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
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Filed
by a Party other than the Registrant
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Check
the appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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AMERICAN
CARESOURCE HOLDINGS, INC.
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(Name
of Registrant as Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment
of Filing Fee (Check the appropriate box):
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x
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No
fee required.
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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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(5)
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¨
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Fee
paid previously with preliminary materials.
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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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(2)
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Form,
Schedule or Registration Statement No.:
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AMERICAN
CARESOURCE HOLDINGS, INC.
5429
LYNDON B. JOHNSON FREEWAY, SUITE 850
DALLAS,
TEXAS 75240
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD MAY 19, 2009
The
Annual Meeting of Stockholders (the “Annual Meeting”) of American CareSource
Holdings, Inc. (“American CareSource Holdings” or the “Company”) will be held at
the Company’s executive offices at 5429 Lyndon B. Johnson Freeway, Suite 850,
Dallas, Texas, on Tuesday, May 19, 2009, at 9:00 a.m., Central Time for the
following purposes:
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1.
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to
elect eight members to the Board of Directors to serve for a term of one
year and until their successors are duly elected and
qualified;
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2.
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to
ratify the selection of McGladrey & Pullen, LLP as the Company’s
independent auditors for the fiscal year ending December 31,
2009;
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3.
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to
approve the American CareSource Holdings, Inc. 2009 Equity Incentive
Plan;
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4.
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to
amend the American CareSource Holdings, Inc. Employee Stock Option
Plan (the “2005 Stock Option Plan”) to increase the number of
shares subject to the 2005 Stock Option Plan from 3,249,329 shares to
3,749,329 shares; and
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5.
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to
transact such other business as may properly come before the Annual
Meeting and at any meeting following postponement or adjournment
thereof.
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Holders
of record of our common stock at the close of business on April 7, 2009 are
entitled to notice of, and to vote at, the Annual Meeting and at any meeting
following postponement or adjournment thereof.
In
addition to the proxy statement and proxy card, a copy of our 2008 Annual
Report, which includes the Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2008, is enclosed.
It is
important that your shares be represented and voted at the Annual
Meeting. You can vote your shares by completing, signing and dating
the enclosed proxy card and returning it to the Company. You can
revoke a proxy at any time prior to its exercise at the Annual Meeting by
following the instructions in the enclosed proxy statement.
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By Order
of the Board of Directors,
Steven
J. Armond
Chief
Financial Officer and
Secretary
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Dallas,
Texas
April 20,
2009
YOUR
VOTE IS IMPORTANT. PLEASE SIGN, DATE AND MAIL THE ENCLOSED
PROXY
CARD IN THE ENCLOSED PREPAID ENVELOPE.
TABLE
OF CONTENTS
PROXIES
AND VOTING PROCEDURES
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2
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PROPOSAL
1 -- ELECTION OF DIRECTORS
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4
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GOVERNANCE
OF THE COMPANY
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7
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AUDIT
COMMITTEE OF THE BOARD OF DIRECTORS
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7
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COMPENSATION
COMMITTEE OF THE BOARD OF DIRECTORS
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7
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GOVERNANCE
AND NOMINATIONS COMMITTEE OF THE BOARD OF DIRECTORS
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8
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REPORT
OF THE AUDIT COMMITTEE
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9
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COMMUNICATIONS
WITH THE BOARD OF DIRECTORS
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10
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DIRECTOR
COMPENSATION
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11
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EXECUTIVES
AND EXECUTIVE COMPENSATION
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12
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SUMMARY
COMPENSATION TABLE
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13
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OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
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14
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CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
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20
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SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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20
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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20
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PROPOSAL
2 -- RATIFICATION OF INDEPENDENT AUDITORS
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23
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PROPOSAL
3 -- PROPOSAL TO APPROVE 2009 EQUITY INCENTIVE PLAN
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24
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PROPOSAL
4 -- PROPOSAL TO AMEND 2005 STOCK OPTION PLAN
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32
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ANNUAL
REPORT TO STOCKHOLDERS
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36
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HOUSEHOLDING
OF ANNUAL MEETING MATERIALS
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36
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STOCKHOLDER
PROPOSALS FOR THE 2009 ANNUAL MEETING
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36
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OTHER
MATTERS
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36
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EXHIBIT
A -- 2009 EQUITY INCENTIVE PLAN
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EXHIBIT
B -- 2005 STOCK OPTION PLAN
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AMERICAN
CARESOURCE HOLDINGS, INC.
5429
LYNDON B. JOHNSON FREEWAY, SUITE 850
DALLAS,
TEXAS 75240
PROXY
STATEMENT
FOR
THE
ANNUAL
MEETING OF STOCKHOLDERS
We are
providing these proxy materials in connection with the solicitation by our Board
of Directors of proxies to be voted at the Annual Meeting of Stockholders (the
“Annual Meeting”) of American CareSource Holdings, Inc. (“American CareSource
Holdings” or the “Company”), to be held on May 19, 2009, and at any meeting
following postponement or adjournment of the Annual Meeting.
You are
cordially invited to attend the Annual Meeting, which will begin at 9:00 a.m.,
Central Time. The Annual Meeting will be held at the Company’s
executive offices at 5429 Lyndon B. Johnson Freeway, Suite 850, Dallas,
Texas.
We are
first mailing this proxy statement and proxy card (including voting
instructions) on or about April 20, 2009 to persons who were stockholders of
record at the close of business on April 7, 2009, the record date for the Annual
Meeting.
Our
fiscal year begins on January 1 and ends on December 31. References in this
proxy statement to fiscal year 2009 refer to the 12-month period from January 1,
2009 through December 31, 2009. References in this proxy statement to
fiscal year 2008 refer to the 12-month period from January 1, 2008 through
December 31, 2008. References in this proxy statement to fiscal year
2007 refer to the 12-month period from January 1, 2007 through December 31,
2007.
PROXIES
AND VOTING PROCEDURES
What
Is the Purpose of the Annual Meeting?
At the
Annual Meeting, stockholders will vote on the following:
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the
election of our Board of Directors;
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the
ratification of the selection of McGladrey & Pullen, LLP as our
independent auditors for our fiscal year ending December 31,
2009;
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the
approval of the American CareSource Holdings, Inc. 2009 Equity Incentive
Plan;
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the
amendment to the 2005 Stock Option Plan to increase the number of shares
subject to the 2005 Stock Option Plan from 3,249,329 shares to 3,749,329
shares; and
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such
other business as may properly come before the Annual Meeting and any
meeting following the adjournment or postponement
thereof.
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Who
Can Vote?
You are
entitled to notice of, and to vote at, the Annual Meeting all shares of common
stock of American CareSource Holdings that you held as of the close of business
on the record date, April 7, 2009. Each share of common stock is
entitled to one vote with respect to each matter properly brought before the
Annual Meeting.
As of the
record date, April 7, 2009, there were 15,419,442 shares of common stock of
American CareSource Holdings issued and outstanding.
In
accordance with Delaware law, a list of stockholders entitled to vote at the
Annual Meeting will be available at the Annual Meeting.
Who
Is the Record Holder?
You may
own common stock either (1) directly in your name, in which case you are the
record holder of such shares, or (2) indirectly through a broker, bank or other
nominee, in which case such nominee is the record holder.
If your
shares are registered directly in your name, we are sending these proxy
materials directly to you. If the record holder of your shares is a
nominee, you will receive proxy materials from such nominee.
How
Do I Vote?
Record
Holders:
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By
Mail. If you choose to vote by mail, mark your proxy card, date
and sign it, and return it as soon as possible in the postage-paid
envelope provided.
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By
attending the Annual Meeting. If you attend the Annual Meeting,
you can vote your shares in person.
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Stock
Held by Brokers, Banks and Nominees:
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If
your common stock is held by a broker, bank or other nominee, such nominee
will provide you with instructions that you must follow in order to have
your shares voted.
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If
you plan to attend the Annual Meeting and vote in person, you will need to
contact the broker, bank or other nominee to obtain evidence of your
ownership of common stock on April 7,
2009.
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How
Many Shares Must be Represented In Order to Transact Business at the Annual
Meeting?
A quorum
is the number of shares that must be represented, in person or by proxy, in
order to transact business at the Annual Meeting. We will have a
quorum and be able to conduct business at the Annual Meeting if a majority of
the outstanding shares of common stock entitled to vote are present at the
meeting, either in person or by proxy. Abstentions and broker
non-votes will be included in the calculation of the number of shares considered
to be present for purposes of determining whether a quorum is
present.
What
is a Broker Non-Vote?
A broker
non-vote occurs when a nominee holding shares for a beneficial owner does not
vote on a particular proposal because the nominee does not have discretionary
voting power with respect to that proposal and has not received voting
instructions from the beneficial owner.
How
Many Votes Are Required to Approve a Proposal?
If a
quorum is present, the affirmative vote of a plurality of votes cast is required
to elect directors. Thus, a nominee for director may be elected even
if the nominee receives less than a majority of the shares represented at the
meeting. Proxies cannot be voted for a greater number of nominees
than are named in this proxy statement. If a quorum is present, the
affirmative vote of a majority of the votes cast is required to ratify the
selection of our independent auditors, approve the American CareSource Holdings,
Inc. 2009 Equity Incentive Plan and amend the 2005 Stock Option
Plan.
How
Will The Shares Represented By My Executed Proxy Card Be Voted?
All
shares entitled to vote and represented by properly completed proxy cards that
are not revoked will be voted in accordance with the instructions provided on
the proxy cards. If you sign and return your proxy card, but do not
specify how you wish your shares to be voted, your shares represented by that
proxy card will be voted “FOR” the nominees for director, “FOR” the ratification
of the appointment of McGladrey & Pullen, LLP as our independent auditors
for our fiscal year ending December 31, 2009, “FOR” the approval of the American
CareSource Holdings, Inc. 2009 Equity Incentive Plan, and “FOR” amendment of the
2005 Stock Option Plan.
How
Are Abstentions and Broker Non-Votes Counted?
Shares
not voted as a result of a marked abstention or a broker non-vote will not be
counted as votes for or against a particular matter. Accordingly,
marked abstentions and broker non-votes will have no effect on the outcome of
the votes to elect directors, to ratify the appointment of McGladrey &
Pullen, LLP as our independent auditors, to the approve the American CareSource
Holdings, Inc. 2009 Equity Incentive Plan, or to amend the 2005 Stock
Option Plan. However, shares subject to marked abstentions and broker
non-votes will be considered as represented and as part of the quorum at the
Annual Meeting.
How
Can I Revoke My Proxy or Change My Vote?
You can
revoke your proxy prior to the close of voting at the Annual Meeting by
either:
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Sending
written notice of revocation to our Secretary at our executive
offices;
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Sending
a signed proxy card bearing a later date to our Secretary;
or
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If
you attend the Annual Meeting in person, you may revoke your proxy by
either giving notice of revocation to the Inspectors of Election at the
Annual Meeting or by voting in
person.
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Who
Will Pay the Expenses of Proxy Distribution?
We will
pay the expenses for the preparation of the proxy materials and the solicitation
of proxies. Our directors, officers or employees may solicit proxies
on our behalf in person or by telephone, e-mail, facsimile or other electronic
means. These directors, officers and employees will not receive
additional compensation for such services. In accordance with the
regulations of the United States Securities and Exchange Commission (the “SEC”),
we may reimburse brokerage firms and other custodians, nominees and fiduciaries
for their expenses incurred in sending proxies and proxy materials to beneficial
owners of our common stock.
PROPOSAL
1
ELECTION
OF DIRECTORS
Our Board
of Directors currently consists of eight directors. At our Annual
Meeting, eight directors are to be elected.
The eight
directors identified below have been nominated by the Board of Directors for
election to a new one-year term. If elected, each nominee will continue in
office until the next Annual Meeting of Stockholders and until his successor has
been duly elected and qualified, or until the earliest of his death,
resignation, retirement or removal. Each nominee has indicated to the
Company that he will serve if elected. We do not anticipate that any
nominee will be unable to stand for election, but, if that happens, your proxy
will be voted in favor of another person nominated by the Board of
Directors. Biographical information regarding each nominee
follows. The age of each nominee is as of May 19, 2009, the date of
our Annual Meeting.
The
following table identifies the directors nominated for election at the Annual
Meeting.
Name
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Age
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Position
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Sami
S. Abbasi
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43
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Director
(1)
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David
S. Boone
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47
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Director
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Edward
B. Berger
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79
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Director,
Chairman of the Board
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John
W. Colloton
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78
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Director
(2)
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Kenneth
S. George
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60
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Director
(3)
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John
N. Hatsopoulos
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74
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Director
(4)
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John
Pappajohn
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80
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Director
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Derace
L. Schaffer, MD
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61
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Director
(5)
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_________________________
(1)
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Member
of the Audit Committee and Compensation
Committee
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(2)
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Chairman
of the Governance and Nominations Committee and member of the Audit
Committee
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(3)
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Chairman
of the Audit Committee and member of the Compensation
Committee
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(4)
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Chairman
of the Compensation Committee and member of the Governance and Nominations
Committee
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(5)
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Member
of the Governance and Nominations Committee and Compensation
Committee
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There are
no familial relationships among our directors and/or executive
officers.
Sami S. Abbasi,
43
. Mr. Abbasi was appointed to the Board of Directors of American
CareSource Holdings on September 4, 2008. Since 2007, Mr.
Abbasi has been Chairman and Chief Executive Officer of National Surgical Care,
Inc., and prior to holding that position he served as President and Chief
Executive Officer of Radiologix, Inc. from 2004 until 2006. Previous
positions held at Radiologix, Inc. include Executive Vice President and Chief
Operating Officer from October 2003 until November 2004 and as Executive Vice
President and Chief Financial Officer from December 2000 until March
2004. From January 2000 through June 2000, Mr. Abbasi served as Chief
Financial Officer and Chief Operating Officer of Adminiquest, Inc., a private
company that provided web-enabled and full-service outsourcing solutions to the
insurance and benefits industry. From August 1996 through December 1999, he was
Senior Vice President and Chief Financial Officer of Radiologix. From January
1995 through July 1996, Mr. Abbasi served as Vice President in the Healthcare
Group of Robertson, Stephens and Company, where he was responsible for
investment banking business development and executing a broad range of corporate
finance transactions and mergers and acquisitions. From June 1988 through
January 1995, he held various positions at Citicorp Securities, including Vice
President and Senior Industry Analyst in the Healthcare Group. Mr. Abbasi
received his M.B.A. from the University of Rochester and his B.A. in Economics
from the University of Pennsylvania.
Edward B. Berger,
80
. Mr. Berger has served as a director of American CareSource
Holdings since March 2006, as Non-Executive Chairman of the Board since March
30, 2007 and as Executive Chairman since April 16, 2007. For the past
25 years, Mr. Berger has been President of Berger Equities, Inc., a real estate
investment firm owned by Mr. Berger and his spouse. For the past
seven years, Mr. Berger has been the sole owner and member of A Plus Consulting,
LLC. Since 2006, Mr. Berger is a director of ConMed Healthcare
Management, Inc., a public company providing correctional facility healthcare
services, and chairman of its audit committee. Mr. Berger has
extensive experience in the healthcare industry, having served as past President
and CEO of Palo Verde Hospital, past President and member of the Board of
Trustees of Kino Community Hospital, and past member of the Long Range Planning
Committee of Tucson Medical Center, all in Tucson, Arizona. In June
of 2002, Mr. Berger became an independent director of CardSystems Solutions,
Inc. (CardSystems”), a privately held credit card processing company and was
associated with CardSystems thru November of 2007. On May 11, 2006,
the Board of Directors of CardSystems determined it was in the best interests of
its stockholders to liquidate its assets in a Chapter 11
bankruptcy. Upon the resignation of each member of the Board of
Directors, at the request of certain stockholders of CardSystems, Mr. Berger
agreed to become the sole director, Chief Executive Officer and liquidating
agent for CardSystems. On May 12, 2006, CardSystems filed for
bankruptcy protection under Chapter 11 of Title 11 of the U.S. Bankruptcy
Code. Mr. Berger received a Juris Doctorate from New York Law School
and a Masters Degree in Education as well as a Bachelor of Arts Degree in
History and English from the University of Arizona. Mr. Berger is
currently an Adjunct Professor in Political Science at Pima Community College,
Chairman of the Desert Angels Inc., an Angel investing group, and recently
retired as Chairman of the MBA Advisory Council, Eller Graduate School of
Management, at the University of Arizona.
David S. Boone,
47
. Mr. Boone has been the Company’s President and Chief
Executive Officer since September 2007, and was named director on
March 10,
2009. Mr. Boone formerly served as our Chief Financial Officer since
June 2005 and Chief Operating Officer since December 2005. Prior to
joining American CareSource Holdings, from 2001 through 2005, Mr. Boone was
Senior Vice President of Finance for Belo Corporation, a public company owning
television broadcasting and newspaper publishing operations and interactive
media and cable news operations, and was responsible for managing treasury,
planning and controller functions. He has previously held several
other senior executive positions. Mr. Boone holds a Bachelor of Science degree
in accountancy, with Distinction, from the University of Illinois and a Masters
in Business Administration from the Harvard Graduate School of Business
Administration. He is also a Certified Public Accountant.
John W. Colloton,
78
. Mr. Colloton has served as one of our directors since
2004, is currently the Chairman of the Governance and Nominations Committee and
is a member of the Audit Committee. He is Emeritus director and Chief
Executive Officer of the University of Iowa Hospitals and
Clinics. From 1973 until 2008, Mr. Colloton served as a director of
WellMark, Inc. (Iowa-South Dakota Blue Cross & Blue Shield) during which
tenure he served several years as board chairman and held membership on all
board committees. From 2000 until his retirement from the WellMark,
Inc.’s board of directors, he served as lead director. Since August
2007, Mr. Colloton has served on the board of directors of ConMed Healthcare
Management, Inc., a public company providing correctional healthcare services,
and also serves on its audit and compensation committees. Mr.
Colloton was a director of Allion, Inc., a public company, from 2004 to
2006. From 1989 to 2003, Mr. Colloton was a director of Baxter
International Inc. and, from 1997 to 2002, was a director of Radiologix,
Inc. From 1971 to 1993, Mr. Colloton was a director of the University
of Iowa Hospitals and Clinics and, from 1993 to 2000, was Vice President of the
University of Iowa for Statewide Health Services. Mr. Colloton
received his Bachelor of Arts Degree in Business Administration from Loras
College and holds a Masters Degree in Hospital Administration from the
University of Iowa.
Kenneth S. George,
60
. Mr. George became a director of American CareSource
Holdings in January 2004. Mr. George serves as Chairman of the
Company’s Audit Committee and is a member of the Compensation
Committee. He has served on the board of directors and audit
committee of Access Plans USA, Inc., a public company, since June
2003. Mr. George served two terms as a State Representative in the
Texas House of Representatives. Mr. George has been self-employed,
managing his own investment activities, since 2001. From 1996 to
2001, he was General Partner of Riverside Acquisitions L.L.C. and was active in
commercial real estate, financial and land transactions. From 1994 to
1995, Mr. George was Chairman and Chief Executive Officer of Ameristat, Inc., a
private ambulance provider in the State of Texas. From 1988 to 1994,
he was Chairman and Chief Executive Officer of EPIC Healthcare Group, an owner
of 36 suburban/rural acute care hospitals with 15,000 employees and $1.4 billion
in revenues. Mr. George has a Masters Degree in Business
Administration from the University of Texas at Austin and a Bachelor of Arts
Degree from Washington and Lee University.
John N. Hatsopoulos,
74
. John N. Hatsopoulos has served as a director of American
CareSource Holdings since December 2006. Mr. Hatsopoulos is Chairman
of the Compensation Committee and is a member of the Governance and Nominations
Committee. Since 1999, Mr. Hatsopoulos has been Chief Executive
Officer and a director of American DG Energy, Inc., a public company providing
products and services in support of on-site generation of electricity, heating
and cooling at commercial, institutional and light industrial
facilities. Mr. Hatsopoulos is Chief Executive Officer of Tecogen
Inc., a manufacturer of cogeneration systems, since 1999. Mr.
Hatsopoulos has served as a managing partner of Alexandros Partners LLC, a
financial advisory firm, since 1999. Mr. Hatsopoulos also serves as a
director of Antigenics Inc., a public biotechnology company, since
2007. He is the Chairman of the Board of Directors of Glenrose
Instruments Inc., a public company engaged in radiological and environmental
services, since 1999. Mr. Hatsopoulos is one of the founders of
Thermo Electron Corporation (now Thermo Fisher Scientific Inc.) and the retired
President and Vice Chairman of the Board of Directors of that
company. He served on the Board of Directors of the American Stock
Exchange from 1994 to 2000. He is also a member of the Board of Directors of TEI
BioSciences Inc. since 1999, and a “Member of the Corporation” for Northeastern
University. Mr. Hatsopoulos graduated from Athens College in Athens,
Greece, in 1953. He holds a Bachelor of Science Degree in history and
mathematics from Northeastern University, together with Honorary Doctorates in
Business Administration from Boston College and Northeastern
University.
John Pappajohn,
80
. Mr. Pappajohn has been a director of American CareSource
Holdings since November 2004. Since 1969, Mr. Pappajohn has been the President
and sole owner of Pappajohn Capital Resources, a venture capital firm, and
President and sole owner of Equity Dynamics, Inc., a financial consulting firm,
both located in Des Moines, Iowa. He serves as a director on the boards of the
following public companies: PharmAthene, Inc. (formerly Healthcare Acquisition
Corp.), a biodefense company, since 2007; and ConMed Healthcare Management,
Inc., a provider of correctional healthcare services, since 2005.
Derace L. Schaffer, M.D.,
61
. Dr. Schaffer has been a director of American CareSource
Holdings since November 2004. Dr. Schaffer is the Chief Executive
Officer of The Lan Group, a venture capital firm founded by Dr. Schaffer in 1990
and specializing in healthcare and high technology investments. Dr.
Schaffer has served as a director of Allion Healthcare, Inc., a public company
providing specialty pharmacy and disease management services to HIV/AIDS
patients, since 1996 and currently serves on its audit and compensation
committees. Dr. Schaffer is also a director of CareGuide, Inc.
(formerly Patient Infosystems, Inc.), a provider of population health management
services, since 1996, and serves on its audit and compensation
committees. He has served as chairman of several healthcare
companies, including Radiologix, Inc. before it became a public
company. He co-founded Allion Healthcare, Patient Infosystems, Inc.
(now CareGuide, Inc.) and Radiologix. Dr. Schaffer served as Chief Executive
Officer and Chairman of the Board of Ide Imaging Group, P.C. from 1980 to 2001.
Dr. Schaffer has served as a director on many healthcare boards of directors,
including several health systems and more than ten healthcare services and
technology companies. Dr. Schaffer received his postgraduate
radiology training at Harvard Medical School and Massachusetts General Hospital,
where he served as Chief Resident. Dr. Schaffer is a Clinical
Professor of Radiology at Weill Cornell Medical College.
Director
Independence
We use
the definition of “independence” set forth in Rule 4200(a)(15) of the NASDAQ
Stock Market (“NASDAQ”) Rules, as applicable and as may be modified or
supplemented from time to time and the interpretations thereunder, to determine
if the members of our Board of Directors are independent. In making
this determination, our Board of Directors considers, among other things,
transactions and relationships between each director and his immediate family
and the Company, including those reported in this proxy statement under the
caption “Certain Relationships and Related Transactions.” The purpose
of this review is to determine whether any such relationships or transactions
are material and, therefore, inconsistent with a determination that the
directors are independent. As a result of this review, our Board
affirmatively determined, based on its understanding of such relationships and
transactions, the majority of the members of our Board of Directors, namely Sami
S. Abbasi, John W. Colloton, John N. Hatsopoulos, Kenneth S. George and Derace
L. Schaffer, M.D. are independent directors.
The
Board of Directors unanimously recommends that you vote “FOR”
the
election of each nominee for director named above.
GOVERNANCE
OF THE COMPANY
Pursuant
to the Delaware General Corporation Law and the Company’s Bylaws, our business,
property and affairs are managed by or under the direction of our Board of
Directors. Members of the Board of Directors are kept informed of the
Company’s business through discussions with the Chief Executive Officer and
other officers, by reviewing materials provided to them and by participating in
meetings of the Board of Directors and its committees. We currently
have eight members on our Board of Directors. All of our directors
are standing for re-election. The Board of Directors of the Company has three
standing committees: the Audit Committee, the Compensation Committee and the
Governance and Nominations Committee, each comprised of independent directors
only.
During
fiscal year 2008, the Board of Directors held five meetings, the Audit Committee
held four meetings, the Compensation Committee held four meetings and the
Governance and Nominations Committee held one meeting. The directors
each attended more than 80% of the total number of meetings of the Board of
Directors and the committees of which they were a member during fiscal year
2008.
American
CareSource Holdings has a Code of Business Conduct and Ethics (the “Code of
Conduct”) that applies to all directors, officers and employees, which can be
found at the Company’s web site, www.anci-care.com. All of our
directors, officers and employees are expected to be familiar with the Code of
Conduct and to adhere to those principles and procedures set forth in the Code
of Conduct that apply to them. The Company will post any amendments
to the Code of Conduct, as well as any waivers that are required to be disclosed
by the rules of either the SEC or NASDAQ, on the Company’s web
site.
The
Company’s Board of Directors has adopted Corporate Governance Guidelines and
Charters for the Audit Committee, Compensation Committee, and Governance and
Nominations Committee of the Board of Directors. These documents can be found at
the Company’s web site, www.anci-care.com.
A
stockholder can also obtain a printed copy of any of the materials referred to
above by contacting the Company at the following address:
American
CareSource Holdings, Inc.
5429
Lyndon B. Johnson Freeway
Suite
850
Dallas,
TX 75240
Attn:
Investor Relations
Telephone:
972.308.6830
AUDIT
COMMITTEE OF THE BOARD OF DIRECTORS
The Board
of Directors has an Audit Committee, which currently consists of Kenneth S.
George, as Chairman, John W. Colloton and Sami S. Abbasi. The
functions of the Audit Committee are described in its report, which is included
in this proxy statement. Our Audit Committee makes regular reports to the full
Board of Directors.
COMPENSATION
COMMITTEE OF THE BOARD OF DIRECTORS
The Board
of Directors has a Compensation Committee, which consists of John N.
Hatsopoulos, as Chairman, Sami S. Abbasi, Kenneth S. George and Derace L.
Schaffer, M.D. Our Compensation Committee makes regular reports to
the full Board of Directors. No less frequently than annually, the
Committee reviews its Charter to re-assess its adequacy and recommend any
suggested changes to the Board for approval. Under its Charter, our
Compensation Committee’s responsibilities include:
|
·
|
evaluation
of the performance of our Chief Executive Officer and determination of his
compensation based upon his
performance;
|
|
·
|
approval
of the compensation of our executive officers and employment contracts for
executive officers;
|
|
·
|
administration
of our equity-based compensation plans, recommendations to the full Board
regarding our equity-based compensation plans, and review and approval of
all grants and awards thereunder;
|
|
·
|
review
and approval of changes to our existing equity-based compensation plans,
including recommendations to the full Board of changes that require
stockholder approval; and
|
|
·
|
review
and approval of changes to our health and welfare plans that involve a
material change in costs or benefit
levels.
|
The
Compensation Committee is generally empowered to review the performance and
development of our management in achieving corporate goals and objectives and to
assure that our senior executives are compensated effectively in a manner
consistent with our strategy, competitive practice and the requirements of the
appropriate regulatory bodies. In furtherance of these goals, the
Compensation Committee oversees, reviews and administers all compensation,
equity and employee benefit plans and programs. The Compensation
Committee consults with the Chief Executive Officer as it deems appropriate and
may invite the Chief Executive Officer to attend meetings of the Compensation
Committee, provided that he does not participate in any deliberations or
decision-making by the Compensation Committee establishing goals and objectives
for the Chief Executive Officer, evaluating the performance of the Chief
Executive Officer or fixing the compensation or recommendation of equity grants
for the Chief Executive Officer. The Compensation Committee considers
individual and Company performance in determining salary and bonus levels
consistent with a view to attracting and retaining qualified
executives.
