<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 26, 1997
Registration No. 333-__________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_________________
CONCENTRA MANAGED CARE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-3363415
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
312 UNION WHARF
BOSTON, MASSACHUSETTS 02109
(Address of principal executive offices, including zip code)
____________________
CONCENTRA MANAGED CARE, INC. 1997 EMPLOYEE STOCK PURCHASE PLAN
CONCENTRA MANAGED CARE, INC. 1997 LONG TERM INCENTIVE PLAN
(Full title of the plan)
DONALD J. LARSON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CONCENTRA MANAGED CARE, INC.
312 UNION WHARF
BOSTON, MASSACHUSETTS 02109
(617) 367-2163
(Name, address and telephone number of agent for service)
copy to:
RICHARD A. PARR II
EXECUTIVE VICE PRESIDENT AND
GENERAL COUNSEL
CONCENTRA MANAGED CARE, INC.
3010 LBJ FREEWAY, SUITE 400
DALLAS, TEXAS 75234
(972) 484-2700
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=====================================================================================================================
| | | Proposed |
Title of securities | Amount to be | Proposed maximum | maximum aggregate | Amount of
to be registered | registered | offering price per unit* | offering price* | registration fee
- ----------------------------|---------------- |----------------------------|---------------------|--------------------
<S> |<C> | <C> | <C> | <C>
Common Stock, $0.01 par | | | |
value per share............ |4,300,000 shares | $ 32.18 | $138,374,000 | $41,932.00
- ---------------------------------------------------------------------------------------------------------------------
* Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(h) under the
Securities Act of 1933 and based on the average of the high and low sales prices of the Common Stock reported on
The Nasdaq National Market on September 18, 1997.
=====================================================================================================================
</TABLE>
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
---------------------------------------
The following documents have been filed with the Securities and Exchange
Commission (the "Commission") by Concentra Managed Care, Inc., a Delaware
corporation (the "Registrant"), and are incorporated herein by reference and
made a part hereof:
(a) The Registrant's Registration Statement on Form S-4 (File No. 333-
27105) filed on July 31, 1997;
(b) The Registrant's Current Report on Form 8-K filed on September 11,
1997; and
(c) The description of the Registrant's Common Stock, $0.01 par value per
share, contained in Item 1 of the Registrant's Registration Statement
on Form 8-A filed with the Commission pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act") on June 25, 1997 (File No.
0-22751).
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of a post-
effective amendment that indicates that all securities offered have been sold or
that deregisters all securities then remaining unsold shall also be deemed to be
incorporated by reference herein and to be a part hereof from the dates of
filing of such documents. Any statement contained in a document 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 statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Registration Statement. Upon the written or oral request of any person to whom
a copy of this Registration Statement has been delivered, the Registrant will
provide without charge to such person a copy of any and all documents (excluding
exhibits thereto unless such exhibits are specifically incorporated by reference
into such documents) that have been incorporated by reference into this
Registration Statement but not delivered herewith. Requests for such documents
should be Concentra Managed Care, Inc., 3010 LBJ Freeway, Suite 400, Dallas,
Texas 75234, Attention: Secretary, telephone (972) 481-7507.
ITEM 4. DESCRIPTION OF SECURITIES.
-------------------------
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
--------------------------------------
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
-----------------------------------------
Article Twelfth of the Amended and Restated Certificate of Incorporation of
the Registrant provides that the Registrant shall indemnify its officers and
directors to the maximum extent allowed by the Delaware General Corporation Law.
Pursuant to Section 145 of the Delaware General Corporation Law, the Registrant
generally has the power to indemnify its present and former directors and
officers against expenses and liabilities incurred by them in connection with
any suit to which they are, or are threatened to be made, a party by reason of
their serving in those positions so long as they acted in good faith and in a
manner they reasonably believed to be in, or not opposed to, the best interest
of the Registrant, and with respect to any criminal action, so long as they had
no reasonable cause to believe their conduct was unlawful. With respect to
suits by or in the right of the Registrant, however, indemnification is
generally limited to attorneys' fees and other expenses and is not available if
the person is adjudged to be liable to the Registrant, unless the court
determines that indemnification is appropriate. The statute expressly provides
that the power to indemnify authorized thereby is not exclusive of any rights
granted under any bylaw, agreement, vote of stockholders or disinterested
directors, or otherwise. The Registrant also has the power to purchase and
maintain insurance for its directors and officers. Additionally, Article
Twelfth of the Amended and Restated Certificate of Incorporation provides
-2-
<PAGE>
that, in the event that an officer or director files suit against the Registrant
seeking indemnification of liabilities or expenses incurred, the burden will be
on the Registrant to prove that the indemnification would not be permitted under
the Delaware General Corporation Law.
The preceding discussion of the Registrant's Amended and Restated
Certificate of Incorporation and Section 145 of the Delaware General Corporation
Law is not intended to be exhaustive and is qualified in its entirety by the
Certificate of Incorporation and Section 145 of the Delaware General Corporation
Law.
The Registrant has entered into indemnity agreements with the Registrant's
directors and officers. Pursuant to such agreements, the Registrant will, to
the extent permitted by applicable law, indemnify such persons against all
expenses, judgments, fines and penalties incurred in connection with the defense
or settlement of any actions brought against them by reason of the fact that
they were directors or officers of the Registrant or assumed certain
responsibilities at the direction of the Registrant.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
-----------------------------------
Not applicable.
ITEM 8. EXHIBITS.
--------
Unless otherwise indicated below as being incorporated by reference to
another filing of the Registrant with the Commission, each of the following
exhibits is filed herewith:
4.1 -- Concentra Managed Care, Inc. 1997 Employee Stock Purchase Plan
(filed as Exhibit No. 10.4 to the Registrant's Registration
Statement on Form S-4, File No. 333-27105, and incorporated herein
by reference)
4.2 -- Concentra Managed Care, Inc. 1997 Long-Term Incentive Plan
5.1 -- Opinion of Richard A. Parr II.
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Arthur Andersen LLP
23.3 -- Consent of Richard A. Parr II (included in his opinion filed
as Exhibit 5.1 hereto)
24.1 -- Powers of Attorney (included in the signature pages hereto)
ITEM 9. UNDERTAKINGS.
------------
The 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 of 1933, as amended (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 (1)(i) and (1)(ii) do not apply if the
information required to be
-3-
<PAGE>
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 this
Registration Statement.
(2) That, for the purposes of determining any liability under the
Securities Act, each such post-effective amendment 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.
(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.
(4) 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 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.
(5) 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 foregoing provisions, 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.
-4-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boston, State of
Massachusetts, on the 23rd day of September, 1997.
CONCENTRA MANAGED CARE, INC.
By: /s/ Richard A. Parr II
--------------------------------------------
Richard A. Parr II Executive Vice President,
General Counsel and Secretary
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated. Each person whose signature appears below authorizes and
appoints each of Richard A. Parr II and James M. Greenwood, and each of them
severally, acting alone and without the other, as his attorney-in-fact to
execute in the name of such person and to file any amendments to this
Registration Statement necessary or advisable to enable the Registrant to comply
with the Securities Act of 1933 and any rules, regulations and requirements of
the registration of the securities which are the subject of this Registration
Statement, which amendments may make such changes in the Registration Statement
as such attorney-in-fact may deem appropriate.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ Donald J. Larson President and Chief Executive Officer September 23, 1997
- ------------------------------ (Principal Executive Officer); Director
Donald J. Larson
/s/ Joseph F. Pesce Executive Vice President Chief September 23, 1997
- ------------------------------ Financial Officer and Treasurer
Joseph F. Pesce (Principal Financial Officer and
Accounting Officer)
/s/ John K. Carlyle Chairman of the Board September 23, 1997
- ------------------------------ and Director
John K. Carlyle
/s/ George H. Conrades Director September 23, 1997
- ------------------------------
George H. Conrades
/s/ Robert W. O'Leary Director September 23, 1997
- ------------------------------
Robert W. O'Leary
/s/ Robert A. Ortenzio Director September 23, 1997
- ------------------------------
Robert A. Ortenzio
/s/ Paul B. Queally Director September 23, 1997
- ------------------------------
Paul B. Queally
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Mitchell T. Rabkin, M.D. Director September 23, 1997
- ------------------------------
Mitchell T. Rabkin, M.D.
/s/ Lois E. Silverman Director September 23, 1997
- ------------------------------
Lois E. Silverman
</TABLE>
<PAGE>
EXHIBIT INDEX
Unless otherwise indicated below as being incorporated by reference to
another filing of the Registrant with the Commission, each of the following
exhibits is filed herewith:
Exhibit Description of Exhibit
- ------- ----------------------
4.1 -- Concentra Managed Care, Inc. 1997 Employee Stock Purchase Plan
(filed as Exhibit No. 10.4 to the Registrant's Registration
Statement on Form S-4, File No. 333-27105, and incorporated herein
by reference)
4.2 -- Concentra Managed Care, Inc. 1997 Long-Term Incentive Plan
5.1 -- Opinion of Richard A. Parr II.
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Arthur Andersen LLP
23.3 -- Consent of Richard A. Parr II (included in his opinion filed
as Exhibit 5.1 hereto)
24.1 -- Powers of Attorney (included in the signature pages hereto)
<PAGE>
EXHIBIT 4.2
CONCENTRA MANAGED CARE, INC.
1997 LONG-TERM INCENTIVE PLAN
SCOPE AND PURPOSE OF PLAN
Concentra Managed Care, Inc., a Delaware corporation (the "CORPORATION"),
has adopted this 1997 Long-Term Incentive Plan (the "PLAN") to provide for the
granting of:
(a) Incentive Options to certain Employees;
(b) Nonstatutory Options to certain Employees and other persons;
(c) Performance Units to certain Employees and other persons;
(d) Restricted Stock Awards to certain Employees, Non-employee
Directors, and other persons; and
(e) Stock Appreciation Rights to certain Employees and other persons.
The purpose of the Plan is to provide an incentive for Employees,
directors, and certain consultants and advisors of the Corporation or its
Subsidiaries to remain in the service of the Corporation or its Subsidiaries, to
extend to them the opportunity to acquire a proprietary interest in the
Corporation so that they will apply their best efforts for the benefit of the
Corporation, and to aid the Corporation in attracting able persons to enter the
service of the Corporation and its Subsidiaries.
SECTION 1. DEFINITIONS
1.1 "Annual Retainer" has the meaning given it in Subparagraph 5.2(a).
1.2 "Annual Restricted Stock Award" has the meaning given it in Paragraph
5.2.
1.3 "Award" means the grant of any form of Option, Performance Unit, Reload
Option, Restricted Stock Award, or Stock Appreciation Right under the Plan,
whether granted singly, in combination, or in tandem, to a Holder pursuant to
the terms, conditions, and limitations that the Committee may establish in order
to fulfill the objectives of the Plan.
1.4 "Award Agreement" means the written document or agreement delivered to
Holder evidencing the terms, conditions, and limitations of an Award that the
Corporation granted to that Holder.
1.5 "Board of Directors" means the board of directors of the Corporation.
1.6 "Business Day" means any day other than a Saturday, a Sunday, or a day
on which banking institutions in the State of Texas are authorized or obligated
by law or executive order to close.
1.7 "Change in Control" means the occurrence of any of the following
events:
(i) 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 (x) the then outstanding shares
of Common Stock of the Corporation (the "OUTSTANDING CORPORATION COMMON
STOCK") or (y) 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 Subparagraph (i), the following
acquisitions shall not constitute a Change of Control: (A) any acquisition
directly from the Corporation, (B) any acquisition by the Corporation, (C)
any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Corporation or any corporation controlled by the
Corporation or (D) any acquisition by any corporation pursuant to a
transaction which complies with clauses (A), (B) and (C) of paragraph (iii)
below; or
1
<PAGE>
(ii) Individuals who, as of the date of this Plan, constitute the
Board of Directors cease for any reason to constitute at least a majority
of the Incumbent Board; or
(iii) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the
Corporation or an acquisition of assets of another corporation (a "BUSINESS
COMBINATION"), in each case, unless, following such Business Combination,
(A) 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 50% 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, (B) no
Person (excluding any employee benefit plan (or related trust) of the
Corporation or the 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 results solely from ownership of the Corporation that
existed prior to the Business Combination and (C) 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; or
(iv) Approval by the stockholders of the Corporation of a complete
liquidation or dissolution of the Corporation.
1.8 "Code" means the Internal Revenue Code of 1986, as amended.
1.9 "Committee" means the committee or subcommittee appointed pursuant to
Section 3 by the Board of Directors to administer this Plan.
1.10 "Common Stock" means the authorized common stock, par value $.01 per
share, as described in the Corporation's Certificate of Incorporation.
1.11 "Common Stock Equivalent" means (without duplication with any other
Common Stock or Common Stock Equivalents) rights, warrants, options, convertible
securities, or exchangeable securities or indebtedness, or other rights,
exercisable for or convertible or exchangeable into, directly or indirectly,
Common Stock or securities convertible or exchangeable into Common Stock,
whether at the time the number of shares of Common Stock Equivalents are
determined or within sixty days of that date and that are traded or are of the
same class as securities that are traded on a national securities exchange or
quoted on the NASDAQ National Market System, NASDAQ, or National Quotation
Bureau Incorporated. The number of shares of Common Stock Equivalents
outstanding shall equal the number of shares of Common Stock plus the number of
shares of Common Stock issuable upon exercise, conversion or exchange of all
other Common Stock Equivalents.
1.12 "Corporation" means Concentra Managed Care, Inc., a Delaware
corporation.
1.13 "Date of Grant" has the meaning given it in Paragraph 4.3.
1.14 "Disability" has the meaning given it in Paragraph 11.5.
1.15 "Effective Date" means , 1997.
1.16 "Eligible Individuals" means (a) Employees, (b) Non-employee
Directors, and (c) any other Person that the Committee designates as eligible
for an Award (other than for Incentive Options) because the Person performs bona
fide consulting or advisory services for the Corporation or any of its
Subsidiaries (other than services in connection with the offer or sale of
securities in a capital-raising transaction).
1.17 "Employee" means any employee of the Corporation or of any of its
Subsidiaries, including officers and directors of the Corporation who are also
employees of the Corporation or of any of its Subsidiaries.
1.18 "Exchange Act" means the Securities Exchange Act of 1934.
2
<PAGE>
1.19 "Exercise Notice" has the meaning given it in Paragraph 6.5.
1.20 "Exercise Price" has the meaning given it in Paragraph 6.4.
