As filed with the Securities and Exchange Commission on April 6, 2000
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)
___________________
Delaware 33-0160968
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
245 Fischer Avenue, Suite D-1, Costa Mesa, California 92626
(714) 751-7400
(Address and telephone number of principal executive offices)
___________________
1999 Stock Option and Incentive Plan of ARV Assisted Living, Inc.
(Full title of the plan)
___________________
Douglas M. Pasquale, Chief Executive Officer
ARV Assisted Living, Inc.
245 Fischer Avenue, Suite D-1
Costa Mesa, California 92626
(Name and address of agent for service)
___________________
Telephone number, including area code, of agent for service: (714) 751-7400
___________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==========================================================================
Proposed Proposed
maximum maximum
Title of Amount offering aggregate Amount of
securities to be price offering registration
to be registered per unit price fee
registered
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 2,400,000<1><2> $1.21875<3> $2,925,000<3> $773<3>
no par value
- --------------------------------------------------------------------------
<FN>
<1> This Registration Statement covers, in addition to the number of
shares of Common Stock stated above, options and other rights to
purchase or acquire the shares of Common Stock covered by the
Prospectus and, pursuant to Rule 416(c) under the Securities Act
of 1933, as amended (the "Securities Act"), an additional
indeterminate number of shares, options and rights which by reason
of certain events specified in the 1999 Stock Option and Incentive
Plan of ARV Assisted Living, Inc. (the "Plan") may become subject
to the Plan.
<2> Each share is accompanied by a common share purchase right pursuant
to the registrant's Rights Agreement dated as of May 14, 1998, as
amended, with ChaseMellon Shareholder Services, L.L.C., as rights
agent.
<3> Pursuant to Rule 457(h), the maximum offering price, per share and
in the aggregate, and the registration fee were calculated based
upon the average of the high and low prices of the Common Stock on
April 5, 2000, as reported on the American Stock Exchange and
published in The Western Edition of The Wall Street Journal.
The Exhibit Index for this Registration Statement is at page 8.
==========================================================================
</FN>
</TABLE>
<PAGE>
PART I
INFORMATION REQUIRED IN THE
SECTION 10(a) PROSPECTUS
The documents containing the information specified in Part
I of Form S-8 (plan information and registrant information) will
be sent or given to employees as specified by Securities Act
Rule 428(b)(1). Such documents need not be filed with the
Securities and Exchange Commission (the "Commission") either as
part of this Registration Statement or as prospectuses or
prospectus supplements pursuant to Securities Act Rule 424.
These documents, which include the statement of availability
required by Item 2 of Form S-8, and the documents incorporated
by reference in this Registration Statement pursuant to Item 3
of Form S-8 (Part II hereof), taken together, constitute a
prospectus that meets the requirements of Section 10(a) of the
Securities Act.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
The following documents of ARV Assisted Living, Inc. (the
"Company") filed with the Commission are incorporated herein by
reference:
(a) Annual Report on Form 10-K for the Company's fiscal
year ended December 31, 1999, as amended;
(b) The description of the Company's Common Stock
contained in its Registration Statement on Form 8-A
filed on November 6, 1997, and any amendment or report
filed for the purpose of updating such description; and
(c) The Company's Rights Agreement dated as of May 14,
1998 with ChaseMellon Shareholder Services, L.L.C., as
rights agent ("Chase"), filed as an exhibit to the
Company's Quarterly Report for its quarterly period
ended June 30, 1998, as amended by the First Amendment
to Rights Agreement between the Company and Chase
filed as an exhibit to the Company's Current Report on
Form 8-K filed with the Commission on December 26,
1998.
All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), prior to
the filing of a post-effective amendment which indicates that
all securities offered hereby have been sold or which
deregisters all securities then remaining unsold shall be deemed
to be incorporated by reference into this Registration Statement
and to be a part hereof from the date of filing of such
documents. Any statement contained herein or in a document, all
or a portion of which is incorporated or deemed to be
incorporated by reference herein, shall be deemed to be modified
or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or amended, to constitute a
part of this Registration Statement.
Item 4. Description of Securities
The Company's Common Stock, no par value (the "Common Stock"),
is registered pursuant to Section 12 of the Exchange Act, and,
therefore, the description of securities is omitted.
<PAGE> 3
Item 5. Interests of Named Experts and Counsel
The validity of the original issuance of Common Stock
registered hereby is passed on for the Company by Bernard
Wheeler-Medley. Mr. Wheeler-Medley is the Vice President &
associate General Counsel of the Company, is compensated by the
Company as an employee, is the holder of options to acquire
shares of Common Stock and is eligible to participate in the
Plan.
Item 6. Indemnification of Directors and Officers
The Company's Certificate of Incorporation and Bylaws
provide for indemnification of the officers and directors of the
Company to the fullest extent permitted by law. Section
102(b)(7) of the Delaware General Corporation Law (the "DGCL")
provides that a Delaware corporation has the power to eliminate
or limit the personal liability of a director for violations of
the director's fiduciary duty, except (i) for any breach of the
director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of
law, (iii) pursuant to Section 174 of the DGCL (providing for
liability of directors for unlawful payment of dividends or
unlawful stock purchases or redemptions), or (iv) for any
transaction from which a director derived an improper personal
benefit.
Section 145 of the DGCL provides that a corporation may
indemnify any persons, including officers and directors, who
are, or are threatened to be made, parties to any threatened,
pending or completed legal action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an
action by or in the right of such corporation), by reason of the
fact that such person was a director, officer, employee or agent
of such corporation, or is or was serving at the request of such
corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses
(including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided such
officer, director, employee or agent acted in good faith and in
a manner he reasonably believed to be in or not opposed to the
corporation's best interests and, for criminal proceedings, had
no reasonable cause to believe that his conduct was unlawful. A
Delaware corporation may indemnify officers and directors in an
action by or in the right of the corporation under the same
conditions, except that no indemnification is permitted without
judicial approval if the officer or director is adjudged to be
liable to the corporation. Where an officer is successful on
the merits or otherwise in the defense of any action referred to
above, the corporation must indemnify him against the expenses
which such officer or director actually and reasonably incurred.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
See the attached Exhibit Index at page 8.
Item 9. Undertakings
(a) The undersigned registrant hereby undertakes:
<PAGE> 4
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required
by Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any
facts or events arising after the effective date
of the Registration Statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth in
the Registration Statement; and
(iii) To include any material
information with respect to the plan of
distribution not previously disclosed in the
Registration Statement or any material change to
such information in the Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to be
included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in the Registration
Statement;
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and
the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act,
each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
offering thereof.
(c) Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors,
executive officers and controlling persons of the registrant
pursuant to the provisions described in Item 6 above, or
otherwise, the registrant has been advised that in the opinion
of the Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act, the
registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-8 and
has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the
City of Costa Mesa, State of California, on the 5th day of
April, 2000.
By: /s/ Douglas M. Pasquale
------------------------------
Douglas M. Pasquale, President,
Chief Executive Officer and Director
POWER OF ATTORNEY
Each person whose signature appears below constitutes and
appoints Douglas M. Pasquale and Abdo H. Khoury, or either of
them individually, his true and lawful attorney-in-fact and
agent, with full powers of substitution and resubstitution, for
him and in his name, place and stead, in any and all capacities,
to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the
same, with all exhibits thereto, and other documents in
connection therewith, with the Commission, granting unto said
attorneys-in-fact and agents, full power and authority to do and
perform each and every act and thing requisite and necessary to
be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or either
of them individually, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this
Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Douglas M. Pasquale President, Chief April 5, 2000
- ----------------------- Executive Officer and
Douglas M. Pasquale Director (Principal
Executive Officer)
/s/ Abdo H. Khoury Senior Vice President, April 5, 2000
- ----------------------- Chief Financial Officer
Abdo H. Khoury and Secretary (Principal
Financial and
Accounting Officer)
<PAGE> 6
/s/ David P. Collins Director April 5, 2000
- -----------------------
David P. Collins
/s/ Maurice J. DeWald Director April 5, 200
- -----------------------
Maurice J. DeWald
/s/ Jeffrey Koblentz Director April 6, 2000
- -----------------------
Jeffrey Koblentz
/s/ John A. Moore Director April 5, 2000
- -----------------------
John A. Moore
<PAGE> 7
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------- ----------------------
4. 1999 Stock Option and Incentive Plan of ARV Assisted
Living, Inc.
5. Opinion of Counsel (opinion re legality).
23.1 Consent of KPMG LLP (consent of independent
auditors).
23.2 Consent of Counsel (included in Exhibit 5).
24. Power of Attorney (included in this Registration
Statement under "Signatures").
<PAGE> 8
THE 1999 STOCK OPTION AND INCENTIVE PLAN
OF
ARV ASSISTED LIVING, INC.
