<PAGE>
As filed with the Securities and Exchange Commission on September 23, 1997
Registration No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
_______________
RWD TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
_______________
MARYLAND 52-1552720
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
_______________
10480 LITTLE PATUXENT PARKWAY, SUITE 1200
COLUMBIA, MARYLAND 21044
(410) 730-4377
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive office)
_______________
AMENDED AND RESTATED EQUITY PARTICIPATION PLAN, AS AMENDED
(Full title of the plans)
_______________
RONALD E. HOLTZ JILL CANTOR NORD, ESQUIRE
RWD TECHNOLOGIES, INC. PIPER & MARBURY L.L.P.
10480 LITTLE PATUXENT PARKWAY, SUITE 1200 36 SOUTH CHARLES STREET
COLUMBIA, MARYLAND 21044 BALTIMORE, MARYLAND 21201
(410) 730-4377 (410) 539-2530
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENTS FOR SERVICE)
_______________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER SHARE(A) OFFERING PRICE(A) REGISTRATION FEE(A)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCK,
PAR VALUE $.01 PER SHARE 4,065,000 SHARES $20.3125 $82,570,313 $25,022
- --------------------------------------------------------------------------------------------------------------
</TABLE>
/(a)/ Pursuant to Rules 457(c) and (h)(1), the proposed maximum offering price
per share, proposed maximum aggregate offering price and amount of
registration fee are based upon the average of the high and low prices of
the Common Stock of the registrant on the Nasdaq Stock Market on September
17, 1997.
<PAGE>
PROSPECTUS
666,860 SHARES
RWD TECHNOLOGIES, INC.(R)
COMMON STOCK
___________
The shares of Common Stock of RWD Technologies, Inc. (the "Company")
covered by this Prospectus are shares (the "Shares") of Common Stock of the
Company which, as of the date hereof, have been or, prior to their offer and
sale hereunder, will have been issued upon exercise of options granted under the
Company's Amended and Restated Equity Participation Plan, as amended from time
to time (the "Plan"). The Shares may be offered and sold from time to time by
the stockholders named herein. See "Selling Stockholders." The Company will
not receive any proceeds from the sale of the shares by the Selling
Stockholders.
The Common Stock is quoted on the Nasdaq Stock Market (National Market)
under the symbol "RWDT." On September 22, 1997 the last sale price for the
Common Stock as reported on the Nasdaq Stock Market was $22.50 per share. The
Selling Stockholders may from time to time sell shares of the Common Stock
offered hereby in transactions on the Nasdaq Stock Market, in privately-
negotiated transactions or otherwise, in each case at negotiated prices. See
"Plan of Distribution." The brokers or dealers through or to whom the shares of
Common Stock covered hereby may be sold may be deemed "underwriters" within the
meaning of the Securities Act of 1933, in which event all brokerage commissions
or discounts and other compensation received by such brokers or dealers may be
deemed underwriting compensation.
___________
THESE SECURITIES HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
___________
The date of this Prospectus is September 23, 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information filed by the Company with the Commission, including the reports and
other information incorporated by reference into this Prospectus, can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at its
regional offices located at 7 World Trade Center, 13th Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such material can also be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at rates prescribed by the Commission or from the
Commission's Internet web site at http:\\www.sec.gov. The Common Stock of the
Company is quoted on the Nasdaq National Market. Reports, proxy statements and
other information concerning the Company can be inspected at the offices of the
Nasdaq Stock Market, 1735 K Street, Washington, D.C. 20006. This Prospectus
does not contain all the information set forth in the Registration Statement of
which this Prospectus is a part and exhibits relating thereto which the Company
has filed with the Commission. Copies of the information and exhibits are on
file at the offices of the Commission and may be obtained, upon payment of the
fees prescribed by the Commission, may be examined without charge at the offices
of the Commission or through the Commission's Internet web site.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File No.
0-22145) pursuant to the 1934 Act are incorporated herein by reference:
1. The Company's Quarterly Report on Form 10-Q for the period ended June
30, 1997.
2. The Company's Current Report on Form 8-K dated August 22, 1997 relating
to the election of certain directors of the Company.
3. The description of Common Stock contained in Item 4 of the Company's
Registration Statement on Form 8-A, filed with the Commission under the 1934 Act
on May 27, 1997; and
4. All other documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the 1934 Act subsequent to the date of filing of the
Registration Statement of which this Prospectus is a part and prior to the
termination of the offering made hereby.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the request of any such person, a copy of any
or all of the documents which have been incorporated herein by reference, other
than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Requests for such documents
should be directed to RWD Technologies, Inc., 10480 Little Patuxent Parkway,
Columbia, Maryland 21044, Attention: Chief Financial Officer, telephone: (410)
730-4377.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
<PAGE>
THE COMPANY
RWD Technologies, Inc. provides a broad range of integrated solutions
designed to improve the productivity and effectiveness of workers in complex
operating environments. As the scope and complexity of technology used by
businesses accelerates and the global business environment becomes more
competitive, companies are increasingly focused on maximizing the return on
their advanced technology investments. To achieve this goal, companies must
ensure their employees receive effective performance support, including the
tools and training to operate these advanced systems effectively. Founded in
1988, the Company initially provided conventional performance support services
such as classroom training and hard copy documentation to plant personnel in
large industrial companies employing complex manufacturing systems and
technologies. In recent years, the Company has expanded its performance support
services to include the design, development and implementation of customized
information technology solutions including Enhanced User Interface ("EUI")
systems, Electronic Performance Support Systems ("EPSS"), Electronic Document
Management Systems ("EDMS"), remote diagnostic systems, sales force automation
and Internet/Intranet applications. More recently, RWD has expanded its services
to include end-user training and performance support services essential to the
effective implementation of enterprise-wide business process reengineering
efforts (particularly SAP software implementation) and lean manufacturing
consulting. All of the Company's services are designed to improve its clients'
product quality, worker productivity and competitiveness and to ensure an
attractive return on the clients' technology investments. The Company believes
its focus on end-user performance, embedded in all its service offerings,
differentiates it from many of its competitors in the performance support and
information technology services marketplaces. The Company's registered service
mark, "We bring people and technology together,"(R) succinctly describes the
Company's activities.
The Company's revenue is generated primarily from Fortune 200 companies
having a need for large, diverse and recurring performance support and
information technology solutions. In 1996, RWD provided services to 74 companies
in 23 industries. Among these clients were seven of the Fortune 10 companies and
20 of the Fortune 100 companies. The Company's clients include Bell Atlantic,
Bristol-Myers Squibb, Chrysler, Deere & Company, Dow Chemical, Ford, Media One,
Merck, Procter & Gamble and Steelcase. Chrysler engagements generated 33.9%,
28.5% and 29.0% of total revenue in 1995, 1996 and the first six months of 1997,
respectively. Ford engagements generated 12.6% of total revenue in the first
half of 1997. No other client generated more than 10% of total revenue in any of
these periods. Historically, a large percentage of the Company's revenue has
come from follow-on business from its existing clients. For example, in each of
1994, 1995 and 1996, more than 80% of the year's total revenue was generated by
clients who had been clients in the previous year; and, in each of these years,
aggregate revenue generated by these repeat clients exceeded the previous year's
total revenue by more than 25%. As the scope of the Company's services has
become more comprehensive, average revenue per client has increased from
$424,000 in 1994 to $878,000 in 1996, and the number of clients generating
individually more than $1.0 million of annual revenue increased from seven in
1994 to 19 in 1996.
In 1996, the Company made significant inroads into global markets. The
Company expanded its services to Ford to include the global implementation of
lean manufacturing. To further augment these efforts, the Company expects to
open an office in London in 1998. The Company has begun providing tailored
training and documentation solutions to large companies installing enterprise-
wide software applications in their worldwide operations and has entered into an
alliance with Price Waterhouse to work together to provide implementation
services. As a result of these developments, RWD expects that services to multi-
national clients in their foreign operations will continue to grow.
RWD manages each of its projects using proven state-of-the-art
methodologies and formalized management techniques designed to ensure that each
engagement meets the Company's high standards for quality and client
satisfaction as well as its profitability objectives. The Company believes its
structured project
-3-
<PAGE>
management process, combined with its flexible organizational structure and
substantial commitment to internal training, positions RWD to achieve
sustainable, long-term growth. The Company strives to provide a work environment
and employee reward system that will enable it to attract, develop and retain
highly skilled and motivated professionals. RWD is also committed to significant
and broad-based employee stock ownership, believing this will maximize
employees' dedication to the Company's growth and profitability.
Total revenue and operating income increased from $12.7 million and
$702,000, respectively, in 1992 to $65.0 million and $8.7 million, respectively,
in 1996, while the number of employees increased from 168 on December 31, 1992
to 648 on December 31, 1996. The Company believes demand for the types of
services RWD provides has increased rapidly in recent years and will continue to
do so as the gap between technological complexity and unsupported human
capability continues to widen. The Company's growth strategy is designed to
enhance its position as a comprehensive provider of performance support services
and information technology solutions by (i) increasing sales to its existing
client base, (ii) adding new clients and industries, (iii) broadening its range
of service offerings, (iv) expanding the scope of its geographic presence, (v)
maintaining its emphasis on recruiting and employee development and (vi)
exploring complementary acquisitions.
The Company was incorporated in Maryland in January 1988. The Company's
executive offices are located at 10480 Little Patuxent Parkway, Suite 1200,
Columbia, Maryland 21044-3530, and its telephone number is 410-730-4377.
-4-
<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the shares
of Common Stock offered hereby.
Reliance on Key Clients; Industry Concentration. The Company has relied
------------------------------------------------
in the past, and expects to continue to rely for the foreseeable future, on a
few key clients for a majority of its revenue. Chrysler, the Company's largest
client, generated 33.2%, 33.9%, 28.5% and 29.0% of total revenue in 1994, 1995,
1996 and the first half of 1997, respectively. Ford engagements generated 12.6%
of total revenue in the first half of 1997. The Company's top five clients in
1994, 1995, 1996 and the first half of 1997 generated, in the aggregate, 62.1%,
57.8%, 51.4% and 56.9% of total revenue in each of these respective periods.
Automotive industry clients generated an aggregate of 46.9%, 43.5%, 40.7% and
43.4% of total revenue in 1994, 1995, 1996 and the first half of 1997,
respectively. The automotive industry is subject to cyclical and economic
factors beyond the control of the Company which could negatively affect future
demand for the Company's services from automotive clients. It is also possible
that clients will develop or acquire in-house expertise in services similar to
those provided by the Company, thereby significantly reducing demand for the
Company's services. No assurance can be given that the Company will be able to
maintain its existing client base, maintain or increase the level of revenue
generated by its existing clients or be able to attract new clients. Generally,
the Company's engagements, including those with Chrysler and Ford, have no
minimum purchase requirements and are terminable by the client with little or no
notice to the Company. The loss of one or more of the Company's significant
clients, especially Chrysler or Ford, or a substantial reduction in business
from any of its significant clients, regardless of the reason, is likely to have
a materially adverse effect on the Company.
