As filed with the Securities and Exchange Commission on
December 19, 1997.
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
___________________
Apria Healthcare Group Inc.
(Exact name of registrant as specified in its charter)
___________________
Delaware 33-0488566
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3560 Hyland Avenue, Costa Mesa, California 92626
(Address of principal executive offices)
APRIA HEALTHCARE GROUP INC. 1997 STOCK INCENTIVE PLAN
(Full title of the plan)
Lawrence H. Smallen
Chief Financial Officer, Senior Vice President,
Finance and Treasurer
3560 Hyland Avenue, Costa Mesa, California 92626
(Name and address of agent for service)
___________________
Telephone number, including area code, of agent for service:
(714) 427-2000
___________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Proposed Proposed
maximum maximum
Title of Amount offering aggregate Amount of
securities to be price offering registration
to be registered registered per unit price fee
Common Stock, $0.001 2,500,000<1>,<2> $14.4375<3> $36,093,750<3> $10,648<3>
per share par value shares
<FN>
<1> This Registration Statement covers, in addition to the
number of shares of Common Stock stated above, options and
other rights to purchase or acquire the shares of Common
Stock covered by the Prospectus and, pursuant to Rule 416,
an additional indeterminate number of shares, options and
rights which by reason of certain events specified in the
Plan may become subject to the Plan.
<2> Each share is accompanied by a common share purchase right
pursuant to the registrant's Rights Agreement, dated
February 8, 1995, with U.S. Stock Transfer Corporation ,as
Rights Agent.
<3> Pursuant to Rule 457(h), the maximum offering price, per
share and in the aggregate, and the registration fee were
calculated based upon the average of the high and low
prices of the Common Stock on December 15, 1997, as
reported on the New York Stock Exchange and published in
The Western Edition of The Wall Street Journal.
The Exhibit Index for this Registration Statement is at
page S-3.
</FN>
</TABLE>
<PAGE>
PART I
INFORMATION REQUIRED IN THE
SECTION 10(a) PROSPECTUS
The documents containing the information specified in
Part I of Form S-8 (plan information and registrant information)
will be sent or given to employees as specified by Rule 428(b)(1)
of the Securities Act of 1933, as amended (the "Securities Act").
Such documents need not be filed with the Securities and Exchange
Commission (the "Commission") either as part of this Registration
Statement or as prospectuses or prospectus supplements pursuant
to Rule 424 of the Securities Act. These documents, which include
the statement of availability required by Item 2 of Form S-8, and the
documents incorporated by reference in this Registration Statement
pursuant to Item 3 of Form S-8 (Part II hereof), taken together,
constitute a prospectus that meets the requirements of Section 10(a)
of the Securities Act.
<PAGE>
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of Apria Healthcare Group
Inc. (the "Company") filed with the Commission are incorporated
herein by reference:
(a) Annual Report on Form 10-K for the Company's fiscal
year ended December 31, 1996;
(b) Quarterly Reports on Forms 10-Q for the Company's
quarterly periods ended March 31, 1997, June 30,
1997, and September 30, 1997 as amended;
(c) Current Report on Form 8-K dated June 26, 1997; and
(d) The description of the Company's Common Stock
contained in its Registration Statement on
Form 8-A filed on February 11, 1992, and any
amendment or report filed for
the purpose of updating such description.
All documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"), prior to the
filing of a post-effective amendment which indicates
that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold
shall be deemed to be incorporated by reference into
this Registration Statement and to be a part hereof
from the date of filing of such documents. Any statement
contained herein or in a document, all or a portion of
which is incorporated or deemed to be incorporated by
reference herein, shall be deemed to be modified or
superseded for purposes of this Registration Statement to
the extent that a statement contained herein or in any other
subsequently filed document which also is or
is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or amended,
to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES
The Company's Common Stock, par value $0.001 per
share(the "Common Stock"), is registered pursuant to Section 12
of the Exchange Act, and, therefore, the description of
securities is omitted.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Restated Certificate of Incorporation
and Bylaws provide for indemnification of the officers and
directors of the Company to the fullest extent permitted by law.
Section 102(b)(7) of the Delaware General Corporation Law (the "DGCL")
provides that a Delaware corporation has the power to eliminate
or limit the personal liability of a director for violations of the
director's fiduciary duty, except (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the DGCL (providing for liability of
directors for unlawful payment of dividends or unlawful stock
purchases or redemptions) or (iv) for any transaction from which
a director derived an improper personal benefit. In addition, the
Company has entered into separate indemnification agreements with
each of its directors and officers and maintains insurance on
behalf of any person who is or was a director or officer of the
Company for up to $30 million of covered losses.
Section 145 of the DGCL provides that a corporation
may indemnify any persons, including officers and directors, who
are, or are threatened to be made, parties to any threatened,
pending or completed legal action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than
an action by or in the right of such corporation), by reason of
the fact that such person was a director, officer, employee or
agent of such corporation, or is or was serving at the request
of such corporation as a director, officer, employee or agent
of another corporation or enterprise. The indemnity may include
expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding,
provided such officer, director, employee or agent acted in
good faith and in a manner he reasonably believed to be in or
not opposed to the corporation's best interests and, for
criminal proceedings, had no reasonable cause to believe that
his conduct was unlawful. A Delaware corporation may indemnify
officers and directors in an action by or in the right of the
corporation under the same conditions, except that no
indemnification is permitted without judicial approval if
the officer or director is adjudged to be liable to the
corporation. Where an officer is successful on the
merits or otherwise in the defense of any action referred to
above, the corporation must indemnify him against the
expenses which such officer or director actually and
reasonably incurred.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
See the attached Exhibit Index at page S-3.
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 thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth in
the Registration Statement; and
(iii) To include any material
information with respect to the plan of
distribution not previously disclosed in the
Registration Statement or any material change to
such information in the Registration Statement;
Provided, however, that paragraphs (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 purpose of determining
any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
offering thereof; and
(3) To remove from registration by means of
a post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that,
for purposes of determining any liability under the Securities Act,
each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
offering thereof.
(h) Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, executive
officers and controlling persons of the registrant pursuant to
the provisions described in Item 6 above, or otherwise, the
registrant has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection
with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act
of 1933, 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 Costa Mesa, State of California, on the 16th day of
December, 1997.
APRIA HEALTHCARE GROUP INC.
By: /s/ Jeremy M. Jones
Jeremy M. Jones
Title: Chairman and Chief
Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes
and appoints Jeremy M. Jones and Lawrence H. Smallen, his true and
lawful attorney-in-fact and agent, with full powers of
substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement,
and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent, 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 might or could do in
person, hereby ratifying and confirming all that said attorneys-in-
fact and agents, or each of them individually, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this
Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
Signature Title Date
/s/ Jeremy M. Jones Chairman of the Board and December 16, 1997
Jeremy M. Jones Chief Executive Officer
(Principal Executive Officer)
/s/ Lawrence H. Smallen Chief Financial Officer, December 16, 1997
Lawrence H. Smallen Senior Vice President,
Finance and Treasurer
(Principal Financial
Officer)
/s/ James E. Baker Vice President, Controller December 16, 1997
James E. Baker (Principal Accounting Officer)
/s/ George Argyros Director December 16, 1997
George Argyros
/s/ David L. Goldsmith Director December 16, 1997
David L. Goldsmith
/s/ Leonard Green Director December 16, 1997
Leonard Green
/s/ Terry Hartshorn Director December 16, 1997
Terry Hartshorn
/s/ Frederick S. Moseley, IV Director December 16, 1997
Frederick S. Moseley, IV
/s/ Vincent M. Prager Director December 16, 1997
Vincent M. Prager
/s/ H.J. Mark Tompkins Director December 16, 1997
H.J. Mark Tompkins
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
4. Apria Healthcare Group Inc. 1997
Stock Incentive Plan.
5. Opinion of O'Melveny & Myers LLP
(opinion re legality).
23.1 Consent of Ernst & Young LLP
(Consent of Independent Auditor).
23.2 Consent of O'Melveny & Myers LLP
(included in Exhibit 5).
24. Power of Attorney (included in this
Registration Statement under
"Signatures").
APRIA HEALTHCARE GROUP INC.
