<PAGE> 1
As filed with the Securities and Exchange Commission on December 23, 1996.
Registration No. 333-
----------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
----------------------
MEDICAL ALLIANCE, INC.
(Exact name of registrant as specified in its charter)
TEXAS 73-1347577
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
MEDICAL ALLIANCE, INC.
2445 GATEWAY DRIVE, SUITE 150
IRVING, TEXAS 75063 75063
(Address of principal executive offices) (Zip Code)
----------------------
MEDICAL ALLIANCE, INC.
AMENDED AND RESTATED 1994 LONG-TERM INCENTIVE PLAN
(Full title of the Plan)
MARK NOVY
MEDICAL ALLIANCE, INC.
2445 GATEWAY DRIVE, SUITE 150
IRVING, TEXAS 75063
(972) 580-8999
(Name, Address, including zip code and telephone
number, including area code, of agent of service)
-------------------------------------------------
COPIES TO:
Richard F. Dahlson
Jackson & Walker, L.L.P.
901 Main Street, Suite 6000
Dallas, Texas 75202
APPROXIMATE DATE OF PROPOSED COMMENCEMENT OF SALES
PURSUANT TO THE PLAN:
From time to time after this Registration Statement becomes effective.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Title of Proposed Maximum Proposed Maximum
Securities to be Amount to be Offering Price Per Aggregate Offering Amount of
Registered Registered Share(1) Price (1) Registration Fee
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$0.002 par value 1,195,133 shares $11.565 $13,821,713 $4,188
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rule 457(h)(1) and Rule 457(c), the offering price and
registration fee are computed on the basis of the average high and low
prices of the Common Stock as listed on the Nasdaq Stock Market on
December 17, 1996.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents, which have been filed with the Securities and
Exchange Commission (the "Commission") by Medical Alliance, Inc. (the
"Company"), are incorporated herein by reference and made a part hereof: (i)
Prospectus dated October 11, 1996, filed with the Commission pursuant to Rule
424(b) on October 11, 1996; (ii) Registration Statement on Form 8-A (No.
000-21343), effective as of October 10, 1996; (iii) Quarterly Report on Form
10-Q filed on November 25, 1996, and any amendments filed thereto.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act")
subsequent to the date of this Registration Statement and prior to the filing
of a post- effective amendment that indicates that all securities offered have
been sold or that deregisters all securities then remaining unsold, shall be
deemed to be incorporated herein by reference and to be a part hereof from the
date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Jackson & Walker, L.L.P. Richard F. Dahlson, a partner
in Jackson & Walker, L.L.P., beneficially owns 10,927 shares of the Common
Stock of the Company.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Articles of Incorporation provide that, to the fullest
extent permitted by Texas law, directors of the Company will not be liable to
the Company or its shareholders for monetary damages for an act or omission in
the director's capacity as a director. Texas law does not currently authorize
the elimination or limitation of the liability of a director to the extent the
director is found liable for (i) any breach of the director's duty of loyalty
to the Company or its shareholders, (ii) acts or omissions not in good faith
that constitute a breach of duty of the director to the Company or which
involve intentional misconduct or a knowing violation of law, (iii)
transactions from which the director received an improper benefit, whether
<PAGE> 3
or not the benefit resulted from an action taken within the scope of the
director's office or (iv) acts or omissions for which the liability of a
director is expressly provided by an applicable statute. In addition, the
Company's Articles of Incorporation provide that if applicable law is amended
to authorize the further elimination or limitation of the liability of a
director, then the liability of the directors shall be eliminated or limited to
the fullest extent permitted by law, as amended.
The Company's Articles of Incorporation and Bylaws grant mandatory
indemnification and advancement of expenses to directors and officers of the
Company to the fullest extent authorized by Texas law. In general, a Texas
corporation may indemnify a director or officer who was, is or is threatened to
be made a named defendant or respondent in a proceeding by virtue of his
position in the corporation if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, in the case of criminal proceedings, had no reasonable cause
to believe his conduct was unlawful. A Texas corporation may indemnify a
director or officer in an action brought by or in the right of the corporation
only if such director or officer was not found liable to the corporation,
unless or only to the extent that a court finds him to be fairly and reasonably
entitled to indemnity for such expenses as the court deems proper.
The Company has procured insurance that purports to insure the Company's
directors and officers against certain liabilities incurred by them in the
discharge of their functions as directors and officers, with certain exceptions
including exceptions for liabilities arising from such directors' and officers'
own malfeasance.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Securities Act") may be permitted to directors, officers or
controlling persons of the Company pursuant to the foregoing provisions, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act, as amended, and is therefore unenforceable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
The following is a list of all exhibits filed as a part of this
Registration Statement on Form S-8, including those incorporated herein by
reference.
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
4.1 Restated and Amended Articles of Incorporation of Medical Alliance, Inc. (1)
4.2 Restated and Amended Bylaws of Medical Alliance, Inc. (1)
</TABLE>
-3-
<PAGE> 4
<TABLE>
<S> <C>
4.3 Form of certificate evidencing ownership of the Common Stock of Medical Alliance, Inc.(1)
5 Opinion of Jackson & Walker, L.L.P. (2)
15 None
23.1 Consent of Coopers & Lybrand L.L.P. (2)
23.2 Consent of Jackson & Walker, L.L.P. (contained in its opinion filed herewith)
24 Power of Attorney (contained on the signature page of this Registration Statement).
99 Medical Alliance, Inc. Amended and Restated 1994 Long-Term Incentive Plan.(2)
- --------------
</TABLE>
(1) Previously filed as an exhibit to the Company's registration statement
on Form S-1 (No. 333-09815), and incorporated herein by reference.
(2) Filed herewith.
ITEM 9. UNDERTAKINGS.
(a) The Company hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement;
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<PAGE> 5
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in this Registration Statement or any material change to such
information in this Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed by the Company pursuant to Section 13 or Section 15(d)
of the Exchange Act that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) The Company hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Company's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act), that is
incorporated by reference in this Registration Statement shall be deemed to be
a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
-5-
<PAGE> 6
POWER OF ATTORNEY
Each person whose signature appears below authorizes Mike Wallace,
Mark Novy and Richard F. Dahlson, and each of them, each of whom may act
without joinder of the other, to execute in the name of each such person who is
then an officer or director of the Registrant, and to file any amendments to
this Registration Statement necessary or advisable to enable the Registrant to
comply with the Securities Act of 1933, as amended, and any rules, regulations
and requirements of the Securities and Exchange Commission, in respect thereof,
in connection with the registration of the securities that are the subject of
this Registration Statement, which amendments may make such changes to such
Registration Statement as such attorney may deem appropriate.
SIGNATURE PAGE
Pursuant to the requirements of the Securities Act of 1933, as
amended, Medical Alliance, Inc. certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-8 and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dallas, State of Texas,
on December 23, 1996.
MEDICAL ALLIANCE, INC.
By: /s/ Paul Herchman
------------------------
PAUL HERCHMAN
------------------------
Title: President and C.E.O.
