As filed with the Securities and Exchange Commission on October
19, 1999.
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
(714) 427-2000
(Address and telephone number of principal executive
offices)
___________________
Amended and Restated Apria Healthcare Group Inc.
1997 Stock Incentive Plan
(Full title of the plan)
___________________
John C. Maney
Executive Vice President and Chief Financial Officer
Apria Healthcare Group Inc.
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
___________________
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==================================================================
==========
<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, $2,100,000 $12.844<3> $26,972,400<3>
$7,499<3>
$0.001 par value <1> <2>
per share 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(c) under
the Securities Act of 1933, as amended (the "Securities
Act"),
an additional indeterminate number of shares, options and
rights
which by reason of certain events specified in the Amended
and
Restated Apria Healthcare Group Inc. 1997 Stock Incentive
Plan,
as amended (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 October 13, 1999, 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 7.
</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. 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.
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) Registration Statement on Form S-8 of the Company
relating to the Plan filed with the Commission on
December 19, 1997 (registration number 333-42775);
(b) Annual Report on Form 10-K for the Company's fiscal
year ended December 31, 1998;
(c) Quarterly Reports on Form 10-Q for the Company's
fiscal quarters ended March 31, 1999 and June 30,
1999; 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 5. Interests of Named Experts and Counsel
The validity of the original issuance of the Common Stock
registered hereby is passed on for the Company by Robert S.
Holcombe, the Senior Vice President, General Counsel and
Secretary of the Company. Mr. Holcombe is compensated by
the Company as an employee, is the owner of shares of Common
Stock, is the holder of options to acquire shares of Common
Stock, and is eligible to participate in the Plan.
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 5. Interests of Named Experts and Counsel
The validity of the original issuance of the Common Stock
registered hereby is passed on for the Company by Robert S.
Holcombe, the Senior Vice President, General Counsel and
Secretary of the Company. Mr. Holcombe is compensated by the
Company as an employee, is the owner of shares of Common Stock,
is the holder of options to acquire shares of Common Stock, and
is eligible to participate in the Plan.
Item 8. Exhibits
See the attached Exhibit Index at page 7.
SIGNATURES
Pursuant to the requirements of the Securities Act, the
registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-8 and
has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the
City of Costa Mesa, State of California, on the 21st day of
July, 1999.
By: /s/ Philip L. Carter
------------------------
Philip L. Carter
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and
appoints Philip L. Carter and John C. Maney, or either of them
individually, his or her true and lawful attorney-in-fact and
agent, with full powers 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 (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 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 either 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/ Philip L. Carter Chief Executive July
21, 1999
- - ---------------------- Officer and Director
Philip L. Carter (Principal Executive Officer)
/s/ John C. Maney Executive Vice President July
21, 1999
- - ---------------------- and Chief Financial Officer
John C. Maney (Principal Financial Officer)
/s/ James E. Baker Vice President, July
21, 1999
- - --------------------- Controller (Principal
James E. Baker Accounting Officer)
/s/ Ralph V. Whitworth Director July
21, 1999
- - ----------------------
Ralph V. Whitworth
/s/ David L. Goldsmith Director July
21, 1999
- - ----------------------
David L. Goldsmith
- - ---------------------- Director
Richard H. Koppes
/s/ Philip R. Lochner, Jr. Director July
21, 1999
- - -------------------------
Philip R. Lochner, Jr.
/s/ Beverly Benedict Thomas Director July
21, 1999
- - ---------------------------
Beverly Benedict Thomas
/s/ David H. Batchelder Director July
21, 1999
- - -----------------------
David H. Batchelder
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- - ------ ----------------------
4. Amended and Restated Apria Healthcare Group Inc. 1997
Stock Incentive Plan, as amended.
5. Opinion of Counsel (opinion re legality).
23.1 Consent of Deloitte & Touche LLP (Consent of
Independent Auditor).
23.2 Consent of Ernst & Young LLP (Consent of
Independent Auditors).
23.3 Consent of Counsel (included in Exhibit 5).
24. Power of Attorney (included in this Registration
Statement under "Signatures").
<PAGE>
EXHIBIT 4
AMENDED AND RESTATED
APRIA HEALTHCARE GROUP INC.
1997 STOCK INCENTIVE PLAN
Includes Amendment 1998-1 Made by the Board of Directors
As of June 30, 1998
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I - THE PLAN.
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
............. 2
Section 1.5. Grant of Awards
....................................... 3
Section 1.6. Award Period
.......................................... 4
Section 1.7. Limitations on Exercise and Vesting of
Awards.......... 4
Section 1.8. No Transferability; Limited Exception to Transfer
Restrictions
.......................................... 4
Section 1.9. Acceptance of Notes to Finance Exercise
............... 5
Section 1.10. Limitations on Grants of Awards to Non-Employee
Directors
............................................. 6
ARTICLE II - OPTIONS.
