<PAGE>
As filed with the Securities and Exchange Registration No.__________
Commission on March 29, 2000
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
FIRST CONSULTING GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-3539020
(State of Incorporation) (I.R.S. Employer Identification No.)
111 W. OCEAN BLVD.
LONG BEACH, CALIFORNIA 90802
(Address of principal executive offices)
1997 EQUITY INCENTIVE PLAN, AS AMENDED
1997 NON-EMPLOYEE DIRECTORS' STOCK PLAN, AS AMENDED
1999 NON-OFFICER EQUITY INCENTIVE PLAN
ASSOCIATE 401(k) AND STOCK OWNERSHIP PLAN
(Full title of the plans)
ROBERT R. HOLMEN
VICE PRESIDENT & GENERAL COUNSEL
FIRST CONSULTING GROUP, INC.
111 W. OCEAN BLVD.
LONG BEACH, CALIFORNIA 90802
(562) 624-5200
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------- ---------------- ------------------------ ------------------------- --------------------
Title of Securities to be Amount to be Proposed Maximum Proposed Maximum Amount of
Registered Registered (1) Offering Price Per Aggregate Offering Registration Fee
Share (2) Price (2)
- ---------------------------- ---------------- ------------------------ ------------------------- --------------------
<S> <C> <C> <C> <C>
Common Stock, par value 3,400,000 (See Notes to $48,544,987 $12,816
$.001 per share Calculation of
Registration Fee)
- ---------------------------- ---------------- ------------------------ ------------------------- --------------------
</TABLE>
(1) Includes 1,900,000 shares issuable under the 1997 Equity Incentive Plan, as
amended (the "1997 Plan"), 100,000 shares issuable under the 1997
Non-Employee Directors' Stock Plan, as amended (the "Directors' Plan"),
1,000,000 shares issuable under the 1999 Non-Officer Equity Incentive Plan
(the "1999 Plan"), and 400,000 shares reserved for issuance under the
Associate 401(k) and Stock Ownership Plan (the "401(k) Plan"). Excludes
1,600,000 shares issuable under the 1997 Plan, 200,000 shares issuable
under the Directors' Plan and 1,589,544 shares issuable under the 401(k)
Plan, which shares previously were registered with the Securities and
Exchange Commission on Form S-8.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(h)(1). The price per share and
aggregate offering price are based upon (a) the weighted average exercise
price of $11.55 for 1,354,028 shares subject to options previously granted
under the 1997 Plan, (b) the weighted average exercise price of $12.20 for
348,300 shares subject to options previously granted under the 1999 Plan
and (c) the average of the high and low trading prices of registrant's
Common Stock of $16.88 as reported on the
Page 1
Exhibit Index appears on Page 8
<PAGE>
Nasdaq National Market on March 27, 2000 for 545,972 shares available for
issuance under the 1997 Plan, 651,700 shares available for issuance under
the 1999 Plan, 100,000 shares available for issuance under the Directors'
Plan and 400,000 shares available for issuance under the 401(k) Plan.
Notes to Calculation of Registration Fee
The chart below details the calculations of 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 1,354,028 $11.55 $15,639,023
outstanding options under the
1997 Equity Incentive Plan
- ---------------------------------- ------------------------- ---------------------------- ----------------------------
Shares reserved for future 545,972 $16.88 $9,216,007
issuance under the 1997 Equity
Incentive Plan
- ---------------------------------- ------------------------- ---------------------------- ----------------------------
Shares reserved for future 400,000 $16.88 $6,752,000
issuance under the Associate
401(k) and Stock Ownership Plan
- ---------------------------------- ------------------------- ---------------------------- ----------------------------
Shares reserved for future 100,000 $16.88 $1,688,000
issuance under the 1997
Non-Employee Directors' Stock
Option Plan
- ---------------------------------- ------------------------- ---------------------------- ----------------------------
Shares issuable pursuant to 348,300 $12.20 $4,249,260
outstanding option under the
1999 Non-Officer Equity
Incentive Plan
- ---------------------------------- ------------------------- ---------------------------- ----------------------------
Shares reserved for future 651,700 $16.88 $11,000,696
issuance under the 1999
Non-Officer Equity Incentive Plan
- ---------------------------------- ------------------------- ---------------------------- ----------------------------
</TABLE>
EXPLANATORY NOTE
This Registration Statement on Form S-8 is being filed for the purpose
of registering: (i) 1,000,000 shares of the Registrant's Common Stock to be
issued pursuant to the 1999 Non-Officer Equity Incentive Plan, (ii) an
additional 1,900,000 shares of the Registrant's Common Stock to be issued
pursuant to the 1997 Equity Incentive Plan, (iii) an additional 100,000 shares
of the Registrant's Common Stock to be issued pursuant to the 1997 Non-Employee
Directors' Stock Plan, and (iv) an additional 400,000 shares of the Registrant's
Common Stock to be issued pursuant to the Associate 401(k) Plan and Stock
Ownership Plan.
Page 2
Exhibit Index appears on Page 8
<PAGE>
PART II: INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by First Consulting Group, Inc., a
Delaware corporation ("FCG"), with the Securities and Exchange Commission are
incorporated by reference into this Registration Statement:
(a) FCG's Registration Statement on Form S-8, filed June 4, 1998;
(b) FCG's Annual Report on Form 10-K for the year ended December 31,
1999; and
(c) The description of FCG's Common Stock contained in FCG's
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 FCG 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
Robert R. Holmen, who has passed on certain legal matters with respect
to the validity of the shares offered hereby, is Vice President, General Counsel
and Secretary of FCG. Mr. Holmen is not eligible to receive benefits under the
Directors' Plan or 1999 Plan, but is eligible for benefits under the 1997 Plan
and the 401(k) Plan. Mr. Holmen is the beneficial owner of 18,509 shares of FCG
common stock.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation Law, FCG has
broad powers to indemnify its directors and officers against liabilities they
may incur in such capacities, including liabilities under the Securities Act of
1933, as amended (the "Securities Act").
FCG's Bylaws provide that FCG 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. FCG 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, FCG has entered into
indemnification agreements with each of its directors and executive officers.
FCG has obtained officer and director liability insurance with respect to
liabilities arising out of certain matters, including matters arising under the
Securities Act. In addition, FCG's Certificate of Incorporation provides that,
to the fullest extent permitted by Delaware law, FCG's directors will not be
liable for monetary damages for breach of the directors' fiduciary duty of care
to FCG 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 FCG or its stockholders may not be limited with respect to any
breach of the director's duty of loyalty to FCG 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.
