fee
Common Stock, 180,000<1>,<2> $37.625<3> $6,772,500<3> $2,053<3>
$0.01 par value shares
___________
<FN>
<1> This Registration Statement covers, in addition to the
number of shares of Common Stock stated above, options
and other rights to purchase or acquire the shares of
Common Stock covered by the Prospectus and, pursuant to
Rule 416(c) under the Securities Act of 1933, an
indeterminate number of shares, options and rights which
by reason of certain events specified in the Plan may
become subject to the Plan.
<2> This Registration Statement also includes rights in
respect of such Common Stock pursuant to the Stockholder
Rights Agreement between the Company and American Stock
Transfer & Trust Company.
<3> Calculated pursuant to Rule 457(h).
The Exhibit Index for this Registration Statement is at page S-3.
</FN>
</TABLE>
<PAGE>
PART I
INFORMATION REQUIRED IN THE
SECTION 10(a) PROSPECTUS
The documents containing the information specified in
Part I of Form S-8 (plan information and registrant
information) will be sent or given to optionees as specified
by Rule 428(b)(1) of the Securities Act of 1933, as amended
(the "Securities Act"). Such documents need not be filed with
the Securities and Exchange Commission (the "Commission")
either as part of this Registration Statement or as
prospectuses or prospectus supplements pursuant to Rule 424 of
the Securities Act. These documents, which include the
statement of availability required by Item 2 of Form S-8, and
the documents incorporated by reference in this Registration
Statement pursuant to Item 3 of Form S-8 (Part II hereof),
taken together, constitute a prospectus that meets the
requirements of Section 10(a) of the Securities Act.
<PAGE>
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of Talbert Medical Management
Holdings Corporation (the "Company") filed with the Commission
are incorporated herein by reference:
(a) The Company's Prospectus dated April 21, 1997 filed
with the Commission pursuant to Rule 424(b) under the
Securities Act on April 18, 1997, which contains
audited financial statements for the Company's fiscal
year ended December 31, 1996;
(b) The Company's Current Report on Form 8-K filed with
the Commission on May 8, 1997;
(c) The description of the Company's Common Stock
contained in the Company's Registration Statement on
Form 8-A, filed with the Commission on April 17, 1997.
All documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), prior to the filing of a post-effective amendment which
indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold shall
be deemed to be incorporated by reference into the prospectus
and to be a part hereof from the date of filing of such
documents. Any statement contained herein or in a document,
all or a portion of which is incorporated or deemed to be
incorporated by reference herein, shall be deemed to be
modified or superseded for purposes of this Registration
Statement to the extent that a statement contained herein or
in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or
amended, to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES
The Company's Common Stock is registered pursuant to
Section 12 of the Exchange Act, and, therefore, the
description of the securities is omitted.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation contains a
provision eliminating or limiting director liability for
monetary damages arising from a breach of fiduciary duty as a
director, except for liability of a director (i) for any
breach of such director's duty of loyalty to the Company or
its stockholders; (ii) for acts or omissions not in good faith
or that involve intentional misconduct or a knowing violation
of law; (iii) under the Delaware statutory provision making
directors personally liable, under a negligence standard, for
unlawful dividends or unlawful stock purchases or redemptions;
or (iv) for any transaction from which the director derived an
improper personal benefit. As a result of this provision, the
ability of the Company or a stockholder thereof to
successfully prosecute an action against a director for a
breach of his or her duty of care is limited. However, the
provision does not affect the availability of equitable
remedies such as an injunction or rescission based upon a
director's breach of his duty of care.
In addition, the Certificate of Incorporation and the
Company's Bylaws provide for mandatory indemnification rights,
subject to limited exceptions, to any person who by reason of
the fact that he or she is a director or officer of the
Company, is involved in a legal proceeding of any nature if he
or she acted in good faith and in a manner he or she
reasonably believed to be in and not opposed to the best
interests of the Company. If such legal proceeding is brought
by or in the right of the Company, no indemnification will be
made if the person is adjudged to be liable for negligence or
misconduct in the performance of his duty to the Company,
unless a court finds such person to be entitled to indemnity
despite adjudication of liability. Such indemnification
rights include reimbursement for expenses incurred by such
director or officer in advance of the final disposition of
such proceeding in accordance with the applicable provisions
of Delaware General Corporation Law.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
See the attached Exhibit Index on page S-3.
