<PAGE>
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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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FIRST CONSULTING GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-3539020
(State incorporation) (I.R.S. Employer Identification No.)
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FIRST CONSULTING GROUP, INC.
111 W. OCEAN BOULEVARD, 4TH FLOOR
LONG BEACH, CA 90802
(562) 624-5200
(Address and telephone number of principal executive offices)
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INTEGRATED SYSTEMS CONSULTING GROUP, INC.
AMENDED AND RESTATED STOCK OPTION PLAN
(Full title of the plan)
LUTHER J. NUSSBAUM
CHIEF EXECUTIVE OFFICER
FIRST CONSULTING GROUP, INC.
111 W. OCEAN BOULEVARD, 4TH FLOOR
LONG BEACH, CA 90802
(562) 624-5200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------------
Copies to:
PATRICK A. POHLEN, ESQ.
COOLEY GODWARD LLP
FIVE PALO ALTO SQUARE
3000 EL CAMINO REAL
PALO ALTO, CA 94306-2155
(650) 843-5000
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
TO BE OFFERING AGGREGATE AMOUNT OF
TITLE OF SECURITIES TO BE REGISTERED REGISTERED (1) PRICE PER SHARE (1) OFFERING PRICE (1) REGISTRATION FEE
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
Stock Options and Common Stock, 1,270,500 (See Notes to Calculation $19,308,364 $5,368
$.001 par value........................ of Registration Fee)
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- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(h) promulgated under the
Securities Act of 1933, as amended (the "Securities Act"). The offering
price per share and aggregate offering price are based upon (a) the
weighted average exercise price, for shares subject to outstanding
options granted under the Integrated Systems Consulting Group, Inc.
Amended and Restated Stock Option Plan (the "Option Plan") or (b) the
average of the high and low prices of the Registrant's Common Stock as
reported on the Nasdaq Stock Market for December 29, 1998, for shares
reserved for future issuance pursuant to the Option Plan (pursuant to
Rule 457(c) under the Securities Act).
(2) The shares registered hereunder will be issued upon the exercise of stock
options assumed by First Consulting Group, Inc. (the "Registrant")
pursuant to that certain Agreement and Plan of Merger and Reorganization
among the Registrant, Foxtrot Acquisition Sub, Inc. and Integrated
Systems Consulting Group, Inc. ("ISCG"), dated September 9, 1998. These
options were originally granted to directors, employees and consultants
of ISCG under the Option Plan.
NOTES TO CALCULATION OF REGISTRATION FEE
The chart below details the calculations of the registration fee:
<TABLE>
<CAPTION>
TYPE OF SHARES NUMBER OF SHARES OFFERING PRICE PER SHARE AGGREGATE OFFERING PRICE
<S> <C> <C> <C>
Shares issuable pursuant to 620,354 $8.98 (1)(a) $ 5,570,779
outstanding options under the
Option Plan
Shares reserved for future 650,146 $21.13 (1)(b) $13,737,585
issuance pursuant to the
Option Plan
Proposed Maximum Offering Price 19,308,364
Registration Fee 5,368
</TABLE>
Approximate date of commencement of proposed sale to the public: as soon as
practicable after this Registration Statement becomes effective.
2.
<PAGE>
PART II
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
The following documents filed by the Registrant with the Securities and
Exchange Commission (the "Commission") are incorporated by reference into
this Registration Statement:
(a) The Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998 (File No. 333-41121), including all materials
incorporated by reference therein;
(b) The Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1998 (File No. 333-41121), including all materials
incorporated by reference therein;
(c) The Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998 (File No. 333-41121), including all
materials incorporated by reference therein;
(d) The Registrant's prospectus filed pursuant to Rule 424(b) under the
Securities Act, on February 13, 1998 (No. 333-41121);
(e) The Registrant's Current Report on Form 8-K (File No. 000-23651),
dated September 10, 1998;
(f) The Registrant's Current Report on Form 8-K (File No. 000-23651),
dated September 23, 1998;
(g) The Registrant's Current Report on Form 8-K (File No. 000-23651),
dated November 12, 1998;
(h) The description of the Registrant's Common Stock which is contained
in the Registration Statement on Form 8-A, filed January 22, 1998,
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), including any amendment or report filed for the
purpose of updating such description;
All reports and other documents subsequently filed by the Registrant pursuant
to Sections 13(a), 13(c), 14 and 15(d) of 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 herein and to be a
part of this Registration Statement from the date of the filing of such
reports and documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Registrant by Cooley Godward LLP, Palo Alto, California
("Cooley Godward"). As of the date of this Registration Statement, certain
members and associates of Cooley Godward own an aggregate of approximately
2,500 shares of the Registrant's Common Stock.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Bylaws provide that the Registrant will indemnify its
directors and executive officers and may indemnify its other officers,
employees and other agents to the fullest extent permitted by Delaware law.
The Registrant is also empowered under its Bylaws to enter into
indemnification contracts with its directors and officers and to purchase
insurance on behalf of any person it is required or permitted to indemnify.
Pursuant to this provision, the Registrant has entered into indemnification
agreements with each of its directors and executive officers.
3.