FCG 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
Page 3
<PAGE>
(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
FCG 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 FCG 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 CLAIMED
Not applicable.
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
4.1 * Certificate of Incorporation
4.2 * Bylaws
4.3 * Specimen Stock Certificate
5.1 Opinion of Robert R. Holmen, General Counsel
23.1 Consent of Grant Thorton LLP, Independent Accountants
23.2 Consent of KPMG LLP, Independent Accountants
23.3 Consent of Robert R. Holmen (included in Exhibit 5 hereto)
24.1 Power of Attorney (included on signature pages)
99.1 * FCG's 1997 Equity Incentive Plan (the "1997 Plan")
99.2 * Form of Incentive Stock Option under the 1997 Plan
99.3 * Form of Non-Qualified Stock Option under the 1997 Plan
99.4 * FCG's 1997 Non-Employee Directors' Stock Plan (the "Directors' Plan")
99.5 * Form of Non-Qualified Stock Option under the Directors' Plan
99.6 FCG's 1999 Non-Officer Equity Incentive Plan (the "1999 Plan")
99.7 Form of Non-Qualified Stock Option under the 1999 Plan
99.8 * FCG's Associate 401(k) and Stock Ownership Plan
</TABLE>
* Documents incorporated by reference from FCG's Registration Statement on
Form S-1, as amended (File No. 333-41121), declared effective February 12,
1998.
ITEM 9. UNDERTAKINGS
1. The undersigned registrant hereby undertakes:
(a) 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 and 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 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
Page 4
<PAGE>
(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)(i) and (ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and 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
registrant pursuant to Section 13 or 15(d) o the Exchange Act that are
incorporated by reference in the registration statement.
(b) 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.
(c) 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.
2. 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 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 therein, and the offering of such
securities at that time shall be deemed to be the initial BONA FIDE offering
thereof.
3. Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other that 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.
Page 5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
First Consulting Group, Inc. certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing of 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
March 27, 2000.
FIRST CONSULTING GROUP, INC.
/s/ Luther J. Nussbaum
-----------------------------------------------
Luther J. Nussbaum
Chief Executive Officer & Chairman of the Board
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints LUTHER J. NUSSAUM and ROBERT R. HOLMEN,
or any one of them, his true and lawful attorney-in-fact and agent, with full
power of substitution, 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 Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in 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
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>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Luther J. Nussbaum Chief Executive Officer March 27, 2000
- ------------------------------------ and Chairman of the Board
Luther J. Nussbaum
/s/ Thomas A. Reep Vice President and Chief Financial March 27, 2000
- ------------------------------------ Officer
Thomas A. Reep
/s/ Donald R. Caldwell Director March 27, 2000
- ------------------------------------
Donald R. Caldwell
/s/ Steven Heck Director March 27, 2000
- ------------------------------------
Steven Heck
/s/ Steven Lazarus Director March 27, 2000
- ------------------------------------
Steven Lazarus
/s/ David S. Lipson Director March 27, 2000
- ------------------------------------
David S. Lipson
/s/ Stanley R. Nelson Director March 27, 2000
- ------------------------------------
Stanley R. Nelson
/s/ Stephen E. Olson Director March 27, 2000
- ------------------------------------
Stephen E. Olson
/s/ Scott S. Parker Director March 27, 2000
- --------------------------------------------
Scott S. Parker
Page 6
<PAGE>
/s/ Fatima Reep Director March 27, 2000
- ------------------------------------
Fatima Reep
/s/ Jack O. Vance Director March 27, 2000
- ------------------------------------
Jack O. Vance
</TABLE>
Page 7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description Page No.
- ------ ----------- --------
<C> <C> <C>
5.1 Opinion of Robert R. Holmen, General Counsel 9
23.1 Consent of Grant Thorton LLP, Independent Accountants 10
23.2 Consent of KPMG LLP, Independent Accountants 11
23.3 Consent of Robert R. Holmen (included in Exhibit 5) 9
24.1 Power of Attorney (included on signature pages) 6
99.6 FCG's 1999 Non-Officer Equity Incentive Plan (the "1999 Plan") 12
99.7 Form of Non-Qualified Stock Option under the 1999 Plan 26
</TABLE>
Page 8
<PAGE>
EXHIBIT 5
[FCG Logo]
March 27, 2000
First Consulting Group, Inc.
111 W. Ocean Boulevard
Long Beach, CA 90802
Ladies and Gentlemen:
You have requested my opinion as General Counsel of First Consulting Group,
Inc., a Delaware corporation (the "Company") with respect to certain matters in
connection with the filing by 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 3,400,000 shares of the Company's common stock,
$0.001 par value (the "Shares"), comprised of (i) up to 1,900,000 of the Shares
pursuant to the Company's 1997 Equity Incentive Plan, (ii) up to 100,000 of the
Shares pursuant to the Company's 1997 Non-Employee Directors' Stock Plan, (iii)
up to 1,000,000 of the Shares pursuant to the Company's 1999 Non-Officer Equity
Incentive Plan and (iv) up to 400,000 of the Shares pursuant to the Company's
Associate 401(k) and Stock Ownership Plan (collectively, the "Plans").
In connection with this opinion, I have examined the Registration Statement, the
Plans and related prospectuses, your Certificate of Incorporation and Bylaws,
and such other documents, records, certificates, memoranda and other instruments
as I deem necessary as a basis for this opinion. I have assumed the genuineness
and authenticity of all documents submitted to me as originals, the conformity
to originals of all documents submitted to me 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, I am of the opinion that
the Shares, when sold and issued in accordance with the Plans and related
prospectuses and the Registration Statement, will be validly issued, fully paid
and nonassessable.
I consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ ROBERT R. HOLMEN
- ----------------------------------
Robert R. Holmen
General Counsel
<PAGE>
EXHIBIT 23.1
Consent of Grant Thorton LLP, Independent Accountants
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the 1,900,000 shares issuable under the 1997 Equity Incentive
Plan, the 100,000 shares issuable under the 1997 Non-Employee Directors' Stock
Plan, the 1,000,000 shares issuable under the 1999 Non-Officer Equity Incentive
Plan and the 400,000 shares issuable under the Associate 401(k) and Stock
Ownership Plan of First Consulting Group, Inc., of our report dated February 11,
2000 with respect to the consolidated financial statements of First Consulting
Group, Inc. included in its Annual Report (Form 10-K) for the year ended
December 31, 1999, filed with the Securities and Exchange Commission.