Our
Compensation Committee’s Charter authorizes the Compensation Committee to
delegate any of its responsibilities to one or more subcommittees as it deems
appropriate. Each subcommittee must include one or more members of
the Committee. Our Compensation Committee’s Charter also authorizes
the Compensation Committee to retain compensation consultants and other advisors
to assist in its duties. The plan being submitted for shareholder
approval at the 2009 annual meeting - the American CareSource Holdings, Inc.
2009 Equity Incentive Plan - will be administered by the Committee.
Compensation
Committee Interlocks and Insider Participation
During
2008, John N. Hatsopoulos and Kenneth S. George served on our compensation
committee. None of these committee members were officers or employees of the
Company during 2008, or at any other time in the past. While serving on the
committee, these members were independent directors pursuant to applicable
NASDAQ rules, and none had any relationship requiring disclosure by the Company
under any paragraph of Item 404 (Transaction with Related Persons, Promoters and
Certain Control Persons).
GOVERNANCE
AND NOMINATIONS COMMITTEE OF THE BOARD OF DIRECTORS
The Board
of Directors has a Governance and Nominations Committee, which currently
consists of John W. Colloton, as Chairman, John N. Hatsopoulos and Derace L.
Schaffer, M.D.
Our Board
of Directors and Governance and Nominations Committee regularly evaluate the
Company’s approach to corporate governance in light of changing regulatory
requirements and evolving best practices. The Governance and
Nominations Committee reviews and reassesses the adequacy of our Corporate
Governance Guidelines and recommends any proposed changes to the entire Board
for approval.
Our
Governance and Nominations Committee makes regular reports to the Board of
Directors. The Committee, from time to time, reviews its Charter to
re-assess its adequacy and recommends any suggested changes to the Board for
approval. Under its Charter, our Governance and Nominations
Committee’s responsibilities with respect to Board and Committee membership,
Board evaluation, and succession planning include:
|
·
|
Selection of director
nominees
. The Governance and Nominations Committee
recommends to the Board of Directors nominees for election as directors at
any meeting of stockholders and nominees to fill vacancies on the
Board. The Committee would consider candidates proposed by
stockholders and will apply the same criteria and follow the same process
in considering such candidates as it does when considering other
candidates. The Committee may adopt, in its discretion,
separate procedures regarding director candidates proposed by our
stockholders. Director recommendations by stockholders must be
in writing, include a resume of the candidate’s business and personal
background and include a signed consent that the candidate would be
willing to be considered as a nominee to the Board and, if elected, would
serve. Such recommendation must be sent to the Company’s
Secretary at the Company’s executive offices. When it seeks
nominees for directors, our Governance and Nominations Committee looks for
candidates who it believes will contribute to the Board’s operations and
will represent the interests of the Company’s stockholders. The
Committee generally considers a number of criteria when it is identifying
and selecting candidates, such as high character and integrity, freedom
from conflicts of interest, willingness and ability to devote sufficient
time to the affairs of the Company, diligence in fulfilling the
responsibilities of a director and committee member, capacity and desire
to represent the balanced best interests of the stockholders as a whole
and not primarily of a special interest group or constituency, past
accomplishments, expertise in areas important to the Company’s success and
ability to interact well with other members of the
Board.
|
|
·
|
Review of requisite skills and
criteria for new board members and board
composition.
The Committee reviews with the entire Board
of Directors, on an annual basis, the requisite skills and criteria for
board candidates and the composition of the Board as a
whole.
|
|
·
|
Hiring of search firms to
identify director nominees.
The Committee has the
authority to retain search firms to assist in identifying board
candidates, approve the terms of the search firm’s engagement, and cause
the Company to pay the engaged search firm’s engagement
fee.
|
|
·
|
Selection of committee
members.
The Committee recommends to the Board of
Directors on an annual basis the directors to be appointed to each
committee of the Board of
Directors.
|
|
·
|
Evaluation of the Board of
Directors.
The Committee will oversee an annual
self-evaluation of the Board of Directors and its committees to determine
whether it and its committees are functioning
effectively.
|
|
·
|
Succession of senior
executives.
The Committee will present an annual report to the
Board of Directors on succession planning, including transitional Board
leadership in the event of unplanned
vacancies.
|
Our
Governance and Nominations Committee may delegate any of its responsibilities to
subcommittees as it deems appropriate. The Committee is authorized to
retain independent legal and other advisors, and conduct or authorize
investigations into any matter within the scope of its duties.
REPORT
OF THE AUDIT COMMITTEE
As
described more fully in its Charter, the function of the Audit Committee is to
assist the Board of Directors in its general oversight of the Company’s
financial reporting, internal control and audit
functions. Management, not the Audit Committee nor the independent
auditor, is responsible for the preparation, presentation and integrity of the
Company’s financial statements, accounting and financial reporting principles,
and internal controls and procedures designed to ensure compliance with
accounting standards and applicable laws and regulations. McGladrey
& Pullen, LLP, the Company’s independent auditing firm, is responsible for
performing an independent audit of the consolidated financial statements in
accordance with U.S. generally accepted auditing standards.
The Audit
Committee members are not professional accountants or auditors, and their
functions are not intended to duplicate or to certify the activities of
management and the independent auditor. The Audit Committee acts only
in a board-level oversight capacity. In its oversight role, the
Committee relies on the work and assurances of the Company’s management, which
has the primary responsibility for financial statements and reports, and of the
independent auditors, who, in their report, express an opinion on the conformity
of the Company’s annual financial statements to U.S. generally accepted
accounting principles.
Each of
the directors who serve on the Audit Committee is “independent” within the
meaning of the listing standards contained in the Company Guide of NASDAQ and
Rule 10A-3(b) under the Securities Exchange Act of 1934. That is, the
Board of Directors has determined that neither Kenneth S. George, John W.
Colloton nor Sami S. Abbasi has a relationship with the Company that may
interfere with his independence from the Company and its
management. The Board of Directors has designated Kenneth S. George
as the “Audit Committee financial expert” within the meaning of Item 407(d)(5)
of Regulation S-K under the Securities Exchange Act of 1934. A copy
of our Audit Committee Charter is available at the Company’s web site,
www.anci-care.com.
In
connection with the preparation and filing of our Annual Report on Form 10-K for
the year ended December 31, 2008, the Audit Committee:
|
·
|
reviewed
and discussed the audited financial statements with the Company’s
management and the independent auditors in separate
sessions;
|
|
·
|
discussed
with McGladrey & Pullen, LLP, the Company’s independent auditors, the
matters required to be discussed by Statement of Auditing Standards No. 61
(as modified or supplemented), as adopted by the Public Company Accounting
Oversight Board (“PCAOB”) in Rule
3200T;
|
|
·
|
received
the written disclosures and the letter from McGladrey & Pullen, LLP
required by Independence Standards Board Standard No. 1 (as modified or
supplemented), as adopted by PCAOB in Rule 3600T, and discussed with
McGladrey & Pullen, LLP the independence of McGladrey & Pullen,
LLP; and
|
|
·
|
had
private sessions, at each of its meetings in person or telephonically,
with the Company’s independent auditors and, separately, with the
Company’s financial management team, at which candid discussions of
financial management, accounting and internal control issues took
place.
|
Management
has reviewed the audited financial statements in the Annual Report on Form 10-K
with the Audit Committee, including a discussion of the quality, not just the
acceptability, of the accounting principles, the reasonableness of significant
judgments and the clarity of disclosures in the financial
statements. In addressing the quality of management’s accounting
judgments, members of the Audit Committee asked for management’s representations
that the audited consolidated financial statements of the Company have been
prepared in conformity with accounting principles generally accepted in the
United States of America.
Based on
the review and discussions referred to above, among other things, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the American CareSource Holdings Annual Report on Form
10-K for the year ended December 31, 2008.
Audit
Committee
Kenneth
S. George, Chairman
John W.
Colloton
Sami S.
Abbasi
COMMUNICATIONS
WITH THE BOARD OF DIRECTORS
The
Company encourages its stockholders to communicate with the Board of
Directors. The Board of Directors does not believe a formal process
for stockholders to send communications to the Board of Directors is necessary
because all stockholder communications will be circulated to all members of the
Board and the Board does not screen stockholder communications. All
such communications should be directed to our President and Chief Executive
Officer, David S. Boone, who, in turn, will circulate the communications to the
members of the Board of Directors.
DIRECTOR
COMPENSATION
The
following table sets forth the cash and non-cash compensation of our directors
for the Company’s fiscal year ended December 31, 2008. In the
paragraph following the table and footnotes, we describe our standard
compensation arrangement for service on the Board of Directors and Board
committees. Although stock options have been granted to our board members, there
were no stock awards made to our directors during the fiscal year ended December
31, 2008 nor any year prior thereto.
Name
|
|
Fees
Earned
or
Paid
in
Cash
($)
|
|
|
Option
Awards
($)
(1)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
Sami
S. Abbasi
(2)
|
|
$
|
2,000
|
|
|
$
|
12,306
|
|
|
$
|
14,306
|
|
Edward
B. Berger
(3)
|
|
|
125,000
|
|
|
|
140,263
|
|
|
|
265,263
|
|
John
W. Colloton
|
|
|
3,000
|
|
|
|
9,052
|
|
|
|
12,052
|
|
Kenneth
S. George
|
|
|
6,500
|
|
|
|
6,021
|
|
|
|
12,521
|
|
John
N. Hatsopoulos
|
|
|
4,000
|
|
|
|
30,391
|
|
|
|
34,391
|
|
John
Pappajohn
|
|
|
2,000
|
|
|
|
6,021
|
|
|
|
8,021
|
|
Derace
L. Schaffer
|
|
|
4,000
|
|
|
|
6,021
|
|
|
|
10,021
|
|
__________________________
(1)
|
Represents
the compensation costs of stock options calculated for financial reporting
purposes for the year utilizing the provisions of SFAS No. 123R,
rather than an amount paid to or realized by the Board member. See Note 5,
“Stock Options”, to the Company’s Audited Consolidated Financial
Statements set forth in the Company’s Form 10-K for the assumptions made
in determining SFAS No. 123R values. There can be no assurance
that the SFAS No. 123R amounts will ever by realized by the Board
member.
|
|
At
December 31, 2008, our Board members held options to purchase an aggregate
of the following number of shares of common stock of the Company: Mr.
Abbasi - 25,000 shares; Mr. Berger - 300,000 shares; Mr. Colloton -
71,233 shares; Mr. Kenneth George - 31,233 shares; Mr.
Hatsopoulos - 65,000 shares; Mr. Pappajohn - 71,233 shares; and
Dr. Schaffer - 71,233 shares.
|
(2)
|
In
connection with his appointment to the Board, Mr. Abbasi was granted a
stock option to purchase 25,000 shares of common stock, at an exercise
price of $7.80, the closing price of our common stock as reported on The
American Stock Exchange on September 4, 2008. The stock option will vest
in four equal annual installments commencing September 4,
2009. The per-option SFAS No. 123R grant date value was
$4.54. There can be no assurance that the SFAS No. 123R amounts
will ever be realized.
|
(3)
|
This
amount consists of $125,000
paid to Mr.
Berger’s for his services as our Executive Chairman. The amount
does not reflect amounts earned in 2007, and paid in
2008.
|
In 2008
members of the Board of Directors received a director’s fee of $1,000 for each
board meeting attended. In addition, the Chairman of the Audit
Committee received an additional fee of $2,500. In addition, we
reimburse all outside directors for travel and lodging expenses related to
scheduled Board meetings.
The Board
of Directors has approved a new director compensation plan for 2009, including
payment of a $10,000 annual retainer to each director. As chairman of
the Board, Mr. Berger will receive $15,000, as chair of the Audit Committee, Mr.
George will receive $10,000, as chair of the Compensation Committee, Mr.
Hatsolopoulos will receive $5,000 as chair of the Nominating and Governance
Committee and Mr. Colloton will receive $2,500. Mr. Berger will also
receive a $10,000 payment monthly through April 2009. In addition,
each director will receive, subject to stockholder approval of the 2009 Equity
Incentive Plan, a grant of 3,333 RSUs, vesting monthly over a five year
period. Furthermore, each director will receive $1,000 for each board
meeting attended, and for any conference call over three hours, held in
2009.
EXECUTIVES
AND EXECUTIVE COMPENSATION
Executive
Officers
Our
executive officers are not appointed for fixed terms. The following
are biographical summaries of our executive officers:
Steven J. Armond,
40.
Mr. Armond joined the Company in October 2007 as its Chief
Financial Officer. From 2003 to 2007, Mr. Armond was the Chief
Financial Officer of Data Return, LLC, a provider of enterprise-class strategic
information technology operations services. From 2000 until 2003, Mr.
Armond was Vice President, Finance of the hosting division of the management
services company divine, Inc. and was responsible for management of the
division’s financial, strategic vendor and key alliance
relationships. From 1991 to 2000, Mr. Armond was a corporate manager
with The Quaker Oats Company. Mr. Armond earned a Masters in Business
Administration in Finance and Economics from the University of Chicago Graduate
School of Business and his Bachelor of Science degree in accounting from Purdue
University. Mr. Armond is a Certified Public Accountant.
Kurt Fullmer, 47
. Mr. Fullmer
has served as the Company’s Vice President of Client Development since November
2008. Mr. Fullmer formerly served as the Company's Vice President, Sales &
Revenue from September 2006 through September 2007, then as Vice President of
Operations from September 2007 through November 2008. Mr. Fullmer has
25 years experience in the healthcare industry, including 18 years in managed
care leadership. Most recently, Mr. Fullmer served as Chief Executive Officer of
ClaimsPay Solutions, a provider of HIPAA (Health Insurance
Portability and Accountability Act) compliant electronic payments and remittance
advice for healthcare payers, from January 2006 through September 2006. Before
joining ClaimsPay, Mr. Fullmer was Sr. Vice President, Network and Medical
Management for MEGA Life & Health Insurance Company, starting at
HealthMarket Insurance Agency, an affiliate of MEGA Life & Health, in
January 2001 and maintaining positions there through December 2005, where he
helped develop a consumer driven healthcare insurance plan. During that time, he
also served as President of HealthMarket Insurance Agency, leading sales and
providing broker/agent support. Mr. Fullmer has held key senior executive
positions with OneComp Health System, CCN Managed Care, Intergroup Healthcare of
Utah, and FHP of Utah, Inc. Mr. Fullmer graduated from Utah State University
with a Bachelor of Arts Degree in Human Resource Administration & Industrial
Relations, including minor studies in Chemistry and Economics. He received his
Masters in Business Administration and Masters in Health Administration from the
University of Utah.
Rost A. Ginevich,
45.
Mr. Ginevich joined the Company in March 2008 as our Chief
Information Officer and is primarily responsible for development and execution
of the Company’s information technology strategy. Mr. Ginevich has
over 20 years of information technology experience. Before joining
the Company, from 2007 to 2008, Mr. Ginevich served as a Director at West Monroe
Partners, a full-service business and technology consulting
firm. From 2006 to 2007, Mr. Ginevich was Chief Information Officer
for Kitty Hawk, an AMEX-listed cargo transportation company. From
2002 to 2006, he was with IBM Business Consulting Services, where he managed
business development and execution of large consulting engagements for clients
in various industries. Mr. Ginevich earned a Bachelor of Science
Degree in Computer Science and a Masters in Business Administration from
Oklahoma State University. He has written extensively on topics
related to information technology.
M. Cornelia Outten,
49
. Ms. Outten joined the Company as Vice President of Network
Development in February 2008. Prior to joining the Company, Ms.
Outten served as Senior Vice President, Provider Networks for Interplan Health
Group, a national healthcare management company. From 2002 to 2004,
she was Executive Vice President and Chief Operating Officer of JBC Healthcare
Partners, LLC, a regional PPO retiree medical program in San Diego,
California. Ms. Outten has previously held several other healthcare
management positions and brings nearly 25 years healthcare industry experience
to the Company. She graduated from Salem College with a Bachelor of
Arts Degree in Sociology and Economics and earned a Masters in Health
Administration, with a concentration on Fiscal Management, from Tulane
University.
James T. Robinson, 48.
Mr.
Robinson joined the Company in November 2008 and is responsible for directing
all sales and marketing activities for the Company's growing national network of
ancillary care providers. Previously, Mr. Robinson served as Executive Vice
President of Sales and Marketing and Chief Marketing Officer of VistaCare, Inc.,
where he helped lead the turnaround and eventual sale of the $230 million
nationwide hospice/healthcare services company based in Scottsdale, Arizona.
Prior to joining VistaCare, Mr. Robinson was President and Chief Executive
Officer of HealthBanks, Inc., an innovative, private-equity backed e-Health
Network Company that connects specialty physicians to their patients. Before
HealthBanks, Mr. Robinson was co-founder of Avicenna Systems Corporation, a
venture capital backed e-Health Physician Practice Solutions Company that was
acquired by WebMD. Mr. Robinson earned a Bachelor of Arts from Connecticut
College and holds an MBA from Harvard University.
Matthew D. Thompson,
37.
Mr. Thompson joined the Company as Controller and
Principal Accounting Officer in April 2008. Prior to joining
the Company, Mr. Thompson was Director of Financial Reporting at Highland
Financial Partners, L.P., an affiliate of Highland Capital Management L.P., in
Dallas, Texas. Prior to that, he spent nine years with publicly-held Tyler
Technologies, Inc., a Dallas-based leading provider of integrated, end-to-end
information management solutions and services to local governments. While there,
Mr. Thompson served in various positions, most recently as Division Controller
of Tyler's Courts & Justice and Appraisal & Tax Divisions. Before
joining Tyler Technologies, Mr. Thompson spent five years with Ernst &
Young, LLP. Mr. Thompson, a Certified Public Accountant, earned his
Bachelor’s of Business Administration degree from Baylor University in Waco,
Texas. He is a member of both the American Institute of Certified Public
Accountants as well as the Texas Society of Certified Public
Accountants.
SUMMARY
COMPENSATION TABLE
The
following table and footnotes set forth information, for the fiscal years ended
December 31, 2007 and December 31, 2008, concerning the annual and long-term
compensation awarded to, earned by or paid to: (i) our President and Chief
Executive Officer, and (ii) the four most highly compensated executive officers,
other than the principal executive officer, who received compensation in excess
of $100,000 during the fiscal year ended December 31, 2008 and were serving as
executive officers at December 31, 2008 (collectively referred to as the “Named
Executive Officers” throughout this proxy statement).
Name and Principal Position
|
|
Year
|
|
Salary ($)
(1)
|
|
|
Bonus ($)
(2)
|
|
|
Option
Awards ($)
(3)
|
|
|
All
Other Compensation (
$)
|
|
|
Total ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
S. Boone,
President
and Chief
Executive
Officer
|
|
2008
|
|
$
|
300,000
|
|
|
$
|
125,000
|
(4)
|
|
$
|
102,752
|
|
|
$
|
6,627
|
|
|
$
|
534,379
|
|
|
2007
|
|
|
253,135
|
|
|
|
111,449
|
(5)
|
|
|
25,085
|
|
|
|
750
|
|
|
|
390,419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven
J. Armond,
Chief
Financial Officer
|
|
2008
|
|
|
205,000
|
|
|
|
69,575
|
(6)
|
|
|
145,206
|
|
|
|
11,039
|
|
|
|
430,820
|
|
|
2007
|
|
|
33,231
|
(7)
|
|
|
18,000
|
|
|
|
21,465
|
|
|
|
—
|
|
|
|
72,696
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kurt
Fullmer,
Vice
President of Operations
|
|
2008
|
|
|
205,000
|
|
|
|
61,500
|
(8)
|
|
|
57,703
|
|
|
|
3,297
|
|
|
|
327,500
|
|
|
|
2007
|
|
|
172,884
|
|
|
|
19,229
|
|
|
|
35,355
|
|
|
|
10,542
|
(9)
|
|
|
238,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
M.
Cornelia Outten,
Vice
President of Provider Development
|
|
2008
|
|
|
167,449
|
(10)
|
|
|
55,500
|
(11)
|
|
|
63,647
|
|
|
|
39,285
|
(12)
|
|
|
325,881
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rost
A. Ginevich,
Chief
Information Officer
|
|
2008
|
|
|
141,907
|
(13)
|
|
|
42,292
|
(14)
|
|
|
44,195
|
|
|
|
2,945
|
|
|
|
231,339
|
|
__________________________
(1)
|
Includes
amounts deferred pursuant to salary reduction arrangements under the
Company’s 401(k) Profit Sharing
Plan.
|
(2)
|
All
bonus amounts earned during 2007 were approved by the Compensation
Committee on March 26, 2008. Bonus amounts earned during 2008
were paid partially in cash and partially in restricted stock units
(“RSUs”), at the recommendation of the Compensation Committee and after
approval by our Board of Directors on March 10, 2009. The
cash payments were made on March 31, 2009. The RSUs were valued
at $7.02, which was the closing price of the Company’s stock on March 10,
2009. The RSUs vest monthly over a two-year
period. Vesting of the RSUs may accelerate upon certain
conditions, including a change of control of the Company, or under certain
circumstances, involuntary termination of the executive. The
2009 Equity Incentive Plan under which these awards have been made is
subject to stockholder approval. See “Proposal 3, Approval of
the American CareSource Holdings, Inc. 2009 Equity Incentive Plan,” for a
description of the 2009 Equity Incentive Plan and the terms relating to
these RSUs.
|
(3)
|
Represents
the compensation costs of stock options calculated for financial reporting
purposes for the year utilizing the provisions of SFAS No. 123R,
rather than an amount paid to or realized by the named executive officer.
See Note 5, “Stock Options”, to the Company’s Audited Consolidated
Financial Statements set forth in the Company’s Form 10-K for the
assumptions made in determining SFAS No. 123R values. There can
be no assurance that the SFAS No. 123R amounts will ever by realized
by the named executive officer.
|
(4)
|
Excludes
28,490 RSUs awarded on March 10, 2009, which vest monthly over a two-year
period, and remain subject to shareholder approval of the 2009 Equity
Incentive Plan.
|
(5)
|
This
amount consists of a cash bonus of $25,000 related to Mr. Boone’s
appointment to President and Chief Executive Officer of the Company on
September 23, 2007 and a cash bonus of $86,449 for performance in fiscal
year 2007 and paid in March 2008.
|
(6)
|
Excludes
15,858 RSUs awarded on March 10, 2009, which vest monthly over a two-year
period, and remain subject to shareholder approval of the 2009 Equity
Incentive Plan.
|
(7)
|
Mr.
Armond commenced employment with the Company on October 25,
2007. His annual salary for 2007 was
$180,000.
|
(8)
|
Excludes
14,017 RSUs awarded on March 10, 2009, which vest monthly over a two-year
period, and remain subject to shareholder approval of the 2009 Equity
Incentive Plan.
|
(9)
|
This
amount consists of a commission paid to Mr. Fullmer of $10,242 under his
employment agreement as a result of performance in his previous role as
Vice President of Sales and $300 contributed to Mr. Fullmer’s 401(k) plan
account by the Company.
|
(10)
|
Ms.
Outten commenced employment with the Company on February 27,
2008. Her annual salary for 2008 was
$185,000.
|
(11)
|
Excludes
12,650 RSUs awarded on March 10, 2009, which vest monthly over a two-year
period, and remain subject to shareholder approval of the 2009 Equity
Incentive Plan.
|
(12)
|
Excludes
$35,000 paid to Ms. Outten to reimburse her for amount paid for relocation
costs.
|
(13)
|
Mr.
Ginevich commenced employment with the Company on March 10,
2008. His annual salary for 2008 was
$175,000.
|
(14)
|
Excludes
9,639 RSUs awarded on March 10, 2009, which vest monthly over a two-year
period, and remain subject to shareholder approval of the 2009 Equity
Incentive Plan.
|
(15)
|
Some
of our executive officers may be entitled to receive certain benefits in
the event of the termination of their employment or a change of control of
the Company. These arrangements are described in more detail
below under the heading “Compensation
Arrangements.”
|
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
The
following table sets forth certain information relating to equity awards for
each Named Executive Officer outstanding on December 31, 2008. The
table does not give effect to grants of options that occurred after December 31,
2008. For additional information with respect to these grants, see
the section titled “Stock Option Plan” below.
Option
Awards
|
Name
|
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
|
Number
of Securities Underlying Unexercised
Options
(#)
Unexercisable
|
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned
Options (#)(1)
|
|
Option
Exercise
Price ($)
|
|
Option
Expiration
D
ate
|
David
S. Boone
|
|
179,946
22,493
41,666
—
—
|
|
—
—
58,334
135,000
—
|
|
—
—
—
—
28,490
|
|
$0.31
0.49
2.55
3.29
7.02
|
|
5/1/2015
10/3/2015
9/24/2017
3/26/2018
—
|
Steven
J. Armond
|
|
68,055
—
—
|
|
106,945
75,000
—
|
|
—
—
15,858
|
|
3.50
3.29
7.02
|
|
10/25/2017
3/26/2018
—
|
Kurt
Fullmer
|
|
35,000
—
—
|
|
35,000
60,000
—
|
|
—
—
14,017
|
|
2.55
3.29
7.02
|
|
9/24/2016
3/26/2018
—
|
M.
Cornelia Outten
|
|
—
—
—
|
|
135,000
45,000
—
|
|
—
—
12,650
|
|
2.68
3.29
7.02
|
|
2/12/2018
3/26/2018
—
|
Rost
A. Ginevich
|
|
—
—
|
|
110,000
—
|
|
—
9,639
|
|
4.20
7.02
|
|
5/5/2018
—
|
__________________________
(1)
|
The
2009 Equity Incentive Plan under which these awards have been made is
subject to stockholder approval.
|
2009
Equity Incentive Plan
On March
10, 2009, the Board adopted the American CareSource Holdings, Inc. 2009 Equity
Incentive Plan, subject to shareholder approval which is being sought at the
2009 annual shareholder meeting. If approved, the 2009 Equity
Incentive Plan will become effective on March 10, 2009. Additional
information concerning the 2009 Employee Stock Purchase Plan is provided under
“Proposal 3 - Proposal to Approve the American CareSource Holdings, Inc. 2009
Equity Incentive Plan.” The full text of the Plan is set forth in Appendix
A.
2005
Stock Option Plan
The 2005
Stock Option Plan was adopted by the Board of Directors on January 17,
2005,
and at our
2007 annual meeting, the Company’s stockholders approved an amendment and
restatement of the 2005 Stock Option Plan. On November 14, 2008, the
Board of Directors unanimously approved an increase in the number of shares
available for grant under the 2005 Stock Option Plan from 3,249,329 shares to
3,749,329 shares, subject to the approval of the Company’s stockholders at the
Annual Meeting.
As the
2005 Stock Option Plan is proposed to be amended, a description of the 2005
Stock Option Plan and the proposed amendment are contained under the heading
“Proposal 4 - Proposal to Amend the 2005 Stock Option Plan.” Please
see this section for information regarding the 2005 Stock Option
Plan. Additionally, a copy of the 2005 Stock Option Plan as proposed
to be amended is attached hereto as Appendix B.
401(k)
Profit Sharing Plan
Since
August 1, 2007, the Company has offered a 401(k) Profit Sharing Plan to its
employees. All full-time, permanent employees are eligible to
participate in the 401(k) Profit Sharing Plan after 90 days of
service. The Company made a one-time contribution, ranging from $100
to $1,000, to each participating employee’s
401(k) account. These Company contributions vest one year after
the date the contributions were made. During the year ended
December 31, 2008, the Company contributed approximately $39,000 to the 401(k)
Profit Sharing Plan. The Company's executive officers are eligible to
participate in the 401(k) Profit Sharing Plan on the same basis as its other
employees. Commencing in April 2008, the Company matched
contributions to the account of each participating employee equal to 50% of the
first 4% of salary contributed by an employee to his or her 401(k) account
during a plan year. Beginning in 2009, the Company will match 100% of
the first 1% and 50% of the next 5% of salary contributed by each
employee.
