pre14a
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
SCHEDULE 14A
Proxy Statement Pursuant to
Section 14(a) of the Securities
Exchange Act of 1934 (Amendment
No. )
Filed by the
Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
þ Preliminary
Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
o Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to
§240.14a-12
BioScrip, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
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þ
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No fee required.
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o
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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o
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Fee paid previously with preliminary materials.
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o |
Check box if any part of the fee is offset as provided by
Exchange Act
Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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TABLE OF CONTENTS
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on Thursday,
June 3, 2010
To the Stockholders of BioScrip, Inc.:
Notice is hereby given that the 2010 Annual Meeting of
Stockholders (the Annual Meeting) of BioScrip, Inc.,
a Delaware corporation (the Company), will be held
at the Sheraton Tarrytown Hotel, 600 White Plains Road,
Tarrytown, New York 10591 on Thursday, June 3, 2010 at
9:00 a.m., local time, for the following purposes:
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1.
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To elect ten directors to the Board of Directors of the Company,
each to hold office for a term of one year or until their
respective successors shall have been duly elected and shall
have qualified.
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2.
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To approve an amendment to the Companys Amended and
Restated Certificate of Incorporation to increase the number of
shares of common stock that the Company is authorized to issue
from 75 million shares to 125 million shares.
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3.
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To approve an amendment to the Companys 2008 Equity
Incentive Plan to increase the number of authorized shares of
common stock available for issuance under the 2008 Equity
Incentive Plan by 5,700,000, from 3,580,000 shares to
9,280,000 shares.
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4.
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To ratify the appointment of Ernst & Young LLP as the
Companys independent auditors for the year ending
December 31, 2010.
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5.
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To transact such other business as may properly come before the
Annual Meeting or any adjournments or postponements thereof.
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The foregoing items of business, including information regarding
the Companys current directors and those persons nominated
for election as directors of the Company, are more fully
described in the Proxy Statement which is attached to and made a
part of this notice.
The Board of Directors has fixed the close of business on
April 19, 2010 as the record date for determining
stockholders of the Company entitled to notice of and to vote at
the Annual Meeting and any adjournments or postponements thereof.
All stockholders are cordially invited to attend the Annual
Meeting in person. However, whether or not you plan to attend
the Annual Meeting in person, please mark, sign, date and
mail the enclosed proxy card as promptly as possible in the
enclosed postage-prepaid envelope to ensure your representation
and the presence of a quorum at the Annual Meeting.
Alternatively, you may vote by toll-free telephone call or
electronically via the Internet by following the instructions on
the enclosed proxy card. If you send in your proxy card or vote
by telephone or via the Internet and then decide to attend the
Annual Meeting to vote your shares in person, you may still do
so. Your proxy is revocable as set forth in the Proxy Statement.
By order of the Board of Directors,
Barry A. Posner,
Executive Vice President, Secretary
and General Counsel
Elmsford, New York
May [ ], 2010
Important notice regarding availability of proxy materials
for the Annual Meeting of Stockholders to be held on
June 3, 2010: This Proxy Statement, Proxy Card and the
Companys Annual Report on
Form 10-K
for the year ended December 31, 2009 are also available for
viewing on the Companys website located at
www.bioscrip.com.
BIOSCRIP, INC.
100 Clearbrook Road
Elmsford, New York 10523
(914) 460 -1600
PROXY
STATEMENT
Meeting
Time and Date
This Proxy Statement is being furnished to the stockholders of
BioScrip, Inc., a Delaware corporation (BioScrip or
the Company), in connection with the solicitation by
the Board of Directors of the Company (the Board or
the Board of Directors) of proxies in the enclosed
form for use in voting at the Companys 2010 Annual Meeting
of Stockholders (the Annual Meeting) to be held on
Thursday, June 3, 2010 at 9:00 a.m., local time, at
the Sheraton Tarrytown Hotel, 600 White Plains Road, Tarrytown,
New York 10591 and at any adjournments or postponements thereof.
The shares of BioScrips common stock, par value $.0001 per
share (the Common Stock), represented by the proxies
received, properly marked, dated, executed and not revoked will
be voted at the Annual Meeting.
These proxy solicitation materials are being mailed to
stockholders on or about May [ ], 2010.
Instead of submitting your proxy with the paper proxy card, you
may vote by telephone or electronically via the Internet. If you
vote by telephone or via the Internet it is not necessary to
return your proxy card. Please note that there are separate
telephone and Internet voting arrangements depending upon
whether your shares of Common Stock are registered in your name
or in the name of a broker or bank. You should follow the
instructions on the proxy card you receive.
Record
Date and Shares Outstanding
The close of business on April 19, 2010 has been fixed by
the Board of Directors as the record date (the Record
Date) for determining stockholders of the Company entitled
to notice of and to vote at the Annual Meeting. The only
outstanding voting securities of the Company are shares of
Common Stock. As of the close of business on the Record Date,
the Company had 53,844,956 shares of Common Stock issued
and outstanding and held of record by approximately 290 holders
(in addition to approximately 7,084 stockholders whose shares
were held in nominee name).
Voting
and Solicitation
Each stockholder entitled to vote at the Annual Meeting may cast
one vote in person or by proxy for each share of Common Stock
held by such stockholder. To vote in person, a stockholder
should attend the Annual Meeting with a completed proxy or,
alternatively, the Company will give you a ballot to complete
upon arrival at the Annual Meeting. To vote by mail using a
proxy card, a stockholder should mark, sign, date and mail the
enclosed proxy card as promptly as possible in the enclosed
postage-prepaid envelope. To vote by telephone, dial toll-free
(800) 776-9437
using a touch-tone phone and follow the recorded instructions.
To vote via the Internet, go to
http://www.voteproxy.com
and complete an electronic proxy card. When voting by
telephone or via the Internet, a stockholder will be asked to
provide the company number and account number contained on the
enclosed proxy card.
If on the Record Date a stockholders shares of Common
Stock were held in an account at a brokerage firm, bank, dealer,
or other similar organization, then that stockholder is
considered the beneficial owner of shares held in street
name and these proxy materials are being forwarded by that
organization, which is considered the stockholder of record for
purposes of voting at the Annual Meeting. A stockholder who is a
beneficial owner has the right to direct his or her broker or
other agent on how to vote the shares of Common Stock in his or
her account. Beneficial owners of the Companys Common
Stock are also invited to attend the Annual Meeting. However,
since a beneficial owner is not the stockholder of record, he or
she may not vote in
person at the Annual Meeting unless he or she requests and
obtains a valid proxy from his or her broker or other agent.
Votes cast by proxy or in person at the Annual Meeting will be
tabulated by the Inspector of Election at the Annual Meeting.
The Inspector of Election will also determine whether or not a
quorum is present. The holders of a majority of the shares of
Common Stock issued and outstanding as of the Record Date are
required to be present at the Annual Meeting, either in person
or by proxy, in order to constitute a quorum. Shares of Common
Stock represented at the Annual Meeting in person or by proxy
but not voted will be counted for purposes of determining a
quorum. Accordingly, abstentions and broker
non-votes (shares as to which a broker or nominee
has indicated that it does not have discretionary authority to
vote) on a particular matter, including the election of
directors, will be treated as shares that are present and
entitled to vote at the Annual Meeting for purposes of
determining the presence of a quorum.
Certain matters submitted to a vote of stockholders are
considered to be routine items upon which brokerage
firms may vote in their discretion on behalf of their customers
if such customers have not furnished voting instructions within
a specified period of time prior to the Annual Meeting. On those
matters determined to be non-routine, brokerage
firms that have not received instructions from their customers
would not have discretion to vote. Proposals 1, 2 and 3 are
non-routine matters. Accordingly, if your broker
holds shares that you own in street name, the broker
may not vote your shares on either Proposal 1, 2 or 3
without receiving instructions from you. The broker may vote
your shares on Proposal 4 even if the broker does not
receive instructions from you. In the election of directors, the
ten nominees who receive the greatest number of affirmative
votes will be elected to the Board of Directors. In order to
approve the proposal to amend the Companys Certificate of
Incorporation, the proposal to increase the number of shares
available for grant under the Companys 2008 Equity
Incentive Plan and the proposal to ratify the appointment of
Ernst & Young LLP, the yes votes cast in
favor of each proposal must exceed the no votes cast
against the proposal. If you do not vote in person or vote via
the Internet or by telephone, or sign and return a proxy, your
shares will not be counted as yes votes or
no votes on any proposal to be voted on. Similarly,
an abstention or broker non-vote will not affect the outcome of
the vote on any of the proposals to be acted upon at the Annual
Meeting.
Proxies in the accompanying form that are properly executed,
duly returned to the Company and not revoked, or proxies that
are submitted by telephone or via the Internet and not revoked,
will be voted in accordance with the instructions contained
therein. In the absence of specific instructions with respect to
any or all of the proposals to be acted upon, proxies will be
voted for the election of all of the nominees for director named
in this Proxy Statement and in favor of Proposal 2. No
proposal is currently expected to be considered at the Annual
Meeting other than the proposals set forth in the accompanying
Notice of Annual Meeting. If any other proposals are properly
brought before the Annual Meeting for action it is intended that
the persons named in the proxy and acting thereunder will vote
in accordance with their discretion on such proposals.
The presence of a stockholder at the Annual Meeting will not
revoke such stockholders proxy. However, a proxy may be
revoked at any time before it is voted by delivering to the
Secretary of the Company (at the principal executive offices of
the Company) a written notice of revocation, by executing and
delivering a later dated proxy or by attending the Annual
Meeting and voting in person. Stockholders voting by telephone
or via the Internet may also revoke their proxy by attending the
Annual Meeting and voting in person, by submitting the proxy in
accordance with the instructions thereon or by voting again, at
a later time, by telephone or via the Internet (a
stockholders latest telephone or Internet vote, as
applicable, will be counted and all earlier votes will be
disregarded). However, once voting on a particular proposal is
completed at the Annual Meeting, a stockholder will not be able
to revoke his or her proxy or change his or her vote as to any
proposal or proposals on which voting has been completed.
The solicitation of proxies will be conducted by mail and the
Company will bear all associated costs of the solicitation
process. These costs include the expenses of preparing and
mailing proxy solicitation materials for the Annual Meeting and
reimbursements paid to brokerage firms and others for their
expenses incurred in forwarding such materials to beneficial
owners of shares of Common Stock. The Company may conduct
further solicitations personally, telephonically or by facsimile
through its officers, directors and employees,
2
none of whom will receive additional compensation for assisting
with any such solicitations. Also, the Company has engaged the
services of MacKenzie Partners, Inc., a proxy solicitation firm,
to assist in the solicitation of proxies. The fees to be paid by
the Company for these services will be $7,500, plus
reimbursement of expenses.
Adjournments
and Postponements
Adjournments or postponements of the Annual Meeting may be made
for the purpose of, among other things, soliciting additional
proxies. Any adjournment or postponement may be made from time
to time by approval of the holders of a majority of the shares
of Common Stock present in person or by proxy at the Annual
Meeting (whether or not a quorum exists) without further notice
other than by an announcement made at the Annual Meeting. The
Company does not currently intend to seek an adjournment or
postponement of the Annual Meeting, but no assurance can be
given that one will not be sought.
3
COMMON
STOCK OWNERSHIP BY CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 19, 2010,
certain information concerning the beneficial shareholdings of
(i) each person who is a director of the Company and each
director nominee; (ii) each of the Companys executive
officers named in the Summary Compensation Table set forth
below; (iii) all directors and executive officers of the
Company as a group; and (iv) each person who is known by
the Company to beneficially own more than five percent of the
Companys Common Stock (based on 53,844,956 shares of
common stock outstanding as of April 19, 2010). Each of the
persons named below has sole voting power and sole investment
power with respect to the shares set forth opposite his or her
name, except as otherwise noted.
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Name and Address
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Number of Shares
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of Beneficial Owner(1)
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Beneficially Owned(2)(3)
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Percent of Class(3)
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Kohlberg Management V, L.L.C.
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15,753,153
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(4)
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27.71
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%
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111 Radio Circle Mt. Kisco,
New York 10549
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FMR LLC
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4,697,773
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(5)
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8.72
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%
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82 Devonshire Street
Milwaukee, WI
53202-3508
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Heartland Advisors, Inc.
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3,076,857
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(6)
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5.71
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%
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789 North Water Street
Milwaukee, WI
53202-3508
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Richard H. Friedman
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2,499,444
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(7)
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4.52
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%
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Richard M. Smith
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155,000
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(8)
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*
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Barry A. Posner
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434,597
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(9)
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*
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Stanley G. Rosenbaum
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434,938
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(10)
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*
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Scott W. Friedman
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218,944
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(11)
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*
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Charlotte W. Collins
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48,800
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(12)
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*
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Louis T. DiFazio
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41,000
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(13)
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*
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Samuel P. Frieder
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*
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Myron Z. Holubiak
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66,100
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(14)
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*
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David R. Hubers
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181,700
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(15)
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*
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Richard L. Robbins
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88,500
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(16)
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*
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Stuart A. Samuels
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108,700
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(17)
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*
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Gordon H. Woodward
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*
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All Directors and Executive Officers as a group (23 persons)
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5,050,803
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(18)
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8.85
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%
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* |
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Percentage less than 1% of class. |
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(1) |
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Except as otherwise indicated, all addresses are
c/o BioScrip,
Inc., 100 Clearbrook Road, Elmsford, NY 10523. |
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(2) |
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The inclusion in this table of any shares of Common Stock as
beneficially owned does not constitute an admission of
beneficial ownership of those shares. Except as otherwise
indicated, each person has sole voting power and sole investment
power with respect to all such shares beneficially owned by such
person. |
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(3) |
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Shares deemed beneficially owned by virtue of the right of an
individual to acquire them within 60 days after
April 19, 2010 upon the exercise of an option to purchase
shares of Common Stock are treated as outstanding for purposes
of determining beneficial ownership and the percentage
beneficially owned by such individual. |
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(4) |
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Based on information contained in Schedule 13D filed with
the Securities and Exchange Commission (the
Commission) on April 2, 2010 on behalf of the
following: (i) Kohlberg Management V, L.L.C., a
Delaware limited liability company (Fund V),
(ii) Kohlberg Investors V, L.P., a Delaware limited
partnership (Investors), (iii) Kohlberg
Partners V, L.P., a Delaware limited partnership
(Partners), (iv) Kohlberg Offshore |
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Investors V, L.P., a Delaware limited partnership
(Offshore), (v) Kohlberg TE Investors V,
L.P., a Delaware limited partnership (TE), and
(vi) KOCO Investors V, L.P., a Delaware limited
partnership (KOCO and collectively with Investors,
Partners, Offshore and TE, the Funds). Fund V
is the general partner of the Funds. Includes warrants to
acquire up to an aggregate of 3,004,887 shares of the
Companys common stock and 2,696,516 shares of common
stock held in escrow to satisfy the indemnification obligations
of the Funds in connection with the acquisition of Critical
Homecare Solutions Holdings, Inc. (CHS) by the
Company in March 2010. |
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Based on information contained in Schedule 13G filed with
the Commission on April 12, 2010 by FMR LLC, referred to
herein as FMR. FMR advises that it is a parent holding company.
FMRs wholly owned subsidiary, Fidelity
Management & Research Company, an investment adviser
registered with the Commission, is the beneficial owner of
2,302,800 shares of BioScrip common stock. FMRs
indirect wholly owned subsidiary, Pyramis Global Advisors, LLC,
an investment adviser registered with the Commission, is the
beneficial owner of 26,810 shares of BioScrip common stock.
FMRs indirect wholly owned subsidiary, Pyramis Global
Advisors Trust Company, a bank, is the beneficial owner of
2,087,163 shares of BioScrip common stock. FIL Limited,
which we refer to as FIL, is a qualified institution and is the
beneficial owner of 281,500 shares of BioScrip common
stock. FMR and FIL are of the view that they are not acting as a
group for purposes of Section 13(d) under the
Exchange Act. FMR filed the Schedule 13G with the
Commission on a voluntary basis as if all of the shares were
beneficially owned by it and FIL on a joint basis. |
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Based on information contained in Schedule 13G filed with
the Commission on April 9, 2010 by Heartland Advisors,
Inc., referred to herein as Heartland. Heartland
advises that it is an investment advisor registered with the
Commission. Heartland, by virtue of its investment discretion
and voting authority granted by certain clients, which may be
revoked at any time; and William J. Nasgovitz, President and
principal shareholder of Heartland, share dispositive and voting
power with respect to the shares held by Heartlands
clients and managed by Heartland. Heartland and
Mr. Nasgovitz each specifically disclaim beneficial
ownership of these shares and disclaim the existence of a group. |
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Includes 1,483,365 shares issuable upon exercise of the
vested portion of options held by Mr. Friedman. Excludes
137,500 shares subject to the unvested portion of options
held by Mr. Friedman. Includes 250,000 shares of
Common Stock owned by the Richard H. Friedman Grantor Retained
Annuity Trust. Mr. Friedman is a trustee of the trust. |
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(8) |
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Includes 35,000 shares issuable upon exercise of the vested
portion of options held by Mr. Smith. Excludes
70,000 shares subject to the unvested portion of options
held by Mr. Smith. |
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(9) |
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Includes 384,471 shares issuable upon exercise of the
vested portion of options held by Mr. Posner. Excludes
83,541 shares subject to the unvested portion of options
held by Mr. Posner. |
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(10) |
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Includes 250,181 shares issuable upon exercise of the
vested portion of options held by Mr. Rosenbaum. Excludes
90,103 shares subject to the unvested portion of options
held by Mr. Rosenbaum. |
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(11) |
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Includes 188,675 shares issuable upon exercise of the
vested portion of options held by Mr. Friedman. Excludes
72,083 shares subject to the unvested portion of options held by
Mr. Friedman. |
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(12) |
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Includes 35,000 shares issuable upon exercise of the vested
portion of options to purchase Common Stock held by
Ms. Collins. |
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(13) |
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Includes 25,000 shares issuable upon exercise of the vested
portion of options held by Dr. DiFazio. |
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(14) |
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Includes 52,600 shares issuable upon exercise of the vested
portion of options held by Mr. Holubiak. |
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(15) |
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Includes 92,200 shares issuable upon exercise of the vested
portion of options held by Mr. Hubers. Also includes
16,000 shares of Common Stock held by the David R. Hubers
Grantor Retained Annuity Trust; 25,000 shares of Common
Stock held by the David R. Hubers Revocable Trust; and
12,940 shares of Common Stock held by the Hubers
Grandchildrens Trust. Mr. Hubers is a trustee of
these trusts. |
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(16) |
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Includes 25,000 shares subject to the vested portion of
options held by Mr. Robbins. |
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(17) |
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Includes 92,200 shares issuable upon exercise of the vested
portion of options held by Mr. Samuels. |
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(18) |
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Includes 3,254,934 shares issuable upon exercise of the
vested portion of options. Excludes 934,266 shares subject
to the unvested portion of options. |
5
Equity
Compensation Plan Information
The following table sets forth information relating to equity
securities authorized for issuance under the Companys
equity compensation plans as of December 31, 2009.
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Number of Securities
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Remaining Available
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Number of Securities
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for Future Issuance
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to be Issued Upon
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Weighted-Average
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Under Equity
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Exercise of
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Exercise Price of
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Compensation Plans
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Outstanding Options,
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Outstanding Options,
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(Excluding Securities
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Warrants and Rights
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Warrants and Rights
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Reflected in Column (a))
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Plan Category
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(a)
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(b)
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(c)
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Equity compensation plans approved by security holders
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6,050,057
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5.83
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209,253
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Equity compensation plans not approved by security holders(1)
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Total
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6,050,057
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5.83
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209,253
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(1) |
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In connection with the Companys acquisition of CHS in
March 2010, the Company assumed and adopted the BioScrip/CHS
2006 Equity Incentive Plan (the CHS Plan) and
certain options issued under the CHS Plan were converted into
the right to purchase 716,086 shares of the Companys
Common Stock and all other options issued under the CHS Plan
were either cashed out or cancelled. There are
2,390,229 shares of common stock remaining available for
grant to employees of CHS under the CHS Plan not reflected in
the above table. |
The following table set forth information relating to the number
of stock options and shares of restricted stock granted by the
company in fiscal years 2009, 2008 and 2007.
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Stock Options
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Restricted Stock
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Fiscal Year
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Granted (#)
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Granted (#)
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2009
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1,918,600
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257,860
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2008
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1,099,522
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645,625
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2007
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586,986
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271,493
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6
PROPOSAL 1.
ELECTION
OF DIRECTORS
General
In accordance with the Companys By-Laws, the Board of
Directors shall be comprised of such number of directors as is
designated from time to time by resolution of the Board of
Directors. Directors shall hold office until the next annual
meeting of stockholders or until their respective successors are
duly elected and qualified, or until any such directors
earlier death, resignation or removal. Vacancies on the Board of
Directors and newly created directorships will generally be
filled by the vote of a majority of the directors then in
office, and any directors so chosen will hold office until the
next annual meeting of stockholders. The Board of Directors has
no reason to believe that any of its nominees will be unable or
unwilling to serve as a director if elected and, to the
knowledge of the Board of Directors, each of its nominees
intends to serve in such capacity for the entire term for which
election is sought. However, should any nominee become unwilling
or unable to accept nomination or election as a director of the
Company, the proxies solicited by management will be voted
(unless marked to the contrary) for such person or persons, if
any, as shall be recommended by the Board of Directors. However,
proxies will not be voted for the election of more than eight
directors.
In connection with the acquisition of CHS, the Company entered
into a stockholders agreement with Kohlberg
Investors V, L.P, as stockholders representative, the
stockholders of CHS and an optionholder of CHS. Among other
things, the stockholders agreement grants to the
stockholders representative the right to designate up to
two directors (based on specified ownership percentages of the
Companys common stock) to be nominated for election to the
Companys board of directors. The stockholders
representative designated Messrs. Samuel P. Frieder and
Gordon H. Woodward as its representatives for nomination to the
Board in accordance with the stockholders agreement and
they were appointed to the Companys Board upon the closing
of the acquisition of CHS. For as long as the stockholders
representative has the right to designate one or more directors
to the Board, at least one of those directors will be entitled
to representation on each of the Audit Committee, the Management
Development and Compensation Committee and the Corporate
Strategy Committee.
Based on the recommendation of the Governance and Nominating
Committee, the following ten persons have been nominated for
election to the Board of Directors at this Annual Meeting:
Charlotte W. Collins, Louis T. DiFazio, Samuel P. Frieder,
Richard H. Friedman, Myron Z. Holubiak, David R. Hubers, Richard
L. Robbins, Stuart A. Samuels, Richard M. Smith, and Gordon H.
Woodward. All of the nominees for election to the Board of
Directors currently serve as directors of the Company.
When considering whether directors and nominees have the
experience, qualifications, attributes or skills, taken as a
whole, to enable the Board of Directors to satisfy its oversight
responsibilities effectively in light of the Companys
business and structure, the Board of Directors focused primarily
on each persons background and experience as reflected in
the information discussed in each of the directors
individual biographies set forth below. We believe that the
Companys directors have backgrounds that, when combined,
provide a portfolio of experience and knowledge that serve the
Companys governance and strategic needs. Director nominees
are considered on the basis of a range of criteria including
broad-based business knowledge and relationships, prominence and
reputations in their primary fields of endeavor, as well as a
commitment to good corporate citizenship. They must have
demonstrated experience and ability that is relevant to the
Boards oversight role with respect to the Companys
business and affairs and have expertise and knowledge in various
disciplines relevant to the Companys business
and/or
operations. In particular, the members of the Board of Directors
considered the following important characteristics:
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Mr. Friedman has extensive accounting management and
operational expertise, as well as a track record of judgment and
achievement, as demonstrated by his leadership positions in the
Company and over 25 years in the healthcare industry;
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Mr. Smith has extensive home health industry and management
experience, as well as a track record of judgment and
achievement, as demonstrated by over 17 years of home
health experience in increasingly senior positions at various
public and private healthcare companies;
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Ms. Collins has extensive healthcare industry experience,
as well as a track record of judgment and achievement, as
demonstrated by various leadership positions and practicing
health policy law as a partner in a national law firm and
general counsel of a hospital. She also has academic experience,
having served as a professor of health management and policy for
six years at George Washington University School of Public
Health and Health Services;
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Mr. DiFazio has extensive management and healthcare
industry expertise, as well as a track record of judgment and
achievement, as demonstrated by his leadership positions at a
pharmaceutical company and service on the Board of Trustees of
Rutgers University for over 12 years. He also holds a Ph.D.
in Pharmaceutical Chemistry;
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Messrs. Frieder and Woodward are representatives designated
by the stockholders representative pursuant to the
stockholders agreement, and have significant financial and
investment experience, as well as a track record of judgment and
achievement, as demonstrated by their involvement in Kohlberg
and Co., L.L.C.s investment in numerous portfolio
companies and active roles in overseeing those businesses;
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Mr. Holubiak has extensive management and operational
experience, as well as his track record of judgment and
achievement, as demonstrated by his leadership positions in
numerous companies in the healthcare industry;
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Mr. Hubers has extensive finance and accounting experience,
as well as a track record of judgment and achievement, as
demonstrated by his leadership position at American Express
Financial Advisors Inc.;
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Mr. Robbins has significant financial and accounting
experience, as well as a track record of judgment and
achievement, as demonstrated by his leadership positions in an
accounting firm and a nationwide retailer; and
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Mr. Samuels has significant financial experience from his
position as a management consultant, specializing in business
management, strategic sales and marketing and business
development for several companies, specifically in the
pharmaceutical and healthcare industries. He also has a track
record of judgment and achievement, as demonstrated by the
senior leadership positions he has held in several companies in
the pharmaceutical and healthcare industries.
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In voting for directors, each stockholder is entitled to cast
one vote for each nominee. Stockholders are not entitled to
cumulative voting in the election of directors. The eight
nominees who receive the greatest number of votes will be
elected to the Board of Directors.
Current
Directors and Nominees for Director
The following biographies set forth certain information with
respect to each current director and each nominee for election
as a director, including biographical data for at least the last
five years:
Richard H. Friedman, 59, Chief Executive Officer and
Chairman of the Board of
Directors. Mr. Friedman joined the Company
in April 1996. From May 1996 through March 1998 he served as a
director of the Company as well as its Chief Financial Officer
and Chief Operating Officer. Mr. Friedman also served as
the Companys Treasurer from April 1996 until February
1998. From April 1998 until March 2005 he served as the
Companys Chief Executive Officer and Chairman of the
Board, at which time he was appointed Executive Chairman of the
Board following the Companys merger with Chronimed, Inc.
(Chronimed). In June 2006, Mr. Friedman
reassumed the role of Chief Executive Officer of the Company.
Richard M. Smith, 50, President and Chief Operating
Officer. Mr. Smith joined the Company as its
President and Chief Operating Officer in January 2009 and was
appointed a director of the Company in September 2009. Prior to
joining the Company, from June 2006 to November 2008
Mr. Smith was Chief
8
Executive Officer and a director of Byram Healthcare Centers,
Inc., a provider of medical supplies and pharmacy items to long
term chronic patients. From May 2003 to May 2006 Mr. Smith
was the President and Chief Operating Officer of Option Care,
Inc., a home infusion and specialty pharmaceutical company.
Charlotte W. Collins, Esq., 57, has been a director
of the Company since April 2003. Since January 2008, she has
been Director of Public Policy and Advocacy for the Asthma and
Allergy Foundation of America, directing its government
relations program. From 2003 to 2007, she was Associate
Professor of Health Services Management and Leadership, and
Health Policy at the George Washington University School of
Public Health and Health Services. From January 2002 to June
2003, she was an Associate Research Professor of Health Policy
at the same university. She served a four year term on the
National Allergy and Infectious Diseases Advisory Council of the
National Institutes of Health beginning in 2001. From September
1996 to November 2004, Ms. Collins was of counsel in the
health policy practice of the law firm of Powell, Goldstein LLP
in its Washington DC office. She served as General Counsel of
the Regional Medical Center at Memphis for ten years until 1996
and served as interim general counsel for the District of
Columbia Health and Hospitals Public Benefit Corporation in
1998. In 1993, Ms. Collins co-founded a managed care plan
and served on its board of directors through 1996. She has also
served on the boards of two primary care centers, a Medicare
Part A intermediary company, and as a leadership coach for
the Robert Wood Johnson Foundations Health Policy Fellows
program. In 2006, Modern Healthcare magazine named her one of
the top 25 most influential minority healthcare executives.
