<PAGE> 1
As filed with the Securities and Exchange Commission on November 12, 1997
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PEGASUS SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-2605174
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3811 TURTLE CREEK BOULEVARD, SUITE 1100 75219
DALLAS, TEXAS 75219 (Zip Code)
(Address of Executive Offices)
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1997 EMPLOYEE STOCK PURCHASE PLAN
(Full Title of the Plan)
JOHN F. DAVIS III
PEGASUS SYSTEMS, INC.
3811 TURTLE CREEK BOULEVARD, SUITE 1100
DALLAS, TEXAS 75219
(214) 528-5656
(Name, address and telephone number, including area code, of agent for service)
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With Copies To:
GUY KERR, ESQ.
LOCKE PURNELL RAIN HARRELL
(A PROFESSIONAL CORPORATION)
2200 ROSS AVENUE, SUITE 2200
DALLAS, TEXAS 75201-6776
CALCULATION OF REGISTRATION FEE
<TABLE>
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TITLE PROPOSED PROPOSED MAXIMUM
OF SECURITIES AMOUNT TO MAXIMUM AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED BE REGISTERED OFFERING PRICE (1) REGISTRATION FEE
PRICE
PER SHARE (1)
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<S> <C> <C> <C> <C>
Common Stock, 500,000 shares $16.29 $8,145,000 $2,469.00
$.01 Par Value
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</TABLE>
(1) Estimated in accordance with Rule 457(h) under the Securities Act of
1933, as amended, solely for purposes of calculating the registration fee,
based on the average of the high and low prices reported on the Nasdaq
National Market on November 5, 1997.
In addition, pursuant to Rule 416 under the Securities Act of 1933, as
amended, this Registration Statement also covers shares of Common Stock of the
Company issuable to prevent dilution resulting from stock splits, stock
dividends or similar transactions.
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PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The information specified by Item 1 and Item 2 of Part I of Form S-8
is omitted from this filing in accordance with the provisions of Rule 428 under
the Securities Act of 1933, as amended (the "Securities Act"), and the
introductory Note to Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The documents set forth below are incorporated by reference in this
Registration Statement. All documents subsequently filed by Pegasus Systems,
Inc. (the "Company") pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), prior to the
filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference into this Registration
Statement and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes
of this Registration Statement to the extent a statement contained herein or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Registration Statement.
(1) The Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997;
(2) The Company's Prospectus on Form 424(b) filed with the
Securities and Exchange Commission on August 7, 1997; and
(3) The description of the Common Stock which is contained in the
Company's Registration Statement on Form 8-A filed with the
Securities and Exchange Commission on August 4, 1997 pursuant
to Section 12 of the Exchange Act, and all amendments thereto
and reports which have been filed for the purpose of updating
such description.
ITEM 4. DESCRIPTION OF SECURITIES.
Not Applicable.
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ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL")
provides, in effect, that any person made a party to any action by reason of
the fact that he is or was a director, officer, employee or agent of the
Company may and, in certain cases, must be indemnified by the Company against,
in the case of a non-derivative action, judgments, fines, amounts paid in
settlement and reasonable expenses (including attorney's fees) incurred by him
or her as a result of such action, and in the case of a derivative action,
against expenses (including attorney's fees), if in either type of action he or
she acted in good faith and in a manner he or she reasonably believed to be in
or not opposed to the best interests of the Company. This indemnification does
not apply, in a derivative action, to matters as to which it is adjudged that
the director, officer, employee or agent is liable to the Company, unless upon
court order it is determined that, despite such adjudication of liability, but
in view of all the circumstances of the case, he or she is fairly and
reasonably entitled to indemnity for expenses, and, in a non-derivative action,
to any criminal proceeding in which such person had reasonable cause to believe
his conduct was unlawful.
Article Eight of the Company's Second Amended and Restated Certificate
of Incorporation provides that no director of the Company shall be liable to
the Company or its stockholders for monetary damages for breach of fiduciary
duty as a director to the fullest extent permitted by the DGCL.