Compensation
Arrangements
Compensation
of the Executive Chairman Edward B. Berger
On April
16, 2007, the Board determined to compensate the Executive Chairman by payment
of $15,000 for each month of service and a grant of options, on such date, to
purchase up to 250,000 shares of the Company’s common stock at an exercise price
of $1.86 per share. Such options vest proportionately on a monthly
basis over a period of twelve months commencing on June 8, 2007. This
grant of options replaced the grant of options to purchase up to 100,000 shares
of the Company’s common stock awarded to Mr. Berger on March 30, 2007 in his
capacity as Non-Executive Chairman, which were cancelled.
On March
26, 2008, upon the recommendation of the Compensation Committee, the Board
determined to compensate the Executive Chairman by payment of a salary of
$120,000 per year, retroactive to February 1, 2008, and also approved the
payment of a $20,000 cash bonus to the Executive Chairman for the year ended
December 31, 2007.
Employment
Agreements with Executive Officers: Potential Payments Upon Termination or
Change of Control
On
November 18, 2008 the Company entered into an employment agreement with James
Robinson, Senior Vice President Sales & Marketing. The
agreement provides that, in the event Mr. Robinson is terminated without cause,
he will be eligible for severance payments consisting of six month’s
salary. Mr. Robinson’s annual salary is $200,000. In the
event his employment is terminated upon a “change of control,” the Company will
be obligated to pay Mr. Robinson a lump sum equal to 12 months of compensation,
plus any pro rata bonus earned by Mr. Robinson for that current year, within 30
days following the “change of control.” Mr. Robinson will also be
entitled to continue all benefits for a period of 12 months under the current
plan. Furthermore, in the event of a “change of control,” all of Mr.
Robinson’s options and equity based compensation will vest.
The
Company is a party to an employment agreement dated May 1, 2005 with its
President and Chief Executive Officer, David S. Boone. The employment
agreement provides that, in the event that Mr. Boone is terminated without
“cause” (as such term is defined under the employment agreement) or due to
disability or if Mr. Boone terminates his employment for “good reason” (as such
term is defined under the employment agreement), he shall be entitled to monthly
payments equal to his then applicable monthly base salary, excluding bonus, for
a period of six months following the termination of his
employment. Additionally, the employment agreement provides that in
the event of a “change of control” (as such term is defined under the employment
agreement) of the Company, all options and other equity incentives then granted
to Mr. Boone, if any, which are unvested at the date of the change of control
shall immediately vest and be exercisable. In addition, in lieu of the
six-months of severance payments otherwise applicable under the employment
agreement, in the event of a change of control and related termination of Mr.
Boone’s employment, whether by the Company, with or without cause, or by Mr.
Boone, with or without good reason, in each case within twelve months following
the change of control, the Company will promptly pay to Mr. Boone, in addition
to his base salary and bonus earned and unpaid through the date of termination
of his employment, a lump sum payment equal to six months’ of his then current
base salary. It is expected that the Company will enter into a new
Employment Agreement with Mr. Boone within the next several weeks that will
contain substantially similar terms as his prior agreement except that (i) his
base salary will be increased to $312,500 per year, (ii) the term of
the agreement will be for three years, (iii) in the event that Mr.
Boone is terminated without "cause" (as such term is defined under the
employment agreement) or due to disability or if Mr. Boone terminates his
employment for "good reason" (as such term is defined under the employment
agreement), he will be entitled to a payment equal to a full year of his
applicable monthly base salary, plus any pro rata bonus earned and payable in
accordance with his agreement, (iv) in the event of a “change of control” of the
Company, all options and other equity incentives then granted to Mr. Boone, if
any, which are unvested at the date of the change of control shall immediately
vest and be exercisable. In addition to any severance payments otherwise
applicable under the employment agreement, in the event of a change of control
and related termination of Mr. Boone’s employment, whether by the Company, with
or without cause, or by Mr. Boone, with or without good reason, in each case
within twelve months following the change of control, the Company will pay to
Mr. Boone, in addition to his base salary and bonus earned and unpaid through
the date of termination of his employment, a lump sum payment equal to 12
months’ of his then current base salary.
The
Company is a party to an employment agreement dated October 12, 2007 with its
Chief Financial Officer, Steven J. Armond. The employment agreement
provides that upon the termination of employment by Mr. Armond for “good reason”
(as such term is defined under the employment agreement) or the termination of
Mr. Armond’s employment by the Company other than for “cause” (as such events
are described in the employment agreement), Mr. Armond shall be entitled to
monthly payments (or biweekly payments at the Company’s discretion) equal to his
then applicable monthly base salary for a period of six months after termination
of his employment. Additionally, the employment agreement provides
that in the event of a “change of control” (as such term is defined in the
employment agreement) of the Company, all options and other equity incentives
then granted to Mr. Armond, if any, which are unvested at the date of the change
of control shall immediately vest and be exercisable. In addition, in
lieu of the severance payments otherwise due to Mr. Armond upon the termination
of his employment pursuant to the employment agreement, the Company shall pay
Mr. Armond within one month following the change of control and the related
termination of his employment, a lump sum equal to his annual base salary in
effect at the time of the change of control, plus any pro rata bonus earned by
Mr. Armond for the then current year.
The
Company is a party to an employment agreement dated September 1, 2006 with Kurt
Fullmer, its Vice President of Operations, pursuant to which the Company has
agreed that all stock options previously granted to Mr. Fullmer, which are
unvested at the date of any sale of the Company, shall immediately vest and be
exercisable.
The
Company is a party to an employment agreement dated March 6, 2008 with Rost
Ginevich, its Chief Information Officer, pursuant to which the Company has
agreed that in the event of a termination of Mr. Ginevich’s employment due to a
change of control of the Company, the Company shall, within 30 days thereafter,
pay Mr. Ginevich a lump sum payment equal to three months’ base salary in effect
for Mr. Ginevich at the time his employment terminates plus any pro rata bonus
earned by Mr. Ginevich for the then current year. In addition, during
the three month period following the termination of his employment, Mr. Ginevich
would continue to receive the same health benefits then in effect for the
Company’s employees.
2009
Management Bonus Program
The Board
of Directors of the Company has approved a management bonus program (the “Bonus
Program”) for our President and Chief Executive Officer, Chief Financial
Officer, Vice President of Network Development, Vice President of Operations,
Chief Information Officer and other key director level employees to be
identified from time to time by the Chief Executive Officer. The
Bonus Program is designed to provide for the payment to members of management of
a bonus that is linked to the achievement of key corporate financial performance
objectives and an executive’s personal objectives, which are approved by the
Board. The program’s goal is to compensate members of management
based on the achievement of specific annual goals that our Board believes
correlate closely with growth of long-term stockholder value. The
program is intended to reward members of management for building stockholder
value by exceeding performance expectations. We believe the program
will also promote appropriate feedback necessary for the development of our
management team.
The
annual bonus process for our executives under the Bonus Program consists of five
basic steps. At the beginning of the fiscal year, and based upon the
recommendations of the Chief Executive Officer and Compensation Committee, the
Board of Directors will approve: (1) a target bonus payout for each executive in
the Bonus Program, (2) the financial achievement percentages and bonus modifiers
that will be used to determine the component of the bonus based upon a
comparison of the Company’s financial performance for the fiscal year against
the Board approved financial plan for the fiscal year, (3) the executives’
personal objectives for the fiscal year, and (4) the weight or importance of the
corporate financial performance objectives and the personal
objectives. Lastly, after the end of the fiscal year, the
Compensation Committee will measure the Company’s actual financial performance
and consider each executive’s personal performance to determine the appropriate
adjustment to the executive’s target bonus. These five basic steps
are explained as follows:
(1) Determining the annual target
bonus
. Early in the fiscal year, the Board of Directors will
approve a target bonus payout for each executive in the Bonus
Program. The Board will consider all factors that it deems relevant
to such determination, including, but not limited to, the recommendations of our
Chief Executive Officer (except with respect to his own bonus), competitive
market conditions, and the Board’s assessment of the level of growth reflected
in the Company’s financial performance objectives. There is no
required minimum bonus payout for any executive. Maximum bonus
payouts for those executives at the director and Vice President level are 125%
and 150% of base salary, respectively. The Chief Executive Officer
and Vice President/Officers are not subject to a maximum bonus
payout. All bonuses are paid in cash, except that the bonus of our
Chief Executive Officer and any Vice President/Officer may also include an
equity component.
For
fiscal year 2009, target bonus payouts range from 20% to 60% of base salary and
consist of the following: 20% for Directors, 40% for Vice Presidents, 50% for
Vice President/Officers, and 60% for the Chief Executive
Officer. These annual target bonus levels may be modified based upon
the terms of employment agreements with our executives, which have been approved
by the Chief Executive Officer and Board of Directors, as
applicable.
(2) Determining the
financial achievement percentages, bonus modifiers and corporate financial
plan.
Revenue and earnings before interest, taxes,
depreciation and amortization (“EBITDA”) are two key financial measurements used
in reviewing bonus payouts. Early in the fiscal year, the Board of
Directors will review revenue and EBITDA performance objectives for the fiscal
year and achievement percentages and bonus modifiers that will be used to
evaluate the portion of the bonus applicable to each executive based upon the
Company’s financial performance. The Board will review and consider
senior management’s recommendations for financial achievement percentages, bonus
modifiers and the fiscal year financial plan and discuss such recommendations
with senior management before making final determinations.
For
fiscal year 2009, the financial achievement percentages range from less than 70%
to greater than 135% of the fiscal year financial plan. Bonus
modifiers range from 0 to 1.35 and, in the event of substantial out performance
of corporate financial performance objectives, the program provides for Board
discretion in determining the bonus modifier to be applied. The
fiscal year 2009 financial achievement percentages and bonus modifiers are the
following:
%
Achievement
|
<70%
|
70-85%
|
85-95%
|
95-105%
|
105-115%
|
115-125%
|
125-135%
|
>135%
|
Revenue
vs. Plan
|
0
|
.5
|
.75
|
1.0
|
1.15
|
1.25
|
1.35
|
Discretionary
|
EBITDA
vs. Plan
|
0
|
.5
|
.75
|
1.0
|
1.15
|
1.25
|
1.35
|
Discretionary
|
(3) Determining personal
objectives.
At the same time as steps 1 and 2, the Board of
Directors also approves each executive’s personal objectives for the fiscal
year. Each executive’s personal objectives will be agreed upon by the
executive and approved by our Chief Executive Officer (except with respect to
his own personal objectives). The personal objectives of our Chief
Executive Officer are based upon the Board’s discussions with him regarding the
Company’s objectives.
(4) Determining weight of
corporate financial performance objectives and personal
objectives
. The Board will also evaluate the weight or
importance that will be placed on achievement of the two corporate financial
performance objectives and the personal objectives. For fiscal year
2009, the weight placed on the achievement of the corporate financial
performance objectives is 40% for revenue and 40% for EBITDA, while the weight
for achievement of personal objectives is 20%. Each objective’s
weight is effectively multiplied by the applicable bonus modifier in order to
determine the total achievement for that particular objective. The
following table illustrates the weight or importance placed on each of the three
key objectives as well as the impact that the bonus modifier has on the total
bonus payout potential.
Measurement
|
Weight
|
Modifier
|
Total
|
Revenue
vs. Plan
|
40%
|
1.0
|
40%
|
EBITDA
vs. Plan
|
40%
|
1.0
|
40%
|
Personal
|
20%
|
1.0
|
20%
|
Total
|
100%
|
1.0
|
100%
|
(5) Measuring
performance.
After the end of the fiscal year, the
Compensation Committee will measure the Company’s actual financial performance
(using the predetermined financial achievement percentages) and assess each
executive’s personal performance against his or her personal objectives to
determine the appropriate adjustment to the executive’s target
bonus. The Committee will consider the executive’s overall
contribution to the Company’s success and, in the case of executives other than
the Chief Executive Officer, the recommendation of the Chief Executive
Officer. In determining the appropriate adjustment to target bonuses,
the Compensation Committee will also consider other performance considerations
related to unforeseen events occurring during the fiscal year. In
appropriate circumstances, the Committee has discretion to award a bonus that is
less than the amount determined by the procedures outlined above, including to
award no bonus at all. The annual bonuses will be paid no later than
February 28
th
of each
year following final review and approval by the Compensation
Committee.
Compensation
Decisions Since the End of Fiscal Year 2008
On March
10, 2009, the Board approved compensation for our executive officers, in
accordance with the recommendations of the Compensation Committee, consisting of
2009 base salary levels, 2009 bonus target percentage, bonuses payable in cash
and equity-based awards for the year ended December 31, 2008 and awards of stock
options to purchase shares of the Company’s common stock. The annual base salary
of Mr. Boone was increased from $300,000 to $312,000 while his 2009 bonus target
percentage remains at 60% of base salary. The annual base salary of Mr. Armond
was increased from $205,000 to $213,200, while his 2009 bonus target percentage
remains at 50% of base salary. The annual base salary of Ms. Outten
was increased from $185,000 to $190,000, and her 2009 bonus target percentage is
50% of base salary. The annual base salary of Mr. Ginevich was
increased from $175,000 to $178,000, and his 2009 bonus target percentage is 50%
of base salary. The annual base salary of Mr. Fullmer was
decreased from $205,000 to $175,000, while his personal incentive compensation
agreement was enhanced and adjusted to align his compensation with attaining
certain goals in his role as Vice President of Client Development.
In 2008,
the Company’s Board approved a bonus program for its CEO, CFO, Vice President of
Network Development, Vice President of Operations, Chief Information Officer and
other key director level employees to be identified from time to time by Mr.
Boone, as CEO. In recognition of current economic and market
conditions, the Compensation Committee recommended making bonus payments under
this program partially in cash and partially in equity-based compensation of the
Company under the 2009 Equity Incentive Plan, to be approved by the stockholders
at the Annual Meeting. On March 10, 2009, the Board approved the
award of equity-based compensation under the 2009 Equity Incentive Plan
convertible into approximately 82,500 shares of common stock of the Company to
certain of the Company’s officers, subject to approval of the 2009 Equity
Incentive Plan by our shareholders.
Upon
recommendation of the Compensation Committee, on March 10, 2009 the Board
approved the award to its executive officers and other employees of
non-qualified stock options to purchase an aggregate of approximately 200,000
shares of common stock and RSUs for approximately 82,500 shares of common stock,
subject to the approval of the 2009 Equity Incentive Plan by our
shareholders. These grants included options to purchase up to 87,207
shares of our common stock and 28,490 RSUs to Mr. Boone, options to purchase
24,863 shares of our common stock and 15,858 RSUs to Mr. Armond, options to
purchase 31,113 shares of our common stock and 1,766 RSUs to Mr. Robinson,
options to purchase 3,500 shares of our common stock and 14,017 RSUs to Mr.
Fullmer, options to purchase 5,000 shares of our common stock and 12,650 RSUs to
Ms. Outten and options to purchase 7,500 shares and 9,639 RSUs to Mr.
Ginevich. Such stock options will be exercisable for $7.02 per share
periodically. Upon a “change-of-control,” options granted to Messrs.
Boone, Armond and Robinson will vest in their entirety. The
recipients of the above specified stock options will be entitled to convert
their options to RSUs under the 2009 Equity Incentive Plan for a limited period
of time at a ratio that varies for each individual and is between .4 RSUs for
each stock option and .29 RSUs for each stock option. Recognizing
that the stock ownership of the Company’s executive officers is below industry
standards, the Board has chosen to make these awards to align ownership with
such standards. The Board did not adopt any targets for the grant of such
securities for future years, but may nonetheless decide to make similar grants
in the future.
The Board
of Directors has approved a new director compensation plan for 2009, including
payment of a $10,000 annual retainer to each director. As chairman of
the Board, Mr. Berger will receive $15,000, as chair of the Audit Committee, Mr.
George will receive $10,000, as chair of the Compensation Committee, Mr.
Hatsolopoulos will receive $5,000 as chair of the Nominating and Governance
Committee and Mr. Colloton will receive $2,500. Mr. Berger will also
receive a $10,000 payment monthly through April 2009. In addition,
each director will receive, subject to stockholder approval of the 2009 Equity
Incentive Plan, a grant of 3,333 RSUs, vesting monthly over a 5-year
period. Furthermore, each director will receive $1,000 for each board
meeting attended, and for any conference call over 3-hours, held in
2009.
Additional
information concerning the 2009 Employee Stock Purchase Plan is provided under
“Proposal 3 - Proposal to Approve the American CareSource Holdings, Inc. 2009
Equity Incentive Plan.” The full text of the Plan is set forth in Appendix
A.
Severance
Agreements with Former Executive Officers
Wayne A.
Schellhammer resigned as a director and President and Chief Executive Officer of
the Company on July 12, 2007. Pursuant to a Separation Agreement and
General Release (the “Separation Agreement”), Mr. Schellhammer received a
$250,000 severance payment, payable in twelve equal installments of $20,833.33,
which commenced in July 2007 and terminated in July 2008, and also received a
one-time payment of $5,000 for relocation expenses. Mr. Schellhammer
was also entitled to reimbursement of the amount by which his COBRA health and
dental insurance premium payments exceed the then current premium rates offered
to active employees of the Company until June 30, 2008, unless he earlier
obtained health insurance from another employer. The Separation
Agreement restricted Mr. Schellhammer from selling more than 140,000 shares of
the Company’s common stock in any rolling three-month period until June 30,
2008.
On
January 4, 2008, the Company notified Maria L. Baker, formerly Vice President of
Marketing, that her employment agreement, which was to expire on January 31,
2008, would not be renewed. Ms. Baker’s last day of employment with the Company
was January 31, 2008. The Company agreed that Ms. Baker’s stock
options would continue to vest through June 2008 and the expiration date for her
stock options would be extended to January 31, 2009, in consideration for Ms.
Baker’s execution of a release in favor of the Company. During 2008,
Ms. Baker exercised 56,233 stock options.
On
January 7, 2008, the Company notified Jennifer Boone, formerly Vice President of
Network Development, that her employment agreement, which was to expire on
January 31, 2008, would not be renewed. Ms. Boone’s last day of
employment with the Company was January 31, 2008. The Company has paid
$20,291.67 to Ms. Boone as a severance payment. In addition, the
Company agreed that Ms. Boone’s stock options would continue to vest through
June 2008 and the expiration date for her stock options would be extended to
January 31, 2009, in consideration for Ms. Boone’s execution of a release in
favor of the Company. During 2008, Ms. Boone exercised 50,233 stock
options.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
No
reportable transactions as described in Item 404(a) of Regulation S-K took place
in the year ended December 31, 2008.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our
directors, executive officers, and the persons who beneficially own more than
ten percent of any class of our equity securities, to file reports of ownership
and changes in ownership with the SEC. Copies of all filed reports
are required to be furnished to us. In 2007, the Company initiated
new procedures to ensure compliance with Section 16(a) on an on-going
basis. The following are the late reports filed since the beginning
of the fiscal year ended December 31, 2008 under Section 16(a) and a description
of the transactions reflected in these late reports as not reported on a timely
basis during fiscal year 2008, or prior fiscal years, by the executive officers
and directors identified therein: Kenneth S. George did not file a Form 4 to
report the exercise of 40,000 options on December 31, 2008 until April 8,
2009.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information regarding the beneficial
ownership of the shares of American CareSource Holdings’ common stock as of
April 13, 2009, (i) by each person American CareSource Holdings knows to be the
beneficial owner of 5% or more of the outstanding shares of common stock of
American CareSource Holdings, (ii) the Chief Executive Officer and each Named
Executive Officer listed in the Summary Compensation Table above, (iii) each
director and nominee for director of American CareSource Holdings and (iv) all
executive officers and directors of American CareSource Holdings as a
group. As of April 13, 2009, there were outstanding 15,419,442 shares
of common stock, warrants to purchase 1,336,044 shares of common stock, and
stock options exercisable to purchase 1,136,921 shares of common
stock.
Unless
otherwise noted, the business address of all the individuals and entities named
in this table is c/o American CareSource Holdings, Inc., 5429 Lyndon B. Johnson
Freeway, Suite 850, Dallas, Texas 75240.
Name and Address of Beneficial
Owner
|
|
Amount
and Nature
of
Beneficial Ownership
(1)
|
|
Percentage
of Common
Stock Owned
|
|
|
|
|
|
John
Pappajohn
(2)
|
|
5,178,878
|
|
31.6%
|
|
|
|
|
|
Principal
Life Insurance Company
(3)
711
High Street
Des
Moines, Iowa 50392
|
|
1,691,065
|
|
11.0%
|
|
|
|
|
|
Manchester
Management Company LLC
(4)
535
Boylston Street, Suite 1101
Boston,
Massachusetts 02116
|
|
1,078,013
|
|
7.0%
|
|
|
|
|
|
Derace
L. Schaffer
(5)
|
|
989,538
|
|
6.2%
|
|
|
|
|
|
Edward
B. Berger
(6)
|
|
394,750
|
|
2.5%
|
|
|
|
|
|
David
S. Boone
(7)
|
|
300,857
|
|
1.9%
|
|
|
|
|
|
Kenneth
George
(8)
|
|
66,233
|
|
*
|
|
|
|
|
|
John
N. Hatsopoulos
(9)
|
|
50,278
|
|
*
|
|
|
|
|
|
John
W. Colloton
(10)
|
|
66,233
|
|
*
|
|
|
|
|
|
Steven
J. Armond
(11)
|
|
116,236
|
|
*
|
|
|
|
|
|
Kurt
Fullmer
(12)
|
|
52,500
|
|
*
|
|
|
|
|
|
M.
Cornelia Outten
(13)
|
|
57,313
|
|
*
|
|
|
|
|
|
Rost
A. Ginevich
(14)
|
|
30,792
|
|
*
|
|
|
|
|
|
All
Executive Officers and Directors as a Group (13 persons)
(15)
|
|
7,318,608
|
|
40.9%
|
____________________
*
Represents less than 1% of the shares outstanding
(1)
|
Beneficial
ownership is determined in accordance with Rule 13d-3 of the Securities
Exchange Act of 1934, as amended, such that the number of shares
beneficially owned is deemed to include shares of the Company’s common
stock as to which the beneficial owner has or shares either voting or
investment power. Except as indicated by footnotes and subject
to community property laws, where applicable, the person named above has
sole voting and investment power with respect to all shares of the common
stock shown as beneficially owned by him or her. As provided by
Rule 13d-3, each such person’s percentage ownership is determined by
assuming that the options, warrants or convertible securities that are
held by such person and which are exercisable or convertible within 60
days of April 20, 2009, have been exercised or converted, as the case may
be.
|
(2)
|
Includes
4,164,962 shares of American CareSource Holdings’ common stock
beneficially owned by Mr. Pappajohn, of which 4,119,962 shares are owned
by Mr. Pappajohn directly, 15,000 shares are owned by Halkis, Ltd. (an
entity solely owned by Mr. Pappajohn), 15,000 shares are owned by Mr.
Pappajohn’s wife, and 15,000 shares are owned by Thebes, Ltd. (an entity
solely owned by Mr. Pappajohn’s wife). Mr. Pappajohn disclaims
beneficial ownership of the shares owned by Mrs. Pappajohn and Thebes,
Ltd. Also includes 653,668 shares of American CareSource
Holdings’ common stock issuable upon the exercise of a warrant exercisable
any time before January 27, 2010, 320,248 shares of American CareSource
Holdings’ common stock issuable upon the exercise of a warrant exercisable
any time before August 15, 2010, and 71,233 shares of the Company’s common
stock issuable upon the exercise of options (which are exercisable within
60 days of April 20, 2009). Excludes an aggregate of 275,166
shares subject to a warrant assigned by Mr. Pappajohn to persons not
affiliated with American CareSource Holdings, with respect to which he is
not the beneficial owner.
|
(3)
|
All
information regarding Principal Life Insurance Company (“PLIC”) is based
on information disclosed in a Statement on Schedule 13G (the “Principal
Life 13G”) filed with the SEC on March 9, 2009. In the
Principal Life 13G, PLIC indicates that it has shared voting and shared
dispositive power with respect to all of its shares of American CareSource
Holdings common stock with Principal Financial Group, Inc. (“PFG”) and
Principal Financial Services, Inc. (“PFS”). The Principal Life
13G further indicates that, by virtue of their ownership and control of
PLIC, PFG and PFS, have ultimate voting and dispositive power with respect
to the shares of American CareSource Holdings common stock held by PLIC
and may be deemed indirect beneficial owners of all of the shares of
American CareSource Holdings common stock held of record by PLIC within
the meaning of Rule 13d-3(a) under the Securities Exchange Act of 1934, as
amended.
|
(4)
|
All
information regarding Manchester Management Company LLC (“Manchester”) is
based on information disclosed in an Amendment No. 2 to Statement on
Schedule 13G (the “Manchester 13G”) filed with the SEC on February 17,
2009. In the Manchester 13G, Manchester indicates that it has
shared voting and shared dispositive power with respect to 965,970 shares
of common stock of the Company with James E. Besser and Donald E. Besser
and James E. Besser has sole voting and dispositive power with respect to
100,000 shares of common stock of the
Company.
|
(5)
|
Includes
274,123 shares of American CareSource Holdings’ common stock issuable upon
the exercise of a warrant exercisable any time before January 27, 2010 and
144,238 shares of American CareSource Holdings’ common stock issuable upon
the exercise of a warrant exercisable any time before August 15,
2010. Includes 66,233 shares of the Company’s common stock
issuable upon the exercise of options (which are exercisable within 60
days of April 20, 2009).
|
(6)
|
Consists
of 94,750 shares of American CareSource Holdings’ common stock
beneficially owned by Mr. Berger, of which 64,988 shares are owned by Mr.
Berger directly and 29,762 shares are owned by Tucson Traditions LLC (an
entity in which Mr. Berger has a 33-1/3% ownership interest), and 300,000
shares of the Company’s common stock issuable upon the exercise of options
(which are exercisable within 60 days of April 20,
2009).
|
(7)
|
Includes
297,370 shares of the Company’s common stock issuable upon the exercise of
options (which are exercisable within 60 days of April 20,
2009).
|
(8)
|
Includes
26,233 shares of the Company’s common stock issuable upon the exercise of
options (which are exercisable within 60 days of April 20,
2009).
|
(9)
|
Consists
of 50,278 shares of the Company’s common stock issuable upon the exercise
of options (which are exercisable within 60 days of April 20,
2009).
|
(10)
|
Consists
of 66,233 shares of the Company’s common stock issuable upon the exercise
of options (which are exercisable within 60 days of April 20,
2009).
|
(11)
|
Consists
of 114,236 shares of the Company’s common stock issuable upon the exercise
of options (which are exercisable within 60 days of April 20,
2009).
|
(12)
|
Consists
of 52,500 shares of the Company’s common stock issuable upon the exercise
of options (which are exercisable within 60 days of April 20,
2009).
|
(13)
|
Consists
of 55,313 shares of the Company’s common stock issuable upon the exercise
of options (which are exercisable within 60 days of April 20,
2009).
|
(14)
|
Consists
of 30,792 shares of the Company’s common stock issuable upon the exercise
of options (which are exercisable within 60 days of April 20,
2009).
|
(15)
|
Includes
1,136,921 shares of the Company’s common stock issuable upon the exercise
of warrants, 1,336,044 shares of the Company’s common stock issuable upon
the exercise of options.
|
During
the fiscal year ended December 31, 2008, the following directors and Named
Executive Officers of American CareSource Holdings exercised stock options:
Kenneth S. George – 40,000.
