SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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(as permitted by Rule 14a-6(e)(2)
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
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ACCUHEALTH,INC.
- - --------------------------------------------------------------------------------
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<PAGE>
ACCUHEALTH, INC.
1575 Bronx River Avenue
Bronx, New York 10460
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 22, 1998
The Annual Meeting of Shareholders of Accuhealth, Inc. (the "Company")
will be held on October 22, 1998, at 8:00 A.M. local time at the offices of
Proskauer Rose LLP, 1585 Broadway, 26th Floor, New York, New York 10036, for the
following purposes:
1. To elect each of three persons to serve as a director of a class to
hold office until the 2001 Annual Meeting of Shareholders;
2. To consider and vote upon the approval of the Accuhealth, Inc. 1998
Stock Option Plan;
3. To ratify the selection of Marcum & Kliegman LLP as the Company's
auditors for the fiscal year ending March 31, 1999; and
4. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on September 30,
1998, as the record date to determine the shareholders entitled to notice of,
and to vote at, the Annual Meeting of Shareholders.
You are cordially invited to attend the Annual Meeting.
By Order of the Board of Directors
Prisco J. DeMercurio
Secretary
October 7, 1998
IMPORTANT
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER
TO INSURE THAT YOUR SHARES ARE VOTED.
<PAGE>
ACCUHEALTH, INC.
1575 Bronx River Avenue
Bronx, New York 10460
PROXY STATEMENT
GENERAL
This Proxy Statement and the accompanying proxy card is furnished in
connection with the solicitation of proxies by the Board of Directors of
Accuhealth, Inc. (the "Company") for the Annual Meeting of Shareholders to be
held at the offices of Proskauer Rose LLP, 1585 Broadway, 26th Floor, New York,
New York 10036, on Thursday, October 22, 1998, at 8:00 A.M. local time (the
"Annual Meeting"), and for any adjournments thereof, for the purposes set forth
in the accompanying Notice of Annual Meeting of Shareholders (the "Notice of
Meeting"). This proxy statement, the accompanying proxy card and the 1998 Annual
Report are first being sent to holders of the Company's Common Stock and
Preferred Stock on or about October 13, 1998.
In an effort to have as large a representation at the Annual Meeting as
possible, proxy solicitations may be made in person or by telephone by
directors, officers and employees of the Company, without added compensation.
The Company will bear the entire cost of soliciting proxies hereunder and, upon
request, will reimburse nominees for their reasonable out-of-pocket expenses in
sending proxy materials to beneficial owners.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE DATE
AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE IN
ORDER TO INSURE THAT YOUR SHARES ARE VOTED.
RECORD DATE AND VOTING SECURITIES
Only shareholders of record as at the close of business on September 30,
1998 (the "Record Date") are entitled to vote at the Annual Meeting. On the
record date there were issued and outstanding 3,644,498 shares of the Company's
Common Stock, par value $.01 per share (the "Common Stock"), and 1,350,000
shares of the Company's 6% Cumulative Convertible Preferred Stock, par value
$.01 per share (the "Preferred Stock"). Each outstanding share of Common Stock
and Preferred Stock is entitled to one vote upon each matter to be acted upon at
the Annual Meeting. The holders of a majority of the aggregate of the
outstanding Common Shares and Preferred Shares (the "Shares") shall constitute a
quorum.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth existing ownership as of September 30, 1998,
with respect to the beneficial ownership of shares of Common Stock by (i) each
person known by the Company to be the beneficial owner of 5% or more of the
outstanding shares of Common Stock, (ii) each nominee for director, (iii) each
director, (iv) each current executive officer named in the Summary Compensation
Table below and (v) all officers and directors as a group, and the percentage of
the outstanding shares of Common Stock represented thereby.
3
<PAGE>
Amount of Nature
Name of of Beneficial
Beneficial Owner(1) Ownership(1) Percent of Class(2)
- - ---------------------------------- --------------------- -------------------
Glenn C. Davis 356,947(3)(4) 10.3
c/o Accuhealth, Inc.
1575 Bronx River Ave.
Bronx, New York, 10460
Stanley Goldstein 373,822(3)(5) 10.8
c/o Accuhealth, Inc.
1575 Bronx River Ave.
Bronx, New York, 10460
Donald B. Louria, M.D. 29,500(6) *
Special Situation Fund III, L.P. 628,529(7) 17.0
153 East 53 Street
New York, New York 10022
Penfield Partners, L.P. 289,439(8) 8.4
153 East 53 Street
New York, New York 10022
Special Situations Cayman Fund, L.P. 218,887(9) 6.4
153 East 53 Street
New York, New York 10022
Corbett A. Price 25,360(10) *
Sally Hernandez-Pinero 13,500(11) *
CMNY Capital II, L.P. 309,251(12) 8.8
Jeffrey S. Freed 461,883 14.09
Linda Barkin 233,048 7.1
Robert Giaquinto 444,432 13.6
E. Virgil Conway 30,385(13) *
All Directors and Executive Officers as 1,390,419(14) 36.85
a Group (10 persons)
- - -----------------------
* Percentage of shares beneficially owned does not exceed 1% of the class.
(1) As used herein, the term "beneficial ownership" with respect to a security
is defined by Rule 13d-3 under the Securities Exchange Act of 1934 as
consisting of sole or shared voting power (including the power to vote or
direct the vote) and/or sole or shared investment power (including the
power to dispose or direct the disposition of the shares) with respect to
the security through any contract, arrangement, understanding, relationship
or otherwise, including a right to acquire such power(s) during the next 60
days. Unless otherwise noted, beneficial ownership consists of sole
ownership, voting and investment rights.
4
<PAGE>
(2) Percent of class assumes issuance of the shares subject to currently
exercisable options and shares issuable upon the conversion of 6% Preferred
Stock, as well as an equivalent increase in the number of shares
outstanding.
(3) Includes 140,000 and 120,000 shares issuable pursuant to currently
exercisable stock options for Messrs. Davis and Goldstein, respectively.
(4) Includes 50,000 shares issuable upon conversion of 50,000 shares of 6%
Preferred Stock.
(5) Includes 78,000 shares issuable upon conversion of 78,000 shares of 6%
Preferred Stock.
(6) Includes 22,500 shares issuable pursuant to currently exercisable stock
options and 7,000 shares owned directly or in trust for the benefit of
members of Dr. Louria's family.
(7) Includes 203,524 shares owned of record and beneficially and 425,000 shares
issuable upon conversion of 425,000 shares of 6% Preferred Stock.
(8) Includes 101,990 shares owned of record and beneficially and 187,500 shares
issuable upon conversion of 187,500 shares of 6% Preferred Stock.
(9) Includes 81,387 shares owned of record and beneficially and 137,500 shares
issuable upon conversion of 137,500 shares of 6% Preferred Stock.
(10) Includes 1,860 shares owned of record and beneficially, 10,000 shares
issuable upon conversion of 10,000 shares of 6% Preferred Stock, and 13,500
shares issuable pursuant to currently exercisable stock options.
(11) Includes 13,500 shares issuable pursuant to currently exercisable stock
options.
(12) Includes 59,251 shares owned of record and beneficially and 250,000 shares
issuable upon conversion of 250,000 shares of 6% Preferred Stock.
(13) Includes 6,885 shares owned of record and beneficially, 10,000 shares
issuable upon conversion of 10,000 shares of 6% preferred stock and 13,500
shares issuable pursuant to currently exercisable stock options.
(14) Includes 894,419 shares owned of record and beneficially, 348,000 shares
issuable pursuant to currently exercisable stock options, and 148,000
shares issuable upon conversion of 6% Preferred Stock.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The filing of Forms 3, 4 and 5 (and amendments thereto) by directors and
officers of the Company and by beneficial owners of more than 10% of its
outstanding Common Stock, during or with respect to the prior fiscal year was
inadvertently delayed.
5
<PAGE>
PART III
ITEM 11. EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION AND
NOMINATIONS COMMITTEE ON EXECUTIVE COMPENSATION
Glenn C. Davis, the President and Chief Executive Officer of the Company,
is employed pursuant to an employment agreement (see COMPENSATION OF DIRECTORS
AND OFFICERS -- Employment Agreement). The Board of Directors renewed Mr.
Davis's employment agreement, approved a $25,000 increase in his base salary and
granted Mr. Davis 62,500 shares of the Company's Common Stock, in light of the
Company's improved financial performance for fiscal year 1998, and its desire to
provide an inducement to Mr. Davis to focus on the long-term growth and
profitability of the Company in the discharge of his duties. Factors considered
in determining Mr. Davis's bonus included the Company's success in diversifying
its core home care business, in strengthening its competitive position in the
home care marketplace, and in bringing the Company's expenses into line with
revenues.
Submitted by
Sally Hernandez-Pinero and E. Virgil Conway.
Compensation and Nominations Committee
6
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The graph below compares cumulative total return (assuming an investment of
$100 on April 1, 1993) of the Company, the NASDAQ Market Index, a group of peer
companies selected by the Company (the "New Peer Group"), and a group of
companies presented in the stock performance graph in the Company's 1997 annual
proxy statement (the "Old Peer Group"). The members of the New Peer Group, all
of which engage in the home care and/or infusion business, include: the Company,
The Care Group, Inc., Community Care Services, Inc., Healthcor Holdings, Inc.,
Home Health Corporation of American, Inc., Infu-Tech, Inc., National Home Health
Care, Inc., New York Home Health Care, Inc., Transworld Healthcare, Inc. and
U.S. Hoecake Corp. The Company has determined that the New Peer Group provides a
more useful measure of the Company's five-year performance than the Old Peer
Group due to the greater similarity between the businesses, products, services
and relevant markets of the Company and the New Peer Group. The members of the
Old Peer Group are: Coram Healthcare Corp., Health Professionals, Inc., Income
Health, Inc., Maxicare Health Plans, Inc., Mid Atlantic Medical Services, Inc.
and Olsten Corp. The price of the Company's common stock represented as of March
31, 1994 is extrapolated due to the suspension of trading in the Company's stock
on March 1, 1993, which suspension ended on November 15, 1994.
[The graphical representation of the performance graph was inserted here.]
[Following is the tabular representation of performance graph:
<TABLE>
<CAPTION>
Cummulative Total Return
---------------------------------------------------------
3/93 3/94 3/95 3/96 3/97 3/98
<S> <C> <C> <C> <C> <C> <C>
ACCUHEALTH, INC. 100.00 25.00 44.44 25.00 41.67 30.56
NEW PEER GROUP 100.00 69.94 189.72 153.97 150.75 77.36
OLD PEER GROUP 100.00 142.87 161.45 162.48 97.87 82.74
NASDAQ STOCK MARKET (U.S.) 100.00 107.94 120.07 163.03 181.20 274.99]
</TABLE>
7
<PAGE>
Proposal 1. ELECTION OF DIRECTORS
The Company's Board consists of eight directors, divided into three
classes, consisting respectively of three, two and three directors. The three
current nominees are proposed to be elected at the Annual Meeting for a term of
three years. Proxies cannot be voted for more than three persons.
The Board of Directors has nominated Stanley Goldstein, who currently
serves as director of the class whose term will expire at the 1998 Annual
Meeting, and two new nominees, Dr. Jeffrey Freed and Howard Landis (the
"Nominees"). The Board of Directors unanimously elected Messrs. Freed and Landis
to serve as directors of the Company at a meeting of the Board held on June 25,
1998.
The Board of Directors has no reason to expect that the Nominees will be
unable to stand for election. In the event that a vacancy among the original
nominees occurs prior to the Annual Meeting, the persons named as proxies or
their substitutes may nominate and may vote for other persons in their
discretion.
It is the intent of the persons named as proxies to vote Shares represented
by proxies for the election of each Nominee, unless authority to so vote has
been withheld or a contrary specification made. Proxies cannot be voted for a
greater number of persons than the number of Nominees named in this Proxy
Statement.
Listed below are the executive officers and directors of the Company at
September 30, 1998:
Annual meeting
at which
Officer or Term will
Name Director Since Age Position Expire
- - -------------------- --------------- ------- -------------------- -------------
E. Virgil Conway 1994 67 Director 1999
Glenn C. Davis 1994 50 President, Chief Executive 2000
Officer and Director
Stanley Goldstein 1994 63 Chairman and Director 1998
Donald B. Louria, MD 1994 68 Director 2000
Sally Hernandez-Pinero 1994 44 Director 2000
Corbett A. Price 1994 47 Director 1999
Howard Landis 1998 44 Director New nominee
Jeffrey S. Freed, MD 1998 53 Director, Executive New nominee
Vice President
Prisco J. DeMercurio 1997 47 Senior Vice President - --
Finance, Chief Financial
Officer
Mary Comerford 1998 43 Executive Vice --
Chief Operating
Officer
8
<PAGE>
Set forth below are brief summaries of the business experience of the
persons who were directors as of September 30, 1998:
E. Virgil Conway chairs the Company's Audit and Stock Option Committees and
was elected a director on April 29, 1994. Mr. Conway is a member of the
Executive and Compensation and Nominations Committees. Since May 16, 1995, he
has served as Chairman of the Board of the Metropolitan Transportation
Administration of the City of New York and, from 1989 to 1996, he served as
Chairman of the Audit Committee of the City of New York. From 1992 until July
1995, Mr. Conway served as Chairman of the Financial Accounting Standards
Advisory Council. From 1968 through 1988, Mr. Conway served as Chairman and
Chief Executive Officer and as a director of the Seamen's Bank for Savings, FSB.
From 1986 until 1989, Mr. Conway also served as Vice Chairman of Seamen's
Corporation. From 1967 to 1968, Mr. Conway served as an Executive Vice President
and Trustee at the Manhattan Savings Bank. From 1964 to 1967, Mr. Conway served
as First Deputy Superintendent of Banks of the State of New York and Secretary
of the New York State Banking Board. Mr. Conway specializes in financial
consulting. Mr. Conway serves on several corporate boards, including Union
Pacific Corporation, Con Edison, HRE, a real estate investment trust, Trism,
Inc., a specialized trucking firm, and mutual funds managed by Phoenix Home
Life.
Glenn C. Davis became President of Accuhealth Home Care, Inc. in December
1993, and became a director, Chief Executive Officer and President of the
Company on February 3, 1994. Mr. Davis is a member of the Executive Committee.
Mr. Davis served as the Treasurer of the Company from April 29, 1994 until
August 5, 1994. From June 1993 until June 30, 1995, Mr. Davis was a general
partner of Capstone Management Company, an investment partnership engaged
principally in the initiation, acquisition and management of businesses in the
health care industry. Mr. Davis is a certified public accountant. From 1980
until January 1993, Mr. Davis was a partner with Coopers & Lybrand, an
international accounting and consulting firm.
Stanley Goldstein was elected Chairman of the Company's Board of Directors
on April 29, 1994. Mr. Goldstein has been a private investor from 1981 until the
present. Mr. Goldstein is Chairman of the Executive Committee. From June 1993
until June 30, 1995, Mr. Goldstein was a general partner of Capstone Management
Company, an investment partnership engaged principally in initiation,
acquisition and management of businesses in the health care industry. Mr.
Goldstein is a certified public accountant. From 1964 until 1981, Mr. Goldstein
was the founder and Managing Partner of Goldstein Golub Kessler & Company,
Certified Public Accountants. Mr. Goldstein serves on the boards of directors of
Security Mutual Life Insurance Company and Security Equity Life Insurance
Company.
Donald B. Louria, M.D., M.A.C.P. was elected a director on April 29, 1994.
He is a member of the Professional Conduct Committee. Dr. Louria has been a
Professor and Chairman of the Department of Preventive Medicine and Community
Health of the University of Medicine and Dentistry of New Jersey- New Jersey
Medical School from July 1969 until the present. Over the same period, among
other appointments, Dr. Louria has served as a consultant in Infectious Diseases
to Memorial Hospital for Cancer and Allied Diseases and, from 1971 until the
present, has served on the Consultant Medical Staff in Infectious Diseases at
St. Michael's Medical Center in Newark, New Jersey.
Sally B. Hernandez-Pinero was elected a director on September 20, 1994. She
chairs the Compensation and Nominations Committee and also serves on the
Professional Conduct Committee. Ms. Hernandez-Pinero is Managing Director of the
Fannie Mae American Communities Fund. Ms. Hernandez- Pinero previously was a
member of the law firm of Kalkines Arky Zall & Bernstein, where she was
primarily engaged in public finance, housing and economic development projects,
low income tax credit syndications and intergovernmental relations. Ms.
Hernandez-Pinero served as Chairwoman of the New York City Housing Authority
from February 1992 to January 1994. In that position she had direct
9
<PAGE>
operational responsibility for the nation's largest public housing program with
325 developments housing over 600,000 people, a staff of 16,000 and a budget of
$1.45 billion. From January 1990 to February 1992, Ms. Hernandez-Pinero was
Deputy Mayor for Finance and Economic Development, in which position she
designed and supervised the development and implementation of business,
industrial and commercial development policies for the City of New York. From
January 1988 to January 1990 she served as Commissioner/Chairwoman of the Board
of Directors of the Financial Services Corporation of New York City where she
developed and implemented the course of action and priorities for that agency's
economic development programs. Prior to January 1988, Ms. Hernandez-Pinero
served as Deputy Borough President of Manhattan; General Counsel to the State of
New York Mortgage Agency, and was an attorney with a number of community
development and legal service organizations. Ms. Hernandez- Pinero is a director
of Consolidated Edison Corporation, the Dime Savings Bank and National Income
Realty Trust.
