As filed with the Securities and Exchange Commission on March 4, 1998
Registration No. 333-_______
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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YOUTH SERVICES INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
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Maryland 52-1715690
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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2 Park Center Court, Suite 200
Owings Mills, Maryland 21117
(410) 356-8600
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive office)
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Amendment No. 1 To and Restated
Youth Services International, Inc. 1997 Employee Stock Option Plan
(Full title of the plan)
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Mark S. Demilio, Esquire William Taylor, IV, Esquire
Youth Services International, Inc. Piper & Marbury L.L.P.
2 Park Center Court, Suite 200 36 South Charles Street
Owings Mills, Maryland 21117 Baltimore, Maryland 21201
(410) 356-8600 (410) 576-1876
(Name, address, including zip code, and telephone number, including area code,
of agents for service)
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<TABLE>
CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
Proposed Maximum Proposed Maximum
Title of Securities Amount to be Offering Price Aggregate Amount of
to be Registered Registered Per Share(a) Offering Price(a) Registration Fee(a)
- -----------------------------------------------------------------------------------------------------
Common Stock,
par value $.01 per share 500,000 shares $14.938 $7,469,000 $2,264
- -----------------------------------------------------------------------------------------------------
</TABLE>
(a) Pursuant to Rules 457(c) and (h)(1), the proposed maximum offering price
per share, proposed maximum aggregate offering price and amount of
registration fee are based upon the average of the high and low prices of
the Common Stock of the registrant on the Nasdaq National Market on
February 25, 1998.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. Incorporation of Documents by Reference.
The following documents have been filed by Youth Services
International, Inc. (the "Company") with the Securities and Exchange Commission
and are incorporated herein by reference: (a) Annual Report on Form 10-K for the
transition period ended December 31, 1996; (b) Quarterly Reports on Form 10-Q
for the quarters ended March 31, 1997, June 30, 1997 and September 30, 1997; (c)
Current Reports on Form 8-K dated February 19, 1997, May 12, 1997 and July 22,
1997; and (d) the description of the Company's Common Stock contained in the
section titled "Description of Capital Stock" in the Preliminary Prospectus
included as part of the Company's Registration Statement on Form SB-2 (Reg. No.
33-71958) as filed with the Commission on November 19, 1993 and thereafter
amended and incorporated by reference in the Company's Registration Statement on
Form 8-A filed with the Commission pursuant to Section 12 of the Exchange Act,
and any amendment or report filed for the purpose of updating such description.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Registration
Statement and prior to the filing of a post-effective amendment which indicates
that all securities offered have been sold or which deregisters all securities
remaining unsold shall be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. The documents required to be so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
ITEM 4. Description of Securities.
Not required.
ITEM 5. Interests of Named Experts and Counsel.
Not required.
<PAGE>
ITEM 6. Indemnification of Directors and Officers.
As permitted by the Maryland General Corporation Law, Article SEVENTH,
paragraph (h) of the Company's Charter, provides for indemnification of
directors and officers as follows:
To the maximum extent permitted by the Maryland General
Corporation Law, as from time to time amended, the Corporation shall
indemnify its currently acting and its former directors against any and
all liabilities and expenses incurred in connection with their services
in such capacities, shall indemnify its currently acting and its former
officers to the full extent that indemnification shall be provided to
directors, and may indemnify its employees and agents and persons who
serve and have served, at its request as a director, officer, partner,
trustee, employee or agent of another corporation, partnership, joint
venture or other enterprise as may be determined by the Board of
Directors. The Corporation shall, also to the same extent, advance
expenses to its directors, officers and other persons, if any, and may
by Bylaw, resolution or agreement make further provision for
indemnification of directors, officers, employees and agents. No
amendment or repeal of this paragraph, or the adoption of any provision
of the Corporation's Charter inconsistent with this paragraph, shall
apply to or affect in any respect the indemnification of any director
or officer of the Corporation with respect to any alleged act or
omission which occurred prior to such amendment, repeal or adoption.