Article Eight of the Company's Second Amended and Restated Certificate
of Incorporation also provides that the Company may indemnify to the fullest
extent permitted by Delaware law any and all of its directors and officers, or
former directors and officers, or any person who may have served at the
Company's request as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise. In addition, Section 7.7 of the
Company's Amended and Restated Bylaws provides that the Company shall indemnify
to the fullest extent permitted by Delaware law any and all of its directors
and officers, or former directors and officers, or any person who may have
served at the Company's request as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise and may
indemnify to the fully extent permitted by Delaware law any employees and
agents of the Company.
Reference is made to the Rights Agreement filed as Exhibit 4.3 to the
Company's Registration Statement on Form S-1 (File No. 333-28595) (the "S-1
Registration Statement") declared effective on August 6, 1997, pursuant to
which certain holders of capital stock of the Company named therein have agreed
to indemnify officers and directors of the Company against certain liabilities
under the Securities Act or the Exchange Act in the event Registrable
Securities (as defined therein) held by such holders are included in the
securities to be registered pursuant to a public offering by the Company.
The Company has purchased directors' and officers' liability
insurance. Subject to conditions, limitations and exclusions in the policy,
the insurance covers amounts required to be paid for a claim or claims made
against directors and officers for any act, error, omission, misstatement,
misleading statement or breach of duty by directors and officers in their
capacity as directors and officers of the Company.
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ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
ITEM 8. EXHIBITS.
5.1 Opinion of Locke Purnell Rain Harrell (A Professional
Corporation).
23.1 Consent of Price Waterhouse LLP, Independent Accountants.
23.2 Consent of Locke Purnell Rain Harrell (A Professional
Corporation) (included in opinion filed as Exhibit 5.1).
24.1 Power of Attorney (included on the signature pages of this
Registration Statement).
99.1 1997 Employee Stock Purchase Plan.
ITEM 9. UNDERTAKINGS.
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this Registration
Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in this Registration Statement.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement;
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(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
this Registration Statement or any material change to
such information in this Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by
the Company pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or Section 15(d) of the Exchange Act
(and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities
(other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the
Company 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 Company 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.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Company certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Dallas, State of Texas on November
12, 1997.
PEGASUS SYSTEMS, INC.
By: /s/ John F. Davis, III
--------------------------------------
John F. Davis, III
Chief Executive Officer, President and
Director
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POWER OF ATTORNEY
KNOW ALL MEN AND WOMEN BY THESE PRESENTS, that each person whose
signature appears below hereby constitutes and appoints each of John F. Davis,
III, Jerome L. Galant and Ric L. Floyd, and each of them, his or her true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
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 attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done on and about the
premises as fully and to all intents and purposes as he or she might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
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<S> <C> <C>
/s/ John F. Davis Chief Executive Officer, November 12, 1997
---------------------------- President and Director
John F. Davis, III (Principal Executive Officer)
/s/ Jerome L. Galant Chief Financial Officer November 12, 1997
---------------------------- (Principal Financial and
Jerome L. Galant Accounting Officer)
/s/ John W. Biggs Director November 12, 1997
----------------------------
John W. Biggs
/s/ Donald R. Dixon Director November 12, 1997
----------------------------
Donald R. Dixon
/s/ William C. Hammett, Jr. Director November 12, 1997
----------------------------
William C. Hammett, Jr.
/s/ Ian Malcolm Highet Director November 12, 1997
----------------------------
Ian Malcolm Highet
/s/ Rockwell A. Schnabel Director November 12, 1997
----------------------------
Rockwell A. Schnabel
/s/ Paul Travers Director November 12, 1997
----------------------------
Paul Travers
/s/ Mark C. Wells Director November 12, 1997
----------------------------
Mark C. Wells
/s/ Bruce Wolff Director November 12, 1997
----------------------------
Bruce Wolff
</TABLE>
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INDEX TO EXHIBITS
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Exhibit
Number Exhibit
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5.1 Opinion of Locke Purnell Rain Harrell (A Professional Corporation).
