<PAGE> 1
Registration No. 333-_____________
As filed with the Securities and Exchange Commission on July 18, 1997
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
_______________________
SUPERIOR CONSULTANT HOLDINGS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 38-3306717
(State or other Jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
4000 TOWN CENTER, SUITE 1100 (810) 386-8300
SOUTHFIELD, MICHIGAN 48075 (Telephone number, including
(Address, including Zip Code, of area code, of registrant's
registrant's principal executive offices) principal executive offices)
SUPERIOR CONSULTANT HOLDINGS CORPORATION LONG-TERM INCENTIVE PLAN
Richard P. Saslow, Esq.
Vice President, General Counsel
Superior Consultant Holdings Corporation
4000 Town Center, Suite 1100
Southfield, Michigan 48075
(810) 386-8300
(Name, address, including zip code and telephone number, including area code,
of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED* SHARE** PRICE** REGISTRATION FEE**
- -------------------- ------------ -------------------- -------------------- -------------------
<S> <C> <C> <C> <C>
Common Stock, par
value $.01 per
share 900,000 $29.3750 $26,937,800 8,012
</TABLE>
===============================================================================
* This Registration Statement includes any additional shares of the
registrant's Common Stock that may be issued pursuant to antidilution
provisions contained in the plan.
** Pursuant to Rule 457(h), the registration fee was computed on the basis of
the high and low prices of the registrant's Common Stock on the Nasdaq National
Market on July 15, 1997.
===============================================================================
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents, which have heretofore been filed by Superior
Consultant Holdings Corporation (the "Company") with the Securities and
Exchange Commission (the "Commission"), are incorporated by reference in this
Registration Statement, except to the extent that any statement or information
therein is modified, superseded or replaced by a statement or information
contained in any other subsequently filed document incorporated herein by
reference:
(a) the Company's Annual Report on Form 10-K for the year ended
December 31, 1996;
(b) the Company's Quarterly Report on Form 10-Q for the period
ended March 31, 1997;
(c) the Company's Current Reports contained on Form 8-K dated
March 26, 1997 and Form 8-KA dated May 27, 1997; and
(d) the description of the Company's Common Stock, $0.01 par
value per share, contained in the Company's Registration Statement
on Form 8-A dated October 4, 1996, which incorporates such
description by reference to the Company's Registration Statement on
Form S-1 dated August 15, 1996 (No. 333-10213) (as amended September
20, 1996, October 4, 1996, October 7, 1996, and October 8, 1996).
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act after the date hereof, and prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference herein and to be a part hereof from the date of
filing of such documents.
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 by Richard P. Saslow. Mr. Saslow holds options to purchase 6,000 shares
of Common Stock, 50% of which are currently exercisable.
2
<PAGE> 3
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by the Delaware General Corporation Law, the Company's
Certificate of Incorporation provides that directors of the Company shall not
be personally liable for monetary damages to the Company for certain breaches
of their fiduciary duty as directors, unless they violated their duty of
loyalty to the Company or its stockholders, acted in bad faith, knowingly or
intentionally violated the law, authorized illegal dividends or redemptions, or
derived an improper personal benefit from their action as directors. This
provision would have no effect on the availability of equitable remedies or
nonmonetary relief, such as an injunction or rescission for breach of the duty
of care. In addition, the provision applies only to claims against a director
arising out of his or her role as a director and not in any other capacity
(such as an officer or employee of the Company). Further, liability of a
director for violations of the federal securities laws will not be limited by
this provision. Directors will, however, not be liable for monetary damages
arising from decisions involving violations of the duty of care which could be
deemed grossly negligent.
The Certificate of Incorporation provides that directors and officers of
the Company shall be indemnified by the Company to the fullest extent
authorized by Delaware law, as it now exists or may in the future be amended,
against all expenses and liabilities reasonably incurred in connection with
service for or on behalf of the Company. The Certificate of Incorporation also
authorizes the Company to enter into one or more agreements with any person
which provide for indemnification greater or different from that provided in
the Certificate of Incorporation. The Company has entered into indemnification
agreements with all current members of the Board of Directors and executive
officers.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
See Exhibit Index which is incorporated herein by reference.
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933 (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
3
<PAGE> 4
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3 or Form S-8, and
the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
by the registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to officers, directors, and controlling persons of
the registrant pursuant to the registrant's certificate of incorporation
or by-laws, or otherwise, the registrant has been advised that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
4
<PAGE> 5
SIGNATURES
THE REGISTRANT. Pursuant to the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Southfield, State of Michigan, on the
17th day of July, 1997.
Superior Consultant Holdings Corporation
By:/s/ Richard D. Helppie, Jr.
---------------------------
Richard D. Helppie, Jr.
Chairman of the Board,
President and Chief Executive Officer
5
<PAGE> 6
POWER OF ATTORNEY
The undersigned hereby appoint James T. House and Richard P. Saslow,
either of them, as my attorneys-in-fact to execute and file in my name and in
my behalf, in all capacities as an officer or director of Superior Consultant
Holdings Corporation, Registration Statements on Form S-8 and all amendments
thereto (including post-effective amendments) to be filed with the Securities
and Exchange Commission, relating to the issuance, through the Long-Term
Incentive Plan of common stock of Superior Consultant Holdings Corporation, par
value $0.01 per share.
IN WITNESS WHEREOF, the undersigned has executed this power of attorney on
the 17th day of July, 1997.
/s/ Richard D. Helppie, Jr. /s/ Donald W. Simborg
- --------------------------- ----------------------------
Richard D. Helppie, Jr. Donald W. Simborg
/s/ Douglas S. Peters /s/ Ronald M. Ballantyne III
- --------------------------- ----------------------------
Douglas S. Peters Ronald M. Ballantyne III
/s/ Bernard S. Lachner /s/ James T. House
- --------------------------- ----------------------------
Bernard S. Lachner James T. House
/s/ Richard P. Saslow
-----------------------
Richard P. Saslow
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in their
respective capacities on this 17th day of July, 1997.
Signature Title
--------- -----
/s/ Richard D. Helppie, Jr. Chairman of the Board,
- ------------------------------ President, Chief Executive
Richard D. Helppie, Jr. Officer and Director
(Principal Executive
Officer)
/s/ James T. House Vice President, Chief
- ------------------------------ Financial Officer,
James T. House Treasurer (Principal
Financial Officer and
Principal Accounting
Officer)
/s/ Douglas S. Peters
- ------------------------------ Director
Douglas S. Peters
/s/ Bernard S. Lachner
- ------------------------------ Director
Bernard S. Lachner
6
<PAGE> 7
/s/ Donald W. Simborg
- ------------------------------- Director
Donald W. Simborg
/s/ Ronald M. Ballantyne III
- ------------------------------- Director
Ronald M. Ballantyne III
/s/ Richard P. Saslow
- ------------------------------- Director
Richard P. Saslow
7
<PAGE> 8
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------- --------------------------
4.1 Certificate of Incorporation of Superior Consultant Holdings
Corporation*
4.2 By-Laws of Superior Consultant Holdings Corporation*
4.3 Superior Consultant Holdings Corporation Long-Term Incentive Plan
5 Opinion of Richard P. Saslow, Esq.
23 Consent of Grant Thornton LLP
24 Powers of Attorney (contained on the signature page hereto)
- ----------------
* Filed as an exhibit to Registration Statement No. S-1 as filed with the
Securities and Exchange Commission on August 15, 1996, and incorporated
herein by reference.