Louis T. DiFazio, Ph.D., 72, has been a director of
the Company since May 1998. From March 1997 until his retirement
in June 1998, Dr. DiFazio served as Group Senior Vice
President of the Pharmaceutical Group of Bristol-Myers Squibb.
From 1991 to March 1997, Dr. DiFazio was President of
Worldwide Technical Operations for the Pharmaceutical Group and
also served on the Executive Operating Committee from 1995 until
his retirement. Dr. DiFazio recently completed
12 years of service as a member of the Board of Trustees of
Rutgers University. Dr. DiFazio received his B.S. in
Pharmacy from Rutgers University in 1959 and his Ph.D. in
Pharmaceutical Chemistry from the University of Rhode Island in
1964 where he also received an Honorary Doctor of Science Degree
in 1997.
Samuel P. Frieder, 45, was appointed a director of
the Company in connection with the Companys acquisition of
CHS in March 2010. Mr. Frieder is a Co-Managing Partner of
Kohlberg and Co, L.L.C. (Kohlberg). Mr. Frieder
joined Kohlberg in 1989, became a principal in 1995 and
co-managing partner in 2006. From 1988 to 1989 he was a senior
associate in the Capital Funding Group at Security Pacific
Business Credit. Prior to that, he was a senior real estate
analyst at Manufacturers Hanover Trust Company. He is a
member of the board of directors of AGY Holdings Corporation,
Bauer Hockey, Centerplate, Inc., Central Parking Corporation,
Hawkeye Group, Katy Industries, Inc., Hoffmaster Group Inc.,
Kohlberg Capital Corporation, Niagara Corporation,
Nielsen & Bainbridge, Inc., Packaging Dynamics
Corporation, Pittsburgh Glass Works L.L.C., Stanadyne
Corporation, SVP Holdings, Ltd., Trico Products, Inc. and United
States Infrastructure Corporation. Mr. Frieder holds an
A.B. from Harvard College.
Myron Z. Holubiak, 63, has been a director of the Company
since March 2005. Prior to being appointed a director of the
Company he had served as a director of Chronimed since September
2002. Mr. Holubiak is the former President of Roche
Laboratories, Inc. He held this position from December 1998 to
August 2001. From August 2001 to June 2002, Mr. Holubiak
was President, Chief Operating Officer and member of the Board
of Directors of iPhysicianNet, Inc., a video detailing company.
From July 2002 to April 2007 Mr. Holubiak was President and
Chief Operating Officer of HealthSTAR Communications, Inc., a
health care marketing communications network of
16 companies. Currently, Mr. Holubiak is the President
and a member of the board of directors of 1-800-Doctors, Inc., a
medical referral company that provides consumers access to
physicians and hospitals. From April 2004 to July 2008
Mr. Holubiak served on the board of directors of Nastech
Pharmaceuticals Company, Inc. (now MDRNA, Inc.).
David R. Hubers, 67, has been a director of the Company
since March 2005. Prior to being appointed a director of the
Company he had served as a director of Chronimed since November
2000. Mr. Hubers was Chairman of American Express Financial
Advisors Inc. prior to his retirement. He joined American
Express Financial Advisors Inc. in 1965 and held various
positions, including Senior Vice
9
President of Finance and Chief Financial Officer until being
appointed President and Chief Executive Officer in August 1993.
He served in that capacity until June 2001. Mr. Hubers
serves on the boards of directors of the Carlson School of
Management at the University of Minnesota and Lawson Software, a
publicly held software company. He is also Chairman of the
Compensation Committee at Lawson Software.
Richard L. Robbins, 69, has been a director of the
Company since March 2005. From October 2003 through March 2006,
Mr. Robbins was Senior Vice President, Financial Reporting
and Control and Principal Financial Officer of Footstar, Inc., a
nationwide retailer of footwear. Footstar, Inc. filed for
bankruptcy protection in March 2004 and emerged from bankruptcy
in February 2006. From July 2002 to October 2003,
Mr. Robbins was a partner in Robbins Consulting LLP, a
financial, strategic and management consulting firm. From 1978
to 2002, Mr. Robbins was a partner of Arthur Andersen LLP.
From May 2003 to October 2008, Mr. Robbins served on the
board of directors of Vital Signs, Inc., a medical products
company. From August 2006 to February 2008, Mr. Robbins
served on the board of directors of American Banknote
Holographics, Inc. From August 2007 to April 2009,
Mr. Robbins served on the board of directors of Empire
Resorts, Inc.
Stuart A. Samuels, 68, has been a director of the Company
since March 2005. Prior to being appointed a director of the
Company he had served as a director of Chronimed since November
2000. Since 1990, Mr. Samuels has been a management
consultant, specializing in business management, strategic sales
and marketing and business development for several companies,
specifically in the pharmaceutical and healthcare industries. He
currently serves on the boards of directors of Infomedics, Inc.
and Target Rx, Inc.
Gordon H. Woodward, 40, was appointed a director
of the Company in connection with the Companys acquisition
of CHS in March 2010. Mr. Woodward is a partner of
Kohlberg. Mr. Woodward joined Kohlberg in 1996 and became a
partner in 2001. Prior to joining Kohlberg, Mr. Woodward
was a financial analyst at James D. Wolfensohn Incorporated. He
is a member of the board of directors of Centerplate, Inc.,
Central Parking Corporation, Hoffmaster Group Inc.,
Nielsen & Bainbridge, Inc., Packaging Dynamics
Corporation, Stanadyne Corporation, and United States
Infrastructure Corporation. Mr. Woodward received an A.B.
from Harvard College.
Vote
Required and Recommendation of the Board of Directors
If a quorum is present and voting, the ten nominees receiving
the highest number of votes duly cast at the Annual Meeting will
be elected to the Board of Directors.
THE BOARD
OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE FOR EACH OF THE ABOVE-NAMED
NOMINEES.
10
PROPOSAL 2.
AMENDMENT
TO CERTIFICATE OF INCORPORATION.
The Board has determined that it is in the best interests of the
Company and its stockholders to amend the Companys
Certificate of Incorporation to increase the number of
authorized shares of Common Stock of the Company from
75 million shares to 125 million shares. Accordingly,
on April 28, 2010 the Board of Directors unanimously
approved the proposed Certificate of Amendment to the Second
Amended and Restated Certificate of Incorporation of the
Company, in the form attached hereto as Exhibit A (the
Certificate of Amendment), and hereby solicits the
approval of the Companys stockholders of the Certificate
of Amendment. If the stockholders approve the Certificate of
Amendment, the Company currently intends to file the Certificate
of Amendment with the Delaware Secretary of State as soon as
practicable following stockholder approval. If the Certificate
of Amendment is not approved by the stockholders, the existing
Second Amended and Restated Certificate of Incorporation will
continue in effect.
Of the 75 million shares currently authorized, as of
April 19, 2010 the Company had 53,844,956 shares
issued and outstanding (excluding 2,361,569 shares of
common stock held as treasury stock) and has reserved a total of
12,987,324 shares of common stock for issuance pursuant to
the Companys employee stock option plans, directors
stock option plan and warrants issued in connection with its
acquisition of CHS in March 2010.
The Board of Directors believes that it is in the Companys
best interests to increase the number of authorized shares of
common stock in order to have additional authorized but unissued
shares available for issuance to meet business needs as they
arise. The Board of Directors believes that the availability of
such additional shares will provide the Company with the
flexibility to issue common stock for possible future financing,
stock dividends or distributions, acquisitions, stock option
plans, and other proper corporate purposes that may be
identified in the future by the Board of Directors, without the
possible expense and delay of a special stockholders
meeting. The Companys flexibility is at all times limited
to NASDAQ stockholder voting requirements on the issuance of
capital stock in excess of 20% of the Companys
pre-issuance issued and outstanding number of shares. The
issuance of additional shares of common stock may have a
dilutive effect on earnings per share and, for persons who do
not purchase additional shares to maintain their pro rata
interest in the Company, on such stockholders percentage
voting power.
If the stockholders approve the proposed Certificate of
Amendment, the Board of Directors may cause the issuance of
additional shares of Common Stock without further vote of the
stockholders of the Company, except as provided under Delaware
corporate law or under the rules of any securities exchange on
which shares of Common Stock of the Company are then listed.
Current holders of Common Stock have no preemptive or similar
rights, which means that current common stockholders do not have
a prior right to purchase any new issue of Common Stock of the
Company in order to maintain their appropriate ownership
thereof. The issuance of additional shares of Common Stock would
decrease the proportionate equity interest of the Companys
current stockholders and, depending upon the price paid for such
additional shares, could result in dilution to the
Companys current stockholders.
We have no present arrangements, agreements, understandings, or
plans at the current time for the issuance or use of the
additional shares of common stock proposed to be authorized. The
Board of Directors does not intend to issue any common stock
except on terms which the Board of Directors deems to be in the
best interests of the Company and its stockholders.
Vote
Required and Recommendation of the Board of Directors
Approval of the Amendment to the Companys Certificate of
Incorporation requires the affirmative vote of the holders of a
majority of the shares of Common Stock represented in person or
by proxy at the Annual Meeting.
THE BOARD
OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE AMENDMENT TO THE COMPANYS CERTIFICATE OF
INCORPORATION.
11
PROPOSAL 3.
APPROVAL
OF AN AMENDMENT TO THE COMPANYS 2008 EQUITY INCENTIVE PLAN
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
AVAILABLE FOR ISSUANCE THEREUNDER FROM 3,580,000 SHARES to
9,280,000
In April 2008, the Companys stockholders approved and
adopted the 2008 Equity Incentive Plan (the 2008
Plan) and the performance goals which are a part of the
2008 Plan (each a Performance Goal). At that time
3,580,000 shares of Common Stock were reserved for issuance
thereunder. On April 28, 2010 the Board approved, subject
to approval of the Companys stockholders, an amendment to
the 2008 Plan to increase the number of authorized shares of
Common Stock available for issuance thereunder by
5,700,000 shares, from 3,580,000 shares to
9,280,000 shares. As of April 19, 2010 there are
options to purchase 2,461,544 shares of Common Stock
outstanding under the 2008 Plan at exercise prices ranging from
$1.50 to $7.27 per share and 588,175 shares of Common Stock
issued under the 2008 Plan pursuant to restricted stock grants.
There are 342,754 shares remaining available for grant
under the 2008 Plan.
The primary purpose of the 2008 Plan is to (i) attract and
retain key employees and directors, (ii) provide additional
incentives to key employees and directors to increase the value
of the Companys common stock; and (iii) provide key
employees and directors with a stake in the future of the
Company aligning management with the Companys
stockholders. The Board of Directors relies upon the 2008 Plan
as one of the benefits necessary to attract and retain highly
qualified and motivated employees. Equity is a significant
component of total compensation for employees. If fewer equity
awards were granted to employees, the Company would need to
provide compensation in other forms to provide a total
compensation package that is competitive with other companies
without appropriate consideration given to the management of the
business. Moreover, the Compensation Committee and Board believe
that fewer grants would not sufficiently align management with
the Companys stockholders. Based upon managements
estimates of the number of shares expected to be issued under
the 2008 Plan, the Board of Directors believes it is in the
Companys best interests to amend the 2008 Plan to provide
for the increase in shares available for purchase thereunder so
that the Company may continue to attract and retain the services
of qualified key employees by providing employees an opportunity
to purchase shares of the Companys Common Stock through
the 2008 Plan, to motivate them to increase stockholder value,
and to align management with the Companys stockholders
generally.
In order to address potential concerns regarding the number of
options or stock awards the Company intends to grant in a given
year, the Board of Directors commits to the Companys
stockholders that for fiscal years 2010 through 2012 the Company
will not grant during such three fiscal years a number of shares
subject to options or stock awards to employees or non-employee
directors, such that the average number of shares granted in
each of such fiscal years over such three-year period is greater
than 3.65% of the average number of shares of the Companys
common stock that were outstanding at the end of each of such
three fiscal years. This limitation does not apply to awards
settled in cash as opposed to the delivery of shares of the
Companys common stock and awards under plans assumed in
acquisitions. For purposes of calculating the number of shares
granted in a fiscal year with respect to this commitment, stock
awards will count as equivalent to 1.5 option shares.
The following discussion summarizes the material terms of the
2008 Plan. This discussion does not comport to be complete and
is qualified in its entirety by reference to the 2008 Plan, a
copy of which is attached to this Proxy Statement as
Exhibit B.
Administration
The 2008 Plan is administered by the Management
Development & Compensation Committee (the
Compensation Committee), or such other committee
appointed by the Board of Directors, which shall consist of at
least two or more members of the Companys Board of
Directors. Each director, while serving as a member of the
Compensation Committee, must satisfy the requirements for a
non-employee director under
Rule 16b-3
of the Securities Exchange Act of 1934 (the Exchange
Act) and an outside director under
Section 162(m) of the Internal Revenue Code of 1986, as
amended (the Code). To the extent not inconsistent
with applicable law, including Section 162(m) of the Code,
or the rules and regulations of the principal
12
securities exchange on which the Common Stock is traded or
listed, the Compensation Committee may delegate, by means of an
express resolution that sets forth the requirements and
limitations relating to the delegation and the procedure to be
followed to grant any awards under the 2008 Plan, to (1) a
committee of one or more directors of the Company any of the
authority of the Compensation Committee under the 2008 Plan,
including the right to grant, cancel or suspend awards made
under the 2008 Plan and (2) to the extent permitted by law,
to one or more executive officers or a committee of executive
officers the right to grant awards under the 2008 Plan to key
employees who are not directors or executive officers of the
Company and the authority to take action on behalf of the
Compensation Committee pursuant to the 2008 Plan to cancel or
suspend awards under the 2008 Plan to key employees who are not
directors or executive officers of the Company.
All grants under the 2008 Plan will be evidenced by a
certificate (an Award Agreement) that will
incorporate such terms and conditions as the Compensation
Committee deems necessary or appropriate.
Coverage
Eligibility and Annual Grant Limits
The 2008 Plan provides for the issuance to key employees and
directors of awards (each, an Award) consisting of
stock options (Options), stock appreciation rights
(SARs), restricted stock units (Restricted
Units), stock grants (Stock Grants) and,
solely to key employees, performance units (Performance
Units). A key employee is any employee of the Company or
any subsidiary, parent or affiliate of the Company designated by
the Compensation Committee who, in the judgment of the
Compensation Committee, acting in its absolute discretion, is
key directly or indirectly to the success of the Company. While
all employees are highly valued, for purposes of the Plan, the
Company estimates that there are currently approximately 50 key
employees. No key employee in any calendar year may be granted
an Option to purchase more than 500,000 shares of Common
Stock, SARs with respect to more than 500,000 shares of
Common Stock, and Stock Grants and Restricted Units that are
intended to comply with the requirements of Section 162(m)
of the Code representing more than 350,000 shares of Common
Stock.
Shares Reserved
for Issuance Under the 2008 Plan
Subject to adjustment as described under Adjustment for
Change in Capitalization and Mergers below,
there are 3,580,000 shares of Common Stock authorized for
issuance under the 2008 Plan, all of which may be subject to
ISOs (as defined herein), less one share of Common Stock for
every one share of Stock that was subject to an option or stock
appreciation right granted after December 31, 2007 under
the Companys 2001 Incentive Stock Plan (the 2001
Plan) and one and one-half shares of Common Stock for
every one share of Common Stock that was subject to an award
other than an option or stock appreciation right granted after
December 31, 2007 under the 2001 Plan. Any shares issued
under the 2008 Plan may consist, in whole or in part, of
authorized and unissued shares of Common Stock, treasury shares
of Common Stock or shares of Common Stock purchased in the open
market or otherwise. In no event may more than
500,000 shares of Common Stock in the aggregate be subject
to Awards granted to directors. Any shares of Common Stock that
are issued subject to Awards of Options or SARs will be counted
against this limit as one share of Common Stock for every one
share of Common Stock granted. Any shares of Common Stock that
are issued subject to Awards other than Options or SARs will be
counted against this limit as 1.5 shares of Common Stock
for every one share of Common Stock granted. Upon stockholder
approval of the 2008 Plan no further awards will be made under
the 2001 Plan.
If any shares of Common Stock subject to an Award, or after
December 31, 2007 an award under the 2001 Plan, are
forfeited or expire or any Award, or after December 31,
2007 an award under the 2001 Plan, is settled for cash (in whole
or in part), the shares of Common Stock subject to such Award or
award under the 2001 Plan become, to the extent of the
forfeiture, expiration or cash settlement, available for
issuance under the 2008 Plan as described in the next paragraph.
The following shares of Common Stock are not be added to the
shares of Common Stock authorized for grant as described above:
(1) shares of Common Stock tendered by a key employee or
director or withheld by the Company in payment of the purchase
price of an Option, (2) shares of Common Stock tendered by
a key employee or withheld by the Company to satisfy any tax
withholding obligation with respect to an Award or an award
under the 2001 Plan, and (3) shares of Common
13
Stock subject to a SAR that are not issued in connection with
the stock settlement of the SAR on exercise thereof.
Any shares of Common Stock that again become available for grant
pursuant to the 2008 Plan are added back as one share of Common
Stock for every one share of Common Stock granted if such shares
of Common Stock were subject to Options or SARs granted under
the 2008 Plan or options or stock appreciation rights granted
under the 2001 Plan, and as one and one-half shares of Common
Stock for every one share of Common Stock granted if such shares
of Common Stock were subject to Awards other than Options or
SARs granted under the 2008 Plan or awards other than options or
stock appreciation rights granted under the 2001 Plan.
Shares of Common Stock under Awards made in substitution or
exchange for awards granted by a company acquired by the Company
or any affiliate or subsidiary, or with which the Company or any
affiliate or subsidiary combines, do not reduce the shares of
Common Stock authorized for grant under the 2008 Plan.
Additionally, in the event that a company acquired by the
Company or any affiliate or subsidiary or with which the Company
or any affiliate or subsidiary combines has shares available
under a pre-existing plan approved by stockholders and not
adopted in contemplation of such acquisition or combination, the
shares available for grant pursuant to the terms of that
pre-existing plan (as adjusted, to the extent appropriate, using
the exchange ratio or other adjustment or valuation ratio or
formula used in such acquisition or combination to determine the
consideration payable to the holders of common stock of the
entities party to such acquisition or combination) may be used
for Awards under the 2008 Plan and will not reduce the shares of
Common Stock authorized for grant under the 2008 Plan;
provided that Awards using such available shares will not
be made after the date awards or grants could have been made
under the terms of the pre-existing plan, absent the acquisition
or combination, and will only be made to individuals who were
not employees or directors of the Company, an affiliate or a
subsidiary prior to such acquisition or combination.
Options
The Compensation Committee acting in its absolute discretion has
the right to grant Options to key employees and directors to
purchase shares of Common Stock. Each grant shall be evidenced
by an option certificate setting forth whether the Option is an
incentive stock option (ISO), which is intended to
qualify for special tax treatment under Section 422 of the
Code, or a non-qualified incentive stock option
(Non-ISO).
Each Option granted under the 2008 Plan entitles the holder
thereof to purchase the number of shares of Common Stock
specified in the grant at the exercise price specified in the
related option certificate. At the discretion of the
Compensation Committee, the option certificate can provide for
payment of the exercise price either in cash, by check, or in
Common Stock and which is acceptable to the Compensation
Committee or in any combination of cash, check and such Common
Stock. The exercise price may also be paid (1) through any
cashless exercise procedure which is acceptable to the
Compensation Committee or its delegate and which is facilitated
through a sale of Common Stock, (2) with the consent of the
Compensation Committee, by withholding Common Stock otherwise
issuable in connection with the exercise of the Option, and
(3) through any other method specified in an Award
Agreement.
The terms and conditions of each Option granted under the 2008
Plan will be determined by the Compensation Committee, but no
Option will be granted at an exercise price which is less than
the fair market value of the Common Stock on the grant date
(generally, the closing price for the Common Stock on the
principal securities exchange on which the Common Stock is
traded or listed on the date the Option is granted or, if there
was no closing price on that date, on the last preceding date on
which a closing price was reported). In addition, if the Option
is an ISO that is granted to a 10% stockholder of the Company,
the Option exercise price will be no less than 110% of the fair
market value of the shares of Common Stock on the grant date.
Except for adjustments as described under Adjustment for
Change in Capitalization and Mergers below,
without the approval of the Companys stockholders, the
option price shall not be reduced after the Option is granted,
an Option may not be cancelled in exchange for cash or another
Award, and no other action may be made with respect to an Option
that would be treated as a repricing under the rules and
regulations of the principal securities exchange on which the
Common Stock is traded.
14
No Option granted to an employee of the Company or any
subsidiary of the Company may be exercisable before the
expiration of one year from the Option grant date (but it may
become exercisable pro rata over such time), except in
accordance with the 2008 Plan or as set forth in the Award
Agreement with respect to the retirement, death or disability of
a participant or under special circumstances determined by the
Compensation Committee. No Option may be exercisable more than
10 years from the grant date, or, if the Option is an ISO
granted to a 10% stockholder of the Company, it may not be
exercisable more than five years from the grant date. Moreover,
no Option will be treated as an ISO to the extent that the
aggregate fair market value of the Common Stock subject to the
Option (determined as of the date the ISO was granted) which
would first become exercisable in any calendar year exceeds
$100,000. The Compensation Committee may not, as part of an
Option grant, provide for an Option reload feature whereby an
additional Option is automatically granted to pay all or a part
of the Option exercise price or a part of any related tax
withholding requirement.
Stock
Appreciation Rights
SARs may be granted by the Compensation Committee to key
employees and directors under the 2008 Plan, either as part of
an Option or as stand-alone SARs. The terms and conditions for a
SAR granted as part of an Option will be set forth in the
related option certificate while the terms and conditions of a
stand-alone SAR will be set forth in a related SAR certificate.
SARs entitle the holder to receive an amount (in cash, Common
Stock, or a combination of cash and Common Stock as determined
by the Compensation Committee) equal to the excess of the fair
market value of one share of Common Stock as of the date such
right is exercised over the initial stock price specified in the
option certificate or SAR certificate (the SAR
Value), multiplied by the number of shares of Common Stock
in respect of which the SAR is being exercised. The SAR Value
for a SAR will be no less than the fair market value of a share
of Common Stock as determined on the grant date in accordance
with the 2008 Plan. Except for adjustments as described under
Adjustment for Change in Capitalization and
Mergers below, without the approval of the
Companys stockholders, the SAR Value will not be reduced
after the SAR is granted, a SAR may not be cancelled in exchange
for cash or another Award, and no other action may be made with
respect to a SAR that would be treated as a repricing under the
rules and regulations of the principal securities exchange on
which the Common Stock is traded. In no event may a SAR granted
to an employee of the Company or a subsidiary of the Company be
exercisable before the expiration of one year from the SAR grant
date (but it may become exercisable pro rata over such time),
except in accordance with the 2008 Plan or as set forth in the
Award Agreement with respect to the retirement, death or
disability of a participant or under special circumstances
determined by the Compensation Committee. No SAR may be
exercisable more than 10 years from the grant date.
Restricted
Stock Units
The Compensation Committee acting in its absolute discretion
shall have the right to grant Restricted Units to key employees
and directors and may prescribe that vesting of any or all of
the Restricted Units shall be subject to the achievement of one
or more performance objectives, including the Performance Goals
set forth in the 2008 Plan. The value of each Restricted Unit
corresponds to the fair market value of a share of Common Stock.
The terms and conditions will be set forth in the related
restricted unit certificate. Grants of Restricted Units subject
solely to continued service with the Company or a subsidiary
will not become vested less than (a) three years from the
date of grant (but permitting pro rata vesting over that period)
for grants to key employees and (b) one year from the date
of grant (but permitting pro rata vesting over that period) for
grants to directors; provided that the minimum vesting
requirements do not apply to grants not in excess of 10% of the
initial number of shares available for grants of Restricted
Units under the 2008 Plan. Restricted Units subject to the
achievement of performance objectives will not become vested
less than one year from the date of grant. There will be no
adjustment to Restricted Units for dividends paid by the
Company, except for adjustments made by the Compensation
Committee as described under Adjustment for Change in
Capitalization below.
Unless a key employee or director has made a deferral election
in accordance with the 2008 Plan, upon vesting of a Restricted
Unit, the key employee or director will receive payment from the
Company in shares of Common Stock issued under the 2008 Plan
equal to the number of vested Restricted Units and the
15
Restricted Units will then be automatically cancelled. The
Compensation Committee in its absolute discretion may permit a
key employee or director to elect to defer the receipt of the
delivery of shares of Common Stock that would otherwise be due
upon the vesting of Restricted Units; provided that such
election is made in accordance with Section 409A of the
Code.
Stock
Grants
A Stock Grant may be made by the Compensation Committee to key
employees and directors under the 2008 Plan. The terms and
conditions for a Stock Grant made will be set forth in the
related stock grant certificate and will be determined by the
Compensation Committee acting in its sole discretion. The
Compensation Committee may make the issuance of Common Stock
under a Stock Grant subject to the satisfaction of one or more
employment, performance, purchase or other conditions and may
make the forfeiture of Common Stock issued pursuant to such a
grant subject to similar conditions. The Compensation Committee
may, at the time a Stock Grant is made, prescribe corporate,
divisional,
and/or
individual Performance Goals to all or any portion of the shares
subject to the Stock Grant. Performance Goals may be based on
achieving a certain level of total revenue, earnings, earnings
per share or return on equity of the Company and its
subsidiaries and affiliates, or on the extent of changes in such
criteria. Upon the satisfaction of any applicable forfeiture
conditions and Performance Goals, the shares underlying the
Stock Grant will be transferred to the key employee or director.
Stock Grants subject solely to continued service with the
Company or a subsidiary will not become vested less than
(a) three years from the date of grant (but permitting pro
rata vesting over that period) for grants to key employees and
(b) one year from the date of grant (but permitting pro
rata vesting over that period) for grants to directors; provided
that the minimum vesting requirements do not apply to grants not
in excess of 10% of the initial number of shares available for
Stock Grants under the 2008 Plan. Stock Grants subject to the
achievement of performance conditions will not become vested
less than one year from the date of grant. Unless otherwise
provided in the Award Agreement, cash dividends paid on the
Common Stock will be distributed to the holder of a Stock Grant,
and any stock dividends on the Common Stock will be subject to
the same forfeiture conditions as the shares subject to the
Stock Grant.
Performance
Units
Performance Units may be granted to key employees under the 2008
Plan. The terms and conditions for the Performance Units,
including the Performance Goals, the performance period and a
value for each Performance Unit (or a formula for determining
such value), shall be established by the Compensation Committee
acting in its sole discretion and shall be set forth in a
written agreement covering such Performance Units. The
Compensation Committee shall specify corporate, division
and/or
individual Performance Goals which the key employee must satisfy
in order to receive payment for such Performance Unit. If the
Performance Goals are satisfied, the Company shall pay the key
employee an amount in cash equal to the value of each
Performance Unit at the time of payment. In no event shall a key
employee receive an amount in excess of $1,000,000 in respect of
Performance Units for any given year.
Performance
Goals
Performance Goals for an award of Performance Units or a Stock
Grant that is intended to satisfy the requirements of
Section 162(m) of the Code shall be based on achieving
specified levels of one or any combination of the Performance
Goals (with respect to the Company on a consolidated basis, by
division, segment
and/or
business unit) set forth in the 2008 Plan, including net sales;
revenue; revenue growth or product revenue growth; operating
income; pre- or after-tax income; earnings per share; net
income; return on equity; total stockholder return; return on
assets or net assets; appreciation in
and/or
maintenance of the price of the Common Stock or any other
publicly-traded securities of the Company; market share; gross
profits; earnings; economic value-added models or equivalent
metrics; enterprise value metrics; comparisons with various
stock market indices; reductions in costs; cash flow or cash
flow per share; return on capital; cash flow return on
investment; improvement in or attainment of expense levels or
working capital levels; operating margins, gross margins or cash
margin; year-end cash; debt reductions; stockholder equity;
market share; specific and objectively determinable regulatory
achievements; and implementation, completion or attainment
16
of specific and objectively determinable objectives with respect
to research, development, products or projects, production
volume levels, acquisitions and divestitures and recruiting and
maintaining personnel. The Performance Goals also may be based
solely by reference to the Companys performance or the
performance of a subsidiary. The Compensation Committee may
express any goal in alternatives, such as including or excluding
(a) any acquisitions, dispositions, restructurings,
discontinued operations, extraordinary items, and other unusual
or non-recurring charges, (b) any event either not directly
related to the operations of the Company or not within the
reasonable control of the Companys management, or
(c) the cumulative effects of tax or accounting changes in
accordance with U.S. generally accepted accounting
principles.