<PAGE>
TABLE OF CONTENTS
Page
1. The Plan 1
1.1 Purpose 1
1.2 Administration and Authorization; Power and
Procedure 1
1.3 Participation 2
1.4 Shares Available for Awards; Share Limits 3
1.5 Grant of Awards 4
1.6 Award Period 4
1.7 Limitations on Exercise and Vesting of Awards 4
1.8 No Transferability; Limited Exception to Transfer
Restrictions 5
2. Options 6
2.1 Grants 6
2.2 Option Price 6
2.3 Limitations on Grant and Terms of Incentive Stock
Options 8
2.4 Adjustments to Option Terms; No Repricing Without
Prior Shareholder Approval 8
2.5 Options and Rights in Substitution for Stock
Options Granted by Other Corporations 9
3. Stock Appreciation Rights (Including Limited Stock
Appreciation Rights) 9
3.1 Grants 9
3.2 Exercise of Stock Appreciation Rights 9
3.3 Payment 10
3.4 Limited Stock Appreciation Rights 10
4. Restricted Stock Awards 10
4.1 Grants 10
4.2 Restrictions 11
4.3 Return to the Corporation 12
5. Performance Share Awards and Stock Bonuses 12
5.1 Grants of Performance Share Awards 12
5.2 Special Performance-Based Share Awards 12
5.3 Grants of Stock Bonuses 13
5.4 Deferred Payments 14
5.5 Cash Bonus Awards 14
6. Other Provisions 14
6.1 Rights of Eligible Persons, Participants and
Beneficiaries 14
6.2 Effects of Termination of Employment; Termination
of Subsidiary Status; Discretionary Provisions 15
6.3 Adjustments; Acceleration 16
6.4 Compliance with Laws 18
6.5 Tax Withholding 19
6.6 Plan Amendment, Termination and Suspension 20
6.7 Privileges of Stock Ownership; Voting Rights on
Shares 21
6.8 Effective Date of the Plan 21
6.9 Term of the Plan 21
6.10 Governing Law/Construction/Severability 21
6.11 Captions 22
6.12 Non-Exclusivity of Plan 22
6.13 No Restriction on Corporate Powers 22
6.14 Effect on Other Benefits 22
7. Definitions 22
8. Non-Employee Director Options 27
8.1 Participation. 27
8.2 Annual Options Grants 27
8.3 Option Price 28
8.4 Option Period and Exercisability 28
8.5 Termination of Directorship 28
8.6 Adjustment; Accelerations; Terminations 29
8.7 Acceleration Upon a Change in Control Event 29
8.8 Amendment to Outstanding Awards 29
<PAGE>
1. The Plan.
1.1 Purpose. The purpose of this Plan is to promote the success
of the Company and the interests of its shareholders by
attracting, motivating, retaining and rewarding directors,
officers, employees and other eligible persons with awards and
incentives for high levels of individual performance and improved
financial performance of the Company. Capitalized terms used
herein are defined in Section 7.
1.2 Administration and Authorization; Power and Procedure.
1.2.1 Committee. This Plan will be administered by and all
Awards will be authorized by the Committee. Action of the
Committee with respect to the administration of this Plan will
be taken pursuant to a majority vote or by written consent of
its members.
1.2.2 Plan Awards; Interpretation; Powers of Committee.
Subject to the express provisions of this Plan and any express
limitations on any authority delegated by the Board, the
Committee will have the authority to:
(a) determine eligibility and the particular Eligible Persons
who will receive Awards;
(b) grant Awards to Eligible Persons, determine the price at
which securities will be offered or awarded and the amount
of securities to be offered or awarded to any of such
persons, and determine the other specific terms and
conditions of Awards consistent with the express limits
of this Plan, and establish the installments (if any) in
which Awards will become exercisable or will vest, or
determine that no delayed exercisability or vesting is
required, and establish the events of termination or
reversion of Awards;
(c) approve the forms of Award Agreements (which need not be
identical either as to type of Award or among Participants);
(d) construe and interpret this Plan and any Award or other
agreements defining the rights and obligations of the
Company and Participants under this Plan, further define
the terms used in this Plan, and prescribe, amend and
rescind rules and regulations relating to the
administration of this Plan;
(e) cancel, modify, or waive the Corporation's rights with
respect to, or modify, discontinue, suspend, or terminate
any or all outstanding Awards held by Eligible Persons,
subject to any required consent under Section 6.6;
(f) accelerate or extend the exercisability or extend the term
of any or all outstanding Awards within the maximum ten-year
term of Awards under Section 1.6; and
(g) make all other determinations and take such other action
as contemplated by this Plan or as may be necessary or
advisable for the administration of this Plan and the
effectuation of its purposes.
Notwithstanding the foregoing, the provisions of
Section 8 shall be automatic and, to the maximum extent
possible, self-effectuating.
1.2.3 Binding Determinations. Any action taken by, or
inaction of, the Corporation, any Subsidiary, the Board or the
Committee relating or pursuant to this Plan will be within the
absolute discretion of that entity or body and will be conclusive
and binding upon all persons. Subject only to compliance with
the express provisions hereof, the Board and Committee may act in
their absolute discretion in matters within their authority
related to this Plan.
1.2.4 Reliance on Experts. In making any determination or in
taking or not taking any action under this Plan, the Committee
or the Board, as the case may be, may obtain and may rely
upon the advice of experts, including employees of and
professional advisors to the Corporation.
1.2.5 No Liability. No director, officer or agent of the
Company will be liable for any action, omission or decision
under this Plan taken, made or omitted in good faith.
1.2.6 Bifurcation of Plan Administration. Subject to the
limits of the definition of "Committee" in Section 7, the
Board may delegate different levels of authority to different
Committees with administration and grant authority under this
Plan, provided that each designated Committee granting any
Awards hereunder shall consist exclusively of a member or
members of the Board. A majority of the members of the
acting Committee shall constitute a quorum. The vote of
a majority of a quorum or the unanimous written consent
of the Committee shall constitute action by the Committee.
1.2.7 Delegation. A Committee may delegate ministerial, non-
discretionary functions to individuals who are officers or
employees of the Company.
1.3 Participation. Discretionary Awards may be granted by the
Committee only to those persons that the Committee determines to
be Eligible Persons. An Eligible Person who has been granted an
Award may, if otherwise eligible, be granted additional Awards if
the Committee so determines.
1.4 Shares Available for Awards; Share Limits.
1.4.1 Shares Available. Subject to the provisions of
Section 6.3, the capital stock that may be delivered under
this Plan will be shares of the Corporation's authorized
but unissued Common Stock and any shares of its Common
Stock held as treasury shares. The shares may be delivered
for any lawful consideration.
1.4.2 Aggregate Share Limit. The maximum number of shares of
Common Stock that may be delivered pursuant to Awards granted to
Eligible Persons under this Plan (the "Share Limit") will not
exceed:
(a) 2,400,000 shares of Common Stock, plus
(b) 15% of any increase in the total outstanding
shares of Common Stock after June 30, 1999 (other
than an increase as a result of the issuance of
shares under this Plan or the 1995 Plan), minus
(b) the aggregate number of shares of Common Stock
delivered pursuant to options granted under the
1995 Plan that are outstanding on the Effective
Date of this Plan.
The Share Limit may not contract if shares are
reacquired by the Company after an increase has
occurred, but neither shall the Share Limit increase if
the reacquired shares are reissued.
1.4.3 ISO Share Limit. The maximum number of shares of
Common Stock that may be delivered pursuant to Incentive
Stock Options granted under this Plan will not exceed
1,500,000 shares.
1.4.4 Individual Share Limits. The maximum number of shares
of Common Stock subject to those Options and Stock Appreciation
Rights that are granted under this Plan during any calendar
year to any one individual will be limited to 400,000 and
the maximum individual limit on the number of shares of Common
Stock in the aggregate subject to all Awards that are granted
under this Plan during any calendar year to any one individual
will be 400,000.
1.4.5 Restricted Stock and Stock Bonus Limit. In no event
shall more than 400,000 shares of Common Stock be available for
Awards issued (or reissued) under this Plan as Stock Bonuses or
as time-based Restricted Stock for nominal or no consideration
other than the par value thereof. The limit in this Section
1.4.5 does not apply to shares issued principally for past
services, in respect of compensation earned but deferred, or
as Performance-Based Awards under Section 5.2.
1.4.6 Adjustment. Each of the foregoing numerical limits in
this Section 1.4 will be subject to adjustment as contemplated
by Section 1.4.7 and Section 6.3.
1.4.7 Share Reservation; Replenishment and Reissue of
Unvested Awards. No Award may be granted under this Plan
unless, on the date of grant, the sum of (a) the maximum
number of shares of Common Stock issuable at any time
pursuant to such Award, plus (b) the number of shares
of Common Stock that have previously been issued pursuant
to Awards granted under this Plan, other than reacquired
shares of Common Stock available for reissue consistent
with any applicable legal limitations, plus (c) the
maximum number of shares of Common Stock that may be
issued at any time after such date of grant pursuant
to Awards that are outstanding on such date, plus
(d) the maximum number of shares of Common Stock that
may be issued under the 1995 Plan at any time after such
date of grant pursuant to awards that are outstanding
under the 1995 Plan on such date does not exceed the
Share Limit. Shares of Common Stock that are subject to
or underlie Awards that expire or for any reason are
canceled or terminated, are forfeited, fail to vest, or
for any other reason are not paid or delivered under this
Plan, will again, except to the extent prohibited by law
or the terms of this Plan, be available for subsequent
Awards under this Plan. Shares of Common Stock issued
pursuant to the terms hereof (including shares of Common
Stock offset in satisfaction of applicable withholding
taxes) shall reduce on a share-for-share basis the
number of shares of Common Stock remaining available under
this Plan. Except as limited by law, if an Award is or
may be settled only in cash, such Award need not be counted
against any of the limits under this Section 1.4.
1.5 Grant of Awards. Subject to the express provisions of this
Plan, the Committee will determine the number of shares of Common
Stock subject to each Award, the price (if any) to be paid for
the shares or the Award and, in the case of Performance Share
Awards, in addition to matters addressed in Section 1.2.2, the
specific objectives, goals and "business criteria" as such term
is used in Section 5.2 that further define the terms of the
Performance Share Award. Each Award will be evidenced by an
Award Agreement signed by the Corporation and, if required by the
Committee, by the Participant.
1.6 Award Period. Any Option, SAR, warrant or similar right
shall expire and any other Award shall either vest or be
forfeited at the end of the term of the Award, which shall be not
more than 10 years after the date of grant; provided, however,
that any payment of cash or delivery of stock pursuant to an
Award may be delayed until a future date if specifically
authorized in writing by the Committee and the Participant; and
provided further that each Award will be subject to earlier
termination pursuant to or as provided in Section 6.2 or Section
6.3.
1.7 Limitations on Exercise and Vesting of Awards.
1.7.1 Provisions for Exercise. Unless the Committee
otherwise expressly provides, no Award will be exercisable or
will vest until at least six (6) months after the initial Award
Date, and once exercisable an Award will remain exercisable until
the expiration or earlier termination of the Award.
1.7.2 Procedure. Any exercisable Award will be deemed to be
exercised when the Corporation receives written notice of such
exercise from the Participant in a form approved by the
Committee specifying the Award (or portion thereof) which is
being exercised, together with any required payments in
accordance with Section 2.2.2 and Section 6.5 and any written
statements required pursuant to Section 6.4.
