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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________________________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
________________________________________________________
BEVERLY ENTERPRISES, INC.
(FORMERLY NEW BEVERLY HOLDINGS, INC.)
(Exact Name of Registrant as Specified in Its CHARTER)
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<S> <C> <C>
DELAWARE 5111 ROGERS AVENUE, SUITE 40-A 62-1691861
(State or Other Jurisdiction of FORT SMITH, ARKANSAS 72919 (I.R.S. Employer
Incorporation or Organization) Identification No.)
</TABLE>
(Address of Principal Executive Offices Including Zip Code)
________________________________________________________
NEW BEVERLY HOLDINGS, INC.
1997 LONG-TERM INCENTIVE PLAN
(Full Title of the Plan)
________________________________________________________
ROBERT W. POMMERVILLE
EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL & SECRETARY
BEVERLY ENTERPRISES, INC.
5111 ROGERS AVENUE, SUITE 40-A
FORT SMITH, ARKANSAS 72919
(Name and Address of Agent For Service)
________________________________________________________
(501) 452-6712
(Telephone Number, Including Area Code, of Agent For Service)
________________________________________________________
CALCULATION OF REGISTRATION FEE
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<CAPTION>
TITLE OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED REGISTERED OFFERING PRICE AGGREGATE REGISTRATION FEE
PER SHARE OFFERING PRICE
<S> <C> <C> <C> <C>
COMMON STOCK, PAR 10,000,000(1) $12.44(2) $124,400,000 $36,698
VALUE $.10 PER SHARE
</TABLE>
In addition, pursuant to Rule 416(c) under the Securities Act of 1933, as
amended (the "Securities Act") this Registration Statement on Form S-8 (this
"Registration Statement") also covers an indeterminate amount of interests to
be offered or sold pursuant to the employee benefit plan described in this
Registration Statement. (3)
(1) This Registration Statement registers the issuance or transfer of: (i)
10,000,000 shares of common stock, par value $.10 per share (the
"Shares"), of Beverly Enterprises, Inc., a Delaware corporation (the
"Company"), presently reserved for issuance under the New Beverly
Holdings, Inc. 1997 Long-Term Incentive Plan (the "Plan"), (ii) additional
Shares that become available under the Plan in connection with certain
changes in the number of outstanding Shares because of events such as
recapitalizations, stock dividends, and stock splits, and (iii) any other
securities with respect to which the outstanding Shares are converted or
exchanged.
(2) Pursuant to Paragraphs (c) and (h) of Rule 457 under the Securities Act,
the Company has determined the proposed maximum offering price per Share
to be $12.44. This price is the average of the high and low prices for a
Share on December 4, 1992, a date within five business days before the
filing of this Registration Statement. Pursuant to Paragraph (h) of Rule
457, the Company does not owe a separate registration fee with respect to
the Plan interests.
(3) These Plan interests may include awards of restricted stock, incentive
stock options, non-qualified stock options, performance shares,
performance units, or other stock unit awards.
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PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The information requested in Part I of this Registration
Statement is included in the prospectus for the Plan, which the Company has
excluded from this Registration Statement in accordance with the instructions
to Form S- 8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents previously filed with the Commission
are hereby incorporated by reference into this Registration Statement:
1. The Company's Registration Statement on Form S-1, filed with
the Commission on June 4, 1997, as amended, under which the
Company registered Common Stock under the Securities Act of
1933, as amended.
2. The description of the Shares set forth in the Company's
Registration Statement on Form 8-A, filed with the Commission
on October 15, 1997, under which the Company registered the
Shares under Section 12(g) of the Securities and Exchange Act
of 1934, as amended (the "Exchange Act").
3. The Company's report on Form 10-Q for the quarter ended
September 30, 1997.
4. The Annual Report on Form 10-K for the year ended December 31,
1996, the report on Form 10-Q for the quarter ended March 31,
1997, the report on Form 10-Q for the quarter ended June 30,
1997, the report on Form 10-Q for the quarter ended September
30, 1997 and the current report on Form 8-K dated April 15,
1997, each filed by Beverly Enterprises, Inc., a Delaware
corporation and predecessor of the Company ("Old Beverly").
The Company is incorporating by reference the documents listed
in this Item 4 because the Company succeeded to all of the
business of Old Beverly, other than its institutional and mail
service pharmacy business.
All reports and other documents that the Company subsequently
files with the Securities and Exchange Commission (the "Commission") pursuant
to Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act, prior to the filing
of a post-effective amendment indicating that the Company has sold all of the
securities offered under this Registration Statement or that deregisters the
distribution of all such securities then remaining unsold, shall be deemed to
be incorporated by reference into this Registration Statement from the date
that the Company files such report or document. Any statement contained in
this Registration Statement or any report or document incorporated into this
Registration Statement by reference, however, shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained in a subsequently dated report or document that is also
considered part of this Registration Statement, or in any amendment to this
Registration Statement, is inconsistent with such prior statement. The
Company's file number with the Commission is 1-9550.
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ITEM 4. DESCRIPTION OF SECURITIES.
Inapplicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The validity of the Common Stock has been passed upon for the
Registrant by John W. MacKenzie, its Deputy General Counsel and Assistant
Secretary. Mr. MacKenzie owns approximately 29,758 shares of Common Stock and
options to purchase a number of shares of Common Stock equivalent to those
Options previously held by Mr. MacKenzie to purchase 23,000 shares of the
former Beverly Enterprises, Inc. Common Stock, as adjusted pursuant to the
terms of the Employee Benefit Matters Agreement relating to the Distribution
and Merger, as defined and as described in the Proxy Statement issued by the
former Beverly Enterprises, Inc. dated October 20, 1997. It is currently
anticipated that Mr. MacKenzie will be eligible to participate in the Plan.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Delaware General Corporation Law, the Company's
certificate of incorporation and bylaws, and the Company's indemnification
agreements between the Company and its officers and directors provide that the
Company will indemnify them to the full extent permitted by the Delaware
General Corporation Law for liabilities and expenses that they may incur in
their capacities as directors and officers of the Company. Generally, the
Company will indemnify its directors and officers with respect to actions taken
in good faith in a manner reasonably believed to be in, or not opposed to, the
best interests of the Company. With respect to any criminal action or
proceeding, the director or officer must also not have had any reasonable cause
to believe that his or her actions were UNLAWFUL.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Inapplicable.
ITEM 8. EXHIBITS.
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EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
4.1 Beverly Enterprises, Inc. 1997 Long-Term Incentive Plan
5.1 Opinion of John W. MacKenzie, Esq.
23.1 Consent of John W. MacKenzie, Esq. (contained in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP
</TABLE>
ITEM 9. UNDERTAKINGS.
A. RULE 415 OFFERING. The undersigned Registrant hereby
undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement: (i) to include any prospectus required
by Section 10(a)(3) of the Securities Act, (ii) to reflect in
the prospectus any facts or events arising after the effective
date of the
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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 clauses (i) and (ii) do not
apply if the information required to be included in a
post-effective amendment by those clauses is contained in
periodic reports filed with or furnished to the Commission by
the Registrant pursuant to Section 13 or 15(d) of the Exchange
Act that are incorporated by reference in the Registration
Statement;
(2) That, for the purpose of determining any
liability under the Securities Act, each such post-effective
amendment shall be deemed to be a new 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; and
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
B. FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT
DOCUMENTS BY REFERENCE. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act 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.
C. REQUEST FOR ACCELERATION OF EFFECTIVE DATE OR FILING
OF REGISTRATION STATEMENT ON FORM S-8. 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 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 Act and
will be governed by the final adjudication of such issue.
[SIGNATURES ON THE NEXT PAGE]
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SIGNATURES
Pursuant to the requirements of the Securities Act, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Fort Smith, State of Arkansas, on this 5th day
of December, 1997.
BEVERLY ENTERPRISES, INC.
By: /s/ David R. Banks
------------------------------------
Name: David R. Banks
Title: Chairman of the Board,
Chief Executive Officer and
Director
POWER OF ATTORNEY
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 date indicated. Each of the directors and/or officers of
the Registrant whose signature appears below hereby appoints Robert W.
