<PAGE> 1
As Filed With the Securities and Exchange Commission
on November 5, 1997
Registration No. 333-
................................................................................
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
................................................................................
COVENTRY CORPORATION
(Exact name of Registrant as specified in its charter)
TENNESSEE 62-1297579
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
COVENTRY CORPORATION
53 CENTURY BOULEVARD, SUITE 250 37214
NASHVILLE, TENNESSEE (Zip Code)
(Address of Principal Executive Offices)
COVENTRY CORPORATION RETIREMENT SAVINGS PLAN
(Full title of the plan)
SHIRLEY R. SMITH, ESQ.
VICE PRESIDENT, CORPORATE GENERAL COUNSEL AND SECRETARY
COVENTRY CORPORATION
53 CENTURY BOULEVARD, SUITE 250
NASHVILLE, TENNESSEE 37214
(Name and address of agent for service)
(615) 391-2440
(Telephone number, including area code, of agent for service)
Copy to:
BOB F. THOMPSON, ESQ.
BASS, BERRY & SIMS
2700 FIRST AMERICAN CENTER
NASHVILLE, TENNESSEE 37238
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Proposed maximum Proposed maximum
Title of securities Amount to offering price aggregate offering Amount of
to be registered(1) be registered per share(2) price(2) registration fee
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
par value $.01 per share 1,600,000 shares $14 $22,400,000 $6,788
===================================================================================================================
</TABLE>
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this
registration statement also covers an indeterminate amount of interests to be
offered or sold pursuant to the employee benefit plan described herein.
(2) The offering price is estimated solely for the purpose of determining the
amount of the registration fee. Such estimate has been calculated in accordance
with Rule 457(h) and is based upon the average of the high and low prices per
share of the Registrant's Common Stock as reported on The Nasdaq National Market
on October 31, 1997.
<PAGE> 2
This Registration Statement is filed pursuant to the General
Instructions of Form S-8 for the purpose of registering 1,600,000 shares of
common stock, par value $0.01 per share (the "Common Stock"), of Coventry
Corporation, a Tennessee corporation (the "Registrant"), to be issued pursuant
to the Coventry Corporation 1997 Stock Incentive Plan (the "Plan") that was duly
adopted by the shareholders of the Registrant at the annual meeting of
shareholders on August 20, 1997.
PART II
INFORMATION REQUIRED IN THE REGISTRATION
STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents previously filed by the Registrant with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act") are incorporated herein by reference:
(a) The Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, as amended by
filings dated April 1, 1997, April 30, 1997, June 11,
1997, July 3, 1997 and July 25, 1997;
(b) The Registrant's Quarterly Report on Form 10-Q for
the fiscal quarter ended March 31, 1997, as amended
by filings dated June 11, 1997 and July 3, 1997;
(c) The Registrant's Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 1997;
(d) The Registrant's Current Report on Form 8-K filed
April 14, 1997;
(e) The Registrant's Current Report on Form 8-K filed May
4, 1997;
(f) The Registrant's Current Report on Form 8-K filed
July 9, 1997; and
(g) The description of the Registrant's Common Stock
contained in the Registrant's registration statement
on Form 8-A dated April 11, 1991, as amended or
updated pursuant to the Exchange Act.
All documents and reports subsequently filed by the Registrant or the
Plan pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to
the filing of a post-effective amendment to this Registration Statement which
indicates that all shares covered hereby have been sold or which deregisters all
such shares then remaining unsold shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from the date
of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable
II-1
<PAGE> 3
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Tennessee Business Corporation Act ("TBCA") provides that a
corporation may indemnify any of its directors and officers against liability
incurred in connection with a proceeding if (a) such person acted in good faith;
(b) in the case of conduct in an official capacity with the corporation, he
reasonably believed such conduct was in the corporation's best interests; (c) in
all other cases, he reasonably believed that his conduct was at least not
opposed to the best interests of the corporation; and (d) in connection with any
criminal proceeding, such person had no reasonable cause to believe his conduct
was unlawful. In actions brought by or in the right of the corporation, however,
the TBCA provides that no indemnification may be made if the director or officer
was adjudged to be liable to the corporation. The TBCA also provides that in
connection with any proceeding charging improper personal benefit to an officer
or director, no indemnification may be made if such officer or director is
adjudged liable on the basis that such personal benefit was improperly received.
In cases where the director or officer is wholly successful, on the merits or
otherwise, in the defense of any proceeding instigated because of his or her
status as a director or officer of a corporation, the TBCA mandates that the
corporation indemnify the director or officer against reasonable expenses
incurred in the proceeding. The TBCA provides that a court of competent
jurisdiction, unless the corporation's charter provides otherwise, upon
application, may order that an officer or director be indemnified for reasonable
expenses if, in consideration of all relevant circumstances, the court
determines that such individual is fairly and reasonably entitled to
indemnification, notwithstanding the fact that (a) such officer or director was
adjudged liable to the corporation in a proceeding by or in the right of the
corporation; (b) such officer or director was adjudged liable on the basis that
personal benefit was improperly received by him; or (c) such officer or director
breached his duty of care to the corporation.
The Registrant's Bylaws provide that each director and officer of the
Registrant will be indemnified against all liability and reasonable expenses
incurred by him or her in connection with any claim, action, suit or proceeding,
provided that such person is successful with respect thereto or acted in good
faith, in a manner he or she believed to be in the best interests of the
Registrant, and, in the case of a criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. An officer or
director claiming indemnification who has not been wholly successful with
respect to his claim or proceeding will be entitled to indemnification if
independent legal counsel delivers to the corporation a written finding that
such person has met the standards of conduct described above. In addition, the
Registrant may advance expenses to an officer or director upon receipt of an
undertaking by such person to repay such amount unless he or she is entitled to
indemnification.
The Registrant believes that its Bylaw provisions are necessary to
attract and retain qualified persons as directors and officers.
The Registrant has in effect a directors' and officers' liability
insurance policy which provides coverage for its directors and officers. Under
this policy, the insurer agrees to pay, subject to certain exclusions, for any
claim made against a director or officer of the Registrant for a wrongful act by
such director or officer, but only if and to the extent such director or officer
becomes legally obligated to pay such claim.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable
ITEM 8. EXHIBITS
See Exhibit Index (Page II-6)
II-2
<PAGE> 4
ITEM 9. UNDERTAKINGS
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective
amendment hereof) which individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the
total dollar value of securities would not exceed
that which was registered) and any deviation from the
low or high and of the estimated maximum offering
range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price
represent no more than 20% change in the maximum
aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement; and;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change to
such information in the Registration Statement;
provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section
13 or Section 15(d) of the Exchange Act, that are incorporated
by reference in the Registration Statement.