/s/ GRANT THORTON LLP
Los Angeles County, California
March 29, 2000
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
To the Board of Directors
First Consulting Group, Inc.:
We consent to the use of our report dated January 23, 1998, except as to note
14, which is as of February 27, 1998, with respect to the consolidated
statements of operations, shareholders' equity and cash flows of Integrated
Systems Consulting Group, Inc. for the year ended December 31, 1997 and
related schedule (not separately presented therein), incorporated by
reference in this registration statement on Form S-8, which report appears in
the annual report on Form 10-K of First Consulting Group, Inc. for the year
ended December 31, 1999.
/s/ KPMG LLP
Philadelphia, Pennsylvania
March 28, 2000
<PAGE>
EXHIBIT 99.6
FIRST CONSULTING GROUP, INC.
1999 NON-OFFICER EQUITY INCENTIVE PLAN
ADOPTED AUGUST 4, 1999
1. PURPOSES.
(a) The purpose of the Plan is to provide a means by which selected
Employees of and Consultants to the Company and its Affiliates who are not
Officers or members of the Boards of Directors of the Company or any of its
Affiliates, may be given an opportunity to benefit from increases in value of
the stock of the Company through the granting of (i) Nonstatutory Stock Options,
(ii) stock bonuses, (iii) rights to purchase restricted stock and (iv) stock
appreciation rights, all as described below. The Plan is also intended to
provide a means by which the Company may grant options to persons not previously
employed by the Company as an inducement essential to those persons' entering
into employment contracts with the Company. These inducement grants may be made
to persons who ultimately are employed by the Company as Officers.
The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees of or Consultants to the Company or an Affiliate
and to provide incentives for such persons to exert maximum efforts for the
success of the Company and its Affiliates.
The Company intends that the Stock Awards issued under the Plan shall,
in the discretion of the Board or any Committee to which responsibility for
administration of the Plan has been delegated pursuant to subsection 3(c), be
either (i) Options granted pursuant to Section 6 hereof, (ii) stock bonuses or
rights to purchase restricted stock granted pursuant to Section 7 hereof or
(iii) stock appreciation rights granted pursuant to Section 8 hereof.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f) respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means a Committee appointed by the Board in accordance
with subsection 3(c) of the Plan.
(e) "COMPANY" means First Consulting Group, Inc., a Delaware
corporation.
(f) "CONSULTANT" means any person, including an advisor, engaged by the
Company or an Affiliate to render consulting services and who is compensated for
such services, PROVIDED THAT the term "Consultant" shall not include Directors.
(g) "CONTINUOUS STATUS AS AN EMPLOYEE, OFFICER, DIRECTOR OR CONSULTANT"
means that the Participant's service to the Company or an Affiliate of the
Company, whether in the
1.
<PAGE>
capacity of an Employee, Officer, Director or Consultant, is not interrupted
or terminated. The Participant's Continuous Status as an Employee, Officer,
Director or Consultant shall not be deemed to have terminated merely because of
a change in the capacity in which the Participant renders such service to the
Company or an Affiliate of the Company or a change in the entity for which the
Participant renders such service, provided that there is no interruption or
termination of the Participant's service to the Company. The Board or its
designee, in that party's sole discretion, may determine whether Continuous
Status as an Employee, Officer, Director or Consultant shall be considered
interrupted in the case of (i) any leave of absence approved by the Board or its
designee, including sick leave, military leave, or any other personal leave; or
(ii) transfers between locations of the Company or between the Company,
Affiliates or their successors.
(h) "DIRECTOR" means a member of the Board.
(i) "EMPLOYEE" means any person employed by the Company or any
Affiliate of the Company; PROVIDED THAT except as provided below, Officers and
Directors of the Company shall not be considered Employees for purposes of the
Plan. Notwithstanding the foregoing, an Officer shall be considered an Employee
for purposes of granting a Stock Award to that Officer as an inducement
essential to such Officer's entering into an employment contract with the
Company if such Officer was not an employee of the Company immediately prior to
the date on which such Stock Award is granted.
(j) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(k) "FAIR MARKET VALUE" means, as of any date, the value of the common
stock of the Company determined as follows:
(1) If the common stock is listed on any established stock
exchange or traded on the Nasdaq National Market or The Nasdaq SmallCap Market,
the Fair Market Value of a share of common stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume
of trading in the Company's common stock) on the last market trading day prior
to the day of determination, as reported in THE WALL STREET JOURNAL or such
other source as the Board deems reliable.
(2) In the absence of such markets for the common stock, the
Fair Market Value shall be determined in good faith by the Board.
(l) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or subsidiary, does not
receive compensation (directly or indirectly) from the Company or its parent or
subsidiary for services rendered as a consultant or in any capacity other than
as a Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
("Regulation S-K")), does not possess an interest in any other transaction as to
which disclosure would be required under Item 404(a) of Regulation S-K, and is
not engaged in a business relationship as to which disclosure would be required
under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a
"non-employee director" for purposes of Rule 16b-3.
2.
<PAGE>
(m) "NONSTATUTORY STOCK OPTION" means a stock option not intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.
(n) "OFFICER" means a person who is an officer of the Company,
including any corporate officer with a title of Vice President or above or any
other Employee of the Company whom the Board or the Committee classifies as an
"Officer."
(o) "OPTION" means a Nonstatutory Stock Option granted pursuant to the
Plan.
(p) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.
(q) "OPTIONEE" means a person to whom an Option is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Option.
(r) "PLAN" means this 1999 Non-Officer Equity Incentive Plan.
(s) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3, as in effect with respect to the Company at the time discretion
is being exercised regarding the Plan.
(t) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(u) "STOCK AWARD" means any right granted under the Plan, including any
Option, stock bonus, right to purchase restricted stock or stock appreciation
right.
(v) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a Committee, as provided in subsection 3(c).
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the persons
eligible under the Plan shall be granted Stock Awards; when and how each Stock
Award shall be granted; whether a Stock Award will be an Option, a stock bonus,
a right to purchase restricted stock, or a combination of the foregoing; the
provisions of each Stock Award granted (which need not be identical), including
the time or times when a person shall be permitted to receive stock pursuant to
a Stock Award; and the number of shares with respect to which a Stock Award
shall be granted to each such person.
(2) To construe and interpret the Plan and Stock Awards
granted under it, and to establish, amend and revoke rules and regulations for
its administration. The Board, in the
3.
