<PAGE>
As filed with the Securities and Exchange Commission on June 19, 1998.
================================================================================
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 Issuer as Specified in its Charter)
DELAWARE 58-2224883
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
SIX CONCOURSE PARKWAY
SUITE 2700
ATLANTA, GEORGIA 30328
(770) 280-3000
(Address, including zip code, and telephone number of Principal Executive
Offices)
LHS GROUP INC. 1998 EMPLOYEE STOCK PURCHASE PLAN
LHS GROUP INC. AMENDED AND RESTATED STOCK INCENTIVE PLAN
(Full Titles of the Plans)
JERRY W. BRAXTON COPY TO:
EXECUTIVE VICE PRESIDENT, LAURA G. THATCHER
CHIEF FINANCIAL OFFICER, ALSTON & BIRD LLP
TREASURER AND DIRECTOR ONE ATLANTIC CENTER
LHS GROUP INC. 1201 WEST PEACHTREE STREET, NW
6 CONCOURSE PARKWAY ATLANTA, GEORGIA 30309-3424
SUITE 2700 (404) 881-7546
ATLANTA, GEORGIA 30328
(404) 280-3000
(Name, address, including zip
code, and telephone number,
including area code, of agent
for service)
<TABLE>
<CAPTION>
-----------------------
CALCULATION OF REGISTRATION FEE
================================================================================================================
Proposed Proposed
Maximum Maximum
Title of Securities Amount to Offering Price Aggregate Amount of
to be Registered be Registered Per Unit (1) Offering Price (1) Registration Fee
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 8,500,000 (2) $51.00 $433,500,000.00 $127,883.00
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Determined in accordance with Rule 457(h), the registration fee is based on
the average of the high and low prices of the Company's Common Stock
reported on the Nasdaq National Market on June 15, 1998.
(2) Amount to be registered includes:
(i) 500,000 shares to be issued pursuant to the purchase of shares by
employees under the LHS Group Inc. 1998 Employee Stock Purchase Plan.
(ii) 8,000,000 shares to be issued pursuant to the grant or exercise of
awards under the LHS Group Inc. Amended and Restated Stock Incentive
Plan.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
(a) The documents constituting Part I of this Registration Statement
will be sent or given to participants in the Plans as specified by Rule
428(b)(1) under the Securities Act of 1933, as amended.
(b) Upon written or oral request, the Company will provide, without
charge, the documents incorporated by reference in Item 3 of Part II of this
Registration Statement. The documents are incorporated by reference in the
Section 10(a) prospectus. The Company will also provide, without charge, upon
written or oral request, other documents required to be delivered to employees
pursuant to Rule 428(b). Requests for the above mentioned information, should
be directed to Dr. Wolf J. Gaede, Corporate Secretary, at (770) 280-3000.
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") (File No.
22409) with the Securities and Exchange Commission (the "Commission") pursuant
to the Securities Exchange Act of 1934, as amended (the "Exchange Act") are
incorporated herein by reference and are deemed to be a part hereof from the
date of the filing of such documents:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
(2) The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1998;
(3) All other reports filed by the Company pursuant to Section 13(a) or
15(d) of the Exchange Act since December 31, 1997;
(4) The description of Common Stock contained in the Company's Registration
Statement filed under Section 12 of the Exchange Act, including all amendments
or reports filed for the purpose of updating such description; and
(5) All other documents subsequently filed by the Company pursuant to
Section 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of a
post-effective amendment to this Registration Statement that indicates that all
securities offered have been sold or that deregisters all securities that remain
unsold.
Any statement contained in a document incorporated or deemed incorporated
herein by reference shall be deemed to be modified or superseded for the purpose
of this Registration Statement to the extent that a statement contained herein
or in any subsequently filed document which also is, or is deemed to be,
incorporated herein by reference modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES. Not Applicable.
<PAGE>
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pursuant to the authority of Delaware law, the Company's Articles of
Incorporation provide that the Company may indemnify a director or officer 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 Company, 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 the best interest of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. In addition, the Company's Articles of Incorporation also
eliminate the monetary liability of directors to the fullest extent permitted by
Delaware law.
Under its Bylaws, the Company is required to indemnify its directors and
officers to the fullest extent of the law.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED. Not Applicable.
ITEM 8. EXHIBITS/1/
Exhibit Number Description
-------------- -----------
4.1 Certificate of Incorporation, as amended, filed
herewith.
5 Opinion of Counsel, filed herewith.
23.1 Consent of Counsel (included in Exhibit 5), filed
herewith.
23.2 Consent of Ernst & Young LLP, filed herewith.
24 Power of Attorney (included on signature page).
99.1 LHS Group Inc. 1998 Employee Stock Purchase Plan, filed
herewith.
99.2 LHS Group Inc. Amended and Restated Stock Incentive
Plan, filed herewith.
- ---------------------
/1/ Exhibits are numbered in accordance with Item 601 of Regulation S-K.
<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 this 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 this
Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) 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 Company pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities being offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions described in Item 6 of this Part II,
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
<PAGE>
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 on following page)
<PAGE>
SIGNATURES
The Registrant. 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 June 19,
1998.
LHS GROUP INC.
By: /s/ Hartmut Lademacher
----------------------
Hartmut Lademacher
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Hartmut Lademacher and Dr. Wolf J. Gaede, and each of
them (with full power in each to act alone), as his true and lawful attorneys-
in-fact and agents, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments (including post-effective amendments) to this Registration Statement,
and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents or any of the, or their or his substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
as of June 19, 1998.
Signatures Title
- ------------ -----
/s/ Hartmut Lademacher Chairman of the Board and
- ---------------------- Chief Executive Officer
Hartmut Lademacher (Principal Executive Officer)
/s/ Jerry W. Braxton Executive Vice President, Chief
- ---------------------- Financial Officer, Treasurer and Director
Jerry W. Braxton (Principal Financial and Accounting
Officer)
/s/ Dr. Wolfe J. Gaede Executive Vice President, General Counsel,
- ---------------------- Secretary and Director
Dr. Wolf J. Gaede
<PAGE>
/s/ Ulf Bohla Director
- -----------------------
Ulf Bohla
/s/ William E. Ford Director
- -----------------------
William E. Ford
/s/ William O. Grabe Director
- ------------------------
William O. Grabe
/s/ George F. Schmitt Director
- ------------------------
George F. Schmitt
<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) 280-3000
<PAGE>
EXHIBIT INDEX
TO
REGISTRATION STATEMENT ON FORM S-8
Exhibit Number Description
-------------- -----------
4.1 Certificate of Incorporation, as amended
5 Opinion of Counsel
23.1 Consent of Counsel (included in Exhibit 5)
23.2 Consent of Ernst & Young LLP
24 Power of Attorney (included on signature page)
99.1 LHS Group Inc. 1998 Employee Stock Purchase Plan
99.2 LHS Group Inc. Amended and Restated Stock Incentive Plan
<PAGE>
EXHIBIT 4.1
CERTIFICATE OF INCORPORATION
OF
LHS GROUP HOLDING CORPORATION
The undersigned incorporator, in order to form a corporation under the
General Corporation Law of the State of Delaware (the "General Corporation
Law"), certifies as follows:
1. Name. The name of the corporation is LHS Group Holding Corporation
----
(the "Corporation").
2. Address; Registered Office and Agent. The address of the
------------------------------------
Corporation's registered office is 9 East Loockerman Street, City of Dover,
County of Kent, State of Delaware; and its registered agent at such address is
National Corporate Research, Ltd.
3. Purposes. The purpose of the Corporation is to engage in any lawful
--------
act or activity for which corporations may be organized under the General
Corporation Law.
4. Authorized Capital. The Corporation is authorized to issue two
------------------
classes of stock to be designated, respectively, "Common Stock" and "Preferred
Stock." The total number of shares of stock that the corporation shall have
authority to issue shall be 1,225,000, consisting of 1,000,000 shares of Common
Stock, having a par value of one cent ($.01) per share, and 225,000 shares of
Preferred Stock, having a par value of one cent ($.01) per share.
4.1 The shares of Preferred Stock may be issued from time to time in
one or more series of any number of shares, provided that the aggregate number
of shares issued and not canceled of any and all such series shall not exceed
the total number of shares of Preferred Stock hereinabove authorized. The Board
of Directors of the Corporation (the "Board") is hereby vested with authority to
fix by resolution or resolutions the powers and the designations, preferences
and relative, participating, option or other special rights, and qualifications,
limitations or restrictions thereof, including, without limitation, the voting
rights, the dividend rate, conversion or exchange rights, redemption price and
<PAGE>
liquidation preference, of any series of shares of Preferred Stock, and to fix
the number of shares constituting any such series, and to increase or decrease
the number of shares of any such series (but not below the number of shares
thereof then outstanding). In case the number of shares of any such series
shall be so decreased, the shares constituting such decrease shall resume the
status which they had prior to the adoption of the resolution or resolutions
originally fixing the number of shares of such series. Any of the powers and
the designations, preferences, rights and qualifications, limitations or
restrictions of any such series of Preferred Stock may be made dependent upon
facts ascertainable outside of the resolution or resolutions providing for the
issue of such Preferred Stock adopted by the Board pursuant to the authority
vested in it by this Section 4.1, provided that the manner in which such facts
shall operate upon any of the powers and the designations, preferences, rights
and qualifications, limitations or restrictions of such series of Preferred
Stock is clearly and expressly set forth in the resolution or resolutions
providing for the issue of such Preferred Stock. The term "facts" as used in
the next preceding sentence shall have the meaning given to it in Section 151(a)
of the General Corporation Law. Shares of Preferred Stock of any series that
have been redeemed (whether through the operation of a sinking fund or
otherwise) or that if convertible or exchangeable, have been converted into or
exchanged for shares of any other class or classes shall have the status of
authorized and unissued shares of Preferred Stock of the same series and may be
reissued as a part of the series of which they were originally a part or may be
reclassified and reissued as part of a new series of shares of Preferred Stock
to be created by resolution or resolutions of the Board or as part of any other
series of shares of Preferred Stock, all subject to the conditions or
restrictions on issuance set forth in the resolution or resolutions adopted by
the Board providing for the issue of any series of shares of Preferred Stock.
4.2 (a) Subject to the provisions of any applicable law or of the
By-laws of the Corporation, as from time to time amended, with respect to the
closing of the transfer books or the fixing of a record date for the
-2-
<PAGE>
determination of stockholders entitled to vote and except as otherwise provided
by the resolution or resolutions providing for the issue of any series of shares
of Preferred Stock, the holders of outstanding shares of Common Stock shall
exclusively possess voting power for the election of directors and for all other
purposes, each holder of record of shares of Common Stock being entitled to one
vote for each share of Common Stock standing in his or her name on the books of
the Corporation.
(b) Except as otherwise provided by the resolution or resolutions
providing for the issue of any series of shares of Preferred Stock, the holders
of shares of Common Stock shall be entitled, to the exclusion of the holders of
shares of Preferred Stock of any and all series, to receive such dividends and
other distributions (other than pursuant to clause (c) below) as from time to
time may be declared by the Board.