Non-Transferability
No Award will be transferable by a key employee or director
other than by will or the laws of descent and distribution, and
any Option or SAR will (absent the Compensation Committees
consent) be exercisable during a key employees or
directors lifetime only by the key employee or director,
except that the Compensation Committee may provide in an Award
Agreement that a key employee or director may transfer an award
to certain family members, family trusts, or other family-owned
entities, or for charitable donations under such terms and
conditions determined by the Compensation Committee.
Amendments
to the 2008 Plan
The 2008 Plan may be amended by the Board to the extent that it
deems necessary or appropriate (but any amendment relating to
ISOs will be made subject to the limitations of Code
Section 422), except that no amendment will be made without
stockholder approval to the extent required under applicable law
or exchange rule and no amendment may be made to the change in
control provisions of the 2008 Plan described below under
Change in Control on or after the change in control
date if it would adversely affect any rights that would
otherwise vest on that date. The Board may suspend granting
Awards or may terminate the 2008 Plan at any time. The Board may
not unilaterally modify, amend or cancel any Award previously
granted without the consent of the holder of such Award, unless
there is a dissolution or liquidation of the Company or in
connection with certain corporate transactions.
Adjustment
for Change in Capitalization
The number, kind, or class of shares of Common Stock reserved
for issuance under the 2008 Plan, the annual grant limits, the
number, kind or class of shares of Common Stock subject to
Options, Stock Grants or SARs granted under the 2008 Plan and
the exercise price of Options and the SAR Value of SARs granted
shall be adjusted by the Compensation Committee in an equitable
manner to reflect any change in the capitalization of the
Company (including stock dividends or stock splits).
Mergers
The Compensation Committee as part of any transaction described
in Code Section 424(a) shall have the right to adjust (in
any manner which the Compensation Committee in its discretion
deems consistent with Code Section 424(a)) the number, kind
or class of shares of Common Stock reserved for issuance under
the 2008 Plan, the annual grant limits, and the number, kind or
class of shares of Common Stock subject to Option and SAR grants
and Stock Grants previously made under the 2008 Plan and the
related exercise price of the Options and the SAR Values and,
further, shall have the right to make (in any manner which the
Compensation Committee in its discretion deems consistent with
Code Section 424(a)) Option and SAR grants and Stock Grants
to effect the assumption of, or the substitution for, option,
stock appreciation right and stock grants previously made by any
other corporation to the extent that such transaction calls for
the substitution or assumption of such grants.
Change in
Control
Assumption or Substitution of Certain
Awards. Unless otherwise provided in an Award
Agreement, in the event of a Change in Control (as defined in
the 2008 Plan) in which the successor company assumes or
17
substitutes for an Option, Restricted Unit, SAR, or Stock Grant,
if a key employees employment with the successor company
(or a subsidiary thereof) terminates under the circumstances
specified in the Award Agreement within 24 months following
the Change in Control: (1) Options and SARs outstanding as
of the date of such termination of employment will immediately
vest, become fully exercisable, and may thereafter be exercised
for 24 months (or the period of time set forth in the Award
Agreement), and (2) restrictions, limitations and other
conditions applicable to Restricted Units and Stock Grants shall
lapse and the Restricted Units and Stock Grants will become free
of all restrictions and limitations and become fully vested.
Non-Assumption or Substitution of Certain
Awards. Unless otherwise provided in an Award
Agreement, in the event of a Change in Control in which the
successor company does not assume or substitute for an Option,
Restricted Unit, SAR, or Stock Grant: (1) those Options and
SARs outstanding as of the date of the Change in Control that
are not assumed or substituted for will immediately vest and
become fully exercisable, and (2) restrictions and deferral
limitations on Restricted Units and Stock Grants that are not
assumed or substituted for will lapse and the Restricted Units
and Stock Grants will become free of all restrictions and
limitations and become fully vested.
Impact on Certain Awards. Award Agreements may
provide that in the event of a Change in Control:
(1) Options and SARs outstanding as of the date of the
Change in Control will be cancelled and terminated without
payment if the fair market value of one share of Common Stock as
of the date of the Change in Control is less than the Option
Price or SAR Value, and (2) all Performance Units will be
considered to be earned and payable (either in full or pro rata
based on the portion of performance period completed as of the
date of the Change in Control), and any limitations or other
restriction will lapse and the Performance Units will be
immediately settled or distributed.
Termination of Certain Awards. The
Compensation Committee, in its discretion, may determine that,
upon the occurrence of a Change in Control, each Option and SAR
outstanding will terminate within a specified number of days
after notice to the key employee or director,
and/or that
each key employee or director will receive, with respect to each
share of Common Stock subject to an Option or SAR, an amount
equal to the excess of the fair market value of such share
immediately prior to the occurrence of the Change in Control
over the Option Price or the SAR Value, as applicable, payable
in cash, in one or more kinds of stock or property (including
the stock or property, if any, payable in the transaction) or in
a combination thereof, as the Compensation Committee, in its
discretion, shall determine.
Federal
Income Tax Consequences
The rules concerning the federal income tax consequences with
respect to Awards under the 2008 Plan are technical, and
reasonable persons may differ on the proper interpretation of
such rules. Moreover, the applicable statutory and regulatory
provisions are subject to change, as are their interpretations
and applications, which may vary in individual circumstances.
Therefore, the following discussion is designed to provide only
a brief, general summary description of the federal income tax
consequences associated with such grants, based on a good faith
interpretation of the current federal income tax laws,
regulations (including certain proposed regulations) and
judicial and administrative interpretations. The following
discussion does not set forth (1) any federal tax
consequences other than income tax consequences or (2) any
state, local or foreign tax consequences that may apply.
ISOs. In general, a key employee will not
recognize taxable income upon the grant or the exercise of an
ISO. For purposes of the alternative minimum tax, however, the
key employee will be required to treat an amount equal to the
difference between the fair market value of the Common Stock on
the date of exercise over the option exercise price as an item
of adjustment in computing the key employees alternative
minimum taxable income. If the key employee does not dispose of
the Common Stock received pursuant to the exercise of the ISO
within either (1) two years after the date of the grant of
the ISO or (2) one year after the date of the exercise of
the ISO, a subsequent disposition of the Common Stock generally
will result in long-term capital gain or loss to such individual
with respect to the difference between the amount realized on
the disposition and exercise price. The Company will not be
entitled to any federal income tax deduction as a
18
result of such disposition. In addition, the Company normally
will not be entitled to take a federal income tax deduction at
either the grant or the exercise of an ISO.
If the key employee disposes of the Common Stock acquired upon
exercise of the ISO within either of the above-mentioned time
periods, then in the year of such disposition, such individual
generally will recognize ordinary income, and the Company will
be entitled to a federal income tax deduction (provided the
Company satisfies applicable federal income tax reporting
requirements), in an amount equal to the lesser of (1) the
excess of the fair market value of the Common Stock on the date
of exercise over the option exercise price or (2) the
amount realized upon disposition of the Common Stock over the
exercise price. Any gain in excess of such amount recognized by
the key employee as ordinary income would be taxed to such
individual as short-term or long-term capital gain (depending on
the applicable holding period).
Non-ISOs. A key employee or director will not
recognize any taxable income upon the grant of a Non-ISO, and
the Company will not be entitled to take an income tax deduction
at the time of such grant. Upon the exercise of a Non-ISO, the
key employee or director generally will recognize ordinary
income and the Company will be entitled to a federal income tax
deduction (provided the Company satisfies applicable federal
income tax reporting requirements) in an amount equal to the
excess of the fair market value of the Common Stock on the date
of exercise over the option exercise price. Upon a subsequent
sale of the Common Stock by the key employee or director, such
individual will recognize short-term or long-term capital gain
or loss (depending on the applicable holding period).
SARs. A key employee or director will not
recognize any taxable income upon the grant of a SAR, and the
Company will not be entitled to take an income tax deduction at
the time of such grant. A key employee or director will
recognize ordinary income for federal income tax purposes upon
the exercise of a SAR under the 2008 Plan for cash, Common Stock
or a combination of cash and Common Stock, and the amount of
income that the key employee or director will recognize will
depend on the amount of cash, if any, and the fair market value
of the Common Stock, if any, that the key employee or director
receives as a result of such exercise. The Company generally
will be entitled to a federal income tax deduction in an amount
equal to the ordinary income recognized by the key employee or
director in the same taxable year in which the key employee or
director recognizes such income, if the Company satisfies
applicable federal income tax reporting requirements.
Restricted Units A key employee or director generally
will not recognize income for federal income tax purposes upon
the grant of a Restricted Unit. If the terms of a Restricted
Unit satisfy the requirements under Code Section 409A, the
key employee or director generally will recognize as ordinary
income an amount equal to the amount of cash paid at the time of
payment. However, if the terms of a Restricted Unit fail to
satisfy the requirements under Code Section 409A, the key
employee or director generally will recognize as ordinary income
an amount equal to the value of his or her Restricted Unit at
the time of his or her interest in the unit is no longer subject
to a substantial risk of forfeiture. The Company generally will
be entitled to a federal income tax deduction in an amount equal
to the ordinary income recognized by the key employee or
director in the same taxable year in which the key employee or
director recognizes such income.
Stock Grants. A key employee or director
generally will recognize ordinary income for federal income tax
purposes when such individuals interest in a Stock Grant
is no longer subject to a substantial risk of forfeiture. Such
income will equal the excess of the then fair market value of
the Common Stock subject to such Stock Grant over the purchase
price, if any, paid for such stock. The Company generally will
be entitled to a federal income tax deduction. n an amount equal
to the ordinary income recognized by the key employee or
director in the same taxable year in which the key employee or
director recognizes such income, if the Company satisfies the
applicable federal income tax reporting requirements.
Performance Units. A key employee or director
generally will not recognize income for federal income tax
purposes upon the grant of a Performance Unit. If the terms of a
Performance Unit satisfy the requirements under Code
Section 409A, the key employee or director generally will
recognize as ordinary income an amount equal to the amount of
cash paid at the time of payment. However, if the terms of a
Performance Unit fail to satisfy the requirements under Code
Section 409A, the key employee or director generally will
recognize as ordinary income an amount equal to the value of his
or her Performance Unit at the time of his
19
or her interest in the unit is no longer subject to a
substantial risk of forfeiture. The Company generally will be
entitled to a federal income tax deduction in an amount equal to
the ordinary income recognized by the key employee or director
in the same taxable year in which the key employee or director
recognizes such income.
Code Section 162(m). Code
Section 162(m) imposes a $1 million deduction
limitation on the compensation paid to a public companys
most senior executives unless the compensation meets one of the
exceptions to this limitation. One exception is for option
grants made at fair market value. Another exception is for
grants which are made subject to the satisfaction of one or more
Performance Goals which are set in accordance with Code
Section 162(m) and which are forfeited if there is a
failure to satisfy those Performance Goals. The 2008 Plan has
been designed so that the Compensation Committee can make grants
which can satisfy the requirements for these exceptions.
Vote
Required and Recommendation of the Board of Directors
Approval of the amendment to the 2008 Plan requires the
affirmative vote of the holders of a majority of the shares of
Common Stock represented in person or by proxy at the Annual
Meeting.
THE BOARD
OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
FOR
THE APPROVAL OF THE AMENDMENT TO THE 2008 EQUITY INCENTIVE
PLAN.
20
PROPOSAL 4.
RATIFICATION
OF ERNST & YOUNG LLP AS THE COMPANYS
INDEPENDENT
AUDITORS
FOR THE YEAR ENDING DECEMBER 31, 2010.
Ernst & Young LLP served as the Companys
independent auditors for the year ended December 31, 2009
and the Audit Committee has appointed Ernst & Young
LLP as the Companys independent auditors for the year
ending December 31, 2010. The Board of Directors is asking
that stockholders ratify the appointment of Ernst &
Young LLP as the Companys independent auditors. While the
Companys By-Laws do not require stockholder ratification,
the Company is asking its stockholders to ratify this
appointment because it believes such a proposal is a matter of
good corporate practice. If the stockholders do not ratify the
appointment of Ernst & Young LLP, the Audit Committee
will reconsider whether or not to retain Ernst & Young
LLP as the Companys independent auditors, but may
determine to do so nonetheless. Even if the appointment of
Ernst & Young LLP is ratified by the stockholders, the
Audit Committee may change the appointment at any time during
the year if it determines that a change would be in the best
interests of the Company and its stockholders.
A representative of Ernst & Young LLP is expected to
be present at the Annual Meeting and will have an opportunity to
make a statement, if he or she desires to do so, and to be
available to respond to appropriate questions from stockholders.
Independent
Auditors Fees
The following table shows the aggregate fees billed to the
Company by Ernst & Young LLP for services rendered
during the years ended December 31, 2008 and 2009:
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
Description of Fees
|
|
2008
|
|
|
2009
|
|
|
Audit Fees
|
|
|
1,331,000
|
|
|
|
1,314,003
|
|
Audit Related Fees
|
|
|
|
|
|
|
|
|
Tax Fees(1)
|
|
|
|
|
|
|
|
|
All Other Fees
|
|
|
|
|
|
|
341,000
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
|
1,331,000
|
|
|
|
1,655,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
In 2008 and 2009 Ernst & Young LLP did not provide any
tax compliance, tax advice, or tax planning services, all of
which services were provided by PriceWaterhouseCoopers LLP. Fees
billed by PriceWaterhouseCoopers LLP in 2008 and 2009 for tax
compliance, tax advice, and tax planning services were $286,340
and $210,950, respectively. Fees billed by
PriceWaterhouseCoopers, LLP in 2008 and 2009 included
FIN 48 and state tax planning expenses. |
Audit
Fees
Audit fees consist of the aggregate fees billed by
Ernst & Young LLP for professional services rendered
for the audit of the Companys financial statements as of
and for the years ended December 31, 2008 and 2009, its
reviews of the financial statements included in the
Companys Quarterly Reports on
Form 10-Q
for 2008 and 2009 as well as significant additional work
relating to the performance of Sarbanes-Oxley Section 404
attest services in 2008 and 2009.
Tax
Fees
Tax fees consist of the aggregate fees billed for professional
services rendered for tax compliance, tax advice, and tax
planning.
21
All
Other Fees
All other fees consist of the aggregate fees for professional
services rendered by Ernst & Young LLP other than
those described above and include transaction due diligence in
connection with merger and acquisition related activity,
including the Companys acquisition of CHS.
Pre-Approval
of Audit and Non-Audit Services
In accordance with the provisions of the Audit Committee
charter, the Audit Committee must pre-approve all audit and
non-audit services, and the related fees, provided to the
Company by its independent auditors, or subsequently approve
non-audit services in those circumstances where a subsequent
approval is necessary and permissible under the Exchange Act or
the rules of the Commission. Accordingly, the Audit Committee
pre-approved all services and fees provided by Ernst &
Young LLP during the year ended December 31, 2009 and has
concluded that the provision of these services is compatible
with the accountants independence.
During the year ended December 31, 2009, none of the total
hours expended on the audit of the Companys financial
statements by Ernst & Young LLP were provided by
persons other than full time employees of Ernst &
Young LLP.
THE BOARD
OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE
RATIFICATION OF ERNST & YOUNG LLP AS THE
COMPANYS INDEPENDENT AUDITORS
FOR THE YEAR ENDING DECEMBER 31, 2010.
* * * * *
22
CORPORATE
GOVERNANCE AND BOARD MATTERS
Director
Independence
The Board of Directors has determined that, except for Richard
H. Friedman and Richard M. Smith, each of its current directors
is independent within the meaning of Rule 4200(a)(15) of
the NASDAQ listing standards.
Board
Leadership
The offices of Chairman of the Board and Chief Executive Officer
are currently held Richard H. Friedman. We do not have a lead
independent director. The Board of Directors believes that
Mr. Friedmans service as both Chairman of the Board
and Chief Executive Officer of the Company is in the best
interest of the Company and its stockholders as
Mr. Friedman possesses detailed and in-depth knowledge of
the issues, opportunities and challenges faced by the Company
and is thus best positioned to develop agendas that ensure that
the Board of Directors time and attention are focused on
matters most critical to the Company and its stockholders. His
combined role also enables decisive leadership and ensures clear
accountability. Although the Company believes that the
combination of the offices of Chairman of the Board and Chief
Executive Officer is currently appropriate, our By-Laws do not
establish this approach as a policy and the Governance and
Nominating Committee and the Board continue to review this issue
periodically to determine whether, based on the relevant facts
and circumstances at such future times, separation of these
offices would serve the best interests of the Company and its
stockholders.
The Board of Directors believes that the independent directors
provide effective oversight of the Companys management.
Moreover, in addition to the oversight and feedback provided by
the independent directors during the course of our Board of
Directors meetings, our independent directors have regular
executive sessions at both the Board and Committee levels. Our
Board of Directors has not designated a lead independent
director. Following an executive session of independent
directors, a presiding director acts as a liaison between the
independent directors and the Chairman of the Board regarding
any specific feedback or issues, provides the Chairman of the
Board with input regarding agenda items for Board of Directors
and Committee meetings, and coordinates with the Chairman of the
Board regarding information to be provided to the independent
directors in performing their duties. Our Board believes that
this approach appropriately and effectively complements the
combined Chairman of the Board/Chief Executive Officer structure.
Board
Role in Risk Oversight
The Board of Directors has risk oversight responsibility for the
Company and administers this responsibility both directly and
with assistance from its committees. The Board of Directors and
its committees regularly review material financial,
compensation, compliance and, to a lesser degree operational,
risks with senior management. As part of its responsibilities as
set forth in its charter, the Audit Committee is responsible for
reviewing with management the companys major financial
risk exposures and the steps management has taken to monitor
such exposures, including the Companys procedures and any
related policies, with respect to risk assessment and risk
management. For example, our Executive Vice President and
General Counsel reports to the Audit Committee with respect to
compliance with our risk management policies. The Audit
Committee also performs a central oversight role with respect to
financial risks, and reports on its findings at each regularly
scheduled meeting of the Board. The Management Development and
Compensation Committee considers risk in connection with its
design of compensation programs for our executives. The
Governance and Nominating Committee annually reviews the
Companys corporate governance guidelines and their
implementation as well as compliance risks. Each committee
regularly reports to the Board.
Board
Diversity
While the Company does not maintain a separate policy regarding
the diversity of its Board members, the charter of the
Governance and Nominating Committee provides that in evaluating
the suitability of potential nominees for election as directors,
the committee shall consider (i) the Boards current
composition, including
23
expertise, diversity, and balance of inside, outside and
independent directors; and (ii) the general qualifications
of the potential nominees, including personal and professional
integrity and experience, including any special expertise
relevant to the Company, ability and judgment, and such other
factors deemed appropriate. Consistent with its charter, the
Governance and Nominating Committee and ultimately the Board
seek nominees with distinct professional backgrounds, experience
and perspectives so that the Board as a whole has the
appropriate mix of skills, perspectives, personal and
professional experiences and backgrounds necessary to fulfill
the needs of the Company. See Board Committees
Governance and Nominating Committee on page 25.
Board and
Committee Self-Assessments
The Governance and Nominating Committee oversees an annual
evaluation process, whereby each director evaluates the Board as
a whole and each member of the standing committees of the Board
evaluates the committees on which he or she serves. After these
evaluations are complete, the results are discussed by the Board
and each committee and with each individual director, as
applicable, and, if necessary, action plans are developed.
Board
Meetings; Annual Meeting Attendance
The Board of Directors held a total of five meetings during
2009. During such period, each director attended at least 75% of
the meetings of the Board of Directors and the committees of the
Board of Directors on which the director served that were held
during the applicable period of service. The Company expects
each member of the Board of Directors to attend its annual
meetings absent a valid reason, such as a schedule conflict.
Last year, each member of the Board of Directors attended the
2009 annual meeting of stockholders.
Executive
Sessions
Non-management directors meet regularly in executive sessions.
Non-management directors are all those directors who
are not employees of the Company. The Companys
non-management directors consist of all of its current directors
other than Richard H. Friedman and Richard M. Smith. An
executive session of the Companys non-management directors
is generally held in conjunction with each regularly scheduled
Board of Directors meeting. Additional executive sessions may be
called at the request of the Board of Directors or the
non-management directors.
Board
Committees
The Company has standing Audit, Governance and Nominating,
Management Development and Compensation, and Corporate Strategy
Committees. Each committee, other than the Corporate Strategy
Committee, is comprised solely of independent directors.
Membership in each committee is as follows:
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Management
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Governance and
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Development and
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Corporate
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Audit Committee
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Nominating Committee
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Compensation
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Strategy Committee
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Myron Z. Holubiak
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Charlotte W. Collins*
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Charlotte W. Collins
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Richard H. Friedman
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David R. Hubers
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Louis T. DiFazio
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Samuel P. Frieder
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David R. Hubers
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Richard L. Robbins*
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David R. Hubers
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Myron Z. Holubiak
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Myron Z. Holubiak*
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Gordon H. Woodward
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Stuart A. Samuels
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Stuart A. Samuels*
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Gordon H. Woodward
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* |
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designates committee chairperson. |
The Company has adopted a written charter for each of the
committees, other than the Corporate Strategy Committee.
Stockholders may access a copy of each committees charter
on the Companys website at www.bioscrip.com under the
heading About Us Investors
Corporate Governance.
Audit
Committee
Each member of the Audit Committee satisfies the independence
requirements of Rule 4200(a)(15) of the National
Association of Securities Dealers listing standards and
Rule 10A-3(b)(1)
of the Securities Exchange
24
Act of 1934 (the Exchange Act). The Companys
Board of Directors has determined that Richard L. Robbins is an
audit committee financial expert as that term is
defined in Item 407(d)(5)(ii) of
Regulation S-K
of the Exchange Act. The Audit Committee is responsible, among
its other duties, for overseeing the process of accounting and
financial reporting of the Company and the audits of the
financial statements of the Company; appointing, retaining and
compensating the Companys independent auditors;
pre-approving all audit and non-audit services by the
Companys independent auditors; reviewing the scope of the
audit plan and the results of each audit with management and the
Companys independent accountants; reviewing the internal
audit function; reviewing the adequacy of the Companys
system of internal accounting controls and disclosure controls
and procedures; and reviewing the financial statements and other
financial information included in the Companys annual and
quarterly reports filed with the Commission. During 2009, the
Audit Committee held six meetings.
Governance
and Nominating Committee
Each member of the Governance and Nominating Committee is
independent as set forth in Rule 4200(a)(15) of
the NASDAQ listing standards. The Governance and Nominating
Committees functions include recommending to the Board of
Directors the number and names of proposed nominees for election
to the Board of Directors at the Companys Annual Meeting
of Stockholders; identifying and recommending nominees to fill
expiring and vacant seats on the Board of Directors; reviewing
on an annual basis committee and Board of Directors performance
and recommending changes to the Board of Directors. Except as
may be required by rules promulgated by the NASDAQ Stock Market
or the Commission, it is the current sense of the Governance and
Nominating Committee that there are no specific, minimum
qualifications that must be met by each candidate for the Board
of Directors, nor are there specific qualities or skills that
are necessary for one or more of the members of the Board of
Directors to possess. In evaluating the suitability of potential
nominees for election as members of the Board of Directors, the
Governance and Nominating Committee will take into consideration
the current composition of the Board of Directors, including
expertise, diversity, and balance of inside, outside and
independent directors, as well as the general qualifications of
the potential nominees, including personal and professional
integrity, ability and judgment and such other factors deemed
appropriate. The Governance and Nominating Committee will
evaluate such factors, among others, and will not assign any
particular weighting or priority to any of these factors. While
the Governance and Nominating Committee has not established
specific minimum qualifications for director candidates, the
Committee believes that candidates and nominees must reflect a
Board of Directors that is predominantly independent and is
comprised of directors who (i) are of high integrity,
(ii) have qualifications that will increase the overall
effectiveness of the Board of Directors, including expertise and
knowledge in various disciplines relevant to the Companys
business
and/or
operations, and (iii) meet other requirements as may be
required by applicable rules, such as financial literacy or
financial expertise with respect to Audit Committee members. The
Governance and Nominating Committee will consider
recommendations for nominations from any reasonable source,
including officers and directors as well as from stockholders of
the Company who comply with the procedures set forth in the
Companys By-Laws. See the section below entitled
Stockholder Proposals. The Governance and Nominating
Committee will evaluate all stockholder recommended candidates
on the same basis as any other candidate. When appropriate, the
Governance and Nominating Committee may retain executive
recruitment firms to assist in identifying suitable candidates.
The Governance and Nominating Committee also reviews corporate
governance, compliance and ethics guidelines, and oversees the
annual evaluation of the Board of Directors and management of
the Company. The Governance and Nominating Committee held five
meetings during 2009.
Management
Development and Compensation Committee
The Management Development and Compensation Committee (the
Compensation Committee) reviews and approves the
overall compensation strategy and policies for the Company. Each
member of the Compensation Committee is independent
as set forth in Rule 4200(a)(15) of the NASDAQ listing
standards. In addition, the Compensation Committee reviews and
approves corporate performance goals and objectives relevant to
the compensation of the Companys executive officers and
other senior management; reviews and approves the compensation
and other terms of employment of the Companys Chief
Executive Officer; and
25
oversees the Companys 2008 Equity Incentive Plan (the
2008 Plan), the 2001 Incentive Stock Plan (the
2001 Plan), the 1996 Incentive Stock Plan (the
1996 Plan) and the 1996 Non-Employee Directors Stock
Incentive Plan (the Directors Plan). The 1996 Plan
and the Directors Plan both terminated in 2006. Upon stockholder
approval of the 2008 Plan no further grants were made under the
2001 Plan; provided, that if any shares of Common Stock subject
to an award under the 2001 Plan are forfeited or expire or are
settled for cash (in whole or in part), the shares of Common
Stock subject to such award will, to the extent of the
forfeiture, expiration or cash settlement, again be available
for issuance under the 2008 Plan, subject to certain limitations
as described in the 2008 Plan. The Compensation Committee also
administers the Chronimed Stock Options Plans, which were
assumed by the Company in connection with its merger with
Chronimed Inc. in 2005, and the BioScrip/CHS 2006 Equity
Incentive Plan (the CHS Plan), which was assumed and
adopted by the Company in connection with its acquisition of CHS
in March 2010. In connection with the assumption and adoption of
the CHS Plan, certain options issued under the under CHS Plan
held by the top five executives of CHS were converted into the
right to purchase 716,086 shares of the Companys
Common Stock and all other options issued under the CHS Plan
were either cashed out or cancelled at the closing of the
acquisition of CHS. As of April 19, 2010 there were
2,390,229 shares of common stock remaining available for
grant to employees of CHS under the CHS Plan. The Compensation
Committee is also responsible for ensuring that adequate
management development programs and activities are created and
implemented in order to provide a succession plan for executive
officers and other significant positions within the Company.
During 2009, the Compensation Committee held six meetings.
Corporate
Strategy Committee
The Company also has a Corporate Strategy Committee. The
Corporate Strategy Committee consists of the Companys
Chief Executive Officer plus two or more directors of the
Company, currently Messrs. Holubiak, Hubers and Woodward.
Members of the Corporate Strategy Committee are not required to
be independent directors. The purpose of the Corporate Strategy
Committee is to oversee the development and implementation of
the Companys corporate strategy and to assess
strategic opportunities as they arise from time to time. During
2009 the Corporate Strategy Committee held seven meetings.
Code of
Ethics
The Company is committed to having sound corporate governance
principles and has adopted a Code of Business Conduct and Ethics
for its directors, officers and employees. The Code of Business
Conduct and Ethics covers topics including, but not limited to,
financial reporting, conflicts of interest, confidentiality of
information, and compliance with laws and regulations. The
Companys Code of Business Conduct and Ethics, is available
on the Companys website at www.bioscrip.com under the
heading About Us Investors
Corporate Governance. The information contained in or
connected to the Companys website is not incorporated by
reference to or considered a part of this proxy statement. If
any waivers of the Code of Business Conduct and Ethics are
granted, such waivers will be disclosed on a Current Report on
Form 8-K.