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus
required by Section 10(a)(3) of the Securities
Act;
(ii) To reflect in the prospectus
any facts or events arising after the effective
date of the Registration Statement (or the most
recent post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth
in the Registration Statement; and
(iii) To include any material
information with respect to the plan of
distribution not previously disclosed in the
Registration Statement or any material change to
such information in the Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to be
included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in the Registration
Statement;
(2) That, for the purpose of determining any
liability under the Securities Act, each such post-
effective amendment shall be deemed to be a new regis-
tration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof; and
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(h) Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the provisions described in Item 6 above, or otherwise, the
registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Securities Act
and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on
Form S-8 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Costa Mesa, State of California, on
May 15, 1997.
By: /s/ Jack D. Massimino
Jack D. Massimino
Its: President, Chief
Executive Officer and
Director
POWER OF ATTORNEY
Each person whose signature appears below constitutes
and appoints Jack D. Massimino and Walter R. Stone and each of
them, his true and lawful attorney-in-fact and agent, with
full powers of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign
any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent, each acting alone, full power
and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed below by the
following persons in the capacities and on the dates
indicated.
<TABLE>
<S> <C> <C>
Signature Title Date
/s/ Jack D. Massimino President, Chief Executive May 15, 1997
Jack D. Massimino Officer (Principal Executive
Officer) and Director
/s/ Walter R. Stone Vice President, Finance and May 13, 1997
Walter R. Stone Treasurer (Principal Financial
and Accounting Officer)
/s/ Jack R. Anderson Director May 14, 1997
Jack R. Anderson
/s/ Richard M. Burdge, Sr. Director May 14, 1997
Richard M. Burdge, Sr.
/s/ Jeffrey M. Folick Director May 13, 1997
Jeffrey M. Folick
/s/ Warner Heineman Director May 13, 1997
Warner Heineman
Director May __, 1997
Van B. Honeycutt
/s/ Alan R. Hoops Director May 13, 1997
Alan R. Hoops
/s/ Robert W. Jamplis Director May 13, 1997
Robert W. Jamplis, M.D.
/s/ Robert C. Maxson Director May 13, 1997
Robert C. Maxson
/s/ Westcott W. Price III Director May 15, 1997
Westcott W. Price III
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
4.1 Talbert Medical Management Holdings Corporation
1996 Stock Incentive Plan.
4.2 Form of Stock Option Agreement between Talbert
Medical Management Holdings Corporation and
certain members of management.
4.3 Form of Stock Option Agreement between Talbert
Medical Management Holdings Corporation and
certain non-employee directors.
5. Opinion of Counsel (opinion re legality).
23.1 Consent of Deloitte & Touche LLP, as Independent
Public Accountants.
23.2 Consent of Counsel (included in Exhibit 5).
24. Power of Attorney (included in this
Registration Statement under "Signatures").
<PAGE>
EXHIBIT 4.1
TALBERT MEDICAL MANAGEMENT HOLDINGS CORPORATION
1996 STOCK INCENTIVE PLAN
<PAGE>
TABLE OF CONTENTS
Page
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
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 . . . . . . . . . . . . . . . . . . . 19
7.4 Option Period and Exercisability . . . . . . . . . 20
7.5 Termination of Directorship. . . . . . . . . . . . 20
7.6 Adjustments. . . . . . . . . . . . . . . . . . . . 20
7.7 Acceleration Upon a Change in Control Event. . . . 21
8. DEFINITIONS. . . . . . . . . . . . . . . . . . . . 21
8.1 Definitions. . . . . . . . . . . . . . . . . . . . 21
<PAGE>
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);
(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.
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.
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.
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.
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.
(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.
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
(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.
(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.
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 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.
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.
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 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 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 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 a 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.
(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.
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.
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 20%
per annum commencing on the first anniversary of the
Award Date and each of the next four 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'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 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 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 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.
(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.
(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.
(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.
(a "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 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 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.
<PAGE>
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: ______________, 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.