8
<PAGE> 1
EXHIBIT 4.3
SUPERIOR CONSULTANT HOLDINGS CORPORATION
LONG-TERM INCENTIVE PLAN
<PAGE> 2
TABLE OF CONTENTS
I. PURPOSE 1
II. DEFINITIONS 1
A. Affiliate 1
B. Award 2
C. Award Agreement 2
D. Board 2
E. Cash Award 2
F. Code 2
G. Committee 2
H. Common Stock 2
I. Company 2
J. Disability or Disabled 2
K. Exchange Act 3
L. Fair Market Value 3
M. Formula Option 3
N. Incentive Option 3
O. Key Employee 3
P. Key Non-Employee 3
Q. Non-Employee Board Member 3
R. Nonstatutory Option 3
S. Option 3
i
<PAGE> 3
T. Participant 3
U. Performance Award 4
V. Plan 4
W. Restricted Stock 4
X. Right 4
Y. Shares 4
III. SHARES SUBJECT TO THE PLAN 4
IV. ADMINISTRATION OF THE PLAN 5
V. ELIGIBILITY FOR PARTICIPATION 6
VI. AWARDS UNDER THIS PLAN 7
A. Incentive Option 7
B. Nonstatutory Option 7
C. Formula Option 7
D. Restricted Stock 7
E. Stock Appreciation Right 7
F. Performance Awards 7
G. Cash Awards 8
VII. TERMS AND CONDITIONS OF INCENTIVE OPTIONS AND
NONSTATUTORY OPTIONS 8
A. Option Price 8
B. Number of Shares 8
C. Term of Option 8
D. Date of Exercise 9
<PAGE> 4
E. Medium of Payment 9
F. Termination of Employment 9
G. Total and Permanent Disability 10
H. Death 10
I. Exercise of Option and Issuance of Stock 11
J. Rights as a Stockholder 11
K. Assignability and Transferability of Option 12
L. Other Provisions 12
M. Purchase for Investment 12
VIII. FORMULA OPTIONS 13
IX. REQUIRED TERMS AND CONDITIONS OF RESTRICTED STOCK 13
X. REQUIRED TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS 15
XI. PERFORMANCE AWARDS 15
XII. REQUIRED TERMS AND CONDITIONS OF CASH AWARDS 17
XIII. TERMINATION OF EMPLOYMENT 18
A. Retirement under a Company or Affiliate Retirement Plan 18
B. Resignation in the Best Interests of the Company or an Affiliate 18
C. Death or Disability of a Participant 18
XIV. CANCELLATION AND RESCISSION OF AWARDS 19
XV. PAYMENT OF RESTRICTED STOCK, RIGHTS, PERFORMANCE AWARDS
AND CASH AWARDS 20
iii
<PAGE> 5
XVI. WITHHOLDING 20
XVII. SAVINGS CLAUSE 21
XVIII. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CORPORATE
TRANSACTIONS 21
XIX. DISSOLUTION OR LIQUIDATION OF THE COMPANY 22
XX. TERMINATION OF THE PLAN 22
XXI. AMENDMENT OF THE PLAN 23
XXII. EMPLOYMENT RELATIONSHIP 23
XXIII. INDEMNIFICATION OF COMMITTEE 23
XXIV. UNFUNDED PLAN 23
XXV. MITIGATION OF EXCISE TAX 24
XXVI. EFFECTIVE DATE 24
XXVII. GOVERNING LAW 24
iv
<PAGE> 6
SUPERIOR CONSULTANT HOLDINGS CORPORATION
LONG-TERM INCENTIVE PLAN
I. PURPOSE
The Superior Consultant Holdings Corporation Long-Term Incentive Plan
is adopted effective September 13, 1996. The Plan is designed to attract and
retain selected Key Employees and Key Non-Employees of the Company and its
Affiliates, and reward them for making major contributions to the success of
the Company and its Affiliates. These objectives are accomplished by making
long-term incentive awards under the Plan that will offer Participants an
opportunity to have a greater proprietary interest in, and closer identity
with, the Company and its Affiliates and their financial success.
The Awards may consist of:
1. Incentive Options;
2. Nonstatutory Options;
3. Formula Options;
4. Restricted Stock;
5. Rights;
6. Performance Awards; or
7. Cash Awards;
or any combination of the foregoing, as the Committee may determine.
The Plan is intended to qualify certain compensation awarded under the
Plan for tax deductibility under Section 162(m) of the Code to the extent
deemed appropriate by the Committee. The Plan and the grant of Awards
hereunder are expressly conditioned upon the Plan's approval by the
stockholders of the Company. If such approval is not obtained, then this Plan
and all Awards hereunder shall be null and void ab initio.
II. DEFINITIONS
A. AFFILIATE means any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated association or other
entity (other than the Company) that, for purposes of Section 422 of the Code,
is a parent or subsidiary of the Company, direct or indirect.
1
<PAGE> 7
B. AWARD means the grant to any Key Employee or Key Non-Employee of
any form of Option, Restricted Stock, Right, Performance Award, or Cash Award,
whether granted singly, in combination, or in tandem, and pursuant to such
terms, conditions, and limitations as the Committee may establish in order to
fulfill the objectives of the Plan.
C. AWARD AGREEMENT means an agreement entered into between the Company
and a Participant under which an Award is granted and which sets forth the
terms, conditions, and limitations applicable to the Award.
D. BOARD means the Board of Directors of the Company.
E. CASH AWARD means an Award of cash, subject to the requirements of
Article XII and such other restrictions as the Committee deems appropriate or
desirable.
F. CODE means the Internal Revenue Code of 1986, as amended from time
to time, or any successor statute thereto.
G. COMMITTEE means the committee to which the Board delegates the
power to act under or pursuant to the provisions of the Plan, or the Board if
no committee is selected. If the Board delegates powers to a committee, and if
the Company is or becomes subject to Section 16 of the Exchange Act, then, if
necessary for compliance therewith, such committee shall consist initially of
not less than two (2) members of the Board, each member of which must be a
"non-employee director," within the meaning of the applicable rules promulgated
pursuant to the Exchange Act. If the Company is or becomes subject to
Section_16 of the Exchange Act, no member of the Committee shall receive any
Award pursuant to the Plan or any similar plan of the Company or any Affiliate
while serving on the Committee, unless the Board determines that the grant of
such an Award satisfies the then current Rule_16b-3 requirements under the
Exchange Act. Notwithstanding anything herein to the contrary, and insofar as
it is necessary in order for compensation recognized by Participants pursuant
to the Plan to be fully deductible to the Company for federal income tax
purposes, each member of the Committee also shall be an "outside director" (as
defined in regulations or other guidance issued by the Internal Revenue Service
under Code Section 162(m)).
H. COMMON STOCK means the common stock of the Company.
I. COMPANY means Superior Consultant Holdings Corporation, a Delaware
corporation, and includes any successor or assignee corporation or corporations
into which the Company may be merged, changed, or consolidated; any corporation
for whose securities the securities of the Company shall be exchanged; and any
assignee of or successor to substantially all of the assets of the Company.
J. DISABILITY OR DISABLED means a permanent and total disability as
defined in Section 22(e)(3) of the Code.
2
<PAGE> 8
K. EXCHANGE ACT means the Securities Exchange Act of 1934, as amended
from time to time, or any successor statute thereto.
L. FAIR MARKET VALUE means, if the Shares are listed on any national
securities exchange, the closing sales price, if any, on the largest such
exchange on the valuation date, or, if none, on the most recent trade date
immediately prior to the valuation date provided such trade date is no more
than thirty (30) days prior to the valuation date. If the Shares are not then
listed on any such exchange, the fair market value of such Shares shall be the
closing sales price if such is reported, or otherwise the mean between the
closing "Bid" and the closing "Ask" prices, if any, as reported in the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") for the
valuation date, or if none, on the most recent trade date immediately prior to
the valuation date provided such trade date is no more than thirty (30) days
prior to the valuation date. If the Shares are not then either listed on any
such exchange or quoted in NASDAQ, or there has been no trade date within such
thirty (30) day period, the fair market value shall be the mean between the
average of the "Bid" and the average of the "Ask" prices, if any, as reported
in the National Daily Quotation System for the valuation date, or, if none, for
the most recent trade immediately prior to the valuation date provided such
trade date is no more than thirty (30) days prior to the valuation date. If
the fair market value cannot be determined under the preceding three sentences,
it shall be determined in good faith by the Committee.
M. FORMULA OPTION means a Nonstatutory Option granted automatically
to a Non-Employee Board Member upon his or her initial election as a
Non-Employee Board Member, and any anniversary thereof.
N. INCENTIVE OPTION means an Option that, when granted, is intended to
be an "incentive stock option," as defined in Section 422 of the Code.
O. KEY EMPLOYEE means an employee of the Company or of an Affiliate
who is designated by the Committee as being eligible to be granted one or more
Awards under the Plan.
P. KEY NON-EMPLOYEE means a Non-Employee Board Member, consultant,
advisor or independent contractor of the Company or of an Affiliate who is
designated by the Committee as being eligible to be granted one or more Awards
under the Plan.
Q. NON-EMPLOYEE BOARD MEMBER means a director of the Company who is
not an employee of the Company or any of its Affiliates.
R. NONSTATUTORY OPTION means an Option that, when granted, is not
intended to be an "incentive stock option," as defined in Section 422 of the
Code.
S. OPTION means a right or option to purchase Common Stock, including
Restricted Stock if the Committee so determines.
T. PARTICIPANT means a Key Employee or Key Non-Employee to whom one or
more Awards are granted under the Plan.
3
<PAGE> 9
U. PERFORMANCE AWARD means an Award subject to the requirements of
Article XI, and such performance conditions as the Committee deems appropriate
or desirable.
V. PLAN means Superior Consultant Holdings Corporation Long-Term
Incentive Plan, as amended from time to time.