1997 STOCK INCENTIVE PLAN
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. THE PLAN . . . . . . . . . . . . . . . . . 1
Section 1.1 Purpose. . . . . . . . . . . . . . . . . . 1
Section 1.2 Administration and Authorization; Power and
Procedure. . . . . . . . . . . . . . . . . . 1
Section 1.3 Participation. . . . . . . . . . . . . . . . 2
Section 1.4 Shares Available for Awards; Share Limits . .3
Section 1.5 Grant of Awards. . . . . . . . . . . . . . . 3
Section 1.6 Award Period . . . . . . . . . . . . . . . . 4
Section 1.7 Limitations on Exercise and Vesting of Awards4
Section 1.8 No Transferability; Limited Exception to Transfer
Restrictions . . . . . . . . . . . . . . . . 4
Section 1.9 Acceptance of Notes to Finance Exercise . . .6
Section 1.10 Limitations on Grants of Awards to
Non-Employee Directors. . . . . . . . . . . .6
ARTICLE II. OPTIONS . . . . . . . . . . . . . . . . . . .7
Section 2.1 Grants . . . . . . . . . . . . . . . . . . . 7
Section 2.2 Option Price . . . . . . . . . . . . . . . . 7
Section 2.3 Limitations on Grant and Terms of Incentive Stock
Options. . . . . . . . . . . . . . . . . . . 7
Section 2.4 Limits on 10% Holders. . . . . . . . . . . . 8
Section 2.5 Cancellation and Regrant/Waiver of
Restrictions . . . . . . . . . . . . . . . . 8
Section 2.6 Options and Rights in Substitution for Stock
Options Granted by Other Corporations . . . .8
ARTICLE III. STOCK APPRECIATION RIGHTS . . . . . . . . . .9
Section 3.1 Grants . . . . . . . . . . . . . . . . . . . 9
Section 3.2 Exercise of Stock Appreciation Rights. . . . 9
Section 3.3 Payment. . . . . . . . . . . . . . . . . . . 9
ARTICLE IV. RESTRICTED STOCK AWARDS . . . . . . . . . . .10
Section 4.1 Grants . . . . . . . . . . . . . . . . . . . 10
Section 4.2 Restrictions . . . . . . . . . . . . . . . . 11
Section 4.3 Return to the Corporation. . . . . . . . . . 11
ARTICLE V. PERFORMANCE SHARE AWARDS AND STOCK BONUSES . 11
Section 5.1 Grants of Performance Share Awards . . . . . 11
Section 5.2 Special Performance-Based Share Awards . . . 12
Section 5.3 Grants of Stock Bonuses. . . . . . . . . . . 14
Section 5.4 Deferred Payments. . . . . . . . . . . . . . 14
ARTICLE VI. OTHER PROVISIONS. . . . . . . . . . . . . . ..14
Section 6.1 Rights of Eligible Persons, Participants and
Beneficiaries . . . . . . . . . . . . . . . . 14
Section 6.2 Adjustments; Acceleration. . . . . . . . . . .15
Section 6.3 Effect of Termination of Employment . . . . . 16
Section 6.4 Compliance with Laws . . . . . . . . . . . . .17
Section 6.5 Tax Withholding. . . . . . . . . . . . . . . .17
Section 6.6 Plan Amendment, Termination and Suspension . .17
Section 6.7 Privileges of Stock Ownership. . . . . . . . .18
Section 6.8 Effective Date of the Plan . . . . . . . . . .18
Section 6.9 Term of the Plan . . . . . . . . . . . . . . .18
Section 6.10 Governing Law/Construction/Severability. . . .19
Section 6.11 Captions . . . . . . . . . . . . . . . . . . .19
Section 6.12 Effect of Change of Subsidiary Status. . . . .20
Section 6.13 Non-Exclusivity of Plan. . . . . . . . . . . .20
ARTICLE VII. DEFINITIONS . . . . . . . . . . . . . . . . . 20
Section 7.1 Definitions. . . . . . . . . . . . . . . . . .20
Section 7.2 Changes in Applicable Law. . . . . . . . . . .26
<PAGE>
APRIA HEALTHCARE GROUP INC.
1997 STOCK INCENTIVE PLAN
ARTICLE I. THE PLAN.
Section 1.1 Purpose.
The purpose of this Plan is to promote the success of the
Company by providing an additional means through the grant of
Awards to attract, motivate, retain and reward key employees,
including officers, whether or not directors, of the Company with
awards and incentives for high levels of individual performance
and improved financial performance of the Company and to attract,
motivate and retain experienced and knowledgeable independent
directors. "Corporation" means Apria Healthcare Group Inc., a
Delaware corporation, and "Company" means the Corporation and its
Subsidiaries, collectively. These terms and other capitalized
terms are defined in Article VII.
Section 1.2 Administration and Authorization; Power and
Procedure.
(a) Committee. This Plan shall be administered by and all
Awards to Eligible Persons shall be authorized by the Committee.
Action of the Committee with respect to the administration of
this Plan shall be taken pursuant to a majority vote or by
unanimous written consent of its members.
(b) Plan Awards; Interpretation; Powers of Committee.
Subject to the express provisions of this Plan, the Committee
shall have the authority:
(i) to determine from among those persons
eligible the particular Eligible Persons who will receive any
Awards;
(ii) to grant Awards to Eligible Persons,
determine the price at which securities will be offered or awarded
and the amount of securities to be offered or awarded to any of
such persons, determine the other specific terms and conditions
of such Awards consistent with the express limits of this Plan,
establish the installments (if any) in which such Awards shall
become exercisable or shall vest, or determine that no
delayed exercisability or vesting is required, and establish the
events of termination or reversion of such Awards;
(iii) to approve the forms of Award Agreements
(which need not be identical either as to type of award or among
Participants);
(iv) to construe and interpret this Plan and any
agreements defining the rights and obligations of the
Company and Participants, further define the terms used in this
Plan, and prescribe, amend and rescind rules and regulations
relating to the administration of this Plan;
(v) to cancel, modify, or waive the
Corporation's rights with respect to, or modify, discontinue,
suspend, or terminate any or all outstanding Awards held
by Eligible Persons, subject to any required consent under
Section 6.6;
(vi) to accelerate or extend the exercisability
or extend the term of any or all such outstanding Awards within
the maximum ten-year term of Awards under Section 1.6; and
(vii) to make all other determinations and take
such other action as contemplated by this Plan or as may be
necessary or advisable for the administration of this Plan
and the effectuation of its purposes.
(c) Binding Determinations. Any action taken by, or
inaction of, the Corporation, any Subsidiary, the Board or the
Committee relating or pursuant to this Plan shall be within the
absolute discretion of that entity or body and shall be conclusive
and binding upon all persons. No member of the Board or Committee,
or officer of the Corporation or any Subsidiary, shall be liable for
any such action or inaction of the entity or body, of another
person or, except in circumstances involving bad faith, of
himself or herself. Subject only to compliance with the express
provisions hereof, the Board and Committee may act in their absolute
discretion in matters within their authority related to this
Plan.
(d) Reliance on Experts. In making any determination
or in taking or not taking any action under this Plan, the Committee
or the Board, as the case may be, may obtain and may rely upon the
advice of experts, including professional advisors to the
Corporation. No director, officer or agent of the Company shall
be liable for any such action or determination taken or made or
omitted in good faith.
(e) Delegation. The Committee may delegate
ministerial, non-discretionary functions to a third-party
administrator or to individuals who are officers or employees
of the Company.
Section 1.3 Participation.
Awards may be granted by the Committee only to those
persons that the Committee determines to be Eligible Persons.
An Eligible Person who has been granted an Award may, if
otherwise eligible, be granted additional Awards if the
Committee shall so determine.
Section 1.4 Shares Available for Awards; Share Limits.
(a) Shares Available. Subject to the provisions of
Section 6.2, the capital stock that may be delivered under this
Plan shall be shares of the Corporation's authorized but unissued
Common Stock and any shares of its Common Stock held as treasury
shares. The shares may be delivered for any lawful consideration.