(c) Except as otherwise provided by the resolution or resolutions
providing for the issue of any series of shares of Preferred Stock, in the event
of any liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, the holders of shares of Common Stock shall be
entitled, to the exclusion of the holders of shares of Preferred Stock of any
and all series, to share, ratably according to the number of shares of Common
Stock held by them, in all remaining assets of the Corporation available for
distribution to its stockholders.
4.3 Subject to the provisions of this Certificate of Incorporation
and except as otherwise provided by law, the stock of the Corporation,
regardless of class, may be issued for such consideration and for such corporate
purposes as the Board may from time to time determine.
5. Name and Mailing Address of Incorporator. The name and mailing
----------------------------------------
address of the incorporator are: Janet B. Lapidus, Esq., c/o Simpson Thacher &
Bartlett, 425 Lexington Avenue, New York, New York 10017.
-3-
<PAGE>
6. Election of Directors. Members of the Board of Directors of the
---------------------
Corporation (the "Board") may be elected either by written ballot or by voice
vote.
7. Limitation of Liability. No director of the Corporation shall be
-----------------------
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, provided that this provision shall
not eliminate or limit the liability of a director (a) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (b) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (c) under Section 174 of the General Corporation Law
or (d) for any transaction from which the director derived any improper personal
benefits.
Any repeal or modification of the foregoing provision shall not adversely
affect any right or protection of a director of the Corporation existing at the
time of such repeal or modification.
8. Indemnification.
---------------
8.1 To the extent not prohibited by law, the Corporation shall
indemnify any person who is or was made, or threatened to be made, a party to
any threatened, pending or completed action, suit or proceeding (a
"Proceeding"), whether civil, criminal, administrative or investigative,
including, without limitation, an action by or in the right of the Corporation
to procure a judgment in its favor, by reason of the fact that such person, or a
person of whom such person is a legal representative, is or was a director or
officer of the Corporation, or, at the request of the Corporation, is or was
serving as a director or officer of any other corporation or in a capacity with
comparable authority or responsibilities for any partnership, limited liability
company, joint venture, trust, employee benefit plan or other enterprise (an
"Other Entity"), against judgments, fines, penalties, excise taxes, amounts paid
in settlement and costs, charges and expenses (including attorneys' fees,
disbursements and other charges). Persons who are not directors or officers of
the Corporation (or otherwise entitled to indemnification pursuant to the
-4-
<PAGE>
preceding sentence) may be similarly indemnified in respect of service to the
Corporation or to an Other Entity at the request of the Corporation to the
extent the Board at any time specifies that such persons are entitled to the
benefits of this Section 8.
8.2 The Corporation shall, from time to time, reimburse or advance to
any director or officer or other person entitled to indemnification hereunder
the funds necessary for payment of expenses, including attorneys' fees and
disbursements, incurred in connection with any Proceeding, in advance of the
final disposition of such Proceeding; provided, however, that, if required by
-------- -------
the General Corporation Law, such expenses incurred by or on behalf of any
director or officer or other person may be paid in advance of the final
disposition of a Proceeding only upon receipt by the Corporation of an
undertaking, by or on behalf of such director or officer (or other person
idemnified hereunder), to repay any such amount so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right of appeal that such director, officer or other person is not
entitled to be indemnified for such expenses.
8.3 The rights to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 8 shall not be deemed
exclusive of any other rights to which a person seeking indemnification or
reimbursement or advancement of expenses may have or hereafter be entitled under
any statute, this Certificate of Incorporation, the By-laws of the Corporation
(the "By-laws"), any agreement, any vote of stockholders or disinterested
directors or otherwise, both as to action in his or her official capacity and as
to action in another capacity while holding such office.
8.4 The rights to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 8 shall continue as
to a person who has ceased to be a director or officer (or other person
indemnified hereunder) and shall inure to the benefit of the executors,
administrators, legatees and distributees of such person.
-5-
<PAGE>
8.5 The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of an Other Entity, against any
liability asserted against such person and incurred by such person in any such
capacity, or arising out of such person's status as such, whether or not the
Corporation would have the power to indemnify such person against such liability
under the provisions of this Section 8, the By-laws or under Section 145 of the
General Corporation Law or any other provision of law.
8.6 The provisions of this Section 8 shall be a contract between the
Corporation, on the one hand, and each director and officer who serves in such
capacity at any time while this Section 8 is in effect and any other person
entitled to indemnification hereunder, on the other hand, pursuant to which the
Corporation and each such director, officer, or other person intend to be, and
shall be, legally bound. No repeal or modification of this Section 8 shall
affect any rights or obligations with respect to any state of facts then or
theretofore existing or thereafter arising or any proceeding theretofore or
thereafter brought or threatened based in whole or in part upon any such state
of facts.
8.7 The rights to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 8 shall be
enforceable by any person entitled to such indemnification or reimbursement or
advancement of expenses in any court of competent jurisdiction. The burden of
proving that such indemnification or reimbursement or advancement of expenses is
not appropriate shall be on the Corporation. Neither the failure of the
Corporation (including its Board, its independent legal counsel and its
stockholders) to have made a determination prior to the commencement of such
action that such indemnification or reimbursement or advancement of expenses is
proper in the circumstances nor an actual determination by the Corporation
(including its Board, its independent legal counsel and its stockholders) that
such person is not entitled to such indemnification or reimbursement or
-6-
<PAGE>
advancement of expenses shall constitute a defense to the action or create a
presumption that such person is not so entitled. Such a person shall also be
indemnified for any expenses incurred in connection with successfully
establishing his or her right to such indemnification or reimbursement or
advancement of expenses, in whole or in part, in any such proceeding.
8.8 Any director or officer of the Corporation serving in any
capacity (a) another corporation of which a majority of the shares entitled to
vote in the election of its directors is held, directly or indirectly, by the
Corporation or (b) any employee benefit plan of the Corporation or any
corporation referred to in clause (a) shall be deemed to be doing so at the
request of the Corporation.
8.9 Any person entitled to be indemnified or to reimbursement or
advancement of expenses as a matter of right pursuant to this Section 8 may
elect to have the right to indemnification or reimbursement or advancement of
expenses interpreted on the basis of the applicable law in effect at the time of
the occurrence of the event or events giving rise to the applicable Proceeding,
to the extent permitted by law, or on the basis of the applicable law in effect
at the time such indemnification or reimbursement or advancement of expenses is
sought. Such election shall be made, by a notice in writing to the Corporation,
at the time indemnification or reimbursement or advancement of expenses is
sought; provided, however, that if no such notice is given, the right to
-------- -------
indemnification or reimbursement or advancement of expenses shall be determined
by the law in effect at the time indemnification or reimbursement or advancement
of expenses is sought.
9. Adoption, Amendment and/or Repeal of By-laws. The Board may from time
--------------------------------------------
to time adopt, amend or repeal the By-laws of the Corporation pursuant to the
terms of such By-laws; provided, however, that any By-laws adopted or amended by
-------- -------
the Board may be amended or repealed, and any By-laws may be adopted, by the
stockholders of the Corporation, subject to the terms of such By-laws, by vote
-7-
<PAGE>
of a majority of the holders of shares of stock of the Corporation entitled to
vote in the election of directors of the Corporation.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Incorporation this 19th day of December, 1995.
/s/ Janet B. Lapidus
----------------------------------
Janet B. Lapidus, Incorporator
-8-
<PAGE>
LHS GROUP HOLDING CORPORATION
CERTIFICATE OF THE POWERS, DESIGNATIONS,
PREFERENCES AND RIGHTS OF THE
SERIES A CONVERTIBLE PREFERRED STOCK,
PAR VALUE $.01 PER SHARE
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
LHS Group Holding Corporation, a Delaware corporation (the "Corporation"),
does hereby certify that pursuant to the provisions of Section 151 of the
General Corporation Law of the State of Delaware, the Board of Directors of the
Corporation (the "Board of Directors") duly adopted by the unanimous written
consent of the Board of Directors the following resolution, which resolution
remains in full force and effect on the date hereof:
WHEREAS, the Board of Directors is authorized, within the limitations and
restrictions stated in the Certificate of Incorporation of the Corporation, to
provide by resolution or resolutions for the powers and designations of each
series of Preferred Stock, par value $.01 per share, of the Corporation (the
"Preferred Stock"), and the voting powers, full or limited, or without voting
powers, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, as are not
stated and expressed in the Certificate of Incorporation, or any amendment
thereto, including (but without limiting the generality of the foregoing) such
provisions as may be desired concerning voting, redemption, dividends,
dissolution or the distribution of assets and such other subjects or matters as
may be fixed by resolution or resolutions of the Board of Directors under the
General Corporation Law of the State of Delaware; and
WHEREAS, it is the desire of the Board of Directors, pursuant to its
authority as aforesaid, to authorize and fix the terms of a series of preferred
stock and the number of shares constituting such series.
NOW, THEREFORE, BE IT RESOLVED, that there is hereby authorized such series
of Preferred Stock on the terms and with the provisions set forth herein:
1. Designation and Number of Shares. The designation of the series of
--------------------------------
Preferred Stock authorized by this resolution shall be "Series A Convertible
Preferred Stock" (the "Series A Preferred Stock"). The authorized number of
shares of Series A Preferred Stock shall be 225,000.
<PAGE>
2. Rank. The Series A Preferred Stock shall, with respect to rights upon
----
the liquidation, winding up and dissolution of the Corporation, rank senior to
(a) all classes of common stock of the Corporation (including, without
limitation, the Common Stock, par value $.01 per share, of the Corporation (the
"Common Stock")) and (b) each other class or series of Capital Stock of the
Corporation hereafter created which does not expressly rank pari passu with or
---- -----
senior to the Series A Preferred Stock. All Capital Stock of the Corporation to
which the Series A Preferred Stock ranks senior with respect to dividends and
upon liquidation, dissolution, winding up or otherwise is collectively referred
to herein as the "Junior Securities"; and all Capital Stock of the Corporation
authorized by the Board of Directors after the date hereof which may rank on
parity as to any one of dividends, or upon liquidation, dissolution, winding up
or otherwise and does not rank senior as to any of the same are collectively
referred to herein as "Parity Securities."
3. Dividends. Beginning on the date of issuance of the Series A
---------
Preferred Stock, if the Board of Directors of the Corporation shall declare a
dividend or make any other distribution (including, without limitation, in cash
or other property or assets), to holders of shares of Common Stock, then the
holders of each share of Series A Preferred Stock shall be entitled to receive,
when and as adopted by the Board of Directors, out of funds legally available
therefor, a dividend or distribution in an amount equal to the amount of such
dividend or distribution received by a holder of the number of shares of Common
Stock for which such share of Series A Preferred Stock is convertible on the
record date for such dividend or distribution. Any such amount shall be paid to
the holders of shares of Series A Preferred Stock at the same time such dividend
or distribution is made to holders of Common Stock.