Fluctuating Results; Project Risks. The Company's operating results have
-----------------------------------
fluctuated from period to period in the past and may fluctuate significantly in
future periods. These variations result from a number of factors, such as the
number, significance and mix of client projects commenced or completed during a
period and the number of business days in a particular period. It is difficult
to forecast the timing of revenue because project cycles depend on factors such
as the size and scope of assignments and circumstances specific to particular
clients or industries. Third party products and services are integral to the
success of certain Company projects. To the extent third parties do not deliver
effective products and services on a timely basis, the Company's project results
could be negatively impacted. Additionally, employee utilization rates vary from
period to period not only due to changes in the Company's volume of business but
because of the timing of employee vacations, hiring and training, the amount of
time spent by employees on marketing and project terminations or postponements.
In the past, the Company has experienced some seasonality in its business, with
higher levels of revenue and profitability in the first half of each year. This
trend has resulted from reduced utilization due to holidays and vacations as
well as modestly lower levels of client demand in the second half of the year.
Generally, client engagements, including Chrysler and Ford engagements, are
terminable with little or no notice or penalty, and a client's unanticipated
decision to terminate or postpone a project may result in higher than expected
numbers of unassigned Company professionals or severance costs, either of which
could materially adversely affect the Company's results of operations. The
Company's most significant expenses relate to salaries and benefits for its
professional staff. Since these expenses are generally fixed, the Company's
results of operations in a particular period may be materially adversely
affected if revenue falls below expectations.
Need to Attract and Retain Professional Employees. The Company's
--------------------------------------------------
continued success and future growth will depend upon its ability to attract,
develop and retain a sufficient number of highly skilled, motivated professional
employees. Competition for personnel qualified to deliver most of the Company's
services is intense, and many of the companies with which the Company competes
for qualified professionals have substantially greater financial and other
resources than the Company. Furthermore, competition for qualified personnel can
be expected to increase as competition in the Company's service offerings
increases. There can be no assurance that the Company will be able to recruit,
develop and retain a sufficient number of highly skilled, motivated
professionals to compete successfully. The loss of a significant number of
professional personnel is likely to have a
-5-
<PAGE>
materially adverse effect on the Company's business prospects and results of
operations, particularly its ability to complete existing projects or secure new
projects.
Management of Growth. The Company's rapid growth has placed significant
---------------------
demands on the Company's management, administrative, operating and financial
resources. The Company's ability to manage future growth will require the
Company to continue to enhance its operating, financial and management
information systems and to expand, develop, motivate and manage effectively a
changing and expanding professional work force. If the Company is unable to
manage growth effectively, the quality of the Company's services, its ability to
retain key personnel and its results of operations are likely to be materially
adversely affected. Should the Company acquire businesses in the future, there
can be no assurance that it will be successful in integrating the acquired
businesses into the Company's infrastructure or retaining their key
professionals. Furthermore, there can be no assurance that the Company's
business will continue to expand. The Company's growth could be adversely
affected by client dissatisfaction with prior Company services, reductions in
clients' spending allocations for services the Company provides, restrictions
placed by clients on services to client competitors, increased competition,
possible pricing or labor cost pressures and general economic trends. Also, the
Company's enterprise-wide reengineering implementation support services will
likely continue to depend, in part, upon its alliance with Price Waterhouse. Any
adverse change in this relationship could materially adversely affect the
Company's ability to generate or increase revenue from these services.
Risk of Client Dissatisfaction. The Company is subject to potential
-------------------------------
claims by dissatisfied clients that Company services or actions by RWD employees
did not achieve the results expected by those clients or adversely impacted the
clients' operations. Any such claim could have a materially adverse effect on
the Company's results of operations and financial condition. The Company's
failure to meet a client's expectations or the client's belief that RWD may have
contributed to operating downtime could damage its relationship with that
client, could cause the client to terminate the Company's engagement with little
or no notice and could damage the Company's reputation, thereby adversely
affecting its ability to attract new or repeat business.
Dependence on Key Personnel. The success of the Company is highly
----------------------------
dependent upon the efforts and abilities of its co-founders, Dr. Robert W.
Deutsch, and Mr. John H. Beakes, the Chief Executive Officer and the Chief
Operating Officer, respectively, as well as its Group Vice Presidents, Messrs.
John E. Lapolla, Kenneth J. Rebeck, and Jeffrey W. Wendel. Each of these
individuals is party to an employment agreement with the Company containing
customary noncompetition, nondisclosure and nonsolicitation covenants. There can
be no assurance that these agreements will prevent the loss of any of these
individuals or Company business. The loss of the services of any of these key
executives could have a materially adverse effect upon the Company's business,
results of operations and financial condition. The Company does not maintain key
man life insurance on these or any other RWD employees.
Budget Overruns. The majority of the Company's contracts are on a time
----------------
and materials basis, although many of these contracts contain initial "not-to-
exceed" fees and Company performance obligations. The remainder of the
Company's contracts are on a fixed-price basis, particularly those related to
the Company's information technology services. The failure of the Company to
complete a project to the client's satisfaction within the "not-to-exceed" or
fixed fee exposes the Company to unrecoverable budget overruns, which could have
a materially adverse effect on the Company's business, results of operations and
financial condition.
Risks of Conducting International Operations. The Company expects that
---------------------------------------------
within the next several years, its international operations may increase
significantly. Generally, the cost of doing business abroad is higher for U.S.
businesses than the cost of doing business domestically. Therefore, the Company
could experience a decline in its operating margins as the significance of its
international operations increases. International operations and the provision
of services in foreign markets are subject to a number of special risks,
including currency exchange rate fluctuations, trade barriers, exchange
controls, national and regional labor strikes, political risks and risks of
increases in duties, taxes and governmental royalties, as well as changes in
laws and policies governing operations of foreign-based companies.
-6-
<PAGE>
Rapid Technological Change; Dependence on New Solutions. The Company's
--------------------------------------------------------
future success will depend on its ability to gain expertise in technological
advances rapidly as well as to respond quickly to evolving industry trends and
client needs. There can be no assurance that the Company will be successful in
adapting to these advances in technology or in addressing changing client needs
on a timely basis or, if the Company does gain such expertise, that it will be
able to market new services successfully. There can be no assurance that the
Company will satisfactorily complete projects where unproven technologies or
tools are critical to the projects' success. In addition, there can be no
assurance that the services or technologies developed by others will not
significantly reduce demand for the Company's services or render the Company's
services obsolete.
Substantial Competition. The Company's service areas are highly
------------------------
competitive and are subject to low barriers to entry and rapid change. The
Company faces competition for client assignments from a number of companies
having significantly greater financial, technical and marketing resources and
greater name recognition than the Company. Principal competitors for the
Company's services include the consulting practices of the six largest national
accounting firms as well as professional services groups of many large
technology and management consulting companies. The Company also competes with
smaller service providers whose specific, more narrowly focused service
offerings may be more attractive to potential clients than the Company's multi-
dimensional approach. In addition, clients may elect to use their internal
resources to satisfy their needs for the services the Company provides. There
can be no assurance that the Company will compete successfully with potential
clients' internal resources or with existing or new competitors.
Limited Protection of Proprietary Expertise, Methodologies and Software.
------------------------------------------------------------------------
The Company's success is highly dependent upon its specialized and proprietary
expertise, methodologies and software. To protect proprietary information, the
Company relies only on a combination of trade secret laws, employee
nondisclosure policies and third party confidentiality agreements. A substantial
majority of the Company's employees are not bound by their nondisclosure
agreements once their employment has been terminated, although the Company
believes common law generally prohibits these employees from disclosing to third
parties proprietary information of the Company. There can be no assurance that
the steps taken by the Company to protect its proprietary rights will be
adequate to prevent misappropriation of such rights or that third parties will
not independently develop functionally equivalent or superior methodologies or
software. Additionally, because the Company's engagements are work-for-hire
based, the Company assigns ownership of all materials the Company develops
specifically for its clients to those clients upon project completion. There can
be no assurance, however, that third parties will not assert infringement claims
against the Company in the future that would result in costly litigation or
license arrangements regardless of the merits of such claims.
Risks Associated with Acquisition Strategy. One of the elements of the
-------------------------------------------
Company's growth strategy is to pursue acquisitions that could provide well-
trained, high-quality professionals, new service offerings, additional industry
expertise, a broader client base or an expanded geographic presence. There can
be no assurance that the Company will be able to identify acceptable acquisition
candidates or complete the acquisition of any identified candidates. A
substantial portion of the Company's capital resources could be used for these
acquisitions. The Company may require additional debt or equity financings for
future acquisitions, which may not be available on terms favorable to the
Company, if at all. There also can be no assurance that the Company will be able
to successfully integrate an acquisition into the Company's operations or that
any acquired business will be able to be operated profitably by the Company.
Control by Principal Stockholder. Dr. Deutsch and members of his family
---------------------------------
beneficially own significantly more than a majority of the shares of Common
Stock outstanding on the date of this Prospectus. As a result, Dr. Deutsch and
his family will continue to be able to control the outcome of all matters
requiring a stockholder vote, including the election of the entire Board of
Directors and the approval of significant corporate matters such as change of
control transactions, thereby controlling the affairs and management of the
Company.
Effect of Anti-Takeover Provisions. The Company's Board of Directors has
-----------------------------------
the authority to issue preferred stock and to determine the price, rights,
conversion ratios, preferences and privileges of that stock
-7-
<PAGE>
without further vote or action by the holders of the Common Stock. The rights of
the holders of Common Stock will be subject to, and may be adversely affected
by, the rights, including economic rights, of the holders of any shares of
preferred stock issued in the future. Any such issuance may discourage third
parties from attempting to acquire control of the Company. Furthermore, the
Company is subject to the anti-takeover provisions of the Maryland General
Corporation Law which prohibit the Company from engaging in a "business
combination" with an "interested stockholder" for a period of five years
after the date of the transaction in which the person first becomes an
"interested stockholder," unless the business combination is approved in a
prescribed manner. The Company is also subject to the control share acquisition
provisions of the Maryland General Corporation Law, which provide that shares
acquired by a person with certain levels of voting power have no voting rights
unless approved by a stockholder vote of two-thirds of the votes entitled to be
cast, excluding shares owned by the acquiror and by the Company's officers and
employee-directors, and in certain circumstances, such shares may be redeemed by
the Company. The application of these statutes and certain other provisions of
the Company's Charter could have the effect of discouraging, delaying or
preventing a change of control of the Company not approved by the Board of
Directors, which could adversely affect the market price of the Company's Common
Stock.