<PAGE>
The Registrant obtained officer and director liability insurance with respect
to liabilities arising out of certain matters, including matters arising
under the Securities Act. In addition, the Registrant's Certificate of
Incorporation provides that, to the fullest extent permitted by Delaware law,
the Registrant's directors will not be liable for monetary damages for breach
of the directors' fiduciary duty of care to the Registrant and its
stockholders. This provision in the Certificate of Incorporation does not
eliminate the duty of care, and in appropriate circumstances, equitable
remedies such as an injunction or other forms of non-monetary relief would
remain available under Delaware law. Under current Delaware law, a
directors' liability to the Registrant or its stockholders may not be limited
with respect to any breach of the director's duty of loyalty to the
Registrant or its stockholders, for acts or omissions not in good faith or
involving intentional misconduct, for knowing violations of law, for any
transaction from which the director derived an improper distribution to
stockholders and loans to directors and officers. This provision also does
not effect a director's responsibilities under any other laws such as the
federal securities laws or state or federal environmental laws.
The Registrant has entered into agreements with its directors and officers
that require the Registrant to indemnify such persons against expenses,
judgments, fines, settlements and other amounts actually and reasonably
incurred (including expenses of a derivative action) in connection with any
proceeding, whether actual or threatened, to which any such person may be
made a party by reason of the fact that such person is or was a director or
executive officer of the Registrant or any of its affiliated enterprises. No
indemnity will be provided, however, to any director or executive officer on
account of conduct that is knowingly fraudulent or deliberately dishonest or
constitutes willful misconduct. No indemnification will be available if such
indemnification is unlawful, or in respect of any accounting of profits made
from the purchase or sale of securities of the Registrant in violation of
Section 16(b) of the Exchange Act. The indemnification agreements also set
forth certain procedures that will apply in the event of a claim for
indemnification thereunder.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIM.
Not Applicable.
ITEM 8. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
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4.1* Certificate of Incorporation of the Registrant.
4.2* Bylaws of the Registrant.
4.3* Specimen Stock Certificate.
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Grant Thornton LLP, Independent Auditors.
23.2 Consent of Cooley Godward LLP contained in Exhibit 5.1 to this
Registration Statement.
24.1 Power of Attorney is contained on the signature pages.
99.1 Integrated Systems Consulting Group, Inc. Amended and Restated Stock
Option Plan
99.2 Form of Incentive Stock Option under the Integrated Systems Consulting
Group, Inc. Amended and Restated Stock Option Plan
* Documents incorporated by reference from the Registrant's Registration
Statement on Form S-1, as amended (No. 333-41121), declared effective by
the Commission on February 12, 1998.
4.
<PAGE>
ITEM 9. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
i. To include any prospectus required by section 10(a)(3) of the
Securities Act;
ii. To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. 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;
iii. To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
PROVIDED, HOWEVER, that paragraphs (a)1(i) and (a)1(ii) do not apply if the
Registration Statement is on Form S-3 or Form S-8 and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the issuer pursuant to section 13 or
section 15(d) of the Exchange Act that are incorporated by reference in the
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 herein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be
a new Registration Statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities
Act 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 Commission such indemnification
is against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
5.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Long Beach, State of California, on December 30,
1998.
FIRST CONSULTING GROUP, INC.
By: /s/ Luther J. Nussbaum
------------------------------
Luther J. Nussbaum
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Luther J. Nussbaum and Thomas A. Reep and each
or any 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 (including
post-effective amendments) to this Registration Statement, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in connection therewith, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any
of them, or their or his substitutes or substitute, 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>
SIGNATURE TITLE DATE
- ---------------------- ------------------------------------ ------------------
<S> <C> <C>
/s/ Luther J. Nussbaum
- ------------------------- Chief Executive Officer and Director December 30, 1998
Luther J. Nussbaum (Principal Executive Officer)
/s/ James A. Reep Chairman and Director December 30, 1998
- ------------------------
James A. Reep
/s/ Thomas A. Reep Vice President and Chief December 30, 1998
- ------------------------ Financial Officer (Principal
Thomas A. Reep Financial and Accounting Officer)
/s/ Steven Heck Director December 30, 1998
- ------------------------
Steven Heck
/s/ Steven Lazarus Director December 30, 1998
- ------------------------
Steven Lazarus
6.
<PAGE>
/s/ Stephen E. Olson Director December 30, 1998
- ------------------------
Stephen E. Olson
/s/ Scott S. Parker Director December 30, 1998
- -------------------------
Scott S. Parker
/s/ Stanley R. Nelson Director December 30, 1998
- --------------------------
Stanley R. Nelson
/s/ Jack O. Vance Director December 30, 1998
- --------------------------
Jack O. Vance
/s/ David S. Lipson Director December 30, 1998
- ----------------------------
David S. Lipson
/s/ Donald R. Caldwell Director December 30, 1998
- ------------------------------
Donald R. Caldwell
/s/ Frank Baldino, Jr. Director December 30, 1998
- -------------------------------
Frank Baldino, Jr.
</TABLE>
7.
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
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4.1* Certificate of Incorporation of the Registrant.
4.2* Bylaws of the Registrant.
4.3* Specimen Stock Certificate.
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Grant Thornton LLP, Independent Auditors.
23.2 Consent of Cooley Godward LLP contained in Exhibit 5.1 to this
Registration Statement.