---------------------
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<PAGE> 7
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following persons
in the capacities indicated and on December 23, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Chairman of the Board, Executive
/s/ Paul R. Herchman Officer and President (Principal December 23, 1996
---------------------------------------------- Executive Officer)
Paul R. Herchman
Senior Vice President, Chief
/s/ Michael G. Wallace Financial Officer and Treasurer December 23, 1996
---------------------------------------------- (Principal Financial and
Michael G. Wallace Accounting Officer)
/s/ David A. Kallenberger, M.D. Medical Director December 23, 1996
---------------------------------------------- and Director
David A. Kallenberger, M.D.
/s/ Leo Lopez Director December 23, 1996
----------------------------------------------
Leo Lopez
/s/ Thomas A. Montgomery Director December 23, 1996
----------------------------------------------
Thomas A. Montgomery
/s/ Morris G. Moreland Director December 23, 1996
----------------------------------------------
Morris G. Moreland
/s/ Leon Pritzker Director December 23, 1996
----------------------------------------------
Leon Pritzker
/s/ Jim Silcock Director December 23, 1996
----------------------------------------------
Jim Silcock
/s/ Michael G. Wallace
----------------------------------------------
Michael G. Wallace
As Attorney-in-Fact
</TABLE>
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<PAGE> 8
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Description of Exhibit Numbered Page
- ------ ---------------------- -------------
<S> <C>
4.1 Restated and Amended Articles of Incorporation of Medical Alliance, Inc. as amended. (1)
4.2 Restated and Amended Bylaws of Medical Alliance, Inc. (1)
4.3 Form of certificate evidencing ownership of the Common Stock of Medical Alliance, Inc.(1)
5 Opinion of Jackson & Walker, L.L.P. (2)
15 None
23.1 Consent of Coopers & Lybrand L.L.P. (2)
23.2 Consent of Jackson & Walker, L.L.P. (contained in its opinion filed herewith)
24 Power of Attorney (contained on the signature page of this Registration Statement).
99 Medical Alliance, Inc. Amended and Restated 1994 Long-Term Incentive Plan.
- --------------
</TABLE>
(1) Previously filed as an exhibit to the Company's registration statement
on Form S-1 (No. 333-09815), and incorporated herein by reference.
(2) Filed herewith.
-8-
<PAGE> 1
EXHIBIT 5
December 20, 1996
Medical Alliance, Inc.
2445 Gateway Drive, Suite 150
Irving, Texas 75063
Re: Registration Statement on Form S-8 of Medical Alliance, Inc.
Gentlemen:
We are acting as counsel for Medical Alliance, Inc., a Texas
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended (the "Act"), of the offering and sale of up
to 1,195,133 shares of the Company's Common Stock, par value $0.02 per share
(the "Shares"), in respect of the Company's Amended and Restated 1994 Long-Term
Incentive Plan (the "Plan"). A Registration Statement on Form S-8 covering the
offering and sale of the Shares (the "Registration Statement") is expected to
be filed with the Securities and Exchange Commission (the "Commission") on or
about the date hereof.
In reaching the conclusions expressed in this opinion, we have
examined and relied upon the originals or certified copies of all documents,
certificates and instruments as we have deemed necessary to the opinions
expressed herein, including the Restated and Amended Certificate of
Incorporation, the Restated and Amended Bylaws of the Company and a copy of the
Plan. In making the foregoing examinations, we have assumed the genuineness of
all signatures on original documents, the authenticity of all documents
submitted to us as originals and the conformity to original documents of all
copies submitted to us.
Based solely upon the foregoing, subject to the comments hereinafter
stated, and limited in all respects to the laws of the State of Texas, and the
federal laws of the United States of America, it is our opinion that the
Shares, when sold by the Company in respect of the Plan, will be validly
issued, fully paid and nonassessable.
We hereby consent to the use of this opinion as Exhibit 5 to the
Registration Statement. In giving this consent, we do not admit that we come
within the category of persons whose
<PAGE> 2
Medical Alliance, Inc.
December 20, 1996
Page 2
consent is required under Section 7 of the Act or the rules and regulations of
the Commission promulgated thereunder.
Very truly yours,
/s/ Jackson & Walker, L.L.P.
------------------------------------
JACKSON & WALKER, L.L.P.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement on
Form S-8 of our report dated July 17, 1996, except for Note 17, as to which the
date is September 9, 1996, on our audits of the consolidated financial
statements of Medical Alliance, Inc. and Subsidiaries as of December 31, 1995
and 1994, and for the three years in the period ended December 31, 1995,
appearing in the registration statement on Form S-1 (SEC File No. 333-9815) of
Medical Alliance Inc. and Subsidiaries filed with the Securities and Exchange
Commission pursuant to the Securities Act of 1933.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Dallas, Texas
December 20, 1996
<PAGE> 1
EXHIBIT 99
MEDICAL ALLIANCE, INC.
AMENDED AND RESTATED 1994 LONG-TERM INCENTIVE PLAN
ARTICLE I
DEFINITIONS
As used in this Plan, the following terms will have the following
meanings:
1.1. Annual Shareholders Meeting has the meaning ascribed to it in
Section 4.2.
1.2. Automatic Grant Date has the meanings ascribed to it in
Section 4.2(a).
1.3. Award means a grant of Options under Article IV of the Plan, a
Restricted Stock Award under Article V of the Plan, a Stock Appreciation Rights
Award under Article VI of the Plan, a Performance Share Award under Article VII
of the Plan or a Stock Unit Award under Article VIII of the Plan.
1.4. Award Agreement means an Option Agreement, Restricted Stock
Agreement, Stock Appreciation Rights Agreement, Performance Share Agreement or
Stock Unit Agreement.
1.5. Board means the Company's Board of Directors.
1.6. Cause means an act or acts engaged in by a Participant
involving (i) a felony, (ii) fraud, (iii) embezzlement, (iv) gross or willful
neglect of duty or misconduct, (v) the commission of any act that causes or
reasonably may be expected to cause substantial injury to the Company.
1.7. Code means the federal Internal Revenue Code of 1986, as
amended.
1.8. Committee means a committee comprised of two or more Directors
of the Company, appointed by the Board, the members of which satisfy the
requirements for eligibility set forth in Section 3.1 and which is responsible
for the administration of the Plan; provided that the full Board may at any
time, in its sole discretion, exercise any or all functions and authority of
the Committee.
1.9. Commission means the United States Securities and Exchange
Commission.
1.10. Company means Medical Alliance, Inc., a Texas corporation.
1.11. Director means a member of the Board of Directors of the
Company or of a subsidiary thereof.
1.12. Disability of a Participant will be deemed to occur whenever a
Participant is rendered unable to engage in any substantial gainful activity by
reason of any medically
<PAGE> 2
determinable physical or mental impairment that can be expected to result in
death or that has lasted or can be expected to last for a continuing period of
not less than 12 months. In the case of any dispute as to whether or not a
Participant is disabled within the meaning of this Section, the determination
of disability will be made by a licensed physician selected by the Board and
acceptable to the Participant, which physician's decision will be final and
binding.
1.13. Employee means any employee of the Company or of any of its
subsidiaries, as defined under Section 3401(c) of the Code and the regulations
promulgated thereunder.
1.14. Employment Agreement means an agreement, if any, between the
Company or any subsidiary thereof and a Participant, setting forth the terms
and conditions of the Participant's employment by the Company or such
subsidiary.
1.15. ERISA means the Employee Retirement Income Security Act of
1974, as amended.