Shares Eligible for Future Sale. Sales of a substantial number of shares
--------------------------------
of Common Stock in the public market, or the perception that such sales could
occur, could adversely affect the market price for the Company's Common Stock.
In addition to the shares registered in connection with this offering, which
will be freely transferable upon issuance unless acquired by affiliates, almost
all of the shares to be outstanding upon completion of this offering which have
not been registered under the Securities Act of 1933, as amended (the
"Securities Act") have been held for more than one year; and, as such, those
shares are salable subject to certain volume and manner of sale restrictions
under Rule 144 of the Securities Act.
Additionally, the Company has 175,000 shares of Common Stock reserved for
issuance in connection with its Employee Stock Purchase Plan which are expected
to be registered under the Securities Act under a separate registration
statement prior to the end of 1997; and, as such, will be freely transferable
upon issuance unless acquired by affiliates of the Company.
All directors, executive officers, principal stockholders and certain other
officers of the Company have agreed not to sell or otherwise dispose of any of
their shares or options until December 19, 1997 without the prior written
consent of William Blair & Company, L.L.C., the managing underwriters for the
Company's initial public offering of its Common Stock in June 1997. The Company
has also agreed not to issue, sell or otherwise dispose of any of its shares or
grant any options (other than options granted or shares issued in connection
with the Company's stock option plan or unregistered shares issued in connection
with any acquisition) during such day period. However, William Blair & Company,
L.L.C., may, in its sole discretion and at any time without notice, release for
public sale all or any portion of these shares subject to such lock-up
agreements.
Possible Volatility of Stock Price. The Common Stock has been trading
-----------------------------------
publicly only since June 19, 1997. The market price of the Common Stock may be
subject to significant fluctuations in response to variations in quarterly
operating results and other events or factors, such as announcements of new
services by the Company or its competitors and changes in financial estimates by
securities analysts. Moreover, the stock market and the market prices of the
shares of many technology companies in recent years have experienced significant
price and volume fluctuations. These fluctuations often have been unrelated to
the operating performance of specific public companies. Broad market
fluctuations, as well as economic conditions generally and in technology
industries specifically, may adversely affect the market price of the Common
Stock.
Dividend Policy; S Corporation Distribution. The Company does not
--------------------------------------------
anticipate paying any cash dividends for the foreseeable future. Immediately
prior to its initial public offering in June 1997, the Company converted from S
Corporation to C Corporation status. In connection with this conversion, the
Company effected a distribution to its stockholders (the "S Corporation
Distribution"). As a result of the S Corporation Distribution, consisting of an
aggregate of approximately $9.9 million in cash and $6.5 million of S
Corporation Notes, the Company's retained earnings and stockholders' equity were
significantly reduced. In addition, the Company
-8-
<PAGE>
recorded a one-time, non-cash charge against earnings in the second quarter of
1997 in the amount of approximately $4.5 million, resulting from a deferred tax
liability in connection with the Company's conversion from S Corporation to C
Corporation status. This tax liability will become due ratably over next four
years following conversion.
USE OF PROCEEDS
All of the proceeds from the sale of the shares of the Company's Common
Stock offered hereby will be received by the Selling Stockholders. The Company
will receive none of the proceeds from the sale of the shares of Common Stock.
-9-
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock by the persons listed therein (the
"Selling Stockholders") prior to this offering, the maximum number of shares of
Common Stock to be sold by each of the Selling Stockholders hereby, and the
beneficial ownership of the Company's Common Stock by each of the Selling
Stockholders after this offering, assuming that all shares of Common Stock
offered hereby are sold.
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Prior to Offering Shares To Owned After Offering
------------------------------ Be Sold In -------------------------------
Name, Job Description and This
Address of Beneficial Owner(1) Number Percent Offering Number Percent
- ------------------------------------- -------------- ------------ -------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
John H. Beakes, President, Chief
Operating Officer, Director.......... 576,246 4.0% 129,000 447,246 3.0%
John E. Lapolla, Group Vice Presi-
dent-Manufacturing Performance
Support, Director.................... 150,200 1.0% 150,000 200 *
Kenneth J. Rebeck, Group Vice Presi-
dent-Technology Transfer,
Director............................. 150,000 1.0% 150,000 -- --
Jeffrey W. Wendel, Group Vice Presi-
dent-Information Technology,
Director............................. 39,500 * 39,000 500 *
Robert T. O'Connell, Senior Vice
President-Strategic Business
Planning, Director................... 35,000 * 30,000 5,000 *
Ronald E. Holtz, Vice President, Chief
Financial Officer, Director.......... 10,500 * 9,000 1,500 *
David J. Deutsch, Director(2)........ 627,770 4.4% 12,000 615,770 4.2%
Jerry P. Malec, Director............. 12,770 * 12,000 770 *
Bruce D. Alexander, Director......... 12,500 * 12,000 500 *
Randall Pack......................... 19,100 * 17,100 2,000 *
Sandra J. Hines...................... 16,450 * 16,350 100 *
Mark Potter.......................... 9,900 * 9,900 -- --
Karen E. Lackler..................... 7,800 * 7,800 -- --
Steven McClain....................... 7,200 * 7,200 -- --
Carol Young.......................... 6,000 * 6,000 -- --
James S. Boyle....................... 6,650 * 4,650 2,000 *
Lisa M. Frantz....................... 3,150 * 3,150 -- --
David Meagher........................ 5,150 * 3,150 2,000 *
Robert L. Merl....................... 3,000 * 3,000 -- --
Alka Mital........................... 3,000 * 3,000 -- --
Jaideep Singh........................ 2,850 * 2,850 -- --
Gregory Mitchell..................... 2,250 * 2,100 150 *
Adam R. Rugg......................... 2,500 * 2,100 400 *
Michael Smith........................ 2,040 * 2,040 -- --
Robert B. Gosline.................... 1,500 * 1,500 -- --
Fazel M. Mahate...................... 1,700 * 1,500 200 *
</TABLE>
-10-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Fred A. Semko........................ 1,500 * 1,500 -- --
Joseph Austin, Jr.................... 1,550 * 1,350 200 *
Catherine Witt....................... 2,350 * 1,350 1,000 *
Michael L. Coleman................... 1,200 * 1,200 -- --
Maxine Constable..................... 1,200 * 1,200 -- --
Stacey A. Carlson.................... 1,250 * 1,050 200 *
Kimberly E. Holland.................. 1,200 * 1,050 150 *
Dennis Phillips...................... 1,050 * 1,050 -- --
Timothy Strakna...................... 1,050 * 1,050 -- --
Bradley E. Lemen ................... 1,000 * 1,000 -- --
Other Employees, in the aggregate(3). 23,970 * 18,670 5,300 *
</TABLE>
_____________
* Less than 1%.
(1) The address of each of these holders is c/o RWD Technologies, Inc., 10480
Little Patuxent Parkway, Columbia, Maryland 21044. Unless otherwise noted,
each Selling Stockholder is or was an employee, but is not currently an
executive officer or director, of the Company.
(2) Includes an aggregate of 450,000 shares of Common Stock held in trusts for
Dr. David Deutsch's children and nieces and nephews, for which Dr. David
Deutsch serves as a co-trustee.
(3) Each of these Selling Stockholders is offering less than 1,000 Shares.
The Shares being offered hereby include shares of Common Stock that were
issued prior to the date of this Prospectus to those Selling Stockholders who
are not affiliates of the Company upon their exercise of options that had been
granted under the Company's Amended and Restated Equity Participation Plan, as
amended from time to time (the "Plan"). The Shares being offered hereby also
include shares of Common Stock that, prior to the date of this Prospectus were
issued, and, subsequent to the date of this Prospectus, are issuable upon
exercise of outstanding options granted under the Plan to those Selling
Stockholders who may be considered affiliates of the Company.
PLAN OF DISTRIBUTION
The Company's Common Stock is quoted on the Nasdaq National Market under
the symbol "RWDT." The Shares may be sold from time to time by the Selling
Stockholders directly or through broker-dealers or underwriters who may act
solely as agents, or who may acquire the Shares a principals. In connection
with any sales of the Shares hereunder, the Selling Stockholders and any broker-
dealers participating in such sales may be deemed to be "underwriters" within
the meaning of the Securities Act. The distribution of the Shares hereunder by
the Selling Stockholders may be effected in one or more transactions that may
take place on the Nasdaq National Market or otherwise, including block trades or
ordinary brokers' transactions, or through privately negotiated transactions,
through an underwritten public offering, or through a combination of any such
methods of sale, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. Usual and
customary or specially negotiated brokerage fees or commissions may be paid by
the Selling Stockholders in connection with such sales. Certain expenses
incurred in connection with the registration of the Shares offered hereby under
the federal and state securities laws (currently estimated to be approximately
$30,000) are being borne by the Company. The Company will not bear any
commissions or discounts paid or allowed by the Selling Stockholders to
underwriters, dealers, brokers or agents. To the extent required, the specific
shares of Common Stock to be sold, purchase price, public offering price, the
names of any such agent, dealer or underwriter and any applicable commission or
discount with respect to a particular offering may be set forth in an
accompanying Prospectus Supplement.
LEGAL MATTERS
The legality of the shares offered hereby has been passed upon for the
Company by Piper & Marbury L.L.P., Baltimore, Maryland.
-11-
<PAGE>
<TABLE>
=============================================== ===============================================
<S> <C>
666,860 Shares
No person has been authorized by the
Company to give any information or to
make any representations other than those
contained in this Prospectus in RWD TECHNOLOGIES, INC.(R)
connection with the offer contained in Common Stock
this Prospectus, and if given or made,
such information or representations may
not be relied upon as having been
authorized by the Company. This PROSPECTUS
Prospectus does not constitute an offer
to sell or a solicitation of an offer to
buy any of the securities in any
jurisdiction in which such offer or
solicitation is not authorized, or in
which the person making such offer or
solicitation is not qualified to do so,
or to any person to whom it is unlawful
to make such offer or solicitation.
Neither the delivery of this Prospectus
nor any sale made hereunder shall create
an implication that there has been no
change in the affairs of the Company
since the date hereof.