1.21 "Fair Market Value" means, for a particular day:
(a) If shares of Stock of the same class are listed or admitted to
unlisted trading privileges on any national or regional securities exchange
at the date of determining the Fair Market Value, then the last reported
sale price, regular way, on the composite tape of that exchange on the last
Business Day before the date in question or, if no such sale takes place on
that Business Day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to unlisted
trading privileges on that securities exchange; or
(b) If shares of Stock of the same class are not listed or admitted to
unlisted trading privileges as provided in Subparagraph 1.21(a) and if
sales prices for shares of Stock of the same class in the over-the-counter
market are reported by the NASDAQ National Market System (or a similar
system then in use) at the date of determining the Fair Market Value, then
the last reported sales price so reported on the last Business Day before
the date in question or, if no such sale takes place on that Business Day,
the average of the high bid and low asked prices so reported; or
(c) If shares of Stock of the same class are not listed or admitted to
unlisted trading privileges as provided in Subparagraph 1.21(a) and sales
prices for shares of Stock of the same class are not reported by the NASDAQ
National Market System (or a similar system then in use) as provided in
Subparagraph 1.21(b), and if bid and asked prices for shares of Stock of
the same class in the over-the-counter market are reported by NASDAQ (or,
if not so reported, by the National Quotation Bureau Incorporated) at the
date of determining the Fair Market Value, then the average of the high bid
and low asked prices on the last Business Day before the date in question;
or
(d) If shares of Stock of the same class are not listed or admitted to
unlisted trading privileges as provided in Subparagraph 1.21(a) and sales
prices or bid and asked prices therefor are not reported by NASDAQ (or the
National Quotation Bureau Incorporated) as provided in Subparagraph 1.21(b)
or Subparagraph 1.21(c) at the date of determining the Fair Market Value,
then the value determined in good faith by the Committee, which
determination shall be conclusive for all purposes; or
(e) If shares of Stock of the same class are listed or admitted to
unlisted trading privileges as provided in Subparagraph 1.21(a) or sales
prices or bid and asked prices therefor are reported by NASDAQ (or the
National Quotation Bureau Incorporated) as provided in Subparagraph 1.21(b)
or Subparagraph 1.21(c) at the date of determining the Fair Market Value,
but the volume of trading is so low that the Board of Directors determines
in good faith that such prices are not indicative of the fair value of the
Stock, then the value determined in good faith by the Committee, which
determination shall be conclusive for all purposes notwithstanding the
provisions of Subparagraphs 1.21(a), (b) or (c).
For purposes of valuing Incentive Options, the Fair Market Value of Stock
shall be determined without regard to any restriction other than one that, by
its terms, will never lapse and shall be determined on the date in question
instead of the last Business Day before the date in question.. For purposes of
the redemption provided for in Subparagraph 10.3(d)(v), Fair Market Value shall
have the meaning and shall be determined as provided above; provided, however,
that the Committee, with respect to any such redemption, shall have the right to
determine that the Fair Market Value for purposes of the redemption should be an
amount measured by the value of the shares of stock, other securities, cash or
property otherwise being received by holders of shares of Stock in connection
with the Restructure, and upon that determination the Committee shall have the
power and authority to determine Fair Market Value for purposes of the
redemption based upon the value of such shares of stock, other securities, cash
or property. Any such determination by the Committee shall be conclusive for all
purposes.
1.22 "Holder" means an Eligible Individual to whom an Award has been
granted.
1.23 "Incentive Option" means an incentive stock option as defined under
Section 422 of the Code and regulations thereunder.
1.24 "Incumbent Board" means the individuals who, as of the Effective Date,
constitute the Board of Directors and any other individual who becomes a
director of the Corporation after that date and whose election or appointment by
the Board of Directors 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, but excluding, for this purpose, any such
individual whose initial assumption of office occurs
3
<PAGE>
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 Incumbent Board.
1.25 "NASDAQ" means the National Association of Securities Dealers, Inc.
Automated Quotations, Inc.
1.26 "Non-employee Director" means a director of the Corporation who while
a director is not an Employee.
1.27 "Nonstatutory Option" means a stock option that does not satisfy the
requirements of Section 422 of the Code or that is designated at the Date of
Grant or in the applicable Option Agreement to be an option other than an
Incentive Option.
1.28 "Non-Surviving Event" means an event of Restructure as described in
either subparagraph (b) or (c) of Paragraph 1.38.
1.29 "Normal Retirement" means the separation of the Holder from employment
with the Corporation and its Subsidiaries on account of retirement at any time
on or after the date on which the Holder reaches age sixty.
1.30 "Option Agreement" means an Award Agreement for an Incentive Option or
a Nonstatutory Option.
1.31 "Option" means either an Incentive Option or a Nonstatutory Option, or
both.
1.32 "Performance Period" means a period of one or more fiscal years of the
Corporation, beginning with the fiscal year for which Performance Units are
granted and over which performance is measured, for the purpose of determining
the payment value of Performance Units. A Performance Period shall not exceed
ten years.
1.33 "Performance Unit" means a unit representing a contingent right to
receive a specified amount of cash or shares of Stock at the end of a
Performance Period.
1.34 "Person" means any person or entity of any nature whatsoever,
specifically including (but not limited to) an individual, a firm, a company, a
corporation, a limited liability company, a partnership, a trust or other
entity. A Person, together with that Person's affiliates and associates (as
those terms are defined in Rule 12b-2 under the Exchange Act for purposes of
this definition only), and any Persons acting as a partnership, limited
partnership, joint venture, association, syndicate or other group (whether or
not formally organized), or otherwise acting jointly or in concert or in a
coordinated or consciously parallel manner (whether or not pursuant to any
express agreement), for the purpose of acquiring, holding, voting or disposing
of securities of the Corporation with that Person, shall be deemed a single
"Person."
1.35 "Plan" means the Concentra Managed Care, Inc. 1997 Long-Term Incentive
Plan, as it may be amended from time to time.
1.36 "Reload Option" has the meaning given it in Paragraph 6.10.
1.37 "Restricted Stock Award" means the grant or purchase, on the terms and
conditions that the Committee determines or on the terms and conditions of
Section 5, of Stock that is nontransferable or subject to substantial risk of
forfeiture until specific conditions are met.
1.38 "Restructure" means the occurrence of any one or more of the
following:
(a) The merger or consolidation of the Corporation with any Person,
whether effected as a single transaction or a series of related
transactions, with the Corporation remaining the continuing or surviving
entity of that merger or consolidation and the Stock remaining outstanding
and not changed into or exchanged for stock or other securities of any
other Person or of the Corporation, cash, or other property;
(b) The merger or consolidation of the Corporation with any Person,
whether effected as a single transaction or a series of related
transactions, with (i) the Corporation not being the continuing or
surviving entity of that merger or consolidation or (ii) the Corporation
remaining the continuing or surviving entity of that merger or
consolidation but all or a part of the outstanding shares of Stock are
changed into or exchanged for stock or other securities of any other Person
or the Corporation, cash, or other property; or
(c) The transfer, directly or indirectly, of all or substantially all
of the assets of the Corporation (whether by sale, merger, consolidation,
liquidation or otherwise) to any Person whether effected as a single
transaction or a series of related transactions.
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1.39 "Rule 16b-3" means Rule 16b-3 under Section 16(b) of the Exchange Act,
or any successor rule, as it may be amended from time to time.
1.40 "SAR Exercise Price" has the meaning given it in Paragraph 1.45.
1.41 "Section 162(m)" means Section 162(m) of the Code and the rules and
regulations adopted from time to time thereunder, or any successor law or rule
as it may be amended from time to time.
1.42 "Securities Act" means the Securities Act of 1933.
1.43 "Stock" means Common Stock, or any other securities that are
substituted for the Stock as provided in Section 10.
1.44 "Stock Appreciation Right" means the right to receive an amount equal
to the excess of the Fair Market Value of a share of Stock (as determined on the
date of exercise) over, as appropriate, the Exercise Price of a related Option
or over a price specified in the related Award Agreement (the "SAR EXERCISE
PRICE") that is not less than eighty-five percent of the Fair Market Value of
the Stock on the Date of Grant of the Stock Appreciation Right.
1.45 "Stockholder Approved Standard" means initially (a) total stockholder
return (Stock price appreciation plus dividends), (b) net income, (c) earnings
per share, (d) cash flow per share, (e) return on equity, (f) return on assets,
(g) revenues, (h) costs, (i) costs as a percentage of revenues, (j) increase in
the market price of Stock or other securities, (k) the performance of the
Corporation in any of the items mentioned in clauses (a) through (j) in
comparison to the average performance of the companies included in the Standard
& Poors' Corporation 500 Composite Stock Price Index or successor index, or (l)
the performance of the Corporation in any of the items mentioned in clauses (a)
through (j) in comparison to the average performance of the companies used in a
self-constructed peer group established before the beginning of the Performance
Period; and any other performance objective approved by the stockholders of the
Corporation in accordance with Section 162(m).
1.46 "Subsidiary" means, with respect to any Person, any corporation or
other entity (i) of which a majority of the Voting Securities is owned, directly
or indirectly, by that Person, or (ii) with which such Person has entered into
any management, operating or similar agreement to manage or operate any portion
of such corporation's or the entity's business, operations or assets.
1.47 "Total Shares" has the meaning given it in Paragraph 10.2.
1.48 "Voting Securities" means any securities that are entitled to vote
generally in the election of directors, in the admission of general partners, or
in the selection of any other similar governing body.
SECTION 2. SHARES OF STOCK SUBJECT TO THE PLAN
2.1 Maximum Number of Shares. Subject to the provisions of Paragraph 2.6
and Section 10 of the Plan, the aggregate number of shares of Stock that the
Corporation may have subject to outstanding Awards at one time under the Plan
shall be an amount equal to (a) ten percent of the total number of shares of
Common Stock Equivalents outstanding from time to time minus (b) the total
number of shares of Stock subject to outstanding Awards on the date of
calculation under any other stock-based plan for employees or directors of the
Corporation and its Subsidiaries.
2.2 Determination of Available Shares. In computing the total number of
shares of Stock subject to outstanding Awards at one time under the Plan, the
Committee shall count the number of shares of Stock subject to issuance upon
exercise of outstanding Options, the number of shares of Stock equal to the
number of outstanding Stock Appreciation Rights, the number of shares of Stock
subject to outstanding Restricted Stock Awards to the extent such shares are
subject to a risk of forfeiture under the restrictions governing such Awards,
and the number of shares of Stock that equal the value of outstanding
Performance Units determined in each case as of the Date of Grant of each Award
(other than Awards designated to be paid only in cash), but shall not (except to
the extent subject to the risk of forfeiture under the restrictions governing
such Awards) count the number of shares of Stock that have been issued upon
prior exercise of Options, the number of shares of Stock that were subject to
previously settled Stock Appreciation Rights, the number of shares of Stock
issued under Restricted Stock Awards for which the risk of forfeiture has
lapsed, and the number of shares of Stock issued upon exercise or settlement of
Performance Units. The number of shares of Stock subject to awards under any
employee stock purchase plan of the Corporation during any offering period of
that plan shall equal the number of shares of Stock that would be issued using
(a) the fair market value of the Stock on the first day of the offering period
and (b) an aggregate
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purchase price equal to the total projected payroll deductions during the
authorized period based solely on the number of participants and authorized
payroll deduction amounts for those participants on the first day of the
offering period.
2.3 Restoration of Unused and Surrendered Shares. If Stock subject to any
Award is not issued or transferred, or ceases to be issuable or transferable for
any reason, including (but not exclusively) because an Award is forfeited,
terminated, expires unexercised, is settled in cash in lieu of Stock, or is
exchanged for other Awards, the shares of Stock that were subject to that Award
shall no longer be charged against the number of available shares and shall
again be available for issue, transfer, or exercise pursuant to Awards under the
Plan to the extent of such forfeiture, termination, expiration, settlement or
exchange.
2.4 Description of Shares. The shares to be delivered under the Plan
shall be made available from (a) authorized but unissued shares of Stock, (b)
Stock held in the treasury of the Corporation, or (c) previously issued shares
of Stock reacquired by the Corporation, including shares purchased on the open
market, in each situation as the Board of Directors or the Committee may
determine from time to time at its sole option.
2.5 Registration and Listing of Shares. From time to time, the Board of
Directors and appropriate officers of the Corporation shall be and are
authorized to take whatever actions are necessary to file required documents
with governmental authorities, stock exchanges, and other appropriate Persons to
make shares of Stock available for issuance pursuant to Awards.
2.6 Reduction in Outstanding Shares of Stock. Nothing in this Section 2
shall impair the right of the Corporation to reduce the number of outstanding
shares of Stock pursuant to repurchases, redemptions, or otherwise; provided,
however, that no reduction in the number of outstanding shares of Stock shall
(a) impair the validity of any outstanding Award, whether or not that Award is
fully exercisable or fully vested or (b) impair the status of any shares of
Stock previously issued pursuant to an Award or thereafter issued pursuant to a
then-outstanding Award as duly authorized, validly issued, fully paid, and
nonassessable shares.
2.7 Individual Limitations on Awards. No Person may be granted, during
any one-year period, (a) Awards (other than Awards designated to be paid only in
cash) with respect to more than 250,000 shares of Stock and (b) Awards
designated to be paid only in cash having a value determined on the Date of
Grant in excess of $2,500,000.
SECTION 3. ADMINISTRATION OF THE PLAN
3.1 Committee. The Board of Directors shall administer the Plan with
respect to all Eligible Individuals or may delegate all or part of its duties
under this Plan to the Committee or to any officer or committee of officers of
the Corporation, subject in each case to such conditions and limitations as the
Board of Directors may establish and subject to the following sentence. Unless a
majority of the members of the Board of Directors determines otherwise: (a) the
Committee shall be constituted in a manner that satisfies the requirements of
Rule 16b-3, which Committee shall administer the Plan with respect to all
Eligible Individuals who are subject to Section 16 of the Exchange Act in a
manner that satisfies the requirements of Rule 16b-3; and (b) the Committee
shall be constituted in a manner that satisfies the requirements of Section
162(m), which Committee shall administer the Plan with respect to "performance-
based compensation" for all Eligible Individuals who are reasonably expected to
be "covered employees" as those terms are defined in Section 162(m). The number
of persons that shall constitute the Committee shall be determined from time to
time by a majority of all the members of the Board of Directors. Except for
references in Paragraphs 3.1, 3.2, and 3.3 and unless the context otherwise
requires, references herein to the Committee shall also refer to the Board of
Directors as administrator of the Plan for Eligible Individuals or to the
appropriate delegate of the Committee or the Board of Directors.