(b) Share Limits. The aggregate maximum number of shares
of Common Stock that may be delivered pursuant to Awards (including
Incentive Stock Options) granted under this Plan and which are
required to be charged or reserved by provisions of Section
1.4(c) (the "Maximum Aggregate Limit") shall be 2,500,000 shares,
plus in each calendar year, commencing in 1998, occurring during
the term of this Plan, 1% of the issued and outstanding shares
of the Corporation's Common Stock as of December 31 of the preceding
calendar year. The maximum number of shares of Common Stock that
may be delivered pursuant to Options qualified as Incentive Stock
Options granted under Article II of this Plan is 7,500,000
shares. The maximum number of shares subject to Options and Stock
Appreciation Rights that are granted during any calendar year to
any individual shall be limited to 100,000 shares. Each of the
three foregoing numerical limits shall be subject to adjustment
as contemplated by this Section 1.4 and Section 6.2.
(c) Share Reservation; Replenishment and Reissue of
Unvested Awards. No Award may be granted under this Plan unless,
on the date of grant, the sum of (i) the maximum number of shares
issuable at any time pursuant to such Award, plus (ii) the
number of shares that have previously been issued pursuant to
Awards granted under this Plan, other than reacquired shares
available for reissue consistent with any applicable legal
limitations, plus (iii) the maximum number of shares that
may be issued at any time after such date of grant pursuant
to Awards that are outstanding on such date, does not exceed
the Maximum Aggregate Limit. Shares that are subject to or
underlie Awards which expire or for any reason are cancelled
or terminated, are forfeited, fail to vest, or for any other
reason are not paid or delivered under this Plan, as well
as reacquired shares, shall again, except to the extent
prohibited by law, be available for subsequent Awards under
the Plan. Except as limited by law, if an Award is or may
be settled only in cash, such Award need not be counted
against any of the limits under this Section 1.4.
Section 1.5 Grant of Awards.
Subject to the express provisions of this Plan, the
Committee shall determine the number of shares of Common Stock
subject to each Award, the price (if any) to be paid for the
shares or the Award and, in the case of Performance Share Awards,
in addition to matters addressed in Section 1.2(b), the specific
objectives, goals and performance criteria (such as an increase
in sales, market value, earnings or book value over a base period,
the years of service before vesting, the relevant job
classification or level of responsibility or other factors)
that further define the terms of the Performance Share Award.
Each Award shall be evidenced by an Award Agreement signed on
behalf of the Corporation and, if required by the Committee, by the
Participant. The Award Agreement shall set forth the material
terms and conditions of the Award established by the Committee
consistent with the specific provisions of this Plan. The Award
Agreement may be executed on behalf of the Corporation by a
duly authorized officer by manual or facsimile signature.
Section 1.6 Award Period.
Each Award and all executory rights or obligations under
the related Award Agreement shall expire on such date (if any) as
shall be determined by the Committee, but in the case of Options or
other rights to acquire Common Stock not later than ten (10) years
after the Award Date.
Section 1.7 Limitations on Exercise and Vesting of
Awards.
(a) Provisions for Exercise. Unless the Committee
otherwise expressly provides, no Award shall be exercisable or
shall vest until at least six months after the initial Award Date,
and once exercisable an Award shall remain exercisable until the
expiration or earlier termination of the Award.
(b) Procedure. Any exercisable Award shall be deemed
to be exercised when the Secretary of the Corporation receives
written notice of such exercise from the Participant, together
with any required payment made in accordance with Section 2.2(a).
(c) Fractional Shares/Minimum Issue. Fractional share
interests shall be disregarded, but may be accumulated. The
Committee, however, may determine in the case of Eligible Persons
that cash, other securities, or other property will be paid or
transferred in lieu of any fractional share interests. No fewer
than 100 shares may be purchased on exercise of any Award at one
time unless the number purchased is the total number at the time
available for purchase under the Award.
Section 1.8 No Transferability; Limited Exception to
Transfer Restrictions.
(a) Limit on Exercise and Transfer. Unless otherwise
expressly provided in (or pursuant to) this Section 1.8, by
applicable law and by the Award Agreement, as the same may be
amended, (i) all Awards are non-transferable and shall not be
subject in any manner to sale, transfer, anticipation,
alienation, assignment, pledge, encumbrance or charge; (ii) Awards
shall be exercised only by the Participant; and (iii) amounts
payable or shares issuable pursuant to an Award shall be delivered
only to (or for the account of) the Participant.
(b) Exceptions. The Committee may permit Awards to be
exercised by and paid to certain persons or entities related to
the Participant pursuant to such conditions and procedures as the
Committee may establish. Any permitted transfer shall be subject
to the condition that the Committee receive evidence satisfactory
to it that the transfer is being made for estate and/or tax
planning purposes or a gratuitous or donative basis and without
consideration (other than nominal consideration).
Notwithstanding the foregoing, Incentive Stock Options and
Restricted Stock Awards shall be subject to any and all
applicable transfer restrictions under the Code.
(c) Further Exceptions to Limits On Transfer. The
exercise and transfer restrictions in Section 1.8(a)
shall not apply to:
(i) transfers to the Corporation,
(ii) the designation of a beneficiary to receive
benefits in the event of the Participant's death or, if the
Participant has died, transfers to or exercise by the
Participant's beneficiary, or, in the absence of a validly
designated beneficiary, transfers by will or the laws of descent and
distribution,
(iii) transfers pursuant to a QDRO order,
(iv) if the Participant has suffered a
disability, permitted transfers or exercises on behalf of the
Participant by his or her legal representative, or
(v) the authorization by the Committee of
"cashless exercise" procedures with third parties who provide
financing for the purpose of (or who otherwise facilitate) the
exercise of Awards consistent with applicable laws and the express
authorization of the Committee.
Notwithstanding the foregoing, Incentive Stock Options and
Restricted Stock Awards shall be subject to all applicable
transfer restrictions under the Code.
Section 1.9 Acceptance of Notes to Finance Exercise.
The Corporation may, with the Committee's approval, accept
one or more notes from any Eligible Person in connection with the
exercise or receipt of any outstanding Award; provided that any
such note shall be subject to the following terms and conditions:
(a) The principal of the note shall not exceed the
amount required to be paid to the Corporation upon the exercise or
receipt of one or more Awards under the Plan and the note shall be
delivered directly to the Corporation in consideration of such
exercise or receipt.
(b) The initial term of the note shall be determined by
the Committee; provided that the term of the note, including
extensions, shall not exceed a period of five years.
(c) The note shall provide for full recourse to the
Participant and shall bear interest at a rate determined by the
Committee but not less than the interest rate necessary to avoid
the imputation of interest under the Code.
(d) If the employment of the Participant terminates, the
unpaid principal balance of the note shall become due and payable
on the 10th business day after such termination; provided,
however, that if a sale of such shares would cause such Participant
to incur liability under Section 16(b) of the Exchange Act, the
unpaid balance shall become due and payable on the 10th business day
after the first day on which a sale of such shares could have been
made without incurring such liability assuming for these purposes
that there are no other transactions (or deemed transactions in
securities of this Corporation) by the Participant subsequent to
such termination.
(e) If required by the Committee or by applicable law,
the note shall be secured by a pledge of any shares or rights
financed thereby in compliance with applicable law.
(f) The terms, repayment provisions, and collateral
release provisions of the note and the pledge securing the note
shall conform with applicable rules and regulations of the Federal
Reserve Board as then in effect.
Section 1.10 Limitations on Grants of Awards to
Non-Employee Directors.
Notwithstanding anything else contained herein to the
contrary, the maximum number of shares subject to Nonqualified
Stock Options granted to a Nonemployee Director in any calendar
year shall not exceed 7,500 shares.
ARTICLE II. OPTIONS.
Section 2.1 Grants.
One or more Options may be granted under this Article to
any Eligible Person. Each Option granted shall be designated in the
applicable Award Agreement by the Committee as either an Incentive
Stock Option subject to Section 2.3, or a Non-Qualified Stock
Option.
Section 2.2 Option Price.
(a) Pricing Limits. The purchase price per share of
the Common Stock covered by each Option shall be determined by the
Committee at the time of the Award, but in the case of Incentive
Stock Options shall not be less than 100% (110% in the case of a
Participant described in Section 2.4) of the Fair Market Value of
the Common Stock on the date of grant.