The Company's By-Laws provide indemnification rights equivalent to the
rights provided in the Company's Charter. The Maryland General Corporation Law
permits a corporation to indemnify its directors, officers and certain other
parties against judgments, penalties, fines, settlements and reasonable expenses
actually incurred by them in connection with any proceeding to which they may be
made a party by reason of their service to or at the request of the corporation,
unless it is established that (i) the act or omission of the indemnified party
was material to the matter giving rise to the proceeding and (x) was committed
in bad faith or (y) was the result of active and deliberate dishonesty, (ii) the
indemnified party actually received an improper personal benefit in money,
property or services or (iii) in the case of any criminal proceeding, the
indemnified party had reasonable cause to believe that the act or omission was
unlawful. Indemnification may be made against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by the director or officer
in connection with the proceeding; provided, however, that if the proceeding is
one by or in the right of the corporation, indemnification may not be made with
respect to any proceeding in which the director or officer has been adjudged to
be liable to the corporation. The termination of any proceeding by conviction,
or upon a plea of nolo contendere or its equivalent, or an entry of any order of
probation prior to judgment, creates a rebuttable presumption that the director
or officer did not meet the requisite standard of conduct required for
indemnification to be permitted.
The Company's Charter provides that, to the maximum extent that
limitations on the liability of directors and officers are permitted by the
<PAGE>
Maryland General Corporation Law, as from time to time amended, no director or
officer of the Company shall have any liability to the Company or its
stockholders for money damages. The Maryland General Corporation Law provides
that a corporation's charter may include a provision which restricts or limits
the liability of its directors or officers to the corporation or its
stockholders for money damages except: (i) to the extent that it is proved that
the person actually received an improper benefit or profit in money, property or
services, for the amount of the benefit or profit in money, property or services
actually received, or (ii) to the extent that a judgment or other final
adjudication adverse to the person is entered in a proceeding based on a finding
in the proceeding that the person's action, or failure to act, was the result of
active and deliberate dishonesty and was material to the cause of action
adjudicated in the proceeding. This provision does not limit the ability of the
Company or its stockholders to obtain other relief, such as an injunction or
recission.
As permitted under section 2-418(k) of the Maryland General Corporation
Law, the Company currently maintains director and officer liability insurance
coverage on behalf of its directors and officers against any liability asserted
against such directors and officers in their capacity as such, whether or not
the Company would have the power to indemnify such persons under the provisions
of Maryland law governing indemnification.
ITEM 7. Exemption From Registration Claimed.
Not applicable.
ITEM 8. Exhibits.
Exhibit
Number Description
5 Opinion of Piper & Marbury L.L.P. (contains Consent of Counsel).
10 Amendment No. 1 to and Restated 1997 Employee Stock Option Plan.
23.1 Consent of Counsel (contained in Exhibit 5).
23.2 Consent of Arthur Andersen LLP, independent public accountants.
ITEM 9. Undertakings.
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
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement;
<PAGE>
(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.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) 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.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the 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 Act and will be governed by the final adjudication of
such issue.
SIGNATURES
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
<PAGE>
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Baltimore County, the State of Maryland on this 6th day of
February, 1998.
YOUTH SERVICES INTERNATIONAL, INC.
By:/s/ Timothy P. Cole
Timothy P. Cole
Chairman, Chief Executive Officer
and President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.
/s/ Timothy P. Cole Chairman, Chief Executive February 6, 1998
Timothy P. Cole Officer and President (Principal
Executive Officer)
/s/ William P. Mooney Chief Financial Officer and February 6, 1998
William P. Mooney Treasurer (Principal Financial
and Accounting Officer)
/s/ Alan J. Andreini Director February 6, 1998
Alan J. Andreini
/s/ James A. Flick, Jr. Director February 6, 1998
James A. Flick, Jr.
/s/ Lenneal J. Henderson Director February 6, 1998
Lenneal J. Henderson, Ph.D.
/s/ Bobbie L. Huskey Director February 6, 1998
Bobbie L. Huskey
/s/ Janet Langhart Director February 6, 1998
Janet Langhart
/s/ Jacques T. Schlenger Director February 6, 1998
Jacques T. Schlenger, Esq.
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
5 Opinion of Piper & Marbury L.L.P. (contains Consent of Counsel).
10 Amendment No. 1 to and Restated 1997 Employee Stock Option Plan.
23.1 Consent of Counsel (contained in Exhibit 5).
23.2 Consent of Arthur Andersen LLP, independent public accountants.
<PAGE>
Exhibit 5
PIPER & MARBURY
L.L.P.
CHARLES CENTER SOUTH
36 SOUTH CHARLES STREET
BALTIMORE, MARYLAND 21201-3018
410-539-2530
FAX: 410-539-0489 WASHINGTON
NEW YORK
PHILADELPHIA
EASTON
March 4, 1998
Youth Services International, Inc.
