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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT,
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
NOVEMBER 25, 1998 (NOVEMBER 17, 1998)
COMPREHENSIVE CARE CORPORATION
(Exact Name of Registrant as Specified in Charter)
DELAWARE 0-5751 95-2594724
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
4200 WEST CYPRESS STREET
SUITE 300
TAMPA, FLORIDA 33607
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (813) 872-1561
NOT APPLICABLE.
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 5. OTHER EVENTS.
On November 17, 1998, Comprehensive Care Corporation (the "Company")
held its Annual Meeting of Stockholders. The meeting was held to (i) elect one
(1) Class III director to the Company's Board of Directors and (ii) authorize an
amendment to the Company's 1995 Incentive Plan to increase the number of shares
authorized and available for issuance thereunder from 600,000 to 1,000,000
shares.
Stockholders of the Company's Common Stock, $.01 par value, of record as
of September 29, 1998 (the "Record Date") were entitled to notice of the Annual
Meeting and to vote at such meeting. As of the Record Date, there were 3,474,333
shares of Common Stock entitled to vote at the meeting. Shareholders holding
3,330,946 shares of Common Stock, representing a majority of the Common Stock
and representing a quorum (approximately 96% of the total shares entitled to
vote), were represented at the meeting either in person or by proxy.
RESULTS OF ELECTION OF DIRECTORS
Shareholders were asked to elect one (1) Class III director to the
Company's Board of Directors. Set forth below is the name of the person
nominated for and elected to serve on the Company's Board of Directors for a
term of three (3) years until the year 2001 Annual Meeting of Stockholders and
until his successor is duly elected and qualified as well as the results of the
voting for the nominee.
<TABLE>
<CAPTION>
Name Votes For Votes Against
--------------------- --------- -------------
<S> <C> <C>
A. Richard Pantuliano 2,945,316 385,630
</TABLE>
The Board of Directors of the Company is now comprised of the following
four (4) directors: Messr. Chriss W. Street, the sole Class II Director whose
term expires at the 1999 Annual Meeting of Stockholders; Messrs. William H.
Boucher and J. Marvin Feigenbaum, Class I Directors whose terms expire at the
2000 Annual Meeting of Stockholders; and Messr. A. Richard Pantuliano, the sole
Class III Director whose term expires at the 2001 Annual Meeting of
Stockholders.
PROPOSAL TO AMEND 1995 INCENTIVE PLAN
The Board of Directors submitted to the Stockholders a proposal to
effect the Company's 1995 Incentive Plan (the "Plan") to increase the number of
shares issuable thereunder from 600,000 to 1,000,000 shares. The proposal to
amend the Plan was adopted by the Company's Stockholders as follows:
<TABLE>
<CAPTION>
Votes For Votes Against Abstentions Total Non-Votes
--------- ------------- ----------- ---------------
<S> <C> <C> <C>
1,467,060 327,252 15,598 1,521,036
</TABLE>
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ITEM 7. FINANCIAL STATEMENT, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
C. EXHIBITS. The following document is furnished in accordance with
Item 601 of Regulation S-K.
Exhibit
Number Description
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99.1 Comprehensive Care Corporation 1995 Incentive Plan,
as amended on November 17, 1998
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report on Form 8-K to be signed on its behalf by
the undersigned hereunto duly authorized.
COMPREHENSIVE CARE CORPORATION
By: /s/ CHRISS W. STREET
--------------------------------
Chriss W. Street
Chairman, President and Chief
Executive Officer
Date: November 25, 1998
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EXHIBIT INDEX
Exhibit
Number Description
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99.1 Comprehensive Care Corporation 1995 Incentive Plan,
as amended on November 17, 1998
<PAGE> 1
EXHIBIT 99.1
COMPREHENSIVE CARE CORPORATION
1995 INCENTIVE PLAN
1. PURPOSE
The purpose of the 1995 Incentive Plan (the "Plan") of Comprehensive
Care Corporation (the "Company") is to provide an incentive to key management
employees and consultants whose present and potential contributions to the
Company and its Subsidiaries (as such term is defined in Section 2 below) are or
will be important to the success of the Company by affording them an opportunity
to acquire a proprietary interest in the Company. It is intended that this
purpose will be effected through (a) the granting of incentive stock rights,
stock options, stock appreciation rights and limited stock appreciation rights
and (b) the sale of shares of Common Stock, $.01 par value per share, of the
Company ("Common Stock"), pursuant to restricted stock purchase agreements
(collectively, such rights, options and shares are referred to herein as
"Awards"). Stock options may be granted under the Plan which qualify as
"Incentive Stock Options" under Section 422A of the Internal Revenue Code of
1986, as it may be hereafter amended (the "Code"). Such options are sometimes
referred to as an "ISO" or collectively as "ISOs".
