<PAGE>
As filed with the Securities and Exchange Commission on June 11, 1997
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
___________
LHS GROUP INC.
(Exact name of registrant as specified in its charter)
DELAWARE 58-2224883
(State of incorporation) (IRS Employer Identification No.)
SIX CONCOURSE PARKWAY, SUITE 2700
ATLANTA, GEORGIA 30328
(Address of Principal Executive Offices) (Zip Code)
LHS GROUP INC.
1996 STOCK INCENTIVE PLAN
250,000 STOCK OPTIONS GRANTED TO NON-EMPLOYEE DIRECTORS
436,000 STOCK OPTIONS GRANTED TO CERTAIN FUTURE EMPLOYEES
(Full title of the plan)
JERRY BRAXTON
CHIEF FINANCIAL OFFICER
LHS GROUP INC.
SIX CONCOURSE PARKWAY, SUITE 2700
ATLANTA, GEORGIA 30328
(770) 280-3004
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPY TO:
M. HILL JEFFRIES
ALSTON & BIRD LLP
ONE ATLANTIC CENTER
1201 WEST PEACHTREE STREET
ATLANTA, GEORGIA 30309-3424
(404) 881-7000
___________
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===============================================================================================================
TITLE OF PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION
BE REGISTERED REGISTERED (1) SHARE (2) PRICE FEE
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 2,931,500 $ 5.30 $15,536,950 $ 4,709
- ---------------------------------------------------------------------------------------------------------------
Common Stock, $.01 par value 73,000 $16.75 $ 1,222,750 $ 371
- ---------------------------------------------------------------------------------------------------------------
Common Stock, $.01 par value 74,000 $16.00 $ 1,184,000 $ 359
- ---------------------------------------------------------------------------------------------------------------
Common Stock, $.01 par value 1,607,500 $39.125 $62,893,438 $19,059
- ---------------------------------------------------------------------------------------------------------------
Total 4,686,000 $80,837,138 $24,497
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) This Registration Statement also covers any additional shares that may
hereafter become purchasable as a result of the adjustment provisions of the
LHS Group Inc. 1996 Stock Incentive Plan (the "Plan") and the Option
Agreements with the non-employee directors and certain future employees of
the Company.
(2) Determined in accordance with Rule 457(h), the registration fee is based on
the average option price per share for shares presently subject to options
and, for those shares not presently subject to options, on the average of
the high and low prices of the Registrant's Common Stock reported on the
NASDAQ National Market on June 10, 1997.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed by LHS Group Inc. (the "Company") with the
Securities and Exchange Commission (the "Commission") are incorporated herein by
reference:
(a) The Company's prospectus dated May 15, 1997 which forms a part of
the Company's Registration Statements on Form S-1 (Registration Nos. 333-22195
and 333-27247); and
(b) The description of the Common Stock, $.01 par value per share, of
the Company which is contained in a registration statement filed under Section
12 of the Securities Exchange Act of 1934, including any amendment or report
filed for the purpose of updating such description.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14, and 15(d) of the Securities Exchange Act of 1934 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 the filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES. Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's By-Laws provide for indemnification of directors and officers of
the Company to the full extent permitted by Delaware law.
Section 145 of the General Corporation Law of the State of Delaware provides
generally that a corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at its request in such capacity in another
corporation or business association, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
be the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. In addition, pursuant to the authority of Delaware law, the
Certificate of Incorporation of the Company also eliminates the monetary
liability of directors to the fullest extent permitted by Delaware law.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED. Not applicable.
ITEM 8. EXHIBITS.*
4(a) Registrant's Certificate of Incorporation, as amended, hereby
incorporated by reference from Exhibit 3.1 to the Registrant's Registration
Statement on Form S-1 dated May 15, 1997 with Registration No. 333-22195.
4(b) Registrant's Bylaws hereby incorporated by reference from Exhibit 3.2
to the Registrant's Registration Statement on Form S-1 dated May 15, 1997 with
Registration No. 333-22195.
4(c) LHS Group Inc.'s 1996 Stock Incentive Plan.
<PAGE>
5 Opinion of counsel of Registrant.
23(a) Consent of counsel (included in Exhibit 5).
23(b) Consent of Ernst & Young LLP.
- -------------------------
* Exhibits are numbered in accordance with Item 601 of Regulation S-K.
II-3
<PAGE>
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;
(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;
and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change in such information in the registration statement;
provided, however, that paragraphs (a)(l)(i) and (a)(l)(ii) above 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 Securities Exchange Act of 1934 that are
incorporated by reference 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.
(b) The undersigned issuer 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 l934 (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.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registration pursuant to the foregoing provisions, or otherwise, the
Registration has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act 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.
II-4
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, the registrant,
LHS Group Inc., certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Atlanta, State of Georgia, on the 10th day of
June, 1997.
LHS GROUP INC.
Registrant
By: /s/ Hartmut Lademacher
------------------------
Hartmut Lademacher
Chairman of the Board of Directors and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities on June 10, 1997.
SIGNATURE TITLE
--------- -----
/s/ Hartmut Lademacher Chairman of the Board and Chief Executive Officer
- --------------------------- (Principal Executive Officer)
Hartmut Lademacher
/s/ Jerry W. Braxton Executive Vice President, Chief Financial Officer,
- --------------------------- Treasurer and Director (Principal Financial and
Jerry W. Braxton Accounting Officer)
/s/ Dr. Wolf J. Gaede Executive Vice President, General Counsel and
- --------------------------- Director
Dr. Wolf J. Gaede
Director
- ---------------------------
Ulf Bohla
/s/ William E. Ford Director
- ---------------------------
William E. Ford
Director
- ---------------------------
William O. Grabe
Director
- ---------------------------
George F. Schmitt
II-5
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER* DESCRIPTION
- -------------- -----------
4(c) LHS Group Inc. 1996 Stock Incentive Plan.