23.1 Consent of Price Waterhouse LLP, Independent Accountants.
23.2 Consent of Locke Purnell Rain Harrell (A Professional Corporation) (included in opinion filed
as Exhibit 5.1).
24.1 Power of Attorney (included on the signature pages of this Registration Statement).
99.1 1997 Employee Stock Purchase Plan.
</TABLE>
<PAGE> 1
EXHIBIT 5.1
November 12, 1997
Pegasus Systems, Inc.
3811 Turtle Creek Boulevard, Suite 1100
Dallas, Texas 75219
Re: Registration of 500,000 shares of Common Stock, par value $.01
per share, pursuant to a Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as special counsel for Pegasus Systems, Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement on Form S-8 (the "Registration Statement"), of 500,000
shares of Common Stock, par value $.01 per share, of the Company (the "Common
Stock") to be offered pursuant to the Pegasus Systems, Inc. 1997 Employee Stock
Purchase Plan (the "Purchase Plan").
Based upon our examination of such papers and documents and the
investigation of such matters of law as we have deemed relevant or necessary in
rendering this opinion, we hereby advise you that we are of the opinion that:
1. The Company is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Delaware.
2. Assuming, with respect to shares of Common Stock issued after
the date hereof, (i) the receipt of proper consideration for the issuance
thereof in excess of par value thereof, (ii) the availability of a sufficient
number of shares of Common Stock authorized by the Company's Certificate of
Incorporation then in effect, (iii) compliance with the terms of any agreement
entered into in connection with any options under the Purchase Plan, and (iv) no
change occurs in the applicable law or the pertinent facts, the shares of Common
Stock purchasable upon the exercise of any option granted under the Purchase
Plan will upon issuance be duly authorized and validly issued, fully paid and
non-assessable shares of Common Stock.
<PAGE> 2
Pegasus Systems, Inc.
November 12, 1997
Page 2
We consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement filed by the Company with the Securities and Exchange
Commission for the registration under the Securities Act, of 500,000 shares of
Common Stock of the Company covered by the Purchase Plan. By so consenting, we
do not thereby admit that our firm's consent is required by Section 7 of the
Securities Act.
Very truly yours,
LOCKE PURNELL RAIN HARRELL
(A Professional Corporation)
By: /s/ Guy Kerr
---------------------------
Guy Kerr
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated February 21, 1997, except as to Note
13, which is as of May 12, 1997 and Note 15, which is as of August 6, 1997,
relating to the financial statements of Pegasus Systems, Inc. which appears on
page F-2 of Pegasus Systems, Inc.s Registration Statement on Form S-1 dated
August 6, 1997. We also consent to the application of such report to the
Financial Statement Schedule for the year ended December 31, 1996 listed under
item 16(b) of such Registration Statement on Form S-1 when such schedule is read
in conjunction with the financial statements referred to in our report. The
audit referred to in such report also included this schedule.
PRICE WATERHOUSE LLP
Dallas, Texas
November 11, 1997
<PAGE> 1
EXHIBIT 99.1
PEGASUS SYSTEMS, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I-PURPOSE
1.1. PURPOSE.
The Pegasus Systems, Inc. 1997 Employee Stock Purchase Plan (the
"Plan") is intended to provide a method whereby employees of Pegasus Systems,
Inc. and its subsidiary corporations (hereinafter referred to, unless the
context otherwise requires, as the "Company") will have an opportunity to
acquire a proprietary interest in the Company through the purchase of shares of
the common stock of the Company. It is the intention of the Company to have the
Plan qualify as an "employee stock purchase plan" under Section 423 of the
Internal Revenue Code of 1986, as amended (the "Code"). The provisions of the
Plan shall be construed so as to extend and limit participation in a manner
consistent with the requirements of that section of the Code.
ARTICLE II-DEFINITIONS
2.1. BASE PAY
"Base Pay" shall mean regular straight-time earnings excluding
payments for overtime, shift premium, bonuses and other special payments,
commissions and other marketing incentive payments.
2.2. COMMITTEE
"Committee" shall mean the individuals described in Article XI.