24.1 Power of Attorney is contained on the signature pages.
99.1 Integrated Systems Consulting Group, Inc. Amended and Restated Stock
Option Plan
99.2 Form of Incentive Stock Option under the Amended and Restated Stock
Option Plan
* Documents incorporated by reference from the Registrant's Registration
Statement on Form S-1, as amended (No. 333-41121), declared effective by
the Commission on February 12, 1998.
8.
<PAGE>
EXHIBIT 5.1
December 30, 1998
First Consulting Group, Inc.
111 W. Ocean Boulevard, 4th Floor
Long Beach, CA 90802
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by First Consulting Group, Inc. (the "Company") of a
registration statement on Form S-8 (the "Registration Statement") with the
Securities and Exchange Commission covering the offering of up to 1,270,500
shares of the Company's Common Stock, $.001 par value, (the "Shares") to be
issued upon the exercise of stock options granted or available for grant
pursuant to the Integrated Systems Consulting Group, Inc. Amended and
Restated Stock Option Plan (the "Option Plan").
In connection with this opinion, we have examined the Registration Statement
and related prospectus, your Certificate of Incorporation and Bylaws, as
amended, and such other documents, records, certificates, memoranda and other
instruments as we deem necessary as a basis for this opinion. We have
assumed the genuineness and authenticity of all documents submitted to us as
originals, the conformity to originals of all documents submitted to us as
copies thereof, and the due execution and delivery of all documents where due
execution and delivery are a prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when sold and issued in accordance with the Option Plan, the
Registration Statement and related prospectuses, will be validly issued,
fully paid, and nonassessable (except as to shares issued pursuant to certain
deferred payment arrangements, which will be fully paid and nonassessable
when such deferred payments are made in full).
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
COOLEY GODWARD LLP
By: /s/ Patrick A. Pohlen
-------------------------------
Patrick A. Pohlen
<PAGE>
EXHIBIT 23.1
CONSENT OF GRANT THORNTON LLP, INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 pertaining to the Integrated Systems Consulting Group, Inc. 1989 Stock
Option Plan of our report dated January 17, 1998 (except for Note K, as to which
the date is February 10, 1998), with respect to the consolidated financial
statements of First Consulting Group, Inc. included in its Registration
Statement on Form S-1, as amended (No. 333-41121), filed with the Securities and
Exchange Commission.
/s/ Grant Thornton LLP
-----------------------------
Irvine, California
December 24, 1998
<PAGE>
INTEGRATED SYSTEMS CONSULTING GROUP, INC.
AMENDED AND RESTATED STOCK OPTION PLAN
1. PURPOSE OF THE PLAN
The purposes of this plan are to foster and promote the long-term financial
success of the Company by (a) attracting and retaining key personnel of
outstanding ability by the granting of stock options; (b) strengthening the
Company's capacity to develop and maintain a competent management team; (c)
providing incentive compensation opportunities which are competitive with those
of other businesses; and (d) enabling key personnel to participate in the
financial success of the Company through the ownership of stock in the Company.
2. DEFINITIONS
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Committee" means a Committee appointed by the Board to
administer the Plan. The Committee shall consist of not less
than two persons who shall serve at the pleasure of the Board.
(d) "Company" means Integrated Systems Consulting Group, Inc., a
Pennsylvania corporation, and its Subsidiaries, if any.
(e) "Employee" means any person (including any officer of the
Company) who is employed by the Company.
(f) "Exercise Period" means the period during which a Participant is
entitled to exercise a Stock Option granted to such Participant
under the Plan; subject, however, to any applicable Vesting
Schedule and to the prior termination of such Stock Option under
Section 7 hereof. The Exercise Period of a Stock Option shall be
determined by the Plan Administrator in its sole discretion,
provided that such Exercise Period shall not exceed ten years
from the date of the grant of such Stock Option (or five years
from the date of grant if, on such date, the Employee owns,
directly or by attribution under Section 424(d) of the Code,
shares possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or
an affiliate of the Company).
<PAGE>
(g) "Fair Market Value" means the value of the Shares determined in
good faith by the Plan Administrator. If shares of the Stock are
listed on a stock exchange, such determination shall be made on
the basis of the closing sale price of such Shares on any stock
exchange on which such shares are listed. If shares of the Stock
are not listed on a stock exchange, but are traded on the over-
the-counter market, such determination shall be made on the basis
of the mean between the bid and offer prices for such shares on
the over-the-counter market. In no case shall such Fair Market
Value be less than the par value of such Shares. Fair Market
Value of the Shares shall be determined without regard to any
restrictions other than a restriction which, by its terms, will
never lapse.
(h) "Offer" means a tender or exchange offer, other than one made by
the Company, for shares of Stock in the Company.
(i) "Participant" means a person who is selected by the Plan
Administrator to receive a Stock Option.
(j) "Plan" means the Amended and Restated Stock Option Plan of the
Company, including any amendments thereto.
(k) "Plan Administrator" means either the Board or a Board-appointed
Committee, whichever is designated from time to time to
administer the Plan under Section 3(a) hereof.
(l) "Reorganization Transaction" means a merger, consolidation or
combination of the Company with another corporation or entity or
any similar reorganization of the Company, the complete
liquidation of the Company, or the sale of all or substantially
all of the assets of the Company.