2. ELIGIBILITY
Awards may be made or granted to key Management employees and
consultants who are deemed to render significant services to the Company or its
Subsidiaries and who are deemed to have the potential to contribute to the
future success of the Company (such eligible persons being referred to herein as
"Eligible Participants"). The term "Management employees" includes executive
officers who are employees of the Company or of a Subsidiary, as well as other
employees of the Company and its Subsidiaries. A director of the Company or of
any Subsidiary who is not also an employee of the Company or of one of its
Subsidiaries will not be eligible to receive any Awards under the Plan. No ISO
shall be granted to any person who is not an employee of the Company or a
Subsidiary at the time of grant. No ISO shall be granted to an employee who, at
the time of option is granted, owns stock possessing more than 10% of the total
combined voting power of all classes of capital stock of the employer
corporation (as such term is used in the Code) or any Parent or Subsidiary of
the employer corporation, provided, however, that an ISO may be granted to such
an employee, if at the time such ISO is granted, the option price is at least
110% of the fair market value of stock subject to the ISO on the date of grant
(as determined pursuant to Subsection 8(a) hereof) and such ISO is by its terms
not exercisable after the expiration of five years from the date such option is
granted. The terms "Subsidiary" and "Parent" as used herein shall have the
meanings given them in Section 425 of the Code. Awards may be made to employees
or consultants who hold or have held options, rights or shares under this Plan
or any other plans of the Company.
3. STOCK SUBJECT TO THE PLAN
The shares that may be issued upon exercise of options and rights and
which may be sold under the Plan shall not exceed in the aggregate of 1,000,000
shares of Common Stock, as adjusted to give effect to the anti-dilution
provisions contained in Section 12 hereof. Such shares may be authorized and
unissued shares, or shares purchased by the Company and reserved for issuance
under the Plan. If a stock option or incentive stock right for any reason
expires or is terminated without having been exercised in full, or if the shares
issued pursuant to restricted stock purchase agreements are repurchased by the
Company in accordance with the terms thereof, those shares relating to an
unexercised stock option or incentive stock rights or shares which have been
repurchased shall again become available for grant and/or sale under the Plan.
4. AWARDS UNDER THE PLAN
Awards under the Plan may be of five types. They are "incentive stock
rights", "stock options", "stock appreciation rights", "limited stock
appreciation rights", and "restricted stock purchases". "Incentive stock rights"
are
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composed of incentive stock units which give the holder the right to receive,
without payment of cash or property to the Company, shares of Common Stock,
subject to the terms, conditions and restrictions described in Section 7 hereof.
An option, including an ISO, is a right to purchase Common Stock in accordance
with Section 8 hereof. A "stock appreciation right" is a right given to a holder
of a stock option to receive, upon surrender of all or a portion of his stock
option, without payment of cash or property to the Company, a number of shares
of Common Stock of the Company and/or cash, determined pursuant to a formula in
accordance with Section 9 hereof. A "limited stock appreciation right" is a
stock appreciation right which is exercisable only upon the terms, conditions
and restrictions set forth in Section 10 hereof. A "restricted stock purchase"
is the purchase, at a price determined by the Board of Directors or Committee
(as hereinafter defined), of Common Stock, which is nontransferable and subject
to substantial risk of forfeiture until specific conditions based on continuing
employment or achievement of preestablished performance objectives are met. All
references to "cash" herein shall mean "cash or certified check".
5. ADMINISTRATION
(a) The Plan shall be administered by the Board of Directors or by a
committee (the "Option Committee") of not less than two directors of the Company
appointed by the Board of Directors of the Company (the "Board of Directors")
for such term as the Board of Directors may determine. The Board of Directors
may, from time to time, remove members from, or add members to, the Option
Committee. The administrator of the Plan shall hereinafter be referred to as the
"Plan Administrator". In the event that the Plan Administrator is an Option
Committee of the Board of Directors, none of the members of such Option
Committee shall be an officer or other full-time employee of the Company. It is
the intention of the Company that each member of the Option Committee shall be a
"disinterested person" as that term is defined and interpreted pursuant to Rule
16b-3(c)(2) or any successor rule thereto promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Action by the Option
Committee shall require the affirmative vote of a majority of all its members.
In the event that the Plan Administrator is the Board of Directors, and a member
of the Board of Directors may be eligible, subject to the restrictions in
Section 2, to participate in or receive or hold options under the Plan, no
member of the Board of Directors or the Option Committee shall vote with respect
to the granting of options hereunder to himself or herself, as the case may be,
and, if state corporate law does not permit a committee to grant options to
directors, then any option granted under the Plan to a director for his or her
services as such shall be approved by the full Board of Directors.
With respect to grants made under the Plan to officers and
directors of the Company who are subject to Section 16 of the Exchange Act, the
Plan Administrator shall be constituted at all times so as to meet the
requirements of Rule 16b-3 so long as any of the Company's equity securities are
registered pursuant to Section 12(b) or 12(g) of the Exchange Act.