2 Park Center Court, Suite 200
Owings Mills, Maryland 21117
Registration Statement on Form S-8
Gentlemen:
We have acted as counsel to Youth Services International, Inc., a
Maryland corporation (the "Company"), in connection with the registration under
the Securities Act of 1933, as amended (the "Act"), pursuant to a Registration
Statement on Form S-8 of the Company (the "Registration Statement") filed with
the Securities and Exchange Commission (the "Commission"), of up to 500,000
shares of common stock, par value $.01 per share, of the Company (the "Shares")
to be issued pursuant to the Amendment No. 1 to and Restated Youth Services
International, Inc. 1997 Employee Stock Option Plan (the "Plan").
In our capacity as counsel to the Company, we have examined the
Registration Statement, the Charter and By-Laws of the Company, as amended and
restated and in effect on the date hereof, minutes of the proceedings of the
Company's Board of Directors authorizing the issuance of the Shares and
authorizing the Plan, and such other documents as we have considered necessary.
We have also examined an Officer's Certificate of the Company dated the date
hereof (the "Certificate"). In such examination, we have assumed, without
independent investigation, the genuineness of all signatures, the legal capacity
of all individuals who have executed any of the aforesaid documents, the
authenticity of all documents submitted to us as originals, the conformity with
originals of all documents submitted to us as copies (and the authenticity of
the originals of such copies), and that all public records reviewed are accurate
and complete. As to factual matters we have relied on the Certificate and have
not independently verified the matters stated therein.
Based upon the foregoing and having regard for such legal
considerations as we deem relevant, we are of the opinion and so advise you that
<PAGE>
upon the issuance and delivery of the Shares in accordance with the terms set
forth in the Plan, the Shares will have been duly and validly authorized and
will be validly issued, fully paid, and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving our consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Act or the rules and regulations of the Commission thereunder.
Very truly yours,
/s/ Piper & Marbury L.L.P.
<PAGE>
Exhibit 10
YOUTH SERVICES INTERNATIONAL, INC.
1997 EMPLOYEE
AMENDMENT NO. 1 TO
AND RESTATED
STOCK OPTION PLAN
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<PAGE>
AMENDMENT NO. 1 TO
AND RESTATED
YOUTH SERVICES INTERNATIONAL, INC.
1997 EMPLOYEE STOCK OPTION PLAN
1. Purpose
The proper execution of the duties and responsibilities of the
executives and key employees of Youth Services International, Inc. and its
subsidiaries is a vital factor in the continued growth and success of the
Corporation. Toward this end, it is necessary to attract and retain effective
and capable individuals to assume positions that contribute materially to the
successful operation of the business of the Corporation. It will benefit the
Corporation, therefore, to bind the interests of these persons more closely to
its own interests by offering them an attractive opportunity to acquire a
proprietary interest in the Corporation and thereby provide them with added
incentive to remain in the service of the Corporation and to increase the
prosperity, growth, and earnings of the Corporation. This stock option plan is
intended to serve these purposes.
2. Definitions
The following terms wherever used herein shall have the meanings set
forth below.
(a) The term "Board of Directors" shall mean the Board of Directors of
the Corporation.
(b) The term "Code" shall mean the Internal Revenue Code of 1986, as
amended, and any regulations promulgated thereunder.
(c) The term "Committee" shall mean the Compensation Committee of the
Board of Directors or any other committee appointed by the Board of Directors,
which committee shall consist solely of two or more of those members of the
Board of Directors who are Non-Employee Directors within the meaning of
Rule16b-3 promulgated under the Exchange Act, as it may be amended from time to
time.
(d) The term "Common Stock" shall mean the shares of common stock, par
value $0.01 per share, of the Corporation.
(e) The term "Corporation" shall mean Youth Services International,
Inc.
(f) The term "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
<PAGE>
(g) The term "Fair Market Value" of a share of Common Stock for any
given date shall mean the closing price of the Common Stock as reported on the
National Association of Securities Dealers Automated Quotation (NASDAQ) National
Market System (or if not traded on such system, as reported by any national
stock exchange on which the Common Stock is traded) on the trading day
immediately preceding such date.
(h) The term "Incentive Stock Option" shall mean any Option granted
pursuant to the Plan that is designated as an Incentive Stock Option and which
satisfies the requirements of Section 422(b) of the Code.
(i) The term "Nonqualified Stock Option" shall mean any Option granted
pursuant to the Plan that is not an Incentive Stock Option.
