<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 17, 2000
REGISTRATION STATEMENT NO. 333-
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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THE CONCOURS GROUP, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 8742 76-0521812
(State of incorporation) (Primary standard industrial (I.R.S. Employer
classification code number) Identification No.)
</TABLE>
3 KINGWOOD PLACE, 800 ROCKMEAD DRIVE
KINGWOOD, TEXAS 77339
(281) 359-3464
(Address, including zip code and telephone number, including area code,
of registrant's principal executive offices)
RONALD P. CHRISTMAN
3 KINGWOOD PLACE, 800 ROCKMEAD DRIVE
KINGWOOD, TEXAS 77339
(281) 359-3464
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies To:
<TABLE>
<S> <C>
DONALD W. BRODSKY JULIE T. SPELLMAN
KAREN BRYANT CRAVATH, SWAINE & MOORE
JENKENS & GILCHRIST, A PROFESSIONAL WORLDWIDE PLAZA
CORPORATION 825 EIGHTH AVENUE
1100 LOUISIANA ST., SUITE 1800 NEW YORK, NEW YORK 10019
HOUSTON, TEXAS 77002 (212) 474-1000
(713) 951-3300
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are being offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED PRICE(1)(2) REGISTRATION FEE(2)
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<S> <C> <C>
Common Stock, $.01 par value per share.................... $57,500,000 $15,180
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</TABLE>
(1) In accordance with Rule 457(o) under the Securities Act of 1933, as amended,
the number of shares being registered and the proposed maximum offering
price per share are not included in this table.
(2) Estimated pursuant to Rule 457 under the Securities Act of 1933, as amended,
solely for purposes of calculating the registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS
NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO
BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION, DATED MARCH 17, 2000
PROSPECTUS
SHARES
THE CONCOURS GROUP, INC.
COMMON STOCK
$ PER SHARE
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The Concours Group, Inc. is selling shares of its common stock. The
underwriters named in this prospectus may purchase up to additional
shares of common stock from The Concours Group, Inc. to cover any
over-allotments.
This is an initial public offering of common stock. The Concours Group,
Inc. currently expects the initial public offering price to be between $ and
$ per share, and has applied to have the common stock included for quotation
on the Nasdaq National Market under the symbol " ".
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INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 6.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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<TABLE>
<CAPTION>
PER SHARE TOTAL
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<S> <C> <C>
Public Offering Price $ $
Underwriting Discount $ $
Proceeds to Concours (before expenses) $ $
</TABLE>
The underwriters are offering the shares subject to various conditions. The
underwriters expect to deliver the shares to purchasers on or about ,
2000.
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SALOMON SMITH BARNEY
U.S. BANCORP PIPER JAFFRAY
WILLIAM BLAIR & COMPANY
, 2000
<PAGE> 3
[BACK OF FRONT COVER]
[DESCRIPTION OF ARTWORK]
<PAGE> 4
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. CONCOURS
HAS NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT
MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT
PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION PROVIDED BY THIS
PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THIS
PROSPECTUS.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Prospectus Summary..........................................
Risk Factors................................................
Forward-Looking Statements; Market Data.....................
Use of Proceeds.............................................
Dividend Policy.............................................
Capitalization..............................................
Dilution....................................................
Unaudited Pro Forma Financial Data..........................
Selected Consolidated Financial Data........................
Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................
Business....................................................
Management..................................................
Related Transactions and Recent Acquisition.................
Principal Stockholders......................................
Description of Capital Stock................................
Shares Eligible for Future Sale.............................
Material United States Federal Tax Considerations for
Foreign Holders...........................................
Underwriting................................................
Legal Matters...............................................
Experts.....................................................
Where You Can Find Additional Information...................
Index to Consolidated Financial Statements.................. F-1
</TABLE>
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Until , 2000, all dealers that buy, sell or trade our common stock,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
i
<PAGE> 5
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
Because this is only a summary, it may not contain all of the information that
you should consider before investing in our common stock. You should read the
entire prospectus carefully, including the "Risk Factors" section and our
consolidated financial statements and the notes to those statements, before
deciding to invest in our common stock. Unless noted, all information in this
prospectus assumes that the underwriters have not exercised their over-allotment
option. See "Underwriting." References to "Concours," "we," "our" and "us" refer
to The Concours Group, Inc.
OUR COMPANY
Concours delivers management and strategy consulting, research and
executive education services which enable our clients to improve their
performance and competitiveness by capitalizing on the potential of business,
technology and human assets. Currently our services are focused on advising
Global 1000 and mid-size corporations in developing and deploying eBusiness
strategies. An eBusiness combines the latest Internet and other new technologies
with complementary business and human resource strategies to adapt and thrive in
the digital economy. Our operating model is designed to enable us to rapidly
evolve our services to anticipate and meet the needs of our clients in
fast-changing markets.
We currently provide consulting services in the following areas:
- eBusiness and business strategy;
- eBusiness solution implementation planning and management;
- information technology (IT) strategy, implementation planning and
management; and
- custom executive education.
Our operating model is based on four core capabilities: Re.sults(R)
research projects, subscription-based multi-client programs, mindshare marketing
and a dedicated salesforce. Together they help build long-term relationships
with senior business and technology executives, and they generate a flow of
intellectual capital and consulting and other new business opportunities. All of
our multi-client programs and a portion of our Re.sults research projects are
subscription-based, which provide us with a recurring revenue stream.
We have grown rapidly since our founding in January 1997. Our revenue has
increased from $8.8 million in 1997 to $26.1 million in 1999, a compound annual
growth rate of approximately 72%. During 1999, our top ten clients in North
America based upon total revenue were: Arrow Electronics, Inc.; Ashland Inc.;
Borg-Warner Automotive, Inc.; Cargill, Incorporated; CarrAmerica Realty
Corporation; International Paper Company; Novartis AG; Schneider Electric SA; A.
Schulman Inc.; and The United Illuminating Company. Our top five clients in
Europe during this period based upon total revenue were: Fort James Europe
Limited; Internationale Nederlanden Groep (ING); Rio Tinto plc; Societe Generale
d'Entreprises; and Svenska Kullager Fabriken. Of these 15 clients, eight used
all three of our consulting, research and subscription-based multi-client
services during 1999. For each of the last two years, over 75% of our
subscription-based multi-client and research clients renewed their subscriptions
for at least one program, as adjusted for mergers and acquisitions among
clients.
OUR MARKET OPPORTUNITY
Driven by the accelerating pace of technological change, today's on-going
transformation to a digital economy is fundamentally altering how businesses
operate and compete. In response to these trends, companies are re-evaluating
the performance of their organizations and exploring new business strategies.
Businesses are also significantly changing the ways in which they interact with
their employees, customers, suppliers and other business partners. We believe
that in order to thrive in the new digital economy, businesses must not only
develop and implement new technology strategies, but also transform their
operational and human resources practices such that all employees think and act
digitally.
1
<PAGE> 6
We believe there are significant opportunities for management and strategy
consulting firms that are able to provide comprehensive, advanced eBusiness
strategies and solutions in time frames that enable clients to meet the demands
of their rapidly changing industries. Although many Internet professional
service firms are beginning to offer strategy services, we do not believe these
firms possess the combination of capabilities -- eBusiness and business
strategy, human resource and organizational expertise, research-based advanced
solutions and industry-leading ideas -- that we believe is critical to enable
clients to improve their performance and competitiveness in the digital economy.
In 1999, International Data Corporation estimated that spending on Internet
consulting services will grow from $425 million in 1998 to $4.4 billion in 2003,
a compound annual growth rate of approximately 60%.
OUR SOLUTION
We focus first and foremost on clients' business outcomes and measurable
end-points of value, and then create solutions tailored to meet those outcomes.
We blend the benefits traditionally delivered through executive education and
consulting into each engagement, developing the client's capabilities to learn,
change and improve. Below are the key components of how we deliver client
solutions:
- Advanced solutions. We focus on providing clients with advanced solutions
that combine the latest technological capabilities, business and human
resource practices and innovative operating models. The advanced
solutions, many of which stem from our Re.sults research projects, are
constantly evolving so that we continually update our services.
- Comprehensive solutions. We believe that there is more to eBusiness than
simply installing Web sites and other information systems, and that it
takes more than technology to effect significant business improvement.
Our eBusiness solutions include enabling clients to think digitally in
order to transform their organizations into eBusinesses.
- Senior professionals. We have assembled a group of top consulting
professionals from established firms who average over twelve years of
relevant industry experience. Our professionals have expertise in
numerous industries and business processes.
- Speed of execution. Our methods are designed to share insights
immediately and provide measurable value quickly. Our projects are
typically structured to provide deliverables in 15 to 90 days.
OUR STRATEGY
Concours is committed to creating an industry-leading, multinational
management and strategy consulting, research and executive education firm that
is at the leading edge of business practices and adjusts rapidly to the future
needs of a growing client base. To achieve our goal, we are pursuing the
following growth initiatives:
- continue to evolve our services to anticipate and meet our clients'
changing needs;
- continue geographic expansion;
- continue to attract and retain highly qualified professionals;
- leverage Re.sults research; and
- grow and leverage subscription-based multi-client programs.
OUR OFFICES
We were incorporated in Delaware in January 1997. Our principal executive
offices are located at 3 Kingwood Place, 800 Rockmead Drive, Kingwood, Texas
77339 and our telephone number at that location is (281) 359-3464.
2
<PAGE> 7
THE OFFERING
Common stock offered(1).... shares
Common stock outstanding
after this
offering(1)(2)........... shares
Use of proceeds............ Working capital, capital expenditures, expansion of
our international operations, potential
acquisitions of, or investments in, complementary
businesses and other general corporate purposes.
See "Use of Proceeds."
Proposed Nasdaq National
Market symbol............
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(1) Excludes a 30-day option granted to the underwriters to purchase up to
additional shares of our common stock to cover over-allotments, if
any.
(2) Based on 5,907,104 shares outstanding as of March 1, 2000, plus 3,356,784
shares of common stock to be issued and outstanding upon the automatic
conversion of all of our outstanding convertible preferred stock upon the
consummation of this offering. Excludes 568,875 shares of common stock
issuable upon the exercise of stock options currently exercisable as of
March 1, 2000, with a weighted average exercise price of $3.01 per share.
See "Management -- Our Stock Option Plans" and note 8 to our consolidated
financial statements included elsewhere in this prospectus. Also excludes
the 50,000 shares of common stock issuable upon the exercise of warrants
outstanding as of March 1, 2000, with an exercise price of $5.00 per share.
See "Description of Capital Stock."
RECENT ACQUISITION
On February 29, 2000, Concours purchased all of the outstanding shares of
capital stock of Cepro AB, ("Cepro"), a Swedish management consulting firm, from
Cepro's stockholders in exchange for a total of 1,221,000 shares of Concours
common stock valued at an estimated $12,210,000. Cepro provides consulting
services for businesses throughout Sweden in areas such as strategic planning,
financial analysis, e-commerce, marketing, information management, and executive
and organizational development. Each employee of Cepro entered into an
employment agreement as part of the acquisition. See "Related Transactions and
Recent Acquisition" for a more detailed description of our acquisition of Cepro.
Unless otherwise indicated, the description of our business and operating data
provided for any date or period in this prospectus does not include the business
or operating data of Cepro.
3
<PAGE> 8
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
Our summary historical consolidated financial data set forth below for
1997, 1998 and 1999 is derived from our audited consolidated financial
statements. The summary unaudited pro forma consolidated financial data set
forth below is derived from the pro forma consolidated financial statements
included elsewhere in this prospectus. The summary historical and unaudited pro
forma consolidated financial data is qualified in its entirety by, and should be
read in conjunction with, "Unaudited Pro Forma Consolidated Financial
Information," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the consolidated financial statements of Concours and
Cepro and the notes to those statements included elsewhere in this prospectus.
The following summary unaudited pro forma consolidated financial data is
adjusted for the conversion of all of our outstanding convertible preferred
stock into 3,356,784 shares of common stock upon consummation of this offering,
and for the effects of the following transactions which took place during
February 2000:
- the issuance of 805,425 shares of common stock upon conversion of $4.0
million of convertible debt held by Infologix (BVI) Ltd., our largest
stockholder, and the sale to them of 750,000 shares of common stock for
$6.0 million,
- the repayment of our $1.0 million bank line of credit,
- the sale of 1,546,784 shares of Series B convertible redeemable preferred
stock for $15.0 million to Thayer Equity Investors IV, L.P. and Thayer
CGI Partners LLC (collectively, "Thayer"), and
- the acquisition of Cepro, a Swedish management consulting firm, for
1,221,000 shares of common stock,
as if the transactions had occurred, in the case of the balance sheet on
December 31, 1999 and, in the case of the statement of operations, on January 1,
1999. The pro forma adjustments are based upon available information and various
assumptions and estimates that we believe are reasonable. This summary
information does not purport to be indicative of the consolidated operating
results of Concours that might have been obtained had these events actually
occurred on such dates, nor do they purport to be indicative of the operating
results that may be achieved in the future.
4
<PAGE> 9
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
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PRO FORMA
1997 1998 1999 1999
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(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenue.................... $ 8,812 $ 15,951 $ 26,080 $ 32,876
Costs and expenses of
services(1).................... 5,775 13,016 19,835 26,901(2)
---------- ---------- ---------- ----------
Gross margin..................... 3,037 2,935 6,245 5,975
Other costs and expenses(3)...... 4,059 8,674 13,168 15,856(4)
---------- ---------- ---------- ----------
Operating loss................... $ (1,022) $ (5,739) $ (6,923) $ (9,881)
Net loss......................... $ (974) $ (5,665) $ (7,177) $ (9,879)
========== ========== ========== ==========
Net loss per share, basic and
diluted........................ $ (0.43) $ (1.73) $ (2.32) $ (1.10)
========== ========== ========== ==========
Shares used in computing basic
and diluted net loss per
share.......................... 2,270,630 3,279,447 3,088,248 8,986,457
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
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PRO FORMA
PRO FORMA AS
1997 1998 1999 1999 ADJUSTED(5)
---------- ---------- ---------- ---------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents......... $ 1,485 $ 1,056 $ 705 $ 20,278
Working capital................... 76 (2,033) (5,134) 15,453
Total assets...................... 4,058 5,804 8,848 37,383
Long-term debt, net of current
portion......................... -- -- 4,000 --
Total stockholders' equity
(deficit)....................... 364 (1,372) (8,187) 23,773
</TABLE>
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(1) Includes costs and expenses of services and of related stock-based
compensation.
(2) Includes $1.6 million of amortization of deferred compensation related to
the acquisition of Cepro.
(3) Includes costs and expenses for sales and marketing, general and
administrative and related stock-based compensation.
(4) Includes $1.4 million of amortization of goodwill related to the acquisition
of Cepro.
(5) Adjusted to reflect the sale of shares of common stock in this offering at
an assumed offering price of $ per share and after deducting estimated
underwriting discounts and offering expenses payable by us and the
application of our net proceeds from the offering. See "Capitalization."
5
<PAGE> 10
RISK FACTORS
Before you invest in our common stock, you should be aware that there are
various risks, including those described below. You should consider carefully
these risk factors together with all of the other information included in this
prospectus before you decide to purchase shares of our common stock.
WE HAVE A HISTORY OF LOSSES, WE EXPECT CONTINUING LOSSES AND WE MAY NEVER ATTAIN
PROFITABILITY.
If we do not achieve and sustain profitability in the future, we may be
unable to continue our operations. Our operating costs have exceeded our revenue
in each quarter since our founding in January 1997. We have incurred cumulative
net losses of approximately $13.8 million from January 1997 through December 31,
1999, and we anticipate a net loss at least through 2000. Our revenue may not
continue to grow and we may not achieve or maintain profitability in the future.
Our business strategy may be unsuccessful, and we may be unable to address the
risks we face in a cost-effective manner, if at all. If we cannot successfully
address these risks, they are likely to harm our business and prospects.
WE HAVE A LIMITED OPERATING HISTORY WHICH MAKES IT DIFFICULT TO EVALUATE OUR
BUSINESS.
We have a limited operating history, and you should not rely on our recent
operating results as an indication of our future performance. We first recorded
revenue in the first quarter of 1997. Due to our limited operating history and
the fast-changing nature of our industry, it is difficult for us to predict
future results, and you should not expect our future revenue growth to equal or
exceed our recent growth rates. You should consider our business and prospects
in light of the risks, expenses and difficulties frequently encountered by
growing companies in rapidly evolving industries.
WE DEPEND ON OUR SENIOR MANAGEMENT AND KEY PERSONNEL AND THEIR LOSS WOULD
ADVERSELY AFFECT OUR BUSINESS.
We depend on the continued employment of our senior management and key
personnel. This dependence is particularly important to our business because
personal relationships are a critical element of obtaining and maintaining
clients. We cannot be certain of retaining the services of any of our senior
management and key personnel. If any of these individuals were to leave, such
persons would be difficult to replace and our business and future revenue would
be adversely affected. For example, if any of these members of senior management
or key personnel joins a competitor or forms a competing company, some of our
clients might choose to use their services. In addition, clients, other
companies and competitors seeking to develop capabilities similar to our own may
hire away some of these individuals. Significant losses of client relationships
could seriously harm our business and operating results.
OUR BUSINESS WILL SUFFER IF WE DO NOT ATTRACT AND RETAIN CONSULTING
PROFESSIONALS, PARTICULARLY THOSE WITH INTERNET AND EBUSINESS EXPERIENCE, AND
EXPERIENCED SALES PROFESSIONALS.
Our future success depends on our ability to recruit and retain senior
consultants, particularly with Internet and eBusiness experience, and
experienced sales professionals. Qualified consultants and experienced sales
professionals are in great demand. Competition for such qualified professionals
is intense, and the industry turnover rate for them is high. Due to the recent
growth of the Internet, and in particular electronic commerce, the number and
availability of individuals who have the requisite experience and expertise in
these areas is even more limited than in the past. Many of our competitors have
substantially greater financial resources than we do to attract and compensate
qualified professionals. As competition for these highly skilled individuals
further intensifies, we may need to increase compensation. Any inability to
recruit and retain a sufficient number of qualified professionals could hinder
the growth of our business and our operating results will be negatively
affected.
6
<PAGE> 11
IF WE DO NOT KEEP PACE WITH THE CHANGING REQUIREMENTS OF OUR CLIENTS AND DO NOT
ACCURATELY ANTICIPATE MARKET TRENDS, OUR COMPETITIVE POSITION WILL SUFFER.
Our future success depends on our ability to develop strategic eBusiness,
business and information technology solutions that keep pace with changes in
evolving industry standards, eBusiness and business trends, information
technology and client preferences. We anticipate rapidly changing industry
trends and adapt our research and analysis to meet the changing information
needs of our clients. We may fail to continue to provide helpful and timely
research and analysis of developments and trends. Any such failure would have a
material adverse effect on our revenue and business. The industry and business
sectors that we service undergo frequent and often fundamental changes,
including the introduction of new products and services and the obsolescence of
old products and services, shifting strategies and market positions of major
industry participants and changing objectives and expectations of the users of
our clients' products and services. This environment of rapid and continuous
change presents significant challenges to our ability to provide our clients
with current and timely research and analysis on issues of importance. Meeting
these challenges requires the commitment of substantial resources, and we cannot
assure you that the use of these resources will be successful.
Our future success also depends on our ability to evolve our existing
services or develop new services that address specific industry and business
constituencies and that respond to the changing needs of our current and
prospective clients for information, analysis and advice. The process of
internally researching, developing, launching and gaining client acceptance of
evolved or new services is time-consuming, expensive and inherently risky.
Delays or failures during development or implementation, lack of market
acceptance or inability to enhance existing services could have a material
adverse effect on our business and operating results.
OUR QUARTERLY REVENUE AND OPERATING RESULTS ARE LIKELY TO VARY UNPREDICTABLY,
WHICH MAY CAUSE THE MARKET PRICE OF OUR STOCK TO DECLINE.
As a result of our limited operating history, the rapidly changing nature
of the consulting industry and the markets in which our clients compete and the
other risks described in this section, our quarterly revenue and operating
results may vary significantly in future periods. Operating results are
difficult to predict and may not meet the expectations of securities analysts or
investors. If this occurs, the price of our common stock may be volatile or
decline.
The market price of our common stock could be subject to wide fluctuations
in response to many factors, including:
- our ability to expand our client base and retain current clients;
- terminations, deferrals or modifications of consulting engagements by
clients;
- our ability to attract and retain senior management and qualified
professionals, particularly with eBusiness and Internet experience;
- declines in renewal rates for membership subscriptions to our
multi-client or research programs;
- the demand for eBusiness consulting services;
- the emergence and success of new and existing competition;
- varying operating costs and capital expenditures related to the expansion
of our business operations and infrastructure, domestically and
internationally, including the hiring of new employees;
- our ability to protect our intellectual capital; and
- costs related to any future acquisitions.
7
<PAGE> 12
IF WE DO NOT MANAGE OUR GROWTH EFFECTIVELY, OUR OPERATING RESULTS WILL BE
ADVERSELY AFFECTED.
We are experiencing a period of substantial growth that places a strain on
our financial and other resources, particularly on our management team. The
total number of our employees increased from 45 as of December 31, 1997 to 108
as of December 31, 1999.
We also expanded internationally in 1999 by opening offices in the United
Kingdom, Germany, France, the Netherlands and Sweden. On February 29, 2000, we
acquired Cepro, a Swedish management consulting firm with 46 employees, bringing
the total number of our employees to 165. Our ability to manage our growth
effectively requires us to:
- develop and improve our operational, financial and other internal
systems;
- integrate and manage acquired businesses;
- implement uniform financial standards and other necessary controls,
procedures and policies throughout our U.S. and European offices;
- train, motivate and manage our employees;
- maintain high rates of employee utilization; and
- maintain project quality and client satisfaction.
We may pursue acquisitions of complementary businesses. If we are
successful in acquiring companies and hiring new employees, the risk to our
business of not managing our growth effectively will increase. To the extent our
management must devote significant time and attention to managing our European
expansion and the integration of any acquired business, our ability to service
current clients and develop new clients may suffer. If we are unable to manage
our growth and projects effectively, the quality of our services, our ability to
retain key professionals and our business and operating results will be
adversely affected.
OUR SUCCESS DEPENDS ON PROVIDING OUR CLIENTS WITH SUCCESSFUL SOLUTIONS.
Because many of our services are critical to our clients' businesses, a
failure or inability to meet a client's expectations could damage our reputation
and adversely affect our ability to attract new business. Positive referrals
from clients are often critical in obtaining new clients. In addition, the
failure of a project could have an adverse effect on our operating results.
OUR LACK OF LONG-TERM CONTRACTS WITH CONSULTING CLIENTS REDUCES THE
PREDICTABILITY OF OUR REVENUE AND MAY CAUSE OUR STOCK PRICE TO DECLINE.
We do not have long-term contracts with our consulting clients. Our
consulting clients retain us on an engagement-by-engagement basis. Our operating
expenses are relatively fixed and cannot be reduced on short notice to
compensate for unanticipated large variations in the number or size of
consulting engagements or in subscriptions. These factors make it difficult for
us to predict our revenue and operating results. Our failure to accurately
predict our revenue may seriously harm our financial condition and operating
results, because we incur costs based on our expectations of future revenue. In
addition, it may cause our stock price to decline if the decreases in revenue
cause us to fail to meet investor expectations. Because our services may involve
multiple engagements or stages, there is a risk that a client may choose not to
retain us for additional stages or that the client will cancel or delay
additional planned projects. Such cancellations or delays could result from
factors unrelated to our work product or the progress of the project, but could
be related to general business or financial conditions of the client. When a
client defers, modifies or cancels an engagement or chooses not to retain us for
additional phases of a project, we must be able to rapidly redeploy our
employees to other engagements in order to minimize underutilization of
employees and the resulting harm to our operating results. Our ability to
rapidly deploy our employees is dependent on many factors beyond our control,
and we may not be able to do so.
8
<PAGE> 13
WE DEPEND ON RENEWALS OF OUR SUBSCRIPTION-BASED SERVICES.
We derived 31% of our revenue in 1999 from our subscription-based
multi-client and research programs, and these programs are important sources for
new business for our consulting services. Our future prospects depend on our
ability to achieve and sustain substantial renewal rates on existing
subscriptions and to add new subscribers. Failure to maintain substantial
subscription levels would have a detrimental effect on our operating results.
Our ability to do so depends upon our ability to deliver consistent,
high-quality and timely programs, research and analysis with respect to issues,
developments and trends that subscribers view as important. We cannot assure you
that we will be able to sustain the necessary level of performance to achieve a
substantial rate of subscription renewals and to add new subscribers.
COMPETITION IN THE CONSULTING INDUSTRY IS INTENSE, AND WE MAY NOT BE ABLE TO
COMPETE SUCCESSFULLY.
The consulting industry includes a large and growing number of
participants, is subject to rapid changes and is highly competitive. We compete
for clients and experienced personnel with an increasing number of competitors
that have significantly greater financial, technical, marketing and public
relations resources, longer operating histories, larger number of clients and
greater brand recognition than we do. In addition, the lack of any significant
barriers to entry into this industry permits new industry entrants that further
intensify competition. We compete with:
- traditional "big 5" consulting firms and large systems integrators;
- general management and strategy consulting firms;
- Internet professional services firms;
- internal strategy and IT departments of potential clients;
- Internet professional services groups of large technology companies; and
- small specialty consulting firms in both North America and Europe.
The principal competitive factors in the consulting industry include:
- focus on the client's specific needs;
- eBusiness experience and expertise;
- industry, business process and general business expertise;
- business model as well as technical architecture and information systems
design skills;
- project management and change management skills;
- speed of delivery; and
- objectivity of advice provided.
Our ability to compete also depends in part on a number of other competitive
factors, some of which are beyond our control, including:
- the ability of our competitors to hire, retain and motivate experienced
consulting professionals;
- the effectiveness of our marketing and sales;
- our ability to develop and sustain long-term client relationships;
- the ability to adjust and, when necessary, reinvent our services in the
face of client and industry change; and
- the price at which others offer comparable services.
9
<PAGE> 14
Our multi-client programs and research projects compete with other executive
education services and research firms. Competitive factors in these markets
include:
- breadth of subject matter coverage;
- quality of programming and events; and
- levels of both innovation and practicality in research findings and
recommendations.
We may not be able to compete successfully in the future, and any inability to
compete successfully would harm our business and operating results.
OUR ABILITY TO ATTRACT WELL-KNOWN ACADEMICS AND EXPERIENCED INDUSTRY
PRACTITIONERS AS CONTRIBUTORS TO OUR SERVICES MAY NOT CONTINUE.
The ability to attract well-known academics and experienced industry
practitioners as contributors to our services is a key element of our success,
and we may be unable to continue to do so. We do not have exclusive
relationships or binding agreements with any of the members of our advisory
board or the well-known academics and experienced industry practitioners who
currently participate in our multi-client programs or Re.sults(R) research
projects. Any of them may terminate their relationship with us or work for a
competitor at any time. Competition for the time and services of these
individuals is intense. Additionally, these well-known academics and experienced
industry practitioners are very discriminating in their affiliations and they
may choose not to associate with us in the future.
ACTUAL AND PERCEIVED CONFLICTS OF INTEREST MAY RESTRICT US IN OBTAINING NEW
CLIENTS.
Actual and perceived conflicts of interest are inherent in our industry. We
may decline potential clients because of actual or perceived conflicts of
interest with our existing clients. In addition, potential clients may choose
not to retain us for reasons of actual or perceived conflicts of interest. Some
clients may condition their purchase of our services on our agreement not to
perform services for their competitors for a specified period of time. If we
decide not to perform services for a particular client's competitors, or are
restricted from doing so, or if potential clients in an industry choose not to
retain us because of actual or perceived conflicts, our revenue may decline
significantly.
OUR INTERNATIONAL OPERATIONS AND INVESTMENTS MAY EXPOSE US TO RISKS WHICH COULD
HARM OUR BUSINESS.
In addition to the United States, we have operations in the United Kingdom,
Germany, France, the Netherlands and Sweden. We are exposed to risks inherent in
these international operations. These risks include:
- tax rates in some foreign countries that may exceed those in the United
States and foreign earnings that may be subject to withholding
requirements or the imposition of tariffs, exchange controls or other
restrictions;
- the difficulty of enforcing agreements and collecting receivables through
certain foreign legal systems;
- required compliance with a variety of foreign laws and regulations which
impose a range of restrictions on our operations, corporate governance
and stockholders, with penalties for noncompliance including loss of
license and monetary fines;
- changes in United States laws and regulations relating to foreign trade
and investment;
- uncertain protection of intellectual property rights;
- inconsistent regulations and unexpected changes in regulatory
requirements;
- wage and price controls;
- fluctuations in currency exchange rates; and
10
<PAGE> 15
- linguistic and cultural differences.
We have expended, and will continue to expend, significant financial and
managerial resources in increasing our international operations. The failure of
our current European operations or of any future European or other international
expansion, could harm our operating results.
WE MAY NOT REALIZE BENEFITS FROM OUR ACQUISITION OF CEPRO.
On February 29, 2000, we acquired Cepro, a Swedish management consulting
firm. Achieving the expected benefits of the acquisition will depend in part on
the integration of our operations and personnel in a timely and efficient manner
to minimize the risk that the acquisition will result in the loss of clients or
key employees and to minimize the diversion of the attention of management.
Among the challenges involved in this integration is demonstrating to Cepro's
clients that the acquisition will not result in adverse changes in client
service standards or business focus and demonstrating to our personnel that our
business cultures are compatible. Meeting these challenges requires the
commitment of substantial resources. We may not successfully integrate the
business of Cepro, and we may not realize any of the benefits we anticipate, and
failure to do so could seriously harm our business and operating results.
WE MAY ENGAGE IN FUTURE ACQUISITIONS OR MAKE INVESTMENTS WHICH COULD NEGATIVELY
AFFECT OUR OPERATIONS AND FINANCIAL RESULTS OR DILUTE THE OWNERSHIP PERCENTAGE
OF OUR EXISTING STOCKHOLDERS.
While we have no current agreements or negotiations under way, we expect to
review acquisition and investment prospects that would complement or expand our
current services or may otherwise offer growth opportunities. We may use a
portion of the net proceeds of this offering for future acquisitions or
investments. We have limited experience in acquisition activities and may have
to devote substantial time and resources in order to complete potential
acquisitions. We may not identify or complete acquisitions in a timely manner,
on a cost-effective basis or at all. In the event of any future acquisitions, we
could:
- issue stock that would dilute our current stockholders' percentage
ownership;
- incur debt;
- assume unknown or contingent liabilities; or
- experience negative effects on our reported operating results from
acquisition-related charges and amortization of acquired technology,
goodwill and other intangibles.
These transactions entail numerous risks that could harm our operating results
and cause our stock price to decline, including:
- potential loss of key employees of acquired organizations;
- problems integrating the acquired business, including its information
systems and personnel;
- unanticipated costs that may harm our results of operations;
- diversion of management's attention from our core business and other
business concerns;
- adverse effects on existing business relationships with customers; and
- risks associated with entering an industry in which we have no or limited
prior experience.
Any of these risks could harm our business and operating results.
WE MAY NOT BE ABLE TO PROTECT OUR INTELLECTUAL PROPERTY.
We consider as our intellectual property our research reports, educational
materials and publications, as well as all reusable methodologies, techniques
and expertise developed through our research, consulting engagements and other
activities. We rely on a combination of trademark, service mark, copyright and
11
<PAGE> 16
trade secret laws to protect our intellectual property, and we enter into
confidentiality and non-compete agreements with our employees. We rely on our
clients to respect the copyright on our materials, to limit distribution of our
materials to within their organizations and to use the intellectual capital we
provide for their internal business purposes only. Our protection efforts may
prove to be unsuccessful, and unauthorized parties may copy or infringe upon
aspects of our methodologies, techniques, copyrights, service marks or
trademarks. Existing trade secret, copyright and trademark laws offer only
limited protection. Further, effective trade secret, copyright and trademark
protection may not be available in every country in which we offer or may offer
our services and policing unauthorized use of our intellectual property is
difficult. Our competitors also may independently develop similar methodologies,
techniques and expertise, and we would have no claim against them.
The unauthorized use of our intellectual property by third parties or their
independent development of similar intellectual property could cause the value
of our services to decline significantly and could substantially harm our
business. If we resort to legal proceedings to enforce our intellectual property
rights, the proceedings could be burdensome and expensive and the outcome could
be uncertain.
WE MAY BE SUBJECT TO CLAIMS ALLEGING INTELLECTUAL PROPERTY INFRINGEMENT.
Other parties may assert infringement claims against us or claim that we
have violated their intellectual property rights. Such claims, even if not true,
could result in significant legal and other costs and may be a distraction to
management. If any of these claims were to prevail, we could be forced to pay
damages, comply with injunctions or halt providing certain of our services. Any
of these events could harm our operating results.
THE VALUE OF YOUR INVESTMENT IN OUR COMMON STOCK WILL BE IMMEDIATELY DILUTED.
If you purchase our common stock in this offering, you will pay more for
your shares than the amount paid by existing stockholders or individuals or
companies which acquired shares by exercising options granted before this
offering. As a result, the value of your investment based on the net tangible
book value per share of our common stock will be less than what it would have
been had you and all of the existing stockholders and existing option holders
paid the same amount per share of common stock as you will pay in this offering.
The net tangible book value dilution to new investors in this offering will be
$ per share at an assumed initial public offering price of $ per share.
The exercise of outstanding options and warrants will result in further dilution
to you. See "Dilution" for a more complete description of how the value of your
investment in our common stock will be diluted upon completion of this offering.
A NUMBER OF SHARES ARE OR WILL BE ELIGIBLE FOR FUTURE SALE WHICH MAY DEPRESS OUR
STOCK PRICE.
Sales of substantial amounts of our common stock in the public market
following this offering, or the perception that a large number of shares are
available for sale, could cause the market price of our common stock to decline.
After this offering, shares owned by our current stockholders and holders of
options and warrants to acquire our common stock, on a fully diluted basis
assuming exercise of all options and warrants, including our executive officers
and directors, are expected to constitute approximately % of the outstanding
shares of our common stock, or % if the underwriters' over-allotment option is
exercised in full. Following the expiration of a 180-day lock-up period to which
all of the shares held by our current stockholders and warrant holders will be
subject, the holders whose shares are subject to that lock-up period will in
general be entitled to dispose of their shares. Moreover, Salomon Smith Barney
Inc. may, in its sole discretion and at any time without notice, release all or
any portion of the securities subject to the lock-up agreements. In addition to
the adverse effect a price decline could have on holders of our common stock,
that decline would likely have a negative effect on our ability to raise capital
through the issuance of additional shares of our common stock or other equity
securities.
After this offering, the holders of approximately 5,202,210 shares of our
common stock, including shares issuable upon the exercise of outstanding
warrants, will have rights, subject to some conditions, to require us to file
registration statements covering their shares, or to include their shares in
registration
12
<PAGE> 17
statements that we may file for ourselves or other stockholders. If these
stockholders exercise their registration rights and sell a large number of
shares, the price of our common stock could decline. Furthermore, if we were to
include in a company-initiated registration statement shares held by those
holders pursuant to the exercise of their registration rights, those sales could
impair our ability to raise needed capital by depressing the price at which we
could sell our common stock.
OUR MANAGEMENT HAS BROAD DISCRETION OVER THE USE OF THE NET PROCEEDS FROM THIS
OFFERING AND YOU MAY NOT AGREE WITH HOW THEY USE THEM.
Our management has significant flexibility in applying the proceeds we
receive in this offering. Because the proceeds are not required to be allocated
to any specific purpose, investment or transaction, you cannot determine the
value or propriety of our management's application of the proceeds on our
behalf. See "Use of Proceeds" for a more detailed description of how management
intends to apply the proceeds of this offering.
WE MAY NOT BE ABLE TO OBTAIN ADDITIONAL CAPITAL ON REASONABLE TERMS TO FUND OUR
OPERATIONS AND THIS COULD HURT OUR BUSINESS AND NEGATIVELY IMPACT OUR
STOCKHOLDERS.
If adequate funds are not available on reasonable terms, we may be unable
to develop or enhance our services, take advantage of future opportunities or
respond to competitive pressures, which could seriously harm our business. If
our capital requirements vary from those currently planned or we continue to
experience losses, we may require additional financing sooner than anticipated.
If we raise additional funds through the issuance of debt or equity securities,
the percentage ownership of our existing stockholders will be diluted, the
securities issued may have rights, preferences and privileges senior to those of
holders of our common stock, and the terms of the securities may impose
restrictions on our operations.
OUR STOCK PRICE MAY BE VOLATILE, AND YOU MAY BE UNABLE TO RESELL YOUR SHARES AT
OR ABOVE THE OFFERING PRICE.
There previously has been no public market for our common stock. We cannot
predict the extent to which investor interest in us will lead to the development
of a liquid trading market. The initial public offering price for the shares
will be determined by negotiations between us and the representatives of the
underwriters and may not be indicative of prices that will prevail in the
trading market. The market price of our common stock could be subject to wide
fluctuations in response to many risk factors listed in this section.
In recent years, the stock market has experienced significant price and
volume fluctuations. Our common stock may also experience volatility unrelated
to our own operating performance for reasons that include:
- the performance of similar companies;
- news announcements and other developments with respect to our industry or
our competitors; and
- changes in general economic conditions.
CONTROL BY OUR EXISTING STOCKHOLDERS WILL LIMIT YOUR ABILITY TO INFLUENCE THE
OUTCOME OF MATTERS REQUIRING STOCKHOLDER APPROVAL AND COULD DISCOURAGE POTENTIAL
ACQUISITIONS OF CONCOURS BY THIRD PARTIES.
We anticipate that our executive officers, directors and holders of more
than 5% of our outstanding common stock will, in the aggregate, beneficially own
or have the ability to vote a majority of our outstanding common stock following
the completion of this offering. These stockholders, if acting together, would
be able to influence significantly all matters requiring approval by our
stockholders, including the election of our board of directors and the approval
of mergers or other business combination transactions. This concentration of
ownership could have the effect of delaying or preventing a change in our
control or otherwise discourage a potential acquirer from attempting to obtain
control of us, which in turn could have
13
<PAGE> 18
an adverse effect on the market price of our common stock or prevent our
stockholders from realizing a premium over the market price for their shares of
our common stock.
OUR CHARTER DOCUMENTS AND DELAWARE LAW MAY DISCOURAGE AN ACQUISITION OF
CONCOURS.
Provisions of our certificate of incorporation, bylaws and Delaware law
could make it more difficult for a third party to acquire us, even if doing so
would be beneficial to our stockholders. We may issue shares of preferred stock
in the future without stockholder approval and upon such terms as our board of
directors may determine. Our issuance of this preferred stock could have the
effect of making it more difficult for a third party to acquire, or of
discouraging a third party from acquiring, a majority of our outstanding stock
and potentially prevent the payment of a premium to stockholders in an
acquisition. Our certificate of incorporation and bylaws also provide that
special stockholders meetings may be called only by our Chairman of the Board,
the President or our board of directors, with the result that any third party
takeover not supported by the board of directors could be subject to significant
delays and difficulties. In addition, our board of directors is divided into
three classes, each of which serves for a staggered three-year term, which may
make it more difficult for a third party to gain control of our board of
directors.
14
<PAGE> 19
FORWARD-LOOKING STATEMENTS; MARKET DATA
This prospectus contains forward-looking statements based on our current
expectations, assumptions, estimates and projections about us and our industry.
These forward-looking statements involve risks and actual uncertainties. Such
statements include, in particular, statements about our plans, strategies and
prospects under the headings "Prospectus Summary," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Concours
Business." You can identify certain forward-looking statements by our use of
forward-looking terminology such as the words "may," "will," "believes,"
"expects," "anticipates," "intends," "plans," "estimates" or similar
expressions. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of many factors, including but
not limited to the factors described in the "Risk Factors" section and elsewhere
in this prospectus. We are not obligated to update or revise these
forward-looking statements to reflect new events or circumstances.
This prospectus contains market data related to us and our industry. This
data has been included in the studies published by International Data
Corporation. These studies assume that certain events, trends and activities
will occur and make estimates based on those assumptions. Some of those
assumptions are that:
- customers' purchasing behavior will not dramatically change in terms of
their decision to outsource or insource projects;
- no catastrophic failure of the Internet will occur;
- the positive market forces outweigh the negative forces to sustain
continued growth of business consulting services;
- the number of people online and the total number of hours spent online
will increase significantly over the next few years; and
- Internet security and privacy concerns will be adequately addressed.
If International Data Corporation is wrong about any of its assumptions,
then its estimates also may be wrong. For example, the markets for worldwide
consulting services generally or Internet consulting services specifically may
not grow over the next few years at the rates International Data Corporation
estimates, if at all. If these markets do not grow at the estimated rates, it
may harm our business.
15
<PAGE> 20
USE OF PROCEEDS
We estimate that the net proceeds to us from our sale of shares of common
stock in this offering will be approximately $ million, assuming an initial
public offering price of $ per share and after deducting the underwriting
discounts and commissions and estimated offering expenses payable by us. If the
underwriters fully exercise their over-allotment option, then we estimate that
we will receive approximately an additional $ million in net proceeds.
The principal purposes of this offering are to establish a public market
for our common stock, to increase our visibility in our industry and to
facilitate future access to public capital markets. Since equity is an important
component of our employee compensation, we believe that it is necessary to
provide a public market for our common stock in order to attract and retain
qualified professionals.
We expect to use the net proceeds for working capital, capital
expenditures, expansion of our international operations, potential acquisitions
of, or investments in, complementary businesses and other general corporate
purposes. The amount and timing of these expenditures will vary depending on a
number of factors, including the amount of cash generated by our operations,
competitive and technological developments, future changes in our business
objectives and the rate of growth of our business.
We have not yet determined the amount of net proceeds to be used
specifically for each of the foregoing purposes. Accordingly, management will
have significant flexibility in applying the net proceeds of this offering.
Until this money is used, we intend to place these amounts in short-term,
investment grade, interest-bearing securities.
DIVIDEND POLICY
We have never declared or paid cash dividends on our common stock. We
currently intend to retain all available funds for use in the operation and
expansion of our business, and do not plan to declare or pay any cash dividends
in the foreseeable future. Consequently, stockholders will need to sell shares
of common stock in order to realize a return on their investment, if any.
16
<PAGE> 21
CAPITALIZATION
The following table sets forth our capitalization as of December 31, 1999,
on an actual, pro forma and pro forma as adjusted basis.
- The "Actual" column reflects our capitalization as of December 31, 1999,
on a historical basis;
- The "Pro Forma" column reflects our capitalization, as if the following
all occurred on December 31, 1999:
- the issuance as of February 1, 2000, of 805,425 shares of common stock
to our largest stockholder, Infologix (BVI) Ltd., upon conversion of
$4.0 million of convertible debt and the purchase of 750,000 shares of
common stock for $6.0 million;
- the repayment on February 17, 2000, of our $1.0 million bank line of
credit;
- the issuance as of February 29, 2000, of 1,546,784 shares of Series B
convertible redeemable preferred stock to Thayer Equity Investors IV,
L.P. and Thayer CGI Partners LLC for $15.0 million;
- the issuance as of February 29, 2000, of 1,221,000 shares of common
stock in the Cepro acquisition; and
- the automatic conversion of 1,810,000 shares of Series A convertible
preferred stock and 1,546,784 shares of Series B convertible redeemable
preferred stock into 3,356,784 shares of common stock upon the
consummation of this offering.
- The "Pro Forma as Adjusted" column reflects our capitalization as of
December 31, 1999, with the preceding pro forma adjustments plus the
receipt of the estimated net proceeds from our sale of shares of common
stock in this offering, assuming an initial public offering price of
$ per share.
The table below excludes the 4,425,857 shares of common stock reserved for
issuance under our stock option plans as well as non-stock option plan grants,
of which 2,648,350 are subject to outstanding options, and 568,875 are issuable
under exercisable stock options, all as of March 1, 2000. The currently
exercisable options have a weighted average exercise price of $3.01 per share.
See "Management -- Our Stock Option Plans." and note 8 to our consolidated
financial statements included elsewhere in this prospectus. The table below also
excludes the 50,000 shares issuable upon the exercise of warrants outstanding as
of March 1, 2000, with an exercise price of $5.00 per share. The table below
should be read in conjunction with the consolidated financial statements of
Concours and Cepro and the notes to those statements and the pro forma
consolidated financial statements and the notes to those statements, all of
which are included elsewhere in this prospectus.
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<PAGE> 22
<TABLE>
<CAPTION>
DECEMBER 31, 1999
----------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents................................... $ 705 $ 20,278 $
======== ======== ========
Short-term debt, including current maturities............... $ 1,000 $ -- $ --
======== ======== ========
Long-term debt, net of current maturities................... $ 4,000 $ -- $ --
-------- -------- --------
Stockholders' equity
Series A convertible preferred stock, $.01 par value,
5,000,000 shares authorized; 1,810,000 shares issued
and outstanding actual, no shares pro forma, and no
shares pro forma as adjusted........................... 18 --
Common stock, $.01 par value, 50,000,000 shares
authorized; 3,385,929 shares issued and outstanding
actual, 9,519,138 shares pro forma, and shares pro
forma as adjusted...................................... 34 95
Additional paid-in capital................................ 6,855 43,422
Deferred compensation..................................... (782) (5,432)
Treasury stock, at cost, 272,250 shares................... (463) (463)
Accumulated other comprehensive income (loss)............. (33) (33)
Retained earnings (deficit)............................... (13,816) (13,816)
-------- --------
Total stockholders' equity (deficit).............. (8,187) 23,773
-------- --------
Total capitalization.............................. $ (4,187) $ 23,773 $
======== ======== ========
</TABLE>
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<PAGE> 23
DILUTION
Our pro forma net tangible book value as of December 31, 1999 was $16.4
million, or approximately $1.73 per share. Pro forma net tangible book value per
share represents the amount of total tangible assets less total liabilities,
divided by the number of shares of common stock outstanding, after giving effect
to the pro forma adjustments for stock issuances, conversions and debt
repayments described under "Capitalization" above. For investors in our common
stock, dilution is the per share difference between the assumed initial public
offering price of $ per share and our pro forma net tangible book value
of our common stock immediately after completing this offering. This represents
an immediate increase in net tangible book value of $ per share to
existing stockholders and an immediate dilution of $ per share to new
investors. The following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $
Pro forma net tangible book value per share before this
offering............................................... $1.73
Increase per share attributable to new investors..........
-----
Pro forma net tangible book value per share after this
offering..................................................
-----
Dilution per share to new investors......................... $
=====
</TABLE>
The following table sets forth as of December 31, 1999, on a pro forma
basis as described above under "Capitalization," the number of shares of common
stock purchased from Concours, the total consideration paid and the average
price per share paid by current stockholders and new investors, before deducting
underwriting discounts and estimated offering expenses payable by Concours:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------- -------------------------------------
AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders.................. 9,519,138 % $43,323,715 % $4.55
New stockholders.......................
--------- ----- ----------- -----
Total........................ 100.0% $ % $
========= ===== =========== =====
</TABLE>
The foregoing discussion and tables assume no exercise of any stock options
or warrants outstanding. As of March 1, 2000, there were options outstanding to
purchase a total of 2,648,350 shares of common stock with a weighted average
exercise price of $4.49 per share and warrants outstanding to purchase a total
of 50,000 shares of common stock at an exercise price of $5.00 per share. To the
extent that any of these options or warrants are exercised, your investment will
be further diluted. In addition, more options may be granted in the future. See
"Shares Eligible for Future Sale," "Management -- Our Stock Option Plans" and
note 8 to our consolidated financial statements included elsewhere in this
prospectus.
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<PAGE> 24
UNAUDITED PRO FORMA FINANCIAL DATA
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial
statements as of and for the year-ended December 31, 1999, have been derived
from the application of pro forma adjustments to the historical consolidated
financial statements of Concours and Cepro which are included elsewhere in this
prospectus. The unaudited pro forma condensed consolidated balance sheet and the
unaudited pro forma condensed consolidated statement of operations reflect the
consolidated financial position and results of operations, respectively, of
Concours as if the following had occurred, in the case of the balance sheet on
December 31, 1999 and, in the case of the statement of operations, on January 1,
1999:
- the issuance as of February 1, 2000 of common stock to Infologix (BVI)
Ltd., Concours' largest stockholder, upon its conversion of convertible
debt and their purchase of common stock for cash;
- the repayment on February 17, 2000 of Concours' line of credit;
- the issuance as of February 29, 2000 of common stock in the Cepro
acquisition;
- the issuance as of February 29, 2000 of Series B convertible redeemable
preferred stock for cash; and
- the automatic conversion of all outstanding shares of Series A and Series
B convertible preferred stock into common stock upon the consummation of
this offering.
The pro forma condensed consolidated financial statements are based on
available information and various assumptions and estimates that we believe are
reasonable, but which are subject to change. These statements do not purport to
be indicative of the consolidated operating results or financial condition of
Concours that might have been obtained had these events actually occurred on
such dates, nor do they purport to be indicative of the operating results or
financial condition that may be achieved in the future.
The Cepro acquisition will be accounted for using the purchase method of
accounting. The total purchase cost will be allocated to the Cepro assets
acquired and liabilities assumed, based on their respective fair values. The
allocation of the aggregate purchase price reflected in the pro forma financial
information is preliminary. The actual purchase adjustment to reflect the fair
values of the assets acquired and liabilities assumed will be based upon
management's evaluation of such assets and liabilities and, accordingly, the
adjustments that have been included in the pro forma combined financial
information will change based upon the final allocation of the total purchase
cost of the Cepro acquisition. Such allocation may differ significantly from the
preliminary allocation included herein.
These unaudited pro forma condensed consolidated financial statements
should be read in conjunction with "Capitalization," "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the
consolidated financial statements of Concours and Cepro and the notes to those
statements included elsewhere in this prospectus.
20
<PAGE> 25
THE CONCOURS GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999
ASSETS
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS
------------------- ---------------------------
2000
CEPRO EQUITY
CONCOURS CEPRO(1) ACQUISITION TRANSACTIONS PRO FORMA
-------- -------- ----------- ------------ ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents........... $ 705 $ 173 $ -- $ 5,000(4) $ 20,278
14,400(5)
Accounts receivable, net............ 6,475 1,073 -- -- 7,548
Other current assets................ 721 516 -- -- 1,237
-------- ------ ------- -------- --------
Total current assets........ 7,901 1,762 -- 19,400 29,063
Property and equipment, net........... 713 180 -- -- 893
Intangible assets, net................ 164 -- 7,184(2) -- 7,348
Other assets.......................... 70 9 -- -- 79
-------- ------ ------- -------- --------
Total assets................ $ 8,848 $1,951 $ 7,184 $ 19,400 $ 37,383
======== ====== ======= ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.................... $ 2,887 $ 460 $ -- $ -- $ 3,347
Accrued and other current
liabilities...................... 1,666 983 -- -- 2,649
Line of credit...................... 1,000 -- -- (1,000)(4) --
Deferred revenue.................... 7,482 132 -- -- 7,614
-------- ------ ------- -------- --------
Total current liabilities... 13,035 1,575 -- (1,000) 13,610
-------- ------ ------- -------- --------
Convertible debt...................... 4,000 -- -- (4,000)(6) --
-------- ------ ------- -------- --------
Series B convertible redeemable
preferred stock..................... -- -- -- 14,400(5) --
-------- ------ ------- --------
(14,400)(7)
Stockholders' equity:
Series A convertible preferred
stock............................ 18 -- -- (18)(8) --
Common stock........................ 34 67 (60)(2) 8(6) 95
5(3) 8(4)
15(7)
18(8)
Deferred compensation............... (782) -- (4,650)(3) -- (5,432)
Additional paid-in capital and
other............................ 6,359 66 7,487(2) 3,992(6) 42,926
4,645(3) 5,992(4)
14,385(7)
Retained earnings (deficit)........... (13,816) 243 (243)(2) -- (13,816)
-------- ------ ------- -------- --------
Total stockholders' equity
(deficit)................. (8,187) 376 7,184 24,400 23,773
-------- ------ ------- -------- --------
Total liabilities and
stockholders' equity
(deficit)................. $ 8,848 $1,951 $ 7,184 $ 19,400 $ 37,383
======== ====== ======= ======== ========
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated balance
sheet.
21
<PAGE> 26
THE CONCOURS GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(1) Translations of Swedish kronor (SEK) into U.S. dollars have been made at the
December 31, 1999 conversion rate of 1.00 SEK equals 0.1170 U.S. dollars.
These translations are not representations that SEK have been, could have
been, or can be in the future converted into U.S. dollars at this or any
other rate of exchange.
(2) Reflects the allocation of the purchase price of Cepro related to 756,000
shares (1,221,000 shares issued to Cepro, net of 465,000 shares issued as
compensation) of Concours common stock at $10.00 per share.
(3) Records deferred compensation of $4,650,000 related to the issuance of
465,000 shares (1,221,000 shares issued to Cepro, net of 756,000 shares
issued as purchase consideration) of Concours common stock. Each former
Cepro stockholder's share of 465,000 shares of Concours common stock can be
repurchased by Concours, at $10.00 per share, should that former
stockholder's employment with Cepro be terminated prior to March 1, 2003.
(4) Records the sale of 750,000 shares of Concours common stock, for $6.0
million, and the use of a portion of the proceeds to repay $1.0 million
outstanding under Concours' bank line of credit.
(5) Records the issuance of 1,546,784 shares of Series B convertible redeemable
preferred stock for $15.0 million, net of offering costs of approximately
$600,000.
(6) Reflects the conversion of $4.0 million in convertible debt into 805,425
shares of Concours common stock.
(7) Reflects the automatic conversion of all of the outstanding shares of Series
B convertible redeemable preferred stock, into 1,546,784 shares of common
stock, upon the consummation of the proposed offering.
(8) Reflects the automatic conversion of all of the outstanding shares of Series
A convertible preferred stock, into 1,810,000 shares of common stock, upon
the consummation of the proposed offering.
22
<PAGE> 27
THE CONCOURS GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
ADJUSTMENTS
--------------------------
HISTORICAL 2000
---------------------- CEPRO EQUITY
CONCOURS CEPRO(3) ACQUISITION TRANSACTIONS PRO FORMA
---------- --------- ----------- ------------ ----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Revenue:
Consulting........................ $ 15,738 $6,796 $ -- $ -- $ 22,534
Continuous service and other...... 10,342 -- -- -- 10,342
---------- ------ ------- ---- ----------
Total revenue............. 26,080 6,796 -- -- 32,876
Costs and expenses:
Consulting........................ 11,488 5,516 -- -- 17,004
Continuous service and other...... 8,245 -- -- -- 8,245
Stock-based compensation(1).... 102 -- 1,550(4) -- 1,652
---------- ------ ------- ---- ----------
Gross margin.............. 6,245 1,280 (1,550) -- 5,975
Sales and marketing............... 6,876 133 -- -- 7,009
General and administrative........ 6,212 1,118 1,437(5) -- 8,767
Stock-based compensation(2).... 80 -- -- -- 80
---------- ------ ------- ---- ----------
Operating income (loss)... (6,923) 29 (2,987) -- (9,881)
Interest income (expense), net.... (254) 1 -- 255(6) 2
---------- ------ ------- ---- ----------
Income (loss) before provision for
income taxes................... (7,177) 30 (2,987) 255 (9,879)
Provision for income taxes........ -- 19 -- (19)(7) --
---------- ------ ------- ---- ----------
Net income (loss)................... $ (7,177) $ 11 $(2,987) $274 $ (9,879)
========== ====== ======= ==== ==========
Net loss per share, basic and
diluted........................... $ (2.32) $ (1.10)
Shares used in computing basic and
diluted net loss per share........ 3,088,248 8,986,457(8)
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated statement
of operations.
23
<PAGE> 28
THE CONCOURS GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(1) Includes stock-based compensation for our consulting, multi-client and
research professionals.
(2) Includes stock-based compensation for our senior management, sales and
marketing professionals and administrative personnel.
(3) Translations of Swedish kronor (SEK) into U.S. dollars have been made at the
1999 yearly average conversion rate of 1.00 SEK equals 0.1210 U.S. dollars.
These translations are not representations that SEK have been, could have
been, or can be in the future converted into U.S. dollars at this or any
other rate of exchange.
(4) Records the amortization of deferred compensation related to the issuance of
465,000 shares (1,221,000 shares issued to Cepro, net of 756,000 shares
issued as purchase consideration) of Concours common stock to Cepro
employees over the three-year period during which the repurchase rights
exist.
(5) Records the amortization over a five-year period of $7,184,000 in goodwill
related to the acquisition of Cepro.
(6) Reflects the reduction in interest expense of $255,000 as a result of the
conversion of $4.0 million in convertible debt into 805,425 shares of
Concours common stock and the repayment of Concours' $1.0 million bank line
of credit with proceeds from this sale of Concours common stock.
(7) Eliminates the tax provision of $19,000 on a combined basis.
(8) Shares used in computing pro forma basic and diluted net loss per share:
<TABLE>
<S> <C>
Historical weighted average shares outstanding.............. 3,088,248
Shares issued in the acquisition of Cepro, net of 235,000
shares held in escrow..................................... 986,000
Shares issued upon the conversion of convertible debt....... 805,425
Shares issued for cash...................................... 750,000
Shares issued upon the conversion of Series A and Series B
convertible preferred stock............................... 3,356,784
---------
Total shares used in computing basic and diluted net loss
per share................................................. 8,986,457
=========
</TABLE>
24
<PAGE> 29
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data below for 1997, 1998 and 1999 is
derived from our audited consolidated financial statements and is qualified in
its entirety by, and should be read in conjunction with, "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
our consolidated financial statements and the notes to those statements included
elsewhere in this prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1997 1998 1999
------------- ------------- -------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Consulting........................................... $ 4,878 $ 8,529 $ 15,738
Continuous service and other......................... 3,934 7,422 10,342
---------- ---------- ----------
Total revenue................................ 8,812 15,951 26,080
Costs and expenses:
Consulting........................................... 2,791 6,769 11,488
Continuous service and other......................... 2,984 6,227 8,245
Stock-based compensation(1)....................... 0 20 102
---------- ---------- ----------
Gross margin................................. 3,037 2,935 6,245
Sales and marketing.................................. 2,378 3,964 6,876
General and administrative........................... 1,681 4,692 6,212
Stock-based compensation(2)....................... 0 18 80
---------- ---------- ----------
Operating loss............................... (1,022) (5,739) (6,923)
Interest income (expense), net......................... 48 74 (254)
---------- ---------- ----------
Net loss............................................... $ (974) $ (5,665) $ (7,177)
========== ========== ==========
Net loss per share, basic and diluted.................. $ (0.43) $ (1.73) $ (2.32)
Shares used in computing basic and diluted net loss
per share............................................ 2,270,630 3,279,447 3,088,248
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1997 1998 1999
------ ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $1,485 $ 1,056 $ 705
Working capital............................................. 76 (2,033) (5,134)
Total assets................................................ 4,058 5,804 8,848
Long-term debt, net of current portion...................... 0 0 4,000
Total stockholders' equity (deficit)........................ 364 (1,372) (8,187)
</TABLE>
(1) Includes stock-based compensation for our consulting, multi-client and
research professionals.
(2) Includes stock-based compensation for our senior management, sales and
marketing professionals and administrative personnel.
25
<PAGE> 30
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion in conjunction with "Selected
Consolidated Financial Data" and our consolidated financial statements and the
notes to those statements included elsewhere in this prospectus. The following
discussion contains forward-looking statements that involve risks, uncertainties
and assumptions such as statements of our plans, objectives, expectations and
intentions. Our actual results may differ materially from those discussed in
these forward-looking statements because of the risks and uncertainties inherent
in future events, particularly those identified in "Risk Factors."
OVERVIEW
Concours delivers management and strategy consulting, research and
executive education services which enable our clients to improve their
performance and competitiveness by capitalizing on the potential of business,
technology and human assets. Our operating model is designed to enable us to
rapidly evolve our services to anticipate and meet the needs of our clients in
fast-changing markets. We were founded in January 1997 and our revenue has grown
rapidly from $8.8 million in 1997 to $26.1 million in 1999, a compound annual
growth rate of approximately 72%. We provided services to a total of 154 clients
during 1997, 290 clients during 1998 and 400 clients during 1999. Our
consulting, multi-client and research professionals have increased from 27 at
December 31, 1997 to 56 at December 31, 1999.
In the second half of 1998, we decided to evolve our services by offering
new eBusiness related consulting services and to expand our operations to
Europe. These actions caused higher operating losses in 1998 and 1999. We funded
these activities through private placements of equity in 1998 and convertible
debt in 1999. Leveraging methods devised in our research programs, we developed
various eBusiness related consulting services, and aggressively expanded our
staff of consulting professionals in the United States from 19 at December 31,
1997 to 39 at December 31, 1998 in anticipation of generating significant
revenue from these and other services in 1999. We began building our European
operation in late 1998, establishing operations in the United Kingdom, Germany,
France and the Netherlands, and incurred significant start-up expenses and
operating losses in 1998 and 1999. By December 31, 1999, we employed 24 people
in Europe, including seven consulting professionals, seven sales professionals
and four multi-client professionals. On November 18, 1999, we acquired
Inforesma, a Swedish provider of subscription-based multi-client programs, for
approximately $118,000 in cash and the issuance of 25,000 shares of our common
stock. On February 29, 2000, we purchased all the outstanding shares of stock of
Cepro, a Swedish management consulting firm, in exchange for a total of
1,221,000 shares of Concours common stock valued at an estimated $10.00 per
share. The Cepro acquisition added 40 consulting professionals to our staff.
Consulting revenue is comprised of professional fees and reimbursable
out-of-pocket expenses for consulting services rendered to clients. In 1999, 11%
of our consulting revenue was comprised of reimbursable out-of-pocket expenses.
We currently provide our clients with consulting services in eBusiness and
business strategy; eBusiness solution implementation planning and management; IT
strategy, implementation planning and management; and custom executive
education. Our consulting engagements are typically priced on a time and
materials basis. Revenue is recognized when earned, according to the terms of
the client engagement. Consulting costs consist primarily of the
employee-related expenses of our consulting professionals and other direct
project costs, such as third-party vendor charges and out-of-pocket expenses
associated with the delivery of consulting services. These costs are expensed as
incurred.
Continuous service revenue is comprised of subscription-based membership
fees from our multi-client and research programs. Other revenue represents fees
from client participation in individual research projects and from the sale of
reports from completed research projects. Our multi-client programs bring
together specified populations of executives to discuss with well-known
academics, experienced industry practitioners and senior Concours consultants
the pressing management issues and challenges they face. Our research consists
of 90-day projects designed to develop new business strategies and management
techniques, to provide intellectual capital in support of our multi-client
programs and mindshare marketing
26
<PAGE> 31
and to deliver new ideas and techniques for our consulting practice. Memberships
in our various continuous service programs are sold as renewable, time-based
subscriptions. Subscriptions generally are for one year and may begin in any
calendar month. Subscription fees and most other revenue are recorded as
deferred revenue, when invoiced and are recognized as revenue ratably over the
subscription period or, in the case of other revenue, over the term of the
related projects. Revenue derived from the sale of reports from completed
research projects is recognized upon delivery of the reports. Continuous service
and other costs primarily include costs related to the production and delivery
of multi-client and research services, including compensation of research
personnel, fees for third-party speakers, the production of published materials,
the organization of member meetings and all associated support services. These
costs are recognized over the period of the related program.
To date, a majority of our revenue has been derived from our consulting
services. During 1999, 60% of our revenue was derived from consulting services
and 40% was derived from continuous services and other. We expect that our
consulting services will continue to account for the majority of our total
revenue in the foreseeable future. No single client accounted for more than 10%
of our total revenue during 1999 or 1998.
Sales and marketing expenses consist primarily of salaries, commissions and
related expenses of our direct salesforce and telemarketing professionals and
the costs related to the production and distribution of our mindshare marketing
and other direct mail materials. General and administrative expenses consist
primarily of salaries for executive and senior management, finance, information
technology and various administrative groups along with associated employee
benefits, facilities costs, office supplies and related expenses, depreciation
and amortization and all other corporate costs.
Stock-based compensation consists of expenses arising from a limited number
of our option grants. Stock-based compensation represents the difference between
the exercise price of options to purchase common stock and the fair value of
these shares at the date of grant. In calculating our gross margin, we include
the costs and expenses of stock-based compensation for employees whose expenses
are included in the consulting and continuous service and other costs and
expenses line items. We have recorded aggregate deferred compensation totaling
$1.0 million in connection with certain stock option grants through December 31,
1999, and we recorded amortization expense of $38,000 in 1998 and $182,000 in
1999. We anticipate that additional deferred stock compensation totaling
approximately $4.7 million will be recorded for stock issued to employees in
connection with the acquisition of Cepro in the first quarter of 2000. We expect
to record amortization expense of approximately $1.0 million during 2000, $1.2
million during 2001, $1.1 million during 2002, $1.0 million during 2003 and $0.9
million during 2004. The amount of stock-based compensation expense to be
recorded in future periods may change if any of these shares are repurchased.
See "Related Transactions and Recent Acquisition."
Although we have experienced substantial revenue growth since 1997, our
operating costs and expenses have exceeded our revenue in each quarter since our
founding in January 1997. During the same period, we have incurred cumulative
net losses of approximately $13.8 million. Primarily due to our expansion in
Europe and the amortization of goodwill and deferred compensation related to the
recent Cepro acquisition, we anticipate a net loss from operations through at
least 2000. Due to our limited operating history and the fast-changing nature of
our industry, it is difficult for us to predict future results, and you should
not expect our future revenue growth to equal or exceed our recent growth rates.
As of December 31, 1999, we had net operating loss carryforwards of
approximately $12.5 million that will expire at various dates beginning in 2004.
Utilization of the net operating losses may be limited due to U.S. and foreign
tax laws. See Note 5 to our consolidated financial statements included elsewhere
in this prospectus.
27
<PAGE> 32
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, selected
consolidated statements of operations data as a percentage of total revenue and
data for the costs and expenses of consulting and of continuous services and
other, which are presented as a percentage of the related revenue.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------
1997(1) 1998(1) 1999(1)
------- ------- -------
<S> <C> <C> <C>
REVENUE:
Consulting................................................ 55% 53% 60%
Continuous service and other.............................. 45% 47% 40%
Total revenue..................................... 100% 100% 100%
COSTS AND EXPENSES:
Consulting(2)............................................. 57% 79% 73%
Continuous service and other(3)........................... 76% 84% 80%
Stock-based compensation(4)............................ 0% 0% 0%
Gross margin...................................... 34% 18% 24%
Sales and marketing....................................... 27% 25% 26%
General and administrative................................ 19% 29% 24%
Stock-based compensation(5)............................ 0% 0% 1%
Operating loss.................................... (12%) (36%) (27%)
INTEREST INCOME (EXPENSE), NET.............................. 1% 0% (1%)
NET LOSS.................................................... (11%) (36%) (28%)
</TABLE>
- ---------------
(1) Unless otherwise indicated in the table set forth above, all numbers are
expressed as a percentage of total revenue.
(2) Expressed as a percentage of consulting revenue.
(3) Expressed as a percentage of continuous service and other revenue.
(4) Includes stock-based compensation for our consulting, multi-client and
research professionals.
(5) Includes stock-based compensation for our senior management, sales and
marketing professionals and administrative personnel.
Years Ended December 31, 1998 and 1999
Revenue. Total revenue increased 63% from $16.0 million in 1998 to $26.1
million in 1999. In North America, total revenue was $15.9 million in 1998
compared to $23.4 million in 1999, an increase of 47%. Consulting revenue in
North America grew 69% from $8.4 million in 1998 to $14.2 million in 1999. This
increase primarily reflects strong demand for our new eBusiness services and an
increase in revenue per client. Continuous service and other revenue in North
America increased 23% from $7.4 million in 1998 to $9.1 million in 1999. This
was primarily due to an increase in the number of subscriptions for existing
multi-client programs and the addition of new multi-client programs for senior
eBusiness and HR executives. In Europe, 1998 activities were primarily start-up
in nature, and we recognized only $0.1 million of revenue. In 1999, our first
full year of operation in Europe, consulting revenue was $1.5 million and
continuous service and other revenue was $1.2 million.
Costs and expenses of services. In total, costs and expenses of services,
consisting of costs and expenses of consulting, continuous service and other,
and related stock-based compensation, rose 52% from $13.0 million in 1998 to
$19.8 million in 1999. In North America, total costs and expenses of services
were $12.7 million in 1998 compared to $16.7 million in 1999, an increase of
31%. Costs and expenses of consulting in North America increased 48% from $6.6
million in 1998 to $9.8 million in 1999. The increase primarily reflects the
growth in the number of consulting professionals in North America from an
average of 27 during 1998 to an average of 35 during 1999 and an increase in
other project related expenses associated with the increases in consulting
revenue. Although North American consulting revenue rose 69% compared to 1998,
average consulting headcount grew only 30% because we were able to increase the
utilization of an increasing number of the consulting professionals we hired in
1998. The
28
<PAGE> 33
costs and expenses of continuous service and other in North America increased
from $6.1 million in 1998 to $6.9 million in 1999. This increase was primarily
due to cost of the new multi-client programs for senior eBusiness and HR
executives and the overall growth in the number of memberships. In Europe, in
our first full year of operation, the costs and expenses of consulting were $1.7
million and the costs and expenses of continuous service and other was $1.4
million.
Gross margin. Our overall gross margin increased from 18% in 1998 to 24% in
1999. In North America, the overall gross margin improved from 20% in 1998 to
29% in 1999. Our consulting gross margin in North America rose from 22% in 1998
to 31% in 1999. As 1999 progressed, the demand for our eBusiness consulting
services accelerated, and we were able to increase the utilization of an
increasing number of the consulting professionals we hired in 1998. Our
continuous service and other gross margin in North America improved from 18% in
1998 to 25% in 1999 as the rate of revenue growth due to increasing memberships
exceeded the rate of growth of related costs and expenses. In Europe, the costs
and expenses of consulting services exceeded consulting revenue by $0.2 million
and the costs and expenses of continuous service and other also exceeded
continuous service and other revenue by $0.2 million. This reflects the start-up
nature of operations in Europe during 1999.
Sales and marketing. Total sales and marketing costs and expenses increased
73% from $4.0 million in 1998 to $6.9 million in 1999. Sales and marketing costs
and expenses in North America rose from $3.7 million to $5.2 million, or 39%.
This increase reflects higher costs associated with mindshare marketing and
direct mail programs to support our new eBusiness and multi-client service
offerings and the general growth in the business. As a percentage of revenue,
these expenses decreased from 24% in 1998 to 22% in 1999 due to sales and
marketing spending growing at a slower rate than the rate of revenue growth.
Sales and marketing costs and expenses in Europe during our first full year of
operation increased from $0.2 million in 1998 to $1.7 million in 1999. This was
primarily due to the increase in the number of sales professionals from three at
December 31, 1998 to seven at December 31, 1999 and 1999 mindshare marketing and
direct mail activities.
General and administrative. Total general and administrative costs and
expenses increased by 32% from $4.7 million in 1998 to $6.2 million in 1999.
North American general and administrative costs and expenses increased by 16%
from $4.0 million in 1998 to $4.6 million in 1999. This increase was due to
additional staff, facilities, equipment and general growth in the business. As a
percentage of revenue, these expenses decreased from 25% in 1998 to 20% in 1999
as general and administrative spending grew at a slower rate than the rate of
revenue growth. General and administrative costs and expenses in Europe
increased from $0.7 million in 1998 to $1.6 million in 1999 reflecting a full
year of operation and spending for additional staff, facilities and equipment to
support our European operations.
Years Ended December 31, 1997 and 1998
Revenue. Total revenue increased 81% from $8.8 million in 1997 to $16.0
million in 1998 with no revenue generated in Europe in 1997 and only
approximately $0.1 million of revenue generated in Europe in 1998. Consulting
revenue in North America grew 73% from $4.9 million in 1997 to $8.4 million in
1998 reflecting an increasing number of clients. Continuous service and other
revenue in North America increased 88% from $3.9 million in 1997 to $7.4 million
in 1998. This was primarily due to an increase in the number of subscriptions
for our existing multi-client and research programs, an increase in the average
price per subscription for our multi-client programs and an increase in the
number of research projects.
Costs and expenses of services. In total, costs and expenses of services,
consisting of costs and expenses of consulting, continuous service and other and
related stock-based compensation, rose 125% from $5.8 million in 1997 to $13.0
million in 1998, with costs of approximately $0.3 million incurred in Europe.
The costs and expenses of consulting in North America increased 136% from $2.8
million in 1997 to $6.6 million in 1998. The increase primarily reflects the
growth of consulting professionals in North America from an average of nine in
1997 to an average of 27 in 1998. We aggressively hired consulting professionals
in 1998 both in support of higher 1998 consulting revenue and in anticipation of
future demand for our emerging eBusiness consulting services. The costs and
expenses of continuous service and
29
<PAGE> 34
other increased from $3.0 million in 1997 to $6.1 million in 1998. This increase
was primarily due to the development cost of expanding the content of our
existing multi-client programs, the growth in the number of memberships and the
cost of completing more research projects in 1998 than in 1997.
Gross margin. Our overall gross margin declined from 34% in 1997 to 18% in
1998. Our consulting gross margin in North America declined from 43% in 1997 to
22% in 1998 primarily as the result of the hiring of consulting professionals in
preparation for our new eBusiness consulting service offerings. Continuous
service and other gross margin was 24% in 1997 compared to 18% in 1998. This
decline was primarily due to the costs and expenses of delivering our
multi-client and research services growing at a rate faster than the growth in
continuous service and other revenue.
Sales and marketing. Total sales and marketing costs and expenses increased
67% from $2.4 million in 1997 to $4.0 million in 1998, with start-up activities
in Europe during 1998 accounting for 14% of this increase. Sales and marketing
expenses in North America rose from $2.4 million to $3.7 million, or 57%. The
increase was primarily due to the increase in average sales and marketing
headcount from seven sales and telemarketing professionals in 1997 to 14 in
1998. As a percentage of revenue, these expenses decreased from 27% in 1997 to
24% in 1998 due to sales and marketing spending growing at a slower rate than
the rate of revenue growth.
General and administrative. Total general and administrative costs and
expenses increased by 179% from $1.7 million in 1997 to $4.7 million in 1998.
European start-up expenses in 1998 of $0.7 million accounted for 23% of this
increase. North American general and administrative costs and expenses increased
by 137% from $1.7 million in 1997 to $4.0 million in 1998. This increase was due
to additional staff, facilities, equipment and general growth in the business.
As a percentage of revenue, general and administrative expenses increased from
19% in 1997 to 25% in 1998 as we invested in our infrastructure to support
continued growth.
QUARTERLY RESULTS OF OPERATIONS
The following table presents our unaudited quarterly operating results for
each of the eight quarters ended December 31, 1999. We have prepared this
unaudited information on the same basis as the audited consolidated financial
statements appearing elsewhere in this prospectus. We believe all necessary
adjustments, consisting only of normal recurring adjustments, have been included
to present fairly the quarterly results. These unaudited quarterly results
should be read in conjunction with our consolidated financial statements,
together with the related notes, included elsewhere in this prospectus. The
operating results in any quarter are not necessarily indicative of the results
that may be expected for any future period. We expect that our quarterly results
may fluctuate significantly.
30
<PAGE> 35
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------------------------------------------
MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31,
1998 1998 1998 1998 1999 1999 1999 1999
-------- -------- --------- -------- -------- -------- --------- --------
(IN THOUSANDS, EXCEPT FOR PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Consulting.................. $2,149 $2,442 $ 2,365 $ 1,573 $ 2,927 $ 3,777 $ 4,031 $ 5,003
Continuous service and
other..................... 1,695 1,622 1,913 2,192 2,246 2,593 2,759 2,745
------ ------ ------- ------- ------- ------- ------- -------
Total revenue......... 3,844 4,064 4,278 3,765 5,173 6,370 6,790 7,748
Costs and expenses:
Consulting.................. 1,463 1,534 1,811 1,980 2,667 2,718 2,898 3,205
Continuous service and
other..................... 1,424 1,387 1,517 1,899 2,126 2,273 2,117 1,730
Stock-based
compensation............ 0 0 0 20 25 26 25 27
------ ------ ------- ------- ------- ------- ------- -------
Gross margin.......... 957 1,143 950 (134) 355 1,353 1,750 2,786
Sales and marketing......... 698 810 1,035 1,420 1,802 1,613 1,603 1,862
General and
administrative............ 759 802 1,044 2,069 1,389 1,509 1,475 1,835
Stock-based
compensation............ 0 0 0 18 20 20 20 20
------ ------ ------- ------- ------- ------- ------- -------
Operating loss........ (500) (469) (1,129) (3,641) (2,856) (1,789) (1,348) (931)
Interest income (expense),
net......................... 32 25 13 4 (14) (37) (81) (122)
------ ------ ------- ------- ------- ------- ------- -------
Net loss...................... $ (468) $ (444) $(1,116) $(3,637) $(2,870) $(1,826) $(1,429) $(1,053)
====== ====== ======= ======= ======= ======= ======= =======
PERCENTAGE OF REVENUE(1):)
Revenue:
Consulting.................. 55.9% 60.1% 55.3% 41.8% 56.6% 59.3% 59.4% 64.6%
Continuous service and
other..................... 44.1 39.9 44.7 58.2 43.4 40.7 40.6 35.4
Total revenue......... 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Costs and expenses:
Consulting(2)............... 68.1 62.8 76.6 125.9 91.1 72.0 71.9 64.1
Continuous service and
other(3).................. 84.0 85.5 79.3 86.6 94.7 87.7 76.7 63.0
Stock-based
compensation(4)......... 0.0 0.0 0.0 0.5 0.5 0.4 0.4 0.3
Gross margin.......... 24.9 28.1 22.2 (3.6) 6.9 21.2 25.8 36.0
Sales and marketing......... 18.2 19.9 24.2 37.7 34.8 25.3 23.6 24.0
General and
administrative............ 19.7 19.7 24.4 55.0 26.9 23.7 21.7 23.7
Stock-based
compensation(5)......... 0.0 0.0 0.0 0.5 0.4 0.3 0.3 0.3
Operating loss........ (13.0) (11.5) (26.4) (96.7) (55.2) (28.1) (19.9) (12.0)
Interest income (expense),
net......................... 0.8 0.6 0.3 0.1 (0.3) (0.6) (1.1) (1.6)
Net loss...................... (12.2)% (10.9)% (26.1)% (96.6)% (55.5)% (28.7)% (21.0)% (13.6)%
</TABLE>
- ------------------
(1) Unless otherwise indicated in the table set forth above, all numbers are
expressed as a percentage of Total revenue.
(2) Expressed as a percentage of Consulting revenue.
(3) Expressed as a percentage of Continuous service and other revenue.
(4) Includes stock-based compensation for our consulting, multi-client and
research professionals.
(5) Includes stock-based compensation for our senior management, sales and
marketing professionals and administrative personnel.
LIQUIDITY AND CAPITAL RESOURCES
From our founding in January 1997 through December 31, 1999, we funded our
operations through internally generated cash and the private sale of equity and
convertible debt securities to Infologix (BVI) Ltd., our largest stockholder.
Net proceeds from the sale of common and convertible preferred stock from
January 1997 through December 31, 1999 totaled $5.6 million. Net proceeds from
the issuance of convertible debt to an affiliate of Infologix totaled $4.0
million. In addition, we had a $1.0 million line of credit with Bank One with
interest at the Bank One index rate plus 0.5 percent that was fully drawn at
December 31, 1999 and repaid in full in February 2000. This line of credit has
been terminated.
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On February 1, 2000, we issued 750,000 shares of common stock to Infologix
for $6.0 million. A portion of these funds was used to repay our $1.0 million
bank line of credit. Effective February 29, 2000, we sold 1,546,784 shares of
Series B convertible redeemable preferred stock to Thayer Equity Investors IV,
L.P. and Thayer CGI Partners LLC for $15.0 million. The stock is automatically
convertible into common stock on a share-for-share basis upon the consummation
of this offering.
Cash provided by operations in 1997 totaled $0.5 million. Cash used in
operations for 1998 was $3.8 million and for 1999 was $5.0 million. Cash used by
operations resulted from costs incurred to support the significant growth and
development of our programs and operations in 1998 and 1999, including our
expansion into Europe.
Cash used in investing activities totaled $0.3 million in 1997, $0.5
million in 1998 and $0.4 million in 1999 for the purchase of computers and other
property and equipment.
Cash provided by financing activities was $1.3 million in 1997 and $3.9
million in 1998. These cash flows came primarily from the proceeds of the
private sale of common and convertible preferred stock to Infologix. Cash
provided by financing activities in 1999 was $5.1 million; the proceeds from the
issuance of convertible debt from an affiliate of Infologix provided $4.0
million and draws on our line of credit provided $1.0 million.
As of December 31, 1999 we had cash and cash equivalents of $0.7 million.
We believe that our current cash and cash equivalents, internally generated
funds, the proceeds received by us from private equity financings, and the
proceeds of this offering will be sufficient to meet our working capital and
capital expenditure requirements for the foreseeable future.
DISCLOSURE ABOUT MARKET RISK
Our exposure to market risk is confined to our cash and cash equivalents
which have maturities of less than three months. We plan to invest in U.S.
Government debt obligations and investment grade commercial paper, which we
believe are subject to limited credit risk. We currently do not hedge interest
rate exposure. Because of the short-term maturities of our investments, we do
not believe that an increase in market rates would have any material negative
impact on the realized value of our investment portfolio.
We have foreign currency risk as a result of our operations in foreign
countries. All transactions made by our foreign subsidiaries have been made in
the local currency of each country in which we operate. Additionally, we do not
own a significant amount of assets through our foreign locations. Accordingly,
we have not had any material exposure to foreign currency rate fluctuations.
YEAR 2000 ISSUE
Many existing computer programs were designed and developed without
considering the impact of the change in the century and consequently use only
two digits to identify a year in the date field. If not corrected, many computer
applications could fail or create erroneous results at or after the year 2000.
We have conducted an assessment of the potential impact of the year 2000 issue
on our operations and our key vendors. In light of the fact that we have only
been in existence for over three years, our key financial, information and
operation systems have been designed to be year 2000 compliant without the need
for any modifications or conversions. Accordingly, the year 2000 issue has not
had, and we do not expect it to have, a material effect on our consolidated
financial position, results of operations or cash flows.
Our standard client contract does not warrant year 2000 compliance. We have
reviewed significant non-standard client contracts to determine our exposure for
failure to provide year 2000 compliant solutions. We believe these contracts do
not present a material year 2000 risk to us. Nevertheless, under either
contractual arrangement, we may become involved in disputes regarding year 2000
problems.
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RECENT ACCOUNTING PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin 101, "Revenue Recognition in Financial Statements" (SAB 101)
which provides guidance related to revenue recognition based on interpretations
and practices followed by the SEC. SAB 101 is effective the first fiscal quarter
of fiscal years beginning after December 15, 1999 and requires companies to
report any changes in revenue recognition as a cumulative change in accounting
principle at the time of implementation. Concours management believes that its
revenue recognition policy is in accordance with SAB 101 and does not believe
that adoption of this SAB will have a material impact on its financial position
or results of operations.
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BUSINESS
OVERVIEW
Concours delivers management and strategy consulting, research and
executive education services which enable our clients to improve their
performance and competitiveness by capitalizing on the potential of business,
technology and human assets. Currently our services are focused on advising
Global 1000 and mid-size corporations in developing and deploying eBusiness
strategies. An eBusiness combines the latest Internet and other new technologies
with complementary business and human resource strategies to adapt and thrive in
the digital economy. Our operating model is designed to enable us to rapidly
evolve our services to anticipate and meet the needs of our clients in
fast-changing markets.
We currently provide consulting services in the following areas:
- eBusiness and business strategy;
- eBusiness solution implementation planning and management;
- information technology (IT) strategy, implementation planning and
management; and
- custom executive education.
We differentiate our consulting services through the seniority and
experience of our consultants, who average over twelve years of relevant
industry experience; speed of delivery of services to clients, with engagements
generally structured to provide deliverables in 15 to 90 days; and the
integration of our latest research into client engagements and internal practice
development. We often enter consulting engagements through a process of
executive enlightenment in which we identify and articulate critical ideas,
issues and questions surrounding new business initiatives. We are then
frequently retained on a noncompetitive basis to advise on strategy development
and related implementation planning and management.
Our operating model is based on four core capabilities: Re.sults(R)
research projects, subscription-based multi-client programs, mindshare marketing
and a dedicated salesforce. Together they help build long-term relationships
with senior business and technology executives, and they generate a flow of
intellectual capital and consulting and other new business opportunities. All of
our multi-client programs and a portion of our Re.sults research projects are
subscription-based, which provide us with a recurring revenue stream.
During 1999, our top ten clients in North America based upon total revenue
were: Arrow Electronics, Inc.; Ashland Inc.; Borg-Warner Automotive, Inc.;
Cargill, Incorporated; CarrAmerica Realty Corporation; International Paper
Company; Novartis AG; A. Schulman, Inc.; Schneider Electric SA; and The United
Illuminating Company. Our top five clients in Europe during this period based
upon total revenue were: Fort James Europe Limited; Internationale Nederlanden
Groep (ING); Rio Tinto plc; Societe Generale d'Entreprises; and Svenska Kullager
Fabriken. Of these 15 clients, eight used all three of our consulting, research
and subscription-based multi-client services during 1999. From our founding in
January 1997 through December 31, 1999, we have performed consulting services
for a total of 184 clients. As of December 31, 1999, 255 clients were
participating in one or more of our subscription-based multi-client or research
programs. For each of the last two years, over 75% of our subscription-based
multi-client and research clients renewed their subscriptions for at least one
program, as adjusted for mergers and acquisitions among clients.
We have grown rapidly since our founding in January 1997. Our revenue has
increased from $8.8 million in 1997 to $26.1 million in 1999, a compound annual
growth rate of approximately 72%. As of March 1, 2000, we employed a total of
165 people in our offices in Houston, Cambridge (Massachusetts), London, Paris,
Munich, Amsterdam, Gothenburg (Sweden) and Stockholm, of which 46 of these
employees are employees in our newly acquired subsidiary, Cepro. On February 29,
2000, we acquired Cepro, a Swedish management consulting firm, to expand our
existing European operations.
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INDUSTRY BACKGROUND
Driven by the accelerating pace of technological change, today's on-going
transformation to a digital economy is fundamentally altering how businesses
operate and compete. In response to these trends, companies are reevaluating the
performance of their organizations and exploring new business strategies. As a
result, many senior business and technology executives are turning to external
consultants and research professionals, who possess specific subject knowledge,
to gain industry-leading advice on management and operational challenges. In
1999, International Data Corporation estimated that worldwide consulting
services will increase from $52.4 billion in 1998 to $102.8 billion in 2003, a
compound annual growth rate of approximately 14%.
Additionally, the on-going transformation to a digital economy is
significantly changing the ways in which businesses interact with their
employees, customers, suppliers and other business partners. We believe that, in
order to thrive in the new digital economy, businesses must not only develop and
implement new technology strategies, but also transform their operational and
human resources practices such that all employees think and act digitally. We
believe the speed of this transformation has created a market for quick access
to leading eBusiness management practices and solutions to achieve these
changes. Global 1000 and mid-size corporations are increasingly turning to
outside consulting firms to develop comprehensive eBusiness strategies and
solutions. In 1999, International Data Corporation estimated that spending on
Internet consulting services will grow from $425 million in 1998 to $4.4 billion
in 2003, a compound annual growth rate of approximately 60%.
We believe there are significant opportunities for management and strategy
consulting firms that are able to provide comprehensive, advanced eBusiness
strategies and solutions in time frames that enable clients to meet the demands
of their rapidly changing industries. We believe that many traditional
management and strategy consulting firms continue to engage in lengthy
consulting engagements, do not focus on rapid deliverables with measurable
outcomes, and are not based on leading eBusiness solutions and innovative
management practices. Although many Internet professional service firms are
beginning to offer strategy services, we do not believe these firms possess the
combination of capabilities -- eBusiness and business strategy, human resource
and organizational expertise, research-based advanced solutions and
industry-leading ideas -- that we believe is critical to enable clients to
improve their performance and competitiveness in the digital economy.
CONCOURS APPROACH TO MARKET
We have developed four core capabilities:
- Re.sults research. We believe that a key to success in the consulting
industry is the ability to continuously innovate and offer clients
leading business strategies and up-to-date management techniques,
including both current and future best practices. We have developed our
own research methodology, called Re.sults, to implement 90-day projects
to satisfy the rapidly evolving needs of our clients. Our clients pay to
participate in Re.sults projects and are influential in the selection of
topics. Our research is typically performed with well-known academics and
experienced industry practitioners. In addition to direct value to our
clients, these Re.sults research projects deliver new ideas and
techniques for our consulting practice and new intellectual capital to
support our subscription-based multi-client programs and mindshare
marketing. We also believe that the opportunity to participate in
high-quality, forward-looking research has helped us attract and retain
our consulting professionals.
- Subscription-based multi-client programs. We believe that a continuous
flow of new clients and repeat business from past clients is critical to
our success. Our multi-client programs are designed to foster new
business for our consulting services and help build and maintain
long-term relationships with our clients. These programs bring together
specific groups of executives -- including Chief Executive Officers
(CEOs), executives responsible for eBusiness initiatives, Chief
Information Officers (CIOs) and Human Resource (HR) executives -- to
discuss with well-known academics, experienced industry practitioners and
senior Concours consultants the pressing
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management issues and challenges that they face. Executives subscribe on
an annual basis, attend conferences, participate in conference calls and
are provided with selected Re.sults research recommendations and other
Concours-developed content. Many of our current consulting services
clients first participated in one or more of our multi-client programs
before hiring us for consulting engagements. We also use our multi-client
programs to sustain relationships with past consulting clients and
potentially generate future consulting business with them.
- Mindshare marketing. A key challenge in management and strategy
consulting is gaining the attention or "mindshare" of executives. We have
found that when we obtain mindshare -- often by a process of executive
enlightenment in which we identify and articulate critical business
challenges executives face -- we often are retained on a non-competitive
basis to advise on strategy development and related implementation
planning and management. At the center of our executive mindshare
marketing program are thought piece documents on contemporary management
issues, which we periodically distribute free of charge to over 15,000
executives. These thought pieces represent the latest perspectives from
our Re.sults research and consulting field experience. Our strategy is to
share selected intellectual capital in order to capture the attention and
interest of key executives. Our Re.sults research and subscription-based
multi-client programs also contribute to our mindshare marketing by
gaining and maintaining executive mindshare through providing them with
new and improved ideas and management techniques. Our mindshare marketing
program also helps build our marketplace identity through brand name
recognition.
- Dedicated salesforce. We believe two of the keys to sustained growth are
developing new clients and maintaining long-term relationships with
clients who repeatedly use our services over time. Our dedicated
salesforce, whose members average over twelve years of sales experience,
identify prospects, develop and help maintain client relationships,
manage the sale of new business and represent the full range of Concours
services. Because the salesforce handles initial prospecting, our
consultants can focus on providing advice to clients and converting these
prospects into actual engagements.
These core capabilities create vital assets -- new business opportunities,
client relationships, intellectual capital and management techniques -- that
improve the performance and drive the growth of our consulting services. The
relationship between our core capabilities and our consulting services is multi-
faceted. Our consultants participate in research projects, and our researchers
participate in consulting engagements. Individual consultants initiate and
develop client relationships and work with the salesforce to develop prospects
into new clients. Research draws upon the latest consulting field experience,
while consulting extends research output into detailed consulting methods and
tools. And the collective wisdom of Concours -- from consulting, research,
education and sales -- is tapped to create the publications behind our mindshare
marketing program. Our core capabilities are designed and scaled to support new
services we may develop without requiring a significant expansion of personnel
or other resources.
THE CONCOURS SOLUTION
Concours was founded with the goal of providing client-focused management
and strategy consulting, research and executive education services. Our
solutions are designed to work in ways that create significant value for our
clients. We focus first and foremost on their business outcomes and measurable
end-points of value, and then create solutions tailored to meet those outcomes.
We blend the benefits traditionally delivered through executive education and
consulting into each engagement, developing the client's capabilities to learn,
change and improve. Below are the key components of how we deliver client
solutions:
- Advanced solutions. We focus on providing clients with advanced solutions
that combine the latest technological capabilities, business and human
resource practices and innovative operating models. The advanced
solutions, many of which stem from our Re.sults research projects, are
constantly evolving so that we continually update our services. We
believe our focus on future best practices has established Concours as a
leading provider of eBusiness solutions.
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- Comprehensive solutions. We take a comprehensive approach to creating
solutions for each client's situation -- looking at business strategy,
performance of key business processes, management methods, technology and
organizational capabilities. We believe that there is more to eBusiness
than simply installing Web sites and other information systems, and that
it takes more than technology to effect significant business improvement.
Our eBusiness solutions include enabling clients to think digitally in
order to transform their organizations into eBusinesses.
- Senior professionals. We have assembled a group of top consulting
professionals from established firms who average over twelve years of
relevant industry experience. Our professionals have expertise in
numerous industries and business processes. They bring extensive hands-on
experience and practical insight to each engagement. Because their
expertise is continually refreshed through our on-going research on
business, technology and human capital management issues, our consultants
provide the client with knowledge of current and future best practices
and leading management techniques. Most significantly from our clients'
standpoint, senior consultants interact with our clients on a day-to-day
basis.
- Speed of execution. Our methods are designed to share insights
immediately and provide measurable value quickly. Our engagements are
typically structured to provide deliverables in 15 to 90 days. Experience
and research insights enable our senior consultants to assess each
situation quickly, establish direction and formulate working analyses and
action plans at the initial stages of our engagements. We put forward our
best thinking from the beginning and bring a sense of urgency that
imparts momentum to our clients.
GROWTH STRATEGY
Concours is committed to creating an industry-leading, multinational
management and strategy consulting, research and executive education firm that
is at the leading edge of business practices and adjusts rapidly to the future
needs of a growing client base. To achieve our goal, we are pursuing the
following growth initiatives:
- Continue to evolve our services. Our core capabilities of research,
multi-client programs, mindshare marketing and a dedicated salesforce are
together designed to enable us to enhance existing consulting services
regularly, launch new consulting services and multi-client programs
opportunistically, and anticipate and meet our clients' evolving needs.
For example, in late 1998, we published a thought piece on key HR
management issues. In 1999, we created a multi-client program for senior
HR executives and conducted two research projects on organizational
issues in eBusiness. We are now expanding our consulting practice in
eBusiness compensation strategy and organizational transformation. We
will continue to use our core capabilities in this way to develop and
expand our consulting services.
- Continue geographic expansion. We believe that significant opportunities
exist for our services beyond our current locations, including serving
existing and new clients in other markets. Our multi-client and research
services enable us to enter new markets, establish relationships with
senior business and technology executives and then leverage this market
penetration to introduce and expand our other services. For example, in
1999 we began to rapidly build our subscription-based multi-client
programs and Re.sults research projects in Europe and then used this
presence to establish a consulting practice. We have opened five offices
in Europe, and more than 60 corporations have participated in our
subscription-based programs or made use of our consulting services in
Europe. Most recently, we acquired Cepro, a Swedish management consulting
firm, which increased the number of our European consulting professionals
from eight to 48.
- Continue to attract and retain highly qualified professionals. We believe
that Concours is very attractive to highly qualified professionals for a
variety of reasons. The Concours operating model enables senior
consulting professionals to focus on developing and delivering client
engagements while spending relatively little time in identifying new
prospects. Re.sults research provides our consultants with an efficient
way to develop new management techniques and consulting methods in
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conjunction with well-known academics and experienced industry
practitioners. Interaction among our senior professionals creates an
intellectually stimulating environment which promotes the continual
sharing of ideas. Our compensation structures are competitive and include
stock or options for all employees.
- Leverage Re.sults research. Because our research focuses on emerging
management and strategic issues, the Re.sults reports have extended shelf
life, and we can distribute and repurpose them to create both value to
new clients and revenue growth opportunities for Concours. We believe
there may be attractive opportunities to establish relationships with
distributors to resell the reports in areas where it does not yet make
sense to establish Concours operations, license the consulting methods
stemming from our research to other companies, or reformat research
materials as components of executive education courses, including for
delivery through distance learning as that market matures.
- Grow and leverage subscription-based multi-client programs. Our
multi-client program relationships enable us to cross-sell our services,
spurring growth of both existing and new services. Through these
programs, we have ongoing relationships with a wide range of senior
executives -- CEOs, executives responsible for eBusiness initiatives,
senior HR executives, CIOs and other general managers and executive team
members -- who are potential buyers of our consulting services. We will
continue to work aggressively to increase these relationships by growing
the membership of established programs and opportunistically launching
new ones. Our multi-client and research services provide us with an
effective method of introducing potential clients to Concours through the
initial sale of lower priced, subscription-based services.
CONCOURS GROUP SERVICES
We currently provide our clients with consulting services in eBusiness and
business strategy; eBusiness solution implementation planning and management; IT
strategy, implementation planning and management; and custom executive
education. Additionally, our subscription-based multi-client programs and
Re.sults research projects are packaged as services, generate recurring revenue
and play vital roles in business and intellectual capital development.
Consulting Services
Our consulting services enable Global 1000 and mid-size corporations to
develop and execute business strategies, especially strategies to adapt and
thrive as eBusinesses. We work with senior executives to develop business
strategies, design innovative operating models, create or re-shape
organizations, design operational and management processes, develop skills and
capabilities and create business opportunities through technological innovation.
We work with clients in situations that require experienced, knowledgeable,
senior advisors with new insights. Our capabilities encompass business strategy,
organizational effectiveness and process design -- all backed with extensive
expertise in IT and HR. Our consulting services leverage our understanding and
experience with eBusiness, as well as the future best practices developed by
Re.sults research, to provide clients with innovative approaches to solving
their eBusiness and business problems. Our methods are designed to share
insights immediately and provide measurable value quickly. We organize our
engagements around a shared focus on the client's business outcomes. Concours
consulting engagements are typically priced on a time and materials basis.
eBusiness and Business Strategy
Our strategy consulting helps clients to establish eBusiness and business
objectives, launch eBusiness initiatives, accelerate underlying business
processes, build inter-business relationships and develop technical and
organizational infrastructures for eBusinesses. Specifically, we provide
extensive consulting services in:
- Executive awareness -- creating executive team understanding of the
opportunities, pressures and threats posed by the latest business
conditions and trends.
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- Technology and industry assessment -- analyzing changing customer
expectations and behaviors, analyzing current and potential competitors,
assessing the impact of disruptive information technologies, conducting
technology and vendor scans and identifying eBusiness opportunities.
- Strategy development -- identifying the client's digital assets,
assessing channel options and conflicts, creating future scenarios of the
marketplace and competitive landscape, and developing a portfolio of
strategic initiatives.
To facilitate and structure the development and implementation of these
strategies, over the last two years we have developed from a series of Re.sults
research projects a proprietary eBusiness planning methodology called the
eBusiness Playbook(SM). The Playbook is a fast, agile strategy tool much like a
sports team's playbook. The Playbook process includes considering eBusiness
scenarios and options, focusing on desired outcomes, identifying specific
strategic moves and countermoves, committing to capability building and a
flexible game plan and executing specific moves with speed and determination.
The Playbook was developed in response to the fact that lengthy planning
processes and single-scenario strategic plans are not effective because of the
pace of change in eBusiness markets. Strategy development and deployment must be
both fast and flexible. The Playbook helps clients rapidly recognize the
developments in their industries, and then organize their eBusiness
possibilities into ambitious, focused projects with testable business outcomes.
The Playbook enables clients to set eBusiness direction, make decisions, marshal
resources and move quickly into action.
eBusiness Solutions Implementation Planning and Management
In addition to developing strategies and operating models for eBusiness, we
advise clients on the business, technology and human issues of implementation
planning and management. These consulting services include:
- Strategy deployment -- assessing the organization's readiness for
eBusiness, identifying marketplace partners for eBusiness initiatives and
implementers for eBusiness systems, establishing funding methods and
program offices for managing a portfolio of eBusiness initiatives,
developing management methods and performance metrics, coaching
executives on their roles in eBusiness leadership and assisting in the
project management of specific eBusiness initiatives.
- Organizational transformation and change management -- includes
developing organizational and operating models for eBusinesses, creating
management and organizational alignment around eBusiness initiatives,
developing role definitions, competency models and compensation plans for
eBusiness staff and implementing change management programs to transition
people and resources into their new eBusiness roles.