Pommerville and John W. MacKenzie, and each of them severally as his or her
attorney-in-fact to sign his or her name and on his or her behalf, in any and
all capacities stated below, and to file with the Securities and Exchange
Commission any and all amendments, including post-effective amendments to this
Registration Statement as appropriate, and generally to do all such things in
their behalf in their capacities as officers and directors to enable Registrant
to comply with the provisions of the Securities Act of 1933, and all
requirements of the Securities and Exchange Commission.
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<CAPTION>
NAME AND SIGNATURE TITLE DATE
- ------------------------------------------- --------------------------------- -------------------
<S> <C> <C>
/s/ David R. Banks Chairman of the Board, Chief December 5, 1997
- ------------------------------------------- Executive Officer and Director
David R. Banks
/s/ Boyd W. Hendrickson President, Chief Operating Officer December 5, 1997
- ------------------------------------------- and Director
Boyd W. Hendrickson
/s/ Scott M. Tabakin Executive Vice President and Chief December 5, 1997
- ------------------------------------------- Financial Officer
Scott M. Tabakin
/s/ Pamela H. Daniels Vice President, Controller, and December 5, 1997
- ------------------------------------------- Chief Accounting Officer
Pamela H. Daniels
</TABLE>
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<TABLE>
<S> <C> <C>
/s/ Beryl F. Anthony, Jr. Director December 5, 1997
- -------------------------------------------
Beryl F. Anthony, Jr.
/s/ James R. Greene Director December 5, 1997
- -------------------------------------------
James R. Greene
/s/ Edith E. Holiday Director December 5, 1997
- -------------------------------------------
Edith E. Holiday
/s/ Jon E. M. Jacoby Director December 5, 1997
- -------------------------------------------
Jon E. M. Jacoby
/s/ Risa J. Lavizzo-Mourey, M.D. Director December 5, 1997
- -------------------------------------------
Risa J. Lavizzo-Mourey, M.D.
/s/ Louis W. Menk Director December 5, 1997
- -------------------------------------------
Louis W. Menk
/s/ Marilyn R. Seymann Director December 5, 1997
- -------------------------------------------
Marilyn R. Seymann
</TABLE>
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EXHIBIT INDEX
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<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
<S> <C>
4.1 Beverly Enterprises, Inc. 1997 Long-Term Incentive Plan
5.1 Opinion of John W. MacKenzie, Esq.
23.1 Consent of John W. MacKenzie, Esq. (included in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP
</TABLE>
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EXHIBIT 4.1
NEW BEVERLY HOLDINGS, INC.
1997 LONG-TERM INCENTIVE PLAN
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NEW BEVERLY HOLDINGS, INC.
1997 LONG-TERM INCENTIVE PLAN
SECTION 1. PURPOSE
New Beverly Holdings, Inc. (hereinafter referred to as the "Company"),
a Delaware corporation, hereby establishes the 1997 Long-Term Incentive Plan
(the "Plan") to promote the interests of the Company and its stockholders
through the (i) attraction and retention of executive officers and other key
employees essential to the success of the Company; (ii) motivation of executive
officers and other key employees using performance-related incentives linked to
longer-range performance goals and the interests of Company stockholders; and
(iii) enabling of such employees to share in the long-term growth and success
of the Company. The Plan permits the grant of Nonqualified Stock Options,
Incentive Stock Options (intended to qualify under Section 422 of the Internal
Revenue Code of 1986, as amended), Stock Appreciation Rights, Restricted Stock,
Restricted Stock Units, Performance Shares, Performance Units, Bonus Stock, and
any other Stock Unit Awards or stock-based forms of awards as the Committee may
determine in its sole and complete discretion at the time of grant.
SECTION 2. DEFINITIONS
Except as otherwise defined in the Plan, the following terms shall
have the meanings set forth below:
2.1 "Affiliate" shall have the meaning ascribed to such
term in Rule 12b-2 under the Exchange Act.
2.2 "Agreement" means a written agreement implementing
the grant of each Award signed by an authorized officer of the Company
and by the Participant.
2.3 "Award" means, individually or collectively, a grant
under this Plan of any one of Nonqualified Stock Options, Incentive
Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted
Stock Units, Performance Shares, Performance Units, Bonus Stock or
Other Stock Unit Awards.
2.4 "Award Date" or "Grant Date" means the date on which
an Award is made by the Committee under this Plan.
2.5 "Beneficial Owner" shall have the meaning ascribed to
such term in Rule 13d-3 under the Exchange Act.
2.6 "Board" or "Board of Directors" means the Board of
Directors of the Company.
2.7 "Bonus Stock" means an Award granted pursuant to
Section 10 of the Plan expressed as a Share which may or may not be
subject to restrictions.
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2.8 "Cashless Exercise" means the exercise of an Option
by the Participant through the use of a brokerage firm to make payment
to the Company of the Exercise Price, either from the proceeds of a
loan to the Participant from the brokerage firm or from the proceeds
of the sale of Stock issued pursuant to the exercise of the Option,
following which, upon receipt of such payment, the Company delivers
the exercised Shares to the brokerage firm.
2.9 "Change in Control" shall be deemed to have occurred
if the conditions set forth in any one of the following paragraphs
shall have been satisfied:
(a) Any person, corporation or other entity or
group, including any "group" as defined in Section 13(d) (3)
of the Exchange Act, becomes the beneficial owner of Shares
having 30% or more of the total number of votes that may be
cast for the election of directors of the Company; or
(b) As the result of', or in connection with, any
tender or exchange offer, merger or other business
combination, sale of assets or contested election, or any
combination of the foregoing (a "Transaction"), the persons
who were directors of the Company before the Transaction shall
cease to constitute a majority of the Board of Directors of
the Company or any successor to the Company or its assets; or
(c) If at any time (i) the Company shall
consolidate with, or merge with, any other Person and the
Company shall not be the continuing or surviving corporation,
(ii) any Person shall consolidate with, or merge with, the
Company, and the Company shall be the continuing or surviving
corporation and in connection therewith, all or part of the
outstanding stock shall be changed into or exchanged for stock
or other securities of any other Person or cash or any other
property, (iii) the Company shall be a party to a statutory
share exchange with any other Person after which the Company
is a Subsidiary of any other Person, or (iv) the Company shall
sell or otherwise transfer 50% or more of the assets or
earnings power of the Company and its Subsidiaries (taken as a
whole) to any Person or Persons; provided, however, that
notwithstanding anything to the contrary set forth in such
plan, a Change in Control shall not include either (a) the
Distribution or Merger, or (b) any transfer to a consolidated
subsidiary, reorganization, spin-off, split-up, distribution,
or other similar or related transaction(s) or any combination
of the foregoing in which the core business and assets of the
Company and its subsidiaries (taken as a whole) are
transferred to another entity ("Controlled") with respect to
which (1) the majority of the Board of Directors of the
Company (as constituted immediately prior to such
transaction(s)) also serve as directors of Controlled and
immediately after such transaction(s) constitute a majority of
Controlled's board of directors, and (2) more than 70% of the
shareholders of the Company (immediately prior to such
transaction(s)) become shareholders or other owners of
Controlled and immediately after the transaction(s) control
more than 70% of the ownership and voting rights of
Controlled.
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2.10 "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
2.11 "Committee" means the Compensation Committee of the
Board which will administer the Plan pursuant to Section 3 herein,
provided however, any member who is not both a "Non-Employee director"
within the meaning of Rule 16b-3 and an "outside director" within the
meaning of Section 162(m) shall not serve as a Committee member for
the purpose of this Plan unless there would otherwise be less than two
members of the Committee.
2.12 "Common Stock" or "Stock" means the Common Stock of
the Company, with a par value of $.10 per share, or such other
security or right or instrument into which such Common Stock may be
changed or converted in the future.
2.13 "Company" means New Beverly Holdings, Inc., including
all Affiliates and wholly owned Subsidiaries, or any successor
thereto.