Corbett A. Price was elected a director on September 20, 1994. Mr. Price is
a member of the Professional Conduct and Audit Committees. He is the Chairman
and Chief Executive Officer of KURRON, a New York based health care management
company which Mr. Price founded in January 1990. KURRON specializes in the
rehabilitation of distressed hospitals and health care systems. Mr. Price began
his career in health care management in 1975 at the Hospital Corporation of
America, where he served as a Vice President from 1983 to 1989. As head of
Hospital Corporation of America's Mid-Atlantic Division, he directed the
operations of approximately twenty hospitals in four states and the District of
Columbia. Mr. Price has advised the governments of Mexico, Barbados and Jamaica
on health care delivery systems and facilities.
Howard C. Landis was elected a director of the Company on June 25, 1998
pursuant to an agreement between the Company and RFE Investment Partners V, L.P.
("R.E.") pursuant to which RFE purchased a convertible subordinated note issued
by the Company in the amount of $5 million.. Since 1980, Mr. Landis has been
employed by R.E. Management Corp., an investment manager of private equity
investment funds. Since 1983 Mr. Landis has been a general partner of the
private equity funds managed by RFE Management Corp.
Prisco J. DeMercurio joined the Company as Senior Vice President of Finance
and Administration in September 1997. From 1994 to 1996, Mr. DeMercurio was
President and Chief Operating Officer of The Dolphin Agency, a provider of
internet specific applications and web sites. From 1990 to 1993, Mr. DeMercurio
served as president of Film Microelectronics, Inc., a custom microelectronics
manufacturer supplying high-end commercial, aerospace and military users with
thick and thin film products. Mr. DeMercurio is a Certified Public Accountant.
Jeffrey S. Freed, M.D. became Executive Vice President of the Company in
April 1998, in which capacity he directs Strategic Planning and Development for
the Company. Before joining the Company, Dr. Freed was a founder of and the
President and Chief Executive Officer of Healix HealthCare, Inc., ("Healix")
which was acquired by the Company in April 1998. Dr. Freed is a practicing
surgeon and Associate Clinical Professor of Surgery at the Mt. Sinai School of
Medicine. Dr. Freed is Chairman of the Scientific Advisory Board of Biotite,
Inc., an intravenous solution research and development company.
Mary E. B. Comerford, R.N. has been Chief Operating Officer of the Company
since April 1998. Ms. Comerford was a founder and the Chief Operating Officer of
Healix. From 1986 to 1993, Ms. Comerford held a number of senior level positions
with Home Intensive Care, Inc., a national home health care company.
10
<PAGE>
Board Meetings and Committees
During the fiscal year ended March 31, 1998, the Company had the following
committees of the Board of Directors:
Audit Committee. The Audit Committee is presently comprised of two
non-employee directors: E. Virgil Conway and Corbett A. Price. The Committee
reviews the engagement and independence of the Company's independent auditors,
reviews fees payable to and correspondence with the auditors, serves as a
conduit to the Board for reporting on the conduct and results of the audit,
including any irregularities that may be detected in the audit, and discusses
with the auditors their report and any significant issues arising in the course
of the audit. The Audit Committee met four times during the fiscal 1998.
Compensation and Nominations Committee. The Compensation and Nominations
Committee, which met one time during fiscal 1998, consists of two non-employee
directors: E. Virgil Conway and Sally Hernandez-Pinero. The Committee reviews,
approves and makes recommendations to the Board with respect to the Company's
compensation policies, practices and procedures to ensure that such policies,
practices and procedures contribute to the success of the Company. The
Compensation and Nominations Committee also makes recommendations to the Board
with respect to prospective nominees to the Board. The Committee will consider
nominees recommended by security-holders, which recommendations should be
furnished in writing to the Chairman of the Committee at the Company's principal
office.
Stock Option Committee. The members of the Stock Option Committee are E.
Virgil Conway (Chairman) and Stanley Goldstein. The Stock Option Committee
administers the Company's 1988 Stock Option Plan and, subject to stockholder
approval of the plan, will administer the Company's 1998 Stock Option Plan. The
Stock Option Committee held one meeting during fiscal 1998.
Executive Committee. The Executive Committee consists of three directors,
Stanley Goldstein (Chairman), Glenn C. Davis, and E. Virgil Conway. The
Committee meets as necessary between regularly scheduled meetings to take such
action as it may deem advisable for the efficient operation of the Company. The
Committee has the authority to take all actions that could be taken by the full
Board of Directors, with certain exceptions. The Executive Committee met four
times during the 1998 fiscal year.
Professional Conduct Committee. The Professional Conduct Committee consists
of three non- employee directors, Donald B. Louria, M.D. (Chairman), Sally
Hernandez-Pinero and Corbett A. Price. The Committee reviews any complaints
about the conduct of any employee in inter-relationships with clients, advises
management with respect to the medical and ethical practices of the Company and
makes recommendations as to methods to ensure that the Company meets the highest
standards in the delivery of its services.
During the fiscal year ended March 31, 1998, the Board of Directors held 4
meetings. No incumbent director attended fewer than 75% of those meetings or of
meetings of the committees on which he or she served.
Vote Required for Approval
The affirmative votes of the holders of a plurality of the votes cast
at the meeting by holders of shares of Common Stock and Preferred Stock, voting
together as a single class, who are present in person or represented by proxy
and who are entitled to vote at the Annual Meeting is required to elect each
director.
The Board of Directors Recommends a Vote For Each of the Nominated Directors.
11
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Directors who are not officers of, or consultants to, the Company are
entitled to a fee of $6,000 per annum plus $1,000 per annum ($2,000 per annum
for the Chair) for each committee on which they serve. Messrs. Conway, Price and
Landis, Dr. Louria and Ms. Hernandez-Pinero are eligible for the foregoing fees.
The Company does not pay directors fees to officers or consultants for serving
as directors.
The following table sets forth all compensation earned, awarded or paid by
the Company to its Chief Executive Officer for the fiscal year ended March 31,
1998. No other person who was an executive officer at any time during the fiscal
year ended March 31, 1998, received salary and bonus in excess of $100,000
during or attributable to such fiscal year.
Summary Compensation Table
Long Term
Annual Compensation Compensation
-------------------------- ---------------
Name and All other
Principal Position Year Salary Bonus Compensation
- - ---------------------- ------------- --------------- ------- ---------------
Glenn C. Davis FY1998 $250,000 -- --
President and Chief FY1997 $200,000 -- --
Executive Officer FY1996 $219,229 -- $1,854
Employment Agreement
The Board of Directors of the Company has authorized the renewal of its
employment agreement with Glenn C. Davis, its President and Chief Executive
Officer through May 2, 2001. Under the renewed employment agreement, the
Company's President and Chief Executive Officer is entitled to an annual salary
at a rate of $275,000 and an additional 62,500 shares of the Company's common
stock. The agreement also provides for a severance payment equal to 150% of his
annual compensation, including base salary and any initial bonus ("Annual
Compensation"), at the date of termination if (i) his employment is terminated
by him due to a breach of the agreement by the Company, (ii) the Company fails
to offer to extend his employment for additional terms of one year on the same
terms; or (iii) his employment terminates due to disability. If the employment
is terminated due to his death, the severance payment is equal to 50% of his
Annual Compensation at the date of death. The agreement further provides that,
in the event of a merger or sale of substantially all of the assets of the
Company, either the successor corporation or he may elect to terminate his
employment and that, if his employment is so terminated, he would be entitled to
receive a severance payment equal to 300% of his Annual Compensation at the date
of termination. In addition, the agreement provides that he will not compete
with the Company for 18 months after a termination of his employment, except
that, if such termination is by the Company for cause, the non-competition
period will be for 24 months.
Stock Options
The following tables set forth information concerning exercisable options
during the fiscal year ended March 31, 1998, with respect to the Common Stock.
No stock options or stock appreciation rights were granted to executive officers
and no stock options or stock appreciation rights were exercised by executive
officers during such year.
12
<PAGE>
<TABLE>
<CAPTION>
FISCAL YEAR-END OPTION VALUES
Number of Shares Underlying Value of Unexercised in-the-Money
Unexercised Options at Fiscal Year-End Options at Fiscal Year-End (1)
-------------------------------------- ----------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- - --------------- ----------------- ------------------ ---------------- ----------------
<S> <C> <C> <C> <C>
Glenn C. Davis 120,000 80,000 $0 $0
</TABLE>
- - ---------------
(1) Mr. Davis does not own any unexercised options that are, or were at fiscal
year-end, in-the-money.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of June 28, 1994, the Company entered into a Consulting Agreement with
Stanley Goldstein, who is Chairman of the Board. Pursuant to such Consulting
Agreement, Mr. Goldstein provides consulting services to the Company in, among
other areas, capital financing, mergers and acquisitions. The Company has agreed
to pay consulting fees to Mr. Goldstein in the amount of $4,000 per month and an
office expense reimbursement of $1,000 per month for use of Mr. Goldstein's
offices and support facilities in the performance of his consulting duties. The
foregoing fees accrued but were not paid during fiscal 1998. In further
consideration of Mr. Goldstein's consulting services, the Company granted to Mr.
Goldstein an option to purchase 150,000 shares of Common Stock at prices ranging
from $1.625 to $3.00 per share.
In April and July, 1998, Glenn Davis, the President and Chief Executive
Officer of the Company, borrowed an aggregate amount of $100,000 from the
Company. Pursuant to the terms of Mr. Davis' promissory note (the "Note") in
favor of the Company, interest accrues at a rate of 6% per annum and is payable
quarterly. The Note is secured by shares of Company stock owned by Mr. Davis and
is payable on demand after three years.
Howard Landis, a director of the Company, is a partner of the general
partner of R.F.E. Investment Partners V, L.P. ("R.E."). On July 9, 1998, R.E.
purchased a convertible subordinated note (the "Convertible Subordinated Note")
issued by the Company in the amount of $5 million. Mr. Lands was nominated for
election to the Board pursuant to a Stockholders' Agreement, dated as of July
14, 1998, by and among the Company, R.E., Mr. Davis and Mr. Goldstein, which was
entered into in connection with R.E.'s purchase of the Convertible Subordinated
Note and which provides that Messrs. Davis and Goldstein will vote their shares
of Common Stock as necessary to accomplish the nomination and election to the
Company's Board of Directors of one nominee designated by R.E.
Jeffrey Freed, a director of the Company, is a former officer and
stockholder of Helix, which merged with the Company in April 1998 (the "Helix
Merger"). In connection with the Helix Merger, Dr. Freed received shares of the
Company's Common Stock in exchange for shares of Helix stock. In addition, Dr.
Freed was nominated to the Board of Directors of the Company pursuant to the
terms of the Agreement and Plan of Merger, dated as of December 1, 1997 (the
"Helix Merger Agreement"), by and among the Company, H.C. Acquiring Corp., Helix
and certain stockholders of Healix, which provides for Dr. Freed's nomination to
the Board of Directors following the consummation of the Healix Merger.
Mary Comerford, the Chief Executive Officer of the Company, is a former
officer and stockholder of Healix. Ms. Comerford received shares of the
Company's Common Stock pursuant to the terms of the Healix Merger Agreement in
exchange for shares of Healix stock.
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Proposal 2. ADOPTION AND APPROVAL OF THE ACCUHEALTH, INC. 1998 STOCK OPTION
PLAN
The Company's Board of Directors has approved the Accuhealth, Inc. 1998
Stock Incentive Plan (the "Plan") in order to enhance the profitability and
value of the Company for the benefit of its shareholders by enabling the Company
(i) to offer employees of and consultants to the Company and its affiliates (as
defined in the Plan) stock-based incentives and other equity interests in the
Company, thereby creating a means to raise the level of stock ownership by such
individuals in order to attract, retain and reward such individuals and
strengthen the mutuality of interests between such individuals and shareholders
and (ii) to grant nonqualified stock options to non-employee directors thereby
attracting, retaining and rewarding such non-employee directors and
strengthening the mutuality of interests between non-employee directors and
shareholders.
There are currently no shares available for the grant of options under the
Company's 1988 Stock Option Plan (the "1988 Plan"). If outstanding options under
the 1988 Plan expire prior to their exercise, the shares covered thereby would
again be eligible for the issuance of options under the 1988 Plan. However, if
the Plan is approved by stockholders, the Company will not issue any further
options under the 1988 Plan.
The following description of the Plan is a summary and is qualified in its
entirety by reference to the Plan, a copy of which may be obtained upon written
request to the Company's Shareholder Services Department at the Company's
principal business address.
Administration
The Plan will be administered and interpreted by a committee or
subcommittee of the Board (the "Committee") appointed from time to time by the
Board, consisting of two or more non-employee directors, each of whom is
intended to be a non-employee director as defined in Rule 16b-3 under the
Exchange Act ("Rule 16b-3") and an outside director as defined under Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). If no
Committee exists which has the authority to administer the Plan, the functions
of the Committee will be exercised by the Board.
The Committee will have the full authority to administer and interpret the
Plan (except that with respect to awards to non-employee directors, the Plan
(unless otherwise specified therein) will be administered by the Board), to
grant discretionary awards under the Plan, to determine the persons to whom
awards will be granted, to determine the types of awards to be granted, to
determine the terms and conditions of each award, to determine the number of
shares of Common Stock to be covered by each award, to determine whether, to
what extent and under what circumstances to provide loans to participants (other
than non-employee directors) in order to exercise options or to purchase awards
(including shares of Common Stock), to prescribe the form or forms of
instruments evidencing awards and to make all other determinations in connection
with the Plan and the awards thereunder as the Committee (or the Board, in the
case of non-employee directors' awards), in its sole discretion, deems necessary
or desirable.
The terms and conditions of individual awards will be set forth in written
agreements which will be consistent with the terms of the Plan. Awards under the
Plan may not be made on or after the tenth anniversary of the adoption of the
Plan, but awards granted prior to such date may extend beyond that date.
Eligibility and Types of Awards
All employees of, and consultants to, the Company and its affiliates
(including prospective employees and consultants) are eligible to be granted
nonqualified stock options, stock appreciation rights,
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restricted stock, performance shares, performance units and other stock-based
awards. In addition, employees of the Company and its affiliates that qualify as
subsidiaries or parent corporations (within the meaning of Section 424 of the
Code) are eligible to be granted incentive stock options ("ISOs") under the
Plan. Non-employee directors of the Company are eligible to receive grants of
nonqualified stock options only.
Available Shares
The aggregate number of shares of Common Stock which may be issued or used
for reference purposes under the Plan may not exceed 2,000,000. Each outstanding
unexercised stock option granted prior to the effective date of the Plan to
employees of the Company, including, without limitation, stock options that were
granted to employees under the 1988 Plan, whether vested or unbelted, and awards
of restricted stock that were granted to the President and Chief Executive
Officer of the Company will be assumed and deemed to be awards hereunder. Each
award assumed will continue to be governed by the terms of the 1988 Plan and the
applicable agreement in effect prior to the effective date of the Plan, except
that such awards will be subject to the change in control provisions of the Plan
described below.
The maximum number of shares of Common Stock with respect to which any
option, stock appreciation right, award of performance shares or award of
restricted stock for which the grant of such award or lapse of the relevant
restriction period is subject to the attainment of pre-established performance
goals (in accordance with Code Section 162(m)) which may be granted under the
Plan during any fiscal year of the Company to any individual will be 200,000
shares per type of award. The maximum value at grant of performance units which
may be granted under the Plan during any fiscal year of the Company to any
individual will be $100,000. To the extent that shares of Common Stock for which
awards are permitted to be granted to an individual during a fiscal year are not
covered by an award in a fiscal year, the number of shares of Common Stock
available for such awards to such individual will automatically increase in
subsequent fiscal years until used.
The number of shares of Common Stock available for the grant of awards and
the exercise price of an award may be adjusted to reflect any change in the
Company's capital structure or business by reason of certain corporate
transactions or events.
Awards Under the Plan
Stock Options. The Committee may grant nonqualified stock options and ISOs
to purchase shares of Common Stock. The Committee will determine the number of
shares of Common Stock subject to each option, the term of each option (which
may not exceed 10 years (or five years in the case of an ISO granted to a 10%
shareholder)), the exercise price, the vesting schedule (if any), and the other
material terms of each option. No ISO or nonqualified stock option may have an
exercise price less than the fair market value of the Common Stock at the time
of grant (or, in the case of an ISO granted to a 10% shareholder, 110% of fair
market value).
Options will be exercisable at such time or times and subject to such terms
and conditions as determined by the Committee at grant and the exercisability of
such options may be accelerated by the Committee in its sole discretion. Payment
of the purchase price may be made: (i) in cash or by check, bank draft or money
order, (ii) through a "cashless exercise" procedure whereby the recipient
delivers irrevocable instructions to a broker to deliver promptly to the Company
an amount equal to the purchase price, or (iii) on such other terms and
conditions as may be acceptable to the Committee or the Board, as applicable
(including, without limitation, the relinquishment of options or by payment in
full or in part in the form of Common Stock owned by the participant for a
period of at least 6 months (and for which the participant has good title free
and clear of any liens and encumbrances)).
