<PAGE> 1
As Filed with the Securities and Exchange Commission on December 24, 1996
Registration No. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------------------
ARV ASSISTED LIVING, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 33-016098
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
----------------------------------
245 FISCHER AVENUE
COSTA MESA, CALIFORNIA 92626
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES INCLUDING ZIP CODE)
----------------------------------
1995 STOCK OPTION AND INCENTIVE PLAN
OF ARV ASSISTED LIVING, INC.
(FULL TITLE OF THE PLAN)
----------------------------------
COPY TO:
SHEILA M. MULDOON, ESQ. WILLIAM J. CERNIUS, ESQ.
VICE PRESIDENT, SECRETARY DAVID L. KUIPER, ESQ.
AND GENERAL COUNSEL LATHAM & WATKINS
ARV ASSISTED LIVING, INC. 650 TOWN CENTER DRIVE,
245 FISCHER AVENUE TWENTIETH FLOOR
COSTA MESA, CALIFORNIA 92626 COSTA MESA, CALIFORNIA 92626
(714) 751-7400 (714) 540-1235
(NAME AND ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
<TABLE>
<CAPTION>
============================================================================================================
CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF SECURITIES TO BE OFFERING PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE (1) PRICE (1) FEE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock ............................. 1,150,000 $10.56 $12,144,000 $3,680
============================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(h). The Proposed Maximum Aggregate Offering Price
is the average of the high and low sales price of the Common Stock in the
over-the-counter market, as reported on the Nasdaq National Market, on
December 17, 1996 (which were $10.75 and $10.375, respectively).
================================================================================
Proposed sale to take place as soon after the effective date of the Registration
Statement as options granted under the 1995 Stock Option and Incentive Plan
are exercised.
TOTAL PAGES 6
EXHIBIT INDEX ON PAGE 6
<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The information called for in Part I of Form S-8 is not being filed
with or included in this Form S-8 (by incorporation by reference or otherwise)
in accordance with the rules and regulations of the Securities and Exchange
Commission (the "Commission").
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed with the Commission are incorporated
herein by reference:
(a) Annual Report on Form 10-K for the fiscal year ended
March 31, 1996, filed by ARV Assisted Living, Inc. (the "Company")
with the Commission;
(b) Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1996, filed by the Company with the Commission;
(c) The Sections entitled "Management," "Security
Ownership of Directors, Executive Officers and Certain Beneficial
Owners," and "Compensation of Executive Officers" from the Company's
Proxy Statement for its 1996 Annual Meeting of Shareholders.
(d) Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1996, filed by the Company with the Commission;
and
(e) The description of the Company's Common Stock
contained in the Registration Statement on Form S-1 filed on October
17, 1995, including any subsequently filed amendments and reports
updating such description.
All documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), after the date of this Registration Statement and prior to the filing of
a post-effective amendment which indicates that all securities offered have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and to be
a part of it from the respective dates of filing such documents. Any statement
contained in a document 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 superseded, to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
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ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The consolidated financial statements of the Company appearing in the
Company's Annual Report on Form 10-K for the year ended March 31, 1996 have
been audited by KPMG Peat Marwick LLP, independent auditors, as set forth in
their report thereon included therein and incorporated herein by reference.
Such consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The California General Corporation Law provides that California
corporations may include provisions in their articles of incorporation
relieving Directors of monetary liability for breach of their fiduciary duty
as Directors, except for the liability of a Director resulting from (i) any
transaction from which the Director derives an improper personal benefit, (ii)
acts or omissions involving intentional misconduct or a knowing and culpable
violation of law, (iii) acts or omissions that a Director believes to be
contrary to the best interests of the Company or its shareholders or that
involves the absence of good faith on the part of the Director, (iv) acts or
omissions constituting an unexcused pattern of inattention that amounts to an
abdication of the Director's duty to the Company or its shareholders, (v) acts
or omissions showing a reckless disregard for the Director's duty to the Company
or its shareholders in circumstances in which the Director was aware or should
have been aware, in the ordinary course of performing a Director's duties, of a
risk of serious injury to the Company or its shareholders, (vi) any improper
transaction between a Director and the Company in which the Director has a
material financial interest, or (vii) the making of an illegal distribution to
shareholders or an illegal loan or guaranty. The Company's Articles of
Incorporation provide that the Company's Directors are not liable to the Company
or its shareholders for monetary damages for breach of their fiduciary duties to
the fullest extent permitted by California law. The inclusion of this provision
in the Articles of Incorporation may have the effect of reducing the likelihood
of derivative litigation against Directors and may discourage or deter
shareholders or management from bringing a lawsuit against Directors for breach
of their duty of care, even though such an action, if successful, might
otherwise have benefitted the Company and its shareholders.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
See Index to Exhibits on page 6.
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 of 1933, as amended (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 this
Registration Statement or any material change to such information
in this Registration Statement;
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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.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold at termination of the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the 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 this 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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, 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 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.
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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 December 23,
1996.
ARV ASSISTED LIVING, INC.,
a California corporation
By: /s/ GARY L. DAVIDSON
-----------------------------
Gary L. Davidson
President and Chairman
of the Board
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Gary L. Davidson and Graham P. Espley-Jones as his attorneys-in- fact and
agents, with full power of substitution and resubstitution for him in any and
all capacities, to sign any or all amendments or post- effective amendments to
this Registration Statement, and to file the same, with exhibits thereto and
other documents in connection therewith or in connection with the registration
of the Common Stock under the Securities Act with the Commission, granting unto
each of such attorneys-in- fact and agents full power and authority to do and
perform each and every act and thing requisite and necessary in connection with
such matters and hereby ratifying and confirming all that each of such
attorneys-in-fact and agents or his substitutes may do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
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<S> <C> <C>
/s/ GARY L. DAVIDSON President, Chairman of the Board and December 23, 1996
------------------------------------------------ Director (Principal Executive Officer)
Gary L. Davidson
/s/ DAVID P. COLLINS Senior Executive Vice President and December 23, 1996
------------------------------------------------ Director
David P. Collins
/s/ GRAHAM P. ESPLEY-JONES Chief Financial Officer (Principal December 23, 1996
------------------------------------------------ Financial and Accounting Officer)
Graham P. Espley-Jones
/s/ JOHN A. BOOTY Vice Chairman of the Board and Director December 23, 1996
------------------------------------------------
John A. Booty
/s/ R. BRUCE ANDREWS Director December 23, 1996
------------------------------------------------
R. Bruce Andrews
/s/ MAURICE J. DEWALD Director December 23, 1996
------------------------------------------------
Maurice J. DeWald
/s/ JAMES M. PETERS Director December 23, 1996
------------------------------------------------
James M. Peters
/s/ JOHN J. RYDZEWSKI Director December 23, 1996
------------------------------------------------
John J. Rydzewski
</TABLE>
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INDEX TO EXHIBITS
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<CAPTION>
EXHIBIT DESCRIPTION PAGE
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<S> <C> <C>
4.1 The 1995 Stock Option and Incentive Plan of ARV Assisted Living, Inc. 7
5.1 Opinion of Latham & Watkins 28
15.1 Letter re: Unaudited interim financial information 29
23.1 Consent of Latham & Watkins (included in Exhibit 5.1) 28
23.2 Consent of KPMG Peat Marwick LLP 30
24.1 Power of Attorney (included on the signature page to this Registration --
Statement)
</TABLE>
6
<PAGE> 1
EXHIBIT 4.1
THE 1995 STOCK OPTION AND INCENTIVE PLAN
OF
ARV ASSISTED LIVING, INC.
ARV Assisted Living, Inc., a California corporation, has
adopted The 1995 Stock Option and Incentive Plan of ARV Assisted Living, Inc.
(the "Plan"), effective October 1995, for the benefit of its eligible
employees, consultants and directors. The Plan consists of two plans, one for
the benefit of key Employees (as such term is defined below) and consultants
and one for the benefit of Non-Employee Directors (as such term is defined
below).
The purposes of the Plan are as follows:
(1) To provide an additional incentive for directors, key
Employees and consultants to further the growth, development and financial
success of the Company by personally benefiting through the ownership of
Company stock and/or rights which recognize such growth, development and
financial success.
(2) To enable the Company to obtain and retain the
services of directors, key Employees and consultants considered essential to
the long range success of the Company by offering them an opportunity to own
stock in the Company and/or rights which will reflect the growth, development
and financial success of the Company.
ARTICLE I
DEFINITIONS
1.1 General. Wherever the following terms are used in
the Plan they shall have the meaning specified below, unless the context
clearly indicates otherwise.
1.2 Board. "Board" shall mean the Board of Directors of
the Company.
1.3 Code. "Code" shall mean the Internal Revenue Code of
1986, as amended.
1.4 Committee. "Committee" shall mean the Stock Option
Committee of the Board, or a subcommittee of the Board, appointed as provided
in Section 9.1.