W. RESTRICTED STOCK means an Award made in Common Stock or denominated
in units of Common Stock and delivered under the Plan, subject to the
requirements of Article IX, such other restrictions as the Committee deems
appropriate or desirable, and as awarded in accordance with the terms of the
Plan.
X. RIGHT means a stock appreciation right delivered under the Plan,
subject to the requirements of Article X and as awarded in accordance with the
terms of the Plan.
Y. SHARES means the following shares of the capital stock of the
Company as to which Options or Restricted Stock have been or may be granted
under the Plan and upon which Rights or units of Restricted Stock may be based:
treasury or authorized but unissued Common Stock, $.01 par value, of the
Company, or any shares of capital stock into which the Shares are changed or
for which they are exchanged within the provisions of Article XVIII of the
Plan.
III. SHARES SUBJECT TO THE PLAN
The aggregate number of Shares as to which Awards may be granted from
time to time shall be nine hundred thousand (900,000) Shares (subject to
adjustment for stock splits, stock dividends, and other adjustments described
in Article XVIII hereof).
In accordance with Code Section 162(m), if applicable, the aggregate
number of Shares as to which Awards may be granted in any one calendar year to
any one Key Employee shall not exceed six hundred thousand (600,000) Shares
(subject to adjustment for stock splits, stock dividends, and other adjustments
described in Article XVIII hereof).
From time to time, the Committee and appropriate officers of the
Company shall take whatever actions are necessary to file required documents
with governmental authorities and stock exchanges so as to make Shares
available for issuance pursuant to the Plan. Shares subject to Awards that are
forfeited, terminated, expire unexercised, canceled by agreement of the Company
and the Participant, settled in cash in lieu of Common Stock or in such manner
that all or some of the Shares covered by such Awards are not issued to a
Participant, or are exchanged for Awards that do not involve Common Stock,
shall immediately become available for Awards. Awards payable in cash shall
not reduce the number of Shares available for Awards under the Plan.
Except as otherwise set forth herein, the aggregate number of Shares as
to which Awards may be granted shall be subject to change only by means of an
amendment of the Plan duly
4
<PAGE> 10
adopted by the Company and approved by the stockholders of the Company within
one year before or after the date of the adoption of the amendment.
IV. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee. A majority of the
Committee shall constitute a quorum at any meeting thereof (including by
telephone conference) and the acts of a majority of the members present, or
acts approved in writing by a majority of the entire Committee without a
meeting, shall be the acts of the Committee for purposes of this Plan. The
Committee may authorize one or more of its members or an officer of the Company
to execute and deliver documents on behalf of the Committee. A member of the
Committee shall not exercise any discretion respecting himself or herself under
the Plan. The Board shall have the authority to remove, replace or fill any
vacancy of any member of the Committee upon notice to the Committee and the
affected member. Any member of the Committee may resign upon notice to the
Board. The Committee may allocate among one or more of its members, or may
delegate to one or more of its agents, such duties and responsibilities as it
determines. Subject to the provisions of the Plan, the Committee is authorized
to:
A. Interpret the provisions of the Plan and any Award or Award
Agreement, and make all rules and determinations that it deems necessary or
advisable to the administration of the Plan;
B. Determine which employees of the Company or an Affiliate shall be
designated as Key Employees and which of the Key Employees shall be granted
Awards;
C. Determine the Key Non-Employees to whom Awards, other than
Incentive Options and Performance Awards for which Key Non-Employees shall not
be eligible, shall be granted;
D. Determine whether an Option to be granted shall be an Incentive
Option or Nonstatutory Option;
E. Determine the number of Shares for which an Option or Restricted
Stock shall be granted;
F. Determine the number of Rights, the Cash Award or the Performance
Award to be granted;
G. Provide for the acceleration of the right to exercise any Award,
other than an Award for Formula Options, which may not be accelerated; and
H. Specify the terms, conditions, and limitations upon which Awards
may be granted;
5
<PAGE> 11
provided, however, that with respect to Incentive Options, all such
interpretations, rules, determinations, terms, and conditions shall be made and
prescribed in the context of preserving the tax status of the Incentive Options
as incentive stock options within the meaning of Section 422 of the Code.
The Committee may delegate to the chief executive officer and to other
senior officers of the Company or its Affiliates its duties under the Plan
pursuant to such conditions or limitations as the Committee may establish,
except that only the Committee may select, and grant Awards to, Participants
who are subject to Section 16 of the Exchange Act. All determinations of the
Committee shall be made by a majority of its members. No member of the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Award.
The Committee shall have the authority at any time to cancel Awards for
reasonable cause and to provide for the conditions and circumstances under
which Awards shall be forfeited.
Any determination made by the Committee pursuant to the provisions of
the Plan shall be made in its sole discretion, and in the case of any
determination relating to an Award, may be made at the time of the grant of the
Award or, unless in contravention of any express term of the Plan or an
Agreement, at any time thereafter. All decisions made by the Committee
pursuant to the provisions of the Plan shall be final and binding on all
persons, including the Company and the Participants. No determination shall be
subject to de novo review if challenged in court.
V. ELIGIBILITY FOR PARTICIPATION
Awards may be granted under this Plan only to Key Employees and Key
Non-Employees of the Company or its Affiliates. The foregoing notwithstanding,
each Participant receiving an Incentive Option must be a Key Employee of the
Company or of an Affiliate at the time the Incentive Option is granted.
The Committee may at any time and from time to time grant one or more
Awards to one or more Key Employees or Key Non-Employees and may designate the
number of Shares, if applicable, to be subject to each Award so granted,
provided, however that no Incentive Option shall be granted after the
expiration of ten (10) years from the earlier of the date of the adoption of
the Plan by the Company or the approval of the Plan by the stockholders of the
Company, and provided further, that the Fair Market Value of the Shares
(determined at the time the Option is granted) as to which Incentive Options
are exercisable for the first time by any Key Employee during any single
calendar year (under the Plan and under any other incentive stock option plan
of the Company or an Affiliate) shall not exceed One Hundred Thousand Dollars
($100,000). To the extent that the Fair Market Value of such Shares exceeds
One Hundred Thousand Dollars ($100,000), the Shares subject to Option in excess
of One Hundred Thousand Dollars ($100,000) shall, without further action by the
Committee, automatically be converted to Nonstatutory Options.
Notwithstanding any of the foregoing provisions, the Committee may
authorize the grant of an Award to a person not then in the employ of, or
engaged by, the Company or of an
6
<PAGE> 12
Affiliate, conditioned upon such person becoming eligible to be granted an
Award at or prior to the execution of the Award Agreement evidencing the actual
grant of such Award.
VI. AWARDS UNDER THIS PLAN
As the Committee may determine, the following types of Awards may be
granted under the Plan on a stand alone, combination, or tandem basis:
A. INCENTIVE OPTION
An Award in the form of an Option that shall comply with the
requirements of Section 422 of the Code. Subject to adjustments in accordance
with the provisions of Article XVIII, the aggregate number of Shares that may
be subject to Incentive Options under the Plan shall not exceed nine hundred
thousand (900,000).
B. NONSTATUTORY OPTION
An Award in the form of an Option that shall not be intended to comply
with the requirements of Section 422 of the Code.
C. FORMULA OPTION
An Award in the form of an Option granted to a Non-Employee Board
Member at the time of his or her initial election to the Board, and any
anniversary thereof.
D. RESTRICTED STOCK
An Award made to a Participant in Common Stock or denominated in units
of Common Stock, subject to future service and such other restrictions and
conditions as may be established by the Committee, and as set forth in the
Award Agreement, including but not limited to continuous service with the
Company or its Affiliates, achievement of specific business objectives,
increases in specified indices, attaining growth rates, and other measurements
of Company or Affiliate performance.
E. STOCK APPRECIATION RIGHT
An Award in the form of a Right to receive the excess of the Fair
Market Value of a Share on the date the Right is exercised over the Fair Market
Value of a Share on the date the Right was granted.
F. PERFORMANCE AWARDS
An Award made to a Participant that is subject to performance
conditions specified by the Committee, including but not limited to continuous
service with the Company or its Affiliates,
7
<PAGE> 13
achievement of specific business objectives, increases in specified
indices, attaining growth rates, and other measurements of Company or Affiliate
performance.
G. CASH AWARDS
An Award made to a Participant and denominated in cash, with the
eventual payment subject to future service and such other restrictions and
conditions as may be established by the Committee, and as set forth in the
Award Agreement.
Each Award under the Plan shall be evidenced by an Award Agreement. Delivery
of an Award Agreement to each Participant shall constitute an agreement between
the Company and the Participant as to the terms and conditions of the Award.
VII. TERMS AND CONDITIONS OF INCENTIVE OPTIONS AND NONSTATUTORY OPTIONS
Each Option shall be set forth in an Award Agreement, duly executed on
behalf of the Company and by the Participant to whom such Option is granted.