- Process design -- includes redesign and acceleration of supply chains and
other operational business processes to deliver goods and services at the
pace of eBusiness, as well as redesign of enterprise management processes
(such as finance and human resources) both to enable eBusiness
initiatives and to improve their efficiency through Internet-based
technology.
Information Technology Strategy, Implementation Planning and Management
Our broad expertise in IT encompasses not only technology, systems
architecture and implementation planning, but also the management processes of
strategic planning, capability development, cost management and performance
measurement. We offer a wide range of IT services for CIOs, IT organizations and
their businesses, including:
- Developing IT strategies and plans, as well as aligning IT strategies,
resources and project portfolios with the strategies and outcomes of
clients' businesses.
- Improving IT delivery processes such as systems development and customer
support.
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- Improving IT management processes such as cost and asset management,
vendor management and performance measurement.
- Improving working relationships between IT and the rest of the business,
especially with executive management.
- Assessing and developing the capabilities and business-orientation of IT
staff and designing IT organizational structures for complex and diverse
businesses.
- Developing technology architectures, selecting applications and
technologies, and selecting and managing implementation vendors.
- Accelerating key projects, such as Enterprise Resource Planning
implementations, by focusing such key projects on business results and
managing them to completion.
Custom Executive Education
All of our consulting engagements include components of executive education
and often executive coaching. In addition, we perform engagements in which the
primary deliverable is custom executive development programs and organizational
development. Our executive coaching is geared to helping individual executives
quickly adapt to changing roles and business conditions. Our custom executive
development programs are focused on the knowledge and behaviors executive teams
need to make informed and inspired decisions and to lead their organizations to
achieve their business outcomes. Our organizational development consulting
imparts specific management skills and overall organizational effectiveness. Our
action-learning approaches develop executive team understanding, alignment,
urgency, confidence and leadership. Due to market demand, much of our executive
educational emphasis today is on eBusiness markets, opportunities and transition
strategies.
Subscription-Based Multi-Client Programs
Our multi-client programs are designed to anticipate participating
executives' specific needs for information, to equip them with innovative and
useful points of view and management techniques that increase their individual
effectiveness, to develop true peer networks and to improve the alignment of
executive teams. Our objective is to assist executives to become
technology-savvy business leaders rather than technology managers. On an annual
basis, a representative program includes two or three conferences exclusively
for the participating business executives, quarterly teleconferences on
contemporary management issues and participation in two specified Re.sults
research projects. In addition, multi-client programs may include five or six
general conferences for the participating executives and their senior executive
colleagues or personal telephone consultations with our consultants.
Listed below are the three categories of multi-client programs being
offered in 2000, together with their senior executive participants. All three
categories are offered in both North America and Europe:
- CIO programs -- for Chief Information Officers;
- Business executive programs -- for Chief Executive Officers, senior HR
executives, divisional presidents, and executive team members; and
- eBusiness programs -- for senior executives responsible for eBusiness
strategy and implementation.
Conferences feature discussions led by well-known academics, experienced
industry practitioners or senior Concours consultants, and provide ample
opportunity for participants to interact with one another. Participants are
exposed to Concours content, experience the quality of our work, interact with
our senior professionals and learn about our services. Thus, the programs also
function as sources of specific business opportunities, often initiated by
clients at conferences and followed up by our dedicated salesforce after the
events.
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Memberships in the various multi-client programs are available as renewable
one-year subscriptions and may begin in any calendar month. As of March 1, 2000,
the annual subscription price for multi-client programs ranged from
approximately $24,000 to $45,000. For each of the last two years, over 75% of
our subscription-based multi-client and research program clients renewed their
subscriptions for at least one program, as adjusted for mergers and acquisitions
among clients.
Re.sults Research Projects
Our research team delivers 90-day research projects that provide innovative
management techniques, including both current and future best practices at the
intersection of business, technology and human resources management. At present,
we conduct approximately 15 Re.sults research projects per year. We strive to
provide the highest quality research product to both our clients and our
consulting practice. Clients may participate in individual research projects,
participate in all or a group of research projects on a subscription basis or
purchase the results of any completed research projects.
Each Re.sults project addresses a pressing contemporary management issue,
often one that businesses are facing for the first time. Each project typically
brings together Concours senior consultants, well-known academics, experienced
industry practitioners and approximately ten to 30 member companies with common
interests who help shape the project and share their experience. Each project
culminates in a concise, pragmatic and highly readable report addressed to
senior executives. These reports contain a combination of current and future
best practices, innovative management techniques, pragmatic action plans and
illustrative case studies.
The Re.sults process creates a series of value streams:
- Clients. For our clients, Re.sults research provides a significant head
start in resolving management issues at a fraction of the cost of
conventional consulting methods. Clients follow through with local
implementations of our recommendations on their own, or with the
assistance of Concours consultants.
- Consulting Services. For our consulting practice, Re.sults research
provides us with a stream of new points of view, frameworks and
techniques that are converted into specific tools for assessment,
decision-making and implementation within consulting engagements.
- Consulting Professionals. For our consultants, Re.sults research provides
the opportunity for regular intellectual renewal, both by participating
in research projects and by learning about and employing the research
outputs.
- Content. For our mindshare marketing, multi-client programs and executive
education services, Re.sults research provides new intellectual capital.
Re.sults research projects help build ongoing relationships with clients
and sometimes generate new business opportunities for follow-up consulting
services. They also deepen our relationships with the academics and industry
practitioners who participate in our research.
As of March 1, 2000, the price for participation in an individual research
project ranged from $5,000 to $9,750, or $19,750 for the project coupled with
on-site educational, assessment or implementation assistance. We offer a
one-year subscription program that allows a client to participate in all
projects that, as of March 1, 2000, ranged from $60,000 to $75,000 and also
includes two special member conferences. Subscriptions may begin in any calendar
month. Clients also may subscribe to groups of three to five projects. Concours'
multi-client program members may participate in individual Re.sults research
projects at a discounted rate. Companies that do not participate in a research
project can also purchase the results after a project is completed. In this
case, we bundle copies of the report with either a telephone consultation or an
on-site briefing with a Concours professional, thereby bringing extra value to
the client and creating a new business opportunity.
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From our founding in January 1997 through March 1, 2000, we have completed
38 Re.sults research projects, with seven more in development or in the sales
and marketing phase. Current projects focus on key eBusiness topics; however,
the Internet and its commercial applications have been topics from our
inception. Approximately half of our projects have been on eBusiness-related
topics. Following is a list of current and completed projects, in reverse
chronological order.
CURRENT RE.SULTS PROJECTS
- - Developing an eBusiness Scorecard
- - Electronic Supply Chain Management
- - How to Spin-off an eBusiness
- - Competitive Strategies for eBusiness
- - Electronic Customer Relationship Management
- - Making IT a Center of Business Innovation
- - A Business Performance Scorecard for HR
COMPLETED RE.SULTS PROJECTS
- - Succeeding with Shared Services
- - Application Service Providers
- - Web-Enabling Enterprise Systems
- - Succeeding as a Digiprise
- - Focusing IT Professionals on Business Results
- - The Committed and Self-Reliant Employee
- - Cutting IT Costs While Building Capability
- - Mastering Computer-Telephony Integration
- - Information-Enabled Research and Development
- - Delivering Large-Scale Systems Projects
- - Moving from eCommerce to eBusiness
- - Developing Technology Leadership at the Top
- - Managing IT Vendor and Contractor Relationships
- - Purchasing Management in the Digital Age
- - Business Systems Development in Real-Time
- - Human Resources Management in a Technology-Driven Environment
- - Mapping and Leveraging Channel Power
- - Today's Business Opportunities in Emerging Technology
- - Capitalizing on Enterprise Systems and Infrastructure
- - Transforming the Organizational Structure of IT
- - Managing and Exploiting Corporate Intranets
- - Implementing an IT Performance Scorecard
- - Inventory Management in the Digital Age
- - Developing Global Systems and Infrastructure
- - Managing the Desktop for Business Productivity
- - IT Implications of Mergers and Acquisitions
- - Managing the New Infrastructure
- - Leveraging Human Capital in IT
- - Managing Enterprise IT Assets
- - A Business Scorecard for the IT Organization
- - Security and Privacy on Public Infrastructure
- - Managing Customer Knowledge
- - Policy and Procedures Manual for Internet and Intranet Activities
- - Do's and Don'ts of Internet Commerce
- - Getting Serious about Knowledge Management
- - Mastering the Network Computer
- - Implementing Enterprise Systems
- - Applications Development in the Era of the Internet
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CLIENTS
We have a diverse base of clients in various industries, primarily
consisting of Global 1000 and mid-size corporations. From our founding through
December 31, 1999, we have performed consulting services for a total of 184
clients. As of December 31, 1999, a total of 255 clients were participants in
our subscription-based multi-client and research programs. Listed below in
alphabetical order are our top 20 consulting clients in North America during
1999, which are all located in the United States, and our top 20 clients in
North America for our subscription-based multi-client and research programs, in
each case based upon total revenue. Also listed below for 1999 are our top ten
consulting clients in Europe and our top ten clients in Europe for our
subscription-based multi-client and research programs.
TOP 20 NORTH AMERICAN
CONSULTING CLIENTS IN 1999
21st Century Insurance
Arrow Electronics, Inc.
Ashland Inc.
Ball Aerospace & Technologies Corporation
Borden Chemicals and Plastics Limited Partnership
Borg-Warner Automotive, Inc.
Cargill, Incorporated
CarrAmerica Realty Corporation
Fort James Corporation
Internal Revenue Service
International Paper Company
Lanoga Corporation
North Pacific Group, Inc.
Novartis AG
Rohm & Haas Company
Schneider Electric SA
A. Schulman, Inc.
The Thomson Corporation
The United Illuminating Company
Williams-Sonoma, Inc.
TOP 20 NORTH AMERICAN
SUBSCRIPTION-BASED PROGRAM CLIENTS IN 1999
American Greetings Corporation
CMS Energy
Cargill, Incorporated
FPL Group, Inc.
Illinois Power
Johnson & Johnson
LG&E Energy Corporation
Marriott International, Inc.
Northrop Grumman Corporation
Novartis AG
Panasonic Industrial Co.
Pfizer Inc.
Rohm & Haas Company
Royal Bank Financial Group
Schneider Electric SA
Shell Chemical Company
The Principal Financial Group
The Thomson Corporation
Unocal Corporation
Warner-Lambert Company
TOP TEN EUROPEAN
CONSULTING CLIENTS IN 1999
Association Generale des Institutions de Retraite des Cadres
Avis Europe plc
Electricite de France -- Gaz de France
Fort James Europe Limited
Ingenieur-Vertriebsburo fur EDV-Software-Technik GmbH
Internationale Nederlanden Groep (ING)
IMJV Management BV (International Music Joint Venture)
Rio Tinto plc
Societe Generale d'Entreprises
Svenska Kullager Fabriken
TOP TEN EUROPEAN
SUBSCRIPTION-BASED PROGRAM CLIENTS IN 1999
Aachener und Munchener Informatik GmbH
Cable & Wireless plc
Glaxo Wellcome plc
Internationale Nederlanden Groep (ING)
Norwich Union plc
Societe Nationale des Chemins de Fer Francais
Svenska Kullager Fabriken
Systematics AG
The Post Office (UK)
The Scottish Provident Institution (UK)
All of the clients listed above together generated over 59% of our total
revenue worldwide for 1999. In 1999, our top 20 consulting clients based on
total revenue worldwide were all North American clients and all of our top 20
clients for our subscription-based programs based on total revenue worldwide
also were North American. In 1998 and 1999, no customer accounted for more than
10% of our total revenue.
REPRESENTATIVE ENGAGEMENTS
The following case studies are representative of the type of eBusiness
assignments we undertake on behalf of our clients. In addition to profiling
engagements, these cases illustrate the strength of our operating model, how we
leverage our research work and how we blend the disciplines of IT and HR into
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eBusiness solutions. The engagements profiled represent important work recently
performed for the clients, but not all of the consulting services we performed
for them.
ENGAGEMENT ONE
Challenge: A Fortune 50 manufacturing company operating globally was
not addressing the opportunities and competitive threats
created by the digital economy. It needed both to develop
an eBusiness strategy and to mobilize its organization
around implementing that strategy.
Solution: The global CIO, a multi-client program member, brought
Concours into relationships with the CEO and executive
management team members. We first developed and delivered
a four-session custom education program, based on recent
research, for top executives on how to leverage
information technology across the business, especially in
eBusiness initiatives. Because of the success of this
custom executive education, our strategy consultants are
now key members of the CEO's eBusiness development team.
We have developed an enterprise-level eBusiness strategy
to help meet the corporation's growth ambitions, as well
as eBusiness Playbooks for multiple divisions. We are now
working with the client to identify leverageable digital
assets, structure and govern a growing portfolio of
eBusiness initiatives, develop staffing plans and
innovative compensation structures for eBusiness
initiatives and deliver management education programs
across the corporation. We have been performing
consulting services for this client since October 1997,
and we continue to perform consulting and other services
for the client.
ENGAGEMENT TWO
Challenge: The merger of two major natural resources companies drove
the need for coordinated IT, HR and eBusiness strategies
to capitalize on the merger and position the company to
compete in eBusiness markets.
Solution: Executives from both companies participated in our
multi-client programs prior to the merger. In connection
with the merger, we assisted with the consolidation of
the IT organizations and in developing an enterprise-wide
IT strategy and capability transformation plan. We also
helped reorient an Enterprise Resource Planning project
by providing project management assistance and refocusing
the project on business outcomes. We were awarded this
initial work in a competitive process over other firms
after our business development team of senior consultants
and a sales executive demonstrated the breadth of our
relevant research and experience. The Executive Vice
President of HR then selected Concours to partner in the
development of an HR strategy for eBusiness, in large
part we believe because of the mix of IT, HR and
eBusiness expertise demonstrated in our work with the new
IT organization. We are now working with the client to
deploy these strategies and to utilize eBusiness
technology and techniques to improve supply chain
performance. All of these engagements have leveraged our
latest research in eBusiness, IT and HR management. We
have been performing consulting services for this client
since August 1998, and we continue to perform consulting
and other services for the client.
ENGAGEMENT THREE
Challenge: An international manufacturer and distributor saw its
industry changing and wanted to move more aggressively
into eBusiness markets.
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Solution: The client is a multi-client program member and regular
participant in Re.sults research projects. The CIO
arranged for senior Concours consultants to brief the
executive team on eBusiness issues and the eBusiness
Playbook approach to strategy development and execution.
We then developed a Playbook with a range of specific
eBusiness initiatives, including new sales and
distribution channels, channel partner services, spin-off
opportunities and technology-enabled product design
improvements. We continue to assist with the deployment
of selected eBusiness initiatives, and we are also
working with the CIO and IT organization to enhance their
technology and organizational platform to support
eBusiness initiatives and business growth. We have been
performing consulting services for this client since
December 1997, and we continue to perform consulting and
other services for the client.
ENGAGEMENT FOUR
Challenge: A financial services company needed to revamp its IT
capabilities to support business growth targets and
enable eBusiness initiatives.
Solution: The company is a multi-client program member, and the
initial engagement came about through a long-standing
relationship between the CIO and members of our
salesforce. Leveraging the content of one of our
mindshare marketing thought pieces, we first helped the
CIO and IT management team to frame the issues and
challenges they faced. The CIO then engaged us to assist
with the transformation of the IT organization, starting
with changing the project mix to focus on projects with
greater business impact. This work also included
improving IT delivery processes, cost structures,
performance measurement, skills levels and mix, staff
retention rate and customer satisfaction. Based on the
success of this work, we are now assisting the business
management team with the conception and development of
eBusiness initiatives. This includes both conducting
custom executive education and designing the operating
model and marketplace partner strategy for an eBusiness
spin-off that will be in competition with the parent
company. We have been performing consulting services for
this client since August 1997, and we continue to perform
consulting and other services for the client.
SALES AND MARKETING
Our sales and marketing strategy has two primary components: a dedicated
salesforce and our mindshare marketing program. The sales efforts of our
salesforce in the United States are supported by a team of telemarketers. As of
March 1, 2000, our salesforce consisted of 19 dedicated sales executives, and we
had a team of three telemarketing professionals. Seven of these sales executives
are based in Europe.
Our sales executives make calls on executives at companies that are not yet
clients as well as help maintain access to and relationships with past and
present clients. We primarily focus the efforts of our dedicated salesforce on
CEOs or other senior executives. Our sales executives pursue opportunities
generated through the multi-client programs and Re.sults research projects,
through responses to our mindshare marketing thought pieces and through
referrals. Our salesforce represents the full range of our services and also
cross-sells our services to existing clients. After a sales executive identifies
a prospect for consulting services, an appropriate consultant is typically
brought in to meet with the prospect and convert the prospect into an actual
engagement. Our salesforce is compensated with a combination of a base salary
and incentive compensation.
Each telemarketer is assigned two or three sales executives to support in
their sales efforts. The telemarketers typically start the sales process through
use of our extensive database, in which client contacts and marketing and
business development opportunities are maintained. This central database can
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be used to track new opportunities as well as current client status.
Telemarketers call to set up appointments for the sales executives, as well as
to probe for the client's or potential client's needs and generate interest in
our services. Telemarketers receive a base salary plus incentive compensation
for appointments that actually result in meetings. Our dedicated salesforce and
our team of telemarketers allow our consultants to focus on providing advice to
clients and converting prospects into actual engagements instead of prospecting
for new business themselves.
The second primary component of our sales and marketing strategy is our
executive mindshare marketing program. At the center of this program are thought
piece documents on contemporary management issues, which we periodically
distribute free of charge to over 15,000 executives. These thought pieces
represent the latest perspectives from our Re.sults research and consulting
field experience and are written by senior Concours professionals. Our strategy
is to share selected intellectual capital in order to capture the attention and
interest of key executives. These thought pieces typically do not directly
market our services by soliciting participation in our programs or research or
use of our consulting services. Our mindshare marketing program also helps build
our marketplace identity through brand name recognition.
To bolster the sales and marketing efforts by our salesforce and
telemarketers and mindshare marketing program, we employ other market
development efforts designed to build Concours' brand name and recognition in
the marketplace. For example, we use direct mail to invite targeted executives
to participate in specific Concours conferences as our guests. We also send
targeted executives thought pieces of likely interest together with direct
solicitations to participate in related multi-client programs or research or to
use our consulting services. Additionally, our sales and marketing efforts
include seminars and briefings that target senior executives, public speaking
opportunities, speaking opportunities at industry conferences, public relations
programs with industry analysts and press and use of our Web site.
INTELLECTUAL CAPITAL
Consulting, research and executive education are knowledge-intensive
activities. In the past, the ability to acquire and transfer knowledge from
accumulated experience was enough to attract and serve clients. Today, the
amount of electronically available information is enormous and the proprietary
life of knowledge is rapidly shrinking. Therefore, we continuously seek to
identify, incorporate and disseminate new intellectual capital, and to keep
abreast of business, technology and HR issues and trends. We utilize our
accumulated knowledge and experience to develop innovative solutions for our
clients and to provide them with what we believe are the latest and best
management and strategy techniques available.
Intellectual capital is generated by our employees, advisory board members
and other third-party participants in our multi-client programs and research
projects, as well as by our client engagements. Our Re.sults research projects
generate a large amount of forward-looking intellectual capital to which we
retain ownership, including the ability to sell and license the material
elsewhere. We have developed relationships with well-known academics,
experienced industry practitioners and independent management consultants. These
experts lead discussions at our conferences, participate in our research
projects and, on occasion, participate in client engagements.
Intellectual Property
We consider as our intellectual property our research reports, educational
materials and publications, as well as all reusable methodologies, techniques
and expertise developed through our research, consulting engagements and other
activities. We believe that this intellectual property has significant and
ongoing value, but we also believe in the need to constantly update our
intellectual capital and develop new intellectual capital to stay ahead of
business trends, meet the needs of our clients today and anticipate their future
needs. We also believe that the skills and processes through which our employees
develop new intellectual capital are also valuable.
We rely on a combination of trademark, service mark, copyright and trade
secret laws to protect our intellectual property. We enter into confidentiality
and non-compete agreements with our employees. We
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rely on our clients to respect the copyright on our materials, to limit
distribution of our materials to within their organizations and to use the
intellectual capital we provide for their internal business purposes only. Our
clients are not required to enter into any contractual obligations with respect
to their use of our intellectual property. In addition, we use our best efforts
to limit access to, or distribution of, all confidential information generated
in the course of our business or disclosed to us by clients or others.
We have obtained United States registrations for the marks The Concours
Group(R), The IT Concours(R), The Senior Executive Concours(R) and Re.sults(R).
We have also applied for the marks eConcours(SM), Human Resources Concours(SM)
and eBusiness Playbook(SM). Each trademark, trade name or service mark of any
other company appearing in this prospectus belongs to its holder.
We are also the owner of European Community Trademark registrations for the
marks The Concours Group(R), Re.sults(R), The IT Concours(R) and The Senior
Executive Concours(R) and have pending European Community Trademark applications
for the marks eConcours(SM) and Human Resources Concours(SM). The European
Community Trademark provides protection in the United Kingdom, Austria, France,
Germany, Belgium, Luxembourg, the Netherlands, Spain, Portugal, Italy, Greece,
Denmark, Finland, Sweden and Ireland.
Additionally, we are the owner of a Mexican trademark registration for the
mark The Concours Group(R) and have pending applications in Mexico for
eConcours(SM) and Human Resources Concours(SM).
Currently, we are evaluating a possible opposition to a United States
Intent-to-Use Service Mark Application for Business Playbook based on our prior
use of the mark eBusiness Playbook. As of this date, no determination has been
made on whether we will proceed with the opposition.
We pursue the protection of our trademarks in the United States and several
foreign jurisdictions. Policing unauthorized use of our copyrighted material and
marks is difficult and expensive. Our efforts to project our intellectual
property rights could be inadequate to deter misappropriation of our
intellectual property. In addition, it is possible that our competitors will
adopt product or service names similar to ours, thereby impeding our ability to
build brand identity and possibly leading to customer confusion. Our competitors
also may independently develop similar methodologies, techniques, and expertise,
and we would have no claim against them. We may be subject to legal proceedings
and claims from time to time relating to the intellectual property of others in
the ordinary course of our business. We may incur substantial expenses in
defending against these third-party infringement claims, regardless of their
merit.
Knowledge Management
Our internal Web site, operated on a secure server, functions as the
central repository for our intellectual capital, including research products,
consulting proposals and work products, conference agendas and presentations and
a variety of other information such as audio archives of important
teleconferences. The site also contains employee directories and other
administrative information and tools.
We also maintain a public Web site, which serves as a guide to Concours and
our services such as upcoming multi-client events and past, present and future
research projects. It includes facilities for clients to view meeting agendas,
preview venues and register for conferences, as well as to request copies of
thought pieces and other documents. Accessible via the public Web site are
password-protected members-only areas associated with each Re.sults research
project that contain documents and a bulletin board for posting questions and
discussing issues.
Our own research on knowledge management teaches us that technological
tools for organizing information are essential -- but not sufficient -- to reach
the goal of knowledge sharing. Knowledge is shared best when knowledgeable
people are in direct contact with one another. Thus, we place great emphasis on
tracking who among our consultants and researchers has what expertise, on
polling the "wisdom of Concours" to make rapid contact with a range of
expertise, on sharing wisdom and experience whenever asked and on using Re.sults
research projects as vehicles for developing and packaging new knowledge.
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Advisory Board
We have developed relationships with some well-known academics, industry
practitioners and independent management consultants. Several of them have an
ongoing affiliation with us as members of our advisory board. This affiliation
is outlined in simple letters of agreement. These letters do not require
specific duties of advisors, but they may include:
- fees paid for participating in Concours events;
- fees paid for contributing to research projects;
- referral fees and commissions paid to advisory board members for
introducing non-clients to Concours; and
- the terms of any stock options granted them.
Advisory board members work with us in various ways including: leading
discussions at multi-client program conferences, participating in Re.sults
research projects, referring consulting or other business to Concours and
sometimes participating in consulting engagements and executive education
programs. We also look to advisory board members individually or collectively
for specific advice, for example, on issues to explore and companies to study in
upcoming research projects. Most members of the advisory board receive stock
options which vest over time as consideration for joining the advisory board and
are reimbursed for their travel expenses.
Advisory board affiliation is of indefinite duration and either party may
terminate it at any time. The arrangement is non-exclusive. Members of the
advisory board are stockholders and/or optionholders. The advisory board
currently consists of:
Judy Bardwick is a clinical Professor of Psychiatry at the University
of California at San Diego and an international management consultant with
San Diego-based Bardwick and Associates. Professor Bardwick has authored
over 100 papers, articles and books, including Danger in the Comfort Zone
and In Praise of Good Business. She is a fellow of the American
Psychological Association and the Society of Fellows at the University of
Michigan.
Marvin Bressler is Professor of Sociology, Emeritus, and Roger
Williams Straus Professor of the Social Sciences, Emeritus, at Princeton
University, where for over 20 years he was chair of the Sociology
Department. He is a recognized authority on the social aspects of
education, is a frequent contributor to professional journals and is the
author or co-author of seven books, including Quality and Equality in
Education, Evaluation of the Effectiveness of Educational Systems and
Student Activism: The Active Decades.
James Cash is the James E. Robison Professor of Business
Administration at Harvard Business School, where he served as Chairman of
the MBA Program from 1992 to 1995 during the redesign of the MBA Program.
He is currently researching the prevalence of information technology at the
individual, organizational and inter-organizational/industrial levels in
service organizations.
Eric Clemons is Professor of Operations and Information Management at
The Wharton School. He has a total of 22 years of experience on the
faculties of The Wharton School, Cornell University and Harvard Business
School. Professor Clemons is a specialist in channel strategy and the
competitive application of information technology. He is a member of the
editorial board of the Journal of Management Information Systems and the
Journal of Electronic Commerce.
Peter Cochrane is the Chief Technologist for British Telecom and
consultant to a broad range of international companies, as well as a
renowned writer, broadcaster and educator. For the past decade he has been
involved with business and market transformation through technology
businesses in the .com space. In 1999, he was appointed to the Collier
Chair in the Public Understanding of Science and Technology at Bristol
University, United Kingdom.
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Debra Engel acts as director, angel investor and adviser to a number
of companies in Silicon Valley. Ms. Engel serves on the Board of Directors
for Aspect Communications, is Chair of the Board of Directors for ON-SITE
Dental Care and is also on the advisory boards for Icarian Corporation,
Hire Systems, Beyondwork and Decisis. From November 1983 through August
1998, Ms. Engel was with 3Com where she last served as Senior Vice
President for Corporate Services. Prior to joining 3Com, she served as
Staffing Manager for Hewlett Packard.
Mark Millemann, founder of Millemann & Associates, a management
consulting firm based in Portland, Oregon, has extensive experience as a
consultant to CEOs and executive teams of major global corporations. He
specializes in counseling senior executives, individually and as teams, to
understand and adjust their roles, effectiveness, and communication and
leadership styles. He is a regular lecturer at executive conferences, and
his recent publications focus on what it takes to lead sustainable
transformational change.
F. E. "Pete" Peterson is the retired senior vice president of human
resources for Hewlett-Packard Company, where he had worldwide
responsibility for HR activities including staffing, diversity,
compensation, and HR information systems. He has served on the boards or
advisory committees of several national associations and HR-related
start-up companies and is a Fellow of the National Academy of Human
Resource Management.
Kevin Sullivan is an investor with the Angels Forum LLC and a
consultant in Silicon Valley. He has been a senior executive in human
resources for nearly 30 years, most recently as executive vice president at
Wells Fargo Bank, and before that senior vice president of HR at Apple
Computer. He has been a member of the Board of Directors of Silicon Valley
Joint Ventures and Inroads of Northern California and is currently a member
of the Advisory Boards of Decisis and Icarian Software.
Dave Ulrich, Professor of Business Administration at the University of
Michigan Business School, is on the core faculty of the Michigan Executive
Program and co-director of the Michigan Human Resource Executive Program
and Advanced Human Resource Executive Program. He is co-author of
Organizational Capability, The Boundaryless Organization, Human Resource
Champions, and most recently, Results-Based Leadership.
James Wetherbe is the FedEx Professor of Excellence and Director of
the Center for Cycle Time Research at the University of Memphis, as well as
Professor of MIS at the University of Minnesota. He is a leading authority
on the use of computers and information systems to improve organizational
performance and competitiveness. He is the author of 17 books and over 200
articles.
Well-known academics and experienced industry practitioners
A variety of other academics, industry practitioners and independent
consultants work with us periodically as discussion leaders at multi-client
program conferences or as participants in Re.sults research projects. These
people are engaged on a time-and-materials basis through oral or written
agreements either directly or with their respective agents or representatives.
Their relationships with Concours are non-exclusive, and their participation in
one program or project does not mean that they will participate in any future
programs or projects. Well-known academics and experienced industry
practitioners that have participated in multi-client programs to date include:
Jim Champy serves as Chairman, Perot Systems Consulting Practice, and
is the author of Reengineering the Corporation and Reengineering
Management.
Jim Collins is author of the best seller Built to Last and a
management educator and consultant.
Clayton Christensen is a Professor at Harvard Business School and
author of The Innovator's Dilemma: When New Technologies Cause Great Firms
to Fail.
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Peter Drucker has been called the father of modern management and is
the author of thirty-one books ranging from The End of Economic Man,
published in 1938, to his most recent work entitled, Management Challenges
for the 21st Century, published in 1999.
Bran Ferren is a nationally recognized, award winning
designer/technologist working in theater, film special effects, product
design, architecture and the sciences.
Lynda Gratton is a Professor of Organizational Behavior at London
Business School and Dean of its MBA program. She also directs the school's
Executive Human Resource Strategy Program.
Nicholas Negroponte is the founder and Director of the Media
Laboratory at Massachusetts Institute of Technology, an interdisciplinary,
multi-million dollar research center of intellectual and technological
resources focusing exclusively on the study and experimentation of future
forms of human and machine communication.
Lester Thurow has been a Professor of Management and Economics at
Massachusetts Institute of Technology since 1968.
PEOPLE AND CULTURE
We have grown from 45 people at the end of 1997 to 108 people at the end of
1999. As of March 1, 2000, we had a total of 165 employees, of which 46 are
employees of our newly acquired European subsidiary, Cepro. Of the 119 Concours
employees, which does not include Cepro employees, 45 were consulting
professionals with eight of these professionals based in Europe, 17 were
directly responsible for our multi-client or research programs, 22 were involved
in sales and marketing and 35 were involved in management and administrative,
human resources, finance, accounting, legal, information systems and
administrative functions. Of the 46 Cepro employees, 40 are consulting
professionals and six are involved in administrative functions.
Culture
Our core values include collaboration, client-focus, speed of results,
excellence in our outputs and straightforward communication. Our culture,
however, is not homogenous. We accommodate cultural, as well as operational,
variations across our business. We believe that high performance comes from
people who feel that they are at the front lines of their business, rather than
performing secondary duties. Thus, we strive to make all employees feel that
they are on the front lines of their respective endeavors, and to have them
exercise correspondingly high degrees of accountability.
Cultural accommodation is essential to our acquisition philosophy. An
acquisition is assimilated by linking the acquired entity to our client
relationship and intellectual capital development activities, making use of
firm-wide communications infrastructure (e-mail, voicemail, Web site), and
adopting the common information systems for firm-wide functions such as
financial reporting. Our philosophy is to otherwise leave an acquired company
operationally and culturally intact, so that its staff can remain on the front
lines in its industry. We work together on a day-to-day basis in two ways: in
the context of client engagements that draw upon expertise from multiple parts
of Concours, and through participation in our core research and multi-client
activities.
Recruiting Senior Professionals
We attract and employ experienced professionals with strong track records
of individual accomplishment. Our consulting and research professionals have an
average of over twelve years of relevant industry experience. We believe we
excel in complex business and technology environments primarily because of the
quality and experience of our consultants and our extensive research activity.
We believe our success will depend on our ability to continue to attract, retain
and motivate new and existing senior professionals. In 2000, we intend to expand
our recruiting activities for consulting and research professionals to include
on-campus recruitment of MBA candidates with approximately five to ten years of
relevant industry experience.
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Retention
There is significant competition for employees with the skills required to
perform the services we offer. We believe that we have been successful in our
efforts to retain employees because of our emphasis on continued professional
development as well as financial rewards and incentives.
Compensation
Our compensation programs have been structured to attract and retain highly
skilled professionals. We compensate our employees through a combination of
regular cash compensation, performance-based cash incentive compensation and
participation in our stock option incentive plans. We believe our compensation
programs are competitive.
Employee Relations
Our employees are not represented by any union or collective bargaining
arrangement and are retained on an at-will basis. However, the regulations of
certain European countries in which we operate, including Sweden, may make it
difficult for us to terminate certain of those at-will employees. In addition,
those regulations govern the amount of vacation time that must be given to
employees, which is significantly more vacation than in the United States.
Concours considers its relations with employees to be good.
ACQUISITION PHILOSOPHY
From time to time, we will seek strategic acquisitions to further
accelerate our growth. We evaluate potential acquisitions based on strategic and
geographical fit. Our acquisition focus is on consulting or product firms with
complementary services, similar values and characteristics, and whose services
are or will be bought by our existing clients. Our philosophy is to acquire
quality firms and leave their cultures intact, but then link them to our core
capabilities to provide new business opportunities, relationships and practice
ideas to drive their growth beyond their historical growth rate. We expect to
drive additional revenue by cross-marketing into each other's customer base.
On February 29, 2000, we acquired Cepro, a Swedish management consulting
firm that currently services the Swedish market. See "Related Transactions and
Recent Acquisition" for a more detailed description of this acquisition. On
November 18, 1999, we acquired Inforesma, a Swedish provider of
subscription-based multi-client programs. The purchase price for Inforesma was
approximately $118,000 in cash and the issuance of 25,000 shares of our common
stock.
COMPETITION
The pace of business and technological change, the variety of consulting
firms and their offerings and the low barriers to entry for Internet
professional services and other specialist firms together make for a very
dynamic and competitive marketplace.
Our consulting services compete with:
- traditional "big 5" consulting firms and large systems integrators such
as Computer Sciences Corporation and Electronic Data Systems Corporation
in the areas of business systems strategy, eBusiness application design
and deployment and consulting services to CIOs and IT organizations;
- general management and strategy consulting firms such as Bain & Company,
Booz-Allen & Hamilton, Inc., The Boston Consulting Group and McKinsey &
Company in the areas of business strategy, business model design and
executive team counseling;
- Internet professional services firms such as Diamond Technology Partners,
Incorporated and eBusiness implementation firms such as Sapient
Corporation, Scient Corporation and Viant Corporation which also provide
eBusiness strategy and business model design services;
- internal strategy and IT departments of potential clients;
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<PAGE> 56
- Internet professional services groups of large technology companies such
as International Business Machines Corporation and Oracle Corporation;
and
- small specialty firms in both North America and Europe.
Many of our competitors have longer operating histories, larger client
bases, greater brand recognition and significantly greater financial, technical,
marketing and public relations resources than we do. Greater resources may
enable a competitor to respond more quickly to new or emerging technologies and
changes in customer requirements and to devote greater resources to the
development, promotion and sale of its products and services than we do. In
addition, the lack of any significant barriers to entry into this market permits
new market entrants that further intensify competition.
We believe that what clients look for in a management and strategy
consulting firm today include:
- focus on the client's specific needs;
- eBusiness experience and expertise;
- industry, business process and general business expertise;
- business model as well as technical architecture and information systems
design skills;
- project management and change management skills;
- speed of delivery; and
- objectivity of advice provided.
Additional competitive factors in our industry, some of which are beyond
our control, include: the ability of our competitors to hire, retain and
motivate experienced consulting professionals, the effectiveness of marketing
and sales, the ability to develop and sustain long-term client relationships,
the ability to adjust and, when necessary, reinvent our services in the face of
client and industry change and the price at which competitors offer comparable
services.
Our multi-client programs and research projects compete with the Corporate
Executive Board Company and other executive education services and research
firms. Competitive factors in these markets include breadth of subject matter
coverage, quality of programming and events, and levels of both innovation and
practicality in research findings and recommendations.
We believe that we presently compete effectively on all these levels, but
we may be unable to compete effectively in the future due to the evolution of
the market for our services. In addition, some of our competitors may develop
superior services that have greater customer acceptance than the services we
offer.
DESCRIPTION OF FACILITIES
Our headquarters are located in a leased facility in Kingwood, Texas
consisting of approximately 5,970 square feet of office space pursuant to a
lease expiring in September 2002. We also have leased office space in Cambridge,
Massachusetts, consisting of approximately 2,810 square feet, pursuant to a
lease expiring May 2000. We also lease office facilities in Amsterdam,
Gothenburg (Sweden), London, Munich and Paris on a variety of lease terms
ranging from month-to-month to eight years. In 1999, our total lease expense was
$341,000. We plan to continue to occupy the offices of Cepro in Stockholm,
pursuant to a lease expiring September 2004, covering approximately 15,580
square feet at an annual rate of approximately $371,000. We currently do not own
any real property.
We anticipate that additional office space, as well as a replacement for
the current Cambridge, Massachusetts location will be required as business
expands. We believe that we will be able to obtain suitable space as needed.
LEGAL PROCEEDINGS
From time to time, we may be involved in litigation incidental to the
conduct of our business. We are currently not a party to any material legal
proceedings.
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<PAGE> 57
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The executive officers, directors and persons chosen to be directors of
Concours are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Ronald P. Christman............ 60 Chairman of the Board, Chief Executive Officer and
President
Tamara J. Erickson............. 45 President -- Consulting
Lynn D. Keehan................. 49 Executive Vice President and Director
Nicholas P. Vitalari........... 46 Executive Vice President and Director
Jeffrey J. Weiner.............. 44 Chief Financial Officer
Debra Engel.................... 47 Person chosen to be a Director
Hans G. Lindroth............... 41 Director
Barry Romeril.................. 56 Person chosen to be a Director
Leonard J. Sokolow............. 43 Director
Fredrik Wallenberg............. 32 Director
</TABLE>
Ronald P. Christman, Ph.D. is the founder, Chairman of the Board, Chief
Executive Officer and President of Concours. Dr. Christman has served in such
positions and as a director on the Board of Directors since Concours' founding
in January 1997. From February 1986 through November 1996, Dr. Christman served
as President of CSC Index Research/Advisory Services, where he was responsible
for its research and development, marketing and multi-client services. Dr.
Christman received his Ph.D. in Nuclear Science from North Carolina State
University in 1966 after receiving his Bachelor of Science in Physics in 1962
from Randolph Macon College in Ashland, Virginia.
Debra Engel has been elected by the stockholders to become a director on
March 18, 2000. She is a director, investor and advisor to a number of
organizations in Silicon Valley. She serves on the Board of Directors for Aspect
Communications and Beyondwork and is the Chairwoman of the Board of Directors
for ON-SITE Dental Care. She is on the Advisory Boards for Icarian Corporation,
Hire Systems and Decisis. She also serves the nonprofit community as a member of
the Board of Directors for the Community Foundation of Silicon Valley, the
Center for Excellence in Nonprofits and the Center for Innovation at Foothill
College. She is a Senior Fellow and an executive committee member of the Board
of Directors for the American Leadership Forum, is the Advisory Board Co-chair
and past Chairwoman of the Board of Directors for the Career Action Center, and
is an Executive Fellow for the Center of Technology and Innovation at Santa
Clara University. From November 1983 through August 1998, Ms. Engel was with
3Com Corporation, an electronic connectivity and networking systems company,
where she last served as Senior Vice President for Corporate Services. Prior to
joining 3Com, she served as Hewlett Packard's Corporate Staffing Manager and as
Personnel Manager for its Avondale Division. Ms. Engel holds a Master of Science
degree in Industrial Relations from Iowa State University which she received in
1976 and a Bachelor of Science degree in Psychology from Iowa State University
which she received in 1973.
Tamara J. Erickson is President -- Consulting, a position she has held
since November 1998. From October 1997 through November 1998, she was an
independent consultant with Black Brook Partners, a strategy consulting firm.
From April 1996 through September 1997, Ms. Erickson was Managing Partner, North
America for PA Consulting, a management consulting firm. She spent 19 years,
from 1977 through April 1996, with Arthur D. Little, Inc., her latest position
being Chairwoman of Innovation Associates and Senior Vice President. She also
served from 1991 to 1995, as Managing Director of Arthur D. Little's management
consulting business in the United States and Canada, including consulting
services in the areas of strategy, organization, information systems and
operations management. Ms. Erickson is a director of PerkinElmer, Inc., where
she is a member of the audit, governance and compensation committees. Ms.
Erickson is the co-author of the book, Third Generation R&D: Managing
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<PAGE> 58
the Link to Corporate Strategy, published in April 1991 by Harvard Business
School Press. She received a Bachelor of Arts in Biological Sciences from the
University of Chicago in 1976 and a M.B.A. from the Harvard Graduate School of
Business Administration in 1978.
Lynn D. Keehan, Ph.D. is a co-founder and Executive Vice President of
Concours, a position she has held since January 1997. From January 1997 until
March 18, 2000, Dr. Keehan also served Concours as a director. From March 1985
through October 1996, Dr. Keehan was part of Dr. Christman's team at CSC Index
Research/Advisory Services, where she last served as Senior Vice President.
Previously, Dr. Keehan spent ten years in Washington, D.C. with The Urban
Institute, the United States Department of Energy and the Alliance To Save
Energy, managing interdisciplinary research projects. She left Washington, D.C.
in 1982 to co-found a small Boston-based consulting firm, which was acquired by
CSC Index. Dr. Keehan received a Bachelor of Arts in Psychology from the
University of Connecticut in 1971 and completed her Ph.D. in Psychology from The
George Washington University in 1976. Dr. Keehan will be resigning from the
board of directors of Concours, effective March 18, 2000.
Hans G. Lindroth has served as a director of Concours since August 1998. He
currently serves as a Vice President of Lingfield AB, a Swedish venture capital
firm that is an affiliate of Infologix. Prior to joining Lingfield AB in October
1999, he was an officer of Lemshaga Consulting AB, a Swedish consulting firm.
From 1990 to 1998, Mr. Lindroth held a variety of senior management positions
with Marieberg AB, a large newspaper publishing enterprise in Scandinavia. Mr.
Lindroth is currently a director of Saztec Inc., a Nasdaq listed information
conversion company. Mr. Lindroth is a frequent speaker at Internet-related
seminars in Europe. Mr. Lindroth graduated from the University of Stockholm with
a Bachelor of Teaching degree in 1985, and received a Master of Political
Science degree from the University of Linkoping in 1986.
Barry Romeril has been elected by the stockholders to become a director
effective as of March 18, 2000, and is a director, Vice Chairman and Chief
Financial Officer of Xerox Corporation, a position he has held since 1998. He
has been employed at Xerox Corporation since 1993 in a variety of positions. He
also serves as a director of Fuji Xerox, a joint venture company between Xerox
Corporation and Fuji Photo. Before joining Xerox, Mr. Romeril was a director for
British Telecommunications Plc. In addition to his duties on the Board of
Directors at Xerox, Mr. Romeril serves as a director of Billiton Plc, a major
multi-national mining company, and Ebony & Gold Ventures, Inc., an investment
corporation. Mr. Romeril is a member of the Council of Financial Executives of
The Conference Board, a New York-based worldwide business organization. He is
also a Board member of the Private Sector Council, a Washington-based
organization of U.S. companies that make recommendations on improving government
efficiency. Mr. Romeril, a British citizen, graduated from Oxford University in
1966 with an honors degree in Politics, Philosophy and Economics. He is also a
Certified Accountant and a Fellow of the Association of Corporate Treasurers.
Leonard J. Sokolow has been a director of Concours since March 1997. He has
been Chief Executive Officer and Vice Chairman of vFinance.com, Inc., an
Internet-based financial opportunity exchange, since November 1999. Since
September 1996, he has been: President of Union Atlantic LC, a merchant banking
and strategic consulting firm which is a wholly-owned subsidiary of
vFinance.com, and President of Genesis Partners, Inc., a private financial
business consulting firm. He was Chairman and Chief Executive Officer of the
Americas Growth Fund, Inc., from August 1994 to December 1998. He currently
serves as a director of Catalina Lighting, Inc., Advanced Electronics Support
Products, Inc., and Ezcony Interamerica, Inc. Mr. Sokolow is a licensed attorney
and C.P.A. in the state of Florida and received a graduate degree in taxation
from the New York University Graduate School in 1982, a J.D. degree from the
University of Florida School of Law in 1980 and a B.A. degree in Economics and
Accounting from the University of Florida in 1977.
Nicholas P. Vitalari, Ph.D. is a co-founder, director and Executive Vice
President of Concours, positions he has held since January 1997. From April 1990
through November 1996, Dr. Vitalari was with CSC Index Research/Advisory
Services where he last served as Senior Vice President and Global Practice
Leader. During the 1980's, he co-founded Project NOAH, a National Science
Foundation project funded to assess the impact of microcomputers and information
services on business. Dr. Vitalari has consulted
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with various Fortune 500 companies on eBusiness strategy, the strategic use of
IT, fast-cycle time to market methods, transformation of the IT organization and
the use of IT to increase corporate agility. Dr. Vitalari is a former professor
of management and computer science at the University of California (Irvine)
Graduate School of Management. He holds a Ph.D. in MIS and a M.B.A. in
Quantitative Methods from the University of Minnesota, which he earned in 1981
and 1977, respectively. Dr. Vitalari received a Bachelor of Science in Business
Administration from Marquette University in 1975.
Fredrik Wallenberg has been a director since February 1997. Mr. Wallenberg
will be resigning from the board effective March 18, 2000. Mr. Wallenberg served
as Vice President of Travelogix, Inc., a travel management software company,
from August 1996 to July 1999. Before joining Travelogix, Mr. Wallenberg held
several positions. He was employed as a consultant for Tallard BV, an investment
company, from September 1995 to July 1996. Prior to his employment at Tallard,
Mr. Wallenberg worked as a stockbroker for Citicorp Chile S.A. from December
1994 to June 1995. While at Citicorp, Mr. Wallenberg was responsible for
developing a new computer program which tracked stockbroker operations. Mr.
Wallenberg currently serves on the Board of Playnet, Inc., PaperSoft, Inc. and
Zibex, Inc. He holds a B.A. in Economics and a Masters Degree in Business and
Economics with honors from the Stockholm School of Economics.
Jeffrey J. Weiner has served as Chief Financial Officer of Concours since
October 1998 when he joined Concours. From September 1991 to January 1998, He
served as Vice President -- Finance of BSG Corporation, an IT company
specializing in custom development of client-server based information systems.
Previously, Mr. Weiner served in various financial positions with Anadril
Schlumberger and Schlumberger Limited and was in the New York City office of the
accounting firm Price Waterhouse for five years, where he last served in the
position of Senior Auditor. He has been a Certified Public Accountant since
1983. Mr. Weiner received a M.B.A. in International Finance from St. John's
University, New York, New York in 1986, and his B.B.A. in Accounting from
Bernard M. Baruch College, City University of New York in 1978.
BOARD OF DIRECTORS
We currently have authorized seven directors. The board of directors is
divided into three classes: Class I, whose term will expire at the annual
meeting of the stockholders to be held in 2001; Class II, whose term will expire
at the annual meeting of the stockholders to be held in 2002; and Class III,
whose term will expire at the annual meeting of stockholders to be held in 2003.
At each annual meeting of stockholders after the initial classification, each
elected director will serve from the time of his election and qualification
until the third annual meeting following his election. This classification of
the board of directors may have the effect of delaying or preventing changes in
control of the management of Concours. All of our officers serve at the
discretion of the board of directors. There are no family relationships among
the directors and officers of Concours.
Dr. Keehan and Mr. Wallenberg resigned from the board of directors
effective March 18, 2000, and Mr. Romeril and Ms. Engel were elected in their
place as independent directors, and we also established an audit committee upon
which both serve. The board of directors also classified itself as follows: the
Class I directors are Mr. Sokolow and Dr. Vitalari; the Class II directors are
Mr. Romeril and Ms. Engel; and the current Class III directors are Dr. Christman
and Mr. Lindroth.
Committees of the Board
The board of directors has established the following standing committees:
audit, nominating and compensation committees.
Audit Committee. The audit committee will be comprised entirely of
non-employee directors. Effective March 18, 2000, Ms. Engel and Messrs. Romeril
and Sokolow were appointed to the audit committee, and Mr. Romeril was named
chairman. The audit committee reviews the preparation of and the scope of the
audit of our annual consolidated financial statements, reviews drafts of such
statements, makes recommendations as to the engagement and fees of the
independent auditors, and monitors the
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functioning of our accounting and internal control systems by meeting with
representatives of management and the independent auditors. This committee has
direct access to the independent auditors and counsel to Concours and performs
such other duties relating to the maintenance of the proper books of account and
records of Concours and other matters as the board of directors may assign from
time to time. Additionally, in order to maintain listing on Nasdaq, Concours
will be required to maintain an audit committee consisting of at least three
independent directors. Independent directors are persons who are, among other
things, neither officers nor employees of Concours or its subsidiaries or any
other person who has a relationship with any person or entity which, in the
opinion of the board of directors, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a director.
Nominating Committee. The nominating committee reviews the performance of
directors and recommends persons to be management's nominees for directorships.
The nominating committee may consider nominees recommended by stockholders, upon
timely, written request by a stockholder addressed to any member of the
committee. Dr. Christman and Mr. Lindroth are the members of the nominating
committee. Effective March 18, 2000, the board of directors has appointed Ms.
Engel as an additional member of the nominating committee.
Compensation Committee. Until March 17, 2000, the compensation committee
had been comprised of Messrs. Sokolow and Wallenberg. Effective March 18, 2000,
the compensation committee will consist of Dr. Christman, Ms. Engel and Mr.
Sokolow. Ms. Engel will be the chair of the committee. The compensation
committee has sole authority to administer our stock option plans, although it
has no discretion as to the award of stock options under the 2000 Director Stock
Option Plan. The compensation committee also reviews and makes recommendations
regarding the compensation levels of the company's executive officers. Dr.
Christman's salary was set by the compensation committee in February 1997, and
has remained at that level since that time.
MEETINGS OF THE BOARD OF DIRECTORS
During 1999, the board of directors met on two occasions. All of the
directors attended. There were no meetings of the committees of the board, as
they acted by written consent.
COMPENSATION OF DIRECTORS
Directors who are also employees of Concours receive no additional
compensation for their services as directors. Directors who are not employees of
Concours receive no fees for attendance in person at meetings of the board of
directors or committees of the board of directors, but are reimbursed for travel
expenses and other out-of-pocket costs incurred in connection with the
attendance at Board meetings. Mr. Romeril, Ms. Engel, Mr. Lindroth and Mr.
Sokolow, in consideration for their service on the board of directors, will each
receive 15,000 options to purchase shares of common stock on March 18, 2000,
which will vest over three years with one-third vesting upon each anniversary
date of the grant until fully vested. In addition, Ms. Engel received 5,000
options to purchase shares of common stock on March 14, 2000, in consideration
for her service to date on the advisory board. See "-- Director Stock Option
Plan."
The Delaware General Corporation Law provides that a company may indemnify
its directors and officers as to certain liabilities. Our certificate of
incorporation and bylaws provide for the indemnification of our directors and
officers to the fullest extent permitted by law. The effect of such provisions
is to indemnify our directors and officers against all costs, expenses and
liabilities incurred by them in connection with any action, suit or proceeding
in which they are involved by reason of their affiliation with Concours. The
directors will not be liable for monetary damages to Concours or our
stockholders except for those arising from:
- any breach of a director's duty of loyalty to Concours or its
stockholders;
- acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
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- unlawful payments of dividends or unlawful stock repurchases or
redemptions; or
- any transaction from which the director derives any improper personal
benefit.
We may obtain liability insurance and enter into contractual arrangements
with them to effectuate these provisions. The foregoing provisions are not
intended to limit the liability of directors or officers for any violation of
federal securities law.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Other than Dr. Ron Christman, none of the members of our compensation
committee are currently or have been at any time since our founding, an officer
or employee of Concours. No member of our compensation committee serves as a
member of the board of directors or compensation committee of any entity that
has one or more executive officers serving as a member of our board of directors
or compensation committee.
EMPLOYMENT AND NON-COMPETITION AGREEMENTS
We have no employment agreements with any of our executive officers named
above. Concours has entered into non-competition agreements with Dr. Christman,
Ms. Erickson, Dr. Keehan, Dr. Vitalari and Mr. Weiner. The agreements provide
that until the termination, for whatever reason, and for twelve months
thereafter of such person's employment with Concours, they will not solicit
business of the type performed by Concours from any Concours client, or render
services of the type performed by Concours for any Concours client. For a period
of three years following their termination, these employees will not solicit any
Concours employees. A Concours client includes any person that is a client at
the time of, or during the twelve month period prior to, termination of such
employee's employment and prospective clients to whom Concours has made a
presentation during the one-year period prior to such termination.
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table sets forth certain summary information regarding
compensation paid or accrued by us to or on behalf of our Chief Executive
Officer and each of the other four most highly compensated executive officers of
Concours, determined as of the end of 1999, for the fiscal years ended December
31, 1997, 1998 and 1999.
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SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION ------------ ALL OTHER
------------------------------ COMMON ANNUAL COMPENSATION($)
BONUS RESTRICTED STOCK ----------------------
NAME AND ------------------ STOCK UNDERLYING LIFE
PRINCIPAL POSITION YEAR SALARY($) CASH($) STOCK($) AWARDS OPTIONS INSURANCE($) 401(K)($)
- ------------------ ---- --------- ------- -------- ---------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ronald P. Christman.... 1999 300,000 -- -- -- -- -- --
Chief Executive 1998 300,000 -- -- -- -- -- --
Officer 1997 300,000 -- -- -- -- -- --
Lynn D. Keehan......... 1999 206,000 200,000 -- -- -- -- --
Executive Vice 1998 206,000 200,000 -- -- -- -- --
President 1997 200,000 200,000 -- -- -- -- --
Nicholas P. Vitalari... 1999 257,500 39,456 -- -- -- -- --
Executive Vice 1998 257,500 -- -- -- -- -- --
President 1997 250,000 -- -- -- -- -- --
Tamara J. Erickson..... 1999 264,586 92,975(2) -- -- 20,000 -- --
President, Consulting 1998 31,251(1) -- -- -- 80,000 -- --
1997 -- -- -- -- -- -- --
Jeffrey J. Weiner...... 1999 172,000 -- -- -- 55,000 -- --
Chief Financial 1998 35,759(1) -- -- -- 35,000 -- --
Officer 1997 -- -- -- -- -- -- --
</TABLE>
- ------------------
(1) Reflects compensation for the portion of 1998 during which Ms. Erickson and
Mr. Weiner were employed. Ms. Erickson commenced employment in November 1998
and Mr. Weiner in October 1998.
(2) 90,000 of which was paid during 1999 and the remainder was paid during 2000.
Option Grants in Fiscal 1999
The following table contains information concerning the grant of stock
options during the year ended December 31, 1999 to the named executive officers.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
NUMBER OF % OF TOTAL OF STOCK PRICE
SHARES OF OPTIONS APPRECIATION FOR STOCK
COMMON STOCK GRANTED EXERCISE OPTION TERM(1)
UNDERLYING TO EMPLOYEES PRICE EXPIRATION --------------------------
NAME OPTIONS GRANTED IN 1999 PER SHARE DATE 5% 10%
- ---- --------------- ------------ --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Ronald P. Christman.......... -- -- -- -- -- --
Lynn D. Keehan............... -- -- -- -- -- --
Nicholas P. Vitalari......... -- -- -- -- -- --
Tamara J. Erickson........... 20,000 3.28% $5.00 11/1/09 $62,889 $159,374
Jeffrey J.
Weiner -- 1/1/99........... 35,000 5.74% $2.82 01/1/09 $62,072 $157,302
Jeffrey J.
Weiner -- 11/1/99.......... 20,000 3.28% $5.00 11/1/09 $62,889 $159,374
</TABLE>
- ------------------
(1) Options were granted at an exercise price believed by the Compensation
Committee to be equal to the fair market value at the date of grant.
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Stock Option Exercises in 1999 and Fiscal Year-End Option Values
None of the executive officers named in the Summary Compensation Table
exercised any outstanding stock options during 1999 or in any prior period. The
following table sets forth information on the year-end value of the outstanding
options held by the named executive officers at December 31, 1999.
<TABLE>
<CAPTION>
VALUE OF OUTSTANDING OPTIONS
AT DECEMBER 31, 1999
---------------------------------------------------------
COMMON STOCK UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS(1)
AT FISCAL YEAR-END AT FISCAL YEAR-END
--------------------------- ---------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Ronald P. Christman........................... -- -- -- --
Lynn D. Keehan................................ -- -- -- --
Nicholas P. Vitalari.......................... -- -- -- --
Tamara J. Erickson............................ 20,000 80,000 $103,600 $370,800
Jeffrey J. Weiner............................. 8,750 81,250 $ 45,325 $377,275
</TABLE>
- ------------------
(1) There was no public trading market for the common stock at December 31,
1999. Accordingly, these values have been calculated by determining the
difference between the exercise price per share and the fair market value on
December 31, 1999. It was determined by an independent third-party valuation
that the common stock had a fair market value of $8.00 per share on December
31, 1999.
REPURCHASE RIGHTS OF CERTAIN CONCOURS EXECUTIVE OFFICERS
If a Cepro employee leaves Concours prior to March 3, 2003, Dr. Christman,
Dr. Keehan, Dr. Vitalari and Robert Forsyth, an initial and current stockholder
of Concours, have the right to repurchase up to 230,000 repurchasable
non-escrowed Concours shares if Concours, Infologix and four Cepro senior
consultants decline their prior right to repurchase the shares. Dr. Christman,
Dr. Keehan, Dr. Vitalari and Mr. Forsyth each have ten days, in that order, to
elect to repurchase the repurchasable shares. All of these rights were granted
as part of the acquisition of Cepro by Concours.
OUR STOCK OPTION PLANS
Options to purchase a total of 4,425,857 shares of common stock have been
authorized under the following eight stock option plans currently in place: the
1997 Employee Stock Option Plan, the 1998 Employee Stock Option Plan, the 1998
European Equity Compensation Plan, the 1999 Employee Stock Option Plan, the 2000
Employee Stock Option Plan, the 2000 International Equity Compensation Plan, the
2000 Senior Executive Performance Plan and the 2000 Director Stock Option Plan
and by a separate board authorization. As of March 1, 2000, there were
outstanding options to purchase a total of 2,648,350 shares of common stock,
including options to purchase 90,000 shares granted under the separate
authorization, of which options to purchase 568,875 shares were exercisable. As
of that date, the weighted average exercise price of the outstanding options was
$4.49.
United States Employee Stock Option Plans
General. Since our formation in 1997, our board of directors adopted and
our stockholders subsequently approved employee stock option plans for 1997,
1998, 1999, and 2000. Other than differing amounts of options reserved under the
plans, the terms of the plans are substantively the same. The 1997 Employee
Stock Option Plan provides for the grant of options to purchase up to 460,857
shares of our common stock. The 1998 Employee Stock Option Plan provides for the
grant of options to purchase up to 675,000 shares of our common stock. The 1999
Employee Stock Option Plan provides for the grant of options to purchase up to
700,000 shares of our common stock. The 2000 Employee Stock Option Plan provides
for the grant of options to purchase up to 1,000,000 shares of our common stock.
Awards Under the Employee Stock Option Plans. Options under the employee
stock option plans may be made in the form of incentive stock options,
non-qualified stock options or any combination
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<PAGE> 64
thereof. Options may only be granted to employees, non-employees who are under a
written contract with Concours, or a subsidiary of Concours of which Concours
owns 50% or more, to provide consulting or advisory services to Concours or a
subsidiary, or members of the board of directors of Concours or a subsidiary
("Eligible Person(s)") as the board of directors or the compensation committee
shall in its discretion select. Only employees of Concours are eligible to
receive grants of incentive stock options. Generally, if any option terminates,
expires, or is canceled or surrendered as to any shares of common stock, new
options may thereafter be granted covering such shares.
Administration. The employee stock option plans are administered by the
compensation committee. The compensation committee is authorized to:
- adopt rules and regulations for carrying out the purposes of the employee
stock option plans;
- construe, interpret and implement the provisions of the employee stock
option plans or any option;
- adopt, amend and rescind administrative and interpretive rules and
regulations relating to the employee stock option plans or any option;
- make appropriate adjustments to the exercise price and number of shares
subject to the employee stock option plans and options in accordance with
such plans;
- make determinations and perform all acts necessary or advisable for
administering the employee stock option plans;
- correct any defect or supply any omission or reconcile any inconsistency
in the employee stock option plans or any option;
- make certain modifications to the employee stock option plans as
necessary to effectuate the intent of the plans;
- change the date on which any option may be exercised; and
- select eligible persons to whom options will be granted.
The determinations of the compensation committee are made in its sole
discretion and are conclusive.
Option Grants. The compensation committee determines the terms and
conditions of options. Options may generally be exercised as to 25% of the
shares covered by the particular option on the first anniversary of the date of
grant and an additional 25% of the shares covered by the particular option may
be exercised on each of the anniversaries of the date of grant in each of the
following three years. The compensation committee may alter the date on which an
option may be exercised; however, no option may be exercised prior to the first
anniversary of the date of grant, and no option may be exercised after the
expiration of ten years from the date of grant which period is reduced to five
years for certain stockholders owning more than 10% of the total combined voting
power of all classes of stock of Concours or a subsidiary on the date of grant.
The purchase price per share payable upon the exercise of an option is
established by the compensation committee at the time of grant, and, in the case
of an incentive stock option, the option exercise price must be equal to at
least 100% of the fair market value of a share of Concours's common stock on the
date of grant and, in the case of any person owning more than 10% of the total
combined voting power of all classes of stock of Concours or a subsidiary on the
date of grant, at least 110% of the fair market value of a share of Concours's
common stock on the date of grant. The option exercise price is generally
payable in cash or an equivalent thereof. The compensation committee may require
other arrangements be made or conditions met before an option may be exercised.
Incentive stock options are not transferrable by the grantee other than by
will or the laws of descent and distribution or pursuant to a qualified domestic
relations order. Non-qualified stock options may be transferable if so
determined by the compensation committee, in its sole discretion.
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<PAGE> 65
Termination of Employment or Service. In general, upon the earliest event
to occur of the following:
- the death of a grantee;
- the total and permanent disability of a grantee;
- the date on which a grantee ceases to be employed by Concours or a
subsidiary or ceases to be a consultant of Concours or a subsidiary
regardless of the reason; therefore, the date on which a grantee ceases
to be a member of the board of directors, unless the grantee continues to
be an employee or consultant of Concours or a subsidiary;
the grantee's unvested options will automatically and without notice terminate
and become null and void. Additionally, the grantee has 90 days after such event
to exercise any vested options or such options will automatically and without
notice terminate and become null and void. The transfer of an employee's
employment between Concours and a subsidiary is not deemed to be a termination
of the employee's employment under the employee stock option plans. If however,
the grantee commits certain actions including, but not limited to any act of
malfeasance or wrongdoing affecting Concours or a subsidiary, any unexercised
portion of the options held by the grantee immediately terminate and are null
and void.
Other Features. The board of directors may amend, suspend, or terminate the
employee stock option plans or any option; provided, however, that no such
amendment may alter any provision of the employee stock option plans or any
option without compliance with any applicable stockholder approval requirements
or requirements of any stock market on which Concours' common stock is listed
for trading or substantially impair any option previously granted to any grantee
without the consent of the grantee. In the event of a stock dividend, or a
recapitalization resulting in a stock split, combination or exchange of shares,
appropriate adjustments will be made to the maximum number of shares subject to
being optioned under the employee stock option plans and number of shares and
exercise price per share then subject to outstanding options. In the event of
any other corporate transaction, the compensation committee may change the
exercise price or number of shares subject to the options or both, if
appropriate, in its sole discretion.
European and International Stock Option Plans
General. Since commencing European operations in 1998, our board of
directors adopted and our stockholders subsequently approved the 1998 European
Equity Compensation Plan which provides for the grant of awards to purchase up
to 600,000 shares of our common stock, and the 2000 International Equity
Compensation Plan, which provides for the grant of awards to purchase up to
600,000 shares of our common stock (collectively the "International Stock Option
Plans"). Generally, if any awards are forfeited, terminate, expire unexercised,
settle in cash in lieu of stock or are exchanged for other awards, the shares of
common stock which were previously subject to the awards remain available for
awards under the International Stock Option Plans to the extent of such
forfeiture or expiration. If any shares of common stock are used as payment of
the purchase price of common stock upon exercise of an option, such shares of
common stock are available for awards under the International Stock Option
Plans.
Awards Under the International Stock Option Plans. Awards under the
International Stock Option Plans may be made in the form of:
- deferred compensation stock options;
- non-qualified stock options;
- stock appreciation rights;
- restricted awards; or
- any combination thereof.
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<PAGE> 66
Awards generally may only be made to employees, non-employees who are under
a written contract with Concours, or a subsidiary of which Concours owns 50%, to
provide consulting or advisory services to Concours or a subsidiary, or members
of the board of directors of Concours or a subsidiary ("Eligible Person(s)") as
the board of directors or the compensation committee shall in its discretion
select.
Administration. The International Stock Option Plans are administered by
the compensation committee. The compensation committee is authorized to:
- adopt rules and regulations for carrying out the purposes of the
International Stock Option Plans;
- adopt, amend and rescind administrative and interpretive rules and
regulations relating to the International Stock Option Plans or any
award;
- construe the terms of the International Stock Option Plans or any award;
- make appropriate adjustments to the number of shares and price per share
subject to the International Stock Option Plans and options in accordance
with such plans;
- make determinations and perform all acts necessary or advisable for
administering the International Stock Option Plans;
- correct any defect or supply any omission or reconcile any inconsistency
in the International Stock Option Plans or any award;
- make certain modifications to the International Stock Option Plans as
necessary to effectuate the intent of the plans;
- change the date on which any option may be exercised; and
- select to whom options will be granted from a list of Eligible Persons.
The determinations of the compensation committee are made in its sole
discretion and are conclusive.
Option Grants. The compensation committee determines the terms and
conditions of options. Deferred compensation stock options are exercisable in
accordance with the terms of the grant thereof as established by the
compensation committee. Non-qualified stock options may generally be exercised
as to 25% of the shares covered by the particular option on the first
anniversary of the date of grant and an additional 25% of the shares covered by
the particular option may be exercised on each of the anniversaries of the date
of grant in each of the following three years. The compensation committee may
alter the date on which a non-qualified option may be exercised, however no
non-qualified option may be exercised prior to the first anniversary of the date
of grant, and no non-qualified option may be exercised after the expiration of
10 years from the date of grant. The purchase price per share payable upon the
exercise of an option is established by the compensation committee at the time
of grant. The option exercise price is generally payable in cash or an
equivalent thereof. The compensation committee may require other arrangements be
made or conditions met before an option may be exercised. Options may be
transferable if so determined by the compensation committee, in its sole
discretion.
Stock Appreciation Rights and Restricted Awards. The compensation committee
may grant stock appreciation rights and restricted awards under the
International Stock Option Plans. As of March 1, 2000, there are not any stock
appreciation rights or restricted awards outstanding.
Termination of Employment or Service. If a participant's employment by
Concours or a subsidiary terminates by reason of the participant's death or if
such participant's death occurs within three months after the termination of his
or her employment, any award otherwise exercisable, may be exercised for a
period of one year from such date or, if shorter, the expiration of the stated
term of the award. If a participant's employment by Concours or a subsidiary
terminates by reason of the participant's disability, any award otherwise
exercisable, may generally be exercised for a period of one year from such date
or, if shorter, the expiration of the stated term of the award. If a
participant's employment by Concours or a subsidiary terminates for any reason
other than retirement, any award otherwise exercisable may be
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<PAGE> 67
exercised for a period of three months or, if shorter, the expiration of the
stated term of the award. Any right of exercise under a non-vested award held by
the participant at the time of his or her termination by death, disability or
otherwise is generally extinguished and terminated. The transfer of an
employee's employment between Concours and a subsidiary is not deemed to be a
termination of the employee's employment under the International Stock Option
Plans. If however, a participant commits certain actions including, but not
limited to any act of malfeasance or wrongdoing affecting Concours or a
subsidiary, any unexercised portion of the options held by the participant
immediately terminate and are null and void.
Other Features. The board of directors may amend, suspend, or terminate the
International Stock Option Plans or any award; provided, however, that no such
amendment may alter any provision of the International Stock Option Plans or any
award without compliance with any applicable stockholder approval requirements
or requirements of any stock market on which Concours' common stock is listed
for trading or substantially impair any award previously granted to any
participant without the consent of such participant. In the event of a stock
dividend, or a recapitalization resulting in a stock split, combination or
exchange of shares, appropriate adjustments may be made by the board of
directors in its sole discretion to reflect such change with respect to the
maximum number of shares which may be sold or awarded to any participant; the
number of shares covered by each outstanding award and the price per share of
outstanding awards. In the event of any other corporate transaction, the
compensation committee may change the exercise price or number of shares subject
to the options or both, if appropriate, in its sole discretion.
2000 Senior Executive Performance Plan
Our board of directors adopted, and our stockholders subsequently approved,
the 2000 Senior Executive Performance Plan which provides for the grant of
options to purchase up to 175,000 shares of our common stock. Similar to the
employee stock option plans, both incentive and non-qualified options or any
combination thereof, may be issued under the 2000 Senior Executive Performance
Plan. Options may generally be exercised as to 33 1/3% of the shares covered by
the particular option on the first anniversary of the date of grant and an
additional 33 1/3% of the shares covered by the particular option may be
exercised on each of the anniversaries of the date of grant and in each of the
following two years. With respect to the award of options, administration of the
2000 Senior Executive Performance Plan, transferability of options, termination
of the option period, and other plan features, the 2000 Senior Executive
Performance Plan is substantially similar to the employee stock option plans.
As of March 1, 2000, all 175,000 options reserved under the 2000 Senior
Executive Performance Plan are outstanding. Pursuant to the 2000 Senior
Executive Performance Plan, 75,000 options were granted to Dr. Christman; 50,000
options were granted to Dr. Vitalari; and 50,000 options were granted to Dr.
Keehan. The options granted under the 2000 Senior Executive Performance Plan
vest ratably over a 3 year period.
Director Stock Option Plan
We have adopted an option plan for non-employee directors called the 2000
Director Option Plan. Under that plan, each non-employee director is granted
options to purchase 15,000 shares of our common stock on the date he or she
becomes a director. Directors may not hold options to purchase more than 65,000
shares per director at any one time under the director plan. On the day after
each annual meeting of the stockholders, each director who is a non-employee
director on that date is automatically granted options to purchase an additional
5,000 shares of our common stock, subject to the 65,000 share maximum.
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<PAGE> 68
A total of 125,000 shares are reserved for issuance under the 2000 Director
Option Plan. The plan also provides that this number increases annually,
beginning in 2001, by the lesser of:
- 100,000 shares;
- 1% of our outstanding shares of common stock; or
- such lesser amount as the board of directors approves.
The options are granted at an exercise price equal to fair market value on
the date of grant. The 15,000 shares that are granted upon becoming a director
vest over three years, with one-third vesting each year on the anniversary date
of the grant until fully vested. Additional shares that are granted under the
director plan vest over three years, with one-third vesting each year on the
anniversary date of the grant until fully vested. As of March 17, 2000, no
options had been granted under the plan. Mr. Romeril, Ms. Engel, Mr. Lindroth
and Mr. Sokolow will each receive options to purchase 15,000 shares.
LIMITATION ON OUR COMPENSATION DEDUCTION
Section 162(m) of the Internal Revenue Code limits the deduction which
Concours may take for otherwise deductible compensation payable to certain
executive officers to the extent that compensation paid to such officers for a
year exceeds $1.0 million, unless such compensation meets certain requirements.
Although we believe that compensation realized from options that have been
granted under the employee stock option plans generally will satisfy the
requirements of Section 162(m), there is no assurance that such options will
satisfy such requirements.
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RELATED TRANSACTIONS AND RECENT ACQUISITION
RECENT CONVERSION OF CONVERTIBLE DEBT INTO AND PURCHASE OF COMMON STOCK
Infologix (BVI) Ltd., a British Virgin Islands entity, is our largest
stockholder. On February 1, 2000, Infologix acquired from Concours 1,555,425
shares of our common stock. Of these shares, 805,425 shares were acquired upon
conversion of $4.0 million principal amount of convertible debt, plus accrued
interest. An additional 750,000 shares were purchased for $6.0 million.
Infologix also owns warrants to purchase 50,000 shares of common stock for $5.00
per share which were exchanged for certain rights of an affiliate to receive
options to purchase shares under a loan agreement with Concours. These warrants
are currently exercisable. A portion of these funds were used to repay a $1.0
million revolving bank credit facility. Upon repayment of this facility, a
letter of credit provided for Concours by an affiliate of Infologix was
returned. As a result of these transactions, Infologix holds approximately 47.1%
of our common stock as of March 1, 2000, assuming the exercise of their
outstanding warrants to purchase 50,000 shares of our common stock and the
conversion of their 1,810,000 shares of Series A convertible preferred stock.
PURCHASE OF SERIES B CONVERTIBLE REDEEMABLE PREFERRED STOCK
Pursuant to an investment agreement effective February 29, 2000, Concours
sold a total of 1,546,784 shares of Series B convertible redeemable preferred
stock to Thayer Equity Investors IV, L.P., a Delaware limited partnership, and
Thayer CGI Partners LLC, a Delaware limited liability company, for $15.0
million. Upon consummation of this offering, all of these shares will be
converted into 1,546,784 shares of common stock, which represent approximately
20.8% of the common stock outstanding as of March 1, 2000.
ACQUISITION OF SWEDISH MANAGEMENT CONSULTING FIRM
On February 29, 2000, Concours purchased all of the outstanding shares of
stock of Cepro, a Swedish management consulting firm, from Cepro's stockholders
in exchange for a total of 1,221,000 shares of Concours common stock valued on
February 29, 2000, at an estimated $12,210,000. Cepro employs approximately 40
consultants who help businesses in areas such as strategic planning, financial
analysis, e-commerce, marketing, information management, and executive and
organizational development. Each employee of Cepro entered into an employment
agreement as part of the acquisition.
A total of 465,000 of the Concours shares issued to the selling Cepro
stockholders have a repurchase right, described below, associated with them. The
remaining 756,000 shares have no such right. A total of 235,000 of the Concours
shares issued to the former Cepro stockholders are being held in escrow for
three years as security for the indemnity given by the selling Cepro
stockholders under the purchase agreement. If there is a breach of the purchase
agreement, those shares, or a portion of them depending upon the amount of
damage to Concours, must be conveyed back to Concours to pay the obligation
under the indemnity. That pool of 235,000 escrowed shares, however, will be
reduced in number if employees leave and will revert back to Concours. Cepro
employees must remain employed by Cepro until March 1, 2003 to be permitted to
keep all of their escrowed shares as well as their other shares as to which
repurchase rights are associated. The repurchase right permits Concours, and
only Concours, to repurchase the escrowed shares of a Cepro employee departing
prior to March 1, 2003, for $10.00 per share. As to the remaining 230,000 shares
(net of 756,000 shares with no repurchase right and 235,000 escrowed shares), if
a Cepro employee leaves Cepro before March 1, 2003, the Cepro employee must sell
some of his or her shares back to Concours, which has a right of first refusal,
or to Infologix, and other individuals, as described below, if Concours does not
elect to repurchase the shares. As with the escrowed shares, the repurchase
price is $10.00 per share. We do not expect to repurchase a significant portion
of the 465,000 shares, as this would only occur if a significant number of
employees were to leave Cepro.
If Concours declines to repurchase the repurchasable non-escrowed shares,
Infologix then acquires the purchase right. The individuals who have the right
to purchase these shares if Concours and Infologix do not repurchase the shares
are: Cepro senior consultants Michael Collins, Bo Hedberg, A ke Magnusson and
Cepro's managing director Jan Roy. If these individuals do not elect to purchase
the shares, the following individuals have that repurchase right: Dr. Christman,
Dr. Keehan, Dr. Vitalari and Robert Forsyth, an initial and current stockholder
of Concours. If no election is made to purchase shares subject to the repurchase
rights described above, the departing employee may keep them.
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PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of our common stock as of March 1, 2000, and as adjusted to reflect
the sale of the shares of common stock offered by this prospectus, by each
person who is known to Concours to own beneficially more than 5% of the
outstanding shares of our common stock, each director, and persons nominated to
become a director, each executive officer of Concours named in the Summary
Compensation Table above, and all current directors and executive officers as a
group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
PRIOR TO THE OFFERING(1) AFTER THE OFFERING(1)
-------------------------- --------------------------
NAME OF BENEFICIAL OWNER(2) NUMBER PERCENT(3) NUMBER PERCENT(3)
- --------------------------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Infologix (BVI) Ltd.(4)..................... 3,655,426 47.06%
Thayer Equity Investors IV, L.P.(5)......... 1,511,349 20.28%
Thayer CGI Partners LLC(5).................. 35,435 *
Ronald P. Christman(6)(7)................... 600,000 10.16%
Lynn D. Keehan(6)........................... 385,714 6.53%
Nicholas P. Vitalari(6)..................... 300,000 5.08%
Tamara J. Erickson(6)....................... 20,000 *
Jeffrey J. Weiner(6)........................ 17,500 *
Debra Engel(6).............................. * *
Hans G. Lindroth(6)(8)...................... 3,670,290 *
Barry Romeril............................... * *
Leonard J. Sokolow(6)....................... 71,429 1.21%
All executive officers and directors as a
group (11 persons)(8)..................... 5,064,933 64.90%
</TABLE>
- ------------------
* Less than one percent.
(1) Pursuant to Rule 13d-3 under the Exchange Act, a person has beneficial
ownership of any securities as to which such person, directly or indirectly,
through any contract, arrangement, undertaking, relationship or otherwise
has or shares voting power and/or investment power and as to which such
person has the right to acquire such voting and/or investment power within
60 days. Percentage of beneficial ownership as to any person as of a
particular date is calculated by dividing the number of shares beneficially
owned by such person by the sum of the number of shares outstanding as of
such date and the number of shares as to which such person has the right to
acquire voting and/or investment power within 60 days.
(2) Except as set forth in the footnotes to this table and subject to applicable
community property laws, the persons named in the table have sole voting and
investment power with respect to all shares of common stock shown as
beneficially owned by such stockholder.
(3) The percentages above are based upon 5,907,104 shares outstanding as of
March 1, 2000, plus 3,356,784 shares issuable upon conversion of our
convertible preferred stock upon conclusion of this offering, 50,000 shares
issuable under warrants held by Infologix and shares outstanding after
this offering.
(4) The address for Infologix (BVI) Ltd. is c/o Insinger de Beaufort, P.O. Box
565, 28-30 The Parade, St. Helier, Jersey, Chanel Islands, UK JE4 8XY.
(5) The address for Thayer Equity Investors IV, L.P. and Thayer CGI Partners LLC
is 1455 Pennsylvania Ave., N.W., Suite 350, Washington, D.C. 20004.
(6) The address for the officers and directors of Concours is 3 Kingwood Place,
800 Rockmead Dr., Kingwood, Texas 77339.
(7) Includes shares of common stock held by other persons who have granted
Dr. Christman the right to vote such shares pursuant to irrevocable proxies
which expire on , 2003 covering shares of common stock owned
by executives of Concours and shares held by employees of
Concours.
(8) Includes 14,864 shares owned directly and indirectly by Mr. Lindroth and
3,655,426 shares held by Infologix, with whom he is affiliated.
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DESCRIPTION OF CAPITAL STOCK
GENERAL
Our authorized capital stock consists of 50,000,000 shares of common stock,
par value $.01 per share, and 5,000,000 shares of preferred stock, $.01 par
value per share. As of March 1, 2000, there were outstanding:
- 5,907,104 shares of common stock;
- 1,810,000 shares of Series A convertible preferred stock, all of which
will be automatically converted into 1,810,000 shares of our common stock
upon consummation of this offering;
- 1,546,784 shares of Series B convertible redeemable preferred stock, all
of which will be automatically converted into 1,546,784 shares of our
common stock upon consummation of this offering;
- options to purchase a total of 2,648,350 shares of common stock, of which
options to purchase approximately 568,875 shares are exercisable as of
such date; and
- warrants to purchase 50,000 shares of common stock at an exercise price
of $5.00 per share.
There will be shares of common stock outstanding after giving
effect to the sale of the shares of common stock to the public in this offering
assuming:
- complete conversion of the Series A and Series B convertible preferred
stock;
- no exercise of the underwriters' over-allotment option; and
- no exercise of outstanding stock options or warrants.
COMMON STOCK
The holders of our common stock are entitled to one vote per share on all
matters to be voted on by stockholders and have no cumulative voting rights.
Each share of our common stock has identical rights and privileges in every
respect. Subject to the prior rights and preferences applicable to shares of the
preferred stock, the holders of shares of common stock are entitled to receive
such dividends (payable in cash, stock, or otherwise) out of funds legally
available, when and if declared from time to time by the board of directors. In
the event of our liquidation, dissolution or winding up, the holders of shares
of the common stock will be entitled to share ratably in all assets remaining
after the payment of liabilities, subject to the rights of any then outstanding
preferred stock or any series thereof. The common stock has no preemptive,
subscription or conversion rights and there are no redemption or sinking fund
provisions in our certificate of incorporation. The rights, preferences and
privileges of holders of common stock are subject to, and may be adversely
affected by, the rights of holders of shares of any preferred stock or series of
preferred stock currently outstanding or that we may designate and/or issue in
the future. The issued and outstanding shares of our common stock are fully paid
and non-assessable.
PREFERRED STOCK
Our board of directors is empowered, without approval of the stockholders,
to cause shares of preferred stock to be issued from time to time in one or more
series, and the board of directors may determine the numbers of shares of each
series and the designation, powers, privileges, preferences and rights and the
qualifications, limitations and restrictions of the shares of each series. The
specific matters that our board of directors may determine include:
- the designation of each series;
- the number of shares of each series;
- the rate of any dividends;
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- whether any dividends shall be cumulative or non-cumulative;
- the terms of any redemption;
- the amount payable in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of our company;
- rights and terms of any conversion or exchange; and
- restrictions on the issuance of shares of the same series or any other
series.
SERIES A CONVERTIBLE PREFERRED STOCK
Infologix (BVI) Ltd. owns a total of 1,810,000 shares of Series A
convertible preferred stock, which were initially issued by Concours for
$4,080,000. Infologix is the only holder of the Series A convertible preferred
stock. Upon consummation of this offering, all of the shares of the Series A
convertible preferred will be converted into 1,810,000 shares of our common
stock on a share for share basis.
SERIES B CONVERTIBLE REDEEMABLE PREFERRED STOCK
We have issued 1,546,784 shares of Series B convertible redeemable
preferred stock to Thayer and its affiliates for $15.0 million. As of March 1,
2000, Thayer and its affiliates are the only holders of the Series B convertible
redeemable preferred stock. Upon consummation of this offering, all of the
shares of the Series B convertible redeemable preferred stock will be converted
into 1,546,784 shares of our common stock on a share for share basis.
OPTIONS
Options to purchase a total of 4,425,857 shares of common stock have been
authorized under the following eight stock option plans currently in place: the
1997 Employee Stock Option Plan, the 1998 Employee Stock Option Plan, the 1998
European Equity Compensation Plan, the 1999 Employee Stock Option Plan, the 2000
Employee Stock Option Plan, the 2000 International Equity Compensation Plan, the
2000 Senior Executive Performance Plan and the 2000 Director Stock Option Plan
and by a separate board authorization. As of March 1, 2000, there were
outstanding options to purchase a total of 2,648,350 shares of common stock,
including options to purchase 90,000 shares granted under the separate
authorization, of which options to purchase 568,875 shares were exercisable as
of such date.
WARRANTS
Warrants owned by Infologix (BVI) Ltd. entitle it to purchase 50,000 shares
of our common stock for $5.00 per share. Such warrants are currently exercisable
and expire on December 31, 2009.
REGISTRATION RIGHTS
At any time during the three year period beginning six months after the
closing of this offering, the holders of 3,605,426 shares of common stock and
warrants to purchase 50,000 shares of common stock have the right to require us
to register their shares of common stock on Form S-1 for sale under the
Securities Act on two separate occasions. In addition, at any time beginning six
months after the closing of this offering, the holders of approximately
1,546,784 shares of common stock have the right to require us to register their
shares of common stock on Form S-1 for sale under the Securities Act on two
separate occasions. Under an agreement with these stockholders, each set of
stockholders outlined above has the right to have their shares of common stock
included in any registration statement demanded by the other group of
stockholders outlined above. These stockholders also have the right, if we
propose to register any of our securities for sale for our own account, to have
their shares included in that registration. These stockholders also have the
right to require us to register their shares of common stock on Form S-3, when
we become eligible to use this form.
All of the registration rights are subject to conditions and limitations,
including the right of the underwriters to limit the number of shares included
in a registration and to exclude holders' shares from a
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<PAGE> 73
registration initiated by us for our account under certain circumstances. We
have agreed to pay the expenses of those registrations in most cases. We are not
required to honor demands for registration within twelve months after the
effective date of any registration statement, other than on Form S-3. Our board
of directors may defer requests for registrations from these stockholders for
periods ranging from 90 days to 12 months if it determines in good faith that
such a registration would be detrimental to us.
ANTITAKEOVER EFFECTS OF PROVISIONS OF DELAWARE LAW AND OUR CERTIFICATE OF
INCORPORATION AND BYLAWS
Some provisions of our amended and restated certificate of incorporation,
our bylaws and Delaware law could have the effect of making it more difficult
for a third party to acquire a majority of our outstanding voting stock, even if
doing so would be beneficial to our stockholders.
Section 203 of the Delaware General Corporation Law
We are a Delaware corporation and subject to Section 203 of the Delaware
General Corporation Law. Generally, Section 203 prohibits a publicly held
Delaware corporation from engaging in a business combination with an interested
stockholder for a period of three years after the time a stockholder became an
interested stockholder unless, as described below, certain conditions are
satisfied. Thus, it may make acquisition of control of Concours more difficult.
The prohibitions in Section 203 do not apply if the following occur:
- prior to the time the stockholder became an interested stockholder, our
board of directors approved either the business combination or the
transaction which resulted in the stockholder becoming an interested
stockholder;
- upon consummation of the transaction which resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of Concours outstanding at the time the
transaction commenced; or
- at or subsequent to the time the stockholder became an interested
stockholder, the business combination is approved by our board of
directors and authorized by the affirmative vote of at least 66 2/3% of
the outstanding voting stock that is not owned by the interested
stockholder.
Under Section 203, a business combination includes the following:
- any merger or consolidation of Concours with the interested stockholder;
- any sale, lease, exchange or other disposition, except proportionately as
a stockholder of Concours, to or with the interested stockholder of
assets of Concours having an aggregate market value equal to 10% or more
of either the aggregate market value of all the assets of Concours or the
aggregate market value of all the outstanding stock of Concours;
- certain transactions resulting in the issuance or transfer by Concours of
our stock to the interested stockholder;
- certain transactions involving Concours which have the effect of
increasing the proportionate share of the stock of any class or series of
Concours which is owned by the interested stockholder; and
- certain transactions in which the interested stockholder receives
financial benefits provided by us.
Under Section 203, an interested stockholder generally is one of the following:
- any person that owns 15% or more of the outstanding voting stock of
Concours;
- any person that is an affiliate or associate of Concours and was the
owner of 15% or more of the outstanding voting stock of Concours at any
time within the three-year period prior to the date on which it is sought
to be determined whether that person is an interested stockholder; or
- the affiliates or associates of that person.
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Because Infologix (BVI) Ltd. and Thayer will each, individually or through
their affiliates, own more than 15% of our voting stock before we become a
public company and upon completion of the offering, Section 203 by its terms is
currently not applicable to business combinations with them even though they
owns 15% or more of our outstanding stock. If any other person acquires 15% or
more of our outstanding stock in the future, that person will be subject to the
provisions of Section 203.
Classified Board of Directors
Our amended and restated bylaws provide for the board of directors to be
divided into three classes of directors serving staggered three-year terms. As a
result, approximately one-third of the board of directors will be elected each
year. Our bylaws also provide that at least three of our directors will be
"disinterested and independent directors." Holders of a majority of the
outstanding shares of capital stock entitled to vote with respect to an election
of directors will be able to remove directors only for cause. This provision may
be amended only by the affirmative vote of 80% of our directors or by a majority
of our stockholders.
Advance Notice Requirements for Stockholder Proposals and Director Nominations
Our amended and restated bylaws provide that stockholders seeking to bring
business before an annual meeting of stockholders, or to nominate candidates for
election as directors at an annual meeting of stockholders, must provide timely
notice thereof in writing. To be timely, a stockholder's notice must be
delivered to or mailed and received at principal executive offices, not less
than 60 days nor more than 90 days prior to the scheduled date of the annual
meeting, regardless of any postponement, deferral or adjournment of that
meeting. However, if less than 70 days notice or prior public disclosure of the
date of the annual meeting is given or made to stockholders, a stockholder's
notice will be timely if delivered or mailed and received not later than the
close of business on the tenth day following the earlier of the day on which the
notice of the date of the meeting was mailed or the day on which the public
disclosure was made. Our amended and restated bylaws also specify certain
requirements as to the form and content of a stockholder's notice. These
provisions may preclude stockholders from bringing matters before an annual
meeting of stockholders or from making nominations for directors at an annual
meeting of stockholders.
Limitations on Changes of Control of Concours
The provisions of our restated certificate of incorporation and bylaws
described above, and the provisions of Section 203, could have the following
effects, among others:
- delaying, deferring or preventing a change in control;
- delaying, deferring or preventing the removal of existing management;
- deterring potential acquirors from making an offer to our stockholders;
or
- limiting any opportunity of our stockholders to realize premiums over
prevailing market prices of our common stock in connection with offers by
potential acquirors.
Any of the above could occur, notwithstanding that a majority of our
stockholders might benefit from such a change in control or offer.
LISTING
We have applied for our common stock to be quoted on the Nasdaq National
Market under the symbol " ".
TRANSFER AGENT
Our transfer agent and registrar for our common stock is . Their
telephone number is .
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SHARES ELIGIBLE FOR FUTURE SALE
Upon the completion of the offering, shares of common stock will
be outstanding ( ) shares of common stock if the underwriters'
over-allotment option is exercised in full). Of those shares, shares
of common stock sold by us in the offering will be freely tradable without
restriction or further registration under the Securities Act, unless held by an
affiliate of Concours, as defined under the Securities Act. Any such affiliate
will be subject to the resale limitations of Rule 144 adopted under the
Securities Act.
The remaining 9,313,888 shares of common stock outstanding at March 1, 2000
on a pro forma basis constitute restricted securities for purposes of Rule 144.
Restricted securities may not be resold except in compliance with the
registration requirements of the Securities Act or pursuant to an exemption
therefrom, including the exemption provided by Rule 144. Some holders of these
shares have rights to have their shares registered under the Securities Act in
the future, but may not exercise such registration rights, and have agreed along
with Concours that they will not sell, transfer or otherwise dispose of any of
their shares, for 180 days following the completion of the offering.
In general, under Rule 144, a person who is deemed to be an affiliate of
Concours is entitled to sell within any three-month period a number of shares
beneficially owned for at least one year that does not exceed the greater of
1.0% of the then outstanding shares of common stock or the average weekly
trading volume of the outstanding shares of common stock during the four
calendar weeks preceding such sale. Sales under Rule 144 are also subject to
certain requirements as to the manner of sale, notice and the availability of
current public information about Concours. However, a person who is not deemed
to be an affiliate of Concours at any time during the 90 days preceding a
proposed sale and who has beneficially owned restricted securities for at least
two years is entitled to sell such shares under Rule 144 without regard to the
volume, manner of sale or notice requirements.
We, together with each of our executive officers and directors, who
collectively, upon completion of the offering, will own an aggregate of
shares of common stock, have agreed not to sell, pledge, or otherwise dispose of
any shares of common stock or securities convertible into or exercisable for
shares of common stock for a period of 180 days following the date of this
prospectus without the prior written consent of Salomon Smith Barney as
representative for the underwriters.
We have reserved an aggregate of 4,425,857 shares of common stock for
issuance upon exercise of options granted or to be granted under our various
stock option plans and under a separate board authorization. See
"Management -- Our Stock Option Plans" and note 8 to our consolidated financial
statements included elsewhere in this prospectus. We intend to file a
registration statement on Form S-8 under the Securities Act to register all of
the shares of common stock reserved for issuance under these plans. This
registration statement is expected to be filed as soon as practicable after the
consummation of the offering and will automatically become effective upon
filing. Shares issued under our stock option plans after such registration
statement is filed may thereafter be sold in the public market, subject,
however, to the limitations imposed by Rule 144 on affiliates of Concours, the
lock-up agreements described above and any transfer or vesting restrictions
imposed on options at the time of grant.
An increase in the number of shares of common shares that may come
available for sale in the public market may adversely affect the market price
prevailing from time to time of the common stock in the public market and could
impair our ability to raise additional capital through the sale of our equity
securities.
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MATERIAL UNITED STATES FEDERAL TAX
CONSIDERATIONS FOR FOREIGN HOLDERS
GENERAL
In the opinion of Jenkens & Gilchrist, A Professional Corporation, the
following are material United States federal income and estate tax
considerations that are generally applicable to foreign holders of our common
stock as of the date of this prospectus. A "foreign holder" is a person or
entity who or which is not:
- an individual U.S. citizen or resident alien;
- a domestic corporation, or other entity taxable as a corporation created
or organized under U.S. law (federal or state);
- an estate whose income is includable in gross income for U.S. purposes
regardless of its source; or
- a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and at least one U.S.
person has authority to control all substantial decisions of the trust.
This opinion only applies to you only if you hold our common stock as a
capital asset for tax purposes (that is, for investment purposes). In addition,
this opinion does not address all of the United States federal tax consequences
that may be relevant to you in light of your particular circumstances including,
but not limited to if you are a member of a class of holders subject to special
rules, such as:
- a partner in a partnership holding our common stock;
- a dealer in securities or currencies;
- a trader in securities that elects to use a mark-to-market method of
accounting for your securities holdings;
- a bank;
- a life insurance company;
- a tax-exempt organization;
- a person that holds our common stock as part of a straddle or a hedging,
integrated, constructive sale or conversion transaction for tax purposes;
- a person whose functional currency for tax purposes is not the U.S.
dollar;
- a person liable for alternative minimum tax; or
- a person that owns, or is treated as owning, 5% or more of our common
stock.
The explanation of material United States federal tax laws set out below is
based on the Internal Revenue Code of 1986, as amended (the "Code"), existing
and proposed regulations, IRS rulings and pronouncements, reports of
congressional committees, judicial decisions and current administrative rulings
and practice, all as of the date of this document, and which are subject to
change. Any such change could be retroactive and change the United States
federal tax consequences discussed below. No advance ruling from the Internal
Revenue Service with respect to these matters has been requested. Accordingly,
it is possible that the United States federal tax consequences may differ from
those described below. No foreign law nor United States state or local tax
considerations are discussed.
ALL FOREIGN HOLDERS ARE URGED TO CONSULT THEIR PROFESSIONAL TAX ADVISORS
REGARDING THE SPECIFIC TAX CONSEQUENCES APPLICABLE, INCLUDING APPLICABILITY OF
UNITED STATES FEDERAL INCOME TAX LAW, STATE AND LOCAL TAX LAWS, THE TAX LAWS OF
ANY OTHER JURISDICTION TO WHICH THEY MAY BE SUBJECT; POSSIBLE FUTURE CHANGES IN
UNITED STATES FEDERAL INCOME TAX LAWS; AND ANY PENDING OR PROPOSED LEGISLATION.
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Dividends
You generally will be subject to withholding of U.S. federal income tax at
a rate of 30% or such lower rate as may be specified by an applicable income tax
treaty in connection with dividends paid on our common stock unless the
dividends are "effectively connected" with your conduct of a trade or business
in the United States and, if required by an income tax treaty, such dividends
are attributable to a "permanent establishment."
If the dividends are "effectively connected" and/or are attributable to
permanent establishment, you generally will be subject to U.S. federal income
tax at ordinary U.S. federal income tax rates on a net income basis. In
addition, any effectively connected dividends received by a non-U.S. corporation
may also, under certain circumstances, be subject to an additional "branch
profits tax" at a rate of 30% or such lower rate as may be specified by an
applicable income tax treaty.
If you are eligible for a reduced rate of withholding pursuant to an
applicable income tax treaty, you may be required to submit documentation to
avail yourself of that treaty and may be able to obtain a refund of any excess
amounts withheld by us by filing an appropriate claim for refund with the
Internal Revenue Service.
Sale or Other Disposition of Common Stock
You will not be subject to U.S. federal income tax on any gain recognized
in connection with the sale or other disposition of our common stock unless:
- your gain is effectively connected with a trade or business that you
conduct in the United States and, if required by an income tax treaty,
such gain is attributable to a permanent establishment;
- you are an individual and are present in the United States for at least
183 days in the taxable year of the sale or other disposition, and
certain other conditions are met;
- you are an expatriate subject to the provisions of U.S. federal income
tax law applicable to certain United States expatriates, or
- Concours is or has been a "United States real property holding
corporation" for U.S. federal income tax purposes at any time during the
shorter of:
- the 5-year period preceding such sale or disposition or
- the period that you held our common stock.
We do not believe that we were, are, nor do we expect to become, a United States
real property holding corporation.
Effectively connected gains realized by a non-U.S. corporation may also,
under certain circumstances, be subject to an additional "branch profits tax" at
a rate of 30% or such lower rate as may be specified by an applicable income tax
treaty.
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INFORMATION REPORTING AND BACKUP WITHHOLDING
Dividends
- United States backup withholding tax generally will not apply to
dividends paid to a foreign holder at an address outside the United
States unless we or our paying agent knows that the payee is not a
foreign holder.
- Under applicable Treasury regulations, we are required to report annually
to the Internal Revenue Service and to each foreign holder the amount of
dividends paid to such foreign holder and the amount of tax withheld with
respect to such dividends. This information may be made available to the
tax authorities in the foreign holder's country or residence under the
provisions of an applicable income tax treaty or agreement.
Sale Through a U.S. Office of a Broker
The payment of proceeds in connection with the sale or other disposition of
our common stock to or through a United States office of a broker generally will
be subject to information reporting and backup withholding at a rate of 31%
unless the foreign holder either certifies its status as a foreign holder under
penalties of perjury or otherwise establishes an exemption from backup
withholding.
Sale Through a Foreign Office of a Broker
The payment of proceeds in connection with the sale or other disposition of
our common stock to or through a foreign office of a United States broker or
foreign broker with certain types of relationships with the United States is not
subject to backup withholding. The broker is, however, required to report the
sale to the Internal Revenue Service unless it has documentary evidence in its
files that the seller is a foreign holder and certain other conditions are
satisfied, or the holder otherwise establishes an exemption.
Backup Withholding is not an Additional Tax
Generally speaking, a foreign holder may take a credit against its U.S.
federal income tax liability for amounts withheld under the backup withholding
rules and it may obtain a refund of any excess amounts withheld under such rules
by filing the appropriate claim for refund with the Internal Revenue Service.
New Treasury Regulations
Final United States Treasury regulations, effective for payments made after
December 31, 2000, may affect the procedures to be followed by a foreign holder
in establishing its foreign status for purposes of the rules applicable to
withholding, backup withholding and information reporting. Foreign holders
should consult their tax advisors concerning such Treasury regulations.
UNITED STATES FEDERAL ESTATE TAX
Common stock owned or treated as owned by an individual who is not a
citizen or "resident" (as specifically defined for U.S. federal estate tax
purposes) of the United States at the time of death, will be included in such
individual's gross estate for U.S. federal estate tax purposes, unless an
applicable estate treaty provides otherwise.
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UNDERWRITING
Subject to the terms and conditions stated in the underwriting agreement
dated , 2000, each underwriter named below has severally agreed to
purchase and we have agreed to sell to each underwriter, the number of shares
set forth below opposite their respective names.
<TABLE>
<CAPTION>
NUMBER
NAME OF SHARES
- ---- ---------
<S> <C>
Salomon Smith Barney Inc. ..................................
U.S. Bancorp Piper Jaffray Inc. ............................
William Blair & Company, L.L.C..............................
---------
Total.............................................
=========
</TABLE>
The underwriting agreement provides that the obligations of the several
underwriters to purchase the shares included in this offering are subject to
approval of various legal matters by counsel and to various other conditions.
The underwriters are obligated to purchase all the shares, other than those
covered by the over-allotment option described below, if they purchase any of
the shares.