<PAGE>
exercise of this power, may correct any defect, omission or inconsistency in the
Plan or in any Stock Award Agreement, in a manner and to the extent it shall
deem necessary or expedient to make the Plan fully effective.
(3) To amend the Plan or a Stock Award as provided in Section 13.
(4) To terminate or suspend the Plan as provided in Section 14.
(5) Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.
(c) The Board may delegate administration of the Plan to a committee of
the Board composed of two (2) or more members (the "Committee"), all of the
members of which Committee may be, in the discretion of the Board, Non-Employee
Directors. If administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board, including the power to delegate to a subcommittee any of
the administrative powers the Committee is authorized to exercise (and
references in this Plan to the Board shall thereafter be to the Committee or
such a subcommittee), subject, however, to such resolutions, not inconsistent
with the provisions of the Plan, as may be adopted from time to time by the
Board. The Board may abolish the Committee at any time and revest in the Board
the administration of the Plan. In addition, notwithstanding anything in this
Section 3 to the contrary, the Board or the Committee may delegate to a
committee of one or more members of the Board the authority to grant Stock
Awards to eligible persons who are not then subject to Section 16 of the
Exchange Act.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 12 relating to adjustments
upon changes in stock, the stock that may be issued pursuant to Stock Awards
shall not exceed in the aggregate one million (1,000,000) shares of the
Company's Common Stock. If any Stock Award shall for any reason expire or
otherwise terminate, in whole or in part, without having been exercised in full,
the stock not acquired under such Stock Award shall revert to and again become
available for issuance under the Plan. Notwithstanding the foregoing, Shares
subject to stock appreciation rights exercised in accordance with Section 8 of
the Plan shall not be available for subsequent issuance under the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) Stock Awards may be granted only to Employees or Consultants.
(b) A Consultant shall not be eligible for the grant of a Stock Award
if, at the time of grant, a Form S-8 Registration Statement under the Securities
Act ("Form S-8") is not available to register either the offer or the sale of
the Company's securities to such Consultant because of the nature of the
services that the Consultant is providing to the Company, or because the
Consultant is not a natural person, or as otherwise provided by the rules
governing the use of
4.
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Form S-8, unless the Company determines both (i) that such grant (A) shall be
registered in another manner under the Securities Act (e.g., on a Form S-3
Registration Statement) or (B) does not require registration under the
Securities Act in order to comply with the requirements of the Securities Act,
if applicable, and (ii) that such grant complies with the securities laws of all
other relevant jurisdictions.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:
(a) TERM. No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.
(b) PRICE. The exercise price of each Option shall be not less than
eighty-five percent (85%) of the Fair Market Value of the stock subject to the
Option on the date of grant.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii) at
the discretion of the Board or the Committee, at the time of the grant of the
Option, (A) by delivery to the Company of other common stock of the Company, (B)
according to a deferred payment arrangement (however, in the event the Company
is then incorporated in the state of Delaware, then payment of the common
stock's "par value" as defined in the Delaware General Corporation Law shall not
be made by deferred payment), or other arrangement (which may include, without
limiting the generality of the foregoing, the use of other common stock of the
Company) with the person to whom the Option is granted or to whom the Option is
transferred pursuant to subsection 6(d) or (C) in any other form of legal
consideration that may be acceptable to the Board. In the case of any deferred
payment arrangement, interest shall be compounded at least annually and shall be
charged at the minimum rate of interest necessary to avoid the treatment as
interest, under any applicable provisions of the Code, of any amounts other than
amounts stated to be interest under the deferred payment arrangement.
(d) TRANSFERABILITY. An Option may be transferable to the extent
provided in the Option Agreement; provided, however, that if the Option
Agreement does not specifically provide for transferability, then such Option
shall not be transferable except by will or by the laws of descent and
distribution. Notwithstanding the foregoing, the person to whom the Option is
granted may, by delivering written notice to the Company, in a form satisfactory
to the Company, designate a third party who, in the event of the death of the
Optionee, shall thereafter be entitled to exercise the Option.
(e) VESTING. The total number of shares of stock subject to an Option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). The Option Agreement may provide that from time to time during
each of such installment periods, the Option may become exercisable ("vest")
with respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period
and/or any prior period as to which the Option became vested but was not fully
exercised. The
5.
<PAGE>
Option may be subject to such other terms and conditions on the time or times
when it may be exercised (which may be based on performance or other criteria)
as the Board may deem appropriate. The provisions of this subsection 6(e) are
subject to any Option provisions governing the minimum number of shares as to
which an Option may be exercised.
(f) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. In the event an Optionee's Continuous Status as an Employee,
Officer, Director or Consultant terminates (other than upon the Optionee's death
or disability), the Optionee may exercise the Option (to the extent that the
Optionee was entitled to exercise it as of the date of termination) but only
within such period of time ending on the earlier of (i) the date three (3)
months following the termination of the Optionee's Continuous Status as an
Employee, Officer, Director or Consultant (or such longer period as specified in
the Option Agreement), or (ii) the expiration of the term of the Option as set
forth in the Option Agreement; provided, however, if the Optionee is terminated
for cause, then the Option shall terminate on the date Optionee's Continuous
Status as an Employee, Officer, Director or Consultant ceases. If, at the date
of termination, the Optionee is not entitled to exercise the entire Option, the
shares covered by the unexercisable portion of the Option shall revert to and
again become available for issuance under the Plan. If, after termination, the
Optionee does not exercise the Option within the time specified in the Option
Agreement, the Option shall terminate, and the shares covered by such Option
shall revert to and again become available for issuance under the Plan.
An Optionee's Option Agreement may also provide that if the exercise of
the Option following the termination of the Optionee's Continuous Status as an
Employee, Officer, Director, or Consultant (other than upon the Optionee's death
or disability) would result in liability under Section 16(b) of the Exchange
Act, then the Option shall terminate on the earlier of (i) the expiration of the
term of the Option set forth in the Option Agreement, or (ii) the tenth (10th)
day after the last date on which such exercise would result in such liability
under Section 16(b) of the Exchange Act.
Finally, an Optionee's Option Agreement may also provide that if the
exercise of the Option following the termination of the Optionee's Continuous
Status as an Employee, Officer, Director or Consultant (other than upon the
Optionee's death or disability) would be prohibited at any time solely because
the issuance of shares would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of the term of the Option set forth in the first paragraph of this
subsection 6(f), or (ii) the expiration of a period of three (3) months after
the termination of the Optionee's Continuous Status as an Employee, Officer,
Director or Consultant during which the exercise of the Option would not be in
violation of such registration requirements.