PROPOSAL
2
RATIFICATION
OF INDEPENDENT AUDITORS
Appointment
of Auditors for Fiscal Year 2009
The Audit
Committee has appointed McGladrey & Pullen, LLP as our independent auditors
for fiscal year 2009. We are not required to have the stockholders
ratify the selection of McGladrey & Pullen, LLP as our independent
auditors. We are doing so because we believe it is a matter of good
corporate practice. If the stockholders do not ratify the selection,
the Audit Committee will reconsider whether or not to retain McGladrey &
Pullen, LLP, but may retain such independent auditors. Even if the
selection is ratified, the Audit Committee, in its discretion, may change the
appointment at any time during the year if it determines that such a change
would be in the best interests of American CareSource Holdings and its
stockholders. Representatives of McGladrey & Pullen, LLP are not
expected to be present at the Annual Meeting, will not have an opportunity to
make a statement and will not be available to respond to questions.
McGladrey
& Pullen, LLP was first engaged as our independent registered public
accounting firm on January 1, 2004 and has audited our financial statements for
fiscal years 2004 through 2008.
The
Board of Directors unanimously recommends that you vote “FOR” the ratification
of the appointment
of
McGladrey & Pullen, LLP as our independent auditors for fiscal year
2009.
Principal
Accountant Fees and Services
Relationship
with Independent Auditors
Audit
services performed by McGladrey & Pullen, LLP for the fiscal years 2008 and
2007, respectively, consisted of the examination of American CareSource
Holdings’ financial statements, services related to filings with the SEC,
audits, quarterly reviews and tax services.
Audit
Fees
For
fiscal year 2008, the Company incurred $126,500 in aggregate audit fees from
McGladrey & Pullen, LLP for professional services rendered in connection
with: (i) the audit of American CareSource Holdings’ annual financial statements
for the year ended December 31, 2008; (ii) the review of American CareSource
Holdings’ quarterly financial statements for the quarters ended March 31, 2008,
June 30, 2008 and September 30, 2008; and (iii) the review of reports filed with
the SEC by American CareSource Holdings during the period
reported. For fiscal year 2007, the Company incurred $120,000 in
aggregate audit fees from McGladrey & Pullen, LLP for professional services
rendered in connection with: (i) the audit of American CareSource Holdings’
annual financial statements for the year ended December 31, 2007; (ii) the
review of American CareSource Holdings’ quarterly financial statements for the
quarters ended March 31, 2007, June 30, 2007 and September 30, 2007; and (iii)
the review of reports filed with the SEC by American CareSource Holdings during
the period reported.
Audit-Related
Fees
For
fiscal year 2008, the Company incurred $20,000 in aggregate audit-related fees
from McGladrey & Pullen, LLP. For fiscal year 2007, the Company
incurred $7,000 in aggregate audit-related fees from McGladrey & Pullen,
LLP. Audit-related fees consist of accounting consultations
concerning financial accounting and reporting matters, and amounts related to
private placements and filing of registration statements and amendments to
registration statements with the SEC.
Tax
Fees
For
fiscal 2008, the Company incurred $16,000 in aggregate fees from RSM McGladrey,
Inc., an entity associated with McGladrey & Pullen, LLP, for professional
services rendered related to the taxes of American CareSource Holdings for the
year ended December 31, 2008, as compared to incurring no fees for the year
ended December 31, 2007. Tax fees consist of tax compliance, tax
consultations and tax return preparation.
All
Other Fees
There
were no other fees billed by McGladrey & Pullen, LLP or RSM McGladrey, Inc.
for the fiscal years ended December 31, 2008 and 2007,
respectively.
The Audit
Committee considers at least annually whether the provision of non-audit
services by McGladrey & Pullen, LLP is compatible with maintaining auditor
independence.
Pre-Approval
of Audit and Permissible Non-Audit Services
The Audit
Committee is required to pre-approve all audit and permissible non-audit
services provided by the independent auditors. These services may
include audit services, audit-related services, tax services and other
services. The Audit Committee has adopted a policy for the
pre-approval of services provided by the independent auditors. Under
the policy, pre-approval is generally provided for up to one year and any
pre-approval must be detailed as to the particular service or category of
services and is subject to a specific budget. In addition, the Audit
Committee may pre-approve particular services on a case-by-case
basis. For each proposed service, the independent auditor is required
to provide detailed back-up documentation at the time of
approval. All audit and permissible non-audit services provided by
McGladrey & Pullen, LLP and RSM McGladrey, Inc. to American CareSource
Holdings for the fiscal years ended 2008 and 2007 were approved by the Audit
Committee.
PROPOSAL
3
APPROVAL
OF THE AMERICAN CARESOURCE HOLDINGS, INC.
2009
EQUITY INCENTIVE PLAN
On March
10, 2009, the Board adopted the American CareSource Holdings, Inc. 2009 Equity
Incentive Plan (the “2009 Plan”), subject to shareholder
approval. The Compensation Committee of the Board of Directors
reviewed the various compensation opportunities that could be available to
provide further and additional equity based incentives to
management. The Board determined that it is beneficial to the Company
to adopt a more flexible and updated incentive plan, that is intended to
eventually replace the existing 2005 Option Plan at such point that there are no
longer any options available for grant under the 2005 Option
Plan. Further description of the events leading up to the Board’s
decision to adopt this new plan is set out more fully below, under “Proposal 4
-- Proposal to Amend 2005 Stock Option Plan,” below. Following the
adoption of the 2009 Plan, the Board granted options to purchase an aggregate of
200,000 shares of common stock and RSUs for approximately 82,500 shares of
common stock to its officers, directors and employees. The grant of
all such options and RSUs is conditioned upon the approval of the 2009 Plan at
the Stockholders Meeting. See “Awards under the Plan” for specific
information with respect to grants of awards under the Plan to our officers and
directors. Approval of the Plan will result in the effectiveness of
all of these awards.
The
material features of the 2009 Plan are summarized below and such summary is
qualified in its entirety by reference to the complete text of the 2009
Plan. A full copy of the 2009 Plan is attached as Exhibit
A.
Purpose
The 2009
Plan is intended to allow selected employees, officers and consultants of our
Company or an affiliate to acquire or increase equity ownership in our Company,
thereby strengthening their commitment to our success and stimulating their
efforts on behalf of our Company, and to assist us and our affiliates in
attracting new employees, officers and consultants and retaining existing
employees, officers and consultants. The 2009 Plan is also intended
to optimize the profitability and growth of our Company and our affiliates
through incentives which are consistent with our goals, to provide grantees with
an incentive for excellence in individual performance to promote teamwork among
employees, officers and consultants, and to attract and retain highly qualified
persons to serve as non-employee Directors and to promote ownership by such
non-employee Directors of a greater proprietary interest in our Company, thereby
aligning such non-employee Directors’ interests more closely with the interests
of our stockholders. Where appropriate, the 2009 Plan may be utilized
to provide annual cash incentive compensation opportunities that are competitive
with those of other peer corporations.
Administration
The 2009
Plan will be administered by the Board with respect to non-employee Director
grantees and by the compensation committee of the Board with respect to all
other grantees. The Board or Committee may delegate administrative
authority to our Chief Executive Officer or Chief Operating Officer except with
respect to awards to non-employee Directors (which must be administered by the
full Board), awards to executive officers that are intended to comply with the
Rule 16b-3 under the Securities Exchange Act of 1934 and awards intended to
comply with the performance-based exception to tax deductibility limitations
under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
“Code”). If and to the extent that compliance with Rule 16b-3 or the
performance-based exception to tax deductibility limitations under Code Section
162(m) is desirable, such award must be administered by the Committee or a
committee comprised of two or more Directors who qualify as “non-employee
directors” under Rule 16b-3 and -outside directors” under Code Section
162(m). The relevant person or group that administers the 2009 Plan
with respect to an award is referred to in this summary as the “Committee.”
Subject to the terms of the 2009 Plan, the Committee has full power and
discretion to select those persons to whom awards will be granted (other than
awards to non-employee Directors); to determine the amounts and terms of awards;
to change and determine the terms of any award agreement, including but not
limited to the term and the vesting schedule; to determine and change the
conditions, restrictions and performance criteria relating to any award; to
determine the settlement, cancellation, forfeiture, exchange or surrender of any
award; to make adjustments in the terms and conditions of awards including, but
not limited to, changing the exercise price of any award; to construe and
interpret the 2009 Plan and any award agreement: to establish, amend and revoke
rules and regulations for the administration of the 2009 Plan; to make all
determinations deemed necessary or advisable for administration of the 2009
Plan; and to exercise any powers and perform any acts it deems necessary or
advisable to administer the 2009 Plan and subject to certain exceptions, to
amend, alter or discontinue the Plan or amend the terms of any
award.
Eligibility
The 2009
Plan provides for awards to our employees and officers of our Company or an
affiliate and consultants and potential consultants to our Company or an
affiliate.
Some
awards will be provided to officers and others who are deemed by us to be
“insiders” for purposes of Section 16 of the Securities Exchange Act of
1934. As of December 31, 2008, we and our affiliates had
approximately 59 full-time and part-time employees and officers, and our
management currently estimates that approximately 100% will be granted awards
under the 2009 Plan. An affiliate is defined in the 2009 Plan as any
entity, individual, venture or division that directly or indirectly, through one
or more intermediaries, controls, or is controlled by or is under common control
with our Company. For this purpose, “control” means ownership of 50%
or more of the total combined voting power or value of all classes of stock or
interests of an entity, or the power to direct the management and policies of
the entity, by contract or otherwise.
The 2009
Plan also allows non-employee Directors to elect to receive all or any portion
of their annual Director’s fees in the form of stock options. The
2009 Plan also provides that the Board may implement procedures to allow
non-employee Directors to elect to receive all or a portion of their annual
Director’s fees in the form of common stock or deferred stock. As of
April 20, 2009, the Board had not implemented procedures to allow non-employee
Directors to elect to receive any portion of their annual Director’s fees in the
form of common stock or deferred stock. If the nominees for election
named in this proxy statement are elected, four Directors will qualify as
non-employee Directors under the 2009 Plan in 2009.
Participation
The
Committee may make award grants to eligible grantees (other than non-employee
Directors) in its discretion, subject to the limits on awards.
The 2009
Plan permits non-employee Directors to elect to receive all or part of their
annual Director’s fees in the form of stock options. The 2009 Plan
also provides that the Board may implement procedures to permit non-employee
Directors to elect to receive all or part of their annual Director’s fees in the
form of common stock or deferred stock, as described below.
Awards
Under the Plan
Under the
terms of the 2009 Plan, 1,500,000 shares of our common stock are authorized for
delivery in settlement of awards. These are in addition to the
3,749,329 shares of our common stock that are authorized for delivery under the
2005 Stock Option Plan (subject to shareholder approval of Proposal 4 –
Amendment of the 2005 Stock Option Plan), of which 2,398,700 shares have already
been issued or are subject to options previously granted under the 2005 Stock
Option Plan that remain outstanding as of April 20, 2009.
The stock
delivered to settle awards made under the 2009 Plan may be authorized and
unissued shares or treasury shares, including shares repurchased by us for
purposes of the 2009 Plan. If any shares subject to any award granted
under the 2009 Plan are forfeited or payment is made in a form other than shares
or the award otherwise terminates without payment being made the shares subject
to such awards will again be available for issuance under the 2009
Plan. In addition, shares withheld or surrendered in payment of the
exercise price for stock options or withheld for taxes upon the exercise or
settlement of an award, will again be available for issuance under the 2009
Plan.
Upon
recommendation of the Compensation Committee, on March 10, 2009 the Board
approved the award to its executive officers and other employees of
non-qualified stock options to purchase an aggregate of approximately 200,000
shares of common stock and RSUs for approximately 82,500 shares of common stock,
subject to the approval of the 2009 Equity Incentive Plan by our
shareholders. These grants included options to purchase up to 87,207
shares of our common stock and 28,490 RSUs to Mr. Boone, options to purchase
24,863 shares of our common stock and 15,858 RSUs to Mr. Armond, options to
purchase 31,113 shares of our common stock and 1,766 RSUs to Mr. Robinson,
options to purchase 3,500 shares of our common stock and 14,017 RSUs to Mr.
Fullmer, options to purchase 5,000 shares of our common stock and 12,650 RSUs to
Ms. Outten and options to purchase 7,500 shares and 9,639 RSUs to Mr.
Ginevich. Such stock options will be exercisable for $7.02 per share
periodically. Upon a “change-of-control,” options granted to Messrs.
Boone, Armond and Robinson will vest in their entirety. The
recipients of the above specified stock options will be entitled to convert
their options to RSUs under the 2009 Equity Incentive Plan for a limited period
of time at a ratio that varies for each individual and is between .4 RSUs for
each stock option and .29 RSUs for each stock option. Recognizing
that the stock ownership of the Company’s executive officers is below industry
standards, the Board has chosen to make these awards to align ownership with
such standards. The Board did not adopt any targets for the grant of such
securities for future years, but may nonetheless decide to make similar grants
in the future.
If a
dividend or other distribution, recapitalization, forward or reverse stock
split, subdivision, consolidation or reduction of capital, reorganization,
merger, consolidation, scheme or arrangement, split-up, spin-off or combination,
or similar transaction or event affects the common stock such that an adjustment
is appropriate in order to prevent dilution or enlargement of the rights of
grantees, the Committee will make an equitable change or adjustment as it deems
appropriate in the number and kind of securities subject to or to be issued in
connection with awards (whether or not then outstanding) and the exercise price
or grant price relating to an award.
The
Committee may also grant awards (“Acquired Entity Awards”) to employees or
consultants of another corporation or other entity (an “Acquired Entity”) in
substitution of stock or other stock-based awards held by any employees or
consultants of such Acquired Entity who become eligible employees of our Company
or any of our affiliates as a result of a merger or consolidation of the
Acquired Entity into our Company or any of our affiliates or the acquisition of
the Acquired Entity by us or any of our affiliates. The Acquired
Entity Awards are intended to preserve the economic value of the awards held by
employees and/or consultants of the Acquired Entity immediately prior to its
merger or consolidation into, or acquisition by, our Company or any of our
affiliates. Acquired Entity Awards will not count against the overall
limit on the number of shares of common stock available for issuance under this
2009 Plan nor will they count against the individual limits on awards described
below.
Limits
on Awards
The 2009
Plan contains several limits on the number of shares and the amount of cash that
may be issued as awards. Awards may not be granted to any individual
in any calendar year for an aggregate number of shares of common stock in excess
of 850,000 shares of common stock for awards granted in any calendar
year. In addition, the maximum potential value of any award that may
be granted to the Chief Executive Officer or any of our other four highest
compensated officers in any calendar year which may settled in cash or property
other than common stock may not exceed $5 million.
Summary
of Awards under the 2009 Plan
The 2009
Plan permits the granting of any or all of the following types of awards to all
grantees other than non-employee Directors:
|
·
|
stock
options including incentive stock options (“ISOs”), non-qualified stock
options and stock appreciation rights
(“SARs”);
|
|
·
|
restricted
stock and deferred stock (including restricted stock
units);
|
|
·
|
performance
shares; and
|
|
·
|
other
stock-based awards.
|
With
respect to non-employee Directors, the 2009 Plan provides for an election to
receive all or any portion of their annual fees in the form of stock
options. In addition, the Board has the authority under the 2009 Plan
to adopt procedures to allow non-employee Directors to elect to receive all or
any portion of their annual fees in the form of common stock and/or deferred
stock. Unless and until such procedures are adopted, annual
Director’s fees may be paid in any combination of cash or stock options but may
not be paid in the form of common stock or deferred stock. As of
April 20, 2009, the Board had not adopted any procedures to allow non-employee
Directors to elect to receive any portion of their annual fees in common stock
or deferred stock.
Generally,
awards under the 2009 Plan (other than non-employee Director awards) are granted
for no consideration other than prior and future services. Awards
(other than non-employee Director awards) granted under the 2009 Plan may, in
the discretion of the Committee, be granted alone or in addition to, in tandem
with or in substitution for, any other award under the 2009 Plan or other plan
of our Company. The material terms of each award will be set forth in
a written award agreement between the grantee and us.
Stock
Options and SARs
The
Committee is authorized to grant stock options, including ISOs (except that ISOs
may only be granted to employees), nonqualified stock options, and
SARs. A stock option allows a grantee to purchase a specified number
of shares at a predetermined price during a fixed period measured from the date
of grant. An SAR entitles the grantee to receive the excess of the
fair market value of a share on the date of exercise over the grant price of the
SAR. The purchase price per share of stock subject to a stock option
and the grant price of an SAR is determined by the Committee and set forth in
the award agreement. The purchase price per share under any option
cannot be less than the fair market value of a share on the grant date;
provided, however, that if grantee owns more than 10% of the combined voting
power of all classes of stock of the Company or any subsidiary or parent
corporation of the Company, the purchase price under an ISO may not be less than
110% of the fair market value of the Company’s common stock on the date of the
grant. The purchase price per share under any other non-qualified
stock option cannot be less than par value of the stock. The term of
each option or SAR is determined by the Committee and set forth in the award
agreement, except that the term of ISOs and SARs granted in tandem with ISOs may
not exceed ten years (and may not exceed five years, if grantee owns more than
10% of the combined voting power of all classes of stock of the Company or any
subsidiary or parent corporation of the Company). Such awards are
exercisable in whole or in part at such time or times as determined by the
Committee and set forth in the award agreement. Options may be
exercised by payment of the purchase price in cash, stock or other outstanding
awards, or may be exercised on a cashless basis (subject to applicable law), or
as the Committee determines. Methods of exercise and settlement and
other terms of the SARs will be determined by the Committee.
Restricted
Stock and Deferred Stock
The
Committee may award restricted stock consisting of shares which remain subject
to a risk of forfeiture and may not be disposed of by grantees until certain
restrictions established by the Committee lapse. A grantee receiving
restricted stock will have all of the rights of a stockholder of our Company,
including the right to vote the shares and the right to receive any dividends,
except as otherwise provided in the award agreement. Upon the
grantee’s termination of affiliation with the Company and all of its affiliates
during the restriction period, restricted stock will be forfeited, subject to
such exceptions, if any, as are provided in the award agreement or any other
agreement with the grantee.
The
Committee may also make deferred stock awards, generally consisting of a right
to receive shares at the end of specified deferral periods. Awards of
deferred stock may be subject to a risk of forfeiture as provided in the award
agreement. If the grantee terminates his or her affiliation with the
Company and its affiliates before the forfeiture restrictions have lapsed, the
grantee’s right to the deferred stock will be forfeited, subject to such
exceptions, if any, as are provided in the award agreement or any other
agreement with the grantee. The Company will deliver to the grantee
shares of common stock in settlement of vested deferred stock on the earlier of
the date specified in the award agreement or upon the occurrence of a
distribution event (death, disability, separation from service, change of
control of the Company or unforeseeable financial hardship), if any, specified
in the award agreement.
Deferred
stock awards carry no voting or other rights associated with stock
ownership. Except as otherwise provided in the award agreement,
grantees will receive dividend equivalents with respect to deferred stock, which
will be deemed to be reinvested in additional shares of deferred
stock.
Dividend
Equivalent
The
Committee is authorized to grant dividend equivalents which provide a grantee
the right to receive a payment in an amount equal to the dividends on a
specified number of shares of our common stock. Dividend equivalents
may be paid directly to grantees or may be deferred for later delivery under the
2009 Plan.
Performance
Unit
The
Committee may grant performance units, which entitle a grantee to cash or shares
conditioned upon the fulfillment of certain performance conditions and other
restrictions as specified by the Committee and reflected in the award
agreement. The initial value of a performance unit will be determined
by the Committee at the time of grant. The Committee will determine
the terms and conditions of such awards, including performance and other
restrictions placed on these awards, which will be reflected in the award
agreement. It is expected that the performance measures for
performance units will generally be selected from among those listed in the 2009
Plan.
Performance
Shares
The
Committee may grant performance shares, which entitle a grantee to a certain
number of shares of common stock, conditioned upon the fulfillment of certain
performance conditions and other restrictions as specified by the Committee and
reflected in the award agreement. The Committee will determine the
terms and conditions of such awards, including performance and other
restrictions placed on these awards, which will be reflected in the award
agreement. It is expected that the performance measures for
performance shares will generally be selected from among those listed in the
2009 Plan.
Other
Stock-Based Awards
In order
to enable us to respond to material developments in the area of taxes and other
legislation and regulations and interpretations thereof, and to trends in
executive compensation practices, the 2009 Plan authorizes the Committee to
grant awards that are valued in whole or in part by reference to or otherwise
based on our securities. The Committee determines the terms and
conditions of such awards, including consideration paid for awards granted as
share purchase rights and whether awards are paid in shares or
cash.
Director
Election To Receive Fees as Common Stock, Deferred Stock and/or Stock
Options
A
non-employee Director may elect to have all or part of his or her annual
Director’s fees paid in the form of stock options (“Directors’
Options”). The number of shares subject to Directors’ Options will be
determined so that the Directors’ Options will have an economic value
(determined by Black-Scholes or similar option pricing model) equal to the
amount of the annual Directors’ fees the non-employee Director elects to convert
into the Directors’ Options. The purchase price per share under the
Directors’ Options will equal the fair market value of a share of common stock
on the grant date. Directors’ Options will be fully vested and
exercisable at all times throughout the term of the option. The
option term will be determined by the Board and uniformly applied to all
Directors’ Options granted on the same date but may not exceed the earlier of
(i) ten years from the date of grant or (ii) five years after the date the
non-employee Director ceases to serve as a non-employee Director.
In
addition, the Board may adopt procedures under the 2009 Plan to allow each
non-employee Director to receive all or part of his or her annual Director’s
fees in the form of shares of common stock, valued at their fair market value on
the date the fees would otherwise have been payable in cash. The
Board may also adopt procedures to allow non-employee Directors to elect (before
the annual Director’s fees are otherwise payable) to defer (until such later
date elected by the Director) the receipt of such shares. Dividends
that would have been paid on deferred stock may be deferred or paid in cash, as
elected by the non-employee Director. All deferred stock is
nonforfeitable. As of April 20, 2009, the Board had not adopted any
procedures to allow non-employee Directors to elect to receive any portion of
their annual fees in the form of common stock or deferred stock.
Performance-Based
Awards
The
Committee may require satisfaction of pre-established performance goals,
consisting of one or more business criteria and a targeted performance level
with respect to such criteria, as a condition of awards being granted or
becoming exercisable or payable under the 2009 Plan, or as a condition to
accelerating the timing of such events.
The
performance measure(s) to be used for purposes of any awards (other than stock
options or SARs) intended to satisfy the “performance based” exception to tax
deductibility limitations under Code Section 162(m) will be chosen from among
the following:
|
·
|
earnings
(either in the aggregate or on a per-share
basis);
|
|
·
|
operating
income or loss;
|
|
·
|
cash
flow (as modified or adjusted for purposes of reporting cash flow in
accordance with industry practice);
|
|
·
|
stockholder
returns (including return on assets, investments, equity, or gross sales)
(including income applicable to common stockholders or other class of
stockholders);
|
|
·
|
return
measures (including return on assets, equity, or
sales);
|
|
·
|
earnings
before or after either, or any combination of, interest, taxes,
depreciation or amortization (EBITDA) (as modified or adjusted for
purposes of reporting EBITDA in accordance with industry
practice);
|
|
·
|
share
price (including growth measures and total stockholder return or
attainment by the shares of a specified value for a specified period of
time);
|
|
·
|
reductions
in expense levels in each case where applicable determined either on a
Company-wide basis or in respect of any one or more business
units;
|
|
·
|
annual
net income to common stock;
|
|
·
|
annual
cash flow provided by operations;
|
|
·
|
changes
in annual revenues;
|
|
·
|
strategic
business criteria, consisting of one or more objectives based on meeting
specified revenue, market penetration, geographic business expansion
goals, objectively identified project milestones, production volume
levels, cost targets, and goals relating to acquisitions or
divestitures;
|
|
·
|
results
of customer satisfaction surveys;
|
|
·
|
aggregate
product price and other product price
measures;
|
|
·
|
operating
and maintenance cost management;
|
|
·
|
achievement
of business or operational goals such as market shares and/or business
development.
|
The
Committee has the discretion to adjust the determinations of the degree of
attainment of the pre-established performance goals; provided, however, that
awards which the Committee intends to qualify for the performance-based
exception to the tax deduction limitations under Code Section 162(m) may not be
adjusted upward (the Committee retains the discretion to adjust such awards
downward), unless the Committee intends to amend the award to no longer qualify
for the performance-based exception.
Payment
of Awards
Awards
may be settled in cash, stock, other awards or other property, in the discretion
of the Committee. The 2009 Plan authorizes the Committee to place
shares or other property in trusts or make other arrangements to provide for
payment of our obligations under the 2009 Plan. The Committee may
condition the payment of an award on the withholding of taxes and may provide
that a portion of the stock or other property to be distributed will be withheld
to satisfy such tax obligations.
Transfer
Limitations on Awards
Awards
granted under the 2009 Plan generally may not be pledged or otherwise encumbered
and generally are not transferable except by will or by the laws of descent and
distribution. Each award will be exercisable during the grantee’s
lifetime only by the grantee or, if permitted under applicable law, by the
grantee’s guardian or legal representative. However, transfers of
awards for estate planning purposes may be permitted in the discretion of the
Committee.
Payment
of Taxes
The
Committee may provide that when taxes are to be withheld in connection with the
exercise of a stock option by a stockholder, or upon the lapse of restrictions
on restricted stock, or upon the transfer of deferred stock, or upon payment of
any other benefit or right under the 2009 Plan (the date on which such exercise
occurs or such restrictions lapse or such payment of any other benefit or right
occurs hereinafter referred to as the “Tax Date”), the stock holder may elect to
make payment for the withholding of federal, state and local taxes:
|
(i)
|
payment
of an amount in cash equal to the amount to be
withheld;
|
|
(ii)
|
delivering
part or all of the amount to be withheld in the form of common stock
valued at their fair market value on the Tax
Date;
|
|
(iii)
|
requesting
the Company to withhold from those shares of common stock that would
otherwise be received upon exercise of the stock option, upon the lapse of
restrictions on restricted stock, or upon the transfer of deferred stock,
a number of shares having a fair market value on the Tax Date equal to the
amount to be withheld; or
|
|
(iv)
|
withholding
from any compensation otherwise due to the
grantee.
|
If the
Company withholds shares in accordance with item (iii) above, it will be
required to pay for the benefit of the employee, the tax liability related
thereto.
Amendment
to and Termination of the 2009 Plan
The 2009
Plan may be amended, altered, suspended, discontinued or terminated by the Board
without further stockholder approval, unless such approval of an amendment or
alteration is required by law or regulation or under the rules of any stock
exchange or automated quotation system on which the common stock is then listed
or quoted. Thus, stockholder approval will not necessarily be
required for amendments which might increase the cost of the 2009 Plan or
broaden eligibility. Stockholder approval will not be deemed to be
required under laws or regulations that condition favorable treatment of
grantees on such approval, although the Board may, in its discretion, seek
stockholder approval in any circumstance in which it deems such approval
advisable.
In
addition, subject to the terms of the 2009 Plan, no amendment or termination of
the 2009 Plan may materially and adversely affect the right of a grantee under
any award granted under the 2009 Plan.
Unless
earlier terminated by the Board, the 2009 Plan will terminate when no shares
remain reserved and available for issuance or, if earlier, on March 10,
2019. The terms of the 2009 Plan shall continue to apply to any
awards made prior to the termination of the 2009 Plan until we have no further
obligation with respect to any award granted under the 2009 Plan.
Federal
Income Tax Consequences
We
believe that under present law the following are the federal tax consequences
generally arising with respect to awards granted under the 2009
Plan. This summary is for stockholder information purposes and is not
intended to provide tax advice to grantees.