5 Opinion of counsel to Registrant.
23(a) Consent of counsel (included in Exhibit 5).
23(b) Consent of Ernst & Young LLP.
- ----------------------
*Exhibits are numbered in accordance with Item 601 of Regulation S-K.
<PAGE>
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------------------
EXHIBITS FILED WITH
REGISTRATION STATEMENT
ON FORM S-8
UNDER
THE SECURITIES ACT OF 1933
--------------------------------------------
LHS GROUP INC.
SIX CONCOURSE PARKWAY, SUITE 2700
ATLANTA, GEORGIA 30328
(770) 280-3004
<PAGE>
EXHIBIT 4(C)
------------
LHS GROUP, INC.
STOCK INCENTIVE PLAN 1996
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1 1
1.1 Purpose........................................ 1
1.2 Administration................................. 1
1.3 Persons Eligible for Awards.................... 2
1.4 Types of Awards Under the Plan................. 2
1.5 Shares Available for Awards.................... 3
1.6 Definitions of Certain Terms................... 3
1.7 Agreements Evidencing Awards................... 4
ARTICLE 2 5
2.1 Grant of Stock Options......................... 5
2.2 Exercisability of Options...................... 5
2.3 Limitation on Exercise......................... 6
2.4 Payment of Option Price........................ 6
2.5 Termination of Employment Due to Death......... 8
2.6 Special ISO Requirements....................... 8
ARTICLE 3 9
3.1 Grant of Restricted Stock Awards............... 9
3.2 Issuance and Restrictions...................... 9
3.3 Forfeiture..................................... 9
3.4 Certificates for Restricted Stock.............. 9
ARTICLE 4 10
4.1 Grant of Other Stock-Based Awards.............. 10
ARTICLE 5 10
5.1 Amendment of the Plan; Modification of Awards.. 10
5.2 Restrictions................................... 11
5.3 Nontransferability............................. 11
5.4 Withholding Taxes.............................. 12
5.5 Adjustments Upon Changes in Capitalization..... 12
5.6 Right of Discharge Reserved.................... 13
5.7 No Rights as a Stockholder..................... 13
5.8 Nature of Payments............................. 13
5.9 Non-Uniform Determinations..................... 13
5.10 Other Payments or Awards....................... 14
5.11 Reorganization................................. 14
5.12 Section Headings............................... 16
5.13 Rights of First Refusal and.................... 16
5.14 Exculpation and Indemnification................ 16
5.15 Effective Date and Term of the Plan............ 16
5.16 Governing Law.................................. 17
<PAGE>
LHS GROUP, INC.
STOCK INCENTIVE PLAN
ARTICLE 1
GENERAL
1.1 Purpose.
-------
The purpose of the LHS Group, Inc. Stock Incentive Plan (the "Plan")
is to provide for certain officers, directors and key personnel, as defined in
Section 1.3, of LHS Group, Inc. (the "Company") and certain of its Affiliates an
equity-based incentive in the form of stock options ("Options"), restricted
stock and other stock-based awards to maintain and enhance the performance and
profitability of the Company. It is the further purpose of this Plan to permit
the granting of Options that will constitute performance based compensation for
certain executive officers, as described in Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), and regulations promulgated
thereunder, if and to the extent that relief from the Code Section 162(m)
limitation on certain tax deductions is sought by the Company.
1.2 Administration.
---------------
(a) The Plan shall be administered by a committee (the "Committee")
appointed by the Board of Directors of the Company (the "Board"), which
Committee shall consist of two or more directors. It is intended that the
directors appointed to serve on the Committee shall be "non-employee directors"
(within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") and "outside directors" (within the
meaning of Code Section 162(m)) to the extent Rule 16b-3 and (if necessary for
relief from the limitation under Code Section 162(m) and such relief is sought
by the Company) Code Section 162(m), respectively, are applicable; however, the
mere fact that a Committee member shall fail to qualify under either of the
foregoing requirements shall not invalidate any Award made by the Committee
which Award is otherwise validly made under the Plan. The members of the
Committee shall be appointed by, and may be changed at any time and from time to
time in the discretion of, the Board.
(b) The Committee shall have the authority (i) to exercise all of the
powers granted to it under the Plan, (ii) to construe, interpret and implement
the Plan and any Plan agreements executed pursuant to the Plan, (iii) to
prescribe, amend and rescind rules relating to the Plan, (iv) to make any
determination necessary or advisable in administering the Plan, and (v) to
correct any defect, supply any omission and reconcile any inconsistency in the
Plan. The acts of a majority of the members present at any meeting of the
Committee at which a quorum is present, or acts approved unanimously in writing
by the entire Committee, shall be the acts of the Committee for purposes of the
Plan.
<PAGE>
(c) The determination of the Committee on all matters relating to the
Plan or any Plan agreement shall be conclusive.
(d) 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
hereunder.
(e) Notwithstanding anything to the contrary contained herein: (i)
until the Board shall appoint the members of the Committee, the Plan shall be
administered by the Board, and (ii) the Board may, in its sole discretion, at
any time and from time to time, resolve to administer the Plan. In either of
the foregoing events, unless otherwise provided herein, the term Committee as
used herein shall be deemed to mean the Board.
1.3 Persons Eligible for Awards.
----------------------------
Awards under the Plan may be made to such officers, employee-directors
and executive, managerial, professional or other employees ("key personnel") of
the Company or its Affiliates as the Committee shall from time to time in its
sole discretion select. From and after the date, if any, upon which the Common
Stock shall be traded on a national securities exchange or on the Nasdaq
National Market, non-employee directors and consultants of the Company will also
be eligible to receive Awards under the Plan.