(m) "Shares" means the shares of Stock reserved for issuance or
transfer by the Company under the Plan as set forth in Section
4(a) hereof. The term "Shares" shall also include all shares of
Stock received with respect to Shares by a Participant pursuant
to a stock dividend, stock split, recapitalization or other
similar transaction.
(n) "Stock" means the Common Stock, par value $.005 per share, of the
Company.
(o) "Stock Option" or "Option" means an option to purchase Shares
granted under Section 6 hereof.
(p) "Subsidiary" means any corporation the majority of the
outstanding voting stock of which is owned, directly or
indirectly, by the Company.
-2-
<PAGE>
(q) "Termination of Employment" means the time when the employee-
employer relationship between the Participant and the Company is
terminated for any reason, including, but not limited to, a
termination by resignation, discharge, death, disability, or
retirement, but excluding such termination where there is a
simultaneous reemployment by either the Company or a Subsidiary.
(r) "Vesting Schedule" means the dates when a Participant can
exercise the Options granted under this Plan, as set forth in
Section 6(c) hereof.
3. ADMINISTRATION OF THE PLAN
(a) The Plan shall be administered under the direction of the Board.
The Board may at any time, in its sole discretion, appoint a
Committee of the Company which shall have all of the powers,
duties, and responsibilities of the Board of Directors under this
Plan and shall be subject to all of the terms and conditions of
this Plan applicable to the Board of Directors. The Committee, if
appointed, shall consist of two or more persons who shall serve
at the pleasure of the Board of Directors. Such persons may or
may not be Directors of the Company. The Board shall determine,
from time to time, whether the Plan shall be administered by the
Board or the Committee, and whichever body is so designated shall
be the Plan Administrator hereunder.
(b) Subject to the provisions of the Plan, the Plan Administrator
shall have exclusive power to select the Employees who are to be
Participants under the Plan as set forth in Section 5 hereof and
to determine the Options to be granted to the Participants
selected and the time or times when, and terms, conditions and
restrictions subject to which, such Options will be granted.
(c) Decisions and determinations by the Plan Administrator shall be
final and binding upon all persons, including, but not limited
to, the Company and its shareholders, Participants and their
personal representatives, heirs and assigns, and other Employees.
The Plan Administrator shall have the authority to interpret the
Plan, establish and revise rules and regulations relating to the
Plan, and make any other determinations that it believes
necessary or advisable for the administration of the Plan;
provided, however, that no such rules, regulations or
determinations are inconsistent with the terms of this Plan.
(d) The provisions of the By-laws of the Company governing the number
of Directors of the Board required for action to be taken by the
Board at a meeting and the requirements for voting by Directors
at a meeting at which a quorum is present, or for acting by their
written consent, shall be
-3-
<PAGE>
complied with by the Board in order to take valid actions under
the Plan. Notwithstanding anything in the By-laws to the
contrary, a majority of the Committee shall constitute a quorum,
and the acts of a majority of the members of the Committee
present at any meeting at which a quorum is present, or acts
approved in writing by a majority of the Committee without a
meeting, shall be the acts of the Committee.
(e) All expenses and liabilities incurred by the Plan Administrator
in the administration of the Plan shall be borne by the Company.
The Plan Administrator may employ attorneys, consultants,
accountants, or other persons to render services in connection
with the Plan, and the Company, the Board, the Committee, and the
members of the Board and Committee shall be entitled to rely upon
the advice, opinions, or valuations of any such persons. Neither
the Company, the Board, the Committee, nor any member of the
Board or Committee shall be personally liable for any action,
determination, or interpretation taken or made in good faith with
respect to the Plan, and all members of the Board and Committee
shall be indemnified by the Company with respect to any such
liability to the fullest extent permitted by the By-laws of the
Company.
4. STOCK SUBJECT TO THE PLAN
(a) The maximum number of shares of Stock which may be issued or
transferred by the Company under the Plan and which shall be
reserved for such issuance shall be 1,650,000 Shares.
(b) The Board may reserve authorized but unissued shares of Stock, or
treasury shares of Stock, not otherwise reserved or restricted,
for issuance under this Plan. Shares reserved for issuance or
transfer under outstanding Stock Options under this Plan which
expire unexercised or which are cancelled shall again become
reserved for issuance under this Plan.
(c) The approval of this Plan by the Board shall constitute the
Board's conclusive judgment and determination that, when Shares
have been issued to a Participant in accordance with the terms
and conditions of the Plan, such Shares shall be considered to be
issued for full and adequate consideration and shall be fully
paid and nonassessable Stock, and that such consideration shall
be accounted for in accordance with the Company's standard
accounting practice.
-4-
<PAGE>
5. ELIGIBILITY
The Plan Administrator shall from time to time, in its absolute discretion,
select Participants to whom Stock Options shall be granted from among those
Employees who are key personnel of the Company or, subject to Section 13(h)
hereof, from among members of the Board. No Stock options shall be granted to
any individual who, at the time the Stock Option is granted, owns (after
application of the ownership attribution rules contained in Code Section 424(d))
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company, unless the purchase price per Share
under such Option is at least 110% of the Fair Market Value of such Share on the
date the Option is granted and such Option is not exercisable after the
expiration of five (5) years from the date on which such Option is granted.