3.2 Duration, Removal, Etc. The members of the Committee shall serve at
the pleasure of the Board of Directors, which shall have the power, at any time
and from time to time, to remove members from or add members to the Committee.
Removal from the Committee may be with or without cause. Any individual serving
as a member of the Committee shall have the right to resign from membership in
the Committee by at least three days written notice to the Board of Directors.
The Board of Directors, and not the remaining members of the Committee, shall
have the power and authority to fill vacancies on the Committee, however caused.
3.3 Meetings and Actions of Committee. The Board of Directors shall
designate which of the Committee members shall be the chairman of the Committee.
If the Board of Directors fails to designate a Committee chairman, the members
of the Committee shall elect one of the Committee members as chairman, who shall
act as chairman until he ceases to be a member of the Committee or until the
Board of Directors elects a new chairman. The Committee shall hold its meetings
at those times and places as the chairman of the Committee may determine. At all
meetings of the Committee, a quorum for the transaction of business shall be
required, and a quorum shall be deemed present if at least a majority of the
members of the Committee are present. At any meeting of the Committee, each
member shall have one vote. All decisions and determinations of the Committee
shall be made by the majority vote or majority decision of all of its members
present at a meeting at which a quorum is present; provided, however, that
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any decision or determination reduced to writing and signed by all of the
members of the Committee shall be as fully effective as if it had been made at a
meeting that was duly called and held. The Committee may make any rules and
regulations as it may deem advisable for the conduct of its business that are
not inconsistent with the provisions of the Plan, the Certificate of
Incorporation, the by-laws of the Corporation, Rule 16b-3 so long as it is
applicable, and Section 162(m) so long as it is applicable.
3.4 Committee's Powers. Subject to the express provisions of the Plan and
any applicable law with which the Corporation intends the Plan to comply, the
Committee shall have the authority, in its sole and absolute discretion, (a) to
adopt, amend, and rescind administrative and interpretive rules and regulations
relating to the Plan, including without limitation to adopt and observe such
procedures concerning the counting of Awards against the Plan and individual
maximums as it may deem appropriate from time to time; (b) to determine the
Eligible Individuals to whom, and the time or times at which, Awards shall be
granted; (c) to determine the amount of cash and the number of shares of Stock,
Stock Appreciation Rights, Restricted Stock Awards, or Performance Units, or any
combination thereof, that shall be the subject of each Award; (d) to determine
the terms and provisions of each Award Agreement (which need not be identical),
including provisions defining or otherwise relating to (i) the term and the
period or periods and extent of exercisability of the Options, (ii) the extent
to which the transferability of shares of Stock issued or transferred pursuant
to any Award is restricted, (iii) the effect of termination of employment on the
Award, and (iv) the effect of approved leaves of absence (consistent with any
applicable regulations of the Internal Revenue Service); (e) to accelerate,
pursuant to Section 10, the time of exercisability of any Option or Stock
Appreciation Right that has been granted or the time of vesting or settlement of
any Restricted Stock Award or Performance Unit; (f) to construe the respective
Award Agreements and the Plan; (g) to make determinations of the Fair Market
Value of the Stock pursuant to the Plan; (h) to delegate its duties under the
Plan to such agents as it may appoint from time to time, subject to the second
sentence of Paragraph 3.1; and (i) to make all other determinations, perform all
other acts, and exercise all other powers and authority necessary or advisable
for administering the Plan, including the delegation of those ministerial acts
and responsibilities as the Committee deems appropriate subject in all respects
to the last two sentences of Paragraph 6.12. The Committee may correct any
defect, supply any omission or reconcile any inconsistency in the Plan, in any
Award, or in any Award Agreement in the manner and to the extent it deems
necessary or desirable to carry the Plan into effect, and the Committee shall be
the sole and final judge of that necessity or desirability. The determinations
of the Committee on the matters referred to in this Paragraph 3.4 shall be final
and conclusive. The Committee shall not have the power to appoint members of the
Committee or to terminate, modify, or amend the Plan. Those powers are vested in
the Board of Directors.
3.5 Transferability of Awards. Notwithstanding any limitation on a
Holder's right to transfer an Award, the Committee may (in its sole discretion)
permit a Holder to transfer an Award, or may cause the Corporation to grant an
Award that otherwise would be granted to an Eligible Individual, in any of the
following circumstances: (a) pursuant to a qualified domestic relations order,
(b) to a trust established for the benefit of the Eligible Individual or one or
more of the children, grandchildren, or spouse of the Eligible Individual; (c)
to a limited partnership in which all the interests are held by the Eligible
Individual and that Person's children, grandchildren or spouse; or (d) to
another Person in circumstances that the Committee believes will result in the
Award continuing to provide an incentive for the Eligible Individual to remain
in the service of the Corporation or its Subsidiaries and apply his or her best
efforts for the benefit of the Corporation or its Subsidiaries. If the Committee
determines to allow such transfers or issuances of Awards, any Holder or
Eligible Individual desiring such transfers or issuances shall make application
therefor in the manner and time that the Committee specifies and shall comply
with such other requirements as the Committee may require to assure compliance
with all applicable laws, including securities laws, and to assure fulfillment
of the purposes of this Plan. The Committee shall not authorize any such
transfer or issuance if it may not be made in compliance with all applicable
federal, state and foreign securities laws. The granting of permission for such
an issuance or transfer shall not obligate the Corporation to register the
shares of Stock to be issued under the applicable Award.
3.6 Limitation on Terms of Awards. Notwithstanding anything to the
contrary in this Plan, the exercise price of outstanding Options shall not be
amended to reduce the exercise price without first obtaining the consent of the
Corporation's stockholders.
SECTION 4. ELIGIBILITY AND PARTICIPATION
4.1 Eligible Individuals. Awards may be granted pursuant to the Plan only
to persons who are Eligible Individuals at the time of the grant thereof or in
connection with the severance or retirement of Eligible Individuals.
4.2 Grant of Awards. Subject to the express provisions of the Plan, the
Committee shall determine which Eligible Individuals shall be granted Awards
from time to time. In making grants, the Committee shall take into consideration
the contribution the potential Holder has made or may make to the success of the
Corporation or its Subsidiaries and such other considerations as the Board of
Directors may from time to time specify. The Committee shall also determine the
number of shares or
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cash amounts subject to each of the Awards and shall authorize and cause the
Corporation to grant Awards in accordance with those determinations.
4.3 Date of Grant. The date on which an Award is granted (the "DATE OF
GRANT") shall be the date specified by the Committee as the effective date or
date of grant of an Award or, if the Committee does not so specify, shall be the
date effective as of which the Committee adopts the resolution approving the
offer of an Award to an individual, including the specification of the number
(or method of determining the number) of shares of Stock and the amount (or
method of determining the amount) of cash to be subject to the Award, even
though certain terms of the Award Agreement may not be determined at that time
and even though the Award Agreement may not be executed or delivered until a
later time. In no event shall a Holder gain any rights in addition to those
specified by the Committee in its grant, regardless of the time that may pass
between the grant of the Award and the actual execution or delivery of the Award
Agreement by the Corporation or the Holder. The Committee may invalidate an
Award at any time before the Award Agreement is signed by the Holder (if
signature is required) or is delivered to the Holder (if signature is not
required), and such Award shall be treated as never having been granted.
4.4 Award Agreements. Each Award granted under the Plan shall be
evidenced by an Award Agreement that incorporates those terms that the Committee
shall deem necessary or desirable. More than one Award may be granted under the
Plan to the same Eligible Individual and be outstanding concurrently. If an
Eligible Individual is granted both one or more Incentive Options and one or
more Nonstatutory Options, those grants shall be evidenced by separate Award
Agreements, one for each of the Incentive Option grants and one for each of the
Nonstatutory Option grants.
4.5 Limitation for Incentive Options. Notwithstanding any provision
contained herein to the contrary, (a) a person shall not be eligible to receive
an Incentive Option unless he or she is an Employee of the Corporation or a
corporate Subsidiary (but not a partnership or other non-corporate Subsidiary
within the meaning of Section 424(e) and (f) of the Code), and (b) a person
shall not be eligible to receive an Incentive Option if, immediately before the
time the Incentive Option is granted, that person owns (within the meaning of
Sections 422 and 424 of the Code) stock possessing more than ten percent of the
total combined voting power or value of all classes of stock of the Corporation
or a Subsidiary. Nevertheless, this Subparagraph 4.5(b) shall not apply if, at
the time the Incentive Option is granted, the Exercise Price of the Incentive
Option is at least one hundred and ten percent of Fair Market Value and the
Incentive Option is not, by its terms, exercisable after the expiration of five
years from the Date of Grant.
4.6 No Right to Award. The adoption of the Plan shall not be deemed to
give any person a right to be granted an Award except pursuant to Section 5.
SECTION 5. AWARDS TO NON-EMPLOYEE DIRECTORS
5.1 Ineligibility for Other Awards. Non-employee Directors shall not be
eligible to receive any Awards under the Plan other than the automatic Awards
specified in this Section 5.
5.2 Automatic Grant of Awards. Awards of Nonstatutory Options shall be
made automatically to Non-employee Directors as follows: Each Non-employee
Director who is a director of the Corporation as of the day of the first meeting
of the Corporation's Board of Directors held after the approval of the Plan by
the Corporation's stockholders shall automatically be granted (a) a Nonstatutory
Option for the purchase of 5,000 shares of Stock effective on the date of such
meeting of the Board of Directors whether or not that director is in attendance
at that meeting and (b) a Restricted Stock Award of that number of shares of
Stock equal to $15,000 divided by the Fair Market Value on the date of such
meeting of the Board of Directors (rounded up to a whole share for any
fractional share), effective on the date of such first meeting of the Board of
Directors, whether or not that director is in attendance at that meeting.
Beginning in 1998, each Non-employee Director who is a director of the
Corporation as of both the day immediately preceding the annual meeting of the
Corporation's stockholders and the day immediately following the annual meeting
shall automatically be granted (a) a Nonstatutory Option for the purchase of
5,000 shares of Stock effective on the date of the first meeting of the Board of
Directors following the annual meeting, whether or not that director is in
attendance at that meeting and (b) a Restricted Stock Award of that number of
shares of Stock equal to $15,000 divided by the Fair Market Value on the date of
such first meeting of the Board of Directors (rounded up to a whole share for
any fractional share), effective on the date of such first meeting of the Board
of Directors, whether or not that director is in attendance at that meeting.
5.3 Available Stock. The automatic Awards specified in Paragraph 5.2
shall be made in the amounts specified in that Paragraph only if the number of
shares of Stock available to be issued, transferred or exercised pursuant to
Awards under the Plan (as calculated in Section 2) is sufficient to make all
automatic grants required to be made by Paragraph 5.2 on the Date of Grant of
those automatic Awards. In the event that a lesser number of shares of Stock are
available to be issued, transferred, or exercised pursuant to Awards under the
Plan on the Date of Grant of the automatic Awards described Paragraph 5.2, but
their number is
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insufficient to permit the grant of the entire number of shares specified in the
automatic Awards, then the number of available shares shall be apportioned
equally among the automatic Awards made on that date, and the number of shares
apportioned to each automatic Award shall be the number of shares automatically
subject to that automatic Award.
5.4 Terms and Conditions of Automatic Awards. Award Agreements for
Nonstatutory Option Awards to Non-employee Directors shall be in the form
attached as Annex A and, except as expressly provided in those Award Agreements,
the automatic Awards to Non-employee Directors shall not be subject to the
provisions of Section 10 (other than Paragraph 10.1) or 11. In addition, the
following terms and conditions shall apply to automatic Nonstatutory Option
Awards pursuant to Paragraph 5.2: (a) the exercise price for each share of Stock
subject to the Option shall be the Fair Market Value of a share of Stock on the
Date of Grant of such Option; (b) the Option shall become vested and exercisable
with respect to 5,000 shares of Stock (or, if less, the number determined
pursuant to Paragraph 5.3) on the first anniversary of the Date of Grant so long
as the Non-employee Director remains a director of the Corporation after the
Date of Grant through such date; and (c) the Option shall terminate on the
earliest of (i) 11:59 p.m., Boston, Massachusetts, time, on the date ten years
from the Date of Grant, (ii) immediately when the Holder ceases to be a
director, if the Board demands or requests the Holder's resignation from the
Board, (iii) 11:59 p.m., Boston, Massachusetts, time, on the date 90 days after
the Holder ceases to be a director for any reason other than the reasons
specified in the preceding clause (ii) or the following clause (iv), or (iv)
11:59 p.m., Boston, Massachusetts, time, on the date one year after the Holder
ceases to be a director because of death or permanent disability (as defined in
Annex A attached hereto). Award Agreements for Restricted Stock Awards to Non-
employee Directors shall be in the form attached as Annex A and, except as
expressly set forth in those Award Agreements, the automatic Awards to Non-
employee Directors shall not be subject to the provisions of Section 10 (other
than Paragraph 10.1) or 11. In addition, the following terms and conditions
shall apply to automatic Restriced Stock Awards pursuant to Paragraph 5.2: (a)
the restrictions on sale, transfer, alienation and hypothecation of each
Restricted Stock Award shall lapse with respect to all of the shares of Stock
subject to each Restricted Stock Award on the first anniversary of the Date of
Grant so long as the Non-employee Director remains a director of the Corporation
after the Date of Grant through such date; (b) the restricted portion of each
Restricted Stock Award shall be forfeited and terminate on the date the Holder
ceases to be a director for any reason; and (c) if the Non-employee director
fails to attend, during the fiscal year of the Corporation in which the
Restricted Stock Award is made, at least 75% of the aggregate of (i) the total
number of meetings of the Board of Directors (held during the period for which
such person has been a director) and (ii) the total number of meetings held by
all committees of the Board of Directors on which such individual served (during
the periods such person was a member of such committees), the Restricted Stock
Award shall be forfeited (effective as of the day immediately prior to the first
anniversary of the Date of Grant) with respect to that percentage of the
Restricted Stock Award equal to the percentage of the number of meetings in (i)
and (ii) of the Board of Directors and Committees of the Board of Directors held
during such fiscal year that such Non-employee Director failed to attend.