2.3. EMPLOYEE
"Employee" means any person who is customarily employed on a full-time
or part-time basis by the Company or Subsidiary Corporation and is regularly
scheduled to work more than 20 hours per week and five months per year.
2.4. SUBSIDIARY CORPORATION
"Subsidiary Corporation" shall mean any present or future corporation
that (i) would be a "subsidiary corporation" of Pegasus Systems, Inc., as that
term is defined in Section 424 of the Code, and (ii) is designated as a
participating employer under the Plan by the Committee.
ARTICLE III-ELIGIBILITY AND PARTICIPATION
3.1. INITIAL ELIGIBILITY.
Any Employee who shall have completed 90 days' employment and shall be
employed by the Company on the date his or her participation in the Plan is to
become effective shall be eligible to participate in offerings under the Plan
which commence on or after such 90-day period has concluded.
3.2. LEAVE OF ABSENCE.
For purposes of participation in the Plan, an Employee on leave of
absence shall be deemed to remain an Employee for the first ninety (90) days of
such leave of absence and such Employee's employment shall be deemed to have
terminated at the close of business on the ninetieth day of such leave of
absence unless such Employee shall have returned to regular full-time or
part-time employment (as the case may be) prior to the close of business on
such ninetieth day. Termination by the Company of any Employee's leave of
absence, other than termination of such leave of absence on return to full-time
or part-time employment, shall terminate an Employee's employment for all
purposes of the Plan and shall terminate such Employee's participation in the
Plan and right to exercise any option.
3.3. RESTRICTIONS ON PARTICIPATION.
Notwithstanding any provisions of the Plan to the contrary, no
Employee shall be granted an option to participate in the Plan:
(a) if, immediately after the grant, such Employee would own stock, and/or
hold outstanding options to purchase stock, possessing five percent
(5%) or more of the total combined voting power or value of all
classes of stock of the Company (for purposes of this paragraph, the
rules of Section 424(d) of the Code shall apply in determining stock
ownership of any Employee); or
<PAGE> 2
(b) that permits such Employee's rights to purchase stock under all
employee stock purchase plans of the Company to accrue at a rate which
exceeds $25,000 in fair market value of the stock (determined at the
time such option is granted) for each calendar year in which such
option is outstanding.
3.4. COMMENCEMENT OF PARTICIPATION.
An eligible Employee may become a participant by completing an
authorization for a payroll deduction on the form provided by the Company and
filing it with the Company on or before the date set therefor by the Committee,
which date shall be prior to the Offering Commencement Date for the Offering
(as such terms are defined below). Payroll deductions for a participant shall
commence on the applicable Offering Commencement Date when the authorization
for a payroll deduction becomes effective and shall end on the Offering
Termination Date of the Offering to which such authorization is applicable
unless sooner terminated by the participant as provided in Article VIII. This
Section 3.04 is subject to the Company's right to terminate the Plan as
provided in Section 12.05.
ARTICLE IV-OFFERINGS
4.1. ANNUAL OFFERINGS.
The Plan will be implemented by annual offerings of the Company's
common stock (the "Offerings") beginning on each November 15 and terminating on
the following November 14. As used in the Plan, "Offering Commencement Date"
means the November 15 on which the particular Offering begins, and "Offering
Termination Date" means the November 14 on which the particular Offering
terminates.
ARTICLE V-PAYROLL DEDUCTIONS
5.1. AMOUNT OF DEDUCTION.
At the time of filing an authorization for payroll deduction, a
participant shall elect to have deductions made from his or her pay on each
payday while a participant in an Offering at the rate of any whole percentage
(not to exceed 10%) of such Employee's Base Pay in effect at the Offering
Commencement Date of such Offering. In the case of a part-time hourly Employee,
such Employee's Base Pay during an Offering shall be determined by multiplying
such Employee's hourly rate of pay in effect on the Offering Commencement Date
by the number of regularly scheduled hours of work for such Employee during the
Offering.