(b) Subject to the terms and conditions of the Plan, the Plan
Administrator shall have the power:
(i) To determine from time to time the Awards to be granted to
eligible persons under the Plan and to prescribe the terms and provisions (which
need not be identical) of Awards granted under the Plan to such persons;
(ii) To construe and interpret the Plan and grants thereunder
and in its discretion have the authority: (A) to determine, upon review of
relevant information, the fair market value of the Common Stock; (B) to
determine the exercise price per share of stock options to be granted; (C) to
determine the eligible participants to whom, and time or times at which, options
shall be granted and the number of shares to be issuable upon exercise of each
stock option; (D) to construe and interpret the Plan; (E) to prescribe, amend
and rescind rules and regulations relating to the Plan; (F) to determine the
terms and provisions of each grant (which need not be identical); and (G) to
make all other determinations necessary to or advisable for the administration
of the Plan. Notwithstanding the foregoing, in the event any employee of the
Company or any of its Subsidiaries granted an option under the Plan is, at the
time of such grant, a member of the Board of Directors of the Company, the grant
of such grant shall, in the event the Board of Directors at the time such option
is granted is not deemed to satisfy the requirement of Rule 16b-3(b)(2)(i) or
(ii) promulgated under the Act, be subject to the approval of an auxiliary
committee consisting of not less than two persons who qualify
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as "disinterested persons" within the meaning of Rule 16b-3(d)(3) promulgated
under the Act. All decisions and determinations by the Option Committee in the
exercise of this power shall be final and binding upon the Company and the
Optionees; and
(iii) Generally, to exercise such powers and to perform such
acts as are deemed necessary or expedient to promote the best interests of the
Company with respect to the Plan.
6. DURATION OF THE PLAN
The Plan shall become effective upon the approval of the requisite vote
of the stockholders of the Company. The Plan shall remain in effect for a term
of ten (10) years from September 1, 1995 unless sooner terminated under Section
20 hereof. Notwithstanding any of the foregoing to the contrary, the Plan
Administrator shall have the authority to amend the Plan pursuant to Section 20
hereof; provided, however, that Awards already made shall remain in full force
and effect as if the Plan had not been amended or terminated.
7. INCENTIVE STOCK RIGHTS
The Plan Administrator, in its discretion, may grant to Eligible
Participants incentive stock rights composed of incentive stock units. Incentive
stock rights shall be granted pursuant to incentive stock rights agreements in
such form, and not inconsistent with the Plan, as the Plan Administrator shall
approve from time to time and shall include substantially the following terms
and conditions as determined by the Plan Administrator:
(a) Incentive Stock Units. An incentive stock rights agreement shall
specify the number of incentive stock units to which it pertains. Each incentive
stock unit shall be equivalent to one share of Common Stock. Each incentive
stock unit shall entitle the holder thereof to receive, without payment of cash
or property to the Company, one share of Common Stock in consideration for
services performed for the Company or any Subsidiary by the Eligible
Participant, subject to the lapse of the incentive periods (as hereinafter
defined).
(b) Incentive Period. The holder of incentive stock rights shall be
entitled to receive shares of Common Stock only after the lapse of such
incentive periods, and in such manner, as shall be fixed in the discretion of
the Plan Administrator at the time of the grant of such incentive stock rights.
(Such period or periods so fixed is or are herein referred to as an "incentive
period".) To the extent the holder of incentive stock rights receives shares of
Common Stock on the lapse of an incentive period, an equivalent number of
incentive stock units subject to such rights shall be deemed to have been
discharged.
(c) Termination by Reason of Death or Disability. In the event that the
recipient of incentive stock rights ceases to be and employee or consultant of
the Company or any of its Subsidiaries during an incentive period due to death
or permanent disability (as determined by the Plan Administrator), the holder of
incentive stock rights or, in the case of the death of the holder, the personal
representatives, heirs or legatees of such holder, shall be entitled to receive
a number of shares equal to an amount determined by multiplying the total number
of incentive stock units applicable to such incentive period by a fraction, the
numerator of which shall be the number of full calendar months between the date
of grant of the incentive stock rights and the date of such termination and the
denominator of which shall be the number of full calendar months between the
date of grant and the date such incentive period for such units would, but for
such termination, have lapsed. For purposes of this Subsection 7(c), this shall
constitute a lapse of the incentive period with respect to the number of
incentive stock units equal to the number of shares issued. Units upon which the
incentive period do not lapse pursuant to the foregoing sentence shall terminate
and be null and void on the date on which the recipient cases to be employed by
or act as a consultant to the Company or any of its Subsidiaries.