The underwriters, for whom Salomon Smith Barney Inc., U.S. Bancorp Piper
Jaffray Inc. and William Blair & Company, L.L.C. are acting as representatives,
propose to offer some of the shares directly to the public at the public
offering price set forth on the cover page of the prospectus and some of the
shares to various dealers at the public offering price less a concession not in
excess of $ per share. The underwriters may allow, and those dealers may
reallow, a concession not in excess of $ per share on sales to certain other
dealers. If all of the shares are not sold at the initial offering price, the
representatives may change the public offering price and the other selling
terms. The representatives have advised us that the underwriters do not intend
to confirm any sales to any accounts over which they exercise discretionary
authority.
Concours has granted to the underwriters an option, exercisable for 30 days
from the date of this prospectus, to purchase up to additional shares
of common stock at the public offering price less the underwriting discount. The
underwriters may exercise this option solely for the purpose of covering
over-allotments, if any, in connection with this offering. To the extent such
option is exercised, each underwriter will be obligated, subject to various
conditions, to purchase a number of additional shares approximately
proportionate to each underwriter's initial purchase commitment.
Concours, its officers and directors and all other stockholders of Concours
have agreed, that, for a period of 180 days from the date of this prospectus,
they will not, without the prior written consent of Salomon Smith Barney Inc.,
dispose of or hedge any shares of common stock of Concours or any securities
convertible into or exchangeable for common stock. Salomon Smith Barney Inc. in
its sole discretion may release any of the securities subject to these lock-up
agreements at any time without notice.
At our request, the underwriters have reserved up to five percent (5%) of
the shares of common stock for sale, at the initial public offering price, to
employees and friends of Concours through a directed share program. The number
of shares of common stock available for sale to the general public in the public
offering will be reduced to the extent these persons purchase those directed
shares. Any directed shares which are not so purchased will be offered by the
underwriters to the general public on the same basis as the other shares offered
by this prospectus. We have agreed to indemnify the underwriters against certain
liabilities and expenses, including liabilities under the Securities Act of
1933, in connection with sales of the directed shares.
Prior to this offering, there has been no public market for our common
stock. Consequently, the initial public offering price for the shares will be
determined by negotiations between Concours and the representatives. Among the
factors to be considered in determining the initial public offering price are
our record of operations, current financial condition, future prospects, our
markets, the economic conditions in and future prospects for the industry in
which we compete, our management, and currently prevailing general conditions in
the equity securities markets, including current market valuations of publicly
traded
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companies considered comparable to Concours. We cannot assure you, however, that
the prices at which the shares will sell in the public market after this
offering will not be lower than the price at which they are sold by the
underwriters or that an active trading market in our common stock will develop
and continue after this offering.
We have applied to have our common stock included for quotation on the
Nasdaq National Market under the symbol " ".
The following table shows the underwriting discounts and commissions to be
paid to the underwriters by us in connection with this offering. These amounts
are shown assuming both no exercise and full exercise of the underwriters'
option to purchase additional shares of common stock.
<TABLE>
<CAPTION>
NO
EXERCISE FULL EXERCISE
---------- -------------
<S> <C> <C>
Per Share................................................... $ $
Total............................................. $ $
</TABLE>
In connection with this offering, Salomon Smith Barney Inc., on behalf of
the underwriters, may purchase and sell shares of common stock in the open
market. These transactions may include over-allotment, syndicate covering
transactions and stabilizing transactions. Over-allotment involves syndicate
sales of common stock in excess of the number of shares to be purchased by the
underwriters in the offering, which creates a syndicate short position.
Syndicate covering transactions involve purchases of the common stock in the
open market after the distribution has been completed in order to cover
syndicate short positions. Stabilizing transactions consist of bids or purchases
of common stock made for the purpose of preventing or retarding a decline in the
market price of the common stock while the offering is in progress. The
underwriters may also impose a penalty bid. Penalty bids permit the underwriters
to reclaim a selling concession from a syndicate member when Salomon Smith
Barney Inc., in covering syndicate short positions or making stabilizing
purchases, repurchases shares originally sold by that syndicate member.
Any of these activities may cause the price of the common stock to be
higher than the price that otherwise would exist in the open market in the
absence of these types of transactions. These transactions may be effected on
the Nasdaq National Market or in the over-the-counter market, or otherwise and,
if commenced, may be discontinued at any time.
Most of the shares to be sold by Concours in this offering will be sold to
U.S. purchasers, but a limited number of shares may be sold to non-U.S.
purchasers.
If and to the extent that any shares are offered or sold in the United
Kingdom, each representative agrees that it:
- will not offer or sell any shares to persons in the United Kingdom except
to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (whether as principal or agent) for
the purposes of their businesses or in other circumstances which do not
constitute an offer to the public in the United Kingdom for the purposes
of the Public Offers of Securities Regulation 1995 (the "Regulations");
- will comply with all applicable provisions of the Regulations and of the
Financial Services Act 1986 with respect to anything done by it in
relation to the shares of common stock offered hereby in, from or
otherwise involving the United Kingdom; and
- will only issue or pass on in the United Kingdom any document received by
it in connection with the issue of these shares if that person is of a
kind described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1996 (as amended) or is a
person to whom such document may otherwise lawfully be issued or passed
on.
We estimate that the total expenses of this offering will be $ .
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We have agreed to indemnify the underwriters against various liabilities,
including liabilities under the Securities Act of 1933, or to contribute to
payments the underwriters may be required to make in respect of any of those
liabilities.
Some of the underwriters have performed various investment banking,
commercial banking and advisory services for us from time to time for which they
have received customary fees and expenses. The underwriters may, from time to
time, engage in transactions with and perform services for us in the ordinary
course of their business.
LEGAL MATTERS
The validity of the shares of our common stock offered hereby will be
passed upon for us by Jenkens & Gilchrist, A Professional Corporation, Houston,
Texas, and for the underwriters by Cravath, Swaine & Moore, New York, New York.
EXPERTS
The consolidated financial statements of The Concours Group, Inc. included
elsewhere in this prospectus to the extent and for the periods indicated in
their report have been audited by Arthur Andersen LLP, independent public
accountants, and are included herein in reliance upon the authority of said firm
as experts in giving said report.
The consolidated financial statements of Cepro AB included elsewhere in
this prospectus to the extent and for the periods indicated in their report have
been audited by Deloitte & Touche AB, independent public accountants, and are
included herein in reliance upon the authority of said firm as experts in giving
said report.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the
Securities Act with respect to the common stock offered by this prospectus. This
prospectus, which is part of the registration statement, omits certain
information, exhibits, schedules and undertakings set forth in the registration
statement. For further information pertaining to us and our common stock, we
refer you to our registration statement and its exhibits and schedules.
Statements contained in this prospectus as to the contents or provisions of any
documents referred to in this prospectus are not necessarily complete, and in
each instance where a copy of the document has been filed as an exhibit to the
registration statement, we refer you to the exhibit for a more complete
description of the matters involved.
You may read and copy all or any portion of the registration statement
without charge at the office of the SEC at 450 Fifth Street, N.W., Washington,
D.C. 20549. Copies of the registration statement may be obtained from the SEC at
prescribed rates from the Public Reference Section of the SEC at the above
address and at the SEC's regional offices located at 7 World Trade Center, 13th
Floor, New York, New York 10048, and at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. In addition, registration
statements and certain other filings made with the SEC electronically are
publicly available through the SEC's website at http://www.sec.gov. The
registration statement, including all exhibits and amendments to the
registration statement, has been filed electronically with the SEC.
As a result of the offering, we will become subject to the information and
reporting requirements of the Securities Exchange Act of 1934, as amended, and,
in accordance therewith, will file periodic reports, proxy statements and other
information with the Securities and Exchange Commission. Upon approval of the
common stock for the quotation on the Nasdaq National Market, these reports,
proxy and information statements and other information may also be inspected at
the offices of Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006.
We intend to furnish our stockholders with annual reports containing
audited consolidated financial statements and make available quarterly reports
for the first three quarters of each year containing unaudited interim
consolidated financial information.
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THE CONCOURS GROUP, INC.
INDEX
<TABLE>
<S> <C>
The Concours Group, Inc. --
Report of Independent Public Accountants.................. F-2
Consolidated Balance Sheets............................... F-3
Consolidated Statements of Operations and Comprehensive
Loss................................................... F-4
Consolidated Statements of Stockholders' Equity
(Deficit).............................................. F-5
Consolidated Statements of Cash Flows..................... F-6
Notes to Consolidated Financial Statements................ F-7
Cepro AB --
Report of Independent Auditors............................ F-19
Consolidated Income Statements............................ F-20
Consolidated Balance Sheets............................... F-21
Consolidated Statements of Changes in Financial
Position............................................... F-22
Consolidated Statements of Changes in Stockholders'
Equity................................................. F-23
Notes to Consolidated Financial Statements................ F-24
</TABLE>
F-1
<PAGE> 83
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
The Concours Group, Inc.:
We have audited the accompanying consolidated balance sheets of The
Concours Group, Inc., and subsidiaries as of December 31, 1998 and 1999, and the
related consolidated statements of operations and comprehensive loss,
stockholders' equity (deficit) and cash flows for the period from inception
(January 22, 1997) through December 31, 1997, and for the years ended December
31, 1998 and 1999. These consolidated financial statements are the
responsibility of Concours' management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The Concours
Group, Inc., and subsidiaries as of December 31, 1998 and 1999, and the
consolidated results of their operations and cash flows for the period from
inception (January 22, 1997) through December 31, 1997, and for the years ended
December 31, 1998 and 1999, in conformity with accounting principles generally
accepted in the United States.
ARTHUR ANDERSEN LLP
Houston, Texas
March 1, 2000
F-2
<PAGE> 84
THE CONCOURS GROUP, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1999
ASSETS
<TABLE>
<CAPTION>
1998 1999
----------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 1,056,169 $ 705,169
Accounts receivable, net of allowance for doubtful
accounts of $106,525 and $33,182, respectively......... 3,592,123 6,475,455
Prepaid expenses and other................................ 494,095 720,480
----------- ------------
Total current assets.............................. 5,142,387 7,901,104
Property and equipment, net of accumulated depreciation of
$246,861 and $563,693, respectively....................... 629,681 713,178
Intangible assets, net...................................... -- 164,062
Other assets................................................ 31,594 69,284
----------- ------------
Total assets...................................... $ 5,803,662 $ 8,847,628
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 952,425 $ 2,887,475
Accrued liabilities....................................... 672,301 1,665,543
Line of credit............................................ -- 1,000,000
Deferred revenue.......................................... 5,550,856 7,481,924
----------- ------------
Total current liabilities......................... 7,175,582 13,034,942
Convertible debt............................................ -- 4,000,000
----------- ------------
Total liabilities................................. 7,175,582 17,034,942
----------- ------------
Commitments and contingencies
Stockholders' equity (deficit):
Preferred stock, $.01 par value, 5,000,000 shares
authorized, 1,810,000 shares issued and outstanding;
aggregate liquidation preference of $4,290,000......... 18,100 18,100
Common stock, $.01 par value, 50,000,000 shares
authorized, 3,355,929 shares and 3,385,929 shares
issued, respectively................................... 33,559 33,859
Additional paid-in capital................................ 6,281,618 6,854,526
Notes receivable from employees........................... (206,250) --
Deferred compensation..................................... (575,859) (782,357)
Treasury stock, at cost, 222,250 shares and 272,250
shares,
respectively........................................... (312,563) (462,563)
Accumulated other comprehensive income (loss)............. 28,398 (33,375)
Retained earnings (deficit)............................... (6,638,923) (13,815,504)
----------- ------------
Total stockholders' equity (deficit).............. (1,371,920) (8,187,314)
----------- ------------
Total liabilities and stockholders' equity
(deficit)...................................... $ 5,803,662 $ 8,847,628
=========== ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 85
THE CONCOURS GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE PERIOD FROM INCEPTION (JANUARY 22, 1997) THROUGH DECEMBER 31, 1997, AND
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1999
<TABLE>
<CAPTION>
1997 1998 1999
---------- ----------- -----------
<S> <C> <C> <C>
Revenue:
Consulting........................................... $4,877,641 $ 8,528,990 $15,737,811
Continuous service and other......................... 3,934,352 7,422,401 10,342,584
---------- ----------- -----------
Total revenue................................ 8,811,993 15,951,391 26,080,395
Costs and expenses:
Consulting........................................... 2,791,042 6,768,927 11,487,450
Continuous service and other......................... 2,984,050 6,227,271 8,245,391
Stock-based compensation.......................... -- 20,419 102,302
---------- ----------- -----------
Gross margin................................. 3,036,901 2,934,774 6,245,252
Sales and marketing.................................. 2,377,399 3,963,623 6,875,831
General and administrative........................... 1,681,332 4,691,966 6,212,336
Stock-based compensation.......................... -- 17,972 79,720
---------- ----------- -----------
Operating loss............................... (1,021,830) (5,738,787) (6,922,635)
Interest income........................................ 48,049 74,052 1,480
Interest expense....................................... -- 407 255,426
---------- ----------- -----------
Net loss..................................... (973,781) (5,665,142) (7,176,581)
Comprehensive loss, foreign currency translation
adjustment........................................... -- 28,398 (61,773)
---------- ----------- -----------
Comprehensive loss..................................... $ (973,781) $(5,636,744) $(7,238,354)
========== =========== ===========
Net loss per share, basic and diluted.................. $ (0.43) $ (1.73) $ (2.32)
========== =========== ===========
Shares used in computing basic and diluted net loss per
share................................................ 2,270,630 3,279,447 3,088,248
========== =========== ===========
Pro forma net loss per share, basic and diluted........ $ (1.47)
===========
Shares used in computing pro forma basic and diluted
net loss per share................................... 4,898,248
===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 86
THE CONCOURS GROUP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM INCEPTION (JANUARY 22, 1997) THROUGH DECEMBER 31, 1997, AND
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1999
<TABLE>
<CAPTION>
SERIES A
CONVERTIBLE NOTES
PREFERRED STOCK COMMON STOCK ADDITIONAL RECEIVABLE
------------------- ------------------- PAID-IN FROM DEFERRED TREASURY
SHARES AMOUNT SHARES AMOUNT CAPITAL EMPLOYEES COMPENSATION STOCK
--------- ------- --------- ------- ---------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, Inception (January 22,
1997)............................ -- $ -- -- $ -- $ -- $ -- $ -- $ --
Issuance of preferred stock, net
of issuance costs of
$210,000....................... 1,500,000 15,000 -- -- 1,275,000 -- -- --
Issuance of common stock......... -- -- 2,773,429 27,734 19,800 -- -- --
Net loss......................... -- -- -- -- -- -- -- --
--------- ------- --------- ------- ---------- --------- --------- ---------
Balance, December 31, 1997........ 1,500,000 15,000 2,773,429 27,734 1,294,800 -- -- --
Issuance of preferred stock...... 310,000 3,100 -- -- 2,786,900 -- -- --
Issuance of common stock......... -- -- 240,000 2,400 1,197,600 -- -- --
Issuance of common stock to
employees for notes receivable
and cash....................... -- -- 342,500 3,425 388,068 (390,000) -- --
Purchase of 72,250 shares of
common stock with cash for
treasury....................... -- -- -- -- -- -- -- (162,563)
Receipt of 150,000 shares of
common stock for treasury...... -- -- -- -- -- 150,000 -- (150,000)
Collection of note receivable
from employee.................. -- -- -- -- -- 33,750 -- --
Foreign currency translation
adjustment..................... -- -- -- -- -- -- -- --
Deferred compensation related to
grants of options to purchase
common stock................... -- -- -- -- 614,250 -- (614,250) --
Amortization of deferred
compensation................... -- -- -- -- -- -- 38,391 --
Net loss......................... -- -- -- -- -- -- -- --
--------- ------- --------- ------- ---------- --------- --------- ---------
Balance, December 31, 1998........ 1,810,000 18,100 3,355,929 33,559 6,281,618 (206,250) (575,859) (312,563)
Issuance of common stock upon
exercise of stock options...... -- -- 5,000 50 9,638 -- -- --
Purchase of 50,000 shares of
common stock for treasury...... -- -- -- -- -- -- -- (150,000)
Collection of notes receivable
from employees................. -- -- -- -- -- 206,250 -- --
Issuance of common stock for
acquisition of business........ -- -- 25,000 250 174,750 -- -- --
Foreign currency translation
adjustment..................... -- -- -- -- -- -- -- --
Deferred compensation related to
grants of options to purchase
common stock................... -- -- -- -- 388,520 -- (388,520) --
Amortization of deferred
compensation................... -- -- -- -- -- -- 182,022 --
Net loss......................... -- -- -- -- -- -- -- --
--------- ------- --------- ------- ---------- --------- --------- ---------
Balance, December 31, 1999........ 1,810,000 $18,100 3,385,929 $33,859 $6,854,526 $ -- $(782,357) $(462,563)
========= ======= ========= ======= ========== ========= ========= =========
<CAPTION>
ACCUMULATED
OTHER
COMPREHENSIVE RETAINED
INCOME EARNINGS
(LOSS) (DEFICIT)
------------- ------------
<S> <C> <C>
Balance, Inception (January 22,
1997)............................ $ -- $ --
Issuance of preferred stock, net
of issuance costs of
$210,000....................... -- --
Issuance of common stock......... -- --
Net loss......................... -- (973,781)
-------- ------------
Balance, December 31, 1997........ -- (973,781)
Issuance of preferred stock...... -- --
Issuance of common stock......... -- --
Issuance of common stock to
employees for notes receivable
and cash....................... -- --
Purchase of 72,250 shares of
common stock with cash for
treasury....................... -- --
Receipt of 150,000 shares of
common stock for treasury...... -- --
Collection of note receivable
from employee.................. -- --
Foreign currency translation
adjustment..................... 28,398 --
Deferred compensation related to
grants of options to purchase
common stock................... -- --
Amortization of deferred
compensation................... -- --
Net loss......................... -- (5,665,142)
-------- ------------
Balance, December 31, 1998........ 28,398 (6,638,923)
Issuance of common stock upon
exercise of stock options...... -- --
Purchase of 50,000 shares of
common stock for treasury...... -- --
Collection of notes receivable
from employees................. -- --
Issuance of common stock for
acquisition of business........ -- --
Foreign currency translation
adjustment..................... (61,773) --
Deferred compensation related to
grants of options to purchase
common stock................... -- --
Amortization of deferred
compensation................... -- --
Net loss......................... -- (7,176,581)
-------- ------------
Balance, December 31, 1999........ $(33,375) $(13,815,504)
======== ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 87
THE CONCOURS GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION (JANUARY 22, 1997) THROUGH DECEMBER 31, 1997, AND
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1999
<TABLE>
<CAPTION>
1997 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss............................................ $ (973,781) $(5,665,142) $(7,176,581)
Adjustments to reconcile net loss to cash flows
provided by (used in) operating activities --
Depreciation and amortization.................... 60,571 191,706 327,768
Loss on disposition of assets.................... -- 5,989 --
Amortization of deferred compensation............ -- 38,391 182,022
Changes in operating assets and liabilities --
Accounts receivable, net....................... (2,080,274) (1,511,849) (2,839,150)
Prepaid expenses and other..................... (204,291) (289,804) (217,005)
Other assets................................... -- (31,594) (37,690)
Accounts payable............................... 465,436 486,989 1,928,282
Accrued liabilities............................ 326,859 345,442 944,145
Deferred revenue............................... 2,901,578 2,649,278 1,931,068
----------- ----------- -----------
Net cash flows provided by (used in)
operating activities...................... 496,098 (3,780,594) (4,957,141)
----------- ----------- -----------
Cash flows from investing activities:
Purchase of property and equipment.................. (348,507) (539,440) (398,024)
----------- ----------- -----------
Net cash flows used in investing
activities................................ (348,507) (539,440) (398,024)
----------- ----------- -----------
Cash flows from financing activities:
Purchase of treasury stock.......................... -- (162,563) (150,000)
Net proceeds from issuance of common and preferred
stock............................................ 1,337,534 4,025,243 215,938
Net proceeds from convertible debt.................. -- -- 4,000,000
Net proceeds from line of credit.................... -- -- 1,000,000
----------- ----------- -----------
Net cash flows provided by financing
activities................................ 1,337,534 3,862,680 5,065,938
----------- ----------- -----------
Effect of exchange rate changes on cash and cash
equivalents......................................... -- 28,398 (61,773)
----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents......................................... 1,485,125 (428,956) (351,000)
Cash and cash equivalents, beginning of period........ -- 1,485,125 1,056,169
----------- ----------- -----------
Cash and cash equivalents, end of period.............. $ 1,485,125 $ 1,056,169 $ 705,169
=========== =========== ===========
Supplemental data:
Cash paid for interest.............................. $ -- $ 871 $ 252,351
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 88
THE CONCOURS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. BUSINESS AND ORGANIZATION:
The Concours Group, Inc. (Concours), delivers management and strategy
consulting, research and executive education services which enable Concours'
clients to improve their performance and competitiveness by capitalizing on the
potential of business, technology and human assets. Concours' services are
currently focused on advising Global 1000 and mid-size corporations in
developing and deploying eBusiness strategies. Concours provides consulting
services in the following areas: (a) eBusiness and business strategy, (b)
eBusiness solution implementation planning and management, (c) information
technology strategy, implementation planning and management and (d) custom
executive education. Concours' services also include subscription-based
multi-client and research programs. Founded in January 1997 as a Delaware
corporation, Concours' offices in the United States include the corporate
headquarters in Kingwood, Texas, and an office in Cambridge, Massachusetts. In
1998 and 1999, Concours established its European infrastructure and has offices
in London, Paris, Munich, Amsterdam and Gothenburg (Sweden).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Consolidation
The accompanying consolidated financial statements include the accounts of
Concours and its wholly owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated.
Revenue Recognition
A majority of revenue generated by Concours is consulting revenue, which is
comprised of professional fees and reimbursable out-of-pocket expenses.
Consulting engagements are typically priced on a time and materials basis.
Revenue from such fees is recognized when earned, in accordance with the terms
of the client engagement. Continuous service revenue is comprised of
subscription-based membership fees related to multi-client and research
programs. Other revenue represents fees from client participation in individual
research projects and from the sale of reports from completed research projects.
Subscription fees and most other revenue are recorded as deferred revenue when
invoiced and are recognized ratably over the subscription period or, in the case
of other revenue, over the term of the related projects. Revenue derived from
the sale of reports from completed research projects is recognized upon delivery
of the reports.
Costs and Expenses of Consulting and Continuous Service and Other
Costs and expenses of consulting and continuous service and other includes
payroll expenses directly associated with generation of revenue, consulting
fees, speaker fees, travel and entertainment expenses, conference facilities and
program expenses. Costs of consulting are expensed as incurred. Costs of
continuous service and other are deferred and amortized over the same period as
the related revenue.
Cash and Cash Equivalents
Concours considers all short-term investments with an original maturity of
three months or less to be cash equivalents. As of December 31, 1998 and 1999,
Concours had deposits in excess of federally insured limits.
F-7
<PAGE> 89
THE CONCOURS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Prepaid Expenses and Other
Prepaid expenses and other consists primarily of deposits for continuous
service programs, including conference facilities, speakers, entertainment and
promotion items, prepaid commissions and payments for brochures and agendas.
Property and Equipment
Property and equipment is carried at cost and depreciated on a
straight-line basis over the estimated useful economic lives of the related
assets. The estimated useful lives employed in computing depreciation are three
years for computer equipment and software and office equipment and five years
for furniture and fixtures. When property is retired or otherwise disposed of,
the cost and accumulated depreciation are removed from the accounts and any
resulting gain or loss is included in income. Maintenance and repairs are
charged to expense when incurred. Depreciation expense for property and
equipment for the period from inception through December 31, 1997, and for the
years ended December 31, 1998 and 1999, was $60,571, $191,706 and $316,831,
respectively, and was included in general and administrative expenses in the
accompanying statements of operations and comprehensive loss.
Intangible Assets
At December 31, 1999, the only component of intangible assets was a
noncompete agreement with the former owner of an acquired company (see Note 9).
The intangible asset is being amortized over the two-year life of the agreement.
Accumulated amortization at December 31, 1999, was $10,937. There were no
intangible assets at December 31, 1998.
Accrued Liabilities
Accrued liabilities at December 31, 1998 and 1999, was as follows:
<TABLE>
<CAPTION>
1998 1999
-------- ----------
<S> <C> <C>
Accrued payroll............................................. $ 34,198 $ 339,233
Accrued bonuses and commissions............................. 351,676 1,120,921
Other....................................................... 286,427 205,389
-------- ----------
$672,301 $1,665,543
======== ==========
</TABLE>
Income Taxes
Concours accounts for income taxes using the liability method prescribed by
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes." Deferred income taxes reflect the impact of temporary differences
between financial accounting and tax bases of assets and liabilities.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of expenses during the
reporting period. Actual results could differ from those estimates.
F-8
<PAGE> 90
THE CONCOURS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Comprehensive Loss
Concours has adopted SFAS No. 130, "Reporting Comprehensive Income," which
establishes standards for reporting and displaying comprehensive income and its
components. Comprehensive income is the total of net income and all other
nonowner changes in equity. The only component of 1997 comprehensive loss for
Concours was net loss.
Net Loss Per Share
Net loss per share is computed in accordance with SFAS No. 128, "Earnings
Per Share," using the weighted average number of shares of common stock
outstanding. Shares associated with stock options and the convertible preferred
stock are not included because they are antidilutive due to losses incurred for
all periods presented.
Pro forma net loss per share is computed using the weighted average number
of common shares outstanding for the applicable period, including the pro forma
effects of the automatic conversion of each outstanding share of convertible
preferred stock into 1,810,000 shares of Concours' common stock effective upon
the closing of Concours' proposed initial public offering (see Note 11) as if
such conversion occurred on the dates of original issuance.
Fair Value of Financial Instruments
The fair value of current assets and current liabilities approximates their
carrying value due to their short maturity.
Recent Accounting Pronouncement
In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) 101, "Revenue Recognition in Financial Statements,"
which provides guidance related to revenue recognition based on interpretations
and practices followed by the SEC. SAB 101 is effective the first fiscal quarter
of fiscal years beginning after December 15, 1999, and requires companies to
report any changes in revenue recognition as a cumulative change in accounting
principle at the time of implementation. Concours' management believes that its
revenue recognition policy is in accordance with SAB 101 and does not believe
that adoption of the SAB will have a material impact on Concours' financial
position or results of operations.
3. PROPERTY AND EQUIPMENT:
Property and equipment at December 31, 1998 and 1999, was as follows:
<TABLE>
<CAPTION>
1998 1999
--------- ----------
<S> <C> <C>
Computer equipment and software............................. $ 743,869 $1,105,887
Office equipment............................................ 43,819 60,238
Furniture and fixtures...................................... 88,854 110,746
--------- ----------
876,542 1,276,871
Less -- Accumulated depreciation............................ (246,861) (563,693)
--------- ----------
$ 629,681 $ 713,178
========= ==========
</TABLE>
F-9
<PAGE> 91
THE CONCOURS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. DEBT:
Line of Credit
Concours had a line of credit through a financial institution that provided
for borrowings of up to $1.0 million. Borrowings under the line of credit bore
interest at a rate of the Bank One index rate plus 0.5 percent (9.0 percent at
December 31, 1999) which was payable monthly. Borrowings under the line of
credit were not secured by any of Concours' assets but were secured by a $1.0
million letter of credit provided by an affiliate of Infologix (BVI) Ltd. At
December 31, 1999, Concours had a balance of $1.0 million outstanding under the
line of credit. There were no amounts outstanding under the line of credit at
December 31, 1998. On February 17, 2000, Concours paid off the outstanding
balance of the line of credit with proceeds from the sale of common stock to an
affiliate of that same stockholder, and the line of credit has terminated (see
Note 8).
Convertible Debt
During 1999, Concours received $4.0 million in cash from an affiliate of
Infologix (BVI) Ltd. in exchange for four unsecured convertible notes of $1.0
million each, bearing interest at rates ranging from 7.75 percent to 8.00
percent payable quarterly, and rights to receive stock options under similar
terms and conditions as those granted by Concours under the 1999 Employee Stock
Option Plan. On February 1, 2000, the convertible notes were converted into
805,425 shares of Concours' common stock and the stockholder received warrants
to purchase 50,000 shares of common stock at $5.00 per share in consideration
for its waiver of all rights to any options under the terms of the loan
agreements.
5. INCOME TAXES:
Concours recognizes deferred tax assets and liabilities for the expected
future tax consequences of events that have been recognized in different periods
in the financial statements and tax returns. Under this method, deferred tax
assets and liabilities are determined based on the difference between the
financial statement carrying amounts and tax bases of assets and liabilities
using currently enacted rates and laws. Deferred tax assets are evaluated for
realization based on a more-likely-than-not criteria in determining if a
valuation allowance should be provided.
At December 31, 1999, Concours has net operating loss (NOL) carryforwards
for federal income tax purposes of approximately $8.0 million. Since United
States tax laws limit the time during which NOLs may be applied against future
taxable income and tax liabilities, Concours may not be able to take full
advantage of its NOL carryforwards for federal income tax purposes. The
carryforwards will begin to expire in 2012 if not otherwise used. A change in
ownership, as defined by federal income tax regulations, could significantly
limit Concours' ability to utilize its carryforwards. Concours also has NOL
carryforwards for foreign income tax of approximately $4.5 million which begin
to expire in 2004. Due to limitations placed on utilization by the foreign tax
laws, Concours may not be able to take full advantage of the foreign NOL for tax
purposes. A valuation allowance has been established to fully offset Concours'
deferred tax assets as a result of these uncertainties regarding realization.
F-10
<PAGE> 92
THE CONCOURS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A reconciliation of the statutory federal income tax rate to Concours'
effective income tax rate for the period from inception (January 22, 1997)
through December 31, 1997, and for the years ended December 31, 1998 and 1999,
was as follows:
<TABLE>
<CAPTION>
1997 1998 1999
--------- ----------- -----------
<S> <C> <C> <C>
Taxes at statutory rate....................... $(308,038) $(1,301,251) $(1,276,722)
Taxes at foreign statutory rates.............. -- (336,194) (1,080,338)
Permanent differences and other............... -- -- (85,875)
Adjustment to deferred tax valuation
allowance................................... 308,038 1,637,445 2,442,935
--------- ----------- -----------
Tax provision, as reported.......... $ -- $ -- $ --
========= =========== ===========
</TABLE>
Significant components of Concours' deferred tax assets (liabilities) at
December 31, 1998 and 1999, were as follows:
<TABLE>
<CAPTION>
1998 1999
----------- -----------
<S> <C> <C>
Federal net operating loss carryforwards................... $ 1,437,387 $ 2,705,957
Foreign net operating loss carryforwards................... 336,194 1,405,688
Depreciation and amortization.............................. (569) 18,824
Deferred revenue........................................... 193,422 121,732
Other items, net........................................... 59,757 216,925
----------- -----------
Total deferred tax assets........................ 2,026,191 4,469,126
Deferred tax valuation allowance........................... (2,026,191) (4,469,126)
----------- -----------
Net deferred tax assets.......................... $ -- $ --
=========== ===========
</TABLE>
6. EMPLOYEE BENEFIT PLAN:
In 1997, Concours adopted the Concours Group 401(k) Plan (the Plan), a
qualified retirement plan covering all of Concours' employees who are at least
21 years of age. Pursuant to the Plan, employees may elect to reduce their
current compensation by up to the statutorily prescribed annual limit and have
the amount of such reduction contributed to the Plan. The Plan permits, but does
not require, additional matching contributions by Concours on behalf of all
participants in the Plan. No contributions have been made to the Plan by
Concours.
7. COMMITMENTS AND CONTINGENCIES:
Operating Leases
Concours leases office space and equipment under long-term noncancelable
operating leases that expire at various dates through 2002. Rent expense for all
operating leases for the period from inception (January 22, 1997) through
December 31, 1997, and for the years ended December 31, 1998 and 1999,
F-11
<PAGE> 93
THE CONCOURS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
was $94,221, $154,510 and $341,040, respectively. As of December 31, 1999,
Concours had the following rental commitments under non-cancelable operating
leases:
<TABLE>
<S> <C>
Year ending December 31--
2000.................................................. $ 289,400
2001.................................................. 240,708
2002.................................................. 197,067
2003.................................................. 113,433
2004.................................................. 113,433
Thereafter............................................ 89,830
----------
Total......................................... $1,043,871
==========
</TABLE>
Claims
Concours is from time to time subject to legal proceedings and claims which
arise in the normal course of business. In the opinion of management, after
consultation with legal counsel, the amount of the ultimate liability with
respect to these actions will not have a material adverse effect on Concours'
financial position or results of its operations.
8. STOCKHOLDERS' EQUITY:
Series A Convertible Preferred Stock
During 1997 and 1998, Concours issued 1,500,000 shares and 310,000 shares,
respectively, of Series A convertible preferred stock (Series A Preferred Stock)
for net cash proceeds of $1,290,000 and $2,790,000, respectively. Each share of
Series A Preferred Stock may be converted, at the option of the holder, into one
share of common stock. The holders of Series A Preferred Stock have voting
rights identical to those of holders of common stock based on the resulting
shares of common stock which could be acquired upon conversion. The conversion
ratio is subject to adjustment, as defined in the certificate of designation,
upon the occurrence of specified events that would be dilutive in nature.
Holders of Series A Preferred Stock are entitled to liquidation preferences over
holders of common stock. The Series A Preferred Stock is automatically
convertible into common stock upon consummation of an initial public offering of
Concours common stock.
Series B Convertible Redeemable Preferred Stock
Effective February 29, 2000, Concours sold a total of 1,546,784 shares of
Series B convertible redeemable preferred stock (Series B Preferred Stock), par
value $0.01 per share, for $15.0 million before offering costs of $0.6 million.
Under the terms of the amended and restated certificate of designation of
the powers, rights and preferences of both the Series A and Series B Preferred
Stock, the convertible preferred stock has the following characteristics:
Dividends -- Holders of Series A and Series B Preferred Stock shall be
entitled to receive dividends at a cumulative rate of 8 percent per annum of the
original purchase price per share of such stock payable only in Series A and
Series B Preferred Stock. Such dividend shall be payable only if a registration
statement covering Concours' initial public offering of its common stock is not
declared effective before the end of 2000. No dividends or other distributions
may be declared or paid on the common stock until any and all dividends declared
on the Series A and Series B Preferred Stock have been paid in full.
Liquidation Preference -- In the event of any liquidation, dissolution or
winding up of Concours, the holders of Series A and Series B Preferred Stock
shall be entitled to receive, in preference to the common
F-12
<PAGE> 94
THE CONCOURS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
stockholders, for each respective class of convertible preferred stock, an
amount per share equal to the sum of the aggregate consideration paid for the
stock (including contributions to capital made pro rata by all of the holders of
stock) plus the aggregate amount of all accrued but unpaid dividends, divided by
the number of shares of stock outstanding. After liquidation preferences have
been paid to the holders of Series A Preferred Stock and then to the holders of
Series B Preferred Stock, the remaining assets of Concours shall be distributed
to the holders of common stock, and the holders of Series A and Series B
Preferred Stock, ratably on an as-converted basis. The aggregate liquidation
preference of Series A and Series B Preferred Stock is $19.3 million at February
29, 2000.
Voting Rights -- Each holder of the Series A and Series B Preferred Stock
shall have the same voting rights and vote with the holders of common stock with
respect to every matter voted on by the holders of the common stock.
Conversion -- Each share of Series A and Series B Preferred Stock may be
converted at any time at the option of the holder into one share of common
stock, subject to adjustment upon the occurrence of specified events that would
be dilutive in nature. Upon the consummation of a public offering of Concours'
common stock, all issued and outstanding shares of Series A and Series B
Preferred Stock automatically convert into common stock.
Redemption -- At any time after the fifth anniversary of the original
issuance of the Series B Preferred Stock and at the written request of a least
66 2/3 percent of the holders of the then outstanding shares of each of the
Series A and Series B Preferred Stock, Concours will redeem all of the shares of
the Series A and/or Series B Preferred Stock, as applicable, within one year
subsequent to the date the redemption election is received by Concours.
Common Stock
On February 1, 2000, Concours issued 750,000 shares of common stock for
$6.0 million to Concours' largest stockholder. A portion of these funds was used
to repay a $1.0 million bank line of credit (see Note 4).
The holders of the common stock are entitled to receive dividends when and
as declared by the board of directors. Under the terms of a voting trust
agreement (the voting trust) and a voting agreement, as amended (the voting
agreement), the majority of the common stockholders are subject to certain
rights of the trustee including the right to exercise all stockholders' voting
rights and powers and the right to elect three members of the board of
directors. Concours' president and chief executive officer is serving as the
trustee through the year 2019. The voting trust and the voting agreement
terminate upon the consummation of a qualified initial public offering of
Concours' common stock.
Notes Receivable from Employees
During 1998, Concours entered into two promissory notes receivable totaling
$390,000 in connection with the issuance of 340,000 shares of common stock to
two employees. The full-recourse notes were noninterest-bearing, were secured by
a pledge of the shares acquired and the employees' other assets and were payable
in full by January 2001. During 1998, one of the notes was reduced by $150,000
upon the receipt by Concours of 150,000 shares of Concours' common stock in
which the employee was not vested. The remaining portions of the notes were
collected in 1998 and 1999.
Stock Option Plans
Concours has adopted the 1997 Stock Option Plan, the 1998 Stock Option
Plan, the 1998 European Equity Compensation Plan and the 1999 Stock Option Plan
which provides for the issuance of 2,435,857 shares to employees, consultants,
advisors and directors of Concours. Under all stock option
F-13
<PAGE> 95
THE CONCOURS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
plans, Concours grants to the optionee an incentive option to purchase shares of
Concours' common stock that expires 10 years from the date of grant. The
incentive options become exercisable at annual increments of 25 percent
beginning on the first anniversary of the grant date. A portion of these options
are subject to certain acceleration provisions including a change of control of
Concours and the completion of a public offering of Concours' stock.
A summary of the combined balance of the stock option plans as of December
31, 1997, 1998 and 1999, and the activity during the periods then ended was as
follows:
<TABLE>
<CAPTION>
OUTSTANDING EXERCISABLE
-------------------- ------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
SHARES EXERCISE EXERCISE
RESERVED SHARES PRICE SHARES PRICE
---------- --------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
Balance, at inception (January 1997)..... -- -- $ -- $ -- $ --
Shares reserved........................ 460,857 -- --
Granted................................ (432,500) 432,500 1.00
---------- ---------
Balance, December 31, 1997............... 28,357 432,500 1.00 -- --
Shares reserved........................ 1,975,000 --
Granted................................ (1,036,500) 1,036,500 2.08
Exercised.............................. -- (2,500) 1.00
Canceled or forfeited.................. 93,750 (93,750) 1.00
---------- ---------
Balance, December 31, 1998............... 1,060,607 1,372,750 1.82 105,625 1.00
Granted................................ (610,000) 610,000 4.08
Exercised.............................. -- (5,000) 1.94
Canceled or forfeited.................. 214,125 (214,125) 2.37
---------- ---------
Balance, December 31, 1999............... 664,732 1,763,625 2.53 408,125 1.54
========== =========
</TABLE>
Concours follows SFAS No. 123 which permits Concours to use the method of
accounting for employee stock options specified in Accounting Principles Board
(APB) Opinion No. 25, "Accounting for Stock Issued to Employees," and related
interpretations. Under APB Opinion No. 25, Concours recognizes as compensation
expense the excess of the estimated fair value of the common stock issuable upon
exercise of such options over the aggregate exercise price of such options at
the date of grant. Any resulting compensation expense is amortized ratably over
the vesting period of each option. The compensation expense resulting from such
options was $38,391 and $182,022 during the years ended December 31, 1998 and
1999, respectively.
For stock options issued through December 31, 1999, Concours expects to
record future amortization expense for deferred compensation, as follows:
$250,693 during 2000, $250,693 during 2001, $212,302 during 2002 and $68,671
during 2003. The amount of compensation expense to be recorded in future periods
would decrease if unvested options for which deferred compensation has been
recorded are subsequently canceled.
Since Concours accounts for the stock option plans under APB Opinion No. 25
and related interpretations, no compensation cost has been recognized for grants
with exercise prices equal to or in excess of fair value at the grant date. Had
compensation expense for these plans been determined using the fair value method
as set forth in SFAS No. 123, Concours' pro forma net loss and net loss per
share (basic and diluted) would have increased to $(981,303) and $(0.43),
respectively, in 1997, $(5.9 million) and $(1.78), respectively, in 1998 and
$(7.9 million) and $(2.50), respectively, in 1999. The pro forma effects for
fiscal 1997, 1998 and 1999 are not necessarily indicative of the pro forma
effects in future years.
F-14
<PAGE> 96
THE CONCOURS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The weighted average fair value of options granted was $0.80, $1.65 and $3.27
during 1997, 1998 and 1999, respectively. The fair value was estimated on the
date of grant using the Black-Scholes option pricing model with the following
weighted average assumptions used for grants in fiscal 1997, 1998 and 1999:
expected volatility of 69.92 percent; risk-free interest rates of 5.84 percent,
4.86 percent and 5.48 percent, respectively; and expected lives of 10 years.
The number and weighted average fair value of options granted in 1997, 1998
and 1999 was as follows:
<TABLE>
<CAPTION>
1997 1998 1999
--------------------- -------------------- --------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
SHARES FAIR VALUE SHARES FAIR VALUE SHARES FAIR VALUE
-------- ---------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Option price equals fair
market value.......... 432,500 $0.80 699,000 $2.07 210,500 $2.23
Option price greater
than fair market
value................. -- -- -- -- 135,000 4.00
Option price less than
fair market value..... -- -- 337,500 0.79 264,500 3.73
</TABLE>
The following table summarizes information about fixed-price stock options
outstanding at December 31, 1999:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- ------------------------------------------------------------ ----------------------------
WEIGHTED
AVERAGE
REMAINING
CONTRACTUAL WEIGHTED WEIGHTED
RANGE OF OUTSTANDING LIFE AVERAGE EXERCISABLE AVERAGE
EXERCISE PRICES SHARES (IN YEARS) EXERCISE PRICE SHARES EXERCISE PRICE
- --------------- ----------- ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$1.00-$2.50 831,000 8.45 $1.26 314,250 $1.30
$2.51-$5.00 932,625 9.10 3.67 93,875 2.82
--------- -------
$1.00-$5.00 1,763,625 8.80 2.53 408,125 1.54
========= =======
</TABLE>
From January through March 1, 2000, Concours granted employees additional
options under the above plans to purchase 586,350 shares of common stock at
exercise prices equal to the fair value at the date of grant that ranged from
$8.00 to $10.00 per share.
9. ACQUISITION:
On November 18, 1999, Concours acquired Inforesma, a Swedish provider of
subscription-based multi-client programs, for approximately $118,000 in cash and
the issuance of 25,000 shares of common stock. The acquisition was accounted for
as a purchase and, accordingly, the total purchase price of $293,000 was
allocated to the assets acquired and liabilities assumed based on their
respective fair values. In conjunction with the acquisition, the former owner
entered into a two-year non-compete agreement with Concours.
10. SEGMENT AND GEOGRAPHICAL INFORMATION:
Management evaluates the performance of Concours' operations under two
separate business segments, consulting and continuous service and other, the
latter of which includes multi-client programs, subscription-based research
programs and individual research projects. The two segments are managed
separately because each business provides a different type of service, utilizes
different cost structures and billing methods and requires different resources
and marketing strategies. Components of net loss include
F-15
<PAGE> 97
THE CONCOURS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
all costs directly associated with generating revenue for each of the operating
segments. Certain costs including corporate overhead, maintaining a dedicated
sales force, direct mailings and interest expense have not been included as
management does not allocate these expenses in assessing segment performance.
Concours operates principally in the United States, with operations in
various locations in Europe. Revenue derived from Europe represented
approximately 10 percent of total revenue for the year ended December 31, 1999.
Prior to 1999, revenue generated in foreign countries was not significant to
Concours' operations. Concours' foreign operations are subject to local
government regulations and to the uncertainties of the economic and political
conditions of those areas.
No single customer accounted for 10 percent or more of total revenue for
the periods ended December 31, 1998 and 1999. In 1997, one customer accounted
for more than 10 percent of revenue.
Financial information for the reportable segments for the period from
inception (January 22, 1997) through December 31, 1997, and for the years ended
December 31, 1998 and 1999, was as follows:
<TABLE>
<CAPTION>
1997 1998 1999
----------- ----------- ------------
<S> <C> <C> <C>
Revenue --
Consulting................................. $ 4,877,641 $ 8,528,990 $ 15,737,811
Continuous services........................ 3,934,352 7,422,401 10,342,584
----------- ----------- ------------
$ 8,811,993 $15,951,391 $ 26,080,395
=========== =========== ============
Net income (loss) --
Consulting................................. $ 1,374,227 $ 638,633 $ 1,899,601
Continuous services........................ 432,375 210,987 1,195,127
All other.................................. (2,780,383) (6,514,762) (10,271,309)
----------- ----------- ------------
$ (973,781) $(5,665,142) $ (7,176,581)
=========== =========== ============
Identifiable assets --
Consulting................................. $ 1,156,428 $ 2,335,863 $ 3,665,691
Continuous services........................ 1,148,227 1,685,212 3,656,359
All other.................................. 1,752,971 1,782,587 1,525,578
----------- ----------- ------------
$ 4,057,626 $ 5,803,662 $ 8,847,628
=========== =========== ============
Depreciation and amortization --
Consulting................................. $ 16,518 $ 48,535 $ 84,470
Continuous services........................ 9,771 16,610 46,159
All other.................................. 34,282 126,561 197,139
----------- ----------- ------------
$ 60,571 $ 191,706 $ 327,768
=========== =========== ============
Capital expenditures --
Consulting................................. $ 94,416 $ 126,958 $ 96,002
Continuous services........................ 32,324 34,202 10,663
All other.................................. 221,767 378,280 291,359
----------- ----------- ------------
$ 348,507 $ 539,440 $ 398,024
=========== =========== ============
</TABLE>
F-16
<PAGE> 98
THE CONCOURS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Geographical information for the reportable segments for the period from
inception (January 22, 1997) through December 31, 1997, and for the years ended
December 31, 1998 and 1999, was as follows:
<TABLE>
<CAPTION>
1997 1998 1999
---------- ----------- -----------
<S> <C> <C> <C>
Revenue --
United States................................ $8,811,993 $15,851,070 $23,371,961
Europe....................................... -- 100,321 2,708,434
---------- ----------- -----------
$8,811,993 $15,951,391 $26,080,395
========== =========== ===========
Identifiable long-lived assets --
United States................................ $ 287,936 $ 491,288 $ 554,320
Europe....................................... -- 138,393 158,857
---------- ----------- -----------
$ 287,936 $ 629,681 $ 713,177
========== =========== ===========
</TABLE>
11. SUBSEQUENT EVENTS (UNAUDITED):
Acquisition
On February 29, 2000, Concours purchased all of the outstanding shares of
stock of Cepro AB (Cepro), a Swedish consulting firm, from Cepro's stockholders
in exchange for a total of 1,221,000 shares of Concours common stock valued at
an estimated $10.00 per share. Each employee of Cepro entered into an employment
agreement as part of the acquisition.
A total of 235,000 of the Concours shares issued to the selling Cepro
stockholders are being held in escrow for three years as security for the
indemnity given by the selling Cepro stockholders under the purchase agreement.
These escrowed shares, and an additional 230,000 of the total shares, are
subject to a repurchase right whereby Concours has the right to repurchase each
former Cepro stockholder's portion of these shares at a price of $10.00 per
share if the selling stockholder's employment is terminated before March 1,
2003. Because of the service period requirement related to the 465,000 shares
that are subject to Concours' right to repurchase, deferred compensation of $4.7
million has been recorded. The deferred compensation is being amortized over the
three-year period through March 1, 2003.
Registration Statement
In March 2000, the board of directors authorized the filing of a
registration statement with the Securities and Exchange Commission permitting
Concours to sell shares of its common stock to the public. Upon the consummation
of this offering, the outstanding Series A and Series B Preferred Stock will
convert into 3,356,784 shares of common stock.
Pro Forma
The following components of stockholders' equity (deficit) as of December
31, 1999, are adjusted here to reflect on a pro forma basis the Cepro
acquisition and equity transactions, which include the issuance of common stock
to Infologix (BVI) Ltd., Concours' largest stockholder, upon its conversion of
convertible debt and its purchase of common stock for cash (see Notes 4 and 8)
and the issuance of
F-17
<PAGE> 99
THE CONCOURS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Series B Preferred Stock for cash (see Note 8), which occurred through February
29, 2000, and the conversion of all outstanding convertible preferred stock into
common stock:
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTED
FOR THE CEPRO PRO FORMA
ACQUISITION AND ADJUSTED FOR
EQUITY CONVERSION OF
ACTUAL TRANSACTIONS PREFERRED STOCK
------------ --------------- ---------------
<S> <C> <C> <C>
Convertible redeemable preferred stock.... $ -- $ 14,400,000 $ --
============ ============ ============
Stockholders' equity (deficit) --
Preferred stock......................... $ 18,100 $ 18,100 $ --
Common stock............................ 33,859 61,624 95,191
Deferred compensation................... (782,357) (5,432,357) (5,432,357)
Additional paid-in capital and other.... 6,358,588 28,540,823 42,925,356
Retained earnings (deficit)............. (13,815,504) (13,815,504) (13,815,504)
------------ ------------ ------------
Total stockholders' equity
(deficit)..................... $ (8,187,314) $ 9,372,686 $ 23,772,686
============ ============ ============
Shares of common stock.................... 3,385,929 6,162,354 9,519,138
============ ============ ============
</TABLE>
Stock Option Plans
Effective January 1, 2000, the board of directors of Concours adopted the
2000 Employee Stock Option Plan, the 2000 Senior Executive Performance Plan, the
2000 Director Stock Option Plan and the 2000 International Equity Compensation
Plan. A total of 1,000,000; 175,000; 125,000 and 600,000 shares, respectively,
have been reserved for issuance to employees, consultants, advisors, senior
executives and directors under these plans. Options issued under the Employee
Stock Option Plan and International Equity Compensation Plan are generally
exercisable in installments of 25 percent per year beginning on the first
anniversary date of the grant. Options issued under the Senior Executive
Performance Plan and the 2000 Director Stock Option Plan are generally
exercisable in installments of 33 1/3 percent per year beginning on the first
anniversary date of the grant. Options expire 10 years from the date of grant.
As of March 1, 2000, there were a total of 250,000 options issued under these
plans at an exercise price of $8.00 per share.
F-18
<PAGE> 100
REPORT OF INDEPENDENT AUDITORS
To The Board of Directors and Shareholders of Cepro AB:
We have audited the consolidated financial statements, all expressed in
Swedish kronor, of Cepro AB listed in the index to the financial statements on
page F-1. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards in Sweden. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above, expressed in
Swedish kronor, present fairly, in all material respects, the consolidated
financial position of Cepro AB as of December 31, 1999 and 1998 and the
consolidated results of operations and changes in financial position for each of
the years then ended in conformity with accounting principles generally accepted
in Sweden. For purposes of the Cepro AB financial statements, there are no
significant differences between accounting principles generally accepted in
Sweden and accounting principles generally accepted in the United States.
Stockholm, Sweden
February 17, 2000
DELOITTE & TOUCHE AB
F-19
<PAGE> 101
CEPRO AB
CONSOLIDATED INCOME STATEMENTS
(IN THOUSANDS OF SEK)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-----------------
1999 1998
------- -------
<S> <C> <C>
OPERATING INCOME
Net sales................................................... 56,176 52,688
Change of work in progress (Note 9)......................... -- (1,314)
------- -------
Total operating income............................ 56,176 51,374
OPERATING EXPENSES
Other external expenses..................................... (36,703) (30,297)
Personnel expenses (Note 3)................................. (18,413) (19,371)
Depreciation of goodwill and equipment (Note 2, 5, 6)....... (826) (759)
------- -------
OPERATING INCOME............................................ 234 947
RESULTS FROM FINANCIAL INVESTMENTS
Interest income and other financial items................... 40 65
Interest expense and other financial expenses............... (30) (6)
------- -------
INCOME AFTER FINANCIAL ITEMS................................ 244 1,006
Taxes (Note 4).............................................. (156) (383)
------- -------
Net Income........................................ 88 623
======= =======
</TABLE>
F-20
<PAGE> 102
CEPRO AB
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF SEK)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1999 1998
------ ------
<S> <C> <C>
FIXED ASSETS
Intangible assets
Goodwill (Note 5)......................................... 26 91
Tangible assets
Equipment (Note 6)........................................ 1,541 1,769
Financial assets
Minority-owned company (Note 8)........................... 14 14
Other long-term securities................................ 36 36
------ ------
50 50
------ ------
Total fixed assets................................ 1,617 1,910
------ ------
CURRENT ASSETS
Work in progress (Note 9)................................... -- 1,158
Current receivables
Accounts receivable....................................... 9,170 7,248
Other receivables......................................... 123 244
Income tax receivable..................................... 63 --
Prepaid expenses and accrued income (Note 10)............. 4,220 2,073
------ ------
Total current receivables......................... 13,576 9,565
Cash and bank balances...................................... 1,479 3,857
------ ------
Total current assets.............................. 15,055 14,580
------ ------
Total assets...................................... 16,672 16,490
====== ======
EQUITY AND LIABILITIES
EQUITY
Restricted equity
Share capital, 5,750 shares at par value SEK 100.......... 575 575
Other restricted reserves................................. 546 277
------ ------
Total restricted equity................................ 1,121 852
Unrestricted equity
Non-restricted reserves................................... 1,991 1,637
Profit for the year....................................... 88 623
------ ------
Total unrestricted equity.............................. 2,079 2,260
Total equity...................................... 3,200 3,112
Minority interests.......................................... 16 15
Deferred tax liabilities.................................... 341 677
CURRENT LIABILITIES
Accounts payable -- trade................................. 3,928 2,536
Income tax payable........................................ -- 567
Other liabilities......................................... 4,245 2,722
Accrued expenses and prepaid income (Note 11)............. 4,942 6,861
------ ------
Total current liabilities......................... 13,115 12,686
------ ------
Total equity and liabilities...................... 16,672 16,490
====== ======
Memorandum items
Pledged assets (Note 12).................................... 2,502 2,502
Contingent liabilities...................................... None None
</TABLE>
F-21
<PAGE> 103
CEPRO AB
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
(IN THOUSANDS OF SEK)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------
1999 1998
------ -----
<S> <C> <C>
OPERATIONS
Income after financial items................................ 244 1,006
Depreciation................................................ 826 759
Capital gain/loss included in operating income.............. -- 76
Taxes paid.................................................. (498) (560)
------ -----
Cash flow from operations excluding change in operating
assets and liabilities.................................... 572 1,281
Change in operating assets and liabilities
Change in accounts receivable............................. (1,922) 22
Change in work in progress................................ 1,158 1,012
Change in other current assets............................ (2,089) (539)
Change in current liabilities............................. 429 2,866
------ -----
Cash flow from operations................................... (1,852) 4,642
INVESTMENTS
Equipment................................................... (527) (719)
------ -----
Cash flow from investments.................................. (527) (719)
Total cash flow from operations and investments............. (2,379) 3,923
FINANCING
Change in long-term loans................................... -- (389)
Change in minority interests................................ 1 --
------ -----
Cash flow from financing.................................... 1 (389)
Total cash flow............................................. (2,378) 3,534
Liquid funds at beginning of year........................... 3,857 323
------ -----
Liquid funds at year-end.................................... 1,479 3,857
====== =====
</TABLE>
F-22
<PAGE> 104
CEPRO AB
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS OF SEK)
<TABLE>
<CAPTION>
RESTRICTED RETAINED
SHARE CAPITAL RESERVES EARNINGS TOTAL
------------- ---------- -------- -----
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1997.......................... 575 52 1,862 2,489
Redistribution between restricted and non-restricted
reserves............................................ -- 216 (216) --
Profit allocation..................................... -- 9 (9) --
Net income............................................ -- -- 623 623
--- --- ----- -----
BALANCE AT DECEMBER 31, 1998.......................... 575 277 2,260 3,112
Redistribution between restricted and non-restricted
reserves............................................ -- 215 (215) --
Profit allocation..................................... -- 54 (54) --
Net income............................................ -- -- 88 88
--- --- ----- -----
BALANCE AT DECEMBER 31, 1999.......................... 575 546 2,079 3,200
=== === ===== =====
</TABLE>
F-23
<PAGE> 105
CEPRO AB
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 BUSINESS AND ORGANIZATION
Cepro AB (the parent company) and its majority owned subsidiaries (see Note
7) (together with the parent company, the "Group") provide management consulting
services in Sweden and employ directly and indirectly approximately 40
consultants who help businesses in areas such as strategic planning, financial
analysis, marketing, information management and executive and organizational
development. Cepro AB is governed by a Board of Directors (the Board) and the
managing director is the primary operating officer for the Group.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
The accounting principles applied are in accordance with the Annual
Accounts Act and recommendations and statements from the Swedish Accounting
Standards Board, the Swedish Financial Accounting Standards Council and the
Swedish Institute of Authorized Public Accountants (FAR).
The following valuation and translation principles were applied in
preparing these financial statements:
Consolidated financial statements
The income statement and balance sheets for the Group include all companies
in which the parent company at year-end directly or indirectly owned more than
50% of the voting rights. All significant intercompany transactions have been
eliminated.
Currency
All amounts contained in these financial statements are stated in Swedish
kronor. For convenience, the conversion rates from Swedish kronor to U.S. dollar
at December 31, 1999 and for the 1999 yearly average were 1.00 SEK to 0.1170
U.S. dollars and 1.00 SEK to 0.1210 U.S. dollars, respectively.
Net Sales
Net sales is comprised primarily of revenue from professional fees and
reimbursable out-of-pocket expenses from consulting services. Consulting
engagements are typically priced on a time and materials basis. Revenue from
such fees is recognized as the services are provided.
Personnel expenses and other external expenses
Personnel expenses include salaries, payroll taxes, pension expense,
education costs and costs for personnel welfare. Other external expenses include
fees billed for services provided by consultants, office expenses such as rent
and supplies, advertising, printing and other operating costs.
Purchase method
The consolidated financial statements are prepared according to the
recommendation 1:96 from the Swedish Financial Accounting Standards Council. All
acquisitions of companies were accounted for according to the purchase method,
whereby the assets and liabilities in a subsidiary on the date of acquisition
are evaluated to determine the acquisition value to the Group. Any differences
between the acquisition price and the acquisition value are reported as
goodwill.
1996 Merger
A merger was carried out in 1996 (the 1996 merger). Deferred taxes were
recorded related to untaxed profits of the merged company.
F-24
<PAGE> 106
CEPRO AB
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Minority-owned company
The minority-owned company is accounted for at cost. The equity method is
not used because the results are not significant (see Note 8).
Tangible fixed assets
Tangible fixed assets are accounted for at acquisition cost less
accumulated depreciation based on the assets acquisition value and estimated
economic life.
Depreciation is recorded based on the following useful lives as follows:
<TABLE>
<S> <C>
Goodwill.................................................... 4 years
Equipment................................................... 5 years
</TABLE>
Receivables
Receivables are recorded net of reserves for bad debts.
Social Fees
Social fees are amounts paid to the Swedish government for health
insurance, contributions to the national pension fund, supplementary pension
fees, labor market fees and payroll taxes.
U.S. GAAP
Information with respect to U.S. GAAP (Generally Accepted Accounting
Principles in the United States) is given in Note 13.
NOTE 3 AVERAGE NUMBER OF EMPLOYEES, SALARIES, REMUNERATIONS AND SOCIAL FEES
Average number of employees
<TABLE>
<CAPTION>
1999 1998
---------------------- ----------------------
NUMBER OF PERCENTAGE NUMBER OF PERCENTAGE
EMPLOYEES OF MEN EMPLOYEES OF MEN
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Parent company................................. 20 59% 15 53%
Subsidiaries................................... 6 100% 7 100%
-- --- -- ---
Total................................ 26 68% 22 68%
== === == ===
</TABLE>
Salaries, remunerations and social fees
<TABLE>
<CAPTION>
1999 1998
-------------------------- --------------------------
SALARIES AND SOCIAL FEES SALARIES AND SOCIAL FEES
OTHER (PENSION OTHER (PENSION
REMUNERATION COST) REMUNERATION COST)
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Parent company.......................... 6,181 3,679 8,033 3,365
(1,051) (550)
Subsidiaries............................ 4,552 2,547 3,906 2,529
(829) (988)
------ ------ ------ ------
Total for the Group........... 10,733 6,226 11,939 5,894
(1,880) (1,538)
</TABLE>
F-25
<PAGE> 107
CEPRO AB
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Salaries and other remunerations distributed to Board members, the managing
director and other employees
<TABLE>
<CAPTION>
1999 1998
---------------------------- --------------------------------
THE MANAGING OTHER MANAGING OTHER
BOARD DIRECTOR EMPLOYEES THE BOARD DIRECTOR EMPLOYEES
----- -------- --------- --------- -------- ---------
(BONUS PAYMENT) (BONUS PAYMENT)
<S> <C> <C> <C> <C> <C> <C>
Parent company........................... 141 0 6,040 107 0 7,926
(0) (0) (0) (0)
--- -- ------ --- -- ------
Total parent company..................... 141 0 6,040 107 0 7,926
Subsidiaries............................. 359 0 4,193 356 0 3,550
(0) (0) (0) (0)
--- -- ------ --- -- ------
Total subsidiaries....................... 359 0 4,193 356 0 3,550
(0) (0) (0) (0)
--- -- ------ --- -- ------
Total for the Group...................... 500 0 10,233 463 0 11,476
(0) (0) (0) (0)
</TABLE>
Cepro has no pension costs or pension commitments regarding the Board and
the managing director.
According to an agreement regarding severance pay, Cepro's managing
director has the right to a remuneration amounting to 12 months' salary.
NOTE 4 TAXES
<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1999 1998
----- -----
<S> <C> <C>
Corporation tax............................................. (459) (556)
Acquired untaxed reserves related to the 1996 merger:
Tax equalization reserve resolved......................... 120 120
Write-down of merger regulation account................... (86) (86)
Deferred tax on work in progress.......................... -- 222
Change in untaxed reserves................................ 269 (83)
---- ----
Total............................................. (156) (383)
==== ====
</TABLE>
NOTE 5 GOODWILL
<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1999 1998
----- -----
<S> <C> <C>
Acquisition value........................................... 259 259
---- ----
Beginning depreciation...................................... (168) (112)
Depreciation expense for the year........................... (65) (56)
---- ----
Accumulated depreciation.................................... (233) (168)
---- ----
Net book value.................................... 26 91
==== ====
</TABLE>
F-26
<PAGE> 108
CEPRO AB
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 6 EQUIPMENT
<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1999 1998
------ ------
<S> <C> <C>
Acquisition value........................................... 5,074 4,731
Purchases................................................... 527 719
Sales/disposals............................................. (200) (376)
------ ------
Accumulated acquisition value............................... 5,401 5,074
------ ------
Beginning depreciation...................................... (3,305) (2,909)
Sales/disposals............................................. 200 307
Depreciation expense for the year........................... (755) (703)
------ ------
Accumulated depreciation.................................... (3,860) (3,305)
------ ------
Net book value.................................... 1,541 1,769
====== ======
</TABLE>
NOTE 7 PARTICIPATION IN CONSOLIDATED SUBSIDIARIES
<TABLE>
<CAPTION>
NAME OF THE COMPANY REGISTRATION NUMBER REGISTERED OFFICE
- ------------------- ------------------- -----------------
<S> <C> <C>
Cepro Executive Systems AB........................... 556438-7784 Stockholm
Cepro Partner AB..................................... 556327-6467 Stockholm
Hjarntrusten i Stockholm AB.......................... 556369-6458 Stockholm
Cepro KB............................................. 969615-6109 Stockholm
</TABLE>
<TABLE>
<CAPTION>
POSSESSION, EXTENT POSSESSION, VALUE
-------------------- -----------------
NUMBER OF SHARE OF BOOKED BOOKED
NAME OF COMPANY SHARES EQUITY % VALUE VALUE
- --------------- --------- -------- ------- -------
<S> <C> <C> <C> <C>
Cepro Executive Systems AB....................... 600 100% 473 473
Cepro Partner AB................................. 1000 100% 100 100
Hjarntrusten i Stockholm AB...................... 1000 100% 100 100
Cepro KB......................................... 20 56% 0 0
--- ---
673 673
=== ===
</TABLE>
NOTE 8 MINORITY-OWNED COMPANY
<TABLE>
<CAPTION>
NAME OF THE COMPANY REGISTRATION NUMBER REGISTERED OFFICE
- ------------------- ------------------- -----------------
<S> <C> <C>
Hjarntrusten Foretagsutveckling AB................... 556223-4012 Karlstad
</TABLE>
POSSESSION, EXTENT
<TABLE>
<CAPTION>
NUMBER OF SHARE OF
NAME OF COMPANY SHARES EQUITY % COST
- --------------- --------- -------- ----
<S> <C> <C> <C>
Hjarntrusten Foretagsutveckling AB......................... 130 13% 14
</TABLE>
F-27
<PAGE> 109
CEPRO AB
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 9 WORK IN PROGRESS
Work in progress regarding fees earned not invoiced are accounted for at
the invoiced amount as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1999 1998
---- ------
<S> <C> <C>
Uninvoiced fees............................................. -- 3,262
Accrued expenses............................................ -- (1,885)
-- ------
Total............................................. -- 1,377
-- ------
Advance payments from customers............................. -- (1,015)
Accrued expenses............................................ -- 796
-- ------
Total............................................. -- (219)
-- ------
Total work in progress............................ 0 1,158
== ======
</TABLE>
NOTE 10 PREPAID EXPENSES AND ACCRUED INCOME
<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1999 1998
----- -----
<S> <C> <C>
Prepaid rent................................................ -- 591
Other items................................................. 4,045 1,482
Accrued income.............................................. 175 --
----- -----
Total............................................. 4,220 2,073
===== =====
</TABLE>
NOTE 11 ACCRUED EXPENSES AND PREPAID INCOME
<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1999 1998
----- -----
<S> <C> <C>
Accrued salaries............................................ 1,770 3,976
Accrued social costs........................................ 1,322 1,392
Prepaid income.............................................. 1,134 509
Other items................................................. 716 984
----- -----
Total............................................. 4,942 6,861
===== =====
</TABLE>
NOTE 12 PLEDGED ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1999 1998
----- -----
<S> <C> <C>
Chattel mortgages........................................... 2,500 2,500
Deposits.................................................... 2 2
----- -----
Total............................................. 2,502 2,502
===== =====
</TABLE>
NOTE 13 CONSOLIDATED FINANCIAL STATEMENTS ACCORDING TO U.S. GAAP
With respect to the consolidated financial statements for Cepro, there are
no significant differences between Swedish and U.S. GAAP.
F-28
<PAGE> 110
[INSIDE BACK COVER]
[Description Of Art Work]
<PAGE> 111
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHARES
THE CONCOURS GROUP, INC.
COMMON STOCK
[THE CONCOURS GROUP, INC. LOGO]
------------
PROSPECTUS
, 2000
------------
SALOMON SMITH BARNEY
U.S. BANCORP PIPER JAFFRAY
WILLIAM BLAIR & COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 112
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses and costs (other than
underwriting discounts and commissions) expected to be incurred in connection
with the issuance and distribution of the securities registered hereby:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 15,180
NASD filing fee............................................. $ 6,250
Nasdaq National Market listing fee.......................... $ 90,000
Printing and engraving costs................................ $ 250,000
Legal fees and expenses..................................... $ 600,000
Accounting fees and expenses................................ $ 400,000
Blue Sky fees and expenses.................................. $ 10,000
Registrar and Transfer Agent's fees......................... $ 5,000
Miscellaneous............................................... $ 150,000
----------
Total............................................. $1,526,430
==========
</TABLE>
- ---------------
* To be provided by amendment
We will pay all of the expenses to be incurred in connection with the
issuance and distribution of the securities registered hereby.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS; LIMITATION OF LIABILITY FOR
MONETARY DAMAGES
Section 145(a) of the Delaware General Corporation Law of the State of
Delaware ("DGCL") provides that a Delaware corporation may indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation), by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation or
enterprise, against expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no cause to believe his conduct was
unlawful.
Section 145(b) of the DGCL provides that a Delaware corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses actually
and reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted under similar standards, except that no
indemnification may be made in respect of any claim, issue or matter as to which
such person shall have been adjudged to be liable to the corporation unless and
only to the extent that the court in which such action or suit was brought shall
determine that despite the adjudication of liability, such person is fairly and
reasonably entitled to be indemnified for such expenses which the court shall
deem proper.
Section 145 of the DGCL further provides that to the extent a director or
officer of a corporation has been successful in the defense of an action, suit
or proceeding referred to in subsections (a) and (b) or in the defense of any
claim, issue or matter therein, he shall be indemnified against expenses
actually and reasonably incurred by him in connection therewith, that
indemnification provided for by Section 145 of the DGCL shall not be deemed
exclusive of any other rights to which the indemnified party may be
II-1
<PAGE> 113
entitled; and that the corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him or incurred by him in any such
capacity or arising out of his status as such whether or not the corporation
would have the power to indemnify him against such liabilities under such
Section 145.
Out certificate of incorporation provides that we shall indemnify certain
persons, including officers, directors, employees and agents, to the fullest
extent permitted by Section 145 of the DGCL of the State of Delaware. Reference
is made to the Certificate of Incorporation filed as Exhibit 3.1. Our directors
and officers are insured against losses arising from any claim against them as
such for wrongful acts or omission, subject to certain limitations.
Pursuant to the underwriting agreement for this offering, the underwriters
are obligated, under certain circumstances, to indemnify officers, directors and
controlling persons of Concours against certain liabilities, including
liabilities under the Securities Act. Reference is made to the form of
Underwriting Agreement filed as Exhibit 1 hereto.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since its inception, Concours has issued the following securities without
registration under the Securities Act. The information presented below does not
reflect the conversion of all of our issued and outstanding Series A and Series
B convertible preferred stock into common stock upon the closing of this
offering.
On January 10, 1997, in connection with the founding of Concours, we issued
100,000 shares of common stock to the chairman of the board for aggregate
consideration of $1,000.
In February 1997, a total of 1,614,287 shares of common stock were issued
to founders of Concours, comprised of five individuals, three of whom were
executive officers, and two entities, for an aggregate consideration of
$16,142.87. One of these entities, which was also our largest stockholder, also
purchased 1,500,000 shares of Series A convertible preferred stock for total
consideration of $1,290,000.
In March 1997, a total of 656,142 shares of common stock were issued to 10
holders, all but one of whom were executives, employees or consultants of
Concours, for total consideration of $6,561.42.
In May 1997, a total of 259,000 shares of common stock were issued to 14
employees and 11 other holders for a total consideration of $2,690.
In August 1997, a total of 111,000 shares of common stock were issued to 6
individuals, all of whom were employees or consultants of Concours, for total
consideration of $1,110.
In October 1997, 3,000 shares of common stock were issued to one employee
for consideration of $30.00.
In December 1997, a total of 30,000 shares of common stock were issued to
three individuals, all of whom were employees or their affiliates, for total
consideration of $20,100.
In January 1998, a total of 240,000 shares of common stock were issued to
our largest stockholder for total consideration of $1.2 million. In that same
month, 300,000 shares of common stock were issued to an incoming executive
officer in exchange for a $300,000 promissory note, all of which was
subsequently repaid by that officer's reconveyance of 200,000 shares of common
stock to us, in connection with the cessation of his employment.
In September 1998, one employee purchased 40,000 shares of common stock for
total consideration of $90,000. In that same month, our largest stockholder
purchased 310,000 shares of Series A convertible preferred stock for total
consideration of $2,790,000.
II-2
<PAGE> 114
In December 1998, one employee purchased 2,500 shares of common stock for
total consideration of $2,500 upon exercise of a stock option.
In April 1999, one employee purchased 1,250 shares of common stock for
total consideration of $1,250 upon exercise of a stock option.
In November 1999, 25,000 shares of common stock were issued to the owner of
the Swedish consulting firm Inforesma, a provider of subscription-based
multi-client programs, in connection with its acquisition by Concours.
In December 1999, 3,750 shares of common stock were issued to one employee
for total consideration of $8,437.50 upon exercise of a stock option.
In January 2000, two employees purchased a total of 3,000 shares of common
stock for total consideration of $3,312.50 upon exercise of stock options.
In February 2000, a total of 1,555,425 shares of common stock were issued
to our largest stockholder in connection with the conversion into common stock
of $4.0 million of convertible debt plus accrued and unpaid interest, which was
deemed to be exempt from registration under the Act under the provisions of
Section 3(a)(9) thereof, and in connection with the purchase of 750,000 shares
of common stock for total consideration of $6.0 million. This stockholder also
received warrants to purchase 50,000 shares of common stock at an exercise price
of $5.00 in consideration of cancellation of existing rights under a previous
agreement.
In February 2000, two employees purchased 14,000 shares of common stock for
total consideration of $32,200 upon exercise of stock options.
During February 2000, a total of 1,221,000 shares of common stock were
issued to 46 European stockholders of Cepro AB in connection with its
acquisition by Concours in a transaction deemed to be exempt from registration
under the Act under the provisions of Regulation S.
In February 2000, a total of 1,546,784 shares of Series B convertible
preferred stock were issued to two institutional investors for total
consideration of $15 million.
Stock options to purchase 90,000 shares of common stock at an exercise
price of $9.76 were also issued to an independent contractor in connection with
the performance of services for Concours.
Between inception and March 1, 2000, options to purchase an aggregate of
2,558,350 shares of our common stock have been issued and are outstanding under
six of our stock option plans at exercise prices ranging from $1.00 to $10.00
per share with a weighted average exercise price of $3.01 per share for the
568,875 currently exercisable options as of March 1, 2000. As detailed above,
options to purchase a total of 24,500 shares of common stock have been exercised
for aggregate consideration of $47,700.
There were no underwriters employed in connection with any of the
transactions set forth in this Item 15 above.
Unless other specific exemptions are otherwise noted above, all
transactions described above were deemed to be exempt from registration under
the Securities Act of 1933 in reliance upon Section 4(2) and/or Section 3(b) of
the Securities Act as transactions by an issuer not involving any public
offering, and/or under Rule 701 as transactions pursuant to compensatory benefit
plans. The recipients of securities in each such transaction represented their
intentions to acquire the securities for investment only and not with a view to
or for sale in connection with any distribution thereof. Appropriate legends
were affixed to all such share certificates noting that such securities are
deemed to be restricted securities under the Act, along with posting the
restrictions of transfer on the Registrant's stock transfer books. All
recipients either received adequate information about the registrant or had
access through employment or other relationships to obtain such information.
II-3
<PAGE> 115
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<C> <S>
*1.1 -- Form of Underwriting Agreement
3.1 -- Amended and Restated Certificate of Incorporation of the
Registrant, dated February 28, 2000.
3.2 -- First Amendment to the Restated Certificate of
Incorporation of the Registrant, dated March 15, 2000
3.3 -- Amended and Restated Bylaws, dated March 10, 2000
4.1 -- Amended and Restated Certificate of Designation of the
Powers, Rights and Preferences of the Series A
Convertible Preferred Stock and the Series B Convertible
Preferred Stock of the Registrant, dated February 28,
2000
4.2 -- Form of Irrevocable Proxy
*5.1 -- Opinion of Jenkens & Gilchrist, A Professional
Corporation, with respect to the legality of the
securities being registered
8.1 -- Form of opinion of Jenkens & Gilchrist, A Professional
Corporation, as to tax matters
10.1 -- Stock Purchase and Debt Conversion Agreement, dated
February 1, 2000
10.2 -- Exchange Agreement by and among the Registrant and the
Shareholders of Cepro AB dated February 29, 2000
10.3 -- Repurchase Rights Agreement by and among the Registrant
and the Shareholders of Cepro AB, dated February 29, 2000
10.4 -- 1997 Employee Stock Option Plan of the Registrant
10.5 -- 1998 Employee Stock Option Plan of the Registrant
10.6 -- 1999 Employee Stock Option Plan of the Registrant
10.7 -- 2000 Employee Stock Option Plan of the Registrant
10.8 -- 1998 European Equity Compensation Plan of the Registrant
10.9 -- 2000 International Equity Compensation Plan of the
Registrant
10.10 -- 2000 Senior Executive Performance Plan of the Registrant
10.11 -- 2000 Director Stock Option Plan of the Registrant
10.12 -- Form of Letter Agreement with Advisory Board Members
10.13 -- Form of Noncompetition, Nonsolicitation and Nondisclosure
Agreement
10.14 -- Amended and Restated Registration Rights Agreement by and
among the Registrant, Tallard B.V., Thayer Equity
Investors IV, L.P. and Thayer CGI Partners LLC, dated
February 28, 2000
10.15 -- Investment Agreement by and between the Registrant,
Thayer Equity Investors IV, L.P. and Thayer GCI Partners
LLC, dated February 28, 2000
21.1 -- Subsidiaries of the Registrant
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Deloitte & Touche AB
24.1 -- Power of Attorney (contained on Page II-6)
27.1 -- Financial Data Schedule
</TABLE>
- ---------------
* To be filed by amendment.
II-4
<PAGE> 116
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes to provide to the
underwriter at the closing specified in the Underwriting Agreement certificates
in such denominations and registered in such names as required by the
underwriter to permit prompt delivery to each purchaser.
(b) Insofar as indemnification for liabilities arising under the Securities
Act 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 Securities Act
and is, therefore, unenforceable. If a claim for indemnification against such
liabilities (other than payment by the registrant of expenses incurred or paid
by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(c) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4), or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus 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.
II-5
<PAGE> 117
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the city of Houston, state of Texas,
on the 17th day of March, 2000.
THE CONCOURS GROUP, INC.
By: /s/ RONALD P. CHRISTMAN
----------------------------------
Ronald P. Christman
Chairman of the Board, Chief
Executive
Officer and President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears below
as a signatory to this registration statement constitutes and appoints Ronald P.
Christman and Jeffrey J. Weiner, or either one of them, his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments to this registration statement, and to file the same, with
all exhibits thereto, and all other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute may
lawfully do or cause to be done by virtue hereof. Pursuant to the requirements
of the Securities Act of 1933, as amended, this registration statement has been
signed by the following persons in the capacities and on the dates indicated, in
multiple counterparts with the effect of one original.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ RONALD P. CHRISTMAN Chairman of the Board, Chief March 15, 2000
- ----------------------------------------------------- Executive Officer and
Ronald P. Christman President
/s/ LYNN D. KEEHAN Executive Vice President and March 9, 2000
- ----------------------------------------------------- Director
Lynn D. Keehan
/s/ NICHOLAS P. VITALARI Executive Vice President and March 15, 2000
- ----------------------------------------------------- Director
Nicholas P. Vitalari
/s/ JEFFREY J. WEINER Chief Financial Officer March 16, 2000
- -----------------------------------------------------
Jeffrey J. Weiner
/s/ FREDRIK WALLENBERG Director March 11, 2000
- -----------------------------------------------------
Fredrik Wallenberg
/s/ LEONARD J. SOKOLOW Director March 15, 2000
- -----------------------------------------------------
Leonard J. Sokolow
/s/ HANS LINDROTH Director March 15, 2000
- -----------------------------------------------------
Hans Lindroth
</TABLE>
II-6
<PAGE> 118
INDEX TO EXHIBITS
<TABLE>
<C> <S>
*1.1 -- Form of Underwriting Agreement
3.1 -- Amended and Restated Certificate of Incorporation of the
Registrant, dated February 28, 2000.
3.2 -- First Amendment to the Restated Certificate of
Incorporation of the Registrant, dated March 15, 2000
3.3 -- Amended and Restated Bylaws, dated March 10, 2000
4.1 -- Amended and Restated Certificate of Designation of the
Powers, Rights and Preferences of the Series A
Convertible Preferred Stock and the Series B Convertible
Preferred Stock of the Registrant, dated February 28,
2000
4.2 -- Form of Irrevocable Proxy
*5.1 -- Opinion of Jenkens & Gilchrist, A Professional
Corporation, with respect to the legality of the
securities being registered
8.1 -- Form of opinion of Jenkens & Gilchrist, A Professional
Corporation, as to tax matters
10.1 -- Stock Purchase and Debt Conversion Agreement, dated
February 1, 2000
10.2 -- Exchange Agreement by and among the Registrant and the
Shareholders of Cepro AB dated February 29, 2000
10.3 -- Repurchase Rights Agreement by and among the Registrant
and the Shareholders of Cepro AB, dated February 29, 2000
10.4 -- 1997 Employee Stock Option Plan of the Registrant
10.5 -- 1998 Employee Stock Option Plan of the Registrant
10.6 -- 1999 Employee Stock Option Plan of the Registrant
10.7 -- 2000 Employee Stock Option Plan of the Registrant
10.8 -- 1998 European Equity Compensation Plan of the Registrant
10.9 -- 2000 International Equity Compensation Plan of the
Registrant
10.10 -- 2000 Senior Executive Performance Plan of the Registrant
10.11 -- 2000 Director Stock Option Plan of the Registrant
10.12 -- Form of Letter Agreement with Advisory Board Members
10.13 -- Form of Noncompetition, Nonsolicitation and Nondisclosure
Agreement
10.14 -- Amended and Restated Registration Rights Agreement by and
among the Registrant, Tallard B.V., Thayer Equity
Investors IV, L.P. and Thayer CGI Partners LLC, dated
February 28, 2000
10.15 -- Investment Agreement by and between the Registrant,
Thayer Equity Investors IV, L.P. and Thayer GCI Partners
LLC, dated February 28, 2000
21.1 -- Subsidiaries of the Registrant
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Deloitte & Touche AB
24.1 -- Power of Attorney (contained on Page II-6)
27.1 -- Financial Data Schedule
</TABLE>
- ---------------
* To be filed by amendment.
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
THE CONCOURS GROUP, INC.
The Concours Group, Inc., a corporation organized and existing under
the Delaware General Corporation Law (the "DGCL"), HEREBY CERTIFIES as follows:
A. The name of the Corporation is The Concours Group, Inc. The original
Certificate of Incorporation of the Corporation was filed with the Secretary of
State of the State of Delaware on January 10, 1997, as amended on August 26,
1998.
B. This Amended and Restated Certificate of Incorporation has been
adopted in accordance with the provisions of Sections 242 and 245 of the DGCL.
C. The text of the Certificate of Incorporation of the Corporation is
hereby restated and amended to read in its entirety as follows:
FIRST: The name of the Corporation is The Concours Group, Inc. (the
"Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street, Wilmington, Delaware 19801, County of
New Castle. The name of the registered agent of the Corporation at such address
is The Corporation Trust Company.
THIRD: (a) The nature of the business or purposes to be conducted or
promoted by the Corporation is to engage in any lawful business, act or activity
for which corporations may be organized under the DGCL.
(b) The private property of the stockholders shall not be
subject to the payment of corporate debts to any extent whatsoever.
FOURTH: The Corporation is to have perpetual existence.
FIFTH: The total number of shares of stock which the Corporation
shall have authority to issue is Fifty Five Million (55,000,000) of which (a)
Fifty Million (50,000,000) shares shall be common stock, par value $0.01 per
share (the "Common Stock"); (b) Five Million (5,000,000) shares of which shall
be preferred stock, par value $0.01 per share (the "Preferred Stock"), of which
(i) 2,280,100 shares shall be designated Series A Convertible Preferred Stock
and (ii) of which 1,936,000 shares shall be designated Series B Convertible
Preferred Stock.
<PAGE> 2
SIXTH: Provisions Relating to the Common Stock.
(a) Each share of Common Stock of the Corporation shall have
identical rights and privileges in every respect. The holders of shares of
Common Stock shall be entitled to vote upon all matters submitted to a vote of
the stockholders of the Corporation and shall be entitled to one vote for each
share of such stock held.
(b) Subject to the prior rights and preferences applicable to
shares of the Preferred Stock, the holders of shares of the Common Stock shall
be entitled to receive such dividends (payable in cash, stock, or otherwise), if
any, as may be declared thereon by the Board of Directors at any time and from
time to time out of any funds of the Corporation legally available therefor.
(c) In the event of any voluntary or involuntary liquidation,
dissolution, or winding-up of the Corporation, after distribution in full of the
preferential amounts, if any, to be distributed to the holders of shares of the
Preferred Stock or any series thereof, the holders of shares of the Common Stock
shall be entitled to receive all of the remaining assets of the Corporation
available for distribution to its stockholders, ratably in proportion to the
number of shares of the Common Stock held by them. Except as otherwise provided
in this Amended and Restated Certificate of Incorporation, a liquidation,
dissolution, or winding-up of the Corporation, as such terms are used in this
paragraph (c) of Article Sixth, shall not be deemed to be occasioned by or to
include any consolidation or merger of the Corporation with or into any other
corporation or corporations or other entity or a sale, lease, exchange, or
conveyance of all or a part of the assets of the Corporation.
(d) The holders of shares of the Common Stock of the
Corporation shall not have any preemptive or other right to receive any
securities of the Corporation.
SEVENTH: Provisions Relating to the Preferred Stock.
(a) The Preferred Stock may be issued from time to time in
one or more classes or series, the shares of each class or series to have such
designations and powers, preferences, and rights, and qualifications,
limitations, and restrictions thereof, as are stated and expressed herein and in
the resolution or resolutions providing for the issue of such class or series
adopted by the Board of Directors of the Corporation as hereafter prescribed.
(b) Authority is hereby expressly granted to and vested in
the Board of Directors of the Corporation to authorize the issuance of the
Preferred Stock from time to time in one or more classes or series, and with
respect to each class or series of the Preferred Stock, to fix and state by the
resolution or resolutions from time to time adopted providing for the issuance
thereof the following:
(i) whether or not the class or series is to have
voting rights, full, special, or limited, or is to be without voting rights, and
whether or not such class or series
2
<PAGE> 3
is to be entitled to vote as a separate class either alone or together with the
holders of one or more other classes or series of stock;
(ii) the number of shares to constitute the class or
series and the designations thereof;
(iii) the preferences, and relative, participating,
optional, or other special rights, if any, and the qualifications, limitations,
or restrictions thereof, if any, with respect to any class or series;
(iv) whether or not the shares of any class or series
shall be redeemable at the option of the Corporation or the holders thereof or
upon the happening of any specified event, and, if redeemable, the redemption
price or prices (which may be payable in the form of cash, notes, securities, or
other property), and the time or times at which, and the terms and conditions
upon which, such shares shall be redeemable and the manner of redemption;
(v) whether or not the shares of a class or series
shall be subject to the operation of retirement or sinking funds to be applied
to the purchase or redemption of such shares for retirement, and, if such
retirement or sinking funds are to be established, the annual amount thereof,
and the terms and provisions relative to the operation thereof;
(vi) the dividend rate, if any, and whether dividends
are payable in cash, stock of the Corporation, or other property, the conditions
upon which and the times when such dividends are payable, the preference to or
the relation to the payment of dividends payable on any other class or classes
or series of stock, whether or not such dividends shall be cumulative or
noncumulative, and if cumulative, the date or dates from which such dividends
shall accumulate;
(vii) the preferences, if any, and the amounts
thereof which the holders of any class or series thereof shall be entitled to
receive upon the voluntary or involuntary dissolution of, or upon any
distribution of the assets of, the Corporation;
(viii) whether or not the shares of any class or
series, at the option of the Corporation or the holder thereof or upon the
happening of any specified event, shall be convertible into or exchangeable for,
the shares of any other class or classes or of any other series of the same or
any other class or classes of stock, securities, or other property of the
Corporation and the conversion price or prices or ratio or ratios or the rate or
rates at which such exchange may be made, with such adjustments, if any, as
shall be stated and expressed or provided for in such resolution or resolutions;
and
(ix) such other special rights and protective
provisions with respect to any class or series as may to the Board of Directors
of the Corporation seem advisable.
3
<PAGE> 4
(c) The shares of each class or series of the Preferred Stock
may vary from the shares of any other class or series thereof in any or all of
the foregoing respects. The Board of Directors of the Corporation may increase
the number of shares of the Preferred Stock designated for any existing class or
series by a resolution adding to such class or series authorized and unissued
shares of the Preferred Stock not designated for any other class or series. The
Board of Directors of the Corporation may decrease the number of shares of the
Preferred Stock designated for any existing class or series by a resolution
subtracting from such class or series authorized and unissued shares of the
Preferred Stock designated for such existing class or series, and the shares so
subtracted shall become authorized, unissued, and undesignated shares of the
Preferred Stock.
EIGHTH: Board of Directors.
(a) Number of Directors. Except as otherwise fixed by or
pursuant to the provisions of Article Seventh hereof relating to the rights of
the holders of any class or series of stock having a preference over the Common
Stock as to dividends or upon liquidation, the number of the directors of the
Corporation shall be fixed from time to time by this Amended and Restated
Certificate of Incorporation or pursuant to the Bylaws of the Corporation. The
number of directors of the Corporation shall not be less than three (3) nor more
than eleven (11).
(b) Notice of Nomination of Directors. Advance notice of
nominations for the election of directors shall be given in the manner and to
the extent provided in the Bylaws of the Corporation.
(c) Vacancies. Except as otherwise provided for or fixed by or
pursuant to the provisions of Article Seventh hereof relating to the rights of
the holders of any class or series of stock having a preference over the Common
Stock as to dividends or upon liquidation, newly created directorships resulting
from any increase in the number of directors and any vacancies on the Board of
Directors resulting from death, resignation, removal or other cause shall only
be filled in accordance with the Bylaws of the Corporation.
(d) Removal. Any director or the entire Board of Directors may
be removed only for cause and only by the vote of the holders of a majority of
the securities of the Corporation then entitled to vote at an election of
directors. For purposes of this Amended and Restated Certificate of
Incorporation, "cause" shall mean gross neglect or willful misconduct in the
performance of the duties as a director.
NINTH: No contract or transaction between the Corporation and one or
more of its directors or officers, or between the Corporation and any other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof that
authorizes the contract or transaction, or solely because such director's or
officer's votes are counted for such purpose, if (a) the material facts as to
such director's or officer's relationship or interest and as to the contract or
transaction are disclosed or are known to the Board of Directors or a committee
thereof, and the Board of Directors or committee thereof in good faith
authorizes the contract or
4
<PAGE> 5
transaction by the affirmative votes of a majority of the directors having no
interest in the transaction, even though such directors be less than a quorum;
(b) the material facts as to such director's or officer's relationship or
interest and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or (c) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved, or ratified by the Board of Directors, a committee
thereof, or the stockholders.
TENTH: Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for the Corporation under
the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting
of the creditors or class of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths (3/4) in value of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of the Corporation, as the case may
be, agree to any compromise or arrangement and to any reorganization of the
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the
Corporation.
ELEVENTH: Limitation of Liability of Directors. A director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (a) for any breach of the director's duty of loyalty to the
Corporation or its stockholders; (b) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (c) under
Section 174 of the DGCL; or (d) for any transaction from which the director
derived an improper personal benefit. If the DGCL is amended after the date
hereof to authorize action by corporations organized pursuant to the DGCL to
further eliminate or limit the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the DGCL, as amended.
TWELFTH: Indemnification of Directors and Officers.
(a) Each person who was or is made a party or is threatened to
be made a party or is involved in any threatened, pending or completed action,
suit or proceeding, whether formal or informal, whether of a civil, criminal,
administrative or investigative nature (hereinafter a "proceeding"), by reason
of the fact that he or she, or a person of whom he or she is the legal
representative, is or was a director or officer of the Corporation, whether the
basis of such proceeding is an alleged action or inaction in an official
capacity or in any other capacity
5
<PAGE> 6
while serving as a director or officer, shall be indemnified and held harmless
by the Corporation to the fullest extent permissible under Delaware law, as the
same exists or may hereafter exist in the future (but, in the case of any future
change, only to the extent that such change permits the Corporation to provide
broader indemnification rights than the law permitted prior to such change),
against all costs, charges, expenses, liabilities and losses (including, without
limitation, attorneys' fees, judgments, fines, ERISA excise taxes, or penalties
and amounts paid or to be paid in settlement) reasonably incurred or suffered by
such person in connection therewith and such indemnification shall continue as
to a person who has ceased to be a director or officer and shall inure to the
benefit of his or her heirs, executors and administrators.
(b) The Corporation shall pay expenses actually incurred by a
director or officer in connection with any proceeding in advance of its final
disposition; provided, however, that if Delaware law then requires, the payment
of such expenses incurred in advance of the final disposition of a proceeding
shall be made only upon delivery to the Corporation of an undertaking, by or on
behalf of such claimant, to repay all amounts so advanced if it shall ultimately
be determined that such claimant is not entitled to be indemnified.
(c) If a claim under paragraph (a) of this Article Twelfth is
not paid in full by the Corporation within thirty (30) days after a written
claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and shall be entitled to be paid the expense of prosecuting such claim
actually incurred by such claimant in advance of its disposition; provided,
however that the payment of such expenses incurred in advance of the final
disposition of a proceeding shall be made only upon delivery to the Corporation
of an undertaking, by or on behalf of such claimant, to repay all amounts so
advanced if it shall ultimately be determined that such claimant is not entitled
to be indemnified. Neither the failure of the Corporation (including its Board
of Directors, independent legal counsel, or its stockholders) to have made a
determination that indemnification of the claimant is permissible in the
circumstances because the claimant has met the applicable standard of conduct,
if any, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant has
not met the standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the standard of conduct.
(d) Indemnification of Employees and Agents. The Corporation
may provide indemnification to employees and agents of the Corporation to the
fullest extent permissible under Delaware law.
(e) Expenses as a Witness. To the extent that any director,
officer, employee or agent of the Corporation is, by reason of such position, or
position with another entity at the request of the Corporation, a witness in any
action, suit or proceeding, he or she shall be indemnified against all costs and
expenses actually and reasonably incurred by him or her on his or her behalf in
connection therewith.
(f) Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or
6
<PAGE> 7
another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability or
loss under Delaware law.
(g) Indemnity Agreements. The Corporation may enter into
agreements with any director, officer, employee or agent of the Corporation
providing for indemnification to the fullest extent permissible under Delaware
law.
(h) Severability. Each and every paragraph, sentence, term and
provision of this Article Twelfth is separate and distinct, so that if any
paragraph, sentence, term or provision hereof shall be held to be invalid or
unenforceable for any reason, such invalidity or unenforceability shall not
affect the validity or unenforceability of any other paragraph, sentence, term
or provision hereof. To the extent required, any paragraph, sentence, term or
provision of this Article Twelfth may be modified by a court of competent
jurisdiction to preserve its validity and to provide the claimant with, subject
to the limitations set forth in this Article Twelfth and any agreement between
the Corporation and claimant, the broadest possible indemnification permitted
under applicable law.
(i) Contract Right. Each of the rights conferred on directors
and officers of the Corporation by Sections (a), (b), (c) and (d) of this
Article Twelfth and on employees or agents of the Corporation by Sections (c)
and (d) of this Article Twelfth shall be a contract right and any repeal or
amendment of the provisions of this Article Twelfth shall not adversely affect
any right hereunder of any person existing at the time of such repeal or
amendment with respect to any act or omission occurring prior to the time of
such repeal or amendment and, further, shall not apply to any proceeding,
irrespective of when the proceeding is initiated, arising from the service of
such person prior to such repeal or amendment.
(j) Nonexclusivity. The rights conferred in this Article
Twelfth shall not be exclusive of any other rights that any person may have or
hereafter acquire under any statute, bylaw, agreement, vote of stockholders or
vote of disinterested and independent directors or otherwise.
THIRTEENTH: The Corporation reserves the right to amend, add, alter,
change, repeal or adopt any provision contained in this Amended and Restated
Certificate of Incorporation, in the manner now or hereafter prescribed by
statute, and all rights conferred upon stockholders herein are granted subject
to this reservation.
7
<PAGE> 8
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
executed this ____ day of ____________________, 2000.
The Concours Group, Inc.
By:
------------------------------
Ron Christman, President
8
<PAGE> 1
EXHIBIT 3.2
FIRST AMENDMENT
TO THE
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
THE CONCOURS GROUP, INC.
The Concours Group, Inc. (the "Corporation"), a corporation organized
and existing under the General corporation Law of the State of Delaware, as
amended (the "DGCL"), hereby certifies that:
FIRST: All of the directors of the Corporation have executed a
Unanimous Written Consent of Directors of the Corporation in accordance with the
provisions of Section 141(f) of the DGCL, in which they adopted, among others,
the following resolution with respect to the proposed amendment of the Amended
and Restated Certificate of Incorporation of the Corporation (the "Amendment"):
RESOLVED, that the Amended and Restated Certificate of Incorporation of
the Corporation be amended to add to the end of Article Thirteen the
following sentence:
"The Board of Directors is expressly authorized to adopt, amend or
repeal the bylaws of the Corporation, without any action on the part of
the holders of the Corporation's Common Stock, except as may be
otherwise provided by applicable law or the bylaws of the Corporation."
SECOND: The holders of all of the outstanding stock of the Corporation
entitled to vote thereon have executed and delivered to the Corporation a
written consent of stockholders, in accordance with the provisions of Section
228 of the DGCL, in which they adopted a resolution authorizing and approving
the Amendment.
THIRD: The Amendment was duly adopted in accordance with the provisions
of Sections 141, 228 and 242 of the DGCL.
<PAGE> 2
IN WITNESS WHEREOF, the Corporation has caused this First Amendment to
the Amended and Restated Certificate of Incorporation to be executed by Dr. Ron
Christman as President and Secretary, on March 15, 2000.
THE CONCOURS GROUP, INC.
By:
-----------------------------
Dr. Ron Christman
President and Secretary
I, the undersigned, for the purpose of amending the Amended and
Restated Certificate of Incorporation of the Corporation, do make, file and
record this Amendment and do certify that the facts herein stated are true, and
I have accordingly hereto set my hand this 8th day of March, 2000.
--------------------------------
Dr. Ron Christman
<PAGE> 1
EXHIBIT 3.3
AMENDED AND RESTATED
BYLAWS OF
THE CONCOURS GROUP, INC.
ARTICLE 1
OFFICES
1.1 Registered Office. The registered office and registered agent shall
be in the City of Wilmington, County of New Castle, State of Delaware.
1.2 Other Offices. The corporation may also have offices at such other
places, either within or without the State of Delaware, as the board of
directors may from time to time to determine or as the business of the
corporation may require.
ARTICLE 2
MEETINGS OF STOCKHOLDERS
2.1 Annual Meetings.
(a) An annual meeting of stockholders of the corporation shall
be held during each calendar year on such date and at such time as shall be
designated from time to time by the board of directors and stated in the notice
of the meeting, if not a legal holiday in the place where the meeting is to be
held, and, if such date is a legal holiday in such place, then on the next
business day following, at the time specified in the notice of the meeting. At
such meeting, the stockholders shall elect directors and transact such other
business as may properly be brought before the meeting.
(b) At the annual meeting of stockholders, only such business
shall be conducted, and only such proposals shall be acted upon, as shall have
been properly brought before the annual meeting of stockholders (i) by or at the
direction of the board of directors; or (ii) by a stockholder of the corporation
who complies with the procedures set forth in this Article 2. For business or a
proposal to be properly brought before an annual meeting of stockholders by a
stockholder, the stockholder must have given timely notice thereof in writing to
the secretary of the corporation. To be timely, a stockholder's notice must be
delivered to, or mailed and received at, the principal executive offices of the
corporation not less than sixty (60) days nor more than ninety (90) days prior
to the scheduled date of the annual meeting, regardless of any postponement,
deferral or adjournment of that meeting to a later date; provided, however, that
if less than seventy (70) days' notice or prior public disclosure of the date of
the annual meeting is given or made to stockholders, notice by the stockholder
to be timely must be so delivered or mailed and received not later than the
close of business on the tenth (10th) day following the earlier of (x) the day
on which such notice of the date of the meeting was mailed; or (y) the day on
which such public disclosure was made
(c) A stockholder's notice to the secretary shall set forth as
to each matter the stockholder proposes to bring before an annual meeting of
stockholders (i) a description, in five hundred (500) words or less, of the
business desired to be brought before the annual meeting; and the reasons for
conducting such business at the annual meeting; (ii) the name and address, as
such information appears on the corporation's books, of the stockholder
proposing such business and any other stockholder known by such stockholder to
be supporting such
<PAGE> 2
proposal; (iii) the class and number of shares of the corporation that are
beneficially owned by such stockholder and each other stockholder known by such
stockholder to be supporting such proposal on the date of such stockholder's
notice; (iv) a description, in five hundred (500) words or less, of any interest
of the stockholder in such proposal; and (v) a representation that the
stockholder is a holder of record of stock of the corporation and intends to
appear in person or by proxy at the meeting to present the proposal specified in
the notice.