1.7.3 Fractional Shares/Minimum Issue. Fractional share
interests will be disregarded, but may be accumulated. The
Committee, however, may determine in the case of Eligible
Persons that cash, other securities, or other property
will be paid or transferred in lieu of any fractional share
interests. No fewer than 100 shares may be purchased on
exercise of any Award at one time unless the number
purchased is the total number at the time available for
purchase under the Award.
1.8 No Transferability; Limited Exception to Transfer
Restrictions.
1.8.1 Limit On Exercise and Transfer. Unless otherwise
expressly provided in (or pursuant to) this Section 1.8, by
applicable law and by the Award Agreement, as the same may be
amended:
(a) all Awards are non-transferable and will not be subject in
any manner to sale, transfer, anticipation, alienation,
assignment, pledge, encumbrance or charge;
(b) Awards must be exercised only by the Participant; and
(c) amounts payable or shares issuable pursuant to an Award
will be delivered only to (or for the account of) the
Participant.
In addition, an Award and/or the shares covered thereby
will be subject to the restrictions (if any) imposed in
the applicable Award Agreement.
1.8.2 Exceptions. Subject to Section 1.8.4, the Committee
may permit Awards to be exercised by and paid to certain persons
or entities that are "family members" (as such term is defined in
the General Instructions to Securities Act Registration Statement
Form S-8) of the Participant. Any permitted transfer will be
subject to (a) such other conditions and procedures as the
Committee may establish and (b) the condition that the Committee
receive evidence satisfactory to it that the transfer is being
made for estate and/or tax planning purposes and without
consideration (other than nominal consideration).
1.8.3 Further Exceptions to Limits On Transfer. Subject to
Section 1.8.4, the exercise and transfer restrictions in
Section 1.8.1 will not apply to:
(a) transfers to the Corporation;
(b) the designation of a beneficiary to receive benefits if
the Participant dies or, if the Participant has died,
transfers to or exercises by the Participant's
beneficiary, or, in the absence of a validly designated
beneficiary, transfers by will or the laws of descent
and distribution;
(c) transfers to a former spouse pursuant to a domestic
relations order in settlement of marital property rights,
provided that the domestic relations order states with
specificity the Awards (or portions thereof) that are to be
transferred and a copy of the order is received by the
Committee;
(d) if the Participant has suffered a disability, permitted
transfers or exercises on behalf of the Participant by
the Participant's legal representative; or
(e) the authorization by the Committee of "cashless exercise"
procedures with third parties who provide financing for
the purpose of (or who otherwise facilitate) the exercise
of Awards consistent with applicable laws and the express
authorization of the Committee.
1.8.4 Code Restrictions. Incentive Stock Options and
Restricted Stock Awards will be subject to any and all transfer
restrictions under the Code.
2. Options.
2.1 Grants. One or more Options may be granted under this
Section 2 to any Eligible Person. Each Option granted will be
designated in the applicable Award Agreement, by the Committee,
as either an Incentive Stock Option, subject to Section 2.3, or a
Nonqualified Stock Option.
2.2 Option Price.
2.2.1 Pricing Limits. The purchase price per share of the
Common Stock covered by each Option will be determined by the
Committee at the time of the Award, but in no case will the
purchase price per share (with respect to either a Nonqualified
Stock Option or an Incentive Stock Option) be less than 100%
(110% in the case of an Incentive Stock Option granted to a
Participant described in Section 2.3.4) of the Fair Market Value
of the Common Stock on the date of grant and in no case will the
purchase price per share be less than the par value thereof.
2.2.2 Payment Provisions. The purchase price of any shares
purchased on exercise of an Option granted under this
Section 2 will be paid in full at the time of each purchase
in one or a combination of the following methods:
(a) in cash or by electronic funds transfer;
(b) by certified or cashier's check payable to the order
of the Corporation;
(c) if authorized by the Committee or specified in the
applicable Award Agreement, by a promissory note of
the Participant consistent with the requirements of
Section 2.2.3;
(d) by notice and third party payment in such manner as may be
authorized by the Committee; or
(e) subject to the proviso below, by the delivery of shares of
Common Stock of the Corporation already owned by the
Participant, provided that the Committee may in its
absolute discretion limit the Participant's ability
to exercise an Award by delivering previously owned
shares, and any shares of Common Stock delivered
that were initially acquired from the Corporation, upon
exercise of a stock option or otherwise, must have been
owned by the Participant at least six (6) months as of
the date of delivery.
Shares of Common Stock used to satisfy the exercise price of an
Option will be valued at their Fair Market Value on the date of
exercise. Without limiting the generality of the foregoing, the
Committee may provide that an Option can be exercised and
payment made by delivering a properly executed exercise
notice together with irrevocable instructions to a broker
to promptly deliver to the Corporation the amount of sale
proceeds necessary to pay the exercise price and, unless
otherwise prohibited by the Committee or applicable
law, any applicable tax withholding under Section 6.5.
The Corporation will not be obligated to deliver
certificates for any shares unless and until it
receives full payment of the exercise price therefor
and any related withholding obligations under Section
6.5 and any other conditions to exercise have been
satisfied.
2.2.3 Acceptance of Notes to Enhance Exercise. The
Corporation may, with the Committee's express approval in each
specific case, accept one or more notes from any Eligible Person
in connection with the exercise of any outstanding Option subject
to the following terms and conditions:
(a) Principal. The Principal of the note will not exceed the
amount required to be paid to the Corporation upon the
exercise of one or more Options under this Plan and the
note will be delivered directly to the Corporation in
consideration of such exercise or receipt.
(b) Term. The initial term of the note will be determined by
the Committee; but the term of the note, including
extensions, will not exceed a period of five (5) years.
(c) Recourse; Security. The note will provide for full
recourse to the Participant and will bear interest at
a rate determined by the Committee but not less than the
interest rate necessary to avoid the imputation of interest
under the Code. If required by the Committee or by
applicable law, the note will be secured by a pledge of any
shares or rights financed thereby in compliance
with applicable law. The terms, repayment provisions, and
collateral release provisions of the note and the pledge
securing the note will conform with all applicable rules
and regulations, including those of the Federal Reserve
Board and under the Delaware Corporations Code, as then in
effect.
(d) Termination of Employment. If the employment of the
Participant terminates, the unpaid principal balance of the
note will become due and payable on the 10th business day
after such termination unless the Committee expressly
authorizes an extension of the date consistent with the
maximum term of the note.
2.3 Limitations on Grant and Terms of Incentive Stock Options.
2.3.1 $100,000 Limit. To the extent that the aggregate "Fair
Market Value" of stock with respect to which incentive stock
options first become exercisable by a Participant in any calendar
year exceeds $100,000, taking into account both Common Stock
subject to Incentive Stock Options under this Plan and stock
subject to incentive stock options under all other plans of the
Company or any parent corporation, such options will be treated
as Nonqualified Stock Options. For this purpose, the "Fair
Market Value" of the stock subject to options will be determined
as of the date the options were awarded. In reducing the number
of options treated as incentive stock options to meet the
$100,000 limit, the most recently granted options will be reduced
first. To the extent a reduction of simultaneously granted
options is necessary to meet the $100,000 limit, the Committee
may, in the manner and to the extent permitted by law, designate
which shares of Common Stock are to be treated as shares acquired
pursuant to the exercise of an Incentive Stock Option.
2.3.2 Notice of Sale Requirement. Any Participant who
exercises an Incentive Stock Option shall give prompt written
notice to the Corporation of any sale or other transfer of the
shares of Common Stock acquired within one year after the
exercise date or two years after the Award Date.
2.3.3 Other Code Limits. Incentive Stock Options may only be
granted to employees of the Corporation or a Subsidiary that
satisfies the other eligibility requirements of the Code. There
will be imposed in any Award Agreement relating to Incentive
Stock Options such other terms and conditions as from time to
time are required in order that the Option be an "incentive stock
option" as that term is defined in Section 422 of the Code.
2.3.4 Limits on 10% Holders. No Incentive Stock Option may
be granted to any person who, at the time the Option is granted,
owns (or is deemed to own under Section 424(d) of the Code)
shares of outstanding Common Stock possessing more than 10% of
the total combined voting power of all classes of stock of the
Corporation, unless the exercise price of such Option is at least
110% of the Fair Market Value of the stock subject to the Option
and such Option by its terms is not exercisable after the
expiration of five years from the date such Option is granted.
2.4 Adjustments to Option Terms; No Repricing Without Prior
Shareholder Approval. Subject to Section 1.4 and Section 6.6 and
the specific limitations on Awards contained in this Plan, the
Committee from time to time may authorize, generally or in
specific cases only, for the benefit of any Eligible Person any
adjustment in the exercise or purchase price, the vesting
schedule, the number of shares subject to, or the restrictions
upon or the term of, an Award granted under this Section 2 by
cancellation of an outstanding Award and a subsequent regranting
of an Award, by amendment, by substitution of an outstanding
Award, by waiver or by other legally valid means. Such amendment
or other action may result among other changes in an exercise or
purchase price that is higher or lower than the exercise or
purchase price of the original or prior Award, provide for a
greater or lesser number of shares subject to the Award, or
provide for a longer or shorter vesting or exercise period.
Notwithstanding the foregoing, in no case shall the per share
exercise price of any Option or Stock Appreciation Right be
reduced (by amendment, substitution, cancellation and regrant or
other means) without shareholder approval to a price less than
the Fair Market Value of a share of Common Stock on the related
Award Date.
2.5 Options and Rights in Substitution for Stock Options Granted
by Other Corporations. Options and Stock Appreciation Rights may
be granted to Eligible Persons under this Plan in substitution
for employee stock options granted by other entities, in
connection with a distribution, merger or reorganization by or
with the granting entity or an affiliated entity, or the
acquisition by the Company, directly or indirectly, of all or a
substantial part of the stock or assets of the employing entity.
3. Stock Appreciation Rights (Including Limited Stock Appreciation
Rights).