Stockholder
Communications with the Board of Directors
Historically, the Company has not adopted a formal process for
stockholder communications with the Board of Directors.
Nevertheless, every effort has been made to ensure that the
views of stockholders are heard by the Board of Directors or
individual directors, as applicable, and that appropriate
responses are provided to stockholders in a timely manner. We
believe our responsiveness to stockholder communications to the
Board of Directors has been excellent.
Review,
Approval or Ratification of Transactions With Related
Persons
In accordance with the terms of the Companys Audit
Committee Charter, the Audit Committee is required to review and
approve all related person transactions on an ongoing basis. A
related person transaction, as defined in Item 404(a) of
Regulation S-K,
is any transaction, arrangement or relationship in which the
Company is a participant, the amount involved exceeds $120,000,
and one of the Companys
26
executive officers, directors, director nominees, or 5%
stockholders (or their immediate family members) has a direct or
indirect material interest. During 2009 there were no related
person transactions.
Compensation
of Directors
The table below sets forth all compensation earned by the
Companys non-employee directors in 2009.
Director
Compensation Table
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Fees Earned or Paid
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in Cash
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Stock Awards
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Name
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($)(1)
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($)(2)(3)
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Total ($)
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Charlotte W. Collins
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70,000
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13,650
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83,650
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Louis T. DiFazio
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55,000
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13,650
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68,650
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Myron Z. Holubiak
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71,250
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13,650
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84,900
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David R. Hubers
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63,750
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13,650
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77,400
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Richard L. Robbins
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71,250
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13,650
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84,900
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Stuart A. Samuels
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70,000
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13,650
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83,650
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(1) |
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The fees shown include the annual retainer fee paid to each
non-employee director, committee chairmanship fees and
attendance fees for both board and committee meetings. |
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(2) |
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Value of stock and option awards determined in accordance with
FASB ASC Topic 718 and represents aggregate grant date fair
value. Assumptions used in the calculation of these amounts are
included in the footnotes to the Companys audited
financial statements for the fiscal year ended December 31,
2009 included in the Companys Annual Report on
Form 10-K
filed with the Commission on March 2, 2010. |
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(3) |
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The following stock and option awards were outstanding at fiscal
year end and the 2009 restricted common stock grants that vested
on April 28, 2010 for each non-employee director: |
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Stock Awards
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Option Awards
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Outstanding at Fiscal
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Outstanding at Fiscal
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Name
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Year End
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Year End
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Charlotte W. Collins
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13,500
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35,000
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Louis T. DiFazio
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13,500
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25,000
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Myron Z. Holubiak
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13,500
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52,600
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David R. Hubers
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13,500
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92,200
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Richard L. Robbins
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13,500
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25,000
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Stuart A. Samuels
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13,500
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92,200
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During 2009, each non-management director received an annual
director fee of $50,000 plus an annual fee of $5,000 for each
Board committee on which the non-management director serves. In
addition, the chairman of each Board committee received an
additional fee for their added responsibilities as follows:
(i) the chairman of the Audit Committee received an
additional $15,000 fee, and (ii) the chairmen of the
Governance and Nominating Committee and the Compensation
Committee each received an additional $10,000 fee. All of the
above fees are paid quarterly. All Board members are also
reimbursed for expenses incurred in connection with attending
such meetings.
In addition to the above fees, on April 28, 2009, the date
of the Companys 2009 annual meeting of stockholders, each
non-management director, other than Messrs. Frieder and
Woodward, who were not appointed as directors until
March 25, 2010, was granted 5,000 shares of restricted
common stock of the Company, which vested on the one year
anniversary of the grant date.
27
REPORT OF
THE AUDIT COMMITTEE
The Audit Committee is responsible for overseeing the process of
accounting and financial reporting of the Company and the audits
and financial statements of the Company. The Audit Committee
operates pursuant to a written charter which is reviewed
annually by the Audit Committee. As set forth in the Audit
Committee charter, management of the Company is responsible for
the preparation, presentation and integrity of the
Companys financial statements and for the appropriateness
of the accounting principles and reporting policies that are
used by the Company. The independent auditors are responsible
for auditing the Companys financial statements and
expressing an opinion on the conformity of those audited
financial statements with accounting principles generally
accepted in the United States.
In the performance of its oversight function, the Companys
Audit Committee reviewed and discussed with the Companys
management and the Companys independent auditors the
audited consolidated financial statements of the Company
contained in the Companys Annual Report on
Form 10-K
for the year ended December 31, 2009. The Audit Committee
also discussed with our independent auditors the matters
required to be discussed by Statement on Auditing Standards
No. 61, Communications with Audit Committees, as
amended (AICPA, Professional Standards, Vol. 1 AU
Section 380), as adopted by the Public Company Accounting
Oversight Board in Rule 3200T. In addition, the Audit
Committee has received and discussed with the Companys
independent registered public accounting firm the written
disclosures and the letter from the Companys independent
registered public accounting firm required by applicable
requirements of the Public Company Accounting Oversight Board
regarding the independent registered public accounting
firms communications with the audit committee concerning
independence and have discussed with the independent registered
public accounting firm its independence.
Based on the review and discussions described in the preceding
paragraph above, the Audit Committee recommended to the Board of
Directors that the audited consolidated financial statements
referred to above be included in the Companys Annual
Report on
Form 10-K
for the year ended December 31, 2009 filed with the
Commission.
Submitted by the Audit Committee:
Richard L. Robbins, Chairman
Myron Z. Holubiak
David R. Hubers
Gordon H. Woodward
28
EXECUTIVE
OFFICERS
The following sets forth certain information with respect each
executive officer of the Company who is not also a director of
the Company:
Stephen B. Cichy, 39, Senior Vice President, Managed
Care and Marketing and Product Development. Mr. Cichy
joined BioScrip in March 2009. Prior to joining BioScrip, from
August 2007 until March 2009, Mr. Cichy was Vice President
of Product Development for Walgreens, Inc., a prescription drug
retailer. From April 2005 until September 2007, he held various
positions with Option Care, Inc., a specialty pharmacy provider,
including Senior Director of Product Development and Vice
President of Business Development and Commercial Operations.
Option Care was acquired by Walgreens in September 2007. Prior
to joining Option Care, from March 2003 to April 2005,
Mr. Cichy was Director of New Product Planning for
Caremark, Inc., a pharmacy benefit management and specialty
pharmacy company.
Russel J. Corvese, 48, Senior Vice President, Mail and
Managed Care Operations. Mr. Corvese joined
BioScrip in May 1994 and has held various positions including
Vice President of Operations of BioScrips subsidiary,
BioScrip PBM Services, LLC, and Chief Information Officer of
BioScrip.
Dave Evans, 46, Senior Vice President, Strategic
Operations. Mr. Evans joined BioScrip in
February 2009. Prior to joining BioScrip, from August 2006 to
July 2008, Mr. Evans was Chief Financial Officer and
Secretary of Byram Healthcare Centers, Inc., a provider of
medical supplies and pharmacy items to long term chronic
patients. From June 2003 to August 2006, Mr. Evans was the
Corporate Vice President, Strategic Operations of Option Care,
Inc., a home infusion and specialty pharmaceutical company.
Scott W. Friedman, 34, Senior Vice President Business
Development. Mr. Friedman joined BioScrip in
1998 as an employee in the Marketing Department. In February
2002, he was appointed Vice President of Marketing and, in
January 2003, he was appointed Vice President of Pharmaceutical
Relations. In August 2006 he was appointed Executive Vice
President of Sales and Marketing. In April 2010 he was appointed
Senior Vice President of Business Development. Mr. Friedman
is the son of Richard H. Friedman, the Chief Executive Officer
and Chairman of the Board of BioScrip.
Phillip J. Keller, 43, Senior Vice President of Finance and
Principal Accounting Officer. Mr. Keller
joined BioScrip in 2007 as Vice President of Finance and was
appointed Senior Vice President and Principal Accounting Officer
in February 2010. Prior to joining BioScrip, from 2000 to 2007
Mr. Keller was Vice President of Finance and Chief
Financial Officer of DMI Furniture, Inc.
Douglas A. Lee, 43, Senior Vice President and Chief
Information Officer. Mr. Lee joined BioScrip
as its Chief Information Officer in February 2007 and was
appointed a Senior Vice President in April 2010. Prior to
joining BioScrip, Mr. Lee was a principal in Resultares
Consulting Inc., an executive information technology consulting
firm, from November 2006 to February 2007. From August 2004 to
November 2006, he was the Chief Information Officer of Option
Care, Inc. From January 1998 to August 2004, he was a partner
and Chief Information Officer of Technology Extension
Consulting, Inc.
Lisa Nadler, 47, Senior Vice President, Human
Resources. Ms. Nadler joined BioScrip in
July 2009 and is responsible for the development and
implementation of all human resources initiatives. Prior to
joining BioScrip, from 2007 to 2009 Ms. Nadler was Senior
Vice President, Corporate Finance for IMG, Inc., a sports,
entertainment and media company, where she was responsible for
treasury, tax and risk management. From 2000 to 2007,
Ms. Nadler was Senior Vice President, Finance and Human
Resources for Gartner, Inc., an information technology research
and advisory company.
Vito Ponzio, Jr., 55, Senior Vice President, Community
Pharmacy Operations. Mr. Ponzio joined
BioScrip in January 2010 and is responsible for all operations
aspects of the Community Store Division. Previously,
Mr. Ponzio was the Senior Vice President, Administration
for Coram Specialty Infusion Services, a division of Apria
Healthcare. He was with Coram for 19 years, from 1990 to
2009, and was responsible for human resources, legal, risk
management, facilities and construction management, clinical
operations and payroll. During his tenure, he also held the
position of Compliance Officer and EEO Officer of Coram and
served on the Board of Directors for all Coram subsidiary
companies.
29
Barry A. Posner, 46, Executive Vice President, General
Counsel and Secretary. Mr. Posner joined
BioScrip in March 1997 as General Counsel and was appointed
Secretary of BioScrip at that time. In April 1998,
Mr. Posner was appointed Vice President of BioScrip. In
November 2001, he was appointed to the position of Executive
Vice President of BioScrip.
Robert F. Roose, 52, Senior Vice President, Supply
Chain. Mr. Roose joined the Company in
December 2006 and has held various positions including Chief
Procurement Officer. Prior to joining the Company, from August
2004 until September 2006 Mr. Roose was Senior Vice
President and Chief Procurement Officer of Option Care, Inc., a
home infusion and specialty pharmaceutical company.
Stanley G. Rosenbaum, 63, Executive Vice President, Chief
Financial Officer and
Treasurer. Mr. Rosenbaum joined BioScrip as
its Executive Vice President, Chief Financial Officer and
Treasurer in June 2006. From October 2003 to June 2005, he was a
consultant for the Kerr Group, Inc. From October 2000 to April,
2003, he was Chief Financial Officer of Petropac Solutions,
Inc., a private company servicing the petroleum industry.
Michael Saracco, 62, Senior Vice President, National
Sales. Mr. Saracco joined BioScrip in
September 2009 and is responsible for leading BioScrips
national sales efforts, which includes the infusion and
physician specialty sales teams. Prior to joining BioScrip, from
1996 to 2008 Mr. Saracco held various positions at Coram,
Inc including President, Specialty Services. From 1988 to 1995,
Mr. Saracco was Director of Sales and Regional General
Manager for Caremark International, a national home infusion
provider which was acquired by Coram Inc. in 1995.
Joseph Smith, 50, Senior Vice President, Infusion and AIC
Services. Mr. Smith joined BioScrip in
February 2009. Prior to joining BioScrip, from March 2006 to
June 2008, Mr. Smith was Chief Operating Officer and a
director of ActiveCare Network, LLC, a network of clinics that
provide infusion, injection and vaccine services for payors,
pharmaceutical manufacturers and specialty pharmacy clients.
From July 2001 to August 2005, Mr. Smith was Executive Vice
President of Hemophilia Resources of America, Inc., a
distributor of blood products to hemophilia patients. From March
1993 to June 2001, Mr. Smith held various positions with
Coram Healthcare, Inc., a national provider of home infusion
services and specialty pharmacy distribution, including Chief
Operating Officer from December 1998 to July 2000.
Executive officers are appointed by and serve at the pleasure of
the Board, subject to the terms of their respective employment
and/or
severance agreements with the Company. See Employment and
Severance Agreements below.
* * * * *
30
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Overview
The Compensation Committee is comprised of all independent
directors and is responsible for, among other things, overseeing
and approving compensation levels for the Companys Chief
Executive Officer and other executive management, including the
individuals named in the Summary Compensation Table below (the
named executives). The Compensation Committee is
also responsible for the development and administration of
management compensation policies and programs that are
consistent with, linked to and supportive of the basic strategic
objectives of creating stockholder value and paying for quality
performance while taking into consideration the activities,
roles and responsibilities of the Companys management.
The Compensation Committee, from time to time, utilizes
compensation consultants to assist the Committee with:
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compensation benchmarking;
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incentive plan design and grant levels;
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current and anticipated trends in executive
compensation; and
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compliance with executive compensation regulations.
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In 2009, the Compensation Committee engaged Frederic W.
Cook & Co., Inc. (FW Cook) for the sole
purpose of providing the Committee with an update on changes in
the executive compensation environment. For services provided to
the Compensation Committee in 2009 FW Cook was paid $13,720.
Objectives
of the Companys Compensation Program
The Compensation Committee adheres to the following three
principles in discharging its responsibilities:
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Overall compensation programs should be structured to ensure the
Companys ability to attract, retain, motivate and reward
those individuals who are best suited to achieving the desired
performance results, both long-term and short-term, while taking
into account the roles, duties and responsibilities of
individuals and their respective departments
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There should be a strong link between executive officer
compensation and the Companys short-term and long-term
financial performance.
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Annual bonuses and long-term incentive compensation for senior
management and key employees should be at risk, or
based upon the satisfactory achievement of established financial
or other performance related goals and objectives.
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In determining compensation, the Compensation Committee
considers the compensation levels, programs and practices of
certain companies in the healthcare industry to assure that its
programs are market competitive. The Compensation Committee
reviews and periodically adjusts the peer group used by it in
making compensation decisions. In the second half of 2008, a
peer group review was undertaken with the assistance of FW Cook,
which also used national surveys to provide the Compensation
Committee with additional benchmark information. The 2008 peer
group review was used as a basis for determining 2009
compensation. In early 2009, the peer group was again reviewed
to determine 2010 compensation. The peer group companies, which
the Compensation Committee believed to be an appropriate peer
group, had 2008 median revenues of $1.5 billion (as
compared to the Companys $1.4 billion of revenue for
2009) and included the following:
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Catalyst Health.
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Amedisys
|
|
Pharmerica Corporation
|
Centene Corporation
|
|
Lincare Holdings, Inc.
|
|
PSS World Medical, Inc.
|
Almost Family
|
|
LHC Group
|
|
SXC Health
|
Gentiva Health Services, Inc.
|
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|
|
|
31
Managements
Role in Compensation Practices
While the Compensation Committee does not delegate any of its
authority to determine executive compensation, it considers
recommendations from the Companys Chief Executive Officer
in making its compensation decisions for executive officers,
other than himself. In making compensation recommendations to
the Compensation Committee, the Chief Executive Officer
generally considers individual, business unit, division and
Company performance and comparable compensation for a similar
position at other competitive companies. Compensation levels and
targets, as well as performance targets and compensation ranges,
are then proposed by management to the Compensation Committee
which reviews the proposals, discusses them with management and
the Compensation Committees outside consultant, taking
into account the benchmark data, and the Compensation Committee
will approve what it deems appropriate compensation levels. The
Chairman of the Compensation Committee will advise the
Companys Chief Executive Officer of all Compensation
Committee approved recommendations. The Chief Executive Officer
will then inform senior management of such approved compensation
levels.
Chief
Executive Officer Compensation
In setting compensation for the Companys Chief Executive
Officer, the Compensation Committee consulted with its outside
compensation consultant. In May 2008, the Company entered into a
new employment agreement with its Chief Executive Officer. The
Chief Executive Officers new employment agreement is
described below in the section titled Employment and
Severance Arrangements. The Compensation Committee
believes the structure of the employment agreement, as well as
the targeted and potential value of the compensation to be
earned thereunder, is in the best interest of stockholders,
provides a competitive opportunity that is strongly aligned with
stockholder interests, and provides for management continuity.
Elements
of the Companys Executive Compensation
Program
With the above principles and benchmarking data as a guide, the
Compensation Committee embraces a
pay-for-performance
philosophy and has adopted compensation programs that it
believes are competitive with compensation paid to executives in
similar businesses with persons holding similar positions and
having similar duties and responsibilities. The Companys
compensation program for executive officers consists of base
salary, annual cash incentive compensation, and long-term
incentive compensation.
Base Salary. Base salary is the fixed
component of the Companys executive compensation program
and is the only element of executive annual cash compensation
not based on Company performance. The Compensation Committee
reviews base salaries for executives other than the Chief
Executive Officer from time to time and approves salary levels
after assessing a number of factors including the Companys
and the executives performance for the previous year, the
executives scope of responsibilities, competitive
compensation levels coupled with the reasonableness within the
Company, and the Companys ability to pay. The base salary
of the Companys Chief Executive Officer is fixed pursuant
to the terms of his employment agreement. Base salaries allow
the Company to provide a competitive level of compensation in
order to attract and retain superior employees. On an overall
basis, base salary is targeted at the 50th percentile of
the competitive market (as discussed above) for the Chief
Executive Officer and his direct reports. The named executives
did not receive an increase in base salary for 2009 while the
average base salary increase for all salaried employees was
approximately 3.0%.
Annual Cash Incentive Compensation. The
Company does not pay contractual annual bonuses to its
executives or to employees at any level. A broad group of
approximately 230 management employees, including the named
executives, are eligible to participate in a
pay-for-performance
annual cash incentive plan. The cash incentive plan is designed
to motivate employees to continuously improve the Companys
business performance and to promote a results-oriented business
culture by rewarding an executive officers individual
performance as well as the overall performance of the Company
for a given year. Annual cash incentive compensation is
generally targeted at the median of the companies included
within its selected peer group. Executive officers have an
opportunity to receive annual incentive compensation under the
cash incentive plan if individual, corporate and departmental or
business unit goals and objectives are achieved. On an overall
basis annual cash incentive compensation is targeted at the
50th percentile of the competitive market.
32
Company-wide cash incentive awards, including those for
executives, are recommended to the Compensation Committee for
approval based on an assessment by the Companys Chief
Executive Officer. If certain financial performance thresholds
are met, then an annual bonus is paid for that year. In 2009,
the Compensation Committee approved the following bonus program
for the Companys named executives:
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The annual cash bonus for the Chief Executive Officer was
targeted at 100% of base salary. Achievement of the full bonus
amount was tied to the following factors: (i) achievement
of budgeted net income of $19.2 million 60% of
the targeted bonus; (ii) achievement of budgeted sales of
$1.374 billion 10% of the targeted bonus;
(iii) implementation of the Companys new pharmacy and
billing and collection system in all community retail stores and
the Companys mail service facility on or before
September 30, 2009 10% of the targeted bonus;
(iv) implementation of a new employee development and
training program 5% of the targeted bonus;
(v) improvement in employee satisfaction 10% of
the targeted bonus; and (vi) achievement of cost reduction
of $2.0 million above budget during 2009 5% of
the targeted bonus. For 2009 the Companys Chief Executive
Officer earned 80% of his targeted bonus amount.
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The annual cash bonus for the President and Chief Operating
Officer was targeted at 50% of base salary. Achievement of the
full bonus amount was tied to the following factors:
(i) achievement of budgeted net income of
$19.2 million 60% of the targeted bonus;
(ii) achievement of budgeted sales of
$1.374 billion 10% of the targeted bonus;
(iii) implementation of the Companys new pharmacy and
billing and collection system in all community retail stores and
the Companys mail service facility on or before
September 30, 2009 10% of the targeted bonus;
(iv) implementation of a new employee development and
training program 5% of the targeted bonus; and
(v) improvement in employee satisfaction 10% of
the targeted bonus; and (vi) achievement of cost reduction
of $2.0 million above budget during 2009 10% of
the targeted bonus. For 2009 the Companys President and
Chief Operating Officer earned 80% of his targeted bonus amount.
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The annual cash bonus incentive for the Chief Financial Officer
was targeted at 55% of base salary. Achievement of the full
bonus amount was tied to the following factors: ((i) achievement
of budgeted net income of $19.2 million 60% of
the targeted bonus; (ii) achievement of budgeted sales of
$1.374 billion 10% of the targeted bonus;
(iii) implementation of the Companys new pharmacy and
billing and collection system in all community retail stores and
the Companys mail service facility on or before
September 30, 2009 10% of the targeted bonus;
(iv) implementation of a new employee development and
training program 10% of the targeted bonus; and
(v) improvement in employee satisfaction 10% of
the targeted bonus; and (vi) achievement of cost reduction
of $2.0 million above budget during 2009 10% of
the targeted bonus. For 2009 the Companys Chief Financial
Officer earned 80% of his targeted bonus amount.
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The annual cash bonus for the Executive Vice President and
General Counsel was targeted at 40% of base salary. Achievement
of the full bonus amount was tied to the following factors:
(i) achievement of budgeted net income of
$19.2 million 60% of the targeted bonus;
(ii) increase legal and compliance awareness through
development of new education program 10% of the
targeted bonus; (iii) satisfactory results of internal
survey of legal department 10%; (iv) meeting
requirements of board and committee chairs related to
secretarial and governance issues 10% of the
targeted bonus; and (v) achievement of cost reduction of
$2.0 million above budget during 2009 10% of
the targeted bonus. For 2009 the Companys Executive Vice
President and General Counsel earned 92% of his targeted bonus
amount.
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The annual incentive for the Senior Vice President of Business
Development was targeted at 50% of base salary. Achievement of
the full bonus amount was tied to the following factors:
(i) achievement of budgeted net income of
$19.2 million 60% of the targeted bonus;
(ii) achievement of budgeted sales of
$1.374 billion 10% of the targeted bonus;
(iii) implementation of the Companys new pharmacy and
billing and collection system in all community retail stores and
the Companys mail service facility on or before
September 30, 2009 10% of the targeted bonus;
(iv) achievement of cost reductions of $2.0 million
above budget during 2009 10% of the targeted bonus;
(v) implementation of a new employee development and
training program 5% of the targeted bonus; and
(vi) improvement in employee satisfaction 5% of
the targeted bonus. The Senior Vice President of Business
Development
|
33
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|
had the opportunity to earn an additional bonus in an amount
equal to 12.5% of the Companys net income above
$19.2 million. For 2009 the Companys Senior Vice
President of Business Development earned 80% of his targeted
bonus amount and no additional bonus.
|
Long-Term Incentive Compensation. The Company
provides long-term incentives to its executive officers through
the 2008 Plan, which permits the grant of various equity based
awards including stock options, stock appreciation rights,
restricted stock units, stock grants, and performance units. The
2008 Plan does not allow the grant of reload options
or the repricing of stock options.
The purpose of the 2008 Plan is to promote the interests of the
Company by granting equity awards to key employees in order to
(i) attract and retain key employees, (ii) provide an
additional incentive to each key employee to work to increase
the value of the Companys common stock, and
(iii) provide each key employee with a stake in the future
of the Company which corresponds to the stake of each of the
Companys stockholders. Historically stock options were the
only form of long-term incentive utilized by Company as the
Compensation Committee believed that stock options were the
strongest tie to stock price performance and that the interests
of the Companys executives would have the greatest
alignment with stockholder interests through the granting of
stock options. From the Companys merger with Chronimed in
March 2005 until 2009, the Companys stock price had
declined, causing most of the outstanding stock option grants to
be substantially out of the money. To address concerns of the
Compensation Committee related to retention of the management
team, in 2006 the Board approved the Compensation
Committees directive to issue long-term incentive grants
to key executives and employees consisting of 50% of long-term
incentive value in stock options and 50% of long-term incentive
value in performance based restricted stock. Long-term incentive
compensation is generally targeted at the median of the
companies included within its selected peer group. Despite the
Compensation Committees 2006 philosophy of issuing
long-term incentive grants to key executives and employees
consisting of 50% of long-term incentive value in stock options
and 50% of long-term incentive value in performance based
restricted stock, in 2008 and 2009 the Compensation Committee
decided to make a long-term incentive grants consisting solely
of stock options. The Compensation Committee made this decision
based on a number of factors. The factors the Compensation
Committee considered in making this decision included the
following: (i) the large number of outstanding stock
options previously granted to management and other employees
that were out of the money; (ii) the limited number of
shares of stock remaining available for grant under the 2008
Plan; (iii) the terms of the 2008 Plan which provide that
any grant of stock, other than options or stock appreciation
rights, are counted against the pool of stock reserved for
issuance under the 2008 Plan as one and one-half (1.5) shares of
stock for every one share of stock granted; and (iv) the
lack of vesting of the 2007 restricted stock grant which the
Compensation Committee still determined to provide an
appropriate level of incentive to management.
On April 28, 2009 the Compensation Committee approved the
grant of stock options to, among other employees, each of the
named executive officers, other than Richard M. Smith. The
number of stock options granted to each named executive (other
than to Mr. Smith) was as follows: (i) 150,000 options
to Richard Friedman, (ii) 100,000 options to Stanley G.
Rosenbaum, (iii) 100,000 options to Barry A. Posner, and
(iv) 75,000 options to Scott Friedman.
Each stock option had a strike price of $2.73 per share, the
fair market value on the date of grant. Each option vests as to
one third of the shares on the first, second and third
anniversaries of the date of grant. The stock option agreements
evidencing the grants have a ten year term.
Long-term incentive compensation is generally granted on an
annual basis at the first meeting of the Compensation Committee
following the Companys annual stockholder meeting. No
long-term incentive compensation is granted immediately prior
to, coincident with or immediately after the announcement of
Company results. Generally, executives receive only one grant
per cycle, typically a year. In addition, as indicated in
Proposal 3 above, if the amendments to the 2008 Plan are
approved at the Annual Meeting, for fiscal years 2010 through
2012 the Company will not grant during such three fiscal years a
number of shares subject to options or stock awards to employees
or non-employee directors, such that the average number of
shares granted in each of such fiscal years over such three-year
period is greater than 3.65% of the average number of shares of
the Companys common stock that were outstanding at the end
of each of such three fiscal years.
34
Deductibility
of Compensation
In establishing pay levels for our named executives, the
Compensation Committee considers the impact of
Section 162(m) of the Internal Revenue Code of 1986, as
amended (the Code) on the amount of compensation
deductible by the Company. Under current tax law,
Section 162(m) imposes a $1.0 million limit that a
publicly traded company can deduct for compensation paid to its
chief executive officer and its next four most highly
compensated executives. This limitation does not apply to pay
that qualifies as performance-based compensation. In
order to qualify as performance-based, compensation must, among
other things, be based solely on the attainment of
pre-established objective goals under a stockholder approved
plan with no discretion permitted in determining award payouts.
While the Companys annual cash incentive compensation
program is discretionary and therefore does not qualify as
performance-based compensation under
Section 162(m), the Compensation Committee generally seeks
to structure long-term incentive compensation for the named
executives so as to qualify for full tax deductibility under
Section 162(m). Our current restricted stock grants are
based on, and any future grants are generally also expected to
be based on, the Companys achievement of pre-established
performance goals. In addition, options granted under the 2008
Plan will be exempt from the deduction limit of 162(m). The
Compensation Committee intends to continue to pursue a strategy
of maximizing the deductibility of the compensation paid to the
Companys executives when appropriate. However, the
Committee reserves the right to make awards outside of these
plans or to provide compensation that does not qualify for full
tax deductibility under Section 162(m) when deemed
appropriate.
Retirement
The Company maintains a qualified 401(k) plan in which all
employees (including the named executives) may participate.
There are no special executive retirement benefits other than
for the Chief Executive Officer. The retirement benefit for the
Chief Executive Officer is discussed below in the section titled
Employment and Severance Arrangements.
Perquisites
The Company did not provide perquisites to any of its named
executives in 2009.
Stock
Ownership Guidelines
The Company encourages executive stock ownership but does not
currently have any formal stock ownership guidelines in place.
The Compensation Committee has determined it advisable to adopt
stock ownership guidelines for directors and executives and such
guidelines are currently being prepared.
