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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 13, 1998
ENTERPRISE SOFTWARE, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-18034 68-0158367
(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification No.)
incorporation)
38705 Seven Mile Road, Suite 435, Livonia, Michigan 48152
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (248) 380-6070
Not Applicable
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On October 13, 1998, the Board of Directors of the Registrant adopted the
Enterprise Software, Inc. Stock Appreciation Rights Plan (the "Plan"). A copy of
the Plan, as subsequently amended, is filed as an exhibit to this Form 8-K, and
the terms of the Plan are incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Financial Statements - None
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Exhibits -
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Exhibit Reference
Number Exhibit Description
----------------- -------------------
10 Enterprise Software, Inc. Stock Appreciation Rights
Plan, as amended
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Enterprise Software, Inc.
January 21, 1999 By: /s/ Andre A. Blay
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Andre A. Blay
Its: Chairman of the Board and
Chief Executive Officer
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EXHIBIT INDEX
Exhibit Reference
Number Exhibit Description
- ----------------- -------------------
10 Enterprise Software, Inc. Stock Appreciation Rights
Plan, as amended
E-1
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EXHIBIT 10
ENTERPRISE SOFTWARE, INC.
STOCK APPRECIATION RIGHTS PLAN
I. Purposes and Effective Date of the Plan
---------------------------------------
The purposes of the Enterprise Software, Inc. Stock Appreciation Rights
Plan (the "Plan") are to provide a means to attract, reward and retain strong
management, to encourage teamwork among members of management and excellence in
the performance of their individual responsibilities, and to align the interests
of key executives participating in the Plan with the interests of shareholders
by offering an incentive compensation vehicle that is based upon the growth in
shareholders' equity and the value and profitability of Enterprise Software,
Inc. The Plan shall be effective as of November 1, 1998.
II. Definitions
-----------
In this Plan, the following terms shall have the meanings set forth
below:
(a) "Board" means the Board of Directors of the Company.
(b) "Change in Control" shall mean the occurrence of any of
the following events: (i) if any "person" (as such term is used in
Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") including a "group" (as defined in Section
13(d)(3) of the Exchange Act), other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing 40% or more of the combined voting power of the Company's
then outstanding securities; or (ii) during any period of two
consecutive years beginning on or after the date this Plan is approved,
individuals who at the beginning of such period constitute the Board
and any new director (other than a director designated by a person who
has entered into an agreement with the Company to effect a transaction
described in clauses (i) or (iii) of this definition) whose election by
the Board or nomination for election by the Company's shareholders was
approved by a vote of at least two-thirds (2/3) of the directors then
still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved ("Continuing Members"), cease for any reason to constitute at
least a majority thereof; or (iii) the shareholders of the Company
approve a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at
least 75% of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such
merger or consolidation, or (iv) the shareholders of the Company
approve a plan of complete liquidation of the Company or an agreement
for
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the sale or disposition by the Company of all, or substantially all, of
the Company's assets.
(c) "Committee" means the Board or such other committee as the
Board may subsequently appoint for such purpose.
(d) "Common Stock" means the common stock, $.001 par value, of
the Company.
(e) "Company" means Enterprise Software, Inc., a Delaware
corporation.
(f) "Employer" means the Company, any corporation which
becomes a controlled subsidiary of the Company, and/or any successor to
any such corporation.
(g) "Participant" means member of the Board or a key executive
who is employed by an Employer and who is designated by the Committee
to participate in the Plan.
(h) "SAR" means a stock appreciation right granted to a
Participant. An SAR shall entitle the Participant to receive, without
payment to the Company, the value thereof, which shall be equal to the
excess (if any) of the fair market value of a share of Company common
stock on the exercise date over either the fair market value of a share
of common stock of the Company on the date the SAR was granted or such
other amount as may be specified by the Board and reflected in the
grant of the SAR. Participants who are granted SAR's shall not (as a
consequence of the grant) be treated as shareholders under the Articles
of Incorporation or Bylaws of the Company or under applicable law.