(2) That, for the purposes of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
II-3
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Nashville, State of Tennessee, on the 5th day
of November, 1997.
COVENTRY CORPORATION
By: /s/ Allen F. Wise
--------------------------------------------------
Allen F. Wise, President, Chief Executive Officer
and Director
KNOW ALL MEN BY THESE PRESENTS, each person whose signature appears
below hereby constitutes and appoints Allen F. Wise and Dale B. Wolf his or her
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign any and all amendments to this Registration
Statements, and to file the same, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Allen F. Wise President, Chief Executive 10/15/97
- -------------------------------- Officer and Director
Allen F. Wise
/s/ Dale B. Wolf Senior Vice President, Chief 10/15/97
- -------------------------------- Financial Officer and Treasurer
Dale B. Wolf (Principal Financial and
Accounting Officer)
/s/ Shirley R. Smith Vice President, Corporate 10/15/97
- -------------------------------- General Counsel and Secretary
Shirley R. Smith
/s/ Richard H Jones Senior Vice President and 10/15/97
- -------------------------------- Director
Richard H. Jones
/s/ John H. Austin, M.D. Director 10/15/97
- --------------------------------
John H. Austin, M.D.
/s/ Philip N. Bredesen Director 10/15/97
- --------------------------------
Philip N. Bredesen
/s/ Laurence DeFrance Director 10/15/97
- --------------------------------
Laurence DeFrance
/s/ Emerson D. Farley, Jr., M.D. Director 10/15/97
- --------------------------------
Emerson D. Farley, Jr., M.D.
</TABLE>
II-4
<PAGE> 6
<TABLE>
<S> <C> <C>
/s/ Patrick T. Hackett Director 10/15/97
- --------------------------------
Patrick T. Hackett
/s/ Lawrence N. Kugelman Director 10/20/97
- --------------------------------
Lawrence N. Kugelman
/s/ Rodman W. Moorehead, III Director 10/15/97
- --------------------------------
Rodman W. Moorhead, III
</TABLE>
II-5
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequentially Numbered
No. Exhibit Description Page
- --------- --------------------------------------------------------- -----------------------
<S> <C> <C>
4 Coventry Corporation 1997 Stock Incentive Plan
5 Opinion of Bass, Berry & Sims PLC
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Bass, Berry & Sims PLC (included in Exhibit 5)
24 Power of Attorney (included on pages II-4 and II-5)
</TABLE>
II-6
<PAGE> 1
EXHIBIT 4
COVENTRY CORPORATION
1997 STOCK INCENTIVE PLAN
SECTION 1. PURPOSE; DEFINITIONS.
The purpose of the Coventry Corporation 1997 Stock Incentive Plan (the
"Plan") is to enable Coventry Corporation (the "Company") to attract, retain and
reward key employees of and consultants to the Company and its Subsidiaries and
Affiliates, and directors who are not also employees of the Company, and to
strengthen the mutuality of interests between such key employees, consultants,
and directors by awarding such key employees, consultants, and directors
performance-based stock incentives and/or other equity interests or equity-based
incentives in the Company, as well as performance-based incentives payable in
cash. The creation of the Plan shall not diminish or prejudice other
compensation programs approved from time to time by the Board.
For purposes of the Plan, the following terms shall be defined as set
forth below:
A. "Affiliate" means any entity other than the Company and its
Subsidiaries that is designated by the Board as a participating employer under
the Plan, provided that the Company directly or indirectly owns at least 20% of
the combined voting power of all classes of stock of such entity or at least 20%
of the ownership interests in such entity.
B. "Board" means the Board of Directors of the Company.
C. "Cause" has the meaning provided in Section 5(j) of the Plan.
D. "Change in Control" has the meaning provided in Section 9(b) of the
Plan.
E. "Change in Control Price" has the meaning provided in Section 9(d)
of the Plan.
F. "Common Stock" means the Company's Common Stock, par value $.01 per
share.
G. "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.
H. "Committee" means the Committee referred to in Section 2 of the
Plan.
I. "Company" means Coventry Corporation, a corporation organized under
the laws of the State of Delaware or any successor Company.
J. "Disability" means disability as determined under the Company's
Group Long Term Disability Insurance Plan.
<PAGE> 2
K. "Early Retirement" means retirement, for purposes of this Plan with
the express consent of the Company at or before the time of such retirement,
from active employment with the Company and any Subsidiary or Affiliate prior to
age 65, in accordance with any applicable early retirement policy of the Company
then in effect or as may be approved by the Committee.
L. "Effective Date" has the meaning provided in Section 13 of the Plan.
M. "Equity Issuance" means an issuance of Common Stock by the Company
following the Effective Date of this Plan in connection with a public or private
offering [(or on conversion of a security issued in a public or private
offering)], including in connection with an acquisition, merger or similar
transaction, but excluding issuances of Common Stock under this Plan or in any
other compensatory transaction with an officer or employee of, or consultant to,
the Company or its Subsidiaries or Affiliates.
N. "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.
O. "Fair Market Value" means with respect to the Common Stock, as of
any given date or dates, unless otherwise determined by the Committee in good
faith, the reported closing price of a share of Common Stock on The Nasdaq
National Market or such other market or exchange as is the principal trading
market for the Common Stock, or, if no such sale of a share of Common Stock is
reported on The Nasdaq National Market or other exchange or principal trading
market on such date, the fair market value of a share of Common Stock as
determined by the Committee in good faith.
P. "Incentive Stock Option" means any Stock Option intended to be and
designated as an "Incentive Stock Option" within the meaning of Section 422 of
the Code.
Q. "Immediate Family" means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in- law, or sister-in-law, and shall
include adoptive relationships.
R. "Non-Employee Director" means a member of the Board who is a
Non-Employee Director within the meaning of Rule 16b-3(b)(3) promulgated under
the Exchange Act and an outside director within the meaning of Treasury
Regulation ss.1.162-27(e)(3) promulgated under the Code.
S. "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
T. "Normal Retirement" means retirement from active employment with the
Company and any Subsidiary or Affiliate on or after age 65.
U. "Other Stock-Based Award" means an award under Section 8 below that
is valued in whole or in part by reference to, or is otherwise based on, the
Common Stock.
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<PAGE> 3
V. "Outside Director" means a member of the Board who is not an
officer or employee of the Company or any Subsidiary or Affiliate of the
Company.
W. "Plan" means this 1997 Stock Incentive Plan, as amended from time
to time.
X. "Restricted Stock" means an award of shares of Common Stock that is
subject to restrictions under Section 7 of the Plan.
Y. "Restriction Period" has the meaning provided in Section 7 of the
Plan.