1.4 Types of Awards Under the Plan.
-------------------------------
(a) Restricted Stock is Common Stock granted to a Participant under
Article 3 of the Plan that is subject to certain restrictions and to risk of
forfeiture.
(b) An Other Stock-Based Award is a right, granted to a Participant
under Article 4 that relates to or is valued by reference to Common Stock or
other Awards relating to Common Stock.
(c) Options granted under the Plan may be either (i) "nonqualified"
stock options subject to the provisions of Code Section 83 or (ii) options
intended to qualify for incentive stock option treatment described in Code
Section 422 or any successor provision thereto.
(d) All Options when granted are intended to be nonqualified stock
options, unless the applicable Plan agreement explicitly states that the Option
is intended to be an incentive stock option. If an Option is intended to be an
incentive stock option, and if for any reason such Option (or any portion
thereof) shall not qualify as an incentive stock option, then, to the extent of
such nonqualification, such Option (or portion) shall be regarded as a
nonqualified stock option appropriately granted under the Plan provided that
such Option (or portion) otherwise meets the Plan's requirements relating to
nonqualified stock options.
2
<PAGE>
1.5 Shares Available for Awards.
----------------------------
(a) Subject to Section 5.5 (relating to adjustments upon changes in
capitalization), the total number of shares of Common Stock with respect to
which Awards may be granted under the Plan shall be four million (4,000,000)
shares of Common Stock.
In accordance with (and without limitation upon) the preceding
sentence, Awards may be granted in respect of shares covered by previously-
granted Awards that have expired, terminated or been canceled for any reason
whatsoever (other than by reason of exercise or vesting) and with respect to
which shares a grantee has received no benefits of ownership (other than voting
rights and dividends that were forfeited on such expiration, termination or
cancellation).
Over the life of the Plan, a person eligible for Awards under the Plan
may not be granted Options under the Plan covering a total of more than one
million (1,000,000) shares of Common Stock.
(b) Shares of Common Stock that shall be subject to issuance pursuant
to the Plan shall be authorized and unissued or treasury shares of Common Stock.
(c) The aggregate Fair Market Value, determined as of the date an
Option is granted, of the Common Stock for which any grantee may be awarded
incentive stock options which are first exercisable by the grantee during any
calendar year under the Plan (or any other stock option plan required to be
taken into account under Code Section 422(d)) shall not exceed $100,000.
1.6 Definitions of Certain Terms.
-----------------------------
(a) The term "Affiliate" as used herein means any person or entity
which, at the time of reference, directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, the
Company.
(b) The term "Award" as used herein means any Option, Restricted Stock
Award, or Other Stock-Based Award, or any other right or interest relating to
Common Stock or cash, granted to a Participant under the Plan.
(c) The term "Common Stock" as used herein means the shares of common
stock of the Company as constituted on the Effective Date, and any other shares
into which such common stock shall thereafter be changed by reason of a
recapitalization, merger, consolidation, split-up, combination, exchange of
shares or the like.
(d) The term "Effective Date" as used herein means the date that the
Plan is adopted by the Board or such other date as the Board shall determine.
3
<PAGE>
(e) Except as otherwise determined by the Committee in its sole
discretion, the "Fair Market Value" as of any determination date and in respect
of any share of Common Stock shall be (i) if the Common Stock is listed for
trading on the New York Stock Exchange, the closing price, regular way, of the
Common Stock on such determination date as reported on the New York Stock
Exchange Composite Tape, or if no such reported sale of the Common Stock shall
have occurred on such determination date, on the next preceding date on which
there was such a reported sale; (ii) if the Common Stock is not so listed but is
listed on another national securities exchange or authorized for quotation on
the National Association of Securities Dealers Inc.'s Nasdaq National Market
("Nasdaq National Market"), the closing price, regular way, of the Common Stock
on such exchange or Nasdaq National Market, as the case may be, on which the
largest number of shares of Common Stock have been traded in the aggregate on
the preceding 20 trading days on such determination date, or if no such reported
sale of the Common Stock shall have occurred on such determination date on such
exchange or Nasdaq National Market, as the case may be, on the preceding date on
which there was such a reported sale on such exchange or Nasdaq National Market,
as the case may be; (iii) if the Common Stock is not listed for trading on a
national securities exchange or authorized for quotation on Nasdaq National
Market, the average of the closing bid and asked prices as reported by the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
on such determination date, or if no such prices shall have been so reported for
such determination date, on the next preceding date for which such prices were
so reported; or (iv) if the Common Stock is not listed for trading on a national
securities exchange, authorized for quotation on Nasdaq National Market or
reported on NASDAQ, the fair market value of the Common Stock on such
determination date, as determined by the Committee in its sole discretion.
1.7 Agreements Evidencing Awards.
-----------------------------
(a) Awards granted under the Plan shall be evidenced by written
agreements. Any such written agreements shall (i) contain such provisions not
inconsistent with the terms of the Plan as the Committee may in its sole
discretion deem necessary or desirable, and (ii) be referred to herein as "Plan
agreements."
(b) Each Plan agreement shall set forth the number of shares of Common
Stock subject to the Award granted thereby.
(c) Each Plan agreement with respect to the granting of an Option
shall set forth the amount (the "Option Exercise Price") payable by the grantee
to the Company in connection with the exercise of the Option evidenced thereby.
Except as otherwise determined by the Committee, the Option Exercise Price per
share shall not be less than the Fair Market Value of a share of Common Stock on
the date the Option is granted. In no event shall an Option be granted with an
exercise price of less than 50 percent of Fair Market Value of the shares of
Common Stock on the date the Option is granted. In no event shall incentive
stock options or stock options intended to be performance-based compensation
under Code Section 162(m) be granted with an exercise price of less than
4
<PAGE>
100 percent of Fair Market Value on the date the Option is granted (subject, in
the case of incentive stock options, to Section 2.6 of the Plan).