1.5 Common Stock. "Common Stock" shall mean the common
stock of the Company, no par value per share, and any equity security of the
Company issued or authorized to be issued in the future, but excluding any
warrants, options or other rights to purchase Common Stock. Debt securities of
the Company convertible into Common Stock shall be deemed equity securities of
the Company.
1.6 Company. "Company" shall mean ARV Assisted Living,
Inc., a California corporation.
1.7 Corporate Subsidiary. "Corporate Subsidiary" shall
mean any corporation in an unbroken chain of corporations beginning with the
Company if each of the corporations other than the last corporation in the
unbroken chain then owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
1.8 Deferred Stock. "Deferred Stock" shall mean Common
Stock awarded under Article VII of the Plan.
1.9 Director. "Director" shall mean a member of the
Board.
1.10 Dividend Equivalent. "Dividend Equivalent" shall
mean a right to receive the equivalent value (in cash or Common Stock) of
dividends paid on Common Stock, awarded under Article VII of the Plan.
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1.11 Employee. "Employee" shall mean any employee (as
defined in accordance with the regulations and revenue rulings then applicable
under Section 3401(c) of the Code) of the Company, or of any corporation that
is then a Parent Corporation or a Corporate Subsidiary, or of any partnership,
limited liability company or corporation that is then a Partnership Subsidiary,
whether such employee is so employed at the time the Plan is adopted or becomes
so employed subsequent to the adoption of the Plan.
1.12 Exchange Act. "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended.
1.13 Fair Market Value. "Fair Market Value" of a share of
Common Stock as of a given date shall be: (i) the closing price of a share of
such class of the Company's Common Stock on the principal exchange on which
shares of such class of the Company's Common Stock are then trading, if any, on
the trading day previous to such date, or, if shares were not traded on the
trading day previous to such date, then on the next preceding trading day
during which a sale occurred; or (ii) if such class of the Company's Common
Stock is not traded on an exchange but is quoted on The Nasdaq Stock Market or
a successor quotation system, (1) the last sales price (if such class of the
Company's Common Stock is then listed as a National Market Issue on The Nasdaq
Stock Market) or (2) the mean between the closing representative bid and asked
prices (in all other cases) for a share of such class of the Company's Common
Stock on the trading day previous to such date as reported by The Nasdaq Stock
Market or such successor quotation system; or (iii) if such class of the
Company's Common Stock is not publicly traded on an exchange and not quoted on
The Nasdaq Stock Market or a successor quotation system, the mean between the
closing bid and asked prices for a share of such class of the Company's Common
Stock, on the trading day previous to such date, as determined in good faith by
the Committee; or (iv) if such class of the Company's Common Stock is not
publicly traded, the fair market value established by the Committee acting in
good faith.
1.14 Grantee. "Grantee" shall mean an Employee or
consultant granted a Performance Award, Dividend Equivalent, Stock Payment or
Stock Appreciation Right, or an award of Deferred Stock, under the Plan.
1.15 Incentive Stock Option. "Incentive Stock Option"
shall mean an Option that qualifies under Section 422 of the Code and that is
designated as an Incentive Stock Option by the Committee.
1.16 Non-Employee Director. "Non-Employee Director" shall
mean a Director who is not an Employee of the Company.
1.17 Non-Qualified Stock Option. "Non-Qualified Stock
Option" shall mean an Option that is not an Incentive Stock Option.
1.18 Option. "Option" shall mean an option to purchase
the Company's Common Stock, granted under the Plan. "Options" includes both
Incentive Stock Options and Non-Qualified Options; provided, however, that
Options granted to Non-Employee Directors and consultants shall be
Non-Qualified Stock Options.
1.19 Optionee. "Optionee" shall mean an Employee,
consultant or Non-Employee Director granted an Option under the Plan.
1.20 Parent Corporation. "Parent Corporation" shall mean
any corporation in an unbroken chain of corporations ending with the Company if
each of the corporations other than the Company then owns stock possessing 50%
or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain.
1.21 Partnership Subsidiary. "Partnership Subsidiary"
shall mean any partnership or limited liability company 50% or more of the
profits or capital interest of which is owned, directly or indirectly, by the
Company, a Parent Corporation or a Corporate Subsidiary. "Partnership
Subsidiary" shall also mean any corporation that would be a Corporate
Subsidiary with respect to a partnership or limited liability company that is
a Partnership Subsidiary if such partnership or limited liability company were
treated as the Company.
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1.22 Performance Award. "Performance Award" shall mean a
cash bonus, stock bonus or other performance or incentive award that is paid in
cash, Common Stock or a combination of both, awarded under Article VII of the
Plan.
1.23 Plan. "Plan" shall mean The 1995 Stock Option and
Incentive Plan of ARV Assisted Living, Inc.
1.24 Restricted Stock. "Restricted Stock" shall mean
shares of the Company's Common Stock awarded under Article VI of the Plan.
1.25 Restricted Stockholder. "Restricted Stockholder"
shall mean an Employee or consultant to whom Restricted Stock is issued under
Article VI of the Plan.
1.26 Rule 16b-3. "Rule 16b-3" shall mean that certain
Rule 16b-3 under the Exchange Act, as such Rule may be amended from time to
time.
1.27 Stock Appreciation Right. "Stock Appreciation Right"
shall mean a stock appreciation right granted under Article VIII of the Plan.
1.28 Stock Payment. "Stock Payment" shall mean (i) a
payment in the form of shares of Common Stock, or (ii) an option or other right
to purchase shares of Common Stock, as part of a deferred compensation
arrangement, made in lieu of all or any portion of the compensation, including
without limitation, salary, bonuses and commissions, that would otherwise
become payable to a key Employee or consultant in cash, awarded under Article
VII of the Plan.
1.29 Termination of Business Relationship. "Termination of
Business Relationship" in the case of an Option, Restricted Stock award,
Deferred Stock award, Performance Award, Stock Appreciation Right, Dividend
Equivalent or Stock Payment issued or granted to a consultant or other
independent contractor, other than an Employee, shall mean the time when the
business relationship between the Optionee, Grantee or Restricted Stockholder,
as the case may be, and the Company, a Parent Corporation, a Corporate
Subsidiary or a Partnership Subsidiary is terminated for any reason, with or
without cause, including, but not by way of limitation, a termination by
cessation of business, bankruptcy, contract termination, resignation, discharge
or death. The Committee, in its absolute discretion, shall determine the
effect of all other matters and questions relating to Termination of Business
Relationship.
1.30 Termination of Directorship. "Termination of
Directorship" shall mean the time when a Director ceases to be a member of the
Board for any reason, including, but not by way of limitation, a termination by
resignation, expiration of term, removal (with or without cause), retirement or
death. The Board, in its sole and absolute discretion, shall determine the
effect of all matters and questions relating to Termination of Directorship.
1.31 Termination of Employment. "Termination of
Employment" shall mean the time when the employee-employer relationship between
such Employee and the Company, a Parent Corporation, a Corporate Subsidiary or
a Partnership Subsidiary is terminated for any reason, with or without cause,
including, but not by way of limitation, a termination by resignation,
discharge, death or retirement, but excluding (i) terminations where there is a
simultaneous reemployment by the Company, a Parent Corporation, a Corporate
Subsidiary or (except in the case of an Incentive Stock Option) a Partnership
Subsidiary, (ii) at the discretion of the Committee, terminations that result
in a temporary severance of the employee-employer relationship, and (iii) at
the discretion of the Committee or except in the case of an Incentive Stock
Option, terminations that are followed by the simultaneous establishment of a
consulting relationship by Company, a Parent Corporation, a Corporate
Subsidiary or a Partnership Subsidiary with the former employee. The
Committee, in its absolute discretion, shall determine the effect of all other
matters and questions relating to Termination of Employment, including, but not
by way of limitation, the question
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of whether a Termination of Employment resulted from a discharge for good
cause, and all questions of whether particular leaves of absence constitute
Terminations of Employment; provided, however, that, with respect to Incentive
Stock Options, a leave of absence shall constitute a Termination of Employment
if, and to the extent that, such leave of absence interrupts employment for the
purposes of Section 422(a)(2) of the Code and the then applicable regulations
and revenue rulings under said Section.
ARTICLE II
SHARES SUBJECT TO PLAN
2.1 Shares Subject to Plan. The shares of stock subject
to Options, awards of Restricted Stock, Performance Awards, Dividend
Equivalents, awards of Deferred Stock, Stock Payments or Stock Appreciation
Rights shall be Common Stock, initially shares of the Company's Common Stock,
no par value per share. The aggregate number of such shares which may be
issued upon exercise of such options or rights or upon any such awards under
the Plan in any fiscal year shall not exceed 15% of the total outstanding
shares at the end of such fiscal year; provided, however, that the maximum
number of shares which may be issued upon exercise of Incentive Stock Options
shall not exceed 1,155,666. The maximum number of shares which may be subject
to options, rights or other awards granted under the Plan to any individual in
any calendar year shall not exceed 150,000, and the method of counting such
shares shall conform to any requirements applicable to performance-based
compensation under Section 162(m) of the Code. The shares of Common Stock
issuable upon exercise of such options or rights or upon any such awards may be
either previously authorized but unissued shares or treasury shares. The
maximum dollar value of awards (other than stock options and stock appreciation
rights payable in shares of Common Stock) that are intended to qualify as
performance-based compensation under the Code Section 162(m)(4)(c) and that may
be paid to any Employee for any particular performance period shall be limited
to $500,000.