(b) Payment Provisions. The purchase price of any shares
purchased on exercise of an Option granted under this Article
shall be paid in full at the time of each purchase in one or a
combination of the following methods: (i) in cash or by
electronic funds transfer; (ii) by check payable to the order of
the Corporation; (iii) if authorized by the Committee or specified
in the applicable Award Agreement, by a promissory note of the
Participant considered with the requirements of Section 1.9; (iv)
by notice and third party payment in such manner as may be
authorized by the Committee; or (iv) by the delivery of shares of
Common Stock of the Corporation already owned by the Participant,
provided, however, that the Committee may in its absolute
discretion limit the Participant's ability to exercise an Award
by delivering such shares, and provided further that any shares
delivered which were initially acquired upon exercise of an
Option must have been owned by the Participant for at least
six months as of the date of delivery. Shares of Common Stock
used to satisfy the exercise price of an Option shall be valued
at their Fair Market Value on the date of exercise.
Section 2.3 Limitations on Grant and Terms of Incentive
Stock Options.
(a) $100,000 Limit. To the extent that the aggregate
Fair Market Value of stock with respect to which incentive stock
options first become exercisable by a Participant in any calendar
year exceeds $100,000, taking into account both Common Stock subject
to Incentive Stock Options under this Plan and stock subject to
incentive stock options under all other plans of the Company or
any parent corporation, such options shall be treated as Nonqualified
Stock Options. For this purpose, the Fair Market Value of the
stock subject to options shall be determined as of the date the
options were awarded. In reducing the number of options treated
as incentive stock options to meet the $100,000 limit, the most
recently granted options shall be reduced first. To the extent a
reduction of simultaneously granted options is necessary to meet
the $100,000 limit, the Committee may, in the manner and to the
extent permitted by law, designate which shares of Common Stock
are to be treated as shares acquired pursuant to the exercise of an
Incentive Stock Option.
(b) Option Period. Each Option and all rights
thereunder shall expire no later than ten years after the
Award Date.
(c) Other Code Limits. Incentive Stock Options may
only be granted to Eligible Employees who are actually employed
by the Corporation or a Subsidiary and that satisfy the other
eligibility requirements of the Code. There shall be imposed in
any Award Agreement relating to Incentive Stock Options such
other terms and conditions as from time to time are required in
order that the Option be an "incentive stock option" as that
term is defined in Section 422 of the Code.
Section 2.4 Limits on 10% Holders.
No Incentive Stock Option may be granted to any person who,
at the time the Option is granted, owns (or is deemed to own under
Section 424(d) of the Code) shares of outstanding Common Stock
possessing more than 10% of the total combined voting power of
all classes of stock of the Corporation, unless the exercise
price of such Option is at least 110% of the Fair Market Value
of the stock subject to the Option and such Option by its
terms is not exercisable after the expiration of five years from
the date such Option is granted.
Section 2.5 Cancellation and Regrant/Waiver of
Restrictions.
Subject to Section 1.4 and the specific limitations on
Awards contained in this Plan, the Committee from time to time may
authorize, generally or in specific cases only, for the benefit
of any Eligible Person any adjustment in the exercise or purchase
price, the vesting schedule, the number of shares subject to, the
restrictions upon or the term of, an Award granted under this
Article by cancellation of an outstanding Award and a subsequent
regranting of an Award, by amendment, by substitution of an
outstanding Award, by waiver or by other legally valid means.
Such amendment or other action may result among other changes in an
exercise or purchase price which is higher or lower than the
exercise or purchase price of the original Award or prior Award,
provide for a greater or lesser number of shares subject to the
Award, or provide for a longer or shorter vesting or exercise
period.
Section 2.6 Options and Rights in Substitution for Stock
Options Granted by Other Corporations. Options and Stock
Appreciation Rights may be granted to Eligible Persons under this
Plan in substitution for employee stock options granted by other
entities to persons who are or who will become Eligible Persons
in respect of the Company, in connection with a distribution, merger
or reorganization by or with the granting entity or an affiliated
entity, or the acquisition by the Company, directly or
indirectly, of all or a substantial part of the stock or assets of
the other entity.
ARTICLE III. STOCK APPRECIATION RIGHTS.
Section 3.1 Grants.
In its discretion, the Committee may grant a Stock
Appreciation Right to any Eligible Person either concurrently
with the grant of another Award or in respect of an outstanding
Award, in whole or in part, or independently of any other Award. Any
Stock Appreciation Right granted in connection with an Incentive
Stock Option shall contain such terms as may be required to
comply with the provisions of Section 422 of the Code and the
regulations promulgated thereunder, unless the holder otherwise agrees.
Section 3.2 Exercise of Stock Appreciation Rights.
(a) Exercisability. Unless the Award Agreement or the
Committee otherwise provides, a Stock Appreciation Right related
to another Award shall be exercisable at such time or times, and to
the extent, that the related Award shall be exercisable.
(b) Effect on Available Shares. To the extent that a
Stock Appreciation Right is exercised, the number of underlying shares
of Common Stock theretofore subject to a related Award shall be
charged against the maximum amount of Common Stock that may be
delivered pursuant to Awards under this Plan. The number of
shares subject to the Stock Appreciation Right and the related Option of
the Participant shall be reduced by the number of underlying
shares as to which the exercise related, unless the Award
Agreement otherwise provides.
(c) Stand-Alone SARs. A Stock Appreciation Right
granted independently of any other Award shall be exercisable
pursuant to the terms of the Award Agreement but in no event earlier
than six months after the Award Date, except in the case of death or
Total Disability.
Section 3.3 Payment.
(a) Amount. Unless the Committee otherwise provides,
upon exercise of a Stock Appreciation Right and the attendant
surrender of an exercisable portion of any related Award, the
Participant shall be entitled to receive payment of an amount
determined by multiplying
(i) the difference obtained by subtracting the
exercise price per share of Common Stock under the related Award
(if applicable) or the initial share value specified in the
Award from the Fair Market Value of a share of Common Stock on the
date of exercise of the Stock Appreciation Right, by
(ii) the number of shares with respect to which
the Stock Appreciation Right shall have been exercised.
(b) Form of Payment. The Committee, in its sole
discretion, shall determine the form in which payment shall be
made of the amount determined under Section 3.3(a) above, either
solely in cash, solely in shares of Common Stock (valued at Fair
Market Value on the date of exercise of the Stock Appreciation
Right), or partly in such shares and partly in cash, provided
that the Committee shall have determined that such exercise and
payment are consistent with applicable law. If the Committee
permits the Participant to elect to receive cash or shares (or
a combination thereof) on such exercise, any such election
shall be subject to such conditions as
the Committee may impose.
ARTICLE IV. RESTRICTED STOCK AWARDS.
Section 4.1 Grants.
The Committee may, in its discretion, grant one or more
Restricted Stock Awards to any Eligible Person. Each Restricted
Stock Award Agreement shall specify the number of shares of
Common Stock to be issued to the Participant, the date of such
issuance, the consideration for such shares (but not less than
the minimum lawful consideration under applicable state law) by the
Participant, the extent to which the Participant shall be
entitled to dividends, voting and other rights in respect of the
shares prior to vesting and the restrictions imposed on such shares
and the conditions of release or lapse of such restrictions. Such
restrictions shall not lapse earlier than six months after the
Award Date, except to the extent the Committee may otherwise
provide. Stock certificates evidencing shares of Restricted
Stock pending the lapse of the restrictions ("restricted shares")
shall bear a legend making appropriate reference to the restrictions
imposed hereunder and shall be held by the Corporation or by a
third party designated by the Committee until the restrictions on
such shares shall have lapsed and the shares shall have vested in
accordance with the provisions of the Award and Section 1.7.
Upon issuance of the Restricted Stock Award, the Participant may be
required to provide such further assurance and documents as the
Committee may require to enforce the restrictions.
Section 4.2 Restrictions.
(a) Pre-Vesting Restraints. Except as provided in
Section 4.1 and 1.8, restricted shares comprising any Restricted
Stock Award may not be sold, assigned, transferred, pledged or
otherwise disposed of or encumbered, either voluntarily or
involuntarily, until the restrictions on such shares have lapsed
and the shares have become vested.
(b) Dividend and Voting Rights. Unless otherwise
provided in the applicable Award Agreement, a Participant receiving
a Restricted Stock Award shall be entitled to cash dividend and
voting rights for all shares issued even though they are not
vested, provided that such rights shall terminate immediately as
to any restricted shares which cease to be eligible for vesting.