Compensation
Committee Report
Management of the Company has prepared the Compensation
Discussion and Analysis as required by Item 402(b) of
Regulation S-K,
and the Management Development and Compensation Committee of the
Board of Directors has reviewed and discussed it with
management. Based on this review and discussion, the Management
Development and Compensation Committee recommended to the Board
of Directors that the Compensation Discussion and Analysis be
included in the proxy statement for the Companys 2010
Annual Meeting of Stockholders.
Submitted by the Management Development and Compensation
Committee:
Stuart A. Samuels, Chairman
Charlotte W. Collins
Samuel P. Frieder
Myron Z. Holubiak
35
Compensation
Committee Interlocks and Insider Participation
No member of the Management Development and Compensation
Committee is or has been one of our officers or employees or has
had any relationship with us requiring disclosure under the
Commissions rules and regulations. During the year ended
December 31, 2009 none of the Companys executive
officers served on the board of directors, or on the
compensation committee of the board of directors, of any entity
whose executive officers serve on our Board.
Summary
Compensation Table
The table below summarizes the total compensation earned by each
of the Companys named executive officers in 2009, 2008 and
2007.
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Non-Equity
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All
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Stock
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|
Option
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|
Incentive Plan
|
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Other
|
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|
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|
Salary
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Total
|
Name & Principal Position
|
|
Year
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|
$
|
|
($)(1)(2)
|
|
($)(1)(3)
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|
($)(4)
|
|
($)(5)
|
|
($)
|
|
Richard H. Friedman
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2009
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850,000
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|
|
|
|
|
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|
257,430
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|
|
|
680,000
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|
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8,715
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|
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1,796,145
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|
Chairman & Chief Executive Officer
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2008
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802,536
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|
|
738,805
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|
|
|
1,169,100
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|
|
|
|
|
|
|
21,338
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|
|
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2,731,779
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2007
|
|
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|
737,812
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|
|
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216,369
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|
|
|
347,600
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|
|
|
819,611
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|
|
|
8,073
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|
|
|
2,129,465
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Stanley G. Rosenbaum
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2009
|
|
|
|
440,000
|
|
|
|
|
|
|
|
171,620
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|
|
|
193,600
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|
|
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8,715
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|
|
|
813,935
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|
EVP, Chief Financial Officer and Treasurer
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2008
|
|
|
|
440,000
|
|
|
|
138,628
|
|
|
|
245,283
|
|
|
|
|
|
|
|
8,138
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|
|
|
832,049
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|
|
|
|
2007
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|
|
|
400,000
|
|
|
|
|
|
|
|
|
|
|
|
400,000
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|
|
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5,928
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805,928
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Richard M. Smith
President & Chief Operating Officer(6)
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2009
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|
|
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469,519
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|
|
183,600
|
|
|
|
143,325
|
|
|
|
190,000
|
|
|
|
21,709
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|
|
|
1,008,153
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
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Barry A. Posner
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2009
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390,209
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|
|
|
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|
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171,620
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|
|
|
144,378
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|
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|
5,042
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|
|
|
711,249
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EVP, Secretary & General Counsel
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2008
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|
|
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390,209
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|
|
|
99,812
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|
|
|
171,998
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|
|
|
|
|
|
|
7,283
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|
|
|
669,302
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|
|
|
|
2007
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|
|
|
380,401
|
|
|
|
|
|
|
|
|
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234,126
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5,127
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619,654
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Scott W. Friedman
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2009
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290,000
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|
|
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125,925
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|
|
116,000
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|
|
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7,568
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|
|
|
539,493
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SVP, Business Development
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2008
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290,000
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|
|
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110,903
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|
|
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228,775
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|
|
|
|
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6,480
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|
|
|
636,158
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|
|
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2007
|
|
|
|
245,808
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|
|
|
|
|
|
|
|
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|
103,993
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|
|
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7,385
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|
|
|
357,186
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|
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(1) |
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Values reflect the aggregate grant date fair value computed in
accordance with FASB ASC Topic 718. Assumptions used in the
calculation of these amounts are included in the footnotes to
the Companys audited financial statements for the fiscal
year ended December 31, 2009 included in the Companys
Annual Report on
Form 10-K
filed with the Commission on March 2, 2010. |
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(2) |
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The following table lays out the maximum value that would be
recognized by each officer of Restricted Stock Awards granted
assuming each award achieved its respective maximum measurement
level to fully vest: |
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Maximum Value of Stock Awards ($)
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Name
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2007 Grant
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2008 Grant
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2009 Grant
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Richard H. Friedman
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700,000
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3,430,000
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Stanley G. Rosenbaum
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393,750
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Richard M. Smith
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1,200,000
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Barry A. Posner
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283,500
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Scott W. Friedman
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315,000
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(3) |
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The following table lays out the maximum value that would be
recognized by each officer of Option Awards granted assuming the
grants were fully vested, and based on the closing price of
$8.36, on December 31, 2009: |
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Maximum Value of Option Awards ($)
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Name
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2007 Grant
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2008 Grant
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2009 Grant
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Richard H. Friedman
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980,000
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339,000
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844,500
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Stanley G. Rosenbaum
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129,374
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563,000
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Richard M. Smith
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639,450
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Barry A. Posner
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93,150
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|
563,000
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Scott W. Friedman
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115,500
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|
422,250
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36
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(4) |
|
Amounts for 2009 and 2007 include bonus awards under the
Companys Short-term Incentive Plan. |
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(5) |
|
Details regarding the amounts shown for each named executive
officer can be found in the footnotes of the All Other
Compensation table below. |
|
(6) |
|
Mr. Smith joined the Company in 2009. |
All Other
Compensation
The table below and related footnote disclosure describe each
component of compensation included under the column heading
All Other Compensation in the Summary Compensation
Table above.
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|
Registrant
|
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Contributions
|
|
|
|
|
|
|
Life & Disability
|
|
|
|
to Defined
|
|
|
|
|
|
|
Insurance Premiums
|
|
Legal Reimbursement
|
|
Contribution
|
|
|
Name
|
|
Year
|
|
($)
|
|
($)(1)
|
|
Plans ($)(2)
|
|
Total ($)
|
|
Richard H. Friedman
|
|
|
2009
|
|
|
|
1,365
|
|
|
|
|
|
|
|
7,350
|
|
|
|
8,715
|
|
|
|
|
2008
|
|
|
|
1,238
|
|
|
|
13,200
|
|
|
|
6,900
|
|
|
|
21,338
|
|
|
|
|
2007
|
|
|
|
1,323
|
|
|
|
|
|
|
|
6,750
|
|
|
|
8,073
|
|
Stanley G. Rosenbaum
|
|
|
2009
|
|
|
|
1,365
|
|
|
|
|
|
|
|
7,350
|
|
|
|
8,715
|
|
|
|
|
2008
|
|
|
|
1,238
|
|
|
|
|
|
|
|
6,900
|
|
|
|
8,138
|
|
|
|
|
2007
|
|
|
|
1,323
|
|
|
|
|
|
|
|
4,605
|
|
|
|
5,928
|
|
Richard M. Smith
|
|
|
2009
|
|
|
|
1,365
|
|
|
|
12,994
|
|
|
|
7,350
|
|
|
|
21,709
|
|
Barry A. Posner
|
|
|
2009
|
|
|
|
1,365
|
|
|
|
|
|
|
|
3,677
|
|
|
|
5,042
|
|
|
|
|
2008
|
|
|
|
1,238
|
|
|
|
|
|
|
|
6,045
|
|
|
|
7,283
|
|
|
|
|
2007
|
|
|
|
1,323
|
|
|
|
|
|
|
|
3,804
|
|
|
|
5,127
|
|
Scott W. Friedman
|
|
|
2009
|
|
|
|
1,210
|
|
|
|
|
|
|
|
6,358
|
|
|
|
7,568
|
|
|
|
|
2008
|
|
|
|
1,238
|
|
|
|
|
|
|
|
5,242
|
|
|
|
6,480
|
|
|
|
|
2007
|
|
|
|
1,323
|
|
|
|
|
|
|
|
6,062
|
|
|
|
7,385
|
|
|
|
|
(1) |
|
Represents legal fees paid on behalf of Messrs. Friedman
and Smith in connection with the negotiation their employment
agreements executed in May 2008 and November 2008, respectively. |
|
(2) |
|
Value of matching contributions allocated by the Company to each
of the named executive officers pursuant to the Companys
401(k) Plan. |
Grant of
Plan Based Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
All Other
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
Exercise
|
|
Fair
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
Number of
|
|
or Base
|
|
Value of
|
|
|
|
|
Estimated Future Payouts Under
|
|
of Shares
|
|
Securities
|
|
Price of
|
|
Stock &
|
|
|
|
|
Non-Equity Incentive Plan Awards(1)
|
|
of Stock
|
|
Underlying
|
|
Option
|
|
Option
|
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
or Units
|
|
Options
|
|
Awards
|
|
Awards ($)
|
Name
|
|
Grant Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
($/Sh)(4)
|
|
(5)
|
|
Richard H. Friedman
|
|
|
|
|
|
|
|
|
|
|
850,000
|
|
|
|
1,275,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 28, 2009
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
2.73
|
|
|
|
257,430
|
|
Stanley G. Rosenbaum
|
|
|
|
|
|
|
|
|
|
|
242,000
|
|
|
|
363,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 28, 2009
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
2.73
|
|
|
|
171,620
|
|
Richard M. Smith
|
|
|
|
|
|
|
|
|
|
|
237,500
|
|
|
|
356,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 2, 2009
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,000
|
|
|
|
|
|
|
|
|
|
|
|
183,600
|
|
|
|
|
January 2, 2009
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
105,000
|
|
|
|
2.27
|
|
|
|
143,325
|
|
Barry A. Posner
|
|
|
|
|
|
|
|
|
|
|
156,083
|
|
|
|
234,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 28, 2009
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
2.73
|
|
|
|
171,620
|
|
Scott W. Friedman
|
|
|
|
|
|
|
|
|
|
|
145,000
|
|
|
|
217,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 28, 2009
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
|
|
|
2.73
|
|
|
|
125,925
|
|
37
|
|
|
(1) |
|
The Companys Short-term Incentive Plan; threshold
represents 0% of target and maximum represents 150% of target. |
|
(2) |
|
Represents stock options granted under the 2008 Equity Incentive
Plan. Vesting occurs in one-third increments on the first,
second and third anniversary of the grant date. |
|
(3) |
|
Mr. Smith received performance based restricted stock
awards and stock options in accordance with the terms of his
employment agreement. With respect to restricted stock awards,
vesting occurs with the attainment of certain corporate
financial and stock price performance goals. With respect to
option awards, vesting occurs in one-third increments on the
first, second and third anniversary of the grant date. |
|
(4) |
|
Options are granted with an exercise price equal to the closing
price per share of common stock on the date of grant. |
|
(5) |
|
Represents the total fair value, estimated as per FASB ASC Topic
718. |
38
Outstanding
Equity Awards At Fiscal Year End
The following table provides information on the holdings of
stock options and restricted stock by the named executive
officers at December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Awards:
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Market
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
or Payout
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
Number of
|
|
value of
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
Market
|
|
Unearned
|
|
Unearned
|
|
|
|
|
|
|
Number
|
|
|
|
|
|
Number
|
|
Value of
|
|
Shares,
|
|
Shares,
|
|
|
|
|
|
|
of
|
|
|
|
|
|
of Shares
|
|
Shares or
|
|
Units
|
|
Units
|
|
|
Number of
|
|
Number of
|
|
Securities
|
|
|
|
|
|
or Units
|
|
Units of
|
|
or Other
|
|
or Other
|
|
|
Securities
|
|
Securities
|
|
Underlying
|
|
|
|
|
|
of Stock
|
|
Stock
|
|
Rights
|
|
Rights
|
|
|
Underlying
|
|
Underlying
|
|
Unexercised
|
|
Option
|
|
|
|
That
|
|
That
|
|
That
|
|
That
|
|
|
Unexercised
|
|
Unexercised
|
|
Unearned
|
|
Exercise
|
|
Option
|
|
Have Not
|
|
Have Not
|
|
Have Not
|
|
Have Not
|
|
|
Options (#)
|
|
Options (#)
|
|
Options
|
|
Price
|
|
Expiration
|
|
Vested
|
|
Vested
|
|
Vested
|
|
Vested
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
(#)
|
|
($)
|
|
Date
|
|
(#)
|
|
($)
|
|
(#)
|
|
($)
|
|
Richard H. Friedman
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
12.20
|
|
|
|
28-Nov-11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
17.80
|
|
|
|
02-Jan-12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
91,698
|
|
|
|
|
|
|
|
|
|
|
|
5.80
|
|
|
|
02-Jan-13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
7.03
|
|
|
|
02-Jan-14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
6.36
|
|
|
|
03-Jan-15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
7.54
|
|
|
|
03-Jan-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66,666
|
(1)
|
|
|
|
|
|
|
3.46
|
|
|
|
02-Jan-17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66,668
|
|
|
|
133,332
|
(2)
|
|
|
|
|
|
|
7.70
|
|
|
|
02-Jan-18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,500
|
|
|
|
75,000
|
(3)
|
|
|
|
|
|
|
6.52
|
|
|
|
29-Apr-18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
(4)
|
|
|
|
|
|
|
2.73
|
|
|
|
28-Apr-19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
245,000
|
(7)
|
|
|
2,048,200
|
|
Stanley G. Rosenbaum
|
|
|
169,972
|
|
|
|
|
|
|
|
|
|
|
|
2.47
|
|
|
|
01-Nov-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,438
|
|
|
|
46,874
|
(3)
|
|
|
|
|
|
|
6.52
|
|
|
|
29-Apr-18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
(4)
|
|
|
|
|
|
|
2.73
|
|
|
|
28-Apr-19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,125
|
(7)
|
|
|
235,125
|
|
Richard M. Smith
|
|
|
|
|
|
|
105,000
|
(5)
|
|
|
|
|
|
|
2.27
|
|
|
|
02-Jan-19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,000
|
(7)
|
|
|
1,003,200
|
|
Barry A. Posner
|
|
|
70,000
|
|
|
|
|
|
|
|
|
|
|
|
12.20
|
|
|
|
28-Nov-11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
|
|
|
|
|
|
|
|
|
|
|
7.95
|
|
|
|
24-Sep-13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,800
|
|
|
|
|
|
|
|
|
|
|
|
6.00
|
|
|
|
01-Jul-15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
158,587
|
|
|
|
|
|
|
|
|
|
|
|
2.47
|
|
|
|
01-Nov-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,875
|
|
|
|
33,750
|
(3)
|
|
|
|
|
|
|
6.52
|
|
|
|
29-Apr-18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
(4)
|
|
|
|
|
|
|
2.73
|
|
|
|
28-Apr-19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,250
|
(7)
|
|
|
169,290
|
|
Scott W. Friedman
|
|
|
14,000
|
|
|
|
|
|
|
|
|
|
|
|
12.20
|
|
|
|
28-Nov-11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
7.95
|
|
|
|
24-Sep-13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,500
|
|
|
|
|
|
|
|
|
|
|
|
6.00
|
|
|
|
01-Jul-15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,708
|
|
|
|
|
|
|
|
|
|
|
|
2.47
|
|
|
|
01-Nov-16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,334
|
|
|
|
6,666
|
(6)
|
|
|
|
|
|
|
7.16
|
|
|
|
28-Feb-18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,750
|
|
|
|
37,500
|
(3)
|
|
|
|
|
|
|
6.52
|
|
|
|
29-Apr-18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
(4)
|
|
|
|
|
|
|
2.73
|
|
|
|
28-Apr-19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,500
|
(7)
|
|
|
188,100
|
|
|
|
|
(1) |
|
Vesting schedule is one-third vesting on January 2, 2008,
one-third vesting on January 2, 2009, one-third vesting on
January 2, 2010. |
|
(2) |
|
Vesting schedule is one-third vesting on January 2, 2009,
one-third vesting on January 2, 2010, one-third vesting on
January 2, 2011. |
|
(3) |
|
Vesting schedule is one-third vesting on April 29, 2009,
one-third vesting on April 29, 2010, one-third vesting on
April 29, 2011. |
|
(4) |
|
Vesting schedule is one-third vesting on April 28, 2010,
one-third vesting on April 28, 2011, one-third vesting on
April 28, 2012. |
39
|
|
|
(5) |
|
Vesting schedule is one-third vesting on January 2, 2010,
one-third vesting on January 2, 2011, one-third vesting on
January 2, 2012. |
|
(6) |
|
Vesting schedule is one-third vesting on February 28, 2009,
one-third vesting on February 28, 2010, one-third vesting
on February 28, 2011. |
|
(7) |
|
Vesting based on achievement of corporate financial and stock
price performance goals. |
Option
Exercises and Stock Vested
The following table sets forth certain information with respect
to stock options exercised and vested stock awards by the
Companys executive officers during the year ended
December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
|
|
Number of Shares
|
|
|
|
|
Shares Acquired
|
|
Value Realized on
|
|
Acquired on Vesting
|
|
Value Realized on
|
Name
|
|
on Exercise (#)
|
|
Exercise ($)
|
|
(#)
|
|
Vesting ($)
|
|
Richard H. Friedman
|
|
|
491,635
|
|
|
|
1,921,819
|
|
|
|
|
|
|
|
|
|
Stanley G. Rosenbaum(1)
|
|
|
|
|
|
|
|
|
|
|
33,334
|
|
|
|
155,003
|
|
Richard M. Smith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barry A. Posner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott W. Friedman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Mr. Rosenbaum had 33,334 shares vest at $4.65 on
June 21, 2009. |
Employment
and Severance Agreements
On May 30, 2008, the Company entered into a new Employment
Agreement (the Employment Agreement) with Richard H.
Friedman, the Companys Chairman and Chief Executive
Officer. Mr. Friedmans previous employment agreement
with the Company was set to expire by its terms on May 31,
2008. Pursuant to the terms of the Employment Agreement, the
Company agreed to employ Mr. Friedman as the Companys
Chief Executive Officer, President and Chairman for the period
commencing June 1, 2008 and continuing through and
including May 31, 2011; provided that the agreement shall
be extended for up to four additional one year periods unless
either party provides written notice of termination to the other
not less than ninety days prior to the expiration of the then
current term. During the term of the Employment Agreement
Mr. Friedman will be paid a base salary of $850,000 per
annum. In addition, Mr. Friedman is eligible (i) to
participate in the Companys benefit programs, (ii) to
receive a bonus each calendar year under the Companys then
applicable short- and long-term bonus or other incentive plans
(with a maximum target payment equal to 100% of his annual
salary) upon the achievement of pre-established performance
goals; and (iii) to participate in the Companys long
term incentive equity plans and programs in a manner
commensurate with his offices and positions. As a signing bonus,
Mr. Friedman received a one-time special performance share
award of 200,000 shares of restricted common stock, subject
to the achievement of certain performance and time measures as
set forth in the Employment Agreement (the Special Equity
Award).
If Mr. Friedmans employment is terminated early due
to his death: (i) he is entitled to receive his salary and
other benefits earned and prior to the date of termination and
reimbursement for expenses incurred prior to the date of
termination, (ii) with the exception of the Special Equity
Award, all unvested options and restricted stock shall
immediately vest and (together with all fully vested and
exercisable options held by him) may be exercisable by his
estate for the earlier to occur of one year following his date
of death or the original expiration date of the option,
(iii) his estate shall be entitled to receive a pro rata
bonus for the year in which such death occurred, (iv) any
and all deferred compensation shall be paid to
Mr. Friedmans estate, and (v) the Special Equity
Award shall vest on a pro rata basis, subject to achievement of
the agreed upon performance criteria.
If Mr. Friedmans employment is terminated early due
to his disability (as defined in the Employment Agreement):
(i) he is entitled to receive his salary and other benefits
earned and accrued prior to the date of termination and
reimbursement for expenses incurred prior to the date of
termination, (ii) he shall be entitled
40
to receive a pro rata bonus for the year in which termination
occurred, (iii) with the exception of the Special Equity
Award, all unvested options and restricted stock shall
immediately vest and (together with all fully vested and
exercisable options held by him) may be exercisable by him for
the earlier to occur of one year following his date of death or
the original expiration date of the option, (iv) he shall
receive for a period of two years following termination, his
annual salary at the time of termination (less any proceeds
received by him on account of Social Security payments or
similar benefits and the proceeds of any Company provided
long-term disability insurance), continuing coverage under all
benefit plans and programs to which he was previously entitled,
(v) he shall become vested in and paid any pension or other
deferred compensation other than pension or deferred
compensation under a plan intended to be qualified under
Section 401(a) or 403(a) of the Internal Revenue Code of
1986, as amended (the Code), and (vi) the
Special Equity Award shall vest on a pro rata basis, subject to
achievement of the agreed upon performance criteria.
If the Company terminates Mr. Friedman for
Cause (as defined in the Employment Agreement):
(i) he shall be entitled to receive his salary and other
benefits earned and accrued prior to the date of termination and
reimbursement for expenses incurred prior to the date of
termination, (ii) all vested and unvested stock options
shall lapse and terminate immediately, (iii) all unvested
restricted stock shall be forfeited, and (iv) all earned
and unearned performance shares (including performance shares
granted as part of the Special Equity Award) shall lapse and
terminate immediately.
If Mr. Friedman terminates his employment during the term
and it is other than as a result of his death or disability or
without Good Reason (as defined in the Employment Agreement):
(i) he shall be entitled to receive his salary and other
benefits earned and accrued prior to the date of termination and
reimbursement of expenses incurred prior to the date of
termination, (ii) all fully vested and exercisable stock
options may be exercised by him for the earlier to occur of one
year following his date of termination or the original
expiration date of the option, (iii) all unvested
restricted stock shall be forfeited, and (iv) all unearned
performance shares (including performance shares granted as part
of the Special Equity Award) shall lapse and terminate
immediately.
If the Company terminates Mr. Friedmans employment
without Cause or Mr. Friedman terminates his employment for
Good Reason: (i) he shall be entitled to receive his salary
and other benefits earned and accrued prior to the date of
termination and reimbursement of expenses incurred prior to the
date of termination, (ii) he shall be entitled to receive a
pro rata bonus for the year in which termination occurred,
(iii) all unvested options and restricted stock shall
immediately vest and (together with any other vested and
exercisable options then held by Mr. Friedman) may be
exercised by him for the earlier to occur of one year following
his date of termination or the original expiration date of the
option, (iv) he will be entitled to receive for a period of
two years following termination his annual salary at the time of
termination and continuing coverage under all benefit plans and
programs to which he was previously entitled, (v) he shall
become vested in and immediately paid any pension or other
deferred compensation other than pension or deferred
compensation under a plan intended to be qualified under
Section 401(a) or 403(a) of the Code, and (vi) the
Special Equity Award shall vest on a pro rata basis, subject to
achievement of the agreed upon performance criteria.
If within one year following a Change of Control (as
defined in the Employment Agreement) Mr. Friedman is
terminated by the Company or any successor, or within such one
year period he elects to terminate his employment for Good
Reason: (i) he shall be entitled to receive his salary and
other benefits earned and accrued through the date of
termination, (ii) he shall be entitled to receive a pro
rata bonus for the year in which termination occurred,
(iii) all unvested options shall fully vest and (together
with any other vested options then held by Mr. Friedman)
may be exercised by him for the earlier to occur of one year
following his date of termination or the original expiration
date of the option, (iv) all unvested shares of restricted
stock shall fully vest, (v) he will be entitled to receive
for a period of three years following his date of termination
his annual salary at the time of termination and continuing
coverage under all benefits plans and programs to which he was
previously entitled; (vi) he shall become vested in and
immediately paid any pension or other deferred compensation
other than pension or deferred compensation under a plan
intended to
41
be qualified under Section 401(a) or 403(a) of the Code;
and (vii) the Special Equity Award shall vest on a pro rata
basis, subject to achievement of the agreed upon performance
criteria.
If either party elects not to renew the Employment Agreement at
the end of the initial or any renewal term thereof, then
Mr. Friedman shall be entitled to receive a retirement
payment in the amount of $1,700,000.00 (the equivalent of two
years salary), which shall increase by 25% for each year (or
part thereof) that Mr. Friedman remains employed with the
Company following the initial three year term of the Employment
Agreement. In addition, if Mr. Friedmans employment
with the Company is terminated without Cause or he terminates
his employment for Good Reason, then he is entitled to receive,
in addition to any other amounts provided for as a result of
such termination, an amount equal to the incremental retirement
benefit for each year (or portion thereof he remains employed
after the initial three year term). The retirement benefit shall
be paid to Mr. Friedman in equal monthly installments over
a five year period beginning on the first day of the month
following his termination. In the event of his death prior to
payment in full of the retirement benefit, the remainder shall
be paid to a beneficiary designated by Mr. Friedman, or if
no beneficiary is named to his estate.
Mr. Friedman may not directly or indirectly (other than
with the Company) participate in the United States in any
business competitive with the business of the Company during the
term of employment and for one year following the later of his
termination or his receipt of severance payments. Similarly,
during the term and for a period of two years following
termination, Mr. Friedman may not solicit or otherwise
interfere with the Companys relationship with any present
or former Company employee or customer. Mr. Friedman has
also agreed to keep confidential during the term of employment
and thereafter all information concerning the Company and its
business.
The Company and Mr. Smith are parties to a severance
agreement under which he is entitled to receive severance
payment protection in the event of the termination of his
employment under certain circumstances.
If Mr. Smiths employment is terminated due to his
death or disability, (i) he is entitled to receive his
salary, bonus and other benefits earned and accrued through the
date of termination, (ii) all fully vested and exercisable
options may be exercised by his estate for one year following
termination, and (iii) any stock grants that are subject to
forfeiture shall become non-forfeitable and shall fully vest. In
addition, if Mr. Smith should remain disabled for six
months following his termination for disability, he shall also
be entitled to receive for a period of two years following
termination, his annual salary at the time of termination (less
any proceeds received by him on account of Social Security
payments or similar benefits and the proceeds of any Company
provided long-term disability insurance) and continuing coverage
under all benefit plans and programs to which he was previously
entitled.
If the Company terminates Mr. Smith for Cause
or if Mr. Smith terminates his employment without
Good Reason (each as defined in the severance
agreement), (i) he shall be entitled to receive his salary,
bonus and other benefits earned and accrued through the date of
termination, (ii) all vested and unvested stock options
shall lapse and terminate (except that in the event of
termination without Good Reason he shall have 30 days from
the date of termination to exercise any vested options), and
(iii) any stock grants made to him that are subject to
forfeiture shall be immediately forfeited.
If the Company terminates Mr. Smiths employment
without Cause or Mr. Smith terminates his employment for
Good Reason, (i) he is entitled to receive his salary,
bonus and other benefits earned and accrued through the date of
termination, (ii) for a period of two years following
termination he shall be entitled to receive his annual salary at
the time of termination and continuing coverage under all
benefit plans and programs to which he was previously entitled,
(iii) all unvested options shall become vested and
immediately exercisable in accordance with the terms of the
options and he shall become vested in any other pension or
deferred compensation plan, and (iv) any stock grants that
are subject to forfeiture shall become non-forfeitable and shall
fully vest.
If within one year following a Change of Control (as
defined in the severance agreement) Mr. Smith is terminated
by the Company or any successor, or within such one year period
he elects to terminate his employment due to a material
reduction in his duties or a relocation, (i) he will be
entitled to receive his
42
salary and other benefits earned and accrued through the date of
termination, (ii) he will be entitled to receive for two
years following termination his annual salary at the time of
termination and continuing coverage under all benefits plans and
programs to which he was previously entitled to the extent
eligible under such plans or programs, (iii) all unvested
options will fully vest and (together with any other vested
options then held by Mr. Smith) may be exercised in
accordance with their terms, (iv) he will become vested in
any pension or other deferred compensation other than pension or
deferred compensation under a plan intended to be qualified
under Section 401(a) or 403(a) of the Code, (v) all
unvested shares of restricted stock will fully vest and be free
from restriction on transferability (other than restrictions
imposed under Federal and state securities laws), and
(vi) any stock grants previously made that are subject to
forfeiture shall become non-forfeitable.
The severance agreement is intended to comply with the
provisions of 409A of the Internal Revenue Code, to the extent
applicable
On August 24, 2006, the Company entered into a severance
agreement with Mr. Posner. Under the terms of the agreement
Mr. Posner is entitled to receive severance payment
protection in the event of the termination of his employment
under certain circumstances. The severance protections provided
to Mr. Posner under this severance agreement replace and
modify the severance provisions contained in his employment
agreement with the Company which expired in March 2006. There
are no other agreements in effect between the Company and
Mr. Posner other than the severance agreement.