Moreover, the aggregate fair market value (determined as of the time the Option
is granted) of the shares of stock of the Company with respect to which
incentive stock options (as defined in Code Section 422) are exercisable for the
first time by any Participant during any calendar year (pursuant to all
incentive stock option plans of the Company) shall not exceed $100,000.
6. GRANT OF STOCK OPTION; AGREEMENT
All Options granted to Employees pursuant to this Plan shall be "incentive stock
options" within the meaning of Section 422 of the Code unless, at the time of
such grant, the Options are expressly designated as non-qualified stock options.
All Options granted to a Participant who is not an Employee shall be non-
qualified Options. In the case of the grant of non-qualified Options, the
Company shall take whatever action is required to comply with tax withholding
requirements. At the time an Option is granted pursuant to this Plan, each
Participant granted an Option shall enter into an agreement with the Company (a
"Stock Option Agreement"), in a form approved by the Plan Administrator, which
shall set forth the general terms and conditions of the Options granted to the
Participant, and such other terms and conditions as the Plan Administrator
shall, in its sole discretion, determine. A copy of a form of Stock Option
Agreement is attached hereto as Exhibit A. The Stock Option Agreement shall
specify the following terms and conditions with respect to the Option:
(a) NUMBER OF SHARES. The number of Shares issuable or transferable
to the Participant upon the exercise of the Option.
(b) PRICE. The purchase price per Share deliverable upon the
exercise of the Option, which shall not be less than the Fair
Market Value of the Shares on the date the Option is granted.
The purchase price may be paid in cash, by check or in any other
form as may be deemed acceptable by the Plan Administrator.
(c) EXERCISE PERIOD AND VESTING SCHEDULE. The Stock Options granted
under this Plan shall be exercisable by the Participant in
accordance with the following schedule (the "Vesting Schedule"):
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For Options granted BEFORE July 25, 1996:
2 years from date of grant: 20% of Shares
3 years from date of grant: 40% of Shares
4 years from date of grant: 60% of Shares
5 years from date of grant: 80% of Shares
6 years from date of grant: 100% of Shares
For Options granted ON OR AFTER July 25, 1996:
1 year from date of grant: 20% of Shares
2 years from date of grant: 40% of Shares
3 years from date of grant: 60% of Shares
4 years from date of grant: 80% of Shares
5 years from date of grant: 100% of Shares
(d) DISCRETION OF PLAN ADMINISTRATOR. Notwithstanding anything to
the contrary in Section 6(c), the Plan Administrator, at any time
and in its sole discretion, may establish a different Vesting
Schedule for any Stock Options granted under this Plan and may
also provide for the acceleration of the Vesting Schedule with
respect to Stock Options previously granted under the Plan to any
Participant and the acceleration of the right to exercise Stock
Options prior to vesting (provided such Stock is subject to the
Company's right, but not the obligation, to repurchase such Stock
if vesting does not subsequently occur), provided that such grant
or acceleration shall not impair the qualification of such Stock
Option under Code Section 422.
(e) VOLUNTARY. The Participant shall expressly acknowledge and agree
that participation in this Plan is voluntary, and that the
Participant will be solely responsible for all taxes to which he
or she may become subject as a consequence of participation in
the Plan, the exercise of an Option or the ownership, sale,
transfer or other disposition of Shares acquired pursuant to the
exercise of an Option issued hereunder.
(f) 30-DAY WAITING PERIOD WITH RESPECT TO OPTIONS GRANTED PRIOR TO
JULY 25, 1996. With respect only to Options granted hereunder
prior to July 25, 1996, there shall be a 30-day period between
the date on which the Participant exercises the Option pursuant
to this Plan, and the issuance or transfer of the Shares covered
by such Option to the Participant, and the Participant must
remain an Employee at all times during such 30-day period in
order to receive the Shares.
(g) SHARE CERTIFICATES HELD BY COMPANY. The original of any Share
certificates that are issued to a Participant upon exercise of a
Stock Option granted under the Plan may be held by the Plan
Administrator as custodian for the Participant, in the Plan
Administrator's sole discretion. The
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issuance of such certificates shall be recorded on the
Company's stock ledger book and other records so that the
Participant is accorded all rights of a holder of Shares. At
a Participant's request, the Plan Administrator shall furnish
to the Participant a copy of the Share certificate(s) held by
the Plan Administrator as custodian for the Participant.
(h) OTHER. Such other terms and conditions not inconsistent with the
Plan as the Plan Administrator shall specify.
7. TERMINATION OF EMPLOYMENT
(a) DEATH. If the Participant dies while an Employee, any Option
which was exercisable, in accordance with the Vesting Schedule,
by such Participant on the date of such Participant's death shall
be exercisable by such Participant's estate, heirs or legatees at
any time prior to the expiration of one year after the date of
the Participant's death, but in no event after the expiration of
the Exercise Period applicable to such Option.