(d) The chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that the business was not properly brought
before the meeting in accordance with the procedures prescribed by this Article
2, and if the chairman should so determine, the chairman shall so declare to the
meeting and any such business not properly brought before the meeting shall not
be transacted. Notwithstanding the foregoing, nothing in this Article 2 shall be
interpreted or construed to require the inclusion of information about any such
proposal in any proxy statement distributed by, at the direction of, or on
behalf of, the board of directors.
2.2 Special Meetings. A special meeting of the stockholders may be
called at any time by the chairman of the board, the president or the board of
directors. Only business within the purpose or purposes described in the notice
of special meeting may be conducted at such special meeting.
2.3 Place of Meetings. The annual meeting of stockholders may be held
at any place within or without the State of Delaware designated by the board of
directors. Special meetings of stockholders may be held at any place within or
without the State of Delaware designated by the person or persons calling such
special meeting as provided in Section 2.2 above. Meetings of stockholders shall
be held at the principal office of the corporation unless another place is
designated for meetings in the manner provided herein.
2.4 Notice. Except as otherwise provided by law, written or printed
notice stating the place, day, and hour of each meeting of the stockholders and,
in case of a special meeting, the purpose or purposes for which the meeting is
called, shall be delivered not less than ten (10) nor more than sixty (60) days
before the date of the meeting by or at the direction of the chairman, the
president, the secretary, or the board of directors, to each stockholder of
record entitled to vote at such meeting.
2.5 Voting List. At least ten days before each meeting of stockholders,
the secretary shall prepare a complete list of stockholders entitled to vote at
such meeting, arranged in alphabetical order, including the address of each
stockholder and the number of voting shares held by each stockholder. For a
period of ten (10) days prior to such meeting, such list shall be kept on file
at the office of the corporation and shall be subject to inspection by any
stockholder during usual business hours. Such list shall be produced at such
meeting, and at all times during such meeting shall be subject to inspection by
any stockholder. The original stock transfer books shall be prima facie evidence
as to who are the stockholders entitled to examine such list.
2.6 Voting of Shares. Treasury shares, shares of the corporation's own
stock owned by another corporation, the majority of the voting stock of which is
owned or controlled by the corporation, and shares of the corporation's own
stock held by the corporation in a fiduciary capacity shall not be shares
entitled to vote or to be counted in determining the total number of
2
<PAGE> 3
outstanding shares. Shares standing in the name of another domestic or foreign
corporation of any type or kind may be voted by such officer, agent, or proxy as
the bylaws of such corporation may authorize or, in the absence of such
authorization, as the board of directors of such corporation may determine.
Shares held by an administrator, executor, guardian, or conservator may be voted
by him, either in person or by proxy, without transfer of such shares into his
name so long as such shares form a part of the estate served by him and are in
the possession of such estate. Shares held by a trustee may be voted by him,
either in person or by proxy, only after the shares have been transferred into
his name as trustee. Shares standing in the name of a receiver may be voted by
such receiver, and shares held by or under the control of a receiver may be
voted by such receiver without transfer of such shares into his name if
authority to do so is contained in the court order by which such receiver was
appointed. A stockholder whose shares are pledged shall be entitled to vote such
shares until they have been transferred into the name of the pledgee, and
thereafter, the pledgee shall be entitled to vote such shares.
2.7 Quorum. The holders of a majority of the outstanding shares
entitled to vote, present in person or represented by proxy, shall constitute a
quorum at any meeting of stockholders, except as otherwise provided by law, the
certificate of incorporation of the corporation (including any certificate of
designation) as the same may be amended from time to time (the "Certificate of
Incorporation"), or these bylaws. If a quorum is not present or represented at
any meeting of stockholders, a majority of the stockholders entitled to vote at
the meeting, who are present in person or represented by proxy, may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At any reconvening of
an adjourned meeting at which a quorum shall be present or represented by proxy,
any business may be transacted that could have been transacted at the original
meeting, if a quorum had been present or represented.
2.8 Majority Vote; Withdrawal of Quorum. If a quorum is present in
person or represented by proxy at any meeting, the vote of the holders of a
majority of the shares entitled to vote, that are present in person or
represented by proxy, shall decide any question properly brought before such
meeting, unless the question is one on which, by express provision of law, the
Certificate of Incorporation or these bylaws, a different vote is required, in
which event such express provision shall govern and control the decision of such
question. The stockholders present at a duly convened meeting may continue to
transact business until adjournment, notwithstanding any withdrawal of
stockholders which may leave less than a quorum remaining.
2.9 Method of Voting; Proxies. Every stockholder of record shall be
entitled at every meeting of stockholders to one vote on each matter submitted
to a vote, for each share standing in such stockholder's name on the original
stock transfer books of the corporation except to the extent that the voting
rights of the shares of any class or classes are limited or denied by the
Certificate of Incorporation. Such stock transfer books shall be prima facie
evidence as to the identity of stockholders entitled to vote. At any meeting of
stockholders, every stockholder having the right to vote may vote either in
person or by a proxy executed in writing by the stockholder or by his duly
authorized attorney-in-fact. Each such proxy shall be filed with the secretary
of the corporation before, or at the time of, the meeting. No proxy shall be
valid after eleven months from the date of its execution, unless otherwise
provided in the proxy. If no date is stated on a proxy, such proxy shall be
presumed to have been executed on the date of the
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meeting at which it is to be voted. Each proxy shall be revocable unless the
proxy form conspicuously states that the proxy is irrevocable and the proxy is
coupled with an interest.
2.10 Closing of Transfer Books; Record Date. For the purpose of
determining stockholders entitled to notice of, or to vote at, any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, or in order to make a determination
of stockholders for any other proper purpose, the board of directors may provide
that the stock transfer books of the corporation shall be closed for a stated
period but not to exceed in any event sixty days. If the stock transfer books
are closed for the purpose of determining stockholders entitled to notice of, or
to vote at, a meeting of stockholders, such books shall be closed for at least
ten (10) days immediately preceding such meeting. In lieu of closing the stock
transfer books, the board of directors may fix in advance a date as the record
date for any such determination of stockholders, such date in any case to be not
more than sixty (60) days and, in the case of a meeting of stockholders, not
less than ten (10) days prior to the date on which the particular action
requiring such determination of stockholders is to be taken. If the stock
transfer books are not closed and if no record date is fixed for the
determination of stockholders entitled to notice of, or to vote at, a meeting of
stockholders or entitled to receive a distribution (other than a distribution
involving a purchase or redemption by the corporation of any of its own shares)
or a share dividend, the date on which the notice of the meeting is mailed or
the date on which the resolution of the board of directors declaring such
distribution or share dividend is adopted, as the case may be, shall be the
record date for such determination of stockholders. A determination of
stockholders of record entitled to notice of, or to vote at, a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the board of directors may fix a new record date for the adjourned meeting.
2.11 Officers' Duties at Meetings. The chairman shall preside at, and
the secretary shall prepare minutes of, each meeting of stockholders, and in the
absence of either such officer, such duties shall be performed by the person or
persons specified in Article 6 of these bylaws.
ARTICLE 3
DIRECTORS
3.1 General Powers. The business and affairs of the corporation shall
be managed by or under the direction of the board of directors, which may
exercise all such powers of the corporation and do all such lawful acts and
things as are not by law or by the Certificate of Incorporation or by these
bylaws directed or required to be exercised or done by the stockholders.
3.2 Number of Directors; Classification of the Board of Directors;
Independent Directors.
(a) Number of Directors. The number of directors which shall
constitute the board of directors shall be not less than three (3) nor more than
eleven (11). The number of directors that shall constitute the entire board of
directors shall be determined by resolution of the board of directors at any
meeting thereof or by the stockholders at any meeting thereof, but
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shall never be less than three (3). No director need be a stockholder of the
corporation, a resident of the State of Delaware or a citizen or resident of the
United States.
(b) Classification of the Board of Directors. The directors on
the Board of Directors shall be classified, from and after the date on which the
corporation first files a registration statement with the Securities and
Exchange Commission, with respect to the time for which the directors serving at
such time shall severally hold office by dividing them into three classes. If
the total number of directors is not evenly divisible by three, the Board of
Directors shall by resolution, determine the number of directors in each class,
which shall be, as nearly as possible, the same for each class. All directors of
the Corporation shall hold office until their resignation or removal or until
their successors are duly elected or qualified.
The Class One directors shall hold office until the first annual
meeting of the stockholders to be held after the date upon which such director
was elected or until their successors are duly elected and qualified; the Class
Two directors shall hold office until the second annual meeting of the
stockholders to be held after such date or until their successors are duly
elected and qualified; and the Class Three directors shall hold office until the
third annual meeting of the stockholders to be held after such date or until
their successors are duly elected and qualified. At each annual meeting of the
stockholders following the first such annual meeting, the successors to the
class of directors whose terms shall expire in that year shall be elected, and
such successors shall hold office until the third following annual meeting of
stockholders and until the election and qualification of their respective
successors. If successors to the class of directors whose term shall expire at
an annual meeting of stockholders are not elected at such meeting or if such
meeting is not held, directors may be elected at a special meeting of
stockholders as successors to that class of directors.
(c) Independent Directors. No director need be a stockholder,
a resident of the State of Delaware or a citizen of the United States. Three of
the directors on the board of directors shall be "independent directors." An
independent director is a director who is not an officer or employee of the
Corporation or its subsidiaries or an individual having a relationship which, in
the opinion of the Corporation's Board of Directors, would interfere with the
exercise of independent judgment in carrying out the responsibilities as
director. The following directors shall not be considered independent:
(i) a director who is employed by the Corporation or any of its affiliates
for the current year or any of the past three years;
(ii) a director who accepts any compensation from the Corporation or any its
affiliates in excess of $60,000 during the previous fiscal year, other
than compensation for board service, benefits under a tax-qualified
retirement plan, or non-discretionary compensation;
(iii) a director who is a member of the immediate family of an individual who
is, or has been in any of the past three years, employed by the
Corporation or any of its affiliates as an executive officer. Immediate
family includes a person's spouse, parents, children, siblings,
mother-in-law, father-in-law, brother-in-law, sister-in-law,
son-in-law, daughter-in-law, and anyone who resides in such person's
home;
(iv) a director who is a partner in, or a controlling shareholder or an
executive officer of, any for-profit business organization to which the
Corporation made, or from which it received, payments (other than those
arising solely from investments in the Corporation's securities) that
exceed five percent of the Corporation's or business organization's
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consolidated gross revenues for that year, or $200,000, whichever is
more, in any of the past three years;
(v) a director who is employed as an executive of another entity where any
of the Corporation's executives serve on that entity's compensation
committee.
3.3 Changes in Number. No decrease in the number of directors
constituting the entire board of directors shall have the effect of shortening
the term of any incumbent director. Any directorship to be filled by reason of
an increase in the number of directors may be filled by (a) the stockholders at
any annual or special meeting of stockholders called for that purpose; or (b)
the board of directors for a term of office continuing only until the next
election of one or more directors by the stockholders. Whenever the holders of
any class or series of shares are entitled to elect one or more directors
pursuant to the provisions of the Certificate of Incorporation, any newly
created directorship(s) of such class or series to be filled by reason of an
increase in the number of such directors may be filled by the affirmative vote
of a majority of the directors elected by such class or series then in office or
by a sole remaining director so elected or by the vote of the holders of the
outstanding shares of such class or series, and such directorship(s) shall not
in any case be filled by the vote of the remaining directors or by the holders
of the outstanding shares of the corporation as a whole unless otherwise
provided in the Certificate of Incorporation.
3.4 Election, Qualification and Term of Office of Directors.
(a) Directors shall be elected at each annual meeting of
stockholders, and from and after the date on which the corporation first files a
registration statement with the Securities and Exchange Commission, shall hold
office for the term as set forth in Section 3.2(b) hereof. Directors need not be
stockholders unless so required by the Certificate of Incorporation or these
bylaws, wherein other qualifications for directors may be prescribed. Each
director, including a director elected to fill a vacancy, shall hold office
until his successor is elected and qualified or until his earlier resignation or
removal. Elections of directors need not be by written ballot.
(b) Nominations of persons for election to the board of
directors may be made at an annual meeting of stockholders or special meeting of
stockholders called by the board of directors for the purpose of electing
directors (i) by or at the direction of the board of directors or a committee
thereof; or (ii) by any stockholder of the corporation entitled to vote for the
election of directors at such meeting who complies with the notice of procedures
set forth in this Article 3. Such nominations, other than those made by or at
the direction of the board of directors or a committee thereof, shall be made
pursuant to timely notice in writing to the secretary of the corporation. To be
timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the corporation not less than sixty (60) days
nor more than ninety (90) days prior to the scheduled date of the meeting,
regardless of any postponement, deferral or adjournment of that meeting to a
later date; provided, however, that if less than seventy (70) days' notice or
prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so delivered or
received not later than the close of business on the tenth (10th) day following
the earlier of (x) the day on which such notice of the date of the meeting was
mailed; or (y) the day on which such public disclosure was made.
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(c) A stockholder's notice to the secretary shall set forth
(i) as to each person whom the stockholder proposes to nominate for election or
reelection as a director (a) the name, age, business address and residence
address of such person; (b) the principal occupation or employment of such
person; (c) the class and number of shares of the corporation that are
beneficially owned by such person on the date of such stockholder's notice; and
(d) any other information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended, or any successor statute thereto (including, without
limitation, such person's written consent to being named in the proxy statement
as a nominee and to serving as a director if elected); (ii) as to the
stockholder giving notice (a) the name and address, as such information appears
on the corporation's books, of such stockholder and any other stockholders known
by such stockholder to be supporting such nominee(s); (b) the class and number
of shares of the corporation that are beneficially owned by such stockholder and
each other stockholder known by such stockholder to be supporting such
nominee(s) on the date of such stockholder notice; (c) a representation that the
stockholder is a holder of record of stock of the corporation entitled to vote
at such meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; and (d) a description of
all arrangements or understandings between the stockholder and each nominee and
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder.
(d) Subject to the rights, if any, of the holders of any class
or series of stock having a preference over the common stock as to dividends or
upon liquidation, no person shall be eligible for election as a director of the
corporation unless nominated in accordance with the procedures set forth in this
Article 3. The chairman of the meeting shall, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance with the
procedures prescribed by this Article 3 and, if he should so determine, he shall
so declare to the meeting and the defective nomination shall be disregarded.
3.5 First Meeting. Each newly elected board of directors may hold its
first meeting for the purpose of organization and the transaction of business,
if a quorum is present, immediately after, and at the same place as the annual
meeting of stockholders, and notice of such meeting shall not be necessary.
3.6 Regular Meetings. Regular meetings of the board of directors will
be held at least every six months. Written notice stating the place, day, and
hour of each such meeting shall be delivered to each director not less than two
(2) days before the date of the meeting.
3.7 Special Meetings. Special meetings of the board of directors may be
called by the chairman of the board or the president, and may be called by the
president or secretary on the written request of two directors. Written notice
stating the place, day, and hour of each such meeting shall be delivered to each
director not less than two (2) days before the date of the meeting.
3.8 Quorum; Majority Vote. At all meetings of the board of directors, a
majority of the entire board of directors shall constitute a quorum for the
transaction of business and the act of a majority of the directors present at
any meeting at which there is a quorum present shall be the act of the board of
directors, except as may be otherwise specifically provided by statute or by
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the Certificate of Incorporation. If a quorum shall not be present at any
meeting of the board of directors, the directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
3.9 Rules and Regulations. The board of directors may adopt such rules
and regulations not inconsistent with the provisions of law, the Certificate of
Incorporation or these bylaws, for the conduct of its meetings and management of
the affairs of the corporation as the board of directors may deem proper.
3.10 Resignations. Any director of the corporation may at any time
resign by giving written notice to the board of directors, the chairman of the
board, the president or the secretary of the corporation. Such resignation shall
take effect at the time specified therein or, if the time be not specified, upon
receipt thereof; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
3.11 Removal of Directors. Unless otherwise restricted by statute, by
the Certificate of Incorporation or by these bylaws, any director or the entire
board of directors may be removed only for cause by the holders of a majority of
the shares then entitled to vote at an election of directors. For purposes of
these bylaws, "cause" shall mean gross neglect or willful misconduct in the
performance of the duties as a director.
3.12 Vacancies. Subject to the rights of the holders of any class or
series of stock having a preference over the common stock of the corporation as
to dividends or upon liquidation, any vacancies on the board of directors
resulting from death, resignation, removal or other cause, shall only be filled
by the affirmative vote of a majority of the remaining directors then in office,
even though less than a quorum of the board of directors, or by a sole remaining
director, and newly created directorships resulting from any increase in the
number of directors shall be filled by the board of directors, or if not so
filled, by the stockholders at the next annual meeting thereof or at a special
meeting called for that purpose in accordance with Section 2.4 of these bylaws.
Any director elected in accordance with the preceding sentence of this Section
3.12 shall hold office for the remainder of the full term of the class of
directors in which the new directorship was created or the vacancy occurred and
until such successor shall have been elected and qualified.
3.13 Compensation of Directors. Unless otherwise restricted by the
Certificate of Incorporation or these bylaws, the board of directors shall have
the authority to fix the compensation of directors. The directors may be paid
their expenses, if any, of attendance at each meeting of the board of directors
and may be paid a fixed sum for attendance at each meeting of the board of
directors or a stated salary as director. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be allowed
like compensation for attending committee meetings.
ARTICLE 4
EXECUTIVE AND OTHER COMMITTEES
4.1 Executive Committee. The board of directors may, by resolution
adopted by a majority of the entire board of directors, designate annually one
(1) or more of its members to
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constitute members or alternate members of an executive committee, which
committee shall have and may exercise, between meetings of the board of
directors, all the powers and authority of the board of directors in the
management of the business and affairs of the corporation, including, if such
committee is so empowered and authorized by resolution adopted by a majority of
the entire board of directors, the power and authority to declare a dividend and
to authorize the issuance of stock, and may authorize the seal of the
corporation to be affixed to all papers that may require it, except that the
executive committee shall not have such power or authority with reference to:
(a) amending the Certificate of Incorporation;
(b) adopting an agreement of merger or consolidation involving
the corporation;
(c) recommending to the stockholders the sale, lease or
exchange of all or substantially all of the property and assets of the
corporation;
(d) recommending to the stockholders a dissolution of the
corporation or a revocation of a dissolution;
(e) adopting, amending or repealing any bylaw;
(f) filling vacancies on the board of directors or on any
committee of the board of directors, including the executive committee;
(g) fixing the compensation of directors for serving on the
board of directors or on any committee of the board of directors, including the
executive committee; or
(h) amending or repealing any resolution of the board of
directors which by its terms may be amended or repealed only by the board of
directors.
4.2 Other Committees. The board of directors may, by resolution adopted
by a majority of the entire board of directors, designate from among its members
one or more other committees, each of which shall, except as otherwise
prescribed by law, have such authority of the board of directors as may be
specified in the resolution of the board of directors designating such
committee. The board of directors shall have the power at any time to change the
membership of, to increase or decrease the membership of, to fill all vacancies
in, and to discharge any such committee, or any member thereof, either with or
without cause.
4.3 Procedure; Meetings; Quorum. Regular meetings of the executive
committee or any other committee of the board of directors may be held at such
times and places as shall be fixed by resolution adopted by a majority of the
members thereof, unless the board of directors shall otherwise provide. Special
meetings of the executive committee or any other committee of the board of
directors shall be called at the request of any member thereof. Written notice
of each regular and each special meeting of the executive committee or any other
committee of the board of directors shall be delivered to each member thereof
not later than three (3) days before the day on which the meeting is to be held,
but notice need not be given to any member who shall, either before or after the
meeting, submit a signed waiver of such notice or who shall attend such meeting
without protesting, prior to or at its commencement, the lack of such notice to
such member. Any special meeting of the executive committee or any other
committee of the board of directors shall be a legal meeting without any notice
thereof having been given, if all the
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members thereof shall be present thereat. Notice of any adjourned meeting of any
committee of the board of directors need not be given. The executive committee
or any other committee of the board of directors may adopt such rules and
regulations not inconsistent with the provisions of law, the requirements of any
national or foreign stock exchange, the Certificate of Incorporation or these
bylaws for the conduct of its meetings as the executive committee or any other
committee of the board of directors may deem proper. A majority of the executive
committee or any other committee of the board of directors shall constitute a
quorum for the transaction of business at any meeting, and the vote of a
majority of the members thereof present at any meeting at which a quorum is
present shall be the act of such committee. In the absence or disqualification
of a member, the remaining members, whether or not a quorum, may fill a vacancy.
The executive committee or any other committee of the board of directors shall
keep written minutes of its proceedings, a copy of which is to be filed with the
secretary of the corporation, and shall report on such proceedings to the board
of directors.
ARTICLE 5
GENERAL PROVISIONS RELATING TO MEETINGS
5.1 Notice. Whenever by law, the Certificate of Incorporation or these
bylaws, notice is required to be given to any committee member, director, or
stockholder and no provision is made as to how such notice shall be given, it
shall be construed to mean that any such notice may be given (a) in person; (b)
in writing, by mail, postage prepaid, addressed to such committee member,
director, or stockholder at his address as it appears on the books of the
corporation or, in the case of a stockholder, the stock transfer records of the
corporation; (c) by telephone; (d) by telecopier; (e) by courier or overnight
delivery service; (f) by electronic transmission; or (g) by any other method
permitted by law. Any notice required or permitted to be given by mail shall be
deemed to be delivered and given at the time when the same is deposited in the
United States mail, postage prepaid, and addressed as aforesaid. Any notice
required or permitted to be given by telecopier, electronic transmission or
similar means shall be deemed to be delivered and given at the time transmitted
with all charges, if applicable, prepaid and addressed as aforesaid.
5.2 Waiver of Notice. Whenever by law, the Certificate of Incorporation
or these bylaws, any notice is required to be given to any committee member,
stockholder, or director of the corporation, a waiver thereof in writing signed
by the person or persons entitled to such notice, whether before or after the
time notice should have been given, shall be equivalent to the giving of such
notice. Attendance of a committee member, stockholder, or director at a meeting
shall constitute a waiver of notice of such meeting, except where such person
attends for the express purpose of objecting to the transaction of any business
on the ground that the meeting is not lawfully called or convened.
5.3 Telephone and Similar Meetings. Stockholders, directors, or
committee members may participate in and hold a meeting by means of a conference
telephone or similar communications equipment by means of which persons
participating in the meeting can hear each other. Participation in such a
meeting shall constitute presence in person at such meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
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5.4 Action Without Meeting.
(a) Board of Directors and Board Committee Actions. Any action
that may be taken, or is required by law, the Certificate of Incorporation or
these bylaws to be taken, at a meeting of the board of directors or any
committee may be taken without a meeting if a consent in writing, setting forth
the action so taken, shall be signed by all of the directors or committee
members, as the case may be, entitled to vote with respect to the subject matter
thereof, and such consent shall have the same force and effect, as of the date
stated therein, as a unanimous vote of such directors or committee members, as
the case may be, and may be stated as such in any document filed with the
Secretary of State of Delaware or in any certificate or other document delivered
to any person. The consent may be in one or more counterparts so long as each
director or committee member signs one of the counterparts. The signed consent
shall be placed in the minute books of the corporation.
(b) Stockholder Actions. Unless otherwise restricted by the
Certificate of Incorporation, any action that may be taken, or is required by
law, the Certificate of Incorporation or these bylaws to be taken, at a meeting
of the Stockholders may be taken without a meeting, without prior notice and
without a vote, if a consent or consents in writing, setting forth the actions
so taken shall be signed by the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted. The writing or writings shall be delivered to the corporation
by delivery to its registered office in Delaware, its principal place of
business or an officer or agent of the corporation having custody of the books
in which proceedings of meetings of stockholders are recorded. Delivery made to
a corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent shall be given
by the Secretary of the corporation to those stockholders who have not consented
in writing to such action.
ARTICLE 6
OFFICERS
6.1 Election; Qualification. The officers of the corporation shall be
chosen by the board of directors and shall be a chairman, president, one or more
vice presidents, a secretary and a treasurer. The board of directors may also
choose a chairman of the board, one or more assistant secretaries and assistant
treasurers and such other officers and agents as it shall deem necessary. Any
number of offices may be held by the same person, unless the Certificate of
Incorporation or these bylaws otherwise provide.
6.2 Salary. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
6.3 Term; Removal. The officers of the corporation shall hold office
until their successors are chosen and qualify. Any officer elected or appointed
by the board of directors may be removed at any time by the affirmative vote of
a majority of the board of directors, but such removal shall be without
prejudice to the contractual rights, if any, of the person so removed. Election
or appointment of an officer or agent shall not of itself create contract
rights. Any vacancy occurring in any office of the corporation shall be filled
by the board of directors.
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6.4 Resignation. Subject at all times to the right of removal as
provided in Section 6.3 any officer may resign at any time by giving notice to
the board of directors, the president or the secretary of the corporation. Any
such resignation shall take effect at the date of receipt of such notice or at
any later date specified therein; provided that the president or, in the event
of the resignation of the president, the board of directors may designate an
effective date for such resignation which is earlier than the date specified in
such notice but which is not earlier than the date of receipt of such notice;
and, unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
6.5 Vacancies. A vacancy in any office because of death, resignation,
removal or any other cause may be filled for the unexpired portion of the term
in the manner prescribed in these bylaws for election to such office.
6.6 Chairman. The chairman shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect. The chairman shall execute bonds, mortgages
and other contracts requiring a seal, under the seal of the corporation, except
where required or permitted by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the board of directors to some other officer or agent of the corporation.
6.7 President. In the absence of the chairman, the president shall be
the chief executive officer of the corporation, shall preside at all meetings of
the stockholders and the board of directors, shall have general and active
management of the business of the corporation and shall see that all orders and
resolutions of the board of directors are carried into effect. The president
shall execute bonds, mortgages and other contracts requiring a seal, under the
seal of the corporation, except where required or permitted by law to be
otherwise signed and executed and except where the signing and execution thereof
shall be expressly delegated by the board of directors to some other officer or
agent of the corporation.
6.8 Vice Presidents. In the absence of the president and the chairman
or, in the event of their inability or refusal to act, the vice president (or in
the event there be more than one vice president, the vice presidents in the
order designated by the directors, or in the absence of any designation, then in
the order of their election) shall perform the duties of the president, and when
so acting, shall have all the powers of and be subject to all the restrictions
upon the president. The vice presidents shall perform such other duties and have
such other powers as the board of directors may from time to time prescribe.
6.9 Secretary. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the board of directors and the stockholders and, in the case of
any actions taken without a meeting, place the signed written consent to such
actions in a book to be kept for that purpose and shall perform like duties for
the standing committees when required. The secretary shall give, or cause to be
given, notice of all meetings of the stockholders and special meetings of the
board of directors, and shall perform such other duties as may be prescribed by
the board of directors or president, under whose supervision the secretary shall
be. The secretary shall have custody of the corporate seal
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of the corporation and the secretary, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by the secretary's signature or by the signature of such
assistant secretary. The board of directors may give general authority to any
other officer to affix the seal of the corporation and to attest the affixing by
the signature of the secretary.
6.10 Assistant Secretary. The assistant secretary, or if there be more
than one, the assistant secretaries in the order determined by the board of
directors (or if there be no such determination, then in the order of their
election) shall, in the absence of the secretary or in the event of the
secretary's inability or refusal to act, perform the duties and exercise the
powers of the secretary and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
6.11 Treasurer. The treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors. The treasurer
shall disburse the funds of the corporation as may be ordered by the board of
directors, taking proper vouchers for such disbursements, and shall render to
the president and the board of directors, at its regular meetings, or when the
board of directors so requires, an account of all transactions as treasurer and
of the financial condition of the corporation. If required by the board of
directors, the treasurer shall give the corporation a bond in such sum and with
such surety or sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of the office and for the restoration to
the corporation, in case of death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in the possession, or under the control of, the treasurer belonging to the
corporation.
6.12 Assistant Treasurer. The assistant treasurer, or if there shall be
more than one, the assistant treasurers in the order determined by the board of
directors (or if there be no such determination, then in the order of their
election), shall, in the absence of the treasurer or in the event of the
treasurer's inability or refusal to act, perform the duties and exercise the
powers of the treasurer and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
ARTICLE 7
CERTIFICATES OF STOCK
7.1 Certificates. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by,
the chairman, or the president or a vice president and the treasurer or an
assistant treasurer, or the secretary or an assistant secretary of the
corporation, certifying the number of shares owned by such stockholder in the
corporation.
7.2 Facsimile Signatures. Any of or all the signatures on the
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed, or whose facsimile signature has been placed upon, a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if
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such officer, transfer agent or registrar were such officer, transfer agent or
registrar at the date of issue.
7.3 Lost Certificates. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost, stolen or destroyed.
7.4 Transfers of Stock. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
7.5 Registered Stockholders. The corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of Delaware.
ARTICLE 8
AFFILIATED TRANSACTIONS
8.1 Validity. Except as otherwise provided for in the Certificate of
Incorporation and in this bylaw, if Section 9.2 is satisfied, no contract or
transaction between the corporation and any of its directors, officers or
security holders, or any corporation, partnership, association or other
organization in which any of such directors, officers or security holders are
directly or indirectly financially interested, shall be void or voidable solely
because of this relationship, or solely because of the presence of the director,
officer or security holder at the meeting authorizing the contract or
transaction, or solely because of his or their participation in the
authorization of such contract or transaction or vote at the meeting therefor,
whether or not such participation or vote was necessary for the authorization of
such contract or transaction.
8.2 Disclosure, Approval; Fairness. Section 9.1 shall apply only if:
(a) the material facts as to the relationship or interest and
as to the contract or transaction are disclosed or are known:
(i) to the board of directors (or committee thereof)
and it nevertheless in good faith authorizes or ratifies the
contract or transaction by a majority of the
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directors present, each such interested director to be counted
in determining whether a quorum is present but not in
calculating the majority necessary to carry the vote; or
(ii) to the stockholders and they nevertheless
authorize or ratify the contract or transaction by a majority
of the shares present at a meeting considering such contract
or transaction, each such interested person (stockholder) to
be counted in determining whether a quorum is present and for
voting purposes; or
(b) the contract or transaction is fair to the corporation as
of the time it is authorized or ratified by the board of directors (or committee
thereof) or the stockholders.
8.3 Nonexclusive. This provision shall not be construed to invalidate a
contract or transaction that would be valid in the absence of this provision.
ARTICLE 9
GENERAL PROVISIONS
9.1 Dividends. Dividends upon the capital stock of the corporation,
subject to the provisions of the Certificate of Incorporation, if any, may be
declared by the board of directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the Certificate of Incorporation.
9.2 Reserves. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum or sums as
the directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the board of directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
9.3 Annual Statement. The board of directors shall present at each
annual meeting, a full and clear statement of the business and condition of the
corporation.
9.4 Checks. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
9.5 Fiscal Year. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
9.6 Seal. The corporate seal shall have inscribed thereon the name of
the corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
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ARTICLE 10
AMENDMENTS
10.1 Amendments. As provided by the Certificate of Incorporation, these
bylaws may be altered, amended or repealed or new bylaws may be adopted by the
board of directors, subject, however to the provisions of the Amended and
Restated Certificate of Designation of the Powers, Rights and Preferences of the
Series A Convertible Preferred Stock and the Series B Convertible Preferred
Stock, as the same may be amended from time to time (the "Certificate of
Designation"). The approval of a majority of the entire board of directors, at
any meeting of the board of directors must approve such amendments and such
action shall be valid only if notice of such alteration, amendment, repeal or
adoption of new bylaws be contained in the notice of such meeting. The
stockholders of the corporation shall have the power to adopt, amend or repeal
any provisions of the bylaws only to the extent and in the manner provided by
statute, in the Certificate of Incorporation and the Certificate of Designation.
Notwithstanding anything else contained herein, in addition to any affirmative
vote required by applicable law or any other provision of these Amended and
Restated Bylaws or specified in any agreement, and in addition to any voting
rights granted to or held by the holders of any series of preferred stock, the
affirmative vote of not less than eighty percent (80%) of the directors then in
office shall be required to amend, alter, change or repeal Section 3.2.
The Concours Group, Inc.
Date: March 10, 2000
------------------------------------
Dr. Ron Christman, Secretary
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<PAGE> 1
EXHIBIT 4.1
AMENDED AND RESTATED
CERTIFICATE OF DESIGNATION OF THE
POWERS, RIGHTS AND PREFERENCES OF
THE SERIES A CONVERTIBLE PREFERRED STOCK
AND
THE SERIES B CONVERTIBLE PREFERRED STOCK
OF
THE CONCOURS GROUP, INC.
The following resolutions were duly adopted by the Board of Directors
of The Concours Group, Inc., a Delaware corporation (the "CORPORATION"),
pursuant to the provisions of Section 151 of the General Corporation Law of the
State of Delaware, on February 28, 2000, by unanimous written consent of the
Board of Directors of the Corporation (capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in Section 10 hereof):
WHEREAS, pursuant to Article 6 of the Certificate of Incorporation of
the Corporation, the preferred stock, par value $0.01 per share (the "PREFERRED
STOCK"), of the Corporation may be divided into and issued in one or more
series;
WHEREAS, the Board of Directors of the Corporation is vested with the
authority, from time to time, to establish and designate one or more series of
such Preferred Stock and, within the limits prescribed by law and the
Certificate of Incorporation, to fix and determine the relative rights and
preferences of shares of any series of Preferred Stock so established;
WHEREAS, the Board of Directors of the Corporation has previously
established a series of convertible preferred stock designated "SERIES A
CONVERTIBLE PREFERRED STOCK" (the "SERIES A STOCK"); and
WHEREAS, the Board of Directors of the Corporation deems it to be in
the best interest of the Corporation to issue a new series of Preferred Stock;
NOW, THEREFORE, BE IT RESOLVED, that there is hereby established a
series of convertible preferred stock designated "SERIES B CONVERTIBLE PREFERRED
STOCK" (the "SERIES B STOCK," and together with the Series A Stock, the
"DESIGNATED PREFERRED") and that the number of shares that shall constitute such
Series B Stock shall be 1,936,000 shares; and
RESOLVED FURTHER, that the Corporation's Series A Stock and Series B
Stock shall have the following relative rights and preferences:
<PAGE> 2
1. DIVIDENDS.
1.1 Dividends. Subject to the terms and conditions set forth
herein, the holders of shares of the Designated Preferred shall be entitled to
receive dividends at a rate of eight percent (8%) per annum of the original
purchase price per share of such Designated Preferred, which shall be fully
cumulative, and prior and in preference to any declaration or payment of any
dividend or other distribution on any other class or series of Preferred Stock
or the Common Stock (excluding any stock splits and subdivisions for which an
adjustment is made hereunder) pursuant to the terms set forth herein. The
foregoing dividends on the Designated Preferred shall only accumulate and accrue
if the Corporation shall not have filed a registration statement with the
Securities and Exchange Commission ("SEC") for the sale of securities of the
Corporation for its own account on or before two hundred and seventy (270) days
subsequent to the date of the original issuance of the Series B Stock and such
registration statement shall not have been declared effective by the SEC on or
before December 31, 2000. In such event, the foregoing dividends with respect to
the Designated Preferred shall accumulate and accrue retroactively to the date
of the original issuance of the Series B Stock and shall thereafter accumulate
and accrue until the earlier of (i) the conversion of such shares of Designated
Preferred to Common Stock; or (ii) the liquidation, distribution or winding up
of the Corporation. The amount of dividends which accrue for any period that is
shorter or longer than a full annual dividend shall be computed on the basis of
a 365-day year and the actual number of days elapsed (including the first day
but excluding the last day) occurring in the period for which such amount is
payable. If the dividends for any series of Designated Preferred cannot be or
are not paid in full, dividends shall be paid, to the maximum possible extent,
to the holders of Designated Preferred on a pari passu basis, on the basis of
the amount of accrued and unpaid dividends outstanding on each share. No
dividend shall be paid to holders of any series of Designated Preferred unless
dividends are paid to all holders of Designated Preferred pursuant to the terms
of this resolution.
1.2 Payment-in-Kind. The annual dividends payable each year on the
Designated Preferred shall be paid in shares of the series of Preferred Stock
held by each holder of Designated Preferred (each a "PAYMENT-IN-KIND" or more
than one the "PAYMENTS-IN-KIND"). Each Payment-in-Kind shall be equal in amount
to that number of shares of the applicable series of Preferred Stock that is
equal in number to the aggregate dividend payable on any such dividend date
divided by the applicable Original Issuance Price (as defined herein) for such
series of Preferred Stock, and shall be allocated on a pro rata basis to each
holder entitled to receive such dividend. Certificates representing the shares
of Preferred Stock issuable on payment of any Payment-in-Kind shall be delivered
to each holder entitled to receive such Payment-in-Kind (in appropriate
denominations) on or before the ninetieth (90th) day following the date on which
the dividend is declared (or such later date as the independent determination of
fair market value has been made).
1.3 Other Permitted Distributions. If, in any dividend period or
periods, full dividends (whether past or current) upon the outstanding
Designated Preferred at the dividend rate set forth herein shall not have been
paid, then, unless and until all dividends accrued and unpaid on the Designated
Preferred through the payment date for such dividends are declared and paid on
each share of Designated Preferred, no dividends or other distributions shall be
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<PAGE> 3
declared or paid or set apart for payment upon any Common Stock or on any equity
securities ranking junior to the Designated Preferred (such other equity
securities being herein referred to as "JUNIOR STOCK"), nor shall the
Corporation purchase, redeem or otherwise acquire for consideration any such
Common Stock or Junior Stock, except that the Corporation may at any time
(subject to the terms thereof) repurchase, call or otherwise redeem at any time,
out of funds legally available therefor, shares of Common Stock or Preferred
Stock of the Corporation issued to or held by any person (a) subject to the
Corporation's right to purchase such shares contained in any stock purchase or
stock option agreement entered into with such person, (b) pursuant to Section 7
hereof, and (c) pursuant to the terms of that certain Repurchase Rights
Agreement entered into by the Corporation and the other parties signatory
thereto; whether or not dividends on the Series A Preferred or Series B
Preferred shall have been declared and paid or funds set aside therefor, in each
event subject to any other contractual restrictions entered into by the
Corporation.
1.4 Fractional Shares. If any fractional share of Preferred Stock
would be deliverable pursuant to the terms of Section 1.2, the Corporation shall
deliver certificates evidencing such fractional share.
1.5 Declared but Unpaid Dividends. Any declared but unpaid
dividends on shares of Designated Preferred will be added to the applicable
Liquidation Value (as defined below) of such shares and will remain a part
thereof until such dividends are paid.
2. LIQUIDATION PREFERENCE.
2.1. Liquidation Value; Events Deemed a Liquidation. In the event
of any liquidation, dissolution or winding up of the Corporation, either
voluntary or involuntary (an "EVENT"), the holders of the Designated Preferred
shall be entitled to receive from the assets of the Corporation, after payment
of all debts and liabilities of the Corporation, but prior to and in preference
of any distribution of any of the assets of the Corporation to the holders of
any other equity securities of the Corporation by reason of their ownership
thereof (a) in the case of the Series A Stock, an amount per share of Series A
Stock (the "SERIES A LIQUIDATION VALUE") equal to the sum of the aggregate
consideration paid for the Series A Stock (including contributions to capital
made pro rata by all of the holders of Series A Stock) plus the aggregate amount
of all accrued but unpaid dividends, divided by the number of shares of Series A
Stock outstanding; and (ii) in the case of the Series B Stock, an amount per
share of Series B Stock (the "SERIES B LIQUIDATION VALUE") equal to the sum of
the aggregate consideration paid for the Series B Stock (including contributions
to capital made pro rata by all of the holders of Series B Stock ) plus the
aggregate amount of all accrued but unpaid dividends, divided by the number of
shares of Series B Stock outstanding. After the Series A Liquidation Value is
paid to the holders of Series A Stock and the Series B Liquidation Value is paid
to the holders of the Series B Stock, the remaining assets of the Corporation
shall be distributed to the holders of Common Stock and any other equity
securities entitled thereto, and to the holders of Series A Stock and Series B
Stock, ratably on an as-converted basis. However, if upon the occurrence of an
Event, the total amount of assets of the Corporation, after the payment of all
debts and liabilities of the Corporation, available to be distributed among the
stockholders of the Corporation is insufficient to permit the payment to holders
of Series A Stock and Series B Stock of the full
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<PAGE> 4
Series A Liquidation Value and Series B Liquidation Value, then the total amount
of assets and funds of the Corporation legally available for distribution to the
holders of the Series A Stock and Series B Stock, shall be distributed among the
holders of Series A Stock and Series B Stock in proportion to the full amount of
the respective Liquidation Value each holder of Series A Stock and Series B
Stock is entitled to receive. For purposes of the payment of the Series A
Liquidation Value and Series B Liquidation Value described in this Section 2.1,
a merger, acquisition, or sale of more than fifty percent (50%) of the voting
securities of the Corporation or a sale of all or substantially all of the
assets of the Corporation with, by or to an entity in which stockholders of the
Corporation do not own a majority of the outstanding shares subsequent to such
sale shall be deemed an Event within the meaning of this Section 2.1.
2.2. Valuation of Distributed Property. Whenever a distribution
provided for in Section 2.1 is payable in property other than cash, the value of
such distribution shall be the Fair Market Value of such property as determined
by an independent financial services firm mutually acceptable to the Corporation
and to the holders of a majority of the shares of Designated Preferred
(calculated on an as-converted basis).
2.3. Adjustment. The Series A Liquidation Value and the Series B
Liquidation Value shall be subject to adjustment from time to time as necessary
to reflect changes in the capitalization of the Corporation resulting from stock
dividends, stock distributions, subdivisions, stock splits, reclassifications,
or stock combinations, consolidations, reverse splits or similar events.
2.4. Notice. The Corporation will give written notice of the
occurrence of any Event to each record holder of Designated Preferred not less
than thirty (30) days prior to the payment of the amounts described in this
Section 2 and each holder of Designated Preferred may convert all or any portion
of its shares of Designated Preferred into shares of Common Stock in the manner
set forth in Section 4 prior to any such payment.
3. VOTING RIGHTS.
3.1. Identical Rights. Except as otherwise provided herein, each
share of Designated Preferred shall have identical rights and privileges in
every respect. Except as provided in Section 3.2 and Section 3.3 or as otherwise
required by law, the holders of Designated Preferred shall have the same voting
rights and vote with (and in the same class as) the holders of Common Stock with
respect to every matter voted on by the holders of Common Stock; provided,
however, that the holders of Designated Preferred shall be entitled to the
number of votes they would have received if their shares of Designated Preferred
had been converted into Common Stock (with any fractional shares determined on
an aggregate conversion basis for each holder of Designated Preferred being
rounded up to the next highest whole share), on the record date of any such
stockholder action.
3.2. Series A Class Vote. As long as any shares of Series A Stock
are outstanding, the Corporation shall not take any of the following actions,
without first obtaining the approval of the holders of a majority of the then
outstanding shares of Series A Stock (by
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<PAGE> 5
written consent or by vote of the then outstanding shares of Series A Stock,
voting separately as a class):
(a) increase or decrease the size of the Board of Directors;
(b) amend any provision of its Certificate of Incorporation or
its By-laws;
(c) file a registration statement with the SEC under the Act
for the registration of any securities of the Corporation in an
initial public offering unless the initial public offering is a
Series A Qualifying IPO;
(d) (i) sell, lease, exchange, convey or otherwise dispose of
or encumber all or substantially all of its property or business
for an amount less than $150,000,000; or (ii) merge into or
consolidate with any other corporation or other entity (other than
a wholly-owned Subsidiary of the Corporation) or effect any
transaction or series of related transactions in which more than
fifty percent (50%) of the voting power of the Corporation is
disposed of, unless the value received by the stockholders of the
Corporation exceeds $150,000,000;
(e) alter or change the rights, preferences, privileges or
restrictions of the shares of Series A Stock so as to affect
adversely such shares;
(f) increase the number of authorized shares of Series A Stock
or authorize, create or enter into any agreement providing for the
issuance of shares of any class or series having any preference or
priority over the Series A Stock, or authorize or create shares of
any class or any bonds, debentures, notes or other obligations or
securities convertible into, or exchangeable for, or other
obligations or securities convertible into, or exchangeable for, or
having optional rights to purchase, any shares of the Corporation
having any such preference; or
(g) dissolve the Corporation.
3.3. Series B Class Vote. For as long as at least twenty-five
percent (25%) of the shares of Series B Stock originally issued remain
outstanding, the Corporation (unless it has received the written consent of
two-thirds of the members of the Board of Directors of the Corporation, one of
whom shall be a representative designated by the holders of the Series A Stock
or the Series B Stock prior to the time that a majority of the Corporation's
directors are Independent Directors (as defined herein)) shall not take any of
the following actions, without first obtaining the approval of the holders of a
majority of the then outstanding shares of Series B Stock (by written consent or
by vote of the then outstanding shares of Series B Stock, voting separately as a
class):
(a) increase or decrease the size of the Board of Directors;
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<PAGE> 6
(b) amend any provision of its Certificate of Incorporation or
its By-laws;
(c) (i) sell, lease, exchange, convey or otherwise dispose of
or encumber all or substantially all of its property or business
for an amount less than $150,000,000; or merge into or consolidate
with any other corporation or other entity (other than a
wholly-owned subsidiary of the Corporation) or effect any
transaction or series of related transactions in which more than
fifty percent (50%) of the voting power of the Corporation is
disposed of unless the value received by the stockholders of the
Corporation exceeds $150,000,000; or
(d) dissolve the Corporation.
For purposes hereof, the term "Independent Directors" shall mean
directors of the Corporation who are not employees of the Corporation or who are
not paid consultants of or under retainer to the Corporation and who are not
affiliates of any holder of Series B Stock.
So long as at least twenty five percent (25%) of the Series B
Stock originally issued remains outstanding, the Corporation shall not, unless
approved by holders of at least a majority of the issued and outstanding Series
B Stock (by written consent or by vote of the then outstanding shares of Series
B Stock, voting separately as a class) do any of the following:
(i) change the rights, preferences, privileges or restrictions
of the shares of Series B Stock so as to affect adversely such
shares; or
(ii) increase the number of authorized shares of Series B
Stock or authorize, create or enter into any agreement providing
for the issuance of shares of any class or series having any
preference or priority over the Series B Stock, or authorize or
create shares of any class or any bonds, debentures, notes or
other obligations or securities convertible into, or exchangeable
for, or other obligations or securities convertible into, or
exchangeable for, or having optional rights to purchase, any
shares of the Corporation having any such preference.
For so long as at least a majority of the shares of Series B
Stock originally issued remain outstanding, the holders of a majority of the
shares of Series B Stock shall be entitled to nominate and elect one (1)
director as a class. Any vacancy on the Board of Directors occurring because of
the death, resignation or removal of a director elected by the holders of the
Series B Stock shall be filled by the vote or written consent of the holders of
a majority of the shares of Series B Stock. The director nominated and elected
pursuant to the terms of this section shall be from among the original purchaser
of the Series B Stock's board of advisors (or a person mutually agreed upon by
the Corporation and such purchaser with similar credentials and standing), which
nomination shall be subject to the reasonable approval of the Corporation's
Board of Directors.
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4. CONVERSION RIGHTS.
4.1. Voluntary Conversion.
(a) Each share of Designated Preferred shall be convertible,
at the option of the holder thereof, at any time, at the office of the
Corporation, into such number of fully paid and nonassessable shares of Common
Stock as is determined by dividing (i) the applicable Original Issuance Price
for such share, plus accrued and unpaid dividends on such share by (ii) the
applicable Conversion Price at the time in effect for such share. The applicable
"ORIGINAL ISSUANCE PRICE" shall be (x) $1.00 per share for the Series A Stock
and (y) $9.760641 per share for the Series B Stock. The initial Conversion Price
shall be (A) $1.00 per share for the Series A Stock (the "SERIES A CONVERSION
PRICE") and (B) $9.760641 per share for the Series B Stock (the "SERIES B
CONVERSION PRICE" and each, a "CONVERSION PRICE").
(b) Each conversion of shares of Designated Preferred will be
deemed to have been effected as of the close of business on the date on which
the certificate or certificates representing the shares of Designated Preferred
to be converted, together with properly executed conversion instructions or
powers, have been surrendered for conversion at the principal office of the
Corporation (the "CONVERSION DATE"). On the Conversion Date, the rights of the
holder of such shares of Designated Preferred will cease and the Person or
Persons in whose name or names any certificate or certificates representing
shares of Common Stock are to be issued upon such conversion will be deemed to
have become the holder or holders of record of the shares of Common Stock
represented thereby.
(c) As soon as practicable after the Conversion Date (but in
any event within ten (10) business days in the case of Section 4.1(c)(i)), the
Corporation will deliver the following items to the holder of Designated
Preferred so converting its shares (the "CONVERTING HOLDER"):
(i) a certificate or certificates representing the number
of shares of Common Stock issuable by reason of such conversion in such
name or names and in such denomination or denominations as the
Converting Holder has specified;
(ii) payment in cash or, at the option of the Corporation,
in shares of Common Stock (valued for such purpose at the applicable
Conversion Price then in effect) in an amount equal to all accrued
dividends on each share of Designated Preferred converted which have
not been paid prior thereto, plus the amount payable, if any, pursuant
to Section 4.1(d) with respect to such conversion; and
(iii) a certificate representing any shares of Designated
Preferred which were represented by the certificate or certificates
delivered to the Corporation in connection with such conversion but
which were not converted.
(d) If pursuant to Section 4.1(c)(ii), the Corporation is
obligated to pay accrued dividends with respect to shares of Designated
Preferred being converted and for any reason the Corporation is unable at that
time to pay any amount of the accrued dividends on such shares of Designated
Preferred, the Corporation will pay such dividends to the Converting Holder as
soon thereafter as sufficient funds of the Corporation are legally available for
such
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<PAGE> 8
payment. At the request of any such Converting Holder, the Corporation will
provide such Converting Holder with written evidence of its obligation to pay
such amounts.
(e) The issuance of certificates representing shares of Common
Stock upon conversion of shares of Designated Preferred will be made without
charge to the Converting Holders for any issuance tax in respect thereof or for
any other costs incurred by the Corporation in connection with such conversion
and the related issuance of shares of Common Stock. Upon conversion of each
share of Designated Preferred, the Corporation will take all such actions that
are necessary in order to insure that the shares of Common Stock issued with
respect to such conversion are validly issued, fully paid and nonassessable.
(f) If any fractional share of Common Stock would be
deliverable, except for the provisions of this Section 4.1(f), upon any
conversion of shares of Designated Preferred (whether voluntary or automatic as
set forth in Section 4.2), the Corporation, in lieu of delivering the fractional
share therefor, will pay to the Converting Holder an amount equal to the
applicable Conversion Price of such fractional share as of the Conversion Date
or upon the closing of an applicable Qualifying IPO, as the case may be.
4.2. Automatic Conversion.
(a) All issued and outstanding shares of Series A Stock shall
automatically be converted into shares of Common Stock, at the then effective
Series A Conversion Price, upon the consummation of a Series A Qualifying IPO or
upon the approval of the holders of a majority of the outstanding shares of
Series A Stock (by written consent or by vote of the holders of the then
outstanding shares of Series A Stock, voting separately as a class). All issued
and outstanding shares of Series B Stock shall automatically be converted into
shares of Common Stock, at the then effective Series B Conversion Price, upon
the consummation of a Series B Qualifying IPO or upon the approval of a majority
of the holders of the outstanding shares of Series B Stock (by written consent
or by vote of the holders of the then outstanding shares of Series B Stock,
voting separately as a class). Any automatic conversion shall be effected only
at the time of, and subject to, the closing and funding of the applicable
Qualifying IPO and upon written notice of such automatic conversion delivered to
all holders of shares of Series A Stock or Series B Stock, as applicable, at
least twenty (20) but not more than ninety (90) days prior to such closing.
(b) Upon the closing of a Qualifying IPO, each share of Series
A Stock or Series B Stock, as applicable, shall automatically be converted
without any further action by the holders of such shares and whether or not the
certificate(s) representing such shares are surrendered to the Corporation or
its transfer agent; provided, however, that the Corporation shall not be
obligated to issue certificate(s) representing shares of Common Stock issuable
upon such automatic conversion unless certificate(s) representing the shares of
Designated Preferred being converted are either delivered to the Corporation or
its transfer agent, or the holder notifies the Corporation or its transfer agent
that such certificates have been lost, stolen or destroyed and executes an
agreement reasonably satisfactory to the Corporation to indemnify the
Corporation from any loss incurred by it in connection therewith. Upon the
automatic conversion of shares of Designated Preferred, the holders of such
shares of Designated Preferred shall surrender the
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<PAGE> 9
certificates representing such shares at the principal office of the Corporation
or its transfer agent. Promptly following the surrender of certificate(s) of
Designated Preferred, there shall be issued and delivered to such holder at its
last known address shown on the books of the Corporation and in the name or
names indicated on such surrendered certificate(s) or any duly executed
conversion instructions or powers,
(i) a certificate or certificates representing the number of
shares of Common Stock issuable by reason of such automatic conversion
on the date on which such automatic conversion occurred; and
(ii) payment in cash or, at the option of the Corporation, in
shares of Common Stock (valued for such purpose at the applicable
Conversion Price then in effect) in an amount equal to all accrued
dividends on each share of Designated Preferred automatically converted
which have not been paid prior thereto, plus the amount payable, if
any, pursuant to Section 4.1(f) with respect to such conversion.
5. CONVERSION PRICE.
5.1. Adjustment to Conversion Prices. The Series A Conversion Price
and the Series B Conversion Price will be subject to adjustment from time to
time pursuant to this Section 5.
5.2. Reduction of Conversion Price. If and whenever on or after the
date of this Amended and Restated Certificate of Designation, the Corporation
issues or sells, or is deemed to have issued or sold, any shares of its Common
Stock for a price per share which is less than the applicable Conversion Price
in effect immediately prior to the effective date of such issuance or sale, then
immediately upon such issuance or sale, the Conversion Price of each share of
Series A Stock and/or Series B Stock, as applicable, will be reduced to an
amount determined by multiplying the Series A Conversion Price and/or the Series
B Conversion Price, as applicable, by a fraction, the numerator of which shall
be (a) the number of shares of Common Stock outstanding immediately prior to
such issuance or sale, plus (b) the number of shares of Common Stock which the
aggregate consideration received by the Corporation upon the sale of such
additional shares of Common Stock would purchase at the Series A Conversion
Price and/or the Series B Conversion Price, as applicable, and the denominator
of which shall be (x) the number of shares of Common Stock outstanding
immediately prior to such issuance or sale, plus (y) the number of additional
shares of Common Stock so issued. For example, if after the date of original
issuance of shares of Series A Stock and Series B Stock, the Corporation issues
100,000 shares of Common Stock for $0.50 per share (when 2,785,714 shares are
outstanding), the Conversion Price for each share of Designated Preferred
immediately would be reduced to a price determined by multiplying $1.00 and
9.760641, respectively (the initial Conversion Prices), by the above fraction as
follows:
$1.00 X 2,785,714 + 50,000 = 2,835,714 = $0.98
------------------- ---------
2,785,714 + 100,000 2,885,714
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$9.760641 X 2,785,714 + 5,122.61 = 2,790,836.61 $9.439728
--------------------- ------------
2,785,714 + 100,000 2,885,714
resulting in adjusted Conversion Prices of $0.98 and $9.439728 respectively.
The Conversion Prices will not be adjusted in connection with:
(a) any issuance of capital stock, Options (as defined below)
or Convertible Securities (as defined below) of the Corporation pursuant to a
merger, exchange or other acquisition by the Corporation, where such transaction
has been duly approved by directors constituting at least two-thirds of the
directors of the Corporation (provided, however, that the consideration to be
received by holders of the Series A Stock and Series B Stock in any such merger
or exchange shall be consistent);
(b) any issuance of capital stock of the Corporation in a
Qualifying IPO;
(c) any issuance of Common Stock upon the conversion of any
shares of Series A Stock or Series B Stock;
(d) any issuance of capital stock or Options pursuant to a
stock grant, option plan or purchase plan, other employee stock incentive
program or agreement, including, without limitation, pursuant to any such plans
in existence as of the date of this Amended and Restated Certificate of
Designation;
(e) any issuance of the Corporation's capital stock, Options
or Convertible Securities to the holders of Series A Stock or Series B Stock
upon the exercise of their preemptive rights;
(f) any issuance of the Corporation's capital stock to holders
of Designated Preferred pursuant to the terms hereof; or
(g) the issuance of the 1,536,784 shares of Series B Stock
pursuant to the terms of that certain Investment Agreement, dated on or about
February 28, 2000, by and among the Corporation and the other parties signatory
thereto ("Investment Agreement").
5.3 Effect on Series A Conversion Price and Series B Conversion
Price of Certain Events. For purposes of determining the adjusted Conversion
Prices under Section 5.2, the following will apply:
(a) If the Corporation in any manner grants any rights or
options (other than options which form a part of an option pool) ("OPTIONS") to
purchase or subscribe for shares of Common Stock or to purchase or subscribe for
shares of any securities of the Corporation which are convertible into or
exchangeable for Common Stock ("CONVERTIBLE SECURITIES") and the Option exercise
price per share for which Common Stock is issuable upon the exercise of such
Options or upon conversion or exchange of such Convertible Securities, is
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<PAGE> 11
less than the Series A Conversion Price or the Series B Conversion Price in
effect immediately prior to the grant date of such Options, then, for purposes
of calculating the Series A Conversion Price and/or the Series B Conversion
Price, as applicable, the total maximum number of shares of Common Stock
issuable upon the exercise of such Options, or upon conversion or exchange of
such Convertible Securities issuable upon the exercise of such Options, will be
deemed to be outstanding and to have been issued and sold by the Corporation for
the Option exercise price per share. For purposes of this Section 5.3(a), the
"Option exercise price per share" is determined by dividing (i) the total
amount, if any, received or receivable by the Corporation as consideration for
the granting of such Options, plus the minimum aggregate amount of additional
consideration payable to the Corporation upon exercise of all such Options,
plus, in the case of such Options which relate to applicable Convertible
Securities, the minimum aggregate amount of additional consideration, if any,
payable to the Corporation upon the issuance or sale of such Convertible
Securities and the conversion or exchange thereof, by (ii) the total maximum
number of shares of Common Stock issuable upon the exercise of such Options, or
upon the conversion or exchange of all such Convertible Securities issuable upon
the exercise of such Options. No further adjustment of the applicable Conversion
Price will be made upon the issuance of Convertible Securities or Common Stock,
as the case may be, pursuant to the exercise of Options or the issuance of
Common Stock pursuant to the conversion or exchange of Convertible Securities.
(b) If the Corporation in any manner issues or sells any
Convertible Securities and the price per share for which Common Stock is
issuable upon such conversion or exchange is less than the Series A Conversion
Price or Series B Conversion Price in effect immediately prior to the effective
date of such issue or sale, then, for purposes of calculating the Series A
Conversion Price and/or the Series B Conversion Price, as applicable, the
maximum number of shares of Common Stock issuable upon conversion or exchange of
such Convertible Securities will be deemed to be outstanding and to have been
issued and sold by the Corporation for such conversion or exchange price per
share. For the purposes of this Section 5.3(b), the "conversion or exchange
price per share" is determined by dividing (i) the total amount received or
receivable by the Corporation as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the conversion or
exchange thereof, by (ii) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities. No
further adjustment of the applicable Conversion Price will be made upon the
issuance of Common Stock pursuant to the conversion or exchange of such
Convertible Securities, or upon the issuance of Convertible Securities pursuant
to an exercise of any Options, for which adjustments of the Conversion Price had
been or are to be made pursuant to other provisions of this Section 5.
(c) If the exercise price per share provided for in any
Options or the additional consideration, if any, payable upon exercise of any
Options, or the rate at which any Options are exercisable for Common Stock
changes at any time, or if the additional consideration, if any, payable upon
the conversion or exchange of any Convertible Securities, or the rate at which
any Convertible Securities are convertible into or exchangeable for Common Stock
changes at any time, the applicable Conversion Price in effect at the time of
such change will be readjusted to the applicable Conversion Price which would
have been in effect at such
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<PAGE> 12
time if such Options or Convertible Securities still outstanding provided for
such changed purchase price, additional consideration or changed conversion
rate, as the case may be, at the time initially granted, issued or sold.
(d) Upon the expiration of any Option or the termination of
any right to convert or exchange any Convertible Security prior to the exercise
of any such Option or right to convert or exchange such Convertible Security,
the applicable Conversion Price then in effect will be adjusted, if necessary,
to equal the applicable Conversion Price which would have been in effect at the
time of such expiration or termination, had such Option or Convertible Security,
to the extent outstanding immediately prior to such expiration or termination,
never been issued.
(e) If any Common Stock, Option or Convertible Security is
issued or sold or deemed to have been issued or sold for cash, the consideration
deemed received therefor will be the net amount received by the Corporation
therefor. If any Common Stock, Option or Convertible Security is issued or sold
for consideration other than cash, the amount of the consideration deemed
received by the Corporation for such securities will be the Fair Market Value of
such consideration as of the date of receipt. If any Common Stock, Option or
Convertible Security is issued in connection with any merger in which the
Corporation is the surviving corporation, the amount of consideration deemed
received therefor will be the Fair Market Value of such portion of the net
assets and business of the non-surviving corporation or other entity as is
attributable to such Common Stock, Options or Convertible Securities, as the
case may be.
(f) If any Option is issued in connection with the issue or
sale of other securities of the Corporation, together comprising one integrated
transaction in which no specific amount of consideration is allocated to such
Option by the parties thereto, the Option will be deemed to have been issued for
a consideration of $.01 per share.
(g) The number of shares of Common Stock outstanding at any
given time does not include shares owned or held by or for the account of the
Corporation or any Subsidiary, and the disposition by the Corporation of any
such shares will be considered an issue or sale of Common Stock.
(h) If the Corporation takes a record of the holders of Common
Stock for the purpose of notifying them of a right (i) to receive a dividend or
other distribution payable in Common Stock, Options or Convertible Securities,
or (ii) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then the record date relating thereto will be deemed to be the date
of issuance or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or upon the making of such other
distribution, or the date of the granting of any such right of subscription or
purchase, as the case may be.
5.4 Subdivision or Combination of Common Stock. If the Corporation
at any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the applicable Conversion Price in effect immediately
prior to such subdivision will be
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<PAGE> 13
proportionately reduced, and if the Corporation at any time combines (by reverse
stock split or otherwise) one or more classes of its outstanding shares of
Common Stock into a smaller number of shares, the applicable Conversion Price in
effect immediately prior to such combination will be proportionately increased.
6. PREEMPTIVE RIGHTS.
6.1 Series A Preemptive Rights. Each holder of Series A Stock shall
have preemptive rights to acquire any equity securities proposed to be issued by
the Corporation after the date of this Amended and Restated Certificate of
Designation, on a pro rata basis in accordance with the number of shares of
Common Stock such shares of Series A Stock are convertible into at such time;
provided, however, that such preemptive rights shall not apply to:
(a) any issuance of capital stock, Options or Convertible
Securities of the Corporation pursuant to a merger, exchange or other
acquisition by the Corporation, where such transaction has been duly approved by
directors constituting at least two-thirds of the directors of the Corporation
(provided, however, that the consideration to be received by holders of the
Series A Stock and Series B Stock in any such merger or exchange shall be
consistent);
(b) any issuance of capital stock of the Corporation in a
Qualifying IPO;
(c) any issuance of Common Stock upon the conversion of any
shares of Series A Stock or Series B Stock;
(d) any issuance of capital stock or Options pursuant to a
stock grant, option plan or purchase plan, other employee stock incentive
program or agreement, including, without limitation, pursuant to any such plans
in existence as of the date of this Amended and Restated Certificate of
Designation;
(e) upon the issuance of any dividend to holders of Designated
Preferred pursuant to the terms hereof; or
(f) the issuance of the 1,536,784 shares of Series B Stock
pursuant to the terms of the Investment Agreement.
6.2 Series B Preemptive Rights. Each holder of Series B Stock shall
have preemptive rights to acquire any equity securities proposed to be issued by
the Corporation after the date of this Amended and Restated Certificate of
Designation, on a pro rata basis in accordance with the number of shares of
Common Stock such shares of Series B Stock are convertible into at such time;
provided, however, that such preemptive rights shall not apply to:
(a) any issuance of capital stock, Options or Convertible
Securities of the Corporation pursuant to a merger, exchange or other
acquisition by the Corporation, where such transaction has been duly approved by
directors constituting at least two-thirds of the
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<PAGE> 14
directors of the Corporation (provided, however, that the consideration to be
received by holders of the Series A Stock and Series B Stock in any such merger
or exchange shall be consistent);
(b) any issuance of capital stock of the Corporation in a
Qualifying IPO;
(c) any issuance of Common Stock upon the conversion of any
shares of Series A Stock or Series B Stock;
(d) any issuance of capital stock or Options pursuant to a
stock grant, option plan or purchase plan, other employee stock incentive
program or agreement, including, without limitation, pursuant to any such plans
in existence as of the date of this Amended and Restated Certificate of
Designation; or
(e) upon the issuance of any dividend to holders of Designated
Preferred pursuant to the terms hereof.
6.3 Notice. In the event the Corporation proposes to undertake an
issuance of any equity securities subject to preemptive rights contained in
Section 6.1 or Section 6.2, it shall give the holders of the shares of the
Designated Preferred written notice of its intention, describing the amount and
type of such equity securities, and the price and terms upon which the
Corporation proposes to issue the same. Each holder of shares of Designated
Preferred having preemptive rights with respect to such securities shall have
ten (10) days from the date of receipt of any such notice to elect to purchase
up to its pro rata share (calculated on an as-converted basis) of such
securities for the price and upon the terms specified in the notice by giving
written notice to the Corporation and stating therein the quantity of such
securities to be purchased. The closing of the purchase of such securities to be
issued and sold to the holders of shares of Designated Preferred shall occur on
the earlier of (a) the tenth (10th) business day after the expiration of the
option period set forth above, or (b) at the same time as the closing of the
sale of such securities not elected or eligible to be purchased by the holders
of shares of Designated Preferred shall occur. In the event that other
stockholders of the Corporation have preemptive rights or rights of first
refusal with respect to such securities and such stockholders do not purchase
such securities ("ADDITIONAL NEW SECURITIES") then the Corporation shall give
notice to the holders of shares of Designated Preferred of such other
stockholders' failure to purchase such Additional New Securities. The holders of
shares of Designated Preferred having preemptive rights with respect to such
securities shall have ten (10) days from the date of receipt of any such notice
to elect to purchase such Additional New Securities for the price and upon the
terms specified in the notice to the holders of shares of Designated Preferred
(which shall be no less favorable than offered to such other stockholders) by
giving written notice to the Corporation and stating therein the quantity of
Additional New Securities to be purchased. The closing of the purchase of the
Additional New Securities to be issued and sold to the holders of the Designated
Preferred shall occur on the earlier of (i) the tenth (10th) business day after
the expiration of the option periods set forth above; or (ii) at the same time
as the closing of the sale of Additional New Securities not elected or eligible
to be purchased by the holders of shares of Designated Preferred shall occur.
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<PAGE> 15
6.4 Eligible Sales to Third Parties. After giving the notice and
opportunity for the holders of shares of Designated Preferred to participate as
required under Section 6.3 above (or the holders of shares of Designated
Preferred waiving such rights), the Corporation shall have ninety (90) days
thereafter to issue and sell the applicable securities and the Additional New
Securities not elected nor eligible to be purchased by the holders of shares of
Designated Preferred at the price and upon the terms no more favorable to the
purchasers of such securities than specified in the Corporation's notice under
Section 6.3. In the event the Corporation has not sold such applicable
securities or the Additional New Securities within said ninety (90) day period,
the Corporation shall not thereafter issue or sell any such securities or
Additional New Securities without first offering such securities in the manner
provided above.
7. REDEMPTION RIGHTS.
7.1 Redemption Date and Price. At any time after the fifth
anniversary of the original issuance of the Series B Stock and upon receipt by
the Corporation of a written request (a "REDEMPTION ELECTION") from the holders
of not less than sixty-six and two-thirds percent (66 2/3%) of the then
outstanding shares of Series B Stock or Series A Stock that all of the shares of
Series B Stock and/or Series A Stock, as applicable, be redeemed, the
Corporation shall, to the extent it may lawfully do so, redeem all of the shares
of Series B Stock and/or Series A Stock, as applicable, in accordance with the
procedures set forth in this Section 7. The Corporation shall redeem such shares
of Series B Stock and/or Series A Stock, as applicable, on or prior to the date
that is one year subsequent to the date the Corporation receives a Redemption
Election notice (the "REDEMPTION DATE") by paying in cash therefor a sum per
share equal to the greater of (a) the Original Issuance Price of such Series B
Stock and/or Series A Stock, as applicable, (as adjusted for any stock
dividends, combinations or splits with respect to such shares), plus all
declared or accumulated but unpaid dividends on such shares, through to and
including the Redemption Date or (b) the Appraised Value of such shares of
Series B Stock and/or Series A Stock, as applicable (the amounts in clauses (a)
and (b) hereof are each referred to as the "REDEMPTION PRICE"). The Appraised
Value shall be determined as follows: the Company shall have the right to
designate one appraiser with a second appraiser designated by the holders of a
majority of the outstanding shares of Series B Stock and/or Series A Stock, as
applicable. The two appraisers so designated shall designate a third appraiser.
The applicable Appraised Value shall be the average of any two or three
appraisals where the valuations in such appraisals are within 10% of each other.
If such condition is not satisfied, the Appraised Value shall be the average of
the valuations of all three appraisers. The fees of such appraisers and costs of
any appraisals shall be paid equally by the Corporation and the holders of
shares of Series B Stock and/or Series A Stock, as applicable.
7.2 Procedure. Within fifteen (15) days following its receipt of
the Redemption Election, the Corporation shall mail a written notice, first
class postage prepaid, to each holder of record (at the close of business on the
business day next preceding the day on which notice is given) of Series B Stock
and/or Series A Stock, as applicable, at the address last shown on the records
of the Corporation for such holder, notifying such holder of the redemption to
be effected, specifying the number of shares to be redeemed from such holder,
the Redemption Date, the Redemption Price, the place at which payment may be
obtained and calling upon such holder to surrender to the Corporation, in the
manner and at the place
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<PAGE> 16
designated, such holder's certificate or certificates representing the shares to
be redeemed (the "REDEMPTION NOTICE"). On the Redemption Date, each holder of
shares of Series B Stock and/or Series A Stock, as applicable, to be redeemed
shall surrender to the Corporation the certificate or certificates representing
such shares, in the manner and at the place designated in the Redemption Notice,
and thereupon the Redemption Price of such shares shall be payable to the order
of the person whose name appears on such certificate or certificates as the
owner thereof and each surrendered certificate shall be canceled. A copy of the
Redemption Notice shall be mailed simultaneously to each holder of Series B
Stock and/or Series A Stock, as applicable.
7.3 Effect of Redemption; Insufficient Funds. From and after the
receipt by the Corporation of the Redemption Election, all rights of the holders
of shares of Series B Stock and/or Series A Stock, as applicable, designated for
redemption in the Redemption Notice (except the right to receive the Redemption
Price without interest upon surrender of their certificate or certificates)
shall cease with respect to such shares, and such shares shall not thereafter be
transferred on the books of the Corporation or be deemed to be outstanding for
any purpose whatsoever. If the funds of the Corporation legally available for
redemption of shares of Series B Stock and/or Series A Stock, as applicable, on
the Redemption Date are insufficient to redeem the total number of shares of
Series B Stock and/or Series A Stock, as applicable to be redeemed on such date,
those funds which are legally available will be used to redeem the maximum
possible number of such shares ratably among the holders of such shares to be
redeemed based upon the total Redemption Price applicable to each such holder's
shares of Series B Stock and/or Series A Stock, as applicable. At any time
thereafter when additional funds of the Corporation are legally available for
the redemption of shares of Series B Stock and/or Series A Stock, as applicable,
such funds will immediately be used to redeem the balance of the shares which
the Corporation has become obligated to redeem on the Redemption Date but which
it has not redeemed.
7.4 Conversion to Note. Notwithstanding anything else contained
herein, if the Corporation shall not have redeemed the shares of Series B Stock
and/or Series A Stock, as applicable, by the Redemption Date, each holder of
shares of such capital stock may convert such shares into a full recourse
promissory note (the "NOTES") of the Corporation. The principal amount of each
Note shall be equal to the Redemption Price to be paid for such shares of
capital stock. Each Note shall be secured by a pledge from the Corporation of
the securities for which the Note is executed, and the Corporation hereby agrees
to take all actions and execute all documents (in form reasonably satisfactory
to the holders of such capital stock) necessary or appropriate to properly and
fully secure each Note with the securities transferred in exchange therefor. In
addition, each Note shall be in a form reasonably satisfactory to the holders of
such capital stock and shall in any case, unless otherwise agreed to by the
parties (a) have a term of one (1) year, (b) provide for repayment of the
aggregate Redemption Price at a rate no less than one-fourth per quarter, with
principal and interest payable in such equal quarterly installments, and (c)
provide that the unpaid balance of the Note shall accrue interest at the rate of
12% per annum, compounded on a quarterly basis, from the date of issuance until
full payment of the aggregate Redemption Price is made.
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<PAGE> 17
8. REGISTRATION OF TRANSFERS. The Corporation will keep at its
principal office a register of shares of Designated Preferred. Upon the
surrender to the Corporation at its principal office of any certificate(s)
representing shares of Designated Preferred, the Corporation will, at the
request of the record holder of such certificate(s), execute and deliver (at the
Corporation's expense) a new certificate or certificates in exchange therefor
representing in the aggregate the number of shares of Designated Preferred
represented by the surrendered certificate(s). Each new certificate will be
registered in such name and will represent such number of shares of Designated
Preferred as is requested by the holder of the surrendered certificate(s) and
will be substantially identical in form to the surrendered certificate(s).
Dividends, if any, will accrue on the shares of Designated Preferred represented
by such new certificate(s) beginning upon the last date on which dividends were
fully paid on such shares of Designated Preferred represented by the surrendered
certificate(s).
9. REPLACEMENT OF CERTIFICATES. Upon receipt of evidence reasonably
satisfactory to the Corporation (an affidavit of the registered holder will be
satisfactory) of the ownership and loss, theft, destruction or mutilation of any
certificate(s) representing shares of Designated Preferred, and in the case of
any such loss, theft or destruction, upon receipt of indemnity reasonably
satisfactory to the Corporation, or, in the case of any mutilation, upon
surrender of such certificate(s) if possible, the Corporation will (at its
expense) execute and deliver in lieu of such certificate(s), a new certificate
of like kind representing the number of shares of Designated Preferred
represented by such lost, stolen, destroyed or mutilated certificate(s), and
dividends, if any, will accrue on the shares of Designated Preferred represented
by such new certificate from the date which dividends were fully paid on shares
represented by such lost, stolen, destroyed or mutilated certificate(s).
10. DEFINITIONS. The following definitions shall apply:
"ACT" means the Securities Act of 1933, as amended.
"APPRAISED VALUE" means the fair market value of the Series B Stock
as determined by a panel of three appraisers in the manner described in Section
7.1.
"COMMON STOCK" means collectively the Corporation's Common Stock,
par value $.01 per share, and any capital stock of any class of the Corporation
hereafter authorized which is not limited to a fixed sum or percentage of par or
stated value with respect to the rights of the holders thereof to participate in
dividends or in the distribution of assets upon any liquidation, dissolution or
winding up of the Corporation.
"CONVERSION PRICE" means the Series A Conversion Price or the
Series B Conversion Price, as the context requires.
"FAIR MARKET VALUE" means the fair market value as determined by a
majority of the Board of Directors of the Corporation for purposes of Section
2.2 and Section 5.3(e).
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"PERSON" means an individual, partnership, corporation,
association, joint stock corporation, trust, joint venture, unincorporated
organization and governmental entity or any department, agency or political
subdivision thereof.
"SERIES A QUALIFYING IPO" means any underwritten public offering by
the Corporation covering the offer and sale to the public of equity securities
pursuant to an effective registration statement under the Act, or any successor
statute, in which (i) the aggregate cash proceeds to be received by the
Corporation and/or selling stockholders from such offering (without deducting
underwriting discounts, expenses and commissions) are at least $10,000,000; and
(ii) the initial public offering price per share paid by the public for such
shares is at least $3.00 (as adjusted for stock dividends, stock distributions,
subdivisions, stock splits, reclassifications, or stock combinations,
consolidations, reverse splits or similar events).
"SERIES B QUALIFYING IPO" means any underwritten public offering by
the Corporation covering the offer and sale to the public of equity securities
pursuant to an effective registration statement under the Act, or any successor
statute, in which the aggregate cash proceeds to be received by the Corporation
and/or selling stockholders from such offering (without deducting underwriting
discounts, expenses and commissions) are at least $25,000,000.
"QUALIFYING IPO" shall mean a Series A Qualifying IPO or a Series B
Qualifying IPO, as the context requires.
"SUBSIDIARY" means any corporation of which more than 50% of the
outstanding voting securities are owned by the Corporation or any subsidiary of
the Corporation, directly or indirectly, or a partnership or limited liability
company in which the Corporation or any Subsidiary is a general partner or
manager or holds interests entitling it to receive more than 50% of the profits
or losses of the partnership or limited liability company.
11. AMENDMENT AND WAIVER. No amendment, modification or waiver of the
terms of this designation of Designated Preferred will be binding or effective
without the prior approval of the holders of at least a majority of the shares
of Series A Stock and Series B Stock outstanding (each voting as a separate
class) at the time such action is taken; provided, however, that if such action
would change (a) the rate at which or the manner in which dividends on the
shares of Series A Stock or Series B Stock accrue; (b) the times at which such
dividends become payable; (c) the Series A Conversion Price or the Series B
Conversion Price; (d) the number of shares or class of stock into which the
shares of Series A Stock or Series B Stock are convertible; or (e) the
percentage required to approve any change described in this Section 11, then the
prior approval of the holders of all the shares of Series A Stock and/or Series
B Stock, as applicable, then outstanding is required. In addition, no change in
the terms of this designation of Designated Preferred may be accomplished by
merger or consolidation of the Corporation with another corporation or other
entity unless the Corporation has obtained the prior approval of the holders of
at least a majority of the shares of Series A Stock and Series B Stock (each
voting as a separate class) then outstanding.
18
<PAGE> 19
12. NOTICES.
12.1. Immediately upon any adjustment of a Conversion Price, the
Corporation will give written notice thereof to all holders of shares of
Designated Preferred affected by such adjustment.
12.2. The Corporation will give written notice to all holders of
shares of Designated Preferred at least ten (10) days prior to the date on which
the Corporation closes its books or takes a record (a) with respect to any
dividend or distribution upon Common Stock; (b) with respect to any pro rata
subscription offer to holders of Common Stock; or (c) for determining rights to
vote with respect to any matter referred to in Section 3 hereof.
12.3. Except as otherwise expressly provided, all notices referred
to herein will be in writing and will be delivered by registered or certified
mail, return receipt requested, postage prepaid and will be deemed to have been
given when so mailed (a) to the Corporation, at its principal executive offices;
and (b) to any stockholder, at such stockholder's address as it appears in the
records of the Corporation (unless otherwise indicated in writing by any such
stockholder).
[SIGNATURE PAGE FOLLOWS]
19
<PAGE> 20
EXECUTED this 28th day of February, 2000.
THE CONCOURS GROUP, INC.
By:
---------------------------------------
Dr. Ron Christman, President
<PAGE> 1
EXHIBIT 4.2
Irrevocable Proxy
Section 1. Grant of Proxy. The undersigned stockholder of The Concours Group,
Inc., a Delaware corporation (the "Company"), hereby irrevocably appoints the
Proxyholder, as defined in Section 5 below, the sole and exclusive proxy of the
undersigned, with respect to the voting of all shares of stock of the Company
currently owned by the undersigned, and any other shares of stock or other
voting securities, of any class or series, of the Company or of any entity into
or with which the Company may be merged or consolidated, that the undersigned
may hereafter acquire by any means from the Company or from any other person or
entity, including shares issued as stock dividends or pursuant to any
recapitalization or reorganization, and shares issued in exchange for any such
shares or voting securities in any merger, consolidation, reorganization, or
transfer or exchange of assets, of the Company of any class or series, that the
undersigned may at any time own or acquire (the "Shares").
Section 2. Other Proxies Revoked/Future Proxies Prohibited. Upon execution
hereof, all prior proxies given by the undersigned with respect to the Shares
are hereby revoked and no subsequent proxies will be given. The undersigned will
give no other proxy for the Shares, so long as this irrevocable proxy has not
yet terminated.
Section 3. Senior Executive Officer Defined. The term "Senior Executive Officer"
shall be any natural person, independent of their title, that serves in any of
the following capacities with the Company:
a. The president; or
b. The chief executive officer; or
c. The principal financial officer; or
d. The chief operating officer; or
e. Any officer of the Company in charge of a principal business
unit or significant function of the Company.
Section 4. Revocability. This proxy is irrevocable, to the fullest extent
permitted by law of the state of Delaware, as it is coupled with the
Proxyholder's interest as a Senior Executive Officer of the Company.
Section 5. Proxyholder defined. The term "Proxyholder" in this proxy shall first
apply to the "Original Proxyholder" defined in Section 6 below, and if he is
ineligible , then to the serving "Successor Proxyholder" as defined in Section 7
below.
Section 6. Original Proxyholder. The "Original Proxyholder" shall be Dr. Ronald
P. Christman.
Section 7. Successor Proxyholder. Immediately upon the ineligibility, pursuant
to Section 8 below, of the Original Proxyholder, Dr. Lynn Keehan, so long as she
is still a Senior Executive Officer of the Company, shall be the Successor
Proxyholder. If Dr. Lynn Keehan becomes ineligible to serve as Successor
Proxyholder, then Dr. Nicholas Vitalari shall immediately become the Successor
Proxyholder, so long as he is still a Senior Executive Officer of the Company.
Upon Dr. Nicholas Vitalari's ineligibility to serve as Successor Proxyholder,
this Irrevocable Proxy shall terminate.
Section 8. Eligibility of Proxyholder. The Original Proxyholder or the
then-serving Successor Proxyholder shall retain their appointment until the
occurrence of any of the following events:
a. the cessation, by reason of removal or resignation, of their
duties as a Senior Executive Officer of the Company; or
<PAGE> 2
b. their failure, on account of illness or injury, to perform their
duties as a Senior Executive Officer of the Company, where such
failure persists for a period of ninety (90) consecutive days or
for any ninety (90) non-consecutive days out of any period of one
hundred twenty (120) consecutive days; or
c. their legal incapacity, as determined by a final, non-appealable
order by a court of competent jurisdiction; or
d. their death; or
e. their conviction of the commission of a felony; or
f. any attempted assignment, transfer or conveyance of the proxy.
Section 9. Powers. This Irrevocable Proxy empowers the Original Proxyholder or
the then-serving Successor Proxyholder at any time prior to the termination of
this Irrevocable Proxy to exercise all voting rights in person or by proxy
(including, without limitation, the power to execute and deliver written
consents with respect to the Shares or to vote by ballot or by proxy at any
annual or special meeting of stockholders of the Company) of the undersigned at
every annual, special or adjourned meeting of the Company's stockholders, and in
every written consent in lieu of such a meeting, or otherwise. This Irrevocable
Proxy shall not affect or in any way restrict the decisions of the undersigned
to hold or to sell the subject shares.
Section 10. Termination. Unless terminated earlier pursuant to Section 7 above,
this Irrevocable Proxy shall terminate upon the third anniversary of the
effective date of the initial registration statement of the Company filed under
the Securities Act of 1933 (as amended), in connection with its first public
offering of securities, or upon the earlier sale of the shares or a portion
thereof, in which event this Irrevocable Proxy shall no longer cover the Shares
or portion thereof which are sold.
EXECUTED AND EFFECTIVE ___________________, 2000
------------------------------------
(First Name) (Last Name)
(Number of Shares)
------------------------------------
Number of Shares Owned
------------------------------------
Social Security Number
Business Telephone:
-----------------
Home Telephone:
---------------------
Residence Address:
------------------------------------
------------------------------------
------------------------------------
<PAGE> 1
[JENKENS & GILCHRIST LETTERHEAD]
VIA FACSIMILE (281) 359-3443
EXHIBIT 8.1
The Concours Group, Inc.
3 Kingwood Place
800 Rockmead Drive, Suite 151
Kingwood, TX 77339
Ladies and Gentlemen:
We have acted as tax counsel to The Concours Group, Inc., a Delaware
corporation (the "Company") in connection with the initial public offering of
the Company's common stock, as described in the Form S-1 registration statement
filed with the Securities and Exchange Commission (the "Offering") on March 17,
2000 (as thereafter amended from time to time and together with all exhibits
thereto, the "Registration Statement"). Except as otherwise indicated,
capitalized terms used herein shall have the meanings assigned to them in the
Registration Statement.
Set forth below are our opinions and the assumptions and documents upon
which we have relied in rendering our opinions.
A. Documents Reviewed
In connection with the opinions rendered below, we have reviewed and
relied upon the following documents:
1. the Registration Statement;
2. the Certificate of Incorporation of the Company and
the Bylaws of the Company, including all amendments thereto; and
3. such other documents as we have deemed necessary or
appropriate for purposes of this opinion.
<PAGE> 2
March 17, 2000
Page 2
B. Assumptions
In connection with the opinions rendered below, we have assumed:
1. that all signatures on all documents submitted to us
are genuine, that all documents submitted to us as originals are authentic, that
all documents submitted to us as copies are accurate, that all information
submitted to us is accurate and complete, and that all persons executing and
delivering originals or copies of documents examined by us are competent to
execute and/or deliver such documents; and
2. that the Offering and the other transactions
specified in the Registration Statement will be consummated as contemplated in
the Registration Statement and without waiver of any material provision thereof.
C. Opinions
Based solely upon the documents and assumptions set forth above, it is
our opinion that the descriptions of the law and the legal conclusions contained
in the Registration Statement under the caption "Material United States Federal
Tax Considerations for Foreign Holders" as they relate to the Offering are
correct in all material respects and that the discussion thereunder fairly
states the United States federal tax consequences of the Offering that are
likely to be material to the foreign shareholders of the Company who purchase
shares in the Offering.
D. Limitations
1. Except as otherwise indicated, the opinions contained
in this letter are based upon the Code and its legislative history, the Treasury
regulations promulgated thereunder (the "Regulations"), judicial decisions, and
current administrative rulings and practices of the Internal Revenue Service,
all as in effect on the date of this letter. These authorities may be amended or
revoked at any time. Any such changes may or may not be retroactive with respect
to transactions entered into or contemplated prior to the effective date thereof
and could significantly alter the conclusions reached in this letter. There is
no assurance that legislative, judicial, or administrative changes will not
occur in the future. We assume no obligation to update or modify this letter to
reflect any developments that may occur after the date of this letter.
2. The opinions expressed herein represent counsel's
best legal judgment and are not binding upon the Internal Revenue Service or the
courts and are dependent upon the accuracy and completeness of the documents we
have reviewed under the circumstances. We have made no independent investigation
of the facts contained in the documents, assumptions set forth above, and the
factual representations set forth in the Registration Statement. No facts have
come to our
<PAGE> 3
March 17, 2000
Page 3
attention, however, that would cause us to question the accuracy and
completeness of such facts or documents in a material way. Any material
inaccuracy or incompleteness in these documents, assumptions or factual
representations (whether or not made by the Company) could adversely affect the
opinions stated herein.
3. We are expressing opinions only as to those matters
expressly set forth in Section C above. No opinion should be inferred as to any
other matters, including any other transactions described in the Registration
Statement. This opinion does not address the various state, local or foreign tax
consequences that may result from the Offering. In addition, no opinion is
expressed as to any federal income tax consequence of the Offering, except as
specifically set forth herein, and this opinion may not be relied upon except
with respect to the consequences specifically discussed herein.
4. This opinion letter is issued for the benefit of the
Company and its foreign shareholders who purchase shares in the Offering and no
other person or entity may rely hereon without our express written consent. This
opinion letter may be filed as an exhibit to the Registration Statement.
Furthermore, we consent to the reference to Jenkens & Gilchrist, a Professional
Corporation, under the caption "Material United States Federal Tax
Considerations for Foreign Holders". In giving this consent, we do not thereby
admit that we are within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission promulgated thereunder.
Very truly yours,
JENKENS & GILCHRIST,
a Professional Corporation
By:
------------------------------------
Andrius R. Kontrimas,
ARK:lmr Authorized Signatory
cc: Mr. Michael L. Cook
Mr. Bryan W. Lee
Ms. Lisa M. Rossmiller
<PAGE> 1
EXHIBIT 10.1
STOCK PURCHASE AND DEBT CONVERSION AGREEMENT
This Stock Purchase and Sale Agreement (this "AGREEMENT") is executed
effective as of February 1, 2000 (the "EFFECTIVE DATE"), by and among The
Concours Group, Inc., a Delaware corporation (the "COMPANY"), Dr. Ron Christman,
solely in his capacity as Trustee of that certain Voting Trust Agreement
effective as of February 5, 1997 (the "Trustee"), Tallard B.V., a Netherlands
company ("TALLARD"), Infologix (BVI) Limited, a British Virgin Islands company
("INFOLOGIX").
R E C I T A L S
1. Lingfield A.B., a Swedish company ("LINGFIELD"), and Tallard are
related parties. Lingfield and the Company were parties to that certain Loan
Agreement, dated as of March 5, 1999, as amended July 16, 1999 and August 23,
1999 (the "LOAN AGREEMENT"), whereby Lingfield agreed to loan to the Company up
to Four Million United States Dollars ($4,000,000 USD), as evidenced by four
notes convertible into shares of the common stock, $0.01 par value per share
(the "COMMON STOCK") of the Company (the "NOTES").
2. Lingfield, Tallard and the Company were parties to that certain
Registration Rights Agreement, dated as of February 5, 1997, as amended March 5,
1999 and February 1, 2000 (the "REGISTRATION RIGHTS AGREEMENT"), whereby the
Company agreed, upon the occurrence of certain events and under certain
conditions, to effect the registration of certain registerable shares.
3. Lingfield and the Company were parties to that certain Security
Agreement, dated as of March 10, 1999 (the "SECURITY AGREEMENT"), whereby the
Company granted to Lingfield a security interest in certain property of the
Company to secure the indebtedness of the Company to Lingfield under the Loan
Agreement.
4. Lingfield, Tallard, the trustee and his successors in trust of that
certain Voting Agreement dated February 5, 1997, and the Company are parties to
that certain Voting Agreement, dated as of February 5, 1997, as amended March 5,
1999 (the "VOTING AGREEMENT"), whereby the trustee agreed to vote all shares of
Common Stock which he is authorized to vote for the election of the "Tallard
Directors" (as defined in the Voting Agreement), and Tallard and Lingfield
agreed to vote all shares of Common Stock which they are authorized to vote for
the election of the "Trustee Directors" (as defined in the Voting Agreement) to
the Company's Board of Directors.
5. Lingfield and Infologix are parties to that that certain Agreement
Regarding the Transfer of a Receivable ("TRANSFER AGREEMENT"), dated as of
February 1, 2000, whereby Lingfield assigned and transferred to Infologix, and
Infologix accepted such assignment and transfer of, the Notes issued under the
Loan Agreement.
<PAGE> 2
6. Lingfield and Infologix are parties to that certain Assignment and
Assumption Agreement, dated as of February 1, 2000, (the "ASSIGNMENT
AGREEMENT"), whereby Lingfield agreed to assign to Infologix and Infologix
accepted such assignment, of all rights and obligations of Lingfield under the
Loan Agreement, the Registration Rights Agreement, the Security Agreement, and
the Voting Agreement.
7. Infologix desires to purchase from the Company, and the Company has
agreed to sell to Infologix, seven hundred fifty thousand (750,000) shares of
the Common Stock of the Company, conditioned upon the simultaneous conversion of
the Notes by Infologix into eight hundred thousand (800,000) shares of the
Company's Common Stock plus additional shares of the Company's Common Stock in
payment of accrued but unpaid interest on the Notes.
8. Tallard, as the holder of one million eight hundred ten thousand
(1,810,000) shares of Series A Convertible Preferred Stock, $0.01 par value per
share (the "SERIES A STOCK") of the Company, has certain preemptive rights to
acquire equity securities proposed to be issued by the Company. In addition,
Section 5 of that certain Certificate of Designation of the Powers, Rights and
Preferences of the Series A Convertible Preferred Stock of the Company (the
"DESIGNATION") provides for the adjustment of the conversion price of the Series
A Stock effective upon the sale of Common Stock by the Company if the sale is at
a price per share which is less than the conversion price then in effect.
Tallard agrees to waive any and all preemptive rights with respect to all shares
of Common Stock and warrants issued pursuant to this Agreement and acknowledges
that this issuance does not create any reduction or other change in the
conversion price of the Series A Stock under Section 5 of the Designation.
9. Tallard, pursuant to the Loan Agreement, under certain conditions
had certain rights to receive stock options under similar terms and conditions
as those granted by the Company to designated optionees under the 1999 Employee
Stock Option Plan. Tallard and the Company have agreed that, in consideration
for Tallard's waiver of all rights to any options under the terms of the Loan
Agreement, the Company will issue to Tallard warrants to purchase fifty thousand
(50,000) shares of Common Stock of the Company.
10. The parties hereto in connection with this sale and purchase and
debt conversion have agreed to amend various collateral agreements.
AGREEMENTS
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereafter stated, the Company, the Trustee, Tallard, and Infologix agree as
follows:
1. Purchase of Stock by Infologix. Infologix agrees to purchase from
the Company, and the Company agrees to sell to Infologix, on the terms and
conditions set forth in this Agreement, 750,000 shares of Common Stock
("ADDITIONAL COMMON STOCK"); provided, however, that the Company's obligation to
sell the Additional Common Stock to Infologix is
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<PAGE> 3
conditioned upon Infologix's simultaneous conversion of the Notes. The terms and
conditions of the purchase and sale are as follows:
1.1 Purchase Price. The Purchase Price (herein so called) to
be paid by Infologix to the Company for the Additional Common Stock shall be an
aggregate amount of Six Million United States Dollars ($6,000,000 USD). Within
ten (10) days of the Effective Date of this Agreement, Infologix shall initiate
payment to the Company of Three Million United States Dollars ($3,000,000 USD)
of the Purchase Price by wire transfer in accordance with written instructions
provided by the Company. The remaining Three Million United States Dollars
($3,000,000 USD) of the Purchase Price shall be paid by Infologix to the Company
within thirty (30) days of the Effective Date of this Agreement (the "SECOND
PAYMENT"), by wire transfer in accordance with written instructions provided by
the Company. It is the expectation of the parties that the Purchase Price will
be used for working capital and general corporate purposes.
1.2 Conditions.
(a) Repayment of Loan, Cancellation of Guarantees,
Cancellation of Letter of Credit and Amendment to Investment Agreement. The
Company, Tallard, and Infologix agree that within seven (7) days after the
Second Payment, (i) the Company shall apply out of the Purchase Price One
Million United States Dollars ($1,000,000 USD) to repay the principal amount of
the loan plus accrued but unpaid interest through the repayment date under the
revolving credit facility made available to the Company by Bank One, Texas,
N.A.; (ii) the letter of credit issued by Citibank on behalf of Tallard for the
benefit of Bank One, Texas, N.A. shall be canceled or returned to Citibank;
(iii) the Company and Tallard shall cancel that certain Security and
Reimbursement Agreement dated April 1997 by and between the Company and Tallard;
(iv) the Company shall file with the Texas Secretary of State a termination of
that certain Financing Statement filed on March 11, 1997; and (v) the Investment
Agreement dated February 5, 1997, shall be amended to delete Sections 5.6, 5.7,
5.8, and 6, relating to guarantees of Tallard and the provision, use and
transfer of certain information. At the Closing, in addition to other documents
then executed, the parties shall execute such agreements or documents which may
be necessary to effectuate these several purposes.
(b) Conversion of Notes by Infologix. The Company and
Infologix agree that, effective as of the Closing (as defined in Section 3
hereof), the Notes shall be converted into eight hundred thousand (800,000)
shares of the Company's Common Stock on the basis of a value of Five United
States Dollars ($5.00 USD) per share (the "CONVERSION PRICE") plus five thousand
four hundred twenty-five (5,425) shares representing all accrued but unpaid
interest due under the Notes (collectively, the "CONVERTED SHARES"). The
Conversion Price set forth in this Agreement shall supercede and replace any
prior understanding or agreement regarding such conversion price, including
specifically that set out in the Notes. At the Closing, in addition to other
documents then executed, the parties shall execute such agreements or documents
as may be necessary to convert such Notes into shares of the Company's Common
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<PAGE> 4
Stock. The Notes, upon conversion into shares of Common Stock, shall be canceled
and returned to the Company at the time of the Second Payment.
2. Tallard's Waiver of Rights under the Loan Agreement and the
Company's Issuance of Warrants to Tallard. Tallard hereby (i) waives any and all
rights to receive stock options and any rights related to the grant of options
under the 1999 Plan which Tallard may have in connection with the Loan Agreement
( "WAIVER"); (ii) acknowledges and agrees that the Company's grant of options
under the 1999 Plan does not create any obligation of the Company to grant
options to Tallard pursuant to the terms of the Loan Agreement
("ACKNOWLEDGMENT"); and (iii) releases any claim for action for rights to
options pursuant to the Loan Agreement that might be brought against the
Company, its directors, officers or agents in connection with the grant of
options under 1999 Plan ("RELEASE"). In exchange for Tallard's Waiver,
Acknowledgment and Release, the Company agrees to issue to Tallard warrants to
purchase fifty thousand (50,000) shares of Common Stock of the Company
exercisable until December 31, 2009, upon the payment to the Company of Five
United States Dollars ($5.00 USD) per share (the "WARRANTS").
3. Time and Place of Closing. The Closing of the transaction
contemplated by this Agreement (the "Closing") shall take place effective as of
February 1, 2000. The parties agree that all Closing documents and funds may be
transmitted by fax, federal express and/or wire transfer. The date of actual
execution of this Agreement is referred to in this Agreement as the "CLOSING
DATE."
4. Delivery. Upon receipt of the Second Payment, the Company shall
deliver to Infologix certificates representing the Additional Common Stock and
the Converted Shares and to Tallard a certificate representing the Warrants.
5. Tallard's Waiver of Preemptive Rights with Respect to the Additional
Common Stock and Warrants. Tallard hereby waives any and all preemptive rights
or similar rights (including but not limited to any right to receive notice of
preemptive rights) Tallard may have in connection with the issuance of the
Additional Common Stock and Warrants under this Agreement. In addition, Tallard
acknowledges and agrees that the issuance of the Additional Common Stock and
Warrants under this Agreement does not create any reduction or other change in
the conversion price of the Series A Stock under Section 5 of the Designation.
Tallard also hereby releases any claim for action for preemptive rights or for
adjustment to the conversion price of the Series A Stock that might be brought
against the Company, its directors, officers or agents in connection with the
issuance of the Additional Common Stock and Warrants under this Agreement.
6. Representations, Warranties and Covenants of the Company. The
Company represents, warrants and covenants to Tallard and/or Infologix, as the
case may be, that the following are true and correct as of the Effective Date
and will be true and correct as of the Closing Date:
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<PAGE> 5
6.1 Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the corporate authority to own, lease and
operate its property and assets and to carry on its business as it is now being
conducted, and is proposed to be conducted, and is duly qualified as a foreign
corporation to do business and is in good standing in Texas.
6.2 Articles and Bylaws. The Company has previously furnished
to Tallard copies of its Certificate of Incorporation, as amended, and Bylaws,
and said copies are true and complete and contain all amendments to date.
6.3 Subsidiaries. The Company's organizational structure is
depicted on that certain Exhibit A attached hereto and incorporated by reference
herein.
6.4 Authorization. Subject to obtaining any necessary
approvals or consents of the Board of Directors and/or stockholders of the
Company, if any, as contemplated by Section 10 below, all corporate action on
the part of the Company, its officers, directors, and stockholders necessary for
the authorization, execution and delivery of this Agreement and the
authorization, issuance and delivery of the Additional Common Stock, Warrants,
and Converted Shares (collectively, the "NEW SECURITIES" or, as the case may be,
as to Infologix, the Common Stock and Converted Shares, and as to Tallard, the
Warrants) has been taken, or prior to Closing will be taken, and this Agreement
constitutes a valid and legally binding obligation of the Company, enforceable
in accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency or other laws relating to or affecting
creditors' rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding or action in law or
equity.)