2.14 "Covered Participant" means a Participant who is a
"covered employee" as identified in Section 162(m) (3) of the Code,
and the regulations promulgated thereunder, or who the Committee
believes will be such a covered employee for a Performance Period.
2.15 "Department" means the Compensation and Benefits
Department of the Company.
2.16 "Designated Beneficiary" means the beneficiary
designated by the Participant, pursuant to procedures established by
the Department, to receive amounts due to the Participant in the event
of the Participant's death. If the Participant does not make an
effective designation, then the Designated Beneficiary will be deemed
to be the Participant's estate.
2.17 "Disability" means (i) the mental or physical
disability, either occupational or non- occupational in origin, of the
Participant defined as "Total Disability" in the Disability Plan of
the Company currently in effect and as amended from time to time; or
(ii) a determination by the Committee of "Total Disability" based on
medical evidence that precludes the Participant from engaging in any
occupation or employment for wage or profit for at least twelve months
and appears to be permanent.
2.18 "Divestiture" means the sale of, outsourcing of', or
closing by, the Company of the business operations in which the
Participant is employed, or the elimination of the Participant's
position at the Company's discretion.
2.19 "Early Retirement" means retirement of a Participant
from employment with the Company after age 55, but prior to age 65, as
approved by the Committee.
2.20 "Exchange Act" means the Securities Exchange Act of
1934, as in effect and amended from time to time, or any successor
statute thereto, together with any rules, regulations, and
interpretations promulgated thereunder or with respect thereto.
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2.21 "Executive Officer" means any employee designated by
the Company as an officer or any employee covered by Rule 16b-3 of the
Exchange Act.
2.22 "Exercise Price" means the price per share determined
on the Grant Date by the Committee, provided that the Exercise Price
shall not be less than 100% of Fair Market Value on the Grant Date;
except that the Committee in its sole discretion may waive the
preceding limitation with respect to Awards granted upon the
assumption of', or in substitution for, similar awards of another
company with which the Company participates in an acquisition,
separation or similar corporate transaction.
2.23 "Fair Market Value" means, on a given date, the
closing price of Stock as reported on the New York Stock Exchange
composite tape on such day or, if no Shares were traded on the New
York Stock Exchange on such day, then on the next preceding day that
Stock was traded on such exchange, all as reported by such source as
the Committee may select. As to the Awards granted to Participants in
connection with the assumption of awards previously granted by Beverly
Enterprises, Inc. (BEI) pursuant to the Employee Benefits Matters
Agreement dated April 15, 1997 among BEI, the Company and Capstone
Pharmacy Services, Inc., (the "Employee Benefits Agreement"), Fair
Market Value shall have the definition contained therein.
2.24 "Full-time Employee" means an employee designated by
the Company's Department as being a "permanent, full-time employee"
who is eligible for all plans and programs of the Company provided for
such employees. This designation excludes all part-time, temporary, or
contract employees or consultants to the Company.
2.25 "Incentive Stock Option" or "ISO" means an option to
purchase Stock, granted under Section 6 herein, which is designated as
an incentive stock option and is intended to meet the requirements of
Section 422 of the Code.
2.26 "Key Employee" means an officer or other key employee
of the Company or its Subsidiaries, who, in the opinion of the
Committee, can contribute significantly to the growth and
profitability of, or perform services of major importance to, the
Company and its Subsidiaries.
2.27 "Nonqualified Stock Option" or "NQSO" means an option
to purchase Stock, granted under Article 6 herein, which is not
intended to be an Incentive Stock Option.
2.28 "Normal Retirement" means the retirement of any
Participant at age 65 or at some earlier date if approved by the
Committee.
2.29 "Option" means an Incentive Stock Option or a
Nonqualified Stock Option.
2.30 "Other Stock Unit Award" means awards, granted
pursuant to Section 11, of Stock or other securities that are valued
in whole or in part by reference to, or are otherwise based on, Shares
or other securities of the Company.
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2.31 "Participant" means a Key Employee or consultant, or
service provider to the Company who has been granted an Award under
the Plan, or as the context requires, a Permitted Transferee.
2.32 "Performance Award" means a performance-based Award,
which may be in the form of either Performance Shares or Performance
Units.
2.33 "Performance Criteria" or "Performance Goals" or
"Performance Measures" means the objectives established by the
Committee for a Performance Period, for the purpose of determining
when an Award subject to such objectives is earned, which shall
consist of any one or more of the following business or financial
goals of the Company: absolute or relative increases in total
stockholder return, economic value added, return on capital employed,
revenues, sales, net income, earnings per share, return on equity,
cash flow, operating margin, or net worth of the Company, any of its
Subsidiaries, divisions or other areas of the Company.
2.34 "Performance Period" means the time period designated
by the Committee during which performance goals must be met.
2.35 "Performance Share" means an Award, designated as a
Performance Share, granted to a Participant pursuant to Section 9
herein, the value of which is determined, in whole or in part, by the
value of Company Stock in a manner deemed appropriate by the Committee
and described in the Agreement.
2.36 "Performance Unit" means an Award, designated as
Performance Unit, granted to a Participant pursuant to Section 9
herein, the value of which is determined, in whole or in part, by the
attainment of pre- established goals relating to the Company's
financial or operating performance as deemed appropriate by the
Committee and described in the Agreement.
2.37 "Permitted Transferee" means any transferee of a
Nonqualified Stock Option pursuant to a transfer that is approved by
the Committee in accordance with Section 14.4 and the Plan.
2.38 "Period of Restriction" means the period during which
the transfer of Shares of Restricted Stock is restricted, pursuant to
Section 8 herein.
2.39 "Person" shall have the meaning ascribed to such term
in Section 3(a) (9) of the Exchange Act and used in Sections 13(d) and
14(d) thereof', including a "group" as defined in Section 13(d).
2.40 "Plan" means the New Beverly Holdings, Inc. 1997
Long-Term Incentive Plan as herein described and as hereafter from
time to time amended.
2.41 "Restricted Stock" means an Award of Stock granted to
a Participant pursuant to Section 8 herein.
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2.42 "Restricted Stock Unit" means a fixed or variable
right to acquire Stock, which may or may not be subject to
restrictions, contingently awarded under Section 8 of the Plan.
2.43 "Rule 16b-3 " means Rule 16b-3 of the General Rules
and Regulations under the Exchange Act, as amended from time to time,
or any successor thereto.
2.44 "Section 16" means Section 16 of the Exchange Act, or
any successor section under the Exchange Act, as amended from time to
time and as interpreted by regulations and rules promulgated
thereunder from time to time.
2.45 "Section 162(m)" means Section 162(m) of the Code, or
any successor section under the Code, as amended from time to time and
as interpreted by final or proposed regulations promulgated thereunder
from time to time.
2.46 "Securities Act" means the Securities Act of 1933 and
the rules and regulations promulgated thereunder, or any successor
law, as amended from time to time.
2.47 "Shares" means shares of the Common Stock of the
Company.
2.48 "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 the Exercise Price
of a related Option or the Fair Market Value of the Stock on the Date
of Grant of the Stock Appreciation Right.
2.49 "Subsidiary" means a corporation in which the Company
owns, either directly or through one or more of its Subsidiaries, at
least 50% of the total combined voting power of all classes of stock.
SECTION 3. ADMINISTRATION
3.1 The Committee. The Plan shall be administered and
interpreted by the Committee which shall have full authority and all
powers necessary or desirable for such administration. The express
grant in this Plan of any specific power to the Committee shall not be
construed as limiting any power or authority of the Committee. In its
sole and complete discretion the Committee may adopt, alter, suspend
and repeal such administrative rules, regulations, guidelines, and
practices governing the operation of the Plan as it shall from time to
time deem advisable. In addition to any other powers and subject to
the provisions of the Plan, the Committee shall have the following
specific powers: (i) to determine the terms and conditions upon which
the Awards may be made and exercised; (ii) to determine all terms and
provisions of each Agreement, which need not be identical for all
types of Awards nor for the same type of Award to different
participants; (iii) to construe and interpret the Agreements and the
Plan; (iv) to establish, amend, or waive rules or regulations for the
Plan's administration; (v) to accelerate the exercisability of any
Award, the length of a Performance Period or the termination of any
Period of Restriction; (vi) to provide for the grant of Awards upon
the assumption of, or in substitution for, similar awards granted by
an acquired or other company with which the
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Company participates in an acquisition, separation, or similar
corporate transaction; and (vii) to make all other determinations and
take all other actions necessary or advisable for the administration
of the Plan. The Committee may take action by a meeting in person, by
unanimous written consent, or by meeting with the assistance of
communications equipment which allows all Committee members
participating in the meeting to communicate in either oral or written
form. The Committee may seek the assistance or advice of any persons
it deems necessary to the proper administration of the Plan.