(g) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous
Status as an Employee, Officer, Director or Consultant terminates as a result of
the Optionee's disability, the Optionee may exercise the Option (to the extent
that the Optionee was entitled to exercise it as of the date of termination),
but only within such period of time ending on the earlier of (i) the date twelve
(12) months following such termination (or such longer or shorter period
specified in the Option Agreement), or (ii) the expiration of the term of the
Option as set forth in the Option Agreement. If, at the date of termination, the
Optionee is not entitled to exercise the entire Option, the shares covered by
the unexercisable portion of the Option shall revert to and again become
available for issuance under the Plan. If, after termination, the Optionee does
not
6.
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exercise the Option within the time specified herein, the Option shall
terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan.
(h) DEATH OF OPTIONEE. In the event of the death of an Optionee during,
or within a period specified in the Option Agreement after the termination of,
the Optionee's Continuous Status as an Employee, Officer, Director or
Consultant, the Option may be exercised (to the extent the Optionee was entitled
to exercise the Option as of the date of death) by the Optionee's estate, by a
person who acquired the right to exercise the Option by bequest or inheritance
or by a person designated to exercise the option upon the Optionee's death
pursuant to subsection 6(d), but only within the period ending on the earlier of
(i) the date eighteen (18) months following the date of death (or such longer or
shorter period specified in the Option Agreement), or (ii) the expiration of the
term of such Option as set forth in the Option Agreement. If, at the time of
death, the Optionee was not entitled to exercise the entire Option, the shares
covered by the unexercisable portion of the Option shall revert to and again
become available for issuance under the Plan. If, after death, the Option is not
exercised within the time specified herein, the Option shall terminate, and the
shares covered by such Option shall revert to and again become available for
issuance under the Plan.
(i) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee, Officer, Director
or Consultant to exercise the Option as to any part or all of the shares subject
to the Option prior to the full vesting of the Option. Any unvested shares so
purchased may be subject to a repurchase right in favor of the Company or to any
other restriction the Board determines to be appropriate. Any shares repurchased
pursuant to the Company's repurchase right described in this subsection 6(i)
shall be returned to and again become available for issuance under the Plan.
(j) RE-LOAD OPTIONS. Without in any way limiting the authority of the
Board to make or not to make grants of Options hereunder, the Board shall have
the authority (but not an obligation) to include as part of any Option Agreement
a provision entitling the Optionee to a further Option (a "Re-Load Option") in
the event the Optionee exercises the Option evidenced by the Option Agreement,
in whole or in part, by surrendering other shares of Common Stock in accordance
with this Plan and the terms and conditions of the Option Agreement. Any such
Re-Load Option (i) shall be for a number of shares equal to the number of shares
surrendered as part or all of the exercise price of such Option; (ii) shall have
an expiration date which is the same as the expiration date of the Option the
exercise of which gave rise to such Re-Load Option; and (iii) shall have an
exercise price which is equal to one hundred percent (100%) of the Fair Market
Value of the Common Stock subject to the Re-Load Option on the date of exercise
of the original Option.
7. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.
Each stock bonus or restricted stock purchase agreement shall be in
such form and shall contain such terms and conditions as the Board or the
Committee shall deem appropriate. The terms and conditions of stock bonus or
restricted stock purchase agreements may change from time to time, and the terms
and conditions of separate agreements need not be identical, but each stock
bonus or restricted stock purchase agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions as appropriate:
7.
<PAGE>
(a) PURCHASE PRICE. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board or Committee shall
determine and designate in such Stock Award Agreement, but in no event shall the
purchase price be less than eighty-five percent (85%) of the stock's Fair Market
Value on the date such Stock Award is made. Notwithstanding the foregoing, the
Board or the Committee may determine that eligible participants in the Plan may
be awarded stock pursuant to a stock bonus agreement in consideration for past
services actually rendered to the Company or for its benefit.
(b) TRANSFERABILITY. Rights under a stock bonus or restricted stock
purchase agreement shall be transferable only by will or the laws of descent and
distribution, so long as stock awarded under such Stock Award Agreement remains
subject to the terms of the agreement.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to a
stock purchase agreement shall be paid either: (i) in cash at the time of
purchase; (ii) at the discretion of the Board or the Committee, according to a
deferred payment arrangement (however, in the event the Company is then
incorporated in the state of Delaware, then payment of the common stock's "par
value" as defined in the Delaware General Corporation Law shall not be made by
deferred payment), or other arrangement with the person to whom the stock is
sold; or (iii) in any other form of legal consideration that may be acceptable
to the Board or the Committee in its discretion. Notwithstanding the foregoing,
the Board or the Committee to which administration of the Plan has been
delegated may award stock pursuant to a stock bonus agreement in consideration
for past services actually rendered to the Company or for its benefit.
(d) VESTING. Shares of stock sold or awarded under the Plan may, but
need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board or the
Committee.
(e) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. In the event a Participant's Continuous Status as an Employee,
Officer, Director or Consultant terminates, the Company may repurchase or
otherwise reacquire any or all of the shares of stock held by that person which
have not vested as of the date of termination under the terms of the stock bonus
or restricted stock purchase agreement between the Company and such person.
8. STOCK APPRECIATION RIGHTS.
(a) The Board shall have full power and authority, exercisable in its
sole discretion, to grant stock appreciation rights under the Plan to Employees
or Directors of or Consultants to, the Company or its Affiliates. To exercise
any outstanding Stock Appreciation Right, the Participant must provide written
notice of exercise to the Company in compliance with the provisions of the Stock
Award Agreement evidencing such right. Except as provided in subsection 5(c), no
limitation shall exist on the aggregate amount of cash payments the Company may
make under the Plan in connection with the exercise of a Stock Appreciation
Right.
(b) Three types of stock appreciation rights shall be authorized for
issuance under the Plan:
(1) TANDEM STOCK APPRECIATION RIGHTS. Tandem Stock
Appreciation Rights will be granted appurtenant to an Option, and shall, except
as specifically set forth in this Section
8.
<PAGE>
8, be subject to the same terms and conditions applicable to the particular
Option grant to which it pertains. Tandem Stock Appreciation Rights will require
the Participant to elect between the exercise of the underlying Option for
shares of stock and the surrender, in whole or in part, of such Option for an
appreciation distribution. The appreciation distribution payable on the
exercised Tandem Right shall be in cash (or, if so provided, in an equivalent
number of shares of stock based on Fair Market Value on the date of the Option
surrender) in an amount up to the excess of (A) the Fair Market Value (on the
date of the Option surrender) of the number of shares of stock covered by that
portion of the surrendered Option in which the Optionee is vested over (B) the
aggregate exercise price payable for such vested shares.