1.16. Exchange Act means the Securities Exchange Act of 1934, as
amended.
1.17. Grant Date means, with respect to an Option, the date on which
an Option is granted, as specified in Section 4.2 or, as applicable, in Section
4.3.
1.18. Incentive Option means an Option that by its terms is intended
to be treated as an "incentive stock option" within the meaning of Section 422
of the Code.
1.19. Market Value means, on any date, the closing price per share
of the Stock on the New York Stock Exchange on such date.
1.20. Minimum Performance Goal means the minimum objective(s)
established by the Committee that must be satisfied before any portion of a
Performance Share Award is earned. The Minimum Performance Goal may, in the
sole discretion of the Committee, be the same as or less than the Performance
Goal.
1.21. Nonemployee Director, except as used in Section 3.1, means a
member of the Board who is not an Employee.
1.22. Nonstatutory Option means any Option that is not an Incentive
Option.
1.23. Option means an option to purchase Stock granted under the
Plan.
1.24. Option Agreement means a written agreement between the Company
and a Participant setting forth the terms and conditions of an Option.
1.25. Option Price means the price to be paid by a Participant for a
share of Stock upon exercise of an Option.
- 2 -
<PAGE> 3
1.26. Participant means a person to whom an Award has been granted.
1.27. Performance Cycle or Cycle means a period of years selected by
the Committee during which the performance of the Company and/or the
Participant is measured for the purpose of determining the extent to which
Performance Shares that have been contingently awarded with respect to such
Cycle are earned.
1.28. Performance Goal means the objective(s) established by the
Committee at the time each Performance Share Award is granted with respect to
the related Performance Cycle for the purpose of determining the extent to
which Performance Shares that have been contingently awarded for such Cycle are
earned.
1.29. Performance Share or Performance Share Award means an Award
granted pursuant to Article VII expressed as a share of Stock.
1.30. Performance Share Agreement means a written agreement between
the Company and a Participant setting forth the terms and conditions of a
Performance Share Award.
1.31. Plan means this Amended and Restated 1994 Long-Term Incentive
Plan of the Company, as may be amended from time to time.
1.32. Reporting Participant means a Participant who is subject to
the reporting requirements of Section 16 of the Exchange Act.
1.33. Restricted Stock or Restricted Stock Award means an award of
Stock granted under Article V.
1.34. Restricted Stock Agreement means a written agreement between
the Company and a Participant with respect to a Restricted Stock Award.
1.35. Retirement means resignation by the Participant on or after
the date on which the Participant has served the Company or one or more
subsidiaries thereof for at least five (5) years in the aggregate.
1.36. Rule 16b-3 means Rule 16b-3 or its successors promulgated
under the Exchange Act.
1.37. Securities Act means the Securities Act of 1933, as amended.
1.38. Section 162(m) means Section 162(m) of the Code and the
regulations promulgated thereunder.
- 3 -
<PAGE> 4
1.39. Stock means Common Stock, par value $0.002 per share, of the
Company or, in the event the outstanding shares of such stock are hereafter
changed into or exchanged for shares of a different security of the Company or
some other corporation, such other security.
1.40. Stock Appreciation Right or Stock Appreciation Rights Award
means an Award granted under Article VI.
1.41. Stock Appreciation Rights Agreement means an agreement between
the Company and a Participant setting forth the terms and conditions of a Stock
Appreciation Rights Award.
1.42. Stock Unit or Stock Unit Award means an award of Stock or
units granted under Article VIII.
1.43. Stock Unit Agreement means a written agreement between the
Company and a Participant setting forth the terms and conditions of a Stock
Unit Award.
1.44. Ten Percent Owner means a person who owns, or is deemed within
the meaning of Section 422(b)(6) of the Code to own, stock possessing more than
10% of the total combined voting power of all classes of stock of the Company
(or its parent or subsidiary corporations, within the meaning of Sections
424(e) and 424(f) of the Code). Whether a person is a Ten Percent Owner will
be determined with respect to each Option based on the facts existing
immediately prior to the Grant Date of such Option.
1.45. Vesting Year for any portion of any Incentive Option means the
calendar year in which that portion of the Option first becomes exercisable.
ARTICLE II
GENERAL
2.1. PURPOSE. This Plan is intended to encourage ownership of
Stock by Participants and to provide additional incentives for them to promote
the success of the Company's business. The Company intends that Incentive
Options granted under Article IV will qualify as "incentive stock options"
within the meaning of Section 422 of the Code.
2.2. TERM OF THE PLAN. Awards may be granted not later than
December 31, 2004.
2.3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of
Section 9.2 and subject to any additional restrictions elsewhere in the Plan,
the maximum aggregate number of shares of Stock that may be issued from time to
time pursuant to the Plan may not exceed 1,324,290 shares. The maximum
aggregate number of shares of Stock with respect to which Awards may be granted
to any Participant during the term of the Plan may not exceed 50% of the total
number of shares of Stock that may be issued from time to time under the Plan.
Shares to be issued pursuant to Awards may be either authorized but unissued
shares or shares held by the Company in its treasury. If shares of Stock are
reacquired by the Company pursuant to the
- 4 -
<PAGE> 5
provisions of the Plan or if Options expire or terminate for any reason without
having been exercised in full, the reacquired shares and/or the shares not
purchased will again be available for issuance under the Plan to the extent
permitted by law.
2.4. ELIGIBILITY. Any full-time or part-time Employee, Director,
consultant or advisor of one or more of the Company or any subsidiary thereof
will be eligible to be a Participant; provided that Incentive Options may be
granted only to Employees.
2.5. ACCELERATION IN CERTAIN EVENTS. The Committee may accelerate
the exercisability of any Option or Stock Appreciation Right or waive any
restrictions and/or Performance Goals with respect to shares of Restricted
Stock, Performance Shares or Stock Units in whole or in part at any time. In
addition, notwithstanding the provisions of any Award Agreement, the following
provisions will apply:
(i) Mergers and Reorganizations. In the event the
Company or its shareholders enter into an agreement to dispose of all
or substantially all of the assets of the Company by means of a sale,
merger or other reorganization, liquidation or otherwise in a
transaction in which the Company is not the surviving corporation, any
Option or Stock Appreciation Right will become immediately exercisable
with respect to the full number of shares subject to that Option or
Stock Appreciation Right and all restrictions and/or Performance Goals
will be deemed lapsed, waived and/or satisfied (as applicable) with
respect to any Restricted Stock Award, Performance Share Award or
Stock Unit Award; provided that no Option or Stock Appreciation Right
will be immediately exercisable and no restrictions or Performance
Goals will be deemed lapsed, waived and/or satisfied with respect to a
Restricted Stock Award, Performance Share Award or Stock Unit Award
under this Section 2.5 on account of any agreement of merger or other
reorganization when the shareholders of the Company immediately before
the consummation of the transaction will own at least 50% of the total
combined voting power of all classes of stock entitled to vote of the
surviving entity immediately after the consummation of the
transaction.
(ii) Change in Control. All Options and Stock
Appreciation Rights will become immediately exercisable and all
restrictions and/or Performance Goals related to any Restricted Stock
Award, Performance Share Award or Stock Unit Award will be deemed
lapsed, waived and/or satisfied (as applicable) in the event any
Person (other than a Person meeting the requirements of clauses (i)
and (ii) of Rule 13d-1(b)(1) or its successors promulgated under the
Exchange Act) meets the requirements for becoming an Acquiring Person.