2.2 Unexercised Options and Other Rights. If any Option,
or other right to acquire shares of Common Stock under any other award under
the Plan, expires or is cancelled without having been fully exercised, the
number of shares subject to such Option or other right but as to which such
Option or other right was not exercised prior to its expiration or cancellation
may again be optioned, granted or awarded hereunder, subject to the limitations
of Section 2.1.
ARTICLE III
GRANTING OF OPTIONS
3.1 Eligibility. Any Employee or consultant of the
Company or any Parent Corporation, Corporate Subsidiary or Partnership
Subsidiary selected by the Committee pursuant to Section 3.4(a) shall be
eligible to be granted an Option subject to the terms hereof. Each
Non-Employee Director of the Company shall be eligible to be granted Options at
the times and in the manner set forth in Section 3.5.
3.2 Disqualification for Stock Ownership. No person may
be granted an Incentive Stock Option under the Plan if such person, at the time
the Incentive Stock Option is granted, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any then existing Subsidiary unless such Incentive Stock Option
conforms to the applicable provisions of Section 422 of the Code.
3.3 Qualification of Incentive Stock Options. No
Incentive Stock Option shall be granted unless such Option, when granted,
qualifies as an "incentive stock option" under Section 422 of the Code.
Incentive Stock Options shall not be granted to Non-Employee Directors, persons
that are not Employees or persons that are Employees only of a Partnership
Subsidiary, but may, in the discretion of the Committee, be granted to
Directors who are also Employees other than of a Partnership Subsidiary.
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3.4 Granting of Options.
(a) The Committee shall from time to time, in its
absolute discretion, and subject to applicable limitations of the Plan:
(1) Determine which Employees are key Employees;
and
(2) Determine which consultants and other
independent contractors maintain a significant business
relationship with the Company, a Parent Corporation, a
Corporate Subsidiary or a Partnership Subsidiary; and
(3) Select from among the key Employees,
consultants and other independent contractors such of them as
in its opinion should be granted Options; and
(4) Determine the number of shares to be subject
to such Options granted to such selected key Employees,
consultants and independent contractors, and determine, in the
case of Options granted to Employees, whether such Options are
to be Incentive Stock Options or Non-Qualified Options; and
(5) Determine the terms and conditions of such
Options, consistent with the Plan, and whether such Options
are to qualify as performance-based compensation as described
in Section 162(m)(4)(C) of the Code.
(b) Upon the selection of a key Employee, consultant or
other independent contractor to be granted an Option, the Committee
shall instruct the Secretary of the Company to issue the Option and may
impose such conditions on the grant of the Option as it deems
appropriate. Without limiting the generality of the preceding sentence,
the Committee may, in its discretion and on such terms as it deems
appropriate, require as a condition on the grant of an Option to an
Employee or consultant that the Employee or consultant surrender for
cancellation some or all of the unexercised Options, awards of
Restricted Stock or Deferred Stock, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments or other
rights which have been previously granted to him under the Plan or
otherwise. An Option, the grant of which is conditioned upon such
surrender, may have an option price lower (or higher) than the exercise
price of such surrendered Option or other award, may cover the same (or
a lesser or greater) number of shares as such surrendered Option or
other award, may contain such other terms as the Committee deems
appropriate, and shall be exercisable in accordance with its terms,
without regard to the number of shares, price, exercise period or any
other term or condition of such surrendered Option or other award.
(c) Any Incentive Stock Option granted under the Plan may
be modified by the Committee to disqualify such option from treatment as
an "incentive stock option" under Section 422 of the Code.
3.5 Grant of Non-Qualified Stock Options to Non-Employee
Directors.
In addition to the Options granted by the Committee pursuant
to Section 3.4 above, Non-Qualified Stock Options shall be granted to
Non-Employee Directors pursuant to the following formula:
(a) Each person who becomes an Non-Employee Director
shall automatically receive, on the date such Non-Employee Director is
first elected or appointed, an option to purchase 10,000 shares of
Common Stock, at an exercise price equal to the fair market value of the
shares on the date of grant.
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(b) Every fourth year during the term of the Plan
following the date on which such Non-Employee Director is elected or
appointed, on the date of the annual meeting of the shareholders of the
Company, each Non-Employee Director, if such person has continuously
served as an Non-Employee Director, shall automatically receive an
option to purchase 10,000 shares of Common Stock, at an exercise price
equal to the fair market value of the shares on the date of grant.
(c) Options granted pursuant to subsections (a) and (b)
above will vest upon the Optionee's continued service as an Non-Employee
Director at a rate of 2,500 shares per year measured from the date of
grant.
(d) Options granted pursuant to subsections (a) and (b)
above will expire on the earlier of ten years from the date of grant or
one year after an Non-Employee Director's Termination of Directorship.
ARTICLE IV
TERMS OF OPTIONS
4.1 Option Agreement. Each Option shall be evidenced by
a written Stock Option Agreement, which shall be executed by the Optionee and
an authorized officer of the Company and which shall contain such terms and
conditions as the Committee (or the Board, in the case of Options granted to
Non-Employee Directors) shall determine, consistent with the Plan, including,
but not limited to, such terms and conditions as may be required by Code
Section 162(m) of the Code. Stock Option Agreements evidencing Incentive Stock
Options shall contain such terms and conditions as may be necessary to qualify
such Options as "incentive stock options" under Section 422 of the Code.
4.2 Option Price. The price per share of the shares
subject to each Option (other than those granted to Non-Employee Directors
under Section 3.5) shall be set by the Committee; provided, however, that such
price shall be no less than the par value of a share of Common Stock and in the
case of Incentive Stock Options such price shall not be less than the greater
of: (i) 100% of the Fair Market Value of a share of Common Stock on the date
the Option is granted, or (ii) 110% of the fair market value of a share of
Common Stock on the date such Option is granted in the case of an individual
then owning (within the meaning of Section 424(d) of the Code) more than 10% of
the total combined voting power of all classes of stock of the Company or any
Subsidiary.
4.3 Option Term. The term of an Option shall be set by
the Committee in its discretion; provided, however, that, in the case of
Incentive Stock Options, the term shall not be more than ten years from the
date the Incentive Stock Option is granted, or five years from such date if the
Incentive Stock Option is granted to an individual then owning (within the
meaning of Section 424(d) of the Code) more than 10% of the total combined
voting power of all classes of stock of the Company or any Subsidiary; and
provided further, that the term of any Options granted to Non-Employee
Directors under Section 3.5 shall be as set forth in such section without
variation. Except as set forth above and as limited by requirements of Section
422 of the Code and regulations and rulings thereunder applicable to Incentive
Stock Options, the Committee may extend the term of any outstanding Option in
connection with any Termination of Employment or Termination of Directorship of
the Optionee, or amend any other term or condition of such Option relating to
such a termination.
4.4 Option Vesting.
(a) Except with respect to Options to Non-Employee
Directors granted under Section 3.5, the period during which the right
to exercise an Option in whole or in part vests in the Optionee shall be
set by the Committee and the Committee may determine that an Option may
not be exercised in whole or in part for a specified period after it is
granted; provided, however, that Options granted to Non-Employee
Directors under Section 3.5 shall become exercisable as set forth in
such section, without variation or acceleration hereunder. Except as
set forth above, at any time after grant of an Option, the Committee
may, in its sole discretion and subject to whatever terms and conditions
it selects, accelerate the period during which an Option vests.
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(b) No portion of an Option which is unexercisable at
Termination of Employment, Termination of Directorship or Termination of
Business Relationship, as applicable, shall thereafter become
exercisable, except as may be otherwise provided by the Committee with
respect to Options other than those granted under Section 3.5, either in
the Stock Option Agreement or in a resolution adopted following the
grant of the Option.
(c) To the extent that the aggregate Fair Market Value of
stock with respect to which "incentive stock options" (within the
meaning of Section 422 of the Code, but without regard to Section 422(d)
of the Code) are exercisable for the first time by an Optionee during
any calendar year (under the Plan and all other incentive stock option
plans of the Company and any Subsidiary) exceeds $100,000, such Options
shall be treated as Non-Qualified Options to the extent required by
Section 422 of the Code. The rule set forth in the preceding sentence
shall be applied by taking Options into account in the order in which
they were granted. For purposes of this Section 4.4(c), the Fair Market
Value of stock shall be determined as of the time the Option with
respect to such stock is granted.