(2) CONCURRENT STOCK APPRECIATION RIGHTS. Concurrent Rights
will be granted appurtenant to an Option and may apply to all or any portion of
the shares of stock subject to the underlying Option and shall, except as
specifically set forth in this Section 8, be subject to the same terms and
conditions applicable to the particular Option grant to which it pertains. A
Concurrent Right shall be exercised automatically at the same time the
underlying Option is exercised with respect to the particular shares of stock to
which the Concurrent Right pertains. The appreciation distribution payable on an
exercised Concurrent Right shall be in cash (or, if so provided, in an
equivalent number of shares of stock based on Fair Market Value on the date of
the exercise of the Concurrent Right) in an amount equal to such portion as
shall be determined by the Board or the Committee at the time of the grant of
the excess of (A) the aggregate Fair Market Value (on the date of the exercise
of the Concurrent Right) of the vested shares of stock purchased under the
underlying Option which have Concurrent Rights appurtenant to them over (B) the
aggregate exercise price paid for such shares.
(3) INDEPENDENT STOCK APPRECIATION RIGHTS. Independent Rights
will be granted independently of any Option and shall, except as specifically
set forth in this Section 8, be subject to the same terms and conditions
applicable to Nonstatutory Stock Options as set forth in Section 6. They shall
be denominated in share equivalents. The appreciation distribution payable on
the exercised Independent Right shall be not greater than an amount equal to the
excess of (A) the aggregate Fair Market Value (on the date of the exercise of
the Independent Right) of a number of shares of Company stock equal to the
number of share equivalents in which the Participant is vested under such
Independent Right, and with respect to which the Participant is exercising the
Independent Right on such date, over (B) the aggregate Fair Market Value (on the
date of the grant of the Independent Right) of such number of shares of Company
stock. The appreciation distribution payable on the exercised Independent Right
shall be in cash or, if so provided, in an equivalent number of shares of stock
based on Fair Market Value on the date of the exercise of the Independent Right.
9. COVENANTS OF THE COMPANY.
(a) During the terms of the Stock Awards, the Company shall keep
available at all times the number of shares of stock required to satisfy such
Stock Awards.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the Stock Award; provided,
however, that this undertaking shall not require the Company to register under
the Securities Act either the Plan, any Stock Award or any stock issued or
issuable pursuant to any such Stock Award. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or agency the
authority
9.
<PAGE>
which counsel for the Company deems necessary for the lawful issuance and
sale of stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell stock upon exercise of such Stock
Awards unless and until such authority is obtained.
10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Stock Awards shall
constitute general funds of the Company.
11. MISCELLANEOUS.
(a) The Board shall have the power to accelerate the time at which a
Stock Award may first be exercised or the time during which a Stock Award or any
part thereof will vest pursuant to subsection 6(e) or 7(d), notwithstanding the
provisions in the Stock Award stating the time at which it may first be
exercised or the time during which it will vest.
(b) Neither an Employee nor a Consultant nor any person to whom a Stock
Award is transferred under subsection 6(d) or 7(b) shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any shares
subject to such Stock Award unless and until such person has satisfied all
requirements for exercise of the Stock Award pursuant to its terms.
(c) Nothing in the Plan or any instrument executed or Stock Award
granted pursuant thereto shall confer upon any Employee or Consultant or other
holder of Stock Awards any right to continue in the employ of the Company or any
Affiliate (or to continue serving as a Consultant) or shall affect the right of
the Company or any Affiliate to terminate the employment of any Employee with or
without Cause or the right to terminate the relationship of any Consultant
subject to the terms of such Consultant's agreement with the Company or any
Affiliate.
(d) The Company may require any person to whom a Stock Award is
granted, or any person to whom a Stock Award is transferred pursuant to
subsection 6(d) or 7(b), as a condition of exercising or acquiring stock under
any Stock Award, (1) to give written assurances satisfactory to the Company as
to such person's knowledge and experience in financial and business matters
and/or to employ a purchaser representative reasonably satisfactory to the
Company who is knowledgeable and experienced in financial and business matters,
and that he or she is capable of evaluating, alone or together with the
purchaser representative, the merits and risks of exercising the Stock Award;
and (2) to give written assurances satisfactory to the Company stating that such
person is acquiring the stock subject to the Stock Award for such person's own
account and not with any present intention of selling or otherwise distributing
the stock. The foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise or acquisition of stock under the Stock Award has been registered under
a then currently effective registration statement under the Securities Act, or
(ii) as to any particular requirement, a determination is made by counsel for
the Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the transfer
of the stock.
10.
<PAGE>
(e) To the extent provided by the terms of a Stock Award Agreement, the
person to whom a Stock Award is granted may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of stock
under a Stock Award by any of the following means or by a combination of such
means: (1) tendering a cash payment; (2) authorizing the Company to withhold
shares from the shares of the common stock otherwise issuable to the participant
as a result of the exercise or acquisition of stock under the Stock Award; or
(3) delivering to the Company owned and unencumbered shares of Company common
stock. Notwithstanding the foregoing, the Company shall not be authorized to
withhold shares of Common Stock at rates in excess of the minimum statutory
withholding rates for federal and state tax purposes, including payroll taxes.
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject
to any Stock Award, without the receipt of consideration by the Company (through
merger, consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company), the Plan will be appropriately adjusted in the class(es) and maximum
number of shares subject to the Plan pursuant to subsection 4(a), and the
outstanding Stock Awards will be appropriately adjusted in the class(es) and
number of shares and price per share of stock subject to such outstanding Stock
Awards. Such adjustments shall be made by the Board, the determination of which
shall be final, binding and conclusive. (The conversion of any convertible
securities of the Company shall not be treated as a "transaction not involving
the receipt of consideration by the Company.")
(b) A "Change in Control" shall mean: (1) a dissolution, liquidation,
or sale of all or substantially all of the assets of the Company; (2) a merger
or consolidation in which the Company is not the surviving corporation; (3) a
reverse merger in which the Company is the surviving corporation but the shares
of the Company's common stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise; or (4) the individuals who, as of the date of the
adoption of this Plan, are members of the Board (the "Incumbent Board"), cease
for any reason to constitute at least 50% of the Board, provided, however, that
if the election, or nomination for election, by the Company's shareholders of
any new director was approved by a vote of at least 50% of the Incumbent Board,
such new director shall, for purposes of this subsection 13(b), be considered as
a member of the Incumbent Board.