Except for the setting of the Option price under Paragraph A, no Option shall
be granted and no purported grant of any Option shall be effective until such
Award Agreement shall have been duly executed on behalf of the Company and by
the Participant. Each such Award Agreement shall be subject to at least the
following terms and conditions:
A. OPTION PRICE
The purchase price of the Shares covered by each Option granted under the Plan
shall be determined by the Committee. The Option price per share of the Shares
covered by each Nonstatutory Option shall be at such amount as may be
determined by the Committee in its sole discretion on the date of the grant of
the Option. In the case of an Incentive Option, if the Participant owns
directly or by reason of the applicable attribution rules ten percent (10%) or
less of the total combined voting power of all classes of share capital of the
Company, the Option price per share of the Shares covered by each Incentive
Option shall be not less than the Fair Market Value of the Shares on the date
of the grant of the Incentive Option. In all other cases of Incentive Options,
the Option price shall be not less than one hundred ten percent (110%) of the
Fair Market Value on the date of grant.
B. NUMBER OF SHARES
Each Option shall state the number of Shares to which it pertains.
C. TERM OF OPTION
Each Incentive Option shall terminate not more than ten (10) years
from the date of the grant thereof, or at such earlier time as the Award
Agreement may provide, and shall be subject to earlier termination as herein
provided, except that if the Option price is required under
8
<PAGE> 14
Paragraph A of this Article VII to be at least one hundred ten percent
(110%) of Fair Market Value, each such Incentive Option shall terminate not
more than five (5) years from the date of the grant thereof, and shall be
subject to earlier termination as herein provided. The Committee shall
determine the time at which a Nonstatutory Option shall terminate.
D. DATE OF EXERCISE
Upon the authorization of the grant of an Option, or at any time
thereafter, the Committee may, subject to the provisions of Paragraph C of this
Article VII, prescribe the date or dates on which the Option becomes
exercisable, and may provide that the Option become exercisable in installments
over a period of years, or upon the attainment of stated goals.
E. MEDIUM OF PAYMENT
The Option price shall be payable upon the exercise of the Option, as
set forth in Paragraph I. It shall be payable in such form (permitted by
Section 422 of the Code in the case of Incentive Options) as the Committee
shall, either by rules promulgated pursuant to the provisions of Article IV of
the Plan, or in the particular Award Agreement, provide.
F. TERMINATION OF EMPLOYMENT
1. A Participant who ceases to be an employee or Key Non-Employee of
the Company or of an Affiliate for any reason other than death,
Disability, or termination "for cause," as defined in subparagraph (2)
below, may exercise any Option granted to such Participant, to the extent
that the right to purchase Shares thereunder has become exercisable on
the date of such termination, but only within three (3) months after such
date, or, if earlier, within the originally prescribed term of the
Option. A Participant's employment shall not be deemed terminated by
reason of a transfer to another employer that is the Company or an
Affiliate.
2. A Participant who ceases to be an employee or Key Non-Employee of
the Company or of an Affiliate "for cause" shall, upon such termination,
cease to have any right to exercise any Option. For purposes of this
Plan, cause shall mean (i) a Participant's theft or embezzlement, or
attempted theft or embezzlement, of money or property of the Company or
of an Affiliate, a Participant's perpetration or attempted perpetration
of fraud, or a Participant's participation in a fraud or attempted fraud,
on the Company or an Affiliate or a Participant's unauthorized
appropriation of, or a Participant's attempt to misappropriate, any
tangible or intangible assets or property of the Company or an Affiliate;
(ii) any act or acts of disloyalty, dishonesty, misconduct, moral
turpitude, or any other act or acts by a Participant injurious to the
interest, property, operations, business or reputation of the Company or
an Affiliate; (iii) a Participant's commission of a felony or any other
crime the commission of which results in injury to the Company or an
Affiliate; or (iv)any violation of any restriction on the disclosure or
use of confidential information of the Company or an Affiliate, or
client, prospect, or merger or acquisition target, or on competition
with the Company or an Affiliate or any
9
<PAGE> 15
of its businesses as then conducted. The determination of the Committee
as to the existence of cause shall be conclusive and binding upon the
Participant and the Company.
3. A Participant who is absent from work with the Company or an
Affiliate because of temporary disability (any disability other than a
Disability), or who is on leave of absence for any purpose permitted by
any authoritative interpretation (i.e., regulation, ruling, case law,
etc.) of Section 422 of the Code, shall not, during the period of any
such absence, be deemed, by virtue of such absence alone, to have
terminated his or her employment or relationship with the Company or with
an Affiliate, except as the Committee may otherwise expressly provide or
determine.
4. Paragraph F(1) shall control and fix the rights of a Participant
who ceases to be an employee or Key Non-Employee of the Company or of an
Affiliate for any reason other than Disability, death, or termination
"for cause," and who subsequently becomes Disabled or dies. Nothing in
Paragraphs G and H of this Article VII shall be applicable in any such
case except that, in the event of such a subsequent Disability or death
within the three (3) month period after the termination of employment or,
if earlier, within the originally prescribed term of the Option, the
Participant or the Participant's estate or personal representative may
exercise the Option permitted by this Paragraph F within twelve (12)
months after the date of Disability or death of such Participant, but in
no event beyond the originally prescribed term of the Option.
G. TOTAL AND PERMANENT DISABILITY
A Participant who ceases to be an employee or Key Non-Employee of the
Company or of an Affiliate by reason of Disability may exercise any Option
granted to such Participant (i) to the extent that the right to purchase Shares
thereunder has become exercisable on or before the date such Participant
becomes Disabled as determined by the Committee, and (ii) if the Option becomes
exercisable periodically, to the extent of any additional rights that would
have become exercisable had the Participant not become so Disabled until after
the close of business on the next periodic exercise date.
A Disabled Participant shall exercise such rights, if at all, only
within a period of not more than twelve (12) months after the date that the
Participant became Disabled as determined by the Committee (notwithstanding
that the Participant might have been able to exercise the Option as to some or
all of the Shares on a later date if the Participant had not become Disabled)
or, if earlier, within the originally prescribed term of the Option.
H. DEATH
In the event that a Participant to whom an Option has been granted
ceases to be an employee or Key Non-Employee of the Company or of an Affiliate
by reason of such Participant's death, such Option, to the extent that the
right is exercisable but not exercised on the date of death, may be exercised
by the Participant's estate or personal representative within twelve (12)
months after the date of death of such Participant or, if earlier, within the
originally
10
<PAGE> 16
prescribed term of the Option, notwithstanding that the decedent might have
been able to exercise the Option as to some or all of the Shares on a later
date if the Participant were alive and had continued to be an employee or Key
Non-Employee of the Company or of an Affiliate.
I. EXERCISE OF OPTION AND ISSUANCE OF STOCK
Options shall be exercised by giving written notice to the Company.
Such written notice shall: (i) be signed by the person exercising the Option,
(ii) state the number of Shares with respect to which the Option is being
exercised, (iii) contain the warranty required by paragraph M of this Article
VII, if applicable, and (iv) specify a date (other than a Saturday, Sunday or
legal holiday) not less than five (5) nor more than ten (10) days after the
date of such written notice, as the date on which the Shares will be purchased.
Such tender and conveyance shall take place at the principal office of the
Company during ordinary business hours, or at such other hour and place agreed
upon by the Company and the person or persons exercising the Option. On the
date specified in such written notice (which date may be extended by the
Company in order to comply with any law or regulation that requires the
Company to take any action with respect to the Option Shares prior to the
issuance thereof), the Company shall accept payment for the Option Shares in
cash, by bank or certified check, by wire transfer, or by such other means as
may be approved by the Committee and shall deliver to the person or persons
exercising the Option in exchange therefor an appropriate certificate or
certificates for fully paid nonassessable Shares or undertake to deliver
certificates within a reasonable period of time. In the event of any failure
to take up and pay for the number of Shares specified in such written notice on
the date set forth therein (or on the extended date as above provided), the
right to exercise the Option shall terminate with respect to such number of
Shares, but shall continue with respect to the remaining Shares covered by the
Option and not yet acquired pursuant thereto.
If approved in advance by the Committee, payment in full or in part
also may be made (i) by delivering Shares already owned by the Participant
having a total Fair Market Value on the date of such delivery equal to the
Option price; (ii) by the execution and delivery of a note or other evidence of
indebtedness (and any security agreement thereunder) satisfactory to the
Committee; (iii) by authorizing the Company to retain Shares that otherwise
would be issuable upon exercise of the Option having a total Fair Market Value
on the date of delivery equal to the Option price; (iv) by the delivery of cash
or the extension of credit by a broker-dealer to whom the Participant has
submitted a notice of exercise or otherwise indicated an intent to exercise an
Option (in accordance with part 220, Chapter II, Title 12 of the Code of
Federal Regulations, a so-called "cashless" exercise); or (v) by any
combination of the foregoing.