3.1 Grants. The Committee may grant to any Eligible Person
Stock Appreciation Rights either concurrently with the grant of
another Award or in respect of an outstanding Award, in whole or
in part, or independently of any other Award. Any Stock
Appreciation Right granted in connection with an Incentive Stock
Option will contain such terms as may be required to comply with
the provisions of Section 422 of the Code and the regulations
promulgated thereunder, unless the holder otherwise agrees.
3.2 Exercise of Stock Appreciation Rights.
3.2.1 Exercisability. Unless the Award Agreement or the
Committee otherwise provides, a Stock Appreciation Right related
to another Award will be exercisable at such time or times, and
to the extent, that the related Award will be exercisable.
3.2.2 Effect on Available Shares. To the extent that a Stock
Appreciation Right is exercised, only the actual number of
delivered shares of Common Stock will be charged against the
maximum amount of Common Stock that may be delivered pursuant to
Awards under this Plan. The number of shares subject to the
Stock Appreciation Right and the related Option of the
Participant will, however, be reduced by the number of underlying
shares as to which the exercise related, unless the Award
Agreement otherwise provides.
3.2.3 Stand-Alone SARs. A Stock Appreciation Right granted
independently of any other Award will be exercisable pursuant to
the terms of the Award Agreement but in no event earlier than six
months after the Award Date, except in the case of death or Total
Disability.
3.2.4 Proportionate Reduction. If an SAR extends to less
than all the shares covered by the related Award and if a portion
of the related Award is thereafter exercised, the number of
shares subject to the unexercised SAR shall be reduced only if
and to the extent that the remaining number of shares covered by
such related Award is less than the remaining number of shares
subject to such SAR.
3.3 Payment.
3.3.1 Amount. Unless the Committee otherwise provides, upon
exercise of a Stock Appreciation Right and the attendant
surrender of an exercisable portion of any related Award, the
Participant will be entitled to receive, subject to Section 6.5,
payment of an amount determined by multiplying:
(a) the difference (which shall not be less than zero) obtained
by subtracting the exercise price per share of Common Stock
under the related Award (if applicable) or the initial share
value specified in the Award from the Fair Market Value of a
share of Common Stock on the date of exercise of the Stock
Appreciation Right, by
(b) the number of shares with respect to which the Stock
Appreciation Right has been exercised.
3.3.2 Form of Payment. The Committee, in its sole
discretion, will determine the form in which payment will be made
of the amount determined under Section 3.3.1 above, either solely
in cash, solely in shares of Common Stock (valued at Fair Market
Value on the date of exercise of the Stock Appreciation Right),
or partly in such shares and partly in cash; subject to the
Committee's determination that such exercise and payment are
consistent with applicable law. If the Committee permits a
Participant to elect to receive cash or shares (or a combination
thereof) on exercise of a Stock Appreciation Right, any such
election will be subject to such conditions as the Committee may
impose.
3.4 Limited Stock Appreciation Rights. The Committee may grant
to any Eligible Person Stock Appreciation Rights exercisable only
upon or in respect of a change in control or any other specified
event ("Limited SARs") and such Limited SARs may relate to or
operate in tandem or combination with, or substitution for,
Options, other SARs or other Awards (or any combination thereof),
and may be payable in cash or shares based on the spread between
the base price of the SAR and a price based upon or equal to the
Fair Market Value of the Common Stock during a specified period
or at a specified time within a specified period before, after or
including the date of such event.
4. Restricted Stock Awards.
4.1 Grants. The Committee may grant one or more Restricted
Stock Awards to any Eligible Person. Each Restricted Stock Award
Agreement will specify the number of shares of Common Stock to be
issued to the Participant, the date of such issuance, the
consideration for such shares (but not less than the minimum
lawful consideration under applicable state law) to be paid by
the Participant, the extent (if any) to which and the time (if
ever) at which the Participant will be entitled to dividends,
voting and other rights in respect of the shares prior to
vesting, and, subject to Section 4.2.1, the restrictions (which
may be based on performance criteria, passage of time or other
factors or any combination thereof) imposed on such shares and
the conditions of release or lapse of such restrictions. Stock
certificates evidencing shares of Restricted Stock pending the
lapse of the restrictions ("Restricted Shares") will bear a
legend making appropriate reference to the restrictions imposed
hereunder and under the applicable Award Agreement and will be
held by the Corporation or by a third party designated by the
Committee until the restrictions on such shares have lapsed and
the shares have vested in accordance with the provisions of the
Award, Section 1.7, and Section 4.2.1. Upon issuance of the
Restricted Stock Award, the Participant may be required to
provide such further assurances and documents as the Committee
may require to enforce the restrictions.
4.2 Restrictions.
4.2.1 Vesting. Subject to Section 6.3 and any accelerated
vesting in connection with the Participant's death or Total
Disability, the restrictions on shares comprising any Restricted
Stock Award shall not lapse: (a) prior to the first anniversary
of the applicable Award Date in the case of a Restricted Stock
Award that is a Performance-Based Award under Section 5.2, or (b)
in the case of other Restricted Stock Awards, not more rapidly
than in annual one-third (1/3) installments with the first
vesting installment occurring no earlier than the first
anniversary of the applicable Award Date. In all cases, unless
the Committee otherwise expressly provides, no Restricted Stock
Award will vest until at least six (6) months after the Award
Date. The foregoing limits of this Section 4.2.1 do not apply to
shares issued principally for past services or in respect of
compensation earned but deferred.
4.2.2 Pre-Vesting Restraints. Except as provided in
Sections 4.1 and 1.8, restricted shares comprising any Restricted
Stock Award may not be sold, assigned, transferred, pledged or
otherwise disposed of or encumbered, either voluntarily or
involuntarily, until the restrictions on such shares have lapsed
and the shares have become vested.
4.2.3 Dividend and Voting Rights. Unless otherwise provided
in the applicable Award Agreement, a Participant receiving a
Restricted Stock Award will be entitled to cash dividend and
voting rights for all shares issued even though they are not
vested, but such rights will terminate immediately as to any
Restricted Shares which cease to be eligible for vesting.
4.2.4 Cash Payments. If the Participant has paid or received
cash (including any dividends) in connection with the Restricted
Stock Award, the Award Agreement will specify whether and to what
extent such cash will be returned (with or without an earnings
factor) as to any restricted shares that cease to be eligible for
vesting.
4.3 Return to the Corporation. Unless the Committee otherwise
expressly provides in the applicable Award Agreement, Restricted
Shares that remain subject to restrictions at the time of
termination of employment, or are subject to other conditions to
vesting that have not been satisfied by the time specified in the
applicable Award Agreement, will not vest and will be returned to
the Corporation in such manner and on such terms as the Committee
provides.
5. Performance Share Awards and Stock Bonuses.
5.1 Grants of Performance Share Awards. The Committee may grant
Performance Share Awards to Eligible Employees based upon such
factors as the Committee deems relevant in light of the specific
type and terms of the award. An Award Agreement will specify the
maximum number of shares of Common Stock (if any) subject to the
Performance Share Award, the consideration (but not less than the
minimum lawful consideration) to be paid for any such shares as
may be issuable to the Participant, the duration of the Award and
the conditions upon which delivery of any shares or cash to the
Participant will be based. The amount of cash or shares or other
property that may be deliverable pursuant to such Award will be
based upon the degree of attainment over a specified period of
not more than 10 years (a "performance cycle") as may be
established by the Committee of such measure(s) of the
performance of the Company (or any part thereof) or the
Participant as may be established by the Committee. The
Committee may provide for full or partial credit, prior to
completion of such performance cycle or the attainment of the
performance achievement specified in the Award, in the event of
the Participant's death, Retirement, or Total Disability, a
Change in Control Event or in such other circumstances as the
Committee (consistent with Section 6.10.3(b), if applicable) may
determine.
5.2 Special Performance-Based Share Awards. Options or SAR's
granted with an exercise price not less than Fair Market Value at
the applicable date of grant for Section 162(m) purposes to
Eligible Employees which otherwise satisfy the conditions to
deductibility under Section 162(m) are deemed "Qualifying
Awards". Without limiting the generality of the foregoing, and
in addition to Qualifying Awards granted under other provisions
of this Plan, other performance-based awards within the meaning
of Section 162(m) ("Performance-Based Awards"), whether in the
form of restricted stock, performance stock, phantom stock or
other rights, the vesting of which depends on the performance of
the Company on a consolidated, segment, subsidiary, or division
basis, with reference to revenue growth, net earnings (before or
after taxes, interest, depreciation, and/or amortization), cash
flow, return on equity or on assets or on net investment, stock
appreciation, total shareholder return, or cost containment or
reduction, or any combination thereof (the "business criteria")
relative to pre-established performance goals, may be granted
under this Plan. To the extent so defined, these terms are used
as applied under generally accepted accounting principles and in
the Company's financial reporting. The applicable business
criterion or criteria and the specific performance goals must be
approved by the Committee in advance of applicable deadlines
under the Code and while the performance relating to such goals
remains substantially uncertain. The applicable performance
measurement period may not be less than one (except as provided
in Section 1.6) nor more than 10 years. Other types of
performance and non-performance awards may also be granted under
the other provisions of this Plan. The following provisions
relate to all Performance-Based Awards (other than Qualifying
Awards) granted under this Plan:
5.2.1 Eligible Class. The eligible class of persons for
Awards under this Section 5.2 is executive officers of the
Corporation.
5.2.2 Maximum Award. Subject to Section 1.4.2, in no event
will grants in any calendar year to any one individual under this
Section 5.2 relate to more than 400,000 shares or, (if payable
solely in cash) a cash amount of more than $1,000,000.
5.2.3 Committee Certification. To the extent required by
Section 162(m), before any Performance-Based Award under this
Section 5.2 is paid, the Committee must certify that the material
terms of the Performance-Based Award were satisfied.
5.2.4 Terms and Conditions of Awards. The Committee will
have discretion to determine the restrictions or other
limitations of the individual Awards under this Section 5.2
(including the authority to reduce Awards, payouts or vesting or
to pay no Awards, in its sole discretion, if the Committee
preserves such authority at the time of grant by language to this
effect in its authorizing resolutions or otherwise).