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
<PAGE>
EXHIBIT 4.2
TALBERT MEDICAL MANAGEMENT HOLDINGS CORPORATION
1996 STOCK INCENTIVE PLAN
EMPLOYEE NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT dated as of the 21st day of November,
1996, between TALBERT MEDICAL MANAGEMENT HOLDINGS CORPORATION,
a Delaware corporation (the "Corporation"), and ______________
(the "Employee").
W I T N E S S E T H
WHEREAS, the Corporation maintains the Talbert Medical
Management Holdings Corporation 1996 Stock Incentive Plan (the
"Plan"); and
WHEREAS, pursuant to the Plan, the Corporation has
granted to the Employee effective as of the 17th day of
September, 1996 (the "Award Date") an option to purchase all
or any part of __________ authorized but unissued or treasury
shares of Common Stock, par value $.01 per share, of the
Corporation upon the terms and conditions set forth herein
and in the Plan;
NOW, THEREFORE, in consideration of the mutual
promises and covenants made herein and the mutual benefits
to be derived herefrom, the parties agree as follows:
1. DEFINED TERMS. Capitalized terms used herein
and not otherwise defined herein shall have the meaning
assigned to such terms in the Plan.
2. GRANT OF OPTION. This Agreement evidences
the Corporation's grant to the Employee of the right and
option to purchase, on the terms and conditions set forth
herein and in the Plan, all or any part of an aggregate of
_____ shares of the Common Stock at the price of $29.17
per share (the "Option"), exercisable from time to time,
subject to the provisions of this Agreement and the Plan,
prior to the close of business on the day before the tenth
anniversary of the Award Date (the "Expiration Date").
Such price equals the Fair Market Value of a share of the
Corporation's Common Stock as of the Award Date. It is
the intent of the Corporation that this Option constitute
a nonqualified stock option and such option shall not be
deemed an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
3. CONTINUANCE OF EMPLOYMENT. As a condition
of this Option, the Employee hereby agrees to remain in
the employ of the Corporation or one of its Subsidiaries
for a period of one year after the Award Date. Nothing
contained herein or in the Plan shall confer upon the
Employee any right with respect to the continuation of
employment by the Corporation or any Subsidiary or
interfere in any way with the right of the Corporation
or of any Subsidiary at any time to terminate such
employment or to increase or decrease the compensation
of the Employee from the rate in existence at any time.
4. EXERCISABILITY OF OPTION. Except as
earlier permitted by or pursuant to the Plan or by
resolution of the Committee adopted AFTER the date
hereof, no shares may be purchased by exercise of the
Option until the expiration of twelve months after
the Award Date. The Option will become exercisable
(i) at the rate of 20% on the later of the first
anniversary of the Award Date or the date of commencement
of trading of the Common Stock on a national securities
exchange or quotation system and (ii) at the rate of
10% per annum commencing on the second anniversary of
the Award Date and each of the next three anniversaries
thereof. Should the Employee die or suffer a Total
Disability while employed by the Corporation or any
Subsidiary, the Option will become fully exercisable
on the later of (i) such date of death or Total
Disability, or (ii) the date of commencement of
trading of the Common Stock on a national securities
exchange or quotation system.
To the extent the Employee does not in any
year purchase all or any part of the shares to which
the Employee is entitled, the Employee has the right
cumulatively thereafter to purchase any shares not
so purchased and such right shall continue until the
Option terminates or expires. Fractional share
interests shall be disregarded, but may be cumulated.
No fewer than 100 shares may be purchased at any one
time, unless the number purchased is the total number
at the time available for purchase under the Option.
5. METHOD OF EXERCISE OF OPTION. The
Option shall be exercisable by the delivery to the
Corporation of a written notice stating the number
of shares to be purchased pursuant to the Option
and accompanied by payment made in accordance with
and in a form permitted in Section 2.2 of the Plan
for the full purchase price of the shares to be
purchased, subject to such further limitations and
rules or procedures as the Committee may from time
to time establish as to any non-cash payment and as
to the tax withholding requirements of Section 6.5
of the Plan. Shares delivered in payment of the
exercise price must have been owned by Employee
for at least six months prior to the exercise. In
addition, the Employee (or the Employee's Beneficiary
or Personal Representative) shall furnish any written
statements required pursuant to Section 6.4 of the Plan.