6.5 Reservation. At any time during the period within which
the rights represented by the Warrants may be exercised, the Company will at all
time have authorized, and reserved for issuance or transfer upon the exercise of
the subscription rights evidenced by the Warrants, a sufficient number of shares
of its Common Stock to provide for the exercise of the rights represented by the
Warrants.
6.6 Capitalization and Valid Issuance of Stock.
(a) The authorized capital of the Company consists
prior to the Closing of ten million (10,000,000) shares of Common Stock, of
which three million one hundred forty-one thousand four hundred twenty-nine
(3,141,429) shares are issued and outstanding as of February 1, 2000, and five
million (5,000,000) shares of preferred stock, par value one cent ($0.01) per
share (the "PREFERRED STOCK"), of which one million eight hundred ten thousand
(1,810,000) shares are issued and outstanding as of February 1, 2000.
-5-
<PAGE> 6
(b) Immediately prior to the Closing, no options,
warrants, rights (including conversion or preemptive rights) or agreements for
the purchase or acquisition from the Company of any shares of capital stock
shall be outstanding except for (i) outstanding options to purchase Common Stock
of the Company that have been granted pursuant to the Company's (a) 1997
Employee Stock Option Plan, (b) 1998 Employee Stock Option Plan, (c) 1998
European Equity Compensation Plan, (d) 1999 Employee Stock Option Plan, and (e)
2000 Senior Executive Performance Plan; and (ii) the Notes which, pursuant to
Section 1.2(b) of this Agreement, will be converted into shares of the Company's
Common Stock.
(c) The shares of Common Stock to be purchased by
Infologix, the shares to be issued to Infologix upon the conversion of the
Notes, and the shares to be issued upon exercise of the Warrants (the "Warrant
Shares"), when issued and delivered in accordance with the terms of this
Agreement and upon payment therefor, will be duly and validly authorized and
issued, fully paid and nonassessable and free from all U.S. federal or U.S.
state taxes, liens and charges with respect to the issue thereof. The shares of
Preferred Stock, including the Series A Stock, outstanding on the Effective Date
are all duly and validly authorized and issued, fully paid and nonassessable.
6.7 Conflicting Laws, Agreements and Charter Provisions.
Neither the execution nor delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) conflict with, or result in a breach
of the provisions of any agreement, or instrument (including its charter and
bylaws) to or by which the Company is bound; (ii) to the Company's knowledge,
violate any order, judgment, statute, law (including securities and blue sky
laws), rule or regulation to which the Company is or such transactions are
subject, or (iii) result in the creation of any lien or encumbrances upon any of
the properties or assets of the Company.
6.8 Legal Proceedings.
(a) Litigation. No action, suit, proceeding, or
investigation is pending or currently threatened against the Company, which
questions the validity of this Agreement or the right of the Company to enter
into it, or to consummate the transactions contemplated hereby, or which might
result, either individually or in the aggregate, in any material adverse changes
in the assets, condition, business or operating results of the Company, or any
change in the current equity ownership of the Company, nor to the Company's
knowledge is there any basis for the foregoing. The Company is not a party or
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality.
(b) Compliance With Law and Other Instruments. The
Company is not in violation of any provision of its Certificate of Incorporation
or, to its knowledge, of any law, ordinance, requirement, regulation, judgment,
injunction, award, decree or order specifically applicable to it, the violation
of which might materially and adversely affect its financial condition,
prospects, results of operations, assets or business taken as a whole. There is
not, under any material agreement or instrument to which the Company is a party,
any existing
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<PAGE> 7
default or event which with notice or lapse of time or both would constitute a
material default or create a material lien, charge or encumbrance on any assets
of the Company.
6.9 Registration Rights. Except for the Registration Rights
Agreement, the Company is not under any obligation to register under the
Securities Act of 1933, as amended (the "ACT"), the offer and sale of any of its
outstanding securities or its securities which may hereafter be issued.
7. Representations and Warranties of Tallard and Infologix and
Restrictions on Transfer of the New Securities. Each of Tallard and Infologix
represents and warrants to the Company as to itself that as of the Effective
Date and as of the Closing Date, the following statements will be true and
correct.
7.1 Organization and Qualification. Tallard is a company, duly
organized, validly existing and in good standing under the laws of the
Netherlands. Infologix is a company, duly organized, validly existing and in
good standing under the laws of the British Virgin Islands. Tallard and
Infologix have the requisite power and authority to carry on business as now
conducted.
7.2 Authorization. The execution, delivery and performance of
this Agreement have been duly authorized by all necessary action on the part of
Tallard and Infologix. Tallard and Infologix have the full right, power and
authority to enter into this Agreement and this Agreement constitutes the valid
and binding obligation of each of Tallard and Infologix enforceable in
accordance with its terms, except as may be limited by bankruptcy, insolvency or
other laws relating to or affecting creditors' rights generally and by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding or action in law or equity).
7.3 Investment Representations.
(a) Each of Tallard and Infologix is an "accredited
investor" within the meaning of Regulation D under the Act and is acquiring New
Securities for its own account solely for investment, and not with a view to the
distribution or resale thereof. There are no contracts, agreements or
understandings with any persons or entities to sell, transfer or grant
participation in the New Securities, with the exception of the transfer
referenced in Section 11.
(b) Tallard and Infologix have received and examined
all the information and materials each considers necessary or appropriate to
decide whether to purchase the New Securities, and have had an opportunity to
ask questions of and receive answers from the Company respecting the provisions
of the offering of the New Securities. Tallard acknowledges that it has a
representative on the Board of Directors of the Company. Tallard and Infologix
acknowledge that they are related parties under common control, and that all
information obtained by Tallard as a result of Tallard's position on the Board
of Directors of the
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<PAGE> 8
Company or to which Tallard has access are deemed to be in the possession of or
accessible to Infologix.
(c) Each of Tallard and Infologix (i) has substantial
knowledge and experience in financial and business matters including without
limitation evaluating and investing in non-seasoned companies, (ii) is capable
of evaluating the merits of the prospective investment, (iii) is a sophisticated
investor and (iv) has the ability to bear the economic risks including the risk
of a total loss of its investment.
(d) Each of Tallard and Infologix understands that it
may not sell or otherwise dispose of the New Securities except in accordance
with the provisions of Section 7.4 hereof and understands that the New
Securities have not been registered under the Act and will be issued in reliance
on an exemption from the registration requirements thereof, and that the
certificates representing the New Securities may be the subject of a stop
transfer notice with the Company's stock transfer agent and such certificates
will contain the following legend, and any additions thereto required by
applicable state securities laws:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 or any applicable state securities
laws, and may not be offered for sale, sold or transferred in the
absence of such registration or an opinion of counsel in form and
substance satisfactory to The Concours Group, Inc. ("CONCOURS") to the
effect that such registration is not required. Transfer of these shares
is further restricted by the terms of the Stock Purchase and Debt
Conversion Agreement among Concours and certain stockholders, dated as
of February 1, 2000, and the Buy-Sell Agreement, among the Concours and
certain stockholders, dated as of February 5, 1997, as amended. A copy
of each of these agreements is on file at the offices of Concours."
Tallard and Infologix acknowledge that the Company is relying on Tallard's and
Infologix's representations and warranties contained herein for purposes of
determining compliance with the applicable federal and state securities laws.
7.4 Restrictions on Transfer. Except for sales, transfers, or
other dispositions pursuant to an effective registration statement under the
Act, Tallard and Infologix agree not to sell, transfer, or otherwise dispose of
any of the New Securities or the Warrant Shares unless prior to the sale,
transfer, or other disposition of any such shares: (i) Tallard or Infologix
delivers to the Company written notice of the proposed sale, transfer, or other
disposition, together with an opinion of counsel reasonably acceptable to the
Company to the effect that the proposed sale, transfer, or other disposition may
be effected without registration under the Act and qualification under any
applicable state securities laws then in effect, and, if requested by the
Company, the written consent of the transferee of such shares to be bound by the
terms of this Agreement; or (ii) such sale, transfer, or other disposition is
the subject of a no-action letter issued by the Staff of the Securities and
Exchange Commission permitting such sale or
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<PAGE> 9
disposition. Tallard and Infologix acknowledge that there is no currently
available exemption under Rule 144 promulgated under the Act for sales of
capital stock of the Company.
7.5 Beneficial Ownership. Lingfield's transfer and assignment to
Infologix of all its rights and obligations under the Loan Agreement, the Notes,
the Registration Rights Agreement, the Security Agreement, and the Voting
Agreement was a transfer and assignment to an affiliated or related party of
Lingfield and did not result in a change in the beneficial ownership of the
Notes.
8. Amendment to Voting Agreement. The parties agree that the New
Securities and the Warrant Shares shall be included among the "Tallard Shares",
as that term is defined in that certain Voting Agreement effective as of
February 5, 1997 by and between Tallard and the Trustee and his
successors-in-trust as Trustee, as amended March 5, 1999, and shall be subject
to the terms and provisions of the Voting Agreement just as if the New
Securities were originally included among the Tallard Shares. At the Closing, in
addition to other documents then executed, Tallard and the Trustee shall execute
such agreements or documents as may be necessary to modify the Voting Agreement
for such purpose.
9. Amendment to Registration Rights Agreement. The parties agree that
the New Securities and the Warrant Shares shall be included among the "Shares",
as that term is defined in that certain Registration Rights Agreement entered
into as of February 5, 1997, between the Company and Tallard, as amended March
5, 1999, and shall be subject to the benefits of the Registration Rights
Agreement, just as if the New Securities and the Warrant Shares were originally
included among the Shares. At the Closing, in addition to other documents then
executed, the Company and Tallard shall execute such agreements or documents
which may be necessary to amend the Registration Rights Agreement for such
purpose.
10. Board and Stockholders Approval. The obligations of the Company and
the Trustee under this Agreement shall be subject to any necessary approvals or
consents by the Board of Directors and/or stockholders of the Company of the
terms and conditions of this Agreement. Any necessary approvals or consents by
the Board of Directors and/or stockholders, as the case may be, shall be
obtained within ten (10) days of the Effective Date of this Agreement ("APPROVAL
DATE"). In the event that prior to the Approval Date, the Board of Directors
and/or the stockholders, as the case may be, of the Company do not provide all
necessary approvals or consents of the obligations of the Company under this
Agreement, then this Agreement shall automatically terminate and be of no force
or effect.
11. Further Assurances and Intentions of the Parties. The parties
hereto acknowledge that the certificate representing the Warrants (the "WARRANT
CERTIFICATE") has not yet been drafted and agree that the Warrant Certificate
shall be drafted substantially similar to the terms and conditions as provided
herein and under the stock options granted pursuant to the Company's 1999
Employee Stock Option Plan. The parties hereto agree that Tallard may transfer
(i) the Warrants or the Warrant Shares, as the case may be, and (ii) its shares
of Series A Stock and
-9-
<PAGE> 10
Common Stock of the Company to Infologix (collectively, the "TRANSFERS"),
subject to any necessary approvals or consents. The parties further acknowledge
and agree to cooperate with each other and use reasonable efforts to effectuate
the Transfers.
12. Miscellaneous.
12.1 Notices. Any notice or other communication required or
permitted hereunder shall be in written and shall be sent by registered or
certified mail, return receipt requested, or facsimile, or by overnight courier,
delivered against receipt to the party to whom it is to be given at the address
of such party as set forth below, or to such other address as the party shall
have furnished in writing to all parties in accordance with the provisions of
this Section 12.1, and shall be deemed properly given, (a) in the case of
registered or certified mail, five business days after deposit in the United
States mail, (b) in the case of facsimile, upon receipt of a confirmation
notice, and (c) in the case of an overnight courier, on such courier's
guaranteed delivery date, except for a notice changing a party's address which
shall be deemed given only at the time of receipt thereof by each party affected
thereby, and in the case of facsimile, on the day following the date of
transmission:
If to the Company:
The Concours Group, Inc.
3 Kingwood Place
800 Rockmead Drive, Suite 151
Kingwood, TX 77339
Attn: Dr. Ron Christman
Fax: (281) 359-3443
With a copy to:
Jenkens & Gilchrist
A Professional Corporation
1100 Louisiana, Suite 1800
Houston, Texas 77002
Attn: Andrius Kontrimas
Fax: (713) 951-3314
If to Tallard:
Tallard, B.V.
Alexander Battalaan 40
6221 CE Maastricht
The Netherlands
Fax: 011 31 43 325 5043
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<PAGE> 11
With a copy to:
Vinge Law Firm
Nils Ericsonsgatan 17
Box 11025
40421 Goteborg
Sweden
Attn: Bjorn Aschan
Fax: 011 46 31 158 811
If to Infologix:
Infologix (BVI) Limited
c/o Insinger Trust (BVI) Limited
P. O. Box 438 Tropic Isle Building
Wickhams Cay Road Town
Tortola
British Virgin Islands
Fax: +1 284 494 2704
With a copy to:
Vinge Law Firm
Nils Ericsonsgatan 17
Box 11025
40421 Goteborg
Sweden
Attn: Bjorn Aschan
Fax: 011 46 31 158 811
12.2 Binding Effect. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and the successors
and assigns of the Company, Tallard, and Infologix.
12.3 No Third Party Beneficiaries. This Agreement does not
create and shall not be construed as creating any rights enforceable by any
person not a party to this Agreement.
12.4 Severability. If any provisions of this Agreement is held
by a court of competent jurisdiction to be invalid, illegal or unenforceable,
that shall, in no way, affect the validity or enforceability of any other
provision of this Agreement and that provision shall be deemed modified to the
minimum extent necessary to render it valid, legal and enforceable while
accomplishing the intent of such provision as nearly as practicable.
-11-
<PAGE> 12
12.5 Construction. The parties have participated jointly in
the negotiation and drafting of this Agreement and agree that no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement. The headings of this
Agreement are solely for convenience of reference and shall be given no effect
in the construction or interpretation of this Agreement. Pronouns shall be
deemed to include the singular, plural, masculine, feminine or neuter, as the
context requires. References to section numbers are to sections of this
Agreement unless otherwise indicated. All exhibits attached to this Agreement
are incorporated herein as if set forth in this Agreement in full.
12.6 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
12.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic law of the State of Texas without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Texas or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Texas.
12.8 Expenses. Each party shall pay its expenses relating to
the preparation, execution, delivery and performance of this Agreement and all
transactions contemplated hereby.
12.9 Entire Agreement. This Agreement sets forth the entire
understanding and agreement among the parties with respect to the subject matter
hereof and supersedes and replaces any prior understanding, agreement or
statement (written or oral).
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<PAGE> 13
IN WITNESS WHEREOF, each of the parties hereto has executed, or has
caused this Agreement to be executed on its behalf by its duly authorized
officer, as of the day and year first above written.
THE CONCOURS GROUP, INC.
By:
----------------------------------------
Dr. Ron Christman, its President
TALLARD B.V., A NETHERLANDS COMPANY
By:
---------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
INFOLOGIX (BVI) LIMITED, A BRITISH VIRGIN
ISLANDS COMPANY
By:
---------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
TRUSTEE OF THE VOTING TRUST
-------------------------------------------
Dr. Ron Christman, as Trustee
<PAGE> 1
EXHIBIT 10.2
EXCHANGE AGREEMENT
BY AND
AMONG
THE CONCOURS GROUP, INC.,
A DELAWARE CORPORATION
AND
THE SHAREHOLDERS OF CEPRO AB
LISTED ON EXHIBIT A
DATED AS OF FEBRUARY 29, 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
EXCHANGE AGREEMENT................................................................1
RECITALS..........................................................................1
AGREEMENT.........................................................................1
ARTICLE 1.........................................................................1
EXCHANGE OF SHARES................................................................1
1.1 Exchange of Shares.......................................................1
1.2 The Closing..............................................................2
ARTICLE 2.........................................................................2
REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS........................2
2.1 Authorization of Transaction.............................................2
2.2 Noncontravention.........................................................2
2.3 Registration and Valid Existence.........................................3
2.4 Subsidiaries.............................................................3
2.5 Power and Authority......................................................3
2.6 Cepro's Capitalization...................................................3
2.7 Registration Rights......................................................4
2.8 Cepro KB.................................................................4
2.9 Financial Statements.....................................................4
2.10 No Undisclosed Liabilities............................................4
2.11 Cepro Executive Systems AB............................................5
2.12 Intangible Property...................................................5
2.13 Title to Properties and Assets........................................5
2.14 Taxes.................................................................5
2.15 Material Contracts and Commitments....................................5
2.16 Compliance with Other Instruments.....................................6
2.17 Litigation............................................................6
2.18 Permits, Licenses and Laws............................................6
2.19 Consents..............................................................6
2.20 Employee Matters......................................................6
2.21 Brokers' Fees.........................................................7
2.22 Affiliate Transactions................................................7
2.23 Adverse Changes.......................................................7
2.24 Access to Data........................................................8
2.25 Cepro Consultants.....................................................8
2.26 Information Supplied to Concours......................................8
2.27 Brokers' Fees.........................................................8
2.28 Shares................................................................8
2.29 Unregistered Securities...............................................8
2.30 Legends...............................................................8
2.31 Disposition of Shares.................................................9
2.32 Joinder of Transferees of the Shares..................................9
2.33 Representations and Warranties of Concours...........................10
2.34 Net Worth of Cepro...................................................10
2.35 Performance..........................................................10
ARTICLE 3........................................................................10
REPRESENTATIONS AND WARRANTIES OF CONCOURS.......................................10
3.1 Authorization; Power....................................................10
3.2 Organization and Good Standing..........................................10
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
3.3 Concours' Capitalization................................................11
3.4 Registration Rights.....................................................11
3.5 Unregistered Securities.................................................11
3.6 Accredited Investor Status..............................................11
3.7 Brokerage...............................................................11
3.8 Consents................................................................11
3.9 Financial Statements....................................................11
3.10 Adverse Changes......................................................12
3.11 Information Supplied to Cepro........................................13
3.12 Representations and Warranties of the Selling Shareholders...........13
ARTICLE 4........................................................................13
AFFIRMATIVE COVENANTS OF THE SELLING SHAREHOLDERS................................13
4.1 Preparation of Net Worth Balance Sheets.................................13
4.2 Termination of Prior Agreements and Rights..............................13
4.3 Fulfillment of Other Obligations........................................13
ARTICLE 5........................................................................13
AFFIRMATIVE COVENANTS OF CONCOURS................................................13
5.1 Concours Board of Directors Meetings....................................13
5.2 Registration Rights.....................................................14
5.3 Stock option program....................................................14
5.4 SPP Distribution........................................................14
5.5 Discharge of Liability..................................................14
ARTICLE 6........................................................................14
CLOSING DELIVERIES...............................................................14
6.1 Closing Deliveries of Selling Shareholders..............................14
6.2 Closing Deliveries of Concours..........................................15
ARTICLE 7........................................................................15
INDEMNIFICATION..................................................................15
7.1 Survival; Indemnity.....................................................15
7.2 Indemnification by the Selling Shareholders.............................16
7.3 Indemnification by Concours.............................................17
ARTICLE 8........................................................................18
MISCELLANEOUS....................................................................18
8.1 Incorporation by Reference..............................................18
8.2 No Third Party Beneficiaries............................................18
8.3 Entire Agreement; Amendments and Waivers................................18
8.4 Dispute Resolution......................................................18
8.5 Notices.................................................................19
8.6 Construction............................................................19
8.7 Severability............................................................19
8.8 Attorneys' Fees.........................................................20
8.9 Counterparts............................................................20
EXHIBIT A
SELLING SHAREHOLDERS
</TABLE>
ii
<PAGE> 4
EXCHANGE AGREEMENT
This Exchange Agreement (this "AGREEMENT") is made as of the close of
Concours' business on February 29, 2000, by and among The Concours Group, Inc.
("CONCOURS"), a Delaware corporation, and the shareholders of Cepro AB
("CEPRO"), a Swedish private company, listed on Exhibit A hereto (the "SELLING
SHAREHOLDERS").
RECITALS
Concours desires to purchase all of the outstanding shares of capital
stock of Cepro (the "CEPRO SHARES") and the Selling Shareholders desire to
acquire 1,221,000 shares of Concours common stock, par value of $0.01 per share
(the "CONCOURS SHARES"), for the consideration and on the terms set forth in
this Agreement.
The valuation of Cepro is premised upon the existence of a customer
base and service capabilities.
The value of Cepro decreases to the extent human capital diminishes.
The parties have negotiated in good faith to reach agreement on the
valuation of Cepro.
Concours and the Selling Shareholders desire to set forth certain
agreements and certain terms and conditions regarding the transactions
referenced above and elsewhere in this Agreement (the "TRANSACTIONS").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants stated herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
AGREEMENT
The parties, intending to be legally bound, agree as follows:
ARTICLE 1
EXCHANGE OF SHARES
1.1 EXCHANGE OF SHARES. In reliance upon the representations and warranties
set forth herein and the other terms and provisions of this Agreement, Concours
agrees to acquire, and the Selling Shareholders agree to deliver to Concours,
one-hundred percent of the issued and outstanding Cepro Shares, in exchange for
which the Selling Shareholders will receive an aggregate of 1,221,000 Concours
Shares of which 235,000 shall be placed in escrow (the "Escrowed Shares"), with
Concours or one of its affiliates as escrow agent, to secure the indemnification
obligations of the Selling Shareholders under this Agreement. The term "Selling
Shareholders" includes the management consultants employed by Cepro,
1
<PAGE> 5
regardless of whether such management consultants are employed directly or
through entities held by such management consultants (the "CEPRO CONSULTANTS").
The term "Cepro Consultants" includes the executive management team of Cepro.
The Selling Shareholders acknowledge that the acquisition of Cepro Shares by
Concours from the Selling Shareholders is being made in reliance on the
representations and warranties, covenants and agreements set forth in this
Agreement, all of which are a material inducement to the acquisition of the
Cepro Shares by Concours and Concours is entitled to rely thereon with respect
to its acquisition of the Cepro Shares. At the Closing, (i) Concours is issuing
a total of 1,221,000 Concours Shares in the names of the Selling Shareholders in
exchange for the Cepro Shares; (ii) the Selling Shareholders are delivering
stock certificates for a total of 5,750 Cepro Shares endorsed in blank or to the
order of Concours, effecting the transfer to Concours of all of the Cepro Shares
to and in the name of Concours, representing all of the equity interest in
Cepro. Each Selling Shareholder is receiving that number of Concours Shares that
bears the same ratio to all of the Concours Shares as the number of such Selling
Shareholder's Cepro Shares bears to all of the outstanding Cepro Shares;
provided, however, that Concours shall not issue any fractional shares. In each
case in which the calculation of Concours Shares to which a Selling Shareholder
would be entitled under this Section 1.1 would result in a Selling Shareholder
having the right to a fractional Concours Share, the fraction shall be rounded
up or down to the nearest whole share as follows: If the fraction is .5 or
greater the number shall be rounded up and if the fraction is less than .5 the
fraction shall be rounded down.
1.2 THE CLOSING. The closing of the transactions described in this
Agreement (the CLOSING") is taking place in Stockholm at the Advocatfirman
Delphi & Co. office located in Stockholm, Sweden on February 29, 2000, to be
effective as of the close of Concours' business on February 29, 2000 or such
other date as the parties mutually determine (the "CLOSING Date").
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS
The Selling Shareholders represent and warrant to Concours that the
following statements are correct and complete as of the Closing Date except as
set forth in the schedules attached hereto.
2.1 AUTHORIZATION OF TRANSACTION. Each Selling Shareholder has full power
and authority to execute and deliver this Agreement, the Buy-Sell Agreement, the
Noncompetition, Nonsolicitation and Nondisclosure Agreement, the Employment
Agreement, the Voting Trust Agreement and the Power of Attorney in substantially
the forms attached here to as Exhibits B, C, D, E and F respectively, previously
reviewed by each such Selling Shareholder (collectively, the "ANCILLARY
AGREEMENTS") and to transfer and deliver his or her Cepro Shares, and to perform
his or her obligations under each of such agreements. This Agreement and the
Ancillary Agreements constitute the legal, valid, and binding obligation of each
Selling Shareholder, enforceable against each Selling Shareholder in accordance
with their respective terms.
2.2 NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement or the Ancillary Agreements, nor the consummation of the Transactions,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which a Selling
2
<PAGE> 6
Shareholder or Cepro is subject, or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which a Selling Shareholder or Cepro is a party or by which a Selling
Shareholder or Cepro is bound.
2.3 REGISTRATION AND VALID EXISTENCE. Cepro and each of its subsidiaries
(the "CEPRO SUBSIDIARIES") is a private company or partnership, duly registered
and validly existing under the laws of Sweden, each has all requisite power and
authority to carry on the business in which it is now engaged (the "BUSINESS"),
and is duly qualified in each jurisdiction in which the location or nature of
its property or the character of the Business makes such qualification necessary
except where the failure to be so qualified would not have a material adverse
effect on Cepro. The Selling Shareholders have furnished to Concours true,
complete and accurate copies of the governance documents of Cepro and the Cepro
Subsidiaries as presently in effect, and all minutes and consents of the
directors and shareholders of Cepro since January 1997. Such minutes and
consents reflect all transactions referred to therein accurately in all material
respects and all matters required to be reflected therein. Cepro's articles of
association, as amended, permit one director. Jan Roy is also appointed as the
sole director of Cepro and each of the Cepro Subsidiaries. Hans Lindroth is
appointed as the sole alternate member of the board of directors. Jan Roy has
also been appointed as the sole managing director of Cepro and Hjarntrusten i
Stockholm AB. Herein, unless expressly stated or the context requires otherwise,
each representation and warranty made with respect to Cepro or the Cepro Capital
Stock (as defined below) shall be deemed made equally but separately for each
Subsidiary and the stock or other equity interests of such Subsidiary. Further,
all information disclosed on any schedule has been separately identified with
respect to Cepro or a Subsidiary with respect to which such information is
disclosed, and grouped together with other information on such schedule
disclosed with respect to Cepro or such Subsidiary.
2.4 SUBSIDIARIES. Except as set forth in Schedule 2.4, Cepro does not
presently own, of record or beneficially, or control, directly or indirectly,
any capital stock, securities convertible into or exchangeable for capital stock
or any other equity interest in any corporation, association or business entity.
Except as set forth in Schedule 2.4, Cepro is not, directly or indirectly, a
participant in any joint venture, partnership or other noncorporate entity.
Cepro is the record and beneficial owner of 100% of the issued and outstanding
capital stock or other equity interests of each Subsidiary. Each Subsidiary is
duly registered and validly existing under the laws of each jurisdiction
indicated in Schedule 2.4.
2.5 POWER AND AUTHORITY. Cepro has the power and authority to own its
properties and to carry on the Business as presently conducted and as proposed
to be conducted.
2.6 CEPRO'S CAPITALIZATION.
(a) The Cepro Shares represent the only class of capital stock of Cepro
(the "CEPRO CAPITAL STOCK"), and they have a par value of SEK 100 per share.
Cepro has no other class or series of capital stock authorized. Immediately
prior to the consummation of the transactions contemplated by this Agreement,
Cepro has 5,750 shares of Cepro Capital Stock outstanding.
3
<PAGE> 7
(b) All of the currently outstanding Cepro Shares have been duly and
validly authorized and issued, are fully paid and non-assessable, were issued in
compliance with all applicable Swedish securities laws and are owned by the
persons identified on Exhibit A hereto, free and clear of all liens, claims or
encumbrances.
(c) The exchange of the Cepro Shares pursuant to the Transactions is
not prohibited by any instrument, agreement, or otherwise.
(d) There are no outstanding subscriptions, warrants, options, calls,
commitments or other rights to purchase or acquire any capital stock of Cepro,
or securities convertible into or exchangeable for any Cepro Capital Stock or
any preemptive rights or rights of first refusal with respect to the issuance or
sale of Cepro Capital Stock. At Closing, there are no restrictions on the
transfer of Cepro Capital Stock other than those arising from Swedish securities
laws. No Selling Shareholder has entered into any agreements with respect to the
voting of Cepro Shares and the Transactions are not prohibited by any such
agreements.
2.7 REGISTRATION RIGHTS. Cepro has no contractual obligation to register
under Swedish law any of its presently outstanding securities or any securities
that it may hereafter issue.
2.8 CEPRO KB. On or before the Closing Date, Cepro KB, a Swedish
partnership of which Cepro held fifty-seven percent of the partnership interests
will have been dissolved. All of the assets of Cepro KB remaining after
discharging its liabilities will have been transferred to Cepro. All of the
liabilities of Cepro KB of any nature, character or description, whether
accrued, contingent, absolute, secured, unsecured or otherwise, will have been
completely satisfied. In the event that any future possible tax liabilities
regarding the status as former partners of Cepro KB arise or are discovered
after the Closing Date, regardless of whether such liabilities are actually
imposed upon Cepro or upon others, such liabilities shall be the obligation
solely of the Selling Shareholders.
2.9 FINANCIAL STATEMENTS. Schedule 2.9 attaches the audited financial
statements of Cepro and its Subsidiaries and of Cepro KB (including balance
sheet, income statement and statement of cash flows) together with the reports
thereon of Cepro's independent certified public accountants for the years 1995
through 1999 (the "CEPRO FINANCIAL STATEMENTS"). The Cepro Financial Statements
have been prepared in accordance with generally accepted Swedish accounting
principles ("SWEDISH GAAP") applied on a consistent basis throughout the periods
indicated. The Cepro Financial Statements fairly present the financial condition
and operating results of Cepro, the Cepro Subsidiaries and Cepro KB as of the
dates, and for the periods, indicated therein. Cepro maintains and will continue
to maintain a standard system of accounting and internal controls established
and administered in accordance with Swedish GAAP.
2.10 NO UNDISCLOSED LIABILITIES. Schedule 2.10 sets forth an accurate list,
as of December 31, 1999 ( the "BALANCE SHEET DATE") of (i) all liabilities,
contingent, accrued or otherwise, of Cepro which are reflected in the December
31, 1999 balance sheet and (ii) any liabilities of any kind of Cepro which are
not reflected in the December 31, 1999 balance sheet. Except as set forth in
Schedule 2.10, since December 31, 1999, Cepro has not incurred any liabilities
of any kind, character or description, whether accrued, absolute, secured or
unsecured, contingent or otherwise, other than liabilities incurred in the
ordinary course of
4
<PAGE> 8
business which are not materially greater than the corresponding liabilities
reflected in the December 31, 1999 balance sheet. Schedule 2.10 contains a
reasonable estimate by the Selling Shareholders of the maximum amount which may
be payable with respect to liabilities which are not fixed. For each such
liability for which the amount is not fixed or is contested, the Selling
Shareholders have provided a summary description of the liability together with
copies of all relevant documentation relating thereto. As of the Closing Date,
Cepro's total liabilities, on a consolidated basis, do not exceed SEK
14,000,000. Except as disclosed in the Financial Statements, Cepro is not a
guarantor of any indebtedness of any other person, firm or corporation.
2.11 CEPRO EXECUTIVE SYSTEMS AB. On the Closing Date, Cepro Executive
Systems AB ("CES") has sufficient assets to satisfy any and all of its
liabilities, including, without limitation, its tax liabilities arising from the
dissolving of its timing reserves.
2.12 INTANGIBLE PROPERTY. Cepro owns or possesses sufficient legal rights
to all material patents, trademarks, service marks, trade names, assumed names,
copyrights, trade secrets, licenses, information and proprietary rights and
processes necessary for the Business and, to the knowledge of the Selling
Shareholders, the Business does not conflict with, or infringe upon, the rights
of others with respect to any intangible property. Schedule 2.12 sets forth all
material patents and pending patent applications, trademarks, service marks,
trade names and copyrights, trade secrets or other proprietary rights or
processes used or necessary in the conduct of the Business. There are no
material outstanding options, licenses, or agreements of any kind relating to
the foregoing, nor is Cepro bound by or a party to any material options,
licenses, or agreements of any kind with respect to patents, trademarks, service
marks, trade names, copyrights, trade secrets, licenses, information and
proprietary rights and processes of any other person or entity. Cepro has not
received any communications alleging that Cepro has violated or, by conducting
the Business, would violate the patents, trademarks, service marks, trade names,
copyrights, trade secrets, or other proprietary rights or processes of any other
person or entity, nor does Cepro believe that there is any basis for any such
allegation.
2.13 TITLE TO PROPERTIES AND ASSETS. Schedule 2.13 sets forth an accurate
list of all of Cepro's leased real property and leased and owned tangible
property. Cepro has sole and exclusive possession of, and good and indefeasible
title to, or a license to use or leasehold rights in, all of the material
properties and assets (real and personal, tangible and intangible) used in the
Business and such properties and assets, or, if applicable, licenses and leases,
are free and clear of all mortgages, liens, claims or encumbrances. Such assets
include all of the assets which are used in or necessary for the conduct of the
Business.
2.14 TAXES. Cepro has filed all Swedish income, franchise and other tax
returns required to be filed by it through the Closing Date and has paid all
taxes reflected as due thereon and all other taxes for which it is liable
whether or not reflected on such returns, including, without limitation, value
added tax, social contributions, penalties and interest. All such tax returns
have been properly prepared in all material respects. There is no pending
dispute with any taxing authority that, if determined adversely to Cepro, would
result in the assertion by any taxing authority of any material tax deficiency,
and Cepro has no knowledge of a proposed liability for any tax to be imposed
upon Cepro's properties or assets other than taxes not yet due and payable.
2.15 MATERIAL CONTRACTS AND COMMITMENTS. Schedule 2.15 sets forth a list of
all the material contracts, agreements, leases and instruments to which
Cepro is a party or to which
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its properties or assets are bound or subject, including the subject of each
contract, the names of the parties to each contract, the date on which the
contract was entered into and the expiration date. All of such contracts,
agreements, leases and instruments are valid, binding and in full force and
effect in all material respects. Cepro is not in violation in any material
respect of any provision of any of such contracts. Schedule 2.15 also sets forth
and separately identifies a list of all material proposed contracts.
2.16 COMPLIANCE WITH OTHER INSTRUMENTS. Cepro is not in violation or
default of any provision of any Swedish rule or regulation or of its governance
documents, which would adversely affect the operations of the Business. The
execution, delivery and performance of this Agreement will not conflict with or,
with or without notice or the lapse of time, result in (a) any default under or
(b) any material modification of the terms of any noncompetition,
confidentiality or other material contract, agreement, obligation or commitment
of Cepro applicable to the Business, or the creation of any lien, charge or
encumbrance of any nature upon any of the properties or assets of the Business
or of Cepro. The execution, delivery and performance of this Agreement will not
violate any judgment, decree, order, statute, rule or regulation of any Swedish
or local government or agency having jurisdiction over Cepro, the Business or
any of Cepro's properties or assets.
2.17 LITIGATION. There are no actions, suits, claims, proceedings or formal
investigations pending or, to the knowledge of the Selling Shareholders,
threatened against Cepro or any of its officers, directors or principal
shareholders relating to the Business or the Transactions which would materially
adversely affect the operations of the Business or the consummation of, or
benefits to be received by Concours by virtue of, the Transactions.
2.18 PERMITS, LICENSES AND LAWS. Schedule 2.18 sets forth a list of all
franchises, permits and material licenses held by Cepro. Cepro has all necessary
franchises, permits, licenses and other rights and privileges necessary to
permit it to own the property and to conduct the Business as currently conducted
and as proposed to be conducted which are material to the operations of the
Business. Cepro is not in violation of any law, regulation, rule, authorization,
judgment, decree or order of any public authority relevant to the ownership of
any properties or the carrying on of the Business.
2.19 CONSENTS. Except as set forth in Schedule 2.19, no consent, approval
or authorization of or designation, declaration or filing with any governmental
authority or other third party is required in connection with the valid
execution and delivery of this Agreement, or the offer, sale, or transfer, as
provided herein, of the Cepro Shares or the consummation of the Transactions.
2.20 EMPLOYEE MATTERS. Schedule 2.20 lists all written and oral employment
agreements and agreements of outside consultants to Cepro. The Selling
Shareholders are not aware that any one or more of the Cepro Consultants or the
outside consultants intends to terminate their employment with Cepro or to
refuse any offer of employment with Cepro, nor does Cepro have a present
intention to terminate the employment of any of the foregoing. The employment
agreement of each outside consultant and Cepro Consultant is replaced as of the
Closing Date by an employment agreement in general conformance with the
applicable form of employment attached as Exhibit D to this Agreement, as
applicable. This will, however, not affect any of the Cepro Consultants'
applicable statutory rights under the Swedish Job Security Act (LAS). Cepro has
complied in all material respects with all applicable laws related to
employment. Schedule 2.20 sets forth the name and salary of each
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full time and part-time employee and the name and compensation arrangement of
each outside consultant, if any.
2.21 BROKERS' FEES. No broker, finder, agent, or similar intermediary has
acted on behalf of Cepro or any Selling Shareholder in connection with the
Transactions and there are no brokerage commissions, finder's fees or similar
items of compensation payable in connection therewith based on any arrangement
or agreement made by or on behalf of Cepro.
2.22 AFFILIATE TRANSACTIONS. Except as otherwise disclosed in Schedule
2.15, Schedule 2.22 contains a complete listing of all compensation and other
agreements of Cepro with or for the benefit of any Selling Shareholder of Cepro,
or any affiliate, child or spouse of any Selling Shareholder.
2.23 ADVERSE CHANGES. Since December 31, 1999, none of the following have
occurred with respect to Cepro which would have a material adverse affect on the
Business or Cepro:
(a) any change in the assets, liabilities, financial condition or
operating results of the Business from that reflected in the Financial
Statements, except changes in the ordinary course of business or changes that
have not been, in the aggregate, materially adverse to Cepro;
(b) any damage, destruction or loss, whether or not covered by
insurance, affecting the business, properties, prospects, financial condition or
operating results of Cepro;
(c) any waiver or compromise of a material debt;
(d) any satisfaction or discharge of any lien, claim, or encumbrance or
payment of any obligation, except in the ordinary course of business, or that is
not material to the business, properties, prospects or financial condition or
operating results of Cepro;
(e) any sale, assignment or transfer outside the ordinary course of
business of any patents, trademarks, copyrights, trade secrets or other
intangible assets;
(f) any resignation or termination of employment of any officer or key
employee of Cepro;
(g) any mortgage, pledge, transfer of a security interest in, or lien
created with respect to any of the properties or assets of Cepro outside the
ordinary course of business except liens for taxes not yet due or payable;
(h) any loans or guarantees made by Cepro to or for the benefit of its
employees, officers or directors, or any members of their immediate families,
other than travel advances and other advances made in the ordinary course of its
business;
(i) any declaration, setting aside or payment or other distribution
with respect to any capital stock, or any direct or indirect redemption,
purchase, or other acquisition of any of Cepro's stock by Cepro;
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(j) any other event or condition that might be reasonably expected to
have a material adverse effect on the assets, Business, properties, financial
condition, operating results or business prospects of Cepro taken as a whole;
(k) any agreement or commitment by Cepro to do any of the things
described in this Section 2.23; or
(l) increase the compensation of any employee of Cepro, except for
increases in the ordinary course of business and consistent with past practice.
2.24 ACCESS TO DATA. The Selling Shareholders have had an opportunity to
discuss Concours' business with the management of Concours, to review records
pertaining to the governance documents, capital structure and financials of the
Concours business and have conducted all inspections and analysis of these
records that they deem necessary.
2.25 CEPRO CONSULTANTS. The Selling Shareholders who have executed this
Agreement and the Ancillary Agreements represent at least ninety percent of all
of the Cepro Consultants employed by Cepro as of January 1, 2000.
2.26 INFORMATION SUPPLIED TO CONCOURS. Neither this Agreement nor the
schedules and exhibits hereto contains any untrue statement of a material fact
or omits to state a material fact required to be stated herein or therein or
necessary in order to make the statements herein and therein not misleading.
2.27 BROKERS' FEES. No broker, finder, agent, or similar intermediary has
acted on behalf of any Selling Shareholder in connection with the Transactions
and there are no brokerage commissions, finder's fees or similar items of
compensation payable in connection therewith based on any arrangement or
agreement made by or on behalf of any Selling Shareholder.
2.28 SHARES. Each Selling Shareholder holds of record and owns beneficially
the Cepro Shares being sold hereunder by such Selling Shareholder, free and
clear of any restrictions on transfer (other than any restrictions under Swedish
securities laws), taxes, security interests, options, warrants, purchase rights,
and any other adverse claims.
2.29 UNREGISTERED SECURITIES. The Selling Shareholders understand that the
securities to be issued pursuant to this Agreement are restricted securities and
have not been registered under the 1933 Act and are issued in reliance upon an
exemption from the registration requirements thereof. The Selling Shareholders
hereby confirm that they have been informed that the Shares are restricted
securities under the 1933 Act and may not be resold or transferred in the United
States unless the Shares are first registered under United States federal
securities laws or unless an exemption from such registration is available.
Accordingly, the Selling Shareholders hereby acknowledge that they are prepared
to hold the Shares for an indefinite period. Each of the Selling Shareholders is
aware that an exemption under Rule 144 promulgated by the Securities and
Exchange Commission is not presently available to exempt the sale of the Shares
from the registration requirement of the securities laws and may not be
available in the future.
2.30 LEGENDS. The Selling Shareholders acknowledge that the certificates
representing the Concours Shares shall bear restrictive legends including, but
not limited to legends substantially as follows:
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THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 ("ACT"). THESE SHARES HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE,
AND MAY NOT BE MORTGAGED, PLEDGED, HYPOTHECATED, OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SHARES
UNDER THE ACT OR AN OPINION OF COUNSEL FOR THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A VOTING
TRUST AGREEMENT AND TO CERTAIN RESTRICTIONS ON TRANSFER UNDER THE TERMS
OF A BUY-SELL AGREEMENT ENTERED INTO BY AND AMONG THIS CORPORATION AND
CERTAIN OF ITS SHAREHOLDERS EFFECTIVE AS OF FEBRUARY 29, 2000, A COPY
OF WHICH IS ON FILE AT THE CORPORATION'S PRINCIPAL PLACE OF BUSINESS OR
REGISTERED OFFICE. A COPY OF EACH SUCH AGREEMENT WILL BE FURNISHED TO
THE HOLDER HEREOF WITHOUT CHARGE UPON WRITTEN REQUEST TO THE
CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE.
THE CORPORATION IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS OR SERIES OF
STOCK. THE CORPORATION WILL FURNISH WITHOUT CHARGE TO THE HOLDER HEREOF
A STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK
OR SERIES THEREOF OF THE CORPORATION, AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR SUCH RIGHTS TO
THE EXTENT THEY HAVE BEEN FIXED. ANY SUCH REQUEST SHOULD BE MADE TO THE
TO THE CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED
OFFICE.
2.31 DISPOSITION OF SHARES. (a) Prior to registration of the sale of the
Concours Shares in accordance with the 1933 Act, no Selling Shareholder will
dispose of any Concours Shares except in compliance with the 1933 Act and the
Buy-Sell Agreement that each Selling Shareholder is entering into (the "Buy-Sell
Agreement"), substantially in the form attached as Exhibit B, contemporaneously
with the execution and delivery of this Agreement.
(b) Concours shall not be required (i) to transfer on its books any
Concours Shares that have been sold or transferred in violation of the
provisions of this Section 2.32, the Buy-Sell Agreement, or the 1933 Act, or
(ii) to treat as the owner of the Concours Shares, or otherwise accord voting or
dividend rights to any transferee to whom the Concours Shares have been
transferred in contravention of the Buy-Sell Agreement.
2.32 JOINDER OF TRANSFEREES OF THE SHARES. If a Selling Shareholder obtains
additional Concours Common Stock (as hereafter defined) in the future or
transfers all or any portion of his or her Concours Common Stock, unless waived
by Concours, in its sole discretion: (i) the transferees to whom the Concours
Common Stock is to be transferred shall be required, as a condition of the
transfer of such Concours Common Stock, to execute this Agreement, the Buy-Sell
Agreement and the Voting Agreement substantially in the forms attached as
Exhibit B and E, respectively, or an Adoption Agreement with respect to each
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such agreement, or any other instrument containing a ratification of and consent
to be bound by the terms of such agreements; (ii) the term "SELLING SHAREHOLDER"
as used herein shall be deemed to include such transferee for all purposes; and
(iii) such transferee by such joinder or ratification and consent agrees to be
bound by all the terms and conditions hereof as if such transferee were a
Selling Shareholder.
2.33 REPRESENTATIONS AND WARRANTIES OF CONCOURS. Each Selling Shareholder
acknowledges his her or its understanding that the only representations and
warranties of Concours to the Selling Shareholders are those specifically set
forth in this Agreement.
2.34 NET WORTH OF CEPRO. The Net Worth of Cepro as of the Closing Date is
in excess of SEK 3.2 million. The term "NET WORTH" means net worth calculated in
accordance with Swedish GAAP, except that liabilities will also be recorded as
of the Closing Date for all costs and expenses incurred in connection with
pursuing or consummating the Transactions, regardless of whether such costs and
expenses were incurred before or after the Closing Date, regardless of whether
any of Cepro's liabilities were contingent or inchoate on the Closing Date, and
regardless of whether they were known or unknown at such time. A balance sheet
prepared in this manner is referred to herein as a "NET WORTH BALANCE SHEET." A
Net Worth of SEK 3.2 million is sufficient to operate the Business in the same
manner that the Business was operated by Cepro and Cepro KB in the six months
prior to the Closing Date.
2.35 PERFORMANCE. Cepro has performed and complied in all material respects
with all covenants, agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing Date.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF CONCOURS
Concours represents and warrants to the Selling Shareholders that the following
statements are correct and complete as of the Closing Date.
3.1 AUTHORIZATION; POWER. The execution, delivery and performance of this
Agreement and the Ancillary Agreements have been duly authorized by all
necessary action of Concours. Concours has the full power and authority to enter
into this Agreement and the Ancillary Agreements. This Agreement and the
Ancillary Agreements have been duly executed and delivered, constitute the valid
and binding obligation of Concours, and are enforceable in accordance with their
terms, except as the enforceability of the same may be limited by bankruptcy,
insolvency or other laws relating to or affecting creditors' rights generally or
by general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
3.2 ORGANIZATION AND GOOD STANDING. Concours is a corporation duly
organized, validly existing and in good standing under the laws of Delaware, has
all requisite power and authority to carry on the business in which it is now
engaged and is duly qualified and in good standing in each jurisdiction in which
the location or nature of its property or the character of its business makes
such qualification necessary except where the failure to be so qualified or in
good standing would not have a material adverse effect on Concours. Concours
management has furnished to Cepro true and accurate copies of the Certificate of
Incorporation and Bylaws of Concours as presently in effect.
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3.3 CONCOURS' CAPITALIZATION.
(a) The authorized capital stock of Concours as of the Closing Date
consists of 50 million shares of common stock, par value $0.01 per share (the
"CONCOURS COMMON STOCK") and five million shares of preferred, par value of
$0.01 per share (the "PREFERRED STOCK"). Concours has no other class or series
of capital stock authorized. Any Selling Shareholder may, upon written request
to the Secretary of Concours, obtain a copy of the Certificate of Designations
setting forth the rights, preferences, powers and restrictions of the Preferred
Stock.
(b) All of the currently issued and outstanding shares of Concours
Common Stock and Preferred Stock have been duly and validly authorized and
issued, are fully paid and non-assessable and were issued in compliance with all
applicable state and United States federal securities laws.
(c) The issuance of the Concours Shares is not prohibited by any
instrument, agreement or otherwise.
(d) Except as set forth in Schedule 3.3, there are no outstanding
subscriptions, warrants, options, calls, commitments or other rights to purchase
or acquire any capital stock of Concours, or securities convertible into or
exchangeable for any capital stock of Concours or any preemptive rights or
rights of first refusal with respect to the issuance or sale of Concours'
capital stock.
3.4 REGISTRATION RIGHTS. As of the date of this Agreement, no employee
shareholders of Concours have registration rights with respect to any capital
stock issued by Concours.
3.5 UNREGISTERED SECURITIES. Concours understands that the Cepro Shares to
be sold to Concours pursuant to this Agreement have not been registered under
the 1933 Act and are being transferred in reliance upon an exemption from the
registration requirements thereof.
3.6 ACCREDITED INVESTOR STATUS. Concours is knowledgeable and experienced
in making investments and is able to bear the economic risk of loss of its
entire investment in Cepro. Concours is an "accredited investor," as that term
is defined in Rule 501(a) of Regulation D under the Securities Act of 1934, as
amended
3.7 BROKERAGE. No broker, finder, agent or similar intermediary has acted
on Concours' behalf in connection with the transactions contemplated by this
Agreement and there are no brokerage commissions, finder's fees or similar
compensation in connection therewith based on any arrangement or agreement made
by or on behalf of Concours.
3.8 CONSENTS. Except as set forth in Schedule 3.8, no consent, approval or
authorization of or designation, declaration or filing with any governmental
authority or other third party is required in connection with the valid
execution and delivery of this Agreement, or the offer, sale, or transfer, as
provided herein, of the Concours Shares for the consummation of the
Transactions.
3.9 FINANCIAL STATEMENTS. Schedule 3.9 attaches the audited consolidated
financial statements of Concours and its subsidiaries (including consolidated
balance sheet, income
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statement and statement of cash flows) together with the reports thereon of
Cepro's independent certified public accountants for the years 1997 and 1998
(the "FINANCIAL STATEMENTS"). The Financial Statements have been prepared in
accordance with generally accepted U.S. accounting principles applied on a
consistent basis throughout the periods indicated. Also attached is the
unaudited consolidated financial statement of Concours for 1999 (the "1999
STATEMENT"). The 1999 statement fairly presents the financial condition and
operating results of Concours and the Concours subsidiaries as of the dates, and
for the periods, indicated therein.
3.10 ADVERSE CHANGES. Since December 31, 1999, none of the following have
occurred with respect to Concours which would have a material adverse affect on
Concours or its business:
(a) any change in Concours' assets, liabilities, financial condition or
operating results from that reflected in the 1999 Financial Statement, except
changes in the ordinary course of business or changes that have not been, in the
aggregate, materially adverse to Concours;
(b) any damage, destruction or loss, not covered by insurance,
materially affecting the business, properties, prospects, financial condition or
operating results of Concours;
(c) any waiver or compromise of a material debt;
(d) any satisfaction or discharge of any lien, claim, or encumbrance or
payment of any obligation, except in the ordinary course of business, or that is
not material to the business, properties, prospects or financial condition or
operating results of Concours;
(e) any sale, assignment or transfer outside the ordinary course of
business of any patents, trademarks, copyrights, trade secrets or other
intangible assets;
(f) any resignation or termination of employment of any officer or key
employee of Concours;
(g) any mortgage, pledge, transfer of a security interest in, or lien
created with respect to any of the properties or assets of Concours outside the
ordinary course of business except liens for taxes not yet due or payable;
(h) any loans or guarantees made by Concours to or for the benefit of
its employees, officers or directors, or any members of their immediate
families, other than travel advances and other advances made in the ordinary
course of its business;
(i) any declaration, setting aside or payment or other distribution
with respect to any capital stock, or any direct or indirect redemption,
purchase, or other acquisition of any of Concours' stock by Concours;
(j) any other event or condition that might be reasonably expected to
have a material adverse effect on the assets, business, properties, financial
condition, operating results or business prospects of Concours taken as a whole;
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(k) any agreement or commitment by Concours to do any of the things
described in this Section 3.10; or increase the compensation of any employee of
Concours, except for increases in the ordinary course of business and consistent
with past practice.
3.11 INFORMATION SUPPLIED TO CEPRO. Neither this Agreement nor the
schedules and exhibits hereto contains any untrue statement of a material fact
or omits to state a material fact required to be stated herein or therein or
necessary in order to make the statements herein and therein not misleading.
3.12 REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS. Concours
acknowledges its understanding that the only representations and warranties of
the Selling Shareholders to Concours are those specifically set forth in this
Agreement.
ARTICLE 4
AFFIRMATIVE COVENANTS OF THE SELLING SHAREHOLDERS
The Selling Shareholders, further covenant and agree as follows:
4.1 PREPARATION OF NET WORTH BALANCE SHEETS. To determine whether the Net
Worth test set forth in Section 2.35 was satisfied as of the Closing Date, Cepro
shall provide to Concours a Net Worth Balance Sheet, reflecting Net Worth as of
the Closing Date, prepared in the manner described in Section 2.35, every six
months. The last Net Worth Balance Sheet shall reflect liabilities (even if
inchoate or contingent on the Closing Date) attributable to Cepro as of the
Closing Date through February 28, 2003, and shall be delivered to Concours no
later than April 15, 2003.
4.2 TERMINATION OF PRIOR AGREEMENTS AND RIGHTS. Each of the Selling
Shareholders agrees, on behalf of each such Selling Shareholder and, if
applicable, each such Selling Shareholder's company, partnership or other entity
(a "CONSULTANT COMPANY") that has done business or had agreements, arrangements
or understandings, whether oral or written, with Cepro or any of the Cepro
Subsidiaries, that by execution of this Agreement and the Ancillary Agreements
such Selling Shareholder is evidencing his or her agreement and intent to
terminate all such agreements, arrangements or understandings that such Selling
Shareholder or such Selling Shareholder's Consultant Company had immediately
prior to the Closing Date. Each Selling Shareholder further agrees that by
executing this Agreement and the Ancillary Agreements such Selling Shareholder
intends and does hereby waive such Selling Shareholder's, and if applicable,
such Selling Shareholder's Consultant Company's right of first refusal under
Cepro's Articles of Association and any other rights such selling Shareholder or
Selling Shareholder's Consultant Company may have under any agreement or
constituent document of any of Cepro and the Cepro Subsidiaries.
4.3 FULFILLMENT OF OTHER OBLIGATIONS. The Selling Shareholders will observe
and comply fully, in all material respects, with all of the other terms,
conditions and covenants of this Agreement and the Ancillary Agreements.
ARTICLE 5
AFFIRMATIVE COVENANTS OF CONCOURS
5.1 CONCOURS BOARD OF DIRECTORS MEETINGS. Until such time as Concours'
first registration statement filed with the United States Securities and
Exchange Commission for
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Concours Common Stock, or any other security issued by Concours, becomes
effective, a representative of Cepro designated by the Selling Shareholders will
be invited to attend all Concours Board of Directors meetings, but shall not be
permitted to vote on any matter.
5.2 REGISTRATION RIGHTS. The Selling Shareholders shall have the same
rights, if any, and obligations with respect to a registered offering of
Concours Common Stock or other securities as all other employee stockholders of
Concours.
5.3 STOCK OPTION PROGRAM. The Selling Shareholders shall be eligible to
participate in Concours' 1998 European Equity Compensation Plan or a
substantially similar stock option plan. It is Concours' intention to adapt such
stock option plans in favor of the Selling Shareholders under Swedish tax laws.
5.4 SPP DISTRIBUTION. If at any time after the Closing Date, SPP makes a
pension premium refund ("Refund") or grants a credit or rebate against future
premium payments ("Rebate") by Cepro based on pension premiums paid by Cepro
prior to December 31, 1999, then subject to the provisions of Section 7.2, such
Refund or Rebate will be distributed to those Selling Shareholders still
employed by Cepro on the date the Refund or the Rebate, as the case may be, is
distributed. Such distribution shall be net of taxes, social contributions, all
other direct expenses of Cepro and reasonable expenses (collectively, "Premium
Expenses"). The Refund or Rebate, net of the Premium Expenses and any indemnity
obligations shall be distributed among such employees in the amounts determined
by management of Cepro, in its sole discretion.
5.5 DISCHARGE OF LIABILITY. Cepro's Board of Directors shall be discharged
from liability for the year 2000 if Cepro's accountant recommends that the Board
of Directors should be granted such discharge from liability.
ARTICLE 6
CLOSING DELIVERIES
6.1 CLOSING DELIVERIES OF SELLING SHAREHOLDERS.
(a) Stock certificates representing 5,750 Cepro Shares, endorsed in
blank or to the order of Concours;
(b) Cepro's governance documents, as amended or restated, certified by
the authority under whose jurisdiction such documents fall, evidencing the
organizational structure reflected in Schedule 2.4;
(c) Certificate, dated within ten days prior to the Closing Date, as to
the corporate existence of Cepro issued by the appropriate authority;
(d) Cepro's Bylaws or comparable governance documents, as amended or
restated, certified by its secretary or other officer, as of the Closing Date;
(e) Buy-Sell Agreement, executed by each Selling Shareholder;
(f) Employment Agreement, executed by each Selling Shareholder;
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(g) Noncompetition, Nonsolicitation and Confidentiality Agreement,
executed by each Selling Shareholder;
(h) Voting Trust Agreement executed by each Selling Shareholder;
(i) Managing Director Agreement executed by Cepro's managing director
comparable to such agreements Concours has with persons in comparable positions
with other Concours affiliates;
(j) Limited Power of Attorney authorizing Jan Roy to sign any and all
of the Transaction Documents on behalf of each of the Selling Shareholders; and
(k) Legal opinion of Cepro's legal counsel in the form set forth as
Exhibit G hereto.
6.2 CLOSING DELIVERIES OF CONCOURS.
(a) Copies of stock certificates representing a total of 1,221,000
Concours Shares to the Selling Shareholders;
(b) Concours Certificate of Existence and Good Standing from the
Secretary of State of Delaware, dated within ten (10) days prior to the closing;
(c) Buy-Sell Agreement, executed by Concours;
(d) Employment Agreement with each of the Selling Shareholders,
executed by Concours;
(e) Noncompetition, Nonsolicitation and Confidentiality Agreement with
each of the Selling Shareholders, executed by Concours;
(f) Voting Trust Agreement, executed by Concours;
(g) Voting Trust Certificate for each Selling Shareholder;
(h) Managing Director Agreement executed by Concours comparable to such
agreements Concours has with persons in comparable positions with other Concours
affiliates; and
(i) Legal opinion of Concours' legal counsel in the form set forth in
Exhibit H hereof.
ARTICLE 7
INDEMNIFICATION
7.1 SURVIVAL; INDEMNITY. The representations and warranties of the parties
set forth in this Agreement shall survive the closing of the Transactions
contemplated by this Agreement and shall continue in effect until March 1, 2003.
No party shall have any claim or
15
<PAGE> 19
right of recovery for any breach of a representation or warranty or covenant or
agreement unless (a) written notice is given in good faith by that party to the
other party of the representation, warranty, covenant or agreement pursuant to
which the claim is made or right of recovery is sought, setting forth in
reasonable detail the specific breach of the representation, warranty, covenant
or agreement, the amount of the claim being made, if known, and the basis for
that amount and, (b) the breach of such representation, warranty, covenant or
agreement has not been cured by the date which is 30 business days from the date
of such notice, or if it cannot reasonably be cured during such period, diligent
effort toward a cure has been commenced and is continuing and a cure is
completed within 120 days from the date of such notice. The indemnities
contained in this Article 7 shall survive the Closing of the Transactions as
provided herein and shall constitute the sole remedy of the parties for the
matters covered hereby. The terms "indemnity" and "indemnification" as used in
this Agreement apply, without limitation, to all Damages (as hereinafter
defined) that result from a third party claim as well as those that damage the
indemnified party even though no third party makes any claim or is involved in
any way.
7.2 INDEMNIFICATION BY THE SELLING SHAREHOLDERS.
(a) Each of the Selling Shareholders, severally and not jointly, agrees
to indemnify Concours, and hold it harmless from, any and all damages, losses,
liabilities and expenses, including, without limitation, reasonable expenses of
investigation and reasonable attorneys' fees and expenses ("DAMAGES") incurred
or suffered by Concours arising out of any breach of, or failure to timely
perform, any representation or warranty, covenant or agreement of the Selling
Shareholders set forth in this Agreement, including any schedule hereto or any
certificate delivered in connection with this Agreement or any misrepresentation
by any Selling Shareholder under this Agreement ("SELLER'S BREACH") (unless such
Seller's Breach has been cured as provided in Section 7.1 above); except that
the Damages arising out of any and each Seller's Breach, to qualify for
indemnification, shall exceed US $10,000; and except that in case of the Damages
being deductible in Cepro's tax return, the compensation by the Selling
Shareholders shall be adjusted to reflect the Damages net of tax.
(b) Concours shall notify the Selling Shareholders of claims from third
parties against Concours, which may require the Selling Shareholders to
compensate Concours as provided above, no later than thirty (30) days after
Concours obtained knowledge of the claim. The Selling Shareholders, acting
together, will be entitled, upon their election by written notice given to
Concours within thirty (30) days after the date on which notice of a claim is
given to the Selling Shareholders, to coordinate with Concours on, and assist
with, through counsel for the Selling Shareholders, the defense or prosecution
of such claim and any litigation resulting therefrom at their expense and
through counsel of their own choosing under the direction of counsel for
Concours as lead counsel in any such proceeding. Concours shall make available
to said counsel for the Selling Shareholders all records and other materials
reasonably required by said counsel for its use in contesting any third party
claim and shall to the extent reasonably possible act in the best interest of
the parties to this Agreement in the defense of all such claims. If the Selling
Shareholders do not elect to coordinate with Concours in the defense or
prosecution of any such claim or litigation, Concours will take all reasonable
steps and measures to defend or prosecute such claim or litigation.
16
<PAGE> 20
(c) In no event shall the Selling Shareholders be held liable for
indirect or consequential damages.
(d) Concours shall not claim compensation from the Selling Shareholders
as provided in this Section 7.2 unless the total amount of Damages, shall
exceed, in the aggregate, US $40,000, and then only with regard to amounts in
excess thereof. Concours will use all reasonable efforts to avail itself of its
existing insurance coverage for claims to which it reasonably believes its
insurance is applicable. To the extent that Concours receives reimbursement
under any of its insurance policies for amounts that have been paid to it by the
Selling Shareholders, such payments by the Selling Shareholders shall be
refunded in the amount of insurance collected by Concours.
(e) Notwithstanding the foregoing, no Selling Shareholder shall be
liable to Concours under this Article 7 in an amount exceeding the value, as of
the Closing Date, of the Concours Shares received by such Selling Shareholder
under this Agreement in exchange for such Selling Shareholder's Cepro Shares. As
to the Net Worth warranty, no Selling Shareholder shall be liable to Concours
under this Article 7 in an amount exceeding the value, at the time of settlement
of a claim for breach, of the Escrowed Shares issued to such Selling Shareholder
under this Agreement. The Selling Shareholders' obligations under this Article 7
shall be secured by the Escrowed Shares and the SPP Refund or Rebate. If, at the
time Cepro receives the SPP Refund or Rebate, there is no claim or other Damages
for which Concours reasonably believes it might be entitled to compensation
under this Article 7, the SPP Refund or Rebate shall be distributed as provided
in Section 5.4 hereof. If, however, Concours reasonably that there are or are
likely to be such Damages or claim, the SPP Refund or Rebate, as the case may
be, shall be held until there is a resolution regarding the existence and amount
of any such Damages or claim and such funds shall be applied to compensate
Concours before any of such funds are distributed. This section notwithstanding,
the source of funds to cover an obligation under this Article 7 shall not be
limited to such Selling Shareholder's Escrowed Shares, other Concours Shares or
the SPP Refund or Rebate.
(f) The Selling Shareholders shall not be liable under this Section 7.2
to the extent that the damage, loss, liability or expense for which indemnity is
sought was the result of the gross negligence or willful misconduct of Concours.
7.3 INDEMNIFICATION BY CONCOURS.
(a) Concours agrees to indemnify each Selling Shareholder and hold them
harmless from, any and all Damages incurred or suffered by the Selling
Shareholders arising out of any breach of, or failure to timely perform, any
Concours representation, warranty, covenant or agreement of Concours set forth
in this Agreement or any certificate delivered in connection herewith or any
misrepresentation by Concours under this Agreement ("CONCOURS BREACH") (unless
such Concours Breach has been cured as provided in Section 7.1); except that the
Damages arising out of any and each Concours Breach to qualify for
indemnification shall exceed US $10,000.
(b) The Selling Shareholders shall notify Concours of claims from third
parties against the Selling Shareholders, which may require Concours to
compensate the Selling Shareholders as provided above, no later than thirty (30)
days after the Selling Shareholders obtained knowledge of the claim. Concours
will be entitled, upon its election, by written notice given to the Selling
Shareholders within thirty (30) days after the date on
17
<PAGE> 21
which notice of a claim is given to Concours, to assume the defense or
prosecution of such claim and any litigation resulting therefrom at its expense
and through counsel of its own choosing. The Selling Shareholders shall make
available to Concours all records and other materials reasonably required by it
for its use in contesting any third party claim and shall cooperate fully with
Concours in the defense of all such claims. If Concours does not assume the
defense or prosecution of any such claim or litigation, the Selling Shareholders
shall take all reasonable steps and efforts to defend or prosecute such claim or
litigation.
(c) In no event shall Concours be held liable for indirect or
consequential damages.
(d) The Selling Shareholders shall not claim compensation from Concours
as provided in subsections (a) and (b) of this Section 7.3 unless the total
amount of Damages, shall exceed, in the aggregate, US $40,000, and then only
with regard to amounts in excess thereof.
(e) Concours shall not be liable under this Section 7.3 to the extent
that the damage, loss, liability or expense for which indemnity is sought was
the result of the gross negligence or willful misconduct of the Selling
Shareholders.
(f) Notwithstanding the foregoing, Concours shall not have liability
under this Article 7 in an amount exceeding, in the aggregate, the value, as of
the Closing Date, of the Concours Shares issued to the Selling Shareholders
under this Agreement in exchange for the Cepro Shares.
ARTICLE 8
MISCELLANEOUS
8.1 INCORPORATION BY REFERENCE. All exhibits and schedules attached to this
Agreement and all documents delivered pursuant to or referred to in this
Agreement are incorporated by reference and expressly made a part of this
Agreement.
8.2 NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person or entity other than the parties hereto and
their respective heirs, executors, administrators, successors and permitted
assigns.
8.3 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement (including the
exhibits and schedules), the other agreements contemplated herein and/or
executed in connection with the consummation of the Transactions and any
agreement into which this Agreement is incorporated by reference contain the
entire agreement among the parties with respect to the transactions contemplated
hereby, and supersede all prior agreements, written or oral, with respect
thereto. Changes in or additions to this Agreement may be made only upon written
consent of Concours and by those Selling Shareholders holding at least a
majority of the Concours Shares. Any party hereto may waive any provision or
breach of this Agreement; provided, however that any such waiver shall not be
deemed to constitute a continuing waiver of any other breach or provision of
this Agreement unless such waiver is expressed in a writing signed by the party
to be bound.
8.4 DISPUTE RESOLUTION. The parties hereby (a) agree to determine, with
finality, any and all disputes arising out of or relating to this Agreement in
accordance with the United
18
<PAGE> 22
Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules, by
one or more arbitrators appointed in accordance with the said rules; (b) agree
the place of arbitration shall be London, England, United Kingdom; (c) agree the
language of the arbitration shall be English; and (d) irrevocably consent to
arbitration pursuant to the above described terms. This Agreement shall be
governed by and construed in accordance with the laws chosen by the arbitrators.
8.5 NOTICES. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, via overnight
delivery, sent by facsimile transmission or sent by United States or Swedish
mail, postage prepaid. Any such notice shall be deemed given when so delivered
personally or sent by facsimile transmission, or one day after the date of
delivery to an overnight delivery service, or if mailed, ten days after the date
of deposit in the United States or Swedish mail, as follows:
If to the Selling Shareholders:
At their respective addresses listed on the signature page.
If to Concours:
Dr. Ron Christman, President
The Concours Group, Inc.
3 Kingwood Place
800 Rockmead Drive, Suite 151
Kingwood, TX 77339
FAX: (281) 358-4401
with a copy to:
Jenkens & Gilchrist
A Professional Corporation
1100 Louisiana Avenue
Houston, Texas 77002
Attention: Andrius Kontrimas
FAX: (713) 951-3314
Any party may, by notice given in accordance with this section to the other
parties, designate another address or person for receipt of notices hereunder.
8.6 CONSTRUCTION. The parties have participated jointly in the negotiation
and drafting of this Agreement. If an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement. The section and paragraph headings herein are for convenience
only and shall not affect the construction hereof. References to articles,
paragraphs and sections are to articles, paragraphs and sections of this
Agreement unless otherwise indicated.
8.7 SEVERABILITY. If any provision of this Agreement is held by final
judgment of a court of competent jurisdiction to be invalid, illegal or
19
<PAGE> 23
unenforceable, such invalid, illegal or unenforceable provision shall be severed
from the remainder of this Agreement, and the remainder of this Agreement shall
be enforced. In addition, the invalid, illegal or unenforceable provision shall
be deemed to be automatically modified, and as so modified to be included in
this Agreement, such modification being made to the minimum extent necessary to
render the provision valid, legal and enforceable. Notwithstanding the
foregoing, however, if the severed or modified provision concerns all or a
portion of the essential consideration to be delivered under this Agreement by
one party to the other, the remaining provisions of this Agreement shall also be
modified to the extent necessary to equitably adjust the parties' respective
rights and obligations hereunder.
8.8 ATTORNEYS' FEES. If any action at law or in equity, including an action
for declaratory relief, is brought to enforce or interpret the provisions of
this Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees and costs from the other party.
8.9 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
[Remainder of page intentionally left blank.]
20
<PAGE> 24
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Granitvagen 24, 183 63 Taby
------------------------------------
Ake Magnusson
<PAGE> 25
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Lotsgatan 16, 185 32 Vaxholm
------------------------------------
Anders Ljung
<PAGE> 26
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Roburvagen 23, 181 33 Lidingo
------------------------------------
Bo Hedberg
<PAGE> 27
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Kungsgatan 73, 112 27 Stockholm
------------------------------------
Lasse Harrling
<PAGE> 28
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Fagelkarrsvagen 13, 122 32 Enskede
------------------------------------
Louise Dahlgren
<PAGE> 29
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Fjalarstigen 3, 182 64 Djursholm
------------------------------------
Michael Collins
<PAGE> 30
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Orrvagen, 191 55 Sollentuna
------------------------------------
Rolf Haagg
<PAGE> 31
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Alvkarleovagen 26, 115 43 Stockholm
------------------------------------
Carl-Johan Petri
<PAGE> 32
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Valhallavagen 145, 115 31 Stockholm
------------------------------------
Gro Knutsen
<PAGE> 33
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Sommarvagen 3, 183 62 Taby
------------------------------------
Hans Nilsson
<PAGE> 34
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Liegatan 2, 193 32 Sigtuna
------------------------------------
Jan Hallgren
<PAGE> 35
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Sysslomansgatan 26, 112 41 Stockholm
------------------------------------
Jeanette Axen
<PAGE> 36
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Varvsgatan 12, 117 29 Stockholm
------------------------------------
John Soderstrom
<PAGE> 37
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Stallvagen 26 B, 139 36 Varmdo
------------------------------------
Jorgen Hansson
<PAGE> 38
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Mariedalsvagen 19, 217 54 Malmo
------------------------------------
Kajs Ponten
<PAGE> 39
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Kakbrinken 3, 111 27 Stockholm
------------------------------------
Nils-Goran Olve
<PAGE> 40
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Kometvagen 19, 183 48 Taby
------------------------------------
Fredrik Bjorklund
<PAGE> 41
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Lilla Banvagen 9, 163 43 Spanga
------------------------------------
Gunilla Gustavsson
<PAGE> 42
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Orrvagen 48, 183 51 Taby
------------------------------------
Lisbeth Roy
<PAGE> 43
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Kalmgatan 45,121 45 Johanneshov
------------------------------------
Mare Rautiainen
<PAGE> 44
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Plommonvagen 4, 179 45 Jarfalla
------------------------------------
Victoria Israelsson
<PAGE> 45
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Aspnasvagen 1, 181 43 Lidingo
------------------------------------
Anders Edlund
<PAGE> 46
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Vastra Bangatan 47 A, 195 40 Marsta
------------------------------------
Anders Eriksson
<PAGE> 47
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Riddargatan 51, 114 57 Stockholm
------------------------------------
Asa Follin
<PAGE> 48
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Drottninggatan 106, 111 60 Stockholm
------------------------------------
Bengt Lundblad
<PAGE> 49
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Drottninggatan 106, 111 60 Stockholm
------------------------------------
Bengt Ryden
<PAGE> 50
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Uddvagen 13 A, 181 30 Lidingo
------------------------------------
Birger Zahn
<PAGE> 51
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Porsvagen 346, 192 48 Solentuna
------------------------------------
Bo Daven
<PAGE> 52
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Vargvagen 7, 131 42 Nacka
------------------------------------
Brian Kylen
<PAGE> 53
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Enkopingsvagen 14, 175 63 Jarfalla
------------------------------------
Eva Lofgren
<PAGE> 54
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Fagelkarrsvagen 13, 122 32 Enskede
------------------------------------
Goran Dahlgren
<PAGE> 55
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Bergsvagen 43, 141 71 Huddinge
------------------------------------
Hans Lindroth
<PAGE> 56
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Fagelsangen 3, 182 74 Stocksund
------------------------------------
Holger Wastlund
<PAGE> 57
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Riddargatan 51, 114 57 Stockholm
------------------------------------
Ilona von Stryk Aulin
<PAGE> 58
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Ostergardsvagen 1, 194 53 Upplands-Vasby
------------------------------------
Jan Bergstrand
<PAGE> 59
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Orrvagen 48, 183 51 Taby
------------------------------------
Jan Roy
<PAGE> 60
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Beckombergavagen 111, 168 56 Bromma
------------------------------------
Kristina Elliot
<PAGE> 61
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Norrstigen 45, 181 31 Lidingo
------------------------------------
Lennart Arvedsson
<PAGE> 62
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Nasbydalsvagen 16, 183 37 Taby
------------------------------------
Mats Wester
<PAGE> 63
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Kartvagen 28, 136 65 Haninge
------------------------------------
Michael Lundin
<PAGE> 64
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Lansmansvagen 209, 191 70 Sollentuna
------------------------------------
Mikael Falck
<PAGE> 65
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Garnsviksvagen 8, 184 42 Akersberga
------------------------------------
Mikael Sundling
<PAGE> 66
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Drottningholmsvagen 70, 112 42 Stockholm
------------------------------------
Per-Eric Magnusson
<PAGE> 67
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Barrstigen 38, 181 62 Lidingo
------------------------------------
Peter Gavatin
<PAGE> 68
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Frodegatan 13A, 753 25 Uppsala
------------------------------------
Roger Wallen
<PAGE> 69
IN WITNESS WHEREOF, This Exchange Agreement has been executed by the
parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
---------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
Address:
Odengatan 45, 113 51 Stockholm
------------------------------------
Rune Brandinger
<PAGE> 70
LIST OF SCHEDULES AND EXHIBITS
<TABLE>
<CAPTION>
DISCLOSURE SCHEDULE:
- --------------------
<S> <C>
Schedule 2.4 Cepro Subsidiaries
Schedule 2.9 Cepro Financial Statements
Schedule 2.10 Liabilities
Schedule 2.12 Intangible Property
Schedule 2.13 Title to Properties and Assets
Schedule 2.15 Material Contracts and Commitments
Schedule 2.18 Permits, Licenses and Laws
Schedule 2.19 Cepro Consents
Schedule 2.20 Employee Matters
Schedule 2.22 Affiliate Transactions
Schedule 3.3 Capitalization
Schedule 3.8 Concours Consents
Schedule 3.9 Concours Financial Statements
</TABLE>
<TABLE>
<CAPTION>
EXHIBITS:
- ---------
<S> <C>
Exhibit A Selling Shareholders
Exhibit B Buy-Sell Agreement
Exhibit C Noncompetition, Nonsolicitation and Nondisclosure Agreement
Exhibit D Employment Agreements
Exhibit E Voting Trust Agreement
Exhibit F Power of Attorney
Exhibit G Legal Opinion of Delphi
Exhibit H Legal Opinion of Jenkens & Gilchrist
</TABLE>
<PAGE> 71
EXHIBIT A
SELLING SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND ADDRESS CEPRO SHARES
- ---------------- -------------
<S> <C>
Arvedson Lennart 169
Axen Jeanette 53
Collins Michael 249
Dahlgren Goran 169
Daven Bo 169
Edlund Anders 53
Elliot Kristina 122
Eriksson Anders 169
Falck Mikael 169
Follin Asa 169
Gavatin Peter 169
Hallgren Jan 169
Hansson Jorgen 169
Harrling Lasse 169
Hedberg Bo 249
Haagg Rolf 169
Knutsen Gro 53
Kylen Brian 169
Ljung Anders 169
Lundin Michael 100
Lundblad Bengt 53
Lofgren Eva 53
Magnusson Per-Eric 169
Magnusson Ake 279
Nilsson Hans 169
Olve Nils-Goram 169
Ponten Kajsa 53
Roy Jan 279
von Stryk Aulin Ilona 169
Sundling Mikael 53
Lindroth Hans 70
Soderstrom John 50
Wallen Roger 53
Bergstrand Jan 100
Rautiainen Mare 32
Wester Mats 32
Brandinger Rune 75
Ryden Bengt 90
Petri Carl-Johan 53
Bjorklund Fredrik 40
Dahlgren Louise 95
Wastlund Holger 169
Roy Lisbeth 95
Gustavsson gunilla 95
Birger Zahn 169
Israelsson Victoria 10
</TABLE>
<PAGE> 72
EXHIBIT B
BUY-SELL AGREEMENT
<PAGE> 73
EXHIBIT C
NONCOMPETITION, NONSOLICITATION AND NONDISCLOSURE AGREEMENT
<PAGE> 74
EXHIBIT D
EMPLOYMENT AGREEMENT
<PAGE> 75
EXHIBIT E
VOTING TRUST AGREEMENT
<PAGE> 76
EXHIBIT F
POWER OF ATTORNEY
<PAGE> 77
EXHIBIT G
LEGAL OPINION OF DELPHI
1 Cepro and each of its subsidiaries (the "Cepro Subsidiaries") is a private
company or partnership, duly registered and validly existing under the laws of
Sweden, each has all requisite power and authority to carry on the business in
which it is now engaged (the "Business"), and is duly qualified in each
jurisdiction in which the location or nature of its property or the character of
the Business makes such qualification necessary except where the failure to be
so qualified would not have a material adverse effect on Cepro.
2 To the knowledge of Delphi, Cepro has no outstanding options, warrants,
conversion rights or other legal obligations of any kind to issue or sell any
Cepro Capital Stock or equity interests in any of the Cepro Subsidiaries. As of
the Closing Date, there are no outstanding subscriptions, warrants, options,
legal obligations or other rights to purchase or acquire any securities
convertible into or exchangeable for any Cepro Capital Stock or any preemptive
rights or rights of first refusal with respect to the issuance or sale of Cepro
Capital Stock.
3 To the knowledge of Delphi, each Selling Shareholder has the corporate power
and authority to execute and deliver this Agreement and each of the Ancillary
Agreements and to perform his or her legal obligations under each of such
agreements. The Agreement and the Ancillary Agreements constitute the valid and
binding obligation of each Selling Shareholder, enforceable against each Selling
Shareholder in accordance with their respective terms.
4 To the knowledge of Delphi, Cepro is not in violation of any authority or
permit required to carry on the Business.
5 To the knowledge of Delphi, except as disclosed in the Agreement, no consent,
approval or authorization or order of any governmental authority or other third
party is required in connection with the valid execution and delivery and
consummation of the Agreement, or the offer, sale, or transfer, as provided in
the Agreement, of the Cepro Shares or the consummation of the Transactions.
6 Neither the execution and the delivery of this Agreement or the Ancillary
Agreements, nor the consummation of the Transactions, will violate any terms or
provisions of Cepro's Articles of Association or bylaws or result in any breach
of or default under any material lease, instrument license, permit or any other
agreement listed in a schedule to the Agreement, except to the extent
specifically set forth in such schedules.
7 To the knowledge of Delphi, Cepro is not in violation of any order issued by
any court or agency and there are no claims, actions, suits or proceedings
pending, or threatened against or affecting Cepro, before any court or
governmental agency or body.
<PAGE> 78
EXHIBIT H
LEGAL OPINION OF JENKENS & GILCHRIST
Concours is a corporation duly incorporated and validly existing under the laws
of the State of Delaware and has all requisite power and authority to carry on
the business in which it is now engaged (the "Business").
To the knowledge of Jenkens & Gilchrist, Schedule 3.3 of the Agreement sets
forth, as of the Closing Date, all of the outstanding options, warrants,
conversion rights or other legal obligations to issue or sell any of the equity
interests in Concours.
To the knowledge of Jenkens & Gilchrist, Concours has full power and authority
to execute and deliver the Exchange Agreement and each of the Ancillary
Agreements and to perform its legal obligations under each of such agreements.
The Agreement and the Ancillary Agreements constitute the legal, valid, and
binding obligation of Concours, enforceable against it in accordance with their
respective terms.
<PAGE> 1
EXHIBIT 10.3
REPURCHASE RIGHTS AGREEMENT
BY AND
AMONG
THE CONCOURS GROUP, INC.,
A DELAWARE CORPORATION
AND
THE SHAREHOLDERS OF CEPRO AB
LISTED ON EXHIBIT A
<PAGE> 2
REPURCHASE RIGHTS AGREEMENT
This Repurchase Rights Agreement (this "AGREEMENT") is made as of the
close of Concours' business on February 29, 2000 (the "EFFECTIVE DATE"), by and
among The Concours Group, Inc. ("CONCOURS"), a Delaware corporation, and the
shareholders of Cepro AB ("CEPRO"), a Swedish private company, listed on Exhibit
A hereto (the "SELLING SHAREHOLDERS").
RECITALS
Concours and the Selling Shareholders have entered into that certain
Exchange Agreement (the "EXCHANGE AGREEMENT") contemporaneously with the
execution of this Agreement, as of the Effective Date. Pursuant to the Exchange
Agreement, Concours is purchasing all of the outstanding shares of capital stock
of Cepro (the "CEPRO SHARES") and the Selling Shareholders are acquiring, a
total of 1,221,000 shares (the "CONCOURS SHARES") of Concours common stock, par
value of $0.01 per share (the "CONCOURS COMMON STOCK"), for the consideration
and on the terms set forth in the Exchange Agreement and in this Agreement
(collectively, the "TRANSACTIONS").
Concours and the Selling Shareholders desire to set forth certain
repurchase rights (the "REPURCHASE RIGHTS") and the related contingencies that
may give rise to the Repurchase Rights.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants stated herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
AGREEMENT
The parties, intending to be legally bound, agree as follows:
ARTICLE 1
REPURCHASE RIGHT
A portion of the Concours Shares acquired under this Agreement are
subject to certain repurchase rights of Concours on the following terms:
1.1 REPURCHASE OF CONCOURS SHARES - GENERAL
(a) The 1,221,000 Concours Shares comprise three categories of shares
with varying attendant rights: (1) "PRIMARY SHARES" totaling 756,000 of the
Concours Shares; (2) "ESCROWED SHARES" totaling 235,000 of the Concours Shares;
and (3) "ADDITIONAL SHARES" totaling 230,000 of the Concours Shares.
<PAGE> 3
(b) The Selling Shareholders represent and warrant that they are, upon
the closing of the Transactions, employees of Cepro, which, after consummation
of the Transactions, will be named Concours-Cepro AB. If a Selling Shareholder's
employment with Cepro is terminated by either the Selling Shareholder or the
employer for any reason or no reason ("TERMINATION"), before March 1, 2003, all
of his or her (the "FORMER EMPLOYEE") Additional Shares and Escrowed Shares, may
be repurchased. In the case of the Primary Shares, there shall be no Repurchase
Rights. With respect to the Additional Shares, the parties, including Concours,
described below (the "ELIGIBLE PURCHASERS") shall have Repurchase Rights. The
Repurchase Price with respect to the Additional Shares and the Escrowed Shares
shall be $10.00 per share.
(c) If a Termination occurs on or after March 1, 2003, the Former
Employee may keep all of his or her Additional Shares and remaining Escrowed
Shares.
(d) The identity of the Eligible Purchasers who may repurchase, and the
priority of each such Eligible Purchaser's right to repurchase, the Additional
Shares under the terms described in the preceding paragraphs are set forth in
Article 2 of the Buy-Sell Agreement attached to the Exchange Agreement as
Exhibit B (the "BUY-SELL AGREEMENT"). Each Eligible Purchaser will have that
number of days to determine whether to repurchase Additional Shares and to close
on the purchase, as is set forth in Article 2 of the Buy-Sell Agreement.
(e) The Escrowed Shares and Additional Shares may be voted by the
Selling Shareholder, subject to the terms of the Voting Trust Agreement attached
to the Exchange Agreement as Exhibit E (the "VOTING TRUST AGREEMENT"), and the
holder of the Escrowed Shares and the Additional shares shall be entitled to any
dividends distributed in respect of Concours Common Stock.
1.2 COMPLIANCE WITH REPURCHASE RIGHT. The Selling Shareholders agree to
observe and comply with the provisions of this Article 1. If the events that
trigger the Repurchase Right occur, the Selling Shareholder will follow the
instructions provided by Concours with respect to the execution of documents
pertaining to or effecting the transfer of the Concours Shares to Concours or
another authorized purchaser and all other instructions provided by Concours.
The Voting Trust Agreement notwithstanding, all certificates evidencing Concours
Shares will remain in the possession of Concours for so long as there is a
Repurchase Right associated with such Concours Shares.
1.3 ADDITIONAL SHARES NOT REPURCHASED. Additional Shares that are not
repurchased by an Eligible Purchaser within 130 days after Termination, may be
retained by such Former Employee, but will continue to be subject to the Voting
Trust Agreement and the Buy-Sell Agreement if such agreements are still in
effect.
<PAGE> 4
ARTICLE 2
ESCROWED SHARES
2.1 TERMS OF ESCROW. Subject to Article 1, the Escrowed Shares will be held
in escrow by Concours as Escrow Agent until March 1, 2003; provided, however,
that if a Termination occurs prior to March 1, 2003, triggering the Repurchase
Rights set forth in this Agreement, the Repurchase Rights shall survive the
expiration of the escrow for the period set forth in this Agreement for the
Repurchase Rights. While in escrow, the Escrowed Shares may not be transferred
to any other holder and may be conveyed, if at all, to Concours, as provided in
this Agreement.
2.2 REPURCHASE OF THE ESCROWED SHARES. Any Escrowed Shares that are still
held by a Selling Shareholder on the date of a Termination may be repurchased by
Concours only; provided, however, that if any such remaining Escrowed Shares
have not been purchased within 130 days after a Termination, the Escrowed Shares
shall be released from escrow and the Former Employee may keep the Escrowed
Shares.
2.3 RELEASE OF ESCROWED SHARES. Escrowed Shares that have not been conveyed
back to Concours pursuant to Section 2.4 shall, effective March 1, 2003, be
released from escrow, at which time they shall not be subject to any repurchase
rights except as provided in Section 2.1, but will continue to remain subject to
the Voting Trust Agreement and the Buy-Sell Agreement if such agreements are
still in effect.
2.4 CONVEYANCE OF ESCROWED SHARES. Under the Exchange Agreement, the
Selling Shareholders are making certain representations and warranties upon
which Concours has relied in determining to acquire Cepro and with respect to
which the Selling Shareholders have indemnified Concours. The Selling
Shareholders' obligations for breaches of their representations and warranties
under the indemnity in the Exchange Agreement are hereby secured by the Escrowed
Shares. Therefore, if there is a breach of the Exchange Agreement by the Selling
Shareholders as a result of which Concours is damaged, Concours may require the
Selling Shareholders to convey to it, in satisfaction of the Selling
Shareholders' obligation to it for such breach, some or all of the Escrowed
Shares to the extent required to compensate Concours for the damages it suffers
in the event of such breach. If this occurs, there shall be no payment by
Concours to the Selling Shareholders for the Escrowed Shares. If there is a
conveyance of Escrowed Shares to Concours pursuant to this Section 2.4, the
number of Escrowed Shares to be contributed to Concours by each Selling
Shareholder, if less than one-hundred percent of all Escrowed Shares are to be
conveyed to Concours, shall be determined on the basis of the ratio that each
such Selling Shareholder's Escrowed Shares bears to the total number of Concours
Shares that, at the time of settlement of such indemnity claim, constitute the
Escrowed Shares, to the nearest whole number. In the case of a conveyance or
capital contribution, the Selling Shareholders shall execute stock powers and
any such other documents required by Concours in the form provided by Concours
for the purpose of effecting the transfer to Concours of the applicable number
of Concours Shares as determined by the amount by which Concours has been
damaged and the market value of the Concours Shares at the time of the breach of
the Exchange Agreement.
<PAGE> 5
ARTICLE 3
MISCELLANEOUS
3.1 INCORPORATION BY REFERENCE. All exhibits and schedules attached to this
Agreement and all documents delivered pursuant to or referred to in this
Agreement, including, without limitation the Exchange Agreement, are
incorporated by reference and expressly made a part of this Agreement.
3.2 NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person or entity other than the parties hereto and
their respective heirs, executors, administrators, successors and permitted
assigns.
3.3 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement (including the
exhibits and schedules) and the other agreements contemplated herein and
executed in connection with the consummation of the Transactions contain the
entire agreement among the parties with respect to the transactions contemplated
hereby, and supersede all prior agreements, written or oral, with respect
thereto. Changes in or additions to this Agreement may be made only upon written
consent of Concours and those Selling Shareholders holding at least a majority
of the Concours Shares.
3.4 DISPUTE RESOLUTION. The parties hereby: (a) agree to determine, with
finality, any and all disputes arising out of or relating to this Agreement in
accordance with the United Nations Commission on International Trade Law
(UNCITRAL) Arbitration Rules, by one or more arbitrators appointed in accordance
with the said rules; (b) agree the place of arbitration shall be London,
England, United Kingdom; (c) agree the language of the arbitration shall be
English; and (d) irrevocably consent to arbitration pursuant to the above
described terms. This Agreement shall be governed by and construed in accordance
with the laws of the arbitrators' choosing.
3.5 NOTICES. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, via overnight
delivery, sent by facsimile transmission or sent by United States or Swedish
mail, postage prepaid. Any such notice shall be deemed given when so delivered
personally or sent by facsimile transmission, or one day after the date of
delivery to an overnight delivery service, or if mailed, seven days after the
date of deposit in the United States or Swedish mail, as follows:
If to the Selling Shareholders:
At their respective addresses listed on the signature page.
If to Concours:
Dr. Ron Christman, President
The Concours Group, Inc.
3 Kingwood Place
800 Rockmead Drive, Suite 151
Kingwood, Texas 77339
<PAGE> 6
FAX: (281) 358-4401
with a copy to:
Jenkens & Gilchrist
A Professional Corporation
1100 Louisiana Avenue, Suite 1800
Houston, Texas 77002
Attention: Andrius Kontrimas
FAX: (713) 951-3314
Any party may, by notice given in accordance with this section to the
other parties, designate another address or person for receipt of notices
hereunder.
3.6 CONSTRUCTION. The parties have participated jointly in the negotiation
and drafting of this Agreement. If an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement. The section and paragraph headings herein are for convenience
only and shall not affect the construction hereof. References to articles,
paragraphs and sections are to articles, paragraphs and sections of this
Agreement unless otherwise indicated.
3.7 SEVERABILITY. If any provision of this Agreement is held by final
judgment of a court of competent jurisdiction to be invalid, illegal or
unenforceable, such invalid, illegal or unenforceable provision shall be severed
from the remainder of this Agreement, and the remainder of this Agreement shall
be enforced. In addition, the invalid, illegal or unenforceable provision shall
be deemed to be automatically modified, and as so modified to be included in
this Agreement, such modification being made to the minimum extent necessary to
render the provision valid, legal and enforceable. Notwithstanding the
foregoing, however, if the severed or modified provision concerns all or a
portion of the essential consideration to be delivered under this Agreement by
one party to the other, the remaining provisions of this Agreement shall also be
modified to the extent necessary to equitably adjust the parties' respective
rights and obligations hereunder.
3.8 ATTORNEYS' FEES. If any action at law or in equity, including an action
for declaratory relief, is brought to enforce or interpret the provisions of
this Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees and costs from the other party.
3.9 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
[Signatures appear on the following page.]
<PAGE> 7
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Ake Magnusson
Address:
Granitvagen 24, 183 63 Taby
<PAGE> 8
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Anders Ljung
Address:
Lotsgatan 16, 185 32 Vaxholm
<PAGE> 9
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Bo Hedberg
Address:
Roburvagen 23, 181 33 Lidingo
<PAGE> 10
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Lasse Harrling
Address:
Kungsgatan 73, 112 27 Stockholm
<PAGE> 11
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Louise Dahlgren
Address:
Fagelkarrsvagen 13, 122 32 Enskede
<PAGE> 12
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Michael Collins
Address:
Fjalarstigen 3, 182 64 Djursholm
<PAGE> 13
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Rolf Haagg
Address:
Orrvagen, 191 55 Sollentuna
<PAGE> 14
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Carl-Johan Petri
Address:
Alvkarleovagen 26, 115 43 Stockholm
<PAGE> 15
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Gro Knutsen
Address:
Valhallavagen 145, 115 31 Stockholm
<PAGE> 16
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Hans Nilsson
Address:
Sommarvagen 3, 183 62 Taby
<PAGE> 17
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Jan Hallgren
Address:
Liegatan 2, 193 32 Sigtuna
<PAGE> 18
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Jeanette Axen
Address:
Sysslomansgatan 26, 112 41 Stockholm
<PAGE> 19
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
John Soderstrom
Address:
Varvsgatan 12, 117 29 Stockholm
<PAGE> 20
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Jorgen Hansson
Address:
Stallvagen 26 B, 139 36 Varmdo
<PAGE> 21
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Kajs Ponten
Address:
Mariedalsvagen 19, 217 54 Malmo
<PAGE> 22
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Nils-Goran Olve
Address:
Kakbrinken 3, 111 27 Stockholm
<PAGE> 23
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Fredrik Bjorklund
Address:
Kometvagen 19, 183 48 Taby
<PAGE> 24
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Gunilla Gustavsson
Address:
Lilla Banvagen 9, 163 43 Spanga
<PAGE> 25
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Lisbeth Roy
Address:
Orrvagen 48, 183 51 Taby
<PAGE> 26
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Mare Rautiainen
Address:
Kalmgatan 45,121 45 Johanneshov
<PAGE> 27
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Victoria Israelsson
Address:
Plommonvagen 4, 179 45 Jarfalla
<PAGE> 28
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Anders Edlund
Address:
Aspnasvagen 1, 181 43 Lidingo
<PAGE> 29
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Anders Eriksson
Address:
Vastra Bangatan 47 A, 195 40 Marsta
<PAGE> 30
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Asa Follin
Address:
Riddargatan 51, 114 57 Stockholm
<PAGE> 31
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Bengt Lundblad
Address:
Drottninggatan 106, 111 60 Stockholm
<PAGE> 32
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Bengt Ryden
Address:
Drottninggatan 106, 111 60 Stockholm
<PAGE> 33
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Birger Zahn
Address:
Uddvagen 13 A, 181 30 Lidingo
<PAGE> 34
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Bo Daven
Address:
Porsvagen 346, 192 48 Solentuna
<PAGE> 35
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Brian Kylen
Address:
Vargvagen 7, 131 42 Nacka
<PAGE> 36
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Eva Lofgren
Address:
Enkopingsvagen 14, 175 63 Jarfalla
<PAGE> 37
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Goran Dahlgren
Address:
Fagelkarrsvagen 13, 122 32 Enskede
<PAGE> 38
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Hans Lindroth
Address:
Bergsvagen 43, 141 71 Huddinge
<PAGE> 39
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Holger Wastlund
Address:
Fagelsangen 3, 182 74 Stocksund
<PAGE> 40
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Ilona von Stryk Aulin
Address:
Riddargatan 51, 114 57 Stockholm
<PAGE> 41
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Jan Bergstrand
Address:
Ostergardsvagen 1, 194 53 Upplands-Vasby
<PAGE> 42
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Jan Roy
Address:
Orrvagen 48, 183 51 Taby
<PAGE> 43
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Kristina Elliot
Address:
Beckombergavagen 111, 168 56 Bromma
<PAGE> 44
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Lennart Arvedsson
Address:
Norrstigen 45, 181 31 Lidingo
<PAGE> 45
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Mats Wester
Address:
Nasbydalsvagen 16, 183 37 Taby
<PAGE> 46
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Michael Lundin
Address:
Kartvagen 28, 136 65 Haninge
<PAGE> 47
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Mikael Falck
Address:
Lansmansvagen 209, 191 70 Sollentuna
<PAGE> 48
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Mikael Sundling
Address:
Garnsviksvagen 8, 184 42 Akersberga
<PAGE> 49
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Per-Eric Magnusson
Address:
Drottningholmsvagen 70, 112 42 Stockholm
<PAGE> 50
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Peter Gavatin
Address:
Barrstigen 38, 181 62 Lidingo
<PAGE> 51
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Roger Wallen
Address:
Frodegatan 13A, 753 25 Uppsala
<PAGE> 52
IN WITNESS WHEREOF, this Repurchase Rights Agreement has been executed
by the parties hereto as of the date first set forth above.
THE CONCOURS GROUP, INC.:
By:
-------------------------------
Dr. Ron Christman, President
SELLING SHAREHOLDER:
-----------------------------------
Rune Brandinger
Address:
Odengatan 45, 113 51 Stockholm
<PAGE> 53
EXHIBIT A
SELLING SHAREHOLDERS
<TABLE>
<CAPTION>
PRIMARY ADDITIONAL ESCROWED TOTAL
NAME SHARES SHARES SHARES SHARES
---- ------- ---------- -------- ------
<S> <C> <C> <C> <C>
Arvedson Lennart 22220 6760 6907 35887
Axen Jeanette 6968 2120 2166 11254
Bergstrand Jan 13148 4000 4087 21235
Birger Zahn 22220 6760 6907 35887
Bjorklund Fredrik 5259 1600 1635 8494
Brandinger Rune 9861 3000 3065 15926
Collins Michael 32738 6760 10177 52875
Dahlgren Goran 22220 6760 6907 35887
Dahlgren Louise 12490 3800 3883 20173
Daven Bo 22220 6760 6907 35887
Edlund Anders 6968 2120 2166 11254
Elliot Kristina 16040 4880 4986 25906
Eriksson Anders 22220 6760 6907 35887
Falck Mikael 22220 6760 6907 35887
Follin Asa 22220 6760 6907 35887
Gavatin Peter 22220 6760 6907 35887
Gustavsson Gunilla 12490 3800 3883 20173
Haagg Rolf 22220 6760 6907 35887
Hallgren Jan 22220 6760 6907 35887
Hansson Jorgen 22220 6760 6907 35887
Harrling Lasse 22220 6760 6907 35887
Hedberg Bo 32738 9960 10177 52875
Israelsson Victoria 1315 400 409 2123
Knutsen Gro 6968 2120 2166 11254
Kylen Brian 22220 6760 6907 35887
Lindroth Hans 9203 2800 2861 14866
Ljung Anders 22220 6760 6907 35887
Lofgren Eva 6968 2120 2166 11254
Lundblad Bengt 6968 2120 2166 11254
Lundin Michael 13148 4000 4087 21235
Magnusson Ake 36682 11160 11403 59245
Magnusson Per-Eric 22220 6760 6907 35887
Nilsson Hans 22220 6760 6907 35887
Olve Nils-Goran 22220 6760 6907 35887
Petri Carl-Johan 6968 2120 2166 11254
Ponten Kajsa 6968 2120 2166 11254
Rautiainen Mare 4207 1280 1308 6795
</TABLE>
<PAGE> 54
<TABLE>
<CAPTION>
PRIMARY ADDITIONAL ESCROWED TOTAL
NAME SHARES SHARES SHARES SHARES
---- ------- ---------- -------- ------
<S> <C> <C> <C> <C>
Roy Jan 36682 11160 11403 59245
Roy Lisbeth 12490 3800 3883 20173
Ryden Bengt 11833 3600 3678 19111
Soderstrom John 6574 2000 2043 10617
Sundling Mikael 6968 2120 2166 11254
von Stryk Aulin Ilona 22220 6760 6907 35887
Wallen Roger 6968 2120 2166 11254
Wastlund Holger 22220 6760 6907 35887
Wester Mats 4207 1280 1308 6795
</TABLE>
2
<PAGE> 1
EXHIBIT 10.4
1997 EMPLOYEE STOCK OPTION PLAN
FOR
THE CONCOURS GROUP, INC.
SECTION 1. PURPOSE. This 1997 Employee Stock Option Plan of The Concours
Group, Inc. is intended as an incentive to attract and retain qualified and
competent employees, consultants, advisors and directors for the Company and its
Subsidiaries, upon whose efforts and judgment the success of the Company is
largely dependent, through the encouragement of stock ownership in the Company
by such persons.