(d) Termination for Any Other Reason. In the event that the employment
or retention as a consultant by the Company of the recipient to whom incentive
stock rights have been issued under the Plan terminates for any reason
(including dismissal by the Company with or without cause), other than death or
permanent disability, such rights as to which the incentive period has not
lapsed shall terminate and be null and void on termination of the relationship.
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(e) Issuance of Shares. Upon the lapse of an incentive period, the
Company shall deliver to the holder of the related incentive stock unit a
certificate or certificates representing the number of shares of Common Stock
equal to the number of incentive stock units with respect to which an incentive
period has lapsed. The Company shall pay all applicable transfer or issue taxes.
8. OPTIONS
Options shall be evidenced by stock option agreements in such form, and
not inconsistent with the Plan, as the Plan Administrator shall approve from
time to time, which agreements shall contain in substance the following terms
and conditions:
(a) Option Price; Number of Shares. The option price, which shall be
approved by the Plan Administrator, shall in no event be less than one hundred
percent (100%), in the case of ISOs, and sixty-five percent (65%), in the case
of other options, of the fair market value of the Common Stock at the time the
option is granted. The fair market value of the Common Stock, for the purpose of
the Plan, shall mean: (i) if the Common Stock is traded on a national securities
exchange or on the NASDAQ National Market System ("NMS"), the per share closing
price of the Common Stock on the principal securities exchange on which they are
listed or on NMS, as the case may be, on the date of grant (or if there is no
closing price for such date of grant, then the last preceding business day on
which there was a closing price); or (ii) if the Common Stock is traded in the
over-the-counter market and quotation are published on the NASDAQ quotation
system (but not on NMS), the mean between the per share closing bid and asked
prices of the Common Stock on the date of grant as reported by NASDAQ (or if
there are no closing bid and asked prices for such date of grant, then the last
preceding business day on which there were closing bid and asked prices); or
(iii) if the Common Stock is traded in the over-the-counter market but bid and
asked quotations are not published on NASDAQ, the mean between the closing bid
and asked prices per share for the Common Stock as furnished by a broker-dealer
which regularly furnishes price quotations for the Common Stock.
The option agreement shall specify the total number of shares
to which it pertains and whether such options are ISOs or are not ISOs. With
respect to ISOs granted under the Plan, the aggregate fair market value
(determined at the time an ISO is granted) of the shares of Common Stock with
respect to which ISOs are exercisable for the first time by such employee during
any calendar year shall not exceed $100,000 under all plans of the employer
corporation or its Parents or Subsidiaries.
(b) Waiting Period and Exercise Dates. At the time an option is
granted, the Plan Administrator will determine the terms and conditions to be
satisfied before shares may be purchased, including the dates on which shares
subject to the option may first be purchased. (The period from the date of grant
of an option until the date on which such option may first be exercised is
referred to herein as the "waiting period".) At the time an option is granted,
the Plan Administrator shall fix the period within which it may be exercised
which shall not be less than six (6) months nor, for an ISO, more than ten (10)
years from the date of grant or for a non-ISO for more than thirteen (13) years
from the date of grant. (Any of such periods is referred to herein as the
"exercise price.")
(c) Form and Time of Payment. Stock purchased pursuant to an option
agreement shall be paid for at the time of purchase either in cash or by
certified check or, in the discretion of the Plan Administrator, as set forth in
the stock option agreement (i) in a combination of cash and a promissory note,
(ii) through the delivery of shares of Common Stock, or (iii) in a combination
of the methods described above. Upon receipt of payment, the Company shall,
without transfer or issue tax to the option holder or other person entitled to
exercise the options, deliver to the option holder (or such other person) a
certificate or certificates for the shares so purchased.
(d) Effect of Termination or Death. In the event that an option holder
ceases to be an employee or consultant of the Company or of any of its
Subsidiaries for any reason other than permanent disability (as determined by
the Plan Administrator) and death, any option, including any unexercised portion
thereof, which was otherwise exercisable on the date of termination, shall
expire unless exercised within a period of three months from the date on which
the option holder ceased to be so employed, but in no event after the expiration
of the exercise period; provided,
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however, that, if the Plan Administrator shall determine that an option holder
shall have been discharged for cause, options granted and not yet exercised
shall terminate immediately and be null and void as of the date of discharge. In
the event of the death of an option holder during this three month period, the
option shall be exercisable by his or her personal representatives, heirs or
legatees to the same extent that the option holder could have exercised the
option if he or she had not died, for the three months from the date of death,
but in no event after the expiration of the exercise period. In the event of the
permanent disability of an option holder while an employee or consultant of the
Company or of any Subsidiary, any option granted to such employee or consultant
shall be exercisable for twelve (12) months after the date of permanent
disability, but in no event after the expiration of the exercise period. In the
event of the death of an option holder while an employee or consultant of the
Company or any of its Subsidiaries, or during the twelve (12) month period after
the date of permanent disability of the option holder, that portion of the
option which had become exercisable on the date of death shall be exercisable by
his or her personal representatives, heirs or legatees at any time prior to the
expiration of one (1) year from the date of the death of the option holder, but
in no event after the expiration of the exercise period. Except as the Plan
Administrator shall provide otherwise, in the event an option holder ceases to
be an employee or consultant of the Company or of any Subsidiary for any reason,
including death, prior to the lapse of the waiting period, his or her option
shall terminate and be null and void.