5.2. PARTICIPANT'S ACCOUNT.
All payroll deductions made for a participant shall be credited to
such participant's account under the Plan. A participant may not make any
separate cash payment into such account except when on leave of absence, and
then only as provided in Section 5.04.
5.3. CHANGES IN PAYROLL DEDUCTIONS.
A participant may discontinue participation in the Plan as provided in
Article VIII, but no other change can be made during an Offering and,
specifically, a participant may not alter the amount of payroll deductions for
that Offering.
5.4. LEAVE OF ABSENCE.
If a participant goes on a leave of absence, such participant may
elect to: (a) withdraw the balance in his or her account pursuant to Section
7.02, (b) discontinue contributions to the Plan but remain a participant in the
Plan, or (c) remain a participant in the Plan during such leave of absence,
authorizing deductions to be made from payments by the Company to the
participant during such leave of absence and undertaking to make cash payments
to the Plan at the end of each payroll period to the extent that amounts
payable by the Company to such participant are insufficient to meet such
participant's authorized Plan deductions.
ARTICLE VI-GRANTING OF OPTION
6.1. NUMBER OF OPTION SHARES.
On the Commencement Date of each Offering, a participating Employee
shall be deemed to have been granted an option to purchase a maximum number of
shares of the stock of the Company equal to an amount determined as follows: an
amount equal to (i) the percentage of the Employee's Base Pay that he or she
elected to have withheld (but not in any case in excess of 10%) multiplied by
(ii) the Employee's Base Pay during the period of the offering (iii) divided by
85% of the market value of the stock of the Company on the applicable Offering
Commencement Date. The market value of the Company's stock shall be determined
as provided in Section 6.02, below. An Employee's Base Pay during the period of
an Offering shall be determined by multiplying his or her normal weekly rate of
pay (as in effect on the last day prior to the Commencement Date of the
particular Offering) by 52 or the hourly rate by 2080, as the case may be;
provided that, in the case of a part-time Employee, the Employee's Base Pay
during the period of an Offering shall be determined by multiplying such
Employee's hourly rate
<PAGE> 3
by the number of regularly scheduled hours of work for such Employee during the
Offering (or, for a part-time salaried employee, by multiplying such Employee's
normal weekly rate of pay by the number of weeks such Employee is expected to
work during the period of the Offering).
6.2. OPTION PRICE.
The option price of stock purchased with payroll deductions made
during such Offering for a participant therein shall be the lower of:
(a) 85% of the closing price of the Company's common stock on the Offering
Commencement Date or the nearest prior business day on which trading
occurred on Nasdaq or any other national stock exchange; or
(b) 85% of the closing price of the Company's common stock on the
Offering Termination Date or the nearest prior business day on which
trading occurred on Nasdaq or any other national stock exchange. If
the common stock of the Company is not admitted to trading on any of
the aforesaid dates for which closing prices of the stock are to be
determined, then reference shall be made to the fair market value of
the stock on that date, as determined on such basis as shall be
established or specified for the purpose by the Committee.
ARTICLE VII-EXERCISE OF OPTION
7.1. EXERCISE.
Unless a participant gives written notice to the Company as
hereinafter provided, his or her option to purchase stock with payroll
deductions made during any Offering will be deemed to have been exercised
automatically on the Offering Termination Date applicable to such Offering, for
the purchase of the number of full shares of stock which the accumulated
payroll deductions in his or her account at that time will purchase at the
applicable option price. In no case, however, shall the participant purchase
more shares than were granted pursuant to Section 6.01, and any excess
in his or her account at that time will be returned to the participant.
7.2. WITHDRAWAL OF ACCOUNT.
By written notice to the Company, at any time prior to the Offering
Termination Date applicable to any Offering, a participant may elect to
withdraw all the accumulated payroll deductions at such time.
7.3. FRACTIONAL SHARES.
Fractional shares will not be issued under the Plan and any
accumulated payroll deductions which would have been used to purchase
fractional shares will be returned to any Employee promptly following the
termination of an Offering.
7.4. TRANSFERABILITY OF OPTION.
During a participant's lifetime, options held by such participant
shall be exercisable only by that participant.