4. Liquidation Preference.
----------------------
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the holders of
shares of Series A Preferred Stock then outstanding shall be entitled to be paid
for each share held thereby, out of the assets of the Corporation available for
distribution to its stockholders, an amount in cash equal to $88.89 for each
such share outstanding (the "Liquidation Preference") plus an amount in cash
equal to all declared and unpaid dividends thereon to the date fixed for
liquidation, dissolution or winding up, before any payment shall be made or any
assets distributed to the holders of any shares of Junior Securities. Except as
provided in the preceding sentence, holders of the Series A Preferred Stock
shall not be entitled to any distribution in the event of any liquidation,
dissolution or winding up of the affairs of the Corporation. If the assets of
the Corporation are not sufficient to pay in full the foregoing liquidation
payments payable to the holders of outstanding shares of the Series A Preferred
Stock and any Parity Securities, then the holders of all shares of Series A
Preferred Stock and any Parity Securities shall share ratably in such
distribution of assets in accordance with the amount that would be payable on
such distribution if the amounts to which the holders of outstanding shares of
Series A Preferred Stock and the holders of
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<PAGE>
outstanding shares of such Parity Securities, if any, are entitled were paid in
full. After the holder of all shares of Series A Preferred Stock any Parity
Securities shall have been paid in full the amounts to which they are entitled
under this paragraph 4, the remaining net assets of the Corporation may be
distributed to the holders of Junior Securities. Written notice of such
liquidation, dissolution or winding up, stating a payment date, the amount of
the Liquidation Payments and the place where such Liquidation Payments shall be
payable, shall be delivered in person, mailed by certified or registered mail,
return receipt requested, or sent by telecopier or telex, not less than ten (10)
days prior to the payment date stated therein, to the holders of record of the
Series A Preferred Stock, such notice to be addressed to each such holder at its
address as shown by the records of the Corporation.
(b) For the purposes of paragraph 2 and this paragraph 4, (i) the
voluntary sale, conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all or part of the
property or assets of the Corporation and (ii)(x) the merger or consolidation of
the Corporation into or with one or more other corporations or (y) the merger or
consolidation of one or more corporations into or with the Corporation, if, in
the case of (x) or (y), the stockholders of the Corporation prior to such merger
or consolidation do not retain at least a majority of the voting power of the
surviving corporation, shall be deemed to be a liquidation, dissolution or
winding up, voluntary or involuntary, of the affairs of the Corporation.
5. Redemption. The shares of Series A Preferred Stock shall not be
----------
redeemed or subject to redemption, whether at the option of the Corporation or
any holder thereof, or otherwise.
6. Voting Rights.
-------------
(a) The holders of record of Series A Preferred Stock, except as
otherwise required under Delaware law or as set forth in paragraph (b) below,
shall not be entitled or permitted to vote on any matter required or permitted
to be voted upon by the stockholders of the Corporation.
(b) So long as any shares of the Series A Preferred Stock are
outstanding, each share of Series A Preferred Stock shall entitle the holder
thereof to vote, in person or by proxy, at a special or annual meeting of
stockholders, on all matters entitled to be voted on by holders of Common Stock
voting together as a single class with other shares entitled to vote thereon.
With respect to any such vote, each share of Series A Preferred Stock shall
entitle the holder thereof to cast that number of votes per share as is equal to
the number of votes that such holder would be entitled to cast had such holder
converted its shares of Series A Preferred Stock into shares of Common Stock on
the record date for determining the stockholders of the Corporation eligible to
vote on any such matters.
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<PAGE>
7. Conversion.
----------
(a) Any holder of Series A Preferred Stock shall have the right, at
its option, at any time and from time to time, to convert, subject to the terms
and provisions of this paragraph 7, any or all of such holder's shares of Series
A Preferred Stock into such number of fully paid and non-assessable shares of
Common Stock as is equal to the product of the number of shares of Series A
Preferred Stock being so converted multiplied by the quotient of (i) the
Liquidation Preference divided by (ii) the conversion price of $88.89 per share,
subject to adjustment as provided in paragraph 7(d) (the "Conversion Price"),
then in effect. Such conversion right shall be exercised by the surrender of
the shares of Series A Preferred Stock to be converted to the Corporation at any
time during usual business hours at its principal place of business to be
maintained by it, accompanied by written notice that the holder elects to
convert such shares of Series A Preferred Stock and specifying the name or names
(with address) in which a certificate or certificates for shares of Common Stock
are to be issued and (if so required by the Corporation) shall be duly endorsed
to the Corporation or in blank, or accompanied by a written instrument or
instruments of transfer in form reasonably satisfactory to the Corporation duly
executed by the holder or its duly authorized legal representative and transfer
tax stamps or funds therefor, if required pursuant to paragraph 7(j). All
shares of Series A Preferred Stock surrendered for conversion shall be delivered
to the Corporation for cancellation and canceled by it and no shares of Series A
Preferred Stock shall be issued in lieu thereof.
(b) As promptly as practicable after the surrender, as herein
provided, of any shares of Series A Preferred Stock for conversion pursuant to
paragraph 7(a), the Corporation shall deliver to or upon the written order of
the holder of such shares of Series A Preferred Stock so surrendered a
certificate or certificates representing the number of duly authorized, fully
paid and non-assessable shares of Common Stock (including fractional shares
thereof) into which such shares of Series A Preferred Stock may be or have been
converted in accordance with the provisions of this paragraph 7. Subject to the
following provisions of this paragraph and of paragraph 7(d), such conversion
shall be deemed to have been made immediately prior to the close of business on
the date that such shares of Series A Preferred Stock shall have been
surrendered in satisfactory form for conversion, and at such time the rights of
the holders of such shares of Series A Preferred Stock shall cease, and the
Person or Persons entitled to receive the shares of Common Stock deliverable
upon conversion of such shares of Series A Preferred Stock shall be treated for
all purposes as having become the record holder or holders of such shares of
Common Stock as and after such time, and such conversion shall be at the
Conversion Price in effect at such time; provided, however, that no surrender
-------- -------
shall be effective to constitute the Person or Persons entitled to receive the
shares of Common Stock deliverable upon such conversion as the record holder or
holders of such shares of Common Stock while the share transfer books of the
Corporation shall be closed (but not for any period in excess of five days), but
such surrender shall be effective to constitute the Person or Persons entitled
-12-
<PAGE>
to receive such shares of Common Stock as the record holder or holders thereof
for all purposes immediately prior to the close of business on the next
succeeding day on which such share transfer books are open, and such conversion
shall be deemed to have been made at, and shall be made at the Conversion Price
in effect at, such time on such next succeeding day.
(c) To the extent permitted by law, when shares of Series A Preferred
Stock are converted, all dividends declared and unpaid on the shares of Series A
Preferred Stock so converted to the date of conversion shall be immediately due
and payable and must accompany the shares of Common Stock issued upon such
conversion.
(d) The Conversion Price shall be subject to adjustment as follows:
(i) In the event that the Corporation shall at any time or from
time to time (w) pay a dividend or make a distribution (other than a dividend or
distribution paid or made to holders of shares of Series A Preferred Stock in
the manner provided in paragraph 3) on its outstanding shares of Common Stock in
Capital Stock, (x) subdivide the outstanding shares of Common Stock into a
larger number of shares, (y) combine its outstanding shares of Common Stock into
a smaller number of shares or (z) issue any shares of its Capital Stock in a
reclassification of the Common Stock, then, and in each such case, the
Conversion Price in effect immediately prior to such event shall be
proportionately adjusted (and any other appropriate actions shall be taken by
the Corporation) so that the holder of any share of Series A Preferred Stock
thereafter surrendered for conversion shall be entitled to receive upon
conversion the number of shares of Common Stock or other securities of the
Corporation that such holder would have owned or would have been entitled to
receive upon or by reason of any of the events described above, had such share
of Series A Preferred Stock been converted immediately prior to the occurrence
of such event. An adjustment made pursuant to this paragraph 7(d)(i) shall
become effective retroactively (x) in the case of any such dividend or
distribution, to a date immediately following the close of business on the
record date for the determination of holders of Common Stock entitled to receive
such dividend or distribution or (y) in the case of any such subdivision,
combination or reclassification, to the close of business on the day upon which
such corporate action becomes effective. If after an adjustment pursuant to this
paragraph 7(d)(i), a holder may receive shares of two or more classes of
securities of the Corporation upon conversion, the Board of Directors shall
determine in good faith the allocation of the adjusted Conversion Price between
the classes of securities to the extent practicable and consistent with this
Certificate of Designations. After such allocation, the Conversion Price of each
class of securities shall thereafter be subject to adjustment on terms as nearly
equivalent as may be practicable to the adjustment provided for in this
paragraph 7. Such adjustment shall be made successively whenever any event
listed above shall occur.
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<PAGE>
(ii) In case the Corporation shall at any time or from time to
time distribute to all holders of shares of its Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Corporation is the resulting or surviving corporation and the Common Stock is
not changed or exchanged) cash, evidences of indebtedness of the Corporation or
another issuer, securities of the Corporation or another issuer or other assets
(excluding dividends or distributions paid or made to holders of shares of
Series A Preferred Stock in the manner provided in paragraph 3, and dividends
payable in shares of Common Stock for which adjustment is made under paragraph
7(d)(i) or rights or warrants to subscribe for or purchase securities of the
Corporation (excluding those distributions in respect of which an adjustment in
the Conversion Price is made pursuant to paragraph 7(d)(i)), then, and in each
such case, the Conversion Price then in effect shall be adjusted by dividing the
Conversion Price in effect immediately prior to the date of such distribution by
a fraction (x) the numerator of which shall be the Current Market Price of the
Common Stock on the record date referred to below and (y) the denominator of
which shall be such Current Market Price of the Common Stock less the then Fair
Market Value (as determined by the Board of Directors) of the portion of the
cash, evidences of indebtedness, securities or other assets so distributed or of
such subscription rights or warrants applicable to one share of Common Stock
(but such denominator not to be less than one); provided, however, that no
-------- -------
adjustment shall be made with respect to any distribution of rights to purchase
securities of the Corporation if the holder of shares of Series A Preferred
Stock would otherwise be entitled to receive such rights upon conversion at any
time of shares of Series A Preferred Stock into Common Stock. Such adjustment
shall be made whenever any such distribution is made and shall become effective
retroactively to a date immediately following the close of business on the
record date for the determination of stockholders entitled to receive such
distribution.
(iii) In the case the Corporation, at any time or from time to
time, shall take any action affecting its Common Stock similar to or having an
effect similar to any of the actions described in any of paragraph 7(d)(i) or
paragraph 7(d)(ii), inclusive, or paragraph 7(h) (but not including any action
described in any such paragraph) and the Board of Directors in good faith
determines that it would be equitable in the circumstances to adjust the
Conversion Price as a result of such action, then, and in each such case, the
Conversion Price shall be adjusted in such manner and at such time as the Board
of Directors of the Corporation in good faith determines would be equitable in
the circumstances (such determination to be evidenced in a resolution, a
certified copy of which shall be mailed to the holders of the shares of Series A
Preferred Stock).