III. Administration of the Plan
--------------------------
(a) The Plan shall be administered by the Committee. No member
of the Committee shall participate in any decision or recommendation
solely involving the Committee member's own participation in the Plan.
The Committee shall be authorized to interpret the Plan and any other
written instruments issued or adopted pursuant to the Plan, to
establish, amend and rescind any rules, regulations and procedures
relating to the Plan, and to make any other determinations which it
believes necessary or advisable for the administration of the Plan. The
Committee may correct any defect or supply any omission or reconcile
any inconsistency in the Plan or in any written instrument issued or
adopted pursuant to the Plan in the manner and to the extent the
Committee deems desirable to carry the Plan into effect. Any decision
of the Committee in the administration of the Plan, as described
herein, shall be final and binding on all affected parties.
(b) Any act which the Plan authorizes or requires the
Committee to do may be done by a majority (expressed from time to time
by a vote at a meeting or, in lieu thereof, a written consent) and
shall constitute the action of the Committee, and shall have the same
effect for all purposes as if assented to by all members of the
Committee.
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(c) The Committee may employ or retain agents and may
designate one or more employees of the Company, by name or by position,
to perform such clerical, accounting, and other services as the
Committee may require in carrying out the provisions of the Plan.
(d) The members of the Committee may authorize one or more of
their members to execute or deliver any instrument, make any payment,
or perform any other act which the Plan authorizes or requires the
Committee to do.
IV. Participation; Grant of SAR's
-----------------------------
The Committee may grant SAR's to any key executive employee or director
of an Employer. SAR's may be awarded at any time and from time to time to a new
Participant, or to then Participants, or to a greater or lesser number of
Participants, and may include or exclude previous Participants, as the Committee
shall determine.
V. Non-Transferability of SAR's
----------------------------
A Participant's interest in the SAR's granted to him shall not be
transferable other than by will or the laws of descent and distribution. During
the Participant's lifetime, the SAR's granted to the Participant shall be paid
only to the Participant, except that, in the event of the Participant's
incapacity, the Committee may permit payment to the Participant's guardian or
legal representative. The Committee also shall permit the payment, upon the
Participant's death, to one or more beneficiaries, including a trust, designated
by the Participant in a manner authorized by the Committee.
VI. Vesting
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(a) Subject to (b) and (c) below, SAR's granted to a Participant shall
become vested and exercisable on such schedule as may be established by the
Committee and reflected in the grant of the SAR, but (except upon a Change in
Control) no SAR granted pursuant to this Plan be exercisable in whole or in part
sooner than one calendar year after the date of the grant of the SAR.
(b) Notwithstanding the foregoing, all SAR's granted hereunder and not
previously expired shall become immediately exercisable in full upon the
occurrence of a Change in Control.
(c) A Participant's interest in the SAR's granted to him shall be
forfeited if his employment is terminated by the Employer for any of the
following reasons:
(i) The Participant engages in fraud or dishonesty involving the
Employer or other acts inimical to the interest of the
Employer; or
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(ii) The Participant is repeatedly or habitually intoxicated or
under the influence of drugs while on the premises of the
Employer or while performing his employment duties, such that
the Committee determines in good faith that the Participant is
impaired in performing the duties of his employment; or
(iii) The Participant is convicted of a felony under state or
federal law, or commits a crime involving moral turpitude; or
(iv) The Participant embezzles any property belonging to the
Employer such that he may be subject to criminal prosecution
therefor or the Participant intentionally and materially
injures the Employer, its personnel or its property.
Nothing in the Plan shall confer upon any Participant the right to continue in
the employ of the Employer.
VII. Exercise and Payment of SAR's/Capital Adjustments
-------------------------------------------------
The SAR's granted to a Participant may be exercised, shall be deemed to
be exercised, and shall be paid as follows:
(a) The Participant may exercise all or any granted SAR's in accordance
with their terms. Such exercise shall be made by written notice to the Committee
from the Participant, or from the Participant's legal representative if the
Participant is incapacitated, stating the number of SAR's exercised. The date of
exercise shall be the date the written notice is received by the Committee.