7.5. DELIVERY OF STOCK.
As promptly as practicable after the Offering Termination Date of each
Offering, the Company will deliver to each participant, as appropriate, the
stock purchased upon exercise of the option.
ARTICLE VIII-WITHDRAWAL
8.1. IN GENERAL.
As indicated in Section 7.02, a participant may withdraw payroll
deductions credited to his or her account under the Plan at any time by giving
written notice to the Company. All of the participant's payroll deductions
credited to such participant's account will be paid promptly after receipt of
notice of withdrawal, and no further payroll deductions will be allowed during
such Offering. The Company may, at its option, treat any attempt to borrow by
an Employee on the security of accumulated payroll deductions as an election,
under Section 7.02, to withdraw such deduction.
8.2. EFFECT ON SUBSEQUENT PARTICIPATION.
A participant's withdrawal from any Offering will not have any effect
upon eligibility to participate in any succeeding Offering or in any similar
plan which may hereafter be adopted by the Company.
8.3. TERMINATION OF EMPLOYMENT.
Upon termination of the participant's employment for any reason,
including retirement (but excluding death while in the employ of the Company or
continuation of a leave of absence for a period beyond 90 days), the payroll
deductions credited to such participant account will be returned, or, in the
case of death subsequent to the termination of employment, to the person or
persons entitled thereto under Section 12.01.
<PAGE> 4
8.4. TERMINATION OF EMPLOYMENT DUE TO DEATH.
Upon termination of the participant's employment because of death, his
or her beneficiary (as defined in Section 12.01) shall have the right to elect,
by written notice given to the Company prior to the earlier of the Offering
Termination Date or the expiration of a period of sixty (60) days commencing
with the date of the death of the participant, either to:
(a) withdraw all of the payroll deductions credited to the participant's
account under the Plan, or
(b) exercise the participant's option for the purchase of stock on the
Offering Termination Date next following the date of the participant's
death for the purchase of the number of full shares of stock which the
accumulated payroll deductions in the participant's account at the
date of the participant's death will purchase at the applicable option
price, and any excess in such account will be returned to said
beneficiary.
In the event that no such written notice of election shall be duly received by
the office of the Company, the beneficiary shall automatically be deemed to
have elected, pursuant to paragraph (b), to exercise the participant's option.
8.5. LEAVE OF ABSENCE.
A participant on leave of absence shall, subject to the election made
by such participant pursuant to Section 5.04, continue to be a participant in
the Plan so long as such participant is on continuous leave of absence. A
participant who has been on leave of absence for more than ninety days and who
therefore is not an Employee for the purpose of the Plan shall not be entitled
to participate in any offering commencing after the ninetieth day of such leave
of absence. Notwithstanding any other provisions of the Plan, unless a
participant on leave of absence returns to regular full-time or part-time
employment with the Company at the earlier of: (a) the termination of such
leave of absence or (b) three months from the ninetieth day of such leave of
absence, such participant's participation in the Plan shall terminate on
whichever of such dates first occurs.
ARTICLE IX-INTEREST
9.1. PAYMENT OF INTEREST.
Interest shall be paid on amounts contributed to the Plan that were
not used to purchase shares of the Company's common stock. Such amounts will
be deemed to have earned simple interest during the period from the date of
withholding to the date of return at the regular passbook savings account rates
per annum in effect at the NationsBank, during the applicable offering period
or, if such rates are not published or otherwise available for such purpose, at
the regular passbook savings account rates per annum in effect during such
period at another major commercial bank selected by the Committee.
ARTICLE X-STOCK
10.1. MAXIMUM SHARES.
The maximum number of shares which shall be issued under the Plan,
subject to adjustment upon changes in capitalization of the Company as provided
in Section 12.04 shall not to exceed 500,000 for all Offerings. If the total
number of shares for which options are exercised on any Offering Termination
Date in accordance with Article VI exceeds the maximum number of shares for the
applicable offering, the Company shall make a pro rata allocation of the shares
available for delivery and distribution in as nearly a uniform manner as shall
be practicable and as it shall determine to be equitable, and the balance of
payroll deductions credited to the account of each participant under the Plan
shall be returned to him or her as promptly as possible.