(c) Cash Payments. If the Participant shall have paid
or received cash (including any dividends) in connection with the
Restricted Stock Award, the Award Agreement shall specify whether
and to what extent such cash shall be returned (with or without
an earnings factor) as to any restricted shares which cease to be
eligible for vesting.
Section 4.3 Return to the Corporation.
Unless the Committee otherwise expressly provides,
restricted shares that remain subject to restrictions at the time of
termination of employment or are subject to other conditions to
vesting that have not been satisfied by the time specified in the
applicable Award Agreement shall not vest and shall be returned
to the Corporation in such manner and on such terms as the Committee
shall therein provide.
ARTICLE V. PERFORMANCE SHARE AWARDS AND STOCK BONUSES.
Section 5.1 Grants of Performance Share Awards.
The Committee may, in its discretion, grant Performance
Share Awards to Eligible Persons based upon such factors as the
Committee shall deem relevant in light of the specific type and
terms of the award. An Award Agreement shall specify the maximum
number of shares of Common Stock (if any) subject to the
Performance Share Award, the consideration (but not less than
the minimum lawful consideration) to be paid for any such shares
as may be issuable to the Participant, the duration of the Award
and the conditions upon which delivery of any shares or cash to
the Participant shall be based. The amount of cash or shares or
other property that may be deliverable pursuant to such Award
shall be based upon the degree of attainment over a specified
period (a "performance cycle") as may be established by the
Committee of such measure(s) of the performance of the Company
(or any part thereof) or the Participant as may be established
by the Committee. The Committee may provide for full or partial
credit, prior to completion of such performance cycle or the
attainment of the performance achievement specified in
the Award, in the event of the Participant's death, or Total
Disability, a Change in Control Event or in such other
circumstances as the Committee consistent with Section
6.10(c)(2), if applicable, may determine.
Section 5.2 Special Performance-Based Share Awards.
Without limiting the generality of the foregoing, and in
addition to Options and Stock Appreciation Rights granted under
other provisions of this Plan which are intended to satisfy the
exception for "performance-based compensation" under Section
162(m) of the Code (with such Awards hereinafter referred to as a
"Qualifying Option" or a "Qualifying Stock Appreciation Right,"
respectively), other performance-based awards within the meaning
of Section 162(m) of the Code ("Performance-Based Awards"), whether
in the form of restricted stock, performance stock, phantom stock,
or other rights, the vesting or exercisability of which depends on
the degree of achievement of the Performance Goals relative to
preestablished targeted levels for the Corporation or the
Corporation and one or more of its Subsidiaries or divisions, may
be granted under this Plan. Any Qualifying Option or Qualifying
Stock Appreciation Right shall be subject only to the
requirements of subsections (a) and (c) below in order for
such Awards to satisfy the requirements for Performance-Based
Awards under this Section 5.2. With the exception of any
Qualifying Option or Qualifying Stock Appreciation Right,
an Award that is intended to satisfy the requirements of this
Section 5.2 shall be designated as a Performance-Based Award
at the time of grant.
(a) Eligible Class. The eligible class of persons for
Performance-Based Awards under this Section shall be the
executive officers of the Corporation.
(b) Performance Goal Alternatives. The specific
performance goals for Performance-Based Awards granted under
this Section (other than Qualifying Options and Qualifying Stock
Appreciation Rights) shall be, on an absolute or relative basis,
one or more of the Performance Goals, as selected by the Committee
in its sole discretion. The Committee shall establish in the
applicable Award Agreement the specific performance target(s)
relative to the Performance Goal(s) which must be attained before
the compensation under the Performance-Based Award becomes payable.
The specific targets shall be determined within the time period
permitted under Section 162(m) of the Code (and any regulations
issued thereunder) so that such targets are considered to be
preestablished and so that the attainment of such targets is
substantially uncertain at the time of their establishment. The
applicable performance measurement period may not be less than one
nor more than 10 years.
(c) Maximum Performance-Based Award. Notwithstanding
any other provision of the Plan to the contrary, in no event shall
grants in any calendar year to a Participant under this Section
5.2 relate to more than 100,000 shares of Common Stock (subject to
adjustment under Section 6.2) or a cash amount of more than
$1,000,000. Awards that are cancelled during the year shall be
counted against this limit to the extent required by Section
162(m) of the Code.
(d) Committee Certification. Before any
Performance-Based Award under this Section 5.2 (other than
Qualifying Options or Qualifying Stock Appreciation Rights) is
paid, the Committee must certify in writing that the Performance
Goal(s) and any other material terms of the Performance-Based Award
were satisfied; provided, however, that a Performance-Based Award
may be paid without regard to the satisfaction of the applicable
Performance Goal in the event of a Change in Control Event in
accordance with Section 6.2(d).
(e) Terms and Conditions of Awards. The Committee will
have the discretion to determine the restrictions or other
limitations of the individual Awards granted under this
Section 5.2 including the authority to reduce Awards, payouts
or vesting or to pay no Awards, in its sole discretion, if the
Committee preserves such authority at the time of grant by
language to this effect in its authorizing resolutions or otherwise.
(f) Adjustments for Changes in Capitalization and other
Material Changes. In the event of a change in corporate
capitalization, such as a stock split or stock dividend, or a
corporate transaction, such as a merger, consolidation, spinoff,
reorganization or similar event, or any partial or complete
liquidation of the Corporation, or any similar event consistent
with regulations issued under Section 162(m) of the Code
including, without limitation, any material change in accounting
policies or practices affecting the Corporation and/or the
Performance Goals or targets, then the Committee may make
adjustments to the Performance Goals and targets relating to
outstanding Performance-Based Awards to the extent such
adjustments are made to reflect the occurrence of such an
event; provided, however, that adjustments described in
this subsection may be made only to the extent that the
occurrence of an event described herein was unforeseen
at the time the targets for a Performance-Based Award were
established by the Committee.
(g) Stock Payout Features. In lieu of cash payment of
an Award, the Committee may require or allow a portion of the Award
to be part in the form of shares of Common Stock, restricted shares
or an Option.
Section 5.3 Grants of Stock Bonuses.
The Committee may grant a Stock Bonus to any Eligible
Person to reward exceptional or special services, contributions or
achievements in the manner and on such terms and conditions
(including any restrictions on such shares) as determined from
time to time by the Committee. The number of shares so awarded
shall be determined by the Committee. The Award may be granted
independently or in lieu of a cash bonus.
Section 5.4 Deferred Payments.
The Committee may authorize for the benefit of any
Eligible Person the deferral of any payment of cash or shares
that may become due or of cash otherwise payable under this Plan,
and provide for accredited benefits thereon based upon such
deferment, at the election or at the request of such Participant,
subject to the other terms of this Plan. Such deferral shall be
subject to such further conditions, restrictions or requirements as the
Committee may impose, subject to any then vested rights of
Participants.
ARTICLE VI. OTHER PROVISIONS.
Section 6.1 Rights of Eligible Persons, Participants and
Beneficiaries.
(a) Employment Status. Status as an Eligible Person
shall not be construed as a commitment that any Award will be made
under this Plan to an Eligible Person or to Eligible Persons
generally.
(b) No Employment Contract. Nothing contained in this
Plan (or in any other documents related to this Plan or to any
Award) shall confer upon any Eligible Person or other Participant
any right to continue in the employ or other service of the Company
or constitute any contract or agreement of employment or other
service, nor shall interfere in any way with the right of the
Company to change such person's compensation or other benefits or
to terminate the employment of such person, with or without
cause, but nothing contained in this Plan or any document related
hereto shall adversely affect any independent contractual right of
such person without his or her consent thereto.
(c) Plan Not Funded. Awards payable under this Plan
shall be payable in shares or from the general assets of the
Corporation, and no special or separate reserve, fund or deposit
shall be made to assure payment of such Awards. No Participant,
Beneficiary or other person shall have any right, title or interest
in any fund or in any specific asset (including shares of Common
Stock, except as expressly otherwise provided) of the Company by
reason of any Award hereunder. Neither the provisions of this Plan
(or of any related documents), nor the creation or adoption of
this Plan, nor any action taken pursuant to the provisions of
this Plan shall create, or be construed to create, a trust of
any kind or a fiduciary relationship between the Company and
any Participant, Beneficiary or other person. To the extent that a
Participant, Beneficiary or other person acquires a right to
receive payment pursuant to any Award hereunder, such right
shall be no greater than the right of any unsecured general
creditor of the Company.