(iv) Notwithstanding anything herein to the contrary, no
adjustment under this paragraph 7(d) need be made to the Conversion Price unless
such adjustment would require an increase or decrease of at least 1% of the
Conversion Price then in effect. Any lesser adjustment shall be carried forward
and shall be made at the time of and together with the next subsequent
adjustment, which, together with any adjustment or adjustments so carried
-14-
<PAGE>
forward, shall amount to an increase or decrease of at least 1% of such
Conversion Price. Any adjustment to the Conversion Price carried forward and not
theretofore made shall be made immediately prior to the conversion of any shares
of Series A Preferred Stock pursuant hereto.
(v) Notwithstanding anything herein to the contrary, no adjustment
under this paragraph 7(d) shall be made upon the grant of options to employees
or directors of the Corporation pursuant to benefit plans approved by the Board
of Directors.
(e) If the Corporation shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or other
distribution, and shall thereafter and before the distribution to stockholders
thereof legally abandon its plan to pay or deliver such dividend or
distribution, then thereafter no adjustment in the Conversion Price then in
effect shall be required by reason of the taking of such record.
(f) Upon any increase or decrease in the Conversion Price, then, and
in each such case, the Corporation promptly shall deliver to each registered
holder of Series A Preferred Stock at least five (5) Business Days prior to
effecting any of the foregoing transactions a certificate, signed by the
President or a Vice President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary of the Corporation, setting forth in
reasonable detail the event requiring the adjustment and the method by which
such adjustment was calculated and specifying the increased or decreased
Conversion Price then in effect following such adjustment.
(g) In case of any capital reorganization or reclassification or other
change of outstanding shares of Common Stock (other than a change in par value,
or from par value to no par value, or from no par value to par value or as a
result of a subdivision or combination), or in case of any consolidation or
merger of the Corporation with or into another Person (other than a
consolidation or merger in which the Corporation is the resulting or surviving
Person and which does not result in any reclassification or change of
outstanding Common Stock), or in case of any sale or other disposition to
another Person of all or substantially all of the assets of the Corporation
which is effected in such a way that holders of Common Stock are entitled to
receive stock or other securities or property (including, without limitation,
cash) (any of the foregoing, a "Transaction"), the Corporation, or such
successor or purchasing Person, as the case may be, shall execute and deliver to
each holder of Series A Preferred Stock at least ten (10) Business Days prior to
effecting any of the foregoing Transactions a certificate that the holder of
each share of Series A Preferred Stock then outstanding shall have the right
thereafter to convert such share of Series A Preferred Stock into the kind and
amount of shares of stock or other securities (of the Corporation or another
issuer) or property or cash receivable upon such Transaction by a holder of the
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<PAGE>
number of shares of Common Stock into which such share of Series A Preferred
Stock could have been converted immediately prior to such Transaction.
(h) In case at any time or from time to time:
(w) the Corporation shall declare a dividend (or any other
distribution) on its shares of Common Stock;
(x) the Corporation shall authorize the granting to the holders of
its Common Stock or rights or warrants to subscribe for or purchase any shares
of Capital Stock of any class or of any other rights or warrants (excluding
shares of Capital Stock or rights for Capital Stock issued pursuant to an
employee benefit plan of the Corporation);
(y) there shall be any reclassification of the Common Stock (other
than a subdivision or combination of the outstanding shares of Common Stock), or
any consolidation or merger to which the Corporation is a party and for which
approval of any stockholders of the Corporation is required, or any sale or
other disposition of all or substantially all of the assets of the Corporation;
or
(z) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
then the Corporation shall mail to each holder of shares of Series A Preferred
Stock at such holder's address as it appears on the transfer books of the
Corporation, as promptly as possible but in any event at least ten (10) days
prior to the applicable date hereinafter specified, a notice stating (A) the
date on which a record is to be taken for the purpose of such dividend,
distribution or grant of rights or warrants or, if a record is not to be taken,
the date as of which the holders of Common Stock of record to be entitled to
such dividend, distribution or grant of rights are to be determined, or (B) the
date on which such reclassification, consolidation, merger, sale, conveyance,
dissolution, liquidation or winding up is expected to become effective. Such
notice also shall specify the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their Common Stock for
shares of stock or other securities or property or cash deliverable upon such
reclassification, consolidation, merger, sale, conveyance, dissolution,
liquidation or winding up.
(i) The Corporation shall at all times reserve and keep available for
issuance upon the conversion of the Series A Preferred Stock, such number of its
authorized but unissued shares of Common Stock as will from time to time be
sufficient to permit the conversion of all outstanding shares of Series A
Preferred Stock, and shall take all action required to increase the authorized
number of shares of Common Stock if at any time there shall be insufficient
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<PAGE>
authorized but unissued shares of Common Stock to permit such reservation or to
permit the conversation of all outstanding shares of Series A Preferred Stock.
(j) The issuance or delivery of certificates for Common Stock upon the
conversion of shares of Series A Preferred Stock shall be made without charge to
the converting holder of shares of Series A Preferred Stock for such
certificates or for any tax in respect of the issuance or delivery of such
certificates or the securities represented thereby, and such certificates shall
be issued or delivered in the respective names of, or (subject to compliance
with the applicable provisions of federal and state securities laws) in such
names as may be directed by, the holders of the shares of Series A Preferred
Stock converted; provided, however, that the Corporation shall not be required
-------- -------
to pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any such certificate in a name other than that of the
holder of the shares of Series A Preferred Stock converted, and the Corporation
shall not be required to issue or deliver such certificate unless or until the
Person or Persons requesting the issuance or delivery thereof shall have paid to
the Corporation the amount of such tax or shall have established to the
reasonable satisfaction of the Corporation that such tax has been paid.
8. Automatic Conversion. Each share of Series A Preferred Stock shall
--------------------
automatically be converted into shares of Common Stock at the then applicable
Conversion Price prior to the closing of a firm commitment underwritten initial
public offering pursuant to an effective registration statement under the
Securities Act covering at least the offer and sale of shares of Common Stock
for the account of the Corporation resulting in the aggregate net proceeds to
the Corporation in excess of $15,000,000. In the event of such offering, the
Person(s) entitled to receive the shares of Common Stock issuable upon such
conversion of the Series A Preferred Stock shall not be deemed to have converted
the Series A Preferred Stock until immediately prior to the closing of such
offering, except that any such Person may convert its shares of Series A
Preferred Stock at an earlier time in accordance with paragraph 7(a).
9. Certain Remedies. Any registered holder of Series A Preferred Stock
----------------
shall be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Certificate of Designations and to enforce specifically the
terms and provisions of this Certificate of Designations, this being in addition
to any other remedy to which such holder may be entitled at law or in equity.
10. Reissuance of Series A Preferred Stock. Shares of Series A Preferred
--------------------------------------
Stock that have been issued and reacquired in any manner, including shares
purchased or converted, shall (upon compliance with any applicable provisions of
the laws of Delaware) have the status of authorized and unissued shares of
Preferred Stock undesignated as to series and may be redesignated and reissued
as part of any series of preferred stock (other than Series A Preferred Stock).
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<PAGE>
11. Business Day. If any payment shall be required by the terms hereof to
------------
be made on a day that is not a Business Day, such payment shall be made on the
immediately succeeding Business Day.
12. Definitions. As used in this Certificate of Designations, the
-----------
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
---- -----
unless the context otherwise requires:
"Board of Directors" means the Board of Directors of the Corporation.
"Business Day" means any day except a Saturday, a Sunday, or other day on
which commercial banks in the State of New York are authorized or required by
law or executive order to close.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in, or other equivalents (however designated
and whether voting or non-voting) of, such Person's capital stock and any and
all rights, warrants or options exchangeable for or convertible into such
capital stock (but excluding any debt security that is exchangeable for or
convertible into such capital stock).
"Common Stock" shall have the meaning ascribed to it in paragraph 2 hereof.
"Corporation" shall have the meaning ascribed to it in the first paragraph
of this Resolution.
"Current Market Price" per share shall mean, on any date specified herein
for the determination thereof, (a) the average of the daily Market Price of the
Common Stock for those days during the period of thirty (30) Trading Days
through and including the date ending one Business Day prior to such date, and
(b) if the Common Stock is not then listed or admitted to trading on any
national securities exchange or quoted in the over-the-counter market, the
Market Price on such date.
"Fair Market Value" shall mean the amount which a willing buyer would pay a
willing seller in an arm's-length transaction.
"Junior Securities" shall have the meaning ascribed to it in paragraph 2
hereof.
"Liquidation Preference" shall have the meaning ascribed to it in paragraph
4 hereof.
"Market Price" shall mean, per share of Common Stock on any date specified
herein: (a) the closing price per share of the Common Stock on such date
published in the Wall Street Journal or, if no such closing price on such date
is published in the Wall Street
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<PAGE>
Journal, the average of the closing bid and asked prices on such date, as
officially reported on the principal national securities exchange on which the
Common Stock is then listed or admitted to trading; or (b) if the Common Stock
is not then listed or admitted to trading on any national securities exchange
but is designated as a national market system security by the NASD, the last
trading price of the Common Stock on such date; or (c) if there shall have been
no trading on such date or if the Common Stock is not so designated, the average
of the reported closing bid and asked prices of the Common Stock on such date as
shown by NASDAQ and reported by any member firm of the New York Stock Exchange,
Inc. selected by the Corporation. If none of (a), (b) or (c) is applicable,
Market Price shall mean the Fair Value of the Common Stock determined by a panel
of three independent appraisers, which shall be nationally recognized investment
banking firms or nationally recognized experts experienced in the valuation of
corporations. Within five (5) Business Days after notice of the necessity of
such calculation shall have been delivered by the Corporation to the holders of
Series A Preferred Stock, the holders of a majority of the shares of Series A
Preferred Stock (the "Majority Stockholders") and the Board of Directors shall
each designate one such appraiser that is willing and able to conduct such
determination. If either the Majority Stockholders or the Board of Directors
fails to make such designation within such period, then the other party that has
made the designation shall have the right to make the designation on its behalf.
The two appraisers designated shall, within a period of five (5) Business Days
after the designation of the second appraiser, agree to designate a third
appraiser. The three appraisers shall conduct their determination as promptly as
practicable, and the Fair Value of the Common Stock shall be the average of the
determination of the two appraisers that are closer to each other than the
determination of the third appraiser, which third determination shall be
discarded; provided, however, that if the determination of two appraisers
-------- -------
are equally close to the determination of the third appraiser, then the Fair
Value of the Common Stock shall be the average of the determination of all three
appraisers. Such determination shall be final and binding on the Majority
Stockholders and the Company. The Majority Stockholders shall be responsible for
the fees and expenses of the appraiser designated by or on behalf of such
Majority Stockholders, and the Company for the fees and expenses of the
appraiser designated by or on behalf of the Board of Directors. The Majority
Stockholders and the Company shall each share half the fees and expenses of the
appraiser designated by the appraisers. For the purposes of this definition, the
"Fair Value" of the Common Stock means the fair market value of the Common Stock
determined in accordance with this definition based upon all considerations that
the appraisers determine to be relevant.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NASDAQ" shall mean the National Market System of the National Association
of Securities Dealers, Inc. Automated Quotations System.