10.2. PARTICIPANT'S INTEREST IN OPTION STOCK.
The participant will have no interest in stock covered by an option
until such option has been exercised.
10.3. REGISTRATION OF STOCK.
Stock to be delivered to a participant under the Plan will be
registered in the name of the participant, or, if the participant so directs by
written notice to the Company prior to the Offering Termination Date applicable
thereto, in the names of the participant and one such other person as may be
designate by the participant, as joint tenants with rights of survivorship or
as tenants by the entireties, to the extent permitted by applicable law.
10.4. RESTRICTIONS ON EXERCISE.
The Board of Directors may, in its discretion, require as conditions
to the exercise of any option that the shares of common stock reserved for
issuance upon the exercise of the option shall have been duly listed, upon
official notice of issuance, upon a stock exchange, and that either:
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(a) a Registration Statement under the Securities Act of 1933, as amended,
with respect to said shares shall be effective, or
(b) the participant shall have represented at the time of purchase, in
form and substance satisfactory to the Company, that such participant
intends to purchase the shares for investment and not for resale or
distribution.
ARTICLE XI-ADMINISTRATION
11.1. APPOINTMENT OF COMMITTEE.
The Board of Directors shall appoint a committee (the "Committee") to
administer the Plan, which shall consist of no fewer than three members of the
Board of Directors. No member of the Committee shall be eligible to purchase
stock under the Plan.
11.2. AUTHORITY OF COMMITTEE.
Subject to the express provisions of the Plan, the Committee shall
have plenary authority in its discretion to interpret and construe any and all
provisions of the Plan, to adopt rules and regulations for administering the
Plan, and to make all other determinations deemed necessary or advisable for
administering the Plan. The Committee's determination on the foregoing matters
shall be conclusive.
11.3. RULES GOVERNING THE ADMINISTRATION OF THE COMMITTEE.
The Board of Directors may from time to time appoint members of the
Committee in substitution for or in addition to members previously appointed
and may fill vacancies, however caused, in the Committee. The Committee may
select one of its members as its Chairman and shall hold its meetings at such
times and places as it shall deem advisable and may hold telephonic meetings. A
majority of its members shall constitute a quorum. All determinations of the
Committee shall be made by a majority of its members. The Committee may correct
any defect or omission or reconcile any inconsistency in the Plan, in the
manner and to the extent is shall deem desirable. Any decision or determination
reduced to writing and signed by a majority of the members of the Committee
shall be as fully effective as if it had been made by a majority vote at a
meeting duly called and held. The Committee may appoint a secretary and shall
make such rules and regulations for the conduct of its business as it shall
deem advisable.
ARTICLE XII-MISCELLANEOUS
12.1. DESIGNATION OF BENEFICIARY.
A participant may file a written designation of a beneficiary who is
to receive any stock and/or cash. Such designation of beneficiary may be
changed by the participant at any time by written notice to the Company. Upon
the death of a participant and upon receipt by the Company of proof of identity
and existence at the participant's death of a beneficiary validly designated by
him under the Plan, the Company shall deliver such stock and/or cash to such
beneficiary. In the event of the death of a participant and in the absence of a
beneficiary validly designated under the Plan who is living at the time of such
participant's death, the Company shall deliver such stock and/or cash to the
executor or administrator of the estate of the participant, or if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its discretion, may deliver such stock and/or cash to the
spouse or to any one or more dependents of the participant as the Company may
designate. No beneficiary shall, prior to the death of the participant by whom
he has been designated, acquire any interest in the stock or cash credited to
the participant under the Plan.
12.2. TRANSFERABILITY.
Neither payroll deductions credited to a participant's account nor any
rights with regard to the exercise of an option or to receive stock under the
Plan may be assigned, transferred, pledged, or otherwise disposed of in any way
by the participant other than by will or the laws of descent and distribution.