5.5 Tax Withholding. The Corporation shall have the right, subject to
applicable law, to require a Non-employee Director to pay to the Corporation the
amount necessary to satisfy the Corporation's current or future obligation to
withhold federal, state or local income or other taxes that the Non-employee
Director incurs by the granting, vesting or exercising of an Option or
Restricted Stock Award. Tax withholding obligations in respect of Options or
Restricted Stock Awards to Non-employee Directors may not be satisfied by the
Corporation's withholding of Stock subject to the Option or Restricted Stock
Award or by the Non-employee Director's transfer of Stock to the Corporation.
5.6 Privileges of a Stockholder. A Non-Employee Director shall have all
voting, dividend, liquidation, and other rights with respect to Stock received
by him as a Restricted Stock Award under this Section in accordance with its
terms.
5.7 Retention as Director. Nothing contained in the Plan or in any
Restricted Stock Award granted under the Plan shall interfere with or limit in
any way the right of the stockholders of the Corporation to remove any Non-
employee Director from the Board in accordance with applicable law (and the
Corporation's governing documents) or confer upon any Non-Employee Director any
right to continue in the service of the Corporation.
5.8 Enforcement of Restrictions. The Committee shall cause a legend to be
placed on the Stock certificates issued pursuant to each Restricted Stock Award
referring to the restrictions imposed in the Plan and, in addition, may in its
sole discretion require one or more of the following methods of enforcing such
restrictions: (a) requiring the Non-employee Director to keep the Stock
certificates, duly endorsed, in the custody of the Corporation while the
restrictions remain in effect; (b) requiring that the Stock certificates, duly
endorsed, be held in the custody of a third party while the restrictions remain
in effect.
5.9 Rights to Subscribe. If the Corporation shall at any time grant to
the holders of its Stock rights to subscribe pro rata for additional shares
thereof or for any other securities of the Corporation or of any other
corporation, there shall be reserved with respect to the shares then outstanding
pursuant to any Restricted Stock Award the Stock or other securities that the
Non-employee Director would have been entitled to subscribe for if immediately
prior to such grant the restrictions applicable to such Restricted
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Stock Award had lapsed. Upon the lapse of all restrictions applicable to Stock
held pursuant to a Restricted Stock Award, the Non-employee Director shall be
provided the opportunity to subscribe for the additional shares or other
securities issuable with respect to such shares of Stock.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS
All Options granted under the Plan shall comply with, and the related
Option Agreements shall be deemed to include and be subject to, the terms and
conditions set forth in this Section 6 (to the extent each term and condition
applies to the form of Option) and also to the terms and conditions set forth in
Paragraph 10.1 and Section 11; provided, however, that the Committee may
authorize an Option Agreement that expressly contains terms and provisions that
differ from the terms and provisions of Section 11. The Committee may also
authorize an Option Agreement that contains any or all of the terms and
provisions of Paragraphs 10.2 and 10.3 or that contains terms and provisions
dealing with similar subject matter differently than do those Paragraphs;
nevertheless, no term or provision of Paragraph 10.2 or 10.3 (or any such
differing term or provision) shall apply to an Option Agreement unless the
Option Agreement expressly states that such term or provision applies.
6.1 Number of Shares. Each Option Agreement shall state the total number
of shares of Stock to which it relates.
6.2 Vesting. Each Option Agreement shall state the time, periods or other
conditions on which the right to exercise the Option or a portion thereof shall
vest and the number (or method of determining the number) of shares of Stock for
which the right to exercise the Option shall vest at each such time, period or
satisfaction of condition.
6.3 Expiration of Options. Nonstatutory Options and Incentive Options may
be exercised during the term determined by the Committee and set forth in the
Option Agreement; provided that no Incentive Option shall be exercised after the
expiration of a period of ten years commencing on the Date of Grant of the
Incentive Option.
6.4 Exercise Price. Each Option Agreement shall state the exercise price
per share of Stock (the "EXERCISE PRICE"). The exercise price per share of Stock
subject to an Incentive Option shall not be less than the greater of (a) the par
value per share of the Stock or (b) 100% of the Fair Market Value per share of
the Stock on the Date of Grant of the Option. The exercise price per share of
Stock subject to a Nonstatutory Option shall not be less than the greater of (a)
the par value per share of the Stock or (b) eighty-five percent of the Fair
Market Value per share of the Stock on the Date of Grant of the Option.
6.5 Method of Exercise. Each Option shall be exercisable only by written,
recorded electronic or other notice of exercise in the manner specified by the
Committee from time to time (the "EXERCISE NOTICE") delivered to the Corporation
or to the Person designated by the Committee during the term of the Option,
which notice shall (a) state the number of shares of Stock with respect to which
the Option is being exercised, (b) be signed or otherwise given by the Holder of
the Option or by the person authorized to exercise the Option in the event of
the Holder's death or disability, (c) be accompanied by the Exercise Price for
all shares of Stock for which the Option is exercised, unless provision for the
payment of the Exercise Price has been made pursuant to Paragraph 6.7 or 6.8 or
in another manner permitted by law and approved in advance by the Committee, and
(d) include such other information, instruments, and documents as may be
required to satisfy any other condition to exercise contained in the Option
Agreement. The Option shall not be deemed to have been exercised unless all of
the requirements of the preceding provisions of this Paragraph 6.5 have been
satisfied.
6.6 Incentive Option Exercises. During the Holder's lifetime, only the
Holder may exercise an Incentive Option. The Holder of an Incentive Option shall
immediately notify the Corporation in writing of any disposition of the Stock
acquired pursuant to the Incentive Option that would disqualify the Incentive
Option from the incentive option tax treatment afforded by Section 422 of the
Code. The notice shall state the number of shares disposed of, the dates of
acquisition and disposition of the shares, and the consideration received upon
that disposition.
6.7 Medium and Time of Payment. The Exercise Price of an Option shall be
payable in full upon the exercise of the Option (a) in cash or by an equivalent
means (such as that specified in Paragraph 6.8) acceptable to the Committee, (b)
on the Committee's prior consent, with shares of Stock owned by the Holder
(including shares received upon exercise of the Option or restricted shares
already held by the Holder) and having a Fair Market Value at least equal to the
aggregate Exercise Price payable in connection with such exercise, or (c) by any
combination of clauses (a) and (b). If the Committee chooses to accept shares of
Stock in payment of all or any portion of the Exercise Price, then (for purposes
of payment of the Exercise Price) those shares of Stock shall be deemed to have
a cash value equal to their aggregate Fair Market Value determined as of the
date of the delivery of the Exercise Notice. If the Committee elects to accept
shares of restricted Stock in payment of all or any portion of the Exercise
Price, then an equal number of shares issued pursuant to the exercise shall be
restricted on the same terms and for the restriction period remaining on the
shares used for payment.
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6.8 Payment with Sale Proceeds. In addition, at the request of the Holder
and to the extent permitted by applicable law, the Committee may (but shall not
be required to) approve arrangements with a brokerage firm under which that
brokerage firm, on behalf of the Holder, shall pay to the Corporation the
Exercise Price of the Option being exercised (either as a loan to the Holder or
from the proceeds of the sale of Stock issued pursuant to that exercise of the
Option), and the Corporation shall promptly cause the exercised shares to be
delivered to the brokerage firm. Such transactions shall be effected in
accordance with the procedures that the Committee may establish from time to
time.
6.9 Reload Provisions. Options may contain a provision pursuant to which
a Holder who pays all or a portion of the Exercise Price of an Option or the tax
required to be withheld pursuant to the exercise of an Option by surrendering
shares of Stock shall automatically be granted an Option for the purchase of the
number of shares of Stock equal to the number of shares surrendered (a "RELOAD
OPTION"). The Date of Grant of the Reload Option shall be the date on which the
Holder surrenders the shares of Stock in respect of which the Reload Option is
granted. The Reload Option shall have an Exercise Price equal to the Fair Market
Value of a share of Stock on the Date of Grant of the Reload Option and shall
have a term that is no longer than the original term of the underlying Option.
6.10 Limitation on Aggregate Value of Shares That May Become First
Exercisable During Any Calendar Year Under an Incentive Option. Except as is
otherwise provided in subparagraph 10.2(b), with respect to any Incentive Option
granted under this Plan, the aggregate Fair Market Value of shares of Stock
subject to an Incentive Option and the aggregate Fair Market Value of shares of
Stock or stock of any parent or Subsidiary corporation within the meaning of
Section 424(e) and (f) of the Code (or a predecessor of the Corporation or a
Subsidiary) subject to any other incentive stock option (within the meaning of
Section 422 of the Code) of the Corporation or a parent or Subsidiary
corporation within the meaning of Section 424(e) and (f) of the Code (or a
predecessor corporation of any such corporation) that first become purchasable
by a Holder in any calendar year may not (with respect to that Holder) exceed
$100,000, or such other amount as may be prescribed under Section 422 of the
Code or applicable regulations or rulings from time to time. As used in the
previous sentence, Fair Market Value shall be determined as of the date the
Incentive Option is granted. For purposes of this Paragraph 6.10 "predecessor
corporation" means (a) a corporation that was a party to a transaction described
in Section 424(a) of the Code (or which would be so described if a substitution
or assumption under that Section had been effected) with the Corporation, (b) a
corporation which, at the time the new incentive stock option (within the
meaning of Section 422 of the Code) is granted, is a Subsidiary of the
Corporation or a predecessor corporation of any such corporations, or (c) a
predecessor corporation of any such corporations. Failure to comply with this
provision shall not impair the enforceability or exercisability of any Option,
but shall cause the excess amount of shares to be reclassified in accordance
with the Code.
6.11 No Fractional Shares. The Corporation shall not in any case be
required to sell, issue, or deliver a fractional share with respect to any
Option. In lieu of the issuance of any fractional share of Stock, the
Corporation shall pay to the Holder an amount in cash equal to the same fraction
(as the fractional Stock) of the Fair Market Value of a share of Stock
determined as of the date of the applicable Exercise Notice.
6.12 Modification, Extension and Renewal of Options. Subject to the terms
and conditions of and within the limitations of the Plan and any applicable law,
and any consent required by the last two sentences of this Paragraph 6.12, the
Committee may (a) modify, extend or renew outstanding Options granted under the
Plan, (b) accept the surrender of Options outstanding hereunder (to the extent
not previously exercised) and authorize the granting of new Options in
substitution for outstanding Options (to the extent not previously exercised),
and (c) amend the terms of an Incentive Option at any time to include provisions
that have the effect of changing the Incentive Option to a Nonstatutory Option.
Nevertheless, without the consent of the Holder, the Committee may not modify
any outstanding Options so as to specify a higher Exercise Price or accept the
surrender of outstanding Incentive Options and authorize the granting of new
Options in substitution therefor specifying a higher Exercise Price. In
addition, no modification of an Option granted hereunder shall, without the
consent of the Holder, materially alter or impair any rights of the Holder or
materially increase the obligations of a Holder under any Option theretofore
granted hereunder to that Holder under the Plan except, with respect to
Incentive Options, as may be necessary to satisfy the requirements of Section
422 of the Code or as permitted in clause (c) of this Paragraph 6.12.
6.13 Other Agreement Provisions. The Option Agreements authorized under
the Plan shall contain such provisions in addition to those required by the Plan
(including, without limitation, restrictions or the removal of restrictions upon
the exercise of the Option and the retention or transfer of shares thereby
acquired) as the Committee may deem advisable. Each Option Agreement shall
identify the Option evidenced thereby as an Incentive Option or Nonstatutory
Option, as the case may be, and no Option Agreement shall cover both an
Incentive Option and a Nonstatutory Option. Each Agreement relating to an
Incentive Option granted hereunder shall contain such limitations and
restrictions upon the exercise of the Incentive Option to which it relates as
shall be necessary for the Incentive Option to which such Agreement relates to
constitute an incentive stock option, as defined in Section 422 of the Code.
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SECTION 7. STOCK APPRECIATION RIGHTS
All Stock Appreciation Rights granted under the Plan shall comply with, and
the related Award Agreements shall be deemed to include and be subject to, the
terms and conditions set forth in this Section 7 (to the extent each term and
condition applies to the form of Stock Appreciation Right) and also to the terms
and conditions set forth in Paragraph 10.1 and Section 11; provided, however,
that the Committee may authorize an Award Agreement relating to a Stock
Appreciation Right that expressly contains terms and provisions that differ from
the terms and provisions of Section 11. The Committee may also authorize an
Award Agreement relating to a Stock Appreciation Right that contains any or all
of the terms and provisions of Paragraphs 10.2 and 10.3 or that contains terms
and provisions dealing with similar subject matter differently than do those
Paragraphs; nevertheless, no term or provision of Paragraph 10.2 or 10.3 (or any
such differing term or provision) shall apply to an Award Agreement relating to
a Stock Appreciation Right unless the Award Agreement expressly states that such
term or provision applies.
7.1 Form of Right. A Stock Appreciation Right may be granted to an
Eligible Individual (a) in connection with an Option, either at the time of
grant or at any time during the term of the Option, or (b) without relation to
an Option.
7.2 Rights Related to Options. A Stock Appreciation Right granted
pursuant to an Option shall entitle the Holder, upon exercise, to surrender that
Option or any portion thereof, to the extent unexercised, and to receive payment
of an amount computed pursuant to Subparagraph 7.2(b). That Option shall then
cease to be exercisable to the extent surrendered. Stock Appreciation Rights
granted in connection with an Option shall be subject to the terms of the Award
Agreement governing the Option, which shall comply with the following provisions
in addition to those applicable to Options:
(a) Exercise and Transfer. Subject to Paragraph 11.10, a Stock
Appreciation Right granted in connection with an Option shall be
exercisable only at such time or times and only to the extent that the
related Option is exercisable and shall not be transferable except to the
extent that the related Option is transferable. To the extent that an
Option has been exercised, the Stock Appreciation Rights granted in
connection with that Option shall terminate.
(b) Value of Right. Upon the exercise of a Stock Appreciation Right
related to an Option, the Holder shall be entitled to receive payment from
the Corporation of an amount determined by multiplying:
(i) The difference obtained by subtracting the Exercise Price of
a share of Stock specified in the related Option from the Fair Market
Value of a share of Stock on the date of exercise of the Stock
Appreciation Right, by
(ii) The number of shares as to which that Stock Appreciation
Right has been exercised.
7.3 Right Without Option. A Stock Appreciation Right granted without
relationship to an Option shall be exercisable as determined by the Committee
and set forth in the Award Agreement governing the Stock Appreciation Right,
which Award Agreement shall comply with the following provisions:
(a) Number of Shares. Each Award Agreement shall state the total
number of shares of Stock to which the Stock Appreciation Right relates.