Z. "Retirement" means Normal or Early Retirement.
AA. "Section 162(m) Maximum" has the meaning provided in Section 3(a)
hereof.
BB. "Stock Appreciation Right" means the right pursuant to an award
granted under Section 6 below to surrender to the Company all (or a portion) of
a Stock Option in exchange for an amount equal to the difference between (i) the
Fair Market Value, as of the date such Stock Option (or such portion thereof) is
surrendered, of the shares of Common Stock covered by such Stock Option (or such
portion thereof), subject, where applicable, to the pricing provisions in
Section 6(b)(ii), and (ii) the aggregate exercise price of such Stock Option (or
such portion thereof).
CC. "Stock Option" or "Option" means any option to purchase shares of
Common Stock (including Restricted Stock, if the Committee so determines)
granted pursuant to Section 5 below.
DD. "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations (other than the last corporation in the unbroken chain) owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by a Committee of not less than two
Non-Employee Directors, who shall be appointed by the Board and who shall serve
at the pleasure of the Board. The functions of the Committee specified in the
Plan may be exercised by an existing Committee of the Board composed exclusively
of Non-Employee Directors. The initial Committee shall be the Compensation and
Benefits Committee of the Board. In the event there are not at least two
Non-Employee Directors on the Board, the Plan shall be administered by the Board
and all references herein to the Committee shall refer to the Board.
The Committee shall have authority to grant, pursuant to the terms of
the Plan, to officers, other key employees, Outside Directors and consultants
eligible under Section 4: (i) Stock Options, (ii) Stock Appreciation Rights,
(iii) Restricted Stock, and/or (iv) Other Stock-Based Awards; provided, however,
that the power to grant and establish the terms and conditions of awards to
Outside Directors under the Plan shall be reserved to the Board.
4-3
<PAGE> 4
In particular, the Committee, or the Board, as the case may be, shall
have the authority, consistent with the terms of the Plan:
(a) to select the officers, key employees and Outside
Directors of and consultants to the Company and its Subsidiaries and
Affiliates to whom Stock Options, Stock Appreciation Rights, Restricted
Stock, and/or Other Stock-Based Awards may from time to time be granted
hereunder;
(b) to determine whether and to what extent Incentive Stock
Options, Non-Qualified Stock Options, Stock Appreciation Rights,
Restricted Stock, and/or Other Stock-Based Awards, or any combination
thereof, are to be granted hereunder to one or more eligible persons;
(c) to determine the number of shares to be covered by each
such award granted hereunder;
(d) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder (including,
but not limited to, the share price and any restriction or limitation,
or any vesting acceleration or waiver of forfeiture restrictions
regarding any Stock Option or other award and/or the shares of Common
Stock relating thereto, based in each case on such factors as the
Committee shall determine, in its sole discretion); and to amend or
waive any such terms and conditions to the extent permitted by Section
10 hereof;
(e) to determine whether and under what circumstances a Stock
Option may be settled in cash or Restricted Stock under Section 5(m) or
(n), as applicable, instead of Common Stock;
(f) to determine whether, to what extent, and under what
circumstances Option grants and/or other awards under the Plan are to
be made, and operate, on a tandem basis vis-a-vis other awards under
the Plan and/or cash awards made outside of the Plan;
(g) to determine whether, to what extent, and under what
circumstances shares of Common Stock and other amounts payable with
respect to an award under this Plan shall be deferred either
automatically or at the election of the participant (including
providing for and determining the amount (if any) of any deemed
earnings on any deferred amount during any deferral period);
(h) to determine whether to require payment of tax withholding
requirements in shares of Common Stock subject to the award; and
(i) to impose any holding period required to satisfy Section
16 under the Exchange Act.
The Committee shall have the authority to adopt, alter, and repeal such
rules, guidelines, and practices governing the Plan as it shall, from time to
time, deem advisable; to interpret the terms and
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<PAGE> 5
provisions of the Plan and any award issued under the Plan (and any agreements
relating thereto); and to otherwise supervise the administration of the Plan.
All decisions made by the Committee pursuant to the provisions of the
Plan shall be made in the Committee's sole discretion and shall be final and
binding on all persons, including the Company and Plan participants.
SECTION 3. SHARES OF COMMON STOCK SUBJECT TO PLAN.
(a) As of the Effective Date, the aggregate number of shares of Common
Stock that may be issued under the Plan shall be One Million Six Hundred
Thousand (1,600,000) shares. Such number shall, upon the consummation of any
Equity Issuance, increase automatically by four and nine-tenths percent (4.9%)
of the number of shares of Common Stock issued in such Equity Issuance;
provided, however, that Incentive Stock Options may not be issued after One
Million Six Hundred Thousand (1,600,000) shares of Common Stock have been issued
under the Plan. The shares of Common Stock issuable under the Plan may consist,
in whole or in part, of authorized and unissued shares or treasury shares. No
officer of the Company or other person whose compensation may be subject to the
limitations on deductibility under Section 162(m) of the Code shall be eligible
to receive awards pursuant to this Plan relating to in excess of 400,000 shares
of Common Stock in any fiscal year (the "Section 162(m) Maximum").
(b) If any shares of Common Stock that have been optioned cease to be
subject to a Stock Option, or if any shares of Common Stock that are subject to
any Restricted Stock or Other Stock-Based Award granted hereunder are forfeited
prior to the payment of any dividends, if applicable, with respect to such
shares of Common Stock, or any such award otherwise terminates without a payment
being made to the participant in the form of Common Stock, such shares shall
again be available for distribution in connection with future awards under the
Plan.
(c) In the event of any merger, reorganization, consolidation,
recapitalization, extraordinary cash dividend, stock dividend, stock split or
other change in corporate structure affecting the Common Stock, an appropriate
substitution or adjustment shall be made in the maximum number of shares that
may be awarded under the Plan, in the number and option price of shares subject
to outstanding Options granted under the Plan, the Section 162(m) Maximum and in
the number of shares subject to other outstanding awards granted under the Plan
as may be determined to be appropriate by the Committee, in its sole discretion,
provided that the number of shares subject to any award shall always be a whole
number. An adjusted option price shall also be used to determine the amount
payable by the Company upon the exercise of any Stock Appreciation Right
associated with any Stock Option.
SECTION 4. ELIGIBILITY.
Officers, other key employees and Outside Directors of and consultants
to the Company and its Subsidiaries and Affiliates who are responsible for or
contribute to the management, growth and/or profitability of the business of the
Company and/or its Subsidiaries and Affiliates are eligible to be
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<PAGE> 6
granted awards under the Plan. Outside Directors are eligible to receive awards
as determined by the Board.
SECTION 5. STOCK OPTIONS.