Section 6.2 Adjustments; Acceleration.
(a) Adjustments. If there shall occur any extraordinary
dividend or other extraordinary distribution in respect of the
Common Stock (whether in the form of cash, Common Stock, other
securities, or other property), or any reclassification,
recapitalization, stock split (including a stock split in the
form of a stock dividend), reverse stock split, reorganization,
merger, combination, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Common Stock or other securities of
the Corporation, or there shall occur any other like corporate
transaction or event in respect of the Common Stock or a sale of
substantially all the assets of the Corporation as an entirety,
then the Committee shall, in such manner and to such extent (if
any) as it deems appropriate and equitable (1) proportionately
adjust any or all of (i) the number and type of shares of Common
Stock (or other securities) which thereafter may be made the
subject of Awards (including the specific numbers of shares set
forth elsewhere in this Plan), (ii) the number, amount and type
of shares of Common Stock (or other securities or property) subject
to any or all outstanding Awards, (iii) the grant, purchase, or
exercise price of any or all outstanding Awards, (iv) the
securities, cash or other property deliverable upon exercise of
any outstanding Awards, or (v) the performance standards
appropriate to any outstanding Awards, or (2) in the case of
an extraordinary dividend or other distribution, recapitalization,
reclassification, merger, reorganization, consolidation,
combination, sale of assets, split up, exchange, or spin off,
make provision for a cash payment or for the substitution or
exchange of any or all outstanding Awards or the cash,
securities or property deliverable to the holder of any or all
outstanding Awards based upon the distribution or consideration
payable to holders of the Common Stock of the Corporation upon
or in respect of such event; provided, however, in
each case, that with respect to Awards of Incentive Stock
Options, no such adjustment shall be made which would cause the
Plan to violate Section 424(a) of the Code or any successor
provisions thereto without the written consent of holders
materially adversely affected thereby. In any of such events,
the Committee may take such action sufficiently prior to such
event if necessary to permit the Participant to realize the
benefits intended to be conveyed with respect to the underlying
shares in the same manner as is available to stockholders generally.
(b) Acceleration of Awards Upon Change in Control. As
to any Participant, unless prior to a Change in Control Event the
Committee determines that, upon its occurrence, there shall be no
acceleration of benefits under Awards or determines that only
certain or limited benefits under Awards shall be accelerated and
the extent to which they shall be accelerated, and/or establishes
a different time in respect of such Change in Control Event for
such acceleration, then upon the occurrence of a Change in
Control Event (i) each Option and Stock Appreciation Right shall
become immediately exercisable, (ii) Restricted Stock shall
immediately vest free of restrictions, and (iii) each Performance
Share Award shall become payable to the Participant; provided,
however, that in no event shall any Award be accelerated as to
any Section 16 Person to a date less than six months after the
Award Date of such Award. The Committee may override the
limitations on acceleration in this Section 6.2(b) by express
provision in the Award Agreement and may accord any Eligible
Person a right to refuse any acceleration, whether pursuant to
the Award Agreement or otherwise, in such circumstances as
the Committee may approve. Any acceleration of
Awards shall comply with applicable regulatory requirements,
including without limitation Section 422 of the Code.
(c) Possible Early Termination of Accelerated Awards.
If any Option or other right to acquire Common Stock under this
Plan has been fully accelerated as permitted by Section 6.2(b) but
is not exercised prior to (i) a dissolution of the Corporation,
or (ii) an event described in Section 6.2(a) that the Corporation
does not survive, or (iii) the consummation of an event described in
Section 6.2(a) that results in a Change in Control Event approved
by the Board, such Option or right shall thereupon terminate,
subject to any provision that has been expressly made by the
Committee for the survival, substitution, exchange or other
settlement of such Option or right.
Section 6.3 Effect of Termination of Employment.
The Committee shall establish in respect of each Award
granted to an Eligible Person the effect of a termination of
employment on the rights and benefits thereunder and in so doing
may make distinctions based upon the cause of termination. In
addition, in the event of, or in anticipation of, a termination
of employment with the Company for any reason, other than discharge
for cause, the Committee may, in its discretion, increase the
portion of the Participant's Award available to the Participant, or
Participant's Beneficiary or Personal Representative, as the case
may be, or, subject to the provisions of Section 1.6, extend the
exercisability period upon such terms as the Committee shall
determine and expressly set forth in or by amendment to the Award
Agreement.
Section 6.4 Compliance with Laws.
This Plan, the granting and vesting of Awards under this
Plan and the offer, issuance and delivery of shares of Common Stock
and/or the payment of money under this Plan or under Awards
granted hereunder are subject to compliance with all applicable
federal and state laws, rules and regulations (including but not
limited to state and federal securities law and federal margin
requirements) and to such approvals by any listing, regulatory
or governmental authority as may, in the opinion of counsel for the
Corporation, be necessary or advisable in connection therewith. Any
securities delivered under this Plan shall be subject to such
restrictions, and the person acquiring such securities shall,
if requested by the Corporation, provide such assurances and
representations to the Corporation as the Corporation may deem
necessary or desirable to assure compliance with all applicable
legal requirements.
Section 6.5 Tax Withholding.
Upon any exercise, vesting, or payment of any Award or
upon the disposition of shares of Common Stock acquired pursuant to
the exercise of an Incentive Stock Option prior to satisfaction of
the holding period requirements of Section 422 of the Code, the
Company shall have the right at its option to (i) require the
Participant (or Personal Representative or Beneficiary, as the
case may be) to pay or provide for payment of the amount of any
taxes which the Company may be required to withhold with respect
to such Award event or payment or (ii) deduct from any amount
payable in cash the amount of any taxes which the Company may
be required to withhold with respect to such cash payment. In
any case where a tax is required to be withheld in connection
with the delivery of shares of Common Stock under this Plan, the
Committee may in its sole discretion grant (either at the time of
the Award or thereafter) to the Participant the right to elect,
pursuant to such rules and subject to such conditions as the
Committee may establish, to have the Corporation reduce the number
of shares to be delivered by (or otherwise reacquire) the
appropriate number of shares valued at their then Fair Market
Value, to satisfy such withholding obligation.
Section 6.6 Plan Amendment, Termination and Suspension.
(a) Board Authorization. The Board may, at any time,
terminate or, from time to time, amend, modify or suspend this
Plan, in whole or in part. No Awards may be granted during any
suspension of this Plan or after termination of this Plan, but
the Committee shall retain jurisdiction as to Awards then
outstanding in accordance with the terms of this Plan.
(b) Stockholder Approval. Any amendment that would (i)
materially increase the benefits accruing to Participants under
this Plan, (ii) materially increase the aggregate number of
securities that may be issued under this Plan, or (iii)
materially modify the requirements as to eligibility for
participation in this Plan, shall be subject to stockholder
approval only to the extent then required by Section 422 of
the Code or applicable law, or deemed necessary or advisable
by the Board.
(c) Amendments to Awards. Without limiting any other
express authority of the Committee under but subject to the express
limits of this Plan, the Committee by agreement or resolution may
waive conditions of or limitations on Awards to Eligible Persons
that the Committee in the prior exercise of its discretion has
imposed, without the consent of a Participant, and may make other
changes to the terms and conditions of Awards that do not affect
in any manner materially adverse to the Participant, his or her
rights and benefits under an Award.
(d) Limitations on Amendments to Plan and Awards. No
amendment, suspension or termination of the Plan or change of or
affecting any outstanding Award shall, without written consent of
the Participant, affect in any manner materially adverse to the
Participant any rights or benefits of the Participant or
obligations of the Corporation under any Award granted under this
Plan prior to the effective date of such change. Changes
contemplated by Section 6.2 shall not be deemed to constitute
changes or amendments for purposes of this Section 6.6.
Section 6.7 Privileges of Stock Ownership.
Except as otherwise expressly authorized by the Committee
or this Plan, a Participant shall not be entitled to any privilege
of stock ownership as to any shares of Common Stock not actually
delivered to and held of record by him or her. No adjustment
will be made for dividends or other rights as a stockholders for
which a record date is prior to such date of delivery.
Section 6.8 Effective Date of the Plan.
This Plan shall be effective as of February 28, 1997, the
date of Board approval, subject to stockholder approval within 12
months thereafter.