(b) Upon the Participant's death, disability, or termination of
employment with the Employer for any reason other than a reason described in
Section VI(b), SAR's held by the Participant to the extent not previously
exercised will be deemed to be exercised on the date of the Participant's death,
disability or termination of employment.
(c) The value of any SAR's exercised or deemed to be exercised under
this Section VII shall be determined as of the date of exercise. An amount equal
to such value shall be paid in a single sum (subject to Section IX) to the
Participant or to the Participant's beneficiary determined under (d) below
within 30 days after such value is determined.
(d) The amount equal to the value of any SAR's deemed to be exercised
on account of the Participant's death shall be paid to the beneficiary(ies)
designated by the Participant in a written designation of beneficiary filed with
the Committee prior to his death. In the event of the Participant's failure to
file such a designation before his death, or its ineffectiveness for any reason,
the amount payable shall be paid to the Participant's surviving spouse, or if
the Participant is not survived by his spouse, in equal shares to his then
surviving issue, per stirpes, or if not survived by any issue, then to the
Participant's estate.
(e) The amount paid under the Plan to a Participant, beneficiary or
other person shall be paid solely in cash.
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(f) No amount paid to a Participant, beneficiary or other person under
the Plan shall be considered as compensation for purposes of any tax qualified
employee pension, profit-sharing, stock bonus or 401(k) plan or other employee
benefit plan of the Employer.
(g) Any amount payable to a Participant, beneficiary or other person
under the Plan which is not claimed by the Participant, beneficiary, or other
person entitled thereto within one year after becoming payable shall be
forfeited and cancelled and shall remain with the Employer, and no other person
shall have any right to, or interest in, such amount.
(h) In the event of any change in the outstanding shares of common
stock of the Company by reason of an issuance of additional shares,
recaptialization, reclassification, reorganization, stock split, reverse stock
split, combination of shares, stock dividend or similar transaction, the
Committee shall proportionately adjust, in an equitable manner the number of
SAR's held by Participants under the Plan and the base value against which the
value of the SAR's is determined. The foregoing adjustment shall be made in a
manner that will cause the relationship between the aggregate appreciation in
outstanding common stock and the increase in value of each SAR granted hereunder
to remain unchanged as a result of the applicable transaction.
VIII. Election by Committee to Pay SAR's in Installments
--------------------------------------------------
(a) At any time after SAR's granted to a Participant are exercised, or
deemed to be exercised and before an amount equal to the value of such SAR's is
paid to the Participant, the Committee in its discretion may elect to have such
amount paid in up to five annual installments. The Committee shall notify the
Participant of such an election in writing and the election once made shall be
irrevocable.
(b) If the Committee makes such an installment election with respect to
a Participant, a Special Account (to be maintained in dollars and cents) shall
be established for the Participant. The initial balance of the Special Account
shall be an amount equal to the value of the SAR's which would have been paid to
the Participant in a single sum had the Committee not elected to have this
amount paid in installments. The Special Account shall be substituted in place
of the SAR's the value of which would have been paid to the Participant in the
absence of the installment election.
(c) The Participant shall receive payment of his Special Account
commencing on his Benefit Commencement Date in annual installments, with
interest, over the period specified by the Committee (up to a maximum of five
years). For purposes of this Section VIII a Participant's Benefit Commencement
Date means the first business day of the month following 60 days after the value
of the SAR's which are exercised or deemed to be exercised is determined in
accordance with Section VII(b).
(d) The annual installment amount for a particular Installment Payment
Year will be computed as follows:
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$W = ($X / [Y - Z])
Where W = Installment amount received by
Participant in a particular Installment
Payment Year.
Where X = Participant's Special Account balance at
the end of the prior Installment Payment
Year (or on the Participant's Benefit
Commencement Date in the case of the first
installment payment).