_____________________________
TABLE OF CONTENTS
PAGE
----
Available Information................ 2
Incorporation of Certain............. 2
Documents by Reference............. 2
The Company.......................... 3
Risk Factors......................... 5
Use of Proceeds...................... 9
Selling Stockholders................. 10 September 23, 1997
Plan of Distribution................. 11
Legal Matters........................ 11
=============================================== ===============================================
</TABLE>
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents have been filed by RWD Technologies, Inc. (the
"Company") with the Securities and Exchange Commission and are incorporated
herein by reference: (a) Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997; (b) Current Report on Form 8-K dated August 22, 1997 relating to
the election of certain directors; and (c) the description of the Company's
Common Stock contained in its Registration Statement on Form 8-A dated May 27,
1997.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Registration Statement
and prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities remaining
unsold shall be deemed to be incorporated by reference into this Registration
Statement and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this Registration Statement to the extent that a statement contained herein or
in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. The
documents required to be so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Registration
Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not required.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Certain legal matters in connection with the issuance of the Common Stock
offered by this Registration Statement are being passed upon for the Company by
Piper & Marbury L.L.P. of Baltimore, Maryland.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by the Maryland General Corporation Law ("MGCL"), Article Eighth,
Paragraph (5) of the Company's Charter provides for indemnification of directors
and officers of the Company, as follows:
The Corporation shall indemnify (A) its directors and officers, whether
serving the Corporation or, at its request, any other entity, to the full
extent required or permitted by the General Laws of the State of Maryland
now or hereafter in force, including the advance of expenses under the
procedures and to the full extent permitted by law and (B) other employees
and agents to such extent as shall be authorized by the Board of Directors
or the Corporation's By-Laws and be permitted by law. The foregoing rights
of indemnification shall not be exclusive of any other rights to which
those seeking indemnification may be entitled. The Board of Directors may
take such action as is necessary to carry out these indemnification
provisions and is expressly empowered to adopt, approve and amend from time
to time such By-Laws, resolutions or contracts implementing such provisions
or such further indemnification arrangements as may be permitted by law.
No amendment of the charter of the Corporation or repeal of any of its
provisions shall limit or eliminate the right to indemnification provided
hereunder with respect to acts or omissions occurring prior to such
amendment or repeal.
II-1
<PAGE>
The Company's By-Laws contain indemnification procedures that implement those of
the Charter. The MGCL permits a corporation to indemnify its directors and
officers, among others, against judgments, penalties, fines, settlements and
reasonable expenses actually incurred by them in connection with any proceeding
to which they may be made a party by reason of their service in those or other
capacities, unless it is established that (a) the act or omission of the
director or officer was material to the matter giving rise to such proceeding
and (i) was committed in bad faith or (ii) was the result of active and
deliberate dishonesty, (b) the director or officer actually received an improper
personal benefit in money, property or services, or (c) in the case of any
criminal proceeding, the director or officer had reasonable cause to believe
that the action or omission was unlawful.
As permitted by the MGCL, Article Eighth, Paragraph (6) of the Company's Charter
provides for limitation of liability of directors and officers of the Company,
as follows:
To the fullest extent permitted by Maryland statutory or decisional law, as
amended or interpreted, no director or officer of this Corporation shall be
personally liable to the Corporation or its stockholders for money damages.
No amendment of the Charter of the Corporation or repeal of any of its
provisions shall limit or eliminate the benefits provided to directors and
officers under this provision with respect to any act or omission which
occurred prior to such amendment or repeal.
The MGCL permits the charter of a Maryland corporation to include a provision
limiting the liability of its directors and officers to the corporation and its
stockholders for money damages, except to the extent that (i) the person
actually received an improper benefit or profit in money, property or services
or (ii) a judgment or other final adjudication is entered in a proceeding based
on a finding that the person's action, or failure to act, was the result of
active and deliberate dishonesty and was material to the cause of action
adjudicated in the proceeding.
As permitted under Section 2-418(k) of the MGCL, the Company has purchased and
maintains insurance on behalf of its directors and officers against any
liability asserted against such directors and officers in their capacities as
such, whether or not the registrant would have the power to indemnify such
persons under the provisions of Maryland law governing indemnification.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4.1 Amended and Restated Equity Participation Plan, as amended (the
"Plan").
4.2 Form of Non-Qualified Stock Option Agreement under the Plan.
4.3 Form of Stock Option Agreement under the Plan.
5.1 Opinion of Piper & Marbury L.L.P. (contains Consent of Counsel).
24.1 Consent of Counsel (contained in Exhibit 5).
25.1 Power of Attorney.
II-2
<PAGE>
ITEM 9. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination
of the offering.
The undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Howard County, in the State of Maryland on this 23rd day of
September, 1997.
RWD TECHNOLOGIES, INC.
By: /s/ Robert W. Deutsch
---------------------------------
Robert W. Deutsch
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities and
on the date indicated.
PRINCIPAL EXECUTIVE OFFICER:
/s/ Robert W. Deutsch
- -----------------------------------------------------
Chairman and Chief Executive Officer September 23, 1997
PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER:
/s/ Ronald E. Holtz
- -----------------------------------------------------
Vice President, Secretary and Chief Financial Officer September 23, 1997
A MAJORITY OF THE BOARD OF DIRECTORS:
Robert W. Deutsch, John H. Beakes, Ronald E. Holtz,
David J. Deutsch, John E. Lapolla, Kenneth J. Rebeck,
Jeffrey W. Wendel, Jerry P. Malec, Robert T.
O'Connell and Bruce Alexander.
By: /s/ Robert W. Deutsch
- -----------------------------------------------------
For himself and as Attorney-in-Fact September 23, 1997
II-4
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4.1 Amended and Restated Equity Participation Plan, as amended (the
"Plan").
4.2 Form of Non-Qualified Stock Option Agreement under the Plan.
4.3 Form of Stock Option Agreement under the Plan.
5.1 Opinion of Piper & Marbury L.L.P. (contains Consent of Counsel).
24.1 Consent of Counsel (contained in Exhibit 5).
25.1 Power of Attorney.
II-5
<PAGE>
Exhibit 4.1
RWD TECHNOLOGIES, INC. AMENDED AND RESTATED EQUITY PARTICIPATION
PLAN,
AS AMENDED ON JUNE 2, 1997
1. ESTABLISHMENT, PURPOSE AND TYPES OF AWARDS
RWD TECHNOLOGIES, INC. hereby amends and restates its 1988 Equity
Participation Plan, as previously amended from time to time, the effective date
of which was January 1, 1989 (as hereby amended and restated, the "Plan"). The
purpose of the Plan is to promote the long-term growth and profitability of RWD
Technologies, Inc. (the "Corporation") by (i) providing its employees with
incentives to improve stockholder value and to contribute to the growth and
financial success of the Corporation, and (ii) enabling the Corporation to
attract, retain and reward the best available employees..
The Plan permits the granting of stock options (including incentive stock
options qualifying under Code section 422 and nonqualified stock options), stock
appreciation rights, restricted or unrestricted stock awards, phantom stock,
performance awards, or any combination of the foregoing.
2. DEFINITIONS
Under this Plan, except where the context otherwise indicates, the
following definitions apply:
(a) "Affiliate" shall mean any entity, whether now or hereafter existing,
which controls, is controlled by, or is under common control with, the
Corporation (including, but not limited to, joint ventures, limited liability
companies, and partnerships). For this purpose, "control" shall mean ownership
of 50% or more of the total combined voting power of all classes of stock of the
entity.
(b) "Award" shall mean any stock option, stock appreciation right, stock
award, phantom stock award, or performance award.
(c) "Board" shall mean the Board of Directors of the Corporation.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended, and
any regulations promulgated thereunder.
(e) "Committee" shall mean the committee of the Board appointed to
administer the Plan; provided, however, that all the members of such committee
shall constitute both "Non-Employee Directors" within the meaning of Rule 16b-3,
and "outside directors" within the meaning of Code section 162(m).
(f) "Common Stock" shall mean shares of common stock of the Corporation,
par value of $.10 per share.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(h) "Fair Market Value" of a share of the Corporation's Common Stock for
any purpose on a particular date shall mean (i) the Closing Price on the trading
day preceding such date, (ii) the Closing Price on the fifth trading day
preceding such date or (iii) the average of the Closing Price on each of the ten
trading days preceding such date, as determined in the discretion of the
Committee on the date of grant; provided, however, that, with respect to any
Award, whichever definition is selected by the Committee on the date of grant
shall be used on all other dates on which the meaning of Fair Market Value is
required for the duration of that Award. As used herein, the "Closing Price" on
a particular date shall mean the last
<PAGE>
reported sale price per share of Common Stock on such date or, in case no such
sale takes place on such date, the average of the high and low bid prices, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on a national
securities exchange or included for quotation on the Nasdaq Stock Market
(National Market), or if the Common Stock is not so listed or admitted to
trading or included for quotation, the last quoted price, or if the Common Stock
is not so quoted, the average of the high bid and low asked prices in the over-
the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System or, if such system is no longer in use,
the principal other automated quotations system that may then be in use or, if
the Common Stock is not quoted by any such organization, the average of the
closing bid and asked prices, as furnished by a professional market maker making
a market in the Common Stock as selected in good faith by the Committee or by
such other source or sources as shall be selected in good faith by the
Committee. As used herein, the term "trading day" shall mean a day on which
public trading of securities occurs and is reported in the principal
consolidated reporting system referred to above, or if the Common Stock is not
listed or admitted to trading on a national securities exchange or included for
quotation on the Nasdaq Stock Market (National Market), any business day.
(i) "Grant Agreement" shall mean a written document memorializing the terms
and conditions of an Award granted pursuant to the Plan and shall incorporate
the terms of the Plan.
(j) "Parent" shall mean a corporation, whether now or hereafter existing,
within the meaning of the definition of "parent corporation" provided in Code
section 424(e), or any successor thereto.
(k) "Rule 16b-3" shall mean Rule 16b-3 as in effect under the Exchange Act
on the effective date of the Plan, or any successor provision prescribing
conditions necessary to exempt the issuance of securities under the Plan (and
further transactions in such securities) from Section 16(b) of the Exchange Act.
(l) "Subsidiary" and "subsidiaries" shall mean only a corporation or
corporations, whether now or hereafter existing, within the meaning of the
definition of "subsidiary corporation" provided in Section 424(f) of the Code,
or any successor thereto.
3. ADMINISTRATION
(a) Powers of the Committee. The Committee shall have all the powers
vested in it by the terms of he Plan, such powers to include authority, in its
sole and absolute discretion, to grant Awards under the Plan, prescribe Grant
Agreements evidencing such Awards and establish programs for granting Awards.