(e) Other Provisions. Each option granted under the Plan may contain
such other terms, provisions, and conditions not inconsistent with the Plan as
may be determined by the Plan Administrator.
9. STOCK APPRECIATION RIGHTS
The Plan Administrator may grant, in its discretion, stock appreciation
rights to Eligible Participants who are granted stock options under the Plan.
Such rights shall be granted pursuant to a stock appreciation rights agreement
in such for, and not inconsistent with the Plan, as the Plan Administrator shall
approve from time to time (and which may be incorporated in the stock option
agreement governing the terms of the related option) and shall include
substantially the following terms and conditions as the Plan Administrator shall
determine:
(a) Grant. Each right shall relate to a specific option granted under
the Plan and shall be granted to the option holder either concurrently with the
grant of such option, or at such later time as determined by the Plan
Administrator.
(b) Exercise. A stock appreciation right shall entitle an option holder
to receive, without payment of cash or property to the Company, a number of
shares of Common Stock, cash, or a combination thereof in the amount determined
pursuant to Subsection 9(c) below. The Plan Administrator shall determine
whether such payment shall be made in Common Stock, cash, or a combination
thereof. Unless otherwise determine by the Plan Administrator, a right shall be
exercisable to no greater extent nor upon any more favorable conditions than its
related option is exercisable under Subsection 8(b) hereof. An option holder
wishing to exercise a right in accordance with this Subsection 9(b) shall give
written notice of such exercise to the Company, which notice shall state that
the holder of the right elects to exercise the right and the number of shares in
respect of which the right is being exercised. The effective date of exercise of
a right shall be the date on which the Company shall have received such notice.
Upon receipt of such notice, the Company shall: (i) deliver to the option holder
or other person entitled to exercise the right, a certificate or certificates
representing such shares; and/or (ii) pay cash. The Company shall pay all
applicable transfer or issue taxes. Notwithstanding the provisions of this
section, no stock appreciation right may be exercised within a period of six
months of the date of grant of such stock appreciation right and no stock
appreciation right granted with respect to an ISO may be exercised unless the
fair market value of the Common Stock on the date of exercise exceeds the
exercise price of an ISO.
(c) Number of Shares or Amount of Cash. The number of shares which
shall be issued pursuant to the exercise of a stock appreciation right shall be
determined by dividing (i) that portion, as elected by the option holder, of the
total number of shares which the option holder is eligible to purchase pursuant
to Subsection 8(b) hereof (and as adjusted pursuant to Section 12 hereof),
multiplied by the amount (if any) by which the fair market value (as determined
in accordance with Subsection 8(a) hereof) of a share of Common Stock on the
exercise date exceeds the option exercise
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price of the related option; by (ii) the fair market value of a share of Common
Stock on the exercise date. In lieu of issuing shares of Common Stock on the
exercise of a right, the Plan Administrator may elect to pay the cash equivalent
of the fair market value on the exercise date of any or all the shares which
would otherwise be issuable on exercise of the right. No fractional shares shall
be issued under this Subsection 9(c). In lieu of the fractional shares, the
option holder shall be entitled to receive a cash adjustment equal to the same
fraction of the fair market value per share of Common Stock on the date of
exercise.
(d) Effect of Exercise. Upon the exercise of stock appreciations
rights, the related option shall be considered to have been exercised to the
extent of the number of shares of Common Stock with respect to which such stock
appreciation rights are exercised, and shall be considered to have been
exercised to that extent for purposes of determining the number of shares of
Common Stock available for the grant of options under the Plan. Upon the
exercise or termination of the related option, the stock appreciation rights
with respect to such related option shall be considered to have been exercised
or terminated to the extent of the number of shares of Common Stock with respect
to which the related option was so exercised or terminated.
(e) Effect of Termination or Death. In the event that an option holder
ceases to be an employee or consultant of the Company or any of its Subsidiaries
for any reason, his stock appreciation rights shall be exercisable only to the
extent and upon the conditions that its related option is exercisable under
Subsection 8(d).