3.2 Selection of Participants. The Committee shall have
sole and complete discretion in determining those Key Employees or
other persons who shall participate in the Plan. The Committee may
request recommendations for individual Awards from the Chief Executive
Officer of the Company and may delegate to the Chief Executive Officer
of the Company the authority to make Awards to Participants who are
not Executive Officers of the Company or Covered Participants, subject
to a fixed maximum Award amount for such a group and a maximum Award
amount for any one Participant, as determined by the Committee. Awards
made to the Executive Officers or Covered Participants shall be
determined by the Committee.
3.3 Committee Decisions. All determinations and
decisions made by the Committee pursuant to the provisions of the Plan
shall be final, conclusive, and binding upon all persons, including
the Company, its stockholders, employees, Participants, and Designated
Beneficiaries, except when the terms of any sale or award of shares of
Stock or any grant of rights or Options under the Plan are required by
law or by the Articles of Incorporation or Bylaws of the Company to be
approved by the Company's Board of Directors or stockholders prior to
any such sale, award or grant.
3.4 Rule 16b-3 Requirements. Notwithstanding any other
provision of the Plan, the Committee may impose such conditions on any
Award, and the Board may amend the Plan in any such respects, as may
be required to satisfy the requirements of Rule 16b-3 or Section
162(m).
3.5 Indemnification of Committee. In addition to such
other rights of indemnification as they may have as directors or as
members of the Committee, the members of the Committee shall be
indemnified by the Company against reasonable expenses incurred from
their administration of the Plan. Such reasonable expenses include,
but are not limited to, attorneys' fees actually and reasonably
incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or
any of them may be a party by reason of any action taken or failure to
act under or in connection with the Plan or any Award granted or made
hereunder, and against all reasonable amounts paid by them in
settlement thereof or paid by them in satisfaction of a judgment in
any such action, suit or proceeding, if such members acted in good
faith and in a manner which they believed to be in, and not opposed
to, the best interests of the Company and its Subsidiaries.
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<PAGE> 9
SECTION 4. ELIGIBILITY
The Committee in its sole and complete discretion shall determine the
Key Employees, including officers, or other persons who shall be eligible for
participation under the Plan, subject to the following limitations:
(i) no Non-Employee director of the Company shall be eligible to
participate under the Plan; (ii) no member of the Committee shall be
eligible to participate under the Plan; (iii) no person owning,
directly or indirectly, more than 5% of the total combined voting
power of all classes of stock of the Company shall be eligible to
participate under the Plan; and (iv) only Full-Time Employees shall be
eligible to receive Incentive Stock Options under the Plan; provided,
however, that Incentive Stock Options may be granted for ISOs assumed
pursuant to the Employee Benefits Agreement, without regard to whether
the grantee is a Full-Time Employee.
SECTION 5. SHARES SUBJECT TO THE PLAN
5.1 Number of Shares. The maximum aggregate number of Shares that
may be issued pursuant to Awards made under the Plan shall not exceed ten
million (10,000,000) Shares, which may be in any combination of Options, Stock
Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance
Shares, Performance Units, Bonus Stock, or Other Stock Unit Awards. No more
than five million Shares may be issued pursuant to Awards of Restricted Stock,
Restricted Stock Units, Performance Shares, Performance Units, Bonus Stock or
Other Stock Unit Awards. Shares of Common Stock may be available from the
authorized but unissued Shares or Shares acquired by the Company, including
Shares purchased in the open market. Except as provided in this Section 5, the
issuance of Shares in connection with the exercise of', or as other payment
for, Awards under the Plan shall reduce the number of Shares available for
future Awards under the Plan.
5.2 Additional Limitations. Notwithstanding the foregoing
provisions of this Section 5, (a) the maximum number of shares of Common Stock
in respect of which Incentive Stock Options may be granted shall be 5.5 million
shares, and (b) no individual Participant may receive in any calendar year
Stock Options and Stock Appreciation Rights relating, in the aggregate, to more
than 1.1 million shares of Common Stock plus any Unused Carryover (as defined
below). In the event of a change in the shares of Common Stock of the Company
that is limited to a change in the designation thereof to "Capital Stock" or
other similar designation, or to a change in the par value thereof', or from
par value to no value, without increase or decrease in the number of issued
shares, the shares resulting from any such change shall be deemed to be shares
of Common Stock for purposes of the Plan. No fractional shares of Common Stock
shall be issued under the Plan unless the Committee determines otherwise.
5.3 Lapsed Awards of Forfeited Shares. Except as provided below,
in the event that (i) any Option or other Award granted under the Plan
terminates, expires, or lapses for any reason other than exercise of the Award,
or is settled in cash in lieu of Common Stock, or (ii) if Shares issued
pursuant to the Awards are canceled or forfeited for any reason, such Shares
subject to
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<PAGE> 10
such Award shall thereafter be again available for grant of an Award under the
Plan; provided further that if', after grant, the Exercise Price of an Option
(or the base price of a Stock Appreciation Right) is reduced, the transaction
shall be treated as a cancellation of the Option (or the Stock Appreciation
Right) and a grant of a new Option (or Stock Appreciation Right) for purposes
of Section 5.2. Notwithstanding the above, with respect to Covered
Participants, Options may not be granted that exceed the maximum number of
Shares for which Options may be issued to the Participants hereunder, and
canceled Shares shall continue to be counted against the maximum aggregate
number of Shares that may be granted pursuant to Awards.
5.4 Unused Carryover. For purposes of this Plan, "Unused
Carryover" means, for any calendar year (beginning with the 1998 calendar
year), the maximum number of shares of Common Stock with respect to which
Options and/or Stock Appreciation Rights could have been granted to the
Participant under the Plan in the previous calendar year in accordance with
this Section 5 (taking into account any Unused Carryover available in such
previous calendar year), reduced by the number of shares of Common Stock with
respect to which Options and/or Stock Appreciation Rights actually were granted
to the Participant in such previous calendar year. If the Participant is not
eligible for an Award in a calendar year in accordance with the terms and
conditions of the Plan, that calendar year shall be disregarded for purposes of
this Section 5.4, and an Unused Carryover shall not be created or increased in
that calendar year. There shall be no Unused Carryover to the 1997 calendar
year.
5.5 Delivery of Shares as Payment. In the event a Participant
pays for any Option or other Award granted under the Plan through the delivery
of previously acquired Shares, the number of Shares available for Awards under
the Plan shall be increased by the number of shares surrendered by the
Participant.
5.6 Capital Adjustments. The number and class of Shares subject
to each outstanding Award, the Exercise Price and the aggregate number, type
and class of Shares for which Awards thereafter may be made shall be subject to
adjustment, if any, as the Committee deems appropriate, based on the occurrence
of a number of specified and non- specified events. Such specified events are
discussed in this Section 5.6, but such discussion is not intended to provide
an exhaustive list of such events which may necessitate such adjustments. In
addition, the Committee may treat different Participants and different Awards
differently, and may condition any adjustment on the execution of an
appropriate waiver and release agreement.