Incentive Stock
Options
. For regular federal income tax purposes, a grantee will not
realize taxable income upon either the grant of an ISO or its exercise if the
grantee has been an employee of the Company or a subsidiary at all times from
the date of grant to a date not more than three months before the date of
exercise. The difference between the fair market value of the stock at the date
of exercise and the exercise price of an ISO, however, will be treated as an
item of tax preference in the year of exercise for purposes of the alternative
minimum tax. If the shares acquired upon an exercise of an ISO are not sold or
otherwise disposed of by the grantee within two years from the date of grant or
within one year from the date of exercise, any gain realized upon a subsequent
sale of the shares will be taxable as a capital gain. In that case, the Company
will not be entitled to a deduction in connection with the grant or the exercise
of the ISO or the subsequent disposition of the shares by the grantee. The
amount of gain or loss realized by the grantee upon such a sale or other
disposition will be measured by the difference between the amount realized on
disposition of the share by the grantee and the exercise price of the ISO (the
grantee’s basis in the stock). If the grantee disposes of the shares within two
years from the date of grant of the ISO or within one year from the date of
exercise of the ISO, the grantee will realize ordinary income in an amount equal
to the excess of the fair market value of the shares at the date of exercise (or
the amount realized on disposition, if less) over the option price, and the
Company will be allowed a corresponding deduction. If the amount realized on the
disposition exceeds the fair market value of the shares at the date of exercise
the gain on disposition in excess of the amount treated as ordinary income will
be treated as a capital gain.
Nonqualified Stock Options
and SARs
. A grantee will not realize income upon the grant of
a nonqualified option (a “NQO”) or an SAR. Upon the exercise of a NQO or an SAR,
the grantee will be required to recognize ordinary income in an amount equal to
the excess of the fair market value of the stock receive upon exercise of the
NQO or SAR over the exercise price of the NQO or grant price of the SAR. Any
compensation includable in the gross income of an employee with respect to a NQO
or SAR will be subject to appropriate federal income and employment taxes. The
Company will be entitled to a business expense deduction in the same amount and
at the same time as when the grantee recognizes compensation
income.
Other
Awards
. In the case of any other awards granted under the 2009
Plan that may be settled either in cash, in stock or other property that is
either not restricted as to transferability or not subject to a substantial risk
of forfeiture, the grantee must generally recognize ordinary income equal to the
cash or the fair market value of shares or other property received on the date
such cash, stock or other property is received. We will be entitled
to a deduction for the same amount.
With
respect to awards involving stock or other property that is restricted as to
transferability and subject to a substantial risk of forfeiture, the grantee
must generally recognize ordinary income equal to the fair market value of the
shares or other property received at the first time the shares or other property
become transferable or not subject to a substantial risk of forfeiture,
whichever occurs earlier unless the grantee makes an election under Section
83(b) of the Code within 30 days after the date of grant, in which case the
grantee will recognize ordinary income equal to the fair market value of the
shares or other property on the date of grant. We will be entitled to a
deduction for the same amount and at the same time that the grantee recognizes
ordinary income.
Special Tax Rules Relating
to Nonqualified Deferred Compensation
. Code Section 409A
provides for acceleration of income and tax penalties on a grantee with respect
to nonqualified deferred compensation if certain conditions are not
met. These conditions restrict the timing of deferral elections and
require deferred compensation to be paid only on a specified date or on the
occurrence of one of the five following events: separation from service, death,
disability, change of control of the Company (or the affiliate for whom the
grantee works) or unforeseeable financial hardship. Generally,
payment of deferred compensation may not be accelerated and additional
restrictions and limitations are imposed on extensions of any deferral
period.
The
requirements of Code Section 409A may apply to any award which is considered
deferred compensation within the meaning of Code Section 409A, including certain
stock options, SARs, deferred stock and other grants that may result in the
deferral of federal income tax to a date later than 2½ months after the end of
the year in which grantee’s right to the compensation is no longer subject to a
substantial risk of forfeiture. Options and SARs will generally be
exempt from the requirements of Section 409A if the option price of the option
or the grant price of an SAR is not less than the fair market value of the
Company’s common stock on the date that the option or SAR is granted and the
option or SAR does not include any additional deferral features other than the
right to exercise the option and receive common stock. Extensions and
other modifications of outstanding options and SARs may cause such awards to
lose their exempt status and become subject to the requirements of Section
409A.
An award
that is subject to Code Section 409A and does not meet the requirements imposed
under Code Section 409A will subject the grantee to (i) acceleration of federal
income tax on the outstanding award and all other similar awards that are
subject to Code Section 409A, (ii) a 20% excise tax on the amount includable in
income and (iii) interest on the amount of taxes that would have been collected
if the awards had been includable in income in the later of January 1, 2005 or
the year in which the employee earns a vested right to the award. The
Company will be entitled to claim a tax deduction on any compensation recognized
by a grantee under Section 409A at the same time that the grantee recognizes
such income.
The
foregoing provides only a general description of the application of federal
income tax laws to certain types of awards under the 2009 Plan. The
summary does not address the effects of foreign, state and local tax
laws. Because of the variety of awards that may be made under the
2009 Plan and the complexities of the tax laws, grantees are encouraged to
consult a tax advisor as to their individual circumstances.
The
Board of Directors unanimously recommends that you vote “FOR”
the
approval of the Company’s 2009 Equity Incentive Plan.
PROPOSAL
4
AMENDMENT
OF THE AMERICAN CARESOURCE HOLDINGS, INC.
2005
STOCK OPTION PLAN
The
Company’s shareholders are being asked to approve an amendment to the 2005 Stock
Option Plan, which increases the number of shares available for stock option
grants under the plan.
Amendment
to the 2005 Stock Option Plan
Our 2005
Stock Option Plan was approved by our stockholders at the Special Meeting of
Stockholders held on January 17, 2005. Under the Company’s 2005 Stock
Option Plan, as it is currently in effect, a maximum of 3,249,329 shares of our
common stock are available for issuance pursuant to the exercise of stock
options granted thereunder, and as of April 20, 2009, 2,398,700 shares of common
stock have either been issued pursuant to the exercise of options that been
granted under the plan or are subject to options that are currently outstanding
under the plan. At the end of 2008, following the recent dramatic
sales and operational growth of the Company and the increase in the need to hire
qualified executives, the Compensation Committee observed that the Company did
not have adequate shares reserved under the 2005 Option Plan to provide for the
grant of sufficient stock options to attract and properly compensate executives
and employees of the caliber that it deemed necessary to advance the Company's
programs. While the Compensation Committee of the Board of Directors
considered adopting a new, more complete and flexible equity plan, an additional
500,000 shares were authorized by the Board under the existing 2005 Stock Option
Plan to facilitate the short term needs of the Compensation Committee while the
new Plan was being considered. On December 11, 2008, the Board
granted options to purchase an aggregate of 13,000 shares of common stock to
five individuals at a purchase price of $7.00 per share. On November
14, 2008, the Board granted James Robinson, our Senior Vice President, Sales and
Marketing, options to purchase 225,000 shares of common stock at a purchase
price of $6.87 per share. The grant to Mr. Robinson is subject to
approval of the amendment of the Plan at the Stockholders Meeting.
Therefore,
our Board of Directors recommends that the 2005 Stock Option Plan be amended to
increase the number of shares available for grant under the plan from 3,249,329
shares to 3,749,329 shares (the “Proposed 2005 Stock Option Plan
Amendment”). If approved, this increase of 500,000 shares would
provide sufficient common stock to cover the grants previously made to the
Company’s recently hired new officers and employees.
Summary
of the 2005 Stock Option Plan
The
following is a summary of the material provisions of our 2005 Stock Option Plan
and is qualified in its entirety by reference to the complete text of our 2005
Stock Option Plan, including the proposed amendment, a copy of which is attached
to this proxy statement as Appendix B.
The 2005
Stock Option Plan is designed to furnish additional incentives to key employees,
directors, nominees and consultants of American CareSource Holdings, Inc., upon
whose judgment, initiative and efforts the successful conduct of our business
largely depends, and to strengthen the ability of the Company to attract and
retain in its employ, or as a member of its Board of Directors, persons of
training, experience and ability. The Board believes it is
beneficial to expand the option pool by 500,000 shares to
3,749,329.
The 2005
Stock Option Plan is currently administered by our Board of
Directors. Our Board of Directors may delegate the
administration of the 2005 Stock Option Plan to any committee, subcommittee or
person charged with the administration of the Plan. For purposes of
the following discussion, the term “Administrator” means the Board of Directors
or the committee to whom it delegates its authority as provided
above. The Administrator has the authority, subject to the terms of
the 2005 Stock Option Plan, to determine the individuals to whom options will be
granted, the times at which options will be granted and the terms and conditions
of the options.
Eligibility
. Options
may be granted to our directors, officers, employees, consultants, and
advisors. Options intended to qualify as incentive stock options
(“ISOs”) meeting the requirements of Section 422 of the Internal Revenue Code,
or any successor provision, may only be granted to key employees while actually
employed by us. Non-employee directors, consultants and advisors are
not entitled to receive ISOs under the 2005 Stock Option Plan, but may receive
grants of non-qualified stock options.
Option
Price
. The option price for ISOs generally will be 100% of the
fair market value of the Company’s common stock on the date the option is
granted; however, if the participant in the 2005 Stock Option Plan owns more
than 10% of the combined voting power of all classes of stock of the Company or
any subsidiary or parent corporation of the Company, the option price will be
not less than 110% of the fair market value of the Company’s common stock on the
date of the grant. The fair market value of the Company’s common
stock first becoming subject to exercise as an incentive stock option by an
optionee who is an employee during any given calendar year may not exceed
$100,000. The option price for non-qualified stock options will be
determined by the Administrator and may be less than, equal to or greater than
the fair market value of the Company’s common stock on the date of
grant. Fair market value for purposes of the 2005 Stock Option Plan
is the closing market price of the Company’s common stock as reported on the
market determined by the Board to be the primary market for the common stock on
the date of grant (currently, NASDAQ). In the event that the
Company’s common stock is not traded on a recognized market at the time of
grant, the Administrator will determine fair market value.
Duration of
Options
. Each stock option will terminate on the date fixed by
the Administrator, which will not be more than ten years after the date of the
grant. If the participant in the 2005 Stock Option Plan owns more
than 10% of the combined voting power of all classes of stock of the Company or
any subsidiary or parent corporation of the Company, and an incentive stock
option is granted to such participant, the option will terminate on the date
fixed by the Administrator, which will not be more than five years after the
date of grant.
Vesting
. Options
become exercisable when they have vested. The Administrator will
specify the relevant vesting provisions at the time of the grant.
Exercise
Period
. The exercise period for options granted under the 2005
Stock Option Plan may not exceed 10 years from the date of grant.
Payment
. The
Administrator will determine whether exercise of options will be settled in
whole or in part in cash, common stock or other securities of the Company or
other property.
Shares That May
Be Issued under the 2005 Stock Option Plan
. As currently in
effect, a maximum of 3,249,329 shares of American CareSource Holdings’ common
stock, which number may be adjusted as described below, are available for
issuance pursuant to the exercise of stock options granted under the 2005 Stock
Option Plan. If the Proposed 2005 Stock Option Plan Amendment is
approved, the number of shares available for grant under the 2005 Stock Option
Plan will increase to 3,749,329 shares. If any stock option
terminates or is canceled for any reason without having been exercised in full,
the shares of stock not issued will then become available for additional grants
of options. The number of shares available under the 2005 Stock
Option Plan is subject to adjustment in the event of any stock split, stock
dividend, recapitalization, spin-off or other similar action.
Number of Options
Outstanding
. As of April 20, 2009, options to purchase
2,398,700 shares of common stock have been granted and are outstanding under the
2005 Stock Option Plan. The strike price of the options ranges from
$0.31 to $7.80. The following table sets forth information regarding
the number of options outstanding and the exercise price of these
options.
|
Number
of
Options
Outstanding
|
Weighted
Average
Exercise Price
|
|
|
|
Options
outstanding 12/31/2007
|
2,000,563
|
$1.41
|
Options
granted 2008
|
1,114,500
|
$4.88
|
Options
granted 1/1/2009 to 4/20/09
|
49,500
|
$7.02
|
Options
exercised
|
(706,630)
|
$0.65
|
Options
cancelled
|
(59,233)
|
$2.28
|
|
|
|
Options
outstanding 4/20/09
|
2,398,700
|
$3.33
|
Number
of Options
Outstanding
at
April 20, 2009
|
Exercise Price
|
440,450
|
Under
$1.00
|
385,750
|
$1.00 -
$2.00
|
340,000
|
$2.01 -
$3.00
|
490,000
|
$3.01 -
$4.00
|
221,000
|
$4.01 -
$5.00
|
50,000
|
$5.01 -
$6.00
|
238,000
|
$6.01 -
$7.00
|
233,500
|
Greater
than $7.00
|
2,398,700
|
|
Of the
options outstanding at April 20, 2009, options to acquire an aggregate of
1,120,977 shares of common stock are fully vested. Options to acquire
a total of 1,517,735 shares of common stock were granted on May 16, 2005, of
which 146,143 vested immediately. On various dates from 2005 through 2008,
options to acquire 791,599 shares of our common stock were granted to directors
and are subject to vesting monthly over a period ranging from one to three
years. Options to acquire an aggregate of 437,439 shares of our
common stock have been granted to our President and Chief Executive Officer,
David S. Boone as follows: 179,946 shares on May 1, 2005; 22,493 shares on
November 3, 2005; 100,000 shares on September 23, 2007, each grant vesting
monthly over three years. In addition, Mr. Boone was granted 135,000
shares on March 26, 2008. Options to acquire 175,000 and 75,000
shares of our common stock were granted to our Chief Financial Officer, Steven
J. Armond, on October 25, 2007 and March 26, 2008, respectively. The
initial grant on October 25, 2007 vests monthly over three years. The
shares granted to both Mr. Boone and Mr. Armond on March 26, 2008 vest 25%
annually beginning on the first anniversary of the grant, then monthly
thereafter.
Income Tax
Consequences.
Under present law the federal income tax
treatment of stock options under the 2005 Stock Option Plan is generally as
follows:
Incentive Stock
Options
. For regular income tax purposes, an optionee will not realize
taxable income upon either the grant of an ISO or its exercise if the optionee
has been an employee of Patient Infosystems or a subsidiary at all times from
the date of grant to a date not more than three months before the date of
exercise. The difference between the fair market value of the stock at the date
of exercise and the exercise price of an ISO, however, will be treated as an
item of tax preference in the year of exercise for purposes of the alternative
minimum tax. If the shares acquired upon an exercise of an ISO are not disposed
of by the optionee within two years from the date of grant or within one year
from the date of exercise, any gain realized upon a subsequent sale of the
shares will be taxable as a capital gain. In that case, the Company will not be
entitled to a deduction in connection with the grant or the exercise of the ISO
or the subsequent disposition of the shares by the optionee. The amount of gain
or loss realized upon such a sale or other disposition will be measured by the
difference between the amount realized and the earlier exercise price of the ISO
(the optionee’s basis in the stock). If the optionee disposes of the shares
within two years from the date of grant of the ISO or within one year from the
date of exercise of the ISO, the optionee will realize ordinary income in an
amount equal to the excess of the fair market value of the shares at the date of
exercise (or the amount realized on disposition, if less) over the option price,
and the Company will be allowed a corresponding deduction. If the amount
realized on the disposition exceeds the fair market value of the shares at the
date of exercise the gain on disposition in excess of the amount treated as
ordinary income will be treated as a capital gain.
Nonqualified Stock
Options
. An optionee will not realize income upon the grant of a
nonqualified option. Upon the exercise of a nonqualified option, an optionee
will be required to recognize ordinary income in an amount equal to the excess
of the fair market value at the date of exercise of the NQO over the option
price. Any compensation includable in the gross income of an employee with
respect to a NQO will be subject to appropriate federal income and employment
taxes. The Company will be entitled to a business expense deduction in the same
amount and at the same time as when the optionee recognizes compensation
income. In the limited circumstances in which an officer who is
subject to Section 16(b) of the Securities Exchange Act of 1934, as amended (the
“1934 Act”) exercises a NQO, which exercise is not exempt under Section 16(b),
no income is recognized for federal income tax purposes at the time of exercise
unless the optionee makes an election under Section 83(b) of the Code within 30
days after the date of exercise, in which case the rules described in the second
preceding paragraph would apply. Where such an election is not made, the
optionee will recognize ordinary income on the first date that sale of such
shares would not create liability under Section 16(b) of the 1934 Act (this is
generally, but not necessarily, six months after the date of exercise). The
ordinary income recognized to such an optionee will be the excess, if any, of
the fair market value of shares on such later date over the option exercise
price. The above discussion does not take into account the effect of
state and local tax laws. Moreover, no assurance can be given that legislative,
administrative, regulatory or judicial changes or interpretations will not occur
which could modify such analysis. In addition, an individual’s particular tax
status and his other tax attributes may result in different tax consequences
from those described above. Therefore, any participant in the Stock Option Plan
should consult with his own tax adviser concerning the tax consequences of the
grant, exercise and surrender of such options and the disposition of any stock
acquired pursuant to the exercise of such options.
Termination of
and Amendments to the 2005 Stock Option Plan
. The Board of
Directors may amend the 2005 Stock Option Plan from time to time, except that no
amendment will be made without stockholder approval if such approval is
necessary to comply with applicable law. The affirmative vote
of a majority of the stockholder votes cast is required to approve any amendment
to our 2005 Stock Option Plan. No options may be granted under the
2005 Stock Option Plan after 2015.
The
Board of Directors unanimously recommends that you vote “FOR”
the
amendment to the Company’s 2005 Stock Option Plan.
ANNUAL
REPORT TO STOCKHOLDERS
In
addition to the proxy statement and proxy card, a copy of the 2008 Annual Report
of the Company, which includes the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2008, and which is not a part of the proxy
soliciting material, is enclosed. The Annual Report on Form 10-K,
which includes our audited financial statements, is being furnished to you
without the exhibits thereto. Upon your request, we will provide you
with a copy of the exhibits. You may under some circumstances be
responsible for our reasonable expenses in furnishing such
exhibits.
You can
write to our Secretary at 5429 Lyndon B. Johnson Freeway, Suite 850, Dallas,
Texas 75240, or telephone us at 972-308-6830 for additional copies of the
Company’s Annual Report on Form 10-K, excluding the exhibits thereto, without
charge. You can also access our Form 10-K and other periodic filings
we make with the SEC from the SEC’s EDGAR database at www.sec.gov.
HOUSEHOLDING
OF ANNUAL MEETING MATERIALS
Only one
copy of our Annual Report and proxy materials is being mailed to stockholders
sharing an address unless the Company has received contrary instructions from
one or more of the stockholders. The Company will deliver promptly
upon written or oral request a separate copy of the Annual Report and proxy
materials to a stockholder at a shared address to which a single copy was
delivered. Stockholders wishing to receive additional copies of
either the Annual Report or the proxy materials for the 2009 Annual Meeting of
Stockholders without charge or who share an address with another stockholder and
are receiving multiple copies and would like to receive a single copy should
call Investor Relations at (972) 398-6830 or write to Investor Relations at the
Company at the Company’s executive offices.
STOCKHOLDER
PROPOSALS FOR THE 2010 ANNUAL MEETING
Stockholders
who wish to present proposals to be included in our proxy materials for the 2010
Annual Meeting of Stockholders must submit such proposals in proper form to our
Secretary at American CareSource Holdings, Inc., 5429 Lyndon B. Johnson Freeway,
Suite 850, Dallas, TX 75240 by December 22, 2009. If a stockholder’s
proposal is not submitted for inclusion in the 2009 proxy materials, but instead
the stockholder seeks to present the proposal directly at the 2010 Annual
Meeting of Stockholders, SEC rules permit us to exercise discretionary voting
authority to the extent conferred by proxy if we: (1) receive notice of the
proposal before March 9, 2010 and advise stockholders in the 2010 proxy
statement of the nature of the proposal and how we intend to vote on such matter
or (2) do not receive notice of the proposal before March 9, 2010.
OTHER
MATTERS
The Board
of Directors is not aware of any matters other than those set forth in this
proxy statement that will be presented for action at the Company’s 2009 Annual
Meeting of Stockholders. However, if any other matter should properly
come before the meeting, the persons authorized by the accompanying proxy card
will vote and act with respect thereto, in what according to their judgment, is
in the interests of American CareSource Holdings and its
stockholders.
EXHIBIT
A
THE
AMERICAN CARESOURCE HOLDINGS, INC. 2009 EQUITY INCENTIVE PLAN
Article
1.
Effective
Date, Objectives and Duration
1.1
Effective Date of the
Plan
. American CareSource Holdings, Inc., a Delaware
corporation (the “Company”), adopted the 2009 Equity Incentive Plan
(the “Plan”) on March 10, 2009, subject to approval by the Company’s
stockholders. The terms of the Plan, as so amended, are set forth
herein.
1.2
Objectives of the
Plan
. The Plan is intended (a) to allow selected employees and
officers of and consultants to the Company and its Affiliates to acquire or
increase equity ownership in the Company, thereby strengthening their commitment
to the success of the Company and stimulating their efforts on behalf of the
Company, and to assist the Company and its Affiliates in attracting new
employees, officers and consultants and retaining existing employees, officers
and consultants, (b) to provide annual cash incentive compensation
opportuni-ties that are competitive with those of other peer corporations, (c)
to optimize the profitability and growth of the Company and its Affiliates
through incentives which are consistent with the Company’s goals, (d) to provide
Grantees with an incentive for excellence in individual performance, and (e) to
promote teamwork among employees, officers, consultants and Non-Employee
Directors, and (f) to attract and retain highly qualified persons to serve as
Non-Employee Directors and to promote ownership by such Non-Employee Directors
of a greater proprietary interest in the Company, thereby aligning such
Non-Employee Directors’ interests more closely with the interests of the
Company’s stockholders.
1.3
Duration of the
Plan
. The Plan shall commence on the Effective Date and shall
remain in effect, subject to the right of the Board of Directors of the Company
(“Board”) to amend or terminate the Plan at any time pursuant to Article 14
hereof, until the earlier of March 10, 2019, or the date all Shares subject to
the Plan shall have been purchased or acquired and the restrictions on all
Restricted Stock granted under the Plan shall have lapsed, according to the
Plan’s provisions.
Article
2.
Definitions
Whenever
used in the Plan, the following terms shall have the meanings set forth
below:
2.1 “Affiliate”
means any Person that directly or indirectly, through one or more
intermediaries, controls, or is controlled by or is under common control with
the Company. For purposes of this definition, “control” shall mean
ownership of 50% or more of the total combined voting power or value of all
classes of stock or interests of the entity, or the power to direct the
management and policies of the entity, by contract or otherwise.
2.2 “Award”
means Options (including non-qualified options and Incentive Stock Options and
Director Options), Restricted Shares, Performance Units (which may be paid in
cash), Performance Shares, Deferred Stock, Dividend Equivalents, or Other
Stock-Based Awards granted under the Plan.
2.3 “Award
Agreement” means the written agreement by which an Award shall be
evidenced.
2.4 “CEO”
means the Chief Executive Officer of the Company.
2.5 “COO”
means the Chief Operating Officer of the Company.
2.6 “Code”
means the Internal Revenue Code of 1986, as amended from time to
time. References to a particular section of the Code include
references to regulations and rulings thereunder and to successor
provisions.
2.7 “Committee”
or “Stock Option Committee” has the meaning set forth in Section
3.1.
2.8 “Common
Stock” means the common stock, $0.01 par value, of the Company.
2.9 “Covered
Employee” means a Grantee who, as of the last day of the fiscal year in which
the value of an Award is recognizable as income for federal income tax purposes,
is one of the group of “covered employees,” within the meaning of Code Section
162(m), with respect to the Company.
2.10 “Deferred
Stock” means a right, granted under Section 10.1 or Article 13, to receive
Shares at the end of a specified deferral period.
2.11 “Director
Option” means a non-qualified Option granted to a Non-Employee Director under
Article 13.
2.12 “Disability”
means, unless otherwise defined in an Award Agreement, or as otherwise
determined under procedures established by the Committee for purposes of the
Plan, a disability within the meaning of Section 22(e)(3) of the
Code.
2.13 “Dividend
Equivalent” means a right to receive payments equal to dividends or property, if
and when paid or distributed, on a specified number of Shares.
2.14 “Eligible
Person” means any employee (including any officer) of, or non employee
consultant to, or Non Employee Director of, the Company or any Affiliate, or
potential employee (including a potential officer) of, or non employee
consultant to, the Company or an Affiliate; provided, however, that solely with
respect to the grant of an Incentive Stock Option, an “Eligible Person” shall be
any employee (including any officer) of the Company or any Subsidiary
Company.
2.15 “Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to
time. Ref-erences to a particular section of the Exchange Act include
references to successor provisions.
2.16 “Fair
Market Value” means (a) with respect to any property other than Shares, the fair
market value of such property determined by such methods or procedures as shall
be established from time to time by the Committee, and (b) with respect to
Shares, unless otherwise determined in the good faith discretion of the
Committee, as of any date, (i) the closing price on the date of determination
reported in the table entitled “New York Stock Exchange Composite Transactions”
contained in The Wall Street Journal (or an equivalent successor table) (or, if
no sale of Shares was reported for such date, on the most recent trading day
prior to such date on which a sale of Shares was reported); (ii) if the Shares
are not listed on the New York Stock Exchange, the closing sales price of the
Shares on such other national exchange on which the Shares are principally
traded, or as reported by the National Market System, or similar organization,
as reported in the appropriate table or listing contained in The Wall Street
Journal, or if no such quotations are available, the average of the high bid and
low asked quotations in the over-the-counter market as reported by the National
Quotation Bureau Incorporated or similar organizations; or (iii) in the event
that there shall be no public market for the Shares, the fair market value of
the Shares as determined (which determination shall be conclusive) in good faith
by the Committee.
2.17 “Grant
Date” means the date on which an Award is granted or, in the case of a grant to
an Eligible Person, such later date as specified in advance by the
Committee.
2.18 “Grantee”
means a person who has been granted an Award.
2.19 “Incentive
Stock Option” means an Option that is intended to meet the requirements of
Section 422 of the Code.
2.20 “including”
or “includes” means “including, without limitation,” or “includes, without
limitation,” respectively.
2.21 “Management
Committee” has the meaning set forth in Section 3.1(b).
2.22 “Non-Employee
Director” means a member of the Board who is not an employee of the Company or
any Affiliate.
2.23 “Other
Stock-Based Award” means a right, granted under Article 12 hereof, that relates
to or is valued by reference to Shares or other Awards relating to
Shares.
2.24 “Option”
means an option granted under Article 6 or Article 13 of the Plan.
2.25 “Option
Price” means the price at which a Share may be purchased by a Grantee pursuant
to an Option.
2.26 “Option
Term” means the period beginning on the Grant Date of an Option and ending on
the date such Option expires, terminates or is cancelled.
2.27 “Performance-Based
Exception” means the performance-based exception from the tax deductibil-ity
limitations of Code Section 162(m) contained in Code Section 162(m)(4)(C)
(including the special provisions for options thereunder).
2.28 “Performance
Measures” has the meaning set forth in Section 4.4.
2.29 “Performance
Period” means the time period during which performance goals must be
met.
2.30 “Performance
Share” and “Performance Unit” have the respective meanings set forth in Article
9.
2.31 “Period
of Restriction” means the period during which Restricted Shares are subject to
forfeiture if the conditions specified in the Award Agreement are not
satisfied.
2.32 “Person”
means any individual, sole proprietorship, partnership, joint venture, limited
liability company, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity or government instrumentality,
division, agency, body or department.
2.33 “Restricted
Shares” means Shares that are both subject to forfeiture and are nontransferable
if the Grantee does not satisfy the conditions specified in the Award Agreement
applicable to such Shares.
2.34 “Rule
16b 3” means Rule 16b 3 promulgated by the SEC under the Exchange Act, as
amended from time to time, together with any successor rule.
2.35 “SEC”
means the United States Securities and Exchange Commission, or any successor
thereto.
2.36 “Section
16 Non-Employee Director” means a member of the Board who satisfies the
require-ments to qualify as a “non-employee director” under Rule
16b-3.
2.37 “Section
16 Person” means a person who is subject to potential liability under Section
16(b) of the 1934 Act with respect to transactions involving equity securities
of the Company.
2.38 “Share”
means a share of Common Stock, and such other securities of the Company as may
be substituted or resubstituted for Shares pursuant to Section 4.2
hereof.