2.6. RESTRICTIONS ON ISSUE OF SHARES. Notwithstanding any other
provision of the Plan, if at any time in the reasonable opinion of the Company
the issuance of shares of Stock pursuant to an Award may constitute a violation
of law, then the Company may delay such issuance and the delivery of a
certificate for such shares of Stock until (i) approval has been obtained from
such governmental agencies, other than the Commission, as may be required
- 5 -
<PAGE> 6
under any applicable law, rule or regulation and (ii) in the case where such
issuance would constitute a violation of a law administered by or a regulation
of the Commission, one of the following conditions has been satisfied:
(1) the issuance of shares of Stock is effectively
registered under the Securities Act; or
(2) a no-action letter in form and substance reasonably
satisfactory to the Company with respect to the issuance of such
shares has been obtained by the Company from the staff of the
Commission.
The Company will make all reasonable efforts to bring about the occurrence of
such events.
2.7. PURCHASE FOR INVESTMENT; SUBSEQUENT REGISTRATION.
(a) Unless the issuance of shares of Stock to be issued
pursuant to an Award has been effectively registered under the
Securities Act, the Company will be under no obligation to issue any
shares of Stock pursuant to an Award unless the Participant gives a
written representation to the Company that is satisfactory in form and
substance to its counsel and upon which the Company may reasonably
rely, that he is acquiring the shares of Stock issued pursuant to such
Award as an investment and not with a view to, or for sale in
connection with, the distribution of any such shares of Stock.
(b) If required in the opinion of counsel, each
certificate representing shares of Stock issued pursuant to an Award
will bear a reference to the investment representation made in
accordance with this Section 2.7 and to the fact that no registration
statement has been filed with the Commission in respect of the
issuance of such shares of Stock.
(c) If the Company deems it necessary or desirable to
register under the Securities Act or other applicable statutes the
issuance of any shares of Stock with respect to which an Award has
been granted, or to qualify the issuance of any such shares for
exemption from the Securities Act or other applicable statutes, then
the Company will take such action at its own expense. The Company may
require from each Participant such information in writing for use in
any registration statement, prospectus, preliminary prospectus or
offering circular as is reasonably necessary for such purpose and may
require reasonable indemnity to the Company and its Directors and
officers from such holder against all losses, claims, damages and
liabilities arising from such use of the information so furnished and
caused by any untrue statement of any material fact therein or caused
by the omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made.
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2.8. WITHHOLDING; NOTICE OF DISPOSITION OF STOCK PRIOR TO
EXPIRATION OF SPECIFIED HOLDING PERIOD.
(a) Whenever shares of Stock are to be issued pursuant to
an Award, the Company will have the right to require the Participant
to remit to the Company an amount sufficient to satisfy federal,
state, local or other withholding tax requirements (whether so
required to secure for the Company an otherwise available tax
deduction or otherwise) prior to the delivery of any certificate or
certificates for such shares of Stock.
(b) When a Participant is required to pay to the Company
an amount required to be withheld under applicable income tax laws in
connection with an Award, such payment may be made, in whole or in
part, (i) in cash, (ii) by check, (iii) if permitted by the Committee,
by delivery to the Company of shares of Stock already owned by the
Participant having a Market Value on the date on which the amount of
tax to be withheld is determined (the "Tax Date") equal to the amount
required to be withheld, (iv) with respect to Options, through the
withholding by the Company ("Company Withholding") of a portion of the
shares of Stock acquired upon the exercise of the Options or (v) in
any other form of valid consideration, as permitted by the Committee
in its sole discretion; provided that a Reporting Participant will not
be permitted to satisfy his withholding obligation through Company
Withholding unless required to do so by the Committee, in its sole
discretion. The Committee may waive or modify any limitation
contained in this Section that is not required for compliance with
Rule 16b-3.
(c) The Company may require as a condition to the
issuance of shares of Stock upon exercise of an Incentive Option that
the party exercising such Option give a written representation to the
Company, which is satisfactory in form and substance to its counsel
and upon which the Company may reasonably rely, that he will report to
the Company any disposition of such shares prior to the expiration of
the holding periods specified by Section 422(a)(1) of the Code. If and
to the extent that the realization of income in such a disposition
imposes upon the Company federal, state, local or other withholding
tax requirements, or any such withholding is required to secure for
the Company an otherwise available tax deduction, the Company will
have the right to require that the recipient remit to the Company an
amount sufficient to satisfy those requirements; and the Company may
require as a condition to the issuance of shares of Stock upon
exercise of an Incentive Option that the party exercising such option
agree, in writing in a form satisfactory to the Company, to make such
a remittance.
2.9. RESERVATION OF STOCK. The Company must at all times during
the term of the Plan reserve or otherwise keep available such number of shares
of Stock as will be sufficient to satisfy the requirements of the Plan and will
pay all fees and expenses necessarily incurred by the Company in connection
therewith.
2.10. NO SPECIAL EMPLOYMENT OR OTHER RIGHTS. Nothing contained in
the Plan or in any Award will confer upon any Participant any right with
respect to the continuation of his
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<PAGE> 8
employment or service with the Company (or any subsidiary), or interfere in any
way with the right of the Company (or any subsidiary), subject to the terms of
any separate employment or consulting agreement or provision of law or
certificate of incorporation or bylaws to the contrary, at any time to
terminate such employment or consulting agreement or to increase or decrease
the compensation of the Participant from the rate in existence at the time of
the grant of an Award.
ARTICLE III
ADMINISTRATION
3.1. ADMINISTRATION. Subject to the provisions of the Plan,
including without limitation the provisions of Section 4.2, the Plan will be
administered by the Committee. Each member of the Committee must qualify as a
"Non- Employee Director" within the meaning of Rule 16b-3. In addition, with
respect to any Award that the Company intends to qualify for the exception for
qualified performance-based compensation set forth in Section 162(m), such
Award must be granted solely by "outside directors" within the meaning of such
Section. Subject to Section 4.2, the Committee will have sole discretion and
authority to determine from time to time the Participants to whom Awards will
be granted and the number of shares of Stock subject to each Award, to
interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to it, to determine and interpret the terms and provisions of each
Award Agreement or waive any conditions, restrictions and/ or Performance Goals
applicable to any Option or Stock Appreciation Right (or the exercise thereof)
or to any shares of Restricted Stock, Performance Shares or Stock Units, and to
make all other determinations necessary or advisable for the administration of
the Plan. In making such determinations, the Committee may take into account
the nature of the services rendered by the respective Participants, their
present and potential contributions to the success of the Company and its
subsidiaries, and such other factors as the Committee in its sole discretion
deems relevant. The Committee's determinations on the matters referred to in
this Section 3.1 will be conclusive.
ARTICLE IV
OPTIONS
4.1 GRANT OF OPTIONS. The Committee may, in its sole discretion,
grant Options in accordance with the terms and conditions set forth in the
Plan. Each Option Agreement may contain such additional terms and conditions,
not inconsistent with the terms of the Plan, as are determined by the Committee
in its sole discretion.