Where Y = Number of years elected by the Committee for the
payment period.
Where Z = Number of Installment Payment Years in
the payment period already elapsed.
For purposes of this Section VIII "Installment Payment Year" means the period
commencing on the Participant's Benefit Commencement Date and ending on the
first anniversary of such date and each 12-month period commencing on a
subsequent anniversary of the Benefit Commencement Date during the payment
period.
(e) All payments made to a Participant pursuant to this Section VIII
shall be paid solely in cash. Interest will be credited to the Special Account
balance in the name of a Participant during any Installment Payment Year at the
prime rate of National Bank of Detroit in effect on the first business day of
such Installment Payment Year (or the prime rate of any other large commercial
bank selected by the Committee).
(f) If the Participant dies before the entire balance of the Special
Account in his name is paid to him, the entire remaining balance of the Special
Account determined as close as administratively feasible to the time of its
payment shall be paid in a lump sum to the Participant's designated
beneficiary(ies) within 30 days of the Participant's death, or in the absence of
an effective designation of beneficiary, as provided in Section VII(d).
IX. Amendment, Suspension, or Termination of the Plan
-------------------------------------------------
The Board may at any time terminate or amend the Plan without obtaining
the approval of the shareholders of the Company. However, no such action shall
decrease the value of the SAR's granted to a Participant prior to the date of
such action.
X. Contractual Obligation Only
---------------------------
The Employer has only a contractual obligation to pay the amounts owed
to any Participant pursuant to the Plan. The satisfaction of payment obligations
under the Plan is to be made solely out of the general corporate funds of the
Employer, which shall at all times remain subject to the claims of its
creditors. Participants have the status of general unsecured creditors of the
Employer. It is the intention of the Employer and the Participants that the Plan
be unfunded for federal income tax purposes and for purposes of Title I of the
Employee Retirement Income Security Act of 1974, as amended. Further, no amounts
shall be segregated for the purpose of
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securing the Company's liability under the Plan nor be held by the Company in
trust for any Participant other than in a so-called "Rabbi Trust" of the kind
described in Revenue Procedure 92-64 or any successor regulation, ruling or
procedure.
XI. Restrictions on Transfer of Benefits
------------------------------------
Other than as provided in Sections V and VII(d), neither the
Participant nor any other person shall have any right to commute, sell, assign,
transfer, alienate, pledge, anticipate, mortgage or otherwise encumber,
hypothecate or convey in advance of actual receipt the amounts, if any, payable
hereunder, or any part thereof, or interest therein, which are, and all rights
to which are, expressly declared to be unassignable and non-transferable. To the
extent permitted by law no part of the amounts payable shall, prior to actual
payment, be subject to garnishment, attachment, seizure or sequestration for the
payment of any debts, judgments, alimony or separate maintenance owed by the
Participant or any other person, nor be transferable by operation of law in the
event of the Participant's or any other person's bankruptcy or insolvency.
XII. Tax Withholding
---------------
(a) Subject to Section XII(b) below, the Employer shall deduct from all
payments under the Plan each Participant's share of any taxes required to be
withheld by any Federal, state or local government. The Participants and their
beneficiaries, distributees and personal representatives will bear any and all
Federal, foreign, state, local income taxes or any other taxes imposed on
Participants on amounts under the Plan.
(b) Pursuant to Code Section 3121(v), compensation, i.e., the value of
SAR's granted to a Participant, deferred pursuant to the Plan is subject to FICA
taxes at the time when there is no substantial risk of forfeiture of the
Participant's right to an amount equal to such value rather than at the time of
payment to the Participant, if the time of payment is later than the time when
there is no such substantial risk of forfeiture. At the time when there is no
such substantial risk of forfeiture such amount shall be considered "vested for
FICA Purposes". Accordingly, at the time the value of SAR's granted to a
Participant becomes Vested for FICA purposes, the Participant will be required
to pay to the Employer, either by payroll deduction or check, his share of FICA
taxes due and payable, unless the Participant has already reached the maximum
compensation levels, if any, subject to FICA at the time such amount is Vested
for FICA purposes.