6. EFFECT OF TERMINATION OF EMPLOYMENT OR
DEATH; CHANGE IN SUBSIDIARY STATUS. The Option and
all other rights hereunder, to the extent not
exercised, shall terminate and become null and void
at such time as the Employee ceases to be employed by
either the Corporation or any Subsidiary, except that
(a) if the Employee terminates (i) by
reason deemed by the Committee, in its discretion,
to be for the convenience of the Corporation, or
(ii) under a retirement plan of the Company or any
Subsidiary after attainment of normal retirement
age as provided for in such retirement plan, or
retirement at an earlier age with the consent of
the Committee, in its discretion, the Employee may
at any time within a period of 90 days after such
termination exercise the Option to the extent the
Option was exercisable at the date of such termination;
(b) if the Employee terminates by reason
of death or Total Disability, or if the Employee
dies or suffers a Total Disability within 90 days
after a termination described in subsection (a),
then the Option may be exercised within a period
of two years after such date of death or Total
Disability (or, if earlier, the Employee's termination
from employment), to the extent that the Option
was exercisable on such date (or, if such death or
Total Disability occurred while the Employee was
employed by the Corporation or any Subsidiary, to
the extent the Option will become exercisable
pursuant to Section 4 hereof);
provided, however, that in no event may the Option be
exercised by anyone under this Section or otherwise
after the Expiration Date. If Employee is employed by
an entity which ceases to be a Subsidiary, such event
shall be deemed for purposes of this Section 6 to be
a termination of employment described in subsection (a)
in respect of Employee. Absence from work caused by
military service or authorized sick leave shall not be
considered as a termination of employment for purposes
of this Section.
7. TERMINATION OF OPTION UNDER CERTAIN EVENTS.
As permitted by Section 6.2 of the Plan, the Committee
retains the right to terminate the Option to the extent not
previously exercised upon an event or transaction which the
Corporation does not survive.
8. NON-TRANSFERABILITY OF OPTION. The Option
and any other rights of the Employee under this Agreement
or the Plan are nontransferable as provided in Section 1.8
of the Plan.
9. NOTICES. Any notice to be given under the
terns of this Agreement shall be in writing and addressed
to the Corporation at its principal office located at
3540 Howard Way, Costa Mesa, California 92626, to the
attention of the Corporate Secretary and to the Employee
at the address given beneath the Employee's signature
hereto, or at such other address as either party may
hereafter designate in writing to the other.
10. PLAN. The Option and all rights of
Employee thereunder are subject to, and the Employee
agrees to be bound by, all of the terms and conditions
of Articles 1, 2, 6 and 8 of the Plan, incorporated
herein by this reference, to the extent such provisions
are applicable to options granted to Eligible Persons.
The Employee acknowledges receipt of a copy of the Plan,
which is made a part hereof by this reference, and agrees
to be bound by the terms thereof. Unless otherwise
expressly provided in other Sections of this Agreement,
provisions of the Plan that confer discretionary
authority on the Committee do not (and shall not be
deemed to) create any rights in the Employee unless
such rights are expressly set forth herein or are
otherwise in the sole discretion of the Committee so
conferred by appropriate action of the Committee under
the Plan after the date hereof.
11. GRANT CONDITIONAL UPON LISTING OF SHARES.
Notwithstanding anything else contained herein to the
contrary, this Option is expressly conditioned upon the
commencement of trading of the shares of the Corporation's
Common Stock on a national securities exchange or quotation
system. In the event that the Corporation's Common Stock
does not commence trading on a national securities exchange
or quotation system within twelve (12) months from the Award
Date, this Option shall be null and void.
IN WITNESS WHEREOF, the Corporation has caused
this Agreement to be executed on its behalf by a duly
authorized officer and the Employee has hereunto set his
or her hand.