4.2. AUTOMATIC GRANTS OF OPTIONS TO NONEMPLOYEE DIRECTORS. In
addition to any other grants made to nonemployee Directors hereunder, during
such period of time, if any, as the Company is subject to the reporting
requirements under the Exchange Act, each nonemployee Director who is elected
or re-elected to the Board at an annual shareholders meeting or special meeting
in lieu of an annual meeting (an "Annual Shareholders Meeting"), is hereby
granted, on the date of such meeting (as used in or with reference to this
Section 4.2, an "Automatic Grant Date"), a Nonstatutory Option to purchase
2,500 shares of Stock upon such
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<PAGE> 9
Director's initial election and a Nonstatutory Option to purchase 1,500 shares
of Stock at each Annual Shareholders Meeting thereafter while he or she
continues to serve as a Director or his or her re-election as a Director. Each
Option granted to a Participant under this Section 4.2 will (i) have an Option
Price equal to 100% of the Market Value of the Stock on the Automatic Grant
Date, (ii) terminate on the tenth anniversary of the Automatic Grant Date
(subject to the provisions of Section 16(b) of the Exchange Act) and (iii)
become exercisable in three equal installments as follows: 33 1/3% on the first
anniversary of the Automatic Grant Date, an additional 33 1/3% on the second
anniversary of the Automatic Grant Date, and an additional 33 1/3% on the third
anniversary of the Automatic Grant Date.
The terms and conditions of, and the amount of shares of stock subject
to purchase under, each Option granted to a Participant under this Section 4.2
may be modified by the Committee prior to or on the Automatic Grant Date of
such Option.
4.3. TIME OF GRANTING OPTIONS. Except as provided in Section 4.2,
the granting of an Option will take place at the time specified in the Option
Agreement.
4.4. OPTION PRICE. The Option Price under each Incentive Option
may not be less than 100% of the Market Value on the Grant Date, or less than
110% of the Market Value on the Grant Date if the Participant is a Ten Percent
Owner. The Option Price under each Nonstatutory Option will not be so limited
solely by reason of this Section 4.4.
4.5. OPTION PERIOD. No Incentive Option may be exercised later
than the tenth anniversary of the Grant Date, or, if the Participant is a Ten
Percent Owner, not later than the fifth anniversary of the Grant Date. The
option period under each Nonstatutory Option will not be so limited solely by
reason of this Section 4.5. Options other than Nondiscretionary Options may
become exercisable in such installments, cumulative or noncumulative, as the
Committee may determine.
4.6. LIMIT ON INCENTIVE OPTION CHARACTERIZATION. To the extent any
Option fails to qualify as an Incentive Option, such Option will be considered
a Nonstatutory Option.
4.7. EXERCISE OF OPTIONS.
(a) Method of Exercise. Each Option will be exercisable
in accordance with the terms of the Option Agreement pursuant to which
the Option was granted. No Option may be exercised for a fraction of
a share of Stock.
(b) Payment of Purchase Price. The purchase price of any
shares of Stock purchased must be paid at the time of exercise of the
Option either (i) in cash, (ii) by certified or cashier's check, (iii)
by shares of Stock, if permitted by the Committee, (iv) if then
permitted under the laws of the State of Texas and approved by the
Committee, by a promissory note for the total purchase price of the
shares of Stock being purchased, which note will contain such terms
and provisions as the Committee may approve,
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<PAGE> 10
including without limitation the right to repay the note partially or
wholly with Stock, (v) by delivery of a copy of irrevocable
instructions from the Participant to a broker or dealer, reasonably
acceptable to the Company, to sell certain of the shares of Stock
purchased upon exercise of the Option or to pledge them as collateral
for a loan and promptly deliver to the Company the amount of sale or
loan proceeds necessary to pay such purchase price or (vi) in any
other form of valid consideration, as permitted by the Committee in
its sole discretion. If any portion of the purchase price or a note
given at the time of exercise is paid in shares of Stock, those shares
will be valued at the then Market Value.
4.8. TERMINATION OF EMPLOYMENT OR ASSOCIATION WITH THE COMPANY.
(a) Termination of Employment with the Company. If a
Participant ceases to be employed by the Company or any subsidiary
thereof because the Participant is terminated for Cause, any Options
held by that Participant will automatically expire. If a
Participant's employment is terminated for any reason other than for
Cause or due to death, such Participant's Option will be exercisable
(to the extent exercisable on the date of termination of the
Participant's employment or, if the Committee, in its sole discretion,
has accelerated the vesting of such Option, to the extent exercisable
following such acceleration) at any time within 3 months after he
ceases to be an Employee (or within (i) three months after termination
if on account of Retirement or (ii) 12 months after termination if on
account of Disability), unless by its terms it expires earlier or
unless, with respect to any Nonstatutory Option, the Committee agrees,
in its sole discretion, to extend the term of such Option; provided
that the term of any such Option will not be extended beyond its
original term. If a Participant dies while employed by the Company or
any subsidiary thereof, or within three months after ceasing to be an
Employee, such Participant's Option will be exercisable (to the extent
exercisable on the date of death, or, if the Committee, in its sole
discretion, has accelerated the vesting of such Option, to the extent
exercisable following such acceleration) at any time within 12 months
after the date of death, unless by its terms it expires earlier or
unless, with respect to any Nonstatutory Option, the Committee agrees,
in its sole discretion, to extend the term of such Option; provided
that the term of any such Option will not be extended beyond its
original term. Military or sick leave will not be deemed a
termination of employment, provided that it does not exceed the longer
of three months or the period during which the absent Participant's
reemployment rights, if any, are guaranteed by statute or by contract.
The foregoing is qualified by the following: (i) if any facts that
would constitute Cause for termination of employment of a Participant
are brought to the attention of the Committee after the Participant's
employment with the Company or any subsidiary thereof has ended, any
Options then held by the Participant may be immediately terminated by
the Committee and (ii) if a Participant is an Employee employed
pursuant to a written Employment Agreement, the Participant's
employment with the Company will be deemed terminated for "cause" for
purposes of the Plan only if the Participant's employment is
considered under the circumstances to have been terminated for cause
for purposes of such agreement.
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<PAGE> 11
(b) Termination of Association with the Company. If (i)
a Nonemployee Director is removed for Cause or (ii) a consultant or
advisor or other Participant who is not an Employee has his
relationship with the Company terminated for Cause, any Options held
by any such Participant will automatically expire. In all other
cases, any Options held by such a Participant, to the extent
exercisable on the date of termination of the Participant's
association with the Company, will remain exercisable and will expire
in accordance with the terms of the applicable Option Agreement;
provided that (i) if any facts that would constitute cause for removal
or termination of a Participant who is a Nonemployee Director,
consultant or advisor or other person who is not an Employee are
brought to the attention of the Committee after such Participant's
association with the Company has ended, any Options held by such
Participant may be immediately terminated by the Committee, and (ii)
if such Participant has been retained pursuant to a written agreement,
the Participant's relationship with the Company will be deemed
terminated for "cause" for purposes of the Plan only if the
Participant's association with the Company is considered under the
circumstances to have been terminated for cause for purposes of such
written agreement.