(j) The term "Option" or "Stock Option" shall mean a right granted
pursuant to the Plan to purchase shares of Common Stock, and shall include the
terms Incentive Stock Option and Nonqualified Stock Option.
(k) The term "Option Agreement" shall mean the written agreement
representing Options granted pursuant to the Plan as contemplated by Paragraph 7
of the Plan.
(l) The term "Plan" shall mean this Youth Services International, Inc.
1997 Employee Stock Option Plan as approved by the Board of Directors on
September 8, 1996 and adopted by the stockholders of the Corporation at the 1996
Annual Meeting of Stockholders, as the same may be amended from time to time.
(m) The term "subsidiary" or "subsidiaries" shall mean a corporation of
which capital stock possessing 50% or more of the total combined voting power of
all classes of its capital stock entitled to vote generally in the election of
directors is owned in the aggregate by the Corporation directly or indirectly
through one or more subsidiaries.
3. Effective Date of the Plan
The Plan shall become effective upon stockholder approval, provided
that such approval is received on or before September 8, 1997, and provided
further that the Board of Directors may grant Options pursuant to the Plan prior
to stockholder approval if such Options by their terms are contingent upon
subsequent stockholder approval of the Plan.
4. Administration
(a) The Plan shall be administered by the Committee.
(b) The Committee may establish, from time to time and at any time, in
its sole and absolute discretion, but subject to the limitations of the Plan as
<PAGE>
set forth herein, such rules and regulations and amendments and supplements
thereto, as it deems necessary to comply with applicable law and regulation and
for the proper administration of the Plan. A majority of the members of the
Committee shall constitute a quorum. The vote of a majority of a quorum shall
constitute action by the Committee.
(c) The Committee may grant options under the Plan, in its sole and
absolute discretion, and shall determine the numbers of shares for which Options
should be granted to each such person and the nature of the Options to be
granted.
(d) Options granted by the Corporation shall be evidenced by a Stock
Option Certificate.
(e) The Committee's interpretation and construction of the provisions
of the Plan and the rules and regulations adopted by the Committee shall be
final. No member of the Committee shall be liable for any action taken or
determination made, in respect of the Plan, in good faith.
5. Participation in the Plan
(a) Participation in the Plan shall be limited to the executives and
key employees of the Corporation and its subsidiaries who shall be designated by
the Committee.
(b) No member of the Committee and no member of the Board of Directors
who is not also an officer of the Corporation shall be eligible to participate
in the Plan.
6. Stock Subject to the Plan
(a) There shall be reserved for the granting of Options pursuant to the
Plan and for issuance and sale pursuant to such Options Five Hundred Thousand
(500,000) shares of Common Stock. To determine the number of shares of Common
Stock available at any time for the granting of Options, the total number of
reserved shares of Common Stock shall be reduced by the number of shares of
Common Stock with respect to which Options have been granted pursuant to the
Plan that are still outstanding or have been exercised. The shares of Common
Stock to be issued upon the exercise of Options granted pursuant to the Plan
shall be made available from the authorized and unissued shares of Common Stock.
If for any reason shares of Common Stock as to which an Option has been granted
cease to be subject to purchase thereunder, then such shares of Common Stock
again shall be available for issuance pursuant to the exercise of Options
pursuant to the Plan. Except as provided in subparagraph 6(c), however, the
aggregate number of shares of Common Stock that may be issued upon the exercise
of Options granted pursuant to the Plan to any single individual shall not
exceed One Hundred Fifty Thousand (150,000) shares.
(b) Proceeds from the purchase of shares of Common Stock upon the
exercise of Options granted pursuant to the Plan shall be used for the general
business purposes of the Corporation.
<PAGE>
(c) In the event of reorganization, recapitalization, stock split,
stock dividend, combination of shares of Common Stock, merger, consolidation,
share exchange, acquisition of property or stock, or any change in the capital
structure of the Corporation, the Committee shall make such adjustments as may
be appropriate in the number and kind of shares reserved for purchase by
executives or other key employees, in the number, kind and price of shares
covered by Options granted pursuant to the Plan but not then exercised, and in
the number of Rights, if any, granted pursuant to the Plan but not then
exercised.
7. Terms and Conditions of Options
(a) Each Option granted pursuant to the Plan shall be evidenced by a
Stock Option Certificate in such form as the Committee from time to time may
determine.