4.5 Consideration. Except as may be otherwise determined
by the Committee, in consideration of the granting of an Option, the Optionee
shall agree, in the written Stock Option Agreement, to remain (as applicable)
in the employ of, as a Director of or in a significant business relationship
with the Company, a Parent Corporation, a Corporate Subsidiary or a Partnership
Subsidiary for a period of at least one year after the Option is granted (or
until the next annual meeting of stockholders of the Company, in the case of an
Non-Employee Director). Nothing in the Plan or in any Stock Option Agreement
hereunder shall confer upon any Optionee any right to continue in the employ
of, as a Director of or in a business relationship with the Company, any Parent
Corporation, any Corporate Subsidiary or any Partnership Subsidiary or shall
interfere with or restrict in any way the rights of the Company, its Parent
Corporations, its Corporate Subsidiaries and its Partnership Subsidiaries,
which are hereby expressly reserved, to discharge or, in the case of a
Non-Employee Director, remove, or to terminate the business relationship with,
any Optionee at any time for any reason whatsoever, with or without cause.
ARTICLE V
EXERCISE OF OPTIONS
5.1 Partial Exercise. At any time and from time to time
prior to the time when any exercisable Option or exercisable portion thereof
becomes unexercisable under the Plan or the applicable Stock Option Agreement,
such Option or portion thereof may be exercised in whole or in part; provided,
however, an Option shall not be exercisable with respect to fractional shares
and the Committee (or the Board, in the case of Options granted to Non-Employee
Directors) may require that, by the terms of the Option, a partial exercise be
with respect to a minimum number of shares.
5.2 Manner of Exercise. An exercisable Option, or any
exercisable portion thereof, may be exercised solely by delivery to the
Secretary or his office of all of the following prior to the time when such
Option or such portion becomes unexercisable under the Plan or the applicable
Stock Option Agreement:
(a) Notice in writing signed by the Optionee or other
person then entitled to exercise such Option or portion, stating that
such Option or portion is exercised, such notice complying with all
applicable rules established by the Committee; and
(b) (1) Full payment (in cash or by check) for the
shares with respect to which such Option or portion is thereby
exercised; or
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(2) With the consent of the Committee, but
subject to the timing requirements of Section 5.3 if
applicable, (A) shares of the Company's Common Stock
owned by the Optionee duly endorsed for transfer to the
Company or (B) shares of the Company's Common Stock issuable
to the Optionee upon exercise of the Option, with a Fair
Market Value on the date of Option exercise equal to the
aggregate Option price of the shares with respect to which
such Option or portion is thereby exercised; or
(3) With the consent of the Committee, a full
recourse promissory note bearing interest (at no less than
such rate as shall then preclude the imputation of interest
under the Code or any successor provision) and payable upon
such terms as may be prescribed by the Committee. The
Committee may also prescribe the form of such note and the
security to be given for such note. No Option may, however,
be exercised by delivery of a promissory note or by a loan
from the Company when or where such loan or other extension of
credit is prohibited by law; or
(4) With the consent of the Committee, any
combination of the consideration provided in the foregoing
subsections (1), (2) and (3); and
(c) The payment to the Company (or other employer) of all
amounts that it is required to withhold under federal, state or local
law in connection with the exercise of the Option; with the consent of
the Committee, but subject to the timing requirements of Section 5.3
in the case of an Officer or a Director, (i) shares of the Company's
Common Stock owned by the Optionee duly endorsed for transfer or (ii)
shares of the Company's Common Stock issuable to the Optionee upon
exercise of the Option, valued at Fair Market Value at the date of
Option exercise, may be used to make all or part of such payment; and
(d) Such representations and documents as the Committee,
in its absolute discretion, deems necessary or advisable to effect
compliance with all applicable provisions of the Securities Act of
1933, as amended (the "Securities Act"), and any other federal or
state securities laws or regulations. The Committee may, in its
absolute discretion, also take whatever additional actions it deems
appropriate to effect such compliance including, without limitation,
placing legends on share certificates and issuing stop-transfer orders
to transfer agents and registrars; and
(e) In the event that the Option or portion thereof shall
be exercised pursuant to Section 10.1 by any person or persons other
than the Optionee, appropriate proof of the right of such person or
persons to exercise the Option or portion thereof.
5.3 Certain Timing Requirements. At the discretion of
the Committee (or Board, in the case of Options granted to Non-Employee
Directors), shares of Common Stock issuable to the Optionee upon exercise of
the Option may be used to satisfy the Option exercise price or the tax
withholding consequences of such exercise, in the case of persons subject to
Section 16 of the Exchange Act, only (i) during the period beginning on the
third business day following the date of release of the quarterly or annual
summary statement of sales and earnings of the Company and ending on the
twelfth business day following such date or (ii) pursuant to an irrevocable
written election by the Optionee to use shares of Common Stock issuable to the
Optionee upon exercise of the Option to pay all or part of the Option price or
the withholding taxes made at least six months prior to the payment of such
Option price or withholding taxes.
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5.4 Conditions to Issuance of Stock Certificates. The
shares of the Company's Common Stock issuable and deliverable upon the exercise
of an Option, or any portion thereof, may be either previously authorized but
unissued shares or issued shares that have then been reacquired by the Company.
The Company shall not be required to issue or deliver any certificate or
certificates for shares of stock purchased upon the exercise of any Option or
portion thereof prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed; and
(b) The completion of any registration or other
qualification of such shares under any state or federal law, or under
the rulings or regulations of the Securities and Exchange Commission or
any other governmental regulatory body that the Committee or Board
shall, in its absolute discretion, deem necessary or advisable; and
(c) The obtaining of any approval or other clearance from
any state or federal governmental agency that the Committee or Board
shall, in its absolute discretion, determine to be necessary or
advisable; and
(d) The lapse of such reasonable period of time following
the exercise of the Option as the Committee or Board may establish from
time to time for reasons of administrative convenience; and
(e) The payment to the Company (or other employer
corporation) of all amounts that it is required to withhold under
federal, state or local law in connection with the exercise of the
Option.
5.5 Rights as Stockholders. The holders of Options shall
not be, nor have any of the rights or privileges of, stockholders of the Company
in respect of any shares purchasable upon the exercise of any part of an Option
unless and until certificates representing such shares have been issued by the
Company to such holders.
5.6 Ownership and Transfer Restrictions. Unless
otherwise approved in writing by the Committee, no shares acquired upon
exercise of any Option by any officer, Director or other person subject to
Section 16 of the Exchange Act may be sold, assigned, pledged, encumbered or
otherwise transferred until at least six months have elapsed from (but
excluding) the date that such Option was granted. The Committee (or Board, in
the case of Options granted to Non-Employee Directors), in its absolute
discretion, may impose such other restrictions on the ownership and
transferability of the shares purchasable upon the exercise of an Option as it
deems appropriate. Any such restriction shall be set forth in the respective
Stock Option Agreement and may be referred to on the certificates evidencing
such shares. The Committee may require the Employee to give the Company prompt
notice of any disposition of shares of Common Stock acquired by exercise of an
Incentive Stock Option within (i) two years from the date of granting such
Option to such Employee or (ii) one year after the transfer of such shares to
such Employee. The Committee may direct that the certificates evidencing
shares acquired by exercise of an Incentive Stock Option refer to such
requirement to give prompt notice of disposition.
ARTICLE VI
AWARD OF RESTRICTED STOCK
6.1 Eligibility. Any executive or other key Employee of
the Company or of any corporation that is then a Parent Corporation or a
Corporate Subsidiary or of any partnership, limited liability company or
corporation that is then a Partnership Subsidiary, including the executive
officers, shall be eligible to be issued Restricted Stock. In addition, any
consultant or other independent contractor (other than a Non-Employee Director)
maintaining a significant business relationship with the Company, a Parent
Corporation, a Corporate Subsidiary or a Partnership Subsidiary shall be
eligible to be issued Restricted Stock.
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6.2 Issuance of Restricted Stock.
(a) The Committee shall from time to time, in its
absolute discretion:
(1) Determine which Employees are executive or
key Employees; and
(2) Determine which consultants and other
independent contractors maintain a significant business
relationship with the Company, a Parent Corporation, a
Corporate Subsidiary or a Partnership Subsidiary; and
(3) Select from among the executive or key
Employees, consultants and other independent contractors
(including the executive officers and those executive or other
key Employees, consultants and other independent contractors
to whom Options have been previously granted and/or Restricted
Stock has been previously issued) such of them as in its
opinion should be issued Restricted Stock; and
(4) Determine the number of shares of Restricted
Stock to be issued to such selected executive or key
Employees, consultants and other independent contractors,
including executive officers; and
(5) Determine the terms and conditions applicable
to such Restricted Stock, consistent with the Plan.
(b) Shares issued as Restricted Stock may be either
previously authorized but unissued shares or issued shares that have
been reacquired by the Company. Legal consideration, but no other cash
payment, shall be required for each issuance of Restricted Stock.