If Mr. Posners employment is terminated early due to
his death or disability, (i) he is entitled to receive his
salary, bonus and other benefits earned and accrued through the
date of termination, (ii) all fully vested and exercisable
options may be exercised by his estate for one year following
termination, (iii) all performance shares granted under any
bonus program will fully vest, and (iv) any stock grants
that are subject to forfeiture will become non-forfeitable and
will fully vest. Notwithstanding the foregoing, if
Mr. Posner should remain disabled for six months following
his termination for disability, he will also be entitled to
receive for a period of two years following termination, his
annual salary at the time of termination (less any proceeds
received by him on account of Social Security payments or
similar benefits and the proceeds of any Company provided
long-term disability insurance) and continuing coverage under
all benefit plans and programs to which he was previously
entitled.
If the Company terminates Mr. Posner for Cause
(as defined in the agreement) or if Mr. Posner terminates
his employment without Good Reason (as defined in
the agreement), (i) he will be entitled to receive his
salary, bonus and other benefits earned and accrued through the
date of termination, (ii) he will be entitled to retain
only those performance shares which shall have vested as of the
date of termination, (iii) all vested and unvested stock
options will lapse and terminate (except that in the event of
termination without Good Reason he shall have 30 days from
the date of termination to exercise any vested options) ,
(iv) any stock grants made to him that are subject to
forfeiture will be immediately forfeited, and (v) all
performance units shall immediately terminate.
If the Company terminates Mr. Posners employment
without Cause or Mr. Posner terminates his
employment for Good Reason, (i) he is entitled
to receive his salary, bonus and other benefits earned and
accrued through the date of termination, (ii) for a period
of two years following termination he will be entitled to
receive his annual salary at the time of termination and
continuing coverage under all benefit plans and programs to
which he was previously entitled, (iii) all unvested
options will become vested and become immediately exercisable in
accordance with the terms of the options and he will become
vested in any other pension or deferred compensation plan,
(iv) all performance shares granted under any bonus program
will fully vest, and (v) any stock grants that are subject
to forfeiture will become non-forfeitable and shall fully vest.
On August 2, 2007, the Company entered into a severance
agreement with Stanley G. Rosenbaum, BioScrips Executive
Vice President, Chief Financial Officer and Treasurer. Under the
terms of the agreement Mr. Rosenbaum is entitled to receive
severance payment protection in the event of the termination of
his employment under certain circumstances.
43
If Mr. Rosenbaums employment is terminated due to his
death or disability, (i) he is entitled to receive his
salary, bonus and other benefits earned and accrued through the
date of termination, (ii) all fully vested and exercisable
options may be exercised by his estate for one year following
termination, and (iii) any stock grants that are subject to
forfeiture shall become non-forfeitable and shall fully vest. In
addition, if Mr. Rosenbaum should remain disabled for six
months following his termination for disability, he shall also
be entitled to receive for a period of two years following
termination, his annual salary at the time of termination (less
any proceeds received by him on account of Social Security
payments or similar benefits and the proceeds of any Company
provided long-term disability insurance) and continuing coverage
under all benefit plans and programs to which he was previously
entitled.
If the Company terminates Mr. Rosenbaum for
Cause or if Mr. Rosenbaum terminates his
employment without Good Reason (each as defined in
the agreement), (i) he shall be entitled to receive his
salary, bonus and other benefits earned and accrued through the
date of termination, (ii) all vested and unvested stock
options shall lapse and terminate (except that in the event of
termination without Good Reason he shall have 30 days from
the date of termination to exercise any vested options), and
(iii) any stock grants made to him that are subject to
forfeiture shall be immediately forfeited.
If the Company terminates Mr. Rosenbaums employment
without Cause or Mr. Rosenbaum terminates his employment
for Good Reason, (i) he is entitled to receive his salary,
bonus and other benefits earned and accrued through the date of
termination, (ii) for a period of two years following
termination he shall be entitled to receive his annual salary at
the time of termination and continuing coverage under all
benefit plans and programs to which he was previously entitled,
(iii) all unvested options shall become vested and
immediately exercisable in accordance with the terms of the
options and he shall become vested in any other pension or
deferred compensation plan, and (iv) any stock grants that
are subject to forfeiture shall become non-forfeitable and shall
fully vest.
The Company entered into amendments to the severance agreements
for Messrs. Posner and Rosenbaum. Each of the severance
agreements was amended to provide that any payments, benefits
and vesting to which an executive may be entitled would be
provided without regard to the deductibility of such payments,
benefits and vesting under Section 280G of the Internal
Revenue Code (the Code) and without regard to
whether such payments would subject the executive to the federal
excise tax levied on certain excess parachute
payments under Code Section 4999 (the Excise
Tax). If any portion of the payments, benefits and vesting
to or for the executives benefit constitutes an
excess parachute payment within the meaning of Code
Section 280G, we would pay to the executive an additional
amount that after reduction for all taxes (including the Excise
Tax) with respect to such
gross-up
payment equals the Excise Tax on such payment; provided, that to
the extent any
gross-up
payment would be considered deferred compensation for purposes
of Code Section 409A, the manner and time of payment and
the affected provisions of the severance agreement would be
adjusted to the extent necessary (but only to the extent
necessary) to comply with the requirements of Code
Section 409A so that the payment does not give rise to the
interest or additional tax amounts to the executive as described
at Code Section 409A(a)(1)(B) or Code
Section 409A(b)(4). Each of the severance agreements was
also amended to provide that it, to the extent applicable,
comply with Code Section 409A in accordance with the
provisions set forth the severance agreement, as amended.
In August 2003, Mr. Scott W. Friedman entered into an
employment letter agreement with the Company which provides for
his employment until terminated by the Company or Scott
Friedman. In October 2004, the Company and Scott Friedman
entered into a letter agreement amending certain provisions of
the 2003 employment letter agreement. Under the agreement, as
amended, in the event Scott Friedman is terminated by the
Company or any successor without cause or he terminates his
employment at any time for good reason, he is entitled to
receive an amount equal to one year of salary and all
outstanding unvested options granted to him and held by him vest
and become immediately exercisable and are otherwise exercisable
in accordance with their terms.
44
The following tables summarize potential change in control and
severance payments to each named executive officer. The columns
describe the payments that would apply in different termination
scenarios a termination of employment as a result of
the named executive officers voluntary resignation without
good reason, his termination by us for cause, death, disability,
termination of employment without cause, termination of
employment as a result of the named executive officers
resignation for good reason or termination of employment as a
result of a change in control. The table assumes that the
termination or change in control occurred on December 31,
2009. For purposes of estimating the value of amounts of equity
compensation to be received in the event of a termination of
employment or change in control, we have assumed a price per
share of our common stock of $8.36, which represents the closing
market price of our common stock as reported on the NASDAQ
Global Market on December 31, 2009. All amounts are
expressed in dollars.
Friedman,
Richard H.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Without
|
|
Upon
|
|
|
Voluntary/
|
|
|
|
|
|
Cause/Good
|
|
Change in
|
Benefit
|
|
For Cause
|
|
Death
|
|
Disability
|
|
Reason
|
|
Control
|
|
Cash Severance
|
|
|
680,000
|
|
|
|
680,000
|
|
|
|
2,380,000
|
|
|
|
2,380,000
|
|
|
|
3,230,000
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
|
|
|
|
|
376,200
|
|
|
|
376,200
|
|
|
|
376,200
|
|
|
|
376,200
|
|
Unexercisable Options
|
|
|
|
|
|
|
1,397,163
|
|
|
|
1,397,163
|
|
|
|
1,397,163
|
|
|
|
1,397,163
|
|
Total
|
|
|
|
|
|
|
1,773,363
|
|
|
|
1,773,363
|
|
|
|
1,773,363
|
|
|
|
1,773,363
|
|
Retirement Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DB Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DC Plan
|
|
|
|
|
|
|
|
|
|
|
14,700
|
|
|
|
14,700
|
|
|
|
22,050
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
14,700
|
|
|
|
14,700
|
|
|
|
22,050
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare
|
|
|
|
|
|
|
|
|
|
|
19,324
|
|
|
|
19,324
|
|
|
|
28,932
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
19,324
|
|
|
|
19,324
|
|
|
|
28,932
|
|
Total
|
|
|
680,000
|
|
|
|
2,453,363
|
|
|
|
4,187,387
|
|
|
|
4,187,387
|
|
|
|
5,054,345
|
|
Cash Severance: Current bonus in the event of voluntary
termination, for cause or upon death; 2 times base salary and
current bonus in the event of termination as a result of
disability, without cause, or for good reason; 3 times base
salary and current bonus in the event of termination as a result
of a change in control.
Restricted Stock: Intrinsic value of accelerated vesting of
restricted stock based on December 31, 2009 closing price
of $8.36.
Unexercisable Options: Intrinsic value of accelerated vesting of
stock options which carry a positive return upon exercise based
on December 31, 2009 closing price of $8.36.
DC Plan: 2 additional years of employer contributions in the
event of termination as a result of disability, without cause,
or for good reason; 3 additional years of employer contributions
in the event of termination as a result of a change in control.
Health & Welfare: 2 additional years of health and
welfare benefits as a result of disability, without cause, or
for good reason; 3 additional years of health and welfare
benefits in the event of termination as a result of a change in
control.
45
Upon a change in control, based upon the assumptions set forth
herein, an excise tax of $646,000 would be imposed upon
Mr. R. Friedman due to regulations under Code
Section 280G. This $646,000 is not deductible by the
Company.
Rosenbaum,
Stanley G.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Without
|
|
Upon
|
|
|
Voluntary/
|
|
|
|
|
|
Cause/Good
|
|
Change in
|
Benefit
|
|
For Cause
|
|
Death
|
|
Disability
|
|
Reason
|
|
Control
|
|
Cash Severance
|
|
|
193,600
|
|
|
|
193,600
|
|
|
|
1,073,600
|
|
|
|
1,073,600
|
|
|
|
1,073,600
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
|
|
|
|
|
235,125
|
|
|
|
235,125
|
|
|
|
235,125
|
|
|
|
235,125
|
|
Unexercisable Options
|
|
|
|
|
|
|
649,248
|
|
|
|
649,248
|
|
|
|
649,248
|
|
|
|
649,248
|
|
Total
|
|
|
|
|
|
|
884,373
|
|
|
|
884,373
|
|
|
|
884,373
|
|
|
|
884,373
|
|
Retirement Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DB Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DC Plan
|
|
|
|
|
|
|
|
|
|
|
14,700
|
|
|
|
14,700
|
|
|
|
14,700
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
14,700
|
|
|
|
14,700
|
|
|
|
14,700
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare
|
|
|
|
|
|
|
|
|
|
|
19,324
|
|
|
|
19,324
|
|
|
|
19,324
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
19,324
|
|
|
|
19,324
|
|
|
|
19,324
|
|
Total
|
|
|
193,600
|
|
|
|
1,077,973
|
|
|
|
1,991,997
|
|
|
|
1,991,997
|
|
|
|
1,991,997
|
|
Cash Severance: Current bonus in the event of voluntary
termination, for cause or upon death; 2 times base salary and
current bonus in the event of termination as a result of
disability, without cause, for good reason, or change in control.
Restricted Stock: Intrinsic value of accelerated vesting of
restricted stock based on December 31, 2009 closing price
of $8.36
Unexercisable Options: Intrinsic value of accelerated vesting of
stock options which carry a positive return upon exercise based
on December 31, 2009 closing price of $8.36.
DC Plan: 2 additional years of employer contributions in the
event of termination as a result of disability, without cause,
for good reason, or change in control.
Health & Welfare: 2 additional years of health and
welfare benefits as a result of disability, without cause, for
good reason, or change in control.
Smith,
Richard M.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Without
|
|
Upon
|
|
|
Voluntary/
|
|
|
|
|
|
Cause/Good
|
|
Change in
|
Benefit
|
|
For Cause
|
|
Death
|
|
Disability
|
|
Reason
|
|
Control
|
|
Cash Severance
|
|
|
190,000
|
|
|
|
190,000
|
|
|
|
1,140,000
|
|
|
|
1,140,000
|
|
|
|
1,140,000
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
|
|
|
|
|
1,003,200
|
|
|
|
1,003,200
|
|
|
|
1,003,200
|
|
|
|
1,003,200
|
|
Unexercisable Options
|
|
|
|
|
|
|
639,450
|
|
|
|
639,450
|
|
|
|
639,450
|
|
|
|
639,450
|
|
Total
|
|
|
|
|
|
|
1,642,650
|
|
|
|
1,642,650
|
|
|
|
1,642,650
|
|
|
|
1,642,650
|
|
Retirement Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DB Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DC Plan
|
|
|
|
|
|
|
|
|
|
|
14,700
|
|
|
|
14,700
|
|
|
|
14,700
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
14,700
|
|
|
|
14,700
|
|
|
|
14,700
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare
|
|
|
|
|
|
|
|
|
|
|
27,626
|
|
|
|
27,626
|
|
|
|
27,626
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
27,626
|
|
|
|
27,626
|
|
|
|
27,626
|
|
Total
|
|
|
190,000
|
|
|
|
1,832,650
|
|
|
|
2,824,976
|
|
|
|
2,824,976
|
|
|
|
2,824,976
|
|
46
Cash Severance: Current bonus in the event of voluntary
termination, for cause or upon death; 2 times base salary and
current bonus in the event of termination as a result of
disability, without cause, for good reason, or change in control.
Restricted Stock: Intrinsic value of accelerated vesting of
restricted stock based on December 31, 2009 closing price
of $8.36.
Unexercisable Options: Intrinsic value of accelerated vesting of
stock options which carry a positive return upon exercise based
on December 31, 2009 closing price of $8.36.
DC Plan: 2 additional years of employer contributions in the
event of termination as a result of disability, without cause,
for good reason, or change in control.
Health & Welfare: 2 additional years of health and
welfare benefits as a result of disability, without cause, for
good reason, or change in control.
Posner,
Barry A.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Without
|
|
Upon
|
|
|
Voluntary/
|
|
|
|
|
|
Cause/Good
|
|
Change in
|
Benefit
|
|
For Cause
|
|
Death
|
|
Disability
|
|
Reason
|
|
Control
|
|
Cash Severance
|
|
|
144,378
|
|
|
|
144,378
|
|
|
|
924,796
|
|
|
|
924,796
|
|
|
|
924,796
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
|
|
|
|
|
169,290
|
|
|
|
169,290
|
|
|
|
169,290
|
|
|
|
169,290
|
|
Unexercisable Options
|
|
|
|
|
|
|
625,100
|
|
|
|
625,100
|
|
|
|
625,100
|
|
|
|
625,100
|
|
Total
|
|
|
|
|
|
|
794,390
|
|
|
|
794,390
|
|
|
|
794,390
|
|
|
|
794,390
|
|
Retirement Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DB Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DC Plan
|
|
|
|
|
|
|
|
|
|
|
14,700
|
|
|
|
14,700
|
|
|
|
14,700
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
14,700
|
|
|
|
14,700
|
|
|
|
14,700
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare
|
|
|
|
|
|
|
|
|
|
|
27,626
|
|
|
|
27,626
|
|
|
|
27,626
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
27,626
|
|
|
|
27,626
|
|
|
|
27,626
|
|
Total
|
|
|
144,378
|
|
|
|
938,768
|
|
|
|
1,761,512
|
|
|
|
1,761,512
|
|
|
|
1,761,512
|
|
Cash Severance: Current bonus in the event of voluntary
termination, for cause or upon death; 2 times base salary and
current bonus in the event of termination as a result of
disability, without cause, for good reason, or change in control.
Restricted Stock: Intrinsic value of accelerated vesting of
restricted stock based on December 31, 2009 closing price
of $8.36.
Unexercisable Options: Intrinsic value of accelerated vesting of
stock options which carry a positive return upon exercise based
on December 31, 2009 closing price of $8.36.
DC Plan: 2 additional years of employer contributions in the
event of termination as a result of disability, without cause,
for good reason, or change in control.
47
Health & Welfare: 2 additional years of health and
welfare benefits as a result of disability, without cause, for
good reason, or change in control.
Friedman,
Scott W.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Without
|
|
Upon
|
|
|
Voluntary/
|
|
|
|
|
|
Cause/Good
|
|
Change in
|
Benefit
|
|
For Cause
|
|
Death
|
|
Disability
|
|
Reason
|
|
Control
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
406,000
|
|
|
|
406,000
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unexercisable Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
499,249
|
|
|
|
499,249
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
499,249
|
|
|
|
499,249
|
|
Retirement Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DB Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DC Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
905,249
|
|
|
|
905,249
|
|
Cash Severance: 1 times base salary and current bonus.
Unexercisable Options: Intrinsic value of accelerated vesting of
stock options which carry a positive return upon exercise based
on December 31, 2009 closing price of $8.36.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors,
officers and beneficial owners of more than 10% of the
Companys Common Stock to file with the Commission initial
reports of ownership and reports of changes in beneficial
ownership of the Companys Common Stock and other equity
securities. Based solely on our review of the copies of such
reports received by the Company or written representations from
reporting persons, the Company believes that during the fiscal
year ended December 31, 2009, the Companys officers,
directors and holders of more than 10% of its common stock
complied with all Section 16(a) filing requirements.
STOCKHOLDER
PROPOSALS
The Companys By-Laws require timely advance written notice
of stockholder nominations of director candidates and of any
other proposals to be presented at an annual meeting of
stockholders. Notice will be considered timely for the Annual
Meeting of Stockholders to be held in 2011 if it is received not
later than the close of business on March 5, 2011 or the
tenth day following the day on which public announcement of the
date of such meeting is first made, and not earlier than the
close of business on February 3, 2011.
In addition, the Companys By-Laws require that such
written notice set forth (i) as to each person whom the
stockholder proposes to nominate for election or re-election to
the Board of Directors: (a) the name, age, business address
and residence address of the person, (b) the principal
occupation or employment of the person, (c) the class or
series and number of shares of capital stock of the Company
which are directly or indirectly owned beneficially or of record
by the person, (d) the date such shares were acquired and
the investment intent of such acquisition, and (e) any
other information relating to the person that would be required
to be disclosed in a proxy statement or other filings required
to be made in connection with solicitations of proxies for a
contested election of directors (even if an election contest or
proxy solicitation is not involved), or is otherwise required,
pursuant to Section 14 of the Securities Exchange Act of
1934, as
48
amended (the Exchange Act), and the rules and
regulations promulgated thereunder (including such persons
written consent to being named in the proxy statement as a
nominee and to serving if elected); and (ii) as to the
stockholder giving the notice: (u) the name and address of
such stockholder, as they appear on the Companys books,
the residence name and address (if different from the
Companys books) of such proposing stockholder and any
Stockholder Associated Person (defined as (x) any person
controlling, directly or indirectly, or acting in concert with,
such stockholder, (y) any beneficial owner of shares of
stock of the Company owned of record or beneficially by such
stockholder or (z) any person directly or indirectly
controlling, controlled by or under common control with such
Stockholder Associated Person) covered by clauses (v), (w),
(y) and (z) below, (v) the class and number of
shares of stock of the Company which are directly or indirectly
held of record or beneficially owned by such stockholder and by
any Stockholder Associated Person with respect to the
Companys securities, a description of any derivative
positions held or beneficially held by the stockholder and any
Stockholder Associated Person and whether and the extent to
which a hedging transaction has been entered into by or on
behalf of such stockholder or any Stockholder Associated Person,
(w) a description of all arrangements or understandings
between such stockholder or any Stockholder Associated Person
and each proposed nominee and any other person or persons
(including their names) pursuant to which the nomination(s) are
to be made by such stockholder, (x) a representation that
such stockholder intends to appear in person or by proxy at the
meeting to nominate the persons named in its notice,
(y) any other information relating to such stockholder or
any Stockholder Associated Person that would be required to be
disclosed in a proxy statement or other filings required to be
made in connection with solicitations of proxies for a contested
election of directors (even if an election contest or proxy
solicitation is not involved), or is otherwise required,
pursuant to Section 14 of the Exchange Act and the rules
and regulations promulgated thereunder, and (z) a
representation as to whether such stockholder or any Stockholder
Associated Person intends to deliver a proxy statement
and/or form
of proxy to holders of at least the percentage of the
Companys outstanding capital stock required to approve the
nomination
and/or
otherwise to solicit proxies from stockholders in support of the
nomination. In addition, any stockholder who submits a notice is
required to update and supplement the information disclosed in
such notice, if necessary, in accordance with the By-Laws.
In the case of other proposals by stockholders at an annual
meeting, the By-Laws require that such written notice set forth
as to each matter such stockholder proposes to bring before the
annual meeting: (i) a brief description of the business
desired to be brought before the annual meeting; (ii) the
name and address, as they appear on the Companys books, of
the stockholder proposing such business, the residence name and
address (if different from the Companys books) of such
proposing stockholder and any Stockholder Associated Person;
(iii) the class and number of shares of stock of the
Company which are directly or indirectly held of record or
beneficially owned by such stockholder and by any Stockholder
Associated Person with respect to the Companys securities,
a description of any derivative positions held or beneficially
held by the stockholder and any Stockholder Associated Person
and whether and the extent to which a hedging transaction has
been entered into by or on behalf of such stockholder or any
Stockholder Associated Person, (iv) a description of all
arrangements or understandings between such stockholder or any
Stockholder Associated Person and any other person or entity in
connection with the proposal of such business by such
stockholder and any material interest of such stockholder or any
Stockholder Associated Person or such other person or entity in
such business, (v) a representation that such stockholder
intends to appear in person or by proxy at the annual meeting to
bring such business before the meeting, and (vi) a
representation as to whether such stockholder or any Stockholder
Associated Person intends to deliver a proxy statement
and/or form
of proxy to holders of at least the percentage of the
Companys outstanding shares required to approve the
proposal
and/or
otherwise to solicit proxies from stockholders in support of the
proposal. In addition, any stockholder who submits a notice is
required to update and supplement the information disclosed in
such notice, if necessary, in accordance with the By-Laws.
Rule 14a-8
under the Exchange Act provides that if the date of this
years annual meeting has been changed by more than
30 days from the date of the previous years meeting,
then the deadline for delivering stockholder proposals in the
Companys proxy statement for the 2011 annual meeting of
stockholders should be a reasonable time before the Company
begins to print and send its proxy materials. The Company held
the 2009 annual meeting of stockholders on April 28, 2009.
However, this year, due to the special meeting of the
49
stockholders held on March 25, 2010 in connection with the
Companys acquisition of CHS, the date of the
Companys annual meeting was pushed back to June 3,
2010. Next year, the Company intends to return to its customary
schedule and hold its annual meeting around the end of April.
Therefore, the Company has determined that a reasonably time for
stockholder proposals intended to be presented at the 2011
annual meeting to be received by the Company at its principal
executive offices at 100 Clearbrook Road, Elmsford, NY 10523,
Attention: Secretary, in order to be eligible for inclusion in
the Companys proxy statement and proxy card relating to
that meeting is no later than December 1, 2010. Upon
receipt of any proposal, the Company will determine whether to
include such proposal in accordance with regulations governing
the solicitation of proxies.
MISCELLANEOUS
A copy of the Companys 2009 Annual Report on
Form 10-K,
including the financial statements and financial statement
schedules, as filed with the Commission, is enclosed but is not
to be regarded as proxy solicitation materials.
HOUSEHOLDING
If you and other residents with the same last name at your
mailing address own shares of Common Stock in street name, your
broker or bank may have sent you a notice that your household
will receive only one annual report and proxy statement for each
company in which you hold stock through that broker or bank.
This practice of sending only one copy of proxy materials is
known as householding. If you received a
householding communication, your broker will send one copy of
this Proxy Statement and one copy of the Companys 2009
Annual Report to Stockholders to your address unless contrary
instructions were given by any stockholder at that address. If
you received more than one copy of the proxy materials this year
and you wish to reduce the number of reports you receive in the
future and save the Company the cost of printing and mailing
these reports, your broker will discontinue the mailing of
reports on the accounts you select if you mark the designated
box on your proxy card, or follow the instructions provided when
you vote over the Internet.
You may revoke your consent to householding at any time by
calling
800-542-1061.
The revocation of your consent to householding will be effective
30 days following its receipt. In any event, if your
household received a single set of proxy materials for this
year, but you would prefer to receive your own copy, we will
send a copy to you if you address your written request to
BioScrip, Inc., Secretary, 100 Clearbrook Road, Elmsford, NY
10523 or contact BioScrip, Inc. Secretary at
914-460-1600.
50
Exhibit A
CERTIFICATE
OF AMENDMENT OF
THE SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
BIOSCRIP, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the
Corporation) is BioScrip, Inc.
2. The certificate of incorporation of the Corporation is
hereby amended by striking out Article FOURTH thereof and
by substituting in lieu of said Article the following new
Article:
FOURTH: The total number of shares of capital stock which
the Corporation shall have authority to issue is one hundred
thirty million (130,000,000) shares, par value one-one hundredth
of a cent ($0.0001) per share, of which one hundred twenty five
million (125,000,000) shares are designated as Common Stock and
five million (5,000,000) shares are designated as Preferred
Stock.
3. The amendment of the certificate of incorporation herein
certified has been duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of
the State of Delaware.
Barry A. Posner,
Executive Vice President
Dated: June 3, 2010
51
Exhibit B
BIOSCRIP,
INC.
2008 EQUITY INCENTIVE PLAN
AS ADOPTED
EFFECTIVE APRIL 29, 2008
(Amended April 28, 2010)
TABLE OF
CONTENTS
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Page
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§ 1. BACKGROUND AND PURPOSE
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1
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§ 2. DEFINITIONS
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1
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2.1
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Affiliate
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1
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2.2
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Award
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1
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2.3
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Award Agreement
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1
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2.4
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Board
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1
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2.5
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Change in Control
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1
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2.6
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Code
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2
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2.7
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Committee
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2
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2.8
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Director
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2
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2.9
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Ending Value
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2
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2.10
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Fair Market Value
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2
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2.11
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ISO
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2
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2.12
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Key Employee
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2
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2.13
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1933 Act
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2
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2.14
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1934 Act
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3
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2.15
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Non-ISO
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3
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2.16
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Option
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3
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2.17
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Option Certificate
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3
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2.18
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Option Price
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3
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2.19
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Parent
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3
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2.20
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Performance Goal
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3
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2.21
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Performance Period
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3
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2.22
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Performance Unit
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3
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2.23
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Plan
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3
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2.24
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Prior Plan
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3
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2.25
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Restricted Stock Unit
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3
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2.26
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Restricted Stock Unit Certificate
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3
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2.27
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Rule 16b-3
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3
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2.28
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SAR Value
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3
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2.29
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Stock
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3
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2.30
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Stock Appreciation Right
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3
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2.31
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Stock Appreciation Right Certificate
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3
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2.32
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Stock Grant
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3
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2.33
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Stock Grant Certificate
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3
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2.34
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Subsidiary
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3
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2.35
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Substitute Awards
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3
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2.36
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Ten Percent Shareholder
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3
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§ 3. SHARES RESERVED UNDER PLAN
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4
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3.1
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Number of Shares
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4
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3.2
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Charter of Shares
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4
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Page
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§ 4. EFFECTIVE DATE
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5
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§ 5. COMMITTEE
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5
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5.1
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Committee Powers
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5
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5.2
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Committee Decisions and Meetings
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5
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5.3
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Delegation
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5
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§ 6. ELIGIBILITY AND ANNUAL GRANT CAPS
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5
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§ 7. OPTIONS
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6
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7.1
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Committee Action
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6
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7.2
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$100,000 Limit
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6
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7.3
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Option Price
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6
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7.4
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Payment
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6
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7.5
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Exercise Period
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6
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7.6
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Reload Option Grants Prohibited
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7
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§ 8. STOCK APPRECIATION RIGHTS
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7
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8.1
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Committee Action
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7
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8.2
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Terms and Conditions
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7
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8.3
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Exercise
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8
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§ 9. RESTRICTED STOCK UNITS
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8
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9.1
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Committee Action
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8
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9.2
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No Adjustment for Cash Dividends
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8
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9.3
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Payment for Restricted Stock Units
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8
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9.4
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Deferrals
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8
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9.5
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Performance-Based Vesting
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9
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§ 10. STOCK GRANTS
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9
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10.1
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Committee Action
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9
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10.2
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Conditions
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9
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10.3
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Dividends and Voting Rights
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9
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10.4
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Satisfaction of Forfeiture Conditions
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9
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10.5
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Performance-Based Vesting
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10
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§ 11. PERFORMANCE UNITS
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10
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11.1
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Committee Action
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10
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11.2
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Conditions
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10
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11.3
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Performance Goals
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10
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11.4
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Performance Period
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10
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11.5
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Payment for Performance Units
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11
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§ 12. NON-TRANSFERABILITY
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11
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§ 13. SECURITIES REGISTRATION
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11
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§ 14. LIFE OF PLAN
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12
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§ 15. ADJUSTMENT
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12
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15.1
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Capital Structure
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12
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15.2
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Mergers
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12
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15.3
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Fractional Shares
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12
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ii
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Page
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§ 16. CHANGE IN CONTROL
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13
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16.1
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Assumption or Substitution of Certain Awards
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13
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16.2
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Non-Assumption or Substitution of Certain Awards
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13
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16.3
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Impact on Certain Awards
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13
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16.4
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Termination of Certain Awards
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13
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§ 17. AMENDMENT OR TERMINATION
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14
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§ 18. MISCELLANEOUS
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14
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18.1
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Shareholder Rights
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14
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18.2
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No Contract of Employment or Service
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14
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18.3
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Withholding
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14
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18.4
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Construction
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14
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18.5
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Other Conditions
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14
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18.6
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Rule 16b-3
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15
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iii
§ 1.