ARTICLE 2
STOCK OPTIONS
2.1 Grant of Stock Options.
-----------------------
The Committee may grant Options to purchase shares of Common Stock in
such amounts and subject to such terms and conditions as the Committee shall
from time to time in its sole discretion determine, subject to the terms of the
Plan. Incentive stock options shall be subject to the provisions of Section
2.6.
2.2 Exercisability of Options.
--------------------------
Subject to the other provisions of this Plan:
(a) Exercisability -- In General. Each Plan agreement shall set forth
-----------------------------
the period during which and the conditions subject to which the Option evidenced
thereby shall be exercisable, as determined by the Committee in its sole
discretion (including without limitation any limitations or prohibitions on
exercisability after termination of employment).
(b) Initial Exercisability; Term. Unless the applicable Plan
-----------------------------
agreement, in the Committee's sole discretion, otherwise specifies:
(i) no Option shall be exercisable prior to the first
anniversary of the date of grant;
(ii) unless otherwise earlier expired, terminated or
canceled under the Plan or the Plan agreement, each Option granted
under the Plan shall become exercisable (A) on the first anniversary
of the date of grant, with respect to 25 percent of the shares of
Common Stock subject to the Option, rounded down to the next lower
full share of Common Stock, and (B) on the first day of each of the
next 48 months following such anniversary, with respect to 1.5625
percent of such shares, rounded down to the next lower full share of
Common Stock; provided that, to the extent that the exercisability of
the Option is delayed with respect to fractional shares on account of
rounding, the Option shall also become exercisable with respect to
such fractional shares if and as they become a whole share on a
cumulative basis; and
(iii) each Option that becomes exercisable shall remain 100
percent exercisable through the day prior to the 10th anniversary of
the date of grant or such earlier date on which it expires, terminates
5
<PAGE>
or is canceled under the Plan or the Plan agreement, at which time
such Option shall terminate and cease to be exercisable.
(c) Exercisability After Termination of Employment. Unless otherwise
-----------------------------------------------
provided in the Plan agreement or herein, no Option (or portion thereof) shall
ever be exercisable if the grantee's employment with the Company or its
Affiliates has terminated before the time at which such Option would otherwise
have become exercisable, and any Option that would otherwise become exercisable
after such termination shall not become exercisable and shall be canceled upon
such termination. Notwithstanding the foregoing provisions of this Section 2.2,
Options exercisable pursuant to the schedule set forth by the Committee at the
time of grant may be fully or more rapidly exercisable or otherwise vested at
any time in the sole discretion of the Committee.
(d) Partial Exercise Permitted. Unless the applicable Plan agreement
---------------------------
otherwise provides, an Option granted under the Plan may be exercised from time
to time as to all or part of the full number of shares as to which such Option
shall then be exercisable.
(e) Notice of Exercise; Exercise Date.
---------------------------------
(i) An Option shall be exercisable by the filing of a
written notice of exercise with the Company, on such form and in such
manner as the Committee shall in its sole discretion prescribe, and by
payment in accordance with Section 2.4.
(ii) Unless the applicable Plan agreement otherwise provides
or the Committee in its sole discretion otherwise determines, the date
of exercise of an Option shall be the date the Company receives such
written notice of exercise.
2.3 Limitation on Exercise.
----------------------
Notwithstanding any other provision of the Plan, and subject to
Section 2.6, no Plan agreement shall permit an incentive stock option to be
exercisable more than 10 years after the date of grant.
2.4 Payment of Option Price.
-----------------------
(a) Tender Due Upon Notice of Exercise. Unless the applicable Plan
-----------------------------------
agreement otherwise provides or the Committee in its sole discretion otherwise
determines, any written notice of exercise of an Option shall be accompanied by
payment of the full purchase price for the shares being purchased.
(b) Manner of Payment. Payment of the Option Exercise Price shall be
-----------------
made in any combination of the following:
6
<PAGE>
(i) by certified or official bank check payable to the
Company (or the equivalent thereof acceptable to the Committee);
(ii) with the consent of the Committee in its sole
discretion, by personal check (subject to collection) , which may in
the Committee's sole discretion be deemed conditional;
(iii) if and to the extent provided in the applicable Plan
agreement, by delivery of previously acquired shares of Common Stock
having a Fair Market Value (determined as of the Option exercise date)
equal to the portion of the Option Exercise Price being paid thereby,
provided that the Committee may require the grantee to furnish an
opinion of counsel acceptable to the Committee to the effect that such
delivery does not require any Consent (as defined in Section 5.2(b));
(iv) with the consent of the Committee in its sole
discretion, by the promissory note and agreement of the grantee
providing for payment with interest on the unpaid balance accruing at
a rate not less than that needed to avoid the imputation of income
under Code Section 7872 and upon such terms and conditions (including
the security, if any, therefor) as the Committee may determine;
provided that any promissory note issued in accordance with this
Section 2.4(b)(v) shall be secured by the stock issued in connection
with delivery of such note and shall provide for full recourse against
the grantee, unless the Committee otherwise determines; and
(v) if permitted by the Committee in its sole discretion,
through the written election of the grantee to have Common Stock
withheld by the Company from the Common Stock otherwise to be
received, with such withheld Common Stock having an aggregate Fair
Market Value on the date of exercise equal to the aggregate Option
Exercise Price; provided that the Committee may provide at the time of
the award that it shall not have discretion to decline such election.
(c) Cashless Exercise. Payment in accordance with clause (i) of
------------------
Section 2.4(b) may be deemed to be satisfied if and to the extent acceptable to
the Committee in its sole discretion, as provided in the applicable Plan
agreement or otherwise, (i) by delivery to the Company of an assignment of a
sufficient amount of the proceeds from the sale of Common Stock acquired upon
exercise to pay for all of the Common Stock acquired upon exercise and an
authorization to the broker or selling agent to pay that amount to the Company,
which sale shall be made at the grantee's direction at the time of exercise,
provided that the Committee may require the grantee to furnish an opinion of
counsel acceptable to the Committee to the effect that such delivery does not
require any Consent (as defined in Section 5.2(b)), or (ii) pursuant to such
7
<PAGE>
other arrangement for cashless exercises as may be acceptable to the Committee
in its sole discretion.