J. RIGHTS AS A STOCKHOLDER
No Participant to whom an Option has been granted shall have rights as
a stockholder with respect to any Shares covered by such Option except as to
such Shares as have been registered in the Company's share register in the name
of such Participant upon the due exercise of the Option and tender of the full
Option price.
11
<PAGE> 17
K. ASSIGNABILITY AND TRANSFERABILITY OF OPTION
Unless otherwise permitted by the Code and by Rule 16b-3 of the
Exchange Act, if applicable, and approved in advance by the Committee, an
Option granted to a Participant shall not be transferable by the Participant
and shall be exercisable, during the Participant's lifetime, only by such
Participant or, in the event of the Participant's incapacity, his guardian or
legal representative. Except as otherwise permitted herein, such Option shall
not be assigned, pledged, or hypothecated in any way (whether by operation of
law or otherwise) and shall not be subject to execution, attachment, or similar
process and any attempted transfer, assignment, pledge, hypothecation or other
disposition of any Option or of any rights granted thereunder contrary to the
provisions of this Paragraph K, or the levy of any attachment or similar
process upon an Option or such rights, shall be null and void.
L. OTHER PROVISIONS
The Award Agreement for an Incentive Option shall contain such
limitations and restrictions upon the exercise of the Option as shall be
necessary in order that such Option can be an "incentive stock option" within
the meaning of Section 422 of the Code. Further, the Award Agreements
authorized under the Plan shall be subject to such other terms and conditions
including, without limitation, restrictions upon the exercise of the Option, as
the Committee shall deem advisable and which, in the case of Incentive Options,
are not inconsistent with the requirements of Section 422 of the Code.
M. PURCHASE FOR INVESTMENT
If Shares to be issued upon the particular exercise of an Option shall
not have been effectively registered under the Securities Act of 1933, as now
in force or hereafter amended, the Company shall be under no obligation to
issue the Shares covered by such exercise unless and until the following
conditions have been fulfilled. The person who exercises such Option shall
warrant to the Company that, at the time of such exercise, such person is
acquiring his or her Option Shares for investment and not with a view to, or
for sale in connection with, the distribution of any such Shares, and shall
make such other representations, warranties, acknowledgments, and affirmations,
if any, as the Committee may require. In such event, the person acquiring such
Shares shall be bound by the provisions of the following legend (or similar
legend) which shall be endorsed upon the certificate(s) evidencing his or her
Option Shares issued pursuant to such exercise.
"The shares represented by this certificate have been acquired for
investment and they may not be sold or otherwise transferred by any
person, including a pledgee, in the absence of an effective registration
statement for the shares under the Securities Act of 1933 or an opinion
of counsel satisfactory to the Company that an exemption from
registration is then available."
12
<PAGE> 18
Without limiting the generality of the foregoing, the Company may delay
issuance of the Shares until completion of any action or obtaining any
consent that the Company deems necessary under any applicable law
(including without limitation state securities or "blue sky" laws).
VIII. FORMULA OPTIONS
A. Subject to the closing of the initial public offering of Shares by
the Company (the "IPO"), each Non-Employee Board Member shall be granted
automatically a Formula Option to purchase three thousand (3,000) Shares upon
his or her initial election and qualification as a Non-Employee Board Member or
upon the effective date of the registration statement for the IPO, whichever is
later; and, thereafter, shall be granted automatically a Formula Option to
purchase three thousand (3,000) Shares upon each anniversary of such
Non-Employee Board Member's election, provided such person remains an incumbent
Non-Employee Board Member on such anniversary date.
B. The purchase price of the Shares subject to the Formula Option
shall be equal to one hundred percent (100%) of the Fair Market Value as of the
date of grant.
C. The Shares subject to each Formula Option granted to a Non-Employee
Board Member shall be fully exercisable upon grant in accordance with the terms
of this Plan. If a Non-Employee Board Member shall cease to be a director of
the Company because of death or Disability, all Shares for which Formula
Options have been granted shall be exercisable in accordance with Paragraphs G
and H of Article VII. If a Non-Employee Board Member ceases to be a director
of the Company for any reason other than death or Disability, his or her right
to exercise the Formula Option, and the timing of such exercise, shall be
governed by the applicable provisions of Paragraph F of Article VII.
D. Formula Options shall be evidenced by an Award Agreement which
shall conform to the requirements of the Plan, and may contain such other
provisions not inconsistent therewith, as the Committee shall deem advisable.
The provisions of Article VII governing Nonstatutory Options, and the exercise
and issuance thereof, shall apply to Formula Options to the extent such
provisions are not inconsistent with this Article VIII.
IX. REQUIRED TERMS AND CONDITIONS OF RESTRICTED STOCK
A. The Committee may from time to time grant an Award in Shares of
Common Stock or grant an Award denominated in units of Common Stock, for such
consideration, if any, as the Committee deems appropriate (which amount may be
less than the Fair Market Value of the Common Stock on the date of the Award),
and subject to such restrictions and conditions and other terms as the
Committee may determine at the time of the Award (including, but not limited
to, continuous service with the Company or its Affiliates, achievement of
specific business objectives, increases in specified indices, attaining growth
rates, and other measurements of Company or Affiliate performance), and subject
further to the general provisions of the Plan, the applicable Award Agreement,
and the following specific rules.
13
<PAGE> 19
B. If Shares of Restricted Stock are awarded, such Shares cannot be
assigned, sold, transferred, pledged, or hypothecated prior to the lapse of the
restrictions applicable thereto, and, in no event, prior to six (6) months from
the date of the Award. The Company shall issue, in the name of the
Participant, stock certificates representing the total number of Shares of
Restricted Stock awarded to the Participant, as soon as may be reasonably
practicable after the grant of the Award, which certificates shall be held by
the Secretary of the Company as provided in Paragraph G.
C. Restricted Stock issued to a Participant under the Plan shall be
governed by an Award Agreement that shall specify whether Shares of Common
Stock are awarded to the Participant, or whether the Award shall be one not of
Shares of Common Stock but one denominated in units of Common Stock, any
consideration required thereto, and such other provisions as the Committee
shall determine.
D. Subject to the provisions of Paragraphs B and E hereof and the
restrictions set forth in the related Award Agreement, the Participant
receiving an Award of Shares of Restricted Stock shall thereupon be a
stockholder with respect to all of the Shares represented by such certificate
or certificates and shall have the rights of a stockholder with respect to such
Shares, including the right to vote such Shares and to receive dividends and
other distributions made with respect to such Shares. All Common Stock
received by a Participant as the result of any dividend on the Shares of
Restricted Stock, or as the result of any stock split, stock distribution, or
combination of the Shares affecting Restricted Stock, shall be subject to the
restrictions set forth in the related Award Agreement.
E. Restricted Stock awarded to a Participant pursuant to the Plan
will be forfeited, and any Shares of Restricted Stock or units of Restricted
Stock sold to a Participant pursuant to the Plan may, at the Company's option,
be resold to the Company for an amount equal to the price paid therefor, and in
either case, such Restricted Stock shall revert to the Company, if the Company
so determines in accordance with Article XIV or any other condition set forth
in the Award Agreement, or, alternatively, if the Participant's employment with
the Company or its Affiliates terminates, other than for reasons set forth in
Article XIII, prior to the expiration of the forfeiture or restriction
provisions set forth in the Award Agreement.
F. The Committee, in its discretion, shall have the power to
accelerate the date on which the restrictions contained in the Award Agreement
shall lapse with respect to any or all Restricted Stock awarded under the Plan.
G. The Secretary of the Company shall hold the certificate or
certificates representing Shares of Restricted Stock issued under the Plan,
properly endorsed for transfer, on behalf of each Participant who holds such
Shares, until such time as the Shares of Restricted Stock are forfeited, resold
to the Company, or the restrictions lapse. Any Restricted Stock denominated in
units of Common Stock, if not previously forfeited, shall be payable in
accordance with Article XV as soon as practicable after the restrictions lapse.
14
<PAGE> 20
H. The Committee may prescribe such other restrictions, conditions,
and terms applicable to Restricted Stock issued to a Participant under the Plan
that are neither inconsistent with nor prohibited by the Plan or the Award
Agreement, including, without limitation, terms providing for a lapse of the
restrictions of this Article or any Award Agreement in installments.
X. REQUIRED TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS
If deemed by the Committee to be in the best interests of the Company,
a Participant may be granted a Right. Each Right shall be granted subject to
such restrictions and conditions and other terms as the Committee may specify
in the Award Agreement at the time the Right is granted, subject to the general
provisions of the Plan, and the following specific rules.