(c) Upon the selection of an executive officer or an
executive or key Employee, consultant or other independent contractor to
be issued Restricted Stock, the Committee shall instruct the Secretary
to issue such Restricted Stock and may impose such conditions on the
issuance of such Restricted Stock as it deems appropriate. Without
limiting the generality of the preceding sentence, the Committee may, in
its discretion and on such terms as it deems appropriate, require as a
condition on the issuance of Restricted Stock to an Employee, consultant
or other independent contractor that the Employee, consultant or other
independent contractor surrender for cancellation some or all of the
Restricted Stock that has been previously granted to him.
6.3 Restricted Stock Agreement. Restricted Stock shall
be issued only pursuant to a written Restricted Stock Agreement, which shall be
executed by the Restricted Stockholder and an authorized Officer of the Company
and which shall contain such terms and conditions as the Committee shall
determine, consistent with the Plan, including, but not limited to, such terms
and conditions as may be required by Code Section 162(m).
6.4 Consideration. As partial consideration for the
issuance of the Restricted Stock, the Restricted Stockholder shall agree, in
the written Restricted Stock Agreement, to remain (as applicable) in the employ
of or in a significant business relationship with the Company, a Parent
Corporation, a Corporate Subsidiary or a Partnership Subsidiary for a period at
least one year after the Restricted Stock is issued. Nothing in the Plan or in
any Restricted Stock Agreement hereunder shall confer upon any Restricted
Stockholder any right to continue in the employ of or in a business
relationship with the Company, any Parent Corporation, any Corporate Subsidiary
or any Partnership Subsidiary or shall interfere with or restrict in any way
the rights of the Company, its Parent Corporations, its Corporate Subsidiaries
and its Partnership Subsidiaries, which are hereby expressly reserved, to
discharge, or to terminate the business relationship with, any Restricted
Stockholder at any time for any reason whatsoever, with or without cause.
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6.5 Rights as Stockholders. Upon delivery of the shares
of Restricted Stock to the escrow holder pursuant to Section 6.8, the
Restricted Stockholder shall have all the rights of a stockholder with respect
to said shares, subject to the restrictions in his Restricted Stock Agreement,
including the right to vote the shares and to receive all dividends or other
distributions paid or made with respect to the shares; provided, however, that
in the discretion of the Committee, any extraordinary distributions with
respect to the Common Stock shall be subject to the restrictions set forth in
Section 6.7.
6.6 Restriction. All shares of Restricted Stock issued
under the Plan (including any shares received by Restricted Stockholders as a
result of stock dividends, stock splits or any other forms of recapitalization)
shall be subject to such restrictions as the Committee shall provide in the
terms of each individual Restricted Stock Agreement; provided, however, that by
a resolution adopted after the Restricted Stock is issued, the Committee may,
on such terms and conditions as it may determine to be appropriate and subject
to Section 10.4, remove any or all of the restrictions imposed by the terms of
the Restricted Stock Agreement. All restrictions imposed pursuant to this
Section 6.6 shall expire within ten years of the date of issuance. Restricted
Stock may not be sold or encumbered until all restrictions are terminated or
expire. Unless provided otherwise by the Committee, if no consideration was
paid by the Restricted Stockholder upon issuance, a Restricted Stockholder's
rights in unvested Restricted Stock shall lapse upon Termination of Employment
or Termination of Business Relationship, as applicable.
6.7 Repurchase of Restricted Stock. The Committee shall
provide in the terms of each individual Restricted Stock Agreement that the
Company shall have the right to repurchase from the Restricted Stockholder the
Restricted Stock then subject to restrictions under the Restricted Stock
Agreement immediately upon a Termination of Employment or Termination of
Business Relationship, as applicable, at a cash price per share equal to the
price paid by the Restricted Stockholder for such Restricted Stock; provided,
however, that provision may be made that no such right of repurchase shall
exist in the event of a Termination of Employment or Termination of Business
Relationship without cause, or following a change in control of the Company or
because of the Restricted Stockholder's retirement, death or disability, or
otherwise.
6.8 Escrow. The Secretary or such other escrow holder as
the Committee may appoint shall retain physical custody of the certificates
representing Restricted Stock until all of the restrictions imposed under the
Restricted Stock Agreement expire or shall have been removed; provided,
however, that in no event shall any Restricted Stockholder retain physical
custody of any certificates representing Restricted Stock issued to him.
6.9 Legend. In order to enforce the restrictions imposed
upon shares of Restricted Stock hereunder, the Committee shall cause a legend
or legends to be placed on certificates representing all shares of Restricted
Stock that are still subject to restrictions under Restricted Stock Agreements,
which legend or legends shall make appropriate reference to the conditions
imposed thereby.
ARTICLE VII
PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS,
DEFERRED STOCK, STOCK PAYMENTS
7.1 Performance Awards. Any executive or other key
Employee of the Company or of any corporation that is then a Parent Corporation
or a Corporate Subsidiary or of any partnership, limited liability company or
corporation that is then a Partnership Subsidiary, including the executive
officers, or any consultant or other independent contractor (other than a
Non-Employee Director) maintaining a significant business relationship with the
Company, a Parent Corporation, a Corporate Subsidiary or a Partnership
Subsidiary, who is selected by the Committee may be granted one or more
Performance Awards. The value of such Performance Awards may be linked to the
market value, book value, net profits or other measure of the value of Common
Stock or other specific performance criteria determined appropriate by the
Committee, in each case on a
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specified date or dates or over any period or periods determined by the
Committee, or may be based upon the appreciation in the market value, book
value, net profits or other measure of the value of a specified number of
shares of Common Stock over a fixed period or periods determined by the
Committee. In making such determinations, the Committee shall consider (among
such other factors as it deems relevant in light of the specific type of award)
the contributions, responsibilities and other compensation of the particular
key Employee, consultant or independent contractor. The Committee, in its
discretion, may determine whether a Performance Award is to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the
Code. Without limiting the generality of the foregoing, the Committee may, in
its discretion and on such terms as it deems appropriate, require as a
condition of the grant of a Performance Award to any such person that the
person surrender for cancellation some or all of the unexercised Options,
awards of Restricted Stock or Deferred Stock, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments, or other rights
that have been previously granted to him under the Plan or otherwise.
7.2 Dividend Equivalents. Any such person selected by
the Committee may be granted Dividend Equivalents based on the dividends
declared on Common Stock, to be credited as of dividend payment dates, during
the period between the date an Option, Stock Appreciation Right, Deferred Stock
or Performance Award is granted, and the date such Option, Stock Appreciation
Right, Deferred Stock or Performance Award is exercised, vests or expires, as
determined by the Committee. Such Dividend Equivalents shall be converted to
cash or additional shares of Common Stock by such formula and at such time and
subject to such limitations as may be determined by the Committee.
7.3 Stock Payments. Any such person selected by the
Committee may receive Stock Payments in the manner determined from time to time
by the Committee. The number of shares shall be determined by the Committee
and may be based upon the Fair Market Value, book value, net profits or other
measure of the value of Common Stock or other specific performance criteria
determined appropriate by the Committee, determined on the date such Stock
Payment is made or on any date thereafter.
7.4 Deferred Stock. Any such person selected by the
Committee may be granted an award of Deferred Stock in the manner determined
from time to time by the Committee. The number of shares of Deferred Stock
shall be determined by the Committee and may be linked to the market value,
book value, net profits or other measure of the value of Common Stock or other
specific performance criteria, in each case on a specified date or dates or
over any period or periods determined by the Committee. Common Stock
underlying a Deferred Stock award will not be issued until the Deferred Stock
award has vested, pursuant to a vesting schedule or performance criteria set by
the Committee. Unless otherwise provided by the Committee, a Grantee of
Deferred Stock shall have no rights as a Company stockholder with respect to
such Deferred Stock until such time as the award has vested and the Common
Stock underlying the award has been issued.
7.5 Written Agreements. Each Performance Award, Dividend
Equivalent, award of Deferred Stock and/or Stock Payment shall be evidenced by
a written agreement, which shall be executed by the Grantee and an authorized
Officer of the Company and which shall contain such terms and conditions as the
Committee shall determine, consistent with the Plan.
7.6 Term. The term of a Performance Award, Dividend
Equivalent, award of Deferred Stock and/or Stock Payment shall be set by the
Committee in its discretion.
7.7 Exercise Upon Termination. A Performance Award,
Dividend Equivalent, award of Deferred Stock and/or Stock Payment is exercisable
only while the Grantee is an Employee, consultant or independent contractor;
provided that the Committee may determine that the Performance Award, Dividend
Equivalent, award of Deferred Stock and/or Stock Payment may be exercised
subsequent to Termination of Employment or Termination of Business Relationship
without cause, or following a change in control of the Company, or because of
the Grantee's retirement, death or disability, or otherwise.