(b) Vesting. Each Award Agreement shall state the time, periods or
other conditions on which the right to exercise the Stock Appreciation
Right or a portion thereof shall vest and the number of shares of Stock for
which the right to exercise the Stock Appreciation Right shall vest at each
such time, period or satisfaction of condition.
(c) Expiration of Rights. Each Award Agreement shall state the date at
which the Stock Appreciation Rights shall expire if not previously exercised.
(d) Value of Right. A Stock Appreciation Right granted without relationship
to an Option shall entitle the Holder, upon exercise of the Stock
Appreciation Right, to receive payment of an amount determined by
multiplying:
(i) The difference obtained by subtracting the SAR Exercise
Price from the Fair Market Value of a share of Stock on the date of
exercise of that Stock Appreciation Right, by
(ii) The number of rights as to which the Stock Appreciation
Right has been exercised.
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7.4 Limitations on Rights. Notwithstanding Subparagraph 7.2(b) and
Subparagraph 7.3(d), the Committee may limit the amount payable upon exercise of
a Stock Appreciation Right. Any such limitation must be determined as of the
Date of Grant and be noted on the instrument evidencing the Stock Appreciation
Right.
7.5 Payment of Rights. Payment of the amount determined under
Subparagraph 7.2(b) or Subparagraph 7.3(d) and Paragraph 7.4 may be made solely
in whole shares of Stock valued at Fair Market Value on the date of exercise of
the Stock Appreciation Right or, in the sole discretion of the Committee, solely
in cash or a combination of cash and Stock. If the Committee decides to make
full payment in shares of Stock and the amount payable results in a fractional
share, payment for the fractional share shall be made in cash.
7.6 Other Agreement Provisions. The Award Agreements authorized relating
to Stock Appreciation Rights shall contain such provisions in addition to those
required by the Plan (including, without limitation, restrictions or the removal
of restrictions upon the exercise of the Stock Appreciation Right and the
retention or transfer of shares thereby acquired) as the Committee may deem
advisable.
SECTION 8. RESTRICTED STOCK AWARDS
All Restricted Stock Awards granted under the Plan shall comply with, and
the related Award Agreements shall be deemed to include, and be subject to the
terms and conditions set forth in this Section 8 and also to the terms and
conditions set forth in Paragraph 10.1 and Section 11; provided, however, that
the Committee may authorize an Award Agreement relating to a Restricted Stock
Award that expressly contains terms and provisions that differ from the terms
and provisions of Section 11. The Committee may also authorize an Award
Agreement relating to a Restricted Stock Award that contains any or all of the
terms and provisions of Paragraphs 10.2 and 10.3 or that contains terms and
provisions dealing with similar subject matter differently than do those
Paragraphs; nevertheless, no term or provision of Paragraph 10.2 or 10.3 (or any
such differing term or provision) shall apply to an Award Agreement relating to
a Restricted Stock Award unless the Award Agreement expressly states that such
term or provision applies.
8.1 Restrictions. All shares of Restricted Stock Awards granted or sold
pursuant to the Plan shall be subject to the following conditions:
(a) Transferability. The shares may not be sold, transferred or
otherwise alienated or hypothecated until the restrictions are removed or
expire.
(b) Conditions to Removal of Restrictions. Conditions to removal or
expiration of the restrictions may include, but are not required to be
limited to, continuing employment or service as a director, officer,
consultant, or advisor or achievement of performance objectives described
in the Award Agreement.
(c) Legend. Each certificate representing Restricted Stock Awards
granted pursuant to the Plan shall bear a legend making appropriate
reference to the restrictions imposed.
(d) Possession. At its sole discretion, the Committee may (i)
authorize issuance of a certificate for shares in the Holder's name only
upon lapse of the applicable restrictions, (ii) require the Corporation,
transfer agent or other custodian to retain physical custody of the
certificates representing Restricted Stock Awards during the restriction
period and may require the Holder of the Award to execute stock powers,
endorsed or in blank, for those certificates and deliver those stock powers
to the Corporation, transfer agent or custodian, or (iii) may require the
Holder to enter into an escrow agreement providing that the certificates
representing Restricted Stock Awards granted or sold pursuant to the Plan
shall remain in the physical custody of an escrow holder until all
restrictions are removed or expire. The Corporation may issue shares
subject to stop-transfer restrictions or may issue such shares subject only
to the restrictive legend described in subparagraph 8.1(c).
(e) Other Conditions. The Committee may impose other conditions on any
shares granted or sold as Restricted Stock Awards pursuant to the Plan as
it may deem advisable, including, without limitation, (i) restrictions
under the Securities Act or Exchange Act, (ii) the requirements of any
securities exchange upon which the shares or shares of the same class are
then listed, and (iii) any state securities law applicable to the shares.
8.2 Expiration of Restrictions. The restrictions imposed in Paragraph 8.1
on Restricted Stock Awards shall lapse as determined by the Committee and set
forth in the applicable Award Agreement, and the Corporation shall promptly
cause to be delivered to the Holder of the Restricted Stock Award a certificate
representing the number of shares for which restrictions have lapsed, free of
any restrictive legend relating to the lapsed restrictions. Each Restricted
Stock Award may have a different restriction
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period, in the discretion of the Committee. The Committee may, in its
discretion, prospectively reduce the restriction period applicable to a
particular Restricted Stock Award. The foregoing notwithstanding, no restriction
not required by law shall remain in effect for more than ten years after the
date of the Award.
8.3 Changes in Accounting Rules. Notwithstanding any other provision of
the Plan to the contrary, if, during the term of the Plan, any changes in the
financial or tax accounting rules applicable to Restricted Stock Awards shall
occur that, in the sole judgement of the Board of Directors, may have a material
adverse effect on the reported earnings, assets, or liabilities of the
Corporation, the Committee shall have the right and power to modify as necessary
any then outstanding Restricted Stock Awards as to which the applicable
restrictions have not been satisfied.
8.4 Rights as Stockholder. Subject to the provisions of Paragraphs 8.1
and 11.11, the Committee may, in its discretion, determine what rights, if any,
the Holder shall have with respect to the Restricted Stock Awards granted or
sold, including the right to vote the shares and receive all dividends and other
distributions paid or made with respect thereto.
8.5 Other Agreement Provisions. The Award Agreements relating to
Restricted Stock Awards shall contain such provisions in addition to those
required by the Plan as the Committee may deem advisable.
SECTION 9. PERFORMANCE UNITS
All Performance Units granted under the Plan shall comply with, and the
related Award Agreements shall be deemed to include and be subject to, the terms
and conditions set forth in this Section 9 (to the extent each term and
condition applies to the form of Performance Unit) and also to the terms and
conditions set forth in Paragraph 10.1 and Section 11; provided, however, that
the Committee may authorize an Award Agreement related to a Performance Unit
that expressly contains terms and provisions that differ from the terms and
provisions of Section 11. The Committee may also authorize an Award Agreement
related to a Performance Unit that contains any or all of the terms and
provisions of Paragraphs 10.2 and 10.3 or that contains terms and provisions
dealing with similar subject matter differently than do those Paragraphs;
nevertheless, no term or provision of Paragraph 10.2 or 10.3 (or any such
differing term or provision) shall apply to an Award Agreement related to a
Performance Unit unless the Award Agreement expressly states that such term or
provision applies.
9.1 Multiple Grants. The Committee may make grants of Performance Units
in such a manner that more than one Performance Period is in progress
simultaneously. At or before the beginning of each Performance Period, the
Committee will establish the contingent value of each Performance Unit, if any,
for that Performance Period, which may vary depending on the degree to which
performance objectives established by the Committee are met.
9.2 Performance Standards. At or before the beginning of each Performance
Period, the Committee will (a) establish the beginning and ending dates of the
Performance Period, (b) establish for that Performance Period specific
performance objectives as the Committee (in its sole discretion) believes are
relevant to the Corporation's overall business objectives, (c) determine the
minimum and maximum value of a Performance Unit and the value of a Performance
Unit based on the degree to which performance objectives are achieved, exceeded
or not achieved, (d) determine a minimum performance level below which
Performance Units will be assigned a value of zero, and a maximum performance
level above which the value of Performance Units will not increase, and (e)
notify each Holder of a Performance Unit for that Performance Period in writing
of the established performance objectives and minimum, target, and maximum
Performance Unit value for that Performance Period.
9.3 Modification of Standards. If the Committee determines in its sole
discretion that the established performance measures or objectives are no longer
suitable to the Corporation's objectives because of a change in the
Corporation's business, operations, corporate structure, capital structure, or
other conditions the Committee deems to be material, the Committee may modify
the performance measures and objectives as it considers appropriate and
equitable.
9.4 Payment. The basis for payment of Performance Units for a given
Performance Period will be the achievement of those performance objectives
determined by the Committee at the beginning of the Performance Period. If
minimum performance is not achieved or exceeded for a Performance Period, no
payment will be made and all contingent rights will cease. If minimum
performance is achieved or exceeded, the value of a Performance Unit will be
based on the degree to which actual performance exceeded the pre-established
minimum performance standards. The amount of payment will be determined by
multiplying the number of Performance Units granted at the beginning of the
Performance Period by the final Performance Unit value. Payments will be made in
cash or Stock as soon as administratively possible following the close of the
applicable Performance Period.
9.5 Other Agreement Provisions. The Award Agreements, if any, authorized
relating to Performance Units shall contain such provisions in addition to those
required by the Plan (including, without limitation, restrictions or the removal
of restrictions upon the transfer of shares thereby acquired) as the Committee
may deem advisable.
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SECTION 10. ADJUSTMENT PROVISIONS
The Committee may authorize an Award that contains any or all of the terms
and provisions of this Section 10 or, with respect to Paragraphs 10.2 and 10.3,
that contains terms and provisions dealing with similar subject matter
differently than do those Paragraphs; nevertheless, no term or provision of
Paragraph 10.2 or 10.3 (or any such differing term or provision) shall apply to
an Award Agreement unless the Award Agreement expressly states that such term or
provision applies.
10.1 Adjustment of Awards and Authorized Stock. The terms of an Award,
the number of shares of Stock authorized pursuant to Paragraph 2.1 for issuance
under the Plan, and the number shares of Stock that constitute the individual
limitations in Paragraph 2.7 shall be subject to adjustment, from time to time,
in accordance with the following provisions:
(a) If at any time or from time to time, the Corporation shall subdivide as
a whole (by reclassification, by a Stock split, by the issuance of a
distribution on Stock payable in Stock or otherwise) the number of shares of
Stock then outstanding into a greater number of shares of Stock, then (i) the
maximum number of shares of Stock available for the Plan and for any individual
as provided in Paragraph 2.1 and Paragraph 2.7, respectively, shall be increased
proportionately, and the kind of shares or other securities available for the
Plan shall be appropriately adjusted, (ii) the number of shares of Stock (or
other kind of shares or securities) that may be acquired under any Award shall
be increased proportionately, and (iii) the price (including Exercise Price) for
each share of Stock (or other kind of shares or unit of other securities)
subject to then outstanding Awards shall be reduced proportionately, without
changing the aggregate purchase price or value as to which outstanding Awards
remain exercisable or subject to restrictions.
(b) If at any time or from time to time the Corporation shall consolidate
as a whole (by reclassification, reverse Stock split, or otherwise) the number
of shares of Stock then outstanding into a lesser number of shares of Stock, (i)
the maximum number of shares of Stock available for the Plan and for any
individual as provided in Paragraph 2.1 and Paragraph 2.7, respectively shall be
decreased proportionately, and the kind of shares or other securities available
for the Plan shall be appropriately adjusted, (ii) the number of shares of Stock
(or other kind of shares or securities) that may be acquired under any Award
shall be decreased proportionately, and (iii) the price (including Exercise
Price) for each share of Stock (or other kind of shares or unit of other
securities) subject to then outstanding Awards shall be increased
proportionately, without changing the aggregate purchase price or value as to
which outstanding Awards remain exercisable or subject to restrictions.
(c) Whenever the number of shares of Stock subject to outstanding Awards
and the price for each share of Stock subject to outstanding Awards are required
to be adjusted as provided in this Paragraph 10.1, the Committee shall promptly
prepare a notice setting forth, in reasonable detail, the event requiring
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated, and the change in price and the number of shares of Stock, other
securities, cash or property purchasable subject to each Award after giving
effect to the adjustments. The Committee shall promptly give each Holder such a
notice.
(d) Adjustments under Paragraph 10(a) and (b) shall be made by the
Committee, and its determination as to what adjustments shall be made and the
extent thereof shall be final, binding and conclusive. No fractional interest
shall be issued under the Plan on account of any such adjustments.
10.2 Changes in Control. Upon the occurrence of a Change in Control with
respect to Awards held by Participants who are employees of the Corporation or
its Subsidiaries or directors of the Corporation upon the occurence of a Change
in Control, (a) all outstanding Stock Appreciation Rights and Options shall
immediately become fully vested and exercisable in full, including that portion
of any Stock Appreciation Award or Option that pursuant to the terms and
provisions of the applicable Award Agreement had not yet become exercisable (the
total number of shares of Stock as to which a Stock Appreciation Right or Option
is exercisable upon the occurrence of a Change in Control is referred to herein
as the "TOTAL SHARES"); (b) the restriction period of any Restricted Stock Award
shall immediately be accelerated and the restrictions shall expire; and (c) the
target payout opportunity attainable under the Performance Units will be deemed
to have been fully earned for all Performance Periods upon the occurrence of the
Change in Control and the Holder will be paid a pro rata portion of all
associated targeted payout opportunities (based on the number of complete and
partial calendar months elapsed as of the occurrence of the Change in Control)
in cash within thirty days following the Change in Control or in Stock effective
as of the Change in Control, for cash and stock-based Performance Units,
respectively. If a Change in Control involves a Restructure or occurs in
connection with a series of related transactions involving a Restructure and if
such Restructure is in the form of a Non-Surviving Event and as a part of such
Restructure shares of stock, other securities, cash or property shall be
issuable or deliverable in exchange for Stock, then the Holder of an Award shall
be entitled to purchase or receive (in lieu of the Total Shares that the Holder
would otherwise be entitled to purchase or receive), as appropriate for the form
of Award, the number of shares of stock, other securities, cash or property to
which that number of Total Shares would have been entitled in connection with
such Restructure (and, for Options, at an aggregate exercise price equal to the
Exercise Price that would have been payable if that number of Total Shares had
been purchased on the exercise of the Option immediately before the consummation
of the Restructure). Nothing in this Paragraph 10.2 shall impose on a Holder the
obligation to exercise any Award
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immediately before or upon the Change of Control, nor shall the Holder forfeit
the right to exercise the Award during the remainder of the original term of the
Award because of a Change in Control or because the Holder's employment is
terminated for any reason following a Change in Control.