4.9. TRANSFERABILITY OF OPTIONS.
(a) Incentive Options. Incentive Options may not be
transferred or assigned other than by will or the laws of descent and
distribution and may be exercised during the lifetime of the
Participant only by the Participant or by the Participant's legally
authorized representative, and each Option Agreement in respect of an
Incentive Option will so provide. The designation by a Participant of
a beneficiary will not constitute a transfer of the Option.
(b) Nonstatutory Options. With respect to Nonstatutory
Options granted hereunder, the Committee may, in its sole discretion,
provide in any Option Agreement (or in an amendment to any existing
Option Agreement) such provisions regarding transferability of the
Nonstatutory Options as the Committee, in its sole discretion, deems
appropriate.
4.10. LIMITATION OF RIGHTS IN STOCK. A Participant will not be
deemed for any purpose to be a shareholder of the Company with respect to any
of the shares of Stock covered by an Option, except to the extent the Option
has been exercised with respect thereto and, in addition, a certificate has
been issued therefor and delivered to the Participant or his agent. Any Stock
issued pursuant to the Option will be subject to all restrictions upon the
transfer thereof that may be now or hereafter imposed by the Articles of
Incorporation of the Company (as amended or restated from time to time), the
Bylaws of the Company (as amended or restated from time to time) and any
applicable Employment Agreement.
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<PAGE> 12
ARTICLE V
RESTRICTED STOCK
5.1 GRANT OF RESTRICTED STOCK AWARDS. The Committee may, in its
sole discretion, grant Restricted Stock Awards in accordance with the terms and
conditions set forth in the Plan. Each Restricted Stock Agreement may contain
such additional terms and conditions, not inconsistent with the terms of the
Plan, as are determined by the Committee in its sole discretion.
5.2. TERMS AND CONDITIONS. Each Restricted Stock Award confers
upon the recipient thereof the right to receive a specified number of shares of
Stock in accordance with the terms and conditions of each Participant's
Restricted Stock Agreement. The general terms and conditions of a Restricted
Stock Award will be as follows:
(a) Any shares of Stock awarded hereunder to a
Participant will be restricted for a period of time to be determined
by the Committee for each Participant at the time of the Award, which
period shall be not less than six months nor more than ten years. The
restrictions will prohibit the sale, assignment, transfer, pledge or
other encumbrance of such shares, and will provide for possible
reversion thereof to the Company in accordance with subparagraph (b)
during the period of restriction.
(b) All Restricted Stock awarded under this Plan to a
Participant will be forfeited and returned to the Company in the event
the Participant's employment or service with the Company or a
subsidiary thereof is terminated prior to the expiration of the period
of restriction, unless the Participant's termination of employment or
service is due to his death, Disability or Retirement or unless the
Committee, in its sole discretion, waives the restrictions established
in accordance with subparagraph (a) with respect to any or all of the
shares of Restricted Stock.
(c) In the event of a Participant's death or Disability,
the restrictions established in accordance with subparagraph (a) will
lapse with respect to all Restricted Stock awarded to the Participant
prior to any such event, and the shares of Stock involved will cease
to be Restricted Stock and will no longer be subject to forfeiture to
the Company pursuant to subparagraph (b).
(d) In the event of a Participant's Retirement, the
restrictions established in accordance with subparagraph (a) will
continue to apply unless the Committee in its sole discretion shortens
the restriction period.
(e) Stock certificates issued with respect to Restricted
Stock Awards will be registered in the name of the Participant, but
will be delivered by him to
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<PAGE> 13
the Company together with a stock power endorsed in blank. Each such
certificate will bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
FORFEITURE, RESTRICTIONS ON TRANSFER AND CERTAIN OTHER TERMS
AND CONDITIONS SET FORTH IN THE AMENDED AND RESTATED 1994
LONG-TERM INCENTIVE PLAN OF MEDICAL ALLIANCE, INC. AND THE
AGREEMENT BETWEEN THE REGISTERED OWNER OF THE SHARES
REPRESENTED BY THIS CERTIFICATE AND MEDICAL ALLIANCE, INC.
ENTERED INTO PURSUANT TO SUCH PLAN."
From the time of grant of the Restricted Stock Award, the
Participant will be entitled to exercise all rights (including
dividend and voting rights) with respect to the shares represented by
such certificate, subject to forfeiture of such voting rights and the
Stock as provided in subparagraph (b).
(f) Upon the lapse of a restriction period as determined
pursuant to subparagraph (a), the Company will return the stock
certificates representing the shares with respect to which the
restriction has lapsed to the Participant or his legal representative,
and pursuant to the instruction of the Participant or his legal
representative will issue a certificate for such shares that does not
bear the legend set forth in subparagraph (e).
(g) Any other securities or assets (other than ordinary
cash dividends) that are received by a Participant with respect to
Restricted Stock awarded to him, which is still subject to
restrictions established in accordance with subparagraph (a), will be
subject to the same restrictions and will be delivered by the
Participant to the Company as provided in subparagraph (e).
5.3. NOTICE TO COMPANY OF SECTION 83(B) ELECTION. Any Participant
who exercises an election under Section 83(b) of the Code to have his receipt
of Shares of Restricted Stock taxed currently, without regard to restrictions,
must give notice to the Company of such election immediately upon making such
election. Such an election must be made within 30 days after the effective
date of issuance and cannot be revoked except with the consent of the Internal
Revenue Service.
ARTICLE VI
STOCK APPRECIATION RIGHTS
6.1. GRANT OF STOCK APPRECIATION RIGHTS. The Committee may, in its
sole discretion, grant Stock Appreciation Rights in accordance with the terms
and conditions set forth in the Plan. Each Stock Appreciation Rights Agreement
may contain such additional terms and
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<PAGE> 14
conditions, not inconsistent with the terms of the Plan, as are determined by
the Committee in its sole discretion.
6.2. TERMS AND CONDITIONS. A Stock Appreciation Right will entitle
a Participant to receive an amount equal to (or if the Committee shall so
determine at the time of grant, less than) the excess of the Market Value on
the date of exercise over the Market Value on the date of grant of such right
(or such other price as is set by the Committee), multiplied by the number of
shares of Stock with respect to which the Stock Appreciation Right shall have
been exercised.
6.3. FORM OF GRANT. A Stock Appreciation Right may be granted in
combination with, in addition to, or completely independent of, an Option or
any other Award.
6.4. FORM OF PAYMENT. Settlement of a Stock Appreciation Right may
be made (i) in cash, (ii) by certified or cashier's check, (iii) if permitted
by the Committee, in shares of Stock or (iv) in any other form of valid
consideration, as determined by the Committee in its sole discretion. However,
any Stock Appreciation Right exercised upon or subsequent to the occurrence of
an event described in Sections 2.5(i) or 2.5(ii) must be paid in cash.
6.5. TIME LIMITATIONS. With respect to Stock Appreciation Rights
granted hereunder to any Participant, the Committee may, in its sole
discretion, provide in any Stock Appreciation Rights Agreement (or in an
amendment to any existing Stock Appreciation Rights Agreement) such provisions
regarding time limitations on exercisability as the Committee, in its sole
discretion, deems appropriate.