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<PAGE>
Stock Appreciation Rights. The Committee may grant stock appreciation
rights ("SARs") either with a stock option which may be exercised only at such
times and to the extent the related option is exercisable ("Tandem SAR") or
independent of a stock option ("Non-Tandem SARs"). An SAR is a right to receive
a payment either in cash or common stock, as the Committee may determine, equal
in value to the excess of the fair market value of one share of Common Stock on
the date of exercise over the exercise price per share established in connection
with the grant of the SAR. The exercise price per share covered by an SAR will
be the exercise price per share of the related option in the case of a Tandem
SAR and will be the fair market value of the Common Stock on the date of grant
in the case of a Non-Tandem SAR.
Restricted Stock. The Committee may award shares of restricted stock. Upon
the award of restricted stock, the recipient has all rights of a shareholder
with respect to the shares, including the right to receive dividends, the right
to vote the shares of restricted stock and, conditioned upon full vesting of
shares of restricted stock, the right to tender such shares, subject to the
conditions and restrictions generally applicable to restricted stock or
specifically set forth in the recipient's restricted stock agreement. The
Committee may, in its sole discretion, determine at grant, that the payment of
dividends, if any, shall be deferred until the expiration of the applicable
restriction period.
Recipients of restricted stock are required to enter into a restricted
stock agreement with the Company which states the restrictions to which the
shares are subject and the criteria or date or dates on which such restrictions
will lapse. Within these limits, based on service, attainment of objective
performance goals, and such other factors as the Committee may determine in its
sole discretion, the Committee may provide for the lapse of such restrictions or
may accelerate or waive such restrictions at any time.
If the grant of restricted stock or the lapse of the relevant restriction
is based on the attainment of objective performance goals, the Committee shall
establish the performance goals, formulae or standards and the applicable
vesting percentage for the restricted stock award applicable to each participant
while the outcome of the performance goals are substantially uncertain. Such
performance goals may incorporate provisions for disregarding (or adjusting for)
changes in accounting methods, corporate transactions (including, without
limitation, dispositions and acquisitions) and other similar events or
circumstances. These performance goals shall be based on one or more of the
following performance criteria (the "Performance Criteria"): (i) revenues,
income before income taxes and extraordinary income, net income, earnings before
income tax, earnings before interest, taxes, depreciation and amortization,
funds from operation of real estate investments or a combination of any or all
of the foregoing, (ii) after-tax or pre-tax profits, (iii) operational cash
flow, (iv) level of, reduction of, or other specified objectives with regard to
the Company's bank debt or other long-term or short-term public or private debt
or other similar financial obligations, (v) earnings per share or earnings per
share from continuing operations, (vi) return on capital employed or return on
invested capital, (vii) after-tax or pre-tax return on shareholders' equity,
(viii) economic value added targets, (ix) fair market value of the shares of
Common Stock, (x) the growth in the value of an investment in the Common Stock
assuming the reinvestment of dividends, and (xi) reducing costs. In addition,
such performance goals may be based upon the attainment of specified levels of
Company (or subsidiary, division or other operational unit of the Company)
performance under one or more of the measures described above relative to the
performance of other corporations. To the extent permitted under the Code, the
Compensation Committee may: (i) designate additional business criteria on which
the performance goals may be based; or (ii) adjust, modify or amend the
aforementioned business criteria.
Performance Units and Performance Shares. The Committee may grant
performance shares entitling recipients to receive a fixed number of shares of
Common Stock or the cash equivalent thereof, as determined by the Committee in
its sole discretion, upon the attainment of performance goals established by the
Committee (based on the Performance Criteria), based on a specified performance
period
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<PAGE>
The Committee may also grant performance units entitling recipients to receive a
value payable in cash or shares of Common Stock, as determined by the Committee,
upon the attainment of performance goals established by the Committee (based on
the Performance Criteria), for a specified performance cycle.
The Committee may subject such grants of performance shares and performance
units to such vesting and forfeiture conditions as it deems appropriate.
Other Stock-Based Awards. The Committee may grant awards of Common Stock
and other awards that are valued in whole or in part by reference to, or are
payable in or otherwise based on, Common Stock and may be granted either alone
or in addition to or in tandem with stock options, stock appreciation rights,
restricted stock, performance shares or performance units. Subject to the
provisions of the Plan, the Committee has the authority to determine the
recipients to whom and the time or times at which such awards will be made, the
number of shares of Common Stock to be awarded pursuant to such awards, and all
other conditions of the awards. The Committee may also provide for the grant of
Common Stock under such awards upon the completion of a specified performance
period.
Change in Control
Unless determined otherwise by the Committee at the time of grant, and
except to the extent provided in the applicable award agreement, the recipient's
employment agreement or other agreement approved by the Committee, upon a change
in control, all vesting and forfeiture conditions, restrictions and limitations
in effect with respect to any outstanding award will immediately lapse and any
unvested awards will automatically become 100% vested. Notwithstanding the
foregoing, the Committee may decide to provide that stock options will be
honored or assumed or new rights substituted therefor by a recipient's employer
immediately following a change in control.
The Committee may, in its sole discretion, provide for accelerated vesting
of an award at any time. Upon a change in control of the Company, options
granted to non-employee directors will be subject to the rules described below.
Non-Employee Director Stock Option Grants
The Plan authorizes the Board or the Committee to grant nonqualified stock
options to each non-employee director, as follows: (i) options to purchase up to
a maximum of 15,000 shares of Common Stock may be granted to each non-employee
director as of the date he or she begins service as a non-employee director on
the Board, and (ii) options to purchase up to a maximum of 10,000 shares of
Common Stock may be granted to each non-employee director as of the first day of
the month following each annual meeting of shareholders of the Company (other
than in the year he or she receives options pursuant to (i) above). The exercise
price per share of such options will be determined by the Board or the Committee
at the time of grant but may not be less than the fair market value of the
Common Stock at the time of grant. The term of each such option will be 5 years.
Options granted to non-employee directors will vest and become exercisable at
the rate of 50% of the shares of Common Stock on or after each of the first two
anniversaries immediately following the date of grant. All options granted to
non-employee directors and not previously exercisable will become fully
exercisable immediately upon a change in control.
Amendment and Termination
Notwithstanding any other provision of the Plan, the Board or Committee may
at any time, amend any or all of the provisions of the Plan, or suspend or
terminate it entirely, retroactively or otherwise; provided, however, that,
unless otherwise required by law or specifically provided in the Plan, the
rights of a participant with respect to awards granted prior to such amendment,
suspension or termination, may
17
<PAGE>
not be impaired without the consent of such participant and, provided further,
without the approval of the shareholders of the Company in accordance with the
laws of the State of New York, to the extent required under Section 162(m) of
the Code, or to the extent applicable to ISOs, Section 422 of the Code, no
amendment may be made which would: (i) increase the aggregate number of shares
of Common Stock that may be issued, (ii) increase the maximum individual
participant share limitations for a fiscal year, (iii) change the classification
of employees or consultants eligible to receive awards, (iv) decrease the
minimum exercise price of any stock option or SAR, (v) extend the maximum option
term, (vi) materially alter the Performance Criteria, or (vii) require
shareholder approval in order for the Plan to continue to comply with the
applicable provisions of Section 162(m) of the Code or, to the extent applicable
to ISOs, Section 422 of the Code.
Miscellaneous
Awards granted under the Plan are generally nontransferable, except that
the Committee may, in its sole discretion, permit the transfer of nonqualified
stock options (other than those granted to non-employee directors) at the time
grant or thereafter.
The Plan is not subject to any of the requirements of the Employee
Retirement Income Security Act of 1974, as amended. The Plan is not, nor is it
intended to be, qualified under Section 401(a) of the Code.
Certain U.S. Federal Income Tax Consequences.
The rules concerning the Federal income tax consequences with respect to
options granted and to be granted pursuant to the Plan are quite technical.
Moreover, the applicable statutory provisions are subject to change, as are
their interpretations and applications which may vary in individual
circumstances. Therefore, the following is designed to provide a general
understanding of the Federal income tax consequences. In addition, the following
discussion does not set forth any state or local tax consequences that may be
applicable.
Incentive Stock Options. In general, an employee will not realize taxable
income upon either the grant or the exercise of an ISO and the Company will not
realize an income tax deduction at either such time. If the recipient does not
sell the Common Stock received pursuant to the exercise of the ISO within either
(i) two years after the date of the grant of the ISO or (ii) one year after the
date of exercise, a subsequent sale of the Common Stock will result in long-term
capital gain or loss to the recipient and will not result in a tax deduction to
the Company. Capital gains rates may be reduced in the case of a longer holding
period.
If the recipient disposes of the Common Stock acquired upon exercise of the
ISO within either of the above mentioned time periods, the recipient will
generally realize as ordinary income an amount equal to the lesser of (i) the
fair market value of the Common Stock on the date of exercise over the option
price, or (ii) the amount realized upon disposition over the option price. In
such event, the Company generally will be entitled to an income tax deduction
equal to the amount recognized as ordinary income. Any gain in excess of such
amount realized by the recipient as ordinary income would be taxed at the rates
applicable to short-term or long-term capital gains (depending on the holding
period).
In addition, (i) officers and directors of the Company subject to Section
16(b) of the Exchange Act may be subject to special rules regarding the income
tax consequences concerning their ISOs, (ii) any entitlement to a tax deduction
on the part of the Company is subject to the applicable federal tax rules
(including, without limitation, Code Section 162(m) regarding the $1,000,000
limitation on deductible compensation), (iii) the exercise of an ISO may have
implications in the computation of alternative
18
<PAGE>
minimum taxable income, and (iv) in the event that the exercisability or vesting
of any award is accelerated because of a change of control, payments relating to
the awards (or a portion thereof), either alone or together with certain other
payments, may constitute parachute payments under Section 280G of the Code,
which excess amounts may be subject to excise taxes.
Nonqualified Stock Options. A recipient will not realize any taxable income
upon the grant of a nonqualified stock option and the Company will not receive a
deduction at the time of such grant unless such option has a readily
ascertainable fair market value (as determined under applicable tax law) at the
time of grant. Upon exercise of a nonqualified stock option, the recipient
generally will realize ordinary income in an amount equal to the excess of the
fair market value of the Common Stock on the date of exercise over the exercise
price. Upon a subsequent sale of the Common Stock by the recipient, the
recipient will recognize short-term or long-term capital gain or loss depending
upon his or her holding period for the Common Stock. The Company will generally
be allowed a deduction equal to the amount recognized by the recipient as
ordinary income.
In addition, (i) any officers and directors of the Company subject to
Section 16(b) of the Exchange Act may be subject to special tax rules regarding
the income tax consequences concerning their nonqualified stock options, (ii)
any entitlement to a tax deduction on the part of the Company is subject to the
applicable tax rules (including, without limitation, Section 162(m) of the Code
regarding a $1,000,000 limitation on deductible compensation), and (iii) in the
event that the exercisability or vesting of any award is accelerated because of
a change of control, payments relating to the awards (or a portion thereof),
either alone or together with certain other payments, may constitute parachute
payments under Section 280G of the Code, which excess amounts may be subject to
excise taxes.
In general, Section 162(m) of the Code denies a publicly held corporation a
deduction for Federal income tax purposes for compensation in excess of
$1,000,000 per year per person to its chief executive officer and four other
officers whose compensation is disclosed in its proxy statement, subject to
certain exceptions. Options will generally qualify under one of these exceptions
if they are granted under a plan that states the maximum number of shares with
respect to which options may be granted to any recipient during a specified
period of the plan under which the options are granted is approved by
shareholders and is administered by a compensation committee comprised or
outside directors. The Plan is intended to satisfy these requirements with
respect to options.
Vote Required for Approval
The affirmative vote of a majority of the votes cast on this proposal by
the holders of shares of Common Stock and Preferred Stock, voting together as a
single class, who are entitled to vote and who are present in person or
represented by proxy at the Annual Meeting is required for approval of this
proposal.
The Board of Directors Recommends a Vote For Proposal 2.
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Proposal 3. RATIFICATION OF THE APPOINTMENT OF CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has selected Marcum & Kliegman LLP ("Marcum &
Kliegman"), which audited and reported upon the Company's financial statements
for the year ended March 31, 1998, to serve as the Company's certified public
accountants for the fiscal year ending March 31, 1999. In the event selection of
Marcum & Kliegman is not ratified by the stockholders, the Board of Directors
will reconsider its selection of such firm.
At a meeting held on March 5, 1998, the Board of Directors of the Company
approved the engagement of Marcum & Kliegman as its independent auditors for the
fiscal year ending March 31, 1998 to replace the firm of Ernst & Young LLP
("E&Y").
The reports of E&Y on the Company's financial statements for the past two
fiscal years did not contain an adverse opinion or a disclaimer of opinion and
were not qualified or modified as to uncertainty, audit scope, or accounting
principles, except that E&Y's audit report for fiscal year 1996 was modified
with regard to the Company's ability to continue as a going concern.
In connection with the audits of the Company's financial statements for
each of the two fiscal years ended March 31, 1997, there were no disagreements
with E&Y on any matters of accounting principles or practices, financial
statement disclosure, or auditing scope and procedures which, if not resolved to
the satisfaction of E&Y would have caused E&Y to make reference to the matter in
their report.
Representatives of Marcum & Kliegman are expected to be present at the
Annual Meeting and will have the opportunity to make a statement if they desire
to do so and will be available to respond to appropriate questions.
Vote Required for Approval
The affirmative votes of the holders of a majority of the votes cast on
this proposal by the holders of Common Stock and Preferred Stock, voting
together as a single class, who are present in person or represented by proxy
and who are entitled to vote at the Annual Meeting is required for approval of
this proposal.
The Board of Directors Recommends a Vote For Proposal 3.
OTHER BUSINESS
The Board of Directors does not know of any matters to be presented for
action at the Meeting other than as set forth in this Proxy Statement. If any
other business should properly come before the Meeting, the persons named in the
proxy intend to vote thereon in accordance with their best judgment.
VOTING PROCEDURES
At the Annual Meeting, shareholders will be requested to act upon the
matters set forth in this Proxy Statement. If you are not present at the Annual
Meeting, your shares can by voted only when represented by proxy. The shares
represented by your proxy will be voted in accordance with your directions if
the proxy is properly signed and returned to the Company at or before the Annual
Meeting. If no instructions are specified in the proxy, the shares represented
thereby will be voted for the nominees for the Board of Directors listed in this
Proxy Statement and in favor of each proposal set forth herein with respect to
matters other than election of directors. If any other matters shall properly
come before the
20
<PAGE>
Meeting, the enclosed proxy will be voted in accordance with the best judgment
of the persons voting such proxy.
Any proxy may be revoked at any time prior to it being voted by delivering
to the Company a written revocation to the Company to the attention of the
Inspector of Election, by properly executing and delivering to the Company a
later-dated proxy, or by attending the Annual Meeting, requesting the return of
the proxy and voting in person.
Abstentions are counted in tabulations of the votes cast on proposals
presented to stockholders, whereas broker non-votes are not counted for purposes
of determining whether a proposal has been approved. Abstentions and broker
non-votes will have no effect on the election of directors (Proposal 1), which
is by plurality vote, but abstentions will, in effect, be votes against the
approval of the proposed 1998 Stock Option Plan (Proposal 2) and the
ratification of the selection of independent public accountants (Proposal 3), as
these items require the affirmative vote of the shares present and eligible to
vote on such matters.
SHAREHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
Shareholder proposals intended to be presented at the Company's 1999 annual
meeting of stockholders must be received by the Company for inclusion in its
proxy statement and form of proxy no later than June 15, 1999. A stockholder who
intends to submit a proposal for the Company's next annual meeting that the
stockholder does not intend to request be included in the Company's proxy
materials in accordance with Securities and Exchange Commission rules must give
notice to the Company prior to August 28, 1998. If the stockholder does not
provide the Company with timely notice of such a proposal, the persons
designated as management proxies on the Company's proxy card may exercise their
discretionary authority to vote on that proposal. If the stockholder does
provide the Company with timely notice of such a proposal, depending upon the
circumstances, management's proxies may not be able to exercise their
discretionary authority to vote on the proposal.
By Order of the Board of Directors
/s/Prisco J. DeMercurio
-----------------------
Prisco J. DeMercurio
Secretary
October 13, 1998
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ACCUHEALTH, INC.
1998 STOCK INCENTIVE PLAN
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I PURPOSE.......................................................1
ARTICLE II DEFINITIONS...................................................1
ARTICLE III ADMINISTRATION................................................7
ARTICLE IV SHARE AND OTHER LIMITATIONS..................................10
ARTICLE V ELIGIBILITY..................................................13
ARTICLE VI STOCK OPTIONS................................................14
ARTICLE VII STOCK APPRECIATION RIGHTS....................................16
ARTICLE VIII RESTRICTED STOCK.............................................19
ARTICLE IX PERFORMANCE SHARES...........................................21
ARTICLE X PERFORMANCE UNITS............................................23
ARTICLE XI OTHER STOCK-BASED AWARDS.....................................25
ARTICLE XII NON-TRANSFERABILITY AND TERMINATION OF
EMPLOYMENT/CONSULTANCY.......................................26
ARTICLE XIII NON-EMPLOYEE DIRECTOR STOCK OPTION GRANTS....................28
ARTICLE XIV CHANGE IN CONTROL PROVISIONS.................................31
ARTICLE XV TERMINATION OR AMENDMENT OF PLAN.............................33
ARTICLE XVI UNFUNDED PLAN................................................34
ARTICLE XVII GENERAL PROVISIONS...........................................35
ARTICLE XVIII EFFECTIVE DATE OF PLAN.......................................38
ARTICLE XIX TERM OF PLAN.................................................38
EXHIBIT A PERFORMANCE CRITERIA........................................A-1
i
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ACCUHEALTH, INC.