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7.8 Payment on Exercise. Payment of the amount
determined under Section 7.2 or 7.3 above shall be in cash, in Common Stock or
a combination of both, as determined by the Committee. To the extent any
payment under this Article VII is effected in Common Stock, it shall be made
subject to satisfaction of all provisions of Section 5.4.
7.9 Consideration. As partial consideration of the
granting of a Performance Award, Dividend Equivalent, award of Deferred Stock
and/or Stock Payment, the Grantee shall agree, in a written agreement, to
remain (as applicable) in the employ of or in a significant business
relationship with the Company, a Parent Corporation, a Corporate Subsidiary or
a Partnership Subsidiary for a period at least one year after the Performance
Award, Dividend Equivalent, award of Deferred Stock and/or Stock Payment is
issued. Nothing in the Plan or in any agreement hereunder shall confer upon
any Grantee any right to continue in the employ of or in a business
relationship with the Company, any Parent Corporation, any Corporate Subsidiary
or any Partnership Subsidiary or shall interfere with or restrict in any way
the rights of the Company, its Parent Corporations, its Corporate Subsidiaries
and its Partnership Subsidiaries, which are hereby expressly reserved, to
discharge, or to terminate the business relationship with, any Grantee at any
time for any reason whatsoever, with or without cause.
ARTICLE VIII
STOCK APPRECIATION RIGHTS
8.1 Grant of Stock Appreciation Rights. Any executive or
other key Employee of the Company or of any corporation that is then a Parent
Corporation or a Corporate Subsidiary or of any partnership, limited liability
company or corporation that is then a Partnership Subsidiary, including the
executive officers, or any consultant or other independent contractor (other
than a Non-Employee Director) maintaining a significant business relationship
with the Company, a Parent Corporation, a Corporate Subsidiary or a Partnership
Subsidiary selected by the Committee may be granted a Stock Appreciation Right.
A Stock Appreciation Right may be granted (i) in connection and simultaneously
with the grant of an Option, (ii) with respect to a previously granted Option,
or (iii) independent of an Option. A Stock Appreciation Right shall be subject
to such terms and conditions not inconsistent with the Plan as the Committee
shall impose and shall be evidenced by a written Stock Appreciation Right
Agreement, which shall be executed by the Grantee and an authorized officer of
the Company. The Committee, in its discretion, may determine whether a Stock
Appreciation Right is to qualify as performance-based compensation as described
in Section 162(m)(4)(C) of the Code. Without limiting the generality of the
foregoing, the Committee may, in its discretion and on such terms as it deems
appropriate, require as a condition of the grant of a Stock Appreciation Right
to any such person that the person surrender for cancellation some or all of
the unexercised Options, awards of Restricted Stock or Deferred Stock,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments, or other rights that have been previously granted to him under the
Plan or otherwise. A Stock Appreciation Right, the grant of which is
conditioned upon such surrender, may have an exercise price lower (or higher)
than the exercise price of the surrendered Option or other award, may cover the
same (or a lesser or greater) number of shares as such surrendered Option or
other award, may contain such other terms as the Committee deems appropriate,
and shall be exercisable in accordance with its terms, without regard to the
number of shares, price, exercise period or any other term or condition of such
surrendered Option or other award.
8.2 Coupled Stock Appreciation Rights.
(a) A Coupled Stock Appreciation Right ("CSAR") shall be
related to a particular Option and shall be exercisable only when and to
the extent the related Option is exercisable.
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(b) A CSAR may be granted to the Grantee for no more than
the number of shares subject to the simultaneously or previously granted
Option to which it is coupled.
(c) A CSAR shall entitle the Grantee (or other person
entitled to exercise the Option pursuant to the Plan) to surrender to
the Company unexercised a portion of the Option to which the CSAR
relates (to the extent then exercisable pursuant to its terms) and to
receive from the Company in exchange therefor an amount determined by
multiplying the difference obtained by subtracting the Option exercise
price from the Fair Market Value of a share of Common Stock on the date
of exercise of the CSAR by the number of shares of Common Stock with
respect to which the CSAR shall have been exercised, subject to any
limitations the Committee may impose.
8.3 Independent Stock Appreciation Rights.
(a) An Independent Stock Appreciation Right ("ISAR")
shall be unrelated to any Option and shall have a term set by the
Committee. An ISAR shall be exercisable in such installments as the
Committee may determine. An ISAR shall cover such number of shares of
Common Stock as the Committee may determine. The exercise price per
share of Common Stock subject to each ISAR shall be set by the
Committee. An ISAR is exercisable only while the Grantee is in the
employ of or in a significant business relationship with the Company, a
Parent Corporation, a Corporate Subsidiary or a Partnership Subsidiary;
provided that the Committee may determine that the ISAR may be exercised
subsequent to Termination of Employment or Termination of Business
Relationship without cause, or following a change in control of the
Company, or because of the Grantee's retirement, death or disability, or
otherwise.
(b) An ISAR shall entitle the Grantee (or other person
entitled to exercise the ISAR pursuant to the Plan) to exercise all or a
specified portion of the ISAR (to the extent then exercisable pursuant
to its terms) and to receive from the Company an amount determined by
multiplying the difference obtained by subtracting the exercise price
per share of the ISAR from the Fair Market Value of a share of Common
Stock on the date of exercise of the ISAR by the number of shares of
Common Stock with respect to which the ISAR shall have been exercised,
subject to any limitations the Committee may impose.
8.4 Payment and Limitations on Exercise.
(a) Payment of the amount determined under Section 8.2(c)
and 8.3(b) above shall be in cash, in Common Stock (based on its Fair
Market Value as of the date the Stock Appreciation Right is exercised)
or a combination of both, as determined by the Committee. To the extent
such payment is effected in Common Stock it shall be made subject to
satisfaction of all provisions of Section 5.4 pertaining to Options.
(b) Grantees of Stock Appreciation Rights who are subject
to Section 16 of the Exchange Act may, in the discretion of the Board or
Committee, be required to comply with any timing or other restrictions
under Rule 16b-3 applicable to the settlement or exercise of a Stock
Appreciation Right.
8.5 Consideration. As partial consideration of the
granting of a Stock Appreciation Right, the Grantee shall agree, in a written
Stock Appreciation Right Agreement, to remain (as applicable) in the employ of
or in a significant business relationship with the Company, a Parent
Corporation, a Corporate Subsidiary or a Partnership Subsidiary for a period at
least one year after the Stock Appreciation Right is granted. Nothing in the
Plan or in any agreement hereunder shall confer upon any Grantee any right to
continue in the employ of or in a business relationship with the Company, any
Parent Corporation, any Corporate Subsidiary or any Partnership Subsidiary or
shall interfere with or restrict in any way the rights of the Company, its
Parent Corporations, its Corporate Subsidiaries and its Partnership
Subsidiaries, which are hereby expressly reserved, to discharge, or to
terminate the business relationship with, any Grantee at any time for any
reason whatsoever, with or without cause.
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8.6 Rights as Stockholders. A Grantee of a Stock
Appreciation Right shall not be, nor have any of the rights or privileges of, a
shareholder of the Company in respect of any shares purchasable upon the
exercise of any part of such Stock Appreciation Right unless and until
certificates representing such shares have been issued by the Company to such
Grantee.
ARTICLE IX
ADMINISTRATION
9.1 Stock Option Committee. The Stock Option Committee
shall consist of two or more Non-Employee Directors, appointed by and holding
office at the pleasure of the Board, each of whom is both (a) a "disinterested
person" as defined by Rule 16b-3 and (b) an "outside director" within the
meaning of Section 162(m) of the Code. Appointment of Committee members shall
be effective upon acceptance of appointment. Committee members may resign at
any time by delivering written notice to the Board. Vacancies in the Committee
shall be filled by the Board.
9.2 Duties and Powers of Committee. It shall be the duty
of the Committee to conduct the general administration of the Plan in
accordance with its provisions. The Committee shall have the power to
interpret the Plan and the agreements pursuant to which Options, awards of
Restricted Stock or Deferred Stock, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments are granted or awarded, and to
adopt such rules for the administration, interpretation, and application of the
Plan as are consistent therewith and to interpret, amend or revoke any such
rules. Any such grant or award under the Plan need not be the same with
respect to each Optionee, Grantee or Restricted Stockholder. Any such
interpretations and rules in regard to Incentive Stock Options shall be
consistent with the basic purpose of the Plan to grant "incentive stock
options" within the meaning of Section 422 of the Code. Notwithstanding the
foregoing, the full Board, acting by a majority of its members in office, shall
conduct the general administration of the Plan with respect to Options granted
to Non-Employee Directors and, with respect to those Options to be granted
concurrently with the consummation of the initial public offering of the Common
Stock of the Company, the Board shall have the right to select persons for
participation and to determine the timing, pricing and amount of grants of such
Options under the Plan.