6.6. EXERCISE OF STOCK APPRECIATION RIGHTS; EFFECTS ON OPTIONS AND
VICE-VERSA. Each Stock Appreciation Right will be exercisable in accordance
with the terms of the Stock Appreciation Rights Agreement pursuant to which the
Stock Appreciation Right is granted. Whenever a Stock Appreciation Right is
granted in relation to an Option and the exercise of one affects the right to
exercise the other, the number of shares of Stock available under the Option to
which the Stock Appreciation Right relates will decrease by a number equal to
the number of shares of Stock for which the Stock Appreciation Right is
exercised. Upon the exercise of an Option, any related Stock Appreciation
Right will terminate as to any number of shares of Stock subject to such Stock
Appreciation Right that exceeds the total number of shares of Stock for which
the Option remains unexercised.
6.7. TRANSFERABILITY OF STOCK APPRECIATION RIGHTS. Subject to
Section 6.9, with respect to Stock Appreciation Rights granted hereunder to any
Participant, the Committee may, in its sole discretion, provide in any Stock
Appreciation Rights Agreement (or in an amendment to any existing Stock
Appreciation Rights Agreement) such provisions regarding transferability of the
Stock Appreciation Rights as the Committee, in its sole discretion, deems
appropriate.
6.8. TERMINATION OF EMPLOYMENT OR SERVICE. Whenever a Stock
Appreciation Right is granted in relation to an Option and the exercise of one
affects the right to exercise the other, in the event of the termination of the
Participant's employment or service with the Company,
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<PAGE> 15
the Stock Appreciation Right may be exercised only during the period, if any,
within which the Option to which it relates may be exercised. If a Stock
Appreciation Right is granted independently of an Option under the Plan, the
following provisions will apply:
(a) Termination of Employment with the Company. If a
Participant ceases to be employed by the Company or any subsidiary
thereof because the Participant is terminated for Cause, any Stock
Appreciation Rights held by that Participant will automatically
expire. If a Participant's employment is terminated for any reason
other than Cause or due to death, such Participant's Stock
Appreciation Right will be exercisable (to the extent exercisable on
the date of termination of the Participant's employment or, if the
Committee, in its sole discretion, has accelerated the vesting of such
Stock Appreciation Right, to the extent exercisable following such
acceleration) at any time within 30 days after he ceases to be an
Employee (or within (i) three months after termination if on account
of Retirement or (ii) 12 months after termination if on account of
Disability), unless by its terms it expires earlier or unless the
Committee agrees, in its sole discretion, to extend the term of such
Stock Appreciation Right; provided that the term of any such Stock
Appreciation Right will not be extended beyond its original term. If
a Participant dies while employed by the Company or any subsidiary
thereof, or within three months after ceasing to be an Employee, such
Participant's Stock Appreciation Right will be exercisable (to the
extent exercisable on the date of death, or, if the Committee, in its
sole discretion, has accelerated the vesting of such Stock
Appreciation Right, to the extent exercisable following such
acceleration) at any time within 12 months after the date of death,
unless by its terms it expires earlier or unless the Committee agrees,
in its sole discretion, to extend the term of such Stock Appreciation
Right; provided that the term of any such Stock Appreciation Right
will not be extended beyond its original term. Military or sick leave
will not be deemed a termination of employment, provided that it does
not exceed the longer of three months or the period during which the
absent Participant's reemployment rights, if any, are guaranteed by
statute or by contract. The foregoing is qualified by the following:
(i) if any facts that would constitute Cause for termination of
employment of a Participant are brought to the attention of the
Committee after the Participant's employment with the Company or any
subsidiary thereof has ended, any Stock Appreciation Rights then held
by the Participant may be immediately terminated by the Committee and
(ii) if a Participant is an Employee employed pursuant to a written
Employment Agreement, the Participant's employment with the Company
will be deemed terminated for "cause" for purposes of the Plan only if
the Participant's employment is considered under the circumstances to
have been terminated for cause for purposes of such agreement.
(b) Termination of Association with the Company. If a
consultant or advisor or other Participant who is not an Employee has
his relationship with the Company terminated for Cause, any Stock
Appreciation Rights held by any such Participant will automatically
expire. In all other cases, any Stock Appreciation Rights held by
such a Participant, to the extent exercisable on the date of
termination of the Participant's association with the Company, will
remain exercisable and will expire in accordance with
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<PAGE> 16
the terms of the applicable Stock Appreciation Rights Agreement;
provided that (i) if any facts that would constitute cause for removal
or termination of a Participant who is a consultant or advisor or
other person who is not an Employee are brought to the attention of
the Committee after such Participant's association with the Company
has ended, any Stock Appreciation Rights held by such Participant may
be immediately terminated by the Committee and (ii) if such
Participant has been retained pursuant to a written agreement, the
Participant's relationship with the Company will be deemed terminated
for "cause" for purposes of the Plan only if the Participant's
association with the Company is considered under the circumstances to
have been terminated for cause for purposes of such written agreement.
6.9. TANDEM INCENTIVE OPTION - STOCK APPRECIATION RIGHT. Whenever
an Incentive Option and a Stock Appreciation Right are granted together and the
exercise of one affects the right to exercise the other, the following
requirements shall apply:
(a) The Stock Appreciation Right will expire no later
than the expiration of the underlying Incentive Option.
(b) The Stock Appreciation Right may be for no more than
the difference between the Option Price of the underlying Incentive
Option and the Market Value of the Stock subject to the underlying
Incentive Option at the time the Stock Appreciation Right is
exercised.
(c) The Stock Appreciation Right is transferable only
when the underlying Incentive Option is transferable, and under the
same conditions.
(d) The Stock Appreciation Right may be exercised only
when the underlying Incentive Option is eligible to be exercised.
(e) The Stock Appreciation Right may be exercised only
when the Market Value of the Stock subject to the underlying Incentive
Option exceeds the Option Price of the underlying Incentive Option.
6.10. WRITTEN NOTICE REQUIRED. Any Stock Appreciation Right will be
deemed to be exercised when written notice of exercise has been received by the
Company at its principal office from the person entitled to exercise the Stock
Appreciation Right.
ARTICLE VII
PERFORMANCE SHARES
7.1. GRANT OF PERFORMANCE SHARES. The Committee may, in its sole
discretion, grant Performance Shares in accordance with the terms and
conditions set forth in the Plan. Each Performance Share Agreement may contain
such additional terms and conditions, not inconsistent with the terms of the
Plan, as are determined by the Committee in its sole discretion.
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7.2. TERMS AND CONDITIONS. Performance Shares may be earned based
on the attainment of Performance Goals established by the Committee for a
particular Performance Cycle. The Committee may establish Performance Goals on
the basis of such criteria and to accomplish such objectives as the Committee
may from time to time select.
7.3. AMOUNT OF PAYMENT. After the end of each Performance Cycle, the
Committee will determine the number of Performance Shares earned by each
Participant with respect to the Performance Cycle in accordance with the
following:
(a) If the Performance Goal is attained or exceeded, a
Participant will be deemed to have earned the full number of
Performance Shares granted to the Participant.
(b) If the Minimum Performance Goal is not attained, a
Participant will be deemed to have earned no Performance Shares.
(c) If the Performance Goal is not attained, but the
Minimum Performance Goal is attained or exceeded, the number of
Performance Shares deemed to have been earned by a Participant will be
a portion of the Performance Shares, as determined based on a formula
established by the Committee at the time of grant.