--------------------------
1998 STOCK INCENTIVE PLAN
--------------------------
ARTICLE I
PURPOSE
The purpose of this Accuhealth, Inc. 1998 Stock Incentive Plan is to enhance the
profitability and value of the Company for the benefit of its shareholders by
enabling the Company (i) to offer employees of and Consultants to the Company
and its Affiliates stock-based incentives and other equity interests in the
Company, thereby creating a means to raise the level of stock ownership by
employees and Consultants in order to attract, retain and reward such
individuals and strengthen the mutuality of interests between such individuals
and the Company's shareholders, and (ii) to make equity based awards to
Non-Employee Directors, thereby creating a means to attract, retain and reward
such Non-Employee Directors and strengthen the mutuality of interests between
Non-Employee Directors and the Company's shareholders.
ARTICLE II
DEFINITIONS
For purposes of this Plan, the following terms shall have the following
meanings:
2.1 "Acquisition Event" has the meaning set forth in Section 4.2(d).
2.2 "Affiliate" means each of the following: (i) any Subsidiary; (ii)
any Parent; (iii) any corporation, trade or business (including, without
limitation, a partnership or limited liability company) which is directly
or indirectly controlled 50% or more (whether by ownership of stock, assets
or an equivalent ownership interest or voting interest) by the Company or
one of its Affiliates; and (iv) any other entity in which the Company or
any of its Affiliates has a material equity interest and which is
designated as an "Affiliate" by resolution of the Committee.
<PAGE>
2.3 "Award" means any award under this Plan of any: (i) Stock Option;
(ii) Stock Appreciation Right; (iii) Restricted Stock; (iv) Performance
Share; (v) Performance Unit; or (vi) Other Stock-Based Award.
2.4 "Board" means the Board of Directors of the Company.
2.5 "Cause" means, with respect to a Participant's Termination of
Employment or Termination of Consultancy: (i) in the case where there is no
employment agreement, consulting agreement, change in control agreement or
similar agreement in effect between the Company or an Affiliate and the
Participant at the time of the grant of the Award (or where there is such
an agreement that does not define "cause" (or words of like import)),
termination due to a Participant's fraud, dishonesty, negligence or
engaging in competition or solicitations in competition with the Company or
any Affiliate; or (ii) in the case where there is an employment agreement,
consulting agreement, change in control agreement or similar agreement in
effect between the Company or an Affiliate and the Participant at the time
of the grant of the Award that defines "cause" (or words of like import),
as defined under such agreement; provided, however, that with regard to any
agreement that conditions "cause" on occurrence of a change in control,
such definition of "cause" shall not apply until a change in control
actually takes place and then only with regard to a termination thereafter.
With respect to a Participant's Termination of Directorship, "cause" shall
mean an act or failure to act that constitutes cause for removal of a
director under applicable New York law.
2.6 "Change in Control" has the meaning set forth in Article XIV.
2.7 "Code" means the Internal Revenue Code of 1986, as amended. Any
reference to any section of the Code shall also be a reference to any
successor provision.
2.8 "Committee" means: (a) with respect to the application of this
Plan to Eligible Employees and Consultants, a committee or subcommittee of
the Board appointed from time to time by the Board, which committee or
subcommittee shall consist of two or more non-employee directors, each of
whom is intended to be, to the extent required by Rule 16b-3, a
"non-employee director" as defined in Rule 16b-3 and, to the extent
required by Section 162(m) of the Code and any regulations thereunder, an
"outside director" as defined under Section 162(m) of the Code; provided,
however, that if and to the extent that no Committee exists which has the
authority to administer this Plan, the functions of the Committee shall be
exercised by the Board and all references herein to the Committee shall be
deemed to be references to the Board; and (b) with respect to the
application of this Plan to Non-Employee Directors, unless specifically
provided otherwise herein, the Board.
2.9 "Common Stock" means the common stock, $.01 par value per share,
of the Company.
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2.10 "Company" means Accuhealth, Inc., a New York corporation, and its
successors by merger, consolidation or otherwise.
2.11 "Consultant" means any advisor or consultant to the Company or
its Affiliates.
2.12 "Disability" means, with respect to an Eligible Employee,
Consultant or Non-Employee Director, a permanent and total disability as
defined in Section 22(e)(3) of the Code. A Disability shall only be deemed
to occur at the time of the determination by the Committee of the
Disability.
2.13 "Effective Date" means the effective date of this Plan as defined
in Article XVIII.
2.14 "Eligible Employee" means each employee of the Company or an
Affiliate.
2.15 "Exchange Act" means the Securities Exchange Act of 1934, as
amended. Any references to any section of the Exchange Act shall also be a
reference to any successor provision.
2.16 "Fair Market Value" means, unless otherwise required by any
applicable provision of the Code or any regulations issued thereunder, as
of any date, the last sales price reported for the Common Stock on the
applicable date: (i) as reported on the principal national securities
exchange on which it is then traded or the Nasdaq Stock Market, Inc. or
(ii) if not traded on any such national securities exchange or the Nasdaq
Stock Market, Inc. as quoted on an automated quotation system sponsored by
the National Association of Securities Dealers, Inc. If the Common Stock is
not readily tradable on a national securities exchange, the Nasdaq Stock
Market, Inc. or any automated quotation system sponsored by the National
Association of Securities Dealers, Inc., or if no trades have been made or
if no quotes are available for such day, its Fair Market Value shall be set
in good faith by the Committee. Notwithstanding anything herein to the
contrary, "Fair Market Value" means the price for Common Stock set by the
Committee in good faith based on reasonable methods set forth under Section
422 of the Code and the regulations thereunder including, without
limitation, a method utilizing the average of prices of the Common Stock
reported on the principal national securities exchange on which it is then
traded during a reasonable period designated by the Committee. For purposes
of the grant of any Stock Option, the applicable date shall be the date for
which the last sales price is available at the time of grant. For purposes
of the conversion of a Performance Unit to shares of Common Stock for
reference purposes, the applicable date shall be the date determined by the
Committee in accordance with Section 10.1. For purposes of the exercise of
any Stock Appreciation Right, the applicable date shall be the date a
notice of exercise is received by the Committee or, if not a day on which
the applicable market is open, the next day that it is open.
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2.17 "Incentive Stock Option" means any Stock Option awarded to an
Eligible Employee under this Plan intended to be and designated as an
"Incentive Stock Option" within the meaning of Section 422 of the Code.
2.18 "Limited Stock Appreciation Right" means an Award of a limited
Tandem Stock Appreciation Right or a Non-Tandem Stock Appreciation Right
made pursuant to Section 7.5 of this Plan.
2.19 "Non-Employee Director" means a director of the Company who is
not an active employee of the Company or an Affiliate and who is not an
officer, director or employee of (i) any entity which, directly or
indirectly, beneficially owns or controls 5% or more of the combined voting
power of the then outstanding voting securities of the Company (or any
Subsidiary) entitled to vote generally in the election of directors of the
Company (or, if applicable, the Subsidiary) or (ii) any entity controlling,
controlled by or under common control (within the meaning of Rule 405 of
the Securities Act) with any such entity.
2.20 "Non-Qualified Stock Option" means any Stock Option awarded under
this Plan that is not an Incentive Stock Option.
2.21 "Non-Tandem Stock Appreciation Right" means a Stock Appreciation
Right entitling a Participant to receive an amount in cash or Common Stock
(as determined by the Committee in its sole discretion) equal to the excess
of: (i) the Fair Market Value of a share of Common Stock as of the date
such right is exercised, over (ii) the aggregate exercise price of such
right.
2.22 "Other Stock-Based Award" means an Award of Common Stock and
other Awards made pursuant to Article XI that are valued in whole or in
part by reference to, or are payable in or otherwise based on, Common
Stock, including, without limitation, an Award valued by reference to
performance of an Affiliate.
2.23 "Parent" means any parent corporation of the Company within the
meaning of Section 424(e) of the Code.
2.24 "Participant" means any Eligible Employee or Consultant to whom
an Award has been made under this Plan and each Non-Employee Director of
the Company; provided, however, that a Non-Employee Director shall be a
Participant for purposes of the Plan solely with respect to awards of Stock
Options pursuant to Article XIII.
2.25 "Performance Criteria" has the meaning set forth in Exhibit A.
2.26 "Performance Cycle" has the meaning set forth in Section 10.1.
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2.27 "Performance Goal" means the objective performance goals
established by the Committee in accordance with Section 162(m) of the Code
and based on one or more Performance Criteria.
2.28 "Performance Period" has the meaning set forth in Section 9.1.
2.29 "Performance Share" means an Award made pursuant to Article IX of
this Plan of the right to receive Common Stock or, as determined by the
Committee in its sole discretion, cash of an equivalent value at the end of
the Performance Period or thereafter.
2.30 "Performance Unit" means an Award made pursuant to Article X of
this Plan of the right to receive a fixed dollar amount, payable in cash or
Common Stock (or a combination of both) as determined by the Committee in
its sole discretion, at the end of a specified Performance Cycle or
thereafter.
2.31 "Plan" means this Accuhealth, Inc. 1998 Stock Incentive Plan, as
amended from time to time.
2.32 "Reference Stock Option" has the meaning set forth in Section
7.1.
2.33 "Restricted Stock" means an Award of shares of Common Stock under
this Plan that is subject to restrictions under Article VIII.
2.34 "Restriction Period" has the meaning set forth in Section 8.3(a)
with respect to Restricted Stock.
2.35 "Retirement" means a Termination of Employment or Termination of
Consultancy without Cause by a Participant at or after age 65 or such
earlier date after age 50 as may be approved by the Committee with regard
to such Participants. With respect to a Participant's Termination of
Directorship, Retirement shall mean the failure to stand for reelection or
the failure to be reelected at or after a Participant has attained age 65
or, with the consent of the Board, before age 65 but after age 50.
2.36 "Rule 16b-3" means Rule 16b-3 under Section 16(b) of the Exchange
Act as then in effect or any successor provisions.
2.37 "Section 162(m) of the Code" means the exception for
performance-based compensation under Section 162(m) of the Code and any
Treasury regulations thereunder.
2.38 "Securities Act" means the Securities Act of 1933, as amended.
Any reference to any section of the Securities Act shall also be a
reference to any successor provision.
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2.39 "Stock Appreciation Right" or "SAR" means the right pursuant to
an Award granted under Article VII.
2.40 "Stock Option" or "Option" means any option to purchase shares of
Common Stock granted to Eligible Employees or Consultants under Article VI
or to Non- Employee Directors under Article XIII.
2.41 "Subsidiary" means any subsidiary corporation of the Company
within the meaning of Section 424(f) of the Code.
2.42 "Tandem Stock Appreciation Right" means a Stock Appreciation
Right entitling the holder to surrender to the Company all (or a portion)
of a Stock Option in exchange for an amount in cash or Common Stock (as
determined by the Committee in its sole discretion) equal to the excess of:
(i) the Fair Market Value, on the date such Stock Option (or such portion
thereof) is surrendered, of the Common Stock covered by such Stock Option
(or such portion thereof), over (ii) the aggregate exercise price of such
Stock Option (or such portion thereof).
2.43 "Ten Percent Shareholder" means a person owning stock possessing
more than 10% of the total combined voting power of all classes of stock of
the Company, its Subsidiaries or its Parent.
2.44 "Termination of Consultancy" means, with respect to a Consultant,
that the Consultant is no longer acting as a consultant to the Company or
an Affiliate. In the event an entity shall cease to be an Affiliate, there
shall be deemed a Termination of Consultancy of any individual who is not
otherwise a Consultant to the Company or another Affiliate at the time the
entity ceases to be an Affiliate.
2.45 "Termination of Directorship" means, with respect to a
Non-Employee Director, that the Non-Employee Director has ceased to be a
director of the Company.
2.46 "Termination of Employment" means: (i) a termination of
employment (for reasons other than a military or personal leave of absence
granted by the Company) of a Participant from the Company and its
Affiliates; or (ii) when an entity which is employing a Participant ceases
to be an Affiliate, unless the Participant otherwise is, or thereupon
becomes, employed by the Company or another Affiliate.
2.47 "Transfer" means anticipate, alienate, attach, sell, assign,
pledge, encumber, charge, hypothecate or otherwise transfer and
"Transferred" has a correlative meaning.
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ARTICLE III
ADMINISTRATION
3.1 The Committee. The Plan shall be administered and interpreted by
the Committee. If for any reason the appointed Committee does not meet the
requirements of Rule 16b-3 or Section 162(m) of the Code, such
noncompliance with the requirements of Rule 16b-3 and Section 162(m) of the
Code shall not affect the validity of Awards, grants, interpretations or
other actions of the Committee.
3.2 Grants of Awards. The Committee shall have full authority to grant
to Eligible Employees and Consultants, pursuant to the terms of this Plan:
(i) Stock Options; (ii) Tandem Stock Appreciation Rights and Non-Tandem
Stock Appreciation Rights; (iii) Restricted Stock; (iv) Performance Shares;
(v) Performance Units; and (vi) Other Stock-Based Awards. All Awards shall
be granted by, confirmed by, and subject to the terms of, a written
agreement executed by the Company and the Participant. In particular, the
Committee shall have the authority:
(a) to select the Eligible Employees and Consultants to whom
Awards may from time to time be granted hereunder;
(b) to determine whether and to what extent Awards, including any
combination of two or more Awards, are to be granted hereunder to one
or more Eligible Employees or Consultants;
(c) to determine, in accordance with the terms of this Plan, the
number of shares of Common Stock to be covered by each Award granted
hereunder;
(d) to determine the terms and conditions, not inconsistent with
the terms of this Plan, of any Award granted hereunder (including, but
not limited to, the exercise or purchase price (if any), any
restriction or limitation, any vesting schedule or acceleration
thereof and any forfeiture restrictions or waiver thereof, regarding
any Award and the shares of Common Stock relating thereto, based on
such factors, if any, as the Committee shall determine, in its sole
discretion);
(e) to determine whether and under what circumstances a Stock
Option may be settled in cash, Common Stock and/or Restricted Stock
under Section 6.3(d) or, with respect to Stock Options granted to
Non-Employee Directors, Section 13.4(d);
(f) to determine whether, to what extent and under what
circumstances to provide loans (which shall be on a recourse basis and
shall bear interest at the rate the Committee shall provide) to
Eligible Employees and Consultants in order to
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exercise Stock Options under this Plan or to purchase Awards under
this Plan (including shares of Common Stock);
(g) to determine whether a Stock Option is an Incentive Stock
Option or Non-Qualified Stock Option, whether a Stock Appreciation
Right is a Tandem Stock Appreciation Right or Non-Tandem Stock
Appreciation Right or whether an Award is intended to satisfy Section
162(m) of the Code;
(h) to determine whether to require an Eligible Employee or
Consultant, as a condition of the granting of any Award, not to sell
or otherwise dispose of shares of Common Stock acquired pursuant to
the exercise of an Option or an Award for a period of time as
determined by the Committee, in its sole discretion, following the
date of the acquisition of such Option or Award;
(i) to modify, extend or renew an Award, subject to Article XV
herein, provided, however, that if an Award is modified, extended or
renewed and thereby deemed to be the issuance of a new Award under the
Code or the applicable accounting rules, the exercise price of an
Award may continue to be the original exercise price even if less than
the Fair Market Value of the Common Stock at the time of such
modification, extension or renewal; and
(j) to offer to buy out an Option previously granted, based on
such terms and conditions as the Committee shall establish and
communicate to the Participant at the time such offer is made.
3.3 Guidelines. Subject to Article XV hereof, the Committee shall have
the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing this Plan and perform all acts,
including the delegation of its administrative responsibilities, as it
shall, from time to time, deem advisable; to construe and interpret the
terms and provisions of this Plan and any Award issued under this Plan (and
any agreements relating thereto); and to otherwise supervise the
administration of this Plan. The Committee may correct any defect, supply
any omission or reconcile any inconsistency in this Plan or in any
agreement relating thereto in the manner and to the extent it shall deem
necessary to effectuate the purpose and intent of this Plan. The Committee
may adopt special guidelines and provisions for persons who are residing
in, or subject to, the taxes of, countries other than the United States to
comply with applicable tax and securities laws and may impose any
limitations and restrictions that it deems necessary to comply with the
applicable tax and securities laws of such countries. To the extent
applicable, this Plan is intended to comply with Section 162(m) of the Code
and the applicable requirements of Rule 16b-3 and shall be limited,
construed and interpreted in a manner so as to comply therewith.
3.4 Decisions Final. Any decision, interpretation or other action made
or taken in good faith by or at the direction of the Company, the Board or
the Committee (or any
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of its members) arising out of or in connectin with this Plan shall be
within the absolute discretion of all and each of them, as the case may be,
and shall be final, binding and conclusive on the Company and all employees
and Participants and their respective heirs, executors, administrators,
successors and assigns.