SECTION 2. DEFINITIONS. As used herein, the following terms shall have the
meaning indicated:
(a) "ACT" shall mean the Securities Exchange Act of 1934, as amended.
(b) "BOARD" shall mean the Board of Directors of the Company.
(c) "BUSINESS DAY" shall mean (i) if the Shares trade on a national
exchange, any day that the national exchange on which the Shares trade is
open or (ii) if the Shares do not trade on a national exchange, any day
that commercial banks in the City of Houston are open.
(d) "COMMISSION" shall mean the Securities and Exchange Commission.
(e) "COMMITTEE" shall mean the Compensation Committee of the Board or
other committee, if any, appointed by the Board pursuant to Section 13
hereof.
(f) "COMMON STOCK" shall mean the Company's common stock, par value
$.01 per share.
(g) "COMPANY" shall mean The Concours Group, Inc.
(h) "DATE OF GRANT" shall mean the date on which an Option is granted
to an Eligible Person pursuant to Section 4 hereof.
(i) "DIRECTOR" shall mean a member of the Board.
(j) "ELIGIBLE PERSON(S)" shall mean those persons who are (i) under
written contract (a "Consulting Contract") with the Company or a Subsidiary
to provide consulting or advisory services to the Company or a Subsidiary
(a "Consultant"), (ii) Employees or (iii) members of the Board of Directors
of the Company or any Subsidiary.
(k) "EMPLOYEE(S)" shall mean those persons who are employees of the
Company or who are employees of any Subsidiary.
<PAGE> 2
(l) "FAIR MARKET VALUE" of a share on a particular date shall be the
closing price of the Common Stock, which shall be (i) if the Common Stock
is listed or admitted for trading on any United States national securities
exchange (which for purposes hereof shall include the NASDAQ National
Market System), the last reported sale price of Common Stock on such
exchange as reported in any newspaper of general circulation, (ii) if the
Common Stock is quoted on NASDAQ (other than on the National Market System)
or any similar system of automated dissemination of quotations of
securities prices in common use, the mean between the closing high bid and
low asked quotations for such day of the Common Stock on such system or
(iii) if neither clause (i) nor (ii) is applicable, the Exercise Price, as
set forth in Section 5 hereof, unless the Board determines, by any fair and
reasonable means prescribed by the Board, a value other than the Exercise
Price.
(m) "INCENTIVE STOCK OPTION" shall mean an option that is an incentive
stock option as defined in Section 422 of the Internal Revenue Code.
(n) "INTERNAL REVENUE CODE" or "CODE" shall mean the Internal Revenue
Code of 1986, as it now exists or may be amended from time to time.
(o) "NONQUALIFIED STOCK OPTION" shall mean a stock option that is not
an incentive stock option as defined in Section 422 of the Internal Revenue
Code.
(p) OPTION" (when capitalized) shall mean any option granted under
this Plan.
(q) "OPTIONEE" shall mean a person to whom an Option is granted under
this Plan or any successor to the rights of such person.
(r) "OUTSIDE DIRECTOR" shall mean a Director who qualifies as an
"outside director" under the regulations promulgated under Section 162(m)
of the Internal Revenue Code and as a "non-employee director" under Rule
16b-3 promulgated under the Securities Exchange Act of 1934, effective
August 15, 1996.
(s) "PLAN" shall mean this 1997 Employee Stock Option Plan for The
Concours Group, Inc.
(t) "SHARE(S)" shall mean a share or shares of the Common Stock.
(u) "SUBSIDIARY" shall mean any corporation (other than the Company)
in any unbroken chain of corporations beginning with the Company if, at the
time of the granting of the Option, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.
2
<PAGE> 3
SECTION 3. SHARES AND OPTIONS.
(a) The Company may grant to Eligible Persons from time to time
Options to purchase an aggregate of up to 428,571 Shares from Shares held
in the Company's treasury or from authorized and unissued Shares. If any
Option granted under the Plan shall terminate, expire, or be canceled or
surrendered as to any Shares, new Options may thereafter be granted
covering such Shares. An Option granted hereunder shall be either an
Incentive Stock Option or a Nonqualified Stock Option as determined by the
Committee at the Date of Grant of such Option and shall clearly state
whether it is an Incentive Stock Option or a Nonqualified Stock Option.
Incentive Stock Options may only be granted to persons who are Employees.
(b) The aggregate Fair Market Value (determined at the Date of Grant
of the Option) of the Shares with respect to which any Incentive Stock
Option is exercisable for the first time by an Optionee during any calendar
year under the Plan and all such plans of the Company and any parent and
subsidiary of the Company (as defined in Section 424 of the Code) shall not
exceed $100,000.
(c) Notwithstanding any provision herein to the contrary, there shall
be no grant of Options in excess of 100,000 Shares to any one individual in
any one year.
SECTION 4. CONDITIONS FOR GRANT OF OPTIONS.
(a) Each Option shall be evidenced by an option agreement that may
contain any term deemed necessary or desirable by the Committee, provided
such terms are not inconsistent with this Plan or any applicable law.
Optionees shall be those persons selected by the Committee from Eligible
Persons. Any person who files with the Committee, in a form satisfactory to
the Committee, a written waiver of eligibility to receive any Option under
this Plan shall not be eligible to receive any Option under this Plan for
the duration of such waiver.
(b) In granting Options, the Committee shall take into consideration
the contribution the person has made or may make to the success of the
Company or its Subsidiaries and such other factors as the Board shall
determine. The Committee shall also have the authority to consult with and
receive recommendations from officers and other personnel of the Company
and its Subsidiaries with regard to these matters. The Committee may from
time to time in granting Options under the Plan prescribe such other terms
and conditions concerning such Options as it deems appropriate, including,
without limitation, relating an Option to achievement of specific goals
established by the Committee or the continued employment of the Optionee
for a specified period of time, provided that such terms and conditions are
not more favorable to an Optionee than those expressly permitted herein.
(c) The Committee in its sole discretion shall determine in each case
whether periods of military or government service shall constitute a
continuation of employment for the purposes of this Plan or any Option.
3
<PAGE> 4
(d) The Committee in its sole discretion may delegate to the Chief
Executive Officer of the Company any or all of its powers under this Plan
with regard to the granting and administration of Options to Eligible
Persons not subject to reporting under Section 16 of the Exchange Act.
SECTION 5. EXERCISE PRICE. The Exercise Price per Share of any Option
shall be determined on the Date of Grant, based on the preceding January
1st or July 1st, whichever is more recent (the "Exercise Price
Determination Date"). The Exercise Price per Share shall be the greater of
(i) $1.00 or (ii) ninety percent (90%) of (a) Annualized Gross Revenues (as
defined herein) divided by (b) the number of shares of the Company's voting
stock outstanding on the day preceding the Exercise Price Determination
Date. Annualized Gross Revenues shall mean the gross revenues of the
Company less reimbursable expenses charged by the Company as reflected on
the Company's unaudited statement of income for the six-month period ending
the day preceding the Exercise Price Determination Date, multiplied by two
(2). Notwithstanding anything contained herein to the contrary, the
Exercise Price of any Incentive Stock Option shall not be less than one
hundred percent (100%) of the Fair Market Value per Share on the Date of
Grant.
SECTION 6. EXERCISE OF OPTIONS.
(a) An Option shall be exercisable in installments as follows;
provided, however, no Option shall be exercisable prior to the first
anniversary date of the date of grant (hereinafter, "Anniversary Date"). An
Option may be exercised as to twenty-five percent (25%) of the Shares
covered by the Option beginning on the first Anniversary Date; thereafter,
an additional twenty-five percent (25%) of the Shares subject to the Option
shall be exercisable as of the Anniversary Date in each of the following
three years except as otherwise provided in Section 7 below. The Committee
may in its sole discretion accelerate the date on which any Option may be
exercised. In no event shall an Option be exercisable after the expiration
of ten (10) years from the Date of Grant.
(b) An Option shall be deemed exercised when (i) the Company has
received written notice of such exercise in accordance with the terms of
the Option, (ii) full payment of the aggregate exercise price of the Shares
as to which the Option is exercised has been made, and (iii) arrangements
that are satisfactory to the Committee in its sole discretion have been
made for the Optionee's payment to the Company of the amount, if any, that
the Committee determines to be necessary for the Company or a Subsidiary to
withhold in accordance with applicable federal or state income tax
withholding requirements. Unless further limited by the Committee in any
Option, the exercise price of any Shares purchased shall be paid solely in
cash, by certified or cashier's check, by money order, by personal check or
with Shares (but with Shares only if permitted by an Option agreement or
otherwise permitted by the Committee in its sole discretion at the time of
exercise) or by a combination of the above. If the exercise price is paid
in whole or in part with Shares, the value of the Shares surrendered shall
be their Fair Market Value on the date received by the Company.
4
<PAGE> 5
SECTION 7. TERMINATION OF OPTION PERIOD.
(a) Unless otherwise provided in any Option or as determined by the
Committee upon the occurrence of the stated event, the unexercised portion
of an Option shall automatically and without notice terminate and become
null and void at the time of the earliest to occur of the following, to the
extent such Option was not exercisable at such time: (i) the death of the
Optionee, (ii) the total and permanent "disability" (as defined in Section
22(e)(3) of the Code), of the Optionee (iii) the date on which the Optionee
ceases to be employed by the Company or a Subsidiary or ceases to be a
Consultant to the Company or a Subsidiary, as the case may be, regardless
of the reason therefor, or (iv) with respect to an Option held by a person
who is a member of the Board of Directors of the Company or a Subsidiary
but who is not also an Employee or Consultant (regardless of whether or not
such person was an Employee or Consultant at the time of grant), the date
on which the Optionee ceases to be a member of such Board of Directors.
(b) Unless otherwise provided in any Option or as determined by the
Committee upon the occurrence of the stated event, the unexercised portion
of an Option shall automatically and without notice terminate and become
null and void ninety (90) days after the earliest to occur of the
following, to the extent such Option was exercisable on the date of the
following: (i) the death of the Optionee, (ii) the total and permanent
"disability" (as defined in Section 22(e)(3) of the Code), of the Optionee
(iii) the date on which the Optionee ceases to be employed by the Company
or a Subsidiary or ceases to be a Consultant to the Company or a
Subsidiary, as the case may be, regardless of the reason therefor, or (iv)
with respect to an Option held by a person who is a member of the Board of
Directors of the Company or a Subsidiary but who is not also an Employee or
Consultant (regardless of whether or not such person was an Employee or
Consultant at the time of grant), the date on which the Optionee ceases to
be a member of such Board of Directors. In no event, however, shall the
ninety (90) day period described in this Section 7(b) extend beyond the
exercise period stated on the Option.
(c) In the event of the death of the Optionee, Options held by such
Optionee may be exercised by the Optionee's legal representative(s), but
only to the extent that such Options would otherwise have been exercisable
by the Optionee.
(d) For purposes of the Plan, the transfer of an Employee's employment
between the Company and any Subsidiary or between Subsidiaries shall not be
deemed to be a termination of the Employee's employment.
(e) Notwithstanding any other provisions set forth herein, if the
Optionee shall (i) commit any act of malfeasance or wrongdoing affecting
the Company or any Subsidiary, (ii) breach any covenant not complete, or
employment contract, with the Company or any Subsidiary, or (iii) engage in
conduct that would warrant the Optionee's discharge for cause (excluding
general dissatisfaction with the performance of the Optionee's duties, but
including any act of disloyalty or any conduct clearly tending to bring
discredit upon the Company or any Subsidiary), any unexercised portion of
Options held by the Optionee shall immediately terminate and be void.
5
<PAGE> 6
SECTION 8. ADJUSTMENT OF SHARES.
(a) If at any time while the Plan is in effect or unexercised Options
are outstanding, there shall be any increase or decrease in the number of
issued and outstanding Shares through the declaration of a stock dividend
or through any recapitalization resulting in a stock split-up, combination
or exchange of Shares, then and in such event:
(i) appropriate adjustment shall be made in the maximum number of
Shares then subject to being optioned under the Plan, so that the same
proportion of the Company's issued and outstanding Shares shall
continue to be subject to being so optioned; and
(ii) appropriate adjustment shall be made in the number of Shares
and the exercise price per Share thereof then subject to outstanding
Options, so that the same proportion of the Company's issued and
outstanding Shares shall remain subject to purchase at the same
aggregate exercise price.
(b) The Committee may change the terms of Options outstanding under
this Plan, with respect to the exercise price or the number of Shares
subject to the Options, or both, when, in the Committee's sole discretion,
such adjustments become appropriate by reason of any corporate transaction.
(c) Except as otherwise expressly provided herein, the issuance by the
Company of shares of its capital stock of any class, or securities
convertible into shares of capital stock of any class, either in connection
with direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to the number of
Shares reserved for issuance under the Plan or the number of or exercise
price of Shares then subject to outstanding Options granted under the Plan.
(d) Without limiting the generality of the foregoing, the existence of
outstanding Options granted under the Plan shall not affect in any manner
the right or power of the Company to make, authorize or consummate (i) any
or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business; (ii) any merger or
consolidation of the Company; (iii) any issue by the Company of debt
securities, or preferred or preference stock that would rank above the
Shares subject to outstanding Options; (iv) the dissolution or liquidation
of the Company; (v) any sale, transfer or assignment of all or any part of
the assets or business of the Company; or (vi) any other corporate act or
proceeding, whether of a similar character or otherwise.
SECTION 9. TRANSFERABILITY OF OPTIONS. Each Incentive Stock Option shall
provide that such Incentive Stock Option shall not be transferrable by the
Optionee otherwise than by will or the laws of descent and distribution and that
so long as an Optionee lives, only such Optionee or his guardian or legal
representative shall have the right to exercise such Incentive Stock Option. The
6
<PAGE> 7
Committee, in its sole discretion, may provide in the agreement governing any
Nonqualified Stock Option that such Nonqualified Stock Option shall be
transferable and, if so, the extent to which such Nonqualified Stock Option is
transferable.
SECTION 10. ISSUANCE OF SHARES. No person shall be, or have any of the
rights or privileges of, a shareholder of the Company with respect to any of the
Shares subject to an Option unless and until certificates representing such
Shares shall have been issued and delivered to such person. As a condition of
any transfer of the certificate for Shares, the Committee may obtain such
agreements or undertakings, if any, as it may deem necessary or advisable to
assure compliance with any provision of the Plan, the agreement evidencing the
Option or any law or regulation including, but not limited to, the following:
(a) A representation, warranty or agreement by the Optionee to the
Company at the time any Option is exercised that he or she is acquiring the
Shares to be issued to him or her for investment and not with a view to, or
for sale in connection with, the distribution of any such Shares; and
(b) A representation, warranty or agreement to be bound by any legends
that are, in the opinion of the Committee, necessary or appropriate to
comply with the provisions of any securities laws deemed by the Board to be
applicable to the issuance of the Shares and are endorsed upon the Share
certificates.
SECTION 11. OPTIONS FOR 10% SHAREHOLDER. Notwithstanding any other
provisions of the Plan to the contrary, an Incentive Stock Option shall not be
granted to any person owning directly (or indirectly through attribution under
Section 424(d) of the Code) at the Date of Grant, stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company (or of
its parent or subsidiary [as defined in Section 424 of the Internal Revenue
Code] at the Date of Grant) unless the exercise price of such Incentive Stock
Option is at least 110% of the Fair Market Value of the Shares subject to such
Incentive Stock Option on the Date of Grant, and the period during which the
Incentive Stock Option may be exercised does not exceed five (5) years from the
Date of Grant.
SECTION 12. NONQUALIFIED STOCK OPTIONS. Nonqualified Stock Options may be
granted hereunder and shall be subject to all terms and provisions hereof except
that each such Nonqualified Stock Option (i) must be clearly designated as a
Nonqualified Stock Option; (ii) may be granted for Shares in excess of the
limits contained in Section 3(b) of this Plan; and (iii) shall not be subject to
Section 11 of this Plan. If both Incentive Stock Options and Nonqualified Stock
Options are granted to an Optionee, the right to exercise, to the full extent
thereof, Options of either type shall not be contingent in whole or in part upon
the exercise of, or failure to exercise, Options of the other type.
7
<PAGE> 8
SECTION 13. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Compensation Committee of
the Board or other committee thereof as appointed by the Board (the
"Committee"), consisting of not less than two (2) members, each of whom is
an Outside Director.
(b) The Committee, from time to time, may adopt rules and regulations
for carrying out the purposes of the Plan. The determinations and the
interpretation and construction of any provision of the Plan by the
Committee shall be final and conclusive.
(c) Subject to the express provisions of this Plan, the Committee
shall have the authority, in its sole and absolute discretion (i) to adopt,
amend, and rescind administrative and interpretive rules and regulations
relating to this Plan or any Option; (ii) to construe the terms of this
Plan or any Option; (iii) as provided in Section 8(a), upon certain events
to make appropriate adjustments to the exercise price and number of Shares
subject to this Plan and Option; and (iv) to make all other determinations
and perform all other acts necessary or advisable for administering this
Plan, including the delegation of such ministerial acts and
responsibilities as the Committee deems appropriate. The Committee may
correct any defect or supply any omission or reconcile any inconsistency in
this Plan or any Option in the manner and to the extent it shall deem
expedient to carry it into effect, and it shall be the sole and final judge
of such expediency. The Committee shall have full discretion to make all
determinations on the matters referred to in this Section 13(c), and such
determinations shall be final, binding and conclusive.
SECTION 14. GOVERNMENT REGULATIONS. This Plan, Options and the obligations
of the Company to sell and deliver Shares under any Options, shall be subject to
all applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.
SECTION 15. MISCELLANEOUS.
(a) The proceeds received by the Company from the sale of Shares
pursuant to an Option shall be used for general corporate purposes.
(b) The grant of an Option shall be in addition to any other
compensation paid to the Optionee or other stock option plans of the
Company or other benefits with respect to the Optionee's position with or
relationship to the Company or its Subsidiaries. The grant of an Option
shall not confer upon the Optionee the right to continue as an Employee or
Consultant, or interfere in any way with the rights of the Company to
terminate his status as an Employee or Consultant.
(c) Neither the members of the Board nor any member of the Committee
shall be liable for any act, omission, or determination taken or made in
good faith with respect to this Plan or any Option, and members of the
Board and the Committee shall, in addition to all other rights of
indemnification and reimbursement, be entitled to indemnification and
reimbursement by the Company in respect of any claim, loss, damage,
liability or expense
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(including attorneys' fees, the costs of settling any suit, provided such
settlement is approved by independent legal counsel selected by the
Company, and amounts paid in satisfaction of a judgment, except a judgment
based on a finding of bad faith) arising from such claim, loss, damage,
liability or expense to the full extent permitted by law and under any
directors' and officers' liability or similar insurance coverage that may
from time to time be in effect.
(d) Any issuance or transfer of Shares to an Optionee, or to his legal
representative, heir, legatee, distributee, or assign in accordance with
the provisions of this Plan or the applicable Option, shall, to the extent
thereof, be in full satisfaction of all claims of such persons under the
Plan. The Committee may require any Optionee, legal representative, heir,
legatee or distributee as a condition precedent to such payment or issuance
or transfer of Shares, to execute a release and receipt for such payment or
issuance or transfer of Shares in such form as it shall determine.
(e) Neither the Committee nor the Company guarantees Shares from loss
or depreciation.
(f) All expenses incident to the administration, termination, or
protection of this Plan or any Option, including, but not limited to, legal
and accounting fees, shall be paid by the Company; provided, however, the
Company may recover any and all damages, fees, expenses and costs arising
out of any actions taken by the Company to enforce its rights under this
Plan or any Option.
(g) Records of the Company shall be conclusive for all purposes under
this Plan or any Option, unless determined by the Committee or the Board to
be incorrect.
(h) The Company shall, upon request or as may be specifically required
under this Plan or any Option, furnish or cause to be furnished all of the
information or documentation that is necessary or required by the Committee
to perform its duties and functions under this Plan or any Option.
(i) The Company assumes no liability to any Optionee or his legal
representatives, heirs, legatees or distributees for any act of, or failure
to act on the part of, the Company, the Committee or the Board.
(j) Any action required of the Company or the Committee relating to
this Plan or any Option shall be by resolution of the Committee or by a
person authorized to act by resolution of the Committee.
(k) If any provision of this Plan or any Option is held to be illegal
or invalid for any reason, the illegality or invalidity shall not affect
the remaining provisions of this Plan or any Option, but such provision
shall be fully severable, and the Plan or Option, as applicable, shall be
construed and enforced as if the illegal or invalid provision had never
been included in the Plan or Option, as applicable.
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(l) Whenever any notice is required or permitted under this Plan, such
notice must be in writing and personally delivered or sent by mail or
delivery by a nationally recognized courier service. Any notice required or
permitted to be delivered under an Option shall be deemed to be delivered
on the date on which it is personally delivered, or, if mailed, whether
actually received or not, on the third Business Day after it is deposited
in the United States mail, certified or registered, postage prepaid,
addressed to the person who is to receive it at the address that such
person has previously specified by written notice delivered in accordance
with this Section 15(l) or, if by courier, seventy-two (72) hours after it
is sent, addressed as described in this Section 15(l). The Company or the
Optionee may change, at any time and from time to time, by written notice
to the other, the address that it or he had previously specified for
receiving notices. Until changed in accordance with this Plan, the Company
and the Optionee shall specify as its and his address for receiving notices
the address set forth in the Option pertaining to the Shares to which such
notice relates.
(m) Any person entitled to notice under this Plan may waive such
notice.
(n) The titles and headings of Sections are included for convenience
of reference only and are not to be considered in construction of this
Plan's provisions.
(o) All questions arising with respect to the provisions of this Plan
shall be determined by application of the laws of the State of Texas except
to the extent Texas law is preempted by federal law. The obligation of the
Company to sell and deliver Shares under this Plan is subject to applicable
laws and to the approval of any governmental authority required in
connection with the authorization, issuance, sale, or delivery of such
Shares.
(p) Words used in the masculine shall apply to the feminine where
applicable, and wherever the context of this Plan dictates, the plural
shall be read as the singular and the singular as the plural.
SECTION 16. AMENDMENT AND DISCONTINUATION OF THE PLAN. The Board may from
time to time amend, suspend or terminate the Plan or any Option; provided,
however, that no such amendment may alter any provision of the Plan or any
Option without compliance with any applicable shareholder approval requirements
promulgated under the Internal Revenue Code, if applicable, or by any stock
exchange or market on which the Common Stock of the Company is listed for
trading; and provided, further, that, except to the extent provided in Section
7, no amendment or suspension of the Plan or any Option issued hereunder shall,
except as specifically permitted in any Option, substantially impair any Option
previously granted to any Optionee without the consent of such Optionee.
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SECTION 17. EFFECTIVE DATE AND TERMINATION DATE. The effective date of the
Plan is the date set forth below, on which the date the Board of the Company
adopted this Plan. The Plan shall terminate on the tenth anniversary of the
effective date.
ADOPTED BY THE BOARD: ____________, 1997
EFFECTIVE DATE: June 2, 1997
Executed to evidence this Plan was adopted by the Board on ____________,
1997.
THE CONCOURS GROUP, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
11
<PAGE> 1
Exhibit 10.5
1998 EMPLOYEE STOCK OPTION PLAN
FOR
THE CONCOURS GROUP, INC.
SECTION 1. PURPOSE. This 1998 Employee Stock Option Plan of The Concours
Group, Inc. is intended as an incentive to attract and retain qualified and
competent employees, consultants, advisors and directors for the Company and its
Subsidiaries, upon whose efforts and judgment the success of the Company is
largely dependent, through the encouragement of stock ownership in the Company
by such persons.
SECTION 2. DEFINITIONS. As used herein, the following terms shall have the
meaning indicated:
(a) "ACT" shall mean the Securities Exchange Act of 1934, as amended.
(b) "BOARD" shall mean the Board of Directors of the Company.
(c) "BUSINESS DAY" shall mean (i) if the Shares trade on a national
exchange, any day that the national exchange on which the Shares trade is
open or (ii) if the Shares do not trade on a national exchange, any day
that commercial banks in the City of Houston are open.
(d) "COMMISSION" shall mean the Securities and Exchange Commission.
(e) "COMMITTEE" shall mean the Compensation Committee of the Board or
other committee, if any, appointed by the Board pursuant to Section 13
hereof, and in the absence any appointment, the Board shall be the
Committee.
(f) "COMMON STOCK" shall mean the Company's common stock, par value
$.01 per share.
(g) "COMPANY" shall mean The Concours Group, Inc.
(h) "DATE OF GRANT" shall mean the date on which an Option is granted
to an Eligible Person pursuant to Section 4 hereof.
(i) "DIRECTOR" shall mean a member of the Board.
(j) "ELIGIBLE PERSON(S)" shall mean those persons who are (i) under
written contract (a "Consulting Contract") with the Company or a Subsidiary
to provide consulting or advisory services to the Company or a Subsidiary
(a "Consultant"), (ii) Employees or (iii) members of the Board of Directors
of the Company or any Subsidiary.
(k) "EMPLOYEE(S)" shall mean those persons who are employees of the
Company or who are employees of any Subsidiary.
<PAGE> 2
(l) "FAIR MARKET VALUE" of a share on a particular date shall be the
closing price of the Common Stock, which shall be (i) if the Common Stock
is listed or admitted for trading on any United States national securities
exchange (which for purposes hereof shall include the NASDAQ National
Market System), the last reported sale price of Common Stock on such
exchange as reported in any newspaper of general circulation, (ii) if the
Common Stock is quoted on NASDAQ (other than on the National Market System)
or any similar system of automated dissemination of quotations of
securities prices in common use, the mean between the closing high bid and
low asked quotations for such day of the Common Stock on such system or
(iii) if neither clause (i) nor (ii) is applicable, the Exercise Price, as
set forth in Section 5 hereof, unless the Board determines, by any fair and
reasonable means prescribed by the Board, a value other than the Exercise
Price.
(m) "INCENTIVE STOCK OPTION" shall mean an option that is an incentive
stock option as defined in Section 422 of the Internal Revenue Code.
(n) "INTERNAL REVENUE CODE" or "CODE" shall mean the Internal Revenue
Code of 1986, as it now exists or may be amended from time to time.
(o) "NONQUALIFIED STOCK OPTION" shall mean a stock option that is not
an incentive stock option as defined in Section 422 of the Internal Revenue
Code.
(p) "OPTION" (when capitalized) shall mean any option granted under
this Plan.
(q) "OPTIONEE" shall mean a person to whom an Option is granted under
this Plan or any successor to the rights of such person.
(r) "OUTSIDE DIRECTOR" shall mean a Director who qualifies as an
"outside director" under the regulations promulgated under Section 162(m)
of the Internal Revenue Code and as a "non-employee director" under Rule
16b-3 promulgated under the Securities Exchange Act of 1934, effective
August 15, 1996.
(s) "PLAN" shall mean this 1998 Employee Stock Option Plan for The
Concours Group, Inc.
(t) "SHARE(S)" shall mean a share or shares of the Common Stock.
(u) "SUBSIDIARY" shall mean any corporation (other than the Company)
in any unbroken chain of corporations beginning with the Company if, at the
time of the granting of the Option, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.
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<PAGE> 3
SECTION 3. SHARES AND OPTIONS.
(a) The Company may grant to Eligible Persons from time to time
Options to purchase an aggregate of up to 675,000 Shares from Shares held
in the Company's treasury or from authorized and unissued Shares. If any
Option granted under the Plan shall terminate, expire, or be canceled or
surrendered as to any Shares, new Options may thereafter be granted
covering such Shares. An Option granted hereunder shall be either an
Incentive Stock Option or a Nonqualified Stock Option as determined by the
Committee at the Date of Grant of such Option and shall clearly state
whether it is an Incentive Stock Option or a Nonqualified Stock Option.
Incentive Stock Options may only be granted to persons who are Employees.
(b) Subject to Section 12, the aggregate Fair Market Value (determined
at the Date of Grant of the Option) of the Shares with respect to which any
Incentive Stock Option is exercisable for the first time by an Optionee
during any calendar year under the Plan and all such plans of the Company
and any parent and subsidiary of the Company (as defined in Section 424 of
the Code) shall not exceed $100,000.
(c) Subject to the provisions of the Plan, the Committee may grant
Options to such Eligible Persons as the Committee in its sole discretion
determines are eligible to receive such grants in accordance with Section 4
below. Notwithstanding any provision herein to the contrary, there shall be
no grant of Options in excess of 100,000 Shares to any one individual in
any one year.
SECTION 4. CONDITIONS FOR GRANT OF OPTIONS.
(a) Each Option shall be evidenced by an option agreement that may
contain any term deemed necessary or desirable by the Committee, provided
such terms are not inconsistent with this Plan or any applicable law.
Optionees shall be those persons selected by the Committee from Eligible
Persons. Any person who files with the Committee, in a form satisfactory to
the Committee, a written waiver of eligibility to receive any Option under
this Plan shall not be eligible to receive any Option under this Plan for
the duration of such waiver.
(b) In granting Options, the Committee shall take into consideration
the contribution the person has made or may make to the success of the
Company or its Subsidiaries and such other factors as the Board shall
determine. The Committee shall also have the authority to consult with and
receive recommendations from officers and other personnel of the Company
and its Subsidiaries with regard to these matters. The Committee may from
time to time in granting Options under the Plan prescribe such other terms
and conditions concerning such Options as it deems appropriate, including,
without limitation, relating an Option to achievement of specific goals
established by the Committee or the continued employment of the Optionee
for a specified period of time, provided that such terms and conditions are
not more favorable to an Optionee than those expressly permitted herein.
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<PAGE> 4
(c) The Committee in its sole discretion shall determine in each case
whether periods of military or government service shall constitute a
continuation of employment for the purposes of this Plan or any Option.
(d) The Committee in its sole discretion may delegate to the Chief
Executive Officer of the Company any or all of its powers under this Plan
with regard to the granting and administration of Options to Eligible
Persons not subject to reporting under Section 16 of the Exchange Act.
SECTION 5. EXERCISE PRICE. The Exercise Price per Share shall be the
greater of (i) $1.00 or (ii) ninety percent (90%) of (a) Annualized Gross
Revenues (as defined herein) divided by (b) the number of shares of the
Company's voting stock outstanding on the day preceding the Exercise Price
Determination Date. The Exercise Price Determination Date is the preceding
January 1st or July 1st, whichever is more recent (hereafter "Exercise
Price Determination Date"). Annualized Gross Revenues shall mean the gross
revenues of the Company less reimbursable expenses charged by the Company
as reflected on the Company's unaudited statement of income for the
six-month period ending the day preceding the Exercise Price Determination
Date, multiplied by two (2). Notwithstanding anything contained herein to
the contrary but subject to Section 11 below, the Exercise Price of any
Incentive Stock Option shall not be less than one hundred percent (100%) of
the Fair Market Value per Share on the Date of Grant.
SECTION 6. EXERCISE OF OPTIONS.
(a) An Option shall be exercisable in installments as follows;
provided, however, no Option shall be exercisable prior to the first
anniversary date of the Date of Grant (hereinafter, "Anniversary Date"). An
Option may be exercised as to twenty-five percent (25%) of the Shares
covered by the Option beginning on the first Anniversary Date; thereafter,
an additional twenty-five percent (25%) of the Shares subject to the Option
shall be exercisable as of the Anniversary Date in each of the following
three years except as otherwise provided in Section 7 below. The Committee
may in its sole discretion accelerate the date on which any Option may be
exercised. In no event shall an Option be exercisable after the expiration
of ten (10) years from the Date of Grant.
(b) An Option shall be deemed exercised when (i) the Company has
received written notice of such exercise in accordance with the terms of
the Option, (ii) full payment of the aggregate exercise price of the Shares
as to which the Option is exercised has been made, and (iii) arrangements
that are satisfactory to the Committee in its sole discretion have been
made for the Optionee's payment to the Company of the amount, if any, that
the Committee determines to be necessary for the Company or a Subsidiary to
withhold in accordance with applicable federal or state income tax
withholding requirements.
(c) Unless further limited by the Committee in any Option, the
exercise price of any Shares purchased shall be paid by any of the
following methods:
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<PAGE> 5
(i) In cash, by certified or cashier's check, by money order, by
personal check (if approved by the Committee) of an amount equal to
the aggregate purchase price of the Shares to which the exercise
relates;
(ii) by delivery of Shares already owned by the Optionee, which
Shares have an aggregate value of the Fair Market Value, as determined
by the Committee in its sole discretion at the time of exercise, on
the date received by the Company, together with any cash tendered
therewith, equal to the purchase price of the Shares to which the
exercise relates; or
(iii) by delivery to the Company of an exercise notice that
requests the Company to issue to the Optionee the full number of
Shares as to which the Option is then exercisable, less the number of
Shares that have an aggregate Fair Market Value, as determined by the
Committee in its sole discretion at the time of exercise, equal to the
aggregate purchase price of the Shares to which such exercise relates.
(This method of exercise allows the Optionee to use a portion of the
Shares issuable at the time of exercise as payment for the Shares to
which the Option relates and is often referred to as a "cashless
exercise." For example, if the Optionee elects to exercise 1,000
Shares at an exercise price of $0.25 and the current Fair Market Value
of the Shares on the date of exercise is $1.00, the Optionee can use
250 of the 1,000 Shares at $1.00 per Share to pay for the exercise of
the entire Option (250 x $1.00 = $250.00) and receive only the
remaining 750 Shares.)
SECTION 7. TERMINATION OF OPTION PERIOD.
(a) Unless otherwise provided in any Option or as determined by the
Committee upon the occurrence of the stated event, the unexercised portion
of an Option shall automatically and without notice terminate and become
null and void at the time of the earliest to occur of the following, to the
extent such Option was not exercisable at such time: (i) the death of the
Optionee, (ii) the total and permanent "disability" (as defined in Section
22(e)(3) of the Code) of the Optionee, (iii) the date on which the Optionee
ceases to be employed by the Company or a Subsidiary or ceases to be a
Consultant to the Company or a Subsidiary, as the case may be, regardless
of the reason therefor, or (iv) with respect to an Option held by a person
who is a member of the Board of Directors of the Company or a Subsidiary
but who is not also an Employee or Consultant (regardless of whether or not
such person was an Employee or Consultant at the time of grant), the date
on which the Optionee ceases to be a member of such Board of Directors.
(b) Unless otherwise provided in any Option or as determined by the
Committee upon the occurrence of the stated event, the unexercised portion
of an Option shall automatically and without notice terminate and become
null and void ninety (90) days after the earliest to occur of the
following, to the extent such Option was exercisable on the date of the
following: (i) the death of the Optionee, (ii) the total and permanent
"disability" (as defined in Section 22(e)(3) of the Code) of the Optionee,
(iii) the date on which the Optionee ceases to be employed by the Company
or a Subsidiary or ceases to be a Consultant to the Company or a
Subsidiary, as the case may be, regardless of the reason therefor, or (iv)
with
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<PAGE> 6
respect to an Option held by a person who is a member of the Board of
Directors of the Company or a Subsidiary but who is not also an Employee or
Consultant (regardless of whether or not such person was an Employee or
Consultant at the time of grant), the date on which the Optionee ceases to
be a member of such Board of Directors. In no event, however, shall the
ninety (90) day period described in this Section 7(b) extend beyond the
exercise period stated on the Option.
(c) In the event of the death of the Optionee, Options held by such
Optionee may be exercised by the Optionee's legal representative(s), but
only to the extent that such Options would otherwise have been exercisable
by the Optionee.
(d) For purposes of the Plan, the transfer of an Employee's employment
between the Company and any Subsidiary or between Subsidiaries shall not be
deemed to be a termination of the Employee's employment.
(e) Notwithstanding any other provisions set forth herein, if the
Optionee shall (i) commit any act of malfeasance or wrongdoing affecting
the Company or any Subsidiary, (ii) breach any covenant not to compete, or
employment contract, with the Company or any Subsidiary, or (iii) engage in
conduct that would warrant the Optionee's discharge for cause (excluding
general dissatisfaction with the performance of the Optionee's duties, but
including any act of disloyalty or any conduct clearly tending to bring
discredit upon the Company or any Subsidiary), any unexercised portion of
Options held by the Optionee shall immediately terminate and be void.
SECTION 8. ADJUSTMENT OF SHARES.
(a) If at any time while the Plan is in effect or unexercised Options
are outstanding, there shall be any increase or decrease in the number of
issued and outstanding Shares through the declaration of a stock dividend
or through any recapitalization resulting in a stock split-up, combination
or exchange of Shares, then and in such event:
(i) appropriate adjustment shall be made in the maximum number of
Shares then subject to being optioned under the Plan, so that the same
proportion of the Company's issued and outstanding Shares shall
continue to be subject to being so optioned; and
(ii) appropriate adjustment shall be made in the number of Shares
and the exercise price per Share thereof then subject to outstanding
Options, so that the same proportion of the Company's issued and
outstanding Shares shall remain subject to purchase at the same
aggregate exercise price.
(b) The Committee may change the terms of Options outstanding under
this Plan, with respect to the exercise price or the number of Shares
subject to the Options, or both, when, in the Committee's sole discretion,
such adjustments become appropriate by reason of any corporate transaction.
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<PAGE> 7
(c) Except as otherwise expressly provided herein, the issuance by the
Company of shares of its capital stock of any class, or securities
convertible into shares of capital stock of any class, either in connection
with direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to the number of
Shares reserved for issuance under the Plan or the number of or exercise
price of Shares then subject to outstanding Options granted under the Plan.
(d) Without limiting the generality of the foregoing, the existence of
outstanding Options granted under the Plan shall not affect in any manner
the right or power of the Company to make, authorize or consummate (i) any
or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business; (ii) any merger or
consolidation of the Company; (iii) any issue by the Company of debt
securities, or preferred or preference stock that would rank above the
Shares subject to outstanding Options; (iv) the dissolution or liquidation
of the Company; (v) any sale, transfer or assignment of all or any part of
the assets or business of the Company; or (vi) any other corporate act or
proceeding, whether of a similar character or otherwise.
SECTION 9. TRANSFERABILITY OF OPTIONS. Each Incentive Stock Option shall
provide that such Incentive Stock Option shall not be transferrable by the
Optionee otherwise than by will or the laws of descent and distribution and that
so long as an Optionee lives, only such Optionee or his guardian or legal
representative shall have the right to exercise such Incentive Stock Option. The
Committee, in its sole discretion, may provide in the agreement governing any
Nonqualified Stock Option that such Nonqualified Stock Option shall be
transferable and, if so, the extent to which such Nonqualified Stock Option is
transferable.
SECTION 10. ISSUANCE OF SHARES. No person shall be, or have any of the
rights or privileges of, a shareholder of the Company with respect to any of the
Shares subject to an Option unless and until certificates representing such
Shares shall have been issued and delivered to such person. As a condition of
any transfer of the certificate for Shares, the Committee may obtain such
agreements or undertakings, if any, as it may deem necessary or advisable to
assure compliance with any provision of the Plan, the agreement evidencing the
Option or any law or regulation including, but not limited to, the following:
(a) A representation, warranty or agreement by the Optionee to the
Company at the time any Option is exercised that he or she is acquiring the
Shares to be issued to him or her for investment and not with a view to, or
for sale in connection with, the distribution of any such Shares; and
(b) A representation, warranty or agreement to be bound by any legends
that are, in the opinion of the Committee, necessary or appropriate to
comply with the provisions of any securities laws deemed by the Board to be
applicable to the issuance of the Shares and are endorsed upon the Share
certificates.
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SECTION 11. OPTIONS FOR 10% SHAREHOLDER. Notwithstanding any other
provisions of the Plan to the contrary, an Incentive Stock Option shall not be
granted to any person owning directly (or indirectly through attribution under
Section 424(d) of the Code) at the Date of Grant, stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company (or of
its parent or subsidiary [as defined in Section 424 of the Internal Revenue
Code] at the Date of Grant) unless the exercise price of such Incentive Stock
Option is at least 110% of the Fair Market Value of the Shares subject to such
Incentive Stock Option on the Date of Grant, and the period during which the
Incentive Stock Option may be exercised does not exceed five (5) years from the
Date of Grant.
SECTION 12. NONQUALIFIED STOCK OPTIONS. Nonqualified Stock Options may be
granted hereunder and shall be subject to all terms and provisions hereof except
that each such Nonqualified Stock Option (i) must be clearly designated as a
Nonqualified Stock Option; (ii) may be granted for Shares in excess of the
limits contained in Section 3(b) of this Plan; and (iii) shall not be subject to
Section 11 of this Plan. If both Incentive Stock Options and Nonqualified Stock
Options are granted to an Optionee, the right to exercise, to the full extent
thereof, Options of either type shall not be contingent in whole or in part upon
the exercise of, or failure to exercise, Options of the other type.
SECTION 13. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Compensation Committee of
the Board or other committee thereof as appointed by the Board (the
"Committee"), consisting of not less than two (2) members, each of whom is
an Outside Director.
(b) The Committee, from time to time, may adopt rules and regulations
for carrying out the purposes of the Plan. The determinations and the
interpretation and construction of any provision of the Plan by the
Committee shall be final and conclusive.
(c) Subject to the express provisions of this Plan, the Committee
shall have the authority, in its sole and absolute discretion (i) to adopt,
amend, and rescind administrative and interpretive rules and regulations
relating to this Plan or any Option; (ii) to construe the terms of this
Plan or any Option; (iii) as provided in Section 8(a), upon certain events
to make appropriate adjustments to the exercise price and number of Shares
subject to this Plan and Option; and (iv) to make all other determinations
and perform all other acts necessary or advisable for administering this
Plan, including the delegation of such ministerial acts and
responsibilities as the Committee deems appropriate. The Committee may
correct any defect or supply any omission or reconcile any inconsistency in
this Plan or any Option in the manner and to the extent it shall deem
expedient to carry it into effect, and it shall be the sole and final judge
of such expediency. The Committee shall have full discretion to make all
determinations on the matters referred to in this Section 13(c), and such
determinations shall be final, binding and conclusive.
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SECTION 14. GOVERNMENT REGULATIONS. This Plan, Options and the obligations
of the Company to sell and deliver Shares under any Options, shall be subject to
all applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.
SECTION 15. MISCELLANEOUS.
(a) The proceeds received by the Company from the sale of Shares
pursuant to an Option shall be used for general corporate purposes.
(b) The grant of an Option shall be in addition to any other
compensation paid to the Optionee or other stock option plans of the
Company or other benefits with respect to the Optionee's position with or
relationship to the Company or its Subsidiaries. The grant of an Option
shall not confer upon the Optionee the right to continue as an Employee or
Consultant, or interfere in any way with the rights of the Company to
terminate his status as an Employee or Consultant.
(c) Neither the members of the Board nor any member of the Committee
shall be liable for any act, omission, or determination taken or made in
good faith with respect to this Plan or any Option, and members of the
Board and the Committee shall, in addition to all other rights of
indemnification and reimbursement, be entitled to indemnification and
reimbursement by the Company in respect of any claim, loss, damage,
liability or expense (including attorneys' fees, the costs of settling any
suit, provided such settlement is approved by independent legal counsel
selected by the Company, and amounts paid in satisfaction of a judgment,
except a judgment based on a finding of bad faith) arising from such claim,
loss, damage, liability or expense to the full extent permitted by law and
under any directors' and officers' liability or similar insurance coverage
that may from time to time be in effect.
(d) Any issuance or transfer of Shares to an Optionee, or to his legal
representative, heir, legatee, distributee, or assign in accordance with
the provisions of this Plan or the applicable Option, shall, to the extent
thereof, be in full satisfaction of all claims of such persons under the
Plan. The Committee may require any Optionee, legal representative, heir,
legatee or distributee as a condition precedent to such payment or issuance
or transfer of Shares, to execute a release and receipt for such payment or
issuance or transfer of Shares in such form as it shall determine.
(e) Neither the Committee nor the Company guarantees Shares from loss
or depreciation.
(f) All expenses incident to the administration, termination, or
protection of this Plan or any Option, including, but not limited to, legal
and accounting fees, shall be paid by the Company; provided, however, the
Company may recover any and all damages, fees, expenses and costs arising
out of any actions taken by the Company to enforce its rights under this
Plan or any Option.
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(g) Records of the Company shall be conclusive for all purposes under
this Plan or any Option, unless determined by the Committee or the Board to
be incorrect.
(h) The Company shall, upon request or as may be specifically required
under this Plan or any Option, furnish or cause to be furnished all of the
information or documentation that is necessary or required by the Committee
to perform its duties and functions under this Plan or any Option.
(i) The Company assumes no liability to any Optionee or his legal
representatives, heirs, legatees or distributees for any act of, or failure
to act on the part of, the Company, the Committee or the Board.
(j) Any action required of the Company or the Committee relating to
this Plan or any Option shall be by resolution of the Company or Committee,
respectively, or by a person authorized to act by resolution of the Company
or Committee, respectively.
(k) If any provision of this Plan or any Option is held to be illegal
or invalid for any reason, the illegality or invalidity shall not affect
the remaining provisions of this Plan or any Option, but such provision
shall be fully severable, and the Plan or Option, as applicable, shall be
construed and enforced as if the illegal or invalid provision had never
been included in the Plan or Option, as applicable.
(l) Whenever any notice is required or permitted under this Plan, such
notice must be in writing and personally delivered or sent by mail or
delivery by a nationally recognized courier service. Any notice required or
permitted to be delivered under an Option shall be deemed to be delivered
on the date on which it is personally delivered, or, if mailed, whether
actually received or not, on the third Business Day after it is deposited
in the United States mail, certified or registered, postage prepaid,
addressed to the person who is to receive it at the address that such
person has previously specified by written notice delivered in accordance
with this Section 15(l) or, if by courier, seventy-two (72) hours after it
is sent, addressed as described in this Section 15(l). The Company or the
Optionee may change, at any time and from time to time, by written notice
to the other, the address that it or he had previously specified for
receiving notices. Until changed in accordance with this Plan, the Company
and the Optionee shall specify as its and his address for receiving notices
the address set forth in the Option pertaining to the Shares to which such
notice relates.
(m) Any person entitled to notice under this Plan may waive such
notice.
(n) The titles and headings of Sections are included for convenience
of reference only and are not to be considered in construction of this
Plan's provisions.
(o) All questions arising with respect to the provisions of this Plan
shall be determined by application of the laws of the State of Texas except
to the extent Texas law is preempted by federal law. The obligation of the
Company to sell and deliver Shares under this Plan is subject to applicable
laws and to the approval of any governmental authority required in
connection with the authorization, issuance, sale, or delivery of such
Shares.
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(p) Words used in the masculine shall apply to the feminine where
applicable, and wherever the context of this Plan dictates, the plural
shall be read as the singular and the singular as the plural.
(q) The Company shall be entitled to recover from an Optionee
reasonable attorneys' fees incurred in connection with the enforcement of
the terms and provisions of the Plan and any agreement governing any
Option, whether by an action to enforce specific performance, or an action
for damages for its breach or otherwise.
SECTION 16. AMENDMENT AND DISCONTINUATION OF THE PLAN. The Board may from
time to time amend, suspend or terminate the Plan or any Option; provided,
however, that no such amendment may alter any provision of the Plan or any
Option without compliance with any applicable shareholder approval requirements
promulgated under the Internal Revenue Code, if applicable, or by any stock
exchange or market on which the Common Stock of the Company is listed for
trading; and provided, further, that, except to the extent provided in Section
7, no amendment or suspension of the Plan or any Option issued hereunder shall,
except as specifically permitted in any Option, substantially impair any Option
previously granted to any Optionee without the consent of such Optionee.
SECTION 17. EFFECTIVE DATE AND TERMINATION DATE. The effective date of the
Plan is the date set forth below, on which the date the Board of the Company
adopted this Plan. The Plan shall terminate on the tenth anniversary of the
effective date.
THE CONCOURS GROUP, INC.
-------------------------
Ron Christman, President
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EXHIBIT 10.6
1999 EMPLOYEE STOCK OPTION PLAN
FOR
THE CONCOURS GROUP, INC.
SECTION 1. PURPOSE. This 1999 Employee Stock Option Plan of The
Concours Group, Inc. is intended as an incentive to attract and retain qualified
and competent employees, consultants, advisors and directors for the Company and
its Subsidiaries, upon whose efforts and judgment the success of the Company is
largely dependent, through the encouragement of stock ownership in the Company
by such persons.
SECTION 2. DEFINITIONS. As used herein, the following terms shall have
the meaning indicated:
(a) "ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(b) "BOARD" shall mean the Board of Directors of the Company.
(c) "BUSINESS DAY" shall mean (i) if the Shares trade on a
national exchange, any day that the national exchange on which the
Shares trade is open or (ii) if the Shares do not trade on a national
exchange, any day that commercial banks in the City of Houston are
open.
(d) "COMMISSION" shall mean the Securities and Exchange
Commission.
(e) "COMMITTEE" shall mean the Compensation Committee of the Board
or other committee, if any, appointed by the Board pursuant to Section
13 hereof, and in the absence any appointment, the Board shall be the
Committee.
(f) "COMMON STOCK" shall mean the Company's common stock, par
value $.01 per share.
(g) "COMPANY" shall mean The Concours Group, Inc.
(h) "DATE OF GRANT" shall mean the date on which an Option is
granted to an Eligible Person pursuant to Section 4 hereof.
(i) "DIRECTOR" shall mean a member of the Board.
(j) "ELIGIBLE PERSON(S)" shall mean those persons who are (i)
under written contract (a "Consulting Contract") with the Company or a
Subsidiary to provide consulting or advisory services to the Company or
a Subsidiary (a "Consultant"), (ii) Employees or (iii) members of the
Board of Directors of the Company or any Subsidiary.
(k) "EMPLOYEE(S)" shall mean those persons who are employees of
the Company or who are employees of any Subsidiary.
<PAGE> 2
(l) "FAIR MARKET VALUE" of a share on a particular date shall
be the closing price of the Common Stock, which shall be (i) if the
Common Stock is listed or admitted for trading on any United States
national securities exchange (which for purposes hereof shall include
the NASDAQ National Market System), the last reported sale price of
Common Stock on such exchange as reported in any newspaper of general
circulation, (ii) if the Common Stock is quoted on NASDAQ (other than
on the National Market System) or any similar system of automated
dissemination of quotations of securities prices in common use, the
mean between the closing high bid and low asked quotations for such day
of the Common Stock on such system or (iii) if neither clause (i) nor
(ii) is applicable, the Exercise Price, as set forth in Section 5
hereof, unless the Board determines, by any fair and reasonable means
prescribed by the Board, a value other than the Exercise Price.
(m) "INCENTIVE STOCK OPTION" shall mean an option that is an
incentive stock option as defined in Section 422 of the Internal
Revenue Code.
(n) "INTERNAL REVENUE CODE" or "CODE" shall mean the Internal
Revenue Code of 1986, as it now exists or may be amended from time to
time.
(o) "NONQUALIFIED STOCK OPTION" shall mean a stock option that is
not an incentive stock option as defined in Section 422 of the Internal
Revenue Code.
(p) "OPTION" (when capitalized) shall mean any option granted
under this Plan.
(q) "OPTIONEE" shall mean a person to whom an Option is granted
under this Plan or any successor to the rights of such person.
(r) "OUTSIDE DIRECTOR" shall mean a Director who qualifies as an
"outside director" under the regulations promulgated under Section
162(m) of the Internal Revenue Code and as a "non-employee director"
under Rule 16b-3 promulgated under the Securities Exchange Act of 1934,
effective August 15, 1996.
(s) "PLAN" shall mean this 1999 Employee Stock Option Plan for The
Concours Group, Inc.
(t) "SHARE(S)" shall mean a share or shares of the Common Stock.
(u) "SUBSIDIARY" shall mean any corporation (other than the
Company) in any unbroken chain of corporations beginning with the
Company if, at the time of the granting of the Option, each of the
corporations other than the last corporation in the unbroken chain owns
stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
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SECTION 3. SHARES AND OPTIONS.
(a) The Company may grant to Eligible Persons from time to time
Options to purchase an aggregate of up to 700,000 Shares from Shares
held in the Company's treasury or from authorized and unissued Shares.
If any Option granted under the Plan shall terminate, expire, or be
canceled or surrendered as to any Shares, new Options may thereafter be
granted covering such Shares. An Option granted hereunder shall be
either an Incentive Stock Option or a Nonqualified Stock Option as
determined by the Committee at the Date of Grant of such Option and
shall clearly state whether it is an Incentive Stock Option or a
Nonqualified Stock Option. Incentive Stock Options may only be granted
to persons who are Employees.
(b) Subject to Section 12, the aggregate Fair Market Value
(determined at the Date of Grant of the Option) of the Shares with
respect to which any Incentive Stock Option is exercisable for the
first time by an Optionee during any calendar year under the Plan and
all such plans of the Company and any parent and subsidiary of the
Company (as defined in Section 424 of the Code) shall not exceed
$100,000.
(c) Subject to the provisions of the Plan, the Committee may grant
Options to such Eligible Persons as the Committee in its sole
discretion determines are eligible to receive such grants in accordance
with Section 4 below. Notwithstanding any provision herein to the
contrary, there shall be no grant of Options in excess of 100,000
Shares to any one individual in any one year.
SECTION 4. CONDITIONS FOR GRANT OF OPTIONS.
(a) Each Option shall be evidenced by an option agreement that may
contain any term deemed necessary or desirable by the Committee,
provided such terms are not inconsistent with this Plan or any
applicable law. Optionees shall be those persons selected by the
Committee from Eligible Persons. Any person who files with the
Committee, in a form satisfactory to the Committee, a written waiver of
eligibility to receive any Option under this Plan shall not be eligible
to receive any Option under this Plan for the duration of such waiver.
(b) In granting Options, the Committee shall take into
consideration the contribution the person has made or may make to the
success of the Company or its Subsidiaries and such other factors as
the Board shall determine. The Committee shall also have the authority
to consult with and receive recommendations from officers and other
personnel of the Company and its Subsidiaries with regard to these
matters. The Committee may from time to time in granting Options under
the Plan prescribe such other terms and conditions concerning such
Options as it deems appropriate, including, without limitation,
relating an Option to achievement of specific goals established by the
Committee or the continued employment of the Optionee for a specified
period of time, provided that such terms and conditions are not more
favorable to an Optionee than those expressly permitted herein.
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(c) The Committee in its sole discretion shall determine in each
case whether periods of military or government service shall constitute
a continuation of employment for the purposes of this Plan or any
Option.
(d) The Committee in its sole discretion may delegate to the Chief
Executive Officer of the Company any or all of its powers under this
Plan with regard to the granting and administration of Options to
Eligible Persons not subject to reporting under Section 16 of the
Exchange Act.
SECTION 5. EXERCISE PRICE. The Exercise Price per Share shall be
determined by the Compensation Committee at the time of grant.
Notwithstanding anything contained herein to the contrary but subject
to Section 11 below, the Exercise Price of any Incentive Stock Option
shall not be less than one hundred percent (100%) of the Fair Market
Value per Share on the Date of Grant.
SECTION 6. EXERCISE OF OPTIONS.
(a) An Option shall be exercisable in installments as follows;
provided, however, no Option shall be exercisable prior to the first
anniversary date of the Date of Grant (hereinafter, "Anniversary
Date"). An Option may be exercised as to twenty-five percent (25%) of
the Shares covered by the Option beginning on the first Anniversary
Date; thereafter, an additional twenty-five percent (25%) of the Shares
subject to the Option shall be exercisable as of the Anniversary Date
in each of the following three years except as otherwise provided in
Section 7 below. The Committee may in its sole discretion accelerate
the date on which any Option may be exercised. In no event shall an
Option be exercisable after the expiration of ten (10) years from the
Date of Grant.
(b) An Option shall be deemed exercised when (i) the Company has
received written notice of such exercise in accordance with the terms
of the Option, (ii) full payment of the aggregate exercise price of the
Shares as to which the Option is exercised has been made, and (iii)
arrangements that are satisfactory to the Committee in its sole
discretion have been made for the Optionee's payment to the Company of
the amount, if any, that the Committee determines to be necessary for
the Company or a Subsidiary to withhold in accordance with applicable
federal or state income tax withholding requirements.
(c) Unless further limited by the Committee in any Option, the
exercise price of any Shares purchased shall be paid by any of the
following methods:
(i) In cash, by certified or cashier's check, by money
order, by personal check (if approved by the Committee) of an
amount equal to the aggregate purchase price of the Shares to
which the exercise relates;
(ii) by delivery of Shares already owned by the Optionee,
which Shares have an aggregate value of the Fair Market Value,
as determined by the Committee in its sole discretion at the
time of exercise, on the date received by the Company,
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<PAGE> 5
together with any cash tendered therewith, equal to the
purchase price of the Shares to which the exercise relates; or
(iii) by delivery to the Company of an exercise notice that
requests the Company to issue to the Optionee the full number
of Shares as to which the Option is then exercisable, less the
number of Shares that have an aggregate Fair Market Value, as
determined by the Committee in its sole discretion at the time
of exercise, equal to the aggregate purchase price of the
Shares to which such exercise relates. (This method of
exercise allows the Optionee to use a portion of the Shares
issuable at the time of exercise as payment for the Shares to
which the Option relates and is often referred to as a
"cashless exercise." For example, if the Optionee elects to
exercise 1,000 Shares at an exercise price of $0.25 and the
current Fair Market Value of the Shares on the date of
exercise is $1.00, the Optionee can use 250 of the 1,000
Shares at $1.00 per Share to pay for the exercise of the
entire Option (250 x $1.00 = $250.00) and receive only the
remaining 750 Shares.)
SECTION 7. TERMINATION OF OPTION PERIOD.
(a) Unless otherwise provided in any Option or as determined
by the Committee upon the occurrence of the stated event, the
unexercised portion of an Option shall automatically and without notice
terminate and become null and void at the time of the earliest to occur
of the following, to the extent such Option was not exercisable at such
time: (i) the death of the Optionee, (ii) the total and permanent
"disability" (as defined in Section 22(e)(3) of the Code) of the
Optionee, (iii) the date on which the Optionee ceases to be employed by
the Company or a Subsidiary or ceases to be a Consultant to the Company
or a Subsidiary, as the case may be, regardless of the reason therefor,
or (iv) with respect to an Option held by a person who is a member of
the Board of Directors of the Company or a Subsidiary but who is not
also an Employee or Consultant (regardless of whether or not such
person was an Employee or Consultant at the time of grant), the date on
which the Optionee ceases to be a member of such Board of Directors.
(b) Unless otherwise provided in any Option or as determined
by the Committee upon the occurrence of the stated event, the
unexercised portion of an Option shall automatically and without notice
terminate and become null and void ninety (90) days after the earliest
to occur of the following, to the extent such Option was exercisable on
the date of the following: (i) the death of the Optionee, (ii) the
total and permanent "disability" (as defined in Section 22(e)(3) of the
Code) of the Optionee, (iii) the date on which the Optionee ceases to
be employed by the Company or a Subsidiary or ceases to be a Consultant
to the Company or a Subsidiary, as the case may be, regardless of the
reason therefor, or (iv) with respect to an Option held by a person who
is a member of the Board of Directors of the Company or a Subsidiary
but who is not also an Employee or Consultant (regardless of whether or
not such person was an Employee or Consultant at the time of grant),
the date on which the Optionee ceases to be a member of such Board of
Directors. In no event, however, shall the ninety (90) day period
described in this Section 7(b) extend beyond the exercise period stated
on the Option.
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<PAGE> 6
(c) In the event of the death of the Optionee, Options held by
such Optionee may be exercised by the Optionee's legal
representative(s), but only to the extent that such Options would
otherwise have been exercisable by the Optionee.
(d) For purposes of the Plan, the transfer of an Employee's
employment between the Company and any Subsidiary or between
Subsidiaries shall not be deemed to be a termination of the Employee's
employment.
(e) Notwithstanding any other provisions set forth herein, if
the Optionee shall (i) commit any act of malfeasance or wrongdoing
affecting the Company or any Subsidiary, (ii) breach any covenant not
to compete, or employment contract, with the Company or any Subsidiary,
or (iii) engage in conduct that would warrant the Optionee's discharge
for cause (excluding general dissatisfaction with the performance of
the Optionee's duties, but including any act of disloyalty or any
conduct clearly tending to bring discredit upon the Company or any
Subsidiary), any unexercised portion of Options held by the Optionee
shall immediately terminate and be void.
SECTION 8. ADJUSTMENT OF SHARES.
(a) If at any time while the Plan is in effect or unexercised
Options are outstanding, there shall be any increase or decrease in the
number of issued and outstanding Shares through the declaration of a
stock dividend or through any recapitalization resulting in a stock
split-up, combination or exchange of Shares, then and in such event:
(i) appropriate adjustment shall be made in the maximum
number of Shares then subject to being optioned under the
Plan, so that the same proportion of the Company's issued and
outstanding Shares shall continue to be subject to being so
optioned; and
(ii) appropriate adjustment shall be made in the number of
Shares and the exercise price per Share thereof then subject
to outstanding Options, so that the same proportion of the
Company's issued and outstanding Shares shall remain subject
to purchase at the same aggregate exercise price.
(b) The Committee may change the terms of Options outstanding
under this Plan, with respect to the exercise price or the number of
Shares subject to the Options, or both, when, in the Committee's sole
discretion, such adjustments become appropriate by reason of any
corporate transaction.
(c) Except as otherwise expressly provided herein, the
issuance by the Company of shares of its capital stock of any class, or
securities convertible into shares of capital stock of any class,
either in connection with direct sale or upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares or
obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to the number of Shares reserved for issuance
under the Plan or the
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<PAGE> 7
number of or exercise price of Shares then subject to outstanding
Options granted under the Plan.
(d) Without limiting the generality of the foregoing, the
existence of outstanding Options granted under the Plan shall not
affect in any manner the right or power of the Company to make,
authorize or consummate (i) any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or
its business; (ii) any merger or consolidation of the Company; (iii)
any issue by the Company of debt securities, or preferred or preference
stock that would rank above the Shares subject to outstanding Options;
(iv) the dissolution or liquidation of the Company; (v) any sale,
transfer or assignment of all or any part of the assets or business of
the Company; or (vi) any other corporate act or proceeding, whether of
a similar character or otherwise.
SECTION 9. TRANSFERABILITY OF OPTIONS. Each Incentive Stock Option
shall provide that such Incentive Stock Option shall not be transferrable by the
Optionee otherwise than by will or the laws of descent and distribution and that
so long as an Optionee lives, only such Optionee or his guardian or legal
representative shall have the right to exercise such Incentive Stock Option. The
Committee, in its sole discretion, may provide in the agreement governing any
Nonqualified Stock Option that such Nonqualified Stock Option shall be
transferable and, if so, the extent to which such Nonqualified Stock Option is
transferable.
SECTION 10. ISSUANCE OF SHARES. No person shall be, or have any of the
rights or privileges of, a shareholder of the Company with respect to any of the
Shares subject to an Option unless and until certificates representing such
Shares shall have been issued and delivered to such person. As a condition of
any transfer of the certificate for Shares, the Committee may obtain such
agreements or undertakings, if any, as it may deem necessary or advisable to
assure compliance with any provision of the Plan, the agreement evidencing the
Option or any law or regulation including, but not limited to, the following:
(a) A representation, warranty or agreement by the Optionee to
the Company at the time any Option is exercised that he or she is
acquiring the Shares to be issued to him or her for investment and not
with a view to, or for sale in connection with, the distribution of any
such Shares; and
(b) A representation, warranty or agreement to be bound by any
legends that are, in the opinion of the Committee, necessary or
appropriate to comply with the provisions of any securities laws deemed
by the Board to be applicable to the issuance of the Shares and are
endorsed upon the Share certificates.
SECTION 11. OPTIONS FOR 10% SHAREHOLDER. Notwithstanding any other
provisions of the Plan to the contrary, an Incentive Stock Option shall not be
granted to any person owning directly (or indirectly through attribution under
Section 424(d) of the Code) at the Date of Grant, stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company (or of
its parent or subsidiary [as defined in Section 424 of the Internal Revenue
Code] at the Date of Grant) unless the exercise price of such Incentive Stock
Option is at least 110% of the Fair Market Value of the Shares subject to such
Incentive Stock Option on the Date of Grant, and the period
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<PAGE> 8
during which the Incentive Stock Option may be exercised does not exceed five
(5) years from the Date of Grant.
SECTION 12. NONQUALIFIED STOCK OPTIONS. Nonqualified Stock Options may
be granted hereunder and shall be subject to all terms and provisions hereof
except that each such Nonqualified Stock Option (i) must be clearly designated
as a Nonqualified Stock Option; (ii) may be granted for Shares in excess of the
limits contained in Section 3(b) of this Plan; and (iii) shall not be subject to
Section 11 of this Plan. If both Incentive Stock Options and Nonqualified Stock
Options are granted to an Optionee, the right to exercise, to the full extent
thereof, Options of either type shall not be contingent in whole or in part upon
the exercise of, or failure to exercise, Options of the other type.
SECTION 13. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Compensation
Committee of the Board or other committee thereof as appointed by the
Board (the "Committee"), consisting of not less than two (2) members,
each of whom is an Outside Director.
(b) The Committee, from time to time, may adopt rules and
regulations for carrying out the purposes of the Plan. The
determinations and the interpretation and construction of any provision
of the Plan by the Committee shall be final and conclusive.
(c) Subject to the express provisions of this Plan, the
Committee shall have the authority, in its sole and absolute discretion
(i) to adopt, amend, and rescind administrative and interpretive rules
and regulations relating to this Plan or any Option; (ii) to construe
the terms of this Plan or any Option; (iii) as provided in Section
8(a), upon certain events to make appropriate adjustments to the
exercise price and number of Shares subject to this Plan and Option;
and (iv) to make all other determinations and perform all other acts
necessary or advisable for administering this Plan, including the
delegation of such ministerial acts and responsibilities as the
Committee deems appropriate. The Committee may correct any defect or
supply any omission or reconcile any inconsistency in this Plan or any
Option in the manner and to the extent it shall deem expedient to carry
it into effect, and it shall be the sole and final judge of such
expediency. The Committee shall have full discretion to make all
determinations on the matters referred to in this Section 13(c), and
such determinations shall be final, binding and conclusive.
SECTION 14. GOVERNMENT REGULATIONS. This Plan, Options and the
obligations of the Company to sell and deliver Shares under any Options, shall
be subject to all applicable laws, rules and regulations, and to such approvals
by any governmental agencies or national securities exchanges as may be
required.
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SECTION 15. MISCELLANEOUS.
(a) The proceeds received by the Company from the sale of
Shares pursuant to an Option shall be used for general corporate
purposes.
(b) The grant of an Option shall be in addition to any other
compensation paid to the Optionee or other stock option plans of the
Company or other benefits with respect to the Optionee's position with
or relationship to the Company or its Subsidiaries. The grant of an
Option shall not confer upon the Optionee the right to continue as an
Employee or Consultant, or interfere in any way with the rights of the
Company to terminate his status as an Employee or Consultant.
(c) Neither the members of the Board nor any member of the
Committee shall be liable for any act, omission, or determination taken
or made in good faith with respect to this Plan or any Option, and
members of the Board and the Committee shall, in addition to all other
rights of indemnification and reimbursement, be entitled to
indemnification and reimbursement by the Company in respect of any
claim, loss, damage, liability or expense (including attorneys' fees,
the costs of settling any suit, provided such settlement is approved by
independent legal counsel selected by the Company, and amounts paid in
satisfaction of a judgment, except a judgment based on a finding of bad
faith) arising from such claim, loss, damage, liability or expense to
the full extent permitted by law and under any directors' and officers'
liability or similar insurance coverage that may from time to time be
in effect.
(d) Any issuance or transfer of Shares to an Optionee, or to
his legal representative, heir, legatee, distributee, or assign in
accordance with the provisions of this Plan or the applicable Option,
shall, to the extent thereof, be in full satisfaction of all claims of
such persons under the Plan. The Committee may require any Optionee,
legal representative, heir, legatee or distributee as a condition
precedent to such payment or issuance or transfer of Shares, to execute
a release and receipt for such payment or issuance or transfer of
Shares in such form as it shall determine.
(e) Neither the Committee nor the Company guarantees Shares
from loss or depreciation.
(f) All expenses incident to the administration, termination,
or protection of this Plan or any Option, including, but not limited
to, legal and accounting fees, shall be paid by the Company; provided,
however, the Company may recover any and all damages, fees, expenses
and costs arising out of any actions taken by the Company to enforce
its rights under this Plan or any Option.
(g) Records of the Company shall be conclusive for all
purposes under this Plan or any Option, unless determined by the
Committee or the Board to be incorrect.
(h) The Company shall, upon request or as may be specifically
required under this Plan or any Option, furnish or cause to be
furnished all of the information or documentation
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that is necessary or required by the Committee to perform its duties
and functions under this Plan or any Option.
(i) The Company assumes no liability to any Optionee or his
legal representatives, heirs, legatees or distributees for any act of,
or failure to act on the part of, the Company, the Committee or the
Board.
(j) Any action required of the Company or the Committee
relating to this Plan or any Option shall be by resolution of the
Company or Committee, respectively, or by a person authorized to act by
resolution of the Company or Committee, respectively.
(k) If any provision of this Plan or any Option is held to be
illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining provisions of this Plan or any Option, but
such provision shall be fully severable, and the Plan or Option, as
applicable, shall be construed and enforced as if the illegal or
invalid provision had never been included in the Plan or Option, as
applicable.
(l) Whenever any notice is required or permitted under this
Plan, such notice must be in writing and personally delivered or sent
by mail or delivery by a nationally recognized courier service. Any
notice required or permitted to be delivered under an Option shall be
deemed to be delivered on the date on which it is personally delivered,
or, if mailed, whether actually received or not, on the third Business
Day after it is deposited in the United States mail, certified or
registered, postage prepaid, addressed to the person who is to receive
it at the address that such person has previously specified by written
notice delivered in accordance with this Section 15(l) or, if by
courier, seventy-two (72) hours after it is sent, addressed as
described in this Section 15(l). The Company or the Optionee may
change, at any time and from time to time, by written notice to the
other, the address that it or he had previously specified for receiving
notices. Until changed in accordance with this Plan, the Company and
the Optionee shall specify as its and his address for receiving notices
the address set forth in the Option pertaining to the Shares to which
such notice relates.
(m) Any person entitled to notice under this Plan may waive
such notice.
(n) The titles and headings of Sections are included for
convenience of reference only and are not to be considered in
construction of this Plan's provisions.
(o) All questions arising with respect to the provisions of
this Plan shall be determined by application of the laws of the State
of Texas except to the extent Texas law is preempted by federal law.
The obligation of the Company to sell and deliver Shares under this
Plan is subject to applicable laws and to the approval of any
governmental authority required in connection with the authorization,
issuance, sale, or delivery of such Shares.
(p) Words used in the masculine shall apply to the feminine
where applicable, and wherever the context of this Plan dictates, the
plural shall be read as the singular and the singular as the plural.
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(q) The Company shall be entitled to recover from an Optionee
reasonable attorneys' fees incurred in connection with the enforcement
of the terms and provisions of the Plan and any agreement governing any
Option, whether by an action to enforce specific performance, or an
action for damages for its breach or otherwise.
SECTION 16. AMENDMENT AND DISCONTINUATION OF THE PLAN. The Board may
from time to time amend, suspend or terminate the Plan or any Option; provided,
however, that no such amendment may alter any provision of the Plan or any
Option without compliance with any applicable shareholder approval requirements
promulgated under the Internal Revenue Code, if applicable, or by any stock
exchange or market on which the Common Stock of the Company is listed for
trading; and provided, further, that, except to the extent provided in Section
7, no amendment or suspension of the Plan or any Option issued hereunder shall,
except as specifically permitted in any Option, substantially impair any Option
previously granted to any Optionee without the consent of such Optionee.
SECTION 17. EFFECTIVE DATE AND TERMINATION DATE. The effective date of
the Plan is the date set forth below, on which the date the Board of the Company
adopted this Plan. The Plan shall terminate on the tenth anniversary of the
effective date.
THE CONCOURS GROUP, INC.
-------------------------
Ron Christman, President
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EXHIBIT 10.7
2000 EMPLOYEE STOCK OPTION PLAN
FOR
THE CONCOURS GROUP, INC.
SECTION 1. PURPOSE. This 2000 Employee Stock Option Plan of The
Concours Group, Inc. is intended as an incentive to attract and retain qualified
and competent employees, consultants, advisors and directors for the Company and
its Subsidiaries, upon whose efforts and judgment the success of the Company is
largely dependent, through the encouragement of stock ownership in the Company
by such persons.
SECTION 2. DEFINITIONS. As used herein, the following terms shall have
the meaning indicated:
(a) "ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(b) "BOARD" shall mean the Board of Directors of the Company.
(c) "BUSINESS DAY" shall mean (i) if the Shares trade on a
national exchange, any day that the national exchange on which the
Shares trade is open or (ii) if the Shares do not trade on a national
exchange, any day that commercial banks in the City of Houston are
open.
(d) "COMMISSION" shall mean the Securities and Exchange
Commission.
(e) "COMMITTEE" shall mean the Compensation Committee of the
Board or other committee, if any, appointed by the Board pursuant to
Section 13 hereof, and in the absence any appointment, the Board shall
be the Committee.
(f) "COMMON STOCK" shall mean the Company's common stock, par
value $.01 per share.
(g) "COMPANY" shall mean The Concours Group, Inc.
(h) "DATE OF GRANT" shall mean the date on which an Option is
granted to an Eligible Person pursuant to Section 4 hereof.
(i) "DIRECTOR" shall mean a member of the Board.
(j) "ELIGIBLE PERSON(S)" shall mean those persons who are (i)
under written contract (a "Consulting Contract") with the Company or a
Subsidiary to provide consulting or advisory services to the Company or
a Subsidiary (a "Consultant"), (ii) Employees or (iii) members of the
Board of Directors of the Company or any Subsidiary.
(k) "EMPLOYEE(S)" shall mean those persons who are employees
of the Company or who are employees of any Subsidiary.
<PAGE> 2
(l) "FAIR MARKET VALUE" of a share on a particular date shall
be the closing price of the Common Stock, which shall be (i) if the
Common Stock is listed or admitted for trading on any United States
national securities exchange (which for purposes hereof shall include
the NASDAQ National Market System), the last reported sale price of
Common Stock on such exchange as reported in any newspaper of general
circulation, (ii) if the Common Stock is quoted on NASDAQ (other than
on the National Market System) or any similar system of automated
dissemination of quotations of securities prices in common use, the
mean between the closing high bid and low asked quotations for such day
of the Common Stock on such system or (iii) if neither clause (i) nor
(ii) is applicable, the Exercise Price, as set forth in Section 5
hereof, unless the Board determines, by any fair and reasonable means
prescribed by the Board, a value other than the Exercise Price.
(m) "INCENTIVE STOCK OPTION" shall mean an option that is an
incentive stock option as defined in Section 422 of the Internal
Revenue Code.
(n) "INTERNAL REVENUE CODE" or "CODE" shall mean the Internal
Revenue Code of 1986, as it now exists or may be amended from time to
time.
(o) "NONQUALIFIED STOCK OPTION" shall mean a stock option that
is not an incentive stock option as defined in Section 422 of the
Internal Revenue Code.
(p) "OPTION" (when capitalized) shall mean any option granted
under this Plan.
(q) "OPTIONEE" shall mean a person to whom an Option is
granted under this Plan or any successor to the rights of such person.
(r) "OUTSIDE DIRECTOR" shall mean a Director who qualifies as
an "outside director" under the regulations promulgated under Section
162(m) of the Internal Revenue Code and as a "non-employee director"
under Rule 16b-3 promulgated under the Securities Exchange Act of 1934,
effective August 15, 1996.
(s) "PLAN" shall mean this 2000 Employee Stock Option Plan for
The Concours Group, Inc.
(t) "SHARE(S)" shall mean a share or shares of the Common
Stock.
(u) "SUBSIDIARY" shall mean any corporation (other than the
Company) in any unbroken chain of corporations beginning with the
Company if, at the time of the granting of the Option, each of the
corporations other than the last corporation in the unbroken chain owns
stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
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<PAGE> 3
SECTION 3. SHARES AND OPTIONS.
(a) The Company may grant to Eligible Persons from time to
time Options to purchase an aggregate of up to 1,000,000 Shares from
Shares held in the Company's treasury or from authorized and unissued
Shares. If any Option granted under the Plan shall terminate, expire,
or be canceled or surrendered as to any Shares, new Options may
thereafter be granted covering such Shares. An Option granted hereunder
shall be either an Incentive Stock Option or a Nonqualified Stock
Option as determined by the Committee at the Date of Grant of such
Option and shall clearly state whether it is an Incentive Stock Option
or a Nonqualified Stock Option. Incentive Stock Options may only be
granted to persons who are Employees.
(b) Subject to Section 12, the aggregate Fair Market Value
(determined at the Date of Grant of the Option) of the Shares with
respect to which any Incentive Stock Option is exercisable for the
first time by an Optionee during any calendar year under the Plan and
all such plans of the Company and any parent and subsidiary of the
Company (as defined in Section 424 of the Code) shall not exceed
$100,000.
(c) Subject to the provisions of the Plan, the Committee may
grant Options to such Eligible Persons as the Committee in its sole
discretion determines are eligible to receive such grants in accordance
with Section 4 below. Notwithstanding any provision herein to the
contrary, there shall be no grant of Options in excess of 100,000
Shares to any one individual in any one year.
SECTION 4. CONDITIONS FOR GRANT OF OPTIONS.
(a) Each Option shall be evidenced by an option agreement that
may contain any term deemed necessary or desirable by the Committee,
provided such terms are not inconsistent with this Plan or any
applicable law. Optionees shall be those persons selected by the
Committee from Eligible Persons. Any person who files with the
Committee, in a form satisfactory to the Committee, a written waiver of
eligibility to receive any Option under this Plan shall not be eligible
to receive any Option under this Plan for the duration of such waiver.
(b) In granting Options, the Committee shall take into
consideration the contribution the person has made or may make to the
success of the Company or its Subsidiaries and such other factors as
the Board shall determine. The Committee shall also have the authority
to consult with and receive recommendations from officers and other
personnel of the Company and its Subsidiaries with regard to these
matters. The Committee may from time to time in granting Options under
the Plan prescribe such other terms and conditions concerning such
Options as it deems appropriate, including, without limitation,
relating an Option to achievement of specific goals established by the
Committee or the continued employment of the Optionee for a specified
period of time, provided that such terms and conditions are not more
favorable to an Optionee than those expressly permitted herein.
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<PAGE> 4
(c) The Committee in its sole discretion shall determine in
each case whether periods of military or government service shall
constitute a continuation of employment for the purposes of this Plan
or any Option.
(d) The Committee in its sole discretion may delegate to the
Chief Executive Officer of the Company any or all of its powers under
this Plan with regard to the granting and administration of Options to
Eligible Persons not subject to reporting under Section 16 of the
Exchange Act.
SECTION 5. EXERCISE PRICE. The Exercise Price per Share shall
be determined by the Compensation Committee at the time of grant.
Notwithstanding anything contained herein to the contrary but subject
to Section 11 below, the Exercise Price of any Incentive Stock Option
shall not be less than one hundred percent (100%) of the Fair Market
Value per Share on the Date of Grant.
SECTION 6. EXERCISE OF OPTIONS.
(a) An Option shall be exercisable in installments as follows;
provided, however, no Option shall be exercisable prior to the first
anniversary date of the Date of Grant (hereinafter, "Anniversary
Date"). An Option may be exercised as to twenty-five percent (25%) of
the Shares covered by the Option beginning on the first Anniversary
Date; thereafter, an additional twenty-five percent (25%) of the Shares
subject to the Option shall be exercisable as of the Anniversary Date
in each of the following three years except as otherwise provided in
Section 7 below. The Committee may in its sole discretion accelerate or
postpone the date on which any Option may be exercised. In no event
shall an Option be exercisable after the expiration of ten (10) years
from the Date of Grant.
(b) An Option shall be deemed exercised when (i) the Company
has received written notice of such exercise in accordance with the
terms of the Option, (ii) full payment of the aggregate exercise price
of the Shares as to which the Option is exercised has been made, and
(iii) arrangements that are satisfactory to the Committee in its sole
discretion have been made for the Optionee's payment to the Company of
the amount, if any, that the Committee determines to be necessary for
the Company or a Subsidiary to withhold in accordance with applicable
federal or state income tax withholding requirements.
(c) Unless further limited by the Committee in any Option, the
exercise price of any Shares purchased shall be paid by any of the
following methods:
(i) In cash, by certified or cashier's check, by money
order, by personal check (if approved by the Committee) of an
amount equal to the aggregate purchase price of the Shares to
which the exercise relates;
(ii) If approved by the Committee in its sole discretion,
by delivery of Shares already owned by the Optionee, which
Shares have an aggregate value of the Fair Market Value, as
determined by the Committee in its sole discretion at the time
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<PAGE> 5
of exercise, on the date received by the Company, together
with any cash tendered therewith, equal to the purchase price
of the Shares to which the exercise relates; or
(iii) If approved by the Committee in its sole discretion,
by delivery to the Company of an exercise notice that requests
the Company to issue to the Optionee the full number of Shares
as to which the Option is then exercisable, less the number of
Shares that have an aggregate Fair Market Value, as determined
by the Committee in its sole discretion at the time of
exercise, equal to the aggregate purchase price of the Shares
to which such exercise relates. (This method of exercise
allows the Optionee to use a portion of the Shares issuable at
the time of exercise as payment for the Shares to which the
Option relates and is often referred to as a "cashless
exercise." For example, if the Optionee elects to exercise
1,000 Shares at an exercise price of $0.25 and the current
Fair Market Value of the Shares on the date of exercise is
$1.00, the Optionee can use 250 of the 1,000 Shares at $1.00
per Share to pay for the exercise of the entire Option (250 x
$1.00 = $250.00) and receive only the remaining 750 Shares.)
SECTION 7. TERMINATION OF OPTION PERIOD.
(a) Unless otherwise provided in any Option or as determined
by the Committee upon the occurrence of the stated event, the
unexercised portion of an Option shall automatically and without notice
terminate and become null and void at the time of the earliest to occur
of the following, to the extent such Option was not exercisable at such
time: (i) the death of the Optionee, (ii) the total and permanent
"disability" (as defined in Section 22(e)(3) of the Code) of the
Optionee, (iii) the date on which the Optionee ceases to be employed by
the Company or a Subsidiary or ceases to be a Consultant to the Company
or a Subsidiary, as the case may be, regardless of the reason therefor,
or (iv) with respect to an Option held by a person who is a member of
the Board of Directors of the Company or a Subsidiary but who is not
also an Employee or Consultant (regardless of whether or not such
person was an Employee or Consultant at the time of grant), the date on
which the Optionee ceases to be a member of such Board of Directors.
(b) Unless otherwise provided in any Option or as determined
by the Committee upon the occurrence of the stated event, the
unexercised portion of an Option shall automatically and without notice
terminate and become null and void ninety (90) days after the earliest
to occur of the following, to the extent such Option was exercisable on
the date of the following: (i) the death of the Optionee, (ii) the
total and permanent "disability" (as defined in Section 22(e)(3) of the
Code) of the Optionee, (iii) the date on which the Optionee ceases to
be employed by the Company or a Subsidiary or ceases to be a Consultant
to the Company or a Subsidiary, as the case may be, regardless of the
reason therefor, or (iv) with respect to an Option held by a person who
is a member of the Board of Directors of the Company or a Subsidiary
but who is not also an Employee or Consultant (regardless of whether or
not such person was an Employee or Consultant at the time of grant),
the date on which the Optionee ceases to be a member of such Board of
Directors. In no event, however, shall the ninety (90) day period
described in this Section 7(b) extend beyond the exercise period stated
on the Option.
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<PAGE> 6
(c) In the event of the death of the Optionee, Options held by
such Optionee may be exercised by the Optionee's legal
representative(s), but only to the extent that such Options would
otherwise have been exercisable by the Optionee.
(d) For purposes of the Plan, the transfer of an Employee's
employment between the Company and any Subsidiary or between
Subsidiaries shall not be deemed to be a termination of the Employee's
employment.
(e) Notwithstanding any other provisions set forth herein, if
the Optionee shall (i) commit any act of malfeasance or wrongdoing
affecting the Company or any Subsidiary, (ii) breach any covenant not
to compete, or employment contract, with the Company or any Subsidiary,
or (iii) engage in conduct that would warrant the Optionee's discharge
for cause (excluding general dissatisfaction with the performance of
the Optionee's duties, but including any act of disloyalty or any
conduct clearly tending to bring discredit upon the Company or any
Subsidiary), any unexercised portion of Options held by the Optionee
shall immediately terminate and be void.
SECTION 8. ADJUSTMENT OF SHARES.
(a) If at any time while the Plan is in effect or unexercised
Options are outstanding, there shall be any increase or decrease in the
number of issued and outstanding Shares through the declaration of a
stock dividend or through any recapitalization resulting in a stock
split-up, combination or exchange of Shares, then and in such event:
(i) appropriate adjustment shall be made in the maximum
number of Shares then subject to being optioned under the
Plan, so that the same proportion of the Company's issued and
outstanding Shares shall continue to be subject to being so
optioned; and
(ii) appropriate adjustment shall be made in the number of
Shares and the exercise price per Share thereof then subject
to outstanding Options, so that the same proportion of the
Company's issued and outstanding Shares shall remain subject
to purchase at the same aggregate exercise price.
(b) The Committee may change the terms of Options outstanding
under this Plan, with respect to the exercise price or the number of
Shares subject to the Options, or both, when, in the Committee's sole
discretion, such adjustments become appropriate by reason of any
corporate transaction.
(c) Except as otherwise expressly provided herein, the
issuance by the Company of shares of its capital stock of any class, or
securities convertible into shares of capital stock of any class,
either in connection with direct sale or upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares or
obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to the number of Shares reserved for issuance
under the Plan or the
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<PAGE> 7
number of or exercise price of Shares then subject to outstanding
Options granted under the Plan.
(d) Without limiting the generality of the foregoing, the
existence of outstanding Options granted under the Plan shall not
affect in any manner the right or power of the Company to make,
authorize or consummate (i) any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or
its business; (ii) any merger or consolidation of the Company; (iii)
any issue by the Company of debt securities, or preferred or preference
stock that would rank above the Shares subject to outstanding Options;
(iv) the dissolution or liquidation of the Company; (v) any sale,
transfer or assignment of all or any part of the assets or business of
the Company; or (vi) any other corporate act or proceeding, whether of
a similar character or otherwise.
SECTION 9. TRANSFERABILITY OF OPTIONS. Each Incentive Stock Option
shall provide that such Incentive Stock Option shall not be transferrable by the
Optionee otherwise than by will or the laws of descent and distribution and that
so long as an Optionee lives, only such Optionee or his guardian or legal
representative shall have the right to exercise such Incentive Stock Option. The
Committee, in its sole discretion, may provide in the agreement governing any
Nonqualified Stock Option that such Nonqualified Stock Option shall be
transferable and, if so, the extent to which such Nonqualified Stock Option is
transferable.
SECTION 10. ISSUANCE OF SHARES. No person shall be, or have any of the
rights or privileges of, a shareholder of the Company with respect to any of the
Shares subject to an Option unless and until certificates representing such
Shares shall have been issued and delivered to such person. As a condition of
any transfer of the certificate for Shares, the Committee may obtain such
agreements or undertakings, if any, as it may deem necessary or advisable to
assure compliance with any provision of the Plan, the agreement evidencing the
Option or any law or regulation including, but not limited to, the following:
(a) A representation, warranty or agreement by the Optionee to
the Company at the time any Option is exercised that he or she is
acquiring the Shares to be issued to him or her for investment and not
with a view to, or for sale in connection with, the distribution of any
such Shares; and
(b) A representation, warranty or agreement to be bound by any
legends that are, in the opinion of the Committee, necessary or
appropriate to comply with the provisions of any securities laws deemed
by the Board to be applicable to the issuance of the Shares and are
endorsed upon the Share certificates.
SECTION 11. OPTIONS FOR 10% SHAREHOLDER. Notwithstanding any other
provisions of the Plan to the contrary, an Incentive Stock Option shall not be
granted to any person owning directly (or indirectly through attribution under
Section 424(d) of the Code) at the Date of Grant, stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company (or of
its parent or subsidiary [as defined in Section 424 of the Internal Revenue
Code] at the Date of Grant) unless the exercise price of such Incentive Stock
Option is at least 110% of the Fair Market Value of the Shares subject to such
Incentive Stock Option on the Date of Grant, and the period
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<PAGE> 8
during which the Incentive Stock Option may be exercised does not exceed five
(5) years from the Date of Grant.
SECTION 12. NONQUALIFIED STOCK OPTIONS. Nonqualified Stock Options may
be granted hereunder and shall be subject to all terms and provisions hereof
except that each such Nonqualified Stock Option (i) must be clearly designated
as a Nonqualified Stock Option; (ii) may be granted for Shares in excess of the
limits contained in Section 3(b) of this Plan; and (iii) shall not be subject to
Section 11 of this Plan. If both Incentive Stock Options and Nonqualified Stock
Options are granted to an Optionee, the right to exercise, to the full extent
thereof, Options of either type shall not be contingent in whole or in part upon
the exercise of, or failure to exercise, Options of the other type.
SECTION 13. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Compensation
Committee of the Board or other committee thereof as appointed by the
Board (the "Committee"), consisting of not less than two (2) members,
each of whom is an Outside Director.
(b) The Committee, from time to time, may adopt rules and
regulations for carrying out the purposes of the Plan. The
determinations and the interpretation and construction of any provision
of the Plan by the Committee shall be final and conclusive.
(c) Subject to the express provisions of this Plan, the
Committee shall have the authority, in its sole and absolute discretion
(i) to adopt, amend, and rescind administrative and interpretive rules
and regulations relating to this Plan or any Option; (ii) to construe
the terms of this Plan or any Option; (iii) as provided in Section
8(a), upon certain events to make appropriate adjustments to the
exercise price and number of Shares subject to this Plan and Option;
and (iv) to make all other determinations and perform all other acts
necessary or advisable for administering this Plan, including the
delegation of such ministerial acts and responsibilities as the
Committee deems appropriate. The Committee may correct any defect or
supply any omission or reconcile any inconsistency in this Plan or any
Option in the manner and to the extent it shall deem expedient to carry
it into effect, and it shall be the sole and final judge of such
expediency. The Committee shall have full discretion to make all
determinations on the matters referred to in this Section 13(c), and
such determinations shall be final, binding and conclusive.
(d) The Committee is expressly authorized to make
modifications to the Plan as necessary to effectuate the intent of the
Plan as a result of any changes in the tax, accounting, or securities
laws treatment of Participants and the Plan.
SECTION 14. GOVERNMENT REGULATIONS. This Plan, Options and the
obligations of the Company to sell and deliver Shares under any Options, shall
be subject to all applicable laws, rules and regulations, and to such approvals
by any governmental agencies or national securities exchanges as may be
required.
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SECTION 15. MISCELLANEOUS.
(a) The proceeds received by the Company from the sale of
Shares pursuant to an Option shall be used for general corporate
purposes.
(b) The grant of an Option shall be in addition to any other
compensation paid to the Optionee or other stock option plans of the
Company or other benefits with respect to the Optionee's position with
or relationship to the Company or its Subsidiaries. The grant of an
Option shall not confer upon the Optionee the right to continue as an
Employee or Consultant, or interfere in any way with the rights of the
Company to terminate his status as an Employee or Consultant.
(c) Neither the members of the Board nor any member of the
Committee shall be liable for any act, omission, or determination taken
or made in good faith with respect to this Plan or any Option, and
members of the Board and the Committee shall, in addition to all other
rights of indemnification and reimbursement, be entitled to
indemnification and reimbursement by the Company in respect of any
claim, loss, damage, liability or expense (including attorneys' fees,
the costs of settling any suit, provided such settlement is approved by
independent legal counsel selected by the Company, and amounts paid in
satisfaction of a judgment, except a judgment based on a finding of bad
faith) arising from such claim, loss, damage, liability or expense to
the full extent permitted by law and under any directors' and officers'
liability or similar insurance coverage that may from time to time be
in effect.
(d) Any issuance or transfer of Shares to an Optionee, or to
his legal representative, heir, legatee, distributee, or assign in
accordance with the provisions of this Plan or the applicable Option,
shall, to the extent thereof, be in full satisfaction of all claims of
such persons under the Plan. The Committee may require any Optionee,
legal representative, heir, legatee or distributee as a condition
precedent to such payment or issuance or transfer of Shares, to execute
a release and receipt for such payment or issuance or transfer of
Shares in such form as it shall determine.
(e) Neither the Committee nor the Company guarantees Shares
from loss or depreciation.
(f) All expenses incident to the administration, termination,
or protection of this Plan or any Option, including, but not limited
to, legal and accounting fees, shall be paid by the Company; provided,
however, the Company may recover any and all damages, fees, expenses
and costs arising out of any actions taken by the Company to enforce
its rights under this Plan or any Option.
(g) Records of the Company shall be conclusive for all
purposes under this Plan or any Option, unless determined by the
Committee or the Board to be incorrect.
(h) The Company shall, upon request or as may be specifically
required under this Plan or any Option, furnish or cause to be
furnished all of the information or documentation
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that is necessary or required by the Committee to perform its duties
and functions under this Plan or any Option.
(i) The Company assumes no liability to any Optionee or his
legal representatives, heirs, legatees or distributees for any act of,
or failure to act on the part of, the Company, the Committee or the
Board.
(j) Any action required of the Company or the Committee
relating to this Plan or any Option shall be by resolution of the
Company or Committee, respectively, or by a person authorized to act by
resolution of the Company or Committee, respectively.
(k) If any provision of this Plan or any Option is held to be
illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining provisions of this Plan or any Option, but
such provision shall be fully severable, and the Plan or Option, as
applicable, shall be construed and enforced as if the illegal or
invalid provision had never been included in the Plan or Option, as
applicable.
(l) Whenever any notice is required or permitted under this
Plan, such notice must be in writing and personally delivered or sent
by mail or delivery by a nationally recognized courier service. Any
notice required or permitted to be delivered under an Option shall be
deemed to be delivered on the date on which it is personally delivered,
or, if mailed, whether actually received or not, on the third Business
Day after it is deposited in the United States mail, certified or
registered, postage prepaid, addressed to the person who is to receive
it at the address that such person has previously specified by written
notice delivered in accordance with this Section 15(l) or, if by
courier, seventy-two (72) hours after it is sent, addressed as
described in this Section 15(l). The Company or the Optionee may
change, at any time and from time to time, by written notice to the
other, the address that it or he had previously specified for receiving
notices. Until changed in accordance with this Plan, the Company and
the Optionee shall specify as its and his address for receiving notices
the address set forth in the Option pertaining to the Shares to which
such notice relates.
(m) Any person entitled to notice under this Plan may waive
such notice.
(n) The titles and headings of Sections are included for
convenience of reference only and are not to be considered in
construction of this Plan's provisions.
(o) All questions arising with respect to the provisions of
this Plan shall be determined by application of the laws of the State
of Texas except to the extent Texas law is preempted by federal law.
The obligation of the Company to sell and deliver Shares under this
Plan is subject to applicable laws and to the approval of any
governmental authority required in connection with the authorization,
issuance, sale, or delivery of such Shares.
(p) Words used in the masculine shall apply to the feminine
where applicable, and wherever the context of this Plan dictates, the
plural shall be read as the singular and the singular as the plural.
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(q) The Company shall be entitled to recover from an Optionee
reasonable attorneys' fees incurred in connection with the enforcement
of the terms and provisions of the Plan and any agreement governing any
Option, whether by an action to enforce specific performance, or an
action for damages for its breach or otherwise.
SECTION 16. AMENDMENT AND DISCONTINUATION OF THE PLAN. The Board may
from time to time amend, suspend or terminate the Plan or any Option; provided,
however, that no such amendment may alter any provision of the Plan or any
Option without compliance with any applicable shareholder approval requirements
promulgated under the Internal Revenue Code, if applicable, or by any stock
exchange or market on which the Common Stock of the Company is listed for
trading; and provided, further, that, except to the extent provided in Section
7, no amendment or suspension of the Plan or any Option issued hereunder shall,
except as specifically permitted in any Option, substantially impair any Option
previously granted to any Optionee without the consent of such Optionee.
SECTION 17. EFFECTIVE DATE AND TERMINATION DATE. The effective date of
the Plan is the date set forth below, on which the date the Board of the Company
adopted this Plan. The Plan shall terminate on the tenth anniversary of the
effective date.
THE CONCOURS GROUP, INC.
-----------------------------------------
Ron Christman, President
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EXHIBIT 10.8
1998 EUROPEAN EQUITY COMPENSATION PLAN
FOR
THE CONCOURS GROUP, INC.
SECTION 1. PURPOSE. This European Equity Compensation Plan of The
Concours Group, Inc. is intended as an incentive to attract and retain qualified
and competent employees, consultants, advisors and directors for the Company and
its Subsidiaries with respect to their European operations, upon whose efforts
and judgment the success of the Company is largely dependent, through the
encouragement of stock ownership in the Company by such persons. The Plan is
designed to meet this intent by offering cash incentives and other equity based
incentive awards, thereby providing such individuals a proprietary interest in
pursuing the long-term growth, profitability and financial success of The
Concours Group, Inc. and its Subsidiaries.
SECTION 2. DEFINITIONS. As used herein, the following terms shall have
the meaning indicated:
(a) "AWARD" OR "AWARDS" means an award or grant made to a
Participant under Sections 4 through 6 of this Plan.
(b) "ACT" shall mean the Securities Exchange Act of 1934, as
amended and in effect from time to time, or any successor statute.
(c) "BOARD" shall mean the Board of Directors of the Company.
(d) "BUSINESS DAY" shall mean (i) if the Shares trade on a
national exchange, any day that the national exchange on which the
Shares trade is open or (ii) if the Shares do not trade on a national
exchange, any day that commercial banks in the City of Houston are
open.
(e) "COMMISSION" shall mean the Securities and Exchange
Commission.
(f) "COMMITTEE" shall mean the Compensation Committee of the
Board or other committee, if any, appointed by the Board pursuant to
Section 10 hereof, and in the absence any appointment, the Board shall
be the Committee.
(g) "COMMON STOCK" shall mean the Company's common stock, par
value $.01 per share.
(h) "COMPANY" shall mean The Concours Group, Inc., a Delaware
corporation, or any successor corporation.
(i) "DATE OF GRANT" shall mean the date on which an Option,
SAR, or Restricted Award is granted to an Eligible Person pursuant to
Sections 4 through 6 of this Plan.
(j) "DEFERRED COMPENSATION STOCK OPTION" means any Option
granted pursuant to the provisions of Section 4 of the Plan that is
specifically designated as such.
<PAGE> 2
(k) "DISABILITY" means permanent and total disability. An
individual is permanently and totally disabled if he or she is unable
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 12 months.
(l) "DIRECTOR" shall mean a member of the Board.
(m) "ELIGIBLE PERSON(S)" in countries other than the United
Kingdom and France shall mean those persons who are (i) under written
contract, unless otherwise approved by the Committee (a "CONSULTING
CONTRACT"), with the Company or a Subsidiary to provide consulting or
advisory services to the Company or a Subsidiary (a "CONSULTANT"), (ii)
Employees or (iii) members of the Board of Directors of the Company or
a Subsidiary.
"ELIGIBLE PERSON(S)" in the United Kingdom shall mean
those persons who are Employees.
"ELIGIBLE PERSON(S)" in France shall mean those persons
who are (i) Consultants under a Consulting Contract with the Company or
a Subsidiary, or (ii) Employees.
(n) "EMPLOYEE(S)" shall mean those persons who are employees
of the Company or who are employees of any Subsidiary and shall include
executive directors of the Company or a Subsidiary.
(o) "FAIR MARKET VALUE" of a share on a particular date shall
be the closing price of the Common Stock, which shall be (i) if the
Common Stock is listed or admitted for trading on any United States
national securities exchange (which for purposes hereof shall include
the NASDAQ National Market System), the last reported sale price of
Common Stock on such exchange as reported in any newspaper of general
circulation, (ii) if the Common Stock is quoted on NASDAQ (other than
on the National Market System) or any similar system of automated
dissemination of quotations of securities prices in common use, the
mean between the closing high bid and low asked quotations for such day
of the Common Stock on such system or (iii) if neither clause (i) nor
(ii) is applicable, the price as determined by the Board by any fair
and reasonable means.
(p) "INTERNAL REVENUE CODE" or "CODE" shall mean the Internal
Revenue Code of 1986, as it now exists or may be amended from time to
time.