Any such attempted assignment, transfer, pledge or other disposition shall be
without effect, except that the Company may treat such act as an election to
withdraw funds in accordance with Section 7.02.
12.3. USE OF FUNDS.
All payroll deductions received or held by the Company under this Plan
may be used by the Company for any corporate purpose and the Company shall be
not be obligated to segregate such payroll deductions.
12.4. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
(a) If, while any options are outstanding, the outstanding shares of
common stock of the Company have increased, decreased, changed into, or been
exchanged for a different number or kind of shares or securities of the Company
through reorganization, merger, recapitalization, reclassification, stock
split, reverse stock split or similar transaction, appropriate
<PAGE> 6
and proportionate adjustments may be made by the Committee in the number and/or
kind of shares which are subject to purchase under outstanding options and on
the option exercise price or prices applicable to such outstanding options. In
addition, in any such event, the number and/or kind of shares which may be
offered in the Offerings described in Article IV hereof shall also be
proportionately adjusted. No adjustments shall be made for stock dividends. For
the purposes of this paragraph, any distribution of shares to shareholders in
an amount aggregating 20% or more of the outstanding shares shall be deemed a
stock split and any distributions of shares aggregating less than 20% of the
outstanding shares shall be deemed a stock dividend.
(b) Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all of the property or stock of the Company to
another corporation, the holder of each option then outstanding under the Plan
will thereafter be entitled to receive at the next Offering Termination Date
upon the exercise of such option for each share as to which such option shall
be exercised, as nearly as reasonable may be determined, the cash, securities
and/or property which a holder of one share of the Common stock was entitled to
receive upon and at the time of such transaction. The Board of Directors shall
take such steps in connection with such transactions as the Board shall deem
necessary to assure that the provisions of this Section 12.04 shall thereafter
be applicable, as nearly as reasonable may be determined, in relation to the
said cash, securities and/or property as to which such holder of such option
might thereafter be entitled to receive.
12.5. AMENDMENT AND TERMINATION.
The Board of Directors shall have complete power and authority to
terminate or amend the Plan; provided, however, that the Board of Directors
shall not, without the approval of the stockholders of the Corporation (i)
increase the maximum number of shares which may be issued under any Offering
(except pursuant to Section 12.04); or (ii) amend the requirements as to the
class of employees eligible to purchase stock under the Plan or permit the
members of the Committee to purchase stock under the Plan. No termination,
modification, or amendment of the Plan may, without the consent of an Employee
then having an option under the Plan to purchase stock, adversely affect the
rights of such Employee under such option.
12.6. EFFECTIVE DATE.
The Plan shall be effective as of September 23, 1997, subject to
approval by the holders of the majority of the common stock present and
represented at a special or annual meeting of the shareholders (or by any other
method of approval adequate under Texas sate law). If the Plan is not so
approved within 12 months of the date the Plan is adopted by the Company's
board of directors, the Plan shall be deemed to have not become effective.
12.7. NO EMPLOYMENT RIGHTS.
The Plan does not, directly or indirectly, create any right for the
benefit of any Employee or class of Employees to purchase any shares under the
Plan, or create in any Employee or class of Employees any right with respect to
continuation of employment by the Company, and it shall not be deemed to
interfere in any way with the Company's right to terminate, or otherwise
modify, an Employee's employment at any time.
12.8. EFFECT OF PLAN.
The provisions of the Plan shall, in accordance with its terms, be
binding upon, and inure to the benefit of, all successors of each Employee
participating in the Plan, including, without limitation, such Employee's
estate and the executors, administrators or trustees thereof, heirs and
legatees, and any receiver, trustee in bankruptcy or representative of
creditors of such Employee.
12.9. NOTICES.
All notices or other communications by a participant to the Company
under or in connection with the Plan shall be deemed to have been duly given
when received in the form specified by the Company at the location, or by the
person, that is designated by the Company from time to time for the receipt
thereof, and, in the absence of such a designation, the Company's Human
Resources Department.
12.10. GOVERNING LAW.
The law of the State of Texas will govern all matters relating to this
Plan except to the extent it is superseded by the laws of the United States.