(b) The exercise price per share for Options shall be equal to the Fair
Market Value of a share of Common Stock on the date of grant of the Options.
(c) Each Option, subject to the other limitations set forth in the
Plan, may extend for a period of up to 10 years from the date on which it is
granted. The term of each Option shall be established by the Committee at the
time of grant of the Option, provided that if no term is established by the
Committee the term of the Option shall be 10 years from the date on which it is
granted.
(d) The Committee may provide in the Stock Option Certificate that the
right to exercise each Option for the number of shares subject to each Option
shall vest in the Option holder over such period of time as the Committee, in
its discretion, shall determine for each Option holder.
(e) The Committee may, in its discretion, provide that an Option may
not be exercised in whole or in part for any period or periods of time specified
in the Stock Option Certificate . Except as provided in the Stock Option
Certificate , an Option may be exercised in whole or in part at any time during
its term.
(f) Options shall be nontransferable and nonassignable, except that
Options may be transferred by testamentary instrument or by the laws of descent
and distribution.
(g) Subject to the provisions of paragraph (j) of this Section 7, if an
Option holder's employment with the Company or any of its subsidiaries
terminates without such person having fully exercised any Option, the Option
holder shall have the right, at any time during the ninety (90) days after the
date of termination, to exercise any portion of the option that the option
holder was entitled to exercise on the date of the termination of employment;
provided that in no event may any Option be exercised after the expiration of
the term of the Option. After such ninety (90) day period, the Option and all
rights thereunder shall terminate except (i) to the extent previously exercised
and (ii) as provided in subparagraph (h) of this Paragraph 7.
<PAGE>
(h) The Committee may determine, in its discretion, that the option
holder's Option should not terminate upon the 90 day period set forth in
paragraph (g) or the six month period set forth in paragraph (i) and may take
such action with respect to the Option as the Committee deems appropriate,
including extending the time during which the option holder (or the holder's
executor or administrator) is entitled to purchase the shares of Common Stock
subject to the option and/or accelerating the vesting or exercisability of any
unvested or unexercisable portion of the option.
(i) If an Option holder dies during the term of the holder's Option
(whether while employed or during the period after employment pursuant tot
paragraph (g) or (h) of this Section 7) without having fully exercised the
Option, the executor or administrator of the holder's estate or the person who
inherits the right to exercise the Option by bequest or inheritance shall have
the right within six months of the Option holder's death to purchase the number
of shares of Common Stock that the deceased Option holder was entitled to
purchase at the date of death, after which time the Option shall lapse, provided
that in no event may any Option be exercised after the expiration of the term of
the Option.
(j) The Committee may cancel an Option immediately upon termination of
employment or at any time during the ninety day period referred to in paragraph
(g), if the person had engaged during employment with the Company or engages
during such 90 day period in employment or activities contrary, in the opinion
of the Committee, to the best interests of the Corporation.
(k) The granting of an Option pursuant to the Plan shall not constitute
or be evidence of any agreement or understanding, express or implied, on the
part of the Corporation or any of its subsidiaries to retain or employ the
Option holder for any specified period.
(l) In addition to the general terms and conditions set forth in this
Paragraph 7 in respect of Options granted pursuant to the Plan, Incentive Stock
Options granted pursuant to the Plan shall be subject to the following
additional terms and conditions:
(i) "Incentive stock options" shall be granted only to
individuals who, at the date of grant of the Option, are regular,
full-time employees of the Corporation or any of its subsidiaries;
(ii) No employee who owns beneficially more than 10% of the
total combined voting power of all classes of stock of the Corporation
shall be eligible to be granted an "incentive stock option;"
(iii) The aggregate fair market value (determined at the time
the Incentive Stock Option is granted) of the shares of Common Stock in
<PAGE>
respect of which "incentive stock options" are exercisable for the
first time by the Option holder during any calendar year (under all
such plans of the Corporation and its subsidiaries) shall not exceed
$100,000; and
(iv) The Option Agreement in respect of an Incentive Stock
Option may contain any other terms and conditions specified by the
Committee that are not inconsistent with the Plan, except that such
terms and conditions must be consistent with the requirements for
"incentive stock options" under Section 422 of the Code.