The Committee shall have full power and authority to take all other actions
necessary to carry out the purpose and intent of the Plan, including, but not
limited to, the authority to: (i) determine the eligible persons to whom, and
the time or times at which Awards shall be granted; (ii) determine the types of
Awards to be granted; (iii) determine the number of shares to be covered by or
used for reference purposes for each Award; (iv) impose such terms, limitations,
restrictions and conditions upon any such Award as the Committee shall deem
appropriate; (v) modify, amend, extend or renew outstanding Awards, or accept
the surrender of outstanding Awards and substitute new Awards (provided,
however, that any modification that would materially adversely affect any
outstanding Award shall not be made without the consent of the grantee); (vi)
accelerate or otherwise change the time in which an Award may be exercised or
becomes payable and to waive or accelerate the lapse, in whole or in part, of
any restriction or condition with respect to such Award, including, but not
limited to, any restriction or condition with respect to the vesting or
exercisability of an Award following termination of any grantee's employment;
and (vii) establish objectives and conditions, if any, for earning Awards and
determining whether Awards will be paid after the end of a performance period.
-2-
<PAGE>
The Committee shall have full power and authority, in its sole and absolute
discretion, to administer and interpret the Plan and to adopt and interpret such
rules, regulations, agreements, guidelines and instruments for the
administration of the Plan and for the conduct of its business as the Committee
deems necessary or advisable.
(b) Non-Uniform Determinations. The Committee's determinations under the
Plan (including without limitation, determinations of the persons to receive
Awards, the form, amount and timing of such Awards, the terms and provisions of
such Awards and the Grant Agreements evidencing such Awards) need not be uniform
and may be made by the Committee selectively among persons who receive, or are
eligible to receive, Awards under the Plan, whether or not such persons are
similarly situated.
(c) Limited Liability. To the maximum extent permitted by law, no member
of the Committee shall be liable for any action taken or decision made in good
faith relating to the Plan or any Award thereunder.
(d) Indemnification. To the maximum extent permitted by law and by the
Corporation's charter and by-laws, the members of the Committee shall be
indemnified by the Corporation in respect of all their activities under the
Plan.
(e) Effect of Committee's Decision. All actions taken and decisions and
determinations made by the Committee on all matters relating to the Plan
pursuant to the powers vested in it hereunder shall be in the Committee's sole
and absolute discretion and shall be conclusive and binding on all parties
concerned, including the Corporation, its stockholders, any participants in the
Plan and any other employee of the Corporation, and their respective successors
in interest.
4. SHARES AVAILABLE FOR THE PLAN; MAXIMUM AWARDS
Subject to adjustments as provided in Section 7(d) of the Plan, the shares
of Common Stock that may be delivered, purchased or used for reference purposes
(with respect to stock appreciation rights, phantom stock units or performance
awards) with respect to Awards granted under the Plan shall not exceed an
aggregate of 1,355,000 (4,065,000 after the Corporation's proposed 3:1 stock
split) shares of Common Stock. The Corporation shall reserve such number of
shares for Awards under the Plan, subject to adjustments as provided in Section
7(d) of the Plan. If any Award, or portion of an Award, under the Plan expires
or terminates unexercised, becomes unexercisable or is forfeited or otherwise
terminated, surrendered or canceled as to any shares, or if any shares of Common
Stock are surrendered to the Corporation in connection with any Award (whether
or not such surrendered shares were acquired pursuant to any Award), the shares
subject to such Award and the surrendered shares shall thereafter be available
for further Awards under the Plan; provided, however, than any such shares that
are surrendered to the Corporation in connection with any Award or that are
otherwise forfeited after issuance shall not be available for purchase pursuant
to incentive stock options intended to qualify under Code section 422.
Subject to adjustments as provided in Section 7(d) of the Plan, the maximum
number of shares of Common Stock subject to Awards of any combination that may
be granted during any one fiscal year of the Corporation to any one individual
shall be limited to 200,000. Such per-individual limit shall not be adjusted to
effect a restoration of shares of Common Stock with respect to which the related
Award is terminated, surrendered or canceled.
5. PARTICIPATION
Participation in the Plan shall be open to all employees, officers, and
directors of the Corporation, or of any Affiliate of the Corporation, as may be
selected by the Committee from time to time. Notwithstanding the foregoing,
participation in the Plan with respect to Awards of incentive stock options
shall be limited to employees of the Corporation or of any Parent or Subsidiary
of the Corporation.
-3-
<PAGE>
6. AWARDS
The Committee, in its sole discretion, establishes the terms of all Awards
granted under the Plan. Awards may be granted individually or in tandem with
other types of Awards. All Awards are subject to the terms and conditions
provided in the Grant Agreement.
(a) Stock Options. The Committee may from time to time grant to eligible
participants Awards of incentive stock options as that term is defined in Code
section 422 or nonqualified stock options. Options intended to qualify as
incentive stock options under Code section 422 must have an exercise price at
least equal to Fair Market Value on the date of grant, but nonqualified stock
options may be granted with an exercise price less than Fair Market Value.
Incentive stock option Awards granted under the Plan shall comply in
all respects with Code section 422, including the following requirements of Code
section 422:
(i) Grant Date. An incentive stock option must be granted within 10
years of the earlier of the Plan's adoption by the Board of Directors or
approval by the Corporation's stockholders. The Grant Date is the date the
Committee formally acts to grant an Award to a grantee or such other date
as the Committee shall so designate at the time of taking such formal
action.
(ii) Exercise Price and Term. The exercise price of an incentive
stock option shall not be less than 100% of the Fair Market Value of the
shares on the date the stock option is granted and the term of the stock
option shall not exceed ten years. Notwithstanding the immediately
preceding sentence, the exercise price of any incentive stock option
granted to a grantee who owns (within the meaning of Code section
422(b)(6), after application of the attribution rules in Code section
424(d)) more than 10% of the total combined voting power of all classes of
shares of the Corporation, or its Parent or Subsidiary corporations, shall
be not less than 110% of the Fair Market Value of the Common Stock on the
grant date and the term of such stock option shall not exceed five years.
(iii) Maximum Grant. The aggregate Fair Market Value (determined as
of the Grant Date) of shares of Common Stock with respect to which all
incentive stock options first become exercisable by any grantee in any
calendar year under this or any other plan of the Corporation and its
Parent and Subsidiary corporations may not exceed $100,000 or such other
amount as may be permitted from time to time under Code section 422. To
the extent that such aggregate Fair Market Value shall exceed $100,000, or
other applicable amount, such stock options shall be treated as
nonqualified stock options.
(iv) Grantee. Incentive stock options shall only be issued to
employees of the Corporation, or of a Parent or Subsidiary of the
Corporation.
(v) Tandem Options Prohibited. An incentive stock option may not be
granted in tandem with a nonqualified option in such a manner that the
exercise of one affects a grantee's right to exercise the other.
(vi) Designation. No stock option shall be an incentive stock option
unless so designated by the Committee at the time of grant or in the Grant
Agreement evidencing such stock option.
The requirements set forth in clauses (i) through (vi) above shall be
deemed to be amended, without further action on the part of the Board or
the stockholders of the Corporation to conform with the provisions of Code
section 422, as the same may be in effect from time to time;
-4-
<PAGE>
provided, however, that stockholder approval for amendments to clauses (i)
through (vi) above shall be required if the provisions of Code section 422
shall require the same.
(b) Stock Appreciation Rights. The Committee may from time to time grant
to eligible participants Awards of Stock Appreciation Rights ("SAR"). An SAR
entitles the grantee to receive, subject to the provisions of the Plan and the
Grant Agreement, a payment having an aggregate value equal to the product of (i)
the excess of (A) the Fair Market Value on the exercise date of one share of
Common Stock over (B) the base price per share specified in the Grant Agreement,
times (ii) the number of shares specified by the SAR, or portion thereof, which
is exercised. Payment by the Corporation of the amount receivable upon any
exercise of an SAR may be made by the delivery of Common Stock or cash, or any
combination of Common Stock and cash, as determined in the sole discretion of
the Committee. If upon settlement of the exercise of an SAR a grantee is to
receive a portion of such payment in shares of Common Stock, the number of
shares shall be determined by dividing such portion by the Fair Market Value of
a share of Common Stock on the exercise date. No fractional shares shall be
used for such payment and the Committee shall determine whether cash shall be
given in lieu of such fractional shares or whether such fractional shares shall
be eliminated.
(c) Stock Awards. The Committee may from time to time grant restricted or
unrestricted stock Awards to eligible participants in such amounts and for such
consideration, including no consideration or such minimum consideration as may
be required by law, as it determines. A stock Award may be paid in Common
Stock, in cash, or in a combination of Common Stock and cash, as determined in
the sole discretion of the Committee.
Each stock Award shall specify the applicable restrictions, if any, on such
shares of Common Stock, the duration of such restrictions, and the time or times
at which such restrictions shall lapse with respect to all or a specified number
of shares of Common Stock that are part of the Award. Notwithstanding the
foregoing, the Committee may reduce or shorten the duration of any restriction
applicable to any shares of Common Stock awarded to any grantee under the Plan.
Stock certificates with respect to restricted shares of Common Stock granted
pursuant to a stock Award may be issued at the time of grant of the stock Award,
subject to forfeiture if the restrictions do not lapse, or upon lapse of the
restrictions. If stock certificates are issued at the time of grant of the
stock Award, the certificates shall bear an appropriate legend with respect to
the restrictions applicable to such stock Award or, alternatively, the grantee
may be required to deposit the certificates with the Corporation during the
period of any restriction thereon and to execute a blank stock power or other
instrument of transfer therefor. Except as otherwise provided by the Committee,
during such period of restriction following issuance of stock certificates, the
grantee shall have all of the rights of a holder of Common Stock, including but
not limited to the rights to receive dividends (or amounts equivalent to
dividends) and to vote with respect to the restricted shares. If stock
certificates are issued upon lapse of restrictions on a stock Award, the
Committee may provide that the grantee will be entitled to receive any amounts
per share pursuant to any dividend or distribution paid by the Corporation on
its Common Stock to stockholders of record after grant of the stock Award and
prior to the issuance of the stock certificates.
(d) Phantom Stock. The Committee may from time to time grant Awards to
eligible participants denominated in stock-equivalent units ("phantom stock") in
such amount and for such consideration, including no consideration or such
minimum consideration as may be required by law, as it determines. Phantom
stock units granted to a participant shall be credited to a bookkeeping reserve
account solely for accounting purposes and shall not require a segregation of
any of the Corporation's assets. An Award of phantom stock may be settled in
Common Stock, in cash, or in a combination of Common Stock and cash, as
determined in the sole discretion of the Committee. Except as otherwise
provided in the applicable Grant Agreement, the grantee shall have none of the
rights of a stockholder with respect to any shares of Common Stock represented
by a phantom stock unit as a result of the grant of a phantom stock unit to the
grantee.