(d) Issuance of Shares. As soon as practicable after receipt of full
-------------------
payment, the Company shall deliver to the grantee one or more certificates for
the shares of Common Stock so purchased, which certificates may bear such
legends as the Company may deem appropriate concerning restrictions, including
without limitation any applicable rights of first refusal or rights of
repurchase, on the disposition of the shares in accordance with applicable
securities laws, rules and regulations, or the Plan or the applicable Plan
agreement, or otherwise. Any fractional shares of Common Stock resulting from a
grantee's election under Section 2.4(b) or 5.4 that are accepted by the Company
shall in the sole discretion of the Committee be paid in cash.
2.5 Termination of Employment Due to Death.
---------------------------------------
Unless the applicable Plan agreement provides otherwise, if a grantee
is employment terminates by reason of death, the Options (if any) otherwise
exercisable by him immediately prior to his death shall be exercisable by the
person to whom such Options pass under the grantee's will (or, if applicable,
pursuant to the laws of descent or distribution) until the earlier of (i) one
year after the grantee's death or (ii) the date on which such Options terminate
or expire in accordance with provisions of the Plan and the Plan agreement. Any
person who obtains the right to exercise the Options shall be subject to all the
provisions of the Plan and the Plan agreement.
2.6 Special ISO Requirements.
-------------------------
In order for a grantee to receive special tax treatment with respect
to stock acquired under an Option intended to be an incentive stock option, the
grantee of such Option must be, at all times during the period beginning on the
date of grant and ending on the day three months before the date of exercise of
such Option, an employee of the Company or any of the Company's parent or
subsidiary corporations (within the meaning of Code Section 424), or of a
corporation or a parent or subsidiary corporation of such corporation issuing or
assuming a stock option in a transaction to which Code Section 424(a) applies.
No Option intended to be an incentive stock option shall be granted under the
Plan unless the Plan is approved, directly or indirectly, by (i) the express
consent of stockholders holding at least a majority of the Company's voting
stock voting in person or by proxy at a duly held stockholders, meeting, or (ii)
the unanimous written consent of the stockholders of the Company, within 12
months before or after the date the Plan is adopted. If an Option granted under
the Plan is intended to be an incentive stock option, and if the grantee, at the
time of the grant, owns stock possessing 10 percent or more of the total
combined voting power of all classes of stock of the grantee's employer
corporation or of its parent or subsidiary corporation, then (i) the Option
Exercise Price per share shall in no event be less than 110 percent of the Fair
Market Value of the Common Stock on the date of such grant, and (ii) such Option
shall not be exercisable after the expiration of five years after the date such
Option is granted.
8
<PAGE>
ARTICLE 3
RESTRICTED STOCK AWARDS
3.1. Grant of Restricted Stock.
--------------------------
The Committee is authorized to make Awards of Restricted Stock to
Participants in such amounts and subject to such terms and conditions as may be
selected by the Committee. All Awards of Restricted Stock shall be evidenced by
a Restricted Stock Award Agreement.
3.2. Issuance and Restrictions.
--------------------------
Restricted Stock shall be subject to such restrictions on
transferability and other restrictions as the Committee may impose (including,
without limitation, limitations on the right to vote Restricted Stock or the
right to receive dividends on the Restricted Stock). These restrictions may
lapse separately or in combination at such times, under such circumstances, in
such installments, upon the satisfaction of performance goals or otherwise, as
the Committee determines at the time of the grant of the Award or thereafter.
3.3. Forfeiture.
-----------
Except as otherwise determined by the Committee at the time of the
grant of the Award or thereafter, upon termination of employment during the
applicable restriction period or upon failure to satisfy a performance goal
during the applicable restriction period, Restricted Stock that is at that time
subject to restrictions shall be forfeited and reacquired by the Company;
provided, however, that the Committee may provide in any Award Agreement that
restrictions or forfeiture conditions relating to Restricted Stock will be
waived in whole or in part in the event of terminations resulting from specified
causes, and the Committee may in other cases waive in whole or in part
restrictions or forfeiture conditions relating to Restricted Stock.
3.4. Certificates for Restricted Stock.
----------------------------------
Restricted Stock granted under the Plan may be evidenced in such
manner as the Committee shall determine. If certificates representing shares of
Restricted Stock are registered in the name of the Participant, certificates
must bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Restricted Stock.
9
<PAGE>
ARTICLE 4
OTHER STOCK-BASED AWARDS
4.1. Grant of Other Stock-Based Awards.
----------------------------------
The Committee is authorized, subject to limitations under applicable
law, to grant to Participants such other Awards that are payable in, valued in
whole or in part by reference to, or otherwise based on or related to shares of
Common Stock, as deemed by the Committee to be consistent with the purposes of
the Plan, including without limitation shares of Common Stock awarded purely as
a "bonus" and not subject to any restrictions or conditions, convertible or
exchangeable debt securities, other rights convertible or exchangeable into
shares of Common Stock, and Awards valued by reference to book value of shares
of Common Stock or the value of securities of or the performance of specified
subsidiaries. The Committee shall determine the terms and conditions of such
Awards.