(a) If the outstanding Shares are increased, decreased or
exchanged through merger, consolidation, sale of all or substantially
all of the property of the Company, reorganization, recapitalization,
reclassification, stock dividend, stock split or other distribution in
respect to such Shares, for a different number of Shares or type of
securities, or if additional Shares or new or different Shares or
other securities are distributed with respect to such Shares, an
appropriate and proportionate adjustment shall be made in: (i) the
maximum number of Shares available for the Plan as provided in Section
5.1 herein, (ii) the type of shares or other securities available for
the Plan, (iii) the number of shares of Stock subject to any then
outstanding Awards under the Plan, and (iv) the price (including
Exercise Price) for each Share (or other kind of shares or securities)
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<PAGE> 11
subject to then outstanding Awards, but without change in the
aggregate purchase price as to which such Options remain exercisable
or Restricted Stock releasable.
(b) In the event other events not specified above in this
Section 5.6, such as any extraordinary cash dividend, split-up,
spin-off, combination, exchange of shares, warrants or rights offering
to purchase Common Stock, or other similar corporate event, affect the
Common Stock such that an adjustment is necessary to maintain the
benefits or potential benefits intended to be provided under this
Plan, then the Committee in its discretion may make adjustments to any
or all of (i) the number and type of shares which thereafter may be
optioned and sold or awarded or made subject to Stock Appreciation
Rights under the Plan, (ii) the Exercise Price of any Award made under
the Plan thereafter, and (iii) the number and Exercise Price of each
Share (or other kind of shares or securities) subject to the then
outstanding awards, but without change in the aggregate purchase price
as to which such Options remain exercisable or Restricted Stock
releasable.
(c) Any adjustment made by the Committee pursuant to the
provisions of this Section 5.6, subject to approval by the Board of
Directors, shall be final, binding and conclusive. A notice of such
adjustment, including identification of the event causing such an
adjustment, the calculation method of such adjustment, and the change
in price and the number of shares of Stock, or securities, cash or
property purchasable subject to each Award shall be sent to each
Participant. No fractional interests shall be issued under the Plan
based on such adjustments.
SECTION 6. STOCK OPTIONS
6.1 Grant of Stock Options. Subject to the terms and provisions
of the Plan and applicable law, the Committee, at any time and from time to
time, may grant Options to such Key Employees and other persons as it shall
determine. The Committee shall have sole and complete discretion in determining
the type of Option granted, the Exercise Price, the duration of the Option, the
number of Shares to which the Option pertains, any conditions imposed upon the
exercisability of the Options, the conditions under which the Option may be
terminated and such other provisions as may be warranted to comply with the law
or rules of any securities trading system or stock exchange. Each Option grant
shall have such specified terms and conditions detailed in an Agreement. The
Agreement shall specify whether the Option is intended to be an Incentive Stock
Option within the meaning of Section 422 of the Code, or a Nonqualified Stock
Option not intended to be within the provisions of Section 422 of the Code.
6.2 Exercise Price. The Exercise Price per Share covered by an
Option shall be determined at the time of grant by the Committee, subject to
the limitation that the Exercise Price shall not be less than 100% of Fair
Market Value on the Grant Date. However, Options granted upon the assumption
of, or in substitution for, options of another company with which the Company
participates in an acquisition, separation or similar corporate transaction may
be issued at an Exercise Price less than 100% of the Fair Market Value.
6.3 Exercisability. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall determine, which will be
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<PAGE> 12
specified in the Agreement and need not be the same for each Participant.
However, no Option granted under the Plan may be exercisable after the
expiration of ten years from the Grant Date.
6.4 Method of Exercise. Options shall be exercised by the delivery
of a written notice from the Participant to the Company in the form prescribed
by the Committee setting forth the number of Shares with respect to which the
Option is to be exercised, accompanied by full payment of the Exercise Price
for the Shares. The Exercise Price shall be payable to the Company in full in
cash, or its equivalent, or, to the extent permitted by applicable law and not
in violation of any instrument or agreement to which the Company is a party, by
delivery of Shares (not subject to any security interest or pledge) valued at
Fair Market Value at the time of exercise, or by a combination of the
foregoing, or in any other form of payment acceptable to the Committee. The
Committee reserves the right to require any Shares delivered by the Participant
in full or partial payment of the Exercise Price to be limited to those Shares
already owned by the Participant for at least six (6) months. In addition, at
the request of the Participant, and subject to applicable laws and regulations,
the Company may (but shall not be required to) cooperate in a Cashless Exercise
of the Option. In addition, the Committee may, in its sole discretion, also
permit other forms of "cashless exercise," including withholding from the
Shares to be otherwise issued that number of Shares needed to pay the Exercise
Price. As soon as practicable, after receipt of written notice and payment, the
Company shall deliver to the Participant stock certificates in an appropriate
amount based upon the number of Shares with respect to which the Option is
exercised, issued in the Participant's name.
SECTION 7. STOCK APPRECIATION RIGHTS
7.1 Grant of Stock Appreciation Rights. Subject to the terms and
provisions of the Plan and applicable law, the Committee, at any time and from
time to time, may grant freestanding Stock Appreciation Rights, Stock
Appreciation Rights in tandem with an Option, or Stock Appreciation Rights in
addition to an Option. Stock Appreciation Rights granted in tandem with an
Option or in addition to an Option may be granted at the time the Option is
granted or at a later time. No Stock Appreciation Rights granted under the Plan
may be exercisable after the expiration of ten years from the Grant Date.
7.2 Exercise Price. The Exercise Price of each Stock Appreciation
Right shall be determined on the Grant Date by the Committee, subject to the
limitation that the Exercise Price shall not be less than 100% of Fair Market
Value on the Grant Date. However, Stock Appreciation Rights issued upon
assumption of, or in substitution for, stock appreciation rights of a company
with which the Company participates in an acquisition, separation or similar
corporate transaction may be issued at an Exercise Price less than 100% of the
Fair Market Value.
7.3 Exercise. The Participant is entitled to receive an amount
equal to the excess of the Fair Market Value over the Exercise Price thereof on
the date of exercise of the Stock Appreciation Right.
7.4 Payment. Payment upon exercise of the Stock Appreciation
Right shall be made in the form of cash, Shares, or a combination thereof', as
determined in the sole and complete
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discretion of the Committee. However, if any payment in the form of Shares
results in a fractional share, the payment for the fractional share shall be
made in cash.
SECTION 8. RESTRICTED STOCK AND RESTRICTED STOCK UNITS
8.1 Grant of Restricted Stock. Subject to the terms and
provisions of the Plan and applicable law, the Committee, at any time and from
time to time, may grant Shares of Restricted Stock and Restricted Stock Units
under the Plan to such Participants, and in such amounts and for such duration
of the Period of Restriction and/or conditions of removal of restrictions as it
shall determine. Participants receiving Restricted Stock and Restricted Stock
Units are not required to pay the Company therefor (except for applicable tax
withholding).
8.2 Restricted Stock Agreement. Each Restricted Stock and
Restricted Stock Unit grant shall be evidenced by an Agreement that shall
specify the Period of Restriction; the conditions which must be satisfied prior
to removal of the restriction; the number of Shares of Restricted Stock
granted; and such other provisions as the Committee shall determine. The
Committee may specify, but is not limited to, the following types of
restrictions in the Agreement: (i) restrictions on acceleration or achievement
of terms of vesting based on any business or financial goals of the Company,
including, but not limited to, absolute or relative increases in total
stockholder return, revenues, sales, net income, earnings per share, return on
equity, cash flow, operating margin or net worth of the Company, any of its
Subsidiaries, divisions or other areas of the Company; and (ii) any other
further restrictions that may be advisable under the law, including
requirements set forth by the Exchange Act, the Securities Act, any securities
trading system or stock exchange upon which such Shares are listed.
8.3 Nontransferability. Except as provided in this Section 8 and
subject to applicable law, the Shares of Restricted Stock or Restricted Stock
Units granted under the Plan may not be sold, transferred, pledged, assigned,
exchanged, encumbered or otherwise alienated or hypothecated until the
termination of the applicable Period of Restriction or upon earlier
satisfaction of other conditions as specified by the Committee in its sole
discretion and set forth in the Agreement. All rights with respect to the
Restricted Stock and Restricted Stock Units granted to a Participant under the
Plan shall be exercisable only by such Participant or his or her guardian or
legal representative.