Stock Options may be granted alone, in addition to, or in tandem with
other awards granted under the Plan and/or cash awards made outside of the Plan.
Any Stock Option granted under the Plan shall be in such form as the Committee
may from time to time approve.
Stock Options granted under the Plan may be of two types: (i) Incentive
Stock Options and (ii) Non-Qualified Stock Options. Incentive Stock Options may
be granted only to individuals who are employees of the Company or any
Subsidiary of the Company.
The Committee shall have the authority to grant to any optionee
Incentive Stock Options, Non-Qualified Stock Options, or both types of Stock
Options (in each case with or without Stock Appreciation Rights).
Options granted to officers, key employees, Outside Directors and
consultants under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable.
(a) Option Price. The option price per share of Common Stock
purchasable under a Stock Option shall be determined by the Committee
at the time of grant but shall be not less than 100% (or, in the case
of any employee who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or of any
of its Subsidiaries, not less than 110%) of the Fair Market Value of
the Common Stock at grant, in the case of Incentive Stock Options, and
not less than 100% of the Fair Market Value of the Common Stock at
grant, in the case of Non-Qualified Stock Options.
(b) Option Term. The term of each Stock Option shall be fixed
by the Committee, but no Incentive Stock Option shall be exercisable
more than ten years (or, in the case of an employee who owns stock
possessing more than 10% of the total combined voting power of all
classes of stock of the Company or any of its Subsidiaries or parent
companies, more than five years) after the date the Option is granted.
(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 or after grant; provided, however, that
except as provided in Section 5(g) and (h) and Section 9, unless
otherwise determined by the Committee at or after grant, no Stock
Option shall be exercisable prior to the first anniversary date of the
granting of the Option. The Committee may provide that a Stock Option
shall vest over a period of future service at a rate specified at the
time of grant, or that the Stock Option is exercisable only in
installments. If the Committee provides, in its sole discretion, that
any Stock Option is exercisable only in installments, the Committee may
waive such installment exercise provisions at any time at or
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<PAGE> 7
after grant, in whole or in part, based on such factors as the
Committee shall determine in its sole discretion.
(d) Method of Exercise. Subject to whatever installment
exercise restrictions apply under Section 5(c), Stock Options may be
exercised in whole or in part at any time during the option period, 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, either by check, note, or such other
instrument as the Committee may accept. As determined by the Committee,
in its sole discretion, at or (except in the case of an Incentive Stock
Option) after grant, payment in full or in part may also be made in the
form of shares of Common Stock already owned by the optionee or, in the
case of a Non-Qualified Stock Option, shares of Restricted Stock or
shares subject to such Option or another award hereunder (in each case
valued at the Fair Market Value of the Common Stock on the date the
Option is exercised). If payment of the exercise price is made in part
or in full with Common Stock, the Committee may award to the employee a
new Stock Option to replace the Common Stock which was surrendered. If
payment of the option exercise price of a Non-Qualified Stock Option is
made in whole or in part in the form of Restricted Stock, such
Restricted Stock (and any replacement shares relating thereto) shall
remain (or be) restricted in accordance with the original terms of the
Restricted Stock award in question, and any additional Common Stock
received upon the exercise shall be subject to the same forfeiture
restrictions, unless otherwise determined by the Committee, in its sole
discretion, at or after grant. No shares of Common Stock shall be
issued until full payment therefor has been made. An optionee shall
generally have the rights to dividends or other rights of a shareholder
with respect to shares subject to the Option when the optionee has
given written notice of exercise, has paid in full for such shares,
and, if requested, has given the representation described in Section
12(a).
(e) Transferability of Options. No Non-Qualified Stock Option
shall be transferable by the optionee without the prior written consent
of the Committee other than (i) transfers by the optionee to a member
of his or her Immediate Family or a trust for the benefit of the
optionee or a member of his or her Immediate Family, or (ii) transfers
by will or by the laws of descent and distribution. No Incentive Stock
Option shall be transferable by the optionee otherwise than by will or
by the laws of descent and distribution and all Incentive Stock Options
shall be exercisable, during the optionee's lifetime, only by the
optionee.
(f) Bonus for Taxes. In the case of a Non-Qualified Stock
Option or an optionee who elects to make a disqualifying disposition
(as defined in Section 422(a)(1) of the Code) of Common Stock acquired
pursuant to the exercise of an Incentive Stock Option, the Committee in
its discretion may award at the time of grant or thereafter the right
to receive upon exercise of such Stock Option a cash bonus calculated
to pay part or all of the federal and state, if any, income tax
incurred by the optionee upon such exercise.
(g) Termination by Death. Subject to Section 5(k), if an
optionee's employment by the Company and any Subsidiary or (except in
the case of an Incentive Stock Option) Affiliate terminates by reason
of death, any Stock Option held by such optionee may
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thereafter be exercised, to the extent such option was exercisable at
the time of death or (except in the case of an Incentive Stock Option)
on such accelerated basis as the Committee may determine at or after
grant (or except in the case of an Incentive Stock Option, as may be
determined in accordance with procedures established by the Committee)
by the legal representative of the estate or by the legatee of the
optionee under the will of the optionee, for a period of one year (or
such other period as the Committee may specify at or after grant) from
the date of such death or until the expiration of the stated term of
such Stock Option, whichever period is the shorter.
(h) Termination by Reason of Disability. Subject to Section
5(k), if an optionee's employment by the Company and any Subsidiary or
(except in the case of an Incentive Stock Option) Affiliate terminates
by reason of Disability, any Stock Option held by such optionee may
thereafter be exercised by the optionee, to the extent it was
exercisable at the time of termination or (except in the case of an
Incentive Stock Option) on such accelerated basis as the Committee may
determine at or after grant (or, except in the case of an Incentive
Stock Option, as may be determined in accordance with procedures
established by the Committee), for a period of (i) three years (or such
other period as the Committee may specify at or after grant) from the
date of such termination of employment or until the expiration of the
stated term of such Stock Option, whichever period is the shorter, in
the case of a Non-Qualified Stock Option and (ii) one year from the
date of termination of employment or until the expiration of the stated
term of such Stock Option, whichever period is shorter, in the case of
an Incentive Stock Option; provided however, that, if the optionee dies
within the period specified in (i) above (or other such period as the
committee shall specify at or after grant), any unexercised
Non-Qualified Stock Option held by such optionee shall thereafter be
exercisable to the extent to which it was exercisable at the time of
death for a period of twelve months from the date of such death or
until the expiration of the stated term of such Stock Option, whichever
period is shorter. In the event of termination of employment by reason
of Disability, if an Incentive Stock Option is exercised after the
expiration of the exercise period applicable to Incentive Stock
Options, but before the expiration of any period that would apply if
such Stock Option were a Non-Qualified Stock Option, such Stock Option
will thereafter be treated as a Non-Qualified Stock Option.