10. LIMITED STOCK APPRECIATION RIGHTS
The Plan Administrator may grant, in its discretion, limited stock
appreciation rights ("Limited Rights") to the holder of any option with respect
to all or a portion of the shares subject to such option. Such Limited Rights
shall be granted pursuant to an agreement in such form, and not inconsistent
with the Plan, as the Plan Administrator shall approve from time to time (and
which may be incorporated in the stock option agreements governing the terms of
the related option) and shall include substantially the following terms and
conditions as the Plan Administrator shall determine:
(a) Grants. A Limited Right may be granted concurrently with the grant
of the related option or at such later time as determined by the Plan
Administrator.
(b) Exercise. Unless otherwise determined by the Plan Administrator, a
Limited Right may be exercised only during the period (a) beginning on the first
day following any one of (i) the date of approval by the stockholders of the
Company of an Approved Transaction (as defined in Subsection 10(e) below), (ii)
the date of a Control Purchase (as defined in Subsection 10(e) below), or (iii)
the date of a Board Change (as defined in Subsection 10(e) below); and (b)
ending on the thirtieth day (or such other date specified in the stock option
agreement) following such date (such period herein referred to as the "Limited
Right Exercise Period"). Each Limited Right shall be exercisable during the
Limited Right Exercise Period only to the extent the related option is then
exercisable, and in no event after the termination of the related option.
Limited Rights granted under the Plan shall be exercisable in whole or in part
by notice to the Company. Such notice shall state that the holder of the Limited
Rights elects to exercise the Limited Rights and the number of shares in respect
of which the Limited Rights are being exercised. The effective date of exercise
of a Limited Right shall be deemed to be the date on which the Company shall
have received such notice.
(c) Amount Paid Upon Exercise. Upon the exercise of Limited Rights, the
holder shall receive in cash an amount equal to the excess of the fair market
value (as determined pursuant to Subsection 8(a) above) on the date of exercise
of such Limited Rights of each share of Common Stock with respect to which such
Limited Right shall have been exercised over the exercise price per share of
Common Stock subject to the related option.
(d) Effect of Exercise. Upon the exercise of Limited Rights, the
related option shall be considered to have been exercised to the extent of the
number of shares of Common Stock with respect to which such Limited Rights are
exercised, and shall be considered to have been exercised to that extent for
purposes of determining the number of shares of Common Stock available for the
grant of options under the Plan. Upon the exercise or termination of the related
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option, the Limited Rights with respect to such related option shall be
considered to have been exercised or terminated to the extent of the number of
shares of Common Stock with respect to which the related option was so exercised
or terminated.
(e) Definitions. For purposes of this Section 10:
(i) An "Approved Transaction" shall mean (A) any consolidation
or merger of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of Common Stock would be converted into
cash, securities or other property, other than a merger of the Company in which
the holders of Common Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation immediately
after the merger, or (B) any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company, or (c) the adoption of any plan or proposal for
the liquidation or dissolution of the Company.
(ii) A "Control Purchase" shall mean circumstances in which
any person (as such term is defined in Sections 13(d)(3) and 14(d)(2) of the
Exchange Act), corporation or other entity (other than the Company or any
employee benefit plan sponsored by the Company or any Subsidiary) (A) shall
purchase any Common Stock (or securities convertible into the Company's Common
Stock) for cash, securities or any other consideration pursuant to a tender
offer or exchange offer, without the prior consent of the Board of Directors, or
(B) shall become the "beneficial owner" (as such term is defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing twenty-five percent (25%) or more of the combined voting power of
the then outstanding securities of the Company ordinarily (and apart from rights
occurring under special circumstances) having the right to vote in the election
of directors (calculated as provided in paragraph (d) of such Rule 13d-3 in the
case of rights to acquire the Company's securities).
(iii) A "Board Change" shall mean circumstances in which,
during any period of two consecutive years or less, individuals who at the
beginning of such period constitute the entire Board shall cease for any reason
to constitute a majority thereof unless the election, or the nomination for
election by the Company's stockholders, of each new director was approved by a
vote of at least a majority of the directors then still in office.
11. RESTRICTED STOCK PURCHASES
The Plan Administrator may authorize, in its discretion, the issuance
of restricted shares of Common Stock to Eligible Participants pursuant to
restricted share agreements in such form, and not inconsistent with the Plan, as
the Plan Administrator shall approve from time to time. Any amount of restricted
shares issued shall be subject to the following terms:
(a) Restricted Period and Price. The Plan Administrator shall prescribe
restrictions, terms and conditions, including but not limited to the period
("restricted period") during which the holder must continue to render services
to the Company in order to retain the restricted shares. The Plan Administrator
shall determine the price, if any, to be paid by the holder for the restricted
shares. Upon forfeiture of any restricted shares, any amount paid by the holder
shall be repaid in full by the Company.