8.4 Removal of Restrictions. Except as otherwise noted in this
Section 8, Restricted Stock and Restricted Stock Units covered by each Award
shall be provided to and become freely transferable by the Participant after
the last day of the Period of Restriction and/or upon the satisfaction of other
conditions as determined by the Committee. Except as specifically provided in
this Section 8, the Committee shall have no authority to reduce or remove the
restrictions or to reduce or remove the Period of Restriction without the
express consent of the stockholders of the Company. Except where
performance-based conditions or restrictions are placed on the grant, or except
in the event of the death or disability of the Participant, or a Change in
Control of the Company, the minimum Period of Restriction shall be three (3)
years, which Period of Restriction would permit the removal of restrictions on
no more than one-third (1/3) of the Restricted Stock or Restricted Stock Units
at the end of the first year following the Grant Date, and the removal of the
restrictions on an additional one-third (1/3) at the end of each subsequent
year. Except in the
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<PAGE> 14
event of the death or disability of the Participant, or a Change in Control of
the Company, no restrictions may be removed from Restricted Stock or Restricted
Stock Units during the first year following the Grant Date. If there are
performance-based conditions placed on the grant of Restricted Stock or
Restricted Stock Units, the total Period of Restriction shall be no less than
one (1) year from the Grant Date. The foregoing limitations notwithstanding,
the Committee in its sole discretion may reduce or remove the restrictions or
reduce or remove the Period of Restriction with respect to Restricted Stock or
Restricted Stock Units upon assumption of, or in substitution for, restricted
stock or restricted stock units of a company with which the Company
participates in an acquisition, separation, or similar corporate transaction.
8.5 Voting Rights. During the Period of Restriction, Participants
in whose name Restricted Stock is granted under the Plan may exercise full
voting rights with respect to those Shares.
8.6 Dividends and Other Distributions. During the Period of
Restriction, Participants in whose name Restricted Stock is granted shall be
entitled to receive all dividends and other distributions paid with respect to
those Shares. If any such dividends or distributions are paid in Shares, the
Shares shall be subject to the same restrictions on transferability as the
Restricted Stock with respect to which they were distributed.
SECTION 9. PERFORMANCE AWARDS
9.1 Grant of Performance Awards. Subject to the terms and
provisions of the Plan and applicable law, the Committee, at any time and from
time to time, may grant Performance Awards in the form of either Performance
Units or Performance Shares to Participants subject to such Performance Goals
and Performance Period as it shall determine. The Committee shall have complete
discretion in determining the number and value of Performance Units or
Performance Shares granted to each Participant. Participants receiving
Performance Awards are not required to pay the Company therefor (except for
applicable tax withholding) other than the rendering of services.
9.2 Value of Performance Awards. The Committee shall determine
the number and value of Performance Units or Performance Shares granted to each
Participant as a Performance Award. The Committee shall set Performance Goals
in its discretion for each Participant who is granted a Performance Award. The
extent to which such Performance Goals are met will determine the value of the
Performance Unit or Performance Share to the Participant. Such Performance
Goals may be particular to a Participant, may relate to the performance of the
Subsidiary which employs him or her, may be based on the division which employs
him or her, may be based on the performance of the Company generally, or a
combination of the foregoing. The Performance Goals may be based on achievement
of balance sheet or income statement objectives, or any other objectives
established by the Committee. The Performance Goals may be absolute in their
terms or measured against or in relationship to other companies comparably,
similarly or otherwise situated. The terms and conditions of each Performance
Award will be set forth in an Agreement.
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<PAGE> 15
9.3 Settlement of Performance Awards. After a Performance Period
has ended, the holder of a Performance Unit or Performance Share shall be
entitled to receive the value thereof based on the degree to which the
Performance Goals established by the Committee and set forth in the Agreement
have been satisfied.
9.4 Form of Payment. Payment of the amount to which a Participant
shall be entitled upon the settlement of a Performance Award shall be made in
cash, Stock, or a combination thereof as determined by the Committee. Payment
may be made as prescribed by the Committee.
SECTION 10. BONUS STOCK
Subject to the terms and provisions of the Plan and applicable law,
the Committee, at any time and from time to time, may award Shares of Bonus
Stock to Participants without cash consideration. The Committee shall determine
and indicate in the relevant Agreement whether such Shares of Bonus Stock shall
be unencumbered of any restrictions (other than those advisable to comply with
law) or shall be subject to restrictions and limitations similar to those
referred to in Section 9. In the event the Committee imposes any restrictions
on the Shares of Bonus Stock, then such Shares shall be subject to at least the
following restrictions:
(a) No Shares of Bonus Stock may be sold, transferred,
pledged, assigned, exchanged, encumbered or otherwise alienated or
hypothecated if such Shares are subject to restrictions which have not
lapsed or have not been vested.
(b) If any condition of vesting of the Shares of Bonus
Stock are not met, all such Shares subject to such vesting shall be
delivered to the Company and canceled (in a manner determined by the
Committee) within 60 days of the failure to meet such condition
without any payment from the Company.
SECTION 11. OTHER STOCK UNIT AWARDS
11.1 Grant of Other Stock Unit Awards. Subject to the terms and
provisions of the Plan and applicable law, the Committee, at any time and from
time to time, may issue to Participants, either alone or in addition to other
Awards made under the Plan, Other Stock Unit Awards which may be in the form of
Common Stock or other securities. The value of each such Award shall be based,
in whole or in part, on the value of the underlying Common Stock or other
securities. The Committee, in its sole and complete discretion, may determine
that an Award, either in the form of an Other Stock Unit Award under this
Section 11 or as an Award granted pursuant to Sections 6 through 10, may
provide to the Participant (i) dividends or dividend equivalents (payable on a
current or deferred basis) and (ii) cash payments in lieu of or in addition to
an Award. Subject to the provisions of the Plan, the Committee in its sole and
complete discretion shall determine the terms, restrictions, conditions,
vesting requirements, and payment rules (all of which are sometimes hereinafter
collectively referred to as "Rules") of the Award. The Agreement shall specify
the Rules of each Award as determined by the Committee. However, each Other
Stock Unit Award need not be subject to identical Rules.
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<PAGE> 16
11.2 Rules. The Committee, in its sole and complete discretion,
may grant an Other Stock Unit Award subject to the following Rules:
(a) Common Stock or other securities issued pursuant to
Other Stock Unit Awards may not be sold, transferred, pledged,
assigned, exchanged, encumbered or otherwise alienated or hypothecated
by a Participant until the expiration of at least six months from the
Award Date, except that such limitation shall not apply in the case of
death or disability of the Participant or a Change in Control of the
Company. All rights with respect to such Other Stock Unit Awards
granted to a Participant shall be exercisable during his or her
lifetime only by such Participant or his or her guardian or legal
representative.
(b) Other Stock Unit Awards may require the payment of
cash consideration by the Participant upon receipt of the Award or
provide that the Award, and any Common Stock or other securities
issued in conjunction with the Award be delivered without the payment
of cash consideration.
(c) The Committee, in its sole and complete discretion,
may establish certain Performance Criteria that may relate in whole or
in part to receipt of the Other Stock Unit Awards.
(d) Other Stock Unit Awards may be subject to a deferred
payment schedule and/or vesting over a specified employment period.
(e) The Committee, in its sole and complete discretion,
as a result of certain circumstances, including, without limitation,
the assumption of', or substitution of stock unit awards of a company
with which the Company participates in an acquisition, separation, or
similar corporate transaction, may waive or otherwise remove, in whole
or in part, any restriction or condition imposed on an Other Stock
Unit Award at the time of grant.
SECTION 12. SPECIAL PROVISIONS APPLICABLE TO COVERED PARTICIPANTS
Awards subject to Performance Criteria paid to Covered Participants
under this Plan shall be governed by the conditions of this Section 12 in
addition to the requirements of Sections 8, 9, 10 and 11 above. Should
conditions set forth under this Section 12 conflict with the requirements of
Sections 8, 9, 10 and I 1, the conditions of this Section 12 shall prevail.