A. Rights may be granted, if at all, either singly, in combination
with another Award, or in tandem with another Award. At the time of grant of a
Right, the Committee shall specify the base price of Common Stock to be used in
connection with the calculation described in Paragraph B below, provided that
the base price shall not be less than one hundred percent (100%) of the Fair
Market Value of a Share of Common Stock on the date of grant, unless approved
by the Board.
B. Upon exercise of a Right, which shall be not less than six (6)
months from the date of the grant, the Participant shall be entitled to receive
in accordance with Article XV, and as soon as practicable, the excess of the
Fair Market Value of one Share of Common Stock on the date of exercise over the
base price specified in such Right, multiplied by the number of Shares of
Common Stock then subject to the Right, or the portion thereof being exercised.
C. Notwithstanding anything herein to the contrary, if the Award
granted to a Participant allows him or her to elect to cancel all or any
portion of an unexercised Option by exercising an additional or tandem Right,
then the Option price per Share of Common Stock shall be used as the base price
specified in Paragraph A to determine the value of the Right upon such exercise
and, in the event of the exercise of such Right, the Company's obligation with
respect to such Option or portion thereof shall be discharged by payment of the
Right so exercised. In the event of such a cancellation, the number of Shares
as to which such Option was canceled shall become available for use under the
Plan, less the number of Shares, if any, received by the Participant upon such
cancellation in accordance with Article XV.
D. A Right may be exercised only by the Participant (or, if
applicable under Article XIII, by a legatee or legatees of such Right, or by
the Participant's executors, personal representatives, or distributees).
XI. PERFORMANCE AWARDS
A. A Participant may be granted an Award that is subject to
performance conditions specified by the Committee. The Committee may use
business criteria and other measures of performance it deems appropriate in
establishing any performance conditions (including, but not limited to,
continuous service with the Company or its Affiliates, achievement of specific
15
<PAGE> 21
business objectives, increases in specified indices, attaining growth rates,
and other measurements of Company or Affiliate performance), and may exercise
its discretion to reduce or increase the amounts payable under any Award
subject to performance conditions, except as otherwise limited under Paragraphs
C and D, below, in the case of a Performance Award intended to qualify under
Code Section 162(m).
B. Any Performance Award will be forfeited if the Company so
determines in accordance with Article XIV or any other condition set forth in
the Award Agreement, or, alternatively, if the Participant's employment with
the Company or its Affiliates terminates, other than for reasons set forth in
Article XIII, prior to the expiration of the time period over which the
performance conditions are to be measured.
C. If the Committee determines that a Performance Award to be granted
to a Key Employee should qualify as "performance-based compensation" for
purposes of Code Section 162(m), the grant and/or settlement of such
Performance Award shall be contingent upon achievement of preestablished
performance goals and other terms set forth in this Paragraph C.
1. Performance Goals Generally. The performance goals for such
Performance Awards shall consist of one or more business criteria and a
targeted level or levels of performance with respect to such criteria, as
specified by the Committee consistent with this Paragraph C. Performance
goals shall be objective and shall otherwise meet the requirements of
Code Section 162(m), including the requirement that the level or levels
of performance targeted by the Committee result in the performance goals
being "substantially uncertain." The Committee may determine that more
than one performance goal must be achieved as a condition to settlement
of such Performance Awards. Performance goals may differ for Performance
Awards granted to any one Participant or to different Participants.
2. Business Criteria. One or more of the following business
criteria for the Company, on a consolidated basis, and/or for specified
Affiliates or business units of the Company (except with respect to the
total stockholder return and earnings per share criteria), shall be used
exclusively by the Committee in establishing performance goals for such
Performance Awards: (1) total stockholder return; (2) such total
stockholder return as compared to the total return (on a comparable
basis) of a publicly available index such as, but not limited to, the
Standard& Poor's 500 or the Nasdaq-U.S. Index; (3) net income;
(4) pre-tax earnings; (5) EBITDA; (6) pre-tax operating earnings after
interest expense and before bonuses, service fees, and extraordinary or
special items; (7) operating margin; (8) earnings per share; (9) return
on equity; (10) return on capital; (11) return on investment;
(12) operating income, excluding the effect of charges for acquired
in-process technology and before payment of executive bonuses;
(13) earnings per share, excluding the effect of charges for acquired
in-process technology and before payment of executive bonuses;
(14)working capital; (15) sales; and (16)total revenues. The foregoing
business criteria also may be used in establishing performance goals for
Cash Awards granted under Article XII hereof.
16
<PAGE> 22
3. Compensation Limitation. No Key Employee may receive a
Performance Award in excess of $2,400,000 for any three (3) year period.
D. Achievement of performance goals in respect of such Performance
Awards shall be measured over such periods as may be specified by the
Committee. Performance goals shall be established on or before the dates that
are required or permitted for "performance-based compensation" under Code
Section 162(m).
E. Settlement of Performance Awards may be in cash or Shares, or
other property, in the discretion of the Committee. The Committee may, in its
discretion, reduce the amount of a settlement otherwise to be made in
connection with such Performance Awards, but may not exercise discretion to
increase any such amount payable in respect of a Performance Award subject to
Code Section 162(m).
XII. REQUIRED TERMS AND CONDITIONS OF CASH AWARDS
A. The Committee may from time to time authorize the award of cash
payments under the Plan to Participants, subject to such restrictions and
conditions and other terms as the Committee may determine at the time of
authorization (including, but not limited to, continuous service with the
Company or its Affiliates, achievement of specific business objectives,
increases in specified indices, attaining growth rates, and other measurements
of Company or Affiliate performance), and subject to the general provisions of
the Plan, the applicable Award Agreement, and the following specific rules.
B. Any Cash Award will be forfeited if Company so determines in
accordance with Article XIV or any other condition set forth in the Award
Agreement, or, alternatively, if the Participant's employment with the Company
or its Affiliates terminates, other than for reasons set forth in Article XIII,
prior to the attainment of any goals set forth in the Award Agreement or prior
to the expiration of the forfeiture or restriction provisions set forth in the
Award Agreement, whichever is applicable.
C. The Committee, in its discretion, shall have the power to change
the date on which the restrictions contained in the Award Agreement shall
lapse, or the date on which goals are to be measured, with respect to any Cash
Award.
D. Any Cash Award, if not previously forfeited, shall be payable in
accordance with Article XV as soon as practicable after the restrictions lapse
or the goals are attained.
E. The Committee may prescribe such other restrictions, conditions,
and terms applicable to the Cash Awards issued to a Participant under the Plan
that are neither inconsistent with nor prohibited by the Plan or the Award
Agreement, including, without limitation, terms providing for a lapse of the
restrictions, or a measurement of the goals, in installments.
17
<PAGE> 23
XIII. TERMINATION OF EMPLOYMENT
Except as may otherwise be (i) provided in Article_VII for Options,
(ii) provided for under the Award Agreement, or (iii) permitted pursuant to
Paragraphs A through C of this Article XIII (subject to the limitations under
the Code for Incentive Options), if the employment of a Participant terminates,
all unexpired, unpaid, unexercised, or deferred Awards shall be canceled
immediately.
A. RETIREMENT UNDER A COMPANY OR AFFILIATE RETIREMENT PLAN. When a
Participant's employment terminates as a result of retirement as defined under
a Company or Affiliate retirement plan, the Committee may permit Awards to
continue in effect beyond the date of retirement in accordance with the
applicable Award Agreement, and/or the exercisability and vesting of any Award
may be accelerated.
B. RESIGNATION IN THE BEST INTERESTS OF THE COMPANY OR AN AFFILIATE.
When a Participant resigns from the Company or an Affiliate and, in the
judgment of the chief executive officer or other senior officer designated by
the Committee, the acceleration and/or continuation of outstanding Awards would
be in the best interests of the Company, the Committee may (i) authorize, where
appropriate, the acceleration and/or continuation of all or any part of Awards
granted prior to such termination and (ii) permit the exercise, vesting, and
payment of such Awards for such period as may be set forth in the applicable
Award Agreement, subject to earlier cancellation pursuant to Article XIV or at
such time as the Committee shall deem the continuation of all or any part of
the Participant's Awards are not in the Company's or its Affiliate's best
interests.