10.3 Restructure and No Change in Control. In the event a Restructure
should occur at any time while there is any outstanding Award hereunder and that
Restructure does not occur in connection with a Change in Control or in
connection with a series of related transactions involving a Change in Control,
then:
(a) no Holder of an Option shall automatically be granted corresponding
Stock Appreciation Rights;
(b) neither any outstanding Stock Appreciation Rights nor any outstanding
Options shall immediately become fully vested and exercisable in full merely
because of the occurrence of the Restructure;
(c) the restriction period of any Restricted Stock Award shall not
immediately be accelerated and the restrictions expire merely because of the
occurrence of the Restructure;
(d) the target payout opportunity, attainable under the Performance Units
will not be deemed to have been fully earned for all Performance Periods merely
because of the occurrence of the Restructure; and
(e) at the option of the Committee, the Corporation may (but shall not be
required to) take any one or more of the following actions:
(i) grant each Holder of an Option corresponding Stock or cash
Stock Appreciation Rights;
(ii) accelerate in whole or in part the time of the vesting and
exercisability of any one or more of the outstanding Stock
Appreciation Rights and Options so as to provide that those Stock
Appreciation Rights and Options shall be exercisable before, upon, or
after the consummation of the Restructure;
(iii) accelerate in whole or in part the expiration of some or
all of the restrictions on any Restricted Stock Award so that the
Stock subject to that Restricted Stock Award shall be owned by the
Holder without restriction or risk of forfeiture;
(iv) treat the outstanding Performance Units as having fully or
partially met their targets and pay, in full or in part, the targeted
payout;
(v) if the Restructure is in the form of a Non-Surviving Event,
cause the surviving entity to assume in whole or in part any one or
more of the outstanding Awards upon such terms and provisions as the
Committee deems desirable; or
(vi) redeem in whole or in part any one or more of the
outstanding Awards (whether or not then exercisable) in consideration
of a cash payment, as such payment may be reduced for tax withholding
obligations as contemplated in the section governing the particular
form of Award, in an amount equal to:
(A) for Options and Stock Appreciation Rights granted in
connection with Options, the excess of (1) the Fair Market Value,
determined as of the date immediately preceding the consummation
of the Restructure, of the aggregate number of shares of Stock
subject to the Award and as to which the Award is being redeemed
over (2) the Exercise Price for that number of shares of Stock;
(B) for Stock Appreciation Rights not granted in connection
with an Option, the excess of (1) the Fair Market Value,
determined as of the date immediately preceding the consummation
of the Restructure, of the aggregate number of shares of Stock
subject to the Award and as to which the Award is being redeemed
over (2) the Fair Market Value of the number of shares of Stock
on the Date of Grant;
(C) for Restricted Stock Awards, the Fair Market Value,
determined as of the date immediately preceding the consummation
of the Restructure, of the aggregate number of shares of Stock
subject to the Award and as to which the Award is being redeemed;
and
(D) for Performance Units, the amount per Performance Unit
as the Committee in its sole discretion may determine (which may
be zero dollars).
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The Corporation shall promptly notify each Holder of any election or action
taken by the Corporation under this Paragraph 10.3. In the event of any election
or action taken by the Corporation pursuant to this Paragraph 10.3 that requires
the amendment or cancellation of any Award Agreement as may be specified in any
notice to the Holder thereof, that Holder shall promptly deliver that Award
Agreement to the Corporation in order for that amendment or cancellation to be
implemented by the Corporation and the Committee. The failure of the Holder to
deliver any such Award Agreement to the Corporation as provided in the preceding
sentence shall not in any manner effect the validity or enforceability of any
action taken by the Corporation and the Committee under this Paragraph 10.3,
including, without limitation, any redemption of an Award as of the consummation
of a Restructure. Any cash payment to be made by the Corporation pursuant to
this Paragraph 10.3 in connection with the redemption of any outstanding Awards
shall be paid to the Holder thereof currently with the delivery to the
Corporation of the Award Agreement evidencing that Award; provided, however,
that any such redemption shall be effective upon the consummation of the
Restructure notwithstanding that the payment of the redemption price may occur
subsequent to the consummation. If all or any portion of an outstanding Award is
to be exercised or accelerated upon or after the consummation of a Restructure
that is in the form of a Non-Surviving Event and as a part of that Restructure
shares of stock, other securities, cash or property shall be issuable or
deliverable in exchange for Stock, then the Holder of the Award shall thereafter
be entitled to purchase or receive (in lieu of the number of shares of Stock
that the Holder would otherwise be entitled to purchase or receive) the number
of shares of stock, other securities, cash or property to which such number of
shares of Stock would have been entitled in connection with the Restructure
(and, for Options, at an aggregate exercise price equal to the Exercise Price
that would have been payable if that number of Total Shares had been purchased
on the exercise of the Option immediately before the consummation of the
Restructure).
10.4 Notice of Change in Control or Restructure. The Corporation shall
attempt to keep all Holders informed with respect to any Change in Control or
Restructure or of any potential Change in Control or Restructure to the same
extent that the Corporation's stockholders are informed by the Corporation of
any such event or potential event.
SECTION 11. ADDITIONAL PROVISIONS
11.1 Termination of Employment. Subject to the last sentence of Paragraph
10.2, if a Holder is an Eligible Individual because the Holder is an Employee
and if that employment relationship is terminated for any reason other than
Normal Retirement or that Holder's death or Disability, then the following
provisions shall apply to all Awards held by that Holder that were granted
because that Holder was an Employee:
(a) If the termination is by the Holder's employer, then the following
provisions shall apply: (i) if the termination is in breach of the terms
and provisions of any written employment agreement between that Holder and
the Holder's employer, then all Awards held by that Holder shall become
immediately exercisable, all restrictions on those Awards shall immediately
lapse, and the Awards shall survive the termination of employment; or (ii)
if the termination is not in breach of the terms and provisions of any
written employment agreement between that Holder and the Holder's employer
(or if there is no existing written employment agreement between that
Holder and the Holder's employer), then that portion, if any, of any and
all Awards held by that Holder that are not yet exercisable (or for which
restrictions have not lapsed) as of the date of the termination shall
become null and void as of the date of the termination; provided, however,
that the portion, if any, of any and all Awards held by that Holder which
are exercisable (or for which restrictions have lapsed) as of the date of
such termination shall survive such termination.
(b) If such termination is by the Holder, then the following
provisions shall apply: (i) if the termination is in breach of the terms
and provisions of any written employment agreement between that Holder and
the Holder's employer or if there is no existing written employment
agreement between that Holder and the Holder's employer, then any and all
Awards held by that Holder, whether or not then exercisable and whether or
not restrictions thereon have lapsed (except in full), shall become null
and void as of the date of the termination; or (ii) if the termination is
in accordance with a right of termination granted to a Holder pursuant to
the terms and provisions of any written employment agreement between that
Holder and his employer, then all Awards held by that Holder shall become
immediately exercisable (and all restrictions thereon shall lapse) and
shall survive the termination of employment.
With respect to any Option or Stock Appreciation Right that survives the
termination of employment pursuant to this Paragraph 11.1, the right to exercise
that Option or Stock Appreciation Right shall terminate in all cases on the
180th day following the last date of employment with the Corporation or its
Subsidiary.
11.2 Other Loss of Eligibility. If a Holder is an Eligible Individual
because the Holder is serving in a capacity other than as an Employee and if
that capacity is terminated for any reason other than the Holder's death, then
that portion, if any, of any and all Awards held by the Holder that were granted
because of that capacity which are not yet exercisable (or for which
restrictions have
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not lapsed) as of the date of the termination shall become null and void as of
the date of the termination; provided, however, that the portion, if any, of any
and all of the Awards held by the Holder that are exercisable (or for which
restrictions have lapsed) as of the date of the termination shall survive the
termination.
11.3 Death. Upon the death of a Holder, then any and all Awards held by
the Holder that are not yet exercisable (or for which restrictions have not
lapsed) as of the date of the Holder's death shall become null and void as of
the date of death; provided, however, that the portion, if any, of any and all
Awards held by the Holder that are exercisable as of the date of death shall be
exercisable by that Holder's legal representatives, legatees or distributees for
a period of the lesser of (a) the remainder of the term of the Award or (b) 180
days following the date of the Holder's death. Any portion of an Award not
exercised upon the expiration of the periods specified in (a) or (b) shall be
null and void. Except as expressly provided in this Paragraph 11.3, all Awards
held by a Holder shall not be exercisable after the death of that Holder.
11.4 Retirement. If a Holder is an Eligible Individual because the Holder
is an Employee and if that employment relationship is terminated by reason of
the Holder's Normal Retirement, then the portion, if any, of any and all Awards
held by the Holder that are not yet exercisable (or for which restrictions have
not lapsed) as of the date of that retirement shall become null and void as of
the date of retirement; provided, however, that the portion, if any, of any and
all Awards held by the Holder that are exercisable as of the date of that
retirement shall survive the retirement for their original term.
11.5 Disability. If a Holder is an Eligible Individual because the Holder
is an Employee and if that employment relationship is terminated by reason of
the Holder's Disability, then the portion, if any, of any and all Awards held by
the Holder that are not yet exercisable (or for which restrictions have not
lapsed) as of the date of that termination for Disability shall become null and
void as of the date of termination; provided, however, that the portion, if any,
of any and all Awards held by the Holder that are exercisable as of the date of
that termination shall survive the termination for its original term and shall
be exercisable by the Holder, his guardian, or his legal representative.
"Disability" shall have the meaning given it in the employment agreement of the
Holder; provided, however, that if that Holder has no employment agreement,
"Disability" shall mean a physical or mental impairment of sufficient severity
that, in the opinion of the Corporation, either the Holder is unable to continue
performing the duties he performed before such impairment or the Holder's
condition entitles him to disability benefits under any insurance or employee
benefit plan of the Corporation or its Subsidiaries and that impairment or
condition is cited by the Corporation as the reason for termination of the
Holder's employment.
11.6 Leave of Absence. With respect to an Award, the Committee may, in
its sole discretion, determine that any Holder who is on leave of absence for
any reason will be considered to still be in the employ of the Corporation,
provided that rights to that Award during a leave of absence will be limited to
the extent to which those rights were earned or vested when the leave of absence
began.
11.7 Transferability of Awards. In addition to such other terms and
conditions as may be included in a particular Award Agreement, an Award
requiring exercise shall be exercisable during a Holder's lifetime only by that
Holder or by that Holder's guardian or legal representative. An Award requiring
exercise shall not be transferrable other than by will or the laws of descent
and distribution, except as permitted in accordance with Paragraph 3.5.
11.8 Forfeiture and Restrictions on Transfer. Each Award Agreement may
contain or otherwise provide for conditions giving rise to the forfeiture of the
Stock acquired pursuant to an Award or otherwise and may also provide for those
restrictions on the transferability of shares of the Stock acquired pursuant to
an Award or otherwise that the Committee in its sole and absolute discretion may
deem proper or advisable. The conditions giving rise to forfeiture may include,
but need not be limited to, the requirement that the Holder render substantial
services to the Corporation or its Subsidiaries for a specified period of time.
The restrictions on transferability may include, but need not be limited to,
options and rights of first refusal in favor of the Corporation and stockholders
of the Corporation other than the Holder of such shares of Stock who is a party
to the particular Award Agreement or a subsequent holder of the shares of Stock
who is bound by that Award Agreement.
11.9 Delivery of Certificates of Stock. Subject to Paragraph 11.10, the
Corporation shall promptly issue and deliver a certificate representing the
number of shares of Stock as to which (a) an Option has been exercised after the
Corporation receives an Exercise Notice and upon receipt by the Corporation of
the Exercise Price and any tax withholding as may be requested; (b) a Stock
Appreciation Right has been exercised and upon receipt by the Corporation of any
tax withholding as may be requested; (c) restrictions have lapsed with respect
to a Restricted Stock Award and upon receipt by the Corporation of any tax
withholding as may be requested; and (d) performance objectives have been
achieved during a Performance Period relating to a Performance Unit for Stock.
The value of the shares of Stock, cash or notes transferable because of an Award
under the Plan shall not bear any interest owing to the passage of time, except
as may be otherwise provided in an Award Agreement. If a Holder is entitled to
receive certificates representing Stock received for more than one form of Award
under the Plan, separate Stock certificates shall be issued with respect to each
such Award and for Incentive Options and Nonstatutory Stock Options separately.
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11.10 Conditions to Delivery of Stock. Nothing herein or in any Award
granted hereunder or any Award Agreement shall require the Corporation to issue
any shares with respect to any Award if that issuance would, in the opinion of
counsel for the Corporation, constitute a violation of the Securities Act or any
similar or superseding statute or statutes, any other applicable statute or
regulation, or the rules of any applicable securities exchange or securities
association, as then in effect. At the time of any exercise of an Option or
Stock Appreciation Right, or at the time of any grant of a Restricted Stock
Award or Performance Unit, the Corporation may, as a condition precedent to the
exercise of such Option or Stock Appreciation Right or vesting of any Restricted
Stock Award or Performance Unit, require from the Holder of the Award (or in the
event of his death, his legal representatives, heirs, legatees, or distributees)
such written representations, if any, concerning the Holder's intentions with
regard to the retention or disposition of the shares of Stock being acquired
pursuant to the Award and such written covenants and agreements, if any, as to
the manner of disposal of such shares as, in the opinion of counsel to the
Corporation, may be necessary to ensure that any disposition by that Holder (or
in the event of the Holder's death, his legal representatives, heirs, legatees,
or distributees) will not involve a violation of the Securities Act or any
similar or superseding statute or statutes, any other applicable state or
federal statute or regulation, or any rule of any applicable securities exchange
or securities association, as then in effect.
11.11 Certain Directors and Officers. With respect to Holders who are
directors or officers of the Corporation or any Subsidiary and who are subject
to Section 16(b) of the Exchange Act, Awards shall contain such other terms and
conditions as may be required by Rule 16b-3 unless the majority of the Board of
Directors or the Holder has determined not to have the Award comply with Rule
16b-3.