In the event of a Change in Control other than a 50% change in the
Incumbent Board (as described above), then: (i) any surviving or acquiring
corporation shall assume Stock Awards outstanding under the Plan or shall
substitute similar Stock Awards (including an option to acquire the same
consideration paid to shareholders in the transaction described in this
subsection 13(b)) for those outstanding under the Plan; (ii) in the event any
surviving or acquiring corporation does assume such Stock Awards or substitute
similar Stock Awards for those outstanding under the Plan, then upon the
Participant's Voluntary Termination with Good Reason (as described in subsection
13(c)) or the Participant's Involuntary Termination Without Cause (as described
in subsection 13(d)) the vesting of such Stock Awards and the time during which
such Stock Awards may be exercised shall be accelerated upon the occurrence of
such event (PROVIDED, HOWEVER, that no such acceleration shall occur in the
event the Participant's
11.
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Continuous Status as an Employee, Officer, Director or Consultant terminates due
to the Participant's death or disability); or (iii) in the event any surviving
or acquiring corporation refuses to assume such Stock Awards or to substitute
similar Stock Awards for those outstanding under the Plan, (A) with respect to
Stock Awards held by persons then performing services as Employees, Officers,
Directors or Consultants, the vesting of such Stock Awards and the time during
which such Stock Awards may be exercised shall be accelerated prior to such
event and the Stock Awards terminated if not exercised at or prior to such
event, and (B) with respect to any other Stock Awards outstanding under the
Plan, such Stock Awards shall be terminated if not exercised prior to such
event.
In the event of a Change in Control due to a 50% change in the
Incumbent Board (as described above), then with respect to Stock Awards held by
persons then performing services as Employees, Officers, Directors or
Consultants, the vesting of such Stock Awards and the time during which such
Stock Awards may be exercised shall be accelerated immediately after such event.
(c) The term "Voluntary Termination with Good Reason" means (i) the
Participant's resignation, with Good Reason, as an Employee, Officer, Director
or Consultant of the Company within one month prior to the Change in Control or
(ii) the Participant's resignation, with Good Reason, as an Employee, Officer,
Director or Consultant of the surviving or acquiring corporation which assumed
the Participant's Stock Award or substituted a similar Stock Award for the
Participant's Stock Award within thirteen (13) months after a Change in Control.
"Good Reason" means any of the following:
(1) reduction of the Participant's rate of compensation as in
effect immediately prior to the Change in Control;
(2) failure to provide a package of welfare benefit plans
which, taken as a whole, provide substantially similar benefits to those in
which the Participant was entitled to participate immediately prior to the
Change in Control (except that employee contributions may be raised to the
extent of any cost increases imposed by third parties);
(3) a change in the Participant's responsibilities, authority,
title or office resulting in diminution of position, excluding for this purpose
an isolated, insubstantial and inadvertent action not taken in bad faith which
is remedied by the Company promptly after notice thereof is given by the
Participant;
(4) a request that the Participant relocate to a worksite that
is more than thirty five (35) miles from the Participant's prior worksite,
unless the Participant accepts such relocation opportunity;
(5) failure or refusal of a successor to the Company to assume
the Company's obligations under this Plan; or
(6) material breach by the Company or any successor to the
Company of any of the material provisions of the Participant's Stock Award
Agreement.
(d) The term "Involuntary Termination Without Cause" means (i) the
involuntary termination, without Cause, of the Participant's Continuous Status
as an Employee, Officer,
12.
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Director or Consultant by the Company within one month prior to a Change in
Control or (ii) the involuntary termination, without Cause, of the Participant's
Continuous Status as an Employee, Officer, Director or Consultant of the
surviving or acquiring corporation which assumed the Participant's Stock Award
or substituted a similar Stock Award for the Participant's Stock Award within
thirteen (13) months after a Change in Control. "Cause" means any of the
following:
(1) the Participant's theft, dishonesty, or falsification of
documents or records;
(2) the Participant's improper use or disclosure of the
Company's confidential or proprietary information;
(3) any action by the Participant which has a detrimental
effect on the Company's reputation or business;
(4) the Participant's failure or inability to perform any
reasonable assigned duties after written notice from the Company of, and a
reasonable opportunity to cure, such failure or inability;
(5) any material breach by the Participant of any employment
or service agreement between the Participant and the Company which breach is not
cured pursuant to the terms of such agreement; or
(6) the Participant's conviction (including any plea of guilty
or nolo contendere) of any criminal act which impairs the Participant's ability
to perform his or her duties with the Company.
13. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 12 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company to the extent stockholder approval is necessary for the Plan to
satisfy the requirements of Section 422 of the Code, Rule 16b-3 under the
Exchange Act or any Nasdaq or securities exchange listing requirements. The
Board may in its sole discretion submit any other amendment to the Plan for
stockholder approval.
(b) Rights and obligations under any Stock Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the person to whom the Stock Award was
granted and (ii) such person consents in writing.
(c) The Board at any time, and from time to time, may amend the terms
of any one or more Stock Award; provided, however, that the rights and
obligations under any Stock Award shall not be impaired by any such amendment
unless (i) the Company requests the consent of the person to whom the Stock
Award was granted and (ii) such person consents in writing.
13.
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14. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. No Stock
Awards may be granted under the Plan while the Plan is suspended or after it is
terminated.
(b) Rights and obligations under any Stock Award granted while the Plan
is in effect shall not be impaired by suspension or termination of the Plan,
except with the written consent of the person to whom the Stock Award was
granted.
15. EFFECTIVE DATE OF PLAN.
The Plan shall become effective on the date on which it is adopted by
the Board.
14.
<PAGE>
EXHIBIT 99.7
FIRST CONSULTING GROUP, INC.
1999 NON-OFFICER EQUITY INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION GRANT AGREEMENT
Optionee: < < Name1 > > < < Name2 > >
Number of Option Shares: < < Shares > >
Exercise Price Per Share: < < Price > >
Date of Grant: < < OptionDate > >
Type of Stock Option: NQ
Grant No: < < OptionNumber > >
First Consulting Group, Inc. (the "Company"), pursuant to its 1999
Non-Officer Equity Incentive Plan (the "Plan"), has granted to you, the optionee
named above, an option to purchase shares of the common stock of the Company
("Common Stock"). This option is not intended to qualify as and will not be
treated as an "incentive stock option" within the meaning of Section 422 of the
United States Internal Revenue Code of 1986, as amended (the "Code"). Defined
terms not explicitly defined in this agreement but defined in the Plan shall
have the same definitions as in the Plan.