3.5 Reliance on Counsel. The Company, the Board or the Committee may
consult with legal counsel, who may be counsel for the Company or other
counsel, with respect to its obligations or duties hereunder, or with
respect to any action or proceeding or any question of law, and shall not
be liable with respect to any action taken or omitted by it in good faith
pursuant to the advice of such counsel.
3.6 Procedures. If the Committee is appointed, the Board shall
designate one of the members of the Committee as chairman and the Committee
shall hold meetings, subject to the By-Laws of the Company, at such times
and places as it shall deem advisable. A majority of the Committee members
shall constitute a quorum. All determinations of the Committee shall be
made by a majority of its members present. Any decision or determination
reduced to writing and signed by all the Committee members in accordance
with the By-Laws of the Company, shall be fully as effective as if it had
been made by a vote at a meeting duly called and held. The Committee shall
keep minutes of its meetings and shall make such rules and regulations for
the conduct of its business as it shall deem advisable.
3.7 Designation of Consultants/Liability.
(a) The Committee may designate employees of the Company and
professional advisors to assist the Committee in the
administration of this Plan and may grant authority to officers
to execute agreements or other documents on behalf of the
Committee.
(b) The Committee may employ such legal counsel,
consultants, appraisers and agents as it may deem desirable for
the administration of this Plan and may rely upon any opinion
received from any such counsel, appraiser or consultant and any
computation received from any such consultant, appraiser or
agent. Expenses incurred by the Committee in the engagement of
any such counsel, consultant or agent shall be paid by the
Company. The Committee, its members and any employee of the
Company designated pursuant to paragraph (a) above shall not be
liable for any action or determination made in good faith with
respect to this Plan. To the maximum extent permitted by
applicable law, no officer or employee of the Company or member
or former member of the Committee shall be liable for any action
or determination made in good faith with respect to this Plan or
any Award granted under it. To the maximum extent permitted by
applicable law or the Certificate of Incorporation or By-Laws of
the Company and to the extent not covered by insurance, each
officer, employee of the Company and member or former member of
the Committee shall be indemnified and held harmless by the
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Company against any cost or expense (including reasonable fees of
counsel reasonably acceptable to the Company) or liability
(including any sum paid in settlement of a claim with the
approval of the Company), and advanced amounts necessary to pay
the foregoing at the earliest time and to the fullest extent
permitted, arising out of any act or omission to act in
connection with this Plan, except to the extent arising out of
such officer's, employee's, member's or former member's own fraud
or bad faith. Such indemnification shall be in addition to any
rights of indemnification the officers, employees directors or
members or former officers, employees, directors or members may
have under applicable law or under the Certificate of
Incorporation or By-Laws of the Company or any Affiliate.
Notwithstanding anything else herein, this indemnification will
not apply to the actions or determinations made by an individual
with regard to Awards granted to him or her under this Plan.
ARTICLE IV
SHARE AND OTHER LIMITATIONS
4.1 Shares.
(a) General Limitation. The aggregate number of shares of
Common Stock which may be issued or used for reference purposes
under this Plan or with respect to which Awards may be granted
shall not exceed 2,000,000 shares of Common Stock (subject to any
increase or decrease pursuant to Section 4.2) with respect to all
types of Awards. The shares of Common Stock available under this
Plan may be either authorized and unissued Common Stock or Common
Stock held in or acquired for the treasury of the Company. If any
Stock Option (including any stock option assumed pursuant to
Section 4.4) or Stock Appreciation Right granted under this Plan
expires, terminates or is canceled for any reason without having
been exercised in full or, with respect to Stock Options, the
Company repurchases any Stock Option, the number of shares of
Common Stock underlying such unexercised or repurchased Stock
Option or any unexercised Stock Appreciation Right shall again be
available for the purposes of Awards under this Plan. If any
shares of Restricted Stock (including any shares of restricted
stock assumed pursuant to Section 4.4), Performance Shares or
Performance Units awarded under this Plan to a Participant are
forfeited or repurchased by the Company for any reason, the
number of forfeited or repurchased shares of Restricted Stock,
Performance Shares or Performance Units shall again be available
for the purposes of Awards under this Plan. If a Tandem Stock
Appreciation Right is granted or a Limited Stock Appreciation
Right is granted in tandem with a Stock Option, such grant shall
only apply once against the maximum number of shares of Common
Stock which may be issued under thisPlan. In determining the
number of shares
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of Common Stock available for Awards other han Awards of
Incentive Stock Options, if Common Stock has been exchanged by a
Participant as full or partial payment to the Company, or for
withholding, in connection with the exercise of a Stock Option or
the number shares of Common Stock otherwise deliverable has been
reduced for withholding, the number of shares of Common Stock
exchanged as payment in connection with the exercise or for
withholding or reduced shall again be available for purposes of
Awards under this Plan.
(b) Individual Participant Limitations. (i) The maximum
number of shares of Common Stock subject to any Award of Stock
Options, Stock Appreciation Rights, Performance Shares or shares
of Restricted Stock for which the grant of such Award or the
lapse of the relevant Restriction Period is subject to the
attainment of Performance Goals in accordance with Section
8.3(a)(ii) herein which may be granted under this Plan during any
fiscal year of the Company to each Eligible Employee or
Consultant shall be 200,000 shares per type of Award (subject to
any increase or decrease pursuant to Section 4.2). If a Tandem
Stock Appreciation Right is granted or a Limited Stock
Appreciation Right is granted in tandem with a Stock Option, it
shall apply against the Eligible Employee's or Consultant's
individual share limitations for both Stock Appreciation Rights
and Stock Options.
(ii) There are no annual individual Eligible Employee
or Consultant share limitations on Restricted Stock for which the
grant of such Award or the lapse of the relevant Restriction
Period is not subject to attainment of Performance Goals in
accordance with Section 8.3(a)(ii) hereof.
(iii) The maximum value at grant of Performance Units
which may be granted under this Plan during any fiscal year of
the Company to each Eligible Employee or Consultant shall be
$100,000. Each Performance Unit shall be referenced to one share
of Common Stock and shall be charged against the available shares
under this Plan at the time the unit value measurement is
converted to a referenced number of shares of Common Stock in
accordance with Section 10.1.
(iv) The individual Participant limitations set forth
in this Section 4.1(b) shall be cumulative; that is, to the
extent that shares of Common Stock for which Awards are permitted
to be granted to an Eligible Employee or a Consultant during a
fiscal year are not covered by an Award to such Eligible Employee
or Consultant in a fiscal year, the number of shares of Common
Stock available for Awards to such Eligible Employee or
Consultant shall automatically increase in the subsequent fiscal
years during the term of the Plan until used.
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4.2 Changes.
(a) The existence of this Plan and the Awards granted
hereunder shall not affect in any way the right or power of the
Board or the shareholders of the Company to make or authorize any
adjustment, recapitalization, reorganization or other change in
the Company's capital structure or its business, any merger or
consolidation of the Company or any Affiliate, any issue of
bonds, debentures, preferred or prior preference stock ahead of
or affecting Common Stock, the dissolution or liquidation of the
Company or any Affiliate, any sale or transfer of all or part of
the assets or business of the Company or any Affiliate or any
other corporate act or proceeding.
(b) Subject to the provisions of Section 4.2(d), in the
event of any such change in the capital structure or business of
the Company by reason of any stock split, reverse stock split,
stock dividend, combination or reclassification of shares,
recapitalization, or other change in the capital structure of the
Company, merger, consolidation, spin-off, reorganization, partial
or complete liquidation, issuance of rights or warrants to
purchase any Common Stock or securities convertible into Common
Stock, or any other corporate transaction or event having an
effect similar to any of the foregoing and effected without
receipt of consideration by the Company, then the aggregate
number and kind of shares which thereafter may be issued under
this Plan, the number and kind of shares or other property
(including cash) to be issued upon exercise of an outstanding
Stock Option or other Awards granted under this Plan and the
purchase price thereof shall be appropriately adjusted consistent
with such change in such manner as the Committee may deem
equitable to prevent substantial dilution or enlargement of the
rights granted to, or available for, Participants under this
Plan, and any such adjustment determined by the Committee in good
faith shall be final, binding and conclusive on the Company and
all Participants and employees and their respective heirs,
executors, administrators, successors and assigns.
(c) Fractional shares of Common Stock resulting from any
adjustment in Options or Awards pursuant to Section 4.2(a) or (b)
shall be aggregated until, and eliminated at, the time of
exercise by rounding-down for fractions less than one-half and
rounding-up for fractions equal to or greater than one-half. No
cash settlements shall be made with respect to fractional shares
eliminated by rounding. Notice of any adjustment shall be given
by the Committee to each Participant whose Award has been
adjusted and such adjustment (whether or not such notice is
given) shall be effective and binding for all purposes of this
Plan.
(d) In the event of a merger or consolidation in which the
Company is not the surviving entity or in the event of any
transaction that results in the acquisition of substantially all
of the Company's outstanding Common Stock by a single person or
entity or by a group of persons and/or entities acting in
concert, or in the
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event of the sale or transfer of all or substantially all of the
Company's assets (all of the foregoing being referred to as
"Acquisition Events"), then the Committee may, in its sole
discretion, terminate all outstanding Stock Options and Stock
Appreciation Rights, effective as of the date of the Acquisition
Event, by delivering notice of termination to each Participant at
least 30 days prior to the date of consummation of the
Acquisition Event, in which case during the period from the date
on which such notice of termination is delivered to the
consummation of the Acquisition Event, each such Participant
shall have the right to exercise in full all of his or her Stock
Options and Stock Appreciation Rights that are then outstanding
(without regard to any limitations on exercisability otherwise
contained in the Stock Option or Award Agreements), but any such
exercise shall be contingent upon and subject to the occurrence
of the Acquisition Event, and, provided that, if the Acquisition
Event does not take place within a specified period after giving
such notice for any reason whatsoever, the notice and exercise
pursuant thereto shall be null and void.
If an Acquisition Event occurs but the Committee does not
terminate the outstanding Stock Options and Stock Appreciation Rights
pursuant to this Section 4.2(d), then the provisions of Section 4.2(b)
shall apply.
4.3 Minimum Purchase Price. Notwithstanding any provision of this
Plan to the contrary, if authorized but previously unissued shares of
Common Stock are issued under this Plan, such shares shall not be
issued for a consideration which is less than as permitted under
applicable law.
4.4 Assumption of Awards. All outstanding stock options granted
prior to the Effective Date to employees of the Company, including,
without limitation, stock options that were granted to employees under
the Amended and Restated 1988 Stock Option Plan of Accuhealth, Inc.,
and awards of restricted stock that were granted to the President and
Chief Executive Officer of the Company will be assumed and deemed to
be awards hereunder. Notwithstanding the foregoing, awards assumed
pursuant to this Section 4.4 shall continue to be governed by the
terms of the applicable agreement in effect prior to the Effective
Date, except that such awards will be subject to the Change in Control
provisions of Article 14 hereof.
ARTICLE V
ELIGIBILITY
5.1 General Eligibility. All Eligible Employees and Consultants
and prospective employees of and Consultants to the Company and its
Affiliates are eligible to be granted Non-Qualified Stock Options,
Stock Appreciation Rights, Restricted Stock, Performance
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Shares, Performance Units and Other Stock-Based Awards under this
Plan. Eligibility for the grant of an Award and actual participation
in this Plan shall be determined by the Committee in its sole
discretion. The vesting and exercise of Awards granted to a
prospective employee or Consultant are conditioned upon such
individual actually becoming an Eligible Employee or Consultant.
5.2 Incentive Stock Options. All Eligible Employees of the
Company, its Subsidiaries and its Parent (if any) are eligible to be
granted Incentive Stock Options under this Plan. Eligibility for the
grant of an Award and actual participation in this Plan shall be
determined by the Committee in its sole discretion.
5.3 Non-Employee Directors. Non-Employee Directors are only
eligible to receive an Award of Stock Options in accordance with
Article XIII of the Plan.
ARTICLE VI
STOCK OPTIONS
6.1 Stock Options. Each Stock Option granted hereunder shall be
one of two types: (i) an Incentive Stock Option intended to satisfy
the requirements of Section 422 of the Code; or (ii) a Non-Qualified
Stock Option.
6.2 Grants. The Committee shall have the authority to grant to
any Eligible Employee one or more Incentive Stock Options,
Non-Qualified Stock Options or both types of Stock Options (in each
case with or without Stock Appreciation Rights). To the extent that
any Stock Option does not qualify as an Incentive Stock Option
(whether because of its provisions or the time or manner of its
exercise or otherwise), such Stock Option or the portion thereof which
does not qualify, shall constitute a separate NonQualified Stock
Option. The Committee shall have the authority to grant any Consultant
one or more Non-Qualified Stock Options (with or without Stock
Appreciation Rights). Notwithstanding any other provision of this Plan
to the contrary or any provision in an agreement evidencing the grant
of a Stock Option to the contrary, any Stock Option granted to an
Eligible Employee of an Affiliate (other than an Affiliate which is a
Parent or a Subsidiary) shall be a Non-Qualified Stock Option.
6.3 Terms of Stock Options. Stock Options granted under this Plan
shall be subject to the following terms and conditions, and shall be
in such form and contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall deem
desirable:
(a) Exercise Price. The exercise price per share of Common
Stock purchasable under an Incentive Stock Option
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or a Non-Qualified Stock Option shall be determined by the
Committee at the time of grant, but shall not be less than 100%
of the Fair Market Value of the share of Common Stock at the time
of grant; provided, however, that if an Incentive Stock Option is
granted to a Ten Percent Shareholder, the exercise price shall be
no less than 110% of the Fair Market Value of the Common Stock.
(b) Stock Option Term. The term of each Stock Option shall
be fixed by the Committee; provided, however, that no Stock
Option shall be exercisable more than 10 years after the date
such Stock Option is granted; and further provided that the term
of an Incentive Stock Option granted to a Ten Percent Shareholder
shall not exceed 5 years.
(c) Exercisability. Stock Options shall be exercisable at
such time or times and subject to such terms and conditions as
shall be determined by the Committee at grant. If the Committee
provides, in its discretion, that any Stock Option is exercisable
subject to certain limitations (including, without limitation,
that such Stock Option is exercisable only in installments or
within certain time periods), the Committee may waive such
limitations on the exercisability at any time at or after grant
in whole or in part (including, without limitation, waiver of the
installment exercise provisions or acceleration of the time at
which such Stock Option may be exercised), based on such factors,
if any, as the Committee shall determine, in its sole discretion.
(d) Method of Exercise. Subject to whatever installment
exercise and waiting period provisions apply under subsection (c)
above, Stock Options may be exercised in whole or in part at any
time and from time to time during the Stock Option term by giving
written notice of exercise to the Committee specifying the number
of shares to be purchased. Such notice shall be accompanied by
payment in full of the purchase price as follows: (i) in cash or
by check, bank draft or money order payable to the order of the
Company; (ii) if the Common Stock is traded on a national
securities exchange, the Nasdaq Stock Market, Inc. or quoted on a
national quotation system sponsored by the National Association
of Securities Dealers, through a "cashless exercise" procedure
whereby the Participant delivers irrevocable instructions to a
broker to deliver promptly to the Company an amount equal to the
purchase price; or (iii) on such other terms and conditions as
may be acceptable to the Committee (including, without
limitation, the relinquishment of Stock Options or by payment in
full or in part in the form of Common Stock owned by the
Participant for a period of at least 6 months (and for which the
Participant has good title free and clear of any liens and
encumbrances) based on the Fair Market Value of the Common Stock
on the payment date as determined by the Committee). No shares of
Common Stock shall be issued until payment therefor, as provided
herein, has been made or provided for.
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(e) Incentive Stock Option Limitations. To the extent that
the aggregate Fair Market Value (determined as of the time of
grant) of the Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by an Eligible
Employee during any calendar year under this Plan and/or any
other stock option plan of the Company, any Subsidiary or any
Parent exceeds $100,000, such Options shall be treated as
Non-Qualified Stock Options. In addition, if an Eligible Employee
does not remain employed by the Company, any Subsidiary or any
Parent at all times from the time an Incentive Stock Option is
granted until 3 months prior to the date of exercise thereof (or
such other period as required by applicable law), such Stock
Option shall be treated as a NonQualified Stock Option. Should
any provision of this Plan not be necessary in order for the
Stock Options to qualify as Incentive Stock Options, or should
any additional provisions be required, the Committee may amend
this Plan accordingly, without the necessity of obtaining the
approval of the shareholders of the Company.
(f) Form, Modification, Extension and Renewal of Stock
Options. Subject to the terms and conditions and within the
limitations of this Plan, Stock Options shall be evidenced by
such form of agreement or grant as is approved by the Committee,
and the Committee may (i) modify, extend or renew outstanding
Stock Options granted under this Plan (provided that the rights
of a Participant are not reduced without his consent), and (ii)
accept the surrender of outstanding Stock Options (up to the
extent not theretofore exercised) and authorize the granting of
new Stock Options in substitution therefor (to the extent not
theretofore exercised).