(q) "NONQUALIFIED STOCK OPTION" shall mean a stock option that
is not an incentive stock option as defined in Section 422 of the
Internal Revenue Code.
(r) "OPTION" OR "OPTIONS" (when capitalized) shall mean
Award(s) to purchase shares of Common Stock granted pursuant to the
provisions of Section 4 of this Plan.
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(s) "OUTSIDE DIRECTOR" shall mean a Director who qualifies as
an "outside director" under the regulations promulgated under Section
162(m) of the Internal Revenue Code and as a "non-employee director"
under Rule 16b-3 promulgated under the Securities Exchange Act of 1934,
effective August 15, 1996.
(t) "PARTICIPANT" means an employee of the Company or a
Subsidiary or individual who is performing services for either entity
and who is granted an Award under this Plan.
(u) "PLAN" shall mean this 1998 European Equity Compensation
Plan for The Concours Group, Inc.
(v) "RESTRICTED AWARD" means an Award granted pursuant to the
provisions of Section 6 of this Plan.
(w) "RESTRICTED STOCK GRANT" means an Award of shares of
Common Stock granted pursuant to the provisions of Section 6 of this
Plan.
(x) "RESTRICTED UNIT GRANT" means an Award of units
representing shares of Common Stock granted pursuant to the provisions
of Section 6 of this Plan.
(y) "SHARE(S)" shall mean a share or shares of the Common
Stock of The Concours Group, Inc.
(z) "STOCK APPRECIATION RIGHTS" means an Award to benefit from
the appreciation of Common Stock granted pursuant to the provisions of
Section 5 of this Plan.
(aa) "SUBSIDIARY" shall mean any corporation (other than the
Company) in any unbroken chain of corporations beginning with the
Company if, on the Date of Grant, each of the corporations other than
the last corporation in the unbroken chain owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one
of the other corporations in such chain.
SECTION 3. COMMON STOCK SUBJECT TO THE PLAN. The maximum number of
shares of Common Stock in respect of which Awards may be granted under the Plan
(the "PLAN MAXIMUM") shall be 600,000, subject to adjustment as provided in
Section 8 below. Common Stock issued under the Plan may be either authorized and
unissued shares or issued shares which have been reacquired by the Company. The
following terms and conditions shall apply to Common Stock subject to the Plan:
(a) In no event shall more than the Plan Maximum be cumulatively
available for Awards under the Plan;
(b) For the purpose of computing the total number of shares of Common
Stock available for Awards under the Plan, there shall be counted against the
foregoing limitations (i) the number of shares of Common Stock subject to
issuance upon exercise or settlement of Awards (regardless
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<PAGE> 4
of vesting) and (ii) the number of shares of Common Stock which equal the value
of Restricted Unit Grants or Stock Appreciation Rights determined at the dates
on which such Awards are granted;
(c) If any Awards are forfeited, terminated, expire unexercised,
settled in cash in lieu of stock or exchanged for other Awards, the shares of
Common Stock which were previously subject to the Awards shall again be
available for Awards under the Plan to the extent of such forfeiture or
expiration of the Awards; and
(d) Any shares of Common Stock which are used as full or partial
payment to the Company by a Participant of the purchase price of shares of
Common Stock upon exercise of an Option shall again be available for Awards
under the Plan.
SECTION 4. STOCK OPTIONS. An Option granted hereunder shall be either a
Nonqualified Stock Option or a Deferred Compensation Stock Option as determined
by the Committee at the Date of Grant of such Option and shall clearly state
whether it is a Nonqualified Stock Option or a Deferred Compensation Stock
Option.
(a) Conditions for Grant of Options.
(i) Each Option shall be evidenced by an option agreement that
may contain any term deemed necessary or desirable by the Committee, provided
such terms are not inconsistent with this Plan or any applicable law.
Participants shall be those persons selected by the Committee from Eligible
Persons. Any person who files with the Committee, in a form satisfactory to the
Committee, a written waiver of eligibility to receive any Option under this Plan
shall not be eligible to receive any Option under this Plan for the duration of
such waiver.
(ii) In granting Options, the Committee shall take into
consideration the contribution the person has made or may make to the success of
the Company or its Subsidiaries and such other factors as the Board shall
determine. The Committee shall also have the authority to consult with and
receive recommendations from officers and other personnel of the Company and its
Subsidiaries with regard to these matters. The Committee may from time to time
in granting Options under the Plan prescribe such other terms and conditions
concerning such Options as it deems appropriate, including, without limitation,
relating an Option to achievement of specific goals established by the
Committee, the continued employment of the Participant for a specified period of
time, or the entry into a Buy-Sell Agreement and/or Voting Trust with respect to
shares received pursuant to the exercise of an Option, provided that such terms
and conditions are not more favorable to an Participant than those expressly
permitted herein.
(iii) The Committee in its sole discretion shall determine in
each case whether periods of military or government service shall constitute a
continuation of employment for the purposes of this Plan or any Option.
(iv) The Committee in its sole discretion may delegate to the
Chief Executive Officer of the Company any or all of its powers under this Plan
with regard to the granting and administration of Options to Eligible Persons
not subject to reporting under Section 16 of the Act.
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<PAGE> 5
(b) Exercise Price. The Option exercise price per share shall be
determined by the Committee on the Date of Grant.
(c) Exercisability.
(i) Nonqualified Stock Options shall be exercisable in
installments as follows; provided, however, no Nonqualified Stock Options shall
be exercisable prior to the first anniversary date of the Date of Grant
(hereinafter, "ANNIVERSARY DATE"). Nonqualified Stock Options may be exercised
as to twenty-five percent (25%) of the Shares covered by the Nonqualified Stock
Options beginning on the first Anniversary Date; thereafter, an additional
twenty-five percent (25%) of the Shares subject to the Nonqualified Stock
Options shall be exercisable as of the Anniversary Date in each of the following
three years except as otherwise provided in Section 7 below. The Committee may
in its sole discretion accelerate the date on which any Nonqualified Stock
Options may be exercised. In no event shall Nonqualified Stock Options be
exercisable after the expiration of the day before the date which is ten (10)
years from the Date of Grant.
(ii) Deferred Compensation Stock Options shall become
exercisable in accordance with the terms of the grant thereof as established by
the Committee.
(d) Method of Exercise.
(i) Subject to the applicable exercise restrictions set forth
in Section 4(c), an Option shall be deemed exercised when (i) the Company has
received written notice of such exercise in accordance with the terms of the
Option, (ii) full payment of the aggregate exercise price of the Shares as to
which the Option is exercised has been made, and (iii) arrangements that are
satisfactory to the Committee in its sole discretion have been made for the
Participant's payment to the Company of the amount, if any, that the Committee
determines to be necessary for the Company or a Subsidiary to withhold or
account for in accordance with applicable tax requirements.
(ii) Unless further limited by the Committee in any Option,
the exercise price of any Shares purchased shall be paid by any of the following
methods:
(1) In cash, by certified or cashier's check, by
money order, by personal check (if approved by the Committee)
of an amount equal to the aggregate purchase price of the
Shares to which the exercise relates;
(2) If acceptable to the Committee, by delivery of
Shares already owned by the Participant, which Shares have an
aggregate value of the Fair Market Value, as determined by the
Committee in its sole discretion at the time of exercise, on
the date received by the Company, together with any cash
tendered therewith, equal to the purchase price of the Shares
to which the exercise relates; or
(3) If acceptable to the Committee, by delivery to
the Company of an exercise notice that requests the Company to
issue to the Participant the full number of Shares as to which
the Option is then exercisable, less the number of Shares that
have an aggregate Fair Market Value, as determined by the
Committee in its sole
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discretion at the time of exercise, equal to the aggregate
purchase price of the Shares to which such exercise relates.
(This method of exercise allows the Participant to use a
portion of the Shares issuable at the time of exercise as
payment for the Shares to which the Option relates and is
often referred to as a "cashless exercise." For example, if
the Participant elects to exercise 1,000 Shares at an exercise
price of $0.25 and the current Fair Market Value of the Shares
on the date of exercise is $1.00, the Participant can use 250
of the 1,000 Shares at $1.00 per Share to pay for the exercise
of the entire Option (250 x $1.00 = $250.00) and receive only
the remaining 750 Shares.)
(e) Restrictions on Method of Exercise. Notwithstanding the foregoing
payment provisions, the Committee, in granting Options pursuant to the Plan, may
limit the methods by which an Option may be exercised by any person and, in
processing any purported exercise of an Option granted pursuant to the Plan, may
refuse to recognize the method of exercise selected by the Participant (other
than the method of exercise set forth in Section 4(d)(i), if, in the opinion of
counsel of the Company, (i) the Participant is or within the six months
preceding such exercise was, subject to reporting under Section 16(a) of the Act
and (ii) there is a substantial likelihood that the method of exercise selected
by the Participant would subject the Participant to substantial risk of
liability under Section 16 of the Act.
(f) Transferability of Options. The Committee, in its sole discretion,
may provide in the agreement governing any Nonqualified Stock Option or Deferred
Compensation Option that such Options shall be transferable and, if so, the
extent to which such Nonqualified Stock Options or Deferred Compensation Options
are transferable.
(g) Deferred Compensation Stock Options. Deferred Compensation Stock
Options are intended to provide a means by which compensation payments can be
deferred to future dates. The number of shares of Common Stock subject to a
Deferred Compensation Stock Option shall be determined by the Committee, in its
sole discretion, in accordance with the following formula:
Amount of Compensation to be Deferred
-------------------------------------- = Number of Shares
Fair Market Value - Stock Option Price
Amounts of compensation deferred may include amounts earned under
Awards granted under the Plan or under any other compensation plan, program, or
arrangement of the Company as permitted by the Committee.
SECTION 5. STOCK APPRECIATION RIGHTS. The grant of Stock Appreciation
Rights under the Plan shall be subject to the following terms and conditions,
and shall contain such additional terms and conditions, not inconsistent with
the express terms of the Plan, as the Committee shall deem desirable:
(a) Stock Appreciation Rights. A Stock Appreciation Right is an Award
entitling a Participant to receive an amount equal to (or if the Committee shall
determine on the Date of Grant, less than) the excess of the Fair Market Value
of a share of Common Stock on the date of exercise over the Fair Market Value of
a share of Common Stock on the Date of Grant of the Stock
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Appreciation Right, or such other price as may be set by the Committee,
multiplied by the number of shares of Common Stock with respect to which the
Stock Appreciation Right shall have been exercised.
(b) Grant. A Stock Appreciation Right shall be granted separately. In
no event will Stock Appreciation Rights and other Awards be issued in tandem
whereby the exercise of one such Award affects the right to exercise the other.
(c) Exercise. A Stock Appreciation Right may be exercised by a
Participant in accordance with procedures established by the Committee, except
that in no event shall a Stock Appreciation Right be exercisable prior to the
first Anniversary Date of the Date of Grant. To the extent it is not
inconsistent with any insider trading compliance policies that the Company may
establish from time to time, the Committee, in its discretion, may provide that
a Stock Appreciation Right shall be automatically exercised on one or more
specified dates, or that a Stock Appreciation Right may be exercised during only
limited time periods.
(d) Form of Payment. Payment to the Participant upon exercise of a
Stock Appreciation Right may be made (i) in cash, by certified or cashier's
check or by money order, (ii) in shares of Common Stock, (iii) in the form of a
Deferred Compensation Stock Option, or (iv) any combination of the above, as the
Committee shall determine. The Committee may elect to make this determination
either at the time the Stock Appreciation Right is granted, or with respect to
payments contemplated in clauses (ii) and (iii) above, at the time of the
exercise.
SECTION 6. RESTRICTED AWARDS. Restricted Awards granted under the Plan
may be in the form of either Restricted Stock Grants or Restricted Unit Grants.
Restricted Awards shall be subject to the following terms and conditions, and
may contain such additional terms and conditions, not inconsistent with the
express provisions of the Plan, as the Committee shall deem desirable:
(a) Restricted Stock Grants. A Restricted Stock Grant is an Award of
shares of Common Stock transferred to a Participant subject to such terms and
conditions as the Committee deems appropriate, as set forth in Section 6(d)
below. Further, as a condition to the grant of Restricted Stock to any
Participant who, at the Date of Grant has not been employed by the Company and
has not performed services for the Company, the Committee shall require such
Participant to pay at least an amount equal to the par value of the shares of
Common Stock subject to the Restricted Stock Grant within thirty (30) days of
the date of the grant, and failure to pay such amount shall result in an
automatic termination of the Restricted Stock Grant.
(b) Restricted Unit Grants. A Restricted Unit Grant is an Award of
units granted to a Participant subject to such terms and conditions as the
Committee deems appropriate, including, without limitation, the requirement that
the Participant forfeit such units upon termination of employment for specified
reasons within a specified period of time, and restrictions on the sale,
assignment, transfer or other disposition of the units. Based on the discretion
of the Committee at the time a Restricted Unit Grant is awarded to a
Participant, a unit will have a value (i) equivalent to one share of Common
Stock, or (ii) equivalent to the excess of the Fair Market Value of a share of
Common Stock on the date the restriction lapses over the Fair Market Value
of a share of
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Common Stock on the Date of Grant of the Restricted Unit Grant (or over such
other value as the Committee determines at the time of the grant).
(c) Grant of Awards. Restricted Awards shall be granted separately
under the Plan in such form and on such terms and conditions as the Committee
may from time to time approve. Restricted Awards, however, may not be granted in
tandem with other Awards whereby the exercise of one such Award affects the
right to exercise the other. Subject to the terms of the Plan, the Committee
shall determine the number of Restricted Awards to be granted to a Participant
and the Committee may impose different terms and conditions on any particular
Restricted Award made to any Participant. Each Participant receiving a
Restricted Stock Grant shall be issued a stock certificate in respect of the
shares of Common Stock. The certificate shall be registered in the name of the
Participant, shall be accompanied by a stock power duly executed by the
Participant, and shall bear an appropriate legend referring to the terms,
conditions and restrictions applicable to the Award. The certificate evidencing
the shares shall be held in custody by the Company until the restrictions
imposed thereon shall have lapsed or been removed.
(d) Restriction Period. Restricted Awards shall provide that in order
for a Participant to vest in the Awards, the Participant must continuously
provide services for the Company or its Subsidiaries, subject to relief for
specified reasons, for a period of not less than one (1) year commencing on the
date of the Award and ending on such later date or dates as the Committee may
designate at the time of the Award ("RESTRICTION PERIOD"). During the
Restriction Period, a Participant may not sell, assign, transfer, pledge,
encumber, or otherwise dispose of shares of Common Stock received under a
Restricted Stock Grant. The Committee, in its sole discretion, may provide for
the lapse of restrictions in installments during the Restriction Period. Upon
expiration of the applicable Restriction Period (or lapse of restrictions during
the Restriction Period where the restrictions lapse in installments), the
Participant shall be entitled to receive his or her Restricted Award or the
applicable portion thereof, as the case may be. Upon termination of a
Participant's employment with the Company or any Subsidiary for any reason
during the Restriction Period, all or a portion of the shares or units, as
applicable, that are still subject to a restriction may vest or be forfeited, in
accordance with the terms and conditions established by the Committee at or
after grant.
(e) Payment of Awards. A Participant shall be entitled to receive
payment for a Restricted Unit Grant (or portion thereof) in an amount equal to
the aggregate Fair Market Value of the units covered by the Award upon the
expiration of the applicable Restriction Period. Payment in settlement of a
Restricted Unit Grant shall be made as soon as practicable following the
conclusion of the respective Restriction Period (i) in cash, by certified or
cashier's check or by money order, (ii) in shares of Common Stock equal to the
number of units granted under the Restricted Unit Grant with respect to which
such payment is made, (iii) in the form of a Deferred Compensation Stock Option,
or (iv) in any combination of the above, as the Committee shall determine. The
Committee may elect to make this determination either at the time the Award is
granted, or with respect to payments contemplated in clause (i) and (ii) above,
at the time the Award is settled.
(f) Rights as a Shareholder. A Participant shall have, with respect to
the shares of Common Stock received under a Restricted Stock Grant, all of the
rights of a shareholder of the Company, including the right to vote the shares,
and the right to receive any cash dividends. Stock dividends issued with respect
to the shares covered by a Restricted Stock Grant shall be treated as
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additional shares under the Restricted Stock Grant and shall be subject to the
same restrictions and other terms and conditions that apply to shares under the
Restricted Stock Grant with respect to which the dividends are issued.
SECTION 7. TERMINATION OF EMPLOYMENT. The terms and conditions under
which an Award may be exercised after a Participant's termination of employment
shall be determined by the Committee, except as otherwise provided herein.
(a) Termination by Death. If a Participant's employment by the Company
or any Subsidiary terminates by reason of the Participant's death or if the
Participant's death occurs within three months after the termination of his or
her employment, any Award held by such Participant may thereafter be exercised,
to the extent such Award otherwise was then exercisable by the Participant, by
the legal representative of the Participant's estate or by any person who
acquired the Award by will or the laws of descent and distribution, for a period
of one year from the Participant's termination of employment (as contemplated in
this Section 7(a)) or until the expiration of the stated term of the Award,
whichever period is the shorter. Any right of exercise under a nonvested Award
held by a Participant at the time of his or her death is extinguished and
terminated.
(b) Termination by Reason of Disability. If a Participant's employment
by the Company or Subsidiary terminates by reason of Disability, any Award held
by such Participant may thereafter be exercised by the Participant, to the
extent such Award otherwise was then exercisable by the Participant, for a
period of one year from the date of such termination of employment or until the
expiration of the stated term of such Award, whichever period is the shorter;
provided, however, that if the Participant dies within such one-year period, any
unexercised Award held by such Participant shall thereafter be exercisable to
the extent to which it was exercisable at the time of such death or until the
expiration of the stated term of such Award, whichever period is shorter. Any
right of exercise under a nonvested Award held by the Participant at the time of
his or her termination by reason of Disability is terminated and extinguished.
(c) Other Termination. If a Participant's employment by the Company or
any Subsidiary is terminated for any reason other than retirement, any Award
held by the Participant at the time of his or her termination shall be
exercisable, to the extent otherwise then exercisable, for the lesser of three
(3) months from the date of such termination or the balance of the term of the
Award, and any right of exercise under any nonvested Award held by a Participant
at the time of his or her termination is terminated and extinguished, provided
that the Committee may extend such Award for periods determined in its
discretion; provided, however, that upon termination of employment, if the
Participant continues to serve, or commences serving, as a director of the
Company, then in such event any Awards may continue to be held by the
Participant under the original terms thereof.
(d) For purposes of the Plan, the transfer of an Employee's employment
between the Company and any Subsidiary or between Subsidiaries shall not be
deemed to be a termination of the Employee's employment.
(e) Notwithstanding any other provisions set forth herein, if the
Participant shall (i) commit any act of malfeasance or wrongdoing affecting the
Company or any Subsidiary, (ii) breach any covenant not to compete, or
employment contract, with the Company or any Subsidiary, or (iii)
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engage in conduct that would warrant the Participant's discharge for cause
(excluding general dissatisfaction with the performance of the Participant's
duties, but including any act of disloyalty or any conduct clearly tending to
bring discredit upon the Company or any Subsidiary), any unexercised portion of
Options held by the Participant shall immediately terminate and be void.
SECTION 8. ADJUSTMENT OF SHARES.
(a) If at any time while the Plan is in effect or unexercised Awards
are outstanding, there shall be any increase or decrease in the number of issued
and outstanding Shares through the declaration of a stock dividend or through
any recapitalization resulting in a stock split-up, combination or exchange of
Shares, then and in such event the Board, in its sole discretion, may make
adjustments it deems appropriate to reflect such change with respect to:
(i) the maximum number of Shares which may be sold or awarded
to any Participant;
(ii) the number of shares of Common Stock covered by each
outstanding Award; and
(iii) the price per share in respect of the outstanding
Awards.
(b) The Committee may change the terms of Options outstanding under
this Plan, with respect to the exercise price or the number of Shares subject to
the Options, or both, when, in the Committee's sole discretion, such adjustments
become appropriate by reason of any corporate transaction.
(c) Except as otherwise expressly provided herein, the issuance by the
Company of shares of its capital stock of any class, or securities convertible
into shares of capital stock of any class, either in connection with direct sale
or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to the number of Shares reserved for issuance under the
Plan or the number of or exercise price of Shares then subject to outstanding
Options granted under the Plan.
(d) Without limiting the generality of the foregoing, the existence of
outstanding Awards granted under the Plan shall not affect in any manner the
right or power of the Company to make, authorize or consummate (i) any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business; (ii) any merger or consolidation of
the Company; (iii) any issue by the Company of debt securities, or preferred or
preference stock that would rank above the Shares subject to outstanding
Options; (iv) the dissolution or liquidation of the Company; (v) any sale,
transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
SECTION 9. ISSUANCE OF SHARES. No person shall be, or have any of the
rights or privileges of, a shareholder of the Company with respect to any Awards
unless and until certificates representing such Shares shall have been issued
and delivered to such person. As a condition of any
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transfer of the certificate for Shares, the Committee may obtain such agreements
or undertakings, if any, as it may deem necessary or advisable to assure
compliance with any provision of the Plan, the agreement evidencing the Award or
Awards, or any law or regulation including, but not limited to, the following:
(a) A representation, warranty or agreement by the Participant to the
Company at the time any Option is exercised that he or she is acquiring the
Shares to be issued to him or her for investment and not with a view to, or for
sale in connection with, the distribution of any such Shares; and
(b) A representation, warranty or agreement to be bound by any legends
that are, in the opinion of the Committee, necessary or appropriate to comply
with the provisions of any securities laws deemed by the Board to be applicable
to the issuance of the Shares and are endorsed upon the Share certificates.
SECTION 10. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Compensation Committee of the
Board or other committee thereof as appointed by the Board (the "COMMITTEE"),
consisting of not less than two (2) members. The Committee shall be constituted
so as to permit the Plan to comply with Rule 16b-3 promulgated by the Commission
under the Act or any successor rule and shall initially be comprised of two
members of the Board, each of whom is an Outside Director.
(b) The Committee, from time to time, may adopt rules and regulations
for carrying out the purposes of the Plan. The determinations and the
interpretation and construction of any provision of the Plan by the Committee
shall be final and conclusive.
(c) Subject to the express provisions of this Plan and any insider
trading compliance policies that may be adopted by the Company from time to
time, the Committee shall have the authority, in its sole and absolute
discretion (i) to adopt, amend, and rescind administrative and interpretive
rules and regulations relating to this Plan or any Award; (ii) to construe the
terms of this Plan or any Award; (iii) as provided in Section 8(a), upon certain
events to make appropriate adjustments to the number of Shares and price per
share subject to this Plan; and (iv) to make all other determinations and
perform all other acts necessary or advisable for administering this Plan,
including the delegation of such ministerial acts and responsibilities as the
Committee deems appropriate. The Committee may correct any defect or supply any
omission or reconcile any inconsistency in this Plan or any Option in the manner
and to the extent it shall deem expedient to carry it into effect, and it shall
be the sole and final judge of such expediency. The Committee shall have full
discretion to make all determinations on the matters referred to in this Section
10(c), and such determinations shall be final, binding and conclusive.
(d) The Committee is expressly authorized to make modifications to the
Plan as necessary to effectuate the intent of the Plan as a result of any
changes in the tax, accounting, or securities laws treatment of Participants and
the Plan.
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<PAGE> 12
SECTION 11. GOVERNMENT REGULATIONS. This Plan, Awards and the
obligations of the Company to sell and deliver Shares under any Awards, shall be
subject to all applicable laws, rules and regulations, and to such approvals by
any governmental agencies or national securities exchanges as may be required.
SECTION 12. MISCELLANEOUS.
(a) The proceeds received by the Company from the sale of Shares
pursuant to an Award shall be used for general corporate purposes.
(b) The grant of an Award shall be in addition to any other
compensation paid to the Participant or other plans of the Company or other
benefits with respect to the Participant's position with or relationship to the
Company or its Subsidiaries. The grant of an Award shall not confer upon the
Participant the right to continue as an Employee or Consultant, or interfere in
any way with the rights of the Company or a Subsidiary to terminate his status
as an Employee or Consultant.
(c) Neither the members of the Board nor any member of the Committee
shall be liable for any act, omission, or determination taken or made in good
faith with respect to this Plan or any Award, and members of the Board and the
Committee shall, in addition to all other rights of indemnification and
reimbursement, be entitled to indemnification and reimbursement by the Company
or a Subsidiary in respect of any claim, loss, damage, liability or expense
(including attorneys' fees, the costs of settling any suit, provided such
settlement is approved by independent legal counsel selected by the Company, and
amounts paid in satisfaction of a judgment, except a judgment based on a finding
of bad faith) arising from such claim, loss, damage, liability or expense to the
full extent permitted by law and under any directors' and officers' liability or
similar insurance coverage that may from time to time be in effect.
(d) Any issuance or transfer of Shares to an Participant, or to his
legal representative, heir, legatee, distributee, or assign in accordance with
the provisions of this Plan or the applicable Award, shall, to the extent
thereof, be in full satisfaction of all claims of such persons under the Plan.
The Committee may require any Participant, legal representative, heir, legatee
or distributee as a condition precedent to such payment or issuance or transfer
of Shares, to execute a release and receipt for such payment or issuance or
transfer of Shares in such form as it shall determine.
(e) Neither the Committee nor the Company or a Subsidiary guarantees
Shares from loss or depreciation.
(f) All expenses incident to the administration, termination, or
protection of this Plan or any Option, including, but not limited to, legal and
accounting fees, shall be paid by the Company; provided, however, the Company
may recover any and all damages, fees, expenses and costs arising out of any
actions taken by the Company to enforce its rights under this Plan or any Award.
(g) Records of the Company shall be conclusive for all purposes under
this Plan or any Award, unless determined by the Committee or the Board to be
incorrect.
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<PAGE> 13
(h) The Company or a Subsidiary shall, upon request or as may be
specifically required under this Plan or any Option, furnish or cause to be
furnished all of the information or documentation that is necessary or required
by the Committee to perform its duties and functions under this Plan or any
Option.
(i) The Company and its Subsidiaries do not assume liability to any
Participant or his legal representatives, heirs, legatees or distributees for
any act of, or failure to act on the part of, the Company, its Subsidiaries, the
Committee or the Board.
(j) Any action required of the Company or the Committee relating to
this Plan or any Award shall be by resolution of the Company or Committee,
respectively, or by a person authorized to act by resolution of the Company or
Committee, respectively.
(k) If any provision of this Plan or any Award is held to be illegal or
invalid for any reason, the illegality or invalidity shall not affect the
remaining provisions of this Plan or any Award, but such provision shall be
fully severable, and the Plan or Award, as applicable, shall be construed and
enforced as if the illegal or invalid provision had never been included in the
Plan or Award, as applicable.
(l) Whenever any notice is required or permitted under this Plan, such
notice must be in writing and personally delivered or sent by mail or delivery
by a nationally recognized courier service. Any notice required or permitted to
be delivered under an Award shall be deemed to be delivered on the date on which
it is personally delivered, or, if mailed, whether actually received or not, on
the third Business Day after it is deposited in the United States mail,
certified or registered, postage prepaid, addressed to the person who is to
receive it at the address that such person has previously specified by written
notice delivered in accordance with this Section 13(l) or, if by courier,
seventy-two (72) hours after it is sent, addressed as described in this Section
13(l). The Company or the Participant may change, at any time and from time to
time, by written notice to the other, the address that it or he had previously
specified for receiving notices. Until changed in accordance with this Plan, the
Company and the Participant shall specify as its and his address for receiving
notices the address set forth in the Award pertaining to the Shares to which
such notice relates.
(m) Any person entitled to notice under this Plan may waive such
notice.
(n) The titles and headings of Sections are included for convenience of
reference only and are not to be considered in construction of this Plan's
provisions.
(o) All questions arising with respect to the provisions of this Plan
shall be determined by application of the laws of the State of Texas except to
the extent Texas law is validly preempted. The obligation of the Company to sell
and deliver Shares under this Plan is subject to applicable laws and to the
approval of any governmental authority required in connection with the
authorization, issuance, sale, or delivery of such Shares. The Committee is
authorized to establish dispute resolution procedures, methods, and venue in its
discretion.
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<PAGE> 14
(p) Words used in the masculine shall apply to the feminine where
applicable, and wherever the context of this Plan dictates, the plural shall be
read as the singular and the singular as the plural.
(q) The Company shall be entitled to recover from a Participant
reasonable attorneys' fees incurred in connection with the enforcement of the
terms and provisions of the Plan and any agreement governing any Award, whether
by an action to enforce specific performance, or an action for damages for its
breach or otherwise.
(r) A Participant may not derive any rights to any awards or grants
under this Plan from the fact that awards or grants have been given to others,
even if such persons are in comparable situations. Every Award made herein is
voluntary and at the sole discretion of the Company, and does not, even in the
case of repeated payments, give rise to any future claims.
SECTION 13. AMENDMENT AND DISCONTINUATION OF THE PLAN. The Board may
from time to time amend, suspend or terminate the Plan or any Award; provided,
however, that no such amendment may alter any provision of the Plan or any Award
without compliance with any applicable shareholder approval requirements
promulgated under the Internal Revenue Code, if applicable, or by any stock
exchange or market on which the Common Stock of the Company is listed for
trading; and provided, further, that, except to the extent provided in Section
8, no amendment or suspension of the Plan or any Award issued hereunder shall,
except as specifically permitted in any Award, substantially impair any Award
previously granted to any Participant without the consent of such Participant.
SECTION 14. EFFECTIVE DATE AND TERMINATION DATE. The effective date of
the Plan is the date set forth below, on which the date the Board of the Company
adopted this Plan. The Plan shall terminate on the tenth anniversary of the
effective date.
THE CONCOURS GROUP, INC.
-------------------------
Ron Christman, President
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<PAGE> 1
EXHIBIT 10.9
2000 INTERNATIONAL EQUITY COMPENSATION PLAN
FOR
THE CONCOURS GROUP, INC.
SECTION 1. PURPOSE. This 2000 International Equity Compensation Plan of The
Concours Group, Inc. is intended as an incentive to attract and retain qualified
and competent employees, consultants, advisors and directors for the Company and
its Subsidiaries with respect to their international operations, upon whose
efforts and judgment the success of the Company is largely dependent, through
the encouragement of stock ownership in the Company by such persons. The Plan is
designed to meet this intent by offering cash incentives and other equity based
incentive awards, thereby providing such individuals a proprietary interest in
pursuing the long-term growth, profitability and financial success of The
Concours Group, Inc. and its Subsidiaries.
SECTION 2. DEFINITIONS. As used herein, the following terms shall have the
meaning indicated:
(a) "AWARD" or "AWARDS" means an award or grant made to a Participant
under Sections 4 through 6 of this Plan.
(b) "ACT" shall mean the Securities Exchange Act of 1934, as amended
and in effect from time to time, or any successor statute.
(c) "BOARD" shall mean the Board of Directors of the Company.
(d) "BUSINESS DAY" shall mean (i) if the Shares trade on a national
exchange, any day that the national exchange on which the Shares trade is
open or (ii) if the Shares do not trade on a national exchange, any day
that commercial banks in the City of Houston are open.
(e) "COMMISSION" shall mean the Securities and Exchange Commission.
(f) "COMMITTEE" shall mean the Compensation Committee of the Board or
other committee, if any, appointed by the Board pursuant to Section 10
hereof, and in the absence any appointment, the Board shall be the
Committee.
(g) "COMMON STOCK" shall mean the Company's common stock, par value
$.01 per share.
(h) "COMPANY" shall mean The Concours Group, Inc., a Delaware
corporation, or any successor corporation.
(i) "DATE OF GRANT" shall mean the date on which an Option, SAR, or
Restricted Award is granted to an Eligible Person pursuant to Sections 4
through 6 of this Plan.
(j) "DEFERRED COMPENSATION STOCK OPTION" means any Option granted
pursuant to the provisions of Section 4 of the Plan that is specifically
designated as such.
<PAGE> 2
(k) "DISABILITY" means permanent and total disability. An individual
is permanently and totally disabled if he or she is unable 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 12 months.
(l) "DIRECTOR" shall mean a member of the Board.
(m) "ELIGIBLE PERSON(S)" in countries other than the United Kingdom
and France shall mean those persons who are (i) under written contract,
unless otherwise approved by the Committee (a "CONSULTING CONTRACT"), with
the Company or a Subsidiary to provide consulting or advisory services to
the Company or a Subsidiary (a "CONSULTANT"), (ii) Employees or (iii)
members of the Board of Directors of the Company or a Subsidiary.
"ELIGIBLE PERSON(S)" in the United Kingdom shall mean those
persons who are Employees.
"ELIGIBLE PERSON(S)" in France shall mean those persons who are
(i) Consultants under a Consulting Contract with the Company or a
Subsidiary, or (ii) Employees.
(n) "EMPLOYEE(S)" shall mean those persons who are employees of the
Company or who are employees of any Subsidiary and shall include executive
directors of the Company or a Subsidiary.
(o) "FAIR MARKET VALUE" of a share on a particular date shall be the
closing price of the Common Stock, which shall be (i) if the Common Stock
is listed or admitted for trading on any United States national securities
exchange (which for purposes hereof shall include the NASDAQ National
Market System), the last reported sale price of Common Stock on such
exchange as reported in any newspaper of general circulation, (ii) if the
Common Stock is quoted on NASDAQ (other than on the National Market System)
or any similar system of automated dissemination of quotations of
securities prices in common use, the mean between the closing high bid and
low asked quotations for such day of the Common Stock on such system or
(iii) if neither clause (i) nor (ii) is applicable, the price as determined
by the Board by any fair and reasonable means.
(p) "INTERNAL REVENUE CODE" or "CODE" shall mean the Internal Revenue
Code of 1986, as it now exists or may be amended from time to time.
(q) "NONQUALIFIED STOCK OPTION" shall mean a stock option that is not
an incentive stock option as defined in Section 422 of the Internal Revenue
Code.
(r) "OPTION" or "OPTIONS" (when capitalized) shall mean Award(s) to
purchase shares of Common Stock granted pursuant to the provisions of
Section 4 of this Plan.
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<PAGE> 3
(s) "OUTSIDE DIRECTOR" shall mean a Director who qualifies as an
"outside director" under the regulations promulgated under Section 162(m)
of the Internal Revenue Code and as a "non-employee director" under Rule
16b-3 promulgated under the Securities Exchange Act of 1934, effective
August 15, 1996.
(t) "PARTICIPANT" means an employee of the Company or a Subsidiary or
individual who is performing services for either entity and who is granted
an Award under this Plan.
(u) "PLAN" shall mean this 2000 International Equity Compensation Plan
for The Concours Group, Inc.
(v) "RESTRICTED AWARD" means an Award granted pursuant to the
provisions of Section 6 of this Plan.
(w) "RESTRICTED STOCK GRANT" means an Award of shares of Common Stock
granted pursuant to the provisions of Section 6 of this Plan.
(x) "RESTRICTED UNIT GRANT" means an Award of units representing
shares of Common Stock granted pursuant to the provisions of Section 6 of
this Plan.
(y) "SHARE(S)" shall mean a share or shares of the Common Stock of The
Concours Group, Inc.
(z) "STOCK APPRECIATION RIGHTS" means an Award to benefit from the
appreciation of Common Stock granted pursuant to the provisions of Section
5 of this Plan.
(aa) "SUBSIDIARY" shall mean any corporation (other than the Company)
in any unbroken chain of corporations beginning with the Company if, on the
Date of Grant, each of the corporations other than the last corporation in
the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in
such chain.
SECTION 3. COMMON STOCK SUBJECT TO THE PLAN. The maximum number of shares
of Common Stock in respect of which Awards may be granted under the Plan (the
"PLAN MAXIMUM") shall be 600,000, subject to adjustment as provided in Section 8
below. Common Stock issued under the Plan may be either authorized and unissued
shares or issued shares which have been reacquired by the Company. The following
terms and conditions shall apply to Common Stock subject to the Plan:
(a) In no event shall more than the Plan Maximum be cumulatively available
for Awards under the Plan;
(b) For the purpose of computing the total number of shares of Common Stock
available for Awards under the Plan, there shall be counted against the
foregoing limitations (i) the number of shares of Common Stock subject to
issuance upon exercise or settlement of Awards (regardless
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<PAGE> 4
of vesting) and (ii) the number of shares of Common Stock which equal the value
of Restricted Unit Grants or Stock Appreciation Rights determined at the dates
on which such Awards are granted;
(c) If any Awards are forfeited, terminated, expire unexercised, settled in
cash in lieu of stock or exchanged for other Awards, the shares of Common Stock
which were previously subject to the Awards shall again be available for Awards
under the Plan to the extent of such forfeiture or expiration of the Awards; and
(d) Any shares of Common Stock which are used as full or partial payment to
the Company by a Participant of the purchase price of shares of Common Stock
upon exercise of an Option shall again be available for Awards under the Plan.
SECTION 4. STOCK OPTIONS. An Option granted hereunder shall be either a
Nonqualified Stock Option or a Deferred Compensation Stock Option as determined
by the Committee at the Date of Grant of such Option and shall clearly state
whether it is a Nonqualified Stock Option or a Deferred Compensation Stock
Option.
(a) Conditions for Grant of Options.
(i) Each Option shall be evidenced by an option agreement that may
contain any term deemed necessary or desirable by the Committee, provided such
terms are not inconsistent with this Plan or any applicable law. Participants
shall be those persons selected by the Committee from Eligible Persons. Any
person who files with the Committee, in a form satisfactory to the Committee, a
written waiver of eligibility to receive any Option under this Plan shall not be
eligible to receive any Option under this Plan for the duration of such waiver.
(ii) In granting Options, the Committee shall take into consideration
the contribution the person has made or may make to the success of the Company
or its Subsidiaries and such other factors as the Board shall determine. The
Committee shall also have the authority to consult with and receive
recommendations from officers and other personnel of the Company and its
Subsidiaries with regard to these matters. The Committee may from time to time
in granting Options under the Plan prescribe such other terms and conditions
concerning such Options as it deems appropriate, including, without limitation,
relating an Option to achievement of specific goals established by the
Committee, the continued employment of the Participant for a specified period of
time, or the entry into a Buy-Sell Agreement and/or Voting Trust with respect to
shares received pursuant to the exercise of an Option, provided that such terms
and conditions are not more favorable to an Participant than those expressly
permitted herein.
(iii) The Committee in its sole discretion shall determine in each
case whether periods of military or government service shall constitute a
continuation of employment for the purposes of this Plan or any Option.
(iv) The Committee in its sole discretion may delegate to the Chief
Executive Officer of the Company any or all of its powers under this Plan with
regard to the granting and administration of Options to Eligible Persons not
subject to reporting under Section 16 of the Act.
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<PAGE> 5
(b) Exercise Price. The Option exercise price per share shall be determined
by the Committee on the Date of Grant.
(c) Exercisability.
(i) Nonqualified Stock Options shall be exercisable in installments as
follows; provided, however, no Nonqualified Stock Options shall be exercisable
prior to the first anniversary date of the Date of Grant (hereinafter,
"ANNIVERSARY DATE"). Nonqualified Stock Options may be exercised as to
twenty-five percent (25%) of the Shares covered by the Nonqualified Stock
Options beginning on the first Anniversary Date; thereafter, an additional
twenty-five percent (25%) of the Shares subject to the Nonqualified Stock
Options shall be exercisable as of the Anniversary Date in each of the following
three years except as otherwise provided in Section 7 below. The Committee may
in its sole discretion accelerate or postpone the date on which any Nonqualified
Stock Options may be exercised. In no event shall Nonqualified Stock Options be
exercisable after the expiration of the day before the date which is ten (10)
years from the Date of Grant.
(ii) Deferred Compensation Stock Options shall become exercisable in
accordance with the terms of the grant thereof as established by the Committee.
(d) Method of Exercise.
(i) Subject to the applicable exercise restrictions set forth in
Section 4(c), an Option shall be deemed exercised when (i) the Company has
received written notice of such exercise in accordance with the terms of the
Option, (ii) full payment of the aggregate exercise price of the Shares as to
which the Option is exercised has been made, and (iii) arrangements that are
satisfactory to the Committee in its sole discretion have been made for the
Participant's payment to the Company of the amount, if any, that the Committee
determines to be necessary for the Company or a Subsidiary to withhold or
account for in accordance with applicable tax requirements.
(ii) Unless further limited by the Committee in any Option, the
exercise price of any Shares purchased shall be paid by any of the following
methods:
(1) In cash, by certified or cashier's check, by money order, by
personal check (if approved by the Committee) of an amount equal to
the aggregate purchase price of the Shares to which the exercise
relates;
(2) If acceptable to the Committee, by delivery of Shares already
owned by the Participant, which Shares have an aggregate value of the
Fair Market Value, as determined by the Committee in its sole
discretion at the time of exercise, on the date received by the
Company, together with any cash tendered therewith, equal to the
purchase price of the Shares to which the exercise relates; or
(3) If acceptable to the Committee, by delivery to the Company of
an exercise notice that requests the Company to issue to the
Participant the full number of Shares as to which the Option is then
exercisable, less the number of Shares that have an aggregate Fair
Market Value, as determined by the Committee in its sole
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<PAGE> 6
discretion at the time of exercise, equal to the aggregate purchase
price of the Shares to which such exercise relates. (This method of
exercise allows the Participant to use a portion of the Shares
issuable at the time of exercise as payment for the Shares to which
the Option relates and is often referred to as a "cashless exercise."
For example, if the Participant elects to exercise 1,000 Shares at an
exercise price of $0.25 and the current Fair Market Value of the
Shares on the date of exercise is $1.00, the Participant can use 250
of the 1,000 Shares at $1.00 per Share to pay for the exercise of the
entire Option (250 x $1.00 = $250.00) and receive only the remaining
750 Shares.)
(e) Restrictions on Method of Exercise. Notwithstanding the foregoing
payment provisions, the Committee, in granting Options pursuant to the Plan, may
limit the methods by which an Option may be exercised by any person and, in
processing any purported exercise of an Option granted pursuant to the Plan, may
refuse to recognize the method of exercise selected by the Participant (other
than the method of exercise set forth in Section 4(d)(i), if, in the opinion of
counsel of the Company, (i) the Participant is or within the six months
preceding such exercise was, subject to reporting under Section 16(a) of the Act
and (ii) there is a substantial likelihood that the method of exercise selected
by the Participant would subject the Participant to substantial risk of
liability under Section 16 of the Act.
(f) Transferability of Options. The Committee, in its sole discretion, may
provide in the agreement governing any Nonqualified Stock Option or Deferred
Compensation Option that such Options shall be transferable and, if so, the
extent to which such Nonqualified Stock Options or Deferred Compensation Options
are transferable.
(g) Deferred Compensation Stock Options. Deferred Compensation Stock
Options are intended to provide a means by which compensation payments can be
deferred to future dates. The number of shares of Common Stock subject to a
Deferred Compensation Stock Option shall be determined by the Committee, in its
sole discretion, in accordance with the following formula:
<TABLE>
<S> <C> <C>
Amount of Compensation to be Deferred = Number of Shares
- -------------------------------------
Fair Market Value - Stock Option Price
</TABLE>
Amounts of compensation deferred may include amounts earned under Awards
granted under the Plan or under any other compensation plan, program, or
arrangement of the Company as permitted by the Committee.
SECTION 5. STOCK APPRECIATION RIGHTS. The grant of Stock Appreciation
Rights under the Plan shall be subject to the following terms and conditions,
and shall contain such additional terms and conditions, not inconsistent with
the express terms of the Plan, as the Committee shall deem desirable:
(a) Stock Appreciation Rights. A Stock Appreciation Right is an Award
entitling a Participant to receive an amount equal to (or if the Committee shall
determine on the Date of Grant, less than) the excess of the Fair Market Value
of a share of Common Stock on the date of exercise over the Fair Market Value of
a share of Common Stock on the Date of Grant of the Stock
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<PAGE> 7
Appreciation Right, or such other price as may be set by the Committee,
multiplied by the number of shares of Common Stock with respect to which the
Stock Appreciation Right shall have been exercised.
(b) Grant. A Stock Appreciation Right shall be granted separately. In no
event will Stock Appreciation Rights and other Awards be issued in tandem
whereby the exercise of one such Award affects the right to exercise the other.
(c) Exercise. A Stock Appreciation Right may be exercised by a Participant
in accordance with procedures established by the Committee, except that in no
event shall a Stock Appreciation Right be exercisable prior to the first
Anniversary Date of the Date of Grant. To the extent it is not inconsistent with
any insider trading compliance policies that the Company may establish from time
to time, the Committee, in its discretion, may provide that a Stock Appreciation
Right shall be automatically exercised on one or more specified dates, or that a
Stock Appreciation Right may be exercised during only limited time periods.
(d) Form of Payment. Payment to the Participant upon exercise of a Stock
Appreciation Right may be made (i) in cash, by certified or cashier's check or
by money order, (ii) in shares of Common Stock, (iii) in the form of a Deferred
Compensation Stock Option, or (iv) any combination of the above, as the
Committee shall determine. The Committee may elect to make this determination
either at the time the Stock Appreciation Right is granted, or with respect to
payments contemplated in clauses (ii) and (iii) above, at the time of the
exercise.
SECTION 6. RESTRICTED AWARDS. Restricted Awards granted under the Plan may
be in the form of either Restricted Stock Grants or Restricted Unit Grants.
Restricted Awards shall be subject to the following terms and conditions, and
may contain such additional terms and conditions, not inconsistent with the
express provisions of the Plan, as the Committee shall deem desirable:
(a) Restricted Stock Grants. A Restricted Stock Grant is an Award of shares
of Common Stock transferred to a Participant subject to such terms and
conditions as the Committee deems appropriate, as set forth in Section 6(d)
below. Further, as a condition to the grant of Restricted Stock to any
Participant who, at the Date of Grant has not been employed by the Company and
has not performed services for the Company, the Committee shall require such
Participant to pay at least an amount equal to the par value of the shares of
Common Stock subject to the Restricted Stock Grant within thirty (30) days of
the date of the grant, and failure to pay such amount shall result in an
automatic termination of the Restricted Stock Grant.
(b) Restricted Unit Grants. A Restricted Unit Grant is an Award of units
granted to a Participant subject to such terms and conditions as the Committee
deems appropriate, including, without limitation, the requirement that the
Participant forfeit such units upon termination of employment for specified
reasons within a specified period of time, and restrictions on the sale,
assignment, transfer or other disposition of the units. Based on the discretion
of the Committee at the time a Restricted Unit Grant is awarded to a
Participant, a unit will have a value (i) equivalent to one share of Common
Stock, or (ii) equivalent to the excess of the Fair Market Value of a share of
Common Stock on the date the restriction lapses over the Fair Market Value of a
share of
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<PAGE> 8
Common Stock on the Date of Grant of the Restricted Unit Grant (or over such
other value as the Committee determines at the time of the grant).
(c) Grant of Awards. Restricted Awards shall be granted separately under
the Plan in such form and on such terms and conditions as the Committee may from
time to time approve. Restricted Awards, however, may not be granted in tandem
with other Awards whereby the exercise of one such Award affects the right to
exercise the other. Subject to the terms of the Plan, the Committee shall
determine the number of Restricted Awards to be granted to a Participant and the
Committee may impose different terms and conditions on any particular Restricted
Award made to any Participant. Each Participant receiving a Restricted Stock
Grant shall be issued a stock certificate in respect of the shares of Common
Stock. The certificate shall be registered in the name of the Participant, shall
be accompanied by a stock power duly executed by the Participant, and shall bear
an appropriate legend referring to the terms, conditions and restrictions
applicable to the Award. The certificate evidencing the shares shall be held in
custody by the Company until the restrictions imposed thereon shall have lapsed
or been removed.
(d) Restriction Period. Restricted Awards shall provide that in order for a
Participant to vest in the Awards, the Participant must continuously provide
services for the Company or its Subsidiaries, subject to relief for specified
reasons, for a period of not less than one (1) year commencing on the date of
the Award and ending on such later date or dates as the Committee may designate
at the time of the Award ("Restriction Period""). During the Restriction Period,
a Participant may not sell, assign, transfer, pledge, encumber, or otherwise
dispose of shares of Common Stock received under a Restricted Stock Grant. The
Committee, in its sole discretion, may provide for the lapse of restrictions in
installments during the Restriction Period. Upon expiration of the applicable
Restriction Period (or lapse of restrictions during the Restriction Period where
the restrictions lapse in installments), the Participant shall be entitled to
receive his or her Restricted Award or the applicable portion thereof, as the
case may be. Upon termination of a Participant's employment with the Company or
any Subsidiary for any reason during the Restriction Period, all or a portion of
the shares or units, as applicable, that are still subject to a restriction may
vest or be forfeited, in accordance with the terms and conditions established by
the Committee at or after grant.
(e) Payment of Awards. A Participant shall be entitled to receive payment
for a Restricted Unit Grant (or portion thereof) in an amount equal to the
aggregate Fair Market Value of the units covered by the Award upon the
expiration of the applicable Restriction Period. Payment in settlement of a
Restricted Unit Grant shall be made as soon as practicable following the
conclusion of the respective Restriction Period (i) in cash, by certified or
cashier's check or by money order, (ii) in shares of Common Stock equal to the
number of units granted under the Restricted Unit Grant with respect to which
such payment is made, (iii) in the form of a Deferred Compensation Stock Option,
or (iv) in any combination of the above, as the Committee shall determine. The
Committee may elect to make this determination either at the time the Award is
granted, or with respect to payments contemplated in clause (i) and (ii) above,
at the time the Award is settled.
(f) Rights as a Shareholder. A Participant shall have, with respect to the
shares of Common Stock received under a Restricted Stock Grant, all of the
rights of a shareholder of the Company, including the right to vote the shares,
and the right to receive any cash dividends. Stock
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<PAGE> 9
dividends issued with respect to the shares covered by a Restricted Stock Grant
shall be treated as additional shares under the Restricted Stock Grant and shall
be subject to the same restrictions and other terms and conditions that apply to
shares under the Restricted Stock Grant with respect to which the dividends are
issued.
SECTION 7. TERMINATION OF EMPLOYMENT. The terms and conditions under which
an Award may be exercised after a Participant's termination of employment shall
be determined by the Committee, except as otherwise provided herein.
(a) Termination by Death. If a Participant's employment by the Company or
any Subsidiary terminates by reason of the Participant's death or if the
Participant's death occurs within three months after the termination of his or
her employment, any Award held by such Participant may thereafter be exercised,
to the extent such Award otherwise was then exercisable by the Participant, by
the legal representative of the Participant's estate or by any person who
acquired the Award by will or the laws of descent and distribution, for a period
of one year from the Participant's termination of employment (as contemplated in
this Section 7(a)) or until the expiration of the stated term of the Award,
whichever period is the shorter. Any right of exercise under a nonvested Award
held by a Participant at the time of his or her death is extinguished and
terminated.
(b) Termination by Reason of Disability. If a Participant's employment by
the Company or Subsidiary terminates by reason of Disability, any Award held by
such Participant may thereafter be exercised by the Participant, to the extent
such Award otherwise was then exercisable by the Participant, for a period of
one year from the date of such termination of employment or until the expiration
of the stated term of such Award, whichever period is the shorter; provided,
however, that if the Participant dies within such one-year period, any
unexercised Award held by such Participant shall thereafter be exercisable to
the extent to which it was exercisable at the time of such death or until the
expiration of the stated term of such Award, whichever period is shorter. Any
right of exercise under a nonvested Award held by the Participant at the time of
his or her termination by reason of Disability is terminated and extinguished.
(c) Other Termination. If a Participant's employment by the Company or any
Subsidiary is terminated for any reason other than retirement, any Award held by
the Participant at the time of his or her termination shall be exercisable, to
the extent otherwise then exercisable, for the lesser of three (3) months from
the date of such termination or the balance of the term of the Award, and any
right of exercise under any nonvested Award held by a Participant at the time of
his or her termination is terminated and extinguished, provided that the
Committee may extend such Award for periods determined in its discretion;
provided, however, that upon termination of employment, if the Participant
continues to serve, or commences serving, as a director of the Company, then in
such event any Awards may continue to be held by the Participant under the
original terms thereof.
(d) For purposes of the Plan, the transfer of an Employee's employment
between the Company and any Subsidiary or between Subsidiaries shall not be
deemed to be a termination of the Employee's employment.
(e) Notwithstanding any other provisions set forth herein, if the
Participant shall (i) commit any act of malfeasance or wrongdoing affecting the
Company or any Subsidiary, (ii) breach
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<PAGE> 10
any covenant not to compete, or employment contract, with the Company or any
Subsidiary, or (iii)engage in conduct that would warrant the Participant's
discharge for cause (excluding general dissatisfaction with the performance of
the Participant's duties, but including any act of disloyalty or any conduct
clearly tending to bring discredit upon the Company or any Subsidiary), any
unexercised portion of Options held by the Participant shall immediately
terminate and be void.
SECTION 8. ADJUSTMENT OF SHARES.
(a) If at any time while the Plan is in effect or unexercised Awards are
outstanding, there shall be any increase or decrease in the number of issued and
outstanding Shares through the declaration of a stock dividend or through any
recapitalization resulting in a stock split-up, combination or exchange of
Shares, then and in such event the Board, in its sole discretion, may make
adjustments it deems appropriate to reflect such change with respect to:
(i) the maximum number of Shares which may be sold or awarded to any
Participant;
(ii) the number of shares of Common Stock covered by each outstanding
Award; and
(iii) the price per share in respect of the outstanding Awards.
(b) The Committee may change the terms of Options outstanding under this
Plan, with respect to the exercise price or the number of Shares subject to the
Options, or both, when, in the Committee's sole discretion, such adjustments
become appropriate by reason of any corporate transaction.
(c) Except as otherwise expressly provided herein, the issuance by the
Company of shares of its capital stock of any class, or securities convertible
into shares of capital stock of any class, either in connection with direct sale
or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to the number of Shares reserved for issuance under the
Plan or the number of or exercise price of Shares then subject to outstanding
Options granted under the Plan.
(d) Without limiting the generality of the foregoing, the existence of
outstanding Awards granted under the Plan shall not affect in any manner the
right or power of the Company to make, authorize or consummate (i) any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business; (ii) any merger or consolidation of
the Company; (iii) any issue by the Company of debt securities, or preferred or
preference stock that would rank above the Shares subject to outstanding
Options; (iv) the dissolution or liquidation of the Company; (v) any sale,
transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
SECTION 9. ISSUANCE OF SHARES. No person shall be, or have any of the
rights or privileges of, a shareholder of the Company with respect to any Awards
unless and until certificates
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representing such Shares shall have been issued and delivered to such person. As
a condition of any transfer of the certificate for Shares, the Committee may
obtain such agreements or undertakings, if any, as it may deem necessary or
advisable to assure compliance with any provision of the Plan, the agreement
evidencing the Award or Awards, or any law or regulation including, but not
limited to, the following:
(a) A representation, warranty or agreement by the Participant to the
Company at the time any Option is exercised that he or she is acquiring the
Shares to be issued to him or her for investment and not with a view to, or for
sale in connection with, the distribution of any such Shares; and
(b) A representation, warranty or agreement to be bound by any legends that
are, in the opinion of the Committee, necessary or appropriate to comply with
the provisions of any securities laws deemed by the Board to be applicable to
the issuance of the Shares and are endorsed upon the Share certificates.
SECTION 10. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Compensation Committee of the
Board or other committee thereof as appointed by the Board (the "COMMITTEE"),
consisting of not less than two (2) members. The Committee shall be constituted
so as to permit the Plan to comply with Rule 16b-3 promulgated by the Commission
under the Act or any successor rule and shall initially be comprised of two
members of the Board, each of whom is an Outside Director.
(b) The Committee, from time to time, may adopt rules and regulations for
carrying out the purposes of the Plan. The determinations and the interpretation
and construction of any provision of the Plan by the Committee shall be final
and conclusive.
(c) Subject to the express provisions of this Plan and any insider trading
compliance policies that may be adopted by the Company from time to time, the
Committee shall have the authority, in its sole and absolute discretion (i) to
adopt, amend, and rescind administrative and interpretive rules and regulations
relating to this Plan or any Award; (ii) to construe the terms of this Plan or
any Award; (iii) as provided in Section 8(a), upon certain events to make
appropriate adjustments to the number of Shares and price per share subject to
this Plan; and (iv) to make all other determinations and perform all other acts
necessary or advisable for administering this Plan, including the delegation of
such ministerial acts and responsibilities as the Committee deems appropriate.
The Committee may correct any defect or supply any omission or reconcile any
inconsistency in this Plan or any Option in the manner and to the extent it
shall deem expedient to carry it into effect, and it shall be the sole and final
judge of such expediency. The Committee shall have full discretion to make all
determinations on the matters referred to in this Section 10(c), and such
determinations shall be final, binding and conclusive.
(d) The Committee is expressly authorized to make modifications to the Plan
as necessary to effectuate the intent of the Plan as a result of any changes in
the tax, accounting, or securities laws treatment of Participants and the Plan.
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SECTION 11. GOVERNMENT REGULATIONS. This Plan, Awards and the obligations
of the Company to sell and deliver Shares under any Awards, shall be subject to
all applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.
SECTION 12. MISCELLANEOUS.
(a) The proceeds received by the Company from the sale of Shares pursuant
to an Award shall be used for general corporate purposes.
(b) The grant of an Award shall be in addition to any other compensation
paid to the Participant or other plans of the Company or other benefits with
respect to the Participant's position with or relationship to the Company or its
Subsidiaries. The grant of an Award shall not confer upon the Participant the
right to continue as an Employee or Consultant, or interfere in any way with the
rights of the Company or a Subsidiary to terminate his status as an Employee or
Consultant.
(c) Neither the members of the Board nor any member of the Committee shall
be liable for any act, omission, or determination taken or made in good faith
with respect to this Plan or any Award, and members of the Board and the
Committee shall, in addition to all other rights of indemnification and
reimbursement, be entitled to indemnification and reimbursement by the Company
or a Subsidiary in respect of any claim, loss, damage, liability or expense
(including attorneys' fees, the costs of settling any suit, provided such
settlement is approved by independent legal counsel selected by the Company, and
amounts paid in satisfaction of a judgment, except a judgment based on a finding
of bad faith) arising from such claim, loss, damage, liability or expense to the
full extent permitted by law and under any directors' and officers' liability or
similar insurance coverage that may from time to time be in effect.
(d) Any issuance or transfer of Shares to an Participant, or to his legal
representative, heir, legatee, distributee, or assign in accordance with the
provisions of this Plan or the applicable Award, shall, to the extent thereof,
be in full satisfaction of all claims of such persons under the Plan. The
Committee may require any Participant, legal representative, heir, legatee or
distributee as a condition precedent to such payment or issuance or transfer of
Shares, to execute a release and receipt for such payment or issuance or
transfer of Shares in such form as it shall determine.
(e) Neither the Committee nor the Company or a Subsidiary guarantees Shares
from loss or depreciation.
(f) All expenses incident to the administration, termination, or protection
of this Plan or any Option, including, but not limited to, legal and accounting
fees, shall be paid by the Company; provided, however, the Company may recover
any and all damages, fees, expenses and costs arising out of any actions taken
by the Company to enforce its rights under this Plan or any Award.
(g) Records of the Company shall be conclusive for all purposes under this
Plan or any Award, unless determined by the Committee or the Board to be
incorrect.
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(h) The Company or a Subsidiary shall, upon request or as may be
specifically required under this Plan or any Option, furnish or cause to be
furnished all of the information or documentation that is necessary or required
by the Committee to perform its duties and functions under this Plan or any
Option.
(i) The Company and its Subsidiaries do not assume liability to any
Participant or his legal representatives, heirs, legatees or distributees for
any act of, or failure to act on the part of, the Company, its Subsidiaries, the
Committee or the Board.
(j) Any action required of the Company or the Committee relating to this
Plan or any Award shall be by resolution of the Company or Committee,
respectively, or by a person authorized to act by resolution of the Company or
Committee, respectively.
(k) If any provision of this Plan or any Award is held to be illegal or
invalid for any reason, the illegality or invalidity shall not affect the
remaining provisions of this Plan or any Award, but such provision shall be
fully severable, and the Plan or Award, as applicable, shall be construed and
enforced as if the illegal or invalid provision had never been included in the
Plan or Award, as applicable.
(l) Whenever any notice is required or permitted under this Plan, such
notice must be in writing and personally delivered or sent by mail or delivery
by a nationally recognized courier service. Any notice required or permitted to
be delivered under an Award shall be deemed to be delivered on the date on which
it is personally delivered, or, if mailed, whether actually received or not, on
the third Business Day after it is deposited in the United States mail,
certified or registered, postage prepaid, addressed to the person who is to
receive it at the address that such person has previously specified by written
notice delivered in accordance with this Section 13(l) or, if by courier,
seventy- two (72) hours after it is sent, addressed as described in this Section
13(l). The Company or the Participant may change, at any time and from time to
time, by written notice to the other, the address that it or he had previously
specified for receiving notices. Until changed in accordance with this Plan, the
Company and the Participant shall specify as its and his address for receiving
notices the address set forth in the Award pertaining to the Shares to which
such notice relates.
(m) Any person entitled to notice under this Plan may waive such notice.
(n) The titles and headings of Sections are included for convenience of
reference only and are not to be considered in construction of this Plan's
provisions.
(o) All questions arising with respect to the provisions of this Plan shall
be determined by application of the laws of the State of Texas except to the
extent Texas law is validly preempted. The obligation of the Company to sell and
deliver Shares under this Plan is subject to applicable laws and to the approval
of any governmental authority required in connection with the authorization,
issuance, sale, or delivery of such Shares. The Committee is authorized to
establish dispute resolution procedures, methods, and venue in its discretion.
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(p) Words used in the masculine shall apply to the feminine where
applicable, and wherever the context of this Plan dictates, the plural shall be
read as the singular and the singular as the plural.
(q) The Company shall be entitled to recover from a Participant reasonable
attorneys' fees incurred in connection with the enforcement of the terms and
provisions of the Plan and any agreement governing any Award, whether by an
action to enforce specific performance, or an action for damages for its breach
or otherwise.
(r) A Participant may not derive any rights to any awards or grants under
this Plan from the fact that awards or grants have been given to others, even if
such persons are in comparable situations. Every Award made herein is voluntary
and at the sole discretion of the Company, and does not, even in the case of
repeated payments, give rise to any future claims.
SECTION 13. AMENDMENT AND DISCONTINUATION OF THE PLAN. The Board may from
time to time amend, suspend or terminate the Plan or any Award; provided,
however, that no such amendment may alter any provision of the Plan or any Award
without compliance with any applicable shareholder approval requirements
promulgated under the Internal Revenue Code, if applicable, or by any stock
exchange or market on which the Common Stock of the Company is listed for
trading; and provided, further, that, except to the extent provided in Section
8, no amendment or suspension of the Plan or any Award issued hereunder shall,
except as specifically permitted in any Award, substantially impair any Award
previously granted to any Participant without the consent of such Participant.
SECTION 14. EFFECTIVE DATE AND TERMINATION DATE. The effective date of the
Plan is the date set forth below, on which the date the Board of the Company
adopted this Plan. The Plan shall terminate on the tenth anniversary of the
effective date.
THE CONCOURS GROUP, INC.
-----------------------------------
Ron Christman, President
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EXHIBIT 10.10
2000 SENIOR EXECUTIVE PERFORMANCE PLAN
FOR
THE CONCOURS GROUP, INC.
SECTION 1. PURPOSE. This 2000 Senior Executive Performance Plan of The
Concours Group, Inc. is intended as an incentive to retain and reward qualified
and competent senior executives and directors for the Company and its
Subsidiaries, upon whose efforts and judgment the success of the Company is
largely dependent, through performance-based incentives and the encouragement of
stock ownership in the Company by such persons.
SECTION 2. DEFINITIONS. As used herein, the following terms shall have
the meaning indicated:
(a) "ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(b) "BOARD" shall mean the Board of Directors of the Company.
(c) "BUSINESS DAY" shall mean (i) if the Shares trade on a
national exchange, any day that the national exchange on which the
Shares trade is open or (ii) if the Shares do not trade on a national
exchange, any day that commercial banks in the City of Houston are
open.
(d) "COMMISSION" shall mean the Securities and Exchange
Commission.
(e) "COMMITTEE" shall mean the Compensation Committee of the
Board or other committee, if any, appointed by the Board pursuant to
Section 13 hereof, and in the absence any appointment, the Board shall
be the Committee.
(f) "COMMON STOCK" shall mean the Company's common stock, par
value $.01 per share.
(g) "COMPANY" shall mean The Concours Group, Inc.
(h) "DATE OF GRANT" shall mean the date on which an Option is
granted to an Eligible Person pursuant to Section 4 hereof.
(i) "DIRECTOR" shall mean a member of the Board.
(j) "ELIGIBLE PERSON(S)" shall mean those persons who are (i)
under written contract (a "Consulting Contract") with the Company or a
Subsidiary to provide consulting or advisory services to the Company or
a Subsidiary (a "Consultant"), (ii) Employees or (iii) members of the
Board of Directors of the Company or any Subsidiary.
(k) "EMPLOYEE(S)" shall mean those persons who are employees
of the Company or who are employees of any Subsidiary.
<PAGE> 2
(l) "FAIR MARKET VALUE" of a share on a particular date shall
be the closing price of the Common Stock, which shall be (i) if the
Common Stock is listed or admitted for trading on any United States
national securities exchange (which for purposes hereof shall include
the NASDAQ National Market System), the last reported sale price of
Common Stock on such exchange as reported in any newspaper of general
circulation, (ii) if the Common Stock is quoted on NASDAQ (other than
on the National Market System) or any similar system of automated
dissemination of quotations of securities prices in common use, the
mean between the closing high bid and low asked quotations for such day
of the Common Stock on such system or (iii) if neither clause (i) nor
(ii) is applicable, the Exercise Price, as set forth in Section 5
hereof, unless the Board determines, by any fair and reasonable means
prescribed by the Board, a value other than the Exercise Price.
(m) "INCENTIVE STOCK OPTION" shall mean an option that is an
incentive stock option as defined in Section 422 of the Internal
Revenue Code.
(n) "INTERNAL REVENUE CODE" or "CODE" shall mean the Internal
Revenue Code of 1986, as it now exists or may be amended from time to
time.
(o) "NONQUALIFIED STOCK OPTION" shall mean a stock option that
is not an incentive stock option as defined in Section 422 of the
Internal Revenue Code.
(p) "OPTION" (when capitalized) shall mean any option granted
under this Plan.
(q) "OPTIONEE" shall mean a person to whom an Option is
granted under this Plan or any successor to the rights of such person.
(r) "OUTSIDE DIRECTOR" shall mean a Director who qualifies as
an "outside director" under the regulations promulgated under Section
162(m) of the Internal Revenue Code and as a "non-employee director"
under Rule 16b-3 promulgated under the Securities Exchange Act of 1934,
effective August 15, 1996.
(s) "PLAN" shall mean this 2000 Senior Executive Performance
Plan for The Concours Group, Inc.
(t) "SHARE(S)" shall mean a share or shares of the Common
Stock.
(u) "SUBSIDIARY" shall mean any corporation (other than the
Company) in any unbroken chain of corporations beginning with the
Company if, at the time of the granting of the Option, each of the
corporations other than the last corporation in the unbroken chain owns
stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
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SECTION 3. SHARES AND OPTIONS.
(a) The Company may grant to Eligible Persons from time to
time Options to purchase an aggregate of up to 175,000 Shares from
Shares held in the Company's treasury or from authorized and unissued
Shares. If any Option granted under the Plan shall terminate, expire,
or be canceled or surrendered as to any Shares, new Options may
thereafter be granted covering such Shares. An Option granted hereunder
shall be either an Incentive Stock Option or a Nonqualified Stock
Option as determined by the Committee at the Date of Grant of such
Option and shall clearly state whether it is an Incentive Stock Option
or a Nonqualified Stock Option. Incentive Stock Options may only be
granted to persons who are Employees.
(b) Subject to Section 12, the aggregate Fair Market Value
(determined at the Date of Grant of the Option) of the Shares with
respect to which any Incentive Stock Option is exercisable for the
first time by an Optionee during any calendar year under the Plan and
all such plans of the Company and any parent and subsidiary of the
Company (as defined in Section 424 of the Code) shall not exceed
$100,000.
(c) Subject to the provisions of the Plan, the Committee may
grant Options to such Eligible Persons as the Committee in its sole
discretion determines are eligible to receive such grants in accordance
with Section 4 below. Notwithstanding any provision herein to the
contrary, there shall be no grant of Options in excess of 100,000
Shares to any one individual in any one year.
SECTION 4. CONDITIONS FOR GRANT OF OPTIONS.
(a) Each Option shall be evidenced by an option agreement that
may contain any term deemed necessary or desirable by the Committee,
provided such terms are not inconsistent with this Plan or any
applicable law. Optionees shall be those persons selected by the
Committee from Eligible Persons. Any person who files with the
Committee, in a form satisfactory to the Committee, a written waiver of
eligibility to receive any Option under this Plan shall not be eligible
to receive any Option under this Plan for the duration of such waiver.
(b) In granting Options, the Committee shall take into
consideration the contribution the person has made or may make to the
success of the Company or its Subsidiaries and such other factors as
the Board shall determine. The Committee shall also have the authority
to consult with and receive recommendations from officers and other
personnel of the Company and its Subsidiaries with regard to these
matters. The Committee may from time to time in granting Options under
the Plan prescribe such other terms and conditions concerning such
Options as it deems appropriate, including, without limitation,
relating an Option to achievement of specific goals established by the
Committee or the continued employment of the Optionee for a specified
period of time, provided that such terms and conditions are not more
favorable to an Optionee than those expressly permitted herein.
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(c) The Committee in its sole discretion shall determine in
each case whether periods of military or government service shall
constitute a continuation of employment for the purposes of this Plan
or any Option.
(d) The Committee in its sole discretion may delegate to the
Chief Executive Officer of the Company any or all of its powers under
this Plan with regard to the granting and administration of Options to
Eligible Persons not subject to reporting under Section 16 of the
Exchange Act.
SECTION 5. EXERCISE PRICE. The Exercise Price per Share shall be
determined by the Compensation Committee at the time of grant.
Notwithstanding anything contained herein to the contrary but subject
to Section 11 below, the Exercise Price of any Incentive Stock Option
shall not be less than one hundred percent (100%) of the Fair Market
Value per Share on the Date of Grant.
SECTION 6. EXERCISE OF OPTIONS.
(a) An Option shall be exercisable in installments as follows;
provided, however, no Option shall be exercisable prior to the first
anniversary date of the Date of Grant (hereinafter, "Anniversary
Date"). An Option may be exercised as to thirty-three percent (33%) of
the Shares covered by the Option beginning on the first Anniversary
Date; thereafter, an additional thirty-three percent (33%) of the
Shares subject to the Option shall be exercisable as of the second
Anniversary Date and the remaining thirty-four percent (34%) of the
Shares subject to the Option shall be exercisable as of the third
Anniversary Date, except as otherwise provided in Section 7 below. The
Committee may in its sole discretion accelerate or postpone the date on
which any Option may be exercised. In no event shall an Option be
exercisable after the expiration of ten (10) years from the Date of
Grant.
(b) An Option shall be deemed exercised when (i) the Company
has received written notice of such exercise in accordance with the
terms of the Option, (ii) full payment of the aggregate exercise price
of the Shares as to which the Option is exercised has been made, and
(iii) arrangements that are satisfactory to the Committee in its sole
discretion have been made for the Optionee's payment to the Company of
the amount, if any, that the Committee determines to be necessary for
the Company or a Subsidiary to withhold in accordance with applicable
federal or state income tax withholding requirements.
(c) Unless further limited by the Committee in any Option, the
exercise price of any Shares purchased shall be paid by any of the
following methods:
(i) In cash, by certified or cashier's check, by money
order, by personal check (if approved by the Committee) of an
amount equal to the aggregate purchase price of the Shares to
which the exercise relates;
(ii) If approved by the Committee in its sole discretion, by
delivery of Shares already owned by the Optionee, which Shares
have an aggregate value of the Fair Market Value, as determined
by the Committee in its sole discretion at the time
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<PAGE> 5
of exercise, on the date received by the Company, together with
any cash tendered therewith, equal to the purchase price of the
Shares to which the exercise relates; or
(iii) If approved by the Committee in its sole discretion,
by delivery to the Company of an exercise notice that requests
the Company to issue to the Optionee the full number of Shares as
to which the Option is then exercisable, less the number of
Shares that have an aggregate Fair Market Value, as determined by
the Committee in its sole discretion at the time of exercise,
equal to the aggregate purchase price of the Shares to which such
exercise relates. (This method of exercise allows the Optionee to
use a portion of the Shares issuable at the time of exercise as
payment for the Shares to which the Option relates and is often
referred to as a "cashless exercise." For example, if the
Optionee elects to exercise 1,000 Shares at an exercise price of
$0.25 and the current Fair Market Value of the Shares on the date
of exercise is $1.00, the Optionee can use 250 of the 1,000
Shares at $1.00 per Share to pay for the exercise of the entire
Option (250 x $1.00 = $250.00) and receive only the remaining 750
Shares.)
SECTION 7. TERMINATION OF OPTION PERIOD.
(a) Unless otherwise provided in any Option or as determined
by the Committee upon the occurrence of the stated event, the
unexercised portion of an Option shall automatically and without notice
terminate and become null and void at the time of the earliest to occur
of the following, to the extent such Option was not exercisable at such
time: (i) the death of the Optionee, (ii) the total and permanent
"disability" (as defined in Section 22(e)(3) of the Code) of the
Optionee, (iii) the date on which the Optionee ceases to be employed by
the Company or a Subsidiary or ceases to be a Consultant to the Company
or a Subsidiary, as the case may be, regardless of the reason therefor,
or (iv) with respect to an Option held by a person who is a member of
the Board of Directors of the Company or a Subsidiary but who is not
also an Employee or Consultant (regardless of whether or not such
person was an Employee or Consultant at the time of grant), the date on
which the Optionee ceases to be a member of such Board of Directors.
(b) Unless otherwise provided in any Option or as determined
by the Committee upon the occurrence of the stated event, the
unexercised portion of an Option shall automatically and without notice
terminate and become null and void ninety (90) days after the earliest
to occur of the following, to the extent such Option was exercisable on
the date of the following: (i) the death of the Optionee, (ii) the
total and permanent "disability" (as defined in Section 22(e)(3) of the
Code) of the Optionee, (iii) the date on which the Optionee ceases to
be employed by the Company or a Subsidiary or ceases to be a Consultant
to the Company or a Subsidiary, as the case may be, regardless of the
reason therefor, or (iv) with respect to an Option held by a person who
is a member of the Board of Directors of the Company or a Subsidiary
but who is not also an Employee or Consultant (regardless of whether or
not such person was an Employee or Consultant at the time of grant),
the date on which the Optionee ceases to be a member of such Board of
Directors. In no event, however, shall the ninety (90) day period
described in this Section 7(b) extend beyond the exercise period stated
on the Option.
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(c) In the event of the death of the Optionee, Options held by
such Optionee may be exercised by the Optionee's legal
representative(s), but only to the extent that such Options would
otherwise have been exercisable by the Optionee.
(d) For purposes of the Plan, the transfer of an Employee's
employment between the Company and any Subsidiary or between
Subsidiaries shall not be deemed to be a termination of the Employee's
employment.
(e) Notwithstanding any other provisions set forth herein, if
the Optionee shall (i) commit any act of malfeasance or wrongdoing
affecting the Company or any Subsidiary, (ii) breach any covenant not
to compete, or employment contract, with the Company or any Subsidiary,
or (iii) engage in conduct that would warrant the Optionee's discharge
for cause (excluding general dissatisfaction with the performance of
the Optionee's duties, but including any act of disloyalty or any
conduct clearly tending to bring discredit upon the Company or any
Subsidiary), any unexercised portion of Options held by the Optionee
shall immediately terminate and be void.
SECTION 8. ADJUSTMENT OF SHARES.
(a) If at any time while the Plan is in effect or unexercised
Options are outstanding, there shall be any increase or decrease in the
number of issued and outstanding Shares through the declaration of a
stock dividend or through any recapitalization resulting in a stock
split-up, combination or exchange of Shares, then and in such event:
(i) appropriate adjustment shall be made in the maximum
number of Shares then subject to being optioned under the Plan,
so that the same proportion of the Company's issued and
outstanding Shares shall continue to be subject to being so
optioned; and
(ii) appropriate adjustment shall be made in the number of
Shares and the exercise price per Share thereof then subject to
outstanding Options, so that the same proportion of the Company's
issued and outstanding Shares shall remain subject to purchase at
the same aggregate exercise price.
(b) The Committee may change the terms of Options outstanding
under this Plan, with respect to the exercise price or the number of
Shares subject to the Options, or both, when, in the Committee's sole
discretion, such adjustments become appropriate by reason of any
corporate transaction.
(c) Except as otherwise expressly provided herein, the
issuance by the Company of shares of its capital stock of any class, or
securities convertible into shares of capital stock of any class,
either in connection with direct sale or upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares or
obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to the number of Shares reserved for issuance
under the Plan or the
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number of or exercise price of Shares then subject to outstanding
Options granted under the Plan.
(d) Without limiting the generality of the foregoing, the
existence of outstanding Options granted under the Plan shall not
affect in any manner the right or power of the Company to make,
authorize or consummate (i) any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or
its business; (ii) any merger or consolidation of the Company; (iii)
any issue by the Company of debt securities, or preferred or preference
stock that would rank above the Shares subject to outstanding Options;
(iv) the dissolution or liquidation of the Company; (v) any sale,
transfer or assignment of all or any part of the assets or business of
the Company; or (vi) any other corporate act or proceeding, whether of
a similar character or otherwise.
SECTION 9. TRANSFERABILITY OF OPTIONS. Each Incentive Stock Option
shall provide that such Incentive Stock Option shall not be transferrable by the
Optionee otherwise than by will or the laws of descent and distribution and that
so long as an Optionee lives, only such Optionee or his guardian or legal
representative shall have the right to exercise such Incentive Stock Option. The
Committee, in its sole discretion, may provide in the agreement governing any
Nonqualified Stock Option that such Nonqualified Stock Option shall be
transferable and, if so, the extent to which such Nonqualified Stock Option is
transferable.
SECTION 10. ISSUANCE OF SHARES. No person shall be, or have any of the
rights or privileges of, a shareholder of the Company with respect to any of the
Shares subject to an Option unless and until certificates representing such
Shares shall have been issued and delivered to such person. As a condition of
any transfer of the certificate for Shares, the Committee may obtain such
agreements or undertakings, if any, as it may deem necessary or advisable to
assure compliance with any provision of the Plan, the agreement evidencing the
Option or any law or regulation including, but not limited to, the following:
(a) A representation, warranty or agreement by the Optionee to
the Company at the time any Option is exercised that he or she is
acquiring the Shares to be issued to him or her for investment and not
with a view to, or for sale in connection with, the distribution of any
such Shares; and
(b) A representation, warranty or agreement to be bound by any
legends that are, in the opinion of the Committee, necessary or
appropriate to comply with the provisions of any securities laws deemed
by the Board to be applicable to the issuance of the Shares and are
endorsed upon the Share certificates.
SECTION 11. OPTIONS FOR 10% SHAREHOLDER. Notwithstanding any other
provisions of the Plan to the contrary, an Incentive Stock Option shall not be
granted to any person owning directly (or indirectly through attribution under
Section 424(d) of the Code) at the Date of Grant, stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company (or of
its parent or subsidiary [as defined in Section 424 of the Internal Revenue
Code] at the Date of Grant) unless the exercise price of such Incentive Stock
Option is at least 110% of the Fair Market Value of the Shares subject to such
Incentive Stock Option on the Date of Grant, and the period
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during which the Incentive Stock Option may be exercised does not exceed five
(5) years from the Date of Grant.
SECTION 12. NONQUALIFIED STOCK OPTIONS. Nonqualified Stock Options may
be granted hereunder and shall be subject to all terms and provisions hereof
except that each such Nonqualified Stock Option (i) must be clearly designated
as a Nonqualified Stock Option; (ii) may be granted for Shares in excess of the
limits contained in Section 3(b) of this Plan; and (iii) shall not be subject to
Section 11 of this Plan. If both Incentive Stock Options and Nonqualified Stock
Options are granted to an Optionee, the right to exercise, to the full extent
thereof, Options of either type shall not be contingent in whole or in part upon
the exercise of, or failure to exercise, Options of the other type.
SECTION 13. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Compensation
Committee of the Board or other committee thereof as appointed by the
Board (the "Committee"), consisting of not less than two (2) members,
each of whom is an Outside Director.
(b) The Committee, from time to time, may adopt rules and
regulations for carrying out the purposes of the Plan. The
determinations and the interpretation and construction of any provision
of the Plan by the Committee shall be final and conclusive.
(c) Subject to the express provisions of this Plan, the
Committee shall have the authority, in its sole and absolute discretion
(i) to adopt, amend, and rescind administrative and interpretive rules
and regulations relating to this Plan or any Option; (ii) to construe
the terms of this Plan or any Option; (iii) as provided in Section
8(a), upon certain events to make appropriate adjustments to the
exercise price and number of Shares subject to this Plan and Option;
and (iv) to make all other determinations and perform all other acts
necessary or advisable for administering this Plan, including the
delegation of such ministerial acts and responsibilities as the
Committee deems appropriate. The Committee may correct any defect or
supply any omission or reconcile any inconsistency in this Plan or any
Option in the manner and to the extent it shall deem expedient to carry
it into effect, and it shall be the sole and final judge of such
expediency. The Committee shall have full discretion to make all
determinations on the matters referred to in this Section 13(c), and
such determinations shall be final, binding and conclusive.
(d) The Committee is expressly authorized to make
modifications to the Plan as necessary to effectuate the intent of the
Plan as a result of any changes in the tax, accounting, or securities
laws treatment of Participants and the Plan.
SECTION 14. GOVERNMENT REGULATIONS. This Plan, Options and the
obligations of the Company to sell and deliver Shares under any Options, shall
be subject to all applicable laws, rules and regulations, and to such approvals
by any governmental agencies or national securities exchanges as may be
required.
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SECTION 15. MISCELLANEOUS.
(a) The proceeds received by the Company from the sale of
Shares pursuant to an Option shall be used for general corporate
purposes.
(b) The grant of an Option shall be in addition to any other
compensation paid to the Optionee or other stock option plans of the
Company or other benefits with respect to the Optionee's position with
or relationship to the Company or its Subsidiaries. The grant of an
Option shall not confer upon the Optionee the right to continue as an
Employee or Consultant, or interfere in any way with the rights of the
Company to terminate his status as an Employee or Consultant.
(c) Neither the members of the Board nor any member of the
Committee shall be liable for any act, omission, or determination taken
or made in good faith with respect to this Plan or any Option, and
members of the Board and the Committee shall, in addition to all other
rights of indemnification and reimbursement, be entitled to
indemnification and reimbursement by the Company in respect of any
claim, loss, damage, liability or expense (including attorneys' fees,
the costs of settling any suit, provided such settlement is approved by
independent legal counsel selected by the Company, and amounts paid in
satisfaction of a judgment, except a judgment based on a finding of bad
faith) arising from such claim, loss, damage, liability or expense to
the full extent permitted by law and under any directors' and officers'
liability or similar insurance coverage that may from time to time be
in effect.
(d) Any issuance or transfer of Shares to an Optionee, or to
his legal representative, heir, legatee, distributee, or assign in
accordance with the provisions of this Plan or the applicable Option,
shall, to the extent thereof, be in full satisfaction of all claims of
such persons under the Plan. The Committee may require any Optionee,
legal representative, heir, legatee or distributee as a condition
precedent to such payment or issuance or transfer of Shares, to execute
a release and receipt for such payment or issuance or transfer of
Shares in such form as it shall determine.
(e) Neither the Committee nor the Company guarantees Shares
from loss or depreciation.
(f) All expenses incident to the administration, termination,
or protection of this Plan or any Option, including, but not limited
to, legal and accounting fees, shall be paid by the Company; provided,
however, the Company may recover any and all damages, fees, expenses
and costs arising out of any actions taken by the Company to enforce
its rights under this Plan or any Option.
(g) Records of the Company shall be conclusive for all
purposes under this Plan or any Option, unless determined by the
Committee or the Board to be incorrect.
(h) The Company shall, upon request or as may be specifically
required under this Plan or any Option, furnish or cause to be
furnished all of the information or documentation
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that is necessary or required by the Committee to perform its duties
and functions under this Plan or any Option.
(i) The Company assumes no liability to any Optionee or his
legal representatives, heirs, legatees or distributees for any act of,
or failure to act on the part of, the Company, the Committee or the
Board.
(j) Any action required of the Company or the Committee
relating to this Plan or any Option shall be by resolution of the
Company or Committee, respectively, or by a person authorized to act by
resolution of the Company or Committee, respectively.
(k) If any provision of this Plan or any Option is held to be
illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining provisions of this Plan or any Option, but
such provision shall be fully severable, and the Plan or Option, as
applicable, shall be construed and enforced as if the illegal or
invalid provision had never been included in the Plan or Option, as
applicable.
(l) Whenever any notice is required or permitted under this
Plan, such notice must be in writing and personally delivered or sent
by mail or delivery by a nationally recognized courier service. Any
notice required or permitted to be delivered under an Option shall be
deemed to be delivered on the date on which it is personally delivered,
or, if mailed, whether actually received or not, on the third Business
Day after it is deposited in the United States mail, certified or
registered, postage prepaid, addressed to the person who is to receive
it at the address that such person has previously specified by written
notice delivered in accordance with this Section 15(l) or, if by
courier, seventy-two (72) hours after it is sent, addressed as
described in this Section 15(l). The Company or the Optionee may
change, at any time and from time to time, by written notice to the
other, the address that it or he had previously specified for receiving
notices. Until changed in accordance with this Plan, the Company and
the Optionee shall specify as its and his address for receiving notices
the address set forth in the Option pertaining to the Shares to which
such notice relates.
(m) Any person entitled to notice under this Plan may waive
such notice.
(n) The titles and headings of Sections are included for
convenience of reference only and are not to be considered in
construction of this Plan's provisions.
(o) All questions arising with respect to the provisions of
this Plan shall be determined by application of the laws of the State
of Texas except to the extent Texas law is preempted by federal law.
The obligation of the Company to sell and deliver Shares under this
Plan is subject to applicable laws and to the approval of any
governmental authority required in connection with the authorization,
issuance, sale, or delivery of such Shares.
(p) Words used in the masculine shall apply to the feminine
where applicable, and wherever the context of this Plan dictates, the
plural shall be read as the singular and the singular as the plural.
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(q) The Company shall be entitled to recover from an Optionee
reasonable attorneys' fees incurred in connection with the enforcement
of the terms and provisions of the Plan and any agreement governing any
Option, whether by an action to enforce specific performance, or an
action for damages for its breach or otherwise.
SECTION 16. AMENDMENT AND DISCONTINUATION OF THE PLAN. The Board may
from time to time amend, suspend or terminate the Plan or any Option; provided,
however, that no such amendment may alter any provision of the Plan or any
Option without compliance with any applicable shareholder approval requirements
promulgated under the Internal Revenue Code, if applicable, or by any stock
exchange or market on which the Common Stock of the Company is listed for
trading; and provided, further, that, except to the extent provided in Section
7, no amendment or suspension of the Plan or any Option issued hereunder shall,
except as specifically permitted in any Option, substantially impair any Option
previously granted to any Optionee without the consent of such Optionee.
SECTION 17. EFFECTIVE DATE AND TERMINATION DATE. The effective date of
the Plan is the date set forth below, on which the date the Board of the Company
adopted this Plan. The Plan shall terminate on the tenth anniversary of the
effective date.
THE CONCOURS GROUP, INC.
---------------------------
Ron Christman, President
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EXHIBIT 10.11
THE CONCOURS GROUP, INC.
2000 DIRECTOR STOCK OPTION PLAN
1. PURPOSE OF THE PLAN.
This 2000 Director Stock Option Plan (the "Plan") is intended as an
incentive to attract and retain as independent nonemployee directors on the
Board of Directors (the "Board") of The Concours Group, Inc., a Delaware
corporation (the "Company"), persons of training, experience and ability, to
encourage the sense of proprietorship of such persons and to stimulate the
active interests of such persons in the development and financial success of the
Company. It is further intended that options granted pursuant to this Plan (the
"Options") shall constitute nonqualified stock options within the meaning of
Section 83 of the Internal Revenue Code of 1986, as amended ("Code").
2. SHARES AND OPTIONS.
Subject to adjustments in Paragraph 8 hereof, the maximum aggregate
number of shares of Common Stock, $0.01 par value ("Stock"), of the Company
which may be optioned and sold under the Plan (the "Shares") is 125,000 plus an
annual increase to be added on the first day of the Company's fiscal year
beginning in 2002, equal to the lesser of (i) 100,000 shares of Stock, (ii) 1%
of the outstanding shares of Stock on such date or (iii) a lesser amount
determined by the Board. The Shares subject to the Plan shall consist of
unissued shares or previously issued shares reacquired and held by the Company,
or any corporation or entity in which the Company directly or indirectly
controls 50% or more of the total combined voting power of all classes of its
stock having voting power (any such corporation or entity, a "Subsidiary"), and
such number of Shares shall be and hereby is reserved for sale for such purpose.
Any of such Shares that may remain unsold and that are not subject to
outstanding Options at the termination of the Plan shall cease to be reserved
for the purpose of the Plan, but until termination of the Plan the Company shall
at all times reserve a sufficient number of Shares to meet the requirements of
the Plan.
3. FORMULA FOR AUTOMATIC GRANT OF OPTIONS.
(a) Options shall automatically be granted to all persons who
(i) become directors of the Company, first commencing with those individuals who
are directors on the day following the date that the Company files its first
registration statement with the Securities and Exchange Commission (the
"Commission"); and (ii) are not employees of the Company or a Subsidiary, and
(iii) are not eligible, and have not been eligible for at least one year prior
to becoming a nonemployee director of the Company, to receive any award under
any other stock option plan of the Company that is administered by any person
having discretion with respect to the selection of participants and/or the
amount of awards (any person satisfying all three requirements is hereinafter
referred to as a "Director"). Each person to whom an Option is granted under
this Plan, or any successor to the rights of such person under this Plan by
reason of transfer from the original grantee, hereafter shall be referred to as
an "Optionee." Each Option shall be evidenced by an option agreement, in a form
specified by the Compensation
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Committee of the Board ("Compensation Committee"), containing terms and
conditions that are not inconsistent with this Plan or applicable laws ("Option
Agreement"). The Compensation Committee may from time to time in granting
Options under the Plan prescribe such other terms and conditions concerning such
Options as it deems appropriate, including, without limitation, relating an
Option to achievement of specific goals established by the Compensation
Committee provided, that such terms and conditions are not more favorable to an
Optionee than those expressly permitted herein. The Options automatically
granted to Directors under this Plan shall be in addition to regular director's
fees or other benefits, if any, with respect to any Director's position with the
Company or its Subsidiaries. Neither the Plan nor any Option granted under the
Plan shall confer upon any person any right to continue to serve as a Director.
(b) Subject to Section 3(c) below, on the date (any such date,
an "Eligibility Date") on which an individual first becomes a Director for
purposes of this Plan, such Director shall automatically receive an Option with
respect to 15,000 Shares. Thereafter, each individual who is a Director on the
date after any subsequent annual meeting of stockholders of the Company
occurring more than eleven (11) months after his or her Eligibility Date (any
such date, an "Option Date"), on the day following such annual meeting shall
automatically receive an Option with respect to 5,000 Shares, subject to the
Option Maximum set forth in Section 3(c) below. Options automatically granted
pursuant to this Section 3(b) are exercisable in installments as provided in
Section 6(a) below.
(c) Notwithstanding any provision herein to the contrary, no
Director shall be automatically granted any Option under this Plan which, if
considered together with all other outstanding and unexercised options granted
by the Company hereunder ("Outstanding Options"), would entitle such Director to
purchase more than 65,000 shares of the Company's common stock ("Option
Maximum"); provided, however, that Directors may be granted options under other
plans or outside of any option plan and such options shall not count towards the
Option Maximum. On any Eligibility Date or Option Date on which the automatic
grant of Options pursuant to Section 3(b) above would exceed the Option Maximum
for a Director, the number of Shares in respect of which Options shall be
automatically granted hereunder shall be reduced (or eliminated) so that the
Director's shares of all Company stock covered by Outstanding Options shall not
exceed the Option Maximum. In the event that any such Director subsequently
exercises any of his or her Outstanding Options to purchase shares of the
Company's stock, the shares purchased thereby shall no longer be considered to
be Outstanding Options for purposes of the Option Maximum.
4. OPTION PRICE.
(a) Each Option shall have an exercise price for the related
Shares that is equal to the fair market value of such Shares (determined as set
forth in Section 4(b) below) on the date the Option is granted.
(b) The fair market value of a Share on a particular date
("Fair Market Value") shall be (i) the highest closing price of the Stock on any
established national exchange or exchanges or, if no sale of Stock is made on
such day, the next preceding day on which there was a sale of such stock, or
(ii) if the Stock is not listed on an established stock exchange, the mean
between the closing high bid and low asked quotations of the Stock in the New
York over-the-counter market as reported
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by the National Association of Securities Dealers, Inc. for such date, or (iii)
if the Stock is not listed, the fair market value as determined in good faith by
the Board.
5. OPTION PERIOD.
The Options granted under this Plan shall be for a term of ten
(10) years from the date of granting of each Option.
6. EXERCISE OF OPTIONS; CERTAIN CONDITIONS TO GRANT.
(a) The original Option for 15,000 shares and all Options
granted subsequent to the original Option shall be exercisable in installments
as provided in the Option Agreement; provided, however, no Option shall be
exercisable prior to the first anniversary date of the date of grant
(hereinafter, "Anniversary Date"). An Option may be exercised as to 33 1/3% of
the Shares covered thereby beginning on the first Anniversary Date; thereafter,
an additional 33 1/3% of Shares subject to the Option shall be exercisable as of
the Anniversary Date in each of the following two years except as otherwise
provided in Sections 6(f) and 9 below. The Compensation Committee may, in its
sole discretion accelerate the date on which any Option may be exercised.
(b) Subject to applicable exercise restrictions set forth
herein, Options may be exercised, in whole or in part, by giving written notice
of exercise to the Company specifying the number of Shares to be purchased. The
notice shall be accompanied by payment in full of the purchase price. Unless
further limited by the Committee in any Option, the exercise price of any Shares
purchased shall be paid by any of the following methods, subject to the
restrictions set forth in Section 6(c) hereof:
(i) in cash, by certified or cashier's check, by money order or by
personal check (if approved by the Board) of an amount equal to the
aggregate purchase price of the Shares to which such exercise relates;
(ii) if acceptable to the Compensation Committee, by delivery of
shares of Stock already owned by the Optionee, which shares, including
any cash tendered therewith, have an aggregate Fair Market Value
(determined as of the date preceding the Company's receipt of the
exercise notice) equal to the aggregate purchase price of the Shares to
which such exercise relates; or
(iii) if acceptable to the Compensation Committee, by delivery to the
Company of an exercise notice that requests the Company to issue to the
Optionee the full number of Shares as to which the Option is then
exercisable, less the number of Shares that have an aggregate Fair
Market Value (determined as of the date preceding the Company's receipt
of the exercise notice) equal to the aggregate purchase price of the
Shares to which such exercise relates.
(c) Notwithstanding the foregoing payment provisions, the
Board may refuse to recognize the method of exercise selected by the Optionee
(other than the method of exercise set forth in Section 6(b)(i)), if, in the
opinion of counsel to the Company, (i) the Optionee is, or within
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the six (6) months preceding such exercise was, subject to reporting under
Section 16(a) of the Securities Exchange Act of 1934 (the"Exchange Act"), and
(ii) there is a substantial likelihood that the method of exercise selected by
the Optionee would subject the Optionee to substantial risk of liability under
Section 16 of the Exchange Act.
(d) Notwithstanding any provision herein to the contrary, in
the event a Director is unable to continue as a Director with the Company as a
result of his or her total and permanent "disability" (as defined in Section
22(e)(3) of the Code), he or she may, but only within the period of time 90 days
from the date he or she becomes disabled (but not later than the expiration of
the term of the Option), exercise his or her Option (including any Reload
Option) to the extent he or she was entitled to exercise it at the date of such
termination. To the extent the Optionee was not entitled to exercise the Option
at the date of the termination, or if he or she does not exercise such Option
(which he or she was entitled to exercise) within the time specified herein, the
Option shall terminate.
(e) In the event of the death of an Optionee during his or her
term of service as a Director of the Company, to the extent the Optionee was
entitled to exercise the Option at the time of his or her death the Option may
be exercised within a 90 day period following the date of death (but not later
than the expiration of the term of the Option) by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance.
To the extent the Optionee was not entitled to exercise the Option at the date
of his or her death or if the Optionee's estate or person who acquired the right
to exercise the Option by bequest or inheritance does not exercise such Option
(which it was entitled to exercise) within the time specified herein, the Option
shall terminate.
(f) Upon termination of an Optionee's service as a Director of
the Company (for any reason other than death or disability), Options vested and
exercisable shall be immediately exercisable within a 90 day period beginning on
the date of termination of such service and Options not theretofore vested and
exercisable shall be forfeited; provided, however, that if the Company
terminates the Optionee's service as a Director, then the Company in its sole
discretion may accelerate the vesting of one-half of the Shares subject to the
Option that were not theretofore exercisable so that the shares subject to such
accelerated vesting are exercisable within a 90 day period beginning on the date
of termination of such service.
7. TRANSFERABILITY.
The Board may, in its discretion, authorize all or a portion of any
Option to be on terms which permit transfer by the Optionee to (i) a retirement
or pension plan for the benefit of the Optionee, (ii) the spouse, children or
grandchildren of the Optionee ("Immediate Family Members"), (iii) a trust or
trusts for the exclusive benefit of such Immediate Family Members, (iv) a
charitable trust or trusts created or controlled by the Optionee, or (v) a
partnership in which such Immediate Family Members are the only partners,
provided that (x) there may be no consideration for any such transfer, (y) the
Option Agreement must be approved by the Board, and the Option Agreement or an
amendment thereto must expressly provide for transferability in a manner
consistent with this Section, and (z) subsequent transfers of transferred
Options shall be prohibited except to a transferee to whom the Optionee could
have transferred the Option pursuant to this Section 7 or by will or the laws of
descent and distribution. Following transfer, any such Options shall continue to
be subject
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to the same terms and conditions as were applicable immediately prior to
transfer, provided that for all purposes hereof the term "Optionee" shall be
deemed to refer to the transferee.
8. ADJUSTMENTS.
(a) The existence of the Plan and the Options granted
hereunder shall not affect or restrict in any way the right or power of the
Board or the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of bonds, debentures, preferred or prior preference stocks ahead of or affecting
the Company's Stock or the rights thereof, the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding.
(b) In the event of any change in capitalization affecting the
Stock of the Company, such as a stock dividend, stock split, recapitalization,
merger, consolidation, split-up, combination, exchange of shares, other form of
reorganization, or any other change affecting the Stock, the Board, in its
discretion, may make proportionate adjustments it deems appropriate to reflect
such change with respect to (i) the maximum number of shares of Stock which may
be sold or awarded to any Optionee under this Plan, (ii) the number of shares of
Stock covered by each outstanding Option, and (iii) the price per share in
respect of the outstanding Options. Notwithstanding the foregoing, the Board may
only increase the aggregate number of shares of Stock for which Options may be
granted under the Plan solely to reflect the change, if any, of the
capitalization of the Company.
9. CHANGE OF CONTROL.
(a) In the event of a Change of Control (as defined in Section
9(b) below) of the Company, and except as the Board may expressly provide
otherwise in resolutions adopted prior to the Change of Control, all Options
then outstanding shall become fully exercisable as of the date of the Change of
Control; provided, however, that no Option which has been outstanding less than
one (1) year on the date of the Change of Control shall be afforded such
treatment.
(b) A "Change of Control" shall be deemed to have occurred
upon the occurrence of any one (or more) of the following events, other than a
transaction with another person controlled by the Company or its officers and
directors, or a benefit plan or trust established by the Company for its
employees:
(i) Any person, including a group as defined in Section 13(d)(3) of
the Exchange Act, becomes the beneficial owner of shares of the Company
with respect to which 40% or more of the total number of votes for the
election of the Board may be cast;
(ii) As a result of, or in connection with, any cash tender offer,
exchange offer, merger or other business combination, sale of assets or
contested election, or combination of the above, persons who were
directors of the Company immediately prior to such event shall cease to
constitute a majority of the Board;
5
<PAGE> 6
(iii) The stockholders of the Company shall approve an agreement
providing either for a transaction in which the Company will cease to
be an independent publicly owned corporation or for a sale or other
disposition of all or substantially all the assets of the Company; or
(iv) A tender offer or exchange offer is made for shares of the
Company's Stock (other than one made by the Company), and forty percent
(40%) of the Company's outstanding shares of Stock are acquired
thereunder.