(i) Termination by Reason of Retirement. Subject to Section
5(k), if an optionee's employment by the Company and any Subsidiary or
(except in the case of an Incentive Stock Option) Affiliate terminates
by reason of Normal or Early Retirement, any Stock Option held by such
optionee may thereafter be exercised by the optionee, to the extent it
was exercisable at the time of such Retirement or (except in the case
of an Incentive Stock Option) on such accelerated basis as the
Committee may determine at or after grant (or, except in the case of an
Incentive Stock Option, as may be determined in accordance with
procedures established by the Committee), for a period of (i) three
years (or such other period as the Committee may specify at or after
grant) from the date of such termination of employment or the
expiration of the stated term of such Stock Option, whichever period is
the shorter, in the case of a Non-Qualified Stock Option and (ii) three
months from the date of such termination of employment or the
expiration of the stated term of such Stock Option, whichever period is
the shorter, in the event of an Incentive Stock Option; provided
however, that, if the optionee dies within the period specified in (i)
above (or other such period as the
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Committee shall specify at or after grant), any unexercised
Non-Qualified Stock Option held by such optionee shall thereafter be
exercisable to the extent to which it was exercisable at the time of
death for a period of twelve months from the date of such death or
until the expiration of the stated term of such Stock Option, whichever
period is shorter. In the event of termination of employment by reason
of Retirement, if an Incentive Stock Option is exercised after the
expiration of the exercise period applicable to Incentive Stock
Options, but before the expiration of the period that would apply if
such Stock Option were a Non-Qualified Stock Option, the option will
thereafter be treated as a Non-Qualified Stock Option.
(j) Other Termination. Subject to Section 5(k), unless
otherwise determined by the Committee (or pursuant to procedures
established by the Committee) at or (except in the case of an Incentive
Stock Option) after grant, if an optionee's employment by the Company
and any Subsidiary or (except in the case of an Incentive Stock Option)
Affiliate is involuntarily terminated for any reason other than death,
Disability or Normal or Early Retirement, the Stock Option shall
thereupon terminate, except that such Stock Option may be exercised, to
the extent otherwise then exercisable, for the lesser of three months
or the balance of such Stock Option's term if the involuntary
termination is without Cause. For purposes of this Plan, "Cause" means
(i) a felony conviction of a participant or the failure of a
participant to contest prosecution for a felony, or (ii) a
participant's willful misconduct or dishonesty, which is directly and
materially harmful to the business or reputation of the Company or any
Subsidiary or Affiliate. If an optionee voluntarily terminates
employment with the Company and any Subsidiary or (except in the case
of an Incentive Stock Option) Affiliate (except for Disability, Normal
or Early Retirement), the Stock Option shall thereupon terminate;
provided, however, that the Committee at grant or (except in the case
of an Incentive Stock Option) thereafter may extend the exercise period
in this situation for the lesser of three months or the balance of such
Stock Option's term.
(k) Incentive Stock Options. Anything in the Plan to the
contrary notwithstanding, no term of this Plan relating to Incentive
Stock Options shall be interpreted, amended, or altered, nor shall any
discretion or authority granted under the Plan be so exercised, so as
to disqualify the Plan under Section 422 of the Code, or, without the
consent of the optionee(s) affected, to disqualify any Incentive Stock
Option under such Section 422. No Incentive Stock Option shall be
granted to any participant under the Plan if such grant would cause the
aggregate Fair Market Value (as of the date the Incentive Stock Option
is granted) of the Common Stock with respect to which all Incentive
Stock Options are exercisable for the first time by such participant
during any calendar year (under all such plans of the Company and any
Subsidiary) to exceed $100,000. To the extent permitted under Section
422 of the Code or the applicable regulations thereunder or any
applicable Internal Revenue Service pronouncement:
(i) if (x) a participant's employment is
terminated by reason of death, Disability, or Retirement and
(y) the portion of any Incentive Stock Option that is
otherwise exercisable during the post-termination period
specified under Section 5(g), (h) or (i), applied without
regard to the $100,000 limitation contained in Section 422(d)
of the Code, is greater than the portion of such Option that
is immediately
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exercisable as an "Incentive Stock Option" during such
post-termination period under Section 422, such excess shall
be treated as a Non-Qualified Stock Option; and
(ii) if the exercise of an Incentive Stock Option
is accelerated by reason of a Change in Control, any portion
of such Option that is not exercisable as an Incentive Stock
Option by reason of the $100,000 limitation contained in
Section 422(d) of the Code shall be treated as a Non-Qualified
Stock Option.
(l) Buyout Provisions. The Committee may at any time offer to
buy out for a payment in cash, Common Stock, or Restricted Stock an
Option previously granted, based on such terms and conditions as the
Committee shall establish and communicate to the optionee at the time
that such offer is made.
(m) Settlement Provisions. If the option agreement so provides
at grant or (except in the case of an Incentive Stock Option) is
amended after grant and prior to exercise to so provide (with the
optionee's consent), the Committee may require that all or part of the
shares to be issued with respect to the spread value of an exercised
Option take the form of Restricted Stock, which shall be valued on the
date of exercise on the basis of the Fair Market Value (as determined
by the Committee) of such Restricted Stock determined without regards
to the forfeiture restrictions involved.
(n) Performance and Other Conditions. The Committee may
condition the exercise of any Option upon the attainment of specified
performance goals or other factors as the Committee may determine, in
its sole discretion. Unless specifically provided in the option
agreement, any such conditional Option shall vest immediately prior to
its expiration if the conditions to exercise have not theretofore been
satisfied.
SECTION 6. STOCK APPRECIATION RIGHTS.
(a) Grant and Exercise. Stock Appreciation Rights may be
granted in conjunction with all or part of any Stock Option granted
under the Plan. In the case of a Non-Qualified Stock Option, such
rights may be granted either at or after the time of the grant of such
Stock Option. In the case of an Incentive Stock Option, such rights may
be granted only at the time of the grant of such Stock Option. A Stock
Appreciation Right or applicable portion thereof granted with respect
to a given Stock Option shall terminate and no longer be exercisable
upon the termination or exercise of the related Stock Option, subject
to such provisions as the Committee may specify at grant where a Stock
Appreciation Right is granted with respect to less than the full number
of shares covered by a related Stock Option. A Stock Appreciation Right
may be exercised by an optionee, subject to Section 6(b), in accordance
with the procedures established by the Committee for such purpose. Upon
such exercise, the optionee shall be entitled to receive an amount
determined in the manner prescribed in Section 6(b). Stock Options
relating to exercised Stock Appreciation Rights shall no longer be
exercisable to the extent that the related Stock Appreciation Rights
have been exercised.