8. Methods of Exercise of Options
(a) An optionee desiring to exercise an Option as to all or a part of
the shares of Common Stock covered by the Option shall deliver to the Company
(i) a completed and signed Stock Option Exercise Form (as attached to the Stock
Option Certificate) specifying the number of shares to be purchased, (ii)
payment (as set forth in Subsection 8(b)) in full for the aggregate exercise
price for the shares of Common Stock being purchased; and (iii) if a
Non-Qualified Option, payment (as set forth in Subsection 8(b)) of an amount
equal to the amount required by the Company to be withheld for federal and state
taxes in connection with the exercise.
(b) Payments of the exercise price and the withholding taxes shall be
paid as follows:
(i) in United States dollars by certified check, or bank
draft, or
(ii) in shares of Common Stock owned by the person exercising
the Option and having a Fair Market Value on the date of exercise (as
defined in subparagraph 1(g) above) equal to the exercise price and
withholding amount, or
(iii) by surrender of a number of shares subject to the Option
with a "Net Value" equal to the Exercise Price and withholding amount
for the shares being purchased in the exercise (a "Cashless Exercise").
The Net Value is equal to the Fair Market Value of the shares being
surrendered on the date of exercise less the exercise price for such
surrendered shares; or
(iv) by a combination of the consideration in clauses (i),
(ii) and (iii).
(c) Notwithstanding the foregoing provisions, the Committee, in
granting Options pursuant to the Plan, may limit the methods in which an Option
may be exercised by any person and, in processing any purported exercise of an
Option granted pursuant to the Plan, may refuse to recognize the method of
exercise selected by the Option holder (other than the method of exercise set
forth in subparagraph 8(b)(i)) if, in the opinion of counsel to the Corporation,
there is a substantial likelihood that the method of exercise selected by the
Option holder would subject the Option holder to a substantial risk of liability
under Section 16 of the Exchange Act.
(d) Notwithstanding the foregoing provisions, the Committee may include
in the Stock Option Certificate relating to any such Nonqualified Stock Option
<PAGE>
provisions limiting or eliminating the Option holder's ability to pay his
withholding tax obligation with shares of Common Stock or, if no such provisions
are included in the Stock Option Certificate but in the opinion of the committee
such withholding would have an adverse tax or accounting effect to the
Corporation, at or prior to exercise of the Nonqualified Stock Option the
Committee may so limit or eliminate the Option holder's ability to pay his
withholding tax obligation with shares of Common Stock. Notwithstanding the
foregoing provisions, a holder of a Nonqualified Stock Option may not elect any
of the methods of satisfying his withholding tax obligation in respect of any
exercise if, in the opinion of counsel to the Corporation, there is a
substantial likelihood that the election or timing of the election would subject
the holder to a substantial risk of liability under Section 16 of the Exchange
Act.
(e) An Option holder at any time may elect in writing to abandon an
Option in respect of all or part of the number of shares of Common Stock as to
which the Option shall not have been exercised.
(f) An Option holder shall have none of the rights of a stockholder of
the Corporation until the shares of Common Stock covered by the Option are
issued to him upon exercise of the Option.
9. Amendments and Discontinuance of the Plan
(a) The Committee shall have the right at any time and from time to
time to amend, modify, or discontinue the Plan provided that, except as provided
in subparagraph 6(c), no such amendment, modification, or discontinuance of the
Plan shall (i) revoke or alter the terms of any valid Option previously granted
pursuant to the Plan, (ii) increase the number of shares of Common Stock to be
reserved for issuance and sale pursuant to Options granted pursuant to the Plan,
(iii) change the maximum aggregate number of shares of Common Stock that may be
issued upon the exercise of Options granted pursuant to the Plan to any single
individual, (iv) decrease the price determined pursuant to the provisions of
subparagraph 7(b), (v) change the class of persons to whom Options may be
granted pursuant to the Plan, or (vi) provide for Options exercisable more than
10 years after the date granted.
10. Plan Subject to Governmental Laws and Regulations
The Plan and the grant and exercise of Options pursuant to the Plan
shall be subject to all applicable governmental laws and regulations.
Notwithstanding any other provision of the Plan to the contrary, the Committee
may in its sole and absolute discretion make such changes in the Plan as may be
required to conform the Plan to such laws and regulations.
11. Duration of the Plan
No Option shall be granted pursuant to the Plan after the close of
business on September 7, 2006.
<PAGE>
Exhibit 23.2
CONSENT OF INDENPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-8 Registration Statement of Youth Services
International, Inc. pertaining to the Youth Services International, Inc. 1997
Employee Stock Option Plan, of our report dated July 23, 1997.
/s/ Arthur Andersen LLP
Baltimore, Maryland,
February 25, 1998