5.2.5 Stock Payout Features. In lieu of cash payment of an
Award, the Committee may require or allow all or a portion of the
Award to be paid in the form of stock, Restricted Shares, an
Option, or another Award.
5.2.6 Adjustments for Material Changes. Performance goals or
other features of an Award under this Section 5.2 may provide
that they (a) shall be adjusted to reflect a change in corporate
capitalization, a corporate transaction (such as a
reorganization, combination, separation, or merger) or a complete
or partial corporate liquidation, or (b) shall be calculated
either without regard for or to reflect any change in accounting
policies or practices affecting the Company and/or the business
criteria or performance goals or targets, or (c) shall be
adjusted for any other circumstance or event, or (d) any
combination of (a) through (c), but only to the extent in each
case that such adjustment or determination in respect of
Performance-Based Awards would be consistent with the
requirements of Section 162(m) to qualify as performance-based
compensation.
5.3 Grants of Stock Bonuses. The Committee may grant a Stock
Bonus to any Eligible Person to reward exceptional or special
services, contributions or achievements in the manner and on such
terms and conditions (including any restrictions on such shares)
as determined from time to time by the Committee. The number of
shares so awarded will be determined by the Committee. The Award
may be granted independently or in lieu of a cash bonus.
5.4 Deferred Payments. The Committee may authorize for the
benefit of any Eligible Person the deferral of any payment of
cash or shares that may become due or of cash otherwise payable
under this Plan, and provide for accredited benefits thereon
based upon such deferment, at the election or at the request of
such Participant, subject to the other terms of this Plan. Such
deferral will be subject to such further conditions, restrictions
or requirements as the Committee may impose, subject to any then
vested rights of Participants.
5.5 Cash Bonus Awards.
5.5.1 Performance Goals. The Committee may establish a
program of annual incentive awards that are payable in cash to
Eligible Persons based upon the extent to which performance goals
are met during the performance period. The performance goals may
depend upon the performance of the Company on a consolidated,
subsidiary division basis with reference to any one or
combination of the business criteria (as such term is used in
Section 5.2). In addition, the award may depend upon the
Eligible Person's individual performance.
5.5.2 Payment in Restricted Stock. In lieu of cash payment
of an Award, the Committee may require or allow all or a portion
of the Award to be paid in the form of stock, Restricted Stock,
an Option or other Award.
6. Other Provisions.
6.1 Rights of Eligible Persons, Participants and Beneficiaries.
6.1.1 Employment Status. Status as an Eligible Person will
not be construed as a commitment that any Award will be made
under this Plan to an Eligible Person or to Eligible Persons
generally.
6.1.2 No Employment Contract. Nothing contained in this Plan
(or in any other documents related to this Plan or to any Award)
will confer upon any Eligible Person or Participant any right to
continue in the employ or other service of the Company,
constitute any contract or agreement of employment or other
service, or affect an employee's status as an employee at will
nor shall interfere in any way with the right of the Company to
change such person's compensation or other benefits, or to
terminate his or her employment or other service, with or without
cause. Nothing in this Section 6.1.2, however, is intended to
adversely affect any express independent right of such person
under a separate employment or service contract other than an
Award Agreement.
6.1.3 Plan Not Funded. Awards payable under this Plan will
be payable in shares of Common Stock or from the general assets
of the Corporation, and (except as provided in Section 1.4.3) no
special or separate reserve, fund or deposit will be made to
assure payment of such Awards. No Participant, Beneficiary or
other person will have any right, title or interest in any fund
or in any specific asset (including shares of Common Stock) of
the Company by reason of any Award hereunder. Neither the
provisions of this Plan (or of any related documents), the
creation or adoption of this Plan, nor any action taken pursuant
to the provisions of this Plan will create, or be construed to
create, a trust of any kind or a fiduciary relationship between
the Company and any Participant, Beneficiary or other person. To
the extent that a Participant, Beneficiary or other person
acquires a right to receive payment pursuant to any Award
hereunder, such right will be no greater than the right of any
unsecured general creditor of the Company.
6.2 Effects of Termination of Employment; Termination of
Subsidiary Status; Discretionary Provisions.
6.2.1 Options - Resignation or Dismissal. Unless otherwise
provided in the Award Agreement and subject to earlier
termination pursuant to or as contemplated by Section 1.6 or 6.3,
if the Participant's employment by (or other service specified in
the Award Agreement to) the Company terminates for any reason
(the date of such termination being referred to as the "Severance
Date") other than due to Retirement, Total Disability or death,
or "for cause" (as determined in the sole discretion of the
Committee), the Participant will have until the date which is
three (3) months after the Severance Date to exercise an Option
to the extent that it is vested on the Severance Date. In the
case of a termination by the Company "for cause," the Option will
terminate on the Severance Date (whether or not vested). In all
cases, the Option, to the extent not vested on the Severance
Date, will terminate.
6.2.2 Options - Death or Disability. Unless otherwise
provided in the Award Agreement and subject to earlier
termination pursuant to or as contemplated by Section 1.6 or
6.3, if the Participant's employment by (or specified service
to) the Company terminates as a result of Total Disability or
death, the Participant, the Participant's Personal
Representative or the Participant's Beneficiary, as the case
may be, will have until the date which is twelve (12) months
after the Severance Date to exercise an Option to the extent
that it is vested on the Severance Date. The Option, to the
extent not vested on the Severance Date, will terminate.
6.2.3 Options - Retirement. Unless otherwise provided in the
Award Agreement and subject to earlier termination pursuant to or
as contemplated by Section 1.6 or 6.3, if the Participant's
employment by (or specified service to) the Company terminates as
a result of Retirement, the Participant will have until the date
which is twelve (12) months after the Severance Date to exercise
an Option to the extent that it is vested on the Severance Date.
The Option, to the extent not vested on the Severance Date, will
terminate.
6.2.4 Certain SARs. Any SAR granted concurrently or in
tandem with an Option will have the same post-termination
provisions and exercisability periods as the Option to which it
relates, unless the Committee otherwise provides.
6.2.5 Other Awards. The Committee will establish in respect
of each other Award granted hereunder the Participant's rights
and benefits (if any) if the Participant's employment is
terminated and in so doing may make distinctions based upon the
cause of termination and the nature of the Award.
6.2.6 Events Not Deemed a Termination of Employment. Unless
Company policy or the Committee otherwise provides, a
Participant's employment relationship with the Company shall not
be considered terminated solely due to any sick leave, military
leave, or any other leave of absence, authorized by the Company
or the Committee. Any Award held by any Eligible Person on
approved leave of absence shall continue to vest, unless the
Committee or Company otherwise provides in connection with the
Award, the particular leave or by Company policy. In no event
shall an Option be exercised or other Award vest or become
payable after the expiration of its term set forth in the Award
Agreement or the termination of the Award in accordance with
Section 6.3.
6.2.7 Effect of Change of Subsidiary Status. For purposes of
this Plan and any Award hereunder, if an entity ceases to be a
Subsidiary, a termination of employment will be deemed to have
occurred with respect to each Eligible Person in respect of such
Subsidiary who does not continue as an Eligible Person in respect
of another entity within the Company.
6.2.8 Committee Discretion. Notwithstanding the foregoing
provisions of this Section 6.2, in the event of, or in
anticipation of, a termination of employment with the Company for
any reason, other than discharge for cause, the Committee may
increase the portion of the Participant's Award available to the
Participant, or Participant's Beneficiary or Personal
Representative, as the case may be, or, subject to the provisions
of Section 1.6, extend the exercisability period upon such terms
as the Committee determines and expressly sets forth in or by
amendment to the Award Agreement.
6.3 Adjustments; Acceleration.
6.3.1 Adjustments. Subject to Section 6.3.5, upon or in
contemplation of any reclassification, recapitalization, stock
split (including a stock split in the form of a stock dividend)
or reverse stock split; any merger, combination, consolidation or
other reorganization; any split-up, spin-off, or similar
extraordinary dividend distribution ("spin-off") in respect of
the Common Stock (whether in the form of securities or property);
any exchange of Common Stock or other securities of the
Corporation, or any similar, unusual or extraordinary corporate
transaction in respect of the Common Stock; or a sale of all or
substantially all the assets of the Corporation as an entirety
("asset sale"); then the Committee shall, in such manner, to such
extent (if any) and at such time as it deems appropriate and
equitable in the circumstances:
(a) in any of such events, proportionately adjust any or all of
(a) the number and type of shares of Common Stock or the
number and type of other securities that thereafter may be
made the subject of Awards (including the specific maxima
and numbers of shares set forth elsewhere in this Plan),
(b) the number, amount and type of shares of Common Stock
(or other securities or property) subject to any or all
outstanding Awards, (c) the grant, purchase, or exercise
price of any or all outstanding Awards, (d) the securities,
cash or other property deliverable upon exercise of any
outstanding Awards, or (e) the performance standards
applicable to any outstanding Awards, or
(b) in the case of a recapitalization, reclassification, merger,
consolidation, combination, or other reorganization,
spin-off or asset sale, make provision for a cash payment
or for the substitution or exchange of any or all
outstanding Awards or the cash, securities or property
deliverable to the holder of any or all outstanding Awards
based upon the distribution or consideration payable to
holders of the Common Stock upon or in respect of such
event.
In this context, the Committee may not make adjustments
that would disqualify Options as Incentive Stock
Options without the written consent of holders of the
Incentive Stock Options materially adversely affected
thereby.
In any of such events, the Committee may take such
action prior to such event to the extent the Committee
deems the action necessary to permit the Participant to
realize the benefits intended to be conveyed with
respect to the underlying shares in the same manner as
is available to shareholders generally.