"Parity Securities" shall have the meaning ascribed to such term in
paragraph 2 hereof.
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<PAGE>
"Person" means any individual, firm, corporation, partnership, limited
liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, governmental body or other entity of any kind.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Securities and Exchange Commission thereunder.
"Senior Securities" shall have the meaning ascribed to such term in
paragraph 2 hereof.
"Series A Preferred Stock" shall have the meaning ascribed to it in
paragraph 1 hereof.
"Trading Day" shall mean a day on which the national securities exchanges
are open for trading.
IN WITNESS WHEREOF, LHS GROUP HOLDING CORPORATION has caused this
certificate to be duly executed by its Chief Executive Officer and President
this 21st day of December, 1995.
LHS GROUP HOLDING CORPORATION
By: /s/ Hartmut Lademacher
-------------------------------------
Name: Hartmut Lademacher
Title: Chief Executive Officer and
President
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<PAGE>
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
LHS GROUP HOLDING CORPORATION
LHS GROUP HOLDING CORPORATION, a corporation organized and existing under
the laws of the State of Delaware (the "Corporation") hereby certifies as
follows:
1. The name of the Corporation is LHS GROUP HOLDING CORPORATION. The
date of filing of its Certificate of Incorporation with the Secretary of State
was December 19, 1995.
2. The first paragraph of Article 4 of the Certificate of Incorporation
of the Corporation is hereby amended to read in its entirety as follows:
"4. Authorized Capital. The Corporation is authorized to issue two
------------------
classes of stock to be designated, respectively, "Common Stock" and
"Preferred Stock." The total number of shares of stock that the corporation
shall have authority to issue shall be 2,225,000, consisting of 2,000,000
shares of Common Stock, having a par value of one cent ($.01) per share,
and 225,000 shares of Preferred Stock, having a par value of one cent
($.01) per share.
3. This amendment of the Certificate of Incorporation of the Corporation
has been duly adopted in accordance with the provisions of Sections 228 and 242
of the General Corporation law of the State of Delaware.
IN WITNESS WHEREOF, LHS GROUP HOLDING CORPORATION has caused this
Certificate of Amendment to be signed by Hartmut Lademacher, its Chief Executive
Officer, President and Chairman of the Board, this 15th day of July, 1996.
LHS GROUP HOLDING CORPORATION
By /s/ Hartmut Lademacher
----------------------------------
Hartmut Lademacher
Chief Executive Officer,
President and Chairman of the
Board
ATTEST:
/s/ Wolf Gaede
- --------------------------------
Name: Dr. Wolf Gaede
<PAGE>
CERTIFICATE OF AMENDMENT OF THE
CERTIFICATE OF INCORPORATION
OF
LHS GROUP HOLDING CORPORATION
______________________________________
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
_______________________________________
LHS Group Holding Corporation, a Delaware corporation (the "Corporation"),
does hereby certify as follows:
FIRST: Section 1 of the Corporation's Certificate of Incorporation is
hereby amended by deleting in its entirety the present Section 1 and
substituting in lieu thereof the following new Section 1:
"1. Name. The name of the corporation is LHS Group Inc. (the
----
"Corporation")."
SECOND: The foregoing amendment was duly adopted in accordance with
Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, Wolf Gaede has caused this Certificate to be duly
executed in its corporate name this 30th day of July, 1996 and affirms that the
statements made herein are true under penalties of perjury.
LHS GROUP HOLDING CORPORATION
By: /s/ Wolf Gaede
-----------------------------
Name: Wolf Gaede
Title: Secretary
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<PAGE>
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
LHS GROUP, INC.
LHS GROUP, INC., a corporation organized and existing under the laws of the
State of Delaware (the "Corporation") hereby certifies as follows:
1. The name of the Corporation is LHS Group, Inc. (formerly LHS Group
Holding Corporation). The date of filing of its Certificate of Incorporation
with the Secretary of State was December 19, 1995.
2. The first paragraph of Article 4 of the Certificate of Incorporation
of the Corporation is hereby amended to read in its entirety as follows:
"4. Authorized Capital. The Corporation is authorized to issue two
------------------
classes of stock to be designated, respectively, "Common Stock" and
"Preferred Stock." The total number of shares of stock that the corporation
shall have authority to issue shall be 40,225,000, consisting of 40,000,000
shares of Common Stock, having a par value of one cent ($.01) per share,
and 225,000 shares of Preferred Stock, having a par value of one cent
($.01) per share."
3. This Amendment of the Certificate of Incorporation of the Corporation
has been duly adopted in accordance with the provisions of Sections 228 and 242
of the General Corporation law of the State of Delaware.
IN WITNESS WHEREOF, LHS Group, Inc. has caused this Certificate of
Amendment to be signed by Hartmut Lademacher, its Chief Executive Officer,
President and Chairman of the Board, this 14th day of October, 1996.
LHS GROUP, INC.
By /s/ Hartmut Lademacher
---------------------------------
Hartmut Lademacher
Chief Executive Officer,
President and Chairman of the Board
ATTEST:
/s/ Jerry W. Braxton
- -----------------------------------
Name: Jerry W. Braxton
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<PAGE>
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
LHS GROUP INC.
LHS GROUP INC., a corporation organized and existing under and by virtue of
the Delaware General Corporation Law (the "Corporation"), DOES HEREBY CERTIFY:
FIRST: That on February 19, 1998 the Board of Directors of the Corporation
adopted resolutions setting forth a proposed amendment of the Certificate of
Incorporation of the Corporation, declaring said amendment to be advisable and
submitting the proposed amendment to the stockholders of the Corporation for
their consideration and approval. The proposed amendment is as follows:
NOW, THEREFORE, BE IT HEREBY RESOLVED that paragraph 4 of the Certificate of
Incorporation of the Corporation is hereby amended in its entirety to read as
follows:
"4. Authorized Capital. The Corporation is authorized to issue two classes of
------------------
stock to be designated, respectively, 'Common Stock' and 'Preferred Stock.'
The total number of shares of stock that the corporation shall have
authority to issue shall be 200,225,000, consisting of 200,000,000 shares
of Common Stock, having a par value of one cent ($.01) per share, and
225,000 shares of Preferred Stock, having a par value of one cent ($.01)
per share."
SECOND: That thereafter on May 26, 1998, the stockholders of the
Corporation approved the proposed amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, LHS Group, Inc. has caused this certificate to be signed
by a duly authorized officer this 26th day of May, 1998.
LHS GROUP INC.
By: /s/ Dr. Wolf J. Gaede
-----------------------
Name: Dr. Wolf J. Gaede
Title: Executive Vice President
<PAGE>
EXHIBIT 5.1
Alston & Bird LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
404-881-7000
Fax: 404-881-7777 Telex: 54-2996
June 19, 1998
LHS Group Inc.
Six Concourse Parkway
Suite 2700
Atlanta, Georgia 30328
Re: Form S-8 Registration Statement --
LHS Group Inc. 1998 Employee Stock Purchase Plan and
LHS Group Inc. Amended and Restated Stock Incentive Plan
Ladies and Gentlemen:
We have acted as counsel for LHS Group Inc., a Delaware corporation (the
"Corporation"), in connection with the referenced Registration Statement on Form
S-8 (the "Registration Statement") being filed by the Corporation with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended, and covering 8,500,000 shares of the Corporation's common
stock, $0.01 par value ("Common Stock"), that may be issued pursuant to (i) the
LHS Group Inc. 1998 Employee Stock Purchase Plan and (ii) the LHS Group Inc.
Amended and Restated Stock Incentive Plan (collectively, the "Plans"). 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
Corporation, certificates of public officials and such other documents as we
have deemed appropriate as a basis for the opinions hereinafter set forth. The
opinions set forth herein are limited to the laws of the State of Delaware.
Based upon the foregoing, it is our opinion that the 8,500,000 shares of
Common Stock covered by the Registration Statement and to be issued pursuant to
the Plans, when issued in accordance with the terms and conditions of the Plans,
will be legally and validly issued, fully paid and nonassessable.
The Opinion expressed herein is limited to the laws of the State of Delaware
as codified in the General Corporation Law of the State of Delaware. 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 the
Registration Statement, and may not be relied upon by any other person or for
any other purpose without our prior written consent.
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and further consent to the use of our name wherever
appearing in the Registration Statement.
Sincerely,
ALSTON & BIRD LLP
By: /s/ Laura G. Thatcher
---------------------
Partner
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<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the LHS Group, Inc. 1998 Employee Stock Purchase Plan
and the LHS Group Inc. Amended and Restated Stock Incentive Plan of our report
dated February 8, 1998, with respect to the consolidated financial statements
and schedule of LHS Group Inc. included in its Annual Report (Form 10-K) for the
year ended December 31, 1997, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
---------------------
ERNST & YOUNG, LLP
Atlanta, Georgia
June 19, 1998.
<PAGE>
EXHIBIT 99.1
LHS GROUP INC. 1998 EMPLOYEE STOCK PURCHASE PLAN
<PAGE>
LHS GROUP INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
LHS GROUP INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
TABLE OF CONTENTS
Article I - BACKGROUND..................................................... 1
1.1 Establishment of the Plan............................................ 1
1.2 Applicability of the Plan............................................ 1
1.3 Purpose.............................................................. 1
Article II - DEFINITIONS................................................... 1
2.1 Administrator........................................................ 1
2.2 Board................................................................ 1
2.3 Code................................................................. 1
2.4 Committee............................................................ 1
2.5 Common Stock......................................................... 2
2.6 Compensation......................................................... 2
2.7 Contribution Account................................................. 2
2.8 Corporation.......................................................... 2
2.9 Direct Registration System........................................... 2
2.10 Effective Date....................................................... 2
2.11 Eligible Employee.................................................... 2
2.12 Employee............................................................. 2
2.13 Employer............................................................. 2
2.14 Fair Market Value.................................................... 2
2.15 Offering Date........................................................ 3
<PAGE>
2.16 Offering Period...................................................... 3
2.17 Option............................................................... 3
2.18 Participant.......................................................... 3
2.19 Plan................................................................. 3
2.20 Purchase Date........................................................ 3
2.21 Purchase Price....................................................... 3
2.22 Request Form......................................................... 3
2.23 Stock Account........................................................ 3
2.24 Subsidiary........................................................... 3
2.25 Trading Date......................................................... 3
Article III - ELIGIBILITY AND PARTICIPATION................................ 4
3.1 Eligibility........................................................... 4
3.2 Initial Participation................................................. 4
3.3 Leave of Absence...................................................... 4
Article IV - STOCK AVAILABLE............................................... 5
4.1 In General............................................................ 5
4.2 Adjustment in Event of Changes in Capitalization...................... 5
4.3 Dissolution, Liquidation, or Merger................................... 5
Article V. - OPTION PROVISIONS............................................. 6
5.1 Purchase Price........................................................ 6
5.2 Calendar Year $25,000 Limit........................................... 6
5.3 Offering Period Limit................................................. 6
Article VI - PURCHASING COMMON STOCK....................................... 6
6.1 Participant's Contribution Account.................................... 6
6.2 Payroll Deductions, Dividends......................................... 7
6.3 Deduction Changes and Discontinuance.................................. 7
6.4 Leave of Absence; Transfer of Ineligible Status....................... 7
6.5 Automatic Exercise.................................................... 8
6.6 Listing, Registration, and Qualification of Shares.................... 8
Article VII - WITHDRAWALS, DISTRIBUTIONS................................... 8
7.1 Discontinuance of Deductions; Leave of Absence; Transfer to Ineligible
Status................................................................ 8
7.2 In-Service Withdrawals................................................ 9
7.3 Termination of Employment for Reasons Other Than Death................ 9
<PAGE>
7.4 Death................................................................. 9
7.5 Registration.......................................................... 10
Article VIII - AMENDMENT AND TERMINATION................................... 10
8.1 Amendment............................................................. 10
8.2 Termination........................................................... 10
Article IX - MISCELLANEOUS................................................. 11
9.1 Shareholder Approval.................................................. 11
9.2 Employment Rights..................................................... 11
9.3 Tax Withholding....................................................... 11
9.4 Rights Not Transferable............................................... 11
9.5 No Repurchase of Stock by Corporation................................. 11
9.6 Governing Law......................................................... 11
9.7 Shareholder Approval; Registration.................................... 11
9.8 Available Information................................................. 12
<PAGE>
LHS GROUP INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
BACKGROUND
1.1 ESTABLISHMENT OF THE PLAN. LHS Group Inc. (the "Corporation") hereby
establishes a stock purchase plan, effective July 1, 1998, to be known as the
"LHS Group Inc. 1998 Employee Stock Purchase Plan" (the "Plan"), as set forth in
this document. The Plan is intended to be a qualified employee stock purchase
plan within the meaning of Section 423 of the Internal Revenue Code of 1986, as
amended, and the regulations and rulings thereunder.