Section 6.9 Term of the Plan.
No Award shall be granted more than ten years after the
effective date of this Plan (the "termination date"). Unless
otherwise expressly provided in this Plan or in an applicable
Award Agreement, any Award granted prior to the termination date may
extend beyond such date, and all authority of the Committee with
respect to Awards hereunder, including the authority to amend an
Award, shall continue during any suspension of this Plan and in
respect of outstanding Awards on the termination date.
Section 6.10 Governing Law/Construction/Severability.
(a) Choice of Law. This Plan, the Awards, all documents
evidencing Awards and all other related documents shall be
governed by, and construed in accordance with the laws of the
state of incorporation of the Corporation.
(b) Severability. If any provision shall be held by a
court of competent jurisdiction to be invalid and unenforceable,
the remaining provisions of this Plan shall continue in effect.
(c) Plan Construction.
(1) Rule 16b-3. It is the intent of the
Corporation that transactions in and affecting Awards in the
case of Participants who are or may be subject to Section 16 of
the Exchange Act satisfy any then applicable requirements of Rule
16b-3 so that such persons (unless they otherwise agree) will be
entitled to the benefits of Rule 16b-3 or other exemptive rules
under Section 16 of the Exchange Act in respect of these
transactions and will not be subjected to avoidable liability
thereunder. If any provision of this Plan or of any Award would
otherwise frustrate or conflict with the intent expressed above,
that provision to the extent possible shall be interpreted so as
to avoid such conflict. If the conflict remains irreconcilable,
the Committee may disregard the provision if it concludes that
to do so furthers the interest of the Corporation and is
consistent with the purposes of this Plan as to such persons in
the circumstances.
(2) Section 162(m). It is the further intent of
the Company that Options or Stock Appreciation Rights with an
exercise or base price not less than Fair Market Value on the
date of grant and Performance Share Awards under Section 5.2 of
this Plan that are granted to or held by a Section 16 Person shall
qualify as performance-based compensation under Section 162(m) of
the Code, and this Plan shall be interpreted consistent with such
intent.
Section 6.11 Captions.
Captions and headings are given to the sections and
subsections of this Plan solely as a convenience to facilitate
reference. Such headings shall not be deemed in any way material
or relevant to the construction or interpretation of the Plan or
any provision thereof.
Section 6.12 Effect of Change of Subsidiary Status.
For purposes of this Plan and any Award hereunder, if an
entity ceases to be a Subsidiary a termination of employment and
service shall be deemed to have occurred with respect to each
Eligible Person in respect of such Subsidiary who does not
continue as an Eligible Person in respect of another entity
within the Company.
Section 6.13 Non-Exclusivity of Plan.
Nothing in this Plan shall limit or be deemed to limit the
authority of the Board or the Committee to grant awards or
authorize any other compensation, with or without reference to
the Common Stock, under any other plan or authority.
ARTICLE VII. DEFINITIONS.
Section 7.1 Definitions.
"Award" shall mean an award of any Option, Stock
Appreciation Right, Restricted Stock, Stock Bonus, Performance Share
Award, Performance-Based Award, dividend equivalent or deferred
payment right or other right or security that would constitute a
"derivative security" under Rule 16a-1(c) of the Exchange Act, or
any combination thereof, whether alternative or cumulative,
authorized by and granted under this Plan.
"Award Agreement" shall mean any writing setting forth the
terms of an Award that has been authorized by the Committee.
"Award Date" shall mean the date upon which the Committee
took the action granting an Award or such later date as the
Committee designates as the Award Date at the time of the Award.
"Award Period" shall mean the period beginning on an Award
Date and ending on the expiration date of such Award.
"Beneficiary" shall mean the person, persons, trust or
trusts designated by a Participant or, in the absence of a
designation, entitled by will or the laws of descent and
distribution, to receive the benefits specified in the Award
Agreement and under this Plan in the event of a Participant's
death, and shall mean the Participant's executor or administrator
if no other Beneficiary is designated and able to act under the
circumstances.
"Board" shall mean the Board of Directors of the
Corporation.
"Cash Flow" shall mean cash and cash equivalents derived
from either (i) net cash flow from operations or (ii) net cash flow
from operations, financings and investing activities, as determined
by the Committee at the time an Award is granted.
"Change in Control Event" shall mean any of the following:
(1) Approval by the stockholders of the Corporation of
the dissolution or liquidation of the Corporation;
(2) Approval by the stockholders of the Corporation of
an agreement to merge or consolidate, or otherwise reorganize,
with or into one or more entities that are not Subsidiaries,
as a result of which less than 50% of the outstanding voting
securities of the surviving or resulting entity immediately
after the reorganization are, or will be, owned, directly or
indirectly, by stockholders of the Corporation immediately
before such reorganization (assuming for purposes of such
determination that there is no change in the record
ownership of the Corporation's securities from the record date
for such approval until such reorganization and that such record
owners hold no securities of the other parties to such
reorganization);
(3) Approval by the stockholders of the Corporation of
the sale of substantially all of the Corporation's business
and/or assets to a person or entity which is not a Subsidiary;
(4) Any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act but excluding any person
described in and satisfying the conditions of Rule 13d-1(b)(1)
thereunder), other than a person who is the beneficial owner
(as defined in Rule 13d-3 under the Exchange Act) of more than
20% of the outstanding Shares of Common Stock at the time of
adoption of this Plan, becomes the beneficial owner (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation representing more than 50% of
the combined voting power of the Corporation's then outstanding
securities entitled to then vote generally in the election
of directors of the Corporation; or
(5) At any time during the term of this Plan, 51% or
more of the individuals elected to serve, and who are then serving,
on the Board are individuals who were not (i) members of the
Board at the time of the adoption of this Plan by the Board, or
(ii) nominated or elected to their current term of office as a
director by a committee of the Board which is authorized to
fill vacancies on the Board (or if there is no such
committee, by a majority of the Board in office at the time of
such individual's nomination or election by the Board to fill a
vacancy), or (iii) approved by a majority of members of the
Board who were either members of the Board at the time this
Plan was adopted by the Board, or nominated or elected as
described in clause (5) (ii) above.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Commission" shall mean the Securities and Exchange
Commission.
"Committee" shall mean the Board or a committee appointed
by the Board to administer this Plan, which committee shall be
comprised only of two or more directors or such greater number of
directors as may be required under applicable law, each of whom,
(i) in respect of any decision at a time when the Participant
affected by the decision may be subject to Section 162(m) of the
Code, shall be an "outside" director within the meaning of
Section 162(m) of the Code, and (ii) in respect of any decision
affecting a transaction at a time when the Participant involved
in the transaction may be subject to Section 16 of the Exchange
Act, shall be a "non-employee director" within the meaning of Rule
16b-3(b)(3) promulgated under the Exchange Act.
"Common Stock" shall mean the Common Stock of the
Corporation and such other securities or property as may become
the subject of Awards, or become subject to Awards, pursuant to an
adjustment made under Section 6.2 of this Plan.
"Company" shall mean, collectively, the Corporation and
its Subsidiaries.
"Corporation" shall mean Apria Healthcare Group Inc., a
Delaware corporation, and its successors.
"Disinterested" shall mean disinterested within the
meaning of any applicable regulatory requirements, including
Rule 16b-3.
"EBITDA" shall mean earnings before interest, taxes,
depreciation and amortization.
"Eligible Employee" shall mean an officer (whether or not
a director) or key employee of the Company.
"Eligible Person" means an Eligible Employee, or any Other
Eligible Person, as determined by the Committee in its
discretion.
"EPS" shall mean earnings per common share on a fully
diluted basis determined by dividing (i) net earnings, less
dividends on preferred stock of the Corporation by (ii) the
weighted average number of common shares and common shares
equivalents outstanding.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
"Fair Market Value" on any date shall mean (i) if the
stock is listed or admitted to trade on a national securities
exchange, the closing price of the stock on the principal
national securities exchange on which the stock is so listed or
admitted to trade, on such date, or, if there is no trading of
the stock on such date, then the closing price of the stock as
quoted on such Composite Tape on the next preceding date on
which there was trading in such shares; (ii) if the stock is
not listed or admitted to trade on a national securities
exchange, the last price for the stock on such date, as furnished
by the National Association of Securities Dealers, Inc. ("NASD")
through the NASDAQ National Market Reporting System or a similar
organization if the NASD is no longer reporting such information;
(iii) if the stock is not listed or admitted to trade on a
national securities exchange and is not reported on the
National Market Reporting System, the mean between the bid and
asked price for the stock on such date, as furnished by the NASD
or a similar organization; or (iv) if the stock is not listed or
admitted to trade on a national securities exchange, is not
reported on the National Market Reporting System and if bid and
asked prices for the stock are not furnished by the NASD or a
similar organization, the value as established by the Committee
at such time for purposes of this Plan.