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(b) Terms and Conditions. Stock Appreciation Rights shall be
subject to such terms and conditions, not inconsistent with the
provisions of the Plan, as shall be determined from time to time by the
Committee, including the following:
(i) Stock Appreciation Rights shall be
exercisable only at such time or times and to the extent that
the Stock Options to which they relate shall be exercisable in
accordance with the provisions of Section 5 and this Section 6
of the Plan.
(ii) Upon the exercise of a Stock Appreciation
Right, an optionee shall be entitled to receive an amount in
cash and/or shares of Common Stock 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 related Stock
Option multiplied by the number of shares in respect of which
the Stock Appreciation Right shall have been exercised, with
the Committee having the right to determine the form of
payment. When payment is to be made in shares, the number of
shares to be paid shall be calculated on the basis of the Fair
Market Value of the shares on the date of exercise. When
payment is to be made in cash, such amount shall be calculated
on the basis of the Fair Market Value of the Common Stock on
the date of exercise.
(iii) Stock Appreciation Rights shall be
transferable only when and to the extent that the underlying
Stock Option would be transferable under Section 5(e) of the
Plan.
(iv) Upon the exercise of a Stock Appreciation
Right, the 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
Section 3 of the Plan on the number of shares of Common Stock
to be issued under the Plan.
(v) The Committee, in its sole discretion, may
also provide that, in the event of a Change in Control and/or
a Potential Change in Control, the amount to be paid upon the
exercise of a Stock Appreciation Right shall be based on the
Change in Control Price, subject to such terms and conditions
as the Committee may specify at grant.
(vi) The Committee may condition the exercise of
any Stock Appreciation Right upon the attainment of specified
performance goals or other factors as the Committee may
determine, in its sole discretion.
SECTION 7. RESTRICTED STOCK.
(a) Administration. Shares of Restricted Stock may be issued
either alone, in addition to, or in tandem with other awards granted
under the Plan and/or cash awards made outside the 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 of
Restricted Stock to be awarded to any person, the price (if any) to be
paid by the recipient of Restricted Stock (subject to Section 7(b)),
the time or times within which such awards may be subject
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<PAGE> 12
to forfeiture, and the other terms, restrictions and conditions of the
awards in addition to those set forth in Section 7(c). The Committee
may condition the grant of Restricted Stock upon the attainment of
specified performance goals or such other factors as the Committee may
determine, in its sole discretion. The provisions of Restricted Stock
awards need not be the same with respect to each recipient.
(b) Awards and Certificates. The prospective recipient of a
Restricted Stock award shall not have any rights with respect to such
award, unless and until such recipient has executed an agreement
evidencing the award and has delivered a fully executed copy thereof to
the Company, and has otherwise complied with the applicable terms and
conditions of such award.
(i) The purchase price for shares of Restricted
Stock shall be established by the Committee and may be zero.
(ii) Awards of Restricted Stock must be accepted
within a period of 60 days (or such shorter period as the
Committee may specify at grant) after the award date, by
executing a Restricted Stock Award Agreement and paying
whatever price (if any) is required under Section 7(b)(i).
(iii) Each participant receiving a Restricted
Stock award shall be issued a stock certificate in respect of
such 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.
(iv) The Committee shall require that the stock
certificates evidencing such shares be held in custody by the
Company until the restrictions thereon shall have lapsed, and
that, as a condition of any Restricted Stock award, the
participant shall have delivered a stock power, endorsed in
blank, relating to the shares of Common Stock covered by such
award.
(c) Restrictions and Conditions. The shares of Restricted
Stock awarded pursuant to this Section 7 shall be subject to the
following restrictions and conditions:
(i) In accordance with the provisions of this
Plan and the award agreement, during a period set by the
Committee commencing with the date of such award (the
"Restriction Period"), the participant shall not be permitted
to sell, transfer, pledge, assign, or otherwise encumber
shares of Restricted Stock awarded under the Plan. Within
these limits, the Committee, in its sole discretion, may
provide for the lapse of such restrictions in installments and
may accelerate or waive such restrictions, in whole or in
part, based on service, performance, such other factors or
criteria as the Committee may determine in its sole
discretion.
(ii) Except as provided in this paragraph (ii)
and Section 7(c)(i), the participant shall have, with respect
to the shares of Restricted Stock, all of the rights of a
shareholder of the Company, including the right to vote the
shares, and the right
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to receive any cash dividends. The Committee, in its sole
discretion, as determined at the time of award, may permit or
require the payment of cash dividends to be deferred and, if
the Committee so determines, reinvested, subject to Section
12(e), in additional Restricted Stock to the extent shares are
available under Section 3, or otherwise reinvested. Pursuant
to Section 3 above, stock dividends issued with respect to
Restricted Stock shall be treated as additional shares of
Restricted Stock that are subject to the same restrictions and
other terms and conditions that apply to the shares with
respect to which such dividends are issued. If the Committee
so determines, the award agreement may also impose
restrictions on the right to vote and the right to receive
dividends.
(iii) Subject to the applicable provisions of the
award agreement and this Section 7, upon termination of a
participant's employment with the Company and any Subsidiary
or Affiliate for any reason during the Restriction Period, all
shares still subject to restriction will vest, or be
forfeited, in accordance with the terms and conditions
established by the Committee at or after grant.
(iv) If and when the Restriction Period expires
without a prior forfeiture of the Restricted Stock subject to
such Restriction Period, certificates for an appropriate
number of unrestricted shares shall be delivered to the
participant promptly.
(d) Minimum Value Provisions. In order to better ensure that
award payments actually reflect the performance of the Company and
service of the participant, the Committee may provide, in its sole
discretion, for a tandem performance-based or other award designed to
guarantee a minimum value, payable in cash or Common Stock to the
recipient of a restricted stock award, subject to such performance,
future service, deferral, and other terms and conditions as may be
specified by the Committee.
(e) Limitation on Number of Shares of Restricted Stock. No
more than three percent (3%) of the total number of shares of Common
Stock outstanding may be issued as shares of Restricted Stock under
this Plan.
SECTION 8. OTHER STOCK-BASED AWARDS.
(a) Administration. Other Stock-Based Awards, including,
without limitation, performance shares, convertible preferred stock,
convertible debentures, exchangeable securities and Common Stock awards
or options valued by reference to earnings per share or Subsidiary
performance, may be granted either alone, in addition to, or in tandem
with Stock Options, Stock Appreciation Rights, or Restricted Stock
granted under the Plan and cash awards made outside of the Plan;
provided that no such Other Stock-Based Awards may be granted in tandem
with Incentive Stock Options if that would cause such Stock Options not
to qualify as Incentive Stock Options pursuant to Section 422 of the
Code. Subject to the provisions of the 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
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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 upon the completion of a specified performance period.