1.2 APPLICABILITY OF THE PLAN. The provisions of this Plan are applicable
only to certain individuals who, on or after July 1, 1998, are employees of the
Corporation and its subsidiaries participating in the Plan.
1.3 PURPOSE. The purpose of the Plan is to enhance the proprietary interest
among the employees of the Corporation and its participating subsidiaries
through ownership of Common Stock of the Corporation.
ARTICLE II
DEFINITIONS
Whenever capitalized in this document, the following terms shall have the
respective meanings set forth below.
2.1 ADMINISTRATOR. Administrator shall mean the person or persons (who may
be officers or employees of the Corporation) selected by the Committee to
operate the Plan, perform day-to-day administration of the Plan, and maintain
records of the Plan.
2.2 BOARD. Board shall mean the Board of Directors of the Corporation.
2.3 CODE. Code shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations thereunder.
2.4 COMMITTEE. Committee shall mean a committee which consists of members of
the Board and which has been designated by the Board to have the general
responsibility for the administration of the Plan. Unless otherwise designated
by the Board, the Compensation Committee of the Board of Directors of the
Corporation shall serve as the Committee administering the Plan. Subject to the
express provisions of the Plan, the Committee shall have plenary authority in
its sole and absolute discretion to interpret and construe any and all
provisions of the Plan, to adopt rules and regulations for administering the
Plan, and to make all other determinations necessary or advisable for
<PAGE>
administering the Plan. The Committee's determinations on the foregoing matters
shall be conclusive and binding upon all persons.
2.5 COMMON STOCK. Common Stock shall mean the common stock, par value $.01,
of the Corporation.
2.6 COMPENSATION. Compensation shall mean, for any Participant, for any
Offering Period, the Participant's total compensation from the Company or the
applicable Subsidiary employer for the respective period, subject to appropriate
adjustments that would exclude items such as non-cash compensation and
reimbursement of moving, travel, trade or business expenses.
2.7 CONTRIBUTION ACCOUNT. Contribution Account shall mean the bookkeeping
account established by the Administrator on behalf of each Participant, which
shall be credited with the amounts deducted from the Participant's Compensation
pursuant to Article VI. The Administrator shall establish a separate
Contribution Account for each Participant for each Offering Period.
2.8 CORPORATION. Corporation shall mean LHS Group Inc., a Delaware
corporation.
2.9 DIRECT REGISTRATION SYSTEM. Direct Registration System shall mean a
direct registration system approved by the Securities and Exchange Commission
and by the National Association of Securities Dealers, Inc. or any securities
exchange on which the Common Stock is then listed, whereby shares of Common
Stock may be registered in the holder's name in book-entry form on the books of
the Corporation.
2.10 EFFECTIVE DATE. Effective Date shall mean July 1, 1998.
2.11 ELIGIBLE EMPLOYEE. An Employee eligible to participate in the Plan
pursuant to Section 3.1.
2.12 EMPLOYEE. Employee shall mean an individual employed by an Employer who
meets the employment relationship described in Treasury Regulation Sections
1.423-2(b) and Section 1.421-7(h).
2.13 EMPLOYER. Employer shall mean the Corporation and any Subsidiary
designated by the Committee as an employer participating in the Plan.
2.14 FAIR MARKET VALUE. Fair Market Value of a share of Common Stock, as of
any applicable date, shall mean (i) if the Common Stock is listed on a
securities exchange or is traded over the Nasdaq National Market, the closing
sales price on such exchange or over such system on such date, or (ii) if the
Common Stock is not listed on a securities exchange or traded over the Nasdaq
National Market, the mean between the bid and offered prices as quoted by Nasdaq
for such date, provided that if it is determined that
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<PAGE>
the fair market value is not properly reflected by such Nasdaq quotations, Fair
Market Value will be determined by such other method as the Committee determines
in good faith to be reasonable.
2.15 OFFERING DATE. Offering Date shall mean the first Trading Date of each
Offering Period.
2.16 OFFERING PERIOD. Offering Period shall mean the six (6) month periods
beginning January 1 and July 1 of each year during which offers to purchase
Common Stock are outstanding under the Plan. No Offering Period shall begin and
no payroll deductions shall be taken until the effective date of a Registration
Statement under the Securities Act of 1933, as amended, covering the shares to
be issued under the Plan.
2.17 OPTION. Option shall mean the option to purchase Common Stock granted
under the Plan on each Offering Date.
2.18 PARTICIPANT. Participant shall mean any Eligible Employee who has
elected to participate in the Plan under Section 3.2.
2.19 PLAN. Plan shall mean the LHS Group Inc. 1998 Employee Stock Purchase
Plan, as amended and in effect from time to time.
2.20 PURCHASE DATE. Purchase Date shall mean the last Trading Date of each
Offering Period.
2.21 PURCHASE PRICE. Purchase Price shall mean the purchase price of Common
Stock determined under Section 5.1.
2.22 REQUEST FORM. Request Form shall mean an Employee's authorization
either in writing on a form approved by the Administrator or through electronic
communication approved by the Administrator which specifies the Employee's
payroll deduction in accordance with Section 6.2, and contains such other terms
and provisions as may be required by the Administrator.
2.23 STOCK ACCOUNT. Stock Account shall mean the account established by the
Administrator on behalf of each Participant, which shall be credited with shares
of Common Stock purchased pursuant to the Plan and dividends thereon until
distributed in accordance with the terms of the Plan.
2.24 SUBSIDIARY. Subsidiary shall mean any present or future corporation
which is a "subsidiary corporation" of the Corporation as defined in Code
Section 424.
2.25 TRADING DATE. Trading Date shall mean a date on which shares of Common
Stock are traded on the Nasdaq National Market, a national securities exchange
or in the over-the-counter market.
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<PAGE>
Except when otherwise indicated by the context, the definition of any term
herein in the singular may also include the plural.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY. Each Employee who is an Employee regularly scheduled to
work at least 20 hours each week and at least five months each calendar year
shall be eligible to participate in the Plan as of the later of:
(a) the Offering Date immediately following the Employee's last date of hire
by an Employer; or
(b) the Effective Date.
On each Offering Date, Options will automatically be granted to all Employees
then eligible to participate in the Plan; provided, however, that no Employee
shall be granted an Option for an Offering Period if, immediately after the
grant, the Employee would own stock, and/or hold outstanding options to purchase
stock, possessing five percent or more of the total combined voting power or
value of all classes of stock of the Corporation or any Subsidiary. For
purposes of this Section, the attribution rules of Code Section 424(d) shall
apply in determining stock ownership of any Employee. If an Employee is granted
an Option for an Offering Period and such Employee does not participate in the
Plan for such Offering Period, such Option will be deemed never to have been
granted for purposes of applying the $25,000 annual limitation described in
Section 5.2.
3.2 INITIAL PARTICIPATION. An Eligible Employee having been granted an
Option under Section 3.1 may submit a Request Form to the Administrator to
participate in the Plan for an Offering Period. The Request Form shall
authorize a regular payroll deduction from the Employee's Compensation for the
Offering Period, subject to the limits and procedures described in Article VI.
A Participant's Request Form authorizing a regular payroll deduction shall
remain effective from Offering Period to Offering Period until amended or
canceled under Section 6.3.
3.3 LEAVE OF ABSENCE. For purposes of Section 3.1, an individual on a leave
of absence from an Employer shall be deemed to be an Employee for the first 90
days of such leave. Such individual's employment with the Employer shall be
deemed to terminate at the close of business on the 90th day of the leave,
unless the individual has returned to regular employment with an Employer before
the close of business on such 90th day. Termination of any individual's leave
of absence by an Employer, other than on account of a return to employment with
an Employer, shall be deemed to terminate an individual's employment with the
Employer for all purposes of the Plan.
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<PAGE>
ARTICLE IV
STOCK AVAILABLE
4.1 IN GENERAL. Subject to the adjustments in Sections 4.2 and 4.3, an
aggregate of 500,000 shares of Common Stock shall be available for purchase by
Participants pursuant to the provisions of the Plan. These shares may be
authorized and unissued shares or may be shares issued and subsequently acquired
by the Corporation. If an Option under the Plan expires or terminates for any
reason without having been exercised in whole or part, the shares subject to
such Option that are not purchased shall again be available for subsequent
Option grants under the Plan. If the total number of shares of Common Stock for
which Options are exercised on any Purchase Date exceeds the maximum number of
shares then available under the Plan, the Committee shall make a pro rata
allocation of the shares available in as nearly a uniform manner as shall be
practicable and as it shall determine to be equitable; and the balance of the
cash credited to Participants' Contribution Accounts shall be distributed to the
Participants as soon as practicable.
4.2 ADJUSTMENT IN EVENT OF CHANGES IN CAPITALIZATION. In the event of a
stock dividend, stock split or combination of shares, recapitalization or other
change in the Corporation's capitalization, or other distribution with respect
to holders of the Corporation's Common Stock other than normal cash dividends,
an automatic adjustment shall be made in the number and kind of shares as to
which outstanding Options or portions thereof then unexercised shall be
exercisable and in the available shares set forth in Section 4.1, so that the
proportionate interest of the Participants shall be maintained as before the
occurrence of such event. This adjustment in outstanding Options shall be made
without change in the total price applicable to the unexercised portion of such
Options and with a corresponding adjustment in the Purchase Price per share;
provided, however, that in no event shall any adjustment be made that would
cause any Option to fail to qualify as an option pursuant to an employee stock
purchase plan within the meaning of Section 423 of the Code.