6.3.2 Acceleration of Awards Upon Change in Control. Subject
to Section 6.3.5 and unless prior to a Change in Control Event
the Committee determines that, upon its occurrence, benefits
under any or all Awards will not accelerate or determines that
only certain or limited benefits under any or all Awards will be
accelerated and the extent to which they will be accelerated,
and/or establishes a different time in respect of such Change in
Control Event for such acceleration, then upon (or, as may be
necessary to effectuate the purposes of the acceleration,
immediately prior to) the occurrence of a Change in Control
Event:
(a) each Option and Stock Appreciation Right will become
immediately vested and exercisable,
(b) Restricted Stock will immediately vest free of
restrictions, and
(c) each Performance Share Award will become payable to
the Participant.
The Committee may override the limitations on
acceleration in this Section 6.3.2 by express provision
in the Award Agreement and may accord any Eligible
Person a right to refuse any acceleration, whether
pursuant to the Award Agreement or otherwise, in such
circumstances as the Committee may approve. Any
acceleration of Awards shall comply with applicable
legal requirements and, if necessary to accomplish the
purposes of the acceleration or if the circumstances
otherwise require, may be deemed by the Committee to
occur (subject to Sections 6.3.4 through 6.3.6 ) not
greater than 30 days before or only upon the
consummation of the event.
6.3.3 Possible Early Termination of Accelerated Awards. If
any Option or other right to acquire Common Stock under this
Plan is not exercised prior to (a) a dissolution of the
Corporation, (b) an event described in Section 6.3.1 that
the Corporation does not survive, or (c) the consummation of
an event described in Section 6.3.1 involving a Change in
Control Event approved by the Board, the Option or right shall
terminate if the Committee has expressly provided through a
plan of reorganization or otherwise for the substitution,
assumption, exchange or other settlement of the Option or right.
If the exercisability of the Option or right has been timely
accelerated in any of the circumstances in (a) through
(c) above but is not exercised and no provision has been
made for a substitution, assumption, exchange or other
settlement, the Option or other right shall terminate upon the
occurrence of the event.
6.3.4 Possible Rescission of Acceleration. If the vesting or
payment of an Award has been accelerated in anticipation of an
event and the Committee later determines that the event will not
occur, the Committee may rescind the effect of the acceleration
as to any then outstanding and unexercised or otherwise unpaid
Awards.
6.3.5 Pooling Exception. Any discretion with respect to the
events addressed in this Section 6.3, including any acceleration
of vesting or payments, shall be limited to the extent required
by applicable accounting requirements in the case of a
transaction intended to be accounted for as a pooling of
interests transaction.
6.3.6 Golden Parachute Limitations. Unless otherwise
specified in an Award Agreement or otherwise by the Committee in
the specific case, no Award will be accelerated under this Plan
to an extent or in a manner that would not be fully deductible by
the Company for federal income tax purposes because of
Section 280G of the Code, nor will any payment hereunder be
accelerated if any portion of such accelerated payment would not
be deductible by the Company because of Section 280G of the Code.
If a holder would be entitled to benefits or payments hereunder
and under any other plan or program that would constitute
"parachute payments" as defined in Section 280G of the Code, then
the holder may by written notice to the Company designate the
order in which such parachute payments will be reduced or
modified so that the Company is not denied federal income tax
deductions for any "parachute payments" because of Section 280G
of the Code.
6.4 Compliance with Laws. This Plan, the granting and vesting
of Awards under this Plan, the offer, issuance and delivery of
shares of Common Stock, the acceptance of promissory notes and/or
the payment of money under this Plan or under Awards are subject
to compliance with all applicable federal and state laws, rules
and regulations (including but not limited to state and federal
securities laws and federal margin requirements) and to such
approvals by any listing, regulatory or governmental authority as
may, in the opinion of counsel for the Corporation, be necessary
or advisable in connection therewith. In addition, any
securities delivered under this Plan may be subject to any
special restrictions that the Committee may require to preserve a
pooling of interests under generally accepted accounting
principles. The person acquiring any securities under this Plan
will, if requested by the Corporation, provide such assurances
and representations to the Corporation as the Committee may deem
necessary or desirable to assure compliance with all applicable
legal requirements.
6.5 Tax Withholding.
6.5.1 Provision for Tax Withholding Offset. Upon any
exercise, vesting, or payment of any Award or upon the
disposition of shares of Common Stock acquired pursuant to the
exercise of an Incentive Stock Option prior to satisfaction of
the holding period requirements of Section 422 of the Code, the
Company shall have the right at its option to:
(a) require the Participant (or Personal Representative or
Beneficiary, as the case may be) to pay or provide for
payment of the amount of any taxes which the Company
may be required to withhold with respect to such Award
event or payment;
(b) deduct from any amount payable in cash the amount of any
taxes which the Company may be required to withhold with
respect to such cash payment;
(c) reduce the number of shares of Common Stock to be delivered
(or otherwise reacquired) by the appropriate number of
shares of Common Stock, valued at their then Fair Market
Value, to satisfy such withholding obligation.
The Committee may in its sole discretion (subject to
Section 6.4) grant (either at the time of the Award or
thereafter) to the Participant the right to elect,
pursuant to such rules and subject to such conditions
as the Committee may establish, to have the Corporation
utilize the withholding offset under clause (c) above.
6.5.2 Tax Loans. If so provided in the Award Agreement or
otherwise authorized by the Committee, the Corporation may, to
the extent permitted by law, authorize a loan to an Eligible
Person in the amount of any taxes that the Company may be
required to withhold with respect to shares of Common Stock
received (or disposed of, as the case may be) pursuant to a
transaction described in Section 6.5.1. Such a loan will be for
a term not greater than nine months and at a rate of interest and
pursuant to such other terms and conditions as the Corporation,
under applicable law, may establish. Such a loan need not
otherwise comply with the provisions of Section 2.2.3.
6.6 Plan Amendment, Termination and Suspension.
6.6.1 Board Authorization. The Board may, at any time,
terminate or, from time to time, amend, modify or suspend this
Plan, in whole or in part, provided that any amendment increasing
the number of shares authorized under this Plan (except as a
result of a change made in accordance with Section 6.3) or
materially increasing the benefits that may be granted under this
Plan shall be subject to shareholder approval. No Awards may be
granted during any suspension of this Plan or after termination
of this Plan, but the Committee will retain jurisdiction as to
Awards then outstanding in accordance with the terms of this
Plan.
6.6.2 Shareholder Approval. Any amendment to this Plan shall
be subject to shareholder approval only to the extent required
under Section 6.6.1 or then required under Section 422 or 424 of
the Code or any other applicable law, or only to the extent
deemed necessary or advisable by the Board.
6.6.3 Amendments to Awards. Without limiting any other
express authority of the Committee under but subject to the
express limits of this Plan, the Committee by agreement or
resolution (a) may waive conditions of or limitations on Awards
to Eligible Persons that the Committee in the prior exercise of
its discretion has imposed, without the consent of a Participant,
and (b) may make other changes to the terms and conditions of
Awards that do not affect in any manner materially adverse to the
Participant, the Participant's rights and benefits under an
Award; provided that changes contemplated by Section 6.3 or
Section 6.6.5 will not be deemed to constitute changes or
amendments for purposes of this Section 6.6.
6.6.4 Limitations on Amendments to Plan and Awards. No
amendment, suspension or termination of this Plan or change of or
affecting any outstanding Award will, without written consent of
the Participant, affect in any manner materially adverse to the
Participant any rights or benefits of the Participant or
obligations of the Corporation under any Award granted under this
Plan prior to the effective date of such change. Changes
contemplated by Section 6.3 or Section 6.6.5 will not be deemed
to constitute changes or amendments for purposes of this
Section 6.6.
6.6.5 Accounting Changes. Notwithstanding the foregoing
provisions of Section 6.6.3 or Section 6.6.4, if the accounting
treatment under generally accepted accounting principles of any
Awards granted hereunder would be materially more adverse to the
Company than anticipated at the time of approval of this Plan or
the Awards (including, without limitation, if any Award(s) would
render pooling accounting unavailable to the Company with respect
to any transaction that would, in the absence of such Award(s),
be accounted for as a pooling of interests transaction) because
of a change in those principles or the interpretation or
application thereof by the Corporation's independent accountants,
the Committee may, in the exercise of its discretion and without
the consent of the Participant, amend the terms of such Awards to
the extent the Committee deems necessary to eliminate such
effect.
6.7 Privileges of Stock Ownership; Voting Rights on Shares.
Except as otherwise expressly authorized by the Committee or this
Plan, a Participant will not be entitled to any privilege of
stock ownership as to any shares of Common Stock not actually
delivered to and held of record by the Participant. No
adjustment will be made for dividends or other rights as a
shareholder for which a record date is prior to such date of
delivery.
6.8 Effective Date of the Plan. This Plan is effective upon its
approval by the Board (the "Effective Date"), subject to approval
by the shareholders of the Corporation within twelve months after
the date of such Board approval.
6.9 Term of the Plan. Unless earlier terminated by the Board,
this Plan will terminate at the close of business on the day
before the tenth (10th) anniversary of the Effective Date (the
"Termination Date") and no Awards may be granted under this Plan
after that date. Unless otherwise expressly provided in this
Plan or in an applicable Award Agreement, any Award granted prior
to the termination date may extend beyond such date, and all
authority of the Committee with respect to Awards hereunder,
including the authority to amend an Award, will continue during
any suspension of this Plan and in respect of Awards outstanding
on the termination date.
6.10 Governing Law/Construction/Severability.
6.10.1 Choice of Law. This Plan, the Awards, all documents
evidencing Awards and all other related documents will be
governed by, and construed in accordance with, the laws of the
state of Delaware.
6.10.2 Severability. If a court of competent jurisdiction
holds any provision invalid and unenforceable, the remaining
provisions of this Plan will continue in effect provided that the
essential economic terms of this Plan and any Award can still be
enforced.
6.10.3 Plan Construction. This Plan shall be interpreted
consistent with the intentions of the Corporation set forth
below.
(a) Rule 16b-3. It is the intent of the Corporation that
transactions involving the Awards under this Plan, in the
case of Participants who are or may be subject to Section
16 of the Exchange Act, satisfy to the extent feasible the
requirements for applicable exemptions from Section 16(b)
of the Exchange Act so that such persons (unless they
otherwise agree) will be entitled to the benefits of Rule
16b-3 or other exemptive rules under Section 16 of the
Exchange Act in respect of those transactions and will
not be subjected to avoidable liability thereunder.