(g) Other Terms and Conditions. Stock Options may contain
such other provisions, which shall not be inconsistent with any
of the terms of this Plan, as the Committee shall deem
appropriate including, without limitation, permitting "reloads"
such that the same number of Stock Options are granted as the
number of Stock Options exercised, shares used to pay for the
exercise price of Stock Options or shares used to pay withholding
taxes ("Reloads"). With respect to Reloads, the exercise price of
the new Stock Option shall be the Fair Market Value on the date
of the "reload" and the term of the Stock Option shall be the
same as the remaining term of the Stock Options that are
exercised, if applicable, or such other exercise price and term
as determined by the Committee.
ARTICLE VII
STOCK APPRECIATION RIGHTS
7.1 Tandem Stock Appreciation Rights. Stock Appreciation Rights
may be granted in conjunction with all or part of any Stock Option (a
"Reference Stock Option") granted under this Plan ("Tandem Stock
Appreciation Rights"). In the case of a Non-
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Qualified Stock Option, such rights may be granted either at or after
the time of the grant of such Reference Stock Option. In the case of
an Incentive Stock Option, such rights may be granted only at the time
of the grant of such Reference Stock Option. Consultants shall not be
eligible for a grant of Tandem Stock Appreciation Rights granted in
conjunction with all or part of an Incentive Stock Option.
7.2 Terms and Conditions of Tandem Stock Appreciation Rights.
Tandem Stock Appreciation Rights shall be subject to such terms and
conditions, not inconsistent with the provisions of this Plan, as
shall be determined from time to time by the Committee, including
Article XII and the following:
(a) Term. A Tandem Stock Appreciation Right or applicable
portion thereof granted with respect to a Reference Stock Option
shall terminate and no longer be exercisable upon the termination
or exercise of the Reference Stock Option, except that, unless
otherwise determined by the Committee, in its sole discretion, at
the time of grant, a Tandem Stock Appreciation Right granted with
respect to less than the full number of shares covered by the
Reference Stock Option shall not be reduced until and then only
to the extent the exercise or termination of the Reference Stock
Option causes the number of shares covered by the Tandem Stock
Appreciation Right to exceed the number of shares remaining
available and unexercised under the Reference Stock Option.
(b) Exercisability. Tandem Stock Appreciation Rights shall
be exercisable only at such time or times and to the extent that
the Reference Stock Options to which they relate shall be
exercisable in accordance with the provisions of Article VI and
this Article VII.
(c) Method of Exercise. A Tandem Stock Appreciation Right
may be exercised by a Participant by surrendering the applicable
portion of the Reference Stock Option. Upon such exercise and
surrender, the Participant shall be entitled to receive an amount
determined in the manner prescribed in this Section 7.2. Stock
Options which have been so surrendered, in whole or in part,
shall no longer be exercisable to the extent the related Tandem
Stock Appreciation Rights have been exercised.
(d) Payment. Upon the exercise of a Tandem Stock
Appreciation Right, a Participant shall be entitled to receive up
to, but no more than, an amount in cash and/or Common Stock (as
chosen by the Committee in its sole discretion at grant, or
thereafter if no rights of a Participant are reduced) equal in
value to the excess of the Fair Market Value of one share of
Common Stock over the option price per share specified in the
Reference Stock Option, multiplied by the number of shares in
respect of which the Tandem Stock Appreciation shall have been
exercised, with the Committee having right to determine the form
of payment.
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(e) Deemed Exercise of Reference Stock Option. Upon the
exercise of a Tandem Stock Appreciation Right, the Reference
Stock Option or part thereof to which such Stock Appreciation
Right is related shall be deemed to have been exercised for the
purpose of the limitation set forth in Article IV of this Plan on
the number of shares of Common Stock to be issued under this
Plan.
7.3 Non-Tandem Stock Appreciation Rights. Non-Tandem Stock
Appreciation Rights may also be granted without reference to any Stock
Option granted under this Plan.
7.4 Terms and Conditions of Non-Tandem Stock Appreciation Rights.
Non- Tandem Stock Appreciation Rights shall be subject to such terms
and conditions, not inconsistent with the provisions of this Plan, as
shall be determined from time to time by the Committee, including
Article XII and the following:
(a) Term. The term of each Non-Tandem Stock Appreciation
Right shall be fixed by the Committee, but shall not be greater
than ten (10) years after the date the right is granted.
(b) Exercisability. Non-Tandem Stock Appreciation Rights
shall be exercisable at such time or times and subject to such
terms and conditions as shall be determined by the Committee at
grant. If the Committee provides, in its discretion, that any
such right is exercisable subject to certain limitations
(including, without limitation, that it is exercisable only in
installments or within certain time periods), the Committee may
waive such limitation on the exercisability at any time at or
after grant in whole or in part (including, without limitation,
waiver of the installment exercise provisions or acceleration of
the time at which rights may be exercised), based on such
factors, if any, as the Committee shall determine, in its sole
discretion.
(c) Method of Exercise. Subject to whatever installment
exercise and waiting period provisions apply under subsection (b)
above, Non-Tandem Stock Appreciation Rights may be exercised in
whole or in part at any time and from time to time during the
option term, by giving written notice of exercise to the Company
specifying the number of Non-Tandem Stock Appreciation Rights to
be exercised.
(d) Payment. Upon the exercise of a Non-Tandem Stock
Appreciation Right a Participant shall be entitled to receive,
for each right exercised, up to, but no more than, an amount in
cash and/or Common Stock (as chosen by the Committee in its sole
discretion at grant, or thereafter if no rights of a Participant
are reduced) equal in value to the excess of the Fair Market
Value of one share of Common Stock on the date the right is
exercised over the Fair Market Value of one share of Common Stock
on the date the right was awarded to the Participant.
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7.5 Limited Stock Appreciation Rights. The Committee may, in its
sole discretion, grant a Tandem Stock Appreciation Right or a
Non-Tandem Stock Appreciation Right as a Limited Stock Appreciation
Right. Limited Stock Appreciation Rights may be exercised only upon
the occurrence of a Change in Control or such other event as the
Committee may, in its sole discretion, designate at the time of grant
or thereafter. Upon the exercise of limited Stock Appreciation Rights,
except as otherwise provided in an Award agreement, the Participant
shall receive in cash or Common Stock, as determined by the Committee,
an amount equal to the amount (i) set forth in Section 7.2(d) with
respect to Tandem Stock Appreciation Rights, or (ii) set forth in
Section 7.4(d) with respect to Non-Tandem Stock Appreciation Rights,
as applicable.
ARTICLE VIII
RESTRICTED STOCK
8.1 Awards of Restricted Stock. Shares of Restricted Stock may be
issued to Eligible Employees or Consultants either alone or in
addition to other Awards granted under this Plan. The Committee shall
determine the eligible persons to whom, and the time or times at
which, grants of Restricted Stock will be made, the number of shares
to be awarded, the price (if any) to be paid by the recipient (subject
to Section 8.2), the time or times within which such Awards may be
subject to forfeiture, the vesting schedule and rights to acceleration
thereof, and all other terms and conditions of the Awards. The
Committee may condition the grant or vesting of Restricted Stock upon
the attainment of specified performance goals, including established
Performance Goals in accordance with Section 162(m) of the Code, or
such other factors as the Committee may determine, in its sole
discretion.
8.2 Awards and Certificates. An Eligible Employee or Consultant
selected to receive Restricted Stock shall not have any rights with
respect to such Award, unless and until such Participant has delivered
to the Company a fully executed copy of the applicable Restricted
Stock Award agreement evidencing the Award and has otherwise complied
with the applicable terms and conditions of such Award. Further, such
Award shall be subject to the following conditions:
(a) Purchase Price. The purchase price of Restricted Stock
shall be fixed by the Committee. Subject to Section 4.3, the
purchase price for shares of Restricted Stock may be zero to the
extent permitted by applicable law, and, to the extent not so
permitted, such purchase price may not be less than par value.
(b) Acceptance. Awards of Restricted Stock must be accepted
within a period of 90 days (or such shorter period as the
Committee may specify at grant)
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after the Award date by executing a Restricted Stock Award
agreement and by paying whatever price (if any) the Committee has
designated thereunder.
(c) Legend. Each Participant receiving shares of Restricted
Stock shall be issued a stock certificate in respect of such
shares of Restricted Stock, unless the Committee elects to use
another system, such as book entries by the transfer agent, as
evidencing ownership of shares of Restricted Stock. Such
certificate shall be registered in the name of such Participant,
and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Award,
substantially in the following form:
"The anticipation, alienation, attachment, sale, transfer,
assignment, pledge, encumbrance or charge of the shares of stock
represented hereby are subject to the terms and conditions
(including forfeiture) of the Accuhealth, Inc. (the "Company")
1998 Stock Incentive Plan (the "Plan") and an Agreement entered
into between the registered owner and the Company dated . Copies
of such Plan and Agreement are on file at the principal office of
the Company."
(d) Custody. The Committee may require that any stock
certificates evidencing such shares be held in custody by the
Company until the restrictions thereon shall have lapsed and
that, as a condition to the grant of such Award of Restricted
Stock, the Participant shall have delivered a duly signed stock
power, endorsed in blank, relating to the Common Stock covered by
such Award.
8.3 Restrictions and Conditions on Restricted Stock Awards.
Shares of Restricted Stock awarded pursuant to this Plan shall be
subject to Article XII and the following restrictions and conditions:
(a) Restriction Period; Vesting and Acceleration of Vesting.
(i) The Participant shall not be permitted to Transfer shares of
Restricted Stock awarded under this Plan during the period or
periods set by the Committee (the "Restriction Period")
commencing on the date of such Award, as set forth in the
Restricted Stock Award agreement and such agreement shall set
forth a vesting schedule and any events which would accelerate
vesting of the shares of Restricted Stock. Within these limits,
based on service, attainment of Performance Goals pursuant to
Section 8.3(a)(ii) below and/or such other factors or criteria as
the Committee may determine in its sole discretion, the Committee
may provide for the lapse of such restrictions in installments in
whole or in part, or may accelerate the vesting of all or any
part of any Restricted Stock Award and/or waive the deferral
limitations for all or any part of any Restricted Stock Award.
(ii) Objective Performance Goals, Formulae or
Standards. If the grant of shares of Restricted Stock or the
lapse of restrictions is based on the attainment of Performance
Goals, the Committee shall establish the Performance
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Goals and the applicable vesting percentage of the Restricted
Stock Award applicable to each Participant or class of
Participants in writing prior to the beginning of the applicable
fiscal year or at such later date as otherwise determined by the
Committee and while the outcome of the Performance Goals are
substantially uncertain. Such Performance Goals may incorporate
provisions for disregarding (or adjusting for) changes in
accounting methods, corporate transactions (including, without
limitation, dispositions and acquisitions) and other similar type
events or circumstances. With regard to a Restricted Stock Award
that is intended to comply with Section 162(m) of the Code, to
the extent any such provision would create impermissible
discretion under Section 162(m) of the Code or otherwise violate
Section 162(m) of the Code, such provision shall be of no force
or effect. The applicable Performance Goals shall be based on one
or more of the Performance Criteria set forth in Exhibit A
hereto.
(b) Rights as Shareholder. Except as provided in this
subsection (b) and subsection (a) above and as otherwise
determined by the Committee, the Participant shall have, with
respect to the shares of Restricted Stock, all of the rights of a
holder of shares of Common Stock of the Company including,
without limitation, the right to receive any dividends, the right
to vote such shares and, subject to and conditioned upon the full
vesting of shares of Restricted Stock, the right to tender such
shares. The Committee may, in its sole discretion, determine at
the time of grant that the payment of dividends shall be deferred
until, and conditioned upon, the expiration of the applicable
Restriction Period.
(c) Lapse of Restrictions. If and when the Restriction
Period expires without a prior forfeiture of the Restricted Stock
subject to such Restriction Period, the certificates for such
shares shall be delivered to the Participant. All legends shall
be removed from said certificates at the time of delivery to the
Participant except as otherwise required by applicable law.
ARTICLE IX
PERFORMANCE SHARES
9.1 Award of Performance Shares. Performance Shares may be
awarded either alone or in addition to other Awards granted under this
Plan. The Committee shall, in its sole discretion, determine the
Eligible Employees and Consultants to whom and the time or times at
which such Performance Shares shall be awarded, the duration of the
period (the "Performance Period") during which, and the conditions
under which, a Participant's right to Performance Shares will be
vested and the other terms and conditions of the Award in addition to
those set forth in Section 9.2.
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Each Performance Share awarded shall be referenced to one share
of Common Stock. Except as otherwise provided herein, the Committee
shall condition the right to payment of any Performance Share Award
upon the attainment of objective Performance Goals established
pursuant to Section 9.2(c) below or such other non-performance based
factors or criteria as the Committee may determine in its sole
discretion.
9.2 Terms and Conditions. A Participant selected to receive
Performance Shares shall not have any rights with respect to such
Awards, unless and until such Participant has delivered a fully
executed copy of a Performance Share Award agreement evidencing the
Award to the Company and has otherwise complied with the following
terms and conditions:
(a) Earning of Performance Share Award. At the expiration of
the applicable Performance Period, the Committee shall determine
the extent to which the Performance Goals established pursuant to
Section 9.2(c) are achieved and the percentage of each
Performance Share Award that has been earned.
(b) Payment. Following the Committee's determination in
accordance with subsection (a) above, shares of Common Stock or,
as determined by the Committee in its sole discretion, the cash
equivalent of such shares shall be delivered to the Participant,
in an amount equal to such Participant's earned Performance Share
Award. Notwithstanding the foregoing, except as may be set forth
in the agreement covering the Award, the Committee may, in its
sole discretion and in accordance with Section 162(m) of the
Code, award an amount less than the earned Performance Share
Award and/or subject the payment of all or part of any
Performance Share Award to additional vesting and forfeiture
conditions as it deems appropriate.
(c) Objective Performance Goals, Formulae or Standards. The
Committee shall establish the objective Performance Goals for the
earning of Performance Shares based on a Performance Period
applicable to each Participant or class of Participants in
writing prior to the beginning of the applicable Performance
Period or at such later date as permitted under Section 162(m) of
the Code and while the outcome of the Performance Goals are
substantially uncertain. Such Performance Goals may incorporate,
if and only to the extent permitted under Section 162(m) of the
Code, provisions for disregarding (or adjusting for) changes in
accounting methods, corporate transactions (including, without
limitation, dispositions and acquisitions) and other similar type
events or circumstances. To the extent any such provision would
create impermissible discretion under Section 162(m) of the Code
or otherwise violate Section 162(m) of the Code, such provision
shall be of no force or effect. The applicable Performance Goals
shall be based on one or more of the Performance Criteria set
forth in Exhibit A hereto.
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(d) Dividends and Other Distributions. At the time of any
Award of Performance Shares, the Committee may, in its sole
discretion, award an Eligible Employee or Consultant the right to
receive the cash value of any dividends and other distributions
that would have been received as though the Eligible Employee or
Consultant had held each share of Common Stock referenced by the
earned Performance Share Award from the last day of the first
year of the Performance Period until the actual distribution to
such Participant of the related share of Common Stock or cash
value thereof. Such amounts, if awarded, shall be paid to the
Participant as and when the shares of Common Stock or cash value
thereof are distributed to such Participant and, at the
discretion of the Committee, may be paid with interest from the
first day of the second year of the Performance Period until such
amounts and any earnings thereon are distributed. The applicable
rate of interest shall be determined by the Committee in its sole
discretion; provided, however, that for each fiscal year or part
thereof, the applicable interest rate shall not be greater than a
rate equal to the four-year U.S. Government Treasury rate on the
first day of each applicable fiscal year.
ARTICLE X
PERFORMANCE UNITS
10.1 Awards of Performance Units. Performance Units may be
awarded either alone or in addition to other Awards granted under this
Plan. The Committee shall, in its sole discretion, determine the
Eligible Employees to whom and the time or times at which such
Performance Units shall be awarded, the duration of the period (the
"Performance Cycle") during which, and the conditions under which, a
Participant's right to Performance Units will be vested and the other
terms and conditions of the Award in addition to those set forth in
Section 10.2.
Performance Units shall be awarded in a dollar amount determined
by the Committee and shall be converted for purposes of calculating
growth in value to a referenced number of shares of Common Stock based
on the Fair Market Value of shares of Common Stock at the close of
trading on the first business day following the announcement of the
annual financial results of the Company for the fiscal year of the
Company immediately preceding the fiscal year of the commencement of
the relevant Performance Cycle, provided that the Committee may
provide that the minimum price for such conversion shall be the Fair
Market Value on the date of grant.
Each Performance Unit shall be referenced to one share of Common
Stock. Except as otherwise provided herein, the Committee shall
condition the right to payment of any Performance Unit Award upon the
attainment of objective Performance Goals established pursuant to
Section 10.2(a) or such other non-performance based factors or
criteria as the
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Committee may determine in its sole discretion. The cash value of any
fractional Performance Unit Award subsequent to conversion to shares
of Common Stock shall be treated as a dividend or other distribution
under Section 10.2(e) to the extent any portion of the Performance
Unit Award is earned.