ARTICLE 5
MISCELLANEOUS
5.1 Amendment of the Plan; Modification of Awards.
----------------------------------------------
(a) Plan Amendments. The Board may, without stockholder approval, at
---------------
any time and from time to time suspend, discontinue or amend the Plan in any
respect whatsoever, except that no such amendment shall impair any rights under
any Option theretofore granted under the Plan without the consent of the grantee
of such Option; provided that the Board may not make any amendment to the Plan
that would, if such amendment were not approved by the stockholders of the
Company, cause the Plan to fail to comply with any requirement of applicable law
or regulation, unless and until the approval of the stockholders of the Company
is obtained. Furthermore, from and after the time the Plan is initially
approved by the stockholders, except as and to the extent otherwise permitted by
Section 5.5 or 5.11, no such amendment shall, without stockholder approval,
provide for the grant of stock options that are intended to be performance-based
for purposes of Code Section 1.62(m), or any incentive stock options, having an
Option Exercise Price per share of Common Stock less than 100 percent of the
Fair Market Value of a share of Common Stock on the date of grant.
(b) Award Modifications. With the consent of the grantee and subject
-------------------
to the terms and conditions of the Plan (including Section 5.1(a)), the
Committee may amend outstanding Plan agreements with such grantee, including,
without limitation, any amendment which would (i) accelerate the time or times
at which an Option may vest or become exercisable and/or (ii) extend the
scheduled termination or expiration date of the Option.
10
<PAGE>
5.2 Restrictions.
-------------
(a) Consent Requirements. If the Committee shall at any time
--------------------
determine that any Consent (as hereinafter defined) is necessary or desirable as
a condition of, or in connection with, the granting of any Award under the Plan,
the acquisition, issuance or purchase of shares or other rights hereunder or the
taking of any other action hereunder (each such action being hereinafter
referred to as a "Plan Action"), then such Plan Action shall not be taken, in
whole or in part, unless and until such Consent shall have been effected or
obtained to the full satisfaction of the Committee. Without limiting the
generality of the foregoing, the Committee shall be entitled to determine not to
make any payment whatsoever until Consent has been given if (i) the Committee
may make any payment under the Plan in cash, Common Stock or both, and (ii) the
Committee determines that Consent is necessary or desirable as a condition of,
or in connection with, payment in any one or more of such forms.
(b) Consent Defined. The term "Consent" as used herein with respect
----------------
to any Plan Action means (i) any and all listings, registrations or
qualifications in respect thereof upon any securities exchange or other self-
regulatory organization or under any federal, state, local or foreign law, rule
or regulation, (ii) the expiration, elimination or satisfaction of any
prohibitions, restrictions or limitations under any federal, state or local law,
rule or regulation or the rules of any securities exchange or other self-
regulatory organization, (iii) any and, all written agreements and
representations by the grantee with respect to the disposition of shares, or
with respect to any other matter, which the Committee shall deem necessary or
desirable to comply with the terms of any such listing, registration or
qualification or to obtain an exemption from the requirement that any such
listing, qualification or registration be made, and (iv) any and all consents,
clearances and approvals in respect of a Plan Action by any governmental or
other regulatory bodies or any parties to any loan agreements or other
contractual obligations of the Company or any Affiliate.
5.3 Nontransferability.
-------------------
No Option or unvested Restricted Stock Award granted to any grantee
under the Plan or under any Plan agreement shall be assignable or transferable
by the grantee other than by will or by the laws of descent and distribution;
provided, however, that the Committee may (but need not) permit other transfers
where the Committee concludes that such transferability, (i) does not result in
accelerated taxation, (ii) does not cause any Option intended to be an incentive
stock option to fail to be described in Code Section 422(b), and (iii) is
otherwise appropriate and desirable, taking into account any state or federal
securities laws applicable to transferable Awards. During the lifetime of the
grantee, all rights with respect to any Option granted to the grantee under the
Plan or under any Plan agreement shall be exercisable only by him.
11
<PAGE>
5.4 Withholding Taxes.
------------------
Whenever under the Plan shares of Common Stock are to be delivered
pursuant to an Award, the Committee may require as a condition of delivery that
the grantee remit an amount sufficient to satisfy all federal, state and other
governmental withholding tax requirements related thereto. Whenever cash is to
be paid under the Plan, the Company may, as a condition of its payment, deduct
therefrom, or from any salary or other payments due to the grantee, an amount
sufficient to satisfy all federal, state and other governmental withholding tax
requirements related thereto or to the delivery of any shares of Common Stock
under the Plan.
Upon exercise of an Option, the grantee may, if permitted by the
Committee in its sole discretion, make a written election to have shares of
Common Stock then issued withheld by the Company from the shares of Common Stock
otherwise to be received, or to deliver previously owned shares of Common Stock,
in order to satisfy the liability for such withholding taxes. In the event that
the grantee makes, and the Committee permits, such an election, the number of
shares of Common Stock so withheld or delivered shall have an aggregate Fair
Market Value on the date of exercise sufficient to satisfy the applicable
withholding taxes. Where the exercise of an Option does not give rise to an
obligation by the Company to withhold federal, state or other governmental
income or other taxes on the date of exercise, but may give rise to such an
obligation in the future, the Committee may, in its sole discretion, make such
arrangements and impose such requirements as it deems necessary or appropriate.
Notwithstanding anything contained in the Plan to the contrary, the grantee's
satisfaction of any tax-withholding requirements imposed by the Committee shall
be a condition precedent to the Company's obligation as may otherwise be
provided hereunder to provide shares of Common Stock to the grantee, and the
failure of the grantee to satisfy such requirements with respect to the exercise
of an Option shall cause such Option to be canceled.
5.5 Adjustments Upon Changes in Capitalization.
-------------------------------------------
In the event a stock dividend is declared upon the Common Stock, the
shares of Common Stock then subject to each unexercised Award shall be increased
proportionately without any change in the aggregate purchase price therefor. In
the event the Common Stock shall be changed into or exchanged for a different
number or class of shares of stock or securities of the Company or of another
corporation, whether through reorganization, recapitalization, stock split-up,
combination of shares, merger or consolidation, there shall be substituted for
each such share of Common Stock then subject to each Award the number and class
of shares into which each outstanding share of Common Stock shall be so
exchanged, all without any change in the aggregate purchase price for the shares
then subject to each Award; provided that any Awards covering fractional shares
of Common Stock resulting from any such adjustment shall be eliminated. The
foregoing provisions of this Section 5.5 shall not apply with respect to the
twenty-for-one split of the Common Stock to be effective on October 16, 1996.