"Free Cash Flow" shall mean cash postings less cost of
sales, operating expenses (net of bad debt) and capital
expenditures.
"Incentive Stock Option" shall mean an Option which is
intended, as evidenced by its designation, as an incentive stock
option within the meaning of Section 422 of the Code, the award
of which contains such provisions (including but not limited to the
receipt of stockholder approval of this Plan, if the Award is
made prior to such approval) and is made under such circumstances
and to such persons as may be necessary to comply with that section.
"Nonqualified Stock Option" shall mean an Option that is
designated as a Nonqualified Stock Option and shall include any
Option intended as an Incentive Stock Option that fails to meet
the applicable legal requirements thereof. Any Option granted
hereunder that is not designated as an incentive stock option
shall be deemed to be designated a nonqualified stock option
under this Plan and not an incentive stock option under the Code.
"Non-Employee Director" shall mean a member of the Board
of Directors of the Corporation who is not an officer or employee
of the Company.
"Option" shall mean an option to purchase Common Stock
granted under this Plan. The Committee shall designate any Option
granted to an Eligible Person as a Nonqualified Stock Option or an
Incentive Stock Option.
"Other Eligible Person" shall mean any Non-Employee
Director or any individual consultant or advisor who renders or has
rendered bona fide services (other than services in connection with
the offering or sale of securities of the Company in a capital
raising transaction) to the Company, and who is selected to
participate in this Plan by the Committee. A non-employee agent
providing bona fide services to the Company (other than as an eligible
advisor or consultant) may also be selected as an Other Eligible
Person if such agent's participation in this Plan would not
adversely affect (i) the Corporation's eligibility to use
Form S-8 to register under the Securities Act of 1933, as amended,
the offering of shares issuable under this Plan by the Company or
(ii) the Corporation's compliance with any other applicable laws.
"Participant" shall mean an Eligible Person who has been
granted an Award under this Plan.
"Performance-Based Award" shall mean an Award of a right
to receive shares of Common Stock or other compensation (including
cash) under Section 5.2, the issuance or payment of which is
contingent upon, among other conditions, the attainment of
performance objectives specified by the Committee.
"Performance Goal" shall mean EBITDA or EPS or ROE or Cash
Flow or Free Cash Flow or sales growth or cost containment or
reduction or Total Stockholder Return, and "Performance Goals"
means any one or more thereof.
"Performance Share Award" shall mean an Award of a right
to receive shares of Common Stock made in accordance with Section
5.1, the issuance or payment of which is contingent upon, among
other conditions, the attainment of performance objectives specified
by the Committee.
"Personal Representative" shall mean the person or persons
who, upon the disability or incompetence of a Participant, shall
have acquired on behalf of the Participant, by legal proceeding
or otherwise, the power to exercise the rights or receive benefits
under this Plan and who shall have become the legal representative
of the Participant.
"Plan" shall mean this 1997 Stock Incentive Plan.
"QDRO" shall mean a qualified domestic relations order as
defined in Section 414(p) of the Code or Title I, Section
206(d)(3) of ERISA (to the same extent as if this Plan were subject
thereto), or the applicable rules thereunder.
"Restricted Stock Award" shall mean an award of a fixed
number of shares of Common Stock to the Participant subject,
however, to payment of such consideration, if any, and such
forfeiture provisions, as are set forth in the Award Agreement.
"Restricted Stock" shall mean shares of Common Stock
awarded to a Participant under this Plan, subject to payment of
such consideration, if any, and such conditions on vesting and such
transfer and other restrictions as are established in or pursuant
to this Plan, for so long as such shares remain unvested under
the terms of the applicable Award Agreement.
"ROE" shall mean consolidated net income of the
Corporation (less preferred dividends), divided by the average
consolidated common stockholders equity.
"Rule 16b-3" shall mean Rule 16b-3 as promulgated by the
Commission pursuant to the Exchange Act, as amended from time to
time.
"Section 16 Person" shall mean a person subject to Section
16(a) of the Exchange Act.
"Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.
"Stock Appreciation Right" shall mean a right to receive a
number of shares of Common Stock or an amount of cash, or a
combination of shares and cash, the aggregate amount or value of
which is determined by reference to a change in the Fair Market
Value of the Common Stock that is authorized under this Plan.
"Stock Bonus" shall mean an Award of shares of Common
Stock granted under this Plan for no consideration other than past
services and without restriction other than such transfer or
other restrictions as the Committee may deem advisable to assure
compliance with law.
"Subsidiary" shall mean any corporation or other entity a
majority of whose outstanding voting stock or voting power is
beneficially owned directly or indirectly by the Corporation.
"Total Disability" shall mean a "permanent and total
disability" within the meaning of Section 22(e)(3) of the Code
and (except in the case of a Non-Employee Director) such other
disabilities, infirmities, afflictions or conditions as the
Committee by rule may include.
"Total Stockholder Return" shall mean with respect to the
Corporation or other entities (if measured on a relative basis),
the (i) change in the market price of its common stock (as quoted
in the principal market on which it is traded as of the beginning
and ending of the period) plus dividends and other distributions
paid, divided by (ii) the beginning quoted market price, all of
which is adjusted for any changes in equity structure, including
but not limited to stock splits and stock dividends.
Section 7.2 Changes in Applicable Law.
To the extent any terms defined or utilized in this Plan
are defined by identification to a particular statute or regulation,
and if there shall occur a change in such statutory or regulatory
definition, then the definition of such term shall be deemed to
have been amended to conform to the change in the statutory or
regulatory definition, unless the Committee shall determine that
such change would create a result which is contrary to the
intents and purposes of this Plan or work to create a hardship for
either any Eligible Person or the Company, in which event the
Committee, at its option, shall have authority to amend this Plan
in a manner so as to achieve the original intents and purposes
of this Plan or to diminish or eliminate the hardship caused by
such change in a statutory definition. Any such amendment may
be made retroactively to the date of the change in the
statutory or regulatory definition.
[O'MELVENY & MYERS LLP LETTERHEAD]
December
16th
1 9 9 7
(714) 760-9600
7,955-003
NB1-338939.V1
Apria Healthcare Group Inc.
3560 Hyland Avenue
Costa Mesa, California 92626
Re: Registration Statement on Form S-8 of
Apria Healthcare Group Inc. (the "Company")
Ladies and Gentlemen:
At your request, we have examined the Registration
Statement on Form S-8 to be filed with the Securities and Exchange
Commission in connection with the registration under the Securities
Act of 1933, as amended, of 2,500,000 shares of Common Stock, $0.001
par value, of the Company (the "Common Stock"), to be issued pursuant
to the Apria Healthcare Group Inc. 1997 Stock Incentive Plan
(the "Plan"). At your request, we have examined the proceedings
heretofore taken and to be taken in connection with the
authorization of the Plan and the Common Stock to be issued
pursuant to and in accordance with the Plan.
Based upon such examination and upon such matters
of fact and law as we have deemed relevant, we are of the opinion
that the Common Stock has been duly authorized by all necessary
corporate action on the part of the Company and, when issued in
accordance with such authorization, the provisions of the Plan and
relevant agreements duly authorized by and in accordance with the
terms of the Plan, will be validly issued, fully paid and
nonassessable.
We consent to the use of this opinion as an exhibit
to the Registration Statement.
Respectfully submitted,
/s/ O'Melveny & Myers LLP
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the Apria Healthcare Group Inc. 1997 Stock
Incentive Plan of our report dated February 28, 1997, with respect to
the consolidated financial statements and schedule of Apria Healthcare Group
Inc. included in its Annual Report (Form 10-K) for the year ended
December 31, 1996, filed with the Securities and Exchange Commission.
Ernst & Young LLP
Orange County, California /s/ Ernst & Young LLP
December 19, 1997