(b) Section 162(m). It is the further intent of the Company
that Options or SARs with an exercise or base price not
less than Fair Market Value on the date of grant and
Performance-Based Awards under Section 5.2 of this Plan
that are granted to or held by a person subject to Section
162(m) will qualify as performance-based compensation under
Section 162(m) to the extent that the Committee authorizing
the Award (or the payment thereof, as the case may be)
satisfies the administrative requirements thereof.
6.11 Captions. Captions and headings are given to the sections
and subsections of this Plan solely as a convenience to
facilitate reference. Such headings will not be deemed in any
way material or relevant to the construction or interpretation of
this Plan or any provision thereof.
6.12 Non-Exclusivity of Plan. Nothing in this Plan will limit or
be deemed to limit the authority of the Board or the Committee to
grant awards or authorize any other compensation, with or without
reference to the Common Stock, under any other plan or authority
6.13 No Restriction on Corporate Powers. The existence of this
Plan and the Awards granted hereunder shall not affect or
restrict in any way the right or power of the Board or the
shareholders of the Corporation to make or authorize any
adjustment, recapitalization, reorganization or other change in
the Corporation's capital structure or its business, any merger
or consolidation of the Corporation, any issue of bonds,
debentures, preferred or prior preference stocks ahead of or
affecting the Corporation's capital stock or the rights thereof,
the dissolution or liquidation of the Corporation or any sale or
transfer of all or any part of its assets or business, or any
other corporate act or proceeding.
6.14 Effect on Other Benefits. Payments and other benefits
received by a Participant under an Award made pursuant to this
Plan shall not be deemed a part of a Participant's regular,
recurring compensation for purposes of the termination, indemnity
or severance pay law of any country or state and shall not be
included in, nor have any effect on, the determination of
benefits under any other employee benefit plan or similar
arrangement provided by the Corporation or a Subsidiary, unless
expressly so provided by such other plan or arrangements. Awards
under this Plan may be made in combination with or in tandem
with, or as alternatives to, grants, awards or payments under any
other Corporation or Subsidiary plan.
7. Definitions.
"Award" means an award of any Option, Stock Appreciation Right,
Restricted Stock, Stock Bonus, performance share award, dividend
equivalent or deferred payment right or other right or security
that would constitute a "derivative security" under Rule 16a-1(c)
of the Exchange Act, or any combination thereof, whether
alternative or cumulative, authorized by and granted under this
Plan.
"Award Agreement" means any writing setting forth the terms of an
Award that has been authorized by the Committee.
"Award Date" means the date upon which the Committee took the
action granting an Award or such later date as the Committee
designates as the Award Date at the time of the grant of the
Award.
"Beneficiary" means the person, persons, trust or trusts
designated by a Participant, or, in the absence of a designation,
entitled by will or the laws of descent and distribution, to
receive the benefits specified in the Award Agreement and under
this Plan if the Participant dies, and means the Participant's
executor or administrator if no other Beneficiary is designated
and able to act under the circumstances.
"Board" means the Board of Directors of the Corporation.
"Change in Control Event" means any of the following:
(a) Approval by the shareholders of the Corporation of the
dissolution or liquidation of the Corporation;
(b) Consummation of a merger, consolidation, or other
reorganization, with or into, or the sale of all or
substantially all of the Corporation's business and/or
assets as an entirety to, one or more entities that are not
Subsidiaries or other affiliates (a "Business Combination"),
unless (A) as a result of the Business Combination at least
50% of the outstanding voting securities voting generally in
the election of directors of the surviving or resulting entity
or a parent thereof (the "Successor Entity") immediately after
the reorganization are, or will be, owned, directly or
indirectly, by shareholders of the Corporation immediately
before the Business Combination; and (B) no Person
(excluding the Successor Entity or an Excluded Person)
beneficially owns (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, more than 50% of the outstanding
shares of the combined voting power of the outstanding voting
securities of the Successor Entity, after giving effect to the
Business Combination, except to the extent that such ownership
existed prior to the Business Combination; and (C) at least a
majority of the members of the board of directors of the entity
resulting from the Business Combination were members of the Board
at the time of the execution of the initial agreement, or of the
action of the Board, providing for the Business Combination;
(c) Any Person other than an Excluded Person becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Corporation
representing more than 50% of the combined voting power of the
Corporation's then outstanding securities entitled to then vote
generally in the election of directors of the Corporation, other
than as a result of an acquisition directly from the Company; or
(d) During any period not longer than two consecutive years,
individuals who at the beginning of such period constituted the
Board cease to constitute at least a majority thereof, unless the
election, or the nomination for election by the Corporation's
shareholders, of each new Board member was approved by a vote of
at least three-fourths of the Board members then still in office
who were Board members at the beginning of such period (including
for these purposes, new members whose election or nomination was
so approved), but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a person
other than the Board.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time.
"Commission" means the Securities and Exchange Commission.
"Committee" means the Board or any one or more committees of
director(s) appointed by the Board to administer this Plan with
respect to the Awards within the scope of authority delegated by
the Board. At least one committee will be comprised only of two
or more directors, each of whom, in respect of any decision
involving both (a) a Participant affected by the decision who is
or may be subject to Section 162(m), and (b) compensation
intended as performance-based compensation within the meaning of
Section 162(m), will be Disinterested; in acting on any
transaction with or for the benefit of a Section 16 Person, the
participating members of such Committee also shall be Non-
Employee Directors within the meaning of Rule 16b-3.
"Common Stock" means the Common Stock of the Corporation and such
other securities or property as may become the subject of Awards,
or become subject to Awards, pursuant to an adjustment made under
Section 6.3 of this Plan.
"Company" means, collectively, the Corporation and its
Subsidiaries.
"Corporation" means ARV Assisted Living, Inc., a Delaware
corporation, and its successors.
"Disinterested" means a director who is an "outside director"
within the meaning of Section 162(m) and any applicable legal or
regulatory requirements.
"Eligible Employee" means an officer (whether or not a director)
or employee of the Company.
"Eligible Person" means an Eligible Employee, or any Other
Eligible Person, as determined by the Committee.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
"Excluded Person" means (a) any person described in and
satisfying the conditions of Rule 13d-1(b)(1) under the Exchange
Act, (b) any person who is the beneficial owner (as defined in
Rule 13d-3 under the Exchange Act) of more than 25% of the
outstanding shares of Common Stock on the Effective Date of this
Plan (or any affiliate, successor or related party of or to any
such person), (c) the Company, or (d) an employee benefit plan
(or related trust) sponsored or maintained by the Company or a
Successor Entity.
"Fair Market Value" on any date means
(a) if the stock is listed or admitted to trade on a national
securities exchange, the closing price of the stock on the
Composite Tape, as published in the Western Edition of The Wall
Street Journal, of the principal national securities exchange on
which the stock is so listed or admitted to trade, on such date,
or, if there is no trading of the stock on such date, then the
closing price of the stock as quoted on such Composite Tape on
the next preceding date on which there was trading in such
shares;
(b) if the stock is not listed or admitted to trade on a
national securities exchange, the last/closing price for the
stock on such date, as furnished by the National Association
of Securities Dealers, Inc. ("NASD") through the NASDAQ National
Market Reporting System or a similar organization if the NASD is
no longer reporting such information;
(c) if the stock is not listed or admitted to trade on a
national securities exchange and is not reported on the National
Market Reporting System, the mean between the bid and asked price
for the stock on such date, as furnished by the NASD or a similar
organization; or
(d) if the stock is not listed or admitted to trade on a
national securities exchange, is not reported on the National
Market Reporting System and if bid and asked prices for the stock
are not furnished by the NASD or a similar organization, the
value as established by the Committee at such time for purposes
of this Plan.
Any determination as to fair market value made pursuant to
this Plan shall be determined without regard to any
restriction other than a restriction which, by its terms,
will never lapse, and shall be conclusive and binding on all
persons.
"Incentive Stock Option" means an Option that is designated and
intended as an incentive stock option within the meaning of
Section 422 of the Code, the award of which contains such
provisions (including but not limited to the receipt of
shareholder approval of this Plan, if the award is made prior to
such approval) and is made under such circumstances and to such
persons as may be necessary to comply with that section.
"1995 Plan" means The 1995 Stock Option and Incentive Plan of ARV
Assisted Living, Inc.
"Nonqualified Stock Option" means an Option that is designated as
a Nonqualified Stock Option (an Option not qualified as an
incentive stock option under Section 422 of the Code) and will
include any Option intended as an Incentive Stock Option that
fails to meet the applicable legal requirements thereof. Any
Option granted hereunder that is not designated as an incentive
stock option will be deemed to be designated a nonqualified stock
option under this Plan and not an incentive stock option under
the Code.
"Non-Employee Director" means a member of the Board who is not an
officer or employee of the Company.
"Option" means an option to purchase shares of Common Stock
granted under this Plan. The Committee will designate any Option
granted to an employee of the Company as a Nonqualified Stock
Option or an Incentive Stock Option.
"Other Eligible Person" means any individual consultant or
advisor or agent who renders or has rendered bona fide services
(other than services in connection with the offering or sale of
securities of the Company in a capital raising transaction) to
the Company or any Non-Employee Director, and who (to the extent
provided in the next sentence) is selected to participate in this
Plan by the Committee. A person who is neither an employee or
officer of the Company, nor a Non-Employee Director, who provides
bona fide services to the Company may be selected as an Other
Eligible Person only if such person's participation in this Plan
would not adversely affect (a) the Corporation's eligibility to
use Form S-8 to register under the Securities Act the offering of
shares issuable under this Plan by the Corporation, or (b) the
Corporation's compliance with any other applicable laws.
"Participant" means an Eligible Person who has been granted an
Award under this Plan and a Non-Employee Director who has
received an Option under Section 8 of this Plan.