C. DEATH OR DISABILITY OF A PARTICIPANT.
1. In the event of a Participant's death, the
Participant's estate or beneficiaries shall have a period up to
the earlier of (i) the expiration date specified in the Award
Agreement, or (ii) the expiration date specified in Paragraph H of
Article VII, within which to receive or exercise any outstanding
Awards held by the Participant under such terms as may be
specified in the applicable Award Agreement. Rights to any such
outstanding Awards shall pass by will or the laws of descent and
distribution in the following order: (a) to beneficiaries so
designated by the Participant; (b) to a legal representative of
the Participant; or (c) to the persons entitled thereto as
determined by a court of competent jurisdiction. Awards so
passing shall be made at such times and in such manner as if the
Participant were living.
2. In the event a Participant is determined by the Company to be
Disabled, and subject to the limitations of Paragraph G of Article VII,
Awards may be paid to, or exercised by, the Participant, if legally
competent, or by a legally designated guardian or other representative
if the Participant is legally incompetent by virtue of such Disability.
3. After the death or Disability of a Participant, the
Committee may in its sole discretion at any time (i) terminate
restrictions in Award Agreements; (ii) accelerate
18
<PAGE> 24
any or all installments and rights; and/or (iii) instruct the Company
to pay the total of any accelerated payments in a lump sum to the
Participant, the Participant's estate, beneficiaries or representative,
notwithstanding that, in the absence of such termination of
restrictions or acceleration of payments, any or all of the payments
due under the Awards ultimately might have become payable to other
beneficiaries.
XIV. CANCELLATION AND RESCISSION OF AWARDS
Unless the Award Agreement specifies otherwise, the Committee may
cancel any unexpired, unpaid, unexercised, or deferred Awards at any time if
the Participant is not in compliance with the applicable provisions of the
Award Agreement, the Plan, or with the following conditions:
A. A Participant shall not breach any protective agreement entered
into between him or her and the Company or any Affiliates, or render services
for any organization or engage directly or indirectly in any business which, in
the judgment of the chief executive officer of the Company or other senior
officer designated by the Committee, is or becomes competitive with the
Company, or which organization or business, or the rendering of services to
such organization or business, is or becomes otherwise prejudicial to or in
conflict with the interests of the Company. For a Participant whose employment
has terminated, the judgment of the chief executive officer shall be based on
terms of the protective agreement, if applicable, or on the Participant's
position and responsibilities while employed by the Company or its Affiliates,
the Participant's post-employment responsibilities and position with the other
organization or business, the extent of past, current, and potential
competition or conflict between the Company and the other organization or
business, the effect of the Participant's assuming the post-employment
position on the Company's or its Affiliate's customers, suppliers, investors,
and competitors, and such other considerations as are deemed relevant given the
applicable facts and circumstances. A Participant may, however, purchase as an
investment or otherwise, stock or other securities of any organization or
business so long as they are listed upon a recognized securities exchange or
traded over-the-counter, and such investment does not represent a substantial
investment to the Participant or a greater than one percent (1%) equity
interest in the organization or business.
B. A Participant shall not, without prior written authorization from
the Company, disclose to anyone outside the Company or its Affiliates, or use
in other than the Company's or Affiliate's business, any confidential
information or materials relating to the business of the Company or its
Affiliates, acquired by the Participant either during or after employment or
engagement with the Company or its Affiliates.
C. A Participant shall disclose promptly and assign to the Company all
right, title, and interest in any invention or idea, patentable or not, made or
conceived by the Participant during employment with the Company or an
Affiliate, relating in any manner to the actual or anticipated business,
research, or development work of the Company or its Affiliates, and shall do
anything reasonably necessary to enable the Company or its Affiliates to secure
a patent,
19
<PAGE> 25
trademark, copyright, or other protectable interest where appropriate
in the United States and in foreign countries.
Upon exercise, payment, or delivery pursuant to an Award, the Participant
shall certify on a form acceptable to the Committee that he or she is in
compliance with the terms and conditions of the Plan, including the provisions
of Paragraphs A, B or C of this Article XIV. Failure to comply with the
provisions of Paragraphs A, B or C of this Article XIV prior to, or during the
one (1) year period after, any exercise, payment, or delivery pursuant to an
Award shall cause such exercise, payment, or delivery to be rescinded. The
Company shall notify the Participant in writing of any such rescission within
two (2) years after such exercise, payment, or delivery. Within ten (10) days
after receiving such a notice from the Company, the Participant shall pay to
the Company the amount of any gain realized or payment received as a result of
the rescinded exercise, payment, or delivery pursuant to the Award. Such
payment shall be made either in cash or by returning to the Company the number
of Shares of Common Stock that the Participant received in connection with the
rescinded exercise, payment, or delivery.
XV. PAYMENT OF RESTRICTED STOCK, RIGHTS, PERFORMANCE AWARDS AND CASH AWARDS
Payment of Restricted Stock, Rights, Performance Awards and Cash Awards
may be made, as the Committee shall specify, in the form of cash, Shares of
Common Stock, or combinations thereof; provided, however, that a fractional
Share of Common Stock shall be paid in cash equal to the Fair Market Value of
the fractional Share of Common Stock at the time of payment.
XVI. WITHHOLDING
Except as otherwise provided by the Committee,
A. The Company shall have the power and right to deduct or withhold,
or require a Participant to remit to the Company, an amount sufficient to
satisfy federal, state, and local taxes required by law to be withheld with
respect to any grant, exercise, or payment made under or as a result of this
Plan; and
B. In the case of payments of Awards, or upon any other taxable event
hereunder, a Participant may elect, subject to the approval in advance by the
Committee, to satisfy the withholding requirement, if any, in whole or in part,
by having the Company withhold Shares of Common Stock that would otherwise be
transferred to the Participant having a Fair Market Value, on the date the tax
is to be determined, equal to the minimum marginal tax that could be imposed on
the transaction. All elections shall be made in writing and signed by the
Participant.
20
<PAGE> 26
XVII. SAVINGS CLAUSE
This Plan is intended to comply in all respects with applicable law and
regulations, including, (i) with respect to those Participants who are officers
or directors for purposes of Section 16 of the Exchange Act, Rule 16b-3 of the
Securities and Exchange Commission, if applicable, and (ii) with respect to
executive officers, Code Section 162(m). In case any one or more provisions of
this Plan shall be held invalid, illegal, or unenforceable in any respect under
applicable law and regulation (including Rule 16b-3 and Code Section 162(m)),
the validity, legality, and enforceability of the remaining provisions shall
not in any way be affected or impaired thereby and the invalid, illegal, or
unenforceable provision shall be deemed null and void; however, to the extent
permitted by law, any provision that could be deemed null and void shall first
be construed, interpreted, or revised retroactively to permit this Plan to be
construed in compliance with all applicable law (including Rule 16b-3 and Code
Section 162(m)) so as to foster the intent of this Plan. Notwithstanding
anything herein to the contrary, with respect to Participants who are officers
and directors for purposes of Section 16 of the Exchange Act, if applicable,
and if required to comply with rules promulgated thereunder, no grant of, or
Option to purchase, Shares shall permit unrestricted ownership of Shares by the
Participant for at least six (6) months from the date of grant or Option,
unless the Board determines that the grant of, or Option to purchase, Shares
otherwise satisfies the then current Rule 16b-3 requirements.
XVIII. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CORPORATE TRANSACTIONS
In the event that the outstanding Shares of the Company are changed
into or exchanged for a different number or kind of shares or other securities
of the Company or of another corporation by reason of any reorganization,
merger, consolidation, recapitalization, reclassification, change in par value,
stock split-up, combination of shares or dividends payable in capital stock, or
the like, appropriate adjustments to prevent dilution or enlargement of the
Awards granted to, or available for, Participants shall be made in the manner
and kind of Shares for the purchase of which Awards may be granted under the
Plan, and, in addition, appropriate adjustment shall be made in the number and
kind of Shares and in the Option price per share subject to outstanding
Options. The foregoing notwithstanding, no such adjustment shall be made in an
Incentive Option which shall, within the meaning of Section 424 of the Code,
constitute such a modification, extension, or renewal of an Option as to cause
it to be considered as the grant of a new Option.
Notwithstanding anything herein to the contrary, the Company may, in
its sole discretion, accelerate the timing of the exercise provisions of any
Award in the event of a tender offer for the Company's Shares, the adoption of
a plan of merger or consolidation under which a majority of the Shares of the
Company would be eliminated, or a sale of all or any portion of the Company's
assets or capital stock. Alternatively, the Company may, in its sole
discretion, cancel any or all Awards upon any of the foregoing events and
provide for the payment to Participants in cash of an amount equal to the value
or appreciated value, whichever is applicable, of the Award, as determined in
good faith by the Committee, at the close of business on the date of such
event. The preceding two sentences of this Article XVIII notwithstanding, the
Company shall be
21
<PAGE> 27
required to accelerate the timing of the exercise provisions of any Award if
(i) any such business combination is to be accounted for as a
pooling-of-interests under APB Opinion 16 and (ii)the timing of such
acceleration does not prevent such pooling-of-interests treatment.