12
<PAGE>
5.6 Right of Discharge Reserved.
----------------------------
Nothing in the Plan or in any Plan agreement shall confer upon any
person the right to continue in the employment or service of the Company or an
Affiliate or affect any right which the Company or an Affiliate may have to
terminate the employment or service of such person.
5.7 No Rights as a Stockholder.
---------------------------
No grantee or other person shall have any of the rights of a
stockholder of the Company with respect to shares subject to an Award until the
issuance of a stock certificate (including any restricted stock certificate,
unless otherwise provided in an applicable Plan agreement) to him for such
shares. Except as otherwise provided in Section 5.5, no adjustment shall be
made for dividends, distributions or other rights (whether ordinary or
extraordinary, and whether in cash, securities or other property) for which the
record date is prior to the date such stock certificate is issued.
5.8 Nature of Payments.
-------------------
(a) Any and all Awards hereunder shall be granted, issued, delivered
or paid, as the case may be, in consideration of services performed for the
Company or for its Affiliates by the grantee.
(b) All such Awards shall be considered special incentive payments to
the grantee and shall not, unless otherwise determined by the Committee or
required by the terms of such benefit plan or agreement, be taken into account
in computing the grantee's salary or compensation for the purposes of
determining any benefits under (i) any pension, retirement, life insurance or
other benefit plan of the Company or any Affiliate or (ii) any agreement between
the Company or any Affiliate and the grantee.
(c) By accepting an Award under the Plan, the grantee shall thereby
waive any claim to continued exercise or vesting of an Award or to damages or
severance entitlement related to non-continuation of the Award beyond the period
provided herein or in the applicable Plan agreement, notwithstanding any
contrary provision in any written employment contract with the grantee, whether
any such contract is executed before or after the grant date of the Award.
5.9 Non-Uniform Determinations.
---------------------------
The Committee's determinations under the Plan need not be uniform and
may be made by it selectively among persons who receive, or are eligible to
receive, Awards under the Plan (whether or not such persons are similarly
situated). Without limiting the generality of the foregoing, the Committee
shall be entitled, among other things, to make non-uniform and selective
determinations, and to enter into non-uniform and selective Plan agreements, as
13
<PAGE>
to (a) the persons to receive Awards under the Plan, and (b) the terms and
provisions of Awards under the Plan.
5.10 Other Payments or Awards.
-------------------------
Nothing contained in the Plan shall be deemed in any way to limit or
restrict the Company, any Affiliate or the Committee from making any Award or
payment to any person under any other plan, arrangement or understanding,
whether now existing or hereafter in effect.
5.11 Reorganization.
---------------
(a) In the event that the Company is merged or consolidated with
another corporation and, whether or not the Company shall be the surviving
corporation, there shall be any change in the shares of Common Stock by reason
of such merger or consolidation, or in the event that all or substantially all
of the assets of the Company are acquired by another person, or in the event of
a "Change of Control" (as defined in Section 5.11(c) below) after the date of
the adoption of this Plan, or in the event of a reorganization or liquidation of
the Company (each such event being hereinafter referred to as a "Reorganization
Event") or in the event that the Board shall propose that the Company enter into
a Reorganization Event, then the Committee may in its sole discretion, by
written notice to a grantee, provide that the grantee's Options will be
terminated unless exercised within 30 days (or such longer period as the
Committee shall determine in its sole discretion) after the date of such notice;
provided that if the Committee takes such action the Committee also shall
accelerate the dates upon which all outstanding Options of such grantee shall be
exercisable. Without limiting the generality of the foregoing, or of any other
provisions of this Section 5.11, in the event of a Change of Control (as defined
in Section 5.11(c) below) (i) each Option granted under the Plan shall become
fully and immediately exercisable for all of the shares of Common Stock with
respect to which the Option had not previously become exercisable pursuant to
Section 2.2 or the applicable Plan agreement, and (ii) all restrictions on
outstanding Restricted Stock Awards shall lapse immediately. The Committee also
may in its sole discretion by written notice to a grantee provide that all or
some of the restrictions on any of his other Awards may lapse in the event of a
Reorganization Event upon such terms and conditions as the Committee may
determine.
(b) Whenever deemed appropriate by the Committee, the actions referred
to in Section 5.11(a) may be made conditional upon the consummation of the
applicable Reorganization Event.
(c) For purposes of Section 5.11(a), any of the following events shall
constitute a "Change of Control":
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
14
<PAGE>
"Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 35% or more of the combined
voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that for
purposes of this subsection (i), the following acquisitions shall not
constitute a Change of Control: (A) any acquisition by a Person who is
on the Effective Date the beneficial owner of 35% or more of the
Outstanding Company Voting Securities, (B) any acquisition directly
from the Company, (C) any acquisition by the Company, (D) any
acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the
Company, or (E) any acquisition by any corporation pursuant to a
transaction which complies with clauses (A), (B) and (C) of subsection
(iii) of this definition; or
(ii) Individuals who, as of the Effective Date, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the Effective Date whose election,
or nomination for election by the Company's shareholders, was approved
by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board; or
(iii) Consummation of a reorganization, merger or consolidation
or sale or other disposition of all or substantially all of the assets
of the Company (a "Business Combination"), in each case, unless,
following such Business Combination, (A) all or substantially all of
the individuals and entities who were the beneficial owners of the
Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more
than 65% of the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors of
the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership, immediately
prior to such Business Combination of the Outstanding Company Voting
Securities, and (B) no Person (excluding any corporation resulting
from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such
15
<PAGE>
Business Combination) beneficially owns, directly or indirectly, 35%
or more of the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such
ownership existed prior to the Business Combination, and (C) at least
a majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination.