9.3 Majority Rule. The Committee shall act by a majority
of its members in attendance at a meeting at which a quorum is present or by a
memorandum or other written instrument signed by all members of the Committee.
9.4 Compensation; Professional Assistance; Good Faith
Actions. Members of the Committee shall receive such compensation for their
services as members as may be determined by the Board. All expenses and
liabilities incurred by members of the Committee in connection with the
administration of the Plan shall be borne by the Company. The Committee may
employ attorneys, consultants, accountants, appraisers, brokers or other
persons. The Committee, the Board, the Company and its Officers and Directors
shall be entitled to rely upon the advice, opinions or valuations of any such
persons. All actions taken and all interpretations and determinations made by
the Committee in good faith shall be final and binding upon all Optionees,
Grantees, Restricted Stockholders, the Company and all other interested
persons. No member of the Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan,
Options, awards of Restricted Stock or Deferred Stock, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments, and all
members of the Committee shall be fully protected by the Company in respect to
any such action, determination or interpretation.
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ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Not Transferable. Options, Restricted Stock awards,
Deferred Stock awards, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments under the Plan may not be sold, pledged,
assigned, or transferred in any manner other than by will or the laws of
descent and distribution, unless and until such rights or awards have been
exercised, or the shares underlying such rights or awards have been issued, and
all restrictions applicable to such shares have lapsed. No Option, Restricted
Stock award, Deferred Stock award, Performance Award, Stock Appreciation Right,
Dividend Equivalent or Stock Payment or interest or right therein shall be
liable for the debts, contracts or engagements of the Optionee, Grantee or
Restricted Stockholder or his successors in interest or shall be subject to
disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect.
During the lifetime of the Optionee or Grantee, only he (or his duly
appointed guardian or legal representative) may exercise an Option or other
right or award (or any portion thereof) granted to him under the Plan;
provided, however, a Non-Qualified Stock Option (or portion thereof) which has
been transferred pursuant to a Qualified Domestic Relations Order, as defined
in, and to the extent permitted by, the Code or the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), may be exercised by the person to
whom such Option (or portion thereof) has been transferred. After the death of
the Optionee or Grantee, any exercisable portion of an Option or other right or
award may, prior to the time when such portion becomes unexercisable under the
Plan or the applicable Stock Option Agreement or other agreement, be exercised
by his personal representative or by any person empowered to do so under the
deceased Optionee's or Grantee's will or under the then applicable laws of
descent and distribution.
10.2 Amendment, Suspension or Termination of the Plan.
This Plan may be wholly or partially amended or otherwise modified, suspended
or terminated at any time or from time to time by the Committee. However,
without approval of the Company's stockholders given within twelve months
before or after the action by the Committee, no action of the Committee may,
except as provided in Section 10.3, increase the limits imposed in Section 2.1
on the maximum number of shares that may be issued under the Plan, and no
action of the Committee may be taken that would otherwise require stockholder
approval as a matter of applicable law, regulation or rule. Notwithstanding
the foregoing, the Plan shall not be amended more than once every six months,
other than to comport with changes in the Code, the Employee Retirement Income
Security Act, or the respective rules thereunder. No amendment, suspension or
termination of the Plan shall, without the consent of the holder of Options,
Restricted Stock awards, Deferred Stock awards, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments, alter or impair
any rights or obligations under any Options, Restricted Stock awards, Deferred
Stock awards, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments theretofore granted or awarded, unless the award
itself otherwise expressly so provides. No Options, Restricted Stock, Deferred
Stock, Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments may be granted or awarded during any period of suspension or
after termination of the Plan, and in no event may any Incentive Stock Option
be granted under the Plan after the first to occur of the following events:
(a) The expiration of ten years from the date the Plan is
adopted by the Board; or
(b) The expiration of ten years from the date the Plan is
approved by the Company's stockholders under Section 10.5.
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10.3 Changes in Common Stock or Assets of the Company. In
the event that the outstanding shares of Common Stock are hereafter changed
into or exchanged for cash or a different number or kind of shares or other
securities of the Company, or of another corporation, by reason of
reorganization, merger, consolidation, recapitalization, reclassification,
stock split-up, stock dividend, or combination of shares, appropriate
adjustments shall be made by the Committee in the number and kind of shares for
which Options, Restricted Stock awards, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents, Deferred Stock awards or Stock Payments may be
granted, including adjustments of the limitation in Section 2.1 on the maximum
number and kind of shares that may be issued.
In the event of such a change or exchange, other than for
shares or securities of another corporation or by reason of reorganization, the
Committee shall also make an appropriate and equitable adjustment in the number
and kind of shares as to which all outstanding Options, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments, or portions
thereof then unexercised, shall be exercisable and in the number and kind of
shares of outstanding Restricted Stock or Deferred Stock. Such adjustment
shall be made with the intent that after the change or exchange of shares, each
Optionee's and each Grantee's and each Restricted Stockholder's proportionate
interest shall be maintained as before the occurrence of such event. Such
adjustment in an outstanding Option, Performance Award, Stock Appreciation
Right, Dividend Equivalent or Stock Payment may include a necessary or
appropriate corresponding adjustment in Option, Performance Award, Stock
Appreciation Right, Dividend Equivalent or Stock Payment exercise price, but
shall be made without change in the total price applicable to the Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment, or the unexercised portion thereof (except for any change in the
aggregate price resulting from rounding-off of share quantities or prices).
Where an adjustment of the type described above is made to an
Incentive Stock Option under this Section, the adjustment will be made in a
manner that will not be considered a "modification" under the provisions of
subsection 424(h)(3) of the Code.
Notwithstanding the foregoing, in the event of such a
reorganization, merger, consolidation, recapitalization, reclassification,
stock split-up, stock dividend or combination, or other adjustment or event
that results in shares of Common Stock being exchanged for or converted into
cash, securities or other property, the Company will have the right to
terminate the Plan as of the date of the exchange or conversion, in which case
all options, rights and other awards under the Plan shall become the right to
receive such cash, securities or other property, net of any applicable exercise
price.
In the event of a "spin-off" or other substantial distribution
of assets of the Company that materially diminishes the Fair Market Value of
the Company's Common Stock, the Committee (or the Board, in the case of Options
granted to Non-Employee Directors) may in its discretion make an appropriate
and equitable adjustment to the Option, Performance Award, Stock Appreciation
Right, Dividend Equivalent or Stock Payment exercise price to reflect such
diminution.
10.4 Merger, Sale or Dissolution of the Company. In the
event of the merger or consolidation of the Company with or into another
corporation, the exchange of all or substantially all of the assets of the
Company for the securities of another corporation, the acquisition by another
corporation or person of all or substantially all of the Company's assets or
80% or more of the Company's then outstanding voting stock, or the liquidation
or dissolution of the Company:
(a) At the discretion of the Committee, the terms of an
Option, Performance Award, Stock Appreciation Right, Dividend
Equivalent or Stock Payment may provide that it cannot be exercised
after such event.
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(b) In its discretion, and on such terms and conditions
as it deems appropriate, the Committee may provide either by the terms
of such Option, Performance Award, Stock Appreciation Right, Dividend
Equivalent or Stock Payment or by a resolution adopted prior to the
occurrence of such event that, for a specified period of time prior to
such event, such Option, Performance Award, Stock Appreciation Right,
Dividend Equivalent or Stock Payment shall be exercisable as to all
shares covered thereby, and all restrictions applicable to Restricted
Stock or Performance Plans lapse or the same are deemed to have been
met, notwithstanding anything to the contrary in the Plan or in the
provisions of such Option, Performance Award, Stock Appreciation
Right, Dividend Equivalent or Stock Payment.
(c) In its discretion, and on such terms and conditions
as it deems appropriate, the Committee may provide either by the terms
of such Option, Performance Award, Stock Appreciation Right, Dividend
Equivalent or Stock Payment or by a resolution adopted prior to the
occurrence of such event that upon such event, such Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent or
Stock Payment shall be assumed by the successor corporation, or a
parent or subsidiary thereof, or shall be substituted for by similar
options, rights or awards covering the stock of the successor
corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices.
(d) In its discretion, and on such terms and conditions
as it deems appropriate, the Committee may provide either by the terms
of a Restricted Stock award or Deferred Stock award or by a resolution
adopted prior to the occurrence of such event that, for a specified
period of time prior to such event, the restrictions imposed under a
Restricted Stock Agreement or a Deferred Stock Agreement upon some or
all shares of Restricted Stock or Deferred Stock may be terminated,
and, in the case of Restricted Stock, some or all shares of such
Restricted Stock may cease to be subject to repurchase under Section
6.7 after such event.