(b) TOTAL DISABILITY. If any Participant becomes permanently and
totally disabled within the meaning of Code Section 22(e)(3)
while he or she is an Employee, any Option held by the
Participant which was exercisable, in accordance with the Vesting
Schedule, by the Participant on the date of such disability shall
be exercisable for a period of one year from the date such
Participant ceases Employment, but in no event after the
expiration of the Exercise Period applicable to such Option. If
the Participant dies during such one-year period, the executor,
personal representative, distributee or legatee of the
Participant's estate shall have the right to exercise such Option
during the remainder of such period.
(c) OTHER. If there is a Termination of Employment of a Participant
for any reason not specified in Sections 7(a) or 7(b) hereof, any
Option which was exercisable, in accordance with the Vesting
Schedule, by such Participant on the date of such Termination
shall be exercisable at any time prior to 30 days from the date
of such Termination, but in no event after the termination of the
Exercise Period applicable to such Option. If the Participant
dies during such 30-day period, the executor, personal
representative, legatee or distributee of the Participant's
estate shall have the right to exercise such Option during the
remainder of such period. The Plan Administrator shall have
discretion with respect to applying this Section 7(c) to members
of the Board of Directors who are Participants under the Plan.
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8. LEAVE OF ABSENCE
If a Participant is granted a leave of absence (as defined in Regulations
Section 1.421-7(b)(2)) by the Company, the Plan Administrator may make such
provision respecting continuance of any Stock Option held by such Participant
while such Participant remains on such leave of absence as it may deem
advisable, except that in no event shall any Option become exercisable after the
expiration of the Exercise Period applicable to such Option.
9. COMPLIANCE WITH APPLICABLE LAWS
No Stock Options shall be granted, and no Shares shall be issued or transferred
by the Company to a Participant pursuant to the Plan unless the Plan
Administrator, in its sole discretion, shall have first determined that all
registrations, approvals, exemptions, and any other action required by law to be
taken with respect to the Plan shall have been accomplished, including, but not
limited to, such action, if any, as is then required to comply with the
provisions of the Securities Act of 1933, the Securities Exchange Act of 1934,
any applicable state laws, and the requirements of any exchange on which the
Stock may, at the time, be listed.
10. EMPLOYMENT
No employee or other person shall have any claim or right to be granted a Stock
Option under the Plan. Nothing herein contained shall at any time be deemed to
give any Employee the right to be retained in the employ of the Company,
interfere with the right of the Company to discharge any Employee, give to the
Company the right to require any Employee to remain in its employ, or interfere
with any Employee's right to terminate employment.
11. CORPORATE CHANGES
(a) If any change in the number, class, rights or designation of
outstanding shares of Stock occurs by reason of a stock split,
recapitalization, stock dividend, reclassification, or other
similar transaction, the maximum aggregate number and class of
Shares reserved under the Plan or the exercise price of all
outstanding Stock Options may be appropriately adjusted by the
Board whose determination in such regard shall be conclusive.
When such adjustment is made, the number of Shares issuable or
transferable to Participants upon the exercise of outstanding
Stock Options, or the exercise price of such Options, as the case
may be, shall likewise be appropriately adjusted by the Board.
(b) If the Company becomes a party or subject to a Reorganization
Transaction, or if there is an Offer for shares of the Stock, the
Board may: (1) determine what Participants shall be entitled to
receive, in substitution for Shares issuable or transferable to
them upon the exercise of
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outstanding Stock Options, in the form of stock, securities,
cash or other property to be received by owners of Stock of
the Company as a result of such Reorganization Transaction or
Offer; (2) upon written notice to Participants, provide that
the Participant's Options shall be terminated unless exercised
in accordance with the Plan within thirty (30) days after the
date of such notice; or (3) take any other action with respect
to any outstanding Stock Options which it deems to be
appropriate; provided that under no circumstances shall any
such Board determination increase the length of the Exercise
Periods applicable to the Options.
12. TRANSFERABILITY OF SHARES
(a) If a Participant acquires Shares pursuant to the terms of this
Plan and there is, subsequently, a Termination of Employment with
the Company, either voluntarily or involuntarily, such Employee
shall be obligated to offer to sell within fifteen (15) days to
the Company and the Company shall be obligated to purchase from
the Participant the Shares so acquired (other than Shares of the
Company for which there shall be a public market). If the
termination is by reason of the death of the Participant, the
obligation to offer the Shares shall pass with the Shares to the
Participant's executor, legal representative, distributee, or
legatee. At the discretion of the Plan Administrator this
Section 12 shall not apply to members of the Board of Directors
who are Participants under the Plan.
Closing with respect to the repurchase of the Shares described in
the prior paragraph shall take place at the offices of the
Company within thirty (30) days of the date of Termination of
Employment (or, in the case of the death of the Participant,
within thirty (30) days of the exercise of the Option pursuant to
Section 7(a) hereof). At the sole discretion of the Company,
however, the date of Closing may be postponed until the first
business day following the date which is the one year anniversary
of the date the Shares were transferred to the Participant
pursuant to the Option.
The purchase price for the Shares to be purchased hereunder,
other than in the event the Participant is dismissed from
Employment with the Company for cause, shall be the Fair Market
Value of such Shares (determined in accordance with Section 2(f)
hereof) as of the date of Termination of Employment. If a
Participant is dismissed from Employment with the Company for
cause, the purchase price of those Shares acquired by the
Employee pursuant to the exercise of Stock Options shall be equal
to their Fair Market Value as determined above or the
Participant's exercise price for those Shares, whichever is less.