XIII. Release and Non-Disclosure
--------------------------
Any payment to a Participant, his beneficiary or other distributee in
accordance with the Plan shall, to the extent thereof, be in full satisfaction
of all claims against the Employer with respect to such payment, and the
Employer may require the Participant or his beneficiary or other distributee, as
a condition precedent to such payment, to execute a receipt and release to such
effect. Additionally, as a condition precedent to payment or commencement of
payments hereunder, and in consideration of such payment(s), a Participant may
be required to execute and
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acknowledge a general release of all claims against the Employer in such form as
the Company may then require.
XIV. Claims and Disputes
-------------------
(a) Claims for benefits under the Plan shall be made in writing to the
Committee. The Participant may furnish the Committee with any written material
he believes necessary to perfect his claim.
(b) A Participant whose claim for benefits under the Plan has been
denied, or his duly authorized representative, may request a review upon written
application to the Committee, may review pertinent documents, and may submit
issues and comments in writing. The claimant's written request for review must
be submitted to the Committee within sixty (60) days after receipt by the
claimant of written notification of the denial of a claim. A decision by the
Committee shall be made promptly, and not later than sixty (60) days after the
Committee's receipt of a request for review, unless special circumstances
require an extension of time for proceeding, in which cases a decision shall be
rendered as soon as possible, but not later than one hundred twenty (120) days
after receipt of the request for review. The decision on review shall be in
writing, shall include reasons for the decision, may include specific reference
to the pertinent provision of the Plan on which the decision is based, and shall
be written in a manner calculated to be understood by the claimant.
XV. General
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(a) Titles and headings to the Sections of the Plan are included for
convenience only and shall not control the meaning or interpretation of any
provision of the Plan. Wherever reasonably necessary in the Plan, pronouns of
any gender shall be deemed synonymous, as shall singular and plural pronouns.
(b) The Plan shall be governed by and construed, enforced, and
administered in accordance with the laws of the State of Michigan excluding any
such laws which direct an application of the laws of any other jurisdiction. The
Company, the Employer and the Committee shall be subject to suit regarding the
Plan only in the courts of the State of Michigan, and the Company shall fully
indemnify and defend the Board and the Committee with respect to any actions
relating to the Plan made in good faith by such bodies or their members.
(c) The provisions of the Plan shall be deemed severable and in the
event any provision of the Plan is held invalid, void, or unenforceable, the
same shall not affect, in any respect whatsoever, the validity of any other
provision of the Plan. Furthermore, the Committee shall have the power to modify
such provision to the extent reasonably necessary to make the provision, as so
changed, both legal, valid and enforceable as well as compatible with the other
provisions of the Plan.
(d) Any notice or filing required or permitted to be given under the
Plan shall be sufficient if in writing and hand delivered, or sent by registered
or certified mail: (a) to the Company or the Committee at the principal office
of the Company, directed to the attention of
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the Secretary of the Company (who is a member of the Committee) and (b) to the
Participant at his last known home address on file with the Company's personnel
office. Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on the receipt
for registration or certification. It shall be the Participant's responsibility
to inform the Company's personnel office, in writing, of any change in his home
address.
(e) By agreeing to participate in and receiving a copy of the Plan,
Participants shall be deemed conclusively to have accepted and consented to all
terms of the Plan and all actions or decisions made by the Company, the Board or
the Committee with regard to the Plan. Such terms and consent shall also apply
to, and be binding upon, the beneficiaries, distributees and personal
representatives and other successors in interest of each Participant.
(f) Nothing in the Plan shall confer upon any Participant any right to
continue in the employ of the Employer or to receive future grants of SAR's, nor
shall anything in the Plan interfere with the right of the Employer to terminate
a Participant's employment at any time for any reason.
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