TALBERT MEDICAL MANAGEMENT
HOLDINGS CORPORATION
(a Delaware corporation)
By:
Title: President and Chief
Executive Officer
EMPLOYEE
(Signature)
(Print Name)
(Address)
(City, State, Zip Code)
<PAGE>
EXHIBIT 4.3
TALBERT MEDICAL MANAGEMENT HOLDINGS CORPORATION
1996 STOCK INCENTIVE PLAN
ELIGIBLE DIRECTOR
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT dated as of the 21st day of November,
1996, 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
stockholders of the Corporation have approved the 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 September 17, 1996 (the "Award
Date"), of an Option to purchase an aggregate of _____
shares of Common Stock, par value $.01 per share, under
Article 7 of the Plan, subject to the terms and conditions
and to adjustment as set forth herein or pursuant to the
Plan.
2. EXERCISE PRICE. The Option entitles the
Director to purchase (subject to the terms of Sections 3
through 6 below) all or any part of the Option shares at
a price per share of $29.17, which amount represents
the Fair Market Value of the shares on the Award Date.
3. OPTION EXERCISABILITY AND TERM. Subject
to adjustment pursuant to Section 7.6 of the Plan, the
Option shall become and remain exercisable: (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 or
quotation system (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. The Option shall
terminate on September 16, 2006 unless earlier
terminated in accordance with the terms of Section 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. GRANT CONDITIONED UPON LISTING OF SHARES.
Notwithstanding anything else contained herein to the
contrary, this Option is expressly conditioned upon the
commencement of trading of the shares of the Corporation's
Common Stock on a national securities exchange or
quotation system. In the event that the Corporation's
Common Stock does not commence trading on a national
securities or quotation system exchange within twelve
(12) months from the Award Date, this Option shall be
null and void.
7. NONTRANSFERABILITY. The Option and any
other rights of the Director under this Agreement or the
Plan are nontransferable as provided in Section 1.8 of
the Plan.
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: President and Chief
Executive Officer
DIRECTOR
(Signature)
(Print Name)
(Address)
<PAGE>
[O'MELVENY & MYERS LETTERHEAD]
May
13th
1 9 9 7
253,682-025
NB1-309942.V1
Talbert Medical Management
Holdings Corporation
3540 Howard Way
Costa Mesa, California 92626-1417
Re: Registration on Form S-8 of Talbert Medical
Management Holdings Corporation (the "Company")
Ladies and Gentlemen:
In connection with the preparation of the Form S-8
Registration Statement (the "Registration Statement") to be
submitted by the Company to the Securities and Exchange
Commission in connection with the registration under the
Securities Act of 1933, as amended, of 180,000 shares of Common
Stock, par value $0.01 per share, of the Company (the "Shares"),
to be issued pursuant to the Talbert Medical Management Holdings
Corporation 1996 Stock Incentive Plan (the "Plan"), you have
requested our opinion as to whether the Shares have been duly
authorized by all necessary corporate action on the part of the
Company and, when issued in accordance with such authorization,
the provisions of the Plan and relevant agreements duly
authorized by and in accordance with the terms of the Plan, the
Shares will be validly issued, fully paid and nonassessable.
We have examined (i) the proceedings heretofore taken
and to be taken in connection with the authorization of the Plan
and the Shares to be issued pursuant to and in accordance with
the Plan, (ii) the documents constituting the Plan, and (iii)
such other matters of fact and law as we have deemed relevant.
Based on the foregoing, it is our opinion that the
Shares have been duly authorized by all necessary corporate
action on the part of the Company and, when issued in accordance
with such authorization, the provisions of the Plan and relevant
agreements duly authorized by and in accordance with the terms of
the Plan, the Shares will be validly issued, fully paid and
nonassessable.
We consent to the use of this opinion as an exhibit to
the Registration Statement.
Respectfully submitted,
/s/ O'Melveny & Myers LLP
O'MELVENY & MYERS LLP
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this
Registration Statement of Talbert Medical Management
Holdings Corporation (the Company) on Form S-8 of our
reported dated April 4, 1997 appearing in the Company's
Prospectus which is part of the Registration Statement
No. 333-17679 of Talbert Medical Management Holdings
Corporation on Form S-1 insofar as such report relates
to the consolidated financial statements of the Company
for the year ended December 31, 1996.
/s/ Deloitte & Touche LLP
Costa Mesa, California
May 16, 1997
<PAGE>