-5-
<PAGE>
(e) Performance Awards. The Committee may, in its discretion, grant
performance Awards which become payable on account of attainment of one or more
performance goals established by the Committee. Performance Awards may be paid
by the delivery of Common Stock or cash, or any combination of Common Stock and
cash, as determined in the sole discretion of the Committee. Performance goals
established by the Committee may be based on the Corporation's operating income
or one or more other business criteria selected by the Committee that apply to
an individual or group of individuals, a business unit, or the Corporation as a
whole, over such performance period as the Committee may designate. The
Committee in its discretion may recommend to the Board that the material terms
of any Performance Award or program with respect to some or all eligible
participants be submitted for approval by the stockholders.
7. MISCELLANEOUS
(a) Withholding of Taxes. The Corporation may require, as a condition to
the grant of any Award under the Plan or exercise pursuant to such Award or to
the delivery of certificates for shares issued or payments of cash to a grantee
pursuant to the Plan or a Grant Agreement (hereinafter collectively referred to
as a "taxable event"), that the grantee pay to the Corporation, in cash or in
shares of Common Stock, including shares acquired upon grant of the Award or
exercise of the Award, valued at Fair Market Value on the date as of which the
withholding tax liability is determined, any federal, state or local taxes of
any kind required by law to be withheld with respect to any taxable event under
the Plan. The Corporation, to the extent permitted or required by law, shall
have the right to deduct from any payment of any kind (including salary or
bonus) otherwise due to a grantee any federal, state or local taxes of any kind
required by law to be withheld with respect to any taxable event under the Plan,
or to retain or sell without notice a sufficient number of the shares to be
issued to such grantee to cover any such taxes.
(b) Payment of Exercise Price. Payment of the exercise price for an Award
may be made in accordance with the terms of the Grant Agreement. The
Corporation may make or guarantee loans to grantees to assist grantees in
exercising Awards and satisfying any withholding tax obligations.
(c) Transferability. Except as otherwise determined by the Committee, and
in any event in the case of an incentive stock option or a stock appreciation
right granted with respect to an incentive stock option, no Award granted under
the Plan shall be transferable by a grantee otherwise than by will or the laws
of descent and distribution. Unless otherwise determined by the Committee in
accord with the provisions of the immediately preceding sentence, an Award may
be exercised during the lifetime of the grantee, only by the grantee or, during
the period the grantee is under a legal disability, by the grantee's guardian or
legal representative.
(d) Adjustments; Business Combinations. In the event of a
reclassification, recapitalization, stock split, stock dividend, combination of
shares, or other similar event, the maximum number and kind of shares reserved
for issuance or with respect to which Awards may be granted under the Plan as
provided in Section 4 shall be adjusted to reflect such event, and the Committee
shall make such adjustments as it deems appropriate and equitable in the number,
kind and price of shares covered by outstanding Awards made under the Plan, and
in any other matters which relate to Awards and which are affected by the
changes in the Common Stock referred to above.
The Committee is authorized to make adjustments in the terms and conditions
of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events affecting the Corporation, or the financial statements of
the Corporation or any Subsidiary, or of changes in applicable laws,
regulations, or accounting principles, whenever the Committee determines that
such adjustments are appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the Plan.
(e) Termination, Amendment and Modification of the Plan. The Board,
without further approval of the stockholders, may terminate, amend or modify the
Plan or any portion thereof at any time.
-6-
<PAGE>
(f) Non-Guarantee of Employment or Service. Nothing in the Plan or in any
Grant Agreement thereunder shall confer any right on an individual to continue
in the service of the Corporation or shall interfere in any way with the right
of the Corporation to terminate such service at any time.
(g) Compliance with Securities Laws; Listing and Registration. Common
Stock shall not be issued with respect to an Award granted under the Plan unless
the exercise of such Award and the issuance and delivery of stock certificates
for such Common Stock pursuant thereto shall comply with all relevant provisions
of law, including, without limitation, the Securities Act of 1933 and the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any national securities exchange or any listing or quotation
system established by the National Association of Securities Dealers, Inc.
("Nasdaq System") upon which the Common Stock may then be listed or quoted, and
shall be further subject to the approval of counsel for the Corporation with
respect to such compliance to the extent such approval is sought by the
Committee. If the Corporation determines that the listing, registration or
qualification upon any securities exchange or upon the Nasdaq System or under
any law, of shares subject to any Award is necessary or desirable as a condition
of, or in connection with, the granting of the Award or the issuance or purchase
of shares thereunder, no such Award may be exercised in whole or in part and no
restrictions on such Award shall lapse, unless such listing, registration or
qualification is effected free of any conditions not acceptable to the
Corporation.
(h) No Limit on Other Compensation Arrangements. Nothing contained in the
Plan shall prevent the Corporation or its Affiliates from adopting or continuing
in effect other compensation arrangements (whether such arrangements be
generally applicable or applicable only in specific cases) as the Committee in
its discretion determines desirable, including without limitation the granting
of stock options, stock awards, stock appreciation rights or phantom stock units
otherwise than under the Plan.
(i) No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Corporation and a grantee or any other person. To the
extent that any grantee or other person acquires a right to receive payments
from the Corporation pursuant to an Award, such right shall be no greater than
the right of any unsecured general creditor of the Corporation.
(j) Governing Law. The validity, construction and effect of the Plan, of
Grant Agreements entered into pursuant to the Plan, and of any rules,
regulations, determinations or decisions made by the Committee relating to the
Plan or such Grant Agreements, and the rights of any and all persons having or
claiming to have any interest therein or thereunder, shall be determined
exclusively in accordance with applicable federal laws and the laws of Maryland,
without regard to its conflict of laws principles.
(k) Termination Date. No Award shall be granted under the Plan after the
close of business on the day immediately preceding the tenth anniversary of the
effective date of the Plan (January 1, 1989). Subject to other applicable
provisions of the Plan, all Awards made under the Plan prior to such termination
of the Plan shall remain in effect until such Awards have been satisfied or
terminated in accordance with the Plan and the terms of such Awards.
AMENDMENT NO. 1
- ---------------
Notwithstanding anything herein to the contrary, the provisions of Section
4.5.6 of the Amended and Restated 1988 Equity Participation Plan (the "Old
Plan") shall remain in effect and shall be applicable to all stock option
agreements executed and delivered pursuant to the Old Plan and any options
granted or shares acquired thereunder.
Date Amended and Restated Plan Approved by the Board: February 11, 1997
Date Approved by the Stockholders: March 14, 1997; Amendment No. 1 Approved
June 2, 1997
-7-
<PAGE>
Exhibit 4.2
FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT
[Date]
Employee's Name
RWD Technologies, Inc.
10480 Little Patuxent Parkway
Columbia, MD 21044
Dear Employee:
Stock Option Agreement
----------------------
RWD Technologies, Inc., is pleased to offer you an option to purchase
shares oF the Company's Common Stock. Your option shall be exercisable during a
ten-year period, subject to a five-year vesting schedule, as detailed below:
Number of Shares and Exercise Price: xxx shares at $x.xx per share.
- -----------------------------------
Total Option Period:
- -------------------
Beginning : __________, 199__
Ending: __________, 200__
Vesting Schedule:
----------------
The shares subject to this Option Agreement vest to you over five years.
They shall be exercisable by you according to the following schedule:
Up to 20 percent on and after ________, 199___;
Up to 40 percent on and after ________, 199___;
Up to 60 percent on and after ________, 199___;
Up to 80 percent on and after ________, 200___;
Up to 100 percent on and after ________, 200__;
Although in general your stock option may be exercised according to the
periods specified in the first paragraph of this letter, it is possible that
your option may expire at an earlier date. If you are found to have engaged in
prohibited activities or if your employment terminates for any reason other than
your death, disability or retirement at age 62 or older, your stock option will
expire immediately, If your employment terminates because you die, become
permanently disabled, or retire from the Company at age 62 or older, your stock
option may continue for up to one (1) year.
This option is granted subject to your agreement, reflected by your signing
this document on page two, that you will abided by the terms of the Amended and
Restated 1988 Equity Participation Plan (the "Plan") and the latest form Stock
Restriction Agreement, for this and all prior options granted to you. For
details about these and other important rules, see your copy of the Plan and
sample copy of the form Stock Restriction Agreement, which are being delivered
to you with this letter.
If you decide to exercise all or any part of your stock option, you must
give written notice to the Company. Your written notice should (I) state the
number of shares you intend to purchase and (ii) include a check in an amount
equal to the exercise price multiplied by the number of shares you elect to
purchase. Upon receipt of your stock, you will be required to execute a Stock
Restriction Agreement with the Company, in a form substantially similar to that
which is being delivered to you with this letter.
This option has been granted for good and valuable consideration, the
adequacy and sufficiency of which are duly acknowledged by the Company. This
option is irrevocable other than as above stated.
<PAGE>
If the foregoing accurately sets forth our understanding on this subject,
please indicate your acceptance by signing this letter below and returning the
same to the Company's Business Operations Department.
Sincerely yours,
RWD TECHNOLOGIES, INC.
By:__________________________________
Robert W. Deutsch, Chairman & CEO
Enclosures: Amended and Restated 1988 Equity Participation Plan
Sample Stock Restriction Agreement
The undersigned hereby acknowledges that he/she has carefully read this
letter, the Amended and Restated 1988 Equity Participation Plan, and the Stock
Restriction Agreement. The undersigned hereby agrees to be bound by all of the
provisions set forth herein.
_________________________________
Employee Name
_______________
Date
-2-
<PAGE>
EXHIBIT 4.3
FORM OF STOCK OPTION GRANT AGREEMENT
This Stock Option Grant Agreement (the "Agreement") is entered into by and
between RWD Technologies, Inc., a Maryland corporation (the "Corporation"), and
_____________ ("Grantee") and shall become effective on August 22, 1997 (the
"Grant Date").
ARTICLE 1
GRANT OF OPTION
SECTION 1.1 GRANT OF OPTIONS. Subject to the provisions of the Agreement
-----------------------------
and pursuant to the provisions of the RWD Technologies, Inc. Amended and
Restated Equity Participation Plan adopted by the Stockholders of the
Corporation on March 14, 1997, as amended (the "Plan"), the Corporation hereby
grants to Grantee as of the Grant Date a stock option (the "Option") of the type
stated on Schedule A, attached hereto and made a part hereof, to purchase all or
any part of the number of shares of Common Stock of the Corporation, par value
of $.10 per share, set forth on Schedule A, at the exercise price per share (the
"Exercise Price") set forth on Schedule A.