(a) All Performance Measures relating to Covered
Participants for a relevant Performance Period shall be established by
the Committee in writing prior to the beginning of the Performance
Period, or by such other later date for the Performance Period as may
be permitted under Section 162(m). Performance Measures may include
alternative and multiple Performance Measures and may be based on one
or more business criteria. In establishing Performance Measures, the
Committee shall consider one or more of the following business or
financial goals of the Company: absolute or relative increases in
total stockholder return, economic value added, return on capital
employed, revenues, sales, net
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<PAGE> 17
income, return on equity, cash flow, operating margin or net worth of
the Company, any of its Subsidiaries, divisions or other areas of the
Company.
(b) The Performance Measures must be substantially
uncertain of attainment at the time established, must be objective and
must satisfy third party "objectivity" standards under Section 162(m).
(c) The Performance Measures shall not allow for any
discretion by the Committee as to an increase in any Award, but
discretion to lower an Award is permissible.
(d) The Award and payment of any Award under this Plan to
a Covered Participant with respect to a relevant Performance Period
shall be contingent upon the attainment of the Performance Measures
that are applicable to such Covered Participant. The Committee shall
certify in writing prior to payment of any such Award that such
applicable Performance Measures relating to the Award are satisfied.
Approved minutes of the Committee may be used for this purpose.
(e) The maximum Award that may be paid to any Covered
Participant under the Plan pursuant to Sections 9, 10 and 11 for any
Performance Period is the lesser of $1 Million or 100 percent of the
Covered Participant's annual base salary as of the first day of that
Performance Period. The maximum number of Shares subject to Options,
Stock Appreciation Rights or Restricted Stock granted to any Covered
Participant for any fiscal year shall be the number of shares
determined pursuant to Section 5.2(b).
(f) All Awards to Covered Participants under this Plan
shall be further subject to such other conditions, restrictions, and
requirements as the Committee may determine to be necessary to carry
out the purpose of this Section 12.
SECTION 13. DEFERRED ELECTIONS/TAX REIMBURSEMENTS
The Committee may permit a Participant to elect to defer receipt of
any payment of cash or any delivery of shares of Common Stock that would
otherwise be due to such Participant by virtue of the exercise, earn-out, or
settlement of any Award made under the Plan. If such election is permitted, the
Committee shall establish rules and procedures for such deferrals, including,
without limitation, the payment or crediting of dividend equivalents in respect
of deferrals credited in units of Common Stock. The Committee may also provide
in the relevant Agreement for a tax reimbursement cash payment to be made by
the Company in favor of any Participant in connection with the tax consequences
resulting from the grant, exercise, settlement or earn-out of any Award made
under the Plan.
SECTION 14. GENERAL PROVISIONS
14.1 Plan Term. The Plan was adopted by the Board of Directors of
the Company on May 29, 1997. The Plan was adopted and approved by the BEI
Board of Directors on May 29, 1997, and recommended for consideration by the
BEI stockholders. Subject to approval by the stockholders of BEI, the Plan
shall be effective as of the effective time of the
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<PAGE> 18
Distribution of the Stock of the Company to the stockholders of BEI, pursuant
to the Agreement and Plan of Distribution by and between BEI and the Company
dated as of April 15, 1997; provided, however, no Stock, rights or Options may
be sold, awarded or granted under the Plan until the Company is in receipt of a
Registration Statement under the Securities Act covering the Shares to be
issued under the Plan. Any Stock, rights, or Options granted under this Plan
prior to approval of the Plan by the stockholders of BEI shall be granted
subject to such approval.
The Plan terminates December 31, 2006; however, all Awards made prior
to, and outstanding on such date, shall remain valid in accordance with their
terms and conditions.
14.2 Withholding. The Company shall have the right to deduct or
withhold, or require a Participant or Permitted Transferee to remit to the
Company, any taxes required by law to be withheld from Awards. In the event an
Award is paid in the form of Common Stock, the Committee may require the
Participant or Permitted Transferee to remit to the Company the amount of any
taxes required to be withheld from such payment in Common Stock, or, in lieu
thereof, the Company may withhold from the number of Shares otherwise to be
issued (or the Participant or Permitted Transferee, with respect to Stock
already owned by such Participant or Permitted Transferee (which the Committee
may require to have been held for at least six (6) months), may be provided
the opportunity to elect to tender) the number of shares of Common Stock equal
in Fair Market Value to the amount required to be withheld.
14.3 Awards. Each Award shall be evidenced in a corresponding
Agreement provided in writing to the Participant, which shall specify the
terms, conditions and any Rules applicable to the Award, including but not
limited to the effect of a Change in Control, or death, Disability,
Divestiture, Early Retirement, Normal Retirement or other termination of
employment of the Participant on the Award. Each Permitted Transferee, along
with the transferor, of a Non-Qualified Stock Option transferred in accordance
with the provisions of Section 14.4 shall enter into a Stock Option Transfer
Agreement with the Company in a form specified by the Committee.
14.4 Nontransferability. No Award and no rights or interests
therein may be sold, transferred, pledged, assigned, exchanged, encumbered or
otherwise alienated or hypothecated, except (i) by testamentary disposition by
the Participant or the laws of descent and distribution or, except in the case
of an ISO, by a qualified domestic relations order; and (ii) in the case of
Nonqualified Stock Options, transfers made with the prior approval of the
Committee and on such terms and conditions as the Committee in its sole
discretion shall approve, to (a) the spouse, child, step- child, grandchild or
step-grandchild of the Participant (an "Immediate Family Member"), (b) a trust
the beneficiaries of which do not include persons other than the Participant
and Immediate Family Members; (c) a partnership (either general or limited) the
partners of which do not include persons other than the Participant and
Immediate Family Members (or a corporation the shareholders of which do not
include persons other than the Participant and Immediate Family Members); (d) a
corporation the shareholders of which do not include persons other than the
Participant and Immediate Family Members; or (e) any other transferee that is
approved by the Committee in its sole discretion (each a Permitted Transferee);
provided, however, that, without the prior approval of the Committee, no
Permitted Transferee shall further transfer a Nonqualified Stock Option, other
than by testamentary disposition or the laws of descent and distribution,
either directly or indirectly, including, without limitation, by reason of the
dissolution of, or a
17
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change in the beneficiaries of, a Permitted Transferee that is a trust, the
sale, merger, consolidation, dissolution, or liquidation of a Permitted
Transferee that is a partnership (or the sale of all or any portion of the
partnership interests therein), or the sale, merger, consolidation, dissolution
or liquidation of a Permitted Transferee that is a corporation (or the sale of
all or any portion of the stock thereof). Further, no right or interest of any
Participant in an Award may be assigned in satisfaction of any lien,
obligation, or liability of the Participant.
14.5 No Right to Employment. No granting of an Award shall be
constituted as a right to employment with the Company.
14.6 Rights as Stockholder. Subject to the Award provisions, no
Participant or Designated Beneficiary shall be deemed a stockholder of the
Company nor have any rights as such with respect to any Shares to be provided
under the Plan until he or she has become the holder of such Shares.
Notwithstanding the aforementioned, with respect to Stock granted as Restricted
Stock, Performance Shares, Bonus Stock or Other Stock Unit Awards under this
Plan, the Participant or Designated Beneficiary of such Award shall be deemed
the owner of such Shares provided herein. As such, unless contrary to the
provisions herein or in any such related Agreement, such stockholder shall be
entitled to full voting, dividend and distribution rights as provided any other
Company stockholder for as long as the Participant continues to be deemed the
owner of such stock.