"Performance Share Award" means an Award of a right to receive
shares of Common Stock under Section 5.1, or to receive shares of
Common Stock or other compensation (including cash) under
Section 5.2, the issuance or payment of which is contingent upon,
among other conditions, the attainment of performance objectives
specified by the Committee.
"Person" has the meaning given to such term for purposes of
Sections 13(d) and 14(d) of the Exchange Act.
"Personal Representative" means the person or persons who, upon
the disability or incompetence of a Participant, has acquired on
behalf of the Participant, by legal proceeding or otherwise, the
power to exercise the rights or receive benefits under this Plan
by virtue of having become the legal representative of the
Participant.
"Plan" means The 1999 Stock Option and Incentive Plan of ARV
Assisted Living, Inc., as set forth herein and as it may
hereafter be amended from time to time.
"Restricted Shares" or "Restricted Stock" means shares of Common
Stock awarded to a Participant under this Plan, subject to
payment of such consideration, if any, and such conditions on
vesting (which may include, among others, the passage of time,
specified performance objectives or other factors) and such
transfer and other restrictions as are established in or pursuant
to this Plan and the related Award Agreement, for so long as such
shares remain unvested under the terms of the applicable Award
Agreement.
"Retirement" means retirement from active service as an employee
or officer of the Company on or after attaining (a) age 60 with
ten or more years of employment with the Company, or (b) age 65.
"Rule 16b-3" means Rule 16b-3 as promulgated by the Commission
pursuant to the Exchange Act, as amended from time to time.
"Section 162(m)" means Section 162(m) of the Code and the
regulations promulgated thereunder.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Stock Appreciation Right" or "SAR" means a right authorized
under this Plan to receive a number of shares of Common Stock or
an amount of cash, or a combination of shares and cash, the
aggregate amount or value of which is determined by reference to
a change in the Fair Market Value of the Common Stock.
"Stock Bonus" means an Award of shares of Common Stock granted
under this Plan for no consideration other than past services and
without restriction other than such transfer or other
restrictions as the Committee may deem advisable to assure
compliance with law.
"Subsidiary" means any corporation or other entity a majority of
whose outstanding voting stock or voting power is beneficially
owned directly or indirectly by the Corporation.
"Total Disability" means a "total and permanent disability"
within the meaning of Section 22(e)(3) of the Code and, with
respect to Awards other than Incentive Stock Options, such other
disabilities, infirmities, afflictions, or conditions as the
Committee may include.
8. Non-Employee Director Options.
8.1 Participation. Awards under this Section 8 shall be made
only to Non-Employee Directors and shall be evidenced by Award
Agreements substantially in the form of Exhibit A hereto.
Notwithstanding anything else herein to the contrary, Options
shall be granted under Section 8.2 only during the term of this
Plan.
8.2 Annual Options Grants.
8.2.1 New Non-Employee Directors.
(a) On or after the date of approval of this Plan by the
shareholders of the Corporation, if any person who is
not then an officer or employee of the Company becomes a
member of the Board, such person will automatically be
granted (without any action by the Board or Committee) a
Nonqualified Stock Option (the Award Date of which shall be
the date such person takes office) to purchase 10,000 shares
of Common Stock.
(b) With respect to Non-employee Directors who receive an Option
grant pursuant to Section 8.2.1(a) of this Plan, in the
fourth year following the year in which the Non-Employee
Director received his or her Option grant under Section
8.2.1(a) and thereafter, in each fourth year following the
year in which the Non-Employee Director was last granted an
Option under this Section 8.2.1(b), immediately following
the annual shareholders meeting in such fourth year there
shall be granted automatically (without any action by the
Board or Committee) a Nonqualified Stock Option (the Award
Date of which shall be the date of such annual shareholders
meeting) to the Non-Employee Director to purchase 10,000
shares of Common Stock; provided that the director continues
in office as a Non-Employee Director after such meeting.
8.2.2 Non-Employee Directors under 1995 Plan. With respect
to Non-Employee Directors in office prior to the date of approval
of this Plan by the Corporation's shareholders, in the fourth
year following the year of the Non-Employee Director's last
10,000 share option grant under The 1995 Stock Option and
Incentive Plan of ARV Assisted Living, Inc. (the "1995 Plan"),
and thereafter in each fourth year following the year in which
the Non-Employee Director was last granted an Option under this
Section 8.2.2, immediately following the annual shareholders
meeting in such fourth year there shall be granted automatically
(without any action by the Board or Committee) a Nonqualified
Stock Option (the Award Date of which shall be the date of such
annual shareholders meeting) to the Non-Employee Director to
purchase 10,000 shares of Common Stock; provided that the
director continues in office as a Non-Employee Director after
such meeting.
8.2.3 Maximum Number of Shares. Grants under Section 8.2.1
or 8.2.2 that would otherwise exceed the maximum number of
shares under Section 1.4.1 shall be prorated within such
limitation. A Non-Employee Director shall not receive more
than one Nonqualified Stock Option under this Section 8.2 every
four calendar years. No Non-Employee Director shall be eligible
to receive Options under both Section 8.2.1 and 8.2.2.
8.3 Option Price. The purchase price per share of Common Stock
covered by each Option granted pursuant to Section 8.2 will be
100% of the Fair Market Value of the Common Stock on the Award
Date. The exercise price of any Option granted under Section 8.2
will be paid in full at the time of each purchase (a) in cash or
by check, or (b) in shares of Common Stock valued at their Fair
Market Value on the date of exercise of the Option, or (c) partly
in such shares and partly in cash; provided that any shares used
in payment that were initially acquired upon exercise of an
Option or otherwise from the Corporation must have been owned by
the Participant for at least six months prior to the date of
delivery.
8.4 Option Period and Exercisability. Each Option granted under
Section 8.2 and all rights or obligations thereunder shall expire
on the day before the tenth (10th) anniversary of the applicable
Award Date and shall be subject to earlier termination as
provided below or in Section 8.6. Each Option granted under
Section 8.2 shall become vested in four equal installments, with
an installment becoming vested on each of the first, second,
third, and fourth, respectively, anniversaries of the applicable
Award Date, or, if earlier with respect to a particular
installment, on the day before the annual meeting of the
Corporation's shareholders for the calendar year in which such
installment would have otherwise vested.
8.5 Termination of Directorship. If a Non-Employee Director's
services as a member of the Board terminate for any reason
including, but not limited to, the Non-Employee Director's death
or Total Disability, such termination shall have the following
effect on an Option granted under Section 8.2: (a) the Option to
the extent not vested shall terminate on the date of such
termination, and (b) the Option, to the extent vested on the date
of such termination, shall remain exercisable for one (1) year
after the date of such termination or until the expiration of the
stated term of the Option, whichever first occurs.
8.6 Adjustment; Accelerations; Terminations. Options granted
under section 8.2 will be subject to adjustments, accelerations
and terminations as provided in Section 6.3, but only to the
extent that in the case of a Change in Control Event such effect
and any Board or Committee action in respect thereof is effected
pursuant to the terms of a reorganization agreement approved by
shareholders of the Corporation or is otherwise consistent with
the effect on Options held by persons other than executive
officers or directors of the Corporation (or, if there are none,
consistent in respect of the underlying shares with the effect on
shareholders generally).
8.7 Acceleration Upon a Change in Control Event. Upon the
occurrence of a Change in Control Event and acceleration of
Options generally (to the extent Options other than those granted
under Section 8.2 are outstanding at that time) under Section
6.3.2, each Option granted under Section 8.2 will become
immediately vested and exercisable.
8.8 Amendment to Outstanding Awards. Options granted under
Section 8.2 may be amended by the Board in any manner permitted
under this Plan in respect of Options granted to Eligible Persons
generally.
<PAGE>
Exhibit 5
OPINION OF COUNSEL
April 5, 2000
ARV Assisted Living, Inc.
245 Fischer Avenue
Suite D-1
Costa Mesa, California 92626
Re: Registration on Form S-8 of ARV Assisted Living, Inc.
(the "Company")
Gentlemen:
At your request, I have examined the Registration Statement
on Form S-8 to be filed with the Securities and Exchange
Commission in connection with the registration under the
Securities Act of 1933, as amended, of 2,400,000 shares of Common
Stock of the Company (the "Common Stock"), and additional rights
pursuant to the Company's Rights Agreement dated as of May 14,
1998, as amended, with ChaseMellon Shareholder Services, as
rights agent (together with the Common Stock, the "Shares"),
to be issued pursuant to the 1999 Stock Option and Incentive
Plan of ARV Assisted Living, Inc. (the "Plan"). I have examined
the proceedings heretofore taken and to be taken in connection
with the authorization of the Plan and the Shares to be issued
pursuant to and in accordance with the Plan.
Based upon such examination and upon such matters of fact
and law as I have deemed relevant, I am of the opinion that the
Shares have been duly authorized by all necessary corporate
action on the part of the Company and, when issued in accordance
with such authorization, the provisions of the Plan and relevant
agreements duly authorized by and in accordance with the terms of
the Plan, the Shares will be validly issued, and the Common Stock
will be fully paid and nonassessable.
I consent to the use of this opinion as an exhibit to the
Registration Statement.
Respectfully submitted,
/s/ Bernard Wheeler-Medley
Bernard Wheeler-Medley
Vice President & Associate
General Counsel
<PAGE>
Exhibit 23.1
Consent of Independent Auditors
The Board of Directors
ARV Assisted Living, Inc.:
We consent to the incorporation by reference in the registration
statement dated April 6, 2000, on Form S-8 of ARV Assisted Living,
Inc. of our report dated March 2, 2000, relating to the consolidated
balance sheets of ARV Assisted Living, Inc. and subsidiaries as of
December 31, 1999 and 1998, and the related consolidated statements
of operations, stockholders' equity, and cash flows for each of
the years in the two-year period ended December 31, 1999, and
the nine-month period ended December 31, 1997, and the related
financial statement schedule, which report appears in the
December 31, 1999, annual report on Form 10-K of ARV Assisted
Living, Inc.
KPMG LLP
Orange County, California
March 30, 2000