SECTION 1.2 TERM OF OPTIONS. Unless the Option granted pursuant to
----------------------------
Section 1.1 terminates earlier pursuant to other provisions of the Agreement,
the Option shall expire at 5:00 p.m. Eastern Time on the expiration date
specified in Schedule A. Notwithstanding the foregoing, in no event shall an
Option that is specified on Schedule A as being an Incentive Stock Option expire
later than 5:00 p.m. Eastern Time on the day prior to the tenth (10th)
anniversary of the First Vesting Date.
ARTICLE 2
VESTING
SECTION 2.1 VESTING SCHEDULE. Unless the Option has earlier terminated
-----------------------------
pursuant to the provisions of the Agreement, Grantee shall become vested in a
portion of the Option with respect to a percentage or number of the underlying
shares specified on Schedule A, beginning on the First Vesting Date, as
specified on Schedule A and on each annual anniversary of such First Vesting
Date, in accordance with the vesting schedule specified on Schedule A; provided,
however, that Grantee shall have been in the continuous employ of or affiliation
with the Corporation from the Grant Date through the specified anniversary of
the First Vesting Date.
SECTION 2.2 ACCELERATION OF VESTING. Unless the Option has earlier
------------------------------------
terminated pursuant to the provisions of the Agreement, vesting of the Option
granted to Grantee hereunder shall be accelerated so that the unvested portion
of the Option shall become one hundred percent (100%) vested in Grantee upon the
earlier to occur of: (i) Grantee's Retirement or Disability, as defined in
Article 4 hereunder, or (ii) termination of Grantee's employment or affiliation
with the Corporation as a result of Grantee's death.
<PAGE>
ARTICLE 3
EXERCISE OF OPTION
SECTION 3.1 EXERCISABILITY OF OPTION. No portion of the Option granted to
-------------------------------------
Grantee shall be exercisable by Grantee prior to the time such portion of the
Option has vested.
SECTION 3.2 MANNER OF EXERCISE. The vested portion of the Option may be
-------------------------------
exercised, in whole or in part, by delivering written notice to the Committee in
accordance with Section 5.9 hereof in such form as the Committee may require
from time to time; provided, however, that the Option may not be exercised at
any one time as to fewer than fifty (50) shares (or such number of shares as to
which the Option is then exercisable if such number of shares then exercisable
is less than fifty (50). Such notice shall specify the number of shares of
Common Stock subject to the Option as to which the Option is being exercised,
and shall be accompanied by full payment of the Exercise Price of the shares of
Common Stock as to which the Option is being exercised. Payment of the Exercise
Price shall be made in cash (or cash equivalents acceptable to the Committee in
the Committee's discretion). The Option may be exercised only in multiples of
whole shares and no partial shares shall be issued.
Unless the Committee otherwise determines and notifies the Grantee of such
determination prior to exercise of any portion of the Option, payment of the
exercise price may be made, in whole or in part, by delivery of a properly
executed exercise notice, together with irrevocable instructions (i) to a
brokerage firm approved by the Corporation to deliver promptly to the
Corporation the aggregate amount of stock sale or loan proceeds to pay the
exercise price and any withholding tax obligations that may arise in connection
with the exercise, and (ii) to the Corporation to deliver the certificates for
such purchased shares directly to such brokerage firm. In the Committee's sole
and absolute discretion, the Committee may authorize payment of the Exercise
Price to be made, in whole or in part, by such other means as the Committee may
prescribe.
SECTION 3.3 ISSUANCE OF SHARES AND PAYMENT OF CASH UPON EXERCISE. Upon
-----------------------------------------------------------------
exercise of the Option, in whole or in part, in accordance with the terms of the
Agreement and upon payment of the Exercise Price for the shares of Common Stock
as to which the Option is exercised, the Corporation shall issue to Grantee or
Grantee's permitted transferee, as the case may be, the number of shares of
Common Stock so paid for, in the form of fully paid and nonassessable Common
Stock. The stock certificates for any shares of Common Stock issued hereunder
shall, unless such shares are registered or an exemption from registration is
available under applicable federal and state law, bear a legend restricting
transferability of such shares.
ARTICLE 4
TERMINATION OF OPTION
SECTION 4.1 TERMINATION OF EMPLOYMENT OR AFFILIATION FOR REASON OTHER THAN
---------------------------------------------------------------------------
DEATH, DISABILITY OR RETIREMENT. Unless the Option has earlier terminated
- -------------------------------
pursuant to the provisions of the Agreement, the Option granted to Grantee shall
terminate in its entirety, regardless of whether the Option is vested in whole
or in part, thirty (30) calendar days after the date Grantee is no longer
employed by, nor affiliated with, the Corporation and its affiliates for
-4-
<PAGE>
any reason other than Grantee's death, disability or retirement. Notwithstanding
the foregoing, the Option granted to Grantee shall terminate in its entirety,
regardless of whether the Option is vested in whole or in part, upon termination
of the employment of the Grantee by the Corporation or an affiliate for "cause."
If Grantee is a party to a written employment agreement with the Corporation or
an affiliate which contains a definition of "cause", "termination for cause" or
any other similar term or phrase, whether such Grantee is terminated for "cause"
pursuant to this Section 4.1 shall be determined according to the terms of and
in a manner consistent with the provisions of such written employment agreement.
If Grantee is not party to such a written employment agreement with the
Corporation or an affiliate, then for purposes of this Section 4.1, "cause"
shall mean (I) any substantiated act by Grantee involving dishonesty or bad
faith against the Corporation or an affiliate, or any act or omission that
demonstrates a lack of integrity of Grantee with respect to the Corporation or
an affiliate; (ii) Grantee engaging in acts or omissions that demonstrably and
materially injure the business and affairs of the Corporation or an affiliate,
monetarily or otherwise; (iii) breach or threatened breach by Grantee of any
non-competition or confidentiality agreement entered into between Grantee and
the Corporation or its affiliate; (iv) chronic use of alcohol, drugs or other
similar substances affecting Grantee's work performance; or (v) Grantee being
convicted of, or pleading guilty or nolo contendere to, or being indicted for a
felony or other crime involving theft, fraud or moral turpitude. The good faith
determination by the Committee of whether the Grantee's employment was
terminated by the Corporation for "cause" shall be final and binding for all
purposes hereunder.
SECTION 4.2 UPON GRANTEE'S DEATH. Unless the Option has earlier
---------------------------------
terminated pursuant to the provisions of the Agreement, upon Grantee's death
Grantee's executor, personal representative, the person to whom the Option shall
have been transferred by will or the laws of descent and distribution, or such
other permitted transferee, as the case may be, may exercise all or any part of
the outstanding Option with respect to shares of Common Stock as to which the
Option is vested as of the Grantee's date of death, provided such exercise
occurs within twelve (12) months after the date of Grantee's death, but not
later than the end of the stated term of the Option.
SECTION 4.3 TERMINATION OF EMPLOYMENT OR AFFILIATION BY REASON OF
------------------------------------------------------------------
DISABILITY OR RETIREMENT. Unless the Option has earlier terminated pursuant
- ------------------------
to the provisions of the Agreement, in the event that Grantee ceases, by reason
of Disability or Retirement, to be an employee of or affiliated with the
Corporation or an affiliate, the vested portion of the outstanding Option may be
exercised in whole or in part at any time within twelve (12) months after the
date of disability or retirement, but not later than the end of the stated term
of the Option. For purposes of this Agreement, Disability shall mean the
inability to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a continuous
period of not less than twelve (12) months. Retirement shall mean the
termination of employment without cause at or after the Grantee reaches the
retirement age set forth in the Corporation's Personnel Policy. The Committee
may require such proof of Disability as the Committee in its sole discretion
deems appropriate and the Committee's determination as to whether Grantee is
Disabled shall be final and binding on all parties concerned.
-5-
<PAGE>
SECTION 4.4 ENGAGING IN PROHIBITED ACTIVITIES. (a) Unless the Option has
----------------------------------------------
earlier terminated pursuant to the provisions of the Agreement, the Option
granted to Grantee shall terminate in its entirety, regardless of whether the
Option is vested in whole or in part, upon determination by the Committee that
the Grantee has engaged in "Prohibited Activities," as that term is defined
below. The term "Prohibited Activities" shall encompass all activities listed in
clauses (i) through (iii) of Section 4.1 above as well as (i) participating in
an attempt to gain control of the Corporation, which attempt has not been
approved by the Board of Directors of the Corporation; (ii) recruiting or
otherwise soliciting employees of the Corporation to terminate employment with
the Corporation; or (iii) accepting employment with or serving as a consultant,
advisor or in any other capacity to, an entity or person who engages or has
engaged in any of the activities listed in clauses (i), (ii) or (iii) of Section
4.1 above or clauses (i) or (ii) of this paragraph (a) of Section 4.4, or is in
any way competing with the business interests of the Corporation. The good faith
determination by the Committee of whether the Grantee has engaged in Prohibited
Activities shall be final and binding for all purposes hereunder.
(b) If, subsequent to the time the Grantee exercises all or any
portion of the Option, the Committee determines that, while in the employ of the
Corporation or during the one year period thereafter, the Grantee engaged in any
Prohibited Activities, in addition to the termination of all outstanding
portions of the Option as set forth in paragraph (a) of this Section 4.4, the
Grantee shall be required to remit to the Corporation a "Recapture Payment," as
that term is defined below, within 30 days after notice by the Corporation that
this Section 4.4 applies to the Grantee's Option or portion thereof. The term
"Recapture Payment" shall be defined as: (i) to the extent the Grantee
beneficially owns any shares of Common Stock issued upon exercise of any portion
of the Option, a sum (in immediately available funds) equal to the excess of (i)
the Fair Market Value of said shares over (ii) the aggregate exercise price paid
for said shares of Common Stock.; or (ii) to the extent the Grantee has sold or
otherwise disposed of any shares of Common Stock issued upon exercise of any
portion of the Option, a sum (in immediately available funds) equal to the
excess of (i) the gross proceeds or other benefits to the Grantee from the
disposition of said shares over (ii) the aggregate exercise price paid for said
shares of Common Stock.
ARTICLE 5
MISCELLANEOUS
SECTION 5.1 NON-GUARANTEE OF EMPLOYMENT. Nothing in the Plan or the
----------------------------------------
Agreement shall be construed as a contract of employment between the Corporation
(or an affiliate) and Grantee, or as a contractual right of Grantee to continue
in the employ of the Corporation or an affiliate, or as a limitation of the
right of the Corporation or an affiliate to discharge Grantee at any time.
SECTION 5.2 NO RIGHTS OF STOCKHOLDER. Grantee shall not have any of the
-------------------------------------
rights of a stockholder with respect to the shares of Common Stock that may be
issued upon the exercise of the Option until such shares of Common Stock have
been issued to him upon the due exercise of the Option.