10.2 Terms and Conditions. The Performance Units awarded pursuant
to this Article X shall be subject to the following terms and
conditions:
(a) Performance Goals. The Committee shall establish the
objective Performance Goals for the earnings of Performance Units
based on a Performance Cycle applicable to each Participant or
class of Participants in writing prior to the beginning of the
applicable Performance Cycle or at such later date as permitted
under Section 162(m) of the Code and while the outcome of the
Performance Goals are substantially uncertain. Such Performance
Goals may incorporate, if and only to the extent permitted under
Section 162(m) of the Code, provisions for disregarding (or
adjusting for) changes in accounting methods, corporate
transactions (including, without limitation, dispositions and
acquisitions) and other similar type events or circumstances. To
the extent any such provision would create impermissible
discretion under Section 162(m) of the Code or otherwise violate
Section 162(m) of the Code, such provision shall be of no force
or effect. The applicable Performance Goals shall be based on one
or more of the Performance Criteria set forth in Exhibit A
hereto.
(b) Vesting. At the expiration of the Performance Cycle, the
Committee shall determine and certify in writing the extent to
which the Performance Goals have been achieved, and the
percentage of the Performance Units of each Participant that have
vested.
(c) Payment. Subject to the applicable provisions of the
Award agreement and this Plan, at the expiration of the
Performance Cycle, cash and/or shares of Common Stock (as the
Committee may determine in its sole discretion at grant, or
thereafter if no rights of a Participant are reduced) shall be
delivered to the Participant in payment of the vested Performance
Units covered by the Performance Unit Award. Notwithstanding the
foregoing, except as may be set forth in the agreement covering
the Award, the Committee may, in its sole discretion, and to the
extent applicable and permitted under Section 162(m) of the Code,
award an amount less than the earned Performance Unit Award
and/or subject the payment of all or part of any Performance Unit
Award to additional vesting and forfeiture conditions as it deems
appropriate.
(d) Accelerated Vesting. Based on service, performance
and/or such other factors or criteria, if any, as the Committee
may determine, the Committee may, at or after grant, accelerate
the vesting of all or any part of any Performance Unit Award
and/or waive the deferral limitations for all or any part of such
Award.
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(e) Dividends and Other Distributions. At the time of any
Award of Performance Units, the Committee may, in its sole
discretion, award an Eligible Employee or Consultant the right to
receive the cash value of any dividends and other distributions
that would have been received as though the Eligible Employee or
Consultant had held each share of Common Stock referenced by the
earned Performance Unit Award from the last day of the first year
of the Performance Cycle until the actual distribution to such
Participant of the related share of Common Stock or cash value
thereof. Such amounts, if awarded, shall be paid to the
Participant as and when the shares of Common Stock or cash value
thereof are distributed to such Participant and, at the
discretion of the Committee, may be paid with interest from the
first day of the second year of the Performance Cycle until such
amounts and any earnings thereon are distributed. The applicable
rate of interest shall be determined by the Committee in its sole
discretion; provided, however, that for each fiscal year or part
thereof, the applicable interest rate shall not be greater than a
rate equal to the four-year U.S. Government Treasury rate on the
first day of each applicable fiscal year.
ARTICLE XI
OTHER STOCK-BASED AWARDS
11.1 Other Awards. Other Stock-Based Awards may be granted either
alone or in addition to or in tandem with Stock Options, Stock
Appreciation Rights, Restricted Stock, Performance Shares or
Performance Units.
Subject to the provisions of this Plan, the Committee shall have
authority to determine the persons to whom and the time or times at
which such Awards shall be made, the number of shares of Common Stock
to be awarded pursuant to such Awards, and all other conditions of the
Awards. The Committee may also provide for the grant of Common Stock
under such Awards upon the completion of a specified performance
period.
11.2 Terms and Conditions. Other Stock-Based Awards made pursuant
to this Article XI shall be subject to the following terms and
conditions:
(a) Non-Transferability. Subject to the applicable
provisions of the Award agreement and this Plan, shares of Common
Stock subject to Awards made under this Article XI may not be
Transferred prior to the date on which the shares are issued, or,
if later, the date on which any applicable restriction,
performance or deferral period lapses.
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(b) Dividends. Unless otherwise determined by the Committee
at the time of Award, subject to the provisions of the Award
agreement and this Plan, the recipient of an Award under this
Article XI shall be entitled to receive, currently or on a
deferred basis, dividends or dividend equivalents with respect to
the number of shares of Common Stock covered by the Award, as
determined at the time of the Award by the Committee, in its sole
discretion.
(c) Vesting. Any Award under this Article XI and any Common
Stock covered by any such Award shall vest or be forfeited to the
extent so provided in the Award agreement, as determined by the
Committee, in its sole discretion.
(d) Waiver of Limitation. The Committee may, in its sole
discretion, waive in whole or in part any or all of the
limitations imposed hereunder (if any) with respect to any or all
of an Award under this Article XI.
(e) Price. Common Stock or Other Stock-Based Awards issued
on a bonus basis under this Article XI may be issued for no cash
consideration to the extent permitted by law; Common Stock or
Other Stock-Based Awards purchased pursuant to a purchase right
awarded under this Article XI shall be priced as determined by
the Committee. Subject to Section 4.3, the purchase price of
shares of Common Stock or Other Stock-Based Awards may be zero to
the extent permitted by applicable law, and, to the extent not so
permitted, such purchase price may not be less than par value.
ARTICLE XII
NON-TRANSFERABILITY AND TERMINATION OF
EMPLOYMENT/CONSULTANCY
12.1 Non-Transferability. No Stock Option, Stock Appreciation
Right, Performance Unit, Performance Share or Other Stock-Based Award
shall be Transferable by the Participant otherwise than by will or by
the laws of descent and distribution. All Stock Options and all Stock
Appreciation Rights shall be exercisable, during the Participant's
lifetime, only by the Participant or his or her legal guardian or
representative. Tandem Stock Appreciation Rights shall be
Transferable, to the extent permitted above, only with the underlying
Stock Option. Shares of Restricted Stock under Article VIII may not be
Transferred prior to the date on which shares are issued, or, if
later, the date on which any applicable restriction, performance or
deferral period lapses. No Award shall, except as otherwise
specifically provided by law or herein, be Transferable in any manner,
and any attempt to Transfer any such Award shall be void, and no such
Award shall in any manner be liable for or subject to the debts,
contracts, liabilities, engagements or torts of any person who shall
be entitled to such Award, nor shall it be subject to attachment or
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legal process for or against such person. Notwithstanding the
foregoing, the Committee may determine at the time of grant or
thereafter, that a Non-Qualified Stock Option granted pursuant to
Article VI (other than a Non-Qualified Stock Option granted to a
Non-Employee Director) that is otherwise not transferable pursuant to
this Article XII is transferable in whole or part and in such
circumstances, and under such conditions, as specified by the
Committee.
12.2 Termination of Employment or Termination of Consultancy. The
following rules apply with regard to the Termination of Employment or
Termination of Consultancy of a Participant:
(a) Rules Applicable to Stock Options and Stock Appreciation
Rights. Unless otherwise determined by the Committee at grant or,
if no rights of the Participant are reduced, thereafter:
(i) Termination by Reason of Death, Disability or
Retirement. If a Participant's Termination of Employment or
Termination of Consultancy is by reason of death, Disability or
Retirement, all Stock Options and Stock Appreciation Rights held
by such Participant may be exercised, to the extent exercisable
at the Participant's Termination of Employment or Termination of
Consultancy, by the Participant (or, in the case of death, by the
legal representative of the Participant's estate) at any time
within a period of one year from the date of such Termination of
Employment or Termination of Consultancy, but in no event beyond
the expiration of the stated terms of such Stock Options and
Stock Appreciation Rights; provided, however, that, in the case
of Retirement or Disability, if the Participant dies within such
exercise period, all unexercised Stock Options and Non-Tandem
Stock Appreciation Rights held by such Participant shall
thereafter be exercisable, to the extent to which they were
exercisable at the time of death, for a period of one year from
the date of such death, but in no event beyond the expiration of
the stated term of such Stock Options and Non-Tandem Stock
Appreciation Rights.
(ii) Involuntary Termination Without Cause. If a
Participant's Termination of Employment or Termination of
Consultancy is by involuntary termination without Cause, all
Stock Options and Stock Appreciation Rights held by such
Participant may be exercised, to the extent exercisable at
Termination of Employment or Termination of Consultancy, by the
Participant at any time within a period of 90 days from the date
of such Termination of Employment or Termination of Consultancy,
but in no event beyond the expiration of the stated term of such
Stock Options and Stock Appreciation Rights.
(iii) Voluntary Termination. If a Participant's
Termination of Employment or Termination of Consultancy is
voluntary (other than a voluntary termination described in
Section 12.2(a)(iv)(B) below), all Stock Options and Stock
Appreciation Rights held by such Participant may be exercised, to
the extent
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exercisable at Termination of Employment or Termination of
Consultancy, by the Participant at any time within a period of 30
days from the date of such Termination of Employment or
Termination of Consultancy, but in no event beyond the expiration
of the stated terms of such Stock Options and Stock Appreciation
Rights.
(iv) Termination for Cause. If a Participant's
Termination of Employment or Termination of Consultancy (A) is
for Cause or (B) is a voluntary termination (as provided in
subsection (iii) above) within 90 days after an event which would
be grounds for a Termination of Employment or Termination of
Consultancy for Cause, all Stock Options and Stock Appreciation
Rights held by such Participant shall thereupon terminate and
expire as of the date of such Termination of Employment or
Termination of Consultancy.
(b) Rules Applicable to Restricted Stock. Subject to the
applicable provisions of the Restricted Stock Award agreement and
this Plan, upon a Participant's Termination of Employment or
Termination of Consultancy for any reason during the relevant
Restriction Period, all Restricted Stock still subject to
restriction will vest or be forfeited in accordance with the
terms and conditions established by the Committee at grant or
thereafter.
(c) Rules Applicable to Performance Shares and Performance
Units. Subject to the applicable provisions of the Award
agreement and this Plan, upon a Participant's Termination of
Employment or Termination of Consultancy for any reason during
the Performance Period, the Performance Cycle or other period or
restriction as may be applicable for a given Award, the
Performance Shares or Performance Units in question will vest (to
the extent applicable and to the extent permissible under Section
162(m) of the Code) or be forfeited in accordance with the terms
and conditions established by the Committee at grant or
thereafter.
(d) Rules Applicable to Other Stock-Based Awards. Subject to
the applicable provisions of the Award agreement and this Plan,
upon a Participant's Termination of Employment or Termination of
Consultancy for any reason during any period or restriction as
may be applicable for a given Award, the Other Stock-Based Awards
in question will vest or be forfeited in accordance with the
terms and conditions established by the Committee at grant or
thereafter.
ARTICLE XIII
NON-EMPLOYEE DIRECTOR STOCK OPTION GRANTS
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13.1 Stock Options. The terms of this Article XIII shall apply
only to Stock Options granted to Non-Employee Directors.
13.2 Grants. The Board or the Committee shall have the authority
to grant Stock Options to each Non-Employee Director in accordance
with the following provisions:
(a) Stock Options to purchase up to a maximum of 15,000
shares of Common Stock as of the date the Non-Employee Director
begins service as a Non-Employee Director on the Board; and
(b) In addition to Stock Options granted pursuant to (a)
above, Stock Options to purchase up to a maximum of 10,000 shares
of Common Stock as of the first day of the month following the
annual meeting of the shareholders of the Company, provided he or
she has not, as of such day, experienced a Termination of
Directorship, other than in the year the Non-Employee Director
receives a grant of Stock Options pursuant to (a) above.
13.3 Non-Qualified Stock Options. Stock Options granted under
this Article XIII shall be Non-Qualified Stock Options.
13.4 Terms of Stock Options. Stock Options granted under this
Article XIII shall be subject to the following terms and conditions,
and shall be in such form and contain such additional terms and
conditions, not inconsistent with the terms of this Plan, as the Board
or the Committee shall deem desirable:
(a) Stock Option Price. The Stock Option price per share of
Common Stock purchasable under a Stock Option shall be determined
by the Board or the Committee at the time of grant but shall not
be less than 100% of the Fair Market Value of the share of Common
Stock at the time of grant.
(b) Stock Option Term. The term of each Stock Option shall
be 5 years.
(c) Exercisability. Except as otherwise provided herein, 50%
of any Stock Option granted under this Article XIII shall be
exercisable on and after each of the first two anniversaries
immediately following the date of grant.
(d) Method of Exercise. Subject to whatever waiting period
provisions apply under subsection (c) above, Stock Options may be
exercised in whole or in part at any time and from time to time
during the Stock Option term, by giving written notice of
exercise to the Company specifying the number of shares to be
purchased. Such notice shall be accompanied by payment in full of
the purchase price as follows: (i) in cash or by check, bank
draft or money order payable to the Company; (ii) if the Common
Stock is traded on a national securities exchange, through a
"cashless exercise" procedure whereby the Participant delivers
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irrevocable instructions to a broker to deliver promptly to the
Company an amount equal to the purchase price; or (iii) such
other arrangement for the satisfaction of the purchase price, as
the Board may accept. If and to the extent determined by the
Board in its sole discretion at or after grant, payment in full
or in part may also be made in the form of Common Stock owned by
the Participant for at least 6 months (and for which the
Participant has good title free and clear of any liens and
encumbrances) based on the Fair Market Value of the Common Stock
on the payment date. No shares of Common Stock shall be issued
until payment, as provided herein, therefor has been made or
provided for.
(e) Form, Modification, Extension and Renewal of Stock
Options. Subject to the terms and conditions and within the
limitations of the Plan, a Stock Option shall be evidenced by
such form of agreement or grant as is approved by the Board, and
the Board may modify, extend or renew outstanding Stock Options
granted under the Plan (provided that the rights of a Participant
are not reduced without his consent).
13.5 Termination of Directorship. The following rules apply with
regard to Stock Options upon the Termination of Directorship:
(a) Termination of Directorship by Reason of Death,
Disability or Otherwise Ceasing to be a Director. Except as
otherwise provided herein, upon the Termination of Directorship
by reason of death, Disability, resignation, failure to stand for
reelection or failure to be reelected or otherwise, all
outstanding Stock Options exercisable and not exercised shall
remain exercisable by the Participant or, in the case of death,
by the Participant's estate or by the person given authority to
exercise such Stock Options by his or her will or by operation of
law, at any time within a period of two years from the date of
such Termination of Directorship, but in no event beyond the
expiration of the stated term of such Stock Option.
(b) Cancellation of Options. Except as provided in (a)
above, no Stock Options that were not exercisable as of the date
of Termination of Directorship shall thereafter become
exercisable upon a Termination of Directorship for any reason or
no reason whatsoever, and such Stock Options shall terminate and
become null and void upon a Termination of Directorship. If a
Non-Employee Director's Termination of Directorship is for Cause,
all Stock Options held by the Non-Employee Director shall
thereupon terminate and expire as of the date of termination.
13.6 Acceleration of Exercisability. All Stock Options granted to
Non-Employee Directors and not previously exercisable shall become
fully exercisable immediately upon a Change in Control (as defined
herein). For this purpose, a "Change in Control" shall have the
meaning set forth in Section 14.2.
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13.7 Changes.
(a) The Awards to a Non-Employee Director shall be subject
to Sections 4.2(a), (b) and (c) of the Plan and this Section
13.7, but shall not be subject to Section 4.2(d).
(b) If the Company shall not be the surviving corporation in
any merger or consolidation, or if the Company is to be dissolved
or liquidated, then, unless the surviving corporation assumes the
Stock Options or substitutes new Stock Options which are
determined by the Board in its sole discretion to be
substantially similar in nature and equivalent in terms and value
for Stock Options then outstanding, upon the effective date of
such merger, consolidation, liquidation or dissolution, any
unexercised Stock Options shall expire without additional
compensation to the holder thereof; provided, that, the Board
shall deliver notice to each Non-Employee Director at least 30
days prior to the date of consummation of such merger,
consolidation, dissolution or liquidation which would result in
the expiration of the Stock Options and during the period from
the date on which such notice of termination is delivered to the
consummation of the merger, consolidation, dissolution or
liquidation, such Participant shall have the right to exercise in
full, effective as of such consummation, all Stock Options that
are then outstanding (without regard to limitations on exercise
otherwise contained in the Stock Options) but contingent on
occurrence of the merger, consolidation, dissolution or
liquidation, and, provided that, if the contemplated transaction
does not take place within a 90 day period after giving such
notice for any reason whatsoever, the notice, accelerated vesting
and exercise shall be null and void and, if and when appropriate,
new notice shall be given as aforesaid.
ARTICLE XIV
CHANGE IN CONTROL PROVISIONS
14.1 Benefits. In the event of a Change in Control of the
Company, except as otherwise provided by the Committee upon the grant
of an Award and except as provided in Section 13.6 of this Plan with
regard to Non-Employee Directors, the Participant shall be entitled to
the following benefits:
(a) Except to the extent provided in the applicable Award
agreement, the Participant's employment agreement with the
Company or an Affiliate, as approved by the Committee, or other
written agreement approved by the Committee (as such agreement
may be amended from time to time), (i) Awards granted and not
previously exercisable shall become exercisable upon a Change in
Control, (ii) restrictions to which any shares of Restricted
Stock granted prior to
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the Change in Control are subject shall lapse upon a Change in
Control, and (iii) the conditions required for vesting of any
unvested Performance Units and/or Performance Shares shall be
deemed to be satisfied upon a Change in Control.