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(b) The Shares acquired pursuant to the Plan shall and all share
certificates representing Shares so acquired shall contain a
legend stating that transfer of such Shares is restricted in
accordance with the terms of this Plan.
13. MISCELLANEOUS
(a) EFFECTIVE DATE AND DURATION OF THE PLAN. This Plan shall become
effective upon the approval thereof by the holders of a majority
of the outstanding shares of stock of the Company entitled to
vote thereon within twelve months after the Plan is adopted by
the Board of Directors. Unless sooner terminated, the Plan shall
terminate ten years from the date of shareholder approval, or the
date the Plan is adopted, whichever is earlier.
(b) EFFECT UPON OTHER PLANS. The adoption of the Plan shall not
affect any stock option or other compensation or incentive plan
in effect for the Company or any Subsidiary, and the Plan shall
not preclude the Board from establishing any other forms of
incentive, bonus or other compensation for Employees.
(c) TERMINATION. The right to grant Stock Options under the Plan
shall terminate automatically at the close of business on the
tenth anniversary of the effective date of the Plan, and
thereafter, the function of the Plan Administrator shall be
limited to the administration of Options previously granted. The
Board shall have the right to suspend or terminate the Plan at
any time provided that no action shall, without the consent of
the Participant, adversely affect any rights or obligations under
any Options previously granted to the Participant. The Plan may
be terminated at any time by the shareholders of the Company in
the manner provided by law.
(d) AMENDMENT OF THE PLAN. The Board may modify or amend the Plan in
any respect, except that without shareholder approval the Board
may not, unless otherwise provided specifically herein, (1)
increase the maximum number of Shares set forth in Section 4(a)
hereof; (2) withdraw administration of the Plan from the Plan
Administrator constituted in the manner provided in Section 3(a)
hereof; (3) materially increase the benefits accruing to
Participants; or (4) materially modify the requirements as to
eligibility for participation in the Plan as set forth in Section
5 hereof. Any modification or amendment of the Plan shall not,
without the consent of the Participant, adversely affect any
rights or obligations under Options previously granted to the
Participant. Subject to the foregoing, the Plan may be amended
at any time by the shareholders of the Company in the manner
provided by law. The Plan Administrator may, with the consent of
a Participant, amend an outstanding Option held by a Participant,
in a manner not inconsistent with the Plan.
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(e) ASSIGNABILITY OF OPTIONS. No Stock Options shall be assignable
or transferable by a Participant except by will or by the laws of
descent and distribution. During the life of the Participant,
Options shall be exercisable only by such Participant. No
Participant shall have any rights as a shareholder with respect
to any Shares subject to an Option until the date of issuance of
stock certificates to such Participant for such Shares. Except
as otherwise expressly provided herein, no adjustment shall be
made for dividends or other shareholder rights for which the
record date is prior to the date such stock certificates are
issued.
(f) BINDING EFFECT. Any delivery of Shares upon the exercise of
Stock Options and any delivery of cash in settlement of an Option
to any Participant or former Participant or such Participant's
legal representative or to any beneficiary of such Participant in
accordance with the provisions of this Plan shall be in full
satisfaction of all claims with respect to such Options which
such Participant, representative or beneficiary may have against
the Company, Plan Administrator or any member of the Plan
Administrator. This Plan shall be binding upon the
beneficiaries, heirs, executors, administrators, distributees and
assigns of the Participants and the successors and assigns of the
Company.
(g) GOVERNING LAW. This Plan shall be construed and enforced in
accordance with the laws of the Commonwealth of Pennsylvania.
(h) COMPLIANCE WITH SECURITIES AND EXCHANGE COMMISSION RULE 16b-3.
Notwithstanding anything contained in this Plan to the contrary,
commencing July 25, 1996, no Options shall be granted to any
person who is the beneficial owner of more than 10% of any class
of equity security of the Company which is registered pursuant to
Section 12 of the Securities Exchange Act of 1934 or who is a
director or officer of the Company (hereinafter referred to as an
"insider"), except as follows:
(i) FORMULA PLAN FOR OUTSIDE DIRECTORS. Each outside
member of the Board of Directors (i.e., a director who is not
employed by the Company) shall automatically be granted an Option
for 10,000 Shares upon initial election to the Board of
Directors, and each outside member of the Board of Directors
shall automatically be granted an Option for 2,000 Shares every
two years thereafter following re-election to the Company's Board
of Directors.
(ii) OTHER INSIDERS. All other "insiders" shall be granted
Options only upon recommendation of the Committee and approval by
the Board of Directors.
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(iii) It is the intent of this subsection 13(h) that
profits resulting from the exercise of Options granted to
"insiders" shall not be subject to the short-swing profit
recovery provisions of section 16 of the Securities Exchange Act
but shall instead be exempt from such provisions pursuant to Rule
16b-3 or otherwise. Accordingly, this subsection 13(h) shall be
construed and administered in such a manner as to result in the
foregoing.
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INTEGRATED SYSTEMS CONSULTING GROUP, INC.