2.39 “Subsidiary
Corporation” means a corporation other than the Company in an unbroken chain of
corporations beginning with the Company if, at the time of granting the Option,
each of the corporations other than the last corporation in the unbroken chain
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
2.40 “Termination
of Affiliation” occurs on the first day on which an individual is for any reason
no longer providing services to the Company or any Affiliate in the capacity of
an employee, officer or consultant or with respect to an individual who is an
employee or officer of or a consultant to an Affiliate, the first day on which
such entity ceases to be an Affiliate of the Company.
Article
3.
Administration
3.1
Committee
.
(a) Subject
to Articles 13 and 14, and to Section 3.2, the Plan shall be administered by a
Committee (the “Stock Option Committee” or the “Committee”) appointed by the
Board from time to time. Notwithstanding the foregoing, either the
Board or the compensation committee of the Board (the “Compensation Committee”)
may at any time and in one or more instances reserve administrative powers to
itself as the Committee or exercise any of the administrative powers of the
Committee. To the extent the Board or Compensation Committee
considers it desirable to comply with Rule 16b-3 or meet the Performance-Based
Exception, the Committee shall consist of two or more directors of the Company,
all of whom qualify as “outside directors” within the meaning of Code Section
162(m) and Section 16 Non-Employee Directors. The number of members
of the Committee shall from time to time be increased or decreased, and shall be
subject to such conditions, in each case if and to the extent the Board deems it
appropriate to permit transactions in Shares pursuant to the Plan to satisfy
such conditions of Rule 16b 3 and the Performance-Based Exception as then in
effect.
(b) The
Board or the Compensation Committee may appoint and delegate to another
committee (“Management Committee”), to the CEO, or to the COO, any or all of the
authority of the Board or the Committee, as applicable, with respect to Awards
to Grantees other than Grantees who are executive officers, Non-Employee
Directors, or are (or are expected to be) Covered Employees and/or are Section
16 Persons at the time any such delegated authority is exercised. As
of the Effective Date, the authority of the Committee with respect to Awards to
Grantees other than Non-Employee Directors and senior vice presidents or higher
ranking officers of the Company or any Affiliate shall be delegated to the CEO
and the COO. This delegation shall remain in effect until such time
as the Board or the Compensation Committee rescinds or modifies such
delegation.
(c) Unless
the context requires otherwise, any references herein to “Committee” include
references to the Stock Option Committee, to the Board or Compensation Committee
to the extent either has assumed or exercises administrative powers itself as
the Committee pursuant to subsection (a), and the Management Committee, the CEO
or the COO to the extent they have been delegated authority pursuant to
subsection (b), as applicable; provided that (i) for purposes of Awards to
Non-Employee Directors under Article 13, “Committee” shall include only the full
Board, and (ii) for purposes of Awards intended to comply with Rule 16b-3 or
meet the Performance-Based Exception, “Committee” shall include only the Stock
Option Committee or the Compensation Committee.
3.2
Powers of
Committee
. Subject to and consistent with the provisions of
the Plan (including Article 13), the Committee has full and final authority and
sole discretion as follows; provided that any such authority or discretion
exercised with respect to a specific Non-Employee Director shall be approved by
the affirmative vote of a majority of the members of the Board, even if not a
quorum, but excluding the Non-Employee Director with respect to whom such
authority or discretion is exercised:
(a) to
determine when, to whom and in what types and amounts Awards should be granted;
provided that grants to Non-Employee Directors shall be made solely pursuant to
Article 13;
(b) to
grant Awards to Eligible Persons in any number, and to determine the terms and
conditions ap-plicable to each Award (including the number of Shares or the
amount of cash or other property to which an Award will relate, any exercise
price, grant price or purchase price, any limitation or restriction, any
schedule for or performance conditions relating to the earning of the Award or
the lapse of limitations, forfeiture restrictions, restrictions on
exercisability or transferability, any performance goals including those
relating to the Company and/or an Affiliate and/or any division thereof and/or
an individual, and/or vesting based on the passage of time, based in each case
on such considerations as the Committee shall determine);
(c) to
determine the benefit payable under any Performance Unit, Performance Share,
Dividend Equivalent, or Other Stock-Based Award and to determine whether any
performance or vesting conditions have been satisfied;
(d) to
determine whether or not specific Awards shall be granted in connection with
other specific Awards, and if so, whether they shall be exercisable cumulatively
with, or alternatively to, such other specific Awards and all other matters to
be determined in connection with an Award;
(e) to
determine the Option Term;
(f)
to determine the amount, if any, that a Grantee shall pay for Restricted Shares,
whether to permit or require the payment of cash dividends thereon to be
deferred and the terms related thereto, when Restricted Shares (including
Restricted Shares acquired upon the exercise of an Option) shall be forfeited
and whether such shares shall be held in escrow;
(g) to
determine whether, to what extent and under what circumstances an Award may be
settled in, or the exercise price of an Award may be paid in, cash, Shares,
other Awards or other property, or an Award may be accelerated, vested,
canceled, forfeited or surrendered or any terms of the Award may be waived, and
to accelerate the exercisability of, and to accelerate or waive any or all of
the terms and conditions applicable to, any Award or any group of Awards for any
reason and at any time;
(h) to
determine with respect to Awards granted to Eligible Persons whether, to what
extent and under what circumstances cash, Shares, other Awards, other property
and other amounts payable with respect to an Award will be deferred, either at
the election of the Grantee or if and to the extent specified in the Award
Agreement automatically or at the election of the Committee (whether to limit
loss of deductions pursuant to Code Section 162(m) or otherwise);
(i)
to offer to exchange or buy out any previously granted Award for a payment in
cash, Shares or other Award;
(j)
to construe and interpret the Plan and to make all determinations, including
factual determinations, necessary or advisable for the administration of the
Plan;
(k) to
make, amend, suspend, waive and rescind rules and regulations relating to the
Plan;
(l)
to appoint such agents as the Committee may deem necessary or advisable to
administer the Plan;
(m) to
determine the terms and conditions of all Award Agreements applicable to
Eligible Persons (which need not be identical) and, with the consent of the
Grantee, to amend any such Award Agreement at any time, among other things, to
permit transfers of such Awards to the extent permitted by the Plan; provided
that the consent of the Grantee shall not be required for any amendment (i)
which does not adversely affect the rights of the Grantee, or (ii) which is
necessary or advisable (as determined by the Committee) to carry out the purpose
of the Award as a result of any new applicable law or change in an existing
applicable law, or (iii) to the extent the Award Agreement specifically permits
amendment without consent;
(n) to
cancel, with the consent of the Grantee, outstanding Awards and to grant new
Awards in substi-tution therefor;
(o) to
impose such additional terms and conditions upon the grant, exercise or
retention of Awards as the Committee may, before or concurrently with the grant
thereof, deem appropriate, including limiting the percentage of Awards which may
from time to time be exercised by a Grantee;
(p) to
make adjustments in the terms and conditions of, and the criteria in, Awards in
recognition of unusual or nonrecurring events (including events described in
Section 4.2) affecting the Company or an Affiliate or the financial statements
of the Company or an Affiliate, or, except with respect to Awards granted
pursuant to Article 13, in response to changes in applicable laws, regulations
or accounting principles; provided, however, that in no event shall such
adjustment increase the value of an Award for a person expected to be a Covered
Employee for whom the Committee desires to have the Performance-Based Exception
apply;
(q) to
correct any defect or supply any omission or reconcile any inconsistency, and to
construe and interpret the Plan, the rules and regulations, and Award Agreement
or any other instrument entered into or relating to an Award under the Plan;
and
(r)
to take any other action with respect to any matters relating to the Plan for
which it is responsible and to make all other decisions and determinations as
may be required under the terms of the Plan or as the Committee may deem
necessary or advisable for the administration of the Plan.
Any
action of the Committee with respect to the Plan shall be final, conclusive and
binding on all persons, including the Company, its Affiliates, any Grantee, any
person claiming any rights under the Plan from or through any Grantee, and
stockholders, except to the extent the Committee may subsequently modify, or
take further action not consistent with, its prior action. If not
specified in the Plan, the time at which the Committee must or may make any
determination shall be determined by the Committee, and any such determination
may thereafter be modified by the Committee. The express grant of any
specific power to the Committee, and the taking of any action by the Committee,
shall not be construed as limiting any power or authority of the
Committee. The Committee may delegate to officers or managers of the
Company or any Affiliate the authority, subject to such terms as the Committee
shall determine, to perform specified functions under the Plan (subject to
Sections 4.3 and 5.7(c)).
Article
4.
Shares
Subject to the Plan, Maximum Awards, and 162(m) Compliance
4.1
Number of Shares Available
for Grants
. Subject to adjustment as provided in Section 4.2,
and ex-cept as provided in Section 5.6(b) the number of Shares hereby reserved
for delivery under the Plan shall be 1,500,000.
If any
Shares subject to an Award granted hereunder are forfeited or such Award
otherwise terminates without the delivery of such Shares, the Shares subject to
such Award, to the extent of any such forfeiture or termination, shall again be
available for grant under the Plan. If any Shares subject to an Award
granted hereunder are withheld or applied as payment in connection with the
exercise of an Award or the withholding or payment of taxes related thereto
(“Returned Shares”), such Returned Shares shall again be available for grant
under the Plan.
The
Committee shall from time to time determine the appropriate methodology for
calculating the number of Shares to which an Award relates pursuant to the
Plan.
Shares
delivered pursuant to the Plan may be, in whole or in part, authorized and
unissued Shares, or treasury Shares, including Shares repurchased by the Company
for purposes of the Plan.
4.2
Adjustments in Authorized
Shares and Awards
. In the event that the Committee determines
that any dividend or other distribution (whether in the form of cash, Shares, or
other property), recapitalization, forward or reverse stock split, subdivision,
consolidation or reduction of capital, reorganization, merger, consolidation,
scheme of arrangement, split-up, spin-off or combination involving the Company
or repurchase or exchange of Shares or other securities of the Company or other
rights to purchase Shares or other securities of the Company, or other similar
corporate transaction or event affects the Shares such that any adjustment is
determined by the Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan, then the Committee shall, in such manner as it may deem
equitable, adjust any or all of (a) the number and type of Shares (or other
securities or property) with respect to which Awards may be granted, (b) the
number and type of Shares (or other securities or property) subject to
outstanding Awards, (c) the grant or exercise price with respect to any Award
or, if deemed appropriate, make provision for a cash payment to the holder of an
outstanding Award, (d) the number and kind of Shares of outstanding Restricted
Shares or relating to any other outstanding Award in connection with which
Shares are subject, and (e) the number of Shares with respect to which Awards
may be granted to a Grantee, as set forth in Section 4.3; provided in each case,
that with respect to Stock Options, no such adjustment shall be authorized to
the extent that such adjustment would cause the Option (determined as if such
Option was an Incentive Stock Option) to violate Section 424(a) of
the Code; and provided further that the number of Shares subject to any Award
denominated in Shares shall always be a whole number.
4.3
Compliance with Section
162(m) of the Code
. To the extent the Committee determines
that compliance with the Performance-Based Exception is desirable, the following
shall apply:
(a) Section
162(m) Compliance. All Awards granted to persons the Committee
believes likely to be Covered Employees shall comply with the requirements of
the Performance-Based Exception; provided, however, that to the extent Code
Section 162(m) requires periodic shareholder approval of performance measures,
such approval shall not be required for the continuation of the Plan or as a
condition to grant any Award hereunder after such approval is
required. In addition, in the event that changes are made to Code
Section 162(m) to permit flexibility with respect to the Award or Awards
available under the Plan, the Committee may, subject to this Section 4.3, make
any adjustments to such Awards as it deems appropriate.
(b) Annual
Individual Limitations. No Grantee may be granted Awards (other than
Awards that can-not be satisfied in Shares) with respect to more than 850,000
Shares, subject to adjustment as provided in Sec-tion 4.2 and except as
otherwise provided in Section 5.6(b). The maximum potential value of
Awards to be settled in cash or property (other than Shares) that may be granted
with respect to any calendar year to any Grantee expected to be a Covered
Employee (regardless of when such Award is settled) shall not exceed
$5,000,000. (Thus, Awards that accrue over more than one calendar
year (or fiscal year) may exceed the one-year grant limit in the prior sentence
at the time of payment or settlement.)
4.4
Performance-Based Exception
Under Section 162(m)
. Unless and until the Committee proposes
for stockholder vote and stockholders approve a change in the general
performance measures set forth in this Section 4.4, for Awards (other than
Options) designed to qualify for the Performance-Based Exception, the objective
Performance Measure(s) shall be chosen from among the following:
(a) Earnings
(either in the aggregate or on a per-share basis);
(b) Net
income or loss;
(c) Operating
income or loss;
(d) Operating
profit;
(e) Cash
flow (as modified or adjusted for purposes of reporting cash flow in accordance
with industry practice);
(f)
Stockholder returns (including return on assets, investments, equity, or gross
sales) (including in-come applicable to common stockholders or other class of
stockholders);
(g) Return
measures (including return on assets, equity, or sales);
(h) Earnings
before or after either, or any combination of, interest, taxes, depreciation or
amortization (EBITDA) (as modified or adjusted for purposes of reporting EBITDA
in accordance with industry practice);
(i)
Gross revenues;
(j)
Share price (including growth measures and total stockholder return or
attainment by the Shares of a specified value for a specified period of
time);
(k) Reductions
in expense levels in each case, where applicable, determined either on a
Company-wide basis or in respect of any one or more business units;
(l)
Net economic value;
(m) Market
share;
(n) Annual
net income to common stock;
(o) Annual
cash flow provided by operations;
(p) Changes
in annual revenues;
(q) Strategic
business criteria, consisting of one or more objectives based on meeting
specified revenue, market penetration, geographic business expansion goals,
objectively identified project milestones, production volume levels, cost
targets, and goals relating to acquisitions or divestitures;
(r)
Economic value added;
(s) Sales;
(t) Costs;
(u) Results
of customer satisfaction surveys;
(v) Aggregate
product price and other product price measures;
(w) Safety
record;
(x) Service
reliability;
(y) Operating
and maintenance cost management;
(z) Debt
rating; and/or
(aa) Achievement
of business or operational goals such as market share and/or business
development;
provided
that applicable
performance measures may be applied on a pre- or post-tax basis; and provided
further that the Committee may, on the Grant Date of an Award intended to comply
with the Performance-Based Exception, and in the case of other grants, at any
time, provide that the formula for such Award may include or exclude items to
measure specific objectives, such as losses from discontinued operations,
extraordinary gains or losses, the cumulative effect of accounting changes,
acquisitions or divestitures, foreign exchange impacts and any unusual,
nonrecurring gain or loss. For Awards intended to comply with the
Performance-Based Exception, the Committee shall set the Performance Measures
within the time period prescribed by Section 162(m) of the Code. The
levels of performance required with respect to Performance Measures may be
expressed in absolute or relative levels and may be based upon a set
increase, set positive result, maintenance of the status quo, set decrease or
set negative result. Performance Measures may differ for Awards to
different Grantees. The Committee shall specify the weighting (which
may be the same or different for multiple objectives) to be given to each
performance objective for purposes of determining the final amount payable with
respect to any such Award. Any one or more of the Performance
Measures may apply to the Grantee, a department, unit, division or function
within the Company or any one or more Affiliates; and may apply either alone or
relative to the performance of other businesses or individuals (including
industry or general market indices).
The
Committee shall have the discretion to adjust the determinations of the degree
of attainment of the pre-established performance goals; provided, however, that
Awards which are designed to qualify for the Performance-Based Exception may not
(unless the Committee determines to amend the Award so that it no longer
qualified for the Performance-Based Exception) be adjusted upward (the Committee
shall retain the discretion to adjust such Awards downward). The
Committee may not, unless the Committee determines to amend the Award so that it
no longer qualifies for the Performance-Based Exception, delegate any
responsibility with respect to Awards intended to qualify for the
Performance-Based Exception. All determinations by the Committee as
to the achievement of the Performance Measure(s) shall be in writing prior to
payment of the Award.
In the
event that applicable laws change to permit Committee discretion to alter the
governing performance measures without obtaining stockholder approval of such
changes, and still qualify for the Performance-Based Exception, the Committee
shall have sole discretion to make such changes without obtaining stockholder
approval.
Article
5.
Eligibility
and General Conditions of Awards
5.1
Eligibility
. The
Committee may in its discretion grant Awards to any Eligible Person, whether or
not he or she has previously received an Award. Each Person who, on
any date on which an Award is to be granted pursuant to Article 13, is a
Non-Employee Director eligible to be granted an Award pursuant to Article 13
automatically shall be granted an Award pursuant to Article 13 on such
date.
5.2
Award
Agreement
. To the extent not set forth in the Plan, the terms
and conditions of each Award shall be set forth in an Award
Agreement.
5.3
General Terms and
Termination of Affiliation
. The Committee may impose on any
Award or the exercise or settlement thereof, at the date of grant or, subject to
the provisions of Section 14.2, thereafter, such additional terms and conditions
not inconsistent with the provisions of the Plan as the Committee shall
determine, including terms requiring forfeiture, acceleration or pro-rata
acceleration of Awards in the event of a Termination of Affiliation by the
Grantee. Except as may be required under the Delaware General
Corporation Law, Awards may be granted for no consideration other than prior and
future services. Except as otherwise determined by the Committee
pursuant to this Section 5.3, all Options that have not been exercised, or any
other Awards that remain subject to a risk of forfeiture or which are not
otherwise vested, or which have outstanding Performance Periods, at the time of
a Termination of Affiliation shall be forfeited to the Company.
5.4
Nontransferability of
Awards
.
(a) Each
Award and each right under any Award shall be exercisable only by the Grantee
during the Grantee’s lifetime, or, if permissible under applicable law, by the
Grantee’s guardian or legal representative or by a transferee receiving such
Award pursuant to a qualified domestic relations order (a “QDRO”) as defined in
the Code or Title I of the Employee Retirement Income Security Act of 1974 as
amended, or the rules thereunder.
(b) No
Award (prior to the time, if applicable, Shares are delivered in respect of such
Award), and no right under any Award, may be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by a Grantee otherwise
than by will or by the laws of descent and distribution (or in the case of
Restricted Shares, to the Company) or pursuant to a QDRO, and any such purported
assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall
be void and unenforceable against the Company or any Affiliate; provided that
the designation of a beneficiary to receive benefits in the event of the
Grantee’s death shall not constitute an assignment, alienation, pledge,
attachment, sale, transfer or encumbrance.
(c) Notwithstanding
subsections (a) and (b) above, to the extent provided in the Award Agreement,
Director Options, and Awards other than Incentive Stock Options and Deferred
Stock, may be transferred, without consideration, to a Permitted
Transferee. For this purpose, a “Permitted Transferee” in respect of
any Grantee means any member of the Immediate Family of such Grantee, any trust
of which all of the primary beneficiaries are such Grantee or members of his or
her Immediate Family, or any partnership (including limited liability companies
and similar entities) of which all of the partners or members are such Grantee
or members of his or her Immediate Family; and the “Immediate Family” of a
Grantee means the Grantee’s spouse, children, stepchildren, grandchildren,
parents, stepparents, siblings, grandparents, nieces and
nephews. Such Award may be exercised by such transferee in accordance
with the terms of such Award. If so determined by the Committee, a
Grantee may, in the manner established by the Committee, designate a beneficiary
or beneficiaries to exercise the rights of the Grantee, and to receive any
distribution with respect to any Award upon the death of the
Grantee. A transferee, beneficiary, guardian, legal representative or
other person claiming any rights under the Plan from or through any Grantee
shall be subject to and consistent with the provisions of the Plan and any
applicable Award Agreement, except to the extent the Plan and Award Agreement
otherwise provide with respect to such persons, and to any additional
restrictions or limitations deemed necessary or appropriate by the
Committee.
(d) Nothing
herein shall be construed as requiring the Committee to honor a QDRO except to
the ex-tent required under applicable law.
5.5
Cancellation and Rescission
of Awards
. Unless the Award Agreement specifies otherwise, the
Committee may cancel, rescind, suspend, withhold, or otherwise limit or restrict
any unexercised Award at any time if the Grantee is not in compliance with all
applicable provisions of the Award Agreement and the Plan or if the Grantee has
a Termination of Affiliation.
5.6
Stand-Alone, Tandem and
Substitute Awards
.
(a) Awards
granted under the Plan may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with, or in substitution for, any
other Award granted under the Plan unless such tandem or substitution Award
would subject the Grantee to tax penalties imposed under Section 409A of the
Code; provided further that if the stand-alone, tandem or substitute Award is
intended to qualify for the Performance-Based Exception, it must separately
satisfy the requirements of the Performance-Based Exception. If an
Award is granted in substitution for another Award or any non-Plan award or
benefit, the Committee shall require the surrender of such other Award or
non-Plan award or benefit in consideration for the grant of the new
Award. Awards granted in addition to or in tandem with other Awards
or non-Plan awards or benefits may be granted either at the same time as or at a
different time from the grant of such other Awards or non-Plan awards or
benefits.
(b) The
Committee may, in its discretion and on such terms and conditions as the
Committee considers appropriate in the circumstances, grant Awards under the
Plan (“Substitute Awards”) in substitution for stock and stock-based awards
(“Acquired Entity Awards”) held by employees of or consultants to another
corporation or entity who become Eligible Persons as the result of a merger or
consolidation of the employing corporation or other entity (the “Acquired
Entity”) with the Company or an Affiliate or the acquisition by the Company or
an Affiliate of property or stock of the Acquired Entity immediately prior to
such merger, consolidation or acquisition in order to preserve for the Grantee
the economic value of all or a portion of such Acquired Entity Award at such
price as the Committee determines necessary to achieve preservation of economic
value. The limitations of Sections 4.1 and 4.3 on the number of
Shares reserved or available for grants shall not apply to Substitute Awards
granted under this subsection (b).
5.7
Compliance with Rule
16b-3
.
(a) Six-Month
Holding Period Advice. Unless a Grantee could otherwise dispose of or
exercise a derivative security or dispose of Shares delivered under the Plan
without incurring liability under Section 16(b) of the Exchange Act, the
Committee may advise or require a Grantee to comply with the following in order
to avoid incurring liability under Section 16(b): (i) at least six
months must elapse from the date of acquisition of a derivative security under
the Plan to the date of disposition of the derivative security (other than upon
exercise or conversion) or its underlying equity security, and (ii) Shares
granted or awarded under the Plan other than upon exercise or conversion of a
derivative security must be held for at least six months from the date of grant
of an Award.
(b) Reformation
to Comply with Exchange Act Rules. To the extent the Committee
determines that a grant or other transaction by a Section 16 Person should
comply with applicable provisions of Rule 16b-3 (except for transactions
exempted under alternative Exchange Act rules), the Committee shall take such
actions as necessary to make such grant or other transaction so comply, and if
any provision of this Plan or any Award Agreement relating to a given Award does
not comply with the requirements of Rule 16b-3 as then applicable to any such
grant or transaction, such provision will be construed or deemed amended, if the
Committee so determines, to the extent necessary to conform to the then
applicable requirements of Rule 16b-3.
(c) Rule
16b-3 Administration. Any function relating to a Section 16 Person
shall be performed solely by the Committee or the Board if necessary to ensure
compliance with applicable requirements of Rule 16b-3, to the extent the
Committee determines that such compliance is desired. Each member of
the Committee or person acting on behalf of the Committee shall be entitled to,
in good faith, rely or act upon any report or other information furnished to him
by any officer, manager or other employee of the Company or any Affiliate, the
Company’s independent certified public accountants or any executive compensation
consultant or attorney or other professional retained by the Company to assist
in the administration of the Plan.
5.8
Deferral of Award
Payouts
. The Committee may permit a Grantee to defer, or if
and to the extent specified in an Award Agreement require the Grantee to defer,
receipt of the payment of cash or the delivery of Shares that would otherwise be
due by virtue of the lapse or waiver of restrictions with respect to Restricted
Shares, the satisfaction of any requirements or goals with respect to
Performance Units or Performance Shares, the lapse or waiver of the deferral
period for Deferred Stock, or the lapse or waiver of restrictions with respect
to Other Stock-Based Awards. If the Committee permits such deferrals,
the Committee shall establish rules and procedures for making such deferral
elections and for the payment of such deferrals, which shall conform in form and
substance with applicable regulations promulgated under Section 409A of the Code
to ensure that the Grantee is not subjected to tax penalties under Section 409A
of the Code with respect to such deferrals. Except as otherwise
provided in an Award Agreement, any payment or any Shares that are subject to
such deferral shall be made or delivered to the Grantee as specified in the
Award Agreement or pursuant to the Grantee’s deferral election.
Article
6.
Stock
Options
6.1
Grant of
Options
. Subject to and consistent with the provisions of the
Plan, Options may be granted to any Eligible Person in such number, and upon
such terms, and at any time and from time to time as shall be determined by the
Committee.
6.2
Award
Agreement
. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the Option Term, the number of
Shares to which the Option pertains, the time or times at which such Option
shall be exercisable and such other provisions as the Committee shall
determine.
6.3
Option
Price
. The Option Price of an Option under this Plan shall be
determined in the sole discretion of the Committee but may not be less than 100%
of the Fair Market Value of a Share on the Grant Date. Subject to the
adjustment allowed under Section 4.2, neither the Committee nor the Board shall
have the authority or discretion to change the Option Price of any outstanding
Option.
6.4
Grant of Incentive Stock
Options
. At the time of the grant of any Option, the Committee
may in its discretion designate that such Option shall be made subject to
additional restrictions to permit it to qualify as an Incentive Stock
Option. Any Option designated as an Incentive Stock
Option:
(a) shall
be granted only to an employee of the Company or a Subsidiary
Corporation;
(b) shall
have an Option Price of not less than 100% of the Fair Market Value of a Share
on the Grant Date, and, if granted to a person who owns capital stock (including
stock treated as owned under Section 424(d) of the Code) possessing more than
10% of the total combined voting power of all classes of capital stock of the
Company or any Subsidiary Corporation (a “10% Owner”), have an Option Price not
less than 110% of the Fair Market Value of a Share on its Grant
Date;
(c) shall
be for a period of not more than 10 years (five years if the Grantee is a 10%
Owner) from its Grant Date, and shall be subject to earlier termination as
provided herein or in the applicable Award Agreement;
(d) shall
not have an aggregate Fair Market Value (as of the Grant Date) of the Shares
with respect to which Incentive Stock Options (whether granted under the Plan or
any other stock option plan of the Grantee’s employer or any parent or
Subsidiary Corporation (“Other Plans”)) are exercisable for the first time by
such Grantee during any calendar year (“Current Grant”), determined in
accordance with the provisions of Section 422 of the Code, which exceeds
$100,000 (the “$100,000 Limit”);
(e) shall,
if the aggregate Fair Market Value of the Shares (determined on the Grant Date)
with respect to the Current Grant and all Incentive Stock Options previously
granted under the Plan and any Other Plans which are exercisable for the first
time during a calendar year (“Prior Grants”) would exceed the $100,000 Limit,
be, as to the portion in excess of the $100,000 Limit, exercisable as a separate
option that is not an Incentive Stock Option at such date or dates as are
provided in the Current Grant;
(f) shall
require the Grantee to notify the Committee of any disposition of any Shares
delivered pursuant to the exercise of the Incentive Stock Option under the
circumstances described in Section 421(b) of the Code (relating to holding
periods and certain disqualifying dispositions) (“Disqualifying Disposition”),
within 10 days of such a Disqualifying Disposition;
(g) shall
by its terms not be assignable or transferable other than by will or the laws of
descent and distribution and may be exercised, during the Grantee’s lifetime,
only by the Grantee; provided, however, that the Grantee may, to the extent
provided in the Plan in any manner specified by the Committee, designate in
writing a beneficiary to exercise his or her Incentive Stock Option after the
Grantee’s death; and
(h) shall,
if such Option nevertheless fails to meet the foregoing requirements, or
otherwise fails to meet the requirements of Section 422 of the Code for an
Incentive Stock Option, be treated for all purposes of this Plan, except as
otherwise provided in subsections (d) and (e) above, as an Option that is not an
Incentive Stock Option.