(b) The Committee, in its sole discretion, may provide for
the purchase of any Stock Option by the Company or an Affiliate
for an amount of cash equal to the excess of the Change in
Control Price (as defined below) of the shares of Common Stock
covered by such Stock Options, over the aggregate exercise price
of such Stock Options. For purposes of this Section 14.1, Change
in Control Price shall mean the higher of (i) the highest price
per share of Common Stock paid in any transaction related to a
Change in Control of the Company, or (ii) the highest Fair Market
Value per share of Common Stock at any time during the sixty (60)
day period preceding a Change in Control.
(c) Notwithstanding anything to the contrary herein, the
Committee may decide to provide that Stock Options shall be
honored or assumed, or new rights substituted therefor (each such
honored, assumed or substituted stock option hereinafter called
an "Alternative Option"), by a Participant's employer (or the
parent or a subsidiary of such employer) immediately following
the Change in Control. In the event of any such assumption or
substitution, any such Alternative Option must meet the following
criteria:
(i) the Alternative Option must be based on stock which
is traded on an established securities market, or which will
be so traded within 30 days of the Change in Control;
(ii) the Alternative Option must provide such
Participant with rights and entitlements substantially
equivalent to or better than the rights, terms and
conditions applicable under such Stock Option, including,
but not limited to, an identical or better exercise
schedule; and
(iii) the Alternative Option must have economic value
substantially equivalent to the value of such Stock Option
(determined at the time of the Change in Control).
For purposes of Incentive Stock Options, any assumed or
substituted Stock Option shall comply with the requirements of
Treasury Regulation ss. 1.425-1 (and any amendments thereto).
(d) Notwithstanding anything else herein, the Committee may,
in its sole discretion, provide for accelerated vesting of an
Award or accelerated lapsing of restrictions on shares of
Restricted Stock at any time.
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14.2 Change in Control. A "Change in Control" shall mean the
occurrence of any of the following:
(a) any sale, transfer or other conveyance (other than to
the Company or a wholly owned Subsidiary), whether direct or
indirect, of all or substantially all of the assets of the
Company, on a consolidated basis, in one transaction or a series
of related transactions, if, immediately after such transaction,
any "person" or "group" becomes the "beneficial owner," directly
or indirectly, of more than forty percent (40%) of the total
voting power entitled to vote in the election of directors,
managers, or trustees of the transferee;
(b) any "person" or "group" is or becomes the "beneficial
owner," directly or indirectly, of more than forty percent (40%)
of the total voting power of the voting stock then outstanding;
(c) during any period of twenty-four (24) consecutive
months, individuals who at the beginning of such period
constituted the Board (together with any new directors whose
election by such Board or whose nomination of election by the
shareholders of the Company was approved by a vote of a majority
of the directors then still in the office who were either
directors at the beginning of such period or whose election or
nomination for election was previously so approved), cease for
any reason to constitute a majority of the Board then in office;
or
(d) the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale
or disposition by the Company of all or substantially all the
Company's assets other than such a sale to a person or persons
who beneficially own, directly or indirectly, at least fifty
percent (50%) or more of the combined voting power of the
outstanding voting securities of the Company at the time of the
sale.
For purposes of this Section 14.2, (i) the terms "person" and
"group" shall have the meanings used for purposes of Rules 13d and 13d-5 of the
Exchange Act, whether or not applicable; (ii) the term "beneficial owner" shall
have the meaning used in Rules 13d-3 and 13d-5 under the Exchange Act, whether
or not applicable, except that a person shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time or upon
the occurrence of certain events; and (iii) the term "voting stock" means Common
Stock having generally the right to vote in the election of majority of the
directors of the Company.
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ARTICLE XV
TERMINATION OR AMENDMENT OF PLAN
Notwithstanding any other provision of this Plan, the Board or the
Committee may at any time, and from time to time, amend, in whole or in part,
any or all of the provisions of this Plan (including any amendment deemed
necessary to ensure that the Company may comply with any regulatory requirement
referred to in Article XVII), or suspend or terminate it entirely, retroactively
or otherwise; provided, however, that, unless otherwise required by law or
specifically provided herein, the rights of a Participant with respect to Awards
granted prior to such amendment, suspension or termination, may not be impaired
without the consent of such Participant and, provided further, without the
approval of the shareholders of the Company in accordance with the laws of the
State of New York, to the extent required by the applicable provisions of Rule
16b-3 or Section 162(m) of the Code, or, to the extent applicable to Incentive
Stock Options, Section 422 of the Code, no amendment may be made which would (i)
increase the aggregate number of shares of Common Stock that may be issued under
this Plan; (ii) increase the maximum individual Participant limitations for a
fiscal year under Section 4.1(b); (iii) change the classification of employees
or Consultants eligible to receive Awards under this Plan; (iv) decrease the
minimum option price of any Stock Option or Stock Appreciation Right; (v) extend
the maximum option period under Section 6.3; (vi) materially alter the
Performance Criteria for the Award of Restricted Stock, Performance Units or
Performance Shares as set forth in Exhibit A; or (vii) require shareholder
approval in order for this Plan to continue to comply with the applicable
provisions of Section 162(m) of the Code or, to the extent applicable to
Incentive Stock Options, Section 422 of the Code. In no event may this Plan be
amended without the approval of the shareholders of the Company in accordance
with the applicable laws of the State of New York to increase the aggregate
number of shares of Common Stock that may be issued under this Plan, decrease
the minimum exercise price of any Stock Option or Stock Appreciation Right, or
to make any other amendment that would require shareholder approval under the
rules of any exchange or system on which the Company's securities are listed or
traded at the request of the Company.
The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but, subject to Article IV above or as otherwise
specifically provided herein, no such amendment or other action by the Committee
shall impair the rights of any holder without the holder's consent.
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ARTICLE XVI
UNFUNDED PLAN
16.1 Unfunded Status of Plan. This Plan is intended to constitute
an "unfunded" plan for incentive and deferred compensation. With
respect to any payments as to which a Participant has a fixed and
vested interest but which are not yet made to a Participant by the
Company, nothing contained herein shall give any such Participant any
rights that are greater than those of a general creditor of the
Company.
ARTICLE XVII
GENERAL PROVISIONS
17.1 Legend. The Committee may require each person receiving
shares pursuant to an Award under this Plan to represent to and agree
with the Company in writing that the Participant is acquiring the
shares without a view to distribution thereof, and that any subsequent
offer for sale or sale of any such shares of Common Stock shall be
made either pursuant to (i) a registration statement on an appropriate
form under the Securities Act of 1933, which registration statement
shall have become effective and shall be current with respect to the
shares of Common Stock being offered and sold, or (ii) a specific
exemption from the registration requirements of the Securities Act of
1933, and that in claiming such exemption the Participant will, prior
to any offer for sale or sale of shares of Common Stock, obtain a
favorable written opinion, satisfactory in form and substance to the
Company, from counsel acceptable to the Company as to the availability
of such exception. In addition to any legend required by this Plan,
the certificates for such shares may include any legend which the
Committee deems appropriate to reflect any restrictions on Transfer.
All certificates for shares of Common Stock delivered under this
Plan shall be subject to such stock transfer orders and other
restrictions as the Committee may deem advisable under the rules,
regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Common Stock is then
listed or any national securities association system upon whose system
the Common Stock is then quoted, any applicable Federal or state
securities law, and any applicable corporate law, and the Committee
may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.
17.2 Other Plans. Nothing contained in this Plan shall prevent
the Board from adopting other or additional compensation arrangements,
subject to shareholder approval
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if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases.
17.3 No Right to Employment/Consultancy. Neither this Plan nor
the grant of any Award hereunder shall give any Participant or other
employee or Consultant any right with respect to continuance of
employment or Consultancy by the Company or any Affiliate, nor shall
they be a limitation in any way on the right of the Company or any
Affiliate by which an employee is employed or a Consultant is retained
to terminate his employment or Consultancy at any time.
17.4 Withholding of Taxes. The Company shall have the right to
deduct from any payment to be made to a Participant, or to otherwise
require, prior to the issuance or delivery of any shares of Common
Stock or the payment of any cash hereunder, payment by the Participant
of, any Federal, state or local taxes required by law to be withheld.
Upon the vesting of Restricted Stock, or upon making an election under
Section 83(b) of the Code, a Participant shall pay all required
withholding to the Company.
Any such withholding obligation with regard to any Participant
may be satisfied, subject to the prior approval of the Committee, by
reducing the number of shares of Common Stock otherwise deliverable or
by delivering shares of Common Stock already owned. Any fraction of a
share of Common Stock required to satisfy such tax obligations shall
be disregarded and the amount due shall be paid instead in cash by the
Participant.
17.5 Listing and Other Conditions.
(a) As long as the Common Stock is listed on a national
securities exchange or system sponsored by a national securities
association, the issue of any shares of Common Stock pursuant to
an Award shall be conditioned upon such shares being listed on
such exchange or system. The Company shall have no obligation to
issue such shares unless and until such shares are so listed, and
the right to exercise any Stock Option with respect to such
shares shall be suspended until such listing has been effected.
(b) If at any time counsel to the Company shall be of the
opinion that any sale or delivery of shares of Common Stock
pursuant to an Award is or may in the circumstances be unlawful
or result in the imposition of excise taxes on the Company under
the statutes, rules or regulations of any applicable
jurisdiction, the Company shall have no obligation to make such
sale or delivery, or to make any application or to effect or to
maintain any qualification or registration under the Securities
Act or otherwise with respect to shares of Common Stock or
Awards, and the right to exercise any Stock Option shall be
suspended until, in the opinion of said counsel, such sale or
delivery shall be lawful or will not result in the imposition of
excise taxes on the Company.
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(c) Upon termination of any period of suspension under this
Section 17.5, any Award affected by such suspension which shall
not then have expired or terminated shall be reinstated as to all
shares available before such suspension and as to shares which
would otherwise have become available during the period of such
suspension, but no such suspension shall extend the term of any
Stock Option.
17.6 Governing Law. This Plan shall be governed and construed in
accordance with the laws of the State of New York (regardless of the
law that might otherwise govern under applicable New York principles
of conflict of laws).
17.7 Construction. Wherever any words are used in this Plan in
the masculine gender they shall be construed as though they were also
used in the feminine gender in all cases where they would so apply,
and wherever any words are used herein in the singular form they shall
be construed as though they were also used in the plural form in all
cases where they would so apply.
17.8 Other Benefits. No Award payment under this Plan shall be
deemed compensation for purposes of computing benefits under any
retirement plan of the Company or its Affiliates nor affect any
benefits under any other benefit plan now or subsequently in effect
under which the availability or amount of benefits is related to the
level of compensation.
17.9 Costs. The Company shall bear all expenses included in
administering this Plan, including expenses of issuing Common Stock
pursuant to any Awards hereunder.
17.10 No Right to Same Benefits. The provisions of Awards need
not be the same with respect to each Participant, and such Awards to
individual Participants need not be the same in subsequent years.
17.11 Death/Disability. The Committee may in its discretion
require the transferee of a Participant to supply it with written
notice of the Participant's death or Disability and to supply it with
a copy of the will (in the case of the Participant's death) or such
other evidence as the Committee deems necessary to establish the
validity of the transfer of an Award. The Committee may also require
that the agreement of the transferee to be bound by all of the terms
and conditions of this Plan. If the Committee shall find, without any
obligation or responsibility of any kind to do so, that any person to
whom payment is payable under this Plan is unable to care for his or
her affairs because of disability, illness or accident, any payment
due may be paid to such person's duly appointed legal representative
in such manner and proportions as the Committee may determine, in it
sole discretion. Any such payment shall be a complete discharge of the
liabilities of the Committee and the Board under this Plan.
17.12 Section 16(b) of the Exchange Act. All elections and
transactions under this Plan by persons subject to Section 16 of the
Exchange Act involving shares of Common
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Stock are intended to comply with any applicable exemptive condition
under Rule 16b-3. The Committee may establish and adopt written
administrative guidelines, designed to facilitate compliance with
Section 16(b) of the Exchange Act, as it may deem necessary or proper
for the administration and operation of this Plan and the transaction
of business thereunder.
17.13 Severability of Provisions. If any provision of this Plan
shall be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provisions hereof, and
this Plan shall be construed and enforced as if such provisions had
not been included.
17.14 Headings and Captions. The headings and captions herein are
provided for reference and convenience only, shall not be considered
part of this Plan, and shall not be employed in the construction of
this Plan.
ARTICLE XVIII
EFFECTIVE DATE OF PLAN
The Plan shall be effective upon adoption by the Board, subject to
shareholder approval of this Plan by the shareholders of the Company in
accordance with the requirements of the laws of the State of New York and any
applicable exchange requirements.
ARTICLE XIX
TERM OF PLAN
No Award shall be granted pursuant to this Plan on or after the tenth
anniversary of the earlier of the date this Plan is adopted or the date of
shareholder approval, but Awards granted prior to such tenth anniversary may
extend beyond that date.
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EXHIBIT A
PERFORMANCE CRITERIA
Performance Goals established for purposes of conditioning the grant
of an Award of Restricted Stock based on performance or the vesting of
performance-based Awards of Restricted Stock, Performance Units and/or
Performance Shares shall be based on one or more of the following performance
criteria ("Performance Criteria"): (i) the attainment of certain target levels
of, or a specified percentage increase in, revenues, income before income taxes
and extraordinary items, net income, earnings before income tax, earnings before
interest, taxes, depreciation and amortization, funds from operation of real
estate investments or a combination of any or all of the foregoing; (ii) the
attainment of certain target levels of, or a percentage increase in, after-tax
or pre-tax profits including, without limitation, that attributable to
continuing and/or other operations; (iii) the attainment of certain target
levels of, or a specified increase in, operational cash flow; (iv) the
achievement of a certain level of, reduction of, or other specified objectives
with regard to limiting the level of increase in, all or a portion of, the
Company's bank debt or other long-term or short-term public or private debt or
other similar financial obligations of the Company, which may be calculated net
of such cash balances and/or other offsets and adjustments as may be established
by the Committee; (v) the attainment of a specified percentage increase in
earnings per share or earnings per share from continuing operations; (vi) the
attainment of certain target levels of, or a specified increase in return on
capital employed or return on invested capital; (vii) the attainment of certain
target levels of, or a percentage increase in, after-tax or pre-tax return on
shareholders' equity; (viii) the attainment of certain target levels of, or a
specified increase in, economic value added targets based on a cash flow return
on investment formula; (ix) the attainment of certain target levels in the fair
market value of the shares of the Company's common stock; (x) the growth in the
value of an investment in the Company's common stock assuming the reinvestment
of dividends; and (xi) reducing costs of the Company, as evidenced by meeting or
reducing budgeted expenses established by the Company. For purposes of item (i)
above, "extraordinary items" shall mean all items of gain, loss or expense for
the fiscal year determined to be extraordinary or unusual in nature or
infrequent in occurrence or related to a corporate transaction (including,
without limitation, a disposition or acquisition) or related to a change in
accounting principle, all as determined in accordance with standards established
by Opinion No. 30 of the Accounting Principles Board.
In addition, such Performance Criteria may be based upon the attainment of
specified levels of Company (or subsidiary, division or other operational unit
of the Company) performance under one or more of the measures described above
relative to the performance of other corporations. To the extent permitted under
Code Section 162(m), but only to the extent permitted under Code Section 162(m)
(including, without limitation, compliance with any requirements for shareholder
approval), the Committee may: (i) designate additional business criteria on
which the Performance Criteria may be based or (ii) adjust, modify or amend the
aforementioned business criteria.
A-1
<PAGE>
<TABLE>
<CAPTION>
ACCUHEALTH, INC.
1575 BRONX RIVER AVENUE
BRONX, NEW YORK 10460
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Stanley Goldstein and Glenn C. Davis and each of them as Proxies, each with the power to appoint
his substitute and hereby authorizes them to represent and to vote, as designated below, all the shares of common stock of
Accuhealth, Inc. held of record by the undersigned on September 30, 1998, at the annual meeting of shareholders to be held on
October 22, 1998 or any adjournment thereof.
<S> <C> <C> <C> <C>
1. ELECTION OF DIRECTORS FOR all nominees listed below for the term indicated WITHHOLD AUTHORITY
(except as marked to the contrary below) [ ] to vote for all nominees
listed below [ ]
Terms will expire at the 2001 Annual Meeting: Stanley Goldstein, Jeffrey Freed, Howard Landis
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, DRAW A LINE THROUGH OR STRIKE OUT THAT NOMINEE'S
NAME.
2. PROPOSAL TO APPROVE THE ACCUHEALTH, INC. 1998 STOCK PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO RATIFY THE SELECTION OF MARCUM & KLEIGMAN LLP as the independent public accountants of the corporation
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE)
</TABLE>
<PAGE>
(CONTINUED FROM OTHER SIDE)
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted for election of the Nominees for Director and for Proposals 1, 2 and 3.
Dated:__________________ , 1998
_______________________________
Signature
_______________________________
Signature, if held jointly
Please sign exactly as name
appears. When shares are held
by joint tenants, both should
sign. When signing as attorney,
please give full title as such.
If a corporation, please sign
in full corporate name by
President or other authorized
officer. If a partnership,
please sign in partnership name
by authorized person.
INDICATE CHANGE OF ADDRESS ON
ATTACHED LABEL.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSING ENVELOPE.