10.5 Approval of Plan by Stockholders. The Plan will be
submitted for the approval of the Company's stockholders within twelve months
after the date of the Board's initial adoption of the Plan. Options,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments may be granted and Restricted Stock or Deferred Stock may be awarded
prior to such stockholder approval, provided that such Options, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents or Stock Payments shall
not be exercisable and such Restricted Stock or Deferred Stock shall not vest
prior to the time when the Plan is approved by the stockholders, and provided
further that if such approval has not been obtained at the end of said
twelve-month period, all Options, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments previously granted and all
Restricted Stock or Deferred Stock previously awarded under the Plan shall
thereupon be cancelled and become null and void.
10.6 Tax Withholding. The Company shall be entitled to
require payment in cash or deduction from other compensation payable to each
Optionee, Grantee or Restricted Stockholder of any sums required by federal,
state or local tax law to be withheld with respect to the issuance, vesting or
exercise of any Option, Restricted Stock, Deferred Stock, Performance Award,
Stock Appreciation Right, Dividend Equivalent or Stock Payment. Subject to the
timing requirements of Section 5.3, the Committee (or the Board, in the case of
Options granted to Non-Employee Directors) may in its discretion and in
satisfaction of the foregoing requirement allow such Optionee, Grantee or
Restricted Stockholder to elect to have the Company withhold shares of Common
Stock (or allow the return of shares of Common Stock) having a Fair Market
Value equal to the sums required to be withheld.
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If the Optionee, Grantee or Restricted Stockholder elects to
advance such sums directly, written notice of that election shall be delivered
on or prior to such exercise and, whether pursuant to such election or pursuant
to a requirement imposed by the Company, payment in cash or by check of such
sums for taxes shall be delivered within two days after the date of exercise.
If, as allowed by the Committee, the Optionee, Grantee or Restricted
Stockholder elects to have the Company withhold shares of Common Stock (or
allow the return of shares of Common Stock) having a Fair Market Value equal to
the sums required to be withheld, the value of the shares of Common Stock to be
withheld (or returned as the case may be) will be equal to the Fair Market
Value of such shares on the date that the amount of tax to be withheld is to be
determined (the "Tax Date"). Elections by such persons to have shares of
Common Stock withheld for this purpose will be subject to the following
restrictions: (v) the election must be made on or prior to the Tax Date, (or
such earlier date as may be applicable), (w) the election must be irrevocable,
(x) the election shall be subject to the disapproval of the Committee and (y)
if the person is an officer or director of the Company within the meaning of
Section 16 of the Exchange Act, the election shall be subject to such
additional restrictions as the Committee may impose in an effort to secure the
benefits of any regulations thereunder. The Committee shall not be obligated
to issue shares and/or distribute cash to any person upon exercise of any right
until such payment has been received or shares have been so withheld, unless
withholding (or offset against a cash payment) as of or prior to the date of
such exercise is sufficient to cover all such sums due or which may be due with
respect to such exercise.
10.7 Loans. The Committee may, in its discretion, extend
one or more loans to key Employees in connection with the exercise or receipt
of an Option, Performance Award, Stock Appreciation Right, Dividend Equivalent
or Stock Payment granted under the Plan, or the issuance of Restricted Stock or
Deferred Stock awarded under the Plan. The terms and conditions of any such
loan shall be set by the Committee.
10.8 Limitations Applicable to Section 16 Persons and
Performance-Based Compensation. Notwithstanding any other provision of the
Plan, any Option, Performance Award, Stock Appreciation Right, Dividend
Equivalent or Stock Payment granted, or Restricted Stock or Deferred Stock
awarded, to a key Employee or Director who is then subject to Section 16 of the
Exchange Act, shall be subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange Act (including any
amendment to Rule 16b-3) that are requirements for the application of such
exemptive rule, and the Plan shall be deemed amended to the extent necessary to
conform to such limitations. Furthermore, notwithstanding any other provision
of the Plan, any Option or Stock Appreciation Right intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the Code
shall be subject to any additional limitations set forth in Section 162(m) of
the Code (including any amendment to Section 162(m) of the Code) or any
regulations or rulings issued thereunder that are requirements for
qualification as performance-based compensation as described in Section
162(m)(4)(C) of the Code, and the Plan shall be deemed amended to the extent
necessary to conform to such requirements.
10.9 Effect of Plan Upon Options and Compensation Plans.
The adoption of the Plan shall not affect any other compensation or incentive
plans in effect for the Company, any Parent Corporation, any Corporate
Subsidiary or any Partnership Subsidiary. Nothing in the Plan shall be
construed to limit the right of the Company, any Parent Corporation, any
Corporate Subsidiary or any Partnership Subsidiary (a) to establish any other
forms of incentives or compensation for employees of the Company, any Parent
Corporation, any Corporate Subsidiary or any Partnership Subsidiary or (b) to
grant or assume options or to issued restricted stock otherwise than under the
Plan in connection with any proper corporate purpose, including, but not by way
of limitation, the grant or assumption of options or the issuance of restricted
stock in connection with the acquisition by purchase, lease, merger,
consolidation or otherwise, of the business, stock or assets of any
corporation, firm or association.
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10.10 Compliance with Laws. The Plan, the granting and
vesting of Options, Restricted Stock awards, Deferred Stock awards, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents or Stock Payments under
the Plan and the issuance and delivery of shares of Common Stock and the payment
of money under the Plan or under Options, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments granted or Restricted Stock or
Deferred Stock awarded 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 Company, be necessary or advisable in connection
therewith. Any securities delivered under the Plan shall be subject to such
restrictions, and the person acquiring such securities shall, if requested by
the Company, provide such assurances and representations to the Company as the
Company may deem necessary or desirable to assure compliance with all applicable
legal requirements. To the extent permitted by applicable law, the Plan,
Options, Restricted Stock awards, Deferred Stock awards, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such laws, rules and regulations.
10.11 Titles. Titles are provided herein for convenience
only and are not to serve as a basis for interpretation or construction of the
Plan.
10.12 Governing Law. The Plan and any agreements hereunder
shall be administered, interpreted and enforced under the internal laws of the
State of California without regard to conflicts of laws thereof.
* * *
I hereby certify that the foregoing Plan was duly adopted by
the Board of Directors of ARV Assisted Living, Inc. on October 11, 1995.
Executed on this 11th day of October 1995.
/s/ GRAHAM ESPLEY-JONES
----------------------------
Graham Espley-Jones
Secretary
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EXHIBIT 5.1
[LATHAM & WATKINS LETTERHEAD]
December 24, 1996
Board of Directors
ARV Assisted Living, Inc.
245 Fischer Avenue
Costa Mesa, California 92626
Re: Registration Statement on Form S-8
----------------------------------
Gentlemen:
At your request we have examined the Registration Statement on
Form S-8 (the "Registration Statement") to be filed by you with the Securities
and Exchange Commission in connection with the registration under the
Securities Act of 1933, as amended, of 1,150,000 shares (the "Shares") of
common stock, no par value, of ARV Assisted Living, Inc. (the "Company"), none
of which are issued and outstanding as of the date hereof, but which are
issuable upon exercise of options previously granted and other awards,
including options, to be granted in the future under the 1995 Stock Option and
Incentive Plan of ARV Assisted Living, Inc. (the "Plan").
We are familiar with the proceedings taken by you, and with
the additional proceedings proposed to be taken by you, in connection with the
authorization and proposed issuance and sale of the Shares. Based upon the
foregoing, we are of the opinion that, upon the exercise of options and other
awards granted pursuant to the Plan and the issuance and sale of the Shares,
each in the manner contemplated by the Registration Statement and the Summary
of the Plan dated December 24, 1996, and each in accordance with the terms of
the Plan, the Shares will be legally and validly issued, fully paid and
nonassessable securities of the Company.
We are opining herein as to the effect on the subject
transaction of only the California Corporations Code and we assume no
responsibility as to the application to the subject transaction, or the effect
thereon, of any other laws, of the laws of any other jurisdiction or as to any
matters of municipal law or the laws of any other local agencies within any
other state.
We consent to your filing this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ LATHAM & WATKINS
----------------------------
Latham & Watkins
<PAGE> 1
EXHIBIT 15.1
[PEAT MARWICK LLP LETTERHEAD]
ARV Assisted Living, Inc.
Costa Mesa, CA
Ladies and Gentlemen:
Re: Registration Statement on Form S-8
With respect to the subject registration statement, we acknowledge our
awareness of the use therein of our report dated November 11, 1996 related to
our review of interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such report is
not considered part of a registration statement prepared or certified by an
accountant within the meaning of sections 7 and 11 of the Act.
Very truly yours,
/s/ KPMG Peat Marwick LLP
Orange County, California
December 18, 1996
<PAGE> 1
EXHIBIT 23.2
[PEAT MARWICK LLP LETTERHEAD]
The Board of Directors
ARV Assisted Living, Inc.
We consent to the use of our audit reports incorporated herein by
reference to the financial statements of ARV Assisted Living, Inc. as of
March 31, 1996 and 1995, and for each of the years in the three-year period
ended March 31, 1996 and to the reference to our firm under the heading
"Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
Orange County, California
December 18, 1996