4.3 DISSOLUTION, LIQUIDATION, OR MERGER. Upon the dissolution or liquidation
of the Corporation, or upon a reorganization, merger, or consolidation of the
Corporation with one or more corporations in which the Corporation is not the
surviving corporation, or upon a sale of substantially all of the property or
stock of the Corporation to another corporation, the holder of each Option then
outstanding under the Plan shall be entitled to receive at the next Purchase
Date upon the exercise of such Option for each share as to which such Option
shall be exercised, as nearly as reasonably may be determined, the cash,
securities, or property which a holder of one share of the Common Stock was
entitled to receive upon and at the time of such transaction. The Board shall
take such steps in connection with these transactions as the Board deems
necessary or appropriate to assure that the provisions of this Section shall
thereafter be applicable, as nearly as reasonably may be determined, in relation
to the cash, securities, or property which the holder of the Option may
thereafter be entitled to receive. In lieu of the foregoing, the Committee may
terminate the Plan in accordance with Section 8.2.
-5-
<PAGE>
ARTICLE V
OPTION PROVISIONS
5.1 PURCHASE PRICE. The Purchase Price of a share of Common Stock purchased
for a Participant pursuant to each exercise of an Option shall be the lesser of:
(a) 85 percent of the Fair Market Value of a share of Common Stock on the
Offering Date; or
(b) 85 percent of the Fair Market Value of a share of Common Stock on the
Purchase Date.
5.2 CALENDAR YEAR $25,000 LIMIT. Notwithstanding anything else contained
herein, no Employee may be granted an Option for any Offering Period which
permits such Employee's rights to purchase Common Stock under this Plan and any
other qualified employee stock purchase plan (within the meaning of Code Section
423) of the Corporation and its Subsidiaries to accrue at a rate which exceeds
U.S. $25,000 of Fair Market Value of such Common Stock for each calendar year in
which an Option is outstanding at any time. For purposes of this Section, Fair
Market Value shall be determined as of the Offering Date.
5.3 OFFERING PERIOD LIMIT. Notwithstanding anything else contained herein,
the maximum number of shares of Common Stock that an Eligible Employee may
purchase in any Offering Period is 1,000 shares.
ARTICLE VI
PURCHASING COMMON STOCK
6.1 PARTICIPANT'S CONTRIBUTION ACCOUNT. The Administrator shall establish a
book account in the name of each Participant for each Offering Period. As
discussed in Section 6.2 below, a Participant's payroll deductions shall be
credited to the Participant's Contribution Account, without interest, until such
cash is withdrawn, distributed, or used to purchase Common Stock as described
below.
During such time, if any, as the Corporation participates in a Direct
Registration System, shares of Common Stock acquired upon exercise of an Option
shall be directly registered in the name of the Participant. If the Corporation
does not participate in a Direct Registration System, then until distribution is
requested by a Participant pursuant to Article VII, stock certificates
evidencing the Participant's shares of Common Stock acquired upon exercise of an
Option shall be held by the Corporation as the nominee for the Participant.
These shares shall be credited to the Participant's Stock Account. Certificates
shall be held by the Corporation as nominee for Participants solely as a matter
of convenience. A Participant shall have all ownership rights as to the shares
credited to
-6-
<PAGE>
his or her Stock Account, and the Corporation shall have no ownership or other
rights of any kind with respect to any such certificates or the shares
represented thereby.
All cash received or held by the Corporation under the Plan may be used by the
Corporation for any corporate purpose. The Corporation shall not be obligated
to segregate any assets held under the Plan.
6.2 PAYROLL DEDUCTIONS; DIVIDENDS.
(a) Payroll Deductions. By submitting a Request Form at any time during
or before an Offering Period in accordance with rules adopted by the Committee,
an Eligible Employee may authorize a payroll deduction to purchase Common Stock
under the Plan for the Offering Period. The payroll deduction shall be effective
on the first pay period during the Offering Period commencing at least 30 days
after receipt of the Request Form by the Administrator. The payroll deduction
shall be in any whole percentage up to a maximum of fifteen percent (15%) of
such Employee's Compensation payable each pay period, and at any other time an
element of Compensation is payable. A Participant's payroll deduction shall not
be less than one percent (1%) of such Employee's Compensation payable each
payroll period. For Participants residing outside of the United States, payroll
deductions will be made in local currency and converted to U.S. currency for
deposit in the Participant's Contribution Account.
(b) Dividends. Cash dividends paid on Common Stock which is credited to a
Participant's Stock Account as of the dividend payment date shall be credited to
the Participant's Stock Account and paid to the Participant as soon as
practicable.
6.3 DEDUCTION CHANGES AND DISCONTINUANCE. A Participant may decrease, or
completely discontinue, his or her payroll deductions for and Offering Period by
filing a new Request Form with the Administrator. This decrease or
discontinuance shall be effective on the first pay period commencing at least 30
days after receipt of the Request Form by the Administrator. A Participant may
decrease his or her payroll deductions only once during an Offering Period, but
may discontinue payroll deductions after any such decrease. A Participant who
discontinues his or her payroll deductions for an Offering Period may not resume
participation in the Plan until the following Offering Period.
Any amount held in the Participant's Contribution Account for an Offering
Period after the effective date of the discontinuance of his or her payroll
deductions will either be refunded or used to purchase Common Stock in
accordance with Section 7.1.
6.4 LEAVE OF ABSENCE; TRANSFER TO INELIGIBLE STATUS. If a Participant either
begins a leave of absence, is transferred to employment with a Subsidiary not
participating in the Plan, or remains employed with an Employer but is no longer
eligible to participate in the Plan, the Participant shall cease to be eligible
for payroll deductions to his or her Contribution Account pursuant to Section
6.2. The cash standing to the credit of the Participant's Contribution Account
shall become subject to the provisions of Section 7.1.
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<PAGE>
If the Participant returns from the leave of absence before being deemed to
have ceased employment with the Employer under Section 3.2, or again becomes
eligible to participate in the Plan, the Request Form, if any, in effect
immediately before the leave of absence or disqualifying change in employment
status shall be deemed void and the Participant must again complete a new
Request Form to resume participation in the Plan.
6.5 AUTOMATIC EXERCISE. Unless the cash credited to a Participant's
Contribution Account is withdrawn or distributed as provided in Article VII, his
or her Option shall be deemed to have been exercised automatically on each
Purchase Date, for the purchase of the number of full shares of Common Stock
which the cash (in U.S. Dollars) credited to his or her Contribution Account at
that time will purchase at the Purchase Price. If there is a cash balance
remaining in the Participant's Contribution Account at the end of an Offering
Period representing the exercise price for a fractional share of Common Stock,
such balance shall be retained in the Participant's Contribution Account for the
next Offering Period, unless the Participant requests that it be refunded,
without interest. Any other cash balance remaining in the Participant's
Contribution Account at the end of an Offering Period shall be refunded to the
Participant, without interest. The amount of cash that may be used to purchase
shares of Common Stock may not exceed the Compensation restrictions set forth in
Section 6.2.
If the cash credited to a Participant's Contribution Account on the Purchase
Date exceeds the applicable Compensation restrictions of Section 6.2 or exceeds
the amount necessary to purchase the maximum number of shares of Common Stock
available during the Offering Period, such excess cash shall be refunded to the
Participant. The excess cash may not be used to purchase shares of Common Stock
nor retained in the Participant's Contribution Account for a future Offering
Period.
Each Participant shall receive a statement on an annual basis indicating the
number of shares credited to his or her Stock Account under the Plan.
6.6 LISTING, REGISTRATION, AND QUALIFICATION OF SHARES. The granting of
Options for, and the sale and delivery of, Common Stock under the Plan shall be
subject to the effecting by the Corporation of any listing, registration, or
qualification of the shares subject to that Option upon any securities exchange
or under any federal or state law, or the obtaining of the consent or approval
of any governmental regulatory body deemed necessary or desirable for the
issuance or purchase of the shares covered.
ARTICLE VII
WITHDRAWALS; DISTRIBUTIONS
7.1 DISCONTINUANCE OF DEDUCTIONS; LEAVE OF ABSENCE; TRANSFER TO INELIGIBLE
STATUS. In the event of a Participant's complete discontinuance of payroll
deductions under Section 6.3 or a Participant's leave of absence or transfer to
an ineligible
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<PAGE>
status under Section 6.4, the cash balance then standing to the credit of the
Participant's Contribution Account shall be--
(a) returned to the Participant, in cash, without interest, as soon as
practicable, upon the Participant's written request received by the
Administrator at least 30 days before the next Purchase Date; or
(b) held under the Plan and used to purchase Common Stock for the
Participant under the automatic exercise provisions of Section 6.5.
7.2 IN-SERVICE WITHDRAWALS. During such time, if any, as the Corporation
participates in a Direct Registration System, shares of Common Stock acquired
upon exercise of an Option shall be directly registered in the name of the
Participant and the Participant may withdraw certificates in accordance with the
applicable terms and conditions of such Direct Registration System. If the
Corporation does not participate in a Direct Registration System, (i) a
Participant may, while an Employee of the Corporation or any Subsidiary,
withdraw certificates for some or all of the shares of Common Stock credited to
his or her Stock Account at any time, upon 30 days' written notice to the
Administrator, and (ii) each Participant shall be permitted only one withdrawal
under this Section each calendar quarter. If a Participant requests a
distribution of only a portion of the shares of Common Stock credited to his or
her Stock Account, the Administrator will distribute the oldest securities held
in the Participant's Stock Account first, using a first in-first out
methodology.
7.3 TERMINATION OF EMPLOYMENT FOR REASONS OTHER THAN DEATH. If a
Participant terminates employment with the Corporation and the Subsidiaries for
reasons other than death, the cash balance in the Participant's Contribution
Account shall be returned to the Participant in cash, without interest, as soon
as practicable. Certificates for the shares of Common Stock credited to his or
her Stock Account shall be distributed to the Participant as soon as
practicable, unless the Corporation then participates in a Direct Registration
System, in which case, the Participant shall be entitled to evidence of
ownership of such shares in such form as the terms and conditions of such Direct
Registration System permit.
7.4 DEATH. In the event a Participant dies, the cash balance in his or her
Contribution Account shall be distributed to the Participant's beneficiary, in
cash, without interest, as soon as practicable. Certificates for the shares of
Common Stock credited to the Participant's Stock Account shall be distributed to
the beneficiary as soon as practicable, unless the Corporation then participates
in a Direct Registration System, in which case, the beneficiary shall be
entitled to evidence of ownership of such shares in such form as the terms and
conditions of such Direct Registration System permit.