(d) If a Participant's employment or service with the
Company or any subsidiary thereof has terminated because of death,
Disability or Retirement prior to the end of a Performance Cycle, the
number of Performance Shares such Participant will be deemed to have
earned shall be the number of Performance Shares determined as though
such Participant's employment or service had not terminated,
multiplied by a fraction, the numerator of which is the number of
months such Participant was employed or served the Company or a
subsidiary thereof during the Performance Cycle (including the month
during which employment or service terminated) and the denominator of
which is the total number of months in the Performance Cycle.
(e) If the Participant's employment or service has
terminated for any reason other than death, Disability or Retirement,
such Participant will be deemed to have earned no Performance Shares
except as and to the extent the Committee may determine; provided that
the number of Performance Shares that may be so determined by the
Committee to have been earned may not exceed the number that would
have been earned had the provisions of Section 7.3(a) been applicable.
(f) At any time prior to the end of a Performance Cycle,
the Committee may adjust downward (but not upward) the Performance
Goal and/or the Minimum Performance Goal as a result of major events
unforeseen at the time the Performance Shares were awarded, such as
changes in the economy, the industry, laws affecting the operation of
the Company or any subsidiary thereof, changes in applicable tax laws
or accounting principles or any other event the Committee determines
would have a
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significant impact upon the probability of attaining the previously
established Performance Goal and/or Minimum Performance Goal.
7.4. FORM OF PAYMENT. Payment in respect of earned Performance
Shares will be made to the Participant or, if the Participant has died, to the
Participant's designated beneficiary, as soon as practicable after the
expiration of the Performance Cycle and the Committee's determination under
Section 7.3. Payment in respect of earned Performance Shares may be made in
cash, in shares of Stock or a combination thereof, as determined by the
Committee in its sole discretion at the time of payment.
7.5. ADDITIONAL AWARDS. In the sole discretion of the Committee, a
Performance Share Award may provide the Participant with (i) dividends or
dividend equivalents (payable on a current or deferred basis) and (ii) cash
payments in lieu of or in addition to such Award.
ARTICLE VIII
STOCK UNIT AWARDS
8.1. GRANT OF STOCK UNIT AWARDS. The Committee may, in its sole
discretion, grant Stock Unit Awards in accordance with the terms and conditions
set forth in the Plan. Each Stock Unit Agreement may contain such additional
terms and conditions, not inconsistent with the terms of the Plan, as are
determined by the Committee in its sole discretion.
8.2 TERMS AND CONDITIONS. Stock Unit Awards may be in the form of
Stock or units, the value of which is based, in whole or in part, on the Market
Value of Stock. Stock Unit Awards will be subject to such terms, restrictions,
conditions, vesting requirements and payment requirements as the Committee may
determine in its sole discretion at the time of grant, including without
limitation the following:
(a) Any shares of Stock that are part of a Stock Unit
Award may be subject to restrictions on sale, assignment, transfer,
pledge or other encumbrance.
(b) Stock Unit Awards may provide for the payment of cash
consideration by the Participant or provide that the Award, and any
Stock to be issued in connection therewith, if applicable, shall be
delivered without the payment of cash consideration.
(c) Stock Unit Awards may relate in whole or in part to
certain performance criteria established by the Committee.
(d) Stock Unit Awards may provide for deferred payment
schedules and/or vesting over a specified period of employment or
service with the Company or any subsidiary thereof.
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8.3. ADDITIONAL AWARDS. In the sole discretion of the Committee, a
Stock Unit Award may provide the Participant with (i) dividends or dividend
equivalents (payable on a current or deferred basis) and (ii) cash payments in
lieu of or in addition to such Award.
ARTICLE IX
TERMINATION, AMENDMENT AND ADJUSTMENT
9.1. TERMINATION AND AMENDMENT OF THE PLAN. The Board (or, if the
Board has specifically delegated this authority to the Committee, the
Committee) may at any time terminate the Plan or make such modifications of the
Plan as it deems advisable; provided that no amendment may be made without
approval of the shareholders of the Company if such approval is required under
any applicable statute or rule; and provided further that no amendment may be
made to Section 4.2 (governing Options to Nonemployee Directors) more often
than once in any six-month period except to conform to applicable provisions of
the Code or ERISA, or the rules and regulations under either such statute. No
termination or amendment of the Plan may, without the consent of the
Participant to whom any Award has theretofore been granted, adversely affect
the rights of such Participant under such Award.
9.2. ADJUSTMENT. In the event of any stock dividend payable in
Stock or any split-up or contraction of the number of shares of Stock after the
date an Award is granted and prior to the exercise in full of an Option or
Stock Appreciation Right or the lapse, waiver and/or satisfaction of any
restrictions or Performance Goals related to a Restricted Stock Award,
Performance Share Award or Stock Unit Award, the number of shares subject to
such Award and, if applicable, the Option Price, will be proportionately
adjusted. In the event of any reclassification or change of outstanding shares
of Stock or in case of any consolidation or merger of the Company with or into
another company or in case of any sale or conveyance to another company or
entity of the property of the Company as a whole or substantially as a whole,
shares of stock or other securities equivalent in kind and value to those
shares a Participant would have received if he had held the full number of
shares of Stock subject to the Award immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance (together
with all other shares, stock and securities thereafter issued in respect
thereof) will thereupon be subject to the Award. Upon dissolution or
liquidation of the Company, all Awards will terminate, but the Participant will
have the right, immediately prior to such dissolution or liquidation, to
exercise any Option or Stock Appreciation Right to the extent exercisable on
the date of such dissolution or liquidation. No fraction of a share of Stock
will be purchasable or deliverable upon exercise, but in the event any
adjustment hereunder of the number of shares covered by the Award will cause
such number to include a fraction of a share, such number of shares will be
adjusted to the nearest smaller whole number of shares. In the event of
changes in the outstanding Stock by reason of any stock dividend, split-up,
contraction, reclassification, or change of outstanding shares of Stock of the
nature contemplated by this Section 9.2, the number of shares of Stock
available for the purpose of the Plan as stated in Section 2.3 will be
correspondingly adjusted.
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ARTICLE X
MISCELLANEOUS
10.1. AMENDMENT AND RESTATEMENT OF PRIOR PLAN. The Plan amends and
restates in its entirety that certain Statutory Incentive Stock Option Plan of
the Company, dated as of January 24, 1990, as amended (the "Prior Plan"), such
that all stock options issued under the Plan shall now be governed by, and
subject to, the Plan, and the Prior Plan is deemed to have been superseded by
the Plan and shall no longer by of any force or effect.
10.2. NOTICES AND OTHER COMMUNICATIONS. All notices and other
communications required or permitted under the Plan will be effective if in
writing and if delivered or sent by certified or registered mail, return
receipt requested (a) if to the Participant, at his residence address last
filed with the Company and (b) if to the Company, at its principal executive
offices, Attention: President, or to such other persons or addresses as the
Participant or the Company may specify by a written notice to the other from
time to time.
10.3. PLAN BINDING ON SUCCESSORS. The Plan will be binding upon the
successors and assigns of the Company.
10.4. NUMBER AND GENDER. Whenever used herein, nouns in the singular
will include the plural where appropriate, and the masculine pronoun will
include the female gender.
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