11.12 Securities Act Legend. Certificates for shares of Stock, when
issued, may have the following legend, or statements of other applicable
restrictions endorsed thereon and may not be immediately transferable:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED,
TRANSFERRED, OR OTHERWISE DISPOSED OF UNTIL THE HOLDER HEREOF PROVIDES
EVIDENCE SATISFACTORY TO THE ISSUER (WHICH, IN THE DISCRETION OF THE
ISSUER, MAY INCLUDE AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER) THAT
SUCH OFFER, SALE, PLEDGE, TRANSFER, OR OTHER DISPOSITION WILL NOT VIOLATE
APPLICABLE FEDERAL OR STATE LAWS.
This legend shall not be required for shares of Stock issued pursuant to an
effective registration statement under the Securities Act.
11.13 Legend for Restrictions on Transfer. Each certificate representing
shares issued to a Holder pursuant to an Award granted under the Plan shall, if
such shares are subject to any transfer restriction, including a right of first
refusal, provided for under this Plan or an Award Agreement, bear a legend that
complies with applicable law with respect to the restrictions on transferability
contained in this Paragraph 11.13, such as:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY IMPOSED BY THAT CERTAIN INSTRUMENT ENTITLED
"CONCENTRA MANAGED CARE, INC. 1997 LONG-TERM INCENTIVE PLAN" AS ADOPTED BY
CONCENTRA MANAGED CARE, INC. (THE "CORPORATION") ON , 1997, AND
AN AGREEMENT THEREUNDER BETWEEN THE CORPORATION AND [HOLDER] DATED ,
, AND MAY NOT BE TRANSFERRED, SOLD, OR OTHERWISE DISPOSED OF
EXCEPT AS THEREIN PROVIDED. THE CORPORATION WILL FURNISH A COPY OF SUCH
INSTRUMENT AND AGREEMENT TO THE RECORD HOLDER OF THIS CERTIFICATE WITHOUT
CHARGE ON REQUEST TO THE CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS OR
REGISTERED OFFICE.
11.14 Rights as a Stockholder. A Holder shall have no right as a
stockholder with respect to any shares covered by his Award until a certificate
representing those shares is issued in his name. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash or other property) or
distributions or other rights for which the record date is before the date that
certificate is issued, except as contemplated by Section 10. Nevertheless,
dividends and dividend equivalent rights may be extended to and made part of any
Award denominated in Stock or units of Stock, subject to such terms, conditions,
and restrictions as the Committee may establish. The Committee may also
establish rules and procedures for the crediting of interest on deferred cash
payments and dividend equivalents for deferred payment denominated in Stock or
units of Stock.
11.15 Furnish Information. Each Holder shall furnish to the Corporation
all information requested by the Corporation to enable it to comply with any
reporting or other requirement imposed upon the Corporation by or under any
applicable statute or regulation.
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11.16 Obligation to Exercise. The granting of an Award hereunder shall
impose no obligation upon the Holder to exercise the same or any part thereof.
11.17 Adjustments to Awards. Subject to the general limitations set forth
in Sections 6, 7 and 10, the Committee may make any adjustment in the exercise
price of, the number of shares subject to or the terms of a Nonstatutory Option
or Stock Appreciation Right by canceling an outstanding Nonstatutory Option or
Stock Appreciation Right and regranting a Nonstatutory Option or Stock
Appreciation Right. Such adjustment shall be made by amending, substituting or
regranting an outstanding Nonstatutory Option or Stock Appreciation Right. Such
amendment, substitution or regrant may result in terms and conditions that
differ from the terms and conditions of the original Nonstatutory Option or
Stock Appreciation Right. The Committee may not, however, impair the rights of
any Holder to previously granted Nonstatutory Options or Stock Appreciation
Rights without that Holder's consent. If such action is effected by amendment,
the effective date of such amendment shall be the date of the original grant.
11.18 Remedies. The Corporation shall be entitled to recover from a
Holder reasonable attorneys' fees incurred in connection with the enforcement of
the terms and provisions of the Plan and any Award Agreement whether by an
action to enforce specific performance or for damages for its breach or
otherwise.
11.19 Information Confidential. As partial consideration for the granting
of each Award hereunder, the Holder shall agree with the Corporation that he
will keep confidential all information and knowledge that he has relating to the
manner and amount of his participation in the Plan; provided, however, that such
information may be disclosed as required by law and may be given in confidence
to the Holder's spouse, tax and financial advisors, or to a financial
institution to the extent that such information is necessary to secure a loan.
In the event any breach of this promise comes to the attention of the Committee,
it shall take into consideration that breach in determining whether to recommend
the grant of any future Award to that Holder, as a factor militating against the
advisability of granting any such future Award to that individual.
11.20 Consideration. No Option or Stock Appreciation Right shall be
exercisable, no restriction on any Restricted Stock Award shall lapse, and no
Performance Unit shall be settled in Stock with respect to a Holder unless and
until the Holder shall have paid cash or property to, or performed services for,
the Corporation or any of its Subsidiaries that the Committee believes is equal
to or greater in value than the par value of the Stock subject to such Award.
11.21 Payment of Taxes. The Committee may, in its discretion, require a
Holder to pay to the Corporation (or the Corporation's Subsidiary if the Holder
is an employee of a Subsidiary of the Corporation), at the time of the exercise
of an Award, the amount that the Committee deems necessary to satisfy the
Corporation's or its Subsidiary's current or future obligation to withhold
federal, state or local income or other taxes that the Holder incurs by
exercising an Award. Upon the exercise of an Award requiring tax withholding, a
Holder may (a) direct the Corporation to withhold from the shares of Stock to be
issued to the Holder the number of shares necessary to satisfy the Corporation's
obligation to withhold taxes, that determination to be based on the shares' Fair
Market Value as of the date of exercise; (b) deliver to the Corporation
sufficient shares of Stock (based upon the Fair Market Value at date of
exercise) to satisfy the Corporation's tax withholding obligations, based on the
shares' Fair Market Value as of the date of exercise; or (c) deliver sufficient
cash to the Corporation to satisfy its tax withholding obligations. Holders who
elect to use such a stock withholding feature must make the election at the time
and in the manner that the Committee prescribes. The Committee may, at its sole
option, deny any Holder's request to satisfy withholding obligations through
Stock instead of cash. In the event the Committee subsequently determines that
the aggregate Fair Market Value (as determined above) of any shares of Stock
withheld as payment of any tax withholding obligation is insufficient to
discharge that tax withholding obligation, then the Holder shall pay to the
Corporation, immediately upon the Committee's request, the amount of that
deficiency.
SECTION 12. DURATION AND AMENDMENT OF PLAN
12.1 Duration. No Awards may be granted hereunder after the date that is
ten (10) years from the date the last amendment to this Plan involving an
increase in authorized shares is approved by the stockholders of the
Corporation.
12.2 Amendment. The Board of Directors may, insofar as permitted by law,
with respect to any shares which, at the time, are not subject to Awards,
suspend or discontinue the Plan or revise or amend it in any respect whatsoever,
and may amend any provision of the Plan or any Award Agreement to make the Plan
or the Award Agreement, or both, comply with Section 16(b) of the Exchange Act
and the exemptions therefrom, the Code, the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), the regulations promulgated under the Code or
ERISA, or any other law, rule or regulation that may affect the Plan. The Board
of Directors may also amend, modify, suspend or terminate the Plan for the
purpose of meeting or addressing any changes in other legal requirements
applicable to the Corporation or the Plan or for any other purpose permitted by
law. The Plan may not be
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amended without the consent of the holders of a majority of the shares of Stock
then outstanding to increase materially the aggregate number of shares of Stock
that may be issued under the Plan (except for adjustments pursuant to Section 10
of the Plan).
SECTION 13. GENERAL
13.1 Application of Funds. The proceeds received by the Corporation from
the sale of shares pursuant to Awards shall be used for general corporate
purposes. 13.2 Right of the Corporation and Subsidiaries to Terminate
Employment. Nothing contained in the Plan, or in any Award Agreement, shall
confer upon any Holder the right to continue in the employ of the Corporation or
any Subsidiary, or interfere in any way with the rights of the Corporation or
any Subsidiary to terminate his or her employment at any time.
13.3 No Liability for Good Faith Determinations. Neither the members of
the Board of Directors nor any member of the Committee shall be liable for any
act, omission, or determination taken or made in good faith with respect to the
Plan or any Award granted under it, and members of the Board of Directors and
the Committee shall be entitled to indemnification and reimbursement by the
Corporation in respect of any claim, loss, damage, or expense (including
attorneys' fees, the costs of settling any suit, provided such settlement is
approved by independent legal counsel selected by the Corporation, and amounts
paid in satisfaction of a judgment, except a judgment based on a finding of bad
faith) arising therefrom to the full extent permitted by law and under any
directors and officers liability or similar insurance coverage that may from
time to time be in effect. This right to indemnification shall be in addition
to, and not a limitation on, any other indemnification rights any member of the
Board of Directors or the Committee may have.
13.4 Other Benefits. Participation in the Plan shall not preclude the
Holder from eligibility in any other stock or stock option plan of the
Corporation or any Subsidiary or any old age benefit, insurance, pension, profit
sharing retirement, bonus, or other extra compensation plans that the
Corporation or any Subsidiary has adopted, or may, at any time, adopt for the
benefit of its Employees. Neither the adoption of the Plan by the Board of
Directors nor the submission of the Plan to the stockholders of the Corporation
for approval shall be construed as creating any limitations on the power of the
Board of Directors to adopt such other incentive arrangements as it may deem
desirable, including, without limitation, the granting of stock options and the
awarding of stock and cash otherwise than under the Plan, and such arrangements
may be either generally applicable or applicable only in specific cases.
13.5 Exclusion From Pension and Profit-Sharing Compensation. By
acceptance of an Award (whether in Stock or cash), as applicable, each Holder
shall be deemed to have agreed that the Award is special incentive compensation
that will not be taken into account in any manner as salary, compensation or
bonus in determining the amount of any payment under any pension, retirement or
other employee benefit plan of the Corporation or any Subsidiary. In addition,
each beneficiary of a deceased Holder shall be deemed to have agreed that the
Award will not affect the amount of any life insurance coverage, if any,
provided by the Corporation or a Subsidiary on the life of the Holder that is
payable to the beneficiary under any life insurance plan covering employees of
the Corporation or any Subsidiary.
13.6 Execution of Receipts and Releases. Any payment of cash or any
issuance or transfer of shares of Stock or other property to the Holder, or to
his legal representative, heir, legatee, or distributee, in accordance with the
provisions hereof, shall, to the extent thereof, be in full satisfaction of all
claims of such persons hereunder. The Committee may require any Holder, legal
representative, heir, legatee, or distributee, as a condition precedent to such
payment, to execute a release and receipt therefor in such form as it shall
determine.
13.7 Unfunded Plan. Insofar as it provides for Awards of cash and Stock,
the Plan shall be unfunded. Although bookkeeping accounts may be established
with respect to Holders who are entitled to cash, Stock, other property or
rights thereto under the Plan, any such accounts shall be used merely as a
bookkeeping convenience. The Corporation shall not be required to segregate any
assets that may at any time be represented by cash, Stock, other property or
rights thereto, nor shall the Plan be construed as providing for such
segregation, nor shall the Corporation nor the Board of Directors nor the
Committee be deemed to be a trustee of any cash, Stock, other property or rights
thereto to be granted under the Plan. Any liability of the Corporation to any
Holder with respect to a grant of cash, Stock, other property or rights thereto
under the Plan shall be based solely upon any contractual obligations that may
be created by the Plan and any Award Agreement; no such obligation of the
Corporation shall be deemed to be secured by any pledge or other encumbrance on
any property of the Corporation. Neither the Corporation nor the Board of
Directors nor the Committee shall be required to give any security or bond for
the performance of any obligation that may be created by the Plan.
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13.8 No Guarantee of Interests. The Board of Directors, the Committee and
the Corporation do not guarantee the Stock of the Corporation from loss or
depreciation.
13.9 Payment of Expenses. All expenses incident to the administration,
termination, or protection of the Plan, including, but not limited to, legal and
accounting fees, shall be paid by the Corporation or its Subsidiaries; provided,
however, the Corporation or a Subsidiary may recover any and all damages, fees,
expenses, and costs arising out of any actions taken by the Corporation to
enforce its right to purchase Stock under this Plan.
13.10 Corporation Records. Records of the Corporation or its Subsidiaries
regarding the Holder's period of employment, termination of employment and the
reason therefor, leaves of absence, re-employment, and other matters shall be
conclusive for all purposes hereunder, unless determined by the Committee to be
incorrect.
13.11 Information. The Corporation and its Subsidiaries shall, upon
request or as may be specifically required hereunder, furnish or cause to be
furnished, all of the information or documentation which is necessary or
required by the Committee to perform its duties and functions under the Plan.
13.12 Corporation Action. Any action required of the Corporation shall be
by resolution of its Board of Directors or by a person authorized to act by
resolution of the Board of Directors.
13.13 Severability. If any provision of this Plan is held to be illegal
or invalid for any reason, the illegality or invalidity shall not affect the
remaining provisions hereof, but such provision shall be fully severable and the
Plan shall be construed and enforced as if the illegal or invalid provision had
never been included herein. If any of the terms or provisions of this Plan
conflict with the requirements of Rule 16b-3 (as those terms or provisions are
applied to Eligible Individuals who are subject to Section 16(b) of the Exchange
Act) or Section 422 of the Code (with respect to Incentive Options), then those
conflicting terms or provisions shall be deemed inoperative to the extent they
so conflict with the requirements of Rule 16b-3 or Section 422 of the Code
unless the Committee has determined that the Plan should not comply with such
requirements. With respect to Incentive Options, if this Plan does not contain
any provision required to be included herein under Section 422 of the Code, that
provision shall be deemed to be incorporated herein with the same force and
effect as if that provision had been set out at length herein; provided,
further, that, to the extent any Option that is intended to qualify as an
Incentive Option cannot so qualify, that Option (to that extent) shall be deemed
a Nonstatutory Option for all purposes of the Plan.
13.14 Notices. Whenever any notice is required or permitted hereunder
other than any Exercise Notice or notice to exercise an Stock Appreciation
Right, such notice must be in writing and personally delivered or sent by mail.
Any such notice required or permitted to be delivered hereunder shall be deemed
to be delivered on the date on which it is personally delivered, or, whether
actually received or not, on the third Business Day after it is deposited in the
United States mail, certified or registered, postage prepaid, addressed to the
person who is to receive it at the address which such person has theretofore
specified by written notice delivered in accordance herewith. The Corporation or
a Holder may change, at any time and from time to time, by written notice to the
other, the address which it or he had previously specified for receiving
notices. Until changed in accordance herewith, the Corporation and each Holder
shall specify as its and his address for receiving notices the address set forth
in the Award Agreement pertaining to the shares to which such notice relates.