Notwithstanding
the foregoing and Section 3.2, the Committee may, without the consent of the
Grantee, at any time before the exercise of an Option (whether or not an
Incentive Stock Option), take any action necessary to prevent such Option from
being treated as an Incentive Stock Option.
6.5
Payment
. Except
as otherwise provided by the Committee in an Award Agreement, Options shall be
exercised by the delivery of a written notice of exercise to the Company,
setting forth the number of Shares with respect to which the Option is to be
exercised, accompanied by full payment for the Shares made by any one or more of
the following means:
(a) cash,
personal check or wire transfer;
(b) delivery
of Common Stock owned by the Grantee prior to exercise, valued at their Fair
Market Value on the date of exercise;
(c) with
the approval of the Committee, Shares acquired upon the exercise of such Option,
such Shares valued at their Fair Market Value on the date of
exercise
(d) with
the approval of the Committee, Restricted Shares held by the Grantee prior to
the exercise of the Option, each such share valued at the Fair Market Value of a
Share on the date of exercise; or
(e) subject
to applicable law (including the prohibited loan provisions of Section 402 of
the Sar-banes Oxley Act of 2002), through the sale of the Shares acquired on
exercise of the Option through a broker-dealer to whom the Grantee has submitted
an irrevocable notice of exercise and irrevocable instructions to deliver
promptly to the Company the amount of sale or loan proceeds sufficient to pay
for such Shares, together with, if requested by the Company, the amount of
federal, state, local or foreign withholding taxes payable by Grantee by reason
of such exercise.
The
Committee may in its discretion specify that, if any Restricted Shares
(“Tendered Restricted Shares”) are used to pay the Option Price, (x) all the
Shares acquired on exercise of the Option shall be subject to the same
restrictions as the Tendered Restricted Shares, determined as of the date of
exercise of the Option, or (y) a number of Shares acquired on exercise of the
Option equal to the number of Tendered Restricted Shares shall be subject to the
same restrictions as the Tendered Restricted Shares, determined as of the date
of exercise of the Option.
Article
7.
Stock
Appreciation Rights
7.1
Issuance
. Subject
to and consistent with the provisions of the Plan, the Committee, at any time
and from time to time, may grant SARs to any Eligible Person either alone or in
addition to other Awards granted under the Plan. Such SARs may, but
need not, be granted in connection with a specific Option granted under Article
6. Any SAR related to an Option must be granted at the same time such
Option is granted and have the same term. The Committee may impose
such conditions or restrictions on the exercise of any SAR as it shall deem
appropriate.
7.2
Award
Agreements
. Each SAR grant shall be evidenced by an Award
Agreement in such form as the Committee may approve and shall contain such terms
and conditions not inconsistent with other provisions of the Plan as shall be
determined from time to time by the Committee.
7.3
Grant
Price
. The grant price of a SAR shall be determined by the
Committee in its sole discretion; provided that the grant price shall not be
less than the lesser of 100% of the Fair Market Value of a Share on the date of
the grant of the SAR, or the Option Price under Option to which the SAR
relates.
7.4
Exercise and
Payment
. Upon the exercise of SARs, the Grantee shall be
entitled to receive the value thereof. The Fair Market Value of a
Share on the date of exercise of SARs shall be determined in the same manner as
the Fair Market Value of a Share on the date of grant of an Option is
determined. SARs shall be deemed exercised on the date written notice
of exercise in a form acceptable to the Committee is received by the Secretary
of the Company. The Company shall make payment in respect of any SAR
within five (5) days of the date the SAR is exercised. Any payment by
the Company in respect of a SAR may be made in cash, Shares, other property, or
any combination thereof, as the Committee, in its sole discretion, shall
determine.Grant Limitations. The Committee may at any time impose any
other limitations upon the exercise of SARs which, in the Committee's sole
discretion, are necessary or desirable in order for Grantees to qualify for an
exemption from Section 16(b) of the Exchange Act.
Article
8.
Restricted
Shares
8.1
Grant of Restricted
Shares
. Subject to and consistent with the provisions of the
Plan, the Commit-tee, at any time and from time to time, may grant Restricted
Shares to any Eligible Person in such amounts as the Committee shall
determine.
8.2
Award
Agreement
. Each grant of Restricted Shares shall be evidenced
by an Award Agreement that shall specify the Period(s) of Restriction, the
number of Restricted Shares granted, and such other provisions as the Committee
shall determine. The Committee may impose such conditions and/or
restrictions on any Restricted Shares granted pursuant to the Plan as it may
deem advisable, including restrictions based upon the achievement of specific
performance goals, time-based restrictions on vesting following the attainment
of the performance goals, and/or restrictions under applicable securities laws;
provided that such conditions and/or restrictions may lapse, if so determined by
the Committee, in the event of the Grantee’s Termination of Affiliation due to
death, disability, normal or approved early retirement, or involuntary
termination by the Company or an Affiliate without “cause”.
8.3
Consideration for Restricted
Shares
. The Committee shall determine the amount, if any, that
a Grantee shall pay for Restricted Shares.
8.4
Effect of
Forfeiture
. If Restricted Shares are forfeited, and if the
Grantee was required to pay for such shares or acquired such Restricted Shares
upon the exercise of an Option, the Grantee shall be deemed to have resold such
Restricted Shares to the Company at a price equal to the lesser of (x) the
amount paid by the Grantee for such Restricted Shares, or (y) the Fair Market
Value of a Share on the date of such forfeiture. The Company shall
pay to the Grantee the deemed sale price as soon as is administratively
practical. Such Restricted Shares shall cease to be outstanding, and
shall no longer confer on the Grantee thereof any rights as a stockholder of the
Company, from and after the date of the event causing the forfeiture, whether or
not the Grantee accepts the Company’s tender of payment for such Restricted
Shares.
8.5
Escrow;
Legends
. The Committee may provide that the certificates for
any Restricted Shares (x) shall be held (together with a stock power executed in
blank by the Grantee) in escrow by the Secretary of the Company until such
Restricted Shares become nonforfeitable or are forfeited and/or (y) shall bear
an appropriate legend restricting the transfer of such Restricted Shares under
the Plan. If any Restricted Shares become nonforfeitable, the Company
shall cause certificates for such shares to be delivered without such
legend.
Article
9.
Performance
Units and Performance Shares
9.1
Grant of Performance Units
and Performance Shares
. Subject to and consistent with the
provisions of the Plan, Performance Units or Performance Shares may be granted
to any Eligible Person in such amounts and upon such terms, and at any time and
from time to time, as shall be determined by the Committee.
9.2
Value/Performance
Goals
. The Committee shall set performance goals in its
discretion which, de-pending on the extent to which they are met, will determine
the number or value of Performance Units or Performance Shares that will be paid
to the Grantee. With respect to Covered Employees and to the extent
the Committee deems it appropriate to comply with Section 162(m) of the Code,
all performance goals shall be objective Performance Measures satisfying the
requirements for the Performance-Based Exception, and shall be set by the
Committee within the time period prescribed by Section 162(m) of the Code and
related regulations.
(a) Performance
Unit. Each Performance Unit shall have an initial value that is
established by the Committee at the time of grant.
(b) Performance
Share. Each Performance Share shall have an initial value equal to
the Fair Market Value of a Share on the date of grant.
9.3
Earning of Performance Units
and Performance Shares
. After the applicable Performance
Period has ended, the holder of Performance Units or Performance Shares shall be
entitled to payment based on the level of achievement of performance goals set
by the Committee. If a Performance Unit or Performance Share Award is
intended to comply with the Performance-Based Exception, the Committee shall
certify the level of achievement of the performance goals in writing before the
Award is settled.
At the
discretion of the Committee, the settlement of Performance Units or Performance
Shares may be in cash, Shares of equivalent value, or in some combination
thereof, as set forth in the Award Agreement.
If a
Grantee is promoted, demoted or transferred to a different business unit of the
Company during a Performance Period, then, to the extent the Committee
determines that the Award, the performance goals, or the Performance Period are
no longer appropriate, the Committee may adjust, change, eliminate or cancel the
Award, the performance goals, or the applicable Performance Period, as it deems
appropriate in order to make them appropriate and comparable to the initial
Award, the performance goals, or the Performance Period.
At the
discretion of the Committee, a Grantee may be entitled to receive any dividends
or Dividend Equivalents declared with respect to Shares deliverable in
connection with grants of Performance Units or Performance Shares which have
been earned, but not yet delivered to the Grantee.
Article
10.
Deferred
Stock
10.1
Grant of Deferred
Stock
. Subject to and consistent with the provisions of the
Plan, the Committee, at any time and from time to time, may grant Deferred Stock
to any Eligible Person, in such amount and upon such terms as the Committee
shall determine; provided that any such grant of Deferred Stock shall either (i)
qualify as a short-term deferral within the meaning of final regulations under
Section 409A of the Code or (ii) conform in form and substance with applicable
regulations promulgated under Section 409A of the Code to ensure that the
Grantee is not subjected to tax penalties under Section 409A of the Code with
respect to such Deferred Shares. Deferred Stock which qualifies as a
short-term deferral within the meaning of final regulations under Section 409A
of the Code are sometimes referred to as restricted stock units.
10.2
Vesting and
Delivery
. Delivery of Shares will occur upon expiration of the
deferral period or upon the occurrence of one or more of the distribution events
described in Section 409A(a)(2) of the Code as specified by the Committee in the
Grantee’s Award Agreement for the Award of Deferred Stock. In
addition, an Award of Deferred Stock shall be subject to such substantial risk
of forfeiture conditions as the Committee may impose, which conditions may lapse
at the expiration of the deferral period or at other specified times, separately
or in combination, in installments or otherwise, as the Committee shall
determine at the time of grant or thereafter. Unless and only to the extent that
the Committee shall provide otherwise in the Award Agreement, a Grantee awarded
Deferred Stock will have no voting rights but will have the rights to receive
Dividend Equivalents in respect of Deferred Stock, which Dividend Equivalents
shall be deemed reinvested in additional Shares of Deferred
Stock. Except as provided in the Award Agreement, to the extent that
the Grantee has a Termination of Affiliation while the Deferred Stock remains
subject to a substantial risk of forfeiture, such Deferred Shares shall be
forfeited.
Article
11.
Dividend
Equivalents
The
Committee is authorized to grant Awards of Dividend Equivalents alone or in
conjunction with other Awards. The Committee may provide that
Dividend Equivalents shall be paid or distributed when accrued or shall be
deemed to have been reinvested in additional Shares or additional Awards or
otherwise reinvested.
Article
12.
Other
Stock-Based Awards
The
Committee is authorized, subject to limitations under applicable law, to grant
such other Awards that are denominated or payable in, valued in whole or in part
by reference to, or otherwise based on, or related to, Shares, as deemed by the
Committee to be consistent with the purposes of the Plan including Shares
awarded which are not subject to any restrictions or conditions, convertible or
exchangeable debt securities or other rights convertible or exchangeable into
Shares, and Awards valued by reference to the value of securities of or the
performance of specified Affiliates. Subject to and consistent with
the provisions of the Plan, the Committee shall determine the terms and
conditions of such Awards. Except as provided by the Committee,
Shares delivered pursuant to a purchase right granted under this Article 12
shall be purchased for such consideration, paid for by such methods and in such
forms, including cash, Shares, outstanding Awards or other property, as the
Committee shall determine.
Article
13.
Non-Employee
Director Awards
13.1
Exclusive Means for
Non-Employee Director Awards
. Awards to Non-Employee Directors
shall be made solely pursuant to this Article 13.
13.2
Director
Options
. Each Non-Employee Director may elect (an “Option
Election”) to have all or any portion of the cash fees earned in his or her
capacity as a Non-Employee Director (including annual retainer fees, meeting
fees, fees for service on a Board committee, fees for service as chairman of a
Board committee, and any other fees paid to directors) (“Director Fees”) be paid
as an Award of a Director Option. An Option Election may be made with
respect to the annual retainer fee payable to a Non-Employee Director for a
calendar year, at any time prior to the first day of such calendar year, subject
to such restrictions and advance written filing requirements as the Company may
impose. Each Option Election shall specify the portion of the annual
retainer fee to be paid as an Award of a Director Option and shall remain in
effect with respect to future annual retainer fees until the Non-Employee
Director revokes or changes such Option Election with respect to the annual
retainer payable for calendar years beginning after the date the Company
receives such Non-Employee Director’s revocation or change..
Each
Director Option and Award thereof shall be subject to the following terms and
conditions:
(a) Non-Employee
Director Status. A person must be a Non-Employee Director on the
Grant Date of a Director Option in order to be granted such Director
Option.
(b) The
Grant Date for each such Director Option shall be the date the annual retainer
fee or portion thereof would otherwise have been paid in cash.
(c) The
number of Shares subject to each such Director Option shall be the amount of the
annual retainer fee or portion thereof that would otherwise have been paid in
cash on the Grant Date, divided by the per-Share Modified Black-Scholes Value of
the Director Option as of the Grant Date, rounding up to the next higher whole
number of Shares any fractional portion of a Share equal to or in excess of
one-half Share (and otherwise rounding down to the next lower whole number of
Shares). For purposes of this Article 13 “Modified Black-Scholes
Value” means the per share fair value of the Director Option determined using
the modified Black Scholes option pricing model or similar option pricing model,
and applied on the basis of such risk-free interest rate, expected option life,
volatility, average stock price, and other applicable parameters, or formula
therefor, as the Company in its sole discretion approves.
(d) Option
Price. The Option Price for each Director Option shall be 100 percent
of the Fair Market Value of a Share on the Grant Date.
(e) Director
Option Term. The Option Term of each Director Option shall expire on
the earlier of (i) an anniversary of the Grant Date determined by the Board and
uniformly applied to all Director Options granted on a single Grant Date, not
later than the tenth anniversary of the Grant Date, or (ii) five years, or such
shorter period as the Board may determine, after the date the Grantee ceases to
serve as a Non-Employee Director.
(f)
Vesting and Exercisability. Each Director Option shall be fully
vested and exercisable at any time, or from time to time, throughout the Option
Term.
(g) Method
of Exercise. A Grantee may exercise a Director Option, in whole or in
part, during the Option Term, by giving written notice of exercise to the Human
Resources Department of the Company, specifying the Director Option to be
exercised and the number of Shares to be purchased, and paying in full the
exercise price by any one or any combination of the following
means:
(i)
cash, personal check or wire transfer;
(ii) delivery
of Common Stock owned by the Non-Employee Director prior to exercise, valued at
their Fair Market Value on the date of exercise;
(iii) Shares
acquired upon the exercise of such Directors Options, such Shares valued at
their Fair Market Value on the date of exercise; or
(iv) subject
to applicable law (including the prohibited loan provisions of Section 402 of
the Sarbanes Oxley Act of 2002), through the sale of the Shares acquired on
exercise of the Option through a broker-dealer to whom the Grantee has submitted
an irrevocable notice of exercise and irrevocable instructions to deliver
promptly to the Company the amount of sale or loan proceeds sufficient to pay
for such Shares.
13.3
Election to Receive Director
Fees in Shares or Deferred Stock in Lieu of Cash
.
(a) Payment
of Director Fees in Shares. Pursuant to procedures approved by the
Board to implement this Section 13.3 and subject to the approval of the Board in
its sole discretion, a Non-Employee Director may elect (“Share Election”) to
have the Company pay all or a portion of his or her Director Fees in the form of
Shares in lieu of cash. A Share Election may be made at any time
prior to the date Director Fees would otherwise have been paid in cash, subject
to such restrictions and advance filing requirements as the Company may
impose. Each Share Election shall specify the portion of the Director
Fees to be paid in the form of Shares and shall remain in effect with respect to
future Director Fees until the Non-Employee Director revokes or changes such
Share Election. Any such revocation or change shall have prospective
application only. Shares delivered pursuant to a Share Election shall
be the whole number of Shares determined by dividing the amount of Director Fees
to be paid in Shares by the Fair Market Value of a Share on the date such
Director Fees would otherwise be paid (rounding up to the next higher whole
number of Shares any fractional portion of a Share equal to or in excess of
one-half Share, and otherwise rounding down to the next lower whole number of
Shares).
(b) Payment
of Director Fees in Deferred Stock. A Non-Employee Director who makes
a Deferral Election in accordance with Section 13.4 shall receive all or part
(as he or she elects) of his or her Director Fees in the form of a number of
shares of Deferred Stock equal to the quotient (rounding up to the next higher
whole number of shares, any fractional portion of a Share equal to or in excess
of one-half Share, and otherwise rounding down to the next lower whole number of
Shares) of the amount of Director Fees to be paid in the form of Deferred Stock
divided by the Fair Market Value of a Share on the date such Director Fees would
otherwise be paid in cash.
13.4
Deferral
Elections
. Pursuant to such rules and procedures approved by
the Board to implement this Section 13.4 and subject to the approval of the
Board in its sole discretion, a Non-Employee Director may elect (a “Deferral
Election”) to receive all or a portion of his or her Directors Fees in the form
of Deferred Stock in lieu of cash or Shares as follows:
(a) Timing
of Deferral Elections. A Deferral Election must be filed with the
Human Resources Department of the Company no later than December 31 of the year
preceding the calendar year for which the Directors Fees are payable, subject to
such restrictions and advance filing requirements as the Company may
impose. Notwithstanding the foregoing, a newly elected or appointed
Non-Employee Director may file an initial Deferral Election not later than 30
days after the date such person first became a Non-Employee
Director. A Deferral Election shall be irrevocable after the filing
deadline with respect to such Deferral Election and shall only apply with
respect to Directors Fees payable for services rendered after such deadline;
provided that a Deferral Election filed by a newly elected or appointed
Non-Employee Director during the 30-days period following the date such person
first became a Non-Employee Director, shall apply to Directors Fees payable for
services rendered after the date such Deferral Election was
filed. Each Deferral Election shall remain in effect with respect to
Directors Fees payable for services rendered in subsequent years unless the
Non-Employee Director revokes or changes such Deferral Election. Any
such revocation or change shall apply to Directors Fees payable for services
rendered in calendar years beginning after the date such revocation or change
was filed.
(b) Content
of Deferral Elections. A Deferral Election must specify the
following:
(i)
The dollar amount or percentage of Director Fees to be paid in Deferred
Stock;
(ii) the
date on which such Deferred Stock shall be paid (and if more than one date is
elected, the number of Shares to paid on each specified date); and
(iii) whether
Dividend Equivalents on Deferred Stock are to be paid in cash or deposited in
the form of Deferred Stock to the Non-Employee Director’s Deferral Account (as
defined in Section 13.4(c)), to be paid at the time the Deferred Stock to which
they relate are paid.
(c)
Deferral
Account
. The Company shall establish an account (“Deferral
Account”) on its books for each Non-Employee Director who makes a Deferral
Election. A number of shares of Deferred Stock (determined in the
case of Directors Fees that are otherwise payable in cash, by dividing the
amount of cash to be deferred by the Fair Market Value of a Share on the date
such cash would otherwise be paid, and rounding up to the next higher whole
number of Shares any fractional portion of a Share equal to or in excess of
one-half Share, and otherwise rounding down to the next lower whole number of
Shares) shall be credited to the Non-Employee Director’s Deferral Account as of
each date Directors Fees subject to a Deferral Election would otherwise be
paid. Deferral Accounts shall be maintained for recordkeeping
purposes only and the Company shall not be obligated to segregate or set aside
assets representing securities or other amounts credited to Deferral
Accounts. The obligation to make distributions of securities or other
amounts credited to Deferral Accounts shall be an unfunded unsecured obligation
of the Company.
(d)
Crediting of Dividend
Equivalents
. Whenever dividends are paid or distributions made
with respect to Shares, Dividend Equivalents shall be credited to Deferral
Accounts on all Deferred Stock credited thereto as of the record date for such
dividend or distribution. If the Non-Employee Director has elected
cash payment of Dividend Equivalents pursuant to Section 13.4(b), such Dividend
Equivalents shall be paid in cash on the payment date of the dividend or
distribution. Otherwise, such Dividend Equivalents shall be credited
to the Deferral Account in the form of additional Deferred Stock in a number
determined by dividing the aggregate value of such Dividend Equivalents by the
Fair Market Value of a Share at the payment date of the dividend or distribution
(rounding up to the next higher whole number of Shares any fractional portion of
a Share equal to or in excess of one-half Share, and otherwise rounding down to
the next lower whole number of Shares).
(e)
Settlement of Deferral
Accounts
. The Company shall settle a Non-Employee Director’s
Deferral Account by delivering to such Non-Employee Director a number of Shares
equal to the whole number of Deferred Stock then credited to such Deferral
Account (or a specified portion in the event of any partial settlement);
provided that if less than the value of a whole Share remains in the Deferral
Account at the time of any such distribution, the number of Shares distributed
shall be rounded up to the next higher whole number of Shares if the fractional
portion of a Share remaining is equal to or in excess of one-half Share, and
otherwise shall be rounded down to the next lower whole number of
Shares. Notwithstanding the foregoing, if a Non-Employee Director
incurs a separation from service (as defined in final regulations under Section
409A of the Code) from the Company and all of its Affiliates for any reason
(including death), the Company shall immediately settle such Non-Employee
Director’s Deferral Account by delivering to the holder thereof (which may be
the Non-Employee Director or his or her beneficiary) a number of Shares equal to
the whole number of Deferred Stock then credited to such Deferral
Account.
13.5
Non-Forfeitability
. The
interest of each Non-Employee Director in Director Options or Deferred Stock
(and any Deferral Account relating thereto) granted or delivered under the Plan
at all times shall be non-forfeitable.
Article
14.
Amendment,
Modification, and Termination
14.1
Amendment, Modification, and
Termination
. Subject to Section 14.2, the Board may, at any
time and from time to time, alter, amend, suspend, discontinue or terminate the
Plan in whole or in part without the approval of the Company’s stockholders,
except that (a) any amendment or alteration shall be subject to the approval of
the Company’s stockholders if such stockholder approval is required by any
federal or state law or regulation or the rules of any stock exchange or
automated quotation system on which the Shares may then be listed or quoted, and
(b) the Board may otherwise, in its discretion, determine to submit other such
amendments or alterations to stockholders for approval.
14.2
Awards Previously
Granted
. Except as otherwise specifically permitted in the
Plan or an Award Agreement, no termination, amendment, or modification of the
Plan shall adversely affect in any material way any Award previously granted
under the Plan, without the written consent of the Grantee of such
Award.
Article
15.
Withholding
15.1
Required
Withholding
(a) The
Committee in its sole discretion may provide that when taxes are to be withheld
in connection with the exercise of an Option, or upon the lapse of restrictions
on Restricted Shares, or upon the transfer of Deferred Stock, or upon payment of
any other benefit or right under this Plan (the date on which such exercise
occurs or such restrictions lapse or such payment of any other benefit or right
occurs hereinafter referred to as the “Tax Date”), the Grantee may elect to make
payment for the withholding of federal, state and local taxes, including Social
Security and Medicare (“FICA”) taxes by one or a combination of the following
methods:
(i) payment
of an amount in cash equal to the amount to be withheld;
(ii) delivering
part or all of the amount to be withheld in the form of Common Stock valued at
their Fair Market Value on the Tax Date;
(iii) requesting
the Company to withhold from those Shares that would otherwise be received upon
exercise of the Option, upon the lapse of restrictions on Restricted Stock, or
upon the transfer of Deferred Stock, a number of Shares having a Fair Market
Value on the Tax Date equal to the amount to be withheld; or
(iv) withholding
from any compensation otherwise due to the Grantee.
The
Committee in its sole discretion may provide that the maximum amount of tax
withholding upon exercise of an Option to be satisfied by withholding Shares
upon exercise of such Option pursuant to clause (iii) above shall not exceed the
minimum amount of taxes, including FICA taxes, required to be withheld under
federal, state and local law. An election by Grantee under this
subsection is irrevocable. Any fractional share amount and any
additional withholding not paid by the withholding or surrender of Shares or
delivery of Mature Shares must be paid in cash. If no timely election
is made, the Grantee must deliver cash to satisfy all tax withholding
requirements.
(b) Any
Grantee who makes a Disqualifying Disposition (as defined in Section 6.4(f)) or
an election under Section 83(b) of the Code shall remit to the Company an amount
sufficient to satisfy all resulting tax withholding requirements in the same
manner as set forth in subsection (a).
15.2
Notification under Code
Section 83(b).
If the Grantee, in connection with the exercise
of any Op-tion, or the grant of Restricted Shares, makes the election permitted
under Section 83(b) of the Code to include in such Grantee’s gross income in the
year of transfer the amounts specified in Section 83(b) of the Code, then such
Grantee shall notify the Company of such election within 10 days of filing the
notice of the election with the Internal Revenue Service, in addition to any
filing and notification required pursuant to regulations issued under Sec-tion
83(b) of the Code. The Committee may, in connection with the grant of
an Award or at any time thereafter, prohibit a Grantee from making the election
described above.
Article
16.
Additional
Provisions
16.1
Successors
. All
obligations of the Company under the Plan with respect to Awards granted
here-under shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise of all or substantially all of the business
and/or assets of the Company.
16.2
Gender and
Number
. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine, the plural shall
include the singular and the singular shall include the plural.
16.3
Severability
. If
any part of the Plan is declared by any court or governmental authority to be
unlawful or invalid, such unlawfulness or invalidity shall not invalidate any
other part of the Plan. Any Section or part of a Section so declared
to be unlawful or invalid shall, if possible, be construed in a manner which
will give effect to the terms of such Section or part of a Section to the
fullest extent possible while remaining lawful and valid.
16.4
Requirements of
Law
. The granting of Awards and the delivery of Shares under
the Plan shall be subject to all applicable laws, rules, and regulations, and to
such approvals by any governmental agencies or national securities exchanges as
may be required. Notwithstanding any provision of the Plan or any
Award, Grantees shall not be entitled to exercise, or receive benefits under,
any Award, and the Company (and any Affiliate) shall not be obligated to deliver
any Shares or deliver benefits to a Grantee, if such exercise or delivery would
constitute a violation by the Grantee or the Company of any applicable law or
regulation.
16.5
Securities Law
Compliance
.
(a) If
the Committee deems it necessary to comply with any applicable securities law,
or the require-ments of any stock exchange upon which Shares may be listed, the
Committee may impose any restriction on Awards or Shares acquired pursuant to
Awards under the Plan as it may deem advisable. All certificates for
Shares delivered under the Plan pursuant to any Award or the exercise thereof
shall be subject to such stop transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations and other requirements
of the SEC, any stock exchange upon which Shares are then listed, any applicable
securities law, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such
restrictions. If so requested by the Company, the Grantee shall make
a written representation to the Company that he or she will not sell or offer to
sell any Shares unless a registration statement shall be in effect with respect
to such Shares under the Securities Act of 1993, as amended, and any applicable
state securities law or unless he or she shall have furnished to the Company, in
form and substance satisfactory to the Company, that such registration is not
required.
(b) If
the Committee determines that the exercise or nonforfeitability of, or delivery
of benefits pursu-ant to, any Award would violate any applicable provision of
securities laws or the listing requirements of any national securities exchange
or national market system on which are listed any of the Company’s equity
securities, then the Committee may postpone any such exercise, nonforfeitability
or delivery, as applicable, but the Company shall use all reasonable efforts to
cause such exercise, nonforfeitability or delivery to comply with all such
provisions at the earliest practicable date.
16.6 No
Rights as a Stockholder. No Grantee shall have any rights as a
stockholder of the Company with respect to the Shares (other than Restricted
Shares) which may be deliverable upon exercise or payment of such Award until
such Shares have been delivered to him or her. Restricted Shares,
whether held by a Grantee or in escrow by the Secretary of the Company, shall
confer on the Grantee all rights of a stockholder of the Company, except as
otherwise provided in the Plan or Award Agreement. At the time of a
grant of Restricted Shares, the Committee may require the payment of cash
dividends thereon to be deferred and, if the Committee so determines, reinvested
in additional Restricted Shares. Stock dividends and deferred cash
dividends issued with respect to Restricted Shares shall be subject to the same
restrictions and other terms as apply to the Restricted Shares with respect to
which such dividends are issued. The Committee may in its discretion
provide for payment of interest on deferred cash dividends.