In the event of the Participant's death, the Participant's beneficiary shall
be the person or entity identified on the Participant's beneficiary designation
on such form as determined by the Administrator. This designation of
beneficiary may be changed by the
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<PAGE>
Participant in accordance with procedures established by the Administrator. If
no beneficiary designation form is on file, the beneficiary shall be the
beneficiary designated by the Participant's date record maintained by the
Corporation.
7.5 REGISTRATION. Whether represented in certificate form or by direct
registration pursuant to a Direct Registration System, shares of Common Stock
acquired upon exercise of an Option shall be directly registered in the name of
the Participant or, if the Participant so indicates on the Request Form, (a) in
the Participant's name jointly with a member of the Participant's family, with
the right of survivorship, (b) in the name of a custodian for the Participant
(in the event the Participant is under a legal disability to have stock issued
in the Participant's name), or (c) in a manner giving effect to the status of
such shares as community property. No other names may be included in the Common
Stock registration. The Corporation shall pay all issue or transfer taxes with
respect to the issuance or transfer of shares of such Common Stock, as well as
all fees and expenses necessarily incurred by the Corporation in connection with
such issuance or transfer.
ARTICLE VIII
AMENDMENT AND TERMINATION
8.1 AMENDMENT. The Committee shall have the right to amend or modify the
Plan, in full or in part, at any time and from time to time; provided, however,
that no amendment or modification shall-
(a) affect any right or obligation with respect to any grant previously
made, unless required by law, or
(b) unless previously approved by the stockholders of the Corporation,
where such approval is necessary to satisfy federal securities laws, the Code,
or rules of any stock exchange on which the Corporation's Common Stock is
listed-
(1) in any manner materially affect the eligibility requirements set
forth in Sections 3.1 and 3.3, or change the definition of Employer as set
forth in Section 2.13,
(2) increase the number of shares of Common Stock subject to any
options issued to Participants (except as provided in Sections 4.2 and
4.3), or
(3) materially increase the benefits to Participants under the Plan.
8.2 TERMINATION. The Committee may terminate the Plan at any time in its
sole and absolute discretion. The Plan shall be terminated by the Committee if
at any time the number of shares of Common Stock authorized for purposes of the
Plan is not sufficient to meet all purchase requirements, except as specified in
Section 4.1.
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<PAGE>
Upon termination of the Plan, the Administrator shall give notice thereof to
Participants and shall terminate all payroll deductions. Cash balances then
credited to Participants' Contribution Accounts shall be distributed as soon as
practicable, without interest.
ARTICLE IX
MISCELLANEOUS
9.1 SHAREHOLDER APPROVAL. The Plan shall be approved and ratified by the
stockholders of the Corporation, not later than 12 months after adoption of the
Plan by the Board of Directors of the Corporation, pursuant to Treasury
regulation Section 1.423-2(c). If for any reason such approval is not given by
such date, the Plan shall be null and void, and all payroll deductions to the
Plan shall cease. The cash balances and Common Stock credited to Participants'
accounts shall be promptly distributed to them; and any Common Stock
certificates issued and delivered to Participants prior to such date shall
remain the property of the Participants.
9.2 EMPLOYMENT RIGHTS. Neither the establishment of the Plan, nor the grant
of any Options thereunder, nor the exercise thereof shall be deemed to give to
any Employee the right to be retained in the employ of the Corporation or any
Subsidiary or to interfere with the right of the Corporation or any Subsidiary
to discharge any Employee or otherwise modify the employment relationship at any
time.
9.3 TAX WITHHOLDING. The Administrator may make appropriate provisions for
withholding of federal, state, and local income taxes, and any other taxes, from
a Participant's Compensation to the extent the Administrator deems such
withholding to be legally required.
9.4 RIGHTS NOT TRANSFERABLE. Rights and Options granted under this Plan are
not transferable by the Participant other than by will or by the laws of descent
and distribution and are exercisable only by the Participant during his or her
lifetime.
9.5 NO REPURCHASE OF STOCK BY CORPORATION. The Corporation is under no
obligation to repurchase from any Participant any shares of Common Stock
acquired under the Plan.
9.6 GOVERNING LAW. The Plan shall be governed by and construed in accordance
with the laws of the State of Delaware except to the extent such laws are
preempted by the laws of the United States.
9.7 SHAREHOLDER APPROVAL; REGISTRATION. The Plan was adopted by the Board of
Directors of the Corporation on February 19, 1998, to be effective as of July 1,
1998, provided that no Offering Period may begin until a Registration Statement
under the Securities Act of 1933, as amended, covering the shares to be issued
under the Plan, has
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<PAGE>
become effective. The Plan is subject to approval by the stockholders of the
Corporation within 12 months of approval by the Board of Directors.
9.8 AVAILABLE INFORMATION. The most recently available audited financial
statements of the Corporation shall be available for inspection by all Eligible
Employees as and when requested.
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<PAGE>
EXHIBIT 99.2
LHS GROUP INC.
AMENDED AND RESTATED STOCK INCENTIVE PLAN
<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 Requirements for Incentive Stock Options.. 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 Performance Goals................................. 10
5.2 Amendment of the Plan; Modification of Awards..... 10
5.3 Restrictions...................................... 11
5.4 Nontransferability................................ 11
5.5 Withholding Taxes................................. 12
5.6 Adjustments Upon Changes in Capitalization........ 12
5.7 Right of Discharge Reserved....................... 13
5.8 No Rights as a Stockholder........................ 13
5.9 Nature of Payments................................ 13
5.10 Non-Uniform Determinations........................ 13
5.11 Other Payments or Awards.......................... 14
5.12 Reorganization.................................... 14
5.13 Section Headings.................................. 16
5.14 Rights of First Refusal and....................... 16
5.15 Exculpation and Indemnification................... 16
5.16 Effective Date and Term of the Plan............... 16
5.17 Governing Law..................................... 17
<PAGE>
LHS GROUP INC.
AMENDED AND RESTATED STOCK INCENTIVE PLAN
ARTICLE 1
GENERAL
1.1 Purpose.
-------
The purpose of the LHS Group Inc. Amended and Restated 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 and other awards 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
<PAGE>
writing by the entire Committee, shall be the acts of the Committee for purposes
of the Plan.
(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, directors, consultants 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.
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.
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<PAGE>
1.5 Shares Available for Awards.
---------------------------
(a) Subject to Section 5.6 (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 eight million (8,000,000)
shares of Common Stock, of which not more than 10% may be granted as Awards of
Restricted Stock or unrestricted Awards of Common Stock. The maximum fair market
value (measured as of the date of grant) of any Awards other than Options that
may be received by any one Participant (less any consideration paid by the
Participant for such Award) during any one calendar year under the Plan shall be
$3,000,000.
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).
A person eligible for Awards under the Plan may not be granted Options under
the Plan in any one calendar year covering a total of more than three hundred
thousand (300,000) 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.
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<PAGE>
(d) The term "Effective Date" as used herein means June 18, 1996, being
the date that the Plan was originally adopted by the Board.
(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. The
Option Exercise Price per share shall not be less than 100 percent of the Fair
Market Value of a share of
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<PAGE>
Common Stock 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 or is
-5-
<PAGE>
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 5.3(b));
and
(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.
(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 5.3(b)), or (ii) pursuant to such 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
-7-
<PAGE>
agreement, or otherwise. Any fractional shares of Common Stock resulting from a
grantee's election under Section 2.4(b) or 5.5 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's
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 Requirements for Incentive Stock Options.
------------------------------------------------
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.
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
-8-
<PAGE>
by the Committee. All Awards of Restricted Stock shall be evidenced by a Plan
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 Plan 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.
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
-9-
<PAGE>
performance of specified subsidiaries. The Committee shall determine the terms
and conditions of such Awards.
ARTICLE 5
MISCELLANEOUS
5.1 Performance Goals. The Committee may determine that any Award granted
-----------------
pursuant to this Plan to a Participant (including, but not limited to,
Participants who are "covered employees" as defined in Code Section 162(m))
shall be determined solely on the basis of (a) the achievement by the Company or
a parent or subsidiary of a specified target return, or target growth in return,
on equity or assets, (b) the Company's, or a parent's or subsidiary's, stock
price, (c) the achievement by an individual or a business unit of the Company,
or of a parent or subsidiary, of a specified target, or target growth in,
revenues, net income or earnings per share, including, without limitation,
earnings before interest, taxes, depreciation and amortization (EBITDA), or (d)
any combination of the goals set forth in (a) through (c) above. If an Award is
made on such basis, the Committee has the right for any reason to reduce (but
not increase) the Award, notwithstanding the achievement of a specified goal.
If an Award is made on such basis, the Committee shall establish goals prior to
the beginning of the period for which such performance goal relates (or such
later date as may be permitted under Code Section 162(m) or the regulations
thereunder). Any payment of an Award granted with performance goals shall be
conditioned on the written certification of the Committee in each case that the
performance goals and any other material conditions were satisfied.
5.2 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
Award theretofore granted under the Plan without the consent of the grantee of
such Award; 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, except as and to the extent otherwise permitted by
Section 5.6 or 5.12, no such amendment shall, without stockholder approval,
provide for the grant of 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 5.2(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 Award may vest or
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become exercisable and/or (ii) extend the scheduled termination or expiration
date of the Award.
5.3 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.
5.4 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 factors deemed
relevant, including without limitation, state or federal tax or securities laws
applicable to transferable Awards. During the lifetime of the grantee, all
rights with
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respect to any incentive stock option granted to the grantee under the Plan or
under any Plan agreement shall be exercisable only by him.
5.5 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 Award, 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 Award 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 Award shall cause
such Award to be canceled.
5.6 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.
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<PAGE>
The foregoing provisions of this Section 5.6 shall not apply with respect to the
twenty-for-one split of the Common Stock that became effective on October 16,
1996.
5.7 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.
5.8 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 5.6, 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.
5.9 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.
5.10 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
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<PAGE>
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 to (a) the persons to receive
Awards under the Plan, and (b) the terms and provisions of Awards under the
Plan.
5.11 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.
5.12 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 5.12(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 (or other Awards in the
nature of rights that may be exercised) 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 (or other Awards in the nature of rights that may be
exercised) of such grantee shall be exercisable. 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. Without limiting the generality of the foregoing, or of any other
provisions of this Section 5.12, in the event of a Change of Control (as defined
in Section 5.12(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, (ii) all restrictions on
outstanding Restricted Stock Awards shall lapse immediately, and (iii) all other
Awards in the nature of rights that may be exercised shall become fully
exercisable and all restrictions on outstanding Awards shall lapse.
(b) Whenever deemed appropriate by the Committee, the actions referred
to in Section 5.12(a) may be made conditional upon the consummation of the
applicable Reorganization Event.
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<PAGE>
(c) For purposes of Section 5.12(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
"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)
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<PAGE>
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 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).
5.13 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.
5.14 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.
5.15 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.
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5.16 Effective Date and Term of the Plan.
-----------------------------------
The Plan became as of the Effective Date. The Plan will terminate on June 17,
2006, which is 10 years after the Effective Date, 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.
5.17 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.
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