The provisions of Other Stock-Based Awards need not be the same with
respect to each recipient.
(b) Terms and Conditions. Other Stock-Based Awards made
pursuant to this Section 8 shall be subject to the following terms and
conditions:
(i) Subject to the provisions of this Plan and
the award agreement and unless otherwise determined by the
Committee at grant, the recipient of an award under this
Section 8 shall be entitled to receive, currently or on a
deferred basis, interest or dividends or interest or dividend
equivalents with respect to the number of shares covered by
the award, as determined at the time of the award by the
Committee, in its sole discretion, and the Committee may
provide that such amounts (if any) shall be deemed to have
been reinvested in additional shares of Common Stock or
otherwise reinvested.
(ii) Any award under Section 8 and any shares of
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.
(iii) In the event of the participant's
Retirement, Disability, or death, or in cases of special
circumstances, the Committee may, in its sole discretion,
waive in whole or in part any or all of the remaining
limitations imposed hereunder (if any) with respect to any or
all of an award under this Section 8.
(iv) Each award under this Section 8 shall be
confirmed by, and subject to the terms of, an agreement or
other instrument by the Company and the participant.
SECTION 9. CHANGE IN CONTROL PROVISIONS.
(a) Impact of Event. In the event of:
(1) a "Change in Control" as defined in Section 9(b);
or
(2) a "Potential Change in Control" as defined in
Section 9(c), but only if and to the extent so determined by
the Committee or the Board at or after grant (subject to any
right of approval expressly reserved by the Committee or the
Board at the time of such determination),
(i) Subject to the limitations set forth below
in this Section 9(a), the following acceleration provisions
shall apply:
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(a) Any Stock Appreciation Rights or any
Stock Option awarded under the Plan not previously
exercisable and vested shall become fully exercisable
and vested.
(b) The restrictions applicable to any
Restricted Stock and Other Stock-Based Awards, in
each case to the extent not already vested under the
Plan, shall lapse and such shares and awards shall be
deemed fully vested.
(ii) Subject to the limitations set forth below
in this Section 9(a), the value of all outstanding Stock
Options, Stock Appreciation Rights, Restricted Stock, and
Other Stock-Based Awards, in each case to the extent vested,
shall, unless otherwise determined Board or by the Committee
in its sole discretion prior to any Change in Control, be
cashed out on the basis of the "Change in Control Price" as
defined in Section 9(d) as of the date such Change in Control
or such Potential Change in Control is determined to have
occurred or such other date as the Board or Committee may
determine prior to the Change in Control.
(iii) The Board or the Committee may impose
additional conditions on the acceleration or valuation of any
award in the award agreement.
(b) Definition of Change in Control. For purposes of Section
10(a), a "Change in Control" means the happening of any of the
following:
(i) any person or entity, including a "group" as
defined in Section 13(d)(3) of the Exchange Act, other than
the Company or a wholly-owned subsidiary thereof or any
employee benefit plan of the Company or any of its
Subsidiaries, becomes the beneficial owner of the Company's
securities having 35% or more of the combined voting power of
the then outstanding securities of the Company that may be
cast for the election of directors of the Company (other than
as a result of an issuance of securities initiated by the
Company in the ordinary course of business); or
(ii) as the result of, or in connection with, any
cash tender or exchange offer, merger or other business
combination, sales of assets or contested election, or any
combination of the foregoing transactions, less than a
majority of the combined voting power of the then outstanding
securities of the Company or any successor Company or entity
entitled to vote generally in the election of the directors of
the Company or such other Company or entity after such
transaction are held in the aggregate by the holders of the
Company's securities entitled to vote generally in the
election of directors of the Company immediately prior to such
transaction; or
(iii) during any period of two consecutive years,
individuals who at the beginning of any such period constitute
the Board cease for any reason to constitute at least a
majority thereof, unless the election, or the nomination for
election by the Company's shareholders, of each director of
the Company first elected during such period was approved by a
vote of at least two-thirds of the directors of the Company
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then still in office who were directors of the Company at the
beginning of any such period.
(c) Definition of Potential Change in Control. For purposes of
Section 9(a), a "Potential Change in Control" means the happening of
any one of the following:
(i) The approval by shareholders of an agreement
by the Company, the consummation of which would result in a
Change in Control of the Company as defined in Section 9(b);
or
(ii) The acquisition of beneficial ownership,
directly or indirectly, by any entity, person or group (other
than the Company or a Subsidiary or any Company employee
benefit plan (including any trustee of such plan acting as
such trustee)) of securities of the Company representing 5% or
more of the combined voting power of the Company's outstanding
securities and the adoption by the Committee of a resolution
to the effect that a Potential Change in Control of the
Company has occurred for purposes of this Plan.
(d) Change in Control Price. For purposes of this Section 9,
"Change in Control Price" means the highest price per share paid in any
transaction reported on The Nasdaq National Market or such other
exchange or market as is the principal trading market for the Common
Stock, or paid or offered in any bona fide transaction related to a
Potential or actual Change in Control of the Company at any time during
the 60 day period immediately preceding the occurrence of the Change in
Control (or, where applicable, the occurrence of the Potential Change
in Control event), in each case as determined by the Committee except
that, in the case of Incentive Stock Options and Stock Appreciation
Rights relating to Incentive Stock Options, such price shall be based
only on transactions reported for the date on which the optionee
exercises such Stock Appreciation Rights or, where applicable, the date
on which a cash out occurs under Section 9(a)(ii).
SECTION 10. AMENDMENTS AND TERMINATION.
The Board may at any time amend, alter or discontinue the Plan;
provided, however, that, without the approval of the Company's shareholders, no
amendment or alteration may be made which would (a) except as a result of the
provisions of Section 3(c) of the Plan, increase the maximum number of shares
that may be issued under the Plan or increase the Section 162(m) Maximum, (b)
change the provisions governing Incentive Stock Options except as required or
permitted under the provisions governing incentive stock options under the Code,
or (c) make any change for which applicable law or regulatory authority
(including the regulatory authority of The Nasdaq National Market or any other
market or exchange on which the Common Stock is traded) would require
shareholder approval or for which shareholder approval would be required to
secure full deductibility of compensation received under the Plan under Section
162(m) of the Code. No amendment, alteration, or discontinuation shall be made
which would impair the rights of an optionee or participant under a Stock
Option, Stock Appreciation Right, Restricted Stock or Other Stock-Based Award
theretofore granted, without the participant's consent.