16.7 Nature
of Payments. Unless otherwise specified in the Award Agreement,
Awards shall be special incentive payments to the Grantee and shall not be taken
into account in computing the amount of salary or compensation of the Grantee
for purposes of determining any pension, retirement, death or other benefit
under (a) any pension, retirement, profit sharing, bonus, insurance or other
employee benefit plan of the Company or any Affiliate, except as such plan shall
otherwise expressly provide, or (b) any agreement between (i) the Company or any
Affiliate and (ii) the Grantee, except as such agreement shall otherwise
expressly provide.
16.8 Non-Exclusivity
of Plan. Neither the adoption of the Plan by the Board nor its
submission to the stockholders of the Company for approval shall be construed as
creating any limitations on the power of the Board to adopt such other
compensatory arrangements for employees or Non-Employee Directors as it may deem
desirable.
16.9 Governing
Law. The Plan, and all agreements hereunder, shall be construed in
accordance with and governed by the laws of the State of Delaware, other than
its laws respecting choice of law.
16.10 Share
Certificates. All certificates for Shares delivered under the terms
of the Plan shall be subject to such stop-transfer orders and other restrictions
as the Committee may deem advisable under federal or state securities laws,
rules and regulations thereunder, and the rules of any national securities laws,
rules and regulations thereunder, and the rules of any national securities
exchange or automated quotation system on which Shares are listed or
quoted. The Committee may cause a legend or legends to be placed on
any such certificates to make appropriate reference to such restrictions or any
other restrictions or limitations that may be applicable to
Shares. In addition, during any period in which Awards or Shares are
subject to restrictions or limitations under the terms of the Plan or any Award
Agreement, or during any period during which delivery or receipt of an Award or
Shares has been deferred by the Committee or a Grantee, the Committee may
require any Grantee to enter into an agreement providing that certificates
representing Shares deliverable or delivered pursuant to an Award shall remain
in the physical custody of the Company or such other person as the Committee may
designate.
16.11 Unfunded
Status of Awards; Creation of Trusts. The Plan is intended to
constitute an “unfunded” plan for incentive and deferred
compensation. With respect to any payments not yet made to a Grantee
pursuant to an Award, nothing contained in the Plan or any Award Agreement shall
give any such Grantee any rights that are greater than those of a general
creditor of the Company; provided, however, that the Committee may authorize the
creation of trusts or make other arrangements to meet the Company’s obligations
under the Plan to deliver cash, Shares or other property pursuant to any Award
which trusts or other arrangements shall be consistent with the “unfunded”
status of the Plan unless the Committee otherwise determines.
16.12 Affiliation. Nothing
in the Plan or an Award Agreement shall interfere with or limit in any way the
right of the Company or any Affiliate to terminate any Grantee’s employment or
consulting contract at any time, nor confer upon any Grantee the right to
continue in the employ of or as an officer of or as a consultant to the Company
or any Affiliate.
16.13 Participation. No
employee or officer shall have the right to be selected to receive an Award
under this Plan or, having been so selected, to be selected to receive a future
Award.
16.14 Military
Service. Awards shall be administered in accordance with Section
414(u) of the Code and the Uniformed Services Employment and Reemployment Rights
Act of 1994.
16.15 Construction. The
following rules of construction will apply to the Plan: (a) the word
“or” is disjunctive but not necessarily exclusive, and (b) words in the singular
include the plural, words in the plural include the singular, and words in the
neuter gender include the masculine and feminine genders and words in the
masculine or feminine gender include the other neuter genders.
16.16 Headings. The
headings of articles and sections are included solely for convenience of
reference, and if there is any conflict between such headings and the text of
this Plan, the text shall control.
16.17 Obligations. Unless
otherwise specified in the Award Agreement, the obligation to deliver, pay or
transfer any amount of money or other property pursuant to Awards under this
Plan shall be the sole obligation of a Grantee’s employer; provided that the
obligation to deliver or transfer any Shares pursuant to Awards under this Plan
shall be the sole obligation of the Company.
16.18 No
Right to Continue as Director. Nothing in the Plan or any Award
Agreement shall confer upon any Non-Employee Director the right to continue to
serve as a director of the Company.
16.19 Stockholder
Approval. All Awards granted on or after the Effective Date and prior
to the date the Company’s stockholders approve the amended and restated Plan are
expressly conditioned upon and subject to approval of the amended and restated
Plan by the Company’s stockholders.
EXHIBIT
B
AMENDED
AND RESTATED
AMERICAN
CARESOURCE HOLDINGS, INC.
2005
STOCK OPTION PLAN
Section
1. Purpose
The purpose of the American Caresource
Holdings, Inc. 2005 Stock Option Plan (the “Plan”) is to enable American
Caresource Holdings, Inc. (the “Company”) to attract, retain, motivate and
provide additional incentive to its directors, officers, employees, consultants
and advisors, whose contributions are essential to the growth and success of the
Company, by enabling them to participate in the long-term growth of the Company
through stock ownership.
Section
2. Definitions
As used in the Plan:
"Code" means the Internal Revenue Code
of 1986, as amended from time to time, and the regulations promulgated
thereunder.
"Board" means the Board of Directors of
the Company.
"Cause" means the termination of a
Participant's employment, consulting or advisory relationship with the Company
or the termination of a Participant's membership on the Board because of the
occurrence of any of the following events:
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(i)
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the
Participant materially breaches any of his obligations as a key employee,
consultant, advisor or director of the
Company;
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(ii)
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the
Participant conducts his duties with respect to the Company in a manner
that is improper or negligent; or
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(iii)
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the
Participant fails to perform his obligations faithfully as provided in any
employment or consulting agreement executed between the Company and the
Participant, engages in habitual drunkenness, drug abuse, or commits a
felony, fraud or willful misconduct which has resulted, or is likely to
result, in material damage to the Company, or as the Board in its sole
discretion may determine.
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"Committee" means the Compensation
Committee of the Board (or any successor committee of the Board) responsible for
making recommendations to the Board (or for exercising authority delegated to it
by the Board pursuant to Section 3 of the Plan, if any) with respect to the
grant and terms of Options under the Plan; provided, however, that (i) with
respect to Options to any employees who are officers of the Company or members
of the Board for purposes of Section 16 of the Exchange Act, Committee means all
of the members of the Compensation Committee who are "non-employee directors"
within the meaning of Rule 16b-3 adopted under the Exchange Act, or any
successor rule (ii) with respect to Options to any employees who are officers of
the Company or members of the Board for purposes of Section 16 and who are
intended to satisfy the requirements for "performance based compensation" within
the meaning of Section 162(m)(4)(C) of the Code, the regulations
promulgated thereunder, and any successors thereto, Committee means all of the
members of the Compensation Committee who are "outside directors" within the
meaning of Section 162(m) of the Code, and (iii) with respect to all
Options, the Committee shall be comprised of "independent"
directors.
"Company" means American Caresource
Holdings, Inc., a Delaware corporation, and any present or future parent or
subsidiary corporations (as defined in Section 424 of the Code) or any successor
to such corporations.
"Common
Stock" or "Stock" means the common stock, $0.01 par value per share, of the
Company.
"Disability" means permanent and total
disability as defined in Section 22(e)(3) of the Code.
“Exchange Act” means the Securities
Exchange Act of 1934, as amended.
"Fair Market Value" means, with respect
to Common Stock, shall be determined as follows:
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(i)
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If
the Common Stock is at the time listed on any stock exchange or the Nasdaq
National Market or the Nasdaq SmallCap Market, then the Fair Market Value
shall be the closing selling price per share of Common Stock on the date
in question on the stock exchange or the Nasdaq Market determined by the
Board to be the primary market for the Common Stock, as such price is
officially reported on such exchange or market. If there is no
closing selling price for the Common Stock on the date in question, then
the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation
exists.
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(ii)
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If
the Common Stock is at the time traded on the OTC Bulletin Board
(“OTCBB”), then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question, as such price is quoted
on the OTCBB or any successor system. If there is no closing
selling price for the Common Stock on the date in question, then the Fair
Market Value shall be the closing selling price on the last preceding date
for which such quotation exists.
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(iii)
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If
the Common Stock is not listed or traded on any stock exchange or Nasdaq
System or the OTCBB, the Fair Market Value shall be determined by the
Board in good faith and in the manner established by the Board from time
to time using a reasonable valuation
method.
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"Incentive Stock Option" means an
option to purchase shares of Common Stock awarded to a Participant under the
Plan which is intended to meet the requirements of Section 422 of the Code or
any successor provision.
"Non-Employee Director" means a member
of the Board who is not an employee of the Company.
"Non-Qualified Stock Option" means an
option to purchase shares of Common Stock granted to a Participant under the
Plan which is not intended to be an Incentive Stock Option.
"Option" means an Incentive Stock
Option or a Non-Qualified Stock Option.
"Participant" means an eligible person
selected by the Board to receive an Option under the Plan.
"Plan" means the American Caresource
Holdings, Inc. 2005 Stock Option Plan.
"Retirement" means termination of
employment in accordance with the retirement provisions of any retirement plan
maintained by the Company.
Section
3. Administration
(a) The Plan shall be
administered by the Board. Among other things, the Board shall have
authority, subject to the terms of the Plan including, without limitation, the
provisions governing participation in the Plan, to grant Options, to determine
the individuals to whom and the time or times at which Options may be granted
and to determine the terms and conditions of any Option granted hereunder.
Subject to paragraph (d) of this Section 3, the Board may solicit the
recommendations of the Committee with respect to any of the foregoing, but shall
not be bound to follow any such recommendations.
(b) Subject
to the provisions of this Plan, the Board shall have authority to adopt, alter
and repeal such administrative rules, guidelines and practices governing the
operation of the Plan as it shall from time to time consider advisable, to
interpret the provisions of the Plan and any Option and to decide all disputes
arising in connection with the Plan. The Board's decision and
interpretations shall be final and binding. Any action of the Board
with respect to the administration of the Plan shall be taken pursuant to a
majority vote or by the unanimous written consent of its members.
(c) The
Board may employ such legal counsel, consultants and agents as it may deem
desirable for the administration of the Plan and may rely upon any opinion
received from any such counsel or consultant and any computation received from
any such consultant or agent. The Board shall keep minutes of its
actions under the Plan.
(d) The
Board shall have the authority to delegate all or any portion of the authority
granted to it (consistent with applicable law) under this Section 3 or elsewhere
under the Plan to the Committee. If such authority is so delegated by
Board, the Committee shall have such rights and authority to make determinations
and administer the Plan as are specified in the delegation of
authority. To the extent that the Board delegates its authority as
provided by this Section 3(d), all references in the Plan to the Board's
authority to grant Options and make determinations with respect thereto shall be
deemed to include the Committee.
Section
4. Eligibility
All key employees, consultants and
advisors of the Company who are from time to time responsible for the
management, growth and protection of the business of the Company, and all
directors of the Company, shall be eligible to participate in the
Plan. The Participants under the Plan shall be selected from time to
time by the Board, in its sole discretion, from among those eligible, and the
Board shall determine in its sole discretion the numbers of shares to be covered
by the Option or Options granted to each Participant. Options
intended to qualify as Incentive Stock Options shall be granted only to key
employees while actually employed by the Company. Non-Employee
Directors, consultants and advisors shall not be entitled to receive Incentive
Stock Options under the Plan.
Section
5. Shares of Stock Available for Options
(a) Options
may be granted under the Plan for up to 3,749,329 shares of Common
Stock. If any Option in respect of shares of Common Stock expires or
is terminated before exercise or is forfeited for any reason, without a payment
in the form of Common Stock being granted to the Participant, the shares of
Common Stock subject to such Option, to the extent of such expiration,
termination or forfeiture, shall again be available for grant under the
Plan. Shares of Common Stock issued under the Plan may consist in
whole or in part of authorized and unissued shares, shares purchased in the open
market or otherwise, treasury shares, or any combination thereof, as the Board
may from time to time determine.
(b) In
the event that the Board determines, in its sole discretion, that any stock
dividend, extraordinary cash dividend, creation of a class of equity securities,
recapitalization, reclassification, reorganization, merger, consolidation, stock
split, spin-off, combination, exchange of shares, warrants or rights offering to
purchase Common Stock at a price substantially below Fair Market Value, or other
similar transaction affects the Common Stock such that an adjustment is required
in order to preserve the benefits or potential benefits intended to be granted
under the Plan to Participants, the Board shall have the right to adjust
equitably any or all of (i) the number of shares of Common Stock in respect of
which Options may be granted under the Plan to Participants, (ii) the number and
kind of shares subject to outstanding Options held by Participants, and (iii)
the exercise price with respect to any Options held by Participants, and if
considered appropriate, the Board may make provision for a cash payment with
respect to any outstanding Options held by a Participant, provided that the
number of shares subject to any Option shall always be a whole
number.
Section
6. Incentive Stock Options
(a) Subject
to Federal statutes then applicable and the provisions of the Plan, the Board
may grant Incentive Stock Options and determine the number of shares to be
covered by each such Option, the option price therefor, the term of such Option,
the vesting schedule of such Option, and the other conditions and limitations
applicable to the exercise of the Option. The terms and conditions of
Incentive Stock Options shall be subject to and shall comply with Section 422 of
the Code, or any successor provision, and any regulations
thereunder. Anything in the Plan to the contrary notwithstanding, no
term of the Plan relating to Incentive Stock Options shall be interpreted,
amended or altered, nor shall any discretion or authority granted to the Board
under the Plan be so exercised, so as to disqualify, without the consent of the
Participant, any Incentive Stock Option granted under the Plan pursuant to
Section 422 of the Code.
(b) The
option price per share of Common Stock purchasable under an Incentive Stock
Option shall not be less than 100% of the Fair Market Value of the Common Stock
on the date of grant. If the Participant owns or is deemed to own (by
reason of the attribution rules applicable under Section 424(d) of the Code)
more than 10% of the combined voting power of all classes of stock of the
Company or any subsidiary or parent corporation of the Company and an Incentive
Stock Option is granted to such Participant, the option price shall be not less
than 110% of Fair Market Value of the Common Stock on the date of
grant.
(c) No
Incentive Stock Option shall be exercisable more than ten (10) years after the
date such option is granted. If a Participant owns or is deemed to
own (by reason of the attribution rules of Section 424(d) of the Code) more than
10% of the total combined voting power of all classes of stock of the Company or
any subsidiary or parent corporation of the Company and an Incentive Stock
Option is granted to such Participant, such Option shall not be exercisable
after the expiration of five (5) years from the date of grant.
(d) Unless
otherwise determined by the Board at the time of grant, in the event a
Participant's employment terminates by reason of Retirement or Disability, any
Incentive Stock Option granted to such Participant which is then outstanding may
be exercised at any time prior to the expiration of the term of such Incentive
Stock Option or within three (3) months in the case of Retirement and twelve
(12) months in case of Disability (or such shorter period as the Board shall
determine at the time of grant) following the Participant's termination of
employment, whichever period is shorter.
(e) Unless
otherwise determined by the Board at the time of grant, in the event a
Participant's employment is terminated by reason of death, any Incentive Stock
Option granted to such Participant which is then outstanding may be exercised by
the Participant's legal representative at any time prior to the expiration date
of the term of the Incentive Stock Option or within twelve (12) months (or such
shorter period as the Board shall determine at the time of grant) following the
Participant's termination of employment, whichever period is
shorter.
(f) Unless
otherwise determined by the Board at or after the time of grant, in the event a
Participant's employment shall terminate for Cause, any Incentive Stock Option
granted to such Participant which is then outstanding shall be canceled and
shall terminate.
(g) Unless
otherwise determined by the Board at or after the time of grant, in the event
the a Participant's employment shall terminate for any reason other than death,
Disability, Retirement or Cause, any Incentive Stock Option granted to such
Participant which is then outstanding may be exercised at any time prior to the
expiration of the term of such option or within three (3) months (or such
shorter period as the Board shall determine at the time of grant) following
Participant's termination of employment, whichever period is
shorter.
(h) The
aggregate Fair Market Value of Common Shares first becoming subject to exercise
as an Incentive Stock Option by a Participant who is an employee during any
given calendar year shall not exceed the sum of One Hundred Thousand Dollars
($100,000.00). Such aggregate Fair Market Value shall be determined
as of the date such Option is granted.
Section
7. Non-Qualified Stock Options
(a) Subject
to the provisions of the Plan, the Board may grant Non-Qualified Stock Options
and determine the number of shares to be covered by each such Option, the option
price therefor, the term of such Option, the vesting schedule and the other
conditions and limitations applicable to the exercise of the Non-Qualified Stock
Options.
(b) The
option price per share of Common Stock purchasable under a Non-Qualified Stock
Option shall be the price determined by the Board, which may be less than, equal
to or greater than the Fair Market Value of the Common Stock on the date of
grant.
(c) No
Non-Qualified Stock Option shall be exercisable more than ten (10) years after
the date such option is granted.
(d) Unless
otherwise determined by the Board at the time of grant, in the event a
Participant's employment, consulting or advisory relationship or membership on
the Board terminates by reason of Retirement or Disability, any Non-Qualified
Stock Option granted to such Participant which is then outstanding may be
exercised at any time prior to the expiration of the term of such Non-Qualified
Stock Option or within three (3) months in the case of Retirement and twelve
(12) months in case of Disability (or such shorter period as the Board shall
determine at the time of grant) following the Participant's termination of
employment, whichever period is shorter.
(e) Unless
otherwise determined by the Board at the time of grant, in the event a
Participant's employment, consulting or advisory relationship or membership on
the Board is terminated by reason of death, any Non-Qualified Stock Option
granted to such Participant which is then outstanding may be exercised by the
Participant's legal representative at any time prior to the expiration date of
the term of the Non-Qualified Stock Option or within twelve (12) months (or such
shorter period as the Board shall determine at the time of grant) following the
Participant's termination of employment, whichever period is
shorter.
(f) Unless
otherwise determined by the Board at or after the time of grant, in the event a
Participant's employment, consulting or advisory relationship or membership on
the Board shall terminate for Cause, any Non-Qualified Stock Option granted to
such Participant which is then outstanding shall be canceled and shall
terminate.
(g) Unless
otherwise determined by the Board at or after the time of grant, in the event a
Participant's employment, consulting or advisory relationship or membership on
the Board shall terminate for any reason other than death,
Disability, Retirement or Cause, any Non-Qualified Stock Option granted to such
Participant which is then outstanding may be exercised at any time prior to the
expiration of the term of such Option or within three (3) months (or such
shorter period as the Board shall determine at the time of grant) following
Participant's termination, whichever period is shorter.
Section
8. General Provisions Applicable to Options
(a) Each
Option under the Plan shall be evidenced by a writing delivered to the
Participant specifying the terms and conditions thereof and containing such
other terms and conditions not inconsistent with the provisions of the Plan as
the Board considers necessary or advisable to achieve the purposes of the Plan
or comply with applicable tax and regulatory laws and accounting
principles.
(b) Each
Option may be granted alone, in addition to or in relation to any other
Option. The terms of each Option need not be identical, and the Board
need not treat Participants uniformly. Except as otherwise provided
by the Plan or a particular Option, any determination with respect to an Option
may be made by the Board at the time of grant or at any time
thereafter.
(c) The
Board shall determine whether Options to Participants are settled in whole or in
part in cash, Common Stock, other securities of the Company, or other property,
and may, in its discretion, permit “cashless exercises” pursuant to such
procedures as may be established by the Board.
(d) No
shares shall be delivered pursuant to any exercise of an Option until payment in
full of the option price therefor is received by the Company. Such
payment may be made in whole or in part in cash or by certified or bank check
or, to the extent permitted by the Board at or after the grant of the Option, by
delivery of shares of Common Stock owned by the Participant valued at their Fair
Market Value on the date of delivery, or such other lawful consideration as the
Board may in its sole discretion determine.
(e) No
Option shall be transferable by the Participant otherwise than by will or by the
laws of descent and distribution, and all Options shall be exercisable during
the Participant's lifetime only by the Participant or the Participant's duly
appointed guardian or personal representative.
(f) The
Board may at any time accelerate the exercisability of all or any portion of any
Option.
(g) The
Participant shall pay to the Company, or make provision satisfactory to the
Board for payment of, any taxes required by law to be withheld in respect of
Options under the Plan no later than the date of the event creating the tax
liability. In the Board's sole discretion, a Participant may elect to
have such tax obligations paid, in whole or in part, in shares of Common Stock,
including shares retained from the Option creating the tax
obligation. For withholding tax purposes, the value of the shares of
Common Stock shall be the Fair Market Value on the date the withholding
obligation is incurred. The Company may, to the extent permitted by
law, deduct any such tax obligations from any payment of any kind otherwise due
to the Participant.
(h) For
purposes of the Plan, the following events shall not be deemed a termination of
employment of a Participant:
(i)
a
transfer to the employment of the Company from a subsidiary or from the Company
to a subsidiary, or from one subsidiary to another, or
(ii)
an
approved leave of absence for military service or sickness, or for any other
purpose approved by the Company, if the Participant's right to reemployment is
guaranteed either by a statute or by contract or under the policy pursuant to
which the leave of absence was granted or if the Board otherwise so provides in
writing.
For purposes of the Plan, employees of
a subsidiary of the Company shall be deemed to have terminated their employment
on the date on which such subsidiary ceases to be a subsidiary of the
Company.
(i) The
Board may amend, modify or terminate any outstanding Option held by a
Participant, including substituting therefor another Option of the same or a
different type, changing the date of exercise or realization, and converting an
Incentive Stock Option to a Non-Qualified Stock Option, provided that the
Participant's consent to each action shall be required unless the Board
determines that the action, taking into account any related action, would not
materially and adversely affect the Participant.
Section
9. Miscellaneous
(a) No
person shall have any claim or right to be granted an Option, and the grant of
an Option shall not be construed as giving a Participant the right to continued
employment. The Company expressly reserves the right at any time to
dismiss a Participant free from any liability or claim under the Plan, except as
expressly provided in the applicable Option.
(b) Nothing
contained in the Plan shall prevent the Company from adopting other or
additional compensation arrangements for its employees.
(c) Subject
to the provisions of the applicable Option, no Participant shall have any rights
as a shareholder with respect to any shares of Common Stock to be distributed
under the Plan until he or she becomes the holder thereof.
(d) Notwithstanding
anything to the contrary expressed in this Plan, any provisions hereof that vary
from or conflict with any applicable Federal or State securities laws (including
any regulations promulgated thereunder) shall be deemed to be modified to
conform to and comply with such laws.
(e) No
member of the Board shall be liable for any action or determination taken or
granted in good faith with respect to this Plan nor shall any member of the
Board be liable for any agreement issued pursuant to this Plan or any grants
under it. Each member of the Board shall be indemnified by the
Company against any losses incurred in such administration of the Plan, unless
his action constitutes willful misconduct.
(f) The
Plan shall be effective as of February 1, 2005.
(g) The
Board may amend, suspend or terminate the Plan or any portion thereof at any
time, provided that no amendment shall be granted without shareholder approval
if such approval is necessary to comply with any applicable tax laws or
regulatory requirement.
(h) Options
may not be granted under the Plan after February 1, 2015, but then-outstanding
Options may exercised in accordance with their terms after such
date.
(i) To
the extent that State laws shall not have been preempted by any laws of the
United States, the Plan shall be construed, regulated, interpreted and
administered according to the other laws of the State of Delaware
.
(j) Options
may be granted to employees of the Company who are foreign nationals or employed
outside the United States, or both, on such terms and conditions different from
those specified in the Plan as may, in the judgment of the Board, be necessary
or desirable in order to recognize differences in local law or tax
policy. The Board may also impose conditions on the exercise or
vesting of Options in order to minimize the Company's obligation with respect to
tax equalization for employees on assignments outside their home
country.
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FOLD AND DETACH HERE
AND READ THE REVERSE SIDE
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REVOCABLE
PROXY
American
CareSource Holdings, Inc.
5429 LBJ Freeway, Suite 850, Dallas, TX
75240
ANNUAL MEETING OF STOCKHOLDERS
Tuesday, May 19, 2009, 9:00 a.m.,
Central Time
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
The
undersigned appoints David S. Boone and Steven J. Armond, and each of them,
attorneys and agents, with full power of substitution, to vote as proxy all
shares of common stock of American CareSource Holdings, Inc. (the “Company”)
standing in the name of the undersigned at the Annual Meeting of Stockholders of
the Company to be held at the offices of the Company located at 5429 LBJ
Freeway, Suite 850, Dallas, Texas on Tuesday, May 19, 2009, at 9:00 a.m.,
Central Time and at any adjournment or postponement thereof, in accordance with
the instructions on the reverse side of this form, and with discretionary
authority with respect to such other matters as may properly come before such
meeting or any adjournment or postponement thereof. Receipt of notice of such
meeting and the Proxy Statement therefor dated April 20, 2009 is hereby
acknowledged.
THIS
PROXYWILL BEVOTED AS DIRECTED. IF NO DIRECTIONS ARE GIVEN, THIS PROXYWILL
BEVOTED “FOR” THE NOMINEES FOR DIRECTOR, “FOR” THE RATIFICATION OF THE
APPOINTMENT OF MCGLADREY & PULLEN, LLP AS OUR INDEPENDENT AUDITORS FOR OUR
FISCAL YEAR ENDING DECEMBER 31, 2009, “FOR” THE APPROVAL OF THE AMERICAN
CARESOURCE HOLDINGS, INC. 2009 EQUITY INCENTIVE PLAN, AND “FOR” AMENDMENT OF THE
AMERICAN CARESOURCE HOLDINGS, INC. 2005 STOCK OPTION PLAN.
PLEASE
COMPLETE, DATE, SIGN AND MAIL THIS REVOCABLE PROXY CARD PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
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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 provided left. Please note that
changes to the registered name(s) on the account may not be submitted via
this method.
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(Continued
and to be signed on reverse side)
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FOLD AND DETACH HERE
AND READ THE REVERSE SIDE
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PROXY:
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTIONS ARE GIVEN, THIS
PROXYWILL BE VOTED “FOR” THE PROPOSALS 1,2,3 AND 4. PLEASE MARK, DATE AND
RETURN THIS PROXY PROMPTLY.
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Please
mark
your votes
like this
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1.
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To elect
the following persons to the Board of Directors of the Company for the
term described in the proxy statement:
Nominees:
(1) Sami S. Abbasi
(2) Edward B. Berger (3) David S. Boone (4) John W. Colloton (5) Kenneth S.
George (6) John N. Hatsopoulos (7) John Pappajohn, and (8) Derace L.
Schaffer, MD
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2.
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To
ratify the selection by the Company of McGladrey & Pullen, LLP,
independent public accountants, to audit the financial statements of the
Company for the fiscal year ending December 31, 2009.
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FOR
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AGAINST
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ABSTAIN
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3.
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To
approve the American CareSource Holdings, Inc. 2009 Equity Incentive
Plan.
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FOR
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AGAINST
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ABSTAIN
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FOR ALL
NOMINEES ABOVE
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WITHHOLD
AUTHORITY ALL
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FOR ALL
EXCEPT*
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*To withhold authority to vote for any individual nominee(s), mark
“FOR ALL EXCEPT” and write the number(s) of the nominee on the line
below.
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4.
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To
approve amendment to the American CareSource Holdings, Inc. 2005 Stock
Option Plan to increase the number of shares subject to the American
CareSource Holdings, Inc. 2005 Stock Option Plan from 3,249,329 shares to
3,749,329 shares.
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FOR
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AGAINST
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ABSTAIN
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COMPANY
ID:
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PROXY
NUMBER:
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ACCOUNT
NUMBER:
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Signature of
Stockholder
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Signature of Stockholder
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Date
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Note: This proxy must be signed exactly as the name appears hereon.
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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