BACKGROUND
AND PURPOSE
The purpose of this Plan is to promote the interest of BioScrip,
Inc. (the Company), a Delaware corporation, by
authorizing the Committee to grant Awards to Key Employees and
Directors in order (1) to attract and retain Key Employees
and Directors, (2) to provide an additional incentive to
each Key Employee and Director to work to increase the value of
Stock and (3) to provide each Key Employee and Director
with a stake in the future of the Company which corresponds to
the stake of each of the Companys stockholders.
§ 2.
DEFINITIONS
2.1 Affiliate means any organization
(other than a Subsidiary) that would be treated as under common
control with the Company under § 414(c) of the Code if
50 percent were substituted for
80 percent in the income tax regulations under
§ 414(c) of the Code.
2.2 Award means any Option, Stock
Appreciation Right, Restricted Stock Unit, Stock Grant or
Performance Unit made pursuant to the provisions of the Plan.
2.3 Award Agreement means any Option
Certificate, Restricted Stock Unit Certificate, Stock
Appreciation Right Certificate, or Stock Grant Certificate.
2.4 Board means the Board of Directors
of the Company.
2.5 Change in Control means unless
otherwise provided in an Award Agreement, the occurrence of any
one of the following events:
(a) During any twenty-four (24) month period,
individuals who, as of the beginning of such period, constitute
the Board (the Incumbent Directors) cease for any
reason to constitute at least a majority of the Board, provided
that any person becoming a director subsequent to the beginning
of such period whose election or nomination for election was
approved by a vote of at least a majority of the Incumbent
Directors then on the Board (either by a specific vote or by
approval of the proxy statement of the Company in which such
person is named as a nominee for director, without written
objection to such nomination) shall be an Incumbent Director;
provided, however, that no individual initially elected or
nominated as a director of the Company as a result of an actual
or threatened election contest with respect to directors or as a
result of any other actual or threatened solicitation of proxies
by or on behalf of any person other than the Board shall be
deemed to be an Incumbent Director;
(b) Any person or group (within the
meaning of Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934 (the Exchange Act)) is or
becomes a beneficial owner (as defined in
Rule 13d-3
under the Exchange Act), directly or indirectly, of securities
of the Company representing 30% or more of the combined voting
power of the Companys then outstanding securities eligible
to vote for the election of the Board (the Company Voting
Securities); provided, however, that the event described
in this paragraph (b) shall not be deemed to be a Change in
Control by virtue of any of the following acquisitions:
(i) by the Company or any Affiliate or Subsidiary,
(ii) by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any Affiliate or
Subsidiary, (iii) by any underwriter temporarily holding
securities pursuant to an offering of such securities,
(iv) pursuant to a Non-Qualifying Transaction, as defined
in paragraph (c), or (v) by any person of or group of
Voting Securities from the Company, if a majority of the
Incumbent Board approves in advance the acquisition of
beneficial ownership of 30% or more of Company Voting Securities
by such person or group;
(c) The consummation of a merger, consolidation, statutory
share exchange or similar form of corporate transaction
involving the Company or any of its subsidiaries that requires
the approval of the Companys stockholders, whether for
such transaction or the issuance of securities in the
transaction (a Business Combination), unless
immediately following such Business Combination: (i) more
than 50% of the total voting power of (A) the corporation
resulting from such Business Combination (the
Surviving Corporation), or (B) if applicable,
the ultimate parent corporation that directly or indirectly has
beneficial ownership of 100% of the voting securities eligible
to elect directors of the Surviving Corporation (the
Parent Corporation), is represented by Company
Voting Securities that were outstanding immediately prior to
such Business Combination (or, if applicable, is represented by
shares into which such Company Voting Securities were converted
pursuant to such Business Combination), and such voting power
among the holders thereof is in substantially the same
proportion as the voting power of such Company Voting Securities
among the holders thereof immediately prior to the Business
Combination, (ii) no person (other than any employee
benefit plan (or related trust) sponsored or maintained by the
Surviving Corporation or the Parent Corporation), is or becomes
the beneficial owner, directly or indirectly, of 30% or more of
the total voting power of the outstanding voting securities
eligible to elect directors of the Parent Corporation (or, if
there is no Parent Corporation, the Surviving Corporation) and
(iii) at least a majority of the members of the board of
directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) following the
consummation of the Business Combination were Incumbent
Directors at the time of the Boards approval of the
execution of the initial agreement providing for such Business
Combination (any Business Combination which satisfies all of the
criteria specified in (i), (ii) and (iii) above shall
be deemed to be a Non-Qualifying Transaction);
(d) The stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or the
consummation of a sale of all or substantially all of the
Companys assets; or
(e) The occurrence of any other event that the Board
determines by a duly approved resolution constitutes a Change in
Control.
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because any person acquires beneficial
ownership of more than 30% of the Company Voting Securities as a
result of the acquisition of Company Voting Securities by the
Company which reduces the number of Company Voting Securities
outstanding; provided, that if after such acquisition by the
Company such person becomes the beneficial owner of additional
Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such
person, a Change in Control of the Company shall then occur.
2.6 Code means the Internal Revenue Code
of 1986, as amended.
2.7 Committee means the Management
Development & Compensation Committee, or such other
committee appointed by the Board, which shall have at least 2
members, each of whom shall come within the definition of a
non-employee director under
Rule 16b-3
and an outside director under § 162(m) of
the Code.
2.8 Director means a non-employee member
of the Board.
2.9 Ending Value means, a value for each
Performance Unit or a formula for determining the value of each
Performance Unit at the time of payment.
2.10 Fair Market Value means
(1) the closing price on any date for a share of Stock on
the principal securities exchange on which the Stock is traded
or listed or, if no such closing price is available on such
date, (2) such closing price as so reported in accordance
with clause (1) for the immediately preceding business day,
or, if the Stock is not traded or listed on any securities
exchange, (3) the price which the Committee acting in good
faith determines through any reasonable valuation method that a
share of Stock might change hands between a willing buyer and a
willing seller, neither being under any compulsion to buy or to
sell and both having reasonable knowledge of the relevant facts.
2.11 ISO means an Option which is
intended to satisfy the requirements of § 422 of the
Code.
2.12 Key Employee means an employee of
the Company or any Subsidiary or Parent or Affiliate designated
by the Committee who, in the judgment of the Committee acting in
its absolute discretion, is key directly or indirectly to the
success of the Company.
2.13 1933 Act means the Securities
Act of 1933, as amended.
2
2.14 1934 Act means the Securities
Exchange Act of 1934, as amended.
2.15 Non-ISO means an Option which is
not intended to satisfy the requirements of § 422 of
the Code.
2.16 Option means an option to purchase
Stock which is granted under § 7.
2.17 Option Certificate means the
written certificate which sets forth the terms and conditions of
an Option granted under this Plan.
2.18 Option Price means the price which
shall be paid to purchase one share of Stock upon the exercise
of an Option granted under this Plan.
2.19 Parent means any corporation which
is a parent corporation (within the meaning of
§ 424(e) of the Code) of the Company.
2.20 Performance Goal means a
performance goal described in § 11.3.
2.21 Performance Period means a
performance period as described in § 11.4.
2.22 Performance Unit means an Award
granted under § 11.
2.23 Plan means this BioScrip, Inc. 2008
Equity Incentive Plan as adopted by the Board and as amended
from time to time thereafter.
2.24 Prior Plan means the Companys
2001 Incentive Stock Plan.
2.25 Restricted Stock Unit means an
Award granted under Section 9.
2.26 Restricted Stock Unit Certificate
means the written certificate which sets forth the terms and
conditions of a Restricted Stock Unit.
2.27 Rule 16b-3
means the exemption under
Rule 16b-3
to Section 16(b) of the 1934 Act or any successor to
such rule.
2.28 SAR Value means the value assigned
by the Committee to a share of Stock in connection with the
grant of a Stock Appreciation Right under § 8.
2.29 Stock means the common stock,
$.0001 par value per share, of the Company.
2.30 Stock Appreciation Right means a
right to receive the appreciation in a share of Stock which is
granted under § 8.
2.31 Stock Appreciation Right
Certificate means the written certificate which
sets forth the terms and conditions of a Stock Appreciation
Right which is not granted to a Key Employee as part of an
Option.
2.32 Stock Grant means Stock granted
under § 10.
2.33 Stock Grant Certificate means the
written certificate which sets forth the terms and conditions of
a Stock Grant.
2.34 Subsidiary means a corporation
which is a subsidiary corporation (within the meaning of
§ 424(f) of the Code) of the Company.
2.35 Substitute Awards Awards granted or
shares of Stock issued by the Company in assumption of, or in
substitution or exchange for, awards previously granted, or the
right or obligation to make future awards, in each case by a
company acquired by the Company or any Affiliate or Subsidiary
or with which the Company or any Affiliate or Subsidiary
combines.
2.36 Ten Percent Shareholder means a
person who owns (after taking into account the attribution rules
of § 424(d) of the Code) more than ten percent of the
total combined voting power of all classes of stock of either
the Company, a Subsidiary or Parent.
3
§ 3.
SHARES RESERVED
UNDER PLAN
3.1 Number of Shares (a) Subject to
adjustment as provided in Section 15, a total of
9,280,000 shares of Stock shall be authorized for issuance
under the Plan (which number shall include the
3,580,000 shares of Stock originally reserved for issuance
under the Plan), all of which may subject to ISOs, less one
(1) share of Stock for every one (1) share of Stock
that was subject to an option or stock appreciation right
granted after December 31, 2007 under the Prior Plan and
one and one-half (1.5) shares of Stock for every one
(1) share of Stock that was subject to an award other than
an option or stock appreciation right granted after
December 31, 2007 under the Prior Plan. In no event may
more than 500,000 shares of Stock in the aggregate be
subject to Awards granted to Directors. Any shares of Stock that
are subject to Awards of Options or Stock Appreciation Rights
shall be counted against this limit as one (1.0) share of Stock
for every one (1) share of Stock issued. Any shares of
Stock that are subject to Awards other than Options or Stock
Appreciation Rights shall be counted against this limit as one
and one-half (1.5) shares of Stock for every one (1) share
of Stock issued.
(b) If any shares of Stock subject to an Award, or after
December 31, 2007 an award under the Prior Plan, are
forfeited or expire, or any Award, or after December 31,
2007 an award under the Prior Plan, is settled for cash (in
whole or in part), the shares of Stock subject to such Award or
such award under the Prior Plan shall, to the extent of such
forfeiture, expiration or cash settlement, again be available
for Awards under the Plan, in accordance with
Section 3.1(d) below. Notwithstanding anything to the
contrary contained herein, the following shares of Stock shall
not be added to the shares of Stock authorized for issuance
under paragraph (a) of this Section: (i) shares of
Stock tendered by the Key Employee or Director or withheld by
the Company in payment of the purchase price of an Option,
(ii) shares of Stock tendered by the Key Employee or
withheld by the Company to satisfy any tax withholding
obligation with respect to an Award, and (iii) shares of
Stock subject to a Stock Appreciation Right that are not issued
in connection with the stock settlement of the Stock
Appreciation Right on exercise thereof.
(c) Substitute Awards shall not reduce the shares of Stock
authorized for issuance under the Plan or authorized for grant
to a Participant under Section 6. Additionally, in the
event that a company acquired by the Company or any Affiliate or
Subsidiary or with which the Company or any Affiliate or
Subsidiary combines has shares available under a pre-existing
plan approved by stockholders and not adopted in contemplation
of such acquisition or combination, the shares available for
issuance pursuant to the terms of such pre-existing plan (as
adjusted, to the extent appropriate, using the exchange ratio or
other adjustment or valuation ratio or formula used in such
acquisition or combination to determine the consideration
payable to the holders of common stock of the entities party to
such acquisition or combination) may be used for Awards under
the Plan and shall not reduce the shares of Stock authorized for
issuance under the Plan; provided that Awards using such
available shares shall not be made after the date awards or
grants could have been made under the terms of the pre-existing
plan, absent the acquisition or combination, and shall only be
made to individuals who were not employees or directors of the
Company, an Affiliate or a Subsidiary prior to such acquisition
or combination.
(d) Any shares of Stock that again become available for
issuance pursuant to this Article shall be added back as one
(1) share of Stock if such shares of Stock were subject to
Options or Stock Appreciation Rights granted under the Plan or
options or stock appreciation rights granted under the Prior
Plan, and as one and one-half (1.5) shares of Stock if such
shares of Stock were subject to Awards other than Options or
Stock Appreciation Rights granted under the Plan or awards other
than options or stock appreciation rights granted under the
Prior Plan.
3.2. Character of Shares Any Shares
issued hereunder may consist, in whole or in part, of authorized
and unissued shares, treasury shares or shares purchased in the
open market or otherwise.
4
§ 4.
EFFECTIVE
DATE
The effective date of this Plan shall be the date of its
approval by the shareholders of the Company at a duly called
meeting.
§ 5.
COMMITTEE
§ 5.1 Committee Powers. This
Plan shall be administered by the Committee. The Committee shall
have full power and authority, subject to the provisions of the
Plan and subject to such orders or resolutions not inconsistent
with the provisions of the Plan as may from time to time be
adopted by the Board, to: (i) select the Key Employees and
Directors to whom Awards may from time to time be granted
hereunder; (ii) determine the type or types of Awards, not
inconsistent with the provisions of the Plan, to be granted to
each Participant hereunder; (iii) determine the number of
shares of Stock to be covered by each Award granted hereunder;
(iv) determine the terms and conditions, not inconsistent
with the provisions of the Plan, of any Award granted hereunder;
(v) determine whether, to what extent and under what
circumstances Awards may be settled in cash, shares of Stock or
other property; (vi) determine whether, to what extent, and
under what circumstances cash, shares of Stock, other property
and other amounts payable with respect to an Award made under
the Plan shall be deferred either automatically or at the
election of the Key Employee or Director; (vii) determine
whether, to what extent and under what circumstances any Award
shall be canceled or suspended; (viii) interpret and
administer the Plan and any instrument or agreement entered into
under or in connection with the Plan, including any Award
Agreement; (ix) correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any Award in the
manner and to the extent that the Committee shall deem desirable
to carry it into effect; (x) establish such rules and
regulations and appoint such agents as it shall deem appropriate
for the proper administration of the Plan; (xi) determine
whether any Award, other than an Option or Stock Appreciation
Right, will have dividend equivalents; and (xii) make any
other determination and take any other action that the Committee
deems necessary or desirable for administration of the Plan.
§ 5.2 Committee Decisions and
Meetings. Decisions of the Committee shall be
final, conclusive and binding on all persons or entities,
including the Company, any Affiliate or Subsidiary, and any
Participant employed by any of the foregoing. A majority of the
members of the Committee may determine its actions, including
fixing the time and place of its meetings. Notwithstanding the
foregoing, any action or determination by the Committee
specifically affecting or relating to an Award to a Director
shall require the prior approval of the Board.
§ 5.3. Delegation. To the
extent not inconsistent with applicable law, including
Section 162(m) of the Code, or the rules and regulations of
the principal securities exchange on which the Stock is traded
or listed), the Committee may delegate, by means of an express
resolution that sets forth the requirements and limitations
relating to the delegation and the procedures to be followed to
grant any Awards, to (i) a committee of one or more
directors of the Company any of the authority of the Committee
under the Plan, including the right to grant, cancel or suspend
Awards and (ii) to the extent permitted by law, to one or
more executive officers or a committee of executive officers the
right to grant Awards to Key Employees who are not Directors or
executive officers of the Company and the authority to take
action on behalf of the Committee pursuant to the Plan to cancel
or suspend Awards to Key Employees who are not Directors or
executive officers of the Company.
§ 6.
ELIGIBILITY
AND ANNUAL GRANT CAPS
Only Key Employees who are employed by the Company or a
Subsidiary or Parent shall be eligible for the grant of ISOs
under this Plan. No Key Employee in any calendar year shall be
granted (subject to adjustment under § 15)
(i) Options to purchase more than 500,000 shares of
Stock, (ii) more than 500,000
5
Stock Appreciation Rights based on the appreciation with respect
to shares of Stock, and (iii) Stock Grants and Restricted
Stock Units that are intended to comply with the requirements of
Section 162(m) of the Code representing more than
350,000 shares of Stock.
§ 7.
OPTIONS
7.1 Committee Action. The Committee
acting in its absolute discretion shall have the right to grant
Options to Key Employees and Directors under this Plan from time
to time to purchase shares of Stock. Each grant of an Option
shall be evidenced by an Option Certificate, and each Option
Certificate shall set forth whether the Option is an ISO or a
Non-ISO and shall set forth such other terms and conditions of
such grant as the Committee acting in its absolute discretion
deems consistent with the terms of this Plan; however, if the
Committee grants an ISO and a Non-ISO to a Key Employee on the
same date, the right of the Key Employee to exercise the ISO
shall not be conditioned on his or her failure to exercise the
Non-ISO.
7.2 $100,000 Limit. No Option shall be
treated as an ISO to the extent that the aggregate Fair Market
Value of the Stock subject to the Option which would first
become exercisable in any calendar year exceeds $100,000. Any
such excess shall instead automatically be treated as a Non-ISO.
The Committee shall interpret and administer the ISO limitation
set forth in this § 7.2 in accordance with
§ 422(d) of the Code, and the Committee shall treat
this § 7.2 as in effect only for those periods for
which § 422(d) of the Code is in effect.
7.3 Option Price. The Option Price for
each share of Stock subject to an Option (other than with
respect to a Substitute Award) shall be no less than the Fair
Market Value of a share of Stock on the date the Option is
granted; provided, however, if the Option is an ISO granted to a
Key Employee who is a Ten Percent Shareholder, the Option Price
for each share of Stock subject to such ISO shall be no less
than 110% of the Fair Market Value of a share of Stock on the
date such ISO is granted. Except for adjustments under
§ 15, without the approval of the Companys
stockholders the Option Price shall not be reduced after the
Option is granted, an Option may not be cancelled in exchange
for cash or another Award (other than in connection with a
Change in Control or a Substitute Award), and no other action
may be with respect to an Option that would be treated as a
repricing under the rules and regulations of the principal
securities exchange on which the Stock is traded.
7.4 Payment. The Option Price shall be
payable in full upon the exercise of any Option, and at the
discretion of the Committee an Option Certificate can provide
for the payment of the Option Price either in cash, by check or
in Stock and which is acceptable to the Committee or in any
combination of cash, check and such Stock. The Option Price in
addition may be paid (i) through any cashless exercise
procedure which is acceptable to the Committee or its delegate
and which is facilitated through a sale of Stock, (ii) with
the consent of the Committee, by withholding Stock otherwise
issuable in connection with the exercise of the Option, and
(iii) through any other method specified in an Award
agreement. Any payment made in Stock (including withholding of
Stock) shall be treated as equal to the Fair Market Value of
such Stock on the exercise date.
7.5 Exercise Period. Each Option granted
under this Plan shall be exercisable in whole or in part at such
time or times as set forth in the related Option Certificate,
but in no event may an Option granted to an employees of the
Company or any Subsidiary be exercisable before the expiration
of one year from the date the Option is granted (but may become
exercisable pro rata over such time), except for Substitute
Awards, under circumstances contemplated by Article 16, as
may be set forth in an Award Agreement with respect to the
retirement, death or disability of a Participant or special
circumstances determined by the Committee. No Option Certificate
shall make an Option exercisable on or after the earlier of
(1) the date which is the fifth anniversary of the date the
Option is granted, if the Option is an ISO and the Key Employee
is a Ten Percent Shareholder on the date the Option is
granted, or
6
(2) the date which is the tenth anniversary of the date the
Option is granted, if the Option is (a) a Non-ISO or
(b) an ISO which is granted to a Key Employee who is not a
Ten Percent Shareholder on the date the Option is granted.
An Option Certificate may provide for the exercise of an Option
after the employment of a Key Employee or service of a Director
has terminated for any reason whatsoever, including death or
disability.
7.6 Reload Option Grants Prohibited. The
Committee may not, as part of the grant of an Option, provide in
the related Option Certificate for reload Option
grants (i.e., the automatic grant of an additional Option to pay
all or a part of the Option Price or using Stock to satisfy all
or a part of any related tax withholding requirement.
§ 8.
STOCK
APPRECIATION RIGHTS
8.1 Committee Action. The Committee
acting in its absolute discretion shall have the right to grant
Stock Appreciation Rights to Key Employees and Directors under
this Plan from time to time, and each Stock Appreciation Right
grant shall be evidenced by a Stock Appreciation Right
Certificate or, if such Stock Appreciation Right is granted as
part of an Option, shall be evidenced by the Option Certificate
for the related Option.
8.2 Terms and Conditions.
(a) Stock Appreciation Right
Certificate. If a Stock Appreciation Right is
evidenced by a Stock Appreciation Right Certificate, such
certificate shall set forth the number of shares of Stock on
which the Key Employees or Directors right to
appreciation shall be based and the SAR Value of each share of
Stock. Such SAR Value shall be no less than the Fair Market
Value of a share of Stock on the date that the Stock
Appreciation Right is granted. Except for adjustments under
§ 15, without the approval of the Companys
stockholders the SAR Value shall not be reduced after the Stock
Appreciation Right is granted, a Stock Appreciation Right may
not be cancelled in exchange for cash or another Award (other
than in connection with a Change in Control or a Substitute
Award), and no other action may be taken with respect to a Stock
Appreciation Right that would be treated as a repricing under
the rules and regulations of the principal securities exchange
on which the Stock is traded. The Stock Appreciation Right
Certificate shall set forth such other terms and conditions for
the exercise of the Stock Appreciation Right as the Committee
deems appropriate under the circumstances, but in no event may a
Stock Appreciation Right granted to an employee of the Company
or any Subsidiary be exercisable before the expiration of one
year from the date the Stock Appreciation Right is granted (but
may become exercisable pro rata over such time), except for
Substitute Awards, under circumstances contemplated by
Article 16 or as may be set forth in an Award Agreement
with respect to the retirement, death or disability of the Key
Employee or Director or (ii) special circumstances
determined by the Committee (such as the achievement of
performance objectives). No Stock Appreciation Right Certificate
shall make a Stock Appreciation Right exercisable on or after
the date which is the tenth anniversary of the date such Stock
Appreciation Right is granted.
(b) Option Certificate. If a Stock
Appreciation Right is evidenced by an Option Certificate, the
number of shares of Stock on which the Key Employees or
Directors right to appreciation shall be based shall be
the same as the number of shares of Stock subject to the related
Option and the SAR Value for each such share of Stock shall be
no less than the Option Price under the related Option. Each
such Option Certificate shall provide that the exercise of the
Stock Appreciation Right with respect to any share of Stock
shall cancel the Key Employees or Directors right to
exercise his or her Option with respect to such share and,
conversely, that the exercise of the Option with respect to any
share of Stock shall cancel the Key Employees or
Directors right to exercise his or her Stock Appreciation
Right with respect to such share. A Stock Appreciation Right
which is granted as part of an Option shall be exercisable only
while the related Option is exercisable. The Option Certificate
shall set forth such other terms and conditions for the exercise
of the Stock Appreciation Right as the Committee deems
appropriate under the circumstances.
7
8.3 Exercise. A Stock Appreciation Right
shall be exercisable only when the Fair Market Value of a share
of Stock on which the right to appreciation is based exceeds the
SAR Value for such share, and the payment due on exercise shall
be based on such excess with respect to the number of shares of
Stock to which the exercise relates. A Key Employee or Director
upon the exercise of his or her Stock Appreciation Right shall
receive a payment from the Company in cash or in Stock issued
under this Plan, or in a combination of cash and Stock, and the
number of shares of Stock issued shall be based on the Fair
Market Value of a share of Stock on the date the Stock
Appreciation Right is exercised. The Committee acting in its
absolute discretion shall have the right to determine the form
and time of any payment under this § 8.3.
§ 9.
RESTRICTED
STOCK UNITS
9.1 Committee Action. The Committee
acting in its absolute discretion shall have the right from time
to time to grant to Key Employees and Directors under this Plan
Restricted Stock Units, the value of each of which corresponds
to the Fair Market Value of a share of Stock. Each Restricted
Stock Unit grant shall be evidenced by a Restricted Stock Unit
Certificate that shall set forth the number of Restricted Stock
Units granted to the Key Employee or Director, the vesting
schedule applicable to such Restricted Stock Units and such
other terms and conditions of such grant as the Committee acting
in its absolute discretion deems consistent with the terms of
this Plan. Restricted Stock Units subject solely to continued
service with the Company or a Subsidiary shall not become vested
over a period of less than (i) three (3) years from
the date of grant (but permitting pro rata vesting over such
period) for grants to Key Employees and (ii) one
(1) year from the date of grant (but permitting pro rata
vesting over such period) for grants to Directors; provided that
such restrictions shall not be applicable to grants not in
excess of 10% of the initial number of shares available for
grants of Restricted Stock Units under Section 3.1(a).
Restricted Stock Unit subject to the achievement of performance
objectives shall not become vested over a period of less than
one (1) year.
9.2 No Adjustment for Cash
Dividends. Except for dividend equivalent
adjustments made by the Committee for stock dividends in
accordance with § 15.1, there shall be no adjustment
to Restricted Stock Units for dividends paid by the Company.
9.3 Payment for Restricted Stock
Units. Unless a Key Employee or Director has made
a deferral election in accordance with § 9.4, a Key
Employee or Director shall receive upon the vesting of a
Restricted Stock Unit payment from the Company in Stock issued
under this Plan, and the number of shares of Stock issued to the
Key Employee or Director shall be equal to the number of
Restricted Stock Units that have at such time become vested. At
the time a Key Employee or Director receives shares of stock
equal in number to such Key Employees or Directors
vested Restricted Stock Units, such vested Restricted Stock
Units shall automatically be cancelled and shall give the Key
Employee or Director no further rights to payment of any kind.
9.4 Deferrals. The Committee, in its
absolute discretion, may permit a Key Employee or Director to
elect to defer such Key Employees or Directors
receipt of the delivery of shares of Stock that would otherwise
be due to such Key Employee or Director by virtue of the vesting
of a Restricted Stock Unit; provided such deferral election is
made in accordance with the requirements of Section 409A of
the Code. If any such deferral election is permitted by the
Committee, the Committee shall, in its absolute discretion,
establish additional rules and procedures for such payment
deferrals. However, notwithstanding the preceding provisions of
this Section and notwithstanding any other provision of this
Plan to the contrary, the Committee shall not, (1) in
establishing the terms and provisions of any grant of Restricted
Stock Units, or (2) in exercising its powers under this
§ 9.4, create any arrangement which would constitute
an employee pension benefit plan as defined in § 3(2)
of the Employee Retirement Income Security Act of 1974, as
amended (ERISA), unless the arrangement provides
benefits solely to one or more individuals who constitute
members of a select group of management or highly compensated
employees (within the meaning of ERISA §§ 201(2),
301(a)(3), 401(a)(1) and 4021(b)(6)).