10. SECURITIES LAWS RESTRICTIONS.
Whether or not the Options and Shares covered by the Plan have been
registered under the Securities Act of 1933, as amended, each person exercising
an Option under the Plan may be required by the Company to give a representation
in writing that he or she is acquiring Shares for his or her own account for
investment and not with a view to, or for sale in connection with, the
distribution of any part thereof. As a condition of any transfer of the
certificate evidencing Shares, the Board may obtain such other agreements or
undertakings, if any, that it may deem necessary or appropriate to assume
compliance with any provisions of the Plan or any law or regulation.
Certificates for Shares delivered under the Plan may be subject to such
stop-transfer orders and other restrictions as the Board may deem advisable
under the rules, regulations, and other requirements of the Securities and
Exchange Commission, any stock exchange upon which the Stock is then listed, and
any applicable Federal or state securities laws. The Board may cause a legend or
legends to be put on any such certificates to refer to those restrictions.
11. AMENDMENT, MODIFICATIONS, SUSPENSION OR DISCONTINUANCE OF THIS
PLAN.
(a) Except as set forth in Sections 11(b), 11(c) and 11(d)
below, without stockholder approval the Board may amend, suspend or terminate
the Plan for the purpose of meeting or addressing any changes in legal
requirements or for any other purpose it deems to be in the best interests of
the Company if permitted by law.
(b) Without the approval of the stockholders, the Board may
not make any amendment to the Plan for which stockholder approval is required by
(i) any rules for listed companies promulgated by any national stock exchange on
which the Company's stock is traded or (ii) any other applicable law.
(c) Notwithstanding Sections 11(a) and 11(b) under no
circumstances may the Board amend, alter, discontinue or terminate the Plan so
as to impair the vested rights of Optionees under any Option theretofore granted
under the Plan.
(d) Notwithstanding Sections 11(a) and 11(b), the provisions
in Sections 3(a) and 3(b) regarding eligibility and automatic grants of options
under the Plan shall not be amended more than once every six (6) months, except
for such amendments as may be necessary to comply with applicable provisions of
the Code or the rules and regulations promulgated thereunder.
6
<PAGE> 7
12. GOVERNMENT REGULATIONS.
The Plan, and the granting and exercise of Options thereunder, and the
obligation of the Company to sell and deliver Shares under such Options, shall
be subject to all applicable laws, rules and regulations, and to such approval
by any governmental agencies or national securities exchanges as may be
required.
13. COSTS OF PLAN.
All expenses incident to the administration, termination, or protection
of this Plan or any Option, including, but not limited to, legal and accounting
fees, shall be paid by the Company; provided, however, the Company may recover
any and all damages, fees, expenses and costs arising out of any actions taken
by the Company to enforce its rights under this Plan or any Option.
14. GOVERNING LAW.
All questions arising with respect to the provisions of this
Plan shall be determined by application of the laws of the State of Texas except
to the extent Texas law is preempted by federal law.
15. EFFECTIVE DATE.
The Plan shall be effective when approved by a unanimous written
consent of the Company's Board.
16. INTERPRETATION.
(a) If any provision of the Plan is held invalid for any
reason, such holding shall not affect the remaining provisions hereof, but
instead the Plan shall be construed and enforced as if such provision had never
been included in the Plan.
(b) Headings contained in this Agreement are for convenience
only and shall in no manner be construed as part of this Plan.
(c) Any reference to the masculine, feminine, or neuter gender
shall be a reference to such other gender as is appropriate.
17. SECTION 83(b) ELECTION.
If as a result of exercising an Option, an Optionee receives Shares
that are subject to a "substantial risk of forfeiture" and are not
"transferable" as those terms are defined for purposes of Section 83(a) of the
Code, then such Optionee may elect under Section 83(b) of the Code to include in
his gross income, for his taxable year in which the Shares are transferred to
him, the excess of the fair market value of such Shares at the time of transfer
(determined without regard to any restriction other than one which by its terms
will never lapse), over the amount paid for the Shares. If the Optionee makes
the Section 83(b) election described above, the Optionee shall (i) make such
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<PAGE> 8
election in a manner that is satisfactory to the Board, (ii) provide the Company
with a copy of such election, (iii) agree to promptly notify the Company if an
Internal Revenue Service or state tax agent, on adult or otherwise, questions
the validity or correctness of such election or of the amount of income
reportable on account of such election, and (iv) agree to such withholding as
the Board may reasonably require.
18. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Compensation
Committee or other committee thereof as appointed by the Board (the
"Committee").
(b) The Committee, from time to time, may adopt rules and
regulations for carrying out the purposes of the Plan. The determinations and
the interpretation and construction of any provision of the Plan by the
Committee shall be final and conclusive.
(c) Subject to the express provisions of this Plan, the
Committee shall have the authority, in its sole and absolute discretion (i) to
adopt, amend, and rescind administrative and interpretive rules and regulations
relating to this Plan or any Option; (ii) to construe the terms of this Plan or
any Option; (iii) as provided in Section 8, upon certain events to make
appropriate adjustments to the exercise price and number of Shares subject to
this Plan and Option; and (iv) to make all other determinations and perform all
other acts necessary or advisable for administering this Plan, including the
delegation of such ministerial acts and responsibilities as the Committee deems
appropriate. The Committee may correct any defect or supply any omission or
reconcile any inconsistency in this Plan or any Option in the manner and to the
extent it shall deem expedient to carry it into effect, and it shall be the sole
and final judge of such expediency. The Committee shall have full discretion to
make all determinations on the matters referred to in this Section 18(c), and
such determinations shall be final, binding and conclusive.
19. MISCELLANEOUS.
(a) Neither the members of the Board nor any member of the
Committee shall be liable for any act, omission, or determination taken or made
in good faith with respect to this Plan or any Option, and members of the Board
and the Committee shall, in addition to all other rights of indemnification and
reimbursement, be entitled to indemnification and reimbursement by the Company
in respect of any claim, loss, damage, liability or expense (including
attorneys' fees, the costs of settling any suit, provided such settlement is
approved by independent legal counsel selected by the Company, and amounts paid
in satisfaction of a judgment, except a judgment based on a finding of bad
faith) arising from such claim, loss, damage, liability or expense to the full
extent permitted by law and under any directors' and officers' liability or
similar insurance coverage that may from time to time be in effect.
(b) Any issuance or transfer of Shares to an Optionee, or to
his or her legal representative, heir, legatee, distributee, or assign in
accordance with the provisions of this Plan or the applicable Option, shall, to
the extent thereof, be in full satisfaction of all claims of such persons under
the Plan. The Committee may require any Optionee, legal representative, heir,
legatee or distributee as a condition precedent to such payment or issuance or
transfer of Shares, to execute a
8
<PAGE> 9
release and receipt for such payment or issuance or transfer of Shares in such
form as it shall determine.
(c) Neither the Committee nor the Company guarantees Shares
from loss or depreciation.
(d) Records of the Company shall be conclusive for all
purposes under this Plan or any Option, unless determined by the Committee or
the Board to be incorrect.
(e) The Company shall, upon request or as may be specifically
required under this Plan or any Option, furnish or cause to be furnished all of
the information or documentation that is necessary or required by the Committee
to perform its duties and functions under this Plan or any Option.
(f) The Company assumes no liability to any Optionee or his
legal representatives, heirs, legatees or distributees for any act of, or
failure to act on the part of, the Company, the Committee or the Board.
(g) Any action required of the Company or the Committee
relating to this Plan or any Option shall be by resolution of the Company or
Committee, respectively, or by a person authorized to act by resolution of the
Company or Committee, respectively.
(h) Whenever any notice is required or permitted under this
Plan, such notice must be in writing and personally delivered or sent by mail or
delivery by a nationally recognized courier service. Any notice required or
permitted to be delivered under an Option shall be deemed to be delivered on the
date on which it is personally delivered, or, if mailed, whether actually
received or not, on the third Business Day after it is deposited in the United
States mail, certified or registered, postage prepaid, addressed to the person
who is to receive it at the address that such person has previously specified by
written notice delivered in accordance with this Section 19(j) or, if by
courier, seventy-two (72) hours after it is sent, addressed as described in this
Section 19(j). The Company or the Optionee may change, at any time and from time
to time, by written notice to the other, the address that it or he had
previously specified for receiving notices. Until changed in accordance with
this Plan, the Company and the Optionee shall specify as its and his address for
receiving notices the address set forth in the Option pertaining to the Shares
to which such notice relates.
(i) Any person entitled to notice under this Plan may waive
such notice.
(j) The Company shall be entitled to recover from an Optionee
reasonable attorneys' fees incurred in connection with the enforcement of the
terms and provisions of the Plan and any agreement governing any Option, whether
by an action to enforce specific performance, or an action for damages for its
breach or otherwise.
9
<PAGE> 10
THE CONCOURS GROUP, INC.
-----------------------------------
Ron Christman, President
10
<PAGE> 1
EXHIBIT 10.12
[The Concours Group, Inc. letterhead]
[date]
[name and address]
Dear :
------------
We look forward to the opportunity of having you work with us on The Human
Resources Concours. This letter is just to review our conversations on the ways
we will work together.
We would like you to play three roles:
o Participating regularly in meetings of the HR Concours, the next of
which is _______________. We would look to you to be an active
participant in the discussion and to serve as an adjunct member of
Concours staff, providing continuity across programs and helping us to
deepen relationships with program members.
o Being a team member on HR-oriented Re.sults(sm) research projects (one
remaining in 1999, beginning in September). Each project involves
participation in two workshops and a brainstorming day, plus lending
your experience as we shape the project and develop its results. Each
project will take around 6 days of your time.
o Working with Lynn to identify HR executives who might be interested in
participating in the HR Concours or individual Re.sults(sm) projects.
In addition, we would like to add you to our advisory board, the group of
outside experts and good friends of Concours who advise us on research topic
selection and other issues, and who participate regularly in our programs. The
advisory board includes Jim Cash, Jim Wetherbe, Dave Ulrich, Martin Bresler,
Judy Bardwick, Peter Cochrane and Cliff Ehrlich. We are in the process of
enlisting several more.
The compensation structure for your work with us will be:
o Participating in HR Concours events - $1000/day.
o Participating in research and all other activities on behalf of
Concours - $3000/day.
o Referral fees of 10% of the membership fee for introducing a new member
to the HR Concours, and $1000/company for introducing new members to
Re.sults(sm) projects
<PAGE> 2
(beyond the two projects that are part of their HR Concours
memberships).
o Grant of an option on 5000 shares of Concours Group stock (at the
current option price of $5.00) in recognition of your joining our
advisory board.
o Of course, we reimburse all travel expenses.
We hope this arrangement is attractive to you, not only financially (which we
realize is a minor consideration), but more importantly in terms of meeting your
interests and availability. The HR Concours is an exciting (and strategic)
extension of our services, and we very much look forward to and appreciate your
help in making it a success.
Best regards,
Ronald P. Christman, Ph.D. Lynn D. Keehan, Ph.D.
Chief Executive Officer Executive Vice President
LDK/em
Agreed to and accepted:
- -----------------------------
Name
- -----------------------------
Date
<PAGE> 1
EXHIBIT 10.13
NONCOMPETITION, NONSOLICITATION
AND NONDISCLOSURE AGREEMENT
This Noncompetition, Nonsolicitation and Nondisclosure Agreement (the
"AGREEMENT") is effective as of ___________ (the "EFFECTIVE DATE"), by and
between The Concours Group, Inc., a Delaware corporation (the "COMPANY"), and
__________________ , a resident of _______________ (the "EMPLOYEE").
R E C I T A L S:
A. The Company has agreed to employ the Employee as an employee of the
Company for the term expressed herein and the Employee has agreed to accept such
employment.
B. The Company has valuable proprietary information and relationships
with its other employees which it desires to protect.
NOW THEREFORE, the Company and the Employee hereby agree as follows:
1. TERM OF EMPLOYMENT
1.1 The Employee shall be initially employed for a period of
90 days from the date hereof at the salary set forth in Employee's offer letter.
During such 90 day period and any other period during which the Employee is
employed by the Company, the Company will provide the Employee with access to
the Proprietary Information (defined below). After the initial 90 day period,
the Employee's employment with the Company will terminate 14 days after the
Company provides the Employee notification of the Company's intent to terminate
the Employee's employment. The Employee stipulates that his or her employment
may be terminated under such notification for any reason or for no reason at
all. The Employee further acknowledges and agrees that, if he or she is
terminated, the Company may relieve the Employee of all duties and positions
with the Company during such 90 or 14 day term.
1.2 In the event of termination of the Employee's employment
with the Company, for whatever reason or no reason, the Employee shall return to
the Company within 5 business days of the time such termination is communicated
by either party, or within such other time frame agreed to with the Company, any
and all equipment, software, literature, documents, data, information, order
forms, memoranda, correspondence, customer and prospective customer lists,
customer's orders, records, cards or notes acquired, compiled or coming into the
Employee's knowledge, possession or control in connection with his activities as
an employee of the Company, as well as all machines, parts, equipment or other
materials received from the Company or from any of its customers, agents or
suppliers, in connection with such activities. The Employee will only retain
<PAGE> 2
copies of the Employee's own records related to his or her compensation, this
Agreement and personal copies of any papers written by the Employee and
published elsewhere without restriction.
2. CONFLICTS OF INTEREST.
2.1 So long as the Employee is employed by the Company, he
will faithfully devote his best efforts and all of his working time and
attention to the business and affairs of the Company and shall offer to the
Company all opportunities that become available to the Employee for investment
in or development of the Company's business and related or complementary
businesses suitable for investment or acquisition by the Company in accordance
with the Company's business objectives, as determined from time to time by the
Company's Board of Directors.
2.2 The Employee has a fiduciary duty of loyalty to the
Company, and will not engage in any activity which will or could, in any way,
harm the business, business interests, or reputation of the Company. The
Employee will not directly or indirectly engage in competition with the Company
at any time during the existence of the employment relationship between the
Company and the Employee, and the Employee will not on his own behalf, or as
another's agent, employee, partner, shareholder or otherwise, engage in any of
the same or similar duties or responsibilities required by the Employee's
position with the Company, other than as an employee of the Company.
3. NONDISCLOSURE.
3.1 Subsequent to the execution of this Agreement, the
Employee will have access to certain confidential and highly sensitive
information relating to the Company incident to his employment by the Company
(the "PROPRIETARY INFORMATION"), including, but not limited to, information
pertaining to the following: (i) the identity of the Company's customers and
prospective customers; (ii) the special needs of the Company's customers; (iii)
confidential market studies; (iv) pricing studies, information and analyses; (v)
current and prospective products and inventories; (vi) business projections;
(vii) business plans and strategies; (viii) financial statements and
information; and (ix) special processes, procedures and services of the Company
and its suppliers. The Employee acknowledges and agrees that this information
constitutes a trade secret and, if disclosed, could place the Company at a
competitive disadvantage. Proprietary Information does not include, however,
information that through no breach or fault of the Employee (i) is generally
available to the public; (ii) was previously known or available to the Employee;
(iii) is disclosed to the Employee by a third party not having an obligation of
confidence with respect to such information; (iv) has been furnished by the
Company to a third party on a non-confidential basis; or (v) is required to be
openly disclosed under non-confidential conditions by law or legal process,
provided that the Employee shall have consulted with the Company in advance of,
and cooperated with the Company with respect to the form of such disclosure to
the extent permitted by law. All information related to the Company's business
shall be deemed to be Proprietary Information unless shown to be within one or
more of the foregoing exceptions. Notwithstanding anything to the contrary
herein, for purposes of this Agreement, "Customer" means any person or entity
for whom the Company has provided any services or products or has entered into
an oral or written contract to provide services or products,
2
<PAGE> 3
and "Prospective Customer" means any person or entity for whom the Company has
made a formal sales proposal or entered into discussions for purposes of making
a sales proposal. The Employee agrees not to disclose any of the Proprietary
Information to any person who is not a current employee of the Company at any
time prior to, or subsequent to, the termination of this Agreement without the
express, written consent of the Company.
3.2 For twelve (12) months following his or her termination
for any reason or no reason, the Employee shall keep the Company advised in
writing of the name and address of each business organization for which he or
she acts as agent, partner, officer, principal, representative or employee.
Should the Company believe the Employee is in violation of this Agreement, the
Company may notify each such business organization (whether or not the Employee
has voluntarily provided the information required by the preceding sentence) of
the terms and conditions of this Agreement regarding nonsolicitation of clients,
customers and employees, and the Employee's duties of confidentiality hereunder.
Such notice may be accomplished by providing such business organization with a
copy of this Agreement. The employee consents to said notice, and acknowledges
and agrees that such notification shall not constitute interference with the
Employee's business relations, or otherwise constitute an unreasonable
restriction on the Employee's activities.
4. NONCOMPETITION. For purposes relating to the enforcement of the
Employee's promises set forth in this Agreement, the Employee represents and
warrants that, to the best of his knowledge, the following statements are true
and correct:
4.1 The Company has significant relationships and goodwill
within its industry and these relationships and goodwill are a valuable asset
belonging solely to the Company.
4.2 As an employee and representative of the Company, the
Employee will be responsible for building and maintaining business relationships
and goodwill with current and future customers of the Company and other third
parties on a personal level and that this responsibility creates a special
relationship of trust and confidence between the Company, the Employee and these
third parties.
4.3 The special relationship of trust and confidence between
the Company, the Employee and such third parties creates a high risk and
opportunity for the Employee to misappropriate the relationship and goodwill
existing between the Company and its customers and other third parties such that
it is fair and reasonable for the Company to take steps to protect the Company
from the risk of such misappropriation.
4.4 The Employee acknowledges and agrees that in exchange for
the execution of the noncompetition agreements set forth in this Agreement, the
Company will provide substantial, valuable consideration including, but not
limited to the following: (i) exposure to and access to the Proprietary
Information; (ii) continued employment; and (iii) certain compensation and other
3
<PAGE> 4
benefits. The Employee acknowledges and agrees that the above consideration
constitutes fair and adequate consideration for the execution of the
noncompetition agreements set forth in this Agreement.
4.5 The Employee agrees that for a period of twelve (12)
months following the termination of his employment with the Company, for
whatever reason or no reason, the Employee will not directly or indirectly
solicit or attempt to solicit any business of a competitive nature of the
Company's Customers or Prospective Customers with which the Employee had direct
contact, or for whose benefit the Employee performed services, while employed by
the Company. If Employee violates the provisions of this Section 4.5, Employee
agrees that the twelve (12) month period set forth in this section shall be
extended by the period of violation by the Employee.
4.6 The Employee acknowledges and agrees that the
noncompetition agreements set forth above are ancillary to an otherwise
enforceable agreement, including, without limitation, the agreement by the
Company to provide the Proprietary Information and the Nondisclosure Agreement
by the Employee and supported by independent valuable consideration as required
by Tex. Bus. & Comm. Code Ann. Section 15.50 and that the limitations as to
time, geographical area, and scope of activity to be restrained by the
noncompetition agreements are reasonable and acceptable to the Employee, and do
not impose any greater restraint than is reasonably necessary to protect the
goodwill and other business interests of the Company.
4.7. If at some later date, a court of competent jurisdiction
determines that the noncompetition agreements set forth above do not meet the
criteria set forth in Tex. Bus. & Comm. Code Ann. Section 15.50(2), these
agreements may be reformed pursuant to Tex. Bus. & Comm. Code Ann. Section
15.51(c), so that they may be enforced to the maximum extent permitted under
Texas law.
5. NON-INTERFERENCE
5.1 For a period of twelve (12) months subsequent to the
termination of the Employee's employment with the Company, whether such
termination occurs at the insistence of the Company or the Employee, the
Employee shall not recruit, hire, or attempt to recruit or hire, directly or by
assisting others, any other employees of the Company, nor shall the Employee
contact or communicate with any other employees of the Company for the purpose
of inducing other employees to terminate their employment with the Company. For
purposes of this covenant, "other employees" shall refer to employees who are
still actively employed by, or doing business with, the Company at the time of
the attempted recruiting or hiring.
6. ASSIGNING ORIGINAL WORKS AND GOODWILL
6.1 Attached as ATTACHMENT A is a list describing all
inventions, original works of authorship, developments, improvements and trade
secrets which were made by the Employee prior to his employment with the
Company, which belong to the Employee, which relate to the
4
<PAGE> 5
Company's current and proposed business and products, and which are not assigned
to the Company; or, if no such list is attached, the Employee hereby represents
that there are no such works.
6.2 The Employee will promptly make full written disclosure to
the Company, will hold in trust for the sole right and benefit of the Company,
and hereby assign to the Company his right, title and interest in and to any and
all inventions, original works of authorship, developments, improvements or
trade secrets which he may solely or jointly conceive or develop or reduce to
practice, or cause to be conceived or developed or reduced to practice, during
the period of time he is in the employ of the Company. The Employee also agrees
to sign and deliver to the Company such other documents as may reasonably be
requested by the Company to effect such assignment. This provision shall not be
construed to require or effect an assignment of any invention which the Employee
can prove meets the following conditions: (i) it was developed entirely on the
Employee's own time; (ii) no equipment, supplies, facilities or trade secrets of
the Company were used in its development; and (iii) it either (x) does not
relate to the business of the Company or to the Company's actual or demonstrably
anticipated business activities or (y) does not result from any work performed
by the Employee for the Company.
6.3 The Employee will keep and maintain adequate and current
written records of all inventions and original works of authorship made by the
Employee (solely or jointly with others) within the scope of his employment with
the Company and such records shall be available to the Company and remain the
sole property of the Company at all times.
6.4 The Employee's obligation to assist the Company to obtain
United States or foreign letters patent, copyrights, or mask work rights
covering inventions, works of authorship and mask works, respectively, assigned
hereunder to the Company shall continue beyond the termination of his employment
with the Company, but after any such termination of employment, the Company
shall compensate the Employee at a reasonable rate for time actually spent by
him at the Company's request on such assistance. The Employee hereby irrevocably
designates and appoints the Company and its duly authorized officers and agents
as his agent and attorney in fact, to act for and in his behalf and stead to
execute and file any such applications and to do all other lawfully permitted
acts in furtherance of the prosecution and issuance of letters patent,
copyrights, and mask work rights with the same legal force and effect as if
executed by the Employee. The Employee hereby assigns to the Company any and all
claims, of any nature whatsoever, which he now has or may hereafter acquire for
infringement of any patents, copyrights or mask work rights resulting from any
such application assigned hereunder to the Company.
7. REMEDIES
7.1 If the Employee violates any of the provisions set forth
in this Agreement, the Employee acknowledges and agrees that the Company will
suffer immediate and irreparable harm which cannot be accurately calculated in
monetary damages. Consequently, the Company shall be entitled to apply for
immediate injunctive relief, either by temporary or permanent injunction, to
prevent such a violation. This injunctive relief shall be in addition to any
other legal or equitable
5
<PAGE> 6
relief to which the Company would be entitled. The assertion or existence of any
breach by the Company or claim by the Employee against the Company, whether
predicated upon this Agreement or otherwise, shall not constitute a defense to
the enforcement (whether through injunctive relief or damages) of any promise
contained in Sections 3, 4, 5, or 6.
8. MISCELLANEOUS
8.1 Severability. Each covenant and/or provision of this
Agreement shall be enforceable independently of every other covenant and/or
provision. If any covenant and/or provision of this Agreement is determined to
be unenforceable for any reason, the remaining covenants and/or provisions will
remain effective, binding and enforceable.
8.2 Waiver. The failure of the Company to enforce any
provision of this Agreement shall not constitute a waiver of that particular
provision, or of any other provisions of this Agreement.
8.3 Successors and Assigns. This Agreement may be assigned by
the Company to any successor-in-interest, without the notice or consent of the
Employee and shall inure to the benefit of, and be fully enforceable by, any
successor and/or assignee. The Employee acknowledges and agrees that his
obligations, duties and responsibilities under this Agreement are personal and
shall not be assignable.
8.4 Choice of Law. Texas law (excluding the choice or
conflicts of law provisions of Texas law) will govern the validity,
interpretation and effect of this Agreement, and any other dispute relating to,
or arising out of, the employment relationship between the Company and the
Employee.
8.5 Modification. This Agreement constitutes the complete and
entire agreement between the parties on this subject matter. The covenants
and/or provisions of this Agreement may not be modified by any subsequent
agreement unless the modifying agreement: (i) is in writing; (ii) contains an
express provision referencing this Agreement; (iii) is signed and executed by an
officer of the Company as a representative of the Company; (iv) is signed by the
Employee; and (v) is approved by the Board of Directors of the Company.
8.6 Legal Consultation. The Employee and the Company
acknowledge and agree that both parties have been accorded a reasonable
opportunity to review this Agreement with legal counsel prior to executing the
agreement.
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<PAGE> 7
8.7 Counterparts. This Agreement may be executed in any number
of counterparts each of which when executed and delivered shall be deemed to be
an original and all of which counterparts taken together shall constitute but
one and the same instrument.
This Agreement is executed effective as of the Effective Date.
THE EMPLOYEE
--------------------------------------
THE CONCOURS GROUP, INC.
By:
-----------------------------------
Ron Christman, President
7
<PAGE> 1
EXHIBIT 10.14
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT, dated as of
February 28, 2000 (the "Agreement"), amends and restates that certain
Registration Rights Agreement, dated as of February 5, 1997 (the "ORIGINAL
REGISTRATION RIGHTS AGREEMENT") by and among The Concours Group, Inc., a
Delaware corporation (the "COMPANY"), and Tallard B.V., a Netherlands company
("TALLARD"), which Original Registration Rights Agreement was entered into in
connection with that certain Investment Agreement, dated as of February 5, 1997
(the "INVESTMENT AGREEMENT"), by and among the Company, Tallard and Union
Atlantic, L.C., a Florida limited liability company, and which Original
Registration Rights Agreement was amended by that certain Amendment to
Registration Rights Agreement, dated as of March 5, 1999, by and among the
Company, Tallard and Lingfield AB, a Swedish company ("LINGFIELD"), and by that
certain Second Amendment to Registration Rights Agreement, dated as of February
1, 2000, by and among the Company, Tallard and Infologix (BVI) Limited, a
British Virgin Island Company ("Infologix").
RECITALS:
WHEREAS, Thayer Equity Investors IV, L.P., a Delaware limited
partnership ("THAYER"), Thayer CGI Partners LLC, a Delaware limited liability
company ("THAYER PARTNERS," and together with Thayer, Tallard and Infologix, the
"INVESTORS"), and the Company have entered into an Investment Agreement, of even
date herewith (the "SERIES B INVESTMENT AGREEMENT"), pursuant to which the
Company has agreed to grant certain registration rights to Thayer and Thayer
Partners;
WHEREAS, Section 15(c) of the Original Registration Rights Agreement
permits the amendment of the Original Registration Rights Agreement by consent
of the holders of a majority (the "MAJORITY HOLDERS") of Registrable Shares (as
defined in the Original Registration Rights Agreement, as amended), which
amendment will be binding on all parties to the Original Registration Rights
Agreement, as amended;
WHEREAS, in connection with the Series B Investment Agreement, the
Company deems it advisable that the parties to the Series B Investment Agreement
become parties to this Agreement; and
WHEREAS, the Majority Holders have agreed to amend and restate the
Registration Rights Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree as follows:
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1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
(a) "COMMISSION" means the Securities and Exchange Commission,
or any other federal agency at the time administering the Securities Act.
(b) "COMMON STOCK" means the common stock, $.01 par value per
share, of the Company.
(c) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended, or any similar federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.
(d) "REGISTRATION STATEMENT" means a registration statement
filed by the Company with the Commission for a public offering and sale of
Common Stock (other than a registration statement on Form S-8 or Form S-4, or
their successors, or any other form for a similar limited purpose, or any
registration statement covering only securities proposed to be issued in
exchange for securities or assets of another corporation).
(e) "REGISTRATION EXPENSES" means the expenses described in
Section 5.
(f) "REGISTRABLE SHARES" means the Series A Registrable Shares
and the Series B Registrable Shares.
(g) "SECURITIES ACT" means the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.
(h) "SERIES A REGISTRABLE SHARES" means (i) shares of Common
Stock issued or issuable upon conversion of the 1,810,000 shares of the
Company's Series A Convertible Preferred Stock, $0.01 par value per share (the
"SERIES A STOCK") owned by Tallard as of the date of this Agreement; (ii) shares
of Common Stock issued or issuable upon conversion of the promissory notes (the
"NOTES") issued in connection with that certain Loan Agreement, dated as of
March 5, 1999, by and among the Company, Tallard and Infologix (as successor to
Lingfield); (iii) 240,001 shares of Common Stock owned by Tallard as of the date
of this Agreement; (iv) 750,000 shares of Common Stock purchased by Infologix
pursuant to that certain Stock Purchase and Debt Conversion Agreement, dated as
of February 1, 2000 (the "STOCK PURCHASE AGREEMENT"), by and among the Company,
Tallard and Infologix; (v) 50,000 shares of Common Stock to be issued upon the
exercise of the Warrants issued pursuant to the Stock Purchase Agreement; and
(vi) any other shares of Common Stock issued in respect of such shares (because
of stock splits, stock dividends, reclassifications, recapitalizations, or
similar events); provided, however, that shares of Common Stock which are Series
A Registrable Shares shall cease to be Series A Registrable Shares (x) upon any
sale pursuant to a Registration Statement or Rule 144 under the Securities Act,
or (y) upon any sale in any manner to a person or entity which, by virtue of
Section 14, is not entitled to the rights provided by this Agreement. Wherever
reference is made in this Agreement to a request or consent of holders of a
certain percentage of Series A Registrable Shares, the determination of such
percentage shall include shares of Common Stock
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issuable upon conversion of the Series A Registrable Shares even if such
conversion has not yet been effected.
(i) "SERIES B REGISTRABLE SHARES" means (i) the Common Stock
issued or issuable upon conversion of the 1,546,784 shares of the Company's
Series B Convertible Preferred Stock, par value $0.01 per share (the "SERIES B
STOCK") now owned or hereafter acquired by Thayer and Thayer Partners; and (ii)
any other shares of Common Stock issued in respect of such shares (i) (because
of stock splits, stock dividends, reclassifications, recapitalizations, or
similar events); provided, however, that shares of Common Stock which are Series
B Registrable Shares shall cease to be Series B Registrable Shares (x) upon any
sale pursuant to a Registration Statement or Rule 144 under the Securities Act
or (y) upon any sale in any manner to a person or entity which, by virtue of
Section 14, is not entitled to the rights provided by this Agreement. Wherever
reference is made in this Agreement to a request or consent of holders of a
certain percentage of Series B Registrable Shares, the determination of such
percentage shall include shares of Common Stock issuable upon conversion of the
Series B Registrable Shares even if such conversion has not yet been effected.
(j) "SERIES A STOCKHOLDERS" means Tallard, Infologix and any
persons or entities to whom the rights granted under this Agreement are
transferred by Tallard, Infologix or their respective successors or assigns
pursuant to Section 14.
(k) "SERIES B STOCKHOLDERS" means Thayer, Thayer Partners and
any persons or entities to whom the rights granted under this Agreement are
transferred by Thayer or Thayer Partners, and their respective successors or
assigns pursuant to Section 14.
(l) "STOCKHOLDERS" means the Series A Stockholders and the
Series B Stockholders.
2. DEMAND REGISTRATIONS.
(a) Series A Registrable Shares. At any time during the
three-year period beginning six months after the closing of the Company's first
underwritten public offering pursuant to a Registration Statement, unless this
Agreement is earlier terminated, Series A Stockholders holding in the aggregate
at least 66 2/3% of the Series A Registrable Shares may request, in writing,
that the Company effect the registration on Form S-1 or Form S-2 (or any
successor form) of Series A Registrable Shares owned by such Series A
Stockholders having an offering price of at least $3.00 per share (based on the
closing market price on the business day preceding the date of such notice). If
the holders initiating the registration intend to distribute the Series A
Registrable Shares by means of an underwriting, they shall so advise the Company
in their request. The selection of the managing underwriters of any such
underwritten offering shall be subject to the approval of the Board of Directors
of the Company, which approval shall not be unreasonably withheld. If such
registration is underwritten, the right of other Series A Stockholders and
Series B Stockholders to participate shall be conditioned on such Series A
Stockholders' and Series B Stockholders' participation in such underwriting.
Upon receipt of any such request, the Company promptly shall give written notice
of such proposed registration to all
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Series A Stockholders and Series B Stockholders. Such Series A Stockholders and
Series B Stockholders shall have the right, by giving written notice to the
Company within thirty (30) days after the Company provides its notice, to elect
to have included in such registration such of their Series A Registrable Shares
and Series B Registrable Shares as such Series A Stockholders and Series B
Stockholders may request in such notice of election; provided, however, that if
the underwriter (if any) managing the offering determines that, because of
marketing factors, all of the Series A Registrable Shares and Series B
Registrable Shares requested to be registered by all Series A Stockholders and
Series B Stockholders may not be included in the offering, then all Series A
Stockholders and Series B Stockholders who have requested registration shall
participate in the registration pro rata based upon the number of Series A
Registrable Shares and Series B Registrable Shares which they have requested to
be so registered. Thereupon, the Company shall, as expeditiously as possible,
use its best efforts to effect the registration on Form S-1 or Form S-2 (or any
successor form) of all Series A Registrable Shares and Series B Registrable
Shares which the Company has been requested to so register.
(b) Series B Registrable Shares. At any time after the first
to occur of (i) the date that is the second anniversary of the date of this
Agreement; or (ii) the date that is one hundred and eighty (180) days after the
closing of the Company's first underwritten public offering pursuant to a
Registration Statement where the aggregate gross proceeds (prior to underwriter
commissions and expenses) of such offering is greater than $25,000,000 (a
"QUALIFYING IPO"), unless this Agreement is earlier terminated, Series B
Stockholders holding in the aggregate at least 66 2/3% of the Series B
Registrable Shares may request, in writing, that the Company effect the
registration on Form S-1 (or any successor form) of Series B Registrable Shares
owned by such Series B Stockholders so long as either (x) 50% of the Series B
Registrable Shares outstanding are registered in such offering, or (y) the
aggregate gross proceeds to be received from such offering is expected to be not
less than $25,000,000. If the holders initiating the registration intend to
distribute the Series B Registrable Shares by means of an underwriting, they
shall so advise the Company in their request. The selection of the managing
underwriters of any such underwritten offering shall be subject to the approval
of the Board of Directors of the Company, which approval shall not be
unreasonably withheld. If such registration is underwritten, the right of other
Series B Stockholders and Series A Stockholders to participate shall be
conditioned on such Series B Stockholders' and Series A Stockholders'
participation in such underwriting. Upon receipt of any such request, the
Company promptly shall give written notice of such proposed registration to all
Series B Stockholders and Series A Stockholders. Such Series B Stockholders and
Series A Stockholders shall have the right, by giving written notice to the
Company within thirty (30) days after the Company provides its notice, to elect
to have included in such registration such of their Series B Registrable Shares
and Series A Registrable Shares as such Series B Stockholders and Series A
Stockholders may request in such notice of election; provided, however, that if
the underwriter (if any) managing the offering determines that, because of
marketing factors, all of the Series B Registrable Shares and Series A
Registrable Shares requested to be registered by all Series B Stockholders and
Series A Stockholders may not be included in the offering, then all Series B
Stockholders and Series A Stockholders who have requested registration shall
participate in the registration pro rata based upon the number of Series B
Registrable Shares and Series A Registrable Shares which they have requested to
be so registered. Thereupon, the Company shall, as expeditiously
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as possible, use its best efforts to effect the registration on Form S-1 (or
any successor form) of all Series B Registrable Shares and Series A Registrable
Shares which the Company has been requested to so register; provided further,
however, that if in the good faith determination of the Company's Board of
Directors, the Company is engaged in any other activity that would be adversely
affected by the requested registration to the material detriment of the Company
then the Company may, at its option, direct that such request be delayed. The
Company may delay such registration on no more than two occasions in any twelve
(12) month period for a period not to exceed ninety (90) days in each case.
Thereupon, the Company shall, as expeditiously as possible, use its best efforts
to effect the registration on Form S-1 or Form S-2 (or any successor form) of
all Series B Registrable Shares and Series A Registrable Shares which the
Company has been requested to so register.
(c) Registrations on Forms S-2 and S-3. At any time after the
Company becomes eligible to file a Registration Statement on Form S-3 (or any
successor form relating to secondary offerings), and, in the case of the Series
B Registrable Shares, on Form S-2 (or any successor form relating to secondary
offerings), Series A Stockholders holding in the aggregate at least 50% of the
Series A Registrable Shares and Series B Stockholders holding in the aggregate
at least 66-2/3% of the Series B Registrable Shares may request the Company, in
writing, to effect the registration on Form S-3 (or such successor form) or, in
the case of Series B Registrable Shares, on Form S-2 or Form S-3 (or such
successor form) (i) in the case of the Series A Registrable Shares, shares of
Series A Registrable Shares having an offering price of at least $3.00 per share
(based on the then current public market price); or (ii) in the case of the
Series B Registrable Shares, a number of shares where the aggregate gross
proceeds to be received from such offering is expected to be not less than
$500,000. Upon receipt of any such request, the Company shall promptly give
written notice of such proposed registration to all Series A Stockholders and
Series B Stockholders. Such Series A Stockholders and Series B Stockholders
shall have the right, by giving written notice to the Company within thirty (30)
days after the Company provides its notice, to elect to have included in such
registration such of their Series A Registrable Shares and Series B Registrable
Shares, as such Series A Stockholders and Series B Stockholders may request in
such notice of election; provided, however, that if the underwriter (if any)
managing the offering determines that, because of marketing factors, all of the
Series A Registrable Shares and Series B Registrable Shares, as applicable,
requested to be registered by all Series A Stockholders and Series B
Stockholders, may not be included in the offering, then all Series A
Stockholders or Series B Stockholders who have requested registration shall
participate in the registration pro rata based upon the number of Series A
Registrable Shares or Series B Registrable Shares, as applicable, which they
have requested to be so registered. Thereupon, the Company shall, as
expeditiously as possible, use its best efforts to effect the registration on
Form S-3 (or such successor form) or, in the case of the Series B Registrable
Shares, on Form S-2 (or such successor form) or Form S-3 (or such successor
form) of all Series A Registrable Shares and/or Series B Registrable Shares, as
applicable, which the Company has been requested to so register.
(d) Limitations. The Company shall be required to effect no
more than two registrations pursuant to paragraph (a), no more than two
registrations pursuant to paragraph (b), and no more than three registrations on
Form S-2 or S-3 in the case of the Series B Registrable
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Shares under paragraph (c) above. In addition, the Company shall not be required
to effect any registration (other than on Form S-3 or any successor form
relating to secondary offerings) within twelve (12) months after the effective
date of any other Registration Statement of the Company. The Series B
Stockholders may not make more than two requests for registration on Form S-2 or
S-3 in any one twelve (12) month period; provided, however, that if in the good
faith determination of the Company's Board of Directors the Company is engaged
in any other activity that would be adversely affected by the requested
registration to the material detriment of the Company then the Company may, at
its option direct that such request be delayed. The Company may delay such
registration on no more than one occasion in any twelve (12) month period for a
period not to exceed ninety (90) days.
(e) Delay. If at the time of any request to register
Registrable Shares pursuant to this Section 2, the Company is engaged or has
plans to engage, within ninety (90) days of the time of the request, in a
registered public offering as to which the Stockholders may include Registrable
Shares pursuant to Section 3, or the Company is engaged in any other activity
which, in the good faith determination of the Company's Board of Directors,
would be adversely affected by the requested registration to the material
detriment of the Company, then the Company may, at its option, direct that such
request be delayed for a period not in excess of twelve (12) months from the
effective date of such offering or the date of commencement of such other
material activity, as the case may be.
3. INCIDENTAL REGISTRATION.
(a) Whenever the Company proposes to file a Registration
Statement (other than pursuant to Section 2) it will, prior to such filing, give
written notice to all Stockholders of its intention to do so and, upon the
written request of any Stockholder given within twenty (20) days after the
Company provides such notice (which request shall state the number of
Registrable Shares which the Stockholder wishes to dispose of and the intended
method of disposition), the Company shall use its best efforts to cause all
Registrable Shares which the Company has been requested by such Stockholders to
register to be registered under the Securities Act to the extent necessary to
permit their sale or other disposition in accordance with the intended methods
of distribution specified in the request of such Stockholder or Stockholders;
provided, however, that the Company shall have the right to postpone or withdraw
any registration effected pursuant to this Section 3 without obligation to any
Stockholder; and provided further, that if registration rights pursuant to this
Section 3 arise in connection with an underwritten public offering by the
Company, the Stockholders requesting registration of Registrable Shares may only
dispose of such Registrable Shares in the underwritten public offering.
(b) In connection with any registration under this Section 3
involving an underwriting, the Company shall not be required to include any
Registrable Shares in such registration unless the holders thereof accept the
terms of the underwriting as agreed upon between the Company and the
underwriters selected by it (provided that such terms must be consistent with
this Agreement). If, in the opinion of the managing underwriter, it is
appropriate because of marketing factors to limit the number of Registrable
Shares to be included in the
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offering, then the Company shall be required to include in the registration only
that number of Registrable Shares, if any, which the managing underwriter
believes should be included therein; provided, however, that no persons or
entities other than the Company, the Stockholders and persons or entities
holding registration rights granted in accordance with Section 10 shall be
permitted to include securities in the offering. If the number of Registrable
Shares to be included in the offering in accordance with the foregoing is less
than the total number of shares that the holders of Registrable Shares have
requested to be included, then the holders of Registrable Shares who have
requested registration and other holders of securities entitled to include them
in such registration shall participate in the registration pro rata based upon
their total ownership of shares of Common Stock (giving effect to the conversion
into Common Stock of all securities convertible thereinto). If any holder would
thus be entitled to include more securities than such holder requested to be
registered, the excess shall be allocated among other requesting holders pro
rata in the manner described in the preceding sentence.
4. REGISTRATION PROCEDURES. If and whenever the Company is required by
the provisions of this Agreement to use its best efforts, consistent with legal
requirements, to effect the registration of any of the Registrable Shares under
the Securities Act, the Company shall take the following actions:
(a) file with the Commission a Registration Statement with
respect to such Registrable Shares and use its best efforts to cause that
Registration Statement to become and remain effective;
(b) as expeditiously as possible prepare and file with the
Commission any amendments and supplements to the Registration Statement and the
prospectus included in the Registration Statement as may be necessary to keep
the Registration Statement effective, in the case of a firm commitment
underwritten public offering, until each underwriter has completed the
distribution of all securities purchased by it and, in the case of any other
offering, until the earlier of the sale of all Registrable Shares covered
thereby or 120 days after the effective date thereof;
(c) as expeditiously as possible furnish to each selling
Stockholder such reasonable numbers of copies of the prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents as the selling Stockholder may reasonably request
in order to facilitate the public sale or other disposition of the Registrable
Shares owned by the selling Stockholder; and
(d) as expeditiously as possible use its best efforts to
register or qualify the Registrable Shares covered by the Registration Statement
under the securities or Blue Sky laws of such states as the selling Stockholders
shall reasonably request, and do any and all other acts and things that may be
necessary or desirable to enable the selling Stockholders to consummate the
public sale or other disposition in such states of the Registrable Shares owned
by the selling Stockholder; provided, however, that the Company shall not be
required in connection with this paragraph (d) to qualify as a foreign
corporation or execute a general consent to service of process in any
jurisdiction.
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If the Company has delivered preliminary or final prospectuses to the
selling Stockholders and after having done so the prospectus is amended to
comply with the requirements of the Securities Act, the Company shall promptly
notify the selling Stockholders and, if requested, the selling Stockholders
shall immediately cease making offers of Registrable Shares and return all
prospectuses to the Company. The Company shall promptly provide the selling
Stockholders with revised prospectuses and, following receipt of the revised
prospectuses, the selling Stockholders shall be free to resume making offers of
the Registrable Shares.
5. ALLOCATION OF EXPENSES. The Company will pay all Registration
Expenses of all registrations under this Agreement; provided, however, that if a
registration under Section 2 is withdrawn at the request of the Stockholders
requesting such registration (other than as a result of information concerning
the business or financial condition of the Company which is made known to the
Stockholders after the date on which such registration was requested) and if the
requesting Stockholders elect not to have such registration counted as a
registration requested under Section 2, the requesting Stockholders shall pay
the Registration Expenses of such registration pro rata in accordance with the
number of their Registrable Shares included in such registration. For purposes
of this Section 5, the term "REGISTRATION EXPENSES" shall mean all expenses
incurred by the Company in complying with this Agreement, including, without
limitation, all registration and filing fees, exchange listing fees, printing
expenses, fees and expenses of counsel for the Company and the fees and expenses
of one counsel selected by the selling Stockholders to represent the selling
Stockholders, state Blue Sky fees and expenses, and the expense of any special
audits incident to or required by any such registration, but excluding
underwriting discounts, selling commissions and the fees and expenses of selling
Stockholders' own counsel (other than the counsel selected to represent all
selling Stockholders).
6. INDEMNIFICATION AND CONTRIBUTION.
(a) In the event of any registration of any of the Registrable
Shares under the Securities Act pursuant to this Agreement, the Company will
indemnify and hold harmless the seller of such Registrable Shares, each
underwriter of such Registrable Shares, and each other person, if any, who
controls such seller or underwriter within the meaning of the Securities Act or
the Exchange Act against any losses, claims, damages or liabilities, joint or
several, to which such seller, underwriter or controlling person may become
subject under the Securities Act, the Exchange Act, state securities or Blue Sky
laws or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any Registration
Statement under which such Registrable Shares were registered under the
Securities Act, any preliminary prospectus or final prospectus contained in the
Registration Statement, or any amendment or supplement to such Registration
Statement, or arise out of or are based upon the omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and the Company will reimburse such seller,
underwriter and each such controlling person for any legal or any other expenses
reasonably incurred by such seller, underwriter or controlling person in
connection with investigating or
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defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any untrue
statement or omission made in such Registration Statement, preliminary
prospectus or final prospectus, or any such amendment or supplement, in reliance
upon and in conformity with information furnished to the Company, in writing, by
or on behalf of such seller, underwriter or controlling person specifically for
use in the preparation thereof.
(b) In the event of any registration of any of the Registrable
Shares under the Securities Act pursuant to this Agreement, each seller of
Registrable Shares, severally and not jointly, will indemnify and hold harmless
the Company, each of its directors and officers and each underwriter (if any)
and each person, if any, who controls the Company or any such underwriter within
the meaning of the Securities Act or the Exchange Act, against any losses,
claims, damages or liabilities, joint or several, to which the Company, such
directors and officers, underwriter or controlling person may become subject
under the Securities Act, Exchange Act, state securities or Blue Sky laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement
under which such Registrable Shares were registered under the Securities Act,
any preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if the statement or omission was made in reliance upon
and in conformity with information relating to such selling Stockholder
furnished in writing to the Company by or on behalf of such selling Stockholder
specifically for use in connection with the preparation of such Registration
Statement, prospectus, amendment or supplement; provided, however, that the
obligations of such selling Stockholders hereunder shall be limited to an amount
equal to the proceeds to each selling Stockholder from Registrable Shares sold
in connection with such registration.
(c) Each party entitled to indemnification under this Section
6 (the "INDEMNIFIED PARTY") shall give notice to the party required to provide
indemnification (the "INDEMNIFYING PARTY") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, however, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld); and, provided, further, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 6. The Indemnified
Party may participate in such defense at such party's expense; provided,
however, that the Indemnifying Party shall pay such expense if representation of
such Indemnified Party by the counsel retained by the Indemnifying Party would
be inappropriate due to actual or potential differing interests between the
Indemnified Party and any other party represented by such counsel in such
proceeding. No Indemnifying Party, in the defense of any such claim or
litigation shall, except with the consent of each Indemnified Party, consent to
entry of any
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judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect of such claim or litigation, and no
Indemnified Party shall consent to entry of any judgment or settle such claim or
litigation without the prior written consent of the Indemnifying Party.
(d) In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which either (i) any
holder of Registrable Shares exercising rights under this Agreement, or any
controlling person of any such holder, makes a claim for indemnification
pursuant to this Section 6 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 6 provides for indemnification in such case; or (ii) contribution
under the Securities Act may be required on the part of any such selling
Stockholder or any such controlling person in circumstances for which
indemnification is provided under this Section 6; then, in each such case, the
Company and such selling Stockholder will contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (after contribution
from others) in such proportions so that such selling Stockholder is responsible
for the portion represented by the percentage that the public offering price of
its Registrable Shares offered by the Registration Statement bears to the public
offering price of all securities offered by such Registration Statement, and the
Company is responsible for the remaining portion; provided, however, that, in
any such case (A) no such holder will be required to contribute any amount in
excess of the proceeds to it from all Registrable Shares sold by it pursuant to
such Registration Statement; and (B) no person or entity guilty of fraudulent
misrepresentation within the meaning of Section 11(f) of the Securities Act,
shall be entitled to contribution from any person or entity who is not guilty of
such fraudulent misrepresentation.
7. INDEMNIFICATION WITH RESPECT TO UNDERWRITTEN OFFERING. If the
Registrable Shares are sold pursuant to a Registration Statement in an
underwritten offering pursuant to Section 2, the Company agrees to enter into an
underwriting agreement containing customary representations and warranties with
respect to the business and operations of an issuer of the securities being
registered and customary covenants and agreements to be performed by such
issuer, including, without limitation, customary provisions with respect to
indemnification by the Company of the underwriters of such offering.
8. INFORMATION BY HOLDER. Each Stockholder including Registrable Shares
in any registration shall furnish to the Company such information regarding such
Stockholder and the distribution proposed by such Stockholder as the Company may
reasonably request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Agreement.
9. "STAND-OFF" AGREEMENT. Each Stockholder, if requested by the Company
and the managing underwriter of an offering by the Company of Common Stock or
other securities of the Company pursuant to a Registration Statement, shall
agree not to sell publicly or otherwise transfer or dispose of any Registrable
Shares or other securities of the Company held by such
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Stockholder for a specified period of time (not to exceed 180 days) following
the effective date of such Registration Statement.
10. LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. As long as Tallard
holds any shares of the Company's Series A Stock or any shares issued to Tallard
upon the conversion of the Series A Stock, or Thayer owns any shares of the
Company's Series B Stock or any shares issued to Thayer upon the conversion of
the Series B Stock, the Company shall not, without the prior written consent of
Tallard and Thayer, enter into any agreement with any holder or prospective
holder of any securities of the Company which would allow such holder or
prospective holder to include securities of the Company in any Registration
Statement, unless under the terms of such agreement, such holder or prospective
holder may include such securities in any such registration only on terms
substantially similar to or less favorable than the terms on which holders of
Registrable Shares may include shares in such registration.
11. RULE 144 REQUIREMENTS. After the earliest of (a) the closing of the
sale of securities of the Company pursuant to a Registration Statement; (b) the
registration by the Company of a class of securities under Section 12 of the
Exchange Act; or (c) the issuance by the Company of an offering circular
pursuant to Regulation A under the Securities Act, the Company shall take the
following actions:
(i) comply with the requirements of Rule 144(c) under the
Securities Act with respect to current public information about the Company;
(ii) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements); and
(iii) furnish to any holder of Registrable Shares upon request
(A) a written statement by the Company as to its compliance with the
requirements of Rule 144(c) and the reporting requirements of the Securities Act
and the Exchange Act (at any time after it has become subject to such reporting
requirements); (B) a copy of the most recent annual or quarterly report of the
Company; and (C) such other reports and documents of the Company as such holder
may reasonably request to avail itself of any similar rule or regulation of the
Commission allowing it to sell any such securities without registration.
12. MERGERS, ETC. The Company shall not, directly or indirectly, enter
into any merger, consolidation or reorganization in which the Company shall not
be the surviving corporation unless the proposed surviving corporation shall,
prior to such merger, consolidation or reorganization, agree in writing to
assume the obligations of the Company under this Agreement, and for that
purpose, references hereunder to "Registrable Shares" shall be deemed to include
securities which the Stockholders would be entitled to receive in exchange for
Registrable Shares under any such merger, consolidation or reorganization;
provided, however, that the provisions of this Section 12 shall not apply in the
event of any merger, consolidation or reorganization in which the Company is not
the surviving corporation if all Stockholders are entitled to receive in
exchange for their Registrable Shares consideration consisting solely of
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(a) cash; (b) securities of the acquiring corporation that may be immediately
sold to the public without registration under the Securities Act; or (c)
securities of the acquiring corporation that the acquiring corporation has
agreed to register within 90 days of completion of the transaction for resale to
the public pursuant to the Securities Act.
13. TERMINATION. All of the Company's obligations to register Series A
Registrable Shares under this Agreement shall terminate on the agreement of the
Company and a majority of the holders of the Series A Registrable Shares (by
written consent or by vote of the holders of a majority of the then outstanding
Series A Registrable Shares). All of the Company's obligations to register
Series B Registrable Shares under this Agreement shall terminate on the earlier
of (a) the date that is the fifth anniversary of a Qualifying IPO; or (b) the
date on which all Series B Registrable Shares held by a Series B Stockholders
can be sold under Rule 144(c) of the Securities Act within a ninety (90) day
period.
14. TRANSFERS OF RIGHTS. This Agreement and the rights and obligations
of Tallard hereunder, may be assigned by Tallard to any person or entity to
which Registrable Shares are transferred by Tallard, and such transferee shall
be deemed a "STOCKHOLDER" for purposes of this Agreement. This Agreement and the
rights and obligations of Thayer hereunder, may be transferred by Thayer to (a)
any partner or retired partner of Thayer (or any family member of such person or
trust for the benefit of such person) to which Registrable Shares are
transferred, and such transferee shall be deemed a "STOCKHOLDER" for purposes of
this Agreement, and (b) any person or entity to which Registrable Shares are
transferred, and who acquires at least ten percent (10%) of the Series B Stock
issued pursuant to the terms of the Series B Investment Agreement, and such
transferee shall be deemed a "STOCKHOLDER" for purposes of this Agreement;
provided, however, that in all cases set out in this Section 14 the transferee
provides written notice of such assignment to the Company and agrees to be bound
by the terms of this Agreement.
15. GENERAL.
(a) NOTICES. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be delivered
by hand or fax or mailed by first class certified or registered mail, return
receipt requested, postage prepaid:
If to the Company, to The Concours Group, Inc., 3 Kingwood Place, 800
Rockmead Drive, Kingwood, Texas 77339, Attention: President, or at such other
address or addresses as may have been furnished in writing by the Company to
Tallard and Thayer, with a copy to Andrius Kontrimas, Esq., Jenkens & Gilchrist,
P.C., 1100 Louisiana, Suite 1800, Houston, TX 77002 (fax no. (713) 951-3314); or
If to Tallard, to Tallard B.V., Alexander Battalaan 40, 6221 CE
Maastricht, The Netherlands, or at such other address or addresses as may have
been furnished to the Company in writing by Tallard, with a copy to James D.
Rosener, Esq., Pepper Hamilton LLP, Westlakes Drive, Suite 400, Berwyn,
Pennsylvania 19312 (fax no. (610) 640-7835).
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If to Thayer or Thayer Partners, to Thayer Equity Investors IV, L.P.
1445 Pennsylvania Avenue, N.W., Suite 350, Washington DC 20004, Attention:
Robert Michalik (fax no. (202) 371-0391) or such other address or addresses as
may have been furnished in writing to the Company in writing by Thayer, with a
copy to Christopher J. Hagan, Esq., Hogan & Hartson, L.L.P., 555 13th Street,
N.W, Washington DC 20004 (fax no. (202) 637-5910).
Notices provided in accordance with this Section 15(a) shall be deemed
delivered upon personal delivery, upon receipt of confirmation sheet confirming
the receipt of a fax, or two business days after deposit in the mail.
(b) ENTIRE AGREEMENT. This Agreement embodies the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
(c) AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the holders of at
least fifty percent (50%) of the Series A Registrable Shares and fifty percent
(50%) of the Series B Registrable Shares. No waivers of or exceptions to any
term, condition or provision of this Agreement, in any one or more instances,
shall be deemed to be, or construed as, a further or continuing waiver of any
such term, condition or provision.
(d) COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which shall be one and the same document. This Agreement may be executed and
delivered by facsimile transmission.
(e) SEVERABILITY. If any provision of this Agreement is held
by a court of competent jurisdiction to be invalid, illegal or unenforceable,
such holding shall not affect the validity or enforceability of any other
provision of this Agreement and the provision held to be invalid, illegal or
unenforceable shall be deemed modified to the minimum extent necessary to render
it valid, legal and enforceable while accomplishing the intent of such provision
as nearly as practicable
(f) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF TEXAS WITHOUT
GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE
STATE OF TEXAS OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF TEXAS.
(g) NO THIRD PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any person or entity other than the parties
and their respective successors and permitted assigns.
(h) ATTORNEYS' FEES. If any arbitration or action at law or in
equity, including an action for declaratory relief, is brought to enforce or
interpret the provisions of this Agreement, the prevailing party shall be
entitled to recover reasonable attorneys' fees and costs
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<PAGE> 14
from the other party; provided, however, that no party shall be a prevailing
party unless such party has recovered more or paid less as a result of
arbitration or a final order resulting from judicial proceedings than the amount
offered by an opposing party to settle the dispute.
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<PAGE> 15
Executed as of the date first written above.
COMPANY:
THE CONCOURS GROUP, INC.
By: /s/ Ronald P. Christman
----------------------------
Name: Ronald P. Christman
----------------------------
Title: Chief Executive Officer
----------------------------
TALLARD:
TALLARD B.V.
By: /s/ Insinger Management
----------------------------
Name: (Netherlands) BV
----------------------------
Title: Director
----------------------------
THAYER:
THAYER EQUITY INVESTORS IV, L.P.
By: TC Equity Partners IV, L.L.C.
Its General Partner
By: /s/ Robert E. Michalik
----------------------------
Name: Robert E. Michalik
----------------------------
Title: Vice President
----------------------------
THAYER PARTNERS:
THAYER CGI PARTNERS LLC
By: /s/ Robert E. Michalik
----------------------------
Name: Robert E. Michalik
----------------------------
Title: Vice President
----------------------------
15
<PAGE> 16
INFOLOGIX:
INFOLOGIX (BVI) LIMITED
By: /s/ Martyn David Crespel
----------------------------
Name: Martyn David Crespel
----------------------------
Title: Director
----------------------------
16
<PAGE> 1
EXHIBIT 10.15
INVESTMENT AGREEMENT
This Investment Agreement (the "AGREEMENT") is executed as of February ___,
2000 by and between The Concours Group, Inc., a Delaware corporation (the
"COMPANY"), Thayer Equity Investors IV, L.P. a Delaware limited partnership
("THAYER"), and Thayer CGI Partners LLC, a Delaware limited liability company
(each, an "INVESTOR" and collectively, the "INVESTORS").
RECITALS:
A. The Investors desire to invest in the Company by purchasing shares of
the Company's capital stock; and
B. The Company desires to sell such shares of capital stock to the
Investors.
NOW, THEREFORE, the Company and the Investors hereby agree as follows:
1. PURCHASE AND SALE OF STOCK.
1.1 PURCHASE AND SALE; PURCHASE PRICE. The Investors hereby agree
to purchase from the Company, and the Company hereby agrees to sell to the
Investors at the Closings (as defined below), on the terms and conditions set
forth in this Agreement, the number of shares of the Company's Series B
Convertible Preferred Stock, par value $0.01 per share (the "SERIES B STOCK"),
for an aggregate purchase price of $15,000,000, by wire transfer in accordance
with written instructions provided by the Company.
1.2 CLOSING.
(a) Initial Closing. The initial closing (the "INITIAL
CLOSING") of the sale of the Series B Stock will take place at the offices of
Jenkens & Gilchrist, a Professional Corporation, 1100 Louisiana, Suite 1800,
Houston, Texas 77002, at 10:00 a.m., on the date that is one business day
subsequent to the consummation of the transactions contemplated by that certain
Exchange Agreement, by and among the Company and the shareholders of Cepro AB
(the "CEPRO AGREEMENT"), or such other time and place as agreed to by the
parties hereto (the "INITIAL CLOSING DATE"). At the Initial Closing, the Company
will deliver to the Investors certificates representing an aggregate of 206,238
shares of Series B Stock being acquired by the Investors on the Initial Closing
Date upon payment of the aggregate purchase price of $2,000,000 by Investors to
the Company.
(b) Additional Closing. On or prior to March 13, 2000, the
Investors agree to purchase and the Company agrees to issue, an aggregate of
1,340,546 shares of Series B Stock. The closing ("ADDITIONAL CLOSING") of the
sale of these shares of Series B Stock will take place at the offices of Jenkens
& Gilchrist, a Professional Corporation, 1100 Louisiana, Suite 1800, Houston,
Texas 77002, at 10:00 a.m., on or before March 13, 2000, or such other time and
place
<PAGE> 2
as agreed to by the parties hereto (the "ADDITIONAL CLOSING DATE"). At the
Additional Closing, the Company will deliver to the Investors certificates
representing the 1,331,879 shares of Series B Stock being acquired by the
Investors on the Additional Closing Date upon payment of the aggregate purchase
price of $13,000,000 by the Investors to the Company. There shall be no other
conditions precedent to either the Company's obligation to issue, or the
Investors' obligation to purchase, such shares other than the occurrence of the
Initial Closing. The Initial Closing and the Additional Closing are sometimes
referred to as the "CLOSINGS" and each as a "CLOSING."
1.3 DELIVERY. At each Closing, the Company shall deliver to each of
the Investors a certificate representing the number of shares of the Series B
Stock set forth opposite each Investor's name on Schedule 1.1 against payment of
the purchase price therefor, as specified in Section 1.1 and Section 1.2. The
shares of Series B Stock purchased by the Investors may be referred to herein
collectively as the "PURCHASED SHARES." The Purchased Shares are convertible
into shares of the Company's common stock, $0.01 par value per share (the
"COMMON STOCK"), pursuant to the terms of the Certificate of Designation (as
defined herein). Such shares of Common Stock into which the Purchased Shares are
convertible may be referred to herein collectively as the "CONVERSION SHARES."
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The
Company represents, warrants and covenants to the Investors that the following
are true and correct as of the Initial Closing Date:
2.1 ORGANIZATION AND QUALIFICATION; CORPORATE POWER. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the corporate authority to own, lease and
operate its properties and assets and to carry on its business as it is now
being conducted, and is duly qualified as a foreign corporation to do business
and is in good standing in every jurisdiction in which the failure so to qualify
would have a material adverse effect on the business or properties of the
Company, taken as a whole. The Company has all required corporate power and
authority to execute and deliver this Agreement and the other agreements
contemplated herein, to issue and sell the Series B Stock hereunder, to issue
shares of Common Stock upon conversion of the Series B Stock, and to carry out
the transactions contemplated by this Agreement and the other agreements
contemplated herein.
2.2 ARTICLES AND BYLAWS. The Company has furnished the Investors
with copies of its Certificate of Incorporation and Bylaws, and such copies are
true and complete and contain all amendments to date.
2.3 SUBSIDIARIES. Except as set forth on Schedule 2.3, the Company
has no subsidiaries and does not otherwise own or control, directly or
indirectly, any other corporation, association or business entity.
2.4 AUTHORIZATION. All corporate action on the part of the Company,
its officers, directors, and stockholders necessary for the authorization,
execution and delivery of
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<PAGE> 3
this Agreement and the other agreements contemplated herein by the Company and
the authorization, issuance and delivery of the Purchased Shares (including the
Conversion Shares) has been taken, and this Agreement, and all agreements
executed by the Company pursuant to this Agreement, constitute valid and legally
binding obligations of the Company, enforceable in accordance with their terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency or
other laws relating to or affecting creditors' rights generally and by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding or action in law or equity).
2.5 CAPITALIZATION AND VALID ISSUANCE OF STOCK.
(a) The authorized capital of the Company consists of
50,000,000 shares of Common Stock, of which 5,907,104 shares will be issued and
outstanding immediately prior to the Initial Closing, and 5,000,000 shares of
preferred stock, par value $0.01 per share (the "PREFERRED STOCK") of which
2,280,100 shares have been designated as Series A Convertible Preferred Stock
(the "SERIES A STOCK"), 1,810,000 of which will be issued and outstanding
immediately prior to the Initial Closing, and of which 1,936,000 shares have
been designated Series B Stock, of which no shares will be issued and
outstanding immediately prior to the Initial Closing. Schedule 2.5 sets forth
(i) the names of the persons owning the issued and outstanding shares of Common
Stock and Series A Stock as of the Initial Closing Date and the number of shares
owned by each such person, and (ii) a list of all outstanding options and
warrants to purchase shares of the Company's capital stock or securities
convertible or exercisable into shares of the Company's capital stock as of the
Initial Closing Date.
(b) The Company has filed, and the Secretary of State of
Delaware has accepted, the Amended and Restated Certificate of Designation of
the Powers, Rights and Preferences (the "CERTIFICATE OF DESIGNATION") in the
form attached hereto as Exhibit A, which Certificate of Designation designates
1,936,000 shares of the Preferred Stock as Series B Stock.
(c) Except as set forth in Schedule 2.5, no options, warrants,
rights (including conversion or preemptive rights) or agreements for the
purchase or acquisition from the Company of any shares of its capital stock or
securities convertible or exchangeable into shares of capital stock are
outstanding.
(d) The Purchased Shares when issued, sold and delivered in
accordance with the terms of this Agreement for the consideration expressed
herein, will be duly and validly authorized and issued, fully paid and
nonassessable and free of all encumbrances and restrictions, except restrictions
on transfer imposed by applicable securities laws, the Articles of Incorporation
and as may be agreed upon by the Investors in writing. The Company has
authorized and reserved for issuance upon conversion of the Series B Preferred
not less than 1,936,000 shares of its Common Stock, and the Conversion Shares
will be, when and if issued pursuant to the terms of the Certificate of
Designation, validly authorized and issued, fully paid and nonassessable and
free of all encumbrances and restrictions, except restrictions on transfer
imposed by applicable securities laws, the Certificate of Incorporation and as
may be agreed upon by the Investors in writing. The shares of Common Stock and
Series A Stock issued and
3
<PAGE> 4
outstanding on the Initial Closing Date are all duly and validly authorized and
issued, fully paid and nonassessable, and were not issued in violation of any
preemptive rights of any person.
2.6 CONFLICTING LAWS, AGREEMENTS AND CHARTER PROVISIONS. Neither
the execution nor delivery of this Agreement or the other agreements
contemplated herein, nor the consummation of the transactions contemplated
hereby and thereby will (a) conflict with, or result in a breach of the
provisions of any agreement or instrument (including its charter and bylaws) to
or by which the Company is bound; (b) violate any order, judgment, statute, law
(including securities and Blue Sky laws), rule or regulation to or by which the
Company is, or such transactions are, subject, except where such violation would
not have a material adverse effect on the business or properties of the Company,
taken as a whole; or (c) result in the creation of any lien or encumbrance upon
any of the properties or assets of the Company.
2.7 LEGAL PROCEEDINGS.
(a) Litigation. No action, suit, proceeding or investigation is
pending or, to the Company's knowledge, threatened against the Company that
questions the validity of this Agreement, the other agreements contemplated
herein, or the right of the Company to enter into, or to consummate, the
transactions contemplated hereby and thereby, or which could result, either
individually or in the aggregate, in any material adverse change in the assets,
condition, business or operating results of the Company, taken as a whole, or
any change in the current equity ownership of the Company, nor to the Company's
knowledge, is there any basis for the foregoing. The Company is not a party or
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality.
(b) Compliance With Law and Other Instruments. The Company is
not in violation of any provision of its Certificate of Incorporation or bylaws
or, to its knowledge, of any law, ordinance, requirement, regulation, judgment,
injunction, award, decree or order applicable to its business, the violation of
which would materially and adversely affect its financial condition, prospects,
results of operations, assets or business, taken as a whole. There is not, under
any agreement or instrument to which the Company is a party, any existing
default or event which with notice or lapse of time or both would constitute a
default or create a lien, charge or encumbrance on any assets of the Company,
the effect of either of which would result in a material adverse effect on the
business or properties of the Company, taken as a whole. The Company is not
subject to, or has reason to believe it may become subject to, any material
liability or material corrective or remedial obligation arising under any
federal, state local or foreign law, rule or regulation (including the common
law) relating to or regulating health, safety, pollution or the protection of
the environment.
2.8 REGISTRATION RIGHTS; PREEMPTIVE RIGHTS. Except for that certain
Amended and Restated Registration Rights Agreement (the "REGISTRATION RIGHTS
AGREEMENT") in the form attached hereto as Exhibit B and to be entered into as
of the Initial Closing Date between the Company, the Investors and the other
parties signatory thereto, the Company is not under any obligation to register
under the Securities Act of 1933, as amended (the "ACT"), the offer and sale of
any of its outstanding securities or its securities that may hereafter be issued
by
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<PAGE> 5
the Company. Except as set forth in the Certificate of Designation, there are no
preemptive rights affecting the issuance or sale of the Company's capital stock.
2.9 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state, local or provincial governmental authority on
the part of the Company is required in connection with the consummation of the
transactions contemplated by this Agreement, other than as specifically required
by this Agreement, the filing of a registration statement pursuant to the
Registration Rights Agreement, the filing of a Form D with the Securities and
Exchange Commission and filings required under applicable state securities or
"blue sky" laws, except where the failure to obtain or make such approval,
consent, exemption, authorization, other action, notice or filing would not have
a material adverse effect on the business or properties of the Company, taken as
a whole.
2.10 EMPLOYEES. The Company is not aware that any executive or key
employee of the Company or any material group of employees of the Company has
any plans to terminate employment with the Company. The Company has complied in
all material respects with all laws relating to the employment of labor
(including, without limitation, provisions thereof relating to wages, hours,
equal opportunity, collective bargaining and the payment of social security and
other taxes), and the Company is not aware that it has any material labor
relations problems (including, without limitation, any union organization
activities, threatened or actual strikes or work stoppages or material
grievances). Neither the Company nor, to the best of the Company's knowledge,
any of its employees, is subject to any noncompete, nondisclosure,
confidentiality, employment, consulting or similar agreements relating to,
affecting or in conflict with the present business activities of the Company,
except for agreements between the Company and its present and former employees.
2.11 FINANCIAL STATEMENTS. Schedule 2.11 contains true, correct and
complete copies of the Financial Statements (as defined herein). Except as
described in Schedule 2.11, the Financial Statements are in accordance with the
books and records of the Company, have been prepared consistent with past
practices, have been prepared in accordance with generally accepted accounting
principals ("GAAP") (except that the unaudited Financial Statements do not
contain notes required by GAAP) and present fairly in all material respects the
financial position of the Company on the dates of such statements and the
results of its operations for the periods covered (subject, in the case of the
unaudited Financial Statements, to normal year-end adjustments, none of which,
either individually or in the aggregate, will be material). The Company
maintains its books, records and accounts in accordance with good business
practice and in sufficient detail to reflect fairly and in all material respects
the transactions and dispositions of its assets, liabilities and securities. For
purposes of this Agreement, "FINANCIAL STATEMENTS" shall mean (a) the
consolidated audited balance sheets, and statements of retained earnings,
operations and cash flow of the Company as of and for the years ended December
31, 1998 and 1997, and the notes thereto and (b) the consolidated unaudited
balance sheet and statement of operations of the Company as of and for the
twelve (12) month period ended December 31, 1999.
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2.12 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on
Schedule 2.12, the Company does not have any material obligation or liability
arising out of transactions entered into at or prior to the Initial Closing
other than (a) liabilities set forth on the Financial Statements (including any
notes thereto); and (b) liabilities and obligations which have arisen after the
date of the Financial Statements in the ordinary course of business.
2.13 NO MATERIAL ADVERSE CHANGE. Since the date of the Financial
Statements, there has been no material adverse change in the financial
condition, operating results, assets, operations, business prospects, employee
relations or customer or supplier relations of the Company, taken as a whole.
2.14 ABSENCE OF CERTAIN DEVELOPMENTS.
(a) Except as expressly contemplated by this Agreement or as
set forth on Schedule 2.14, since the date of the Financial Statements, the
Company has not:
(i) issued any notes, bonds or other debt securities or any
capital stock or other equity securities or any securities convertible,
exchangeable or exercisable into any capital stock or other equity securities;
(ii) borrowed any material amount or incurred or become
subject to any material liabilities, except liabilities incurred in the ordinary
course of business and liabilities under contracts entered into in the ordinary
course of business;
(iii) declared or made any payment or distribution of cash
or other property to its stockholders with respect to its capital stock or other
equity securities or purchased or redeemed any shares of its capital stock or
other equity securities (including, without limitation, any warrants, options or
other rights to acquire its capital stock or other equity securities);
(iv) sold, assigned or transferred any of its material
tangible assets, except in the ordinary course of business, or canceled any
material debts or claims;
(v) made capital expenditures or commitments therefor that
aggregate in excess of $500,000; or
(vi) suffered any damage, destruction or casualty loss
exceeding in the aggregate $250,000, whether or not covered by insurance.
(b) The Company has not at any time made any payments for
political contributions or made any bribes, kickback payments or other illegal
payments.
2.15 EMPLOYEE BENEFIT PLANS. Schedule 2.15 attached hereto
identifies the employee benefit plans within Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended, that the Company maintains
and such plans are in compliance with all applicable federal, state and local
laws in all material respects.
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2.16 INSURANCE. The Company is not in default with respect to its
obligations under any insurance policy maintained by it, and the Company has not
been denied insurance coverage. The insurance coverage of the Company is
customary for corporations of similar size engaged in similar lines of business.
Except as set forth on Schedule 2.16, the Company does not have any
self-insurance or co-insurance programs, and the reserves set forth on the
Financial Statements are adequate to cover all anticipated liabilities with
respect to any such self-insurance or co-insurance programs.
2.17 PATENTS, TRADEMARKS, SERVICE MARKS AND COPYRIGHTS.
(a) Ownership. Except as set forth on Schedule 2.17, the
Company owns all patents, trademarks, service marks and copyrights, if any,
necessary to conduct its business, or possesses adequate licenses or other
rights, if any, therefor, without conflict with the rights of others, except for
conflicts which could not reasonably be expected to result in a material adverse
effect on the business or properties of the Company, taken as a whole. Set forth
in Schedule 2.17 is a true and correct description of all proprietary rights
that are registered with a governmental entity or for which applications are
pending, together with the Company's registered domain name.
(b) Conflicting Rights of Third Parties. The Company has the
right to use its proprietary rights without infringing or violating the rights
of any third parties, except for infringements or violations which could not
reasonably be expected to result in a material adverse effect on the business or
properties of the Company, taken as a whole. Use of such proprietary rights does
not require the consent of any other person which has not been obtained and
proprietary rights held by the Company and listed on Schedule 2.17 are freely
transferable. No claim has been asserted by any person to the ownership of or
right to use any proprietary right or challenging or questioning the validity or
effectiveness of any license or agreement constituting a part of any proprietary
right.
(c) Claims of Other Persons. The Company does not have any
knowledge of any claim that, or inquiry as to whether, any product, activity or
operation of the Company infringes upon or involves, or has resulted in the
infringement of, any proprietary right of any other person, corporation or other
entity; and no proceedings have been instituted, are pending or, to the best
knowledge of the Company, are threatened that challenge the rights of the
Company with respect thereto.
2.18 TAX MATTERS.
(a) All required foreign, federal, state, local and other tax
returns, notices and reports (including, without limitation, income, property,
sales, use, franchise, capital stock, excise, added value, employees' income
withholding, social security and unemployment tax returns) of the Company have
been accurately prepared in all material respects and duly and timely filed, and
all foreign, federal, state, local and other taxes required to be paid with
respect to the periods covered by such returns have been paid. Except as set
forth on Schedule 2.18, the
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Company is not and has not been delinquent in the payment of any tax, assessment
or governmental charge.
(b) Except as set forth in Schedule 2.18, the Company has not
had any tax deficiency proposed or assessed against it and has not executed any
waiver of any statute of limitations on the assessment or collection of any tax
or governmental charge. Except as set forth in Schedule 2.18, and except for
sales tax audits, none of the Company's franchise tax returns has ever been
audited by governmental authorities. No tax audit, action, suit, proceeding,
investigation or claim is now pending nor, to the best knowledge of the Company,
threatened against the Company, and no issue or question has been raised (and is
currently pending) by any taxing authority in connection with any of the
Company's tax returns or reports.
(c) The reserves for taxes, assessments and governmental
charges reflected on the balance sheet of the Company (the "BALANCE SHEET") as
of December 31, 1999 (the "BALANCE SHEET DATE"), which Balance Sheet is included
in the Financial Statements are and will be sufficient for the payment of all
unpaid taxes and governmental charges payable by the Company with respect to the
period ended on the Balance Sheet Date. Since the Balance Sheet Date, the
Company have made adequate provisions on its books of account for all taxes,
assessments and governmental charges with respect to its business, properties
and operations for such period. The Company has withheld or collected from each
payment made to each of its employees, the amount of all taxes (including, but
not limited to, federal income taxes, Federal Insurance Contribution Act taxes
and Federal Unemployment Tax Act taxes) required to be withheld or collected
therefrom, and have paid the same to the proper tax receiving officers or
authorized depositories.
2.19 TITLE TO ASSETS; CONDITION OF ASSETS.
(a) Except as disclosed on Schedule 2.19, the Company has good
and indefeasible title to its assets, including, without limitation, those
reflected on the Balance Sheet (other than those since disposed of in the
ordinary course of business), free and clear of all security interests, liens,
charges and other encumbrances, except for (i) liens for taxes not yet due and
payable or being contested in good faith in appropriate proceedings, and (ii)
encumbrances that are incidental to the conduct of its business or ownership of
property, not incurred in connection with the borrowing of money or the
obtaining of credit, and which do not in the aggregate materially detract from
the value of the assets affected or materially impair their use by the Company.
With respect to the assets of the Company that are leased, the Company is in
compliance with all material provisions of such leases. All facilities,
machinery, equipment, fixtures, vehicles and other properties owned, leased or
used by the Company are in good operating condition and repair, normal wear and
tear excepted, are reasonably fit and usable for the purposes for which they are
being used, are adequate and sufficient for the Company's business and, to the
best knowledge of the Company, conform in all material respects with all
applicable ordinances, regulations and laws.
8
<PAGE> 9
(b) The Company enjoys peaceful and undisturbed possession
under all real property leases under which the Company is operating, and all
such leases are valid and subsisting and none of them is in default in any
material respect.
(c) The Company does not own any real property.
2.20 BROKERAGE. Except as provided in Schedule 2.20, there are no
claims for brokerage commissions, finder's fees or similar compensation in
connection with the transactions contemplated by this Agreement based on any
arrangement or agreement made by the Company. The Company shall pay, and hold
each Investor harmless against, any liability, loss or expense (including,
without limitation, reasonable attorneys' fees and out-of-pocket expenses)
arising in connection with any such claim.
2.21 YEAR 2000 COMPLIANCE. Except as set forth on Schedule 2.21,
all of the computer software, computer firmware, computer hardware (whether
general or special purpose), and other similar or related items of automated,
computerized, and/or software system(s) that are used or relied on by the
Company in the conduct of its business will not malfunction, will not cease to
function, will not generate incorrect data, and has not, and will not produce
incorrect results when processing, providing, and/or receiving (a) date-related
data into and between the Twentieth and Twenty-First Centuries and (b)
date-related data in connection with any valid date in the Twentieth and
Twenty-First Centuries, except for any malfunctions or generations of incorrect
data or results that would not individually or in the aggregate have a material
adverse effect on the assets, business, financial condition or results of
operations of the Company, taken as a whole. The Company has not been engaged in
any material year 2000 correction consulting work for customers pertaining to
its work product and has received no material claim or notice from any customer
regarding the failure of the Company to install computer software that is year
2000 compliant.
2.22 FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT. The Company is
not a "foreign person" within the meaning of Section 1445 of the Internal
Revenue Code, and the Company shall deliver to the Investors at the Initial
Closing an affidavit to this effect.
2.23 DISCLOSURE. This Agreement and the exhibits and schedules
hereto, when taken as a whole with the representations and warranties set forth
herein, do not contain any untrue statement of material fact or omit any
material fact necessary in order to make the statements herein and therein not
misleading.
The Investors acknowledge and agree that the Company makes no
representations and warranties with respect to the transactions contemplated by
this Agreement and the other agreements contemplated herein, except for those
specifically set forth in this Section 2. The Investors acknowledge and agree
that it shall not be a breach of any representation or warranty, and that the
Investors shall have waived any such breach, if, as of the Initial Closing, the
Investors had specific knowledge of any fact or matter that would constitute a
breach of any representation or warranty.
9
<PAGE> 10
3. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS AND RESTRICTIONS ON
TRANSFER OF THE PURCHASED SHARES AND THE CONVERSION SHARES. Each Investor
represents, warrants and covenants to the Company that the following statements
are true and correct as of the Initial Closing Date.
3.1 ORGANIZATION AND QUALIFICATION. The Investor is a limited
partnership or limited liability company, duly organized, validly existing and
in good standing under the laws of the State of Delaware. The Investor has the
requisite power and authority to carry on its business as it is now being
conducted.
3.2 AUTHORIZATION. The execution, delivery and performance of this
Agreement and the other agreements contemplated herein have been duly authorized
by all necessary action on the part of the Investor. The Investor has the full
right, power and authority to enter into this Agreement and the other agreements
contemplated herein, and this Agreement and the other agreements contemplated
herein constitute the valid and legally binding obligations of the Investor,
enforceable in accordance with their terms, except as may be limited by
bankruptcy, insolvency or other laws relating to or affecting creditors' rights
generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding or action in law or equity).
3.3 INVESTMENT REPRESENTATIONS.
(a) The Investor is an "ACCREDITED INVESTOR" within the meaning
of Regulation D under the Act and is acquiring the Purchased Shares for its own
account solely for investment, and not with a view to the distribution or resale
thereof. There are no contracts, agreements or understandings with any persons
or entities to sell, transfer or grant participation rights in the Purchased
Shares.
(b) The Investor has received and examined all the information
and materials it considers necessary or appropriate to decide whether to
purchase the Purchased Shares and has had an opportunity to ask questions of,
and receive answers from, the Company respecting the provisions of the offering
of the Purchased Shares.
(c) The Investor (i) has substantial knowledge and experience
in financial and business matters, including, without limitation, evaluating and
investing in private companies; (ii) is capable of evaluating the merits of the
prospective investment; (iii) is a sophisticated investor; and (iv) has the
ability to bear the economic risks, including the risk of a total loss, of its
investment.
(d) The Investor understands that it may not sell or otherwise
dispose of the Purchased Shares or the Conversion Shares except in accordance
with the provisions of Section 3.4 and understands that neither the Purchased
Shares nor the Conversion Shares have been registered under the Act or any
applicable state securities laws and will be issued in reliance on an exemption
from the registration requirements thereof, and that the certificate(s)
representing the Purchased Shares and the Conversion Shares may be the subject
of a stop
10
<PAGE> 11
transfer notice with the Company's stock transfer agent and such certificate(s)
will contain the following legend, and any additions thereto required by
applicable state securities laws:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
SECURITIES LAW, AND MAY NOT BE OFFERED FOR SALE, SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED."
The Investor acknowledges that the Company is relying on its representations and
warranties contained herein for purposes of determining compliance with the
applicable federal and state securities laws.
3.4 RESTRICTIONS ON TRANSFER. Except for sales or other
dispositions pursuant to an effective registration statement under the Act (or
its then equivalent), the Investor agrees not to sell or otherwise dispose of
any of the Purchased Shares or Conversion Shares unless prior to selling or
otherwise disposing of any such shares: (a) the Investor delivers to the Company
written notice of the proposed sale or other disposition, together with an
opinion of counsel reasonably acceptable to the Company to the effect that the
proposed sale or other disposition may be effected without registration under
the Act (or its then equivalent) and qualification under any applicable state
securities laws then in effect, and, if requested by the Company, the written
consent of the transferee of such shares to be bound by the terms of this
Agreement; or (b) such sale or other disposition is the subject of a no-action
letter issued by the Staff of the Securities and Exchange Commission permitting
such sale or disposition. The Investor acknowledges that there is no currently
available exemption under Rule 144 promulgated under the Act for sales of
capital stock of the Company.
4. CONDITIONS TO INITIAL CLOSING.
4.1 CONDITIONS TO INITIAL CLOSING BY INVESTORS. The obligations of
the Investors to purchase and pay for the Purchased Shares being purchased at
the Initial Closing are subject to the satisfaction, on or before the Initial
Closing Date, of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties contained in Section 2 shall be materially true and correct on and as
of the Initial Closing Date.
(b) Compliance Certificates. The Company shall have delivered
to the Investors a certificate, in substance and form acceptable to the
Investors, executed by (i) the Chief Executive Officer of the Company and dated
the Initial Closing Date, and certifying to the fulfillment of the conditions
specified in Section 4.1(a) of this Agreement and (ii) executed by the Chief
Financial Officer of the Company and dated the Initial Closing Date, and
certifying that the audited financial statements, including the notes thereto,
for the year ended December 31, 1999 will, upon receipt, not materially and
adversely vary from the draft financial statements delivered to the Investors on
February 28, 2000.
11
<PAGE> 12
(c) Proceedings. All corporate and other proceedings taken or
to be taken in connection with the transactions contemplated hereby at the
Initial Closing, and all documents or instruments incident thereto, shall be
fully performed or executed and shall be satisfactory in substance and form to
the Investors and the Investors shall have received all such counterpart
originals, certified or other copies of such minutes, documents or instruments
as the Investors may reasonably request.
(d) Securities Law Compliance. The Company shall have taken all
actions under all applicable federal and state securities laws necessary to
consummate the issuance of the Series B Stock pursuant to this Agreement in
compliance with such laws.
(e) Execution and Delivery of Ancillary Documents. The
following ancillary documents or items shall have been executed and/or
delivered:
(i) The Registration Rights Agreement;
(ii) an opinion of Jenkens & Gilchrist, a Professional
Corporation, counsel to the Company substantially in the form of Exhibit C
attached hereto;
(iii) the Certificate of Incorporation of the Company and
all amendments thereto, certified by the Secretary of State of Delaware;
(iv) (A) copies of the resolutions of the Company's Board
of Directors authorizing and approving this Agreement and all of the
transactions and agreements contemplated hereby and thereby; (B) the bylaws of
the Company; and (C) the names of the officer or officers of the Company
authorized to execute this Agreement and any and all documents, agreements and
instruments contemplated herein, all certified by the Secretary of the Company
to be true, correct, complete and in full force and effect and unmodified as of
the Initial Closing Date;
(v) a certificate of existence and good standing for the
Company from the Secretary of State of Delaware; and
(vi) a certificate from the Secretary of State of Texas,
showing that the Company is qualified as a foreign corporation, dated as of a
date within ten (10) days of the Initial Closing Date.
(f) Certificate of Designation. The Certificate of Designation
shall have been filed with, and have been accepted by, the Secretary of State of
the State of Delaware.
4.2 CONDITIONS TO INITIAL CLOSING BY COMPANY. The obligation of the
Company to sell the Purchased Shares being sold at the Initial Closing to the
Investors is subject to the satisfaction, on or before the Initial Closing Date,
of each of the following conditions:
12
<PAGE> 13
(a) Representations and Warranties. The representations and
warranties contained in Section 3 shall be true on and as of the date of Initial
Closing.
(b) Compliance Certificate. The Investors shall have delivered
to the Company a certificate in the form acceptable to the Company, executed by
an authorized officer of the General Partner of the Investors, dated as of the
Initial Closing Date, and certifying to the fulfillment of the conditions
specified in Section 4.2(a) of this Agreement.
5. COVENANTS OF THE COMPANY.
5.1 MAINTENANCE OF THE BUSINESS. Except as otherwise agreed to in
writing by the holders of a majority of the shares of Series B Stock, the
Company shall (a) maintain its corporate existence; (b) maintain all of its
assets in good condition in accordance with prudent business practices, ordinary
wear and tear excepted; (c) hold Board of Directors meetings at least quarterly,
either by telephone or in person; and (d) submit an annual operating plan to its
Board of Directors for its approval at least one month prior to the beginning of
each fiscal year.
5.2 NEGATIVE COVENANTS. Without limiting any other covenants and
provisions hereof or contained in any other agreement to which the Company and
the Investors are parties, the Company covenants and agrees that, for as long as
at least twenty-five percent (25%) of the shares of Series B Stock issued
pursuant to this Agreement remain outstanding, the Company (unless it has
received the written consent of two-thirds of the Board of Directors of the
Company, one of whom shall be a representative designated by the holders of the
Series A Stock or the Series B Stock prior to the time that a majority of the
Company's directors are Independent Directors (as defined herein)) shall comply
with and observe the following negative covenants and provisions and will not:
(a) sell or dispose of all or substantially all of the
Company's property or business for an amount less than $150,000,000;
(b) merge into or consolidate with any other corporation or
other entity (other than a wholly-owned subsidiary of the Company) or effect any
transaction or series of related transactions in which more than fifty percent
(50%) of the voting power of the Company is disposed of, unless the value
received by the stockholders of the Company exceeds $150,000,000;
(c) alter or amend the Company's charter or bylaws;
(d) increase or decrease the number of directors on the
Company's Board of Directors; or
(e) dissolve the Company.
13
<PAGE> 14
For purposes of this Section 5.2, the term "Independent Directors"
shall mean directors of the Company who are not employees of the Company or who
are not paid consultants of or under retainer to the Company and who are not
affiliates of the Investors.
5.3 FINANCIAL STATEMENTS AND OTHER INFORMATION. The Company will
maintain a standard system of accounting records which will fairly present, in
all material respects, the Company's financial condition. In addition, for so
long as the Investors or their affiliates hold at least fifty percent (50%) of
the shares of Series B Stock issued pursuant to this Agreement (or the related
Conversion Shares) the Company will deliver to the Investors or any affiliate of
the Investors which owns at least ten percent (10%) of the Series B Stock issued
pursuant to this Agreement (or the related Conversion Shares), the following:
(a) as soon as practicable, but in any event within ninety (90)
days after the end of each fiscal year of the Company, audited financial
statements, in reasonable detail, prepared in accordance with GAAP;
(b) as soon as practicable, but in any event within forty-five
(45) days after the end of each of the first three quarters of each fiscal year
of the Company, unaudited financial statements of the Company;
(c) as soon as practicable, but in any event within thirty (30)
days after the end of each month, unaudited financial statements of the Company;
and
(d) such other information relating to the financial condition,
business, prospects or corporate affairs of the Company as the Investors may
from time to time reasonably request in writing.
5.4 BOARD OF DIRECTORS. For so long as at least a majority of the
shares of Series B Stock issued pursuant to this Agreement remain outstanding,
the holders of the Series B Stock shall be entitled to designate and elect one
member of the Company's Board of Directors from among the members of Thayer's
board of advisors (or a person mutually agreed upon by the Company and Thayer
with similar credentials and standing), which designation shall be subject to
the reasonable approval of Company's Board of Directors. In addition, for so
long as the Investors in the aggregate hold at least twenty-five percent (25%)
of the shares of Series B Stock issued pursuant to this Agreement, Thayer shall
have the right to have an observer present at all meetings of the Board of
Directors of the Company. The Company shall reimburse the director and the
observer for their reasonable out-of-pocket expenses incurred in attending
meetings of the Board of Directors of the Company.
5.5 INSPECTION. For as long as the Investors or any affiliate of
the Investors own at least fifty percent (50%) of the shares of Series B Stock
issued pursuant to this Agreement, the Company shall permit Thayer, at Thayer's
expense, to visit and inspect the Company's properties during normal business
hours, to examine its books of account and records and to discuss the Company's
affairs, finances and accounts with its officers, all at such reasonable times
as may be requested by Thayer; provided, however, that the Company shall not
14
<PAGE> 15
be obligated pursuant to this Section 5.5 to provide access to any information
that it reasonably considers to be a trade secret or similar confidential
information.
5.6 USE OF INFORMATION. Any information provided pursuant to
Section 5.3 or Section 5.5 shall be used by the Investors solely in furtherance
of their interests as investors in the Company, and the Investors shall maintain
and shall take such steps as are necessary to cause their representatives and
agents to maintain the confidentiality of all non-public information of the
Company obtained under such sections.
5.7 ASSIGNMENT OF INFORMATION AND VISITATION RIGHTS. The rights
granted to the Investors under Sections 5.3 and 5.5 may not be assigned except
to an affiliate of the Investors and provided that (a) the Company shall be
entitled to notice of any such transfer within thirty (30) days of the date such
transaction is effected; (b) such assignee or transferee agrees to be bound by
the terms of this Agreement; and (c) such assignee or transferee is not, in the
Company's reasonable judgment, a competitor of the Company.
6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS; WAIVER AND
AMENDMENT.
6.1 COMPANY AND THE INVESTORS. Except as otherwise herein provided,
all covenants of the Company and the Investors contained in this Agreement shall
survive the execution of this Agreement and the consummation of the transactions
contemplated hereby and remain in effect until the Company consummates an
underwritten public offering of its Common Stock pursuant to an effective
registration statement, with aggregate gross proceeds (prior to underwriter
commissions and expenses) of not less than $25,000,000. The representations and
warranties of the Company made in this Agreement or in any document executed in
connection herewith or in any certificate delivered pursuant to this Agreement,
shall survive the execution and delivery of this Agreement for a period of
fifteen (15) months.
6.2 WAIVER AND MODIFICATION. Any term or provision of this
Agreement may be waived at any time by the written consent of the party which is
entitled to the benefits thereof. Any waiver shall not operate as a waiver of
any other term or provision. This Agreement may only be modified by mutual
written agreement of the parties.
7. MISCELLANEOUS.
7.1 NOTICES. Any notice or other communication required or
permitted hereunder shall be in writing and shall be sent by registered or
certified mail, return receipt requested, or facsimile, or by overnight courier,
delivered against receipt to the party to whom it is to be given at the address
of such party as set forth below, or to such other address as the party shall
have furnished in writing to all parties in accordance with the provisions of
this Section 7.1, and shall be deemed properly given: (a) in the case of
registered or certified mail, five (5) business days after deposit in the United
States mail; (b) in the case of facsimile, upon receipt of a confirmation
notice; and (c) in the case of an overnight courier, on such courier's
guaranteed delivery date, except for a notice changing a party's address, which
shall be deemed given only at
15
<PAGE> 16
the time of receipt thereof by each party affected thereby, and in the case of
facsimile, on the day following the date of transmission:
If to the Company:
The Concours Group, Inc.
3 Kingwood Place
800 Rockmead Drive
Kingwood, Texas 77339
Attn. Dr. Ron Christman
Telephone: (281) 359-3464
Fax: (281) 359-3443
With a copy to:
Jenkens & Gilchrist,
a Professional Corporation
1100 Louisiana, Suite 1800
Houston, Texas 77002
Attn.: Andrius Kontrimas, Esq.
Telephone: (713) 951-3300
Fax: (713) 951-3314
If to the Investors:
Thayer Equity Investors IV, L.P.
1455 Pennsylvania Avenue, N.W.
Suite 350
Washington DC 20004
Attn.: Robert Michalik
Telephone: (202) 371-0150
Fax: (202) 371-0391
With a copy to:
Hogan & Hartson, L.L.P.
555 13th Street, N.W.
Washington DC 20004
Attn.: Christopher J. Hagan, Esq.
Telephone: (202) 637-5771
Fax: (202) 637-5910
7.2 BINDING EFFECT. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and the successors
and assigns of the Company and
16
<PAGE> 17
the respective assigns (to the extent assignable herein), heirs and personal
representatives of the Investor.
7.3 NO THIRD PARTY BENEFICIARIES. This Agreement does not create
and shall not be construed as creating any rights enforceable by any person not
a party to this Agreement.
7.4 SEVERABILITY. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal or unenforceable, that
shall, in no way, affect the validity or enforceability of any other provision
of this Agreement and that provision shall be deemed modified to the minimum
extent necessary to render it valid, legal and enforceable while accomplishing
the intent of such provision as nearly as practicable.
7.5 CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement and agree that no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement. The headings of this
Agreement are solely for convenience of reference and shall be given no effect
in the construction or interpretation of this Agreement. Pronouns shall be
deemed to include the singular, plural, masculine, feminine or neuter, as the
context requires. References to section numbers are to sections of this
Agreement unless otherwise indicated. All exhibits attached to this Agreement
are incorporated herein as if set forth in this Agreement in full.
7.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may be
executed and delivered by facsimile transmission.
7.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF TEXAS WITHOUT
GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE
STATE OF TEXAS OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF TEXAS.
7.8 EXPENSES. Each party to this Agreement shall bear its own
expenses relating to the preparation, execution, delivery and performance of
this Agreement, the Registration Rights Agreement and the Certificate of
Designation and all transactions contemplated hereby; provided, however, upon
consummation of the transactions contemplated hereby, the Company shall pay
reasonable legal fees and out-of-pocket expenses of the Investors of up to
$60,000 in the aggregate.
7.9 ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding and agreement among the parties with respect to the subject matter
hereof and supersedes and replaces any prior understanding, agreement or
statement (written or oral).
[SIGNATURE PAGE FOLLOWS]
17
<PAGE> 18
IN WITNESS WHEREOF, each of the parties hereto has executed, or has
caused this Agreement to be executed on its behalf by its duly authorized
officer, as of the day and year first above written.
THE CONCOURS GROUP, INC.
By: /s/ DR. RON CHRISTMAN
-----------------------------------
Dr. Ron Christman, its President
THAYER EQUITY INVESTORS IV, L.P.
By: TC Equity Partners IV, L.L.C.
Its General Partner
By: /s/ ROBERT E. MICHALIK
---------------------------------
Name: Robert E. Michalik
---------------------------------
Title: Vice President
---------------------------------
THAYER CGI PARTNERS LLC
By: /s/ ROBERT E. MICHALIK
---------------------------------
Name: Robert E. Michalik
---------------------------------
Title: Vice President
---------------------------------
<PAGE> 19
<TABLE>
<CAPTION>
SCHEDULE 1.1
Initial Closing Additional Closing
-------------------------- ---------------------------
Investor Purchase Price Shares Purchase Price Shares
- ------------------ -------------- ------- -------------- ---------
<S> <C> <C> <C> <C>
Thayer Equity
Investors IV, L.P. $9.697538 206,238 $9.67538 1,305,111
Thayer CGI
Partners LLC -- -- $9.67538 35,435
</TABLE>
<PAGE> 20
EXHIBIT A
<PAGE> 21
EXHIBIT B
<PAGE> 22
EXHIBIT C
<PAGE> 1
EXHIBIT 21.1
THE CONCOURS GROUP, INC. SUBSIDIARIES
<TABLE>
<CAPTION>
NAME JURISDICTION OF INCORPORATION
---- -----------------------------
<S> <C>
The Concours Group UK Limited United Kingdom
The Concours Group BV Netherlands
Inforesma AB Sweden
Concours-Cepro AB Sweden
The Concours Group ambH Germany
The Concours Group SAS France
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report and to all references to our Firm included in or made a part of this
Registration Statement.
ARTHUR ANDERSEN LLP
Houston, Texas
March 17, 2000
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
As independent auditors, we hereby consent to the use of our reports and to all
references to our Firm included in or made a part of this registration
statement regarding the financial statements of Cepro AB, expressed in Swedish
Kronor.
Stockholm, Sweden
March 16, 2000
DELOITTE & TOUCHE AB
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1999
<CASH> 705,169
<SECURITIES> 0
<RECEIVABLES> 6,508,637
<ALLOWANCES> 33,182
<INVENTORY> 0
<CURRENT-ASSETS> 7,901,104
<PP&E> 1,276,871
<DEPRECIATION> 563,693
<TOTAL-ASSETS> 8,847,628
<CURRENT-LIABILITIES> 13,034,942
<BONDS> 0
0
18,100
<COMMON> 33,859
<OTHER-SE> (8,239,273)
<TOTAL-LIABILITY-AND-EQUITY> (8,847,628)
<SALES> 26,080,395
<TOTAL-REVENUES> 26,080,395
<CGS> 19,835,143
<TOTAL-COSTS> 33,003,030
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 255,426
<INCOME-PRETAX> (7,176,581)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,922,635)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,176,581)
<EPS-BASIC> (2.32)
<EPS-DILUTED> (2.32)
</TABLE>