Upon a business combination by the Company or any of its Affiliates
with any corporation or other entity through the adoption of a plan of merger
or consolidation or a share exchange or through the purchase of all or
substantially all of the capital stock or assets of such other corporation or
entity, the Board or the Committee may, in its sole discretion, grant Options
pursuant hereto to all or any persons who, on the effective date of such
transaction, hold outstanding options to purchase securities of such other
corporation or entity and who, on and after the effective date of such
transaction, will become employees or directors of, or consultants or advisors
to, the Company or its Affiliates. The number of Shares subject to such
substitute Options shall be determined in accordance with the terms of the
transaction by which the business combination is effected. Notwithstanding the
other provisions of this Plan, the other terms of such substitute Options shall
be substantially the same as or economically equivalent to the terms of the
options for which such Options are substituted, all as determined by the Board
or by the Committee, as the case may be. Upon the grant of substitute Options
pursuant hereto, the options to purchase securities of such other corporation
or entity for which such Options are substituted shall be cancelled
immediately.
XIX. DISSOLUTION OR LIQUIDATION OF THE COMPANY
Upon the dissolution or liquidation of the Company other than in
connection with a transaction to which Article XVIII is applicable, all Awards
granted hereunder shall terminate and become null and void; provided, however,
that if the rights of a Participant under the applicable Award have not
otherwise terminated and expired, the Participant may, if the Committee, in its
sole discretion, so permits, have the right immediately prior to such
dissolution or liquidation to exercise any Award granted hereunder to the
extent that the right thereunder has become exercisable as of the date
immediately prior to such dissolution or liquidation.
XX. TERMINATION OF THE PLAN
The Plan shall terminate (10) years from the earlier of the date of its
adoption by the Board or the date of its approval by the stockholders. The
Plan may be terminated at an earlier date by vote of the stockholders or the
Board; provided, however, that any such earlier termination shall not affect
any Award Agreements executed prior to the effective date of such termination.
Notwithstanding anything in this Plan to the contrary, any Options granted
prior to the effective date of the Plan's termination may be exercised until
the earlier of (i) the date set forth in the Award Agreement, or (ii) in the
case of an Incentive Option, ten (10) years from the date the Option is
granted; and the provisions of the Plan with respect to the full and final
authority of the Committee under the Plan shall continue to control.
22
<PAGE> 28
XXI. AMENDMENT OF THE PLAN
The Plan may be amended by the Board and such amendment shall become
effective upon adoption by the Board; provided, however, that any amendment
that (i) increases the numbers of Shares that may be granted under this Plan,
other than as provided by Article XVIII, (ii) materially modifies the
requirements as to eligibility to participate in the Plan, (iii) materially
increases the benefits to Participants, (iv) extends the period during which
Incentive Options may be granted or exercised, or (v) changes the designation
of the class of employees eligible to receive Incentive Options, or otherwise
causes the Incentive Options to no longer qualify as "incentive stock options"
as defined in Section 422 of the Code, also shall be subject to the approval of
the stockholders of the Company within one (1) year either before or after such
adoption by the Board, subject to the requirements of Article XVII of the Plan.
XXII. EMPLOYMENT RELATIONSHIP
Nothing herein contained shall be deemed to prevent the Company or an
Affiliate from terminating the employment of a Participant, nor to prevent a
Participant from terminating the Participant's employment with the Company or
an Affiliate.
XXIII. INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification as they may have as
directors or as members of the Committee, the members of the Committee shall be
indemnified by the Company against all reasonable expenses, including
attorneys' fees, actually and reasonably incurred in connection with the
defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken by them as directors or members of the Committee and against all amounts
paid by them in settlement thereof (provided such settlement is approved by the
Board) or paid by them in satisfaction of a judgment in any such action, suit
or proceeding, except in relation to matters as to which it shall be adjudged
in such action, suit or proceeding that the director or Committee member is
liable for gross negligence or willful misconduct in the performance of his or
her duties. To receive such indemnification, a director or Committee member
must first offer in writing to the Company the opportunity, at its own expense,
to defend any such action, suit or proceeding.
XXIV. UNFUNDED PLAN
Insofar as it provides for payments in cash in accordance with
Article XV, or otherwise, the Plan shall be unfunded. Although bookkeeping
accounts may be established with respect to Participants who are entitled to
cash, Common Stock, or rights thereto under the Plan, any such accounts shall
be used merely as a bookkeeping convenience. The Company shall not be required
to segregate any assets that may at any time be represented by cash, Common
Stock, or rights thereto, nor shall the Plan be construed as providing for such
segregation, nor shall the Company, the Board, or the Committee be deemed to be
a trustee of any cash, Common Stock, or rights thereto to be granted under the
Plan. Any liability of the Company to any Participant
23
<PAGE> 29
with respect to a grant of cash, Common Stock, or rights thereto under the Plan
shall be based solely upon any contractual obligations that may be created by
the Plan and any Award Agreement; no such obligation of the Company shall be
deemed to be secured by any pledge or other encumbrance on any property of the
Company. Neither the Company nor the Board nor the Committee shall be required
to give any security or bond for the performance of any obligation that may be
created by the Plan.
XXV. MITIGATION OF EXCISE TAX
If any payment or right accruing to a Participant under this Plan
(without the application of this Article XXV), either alone or together with
other payments or rights accruing to the Participant from the Company or an
Affiliate, would constitute a "parachute payment" (as defined in Section 280G
of the Code and regulations thereunder), such payment or right shall be reduced
to the largest amount or greatest right that will result in no portion of the
amount payable or right accruing under the Plan being subject to an excise tax
under Section 4999 of the Code or being disallowed as a deduction under
Section 280G of the Code. The determination of whether any reduction in the
rights or payments under this Plan is to apply shall be made by the Company.
The Participant shall cooperate in good faith with the Company in making such
determination and providing any necessary information for this purpose.
XXVI. EFFECTIVE DATE
This Plan shall become effective upon adoption by the Board, provided
that the Plan is approved by the stockholders of the Company before or at the
Company's next annual meeting, but in no event shall stockholder approval be
sought more than one (1) year after such adoption by the Board.
XXVII. GOVERNING LAW
This Plan shall be governed by the laws of the State of Michigan and
construed in accordance therewith.
24
<PAGE> 1
EXHIBIT 5
July 17, 1997
Superior Consultant Holdings Corporation
4000 Town Center
Suite 1100
Southfield, MI 48075
Re: Registration Statement on Form S-8
Superior Consultant Holdings Corporation Long-Term Incentive Plan
Gentlemen:
I have acted as counsel to Superior Consultant Holdings Corporation (the
"Company") in connection with the Registration Statement on Form S-8 filed by
the Company with the Securities and Exchange Commission to effect the
registration, pursuant to the Securities Act of 1933, of 900,000 shares of
common stock, $0.01 par value (the "Common Stock"), which may be offered by the
Company under the above-referenced Plan.
I am familiar with the corporate proceedings relative to the adoption of
the Plan and the issuance of Common Stock pursuant to the Plan. I have
examined originals or copies, certified or otherwise, of such corporate and
other instruments, documents and records as I have deemed relevant and
necessary to examine for the purpose of this opinion, including the Plan. In
addition, I have reviewed such questions of law as I have considered necessary
and appropriate for the purposes of this opinion.
Based upon and subject to the foregoing, it is my opinion that the shares
of Common Stock proposed to be offered by the Company as set forth in the
Registration Statement have been duly authorized and, when issued and sold as
set forth in the Registration Statement, and in accordance with Superior
Consultant Holdings Corporation Long-Term Incentive Plan referred to in the
Registration Statement, such shares will be validly issued, fully paid and
nonassessable.
<PAGE> 2
Mr. Richard Saslow
July 17, 1997
Page 2
I hereby consent to the filing of this opinion as an exhibit to the
above-referenced Registration Statement and to the reference to me under the
caption of "Interests of Named Experts and Counsel" in such Registration
Statement.
I am admitted to practice law in the State of Michigan and I express no
opinions as to matters under or involving any laws other than the laws of the
State of Michigan, the federal laws of the United States of America, and the
General Corporation Law of the State of Delaware.
Very truly yours,
/s/ Richard P. Saslow
Richard P. Saslow
General Counsel
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated February 21, 1997 (except for Note 13, as to
which the date is March 12, 1997) accompanying the consolidated financial
statements of Superior Consultant Holdings Corporation and Subsidiaries
appearing in the Annual Report on Form 10-K for the year ended December 31,
1996. We consent to the incorporation by reference of said report in the
Registration Statement on Form S-8.
/s/ GRANT THORNTON LLP
Detroit, Michigan
July 15, 1997