Any Exercise Notice or notice to exercise and Stock Appreciation Right shall be
valid only when it is in fact received by the Corporation or the Person it
designates in accordance with procedures that the Committee may adopt from time
to time.
13.15 Waiver of Notice. Any person entitled to notice hereunder may waive
such notice.
13.16 Successors. The Plan shall be binding upon the Holder, his legal
representatives, heirs, legatees, and distributees, upon the Corporation, its
successors, and assigns, and upon the Committee, and its successors.
13.17 Headings. The titles and headings of Sections and Paragraphs are
included for convenience of reference only and are not to be considered in
construction of the provisions hereof.
13.18 Governing Law. All questions arising with respect to the provisions
of the Plan shall be determined by application of the laws of the State of
Delaware except to the extent Delaware law is preempted by federal law.
Questions arising with respect to the provisions of an Award Agreement that are
matters of contract law shall be governed by the laws of the state specified in
the Award Agreement, except to the extent Delaware corporate law conflicts with
the contract law of such state, in which event Delaware corporate law shall
govern. The obligation of the Corporation to sell and deliver Stock hereunder is
subject to applicable laws and to the approval of any governmental authority
required in connection with the authorization, issuance, sale, or delivery of
such Stock.
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13.19 Word Usage. Words used in the masculine shall apply to the feminine
where applicable, and wherever the context of this Plan dictates, the plural
shall be read as the singular and the singular as the plural.
IN WITNESS WHEREOF, Concentra Managed Care, Inc., acting by and through its
officer hereunto duly authorized, has executed this Concentra Managed Care, Inc.
1997 Long-Term Incentive Plan this day of , 1997.
CONCENTRA MANAGED CARE, INC.
By:
------------------------------------
Donald J. Larson
President and Chief Executive Officer
ANNEX A TO
CONCENTRA INCENTIVE PLAN
CONCENTRA MANAGED CARE, INC.
INCENTIVE PLAN
AWARD AGREEMENT FOR NON-EMPLOYEE DIRECTORS
To: Date of Grant:
Number of Shares: Exercise Price Per Share:
A. Option. CONCENTRA MANAGED CARE, INC., a Delaware corporation (the
"CORPORATION"), is pleased to grant you a Nonstatutory Option (the "OPTION") to
purchase shares of the Corporation's common stock, par value $.01 per share. The
number of shares subject to this Option and the exercise price per share are
stated above. This Option is granted under Paragraph 5.2 of the Concentra
Managed Care, Inc. 1997 Long-Term Incentive Plan dated , 1997 (the
"PLAN") and is governed by the terms of the Plan. All terms having their initial
letters capitalized have the meanings given them in the Plan unless otherwise
defined in this Agreement or unless the context requires otherwise.
This Option is not binding on the Corporation until you complete your
address for notice in paragraph 7, sign this document, and return it to the
Corporation's Human Resources Department.
1. Vesting and Exercisability. This Option will vest and will be
exercisable at the times and with respect to the number of shares of Stock as
set forth in the Plan.
In accordance with the preceding schedule, the Option may be exercised,
from time to time, in whole or in part.
2. Method of Exercise. The Option shall be exercisable only by written or
recorded electronic notice of exercise delivered to the Corporation's Human
Resources Department or designee, in accordance with instructions generally
applicable to all optionholders, during the term of the Option. The notice must
(a) state the number of shares of Stock with respect to which the Option is
being exercised, (b) be signed or otherwise given by you (or by your legal
representative, legatee, or distributes in the case of your death or by your
guardian or legal representative in case of your disability), (c) be accompanied
by the Exercise Price for all shares of Stock for which the Option is exercised
(unless you have provided for the payment of such Exercise Price pursuant to
Paragraph 6.7 of the Plan (regarding cashless exercises)), and (d) be
accompanied by the amount that the Corporation is required to withhold for
federal income or other tax purposes. The Option shall not be deemed to have
been exercised unless all of these requirements are satisfied.
3. Duration. The Option will terminate on the earliest of (a) 11.59 p.m.,
Boston, Massachusetts, time, on the date ten years from the Date of Grant; (b)
immediately when you cease to be a director of the Corporation, if the Board of
Directors of the
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Corporation demands or requests your resignation from the Board of Directors;
(c) 11:59 p.m. Boston, Massachusetts, time, on the date 90 days after you cease
to be a director of the Corporation for any reason other than the reasons
specified in the preceding clause (b) or the following clause (d); or (d) 11:59
p.m., Boston, Massachusetts, time, on the date one year after you cease to be a
director because of your death or Disability. In this Option, "Disability" means
a physical or mental impairment of sufficient severity such that, in the opinion
of a physician selected by the Corporation (which may be your physician or any
other physician), you are unable to continue to serve as a director of the
Corporation and that in fact results in the cessation of your service.
4. Transferability. This Option is not transferable other than by will or
the laws of descent and distribution.
5. Rights as a Stockholder. You will have no right as a stockholder with
respect to any shares subject to this Option until a certificate representing
those shares is issued in your name. No adjustment will be made for dividends
(ordinary or extraordinary, whether in cash or other property) or distributions
or other rights for which the record date is before the date that certificate is
issued, except as contemplated by the Plan.
B. Restricted Stock Award. The Corporation hereby grants to you an
aggregate of shares of Common Stock, par value $.01 per share,
of the Corporation (the "Restricted Shares") pursuant to Section 5 of the Plan.
This award is subject to your acceptance of and agreement to all of the terms,
conditions and restrictions described in the Plan that are applicable to Awards
under Section 5 and to your acceptance of and agreement to the further terms,
conditions and restrictions described in this Award Agreement (the "Agreement").
To the extent that any provision of this Agreement conflicts with the expressly
applicable terms of the Plan, it is hereby acknowledged and agreed that those
terms of the Plan shall control and, if necessary, the applicable provisions of
this Agreement shall be hereby deemed amended so as to carry out the purpose and
intent of the Plan. Terms that have their initial letters capitalized but that
are not otherwise defined in this Agreement shall have the meanings given them
in the Plan in effect as of the date of this Agreement.
1. Escrow of Restricted Shares. The Corporation shall issue in your name
a certificate or certificates for the Restricted Shares and retain that
certificate or those certificates during the restriction period. You shall
execute stock powers in blank for those certificates and deliver those stock
powers to the Corporation. You hereby agree that the Corporation shall hold the
Restricted Shares and the related stock powers pursuant to the terms of this
Agreement until such time as the Restricted Shares are either delivered to you
or canceled pursuant to Section 4 of this Agreement.
2. Ownership of Restricted Shares. You are entitled to all the rights of
absolute ownership of the Restricted Shares, including the right to vote those
shares and to receive dividends thereon if, as, and when declared by the Board
of Directors of the Corporation, subject, however, to the terms, conditions and
restrictions described in the Plan and in this Agreement.
3. Restrictions. Until the restrictions set forth in this Section 3 shall
lapse pursuant to Section 4, the Restricted Shares that are still subject to
such restrictions:
(a) shall not be sold, assigned, transferred, pledged, hypothecated or
otherwise disposed of, and
(b) shall be returned to the Corporation, and all of your rights to
those Restricted Shares shall terminate without any payment of
consideration by the Corporation, if your continuous service as a director
of the Corporation shall terminate for any reason, except as provided in
Section 4(a) or (b). If your interest in any Restricted Shares shall
terminate pursuant to this Section 3(b), those Restricted Shares shall be
cancelled; provided, however, that the portion, if any, of any and all of
the Restricted Shares held by you for which restrictions have lapsed as of
the date of the termination shall survive the termination.
4. Lapse of Restrictions. Except as set forth in the following paragraphs
of this Section 4, the restrictions set forth in Section 3 shall lapse in
accordance with the terms of the Plan. The Date of Grant of this Restricted
Stock Award is the date first set forth above.
(a) Any provision of Section 3 to the contrary notwithstanding, if,
having been in the continuous service as a director of the Corporation
since the Date of Grant of this Restricted Stock Award, you shall while in
that status die or terminate that status by reason of Disability (hereafter
defined), then the restrictions set forth in Section 3 shall lapse on the
date of that event.
(b) As used in this Section 4, Disability means a physical or mental
impairment of sufficient severity such that, in the opinion of a physician
selected by the Corporation (which may be your physician or any other
physician), you are unable to continue to serve as a director of the
Corporation and that in fact results in the cessation of your service.
24
<PAGE>
5. Agreement Respecting Taxes. You agree that:
(a) You will pay to the Corporation, or make arrangements satisfactory
to the Corporation regarding payment of any federal, state or local taxes
of any kind required by law to be withheld by the Corporation with respect
to the Restricted Shares; provided, however, that you shall not be entitled
or permitted to satisfy this obligation by the Corporation's withholding of
Stock that is subject to this Agreement or by your transfer of other shares
of Stock to the Corporation; and
(b) the Corporation shall, to the extent permitted by law, have the
right to deduct from any payments of any kind otherwise due to you,
including, but not limited to, those to be made pursuant to Section 7
hereof, any federal, state or local taxes of any kind required by law to be
withheld with respect to those Restricted Shares.
6. Adjustment of Shares. The number of shares of Restricted Stock subject
to this Agreement shall be adjusted as provided in Paragraph 10.1 of the Plan.
7. Agreement Respecting Securities Act of 1933. You hereby represent and
agree that you will not sell Restricted Shares except pursuant to an effective
registration statement under the Securities Act of 1933, as amended, or pursuant
to an exemption from registration under the Securities Act.
8. Restrictive Legend. You hereby acknowledge that the certificate or
certificates for the Restricted Shares bear a legend noted conspicuously thereon
referring to the terms, conditions and restrictions described in the Plan and in
this Agreement. Any attempt to dispose of any Restricted Shares in contravention
of the terms, conditions and restrictions described in the Plan or in this
Agreement shall be ineffective.
C. Incorporation of Plan. The terms and provisions of the Plan are hereby
expressly incorporated herein and made a part of this Agreement and shall be
applicable for all purposes under this Agreement with any necessary changes in
points of detail.
D. Notice. For purposes of notice hereunder, which shall be given in
accordance with Paragraph 13.14 of the Plan, the Corporation, the Committee, and
you agree that any notices shall be given to the Corporation or you at the
following addresses:
Corporation or Concentra Managed Care, Inc.
Committee: 3010 LBJ Freeway, Suite 400
Dallas, Texas 75234
Attn: Legal Department
You:
25
<PAGE>
The Corporation or you may change the address previously specified for
receiving notices at any time and from time to time by written notice to the
other in accordance with Paragraph 13.14 of the Plan.
CONCENTRA MANAGED CARE, INC.
By:
------------------------
Name:
----------------------
Title:
---------------------
DIRECTOR
------------------------
Name:
----------------------
26
<PAGE>
EXHIBIT 5.1
[Concentra Managed Care, Inc. Letterhead]
September 23, 1997
Concentra Managed Care, Inc.
312 Union Wharf
Boston, Massachusetts 02109
Ladies and Gentlemen:
I have acted as counsel for Concentra Managed Care, Inc., a Delaware
corporation (the "Company"), in connection with the Company's registration under
the Securities Act of 1933, as amended (the "ACT"), of 4,300,000 shares of
common stock, par value $.01 per share (the "SHARES"), of the Company pursuant
to the Company's Registration Statement on Form S-8 (the "REGISTRATION
STATEMENT") filed with the Securities and Exchange Commission (the "COMMISSION")
on September 23, 1997.
In reaching the opinions set forth herein, I have examined and am familiar
with the originals or copies, certified or otherwise, of such documents and
records of the Company and OccuSystems, and such statutes, regulations, and
other instructions as I have deemed necessary or advisable for purposes of this
opinion, including (i) the Registration Statement, (ii) the Amended and Restated
Certificate of Incorporation of the Company, (iii) the By-Laws of the Company
and (iv) certain minutes of meetings of, and resolutions adopted by, the Board
of Directors of the Company.
I have assumed that (i) all information contained in all documents reviewed
by me is true, correct, and complete, (ii) all signatures on all documents
reviewed by me are genuine, (iii) all documents submitted to me as originals are
true and complete, (iv) all documents submitted to me as copies are true and
complete copies of the originals thereof, and (v) all persons executing and
delivering originals or copies of documents examined by me were competent to
execute and deliver such documents. In addition, I have assumed that (i) the
Shares will be issued in accordance with the Company's 1997 Employee Stock
Purchase Plan or, upon exercise of the options (the "OPTIONS") granted pursuant
to the Company's 1997 Long-Term Incentive Plan (the "LONG-TERM INCENTIVE PLAN"),
in accordance with the Long-Term Incentive Plan, (ii) the full consideration for
each Share shall be paid to the Company and in no event will such consideration
be less than the par value for each Share, and (iii) certificates evidencing the
Shares will be properly executed and delivered by the Company in accordance with
the Delaware General Corporation Law (the "DGCL").
Based on the foregoing and having due regard for the legal considerations I
deem relevant, I am of the opinion that the Shares will be validly issued, fully
paid and non-assessable.
<PAGE>
This opinion is limited in all respects to the laws of the State of Texas,
the DGCL, and the federal laws of the United States of America. You should be
aware that I am not admitted to the practice of law in the State of Delaware,
and the opinion herein as to the DGCL is based upon the latest unofficial
compilation thereof available to me.
This opinion letter may be filed as an exhibit to the Registration
Statement. In giving this consent, I do not thereby admit that I come within
the category of persons whose consent is required under Section 7 of the Act or
the rules and regulations of the Commission promulgated thereunder.
Very truly yours,
/s/ RICHARD A. PARR II
Richard A. Parr II
General Counsel
<PAGE>
EXHIBIT 23.1
[ARTHUR ANDERSEN LLP LETTERHEAD APPEARS HERE]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-8 of our reports dated
January 27, 1997 included (or incorporated by reference) in CRA Managed Care,
Inc.'s Form 10-K for the year ended December 31, 1996.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts
September 19, 1997
<PAGE>
EXHIBIT 23.2
[ARTHUR ANDERSEN LLP LETTERHEAD APPEARS HERE]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-8 of our reports dated
February 17, 1997 included (or incorporated by reference) in OccuSystems, Inc.'s
Form 10-K for the year ended December 31, 1996.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Dallas, Texas
September 19, 1997