14.7 Construction of the Plan. The Plan, and its rules, rights,
agreements and regulations, shall be governed, construed, interpreted and
administered solely in accordance with the laws of the state of Delaware. In
the event any provision of the Plan shall be held invalid, illegal or
unenforceable, in whole or in part, for any reason, such determination shall
not affect the validity, legality or enforceability of any remaining provision,
portion of provision or the Plan overall, which shall remain in full force and
effect as if the Plan had been absent the invalid, illegal or unenforceable
provision or portion thereof
14.8 Amendment of the Plan. The Committee or Board of Directors
may amend, suspend, or terminate the Plan or any portion thereof at any time,
provided such amendment is made with stockholder approval if such approval is
necessary to comply with any tax or regulatory requirement, including for these
purposes any approval which is a requirement for exemptive relief under Section
16(b) of the Exchange Act or which is a requirement for the performance- based
compensation exception under Section 162(m). The Committee in its sole
discretion may amend the Plan so as to conform with local rules and regulations
subject to any provisions to the contrary specified herein.
14.9 Amendment of Award. In its sole and complete discretion, the
Committee may at any time amend any Award for the following reasons: (i)
additions and/or changes to the Code, any federal or state securities law, or
other law or regulations applicable to the Award, are made, and such additions
and/or changes have some effect on the Award; or (ii) any other event not
described in clause (i) occurs and the Participant gives his or her consent to
such amendment, provided however, except for capital adjustments described in
Section 5.8, the Committee may not reduce the Exercise Price of an Award.
18
<PAGE> 20
14.10 Exemption from Computation of Compensation for Other Purposes.
By acceptance of an applicable Award, subject to the conditions of such Award,
each Participant shall be considered in agreement that all Shares sold or
awarded and all Options granted under this Plan shall be considered special
incentive compensation and will be exempt from inclusion as "wages" or "salary"
in pension, retirement, life insurance, and other employee benefits
arrangements of the Company, except as determined otherwise by the Company. In
addition, each Designated Beneficiary of a deceased Participant shall be in
agreement that all such Awards will be exempt from inclusion in "wages" or
"salary" for purposes of calculating benefits of any life insurance coverage
sponsored by the Company.
14.11 Legend. In its sole and complete discretion, the Committee
may elect to legend certificates representing Shares sold or awarded under the
Plan, to make appropriate references to the restrictions imposed on such
shares.
14.12 Certain Participants. All Agreements for Participants subject
to Section 16(b) of the Exchange Act shall be deemed to include any such
additional terms, conditions, limitations and provisions as Rule 16b-3
requires, unless the Committee in its discretion determines that any such Award
should not be governed by Rule 16b-3. All performance-based Awards shall be
deemed to include any such additional terms, conditions, limitations and
provisions as are necessary to comply with the performance-based compensation
exemption of Section 162(m) unless the Committee in its discretion determines
that any such Award to a Covered Participant is not intended to qualify for the
exemption for performance-based compensation under Section 162(m).
14.13 Change in Control. In the event of a Change in Control, the
Committee is permitted to accelerate the payment or vesting and release any
restrictions on any Awards.
14.14 Listing, Registration and Other Legal Compliance. No Awards
or shares of the Common Stock shall be required to be issued or granted under
the Plan unless legal counsel to the Company shall be satisfied that such
issuance or grant will be in compliance with all applicable federal and state
securities laws and regulations and any other applicable laws or regulations.
The Committee may require, as a condition of any payment or share issuance,
that certain agreements, undertakings, representations, certificates, and/or
information, as the Committee may deem necessary or advisable, be executed or
provided to the Company to assure compliance with all such applicable laws or
regulations. Any certificates for shares of the Restricted Stock and/or Common
Stock delivered under the Plan may be subject to such stock-transfer orders and
such other restrictions as the Committee may deem advisable under the rules,
regulations, or other requirements of the Securities and Exchange Commission,
any stock exchange upon which the Common Stock is then listed, and any
applicable federal or state securities law. In addition, if, at any time
specified herein (or in any Agreement or otherwise) for (a) the making of any
Award, or the making of any determination, (b) the issuance or other
distribution of Restricted Stock and/or other Common Stock, or (c) the payment
of amounts to or through a Participant with respect to any Award, any law,
rule, regulation, or other requirement of any governmental authority or agency
shall require the Company, any Affiliate, or any Participant (or any estate,
designated beneficiary, or other legal representative thereof) to take any
action in connection with any such determination, any such shares to be issued
or distributed, any such payment, or the making of
19
<PAGE> 21
any such determination, as the case may be, shall be deferred until such
required action is taken. With respect to persons subject to Section 16 of the
Exchange Act, transactions under the Plan are intended to comply with all
applicable conditions of Rule 16b-3. To the extent any provision of the Plan or
any action by the administrators of the Plan fails to so comply with such rule,
it shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee.
20
<PAGE> 1
EXHIBIT 5.1
OPINION OF JOHN W. MACKENZIE, ESQ.
<PAGE> 2
December 5, 1997
Beverly Enterprises, Inc.
5111 Rogers Avenue, Suite 40-A
Fort Smith, Arkansas 72919
Ladies and Gentlemen:
I am the Deputy General Counsel of Beverly Enterprises, Inc. (formerly
"New Beverly Holdings, Inc."), a Delaware corporation (the "Company"), and have
acted as counsel for the Company in connection with the proposed filing with
the Securities and Exchange Commission expected to be made on or about December
5, 1997 under the Securities Act of 1933, as amended, of a Registration
Statement on Form S-8 (the "Registration Statement") for the purpose of
registering (i) 10,000,000 shares of Common Stock, par value $.10 per share
(the "Shares") of the Company, presently reserved for issuance under the New
Beverly Holdings, Inc. 1997 Long-Term Incentive Plan (the "Plan"), (ii)
additional Shares that become available under the Plan in connection with
certain changes in the number of outstanding Shares because of events such as
recapitalization, stock dividends and stock splits, and (iii) any other
securities with respect to which the outstanding Shares are converted or
exchanged. In such capacity, I have examined the Certificate of Incorporation
and By-Laws of the Company (as amended), the Plan, and such other documents of
the Company as I have deemed necessary or appropriate for the purposes of the
opinions expressed herein.
Based upon the foregoing, I advise you that, in my opinion, when
issued in accordance with the provisions of the Plan, the Shares issuable under
the Plan, when delivered and paid for in accordance with the Plan, will be
validly issued, fully paid, and nonassessable.
I am licensed to practice law in the Commonwealth of Kentucky. As I
am generally familiar with the Delaware General Corporation Law, however, I did
not consider obtaining special Delaware counsel to be necessary to render the
opinions expressed herein. Accordingly, this opinion letter is based on my
general knowledge and experience and not based on the advice or opinion of
counsel licensed to practice law in the State of Delaware. This opinion letter
is limited to the effect of the Delaware General Corporation Law and present
federal laws of the United States.
This opinion letter and the matters addressed in this letter are as of
the date of this letter. I hereby disclaim any obligation to advise you of any
change in any matter set forth in this letter occurring after such date. This
opinion letter is limited to the matters stated in this letter and no opinion
is implied or may be inferred beyond the opinions expressly stated herein.
<PAGE> 3
This opinion letter is solely for your benefit and no other person may
rely upon the opinions expressed herein. Without my prior written consent,
this letter may not be quoted in whole or in part or otherwise referred to in
any document and may not be furnished to any other person. I hereby consent to
the inclusion of this letter as an exhibit to the Registration Statement.
Very truly yours,
John W. MacKenzie
Deputy General Counsel and
Assistant Secretary
<PAGE> 1
EXHIBIT 23.2
CONSENT OF ERNST & YOUNG LLP
<PAGE> 2
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 333-________) pertaining to the Beverly Enterprises,
Inc. Long-Term Incentive Plan of our report dated February 7, 1997, except for
Note 2, paragraph 3, as to which the date is March 13, 1997, with respect to the
consolidated financial statements and schedule of Beverly Enterprises, Inc.
included in its Annual Report (Form 10-K) for the year ended December 31, 1996,
filed with the Securities and Exchange Commission and to the incorporation by
reference of our report dated April 18, 1997, with respect to the consolidated
financial statements and schedule of Pharmacy Corporation of America and to the
incorporation by reference of our report dated June 2, 1997, with respect to the
balance sheet of New Beverly Holdings, Inc.
ERNST & YOUNG LLP
December 1, 1997
Little Rock, Arkansas