SECTION 5.3 NOTICE OF DISQUALIFYING DISPOSITION. If Grantee makes a
------------------------------------------------
disposition (as that term is defined in (S)424(c) of the Code) of any shares of
Common Stock acquired pursuant to
-6-
<PAGE>
the exercise of an Incentive Stock Option within two (2) years of the Grant Date
or within one (1) year after the shares of Common Stock are transferred to
Grantee, Grantee shall notify the Committee of such disposition in writing.
SECTION 5.4 WITHHOLDING OF TAXES. The Corporation or any affiliate shall
---------------------------------
have the right to deduct from any compensation or any other payment of any kind
(including withholding the issuance of shares of Common Stock) due Grantee the
amount of any federal, state and/or local taxes required by law to be withheld
as the result of the exercise of the Option or the disposition (as that term is
defined in (S)424(c) of the Code) of shares of Common Stock acquired pursuant to
the exercise of the Option; provided, however, that the value of the shares of
Common Stock withheld may not exceed the statutory withholding amount required
by law. In lieu of such deduction, the Committee may require Grantee to make a
cash payment to the Corporation or an affiliate equal to the amount required to
be withheld. If Grantee does not make such payment when requested, the
Corporation may refuse to issue any Common Stock certificate under the Plan
until arrangements satisfactory to the Committee for such payment have been
made.
SECTION 5.5 NONTRANSFERABILITY OF OPTION. The Option shall be
-----------------------------------------
nontransferable otherwise than by will or the laws of descent and distribution
and, during the lifetime of Grantee, the Option may be exercised only by Grantee
or, during the period Grantee is under a legal disability, by Grantee's guardian
or legal representative.
SECTION 5.6 AGREEMENT SUBJECT TO CHARTER, BY-LAWS AND GOVERNING LAWS.
---------------------------------------------------------------------
This Agreement is subject to the Charter and By-Laws of the Corporation, and any
applicable Federal or state laws, rules or regulations, including without
limitation, the laws, rules, and regulations of the State of Maryland, other
than the conflict of laws principles thereof.
SECTION 5.7 GENDER. As used herein the masculine shall include the
-------------------
feminine as the circumstances may require.
SECTION 5.8 HEADINGS. The headings in the Agreement are for reference
---------------------
purposes only and shall not affect the meaning or interpretation of the
Agreement.
SECTION 5.9 NOTICES. All notices and other communications made or given
--------------------
pursuant to the Agreement shall be in writing and shall be sufficiently made or
given if hand delivered or mailed by certified mail, addressed to Grantee at the
address contained in the records of the Corporation, or addressed to the
Committee, care of the Corporation for the attention of its Secretary at its
principal office or, if the receiving party consents in advance, transmitted and
received via telecopy or via such other electronic transmission mechanism as may
be available to the parties.
SECTION 5.10 ENTIRE AGREEMENT; MODIFICATION. The Agreement contains the
--------------------------------------------
entire agreement between the parties with respect to the subject matter
contained herein and may not be modified, except as provided in the Plan or in a
written document signed by each of the parties hereto.
-7-
<PAGE>
SECTION 5.11 CONFORMITY WITH PLAN. This Agreement is intended to conform
----------------------------------
in all respects with, and is subject to all applicable provisions of, the Plan,
which is incorporated herein by reference. Unless stated otherwise herein,
capitalized terms in this Agreement shall have the same meaning as defined in
the Plan. Inconsistencies between this Agreement and the Plan shall be resolved
in accordance with the terms of the Plan. In the event of any ambiguity in the
Agreement or any matters as to which the Agreement is silent, the Plan shall
govern.
IN WITNESS WHEREOF, the parties have executed the Agreement as of the date
first above written.
ATTEST: RWD TECHNOLOGIES, INC.
_____________________________ By: __________________________________
WITNESS: GRANTEE
______________________________ __________________________________
Attachments:
Schedule A: Notice of Grant of Stock Options and Option Agreement and
Exercise Form
Amended and Restated Equity Plan
-8-
<PAGE>
Schedule A
Notice of Grant of Stock Options and Option Agreement
- -------------------------------------------------------------------------------
NAME
OPTION NUMBER: 00001510
ADDRESS
PLAN: EPP
CITY, STATE ZIP
ID: D0003
- -------------------------------------------------------------------------------
Effective ____________, you have been granted a(n) Non-Qualified Stock Option to
buy ________ shares of RWD Technologies, Inc. (the Company) stock at $_______
per share.
The total option price of the shares granted is $____________.
Shares in each period will become fully vested on the date shown.
Shares
Vest Type
Full Vest
Expiration
____________ On Vest Date x/xx/xx x/xx/xx
____________ On Vest Date x/xx/xx x/xx/xx
____________ On Vest Date x/xx/xx x/xx/xx
____________ On Vest Date x/xx/xx x/xx/xx
____________ On Vest Date x/xx/xx x/xx/xx
By your signature and the Company's signature below, you and the Company agree
that these options are granted under and governed by the terms and conditions of
the Company's Amended and Restated Equity Participation Plan, as amended and the
Option Agreement, all of which are attached and made a part of this document.
RWD TECHNOLOGIES, INC.
By:_________________________________
Name and Title
Date:_______________________________
___________________________________
Grantee
Date:_______________________________
<PAGE>
EXERCISE FORM
- ---------------------------------------------
RWD Technologies, Inc.
10480 Little Patuxent Parkway
Columbia, Maryland 21044-3530
Attention: Stock Administrator
Ladies and Gentlemen:
I hereby exercise the Option granted to me on ____________________, ______,
by RWD Technologies, Inc. (the "Company"), subject to all the terms and
provisions thereof and of the RWD Technologies, Inc. Amended and Restated Equity
Participation Plan (the "Plan"), and notify you of my desire to purchase
____________ shares of Common Stock of the Company at a price of $___________
per share pursuant to the exercise of said Stock Option.
Total Amount Enclosed: $__________
Date:________________________
______________________________________
(Optionee)
Received by RWD Technologies, Inc. on
___________________________, _____
By: _________________________________
-II-1-
<PAGE>
EXHIBIT 5.1
PIPER & MARBURY
L.L.P.
CHARLES CENTER SOUTH
36 SOUTH CHARLES STREET
BALTIMORE, MARYLAND 21201-3018
410-539-2530 WASHINGTON
FAX: 410-539-0489 NEW YORK
PHILADELPHIA
September 22, 1997 EASTON
RWD Technologies, Inc.
10480 Little Patuxent Parkway, Suite 1200
Columbia, Maryland 21044
Registration Statement on Form S-8
----------------------------------
Ladies and Gentlemen:
We have acted as counsel for RWD Technologies, Inc., a Maryland corporation (the
"Company"), in connection with a Registration Statement on Form S-8 which was
filed by the Company under the Securities Act of 1933, as amended, (the
"Registration Statement"), and which registers 4,065,000 shares of the Common
Stock of the Company (the "Shares") to be issued pursuant to the Amended and
Restated Equity Participation Plan (the "Plan").
In this capacity, we have examined the Registration Statement, the Charter and
By-Laws of the Company, the Plan, the proceedings of the Board of Directors of
the Company relating to the issuance of the Shares to be issued pursuant to the
Plan, a Certificate of the Secretary of the Company dated September 22, 1997 and
such other statutes, certificates, instruments and documents relating to the
Company and matters of law as we have deemed necessary to the issuance of this
opinion. In such examination, we have assumed, without independent
investigation, the genuineness of all signatures, the legal capacity of all
individuals who have executed any of the aforesaid documents, the authenticity
of all documents submitted to us as originals, the conformity with originals of
all documents submitted to us as copies (and the authenticity of the originals
of such copies), and that all public records reviewed are accurate and complete.
As to factual matters, we have relied on the Certificate of the Secretary and
have not independently verified the matters stated therein. We assume (a) that
the Company will have at the time of exercise of each option granted under the
Plan at least that number of authorized but unissued shares of Common Stock of
the Company equal to the number of shares then being exercised under such
option, and (b) that, to the extent that the shares issued under the Plan exceed
4,065,000 in the aggregate, the Company shall have issued the requisite number
of shares to permit the additional shares to be available under the terms of the
Plan.
Based upon the foregoing, we are of the opinion and advise you that the Shares
to be issued by the Company pursuant to the Plan have been duly and validly
authorized and, when issued and delivered as contemplated in the Registration
Statement and in accordance with the Plan, will be validly issued, fully paid,
and non-assessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to our firm and to our opinion in the
Registration Statement.
Very truly yours,
/s/ Piper & Marbury L.L.P.
<PAGE>
EXHIBIT 25.1
RWD TECHNOLOGIES, INC. POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned directors and officers of
RWD Technologies, Inc., a Maryland corporation, constitute and appoint Robert W.
Deutsch, John H. Beakes and Ronald E. Holtz, or any of them, the true and lawful
agents and attorneys-in-fact of the undersigned with full power and authority in
said agents and attorneys-in-fact, and in any one or both of them, to sign for
the undersigned in their respective names as directors and officers of RWD
Technologies, Inc., a Registration Statement on Form S-8 (or other appropriate
form) to be filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, and any amendment or supplement to such
registration statement relating to the sale of Common Stock under the Amended
and Restated Equity Participation Plan, as amended. We hereby confirm all acts
taken by such agents and attorneys-in-fact, or any one or more of them, as
herein authorized.
Dated: August 22, 1997
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Robert W. Deutsch Chief Executive Officer and Chairman of the Board
- ------------------------ of Directors (Principal Executive Officer)
Dr. Robert. W. Deutsch
/s/ John H. Beakes President, Chief Operating Officer and Director
- ------------------------
John H. Beakes
/s/ Ronald E. Holtz Vice President, Chief Financial Officer, Secretary and Director
- ------------------------ (Principal Financial and Accounting Officer)
Ronald E. Holtz
/s/ Robert T. O'Connell Sr. Vice President-Business Planning and
- ------------------------ Director
Robert T. O'Connell
/s/ Jeffrey W. Wendel Group Vice President-Information Technology and Director
- ------------------------
Jeffrey W. Wendel
/s/ John E. Lapolla Group Vice President-Manufacturing Performance Support and Director
- ------------------------
John E. Lapolla
/s/ Kenneth J. Rebeck Group Vice President-Technology Transfer and Director
- ------------------------
Kenneth J. Rebeck
/s/ Jerry P. Malec
- ------------------------ Director
Jerry P. Malec
/s/ Bruce D. Alexander Director
- ------------------------
Bruce D. Alexander
/s/ David J. Deutsch Director
- ------------------------
David J. Deutsch
</TABLE>
- -1-