(b) Issuance of Restricted Shares. Restricted shares, when issued, will
be represented by a stock certificate or certificates registered in the name of
the holder to whom such restricted shares shall have been awarded. During the
restricted period, certificates representing the restricted shares and any
securities constituting retained distributions (as defined below in Subsection
10(c)) shall bear a restrictive legend to the effect that ownership of the
restricted shares, and the enjoyment of all rights appurtenant thereto, are
subject to the restrictions, terms and conditions provided in the Plan and the
applicable shares agreement. Such certificates shall be deposited by such holder
with the Company, together with stock powers or other instruments of assignment,
each endorsed in blank, which will permit transfer to the Company of all or any
portion of the restricted shares and any retained distributions that shall be
forfeited or that shall not become vested in accordance with the Plan and the
applicable restricted shares agreement.
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(c) Rights With Respect to Restricted Shares. Restricted shares shall
constitute issued and outstanding shares of Common Stock for all corporate
purposes. The holder will have the right to vote such restricted shares, to
receive and retain all regular cash dividends, and such other distributions as
the Plan Administrator may in its sole discretion designate, pay, or distribute
on such restricted shares and to exercise all other rights, powers and
privileges of a holder of Common Stock with respect to such restricted shares,
with the exception that (i) the holder will not be entitled to delivery of the
stock certificate or certificates representing such restricted shares until the
restricted period shall have expired and unless all other vesting requirements
with respect thereto shall have been fulfilled; (ii) the Company will retain
custody of the stock certificate or certificates representing the restricted
shares during the restricted period; (iii) other than regular cash dividends and
such other distributions as the Board may in its sole discretion designate, the
Company will retain custody of all distributions ("retained distributions") made
or declared with respect to the restricted shares (and such retained
distributions will be subject to the same restrictions, terms and conditions as
are applicable to the restricted shares) until such time, if ever, as the
restricted shares with respect to which such retained distributions shall have
been made, paid or declared shall have become vested, and such retained
distributions shall not bear interest or be segregated in separate accounts;
(iv) the holder may not sell, assign, transfer, pledge, exchange, encumber or
dispose of the restricted shares or any retained distributions during the
restricted period; and (v) a breach of any restrictions, terms or conditions
provided in the Plan or established by the Board with respect to any restricted
shares or retained distributions will cause a forfeiture of such restricted
shares and any retained distributions with respect thereto.
(d) Completion of Restricted Period. On the last day of the restricted
period with respect to each Award of restricted shares, and the satisfaction of
any other applicable restrictions, terms and conditions (i) all or part of such
restricted shares shall become vested and (ii) any retained distributions with
respect to such restricted shares shall become vested. Unless the Plan
Administrator determines otherwise, any such restricted shares and retained
distributions that shall not have become vested upon the termination of
employment of the holder shall be forfeited to the Company and the holder shall
not thereafter have any rights (including dividend and voting rights) with
respect to such restricted shares and retained distributions that shall have
been so forfeited, provided, however, that if the holder shall die, become
totally disabled or is terminated by the Company without cause during a
restricted period with respect to any restricted shares, then, unless the
restricted share agreement relating to such shares provided otherwise, the
restricted period applicable to each Award of restricted shares to such holder
shall be deemed to have expired and all such restricted shares and retained
distributions shall become vested.
12. RECAPITALIZATION
In the event that dividends are payable in Common Stock or in the event
there are splits, subdivisions or combinations of shares of Common Stock, the
number of shares available under the Plan shall be increased or decreased
proportionately, as the case may be, and the number of shares delivered upon the
exercise thereafter of any stock option, stock appreciation right or limited
stock appreciation right, upon distribution pursuant to incentive stock rights
theretofore granted or upon sale pursuant to restricted stock purchase
agreements theretofore entered into, and the price per share with respect
thereto, shall be increased or decreased proportionately, as the case may be,
without change in the aggregate purchase price (where applicable).
13. ACCELERATION
Notwithstanding any contrary waiting period in any stock option
agreement, any incentive period in any incentive stock rights agreements or any
Restricted Period with respect to any shares issued pursuant to any restricted
stock purchase agreement, or in the Plan, but subject to any determination by
the Plan Administrator to provide otherwise at the time such Award is granted or
subsequent thereto, each outstanding option granted under the Plan shall become
exercisable in full for the aggregate number of shares covered thereby, and each
share issuable upon lapse of an incentive period or issued pursuant to a
restricted stock purchase agreement shall vest unconditionally on the first day
following the occurrence of any of the following: (a) the approval by the
stockholders of the Company of an Approved Transaction; (b) a Control Purchase;
or (c) a Board Change.
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14. CONTINUATION OF RELATIONSHIP: LEAVE OF ABSENCE
(a) Nothing in the Plan or any Award made hereunder shall interfere
with or limit in any way the right of the Company or of any Subsidiary to
terminate any Eligible Participant's employment at any time, nor confer upon any
Eligible Participant any right to continue any such relation with the Company or
Subsidiary.