8
9.5 Performance-Based
Vesting. Notwithstanding anything contained in
Section 9.1 hereof, the Committee may, at the time of grant
of Restricted Stock Units to Key Employees, prescribe that
vesting of all or any the Restricted Stock Units shall be
subject to the achievement of one or more performance
objectives, including the Performance Goals set forth in
§ 11.3.
§ 10.
STOCK GRANTS
10.1 Committee Action. The Committee
acting in its absolute discretion shall have the right to make
Stock Grants to Key Employees and Directors. Each Stock Grant
shall be evidenced by a Stock Grant Certificate, and each Stock
Grant Certificate shall set forth the conditions, if any, under
which Stock will be issued under the Stock Grant and the
conditions under which the Key Employees or
Directors interest in any Stock which has been issued will
become non-forfeitable.
10.2 Conditions.
(a) Conditions to Issuance of Stock. The
Committee acting in its absolute discretion may make the
issuance of Stock under a Stock Grant subject to the
satisfaction of one, or more than one, condition which the
Committee deems appropriate under the circumstances for Key
Employees or Directors generally or for a Key Employee or
Director in particular, and the related Stock Grant Certificate
shall set forth each such condition and the deadline for
satisfying each such condition. Stock subject to a Stock Grant
shall be issued in the name of a Key Employee or Director only
after each such condition, if any, has been timely satisfied,
and any Stock which is so issued shall be held by the Company
pending the satisfaction of the forfeiture conditions, if any,
under § 10.2(b) for the related Stock Grant.
(b) Forfeiture Conditions. The Committee
acting in its absolute discretion may make Stock issued in the
name of a Key Employee or Director subject to one, or more than
one, objective employment, performance or other forfeiture
condition that the Committee acting in its absolute discretion
deems appropriate under the circumstances for Key Employees or
Directors generally or for a Key Employee or Director in
particular, and the related Stock Grant Certificate shall set
forth each such forfeiture condition, if any, and the deadline,
if any, for satisfying each such forfeiture condition. A Stock
Grant Certificate may not provide for vesting of the Stock Grant
subject solely to continued service with the Company or a
Subsidiary over a period of less than three (3) years from
the date of grant (which may be pro rata over such period) for
grants to Key Employees and (ii) one (1) year from the
date of grant (but permitting pro rata vesting over such period)
for grants to Directors; provided that such restrictions shall
not be applicable to Stock Grants not in excess of 10% of the
initial number of shares available for Stock Grants under
Section 3. Stock Grants subject to the achievement of
performance conditions shall not become vested over a period of
less than one (1) year. A Key Employees or
Directors non-forfeitable interest in the shares of Stock
underlying a Stock Grant shall depend on the extent to which he
or she timely satisfies each such condition.
10.3 Dividends and Voting Rights. If a
cash dividend is paid on a share of Stock after such Stock has
been issued under a Stock Grant but before the first date that a
Key Employees or Directors interest in such Stock
(1) is forfeited completely or (2) becomes completely
non-forfeitable, the Company shall pay such cash dividend
directly to such Key Employee or Director except as otherwise be
provided in the Award agreement. If a Stock dividend is paid on
such a share of Stock during such period, such Stock dividend
shall be treated as part of the related Stock Grant, and a Key
Employees or Directors interest in such Stock
dividend shall be forfeited or shall become non-forfeitable at
the same time as the Stock with respect to which the Stock
dividend was paid is forfeited or becomes non-forfeitable. The
disposition of each other form of dividend which is declared on
such a share of Stock during such period shall be made in
accordance with such rules as the Committee shall adopt with
respect to each such dividend. A Key Employee or Director also
shall have the right to vote the Stock issued under his or her
Stock Grant during such period.
10.4 Satisfaction of Forfeiture
Conditions. A share of Stock shall cease to be
subject to a Stock Grant at such time as a Key Employees
or Directors interest in such Stock becomes
non-forfeitable under this Plan,
9
and the certificate representing such share shall be transferred
to the Key Employee or Director as soon as practicable
thereafter.
10.5 Performance-Based Vesting. The
Committee may, at the time a Stock Grant is made, prescribe that
vesting of all or any portion of the shares subject to the Stock
Grant shall be subject to the achievement of one or more
performance conditions, including the Performance Goals set
forth in § 11.3.
§ 11.
PERFORMANCE
UNITS
11.1 Committee Action. The Committee
(acting in its sole discretion) may from time to time grant
Performance Units to Key Employees under the Plan representing
the right to receive in cash an amount determined by reference
to certain performance measurements, subject to such
restrictions, conditions and other terms as the Committee may
determine.
11.2 Conditions. The written agreement
covering Performance Units shall specify Performance Goals (as
defined in § 11.3), a Performance Period (as defined
in § 11.4)) and an Ending Value. Performance Units
granted to a Key Employee shall be credited to a bookkeeping
account established and maintained for such Key Employee.
11.3 Performance Goals. With respect to
each award of Performance Units, the Committee (acting in its
sole discretion) shall specify as Performance Goals the
corporate, division, segment, business unit,
and/or
individual performance goals which must be satisfied in order
for the Key Employee to be entitled to payment to such
Performance Units. Performance Goals for an Award of Performance
Units that is intended to satisfy the requirements of
Section 162(m) of the Code shall be based on achieving
specified levels of one or any combination of the following with
respect to the Company on a consolidated basis, by division,
segment,
and/or
business unit: net sales; revenue; revenue growth or product
revenue growth; operating income (before or after taxes); pre-
or after-tax income (before or after allocation of corporate
overhead and bonus); earnings per share; net income (before or
after taxes); return on equity; total stockholder return; return
on assets or net assets; appreciation in
and/or
maintenance of the price of the Shares or any other
publicly-traded securities of the Company; market share; gross
profits; earnings (including earnings before taxes, earnings
before interest and taxes, earnings before interest, taxes,
depreciation and amortization or earnings before interest,
taxes, depreciation, amortization and option expense); economic
value-added models or equivalent metrics; comparisons with
various stock market indices; reductions in costs; cash flow or
cash flow per share (before or after dividends); return on
capital (including return on total capital or return on invested
capital); cash flow return on investment; improvement in or
attainment of expense levels or working capital levels;
operating margins, gross margins or cash margin; year-end cash;
debt reductions; stockholder equity; specific and objectively
determinable regulatory achievements; and implementation,
completion or attainment of specific and objectively
determinable objectives with respect to research, development,
products or projects, production volume levels, acquisitions and
divestitures and recruiting and maintaining personnel . The
Performance Goals also may be based solely by reference to the
Companys performance or the performance of a Subsidiary,
division, business segment or business unit of the Company, or
based upon the relative performance of other companies or upon
comparisons of any of the indicators of performance relative to
other companies. The Committee may express any goal in
alternatives, such as including or excluding (a) any
acquisitions or dispositions, restructurings, discontinued
operations, extraordinary items, and other unusual or
non-recurring charges, (b) any event either not directly
related to the operations of the Company or not within the
reasonable control of the Companys management, or
(c) the cumulative effects of tax or accounting changes in
accordance with U.S. generally accepted accounting
principles.
11.4 Performance Period. The Committee
(acting in its sole discretion) shall determine the Performance
Period, which shall be the period of time during which the
Performance Goals must be satisfied in order for the Key
Employee to be entitled to payment of Performance Units granted
to such Key Employee. Different Performance Periods may be
established for different Performance Units. Performance Periods
may run consecutively or concurrently.
10
11.5 Payment for Performance Units. As
soon as practicable following the end of a Performance Period,
the Committee shall determine whether the Performance Goals for
the Performance Period have been achieved. As soon as reasonably
practicable after such determination, or at such later date or
in such installments as the Committee shall determine at the
time of grant, the Company shall pay to the Key Employee an
amount in cash equal to the Ending Value of each Performance
Unit as to which the Performance Goals have been satisfied;
provided, however, that in no event shall a Key Employee receive
an amount in excess of $1,000,000 in respect of Performance
Units for any given year.
§ 12.
NON-TRANSFERABILITY
Except as provided below, no Award shall be transferable by a
Key Employee or Director other than by will or by the laws of
descent and distribution. Any Option or Stock Appreciation Right
shall (absent the Committees consent) be exercisable
during a Key Employees or Directors lifetime only by
the Key Employee or Director. To the extent and under such terms
and conditions as determined by the Committee, a Key Employee or
Director may assign or transfer an Award (each transferee
thereof, a Permitted Assignee) to (i) the Key
Employees or Directors spouse, children or
grandchildren (including any adopted and step children or
grandchildren), parents, grandparents or siblings, (ii) to
a trust for the benefit of one or more of the Key Employee or
Director or the persons referred to in clause (i), (iii) to
a partnership, limited liability company or corporation in which
the Key Employee or Director or the persons referred to in
clause (i) are the only partners, members or stockholders
or (iv) for charitable donations; provided that such
Permitted Assignee shall be bound by and subject to all of the
terms and conditions of the Plan and the Award Agreement
relating to the transferred Award and shall execute an agreement
satisfactory to the Company evidencing such obligations; and
provided further that such Key Employee or Director shall remain
bound by the terms and conditions of the Plan. The person or
persons to whom an Award is transferred by will or by the laws
of descent and distribution (or with the Committees
consent) thereafter shall be treated as the Key Employee or
Director with respect to such Award.
§ 13.
SECURITIES
REGISTRATION
As a condition to the receipt of shares of Stock under this
Plan, the Key Employee or Director shall, if so requested by the
Company, agree to hold such shares of Stock for investment and
not with a view toward resale or distribution to the public and,
if so requested by Company, shall deliver to Company a written
statement satisfactory to Company to that effect. Furthermore,
if so requested by the Company, the Key Employee or Director
shall make a written representation to Company that he or she
will not sell or offer for sale any of such Stock unless a
registration statement shall be in effect with respect to such
Stock under the 1933 Act and any applicable federal or
state securities law or he or she shall have furnished to
Company an opinion in form and substance satisfactory to Company
or its legal counsel satisfactory to Company that such
registration is not required. Certificates representing the
Stock transferred upon the exercise of an Option, Stock
Appreciation Right or Restricted Stock Unit or upon the lapse of
the forfeiture conditions, if any, on any Stock Grant may at the
discretion of Company bear a legend to the effect that such
Stock has not been registered under the 1933 Act or any
applicable state securities law and that such Stock cannot be
sold or offered for sale in the absence of an effective
registration statement as to such Stock under the 1933 Act
and any applicable state securities law or an opinion in form
and substance satisfactory to the Company of legal counsel
satisfactory to the Company that such registration is not
required.
11
§ 14.
LIFE OF PLAN
No Award shall be made under this Plan on or after the earlier of
(1) the tenth anniversary of the effective date of this
Plan (as determined under § 4), in which event this
Plan otherwise thereafter shall continue in effect until all
outstanding Options and Stock Appreciation Rights have been
exercised in full or no longer are exercisable, all Stock issued
under any Stock Grants under this Plan have been forfeited or
have become non-forfeitable, all Restricted Stock Units have
vested and all Performance Periods have ended, or
(2) the date on which all of the Stock reserved under
§ 3 has (as a result of the exercise of Options or
Stock Appreciation Rights granted under this Plan the
satisfaction of the forfeiture conditions, if any, on Stock
Grants, or the payment of shares upon the vesting of Restricted
Stock Units) been issued or no longer is available for use under
this Plan, in which event this Plan also shall terminate on such
date.
§ 15.
ADJUSTMENT
15.1 Capital Structure. The number, kind
or class (or any combination thereof) of shares of Stock
reserved under § 3, the annual grant caps described in
§ 6, the number, kind or class (or any combination
thereof) of shares of Stock subject to Options, Restricted Stock
Units or Stock Appreciation Rights granted under this Plan, the
Option Price of such Options, the SAR Value of such Stock
Appreciation Rights as well as the number, kind or class (or any
combination thereof) of shares of Stock subject to Stock Grants
granted under this Plan shall be adjusted by the Committee in an
equitable manner to reflect any change in the capitalization of
the Company, including, but not limited to, such changes as
stock dividends or stock splits.
15.2 Mergers. The Committee as part of
any corporate transaction described in § 424(a) of the
Code shall have the right to adjust (in any manner which the
Committee in its discretion deems consistent with
§ 424(a) of the Code) the number, kind or class (or
any combination thereof) of shares of Stock reserved under
§ 3 and the annual grant caps described in
§ 6. Furthermore, the Committee as part of any
corporate transaction described in § 424(a) of the
Code shall have the right to adjust (in any manner which the
Committee in its discretion deems consistent with
§ 424(a) of the Code) the number, kind or class (or
any combination thereof) of shares of Stock subject to any
outstanding Stock Grants under this Plan and any related grant
conditions and forfeiture conditions, and the number, kind or
class (or any combination thereof) of shares subject to Option,
Restricted Stock Unit and Stock Appreciation Right grants
previously made under this Plan and the related Option Price and
SAR Value for each such Option Stock Appreciation Right and,
further, shall have the right (in any manner which the Committee
in its discretion deems consistent with § 424(a) of
the Code and without regard to the annual grant caps described
in § 6 of this Plan) to make any Stock Grants and
Option Stock Appreciation Right and Restricted Stock Unit grants
to effect the assumption of, or the substitution for, stock
grants and option, restricted stock unit and stock appreciation
right grants previously made by any other corporation to the
extent that such corporate transaction calls for such
substitution or assumption of such stock grants and stock
option, restricted stock unit and stock appreciation right
grants.
15.3 Fractional Shares. If any adjustment
under this § 15 would create a fractional share of
Stock or a right to acquire a fractional share of Stock, such
fractional share shall be disregarded and the number of shares
of Stock reserved under this Plan and the number subject to any
Options, Restricted Stock Unit or Stock Appreciation Right
grants and Stock Grants shall be the next lower number of shares
of Stock, rounding all fractions downward. An adjustment made
under this § 15 by the Committee shall be conclusive
and binding on all affected persons.
12
§ 16.
CHANGE IN
CONTROL
16.1 Assumption or Substitution of Certain
Awards. Unless otherwise provided in an Award
Agreement, in the event of a Change in Control in which the
successor company assumes or substitutes for an Option,
Restricted Stock Unit, Stock Appreciation Right, or Stock Grant,
if a Key Employees employment with such successor company
(or a subsidiary thereof) terminates under the circumstances
specified in the Award Agreement within 24 months following
such Change in Control (or such other period set forth in the
Award Agreement, including prior thereto if applicable):
(i) Options and Stock Appreciation Rights outstanding as of
the date of such termination of employment will immediately
vest, become fully exercisable, and may thereafter be exercised
for 24 months (or the period of time set forth in the Award
Agreement), and (ii) restrictions, limitations and other
conditions applicable to Restricted Stock Units and Stock Grants
shall lapse and the Restricted Stock Units and Stock Grants
shall become free of all restrictions and limitations and become
fully vested. For the purposes of this Section 11.2, an
Option, Restricted Stock Unit, Stock Appreciation Right, Award
or Stock Grant shall be considered assumed or substituted for if
following the Change in Control the Award confers the right to
purchase or receive, for each share of Stock subject to the
Option, Restricted Stock Unit, Stock Appreciation Right, or
Stock Grant immediately prior to the Change in Control, the
consideration (whether stock, cash or other securities or
property) received in the transaction constituting a Change in
Control by holders of shares of Stock for each share of Stock
held on the effective date of such transaction (and if holders
were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the
outstanding shares); provided, however, that if such
consideration received in the transaction constituting a Change
in Control is not solely common stock of the successor company,
the Committee may, with the consent of the successor company,
provide that the consideration to be received upon the exercise
or vesting of an Option, Restricted Stock Unit, Stock
Appreciation Right or Stock Grant, for each share of Stock
subject thereto, will be solely common stock of the successor
company substantially equal in fair market value to the per
share consideration received by holders of shares of Stock in
the transaction constituting a Change in Control. The
determination of such substantial equality of value of
consideration shall be made by the Committee in its sole
discretion and its determination shall be conclusive and binding.
16.2 Non-Assumption or Substitution of Certain
Awards. Unless otherwise provided in an Award
Agreement in the event of a Change in Control, to the extent the
successor company does not assume or substitute for an Option,
Restricted Stock Unit, Stock Appreciation Right, or Stock Grant:
(i) those Options and Stock Appreciation Rights outstanding
as of the date of the Change in Control that are not assumed or
substituted for shall immediately vest and become fully
exercisable, and (ii) restrictions and deferral limitations
on Restricted Stock Units and Stock Grants that are not assumed
or substituted for shall lapse and the Restricted Stock Units
and Stock Grants shall become free of all restrictions and
limitations and become fully vested.
16.3 Impact on Certain Awards. Award
Agreements may provide that in the event of a Change in Control:
(i) Options and Stock Appreciation Rights outstanding as of
the date of the Change in Control shall be cancelled and
terminated without payment therefor if the Fair Market Value of
one share of Stock as of the date of the Change in Control is
less than the Option Price or SAR Value, and (ii) all
Performance Units shall be considered to be earned and payable
(either in full or pro rata based on the portion of Performance
Period completed as of the date of the Change in Control), and
any limitations or other restriction shall lapse and such
Performance Units shall be immediately settled or distributed.
16.4 Termination of Certain Awards. The
Committee, in its discretion, may determine that, upon the
occurrence of a Change in Control, each Option and Stock
Appreciation Right outstanding shall terminate within a
specified number of days after notice to the Key Employee or
Director,
and/or that
each Key Employee or Director shall receive, with respect to
each share of Stock subject to such Option or Stock Appreciation
Right, an amount equal to the excess of the Fair Market Value of
such share immediately prior to the occurrence of such Change in
Control over the Option Price of such Option and the SAR Value
of such Stock Appreciation Right; such amount to be payable in
cash, in one or more kinds of stock or property
13
(including the stock or property, if any, payable in the
transaction) or in a combination thereof, as the Committee, in
its discretion, shall determine.
§ 17.
AMENDMENT OR
TERMINATION
This Plan may be amended by the Board from time to time to the
extent that the Board deems necessary or appropriate; provided,
however, (1) no amendment shall be made absent the approval
of the stockholders of the Company to the extent such approval
is required under applicable law or exchange rule and
(2) no amendment shall be made to § 16 on or
after any date described in § 16 which might adversely
affect any rights which otherwise vest on such date. The Board
also may suspend granting Awards under this Plan at any time and
may terminate this Plan at any time; provided, however, the
Board shall not have the right unilaterally to modify, amend or
cancel any Award made before such suspension or termination
unless (x) the Key Employee or Director consents in writing
to such modification, amendment or cancellation or
(y) there is a dissolution or liquidation of the Company or
a transaction described in § 15 or § 16.
§ 18.
MISCELLANEOUS
18.1 Stockholder Rights. No Key Employee
or Director shall have any rights as a stockholder of the
Company as a result of the grant of an Option or a Restricted
Stock Unit or Stock Appreciation Right pending the actual
delivery of the Stock subject to such Option, Restricted Stock
Unit or Stock Appreciation Right to such Key Employee or
Director. Subject to § 10.3, a Key Employees or
Directors rights as a stockholder in the shares of Stock
underlying a Stock Grant which is effective shall be set forth
in the related Stock Grant Certificate.
18.2 No Contract of Employment or
Service. The grant of an Award to a Key Employee
or Director under this Plan shall not constitute a contract of
employment or service and shall not confer on a Key Employee or
Director any rights upon his or her termination of employment or
service in addition to those rights, if any, expressly set forth
in the related Option Certificate, Restricted Stock Unit
Certificate, Stock Appreciation Right Certificate, Stock Grant
Certificate, or Performance Unit agreement.
18.3 Withholding. Each Option, Stock
Appreciation Right, Restricted Stock Unit, Performance Unit and
Stock Grant, shall be made subject to the condition that the Key
Employee consents to whatever action the Committee directs to
satisfy the statutory federal and state tax withholding
requirements, if any, which the Company determines are
applicable to the exercise of such Option or Stock Appreciation
Right, the payment of shares upon the vesting of such Restricted
Stock Unit, the satisfaction of any forfeiture conditions with
respect to Stock subject to a Stock Grant issued in the name of
the Key Employee, or to the payment for the Performance Units.
The Committee also shall have the right to provide in an Award
agreement that a Key Employee may elect to satisfy such
statutory federal and state tax withholding requirements through
a reduction in the cash or the number of shares of Stock
actually transferred to him or to her under this Plan. No
withholding through a reduction in shares of Stock shall be
effected under this Plan which exceeds the minimum statutory
federal and state withholding requirements, unless it will not
trigger a negative accounting impact).
18.4 Construction. All references to
sections (§) are to sections (§) of this Plan unless
otherwise indicated. This Plan shall be construed under the laws
of the State of Delaware. Finally, each term set forth in
§ 2 shall have the meaning set forth opposite such
term for purposes of this Plan and, for purposes of such
definitions, the singular shall include the plural and the
plural shall include the singular.
18.5 Other Conditions. Each Award may
require that a Key Employee or Director (as a condition to the
exercise of an Option or a Stock Appreciation Right, the payment
of shares upon the vesting of a Restricted Stock Unit or the
issuance of Stock subject to a Stock Grant) enter into any
agreement or make such representations prepared by the Company,
including (without limitation) any agreement which restricts the
14
transfer of Stock acquired pursuant to the exercise of an Award
or provides for the repurchase of such Stock by the Company.
18.6 Rule 16b-3. The
Committee shall have the right to amend any Award to withhold or
otherwise restrict the transfer of any Stock or cash under this
Plan to a Key Employee or Director as the Committee deems
appropriate in order to satisfy any condition or requirement
under
Rule 16b-3
to the extent Rule 16 of the 1934 Act might be
applicable to such grant or transfer.
IN WITNESS WHEREOF, BioScrip, Inc. has caused its duly
authorized officer to execute this Plan to evidence its adoption
of this Plan.
BIOSCRIP, INC.
By:
Date:
15
2010 ANNUAL MEETING OF STOCKHOLDERS OF
BIOSCRIP, INC.
To be held on
June 3, 2010
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:
The Proxy Statement, Proxy Card and 2009 Annual Report on Form 10-K are available at www.bioscrip.com
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
â
Please detach along perforated line and mail in the envelope provided. â
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PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
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PROPOSAL 1. Election of Directors: |
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NOMINEES: |
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FOR ALL NOMINEES
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Charlotte W. Collins
Louis T. DiFazio |
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WITHHOLD AUTHORITY
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Samuel P. Frieder |
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FOR ALL NOMINEES
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Richard H. Friedman |
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Myron Z. Holubiak |
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Richard L. Robbins |
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Stuart A. Samuels |
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Richard M. Smith |
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Gordon H. Woodward |
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INSTRUCTION: To withhold authority to vote for any individual nominee(s),
mark FOR ALL EXCEPT and fill in the circle next to
each nominee you wish to
withhold, as shown here:
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To change the address on your account, please check
the box at the right and indicate your new address in
the address space above. Please note that changes to
the registered name(s) on the account may not be
submitted via this method.
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PROPOSAL 2. Proposal to approve an amendment to the Companys Amended and
Restated Certificate of Incorporation to increase the number of shares of
common stock that the Company is authorized to issue from 75 million shares to 125 million shares.
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PROPOSAL 3. Proposal to approve an amendment to the Companys 2008 Equity Incentive Plan
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PROPOSAL 4. Proposal to ratify the appointment of Ernst &
Young LLP as the Companys independent auditors.
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THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR IF NO
CONTRARY DIRECTION IS INDICATED WILL BE VOTED FOR PROPOSALS 1, 2, 3
AND 4 ABOVE AND IN THE DISCRETION OF THE PROXIES UPON SUCH OTHER MATTERS WHICH MAY PROPERLY
COME BEFORE THE MEETING AND ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
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Signature of Stockholder
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Date:
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Signature of Stockholder
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Please sign exactly as your name or names appear on this Proxy. When shares are held
jointly, each holder should sign. When signing as executor, administrator, attorney, trustee
or guardian, please give full title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person. |
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PROXY CARD
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
BIOSCRIP, INC.
2010 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 3, 2010
The undersigned stockholder of BIOSCRIP, INC., a Delaware corporation (the Company),
hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement
dated April 26, 2010, and hereby revokes all prior proxies and appoints Richard H. Friedman,
Richard M. Smith and Barry A. Posner, or any one of them, proxies and attorneys-in-fact, with full
powers to each of substitution and resubstitution, on behalf and in the name of the undersigned, to
represent the undersigned at the 2010 Annual Meeting of Stockholders of the Company (the Annual
Meeting) to be held on June 3, 2010, at 9:00 a.m., local time, at the Sheraton Tarrytown Hotel,
600 White Plains Road, Tarrytown, New York 10591, and at any adjournments or postponements thereof,
and to vote all shares of Common Stock of the Company which the undersigned would be entitled to
vote if then and there personally present, on the matters set forth on the reverse side and upon
such other matters as may properly come before the Annual Meeting or any adjournments or
postponements thereof, hereby revoking any proxies heretofore given.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR IF NO CONTRARY
DIRECTION IS INDICATED, WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4 ON THE REVERSE SIDE HEREOF IN
FAVOR OF MANAGEMENTS RECOMMENDATIONS AND FOR SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING AS SAID PROXIES DEEM ADVISABLE AND IN THE BEST INTEREST OF THE COMPANY.
(IMPORTANT TO BE MARKED, SIGNED AND DATED ON REVERSE SIDE)
14475
2010
ANNUAL MEETING OF STOCKHOLDERS OF
BIOSCRIP, INC.
To be held on
June 3, 2010
PROXY VOTING INSTRUCTIONS
INTERNET
- Access www.voteproxy.com
and follow the on-screen instructions. Have your proxy card available when you access the web page, and use the Company Number and Account Number shown on your proxy card.
TELEPHONE
- Call toll-free 1-800-PROXIES (1-800-776-9437) in
the United States or 1-718-921-8500 from foreign countries
from any touch-tone telephone and follow the instructions.
Have your proxy card available when you call and use the
Company Number and Account Number shown on your proxy card.
Vote online/phone until 11:59 PM EST the day before the meeting.
MAIL
- Sign, date and mail your proxy card in the envelope provided as
soon as possible.
IN
PERSON - You may vote your shares in person by attending the
Annual Meeting.
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COMPANY NUMBER
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NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:
The Proxy Statement, Proxy Card and 2009 Annual Report on Form 10-K are available at www.bioscrip.com
â Please
detach along perforated line and mail in the envelope provided
IF you are not voting via telephone or the Internet. â
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PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
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PROPOSAL 1. Election of Directors: |
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NOMINEES: |
o
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FOR ALL NOMINEES
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¡ ¡
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Charlotte W. Collins
Louis T. DiFazio |
o
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WITHHOLD AUTHORITY
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¡
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Samuel P. Frieder |
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FOR ALL NOMINEES
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¡
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Richard H. Friedman |
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¡
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Myron Z. Holubiak |
o
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FOR ALL EXCEPT
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¡
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David R. Hubers |
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(See instructions below) |
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¡
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Richard L. Robbins |
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¡
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Stuart A. Samuels |
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¡
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Richard M. Smith |
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¡
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Gordon H. Woodward |
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INSTRUCTION: To withhold authority to vote for any individual nominee(s),
mark FOR ALL EXCEPT and fill in the circle next to
each nominee you wish to
withhold, as shown here:= |
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To change the address on your account, please check
the box at the right and indicate your new address in
the address space above. Please note that changes to
the registered name(s) on the account may not be
submitted via this method.
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FOR |
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AGAINST |
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ABSTAIN |
PROPOSAL 2.
Proposal to approve an amendment to the Companys Amended and Restated Certificate of Incorporation
to increase the number of shares of common stock that the Company is authorized to issue from 75 million
shares to 125 million shares.
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PROPOSAL 3.
Proposal to approve an amendment to the Companys 2008 Equity Incentive Plan to increase
the number of authorized shares of common stock available for issuance by 5,700,000 shares, from 3,580,000 shares to 9,280,000 shares.
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PROPOSAL 4.
Proposal to ratify the appointment of Ernst & Young LLP as the
Companys independent auditors.
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THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR IF NO
CONTRARY DIRECTION IS INDICATED WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4 ABOVE AND IN THE DISCRETION OF
THE PROXIES UPON SUCH OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS OR
POSTPONEMENTS THEREOF.
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Signature of Stockholder
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Date:
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Signature of Stockholder
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Date:
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Note: |
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Please sign exactly as your name or names appear on this Proxy. When shares are held
jointly, each holder should sign. When signing as executor, administrator, attorney, trustee
or guardian, please give full title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person. |
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