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The Committee may amend the terms of any Stock Option or other award
theretofore granted, prospectively or retroactively, but, subject to Section 3
above, no such amendment shall impair the rights of any holder without the
holder's consent. Solely for purposes of computing the Section 162(m) Maximum,
if any Stock Options or other awards previously granted to a participant are
canceled and new Stock Options or other awards having a lower exercise price or
other more favorable terms for the participant are substituted in their place,
both the initial Stock Options or other awards and the replacement Stock Options
or other awards will be deemed to be outstanding (although the canceled Stock
Options or other awards will not be exercisable or deemed outstanding for any
other purposes).
SECTION 11. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing contained herein shall give any
such participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Common Stock or payments in lieu of or with respect to
awards hereunder; provided, however, that, unless the Committee otherwise
determines with the consent of the affected participant, the existence of such
trusts or other arrangements is consistent with the "unfunded" status of the
Plan.
SECTION 12. GENERAL PROVISIONS.
(a) The Committee may require each person purchasing shares
pursuant to a Stock Option or other award under the Plan to represent
to and agree with the Company in writing that the optionee or
participant is acquiring the shares without a view to distribution
thereof. 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 or other
securities delivered under the 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
Commission, any stock exchange upon which the Common Stock is then
listed, and any applicable Federal or state securities law, and the
Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
(b) Nothing contained in this Plan shall prevent the Board
from adopting other or additional compensation arrangements, subject to
shareholder approval if such approval is required; and such
arrangements may be either generally applicable or applicable only in
specific cases.
(c) The adoption of the Plan shall not confer upon any
employee of the Company or any Subsidiary or Affiliate any right to
continued employment with the Company or a
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Subsidiary or Affiliate, as the case may be, nor shall it interfere in
any way with the right of the Company or a Subsidiary or Affiliate to
terminate the employment of any of its employees at any time.
(d) No later than the date as of which an amount first becomes
includible in the gross income of the participant for Federal income
tax purposes with respect to any award under the Plan, the participant
shall pay to the Company, or make arrangements satisfactory to the
Committee regarding the payment of, any Federal, state, or local taxes
of any kind required by law to be withheld with respect to such amount.
The Committee may require withholding obligations to be settled with
Common Stock, including Common Stock that is part of the award that
gives rise to the withholding requirement. The obligations of the
Company under the Plan shall be conditional on such payment or
arrangements and the Company and its Subsidiaries or Affiliates shall,
to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the participant.
(e) The actual or deemed reinvestment of dividends or dividend
equivalents in additional Restricted Stock (or other types of Plan
awards) at the time of any dividend payment shall only be permissible
if sufficient shares of Common Stock are available under Section 3 for
such reinvestment (taking into account then outstanding Stock Options
and other Plan awards).
(f) The Plan and all awards made and actions taken thereunder
shall be governed by and construed in accordance with the laws of the
State of Tennessee.
(g) The members of the Committee and the Board shall not be
liable to any employee or other person with respect to any
determination made hereunder in a manner that is not inconsistent with
their legal obligations as members of the Board. In addition to such
other rights of indemnification as they may have as directors or as
members of the Committee, the members of the Committee shall be
indemnified by the Company against the reasonable expenses, including
attorneys' fees actually and necessarily incurred in connection with
the defense of any action, suit or proceeding, or in connection with
any appeal therein, to which they or any of them may be a party by
reason of any action taken or failure to act under or in connection
with the Plan or any option granted thereunder, and against all amounts
paid by them in settlement thereof (provided such settlement is
approved by independent legal counsel selected by the Company) or paid
by them in satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such Committee member
is liable for negligence or misconduct in the performance of his
duties; provided that within 60 days after institution of any such
action, suit or proceeding, the Committee member shall in writing offer
the Company the opportunity, at its own expense, to handle and defend
the same.
(h) In addition to any other restrictions on transfer that may
be applicable under the terms of this Plan or the applicable award
agreement, no Stock Option, Stock Appreciation Right, Restricted Stock
award, or Other Stock-Based Award or other right issued under this Plan
is transferable by the participant without the prior written consent of
the Committee, or, in the case of an Outside Director, the Board, other
than (i) transfers by
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the participant to a member of his or her Immediate Family or a trust
for the benefit of the the participant or a member of his or her
Immediate Family or (ii) transfers by will or by the laws of descent
and distribution. The designation of a beneficiary will not constitute
a transfer.
(i) The Committee may, at or after grant, condition the
receipt of any payment in respect of any award or the transfer of any
shares subject to an award on the satisfaction of a six-month holding
period, if such holding period is required for compliance with Section
16 under the Exchange Act.
SECTION 13. EFFECTIVE DATE OF PLAN.
The Plan shall be effective upon approval by the Board of the Company,
subject to approval by a majority of the votes cast by the holders of the
Company's Common Stock at its 1997 Annual Meeting of Shareholders.
SECTION 14. TERM OF PLAN.
No Stock Option, Stock Appreciation Right, Restricted Stock award or
Other Stock-Based Award shall be granted pursuant to the Plan on or after the
tenth anniversary of the Effective Date of the Plan, but awards granted prior to
such tenth anniversary may be extended beyond that date.
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<PAGE> 1
EXHIBIT 5
[LETTERHEAD] BASS, BERRY & SIMS PLC
November 5, 1997
Coventry Corporation
53 Century Boulevard
Suite 250
Nashville, Tennessee 37214
Re: Registration on Form S-8
Ladies and Gentlemen:
We have acted as your counsel in the preparation of a registration
statement on Form S-8 (the "Registration Statement") relating to the Coventry
Corporation 1997 Stock Incentive Plan (the "Plan"), filed by you with the
Securities and Exchange Commission covering 1,600,000 shares of the Company's
Common Stock, par value $0.01 per share (the "Common Stock"), issuable pursuant
to the Plan. In so acting, we have examined and relied upon such records,
documents and other instruments as in our judgment are necessary or appropriate
in order to express the opinion hereinafter set forth and have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals and the conformity to the original documents of all documents
submitted to us as certified or photostatic copies.
Based upon the foregoing, we are of the opinion that the Common Stock,
when issued pursuant to and in accordance with the Plan, will be duly and
validly issued, fully paid and nonassessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
Bass, Berry & Sims PLC
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the inclusion of our
reports dated February 21, 1997, included in Amendment No. 5 to Form 10-K/A for
the year ended December 31, 1996 in this Form S-8 of Coventry Corporation dated
November 5, 1997.
/s/ Arthur Andersen LLP
-----------------------
ARTHUR ANDERSEN LLP
Nashville, Tennessee
November 4, 1997