Section 2.1. Grants
................................................ 6
Section 2.2. Option Price
.......................................... 6
Section 2.3. Limitations on Grant and Terms of Incentive Stock
Options
............................................... 7
Section 2.4. Limits on 10% Holders
................................. 7
Section 2.5. Cancellation and Regrant/Waiver of Restrictions
....... 7
Section 2.6. Options and Rights in Substitution for Stock
Options Granted by Other Corporations
................. 8
ARTICLE III - STOCK APPRECIATION RIGHTS.
Section 3.1. Grants
................................................ 8
Section 3.2. Exercise of Stock Appreciation Rights
................. 8
Section 3.3. Payment
............................................... 8
ARTICLE IV - RESTRICTED STOCK AWARDS.
Section 4.1. Grants
................................................. 9
Section 4.2. Restrictions
........................................... 9
Section 4.3. Return to the Corporation
.............................. 10
ARTICLE V - PERFORMANCE SHARE AWARDS AND STOCK BONUSES.
Section 5.1. Grants of Performance Share Awards
..................... 10
Section 5.2. Special Performance-Based Share Awards
................. 10
Section 5.3. Grants of Stock Bonuses
................................ 12
Section 5.4. Deferred Payments
...................................... 12
ARTICLE VI - OTHER PROVISIONS.
Section 6.1. Rights of Eligible Persons, Participants and
Beneficiaries
.......................................... 13
Section 6.2. Adjustments; Acceleration
.............................. 13
Section 6.3. Effect of Termination of Employment
.................... 14
Section 6.4. Compliance with Laws
................................... 15
Section 6.5. Tax Withholding
........................................ 15
Section 6.6. Plan Amendment, Termination and Suspension
............. 15
Section 6.7. Privileges of Stock Ownership
.......................... 16
Section 6.8. Effective Date of the Plan
............................. 16
Section 6.9. Term of the Plan
....................................... 16
Section 6.10. Governing Law/Construction/Severability
................ 17
Section 6.11. Captions
............................................... 17
Section 6.12. Effect of Change of Subsidiary Status
.................. 17
Section 6.13. Non-Exclusivity of Plan
................................ 18
ARTICLE VII - DEFINITIONS.
Section 7.1. Definitions
........................................... 18
Section 7.2. Changes in Applicable Law
............................. 23
<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. Subject to the bylaws of this Corporation, 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 or his
designee 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 Non-Employee
Director in any calendar year shall not exceed 30,000
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 consistent 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, 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); provided that an event described
in this clause (2) shall not constitute a Change
in Control Event if the majority of members of the
Board of the surviving entity is comprised of
individuals who were members of the Board
immediately prior to such event;
(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),
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 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 measures 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.
<PAGE>
EXHIBIT 5
October 14, 1999
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, I 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 an additional 2,100,000
shares of Common Stock, $0.001 par value, of the Company (the
"Common Stock"), and additional rights pursuant to the Company's
Rights Agreement dated February 8, 1995 with U.S. Stock Transfer
Corporation, as Rights Agent (together with the Common Stock, the
"Shares"), to be issued pursuant to the Amended and Restated
Apria Healthcare Group Inc. 1997 Stock Incentive Plan (the
"Plan"). At your request, I have examined the proceedings
heretofore taken in connection with the authorization of the Plan
and the Shares to be issued pursuant to and in accordance with
the Plan.
Based upon such examination and upon such matters of fact
and law as I have deemed relevant, I am of the opinion that the
Shares have 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, the Shares will be validly issued, and the Common Stock
will be fully paid and nonassessable.
I consent to the use of this opinion as an exhibit to
the Registration Statement.
Respectfully submitted,
/s/ Raoul Smyth
---------------------------
Raoul Smyth,
Associate General Counsel
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration
Statement of Apria Healthcare Group Inc., on Form S-8 of our
report
dated March 29, 1999, appearing in the Company's Annual Report on
Form 10-K of Apria Healthcare Group Inc. for the year ended
December
31, 1998.
/s/ DELOITTE & TOUCHE LLP
Costa Mesa, California
October 15, 1999
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8) pertaining to the Amended and Restated
Apria Healthcare Group Inc. 1997 Stock Incentive Plan of our
report dated March 11, 1998 (except for the second paragraph of
Note 12, as to which the date is April 9, 1998), with respect
to the 1997 consolidated financial statements and schedule of
Apria
Healthcare Group Inc. included in its Annual Report (Form 10-K)
for the year ended December 31, 1998, filed with the Securities
and Exchange Commission.
/s/ Ernst & Young LLP
Orange County, California
October 15, 1999