(b) For purposes of the Plan, a transfer of an employee from the
Company to a Subsidiary or vice versa, or from one Subsidiary to another, or a
leave of absence duly authorized by the Company shall not be deemed a
termination of employment or a break in an incentive, waiting, exercise or
Restricted Period, as the case may be. In the case of any employee on an
approved leave of absence, the Plan Administrator may make such provisions with
respect to continuance of incentive stock rights, options or shares previously
granted while on leave from the employ of the Company or a Subsidiary as it may
deem equitable.
15. GENERAL RESTRICTION
Each Award made under the Plan shall be subject to the requirement
that, if at any time the Plan Administrator shall determine, in its sole and
subjective discretion, that the registration qualification or listing of the
shares subject to such Award upon a securities exchange or under any state or
federal law, or the consent or approval of any government regulatory body, is
necessary or desirable as a condition of, or in connection with, the granting or
exercise of such Award, the Company shall not be required to issue such shares
unless such registration, qualification, listing, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the Plan
Administrator. Nothing in the Plan or any agreement or grant hereunder shall
obligate the Company to effect any such registration, qualification or listing.
16. RIGHTS AS A STOCKHOLDER
The holder of a stock option, incentive stock right, stock appreciation
right or limited stock appreciation right shall have no rights as a stockholder
with respect to any shares covered by the stock option, incentive stock right,
stock appreciation right or limited stock appreciation right, as the case may
be, until the date of issuance of a stock certificate to him for such shares
related to the exercise or discharge thereof. No adjustment shall be made for
the dividends or other rights for which the record date is prior to the date
such stock certificate is issued.
17. NON-ASSIGNABILITY OF INCENTIVE STOCK RIGHTS, STOCK OPTIONS, STOCK
APPRECIATION RIGHTS AND LIMITED STOCK APPRECIATION RIGHTS
No incentive stock right, stock option, stock appreciation right or
limited stock appreciation right shall be assignable or transferable by an
Eligible Participant except by will or by the laws of descent and distribution
and during the lifetime of an Eligible Participant may only be exercised by him.
Notwithstanding the foregoing, to the extent permitted by applicable law and
Rule 16b-3, the Plan Administrator may permit a recipient of an Award to (i)
designate in writing during the Participant's lifetime a beneficiary to receive
and exercise the Award in the event of such Participant's death or (ii) transfer
an Award granted hereunder.
18. WITHHOLDING TAXES
Whenever under the Plan shares are to be issued in satisfaction of
stock options, incentive stock rights, stock appreciation rights or limited
stock appreciation rights granted thereunder, or pursuant to restricted stock
purchases, the Company shall have the right to require the Eligible Participant
to remit to the Company an amount sufficient to satisfy federal, state and local
withholding tax requirements prior to the delivery of any certificates for such
shares or at such later time as when the Company any determine that such taxes
are due. Whenever under the Plan payments are to be made in cash, such payment
shall be net of an amount sufficient to satisfy federal, state and local
withholding tax requirements.
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19. NON-EXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board of Directors nor any
provision of the Plan shall be construed as creating any limitations on the
power of the Plan Administrator to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under the Plan, including, without
limitation, the granting of stock options otherwise than under the Plan, and
such arrangements may be either generally applicable or applicable only in
specific cases.
20. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN
The Plan Administrator may at any time amend, alter, suspend or
discontinue the Plan, but no amendment, alteration, suspension or discontinuance
shall be made which would impair the rights of any recipient of a stock option,
incentive stock right, stock appreciation right or limited stock appreciation
right under any agreement theretofore entered into hereunder, without his
consent, or which, without the requisite vote of the stockholders of the Company
approving such action, would:
(a) except as is provided in Section 12 of the Plan, increase the total
number of shares of Common Stock reserved for the purposes of the Plan; or
(b) extend the duration of the Plan; or
(c) materially increase the benefits accruing to participants under the
Plan; or
(d) change the category of persons who can be Eligible Participants
under the Plan.
Without limiting the foregoing, the Plan Administrator may, any time or
from time to time, authorize the Company, with the consent of the respective
recipients, to issue new options or rights in exchange for the surrender and
cancellation of any or all outstanding options or rights.
21. LIMITATIONS ON EXERCISE
Notwithstanding anything to the contrary contained in the Plan, any
agreement evidencing any Award hereunder may contain such provisions as the
Board of Directors deems appropriate to ensure that the penalty provisions of
Section 4999 of the Code, or any successor thereto, will not apply to any stock
or cash received by the holder from the Company.
22. LIMITATIONS ON AWARDS
Notwithstanding anything to the contrary contained in the plan, no
Eligible Participant may be granted aggregate Awards in any calendar year that
consist of stock or the right to purchase stock that exceeds 200,000 shares.
23. GOVERNING LAW
The Plan shall be governed by, and construed in accordance with, the
laws of the State of Delaware.
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