Notwithstanding the foregoing, the term "Change of Control" shall not include an
offering of any class of shares of Common Stock of the Company or any of its
Affiliates registered under the Securities Act of 1933, as amended (or any
successor act).
5.12 Section Headings.
-----------------
The section headings contained herein are for the purposes of
convenience only and are not intended to define or limit the contents of said
sections.
5.13 Rights of First Refusal and Repurchase.
---------------------------------------
At the time of grant, the Committee may provide in connection with any
grant made under the Plan that shares of Common Stock received in connection
with Awards shall be subject to a right of first refusal pursuant to which the
Company shall be entitled to purchase such shares of Common Stock in the event
of a prospective sale of the shares of Common Stock, subject to such terms and
conditions as the Committee may specify at the time of grant or (if permitted by
the Plan agreement) thereafter, and to a right of repurchase, pursuant to which
the Company shall be entitled to purchase such shares of Common Stock at a price
determined by, or under a formula set by, the Committee at the time of grant or
(if permitted by the Plan agreement) thereafter, subject to such other terms and
conditions as the Committee may specify at the time of grant.
5.14 Exculpation and Indemnification.
--------------------------------
To the maximum extent permitted by law, the Company shall indemnify
and hold harmless the members of the Board and the members of the Committee from
and against any and all liabilities, costs and expenses incurred by such persons
as a result of any act or omission to act in connection with the performance of
such person's duties, responsibilities and obligations under the Plan, other
than such liabilities, costs and expenses as may result from the gross
negligence, bad faith, willful misconduct or criminal acts of such persons.
5.15 Effective Date and Term of the Plan.
------------------------------------
(a) The Plan shall be effective as of the Effective Date; provided
that, notwithstanding any other provision of the Plan, no incentive stock option
16
<PAGE>
made under the Plan shall be exercisable unless and until the Plan is approved,
directly or indirectly, by (i) the express consent of stockholders holding at
least a majority of the Company's voting stock voting in person or by proxy at a
duly held stockholders meeting, or (ii) the unanimous written consent of the
stockholders of the Company, within 12 months before or after the date the Plan
is adopted.
(b) The Plan shall terminate 10 years after the earlier of the date on
which it becomes effective or is approved by shareholders, and no Awards shall
thereafter be made under the Plan. Notwithstanding the foregoing, all Awards
made under the Plan prior to such termination date shall remain in effect until
such Awards have been satisfied or terminated in accordance with the terms and
provisions of the Plan and the applicable Plan agreement.
5.16 Governing Law.
--------------
THE PLAN SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
The foregoing is hereby acknowledged as being the LHS Group, Inc. 1996
Stock Incentive Plan as ratified by the Board of Directors of the Company on
October 14, 1996.
LHS GROUP, INC.
By: /s/ Hartmut Lademacher
------------------------------------
Its: Chairman and Chief Executive Officer
------------------------------------
17
<PAGE>
EXHIBIT 5
---------
[LETTERHEAD OF ALSTON & BIRD LLP APPEARS HERE]
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
404-881-7000
Fax: 404-881-7777
June 11, 1997
LHS Group Inc.
Six Concourse Parkway, Suite 2700
Atlanta, Georgia 30328
Re: LHS Group Inc. - 1996 Stock Incentive Plan
- Options for Non-Employee Directors
- Options for Certain Future Employees
Ladies and Gentlemen:
We have acted as counsel for LHS Group Inc., a Delaware corporation
(the "Company"), in connection with the referenced Registration Statement on
Form S-8 (the "Registration Statement") being filed by the Company with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended, and covering 4,686,000 shares of the Company's common
stock, $0.01 par value ("Common Stock"), 4,000,000 of which may be offered and
sold to the employees of the Company pursuant to the LHS Group Inc. 1996 Stock
Incentive Plan (the "Plan"), 250,000 of which may be offered and sold to non-
employee directors pursuant to stock options, and 436,000 of which may be
offered and sold to certain future employees of the Company pursuant to stock
options (collectively, the "Options"). This Opinion Letter is rendered pursuant
to Item 8 of Form S-8 and Item 601(b)(5) of Regulation S-K.
In the capacity described above, we have considered such matters of
law and of fact, including the examination of originals or copies, certified or
otherwise identified to our satisfaction, of such records and documents of the
Company, certificates of public officials and such other documents as we have
deemed appropriate as a basis for the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that the 4,686,000
shares of Common Stock covered by the Registration Statement and to be issued
upon exercise of the Options, when delivered to participants in accordance with
the terms and conditions of the Plan and the Option Agreements under which they
were granted, will be legally and validly issued, fully paid and nonassessable.
This Opinion Letter is provided to you for your benefit and for the
benefit of the Commission, in each case, solely with regard to the Registration
Statement, may be relied upon by you and the Commission only in connection with
601 Pennsylvania Avenue, N.W.
North Building, Suite 250
Washington, D.C. 20004-2601
<PAGE>
EXHIBIT 23(B)
-------------
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 for registration of 4,000,000 shares of common stock pertaining to the
LHS Group Inc. 1996 Stock Incentive Plan, 250,000 shares of common stock
pertaining to options granted to non-employee directors of the Company and
436,000 shares of common stock pertaining to options granted to certain of the
employees of the Company of our report dated February 7, 1997, with respect to
the consolidated financial statements and schedule of LHS Group Inc. included in
its Registration Statements on Form S-1 (File Nos. 333-22195 and 333-27247),
filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Atlanta, Georgia
June 11, 1997