INCENTIVE STOCK OPTION AGREEMENT
Employee: Grant Date:
Purchase Price Per Share:
Number of shares to which this
Incentive Stock Option Agreement Relates:
The Board of Directors of Integrated Systems Consulting Group, Inc.
(the "Company") advises you that under the Integrated Systems Consulting Group,
Inc. Amended and Restated Stock Option Plan (the "Plan") you have been granted
an option, subject to the terms and conditions of the Plan (which is
incorporated herein by reference) (the "Option"), to purchase the number of
shares of the Company's Common Stock, $.005 par value ("Stock"), set forth
above. Such number of shares (as such may be adjusted as described in Section 7
below) are referred to herein as the "Option Shares." The following is a
summary of the Plan terms and conditions. This summary is for informational
purposes only and, if there is any conflict between the following description
and the Plan itself, the terms and conditions of the Plan shall control.
1. GRANT OF OPTION. The Option was granted to you on the grant
date above. Your right to purchase Option Shares will terminate on the TENTH
ANNIVERSARY of this date, or on an earlier date as provided in Section 5 below.
2. EXERCISE OF OPTION. You may purchase all or, from time to
time, part of the Option Shares which you are entitled to purchase under Section
3 at a purchase price as shown above, the fair market value of a share of Stock
(as determined in accordance with the Plan) on the date the Option was granted
to you. The Option may not be exercised in part at any time for less than 20%
of the number of Option Shares originally subject to the Option (as adjusted
pursuant to Section 9). To exercise the Option, you must deliver the
appropriate OPTION EXERCISE FORM to ISCG along with payment for the full
purchase price for the Option Shares which you are exercising.
3. ENTITLEMENT TO PURCHASE. On the first anniversary of the
grant date and on each of the four succeeding anniversaries of that date you
shall become entitled to purchase 20% of the Option Shares.
4. TRANSFERABILITY OF OPTIONS. The Option may not be
transferred by you (other than by will or the laws of descent and distribution)
and may be exercised during your lifetime only by you.
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5. TERMINATION OF EMPLOYMENT. If you cease to be employed by
the Company on a full-time basis for any reason other than because of your death
or disability, the Option generally may be exercised only within 30 days after
the termination of your employment and, in such event, the Option generally may
be exercised only to the same extent that you would have been entitled to
exercise the Option on the date of your termination and had not previously done
so. If you cease to be employed by the Company on a full-time basis by reason
of death or disability, the Option generally may be exercised only within one
year after the termination of your employment and only to the same extent that
you would have been entitled to exercise the Option on the date of your
termination by reason of such disability and had not previously done so.
6. VOLUNTARY. You hereby acknowledge and agree that
participation in this Plan is voluntary, and that you will be solely responsible
for all taxes to which you may become subject as a consequence of participation
in the Plan, the exercise of an Option or the ownership, sale, transfer, or
other disposition of Option Shares acquired pursuant to the exercise of this
Option. Moreover, you acknowledge that you have had the opportunity to consult
with tax and other advisors concerning your participation in the Plan.
7. ADJUSTMENTS. If the total number of outstanding shares of
Stock of the Company is changed due to a stock split, stock dividend,
recapitalization, etc., the Board of Directors is authorized, but not required,
to adjust the number of Option Shares or the exercise price for such Option
Shares accordingly. If the Company enters into a merger, asset sale or other
similar transaction, the Board has the option of substituting the consideration
received in the transaction for the Option Shares, accelerating the exercise of
the Option, or taking such other action as it deems to be appropriate.
8. CONTINUATION OF EMPLOYMENT. Neither the Plan nor this
Option shall confer upon you any right to continue in the employ of the Company
or any subsidiary, or limit in any respect the right of the Company or any
affiliated entity to terminate your employment at any time.
9. PLAN DOCUMENTS. This Letter Agreement is qualified in its
entirety by reference to the Plan.
10. 10% OR MORE SHAREHOLDERS. If you are a shareholder that
owns 10% or more of the Company stock, Sections 1 and 2 differ as follows.
Section 1 differs in that your right to purchase Option Shares will terminate
on the FIFTH ANNIVERSARY of this date, or on an earlier date as provided in
Section 5 below. Section 2 differs in that your purchase price must be 110%
of the fair market value.
11. SALE OF SHARES. The Company is required to report the
gain on your W-2 as compensation if you sell the shares within one year of
the date of exercise or within two years of the date of grant of the option,
whichever period is later. As a result of this reporting requirement, you
agree to notify the Company in writing immediately upon the sale of any
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stock that you acquire through the exercise of an incentive stock option.
You also agree to identify the shares which have been sold and include the
date of sale, the number of shares sold, and the price at which the shares
were sold.
Please acknowledge your acceptance of the terms of the Plan by
executing the enclosed copy of this Agreement and returning it promptly to Gary
Martin at 575 E. Swedesford Road, Wayne, PA 19087. THE COMPANY RESERVES THE
RIGHT TO REVOKE THIS AGREEMENT IN THE EVENT YOU FAIL TO EXECUTE AND RETURN THE
AGREEMENT IN THE MANNER SPECIFIED WITHIN A MONTH OF RECEIPT.
Integrated Systems Consulting Group, Inc.
By:________________________________
Melissa A. Clancey
ACCEPTED AND AGREED:
_________________________________
Employee Date
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