The details of your option are as follows:
1. VESTING. Subject to the limitations contained herein, 1/5th of the shares
will vest (become exercisable) on the first anniversary of the date of original
grant, and 1/60th of the shares shall vest on a monthly basis thereafter until
either (i) your Continuous Status as an Employee, Officer, Director or
Consultant (as such term is defined in Section 2(g) of the Plan terminates for
any reason, or (ii) this option becomes fully vested. The vesting of this option
may accelerate pursuant to Section 12(b) of the Plan.
2. EXERCISE PRICE AND METHOD OF PAYMENT.
(a) EXERCISE PRICE. The exercise price of this option shall not be less
than 100% of the fair market value of the Common Stock on the date of grant of
this option.
(b) METHOD OF PAYMENT. Payment of the exercise price per share is due in
full upon exercise of all or any part of each installment which has accrued to
you. You may elect, to the extent permitted by applicable statutes and
regulations, to make payment of the exercise price under one of the following
alternatives:
(i) Payment of the exercise price per share in cash (including
check) at the time of exercise;
(ii) Provided that at the time of exercise the Company's Common
Stock is publicly traded, payment pursuant to a program developed under
Regulation T (as promulgated by the Federal Reserve Board pursuant to the United
States Securities Exchange Act of 1934, as amended (the "Exchange Act"), with a
principal purpose to regulate extensions of credit by and to United States
brokers and dealers) which, prior to the issuance of Common Stock, results in
either the receipt of cash (or check) by the Company or the receipt of
irrevocable instructions to pay the aggregate exercise price to the Company from
the sales proceeds;
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(iii) Provided that at the time of exercise the Company's Common
Stock is publicly traded and quoted regularly in THE WALL STREET JOURNAL,
payment by delivery of already-owned shares of Common Stock, held for the period
required to avoid a charge to the Company's reported earnings, and owned free
and clear of any liens, claims, encumbrances or security interests, which Common
Stock shall be valued at its fair market value on the date of exercise; or
(iv) Payment by a combination of the methods of payment permitted
by subsection 2(b)(i) through 2(b)(iii) above.
3. WHOLE SHARES. This option may not be exercised for any number of shares
which would require the issuance of anything other than whole shares.
4. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, this option may not be exercised unless the shares issuable
upon exercise of this option are then registered under the Securities Act of
1933, as amended (the "Securities Act"), or, if such shares are not then so
registered, the Company has determined that such exercise and issuance would be
exempt from the registration requirements of the Securities Act.
5. TERM. The term of this option commences on the date of grant, and expires
on the Expiration Date, which date shall be the day prior to the 10 year
anniversary of the Date of Grant unless this option expires sooner as set forth
below or in the Plan. In no event may this option be exercised on or after the
Expiration Date. This option shall terminate prior to the Expiration Date of its
term as follows: three (3) months after the termination of your Continuous
Status as an Employee, Officer, Director or Consultant (as defined in the Plan)
with the Company or an Affiliate of the Company unless one of the following
circumstances exists:
(a) Your termination of Continuous Status as an Employee, Officer,
Director or Consultant is due to your permanent and total disability (within the
meaning of Section 422(c)(6) of the Code). This option will then expire on the
earlier of the Expiration Date set forth above or twelve (12) months following
such termination of Continuous Status as an Employee, Officer, Director or
Consultant.
(b) Your termination of Continuous Status as an Employee, Officer,
Director or Consultant is due to your death or your death occurs within three
(3) months following your termination of Continuous Status as an Employee,
Officer, Director or Consultant. This option will then expire on the earlier of
the Expiration Date set forth above or eighteen (18) months after your death.
(c) If during any part of such three (3) month period you may not
exercise your option solely because of the condition set forth in Section 4
above, then your option will not expire until the earlier of the Expiration Date
set forth above or until this option shall have been exercisable for an
aggregate period of three (3) months after your termination of Continuous Status
as an Employee, Officer, Director or Consultant.
(d) If your exercise of the option within three (3) months after
termination of your Continuous Status as an Employee, Officer, Director or
Consultant with the Company or with an Affiliate of the Company would result in
liability under Section 16(b) of the Exchange Act, then your option will expire
on the earlier of (i) the Expiration Date set forth above, (ii) the tenth (10th)
day after the last date upon which exercise would result in such liability or
(iii) six (6) months
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<PAGE>
and ten (10) days after the termination of your Continuous Status as an
Employee, Officer, Director or Consultant with the Company or an Affiliate of
the Company.
However, this option may be exercised following termination of
Continuous Status as an Employee, Officer, Director or Consultant only as to
that number of shares as to which it was exercisable on the date of termination
of Continuous Status as an Employee, Officer, Director or Consultant under the
provisions of Section 1 of this option.
6. EXERCISE.
(a) This option may be exercised, to the extent specified above, by
delivering a notice of exercise (in a form designated by the Company) together
with the exercise price to the Secretary of the Company, or to such other person
as the Company may designate, during regular business hours, together with such
additional documents as the Company may then require pursuant to the Plan.
(b) By exercising this option you agree that as a precondition to the
completion of any exercise of this option, the Company may require you to enter
an arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the exercise of
this option; (2) the lapse of any substantial risk of forfeiture to which the
shares are subject at the time of exercise; or (3) the disposition of shares
acquired upon such exercise.
7. TRANSFERABILITY. This option is not transferable, except by will or by the
laws of descent and distribution, and is exercisable during your life only by
you. Notwithstanding the foregoing, by delivering written notice to the Company,
in a form satisfactory to the Company, you may designate a third party who, in
the event of your death, shall thereafter be entitled to exercise this option.
8. OPTION NOT A SERVICE CONTRACT. This option is not an employment contract and
nothing in this option shall be deemed to create in any way whatsoever any
obligation on your part to continue in the employ of the Company, or of the
Company to continue your employment with the Company. In addition, nothing in
this option shall obligate the Company or any Affiliate of the Company, or their
respective shareholders, Board of Directors, officers or employees to continue
any relationship which you might have as a Director or Consultant for the
Company or Affiliate of the Company.
By receiving this option, you shall not acquire any right to compensation
or damages in consequence of the termination of your office or employment for
any reason whatsoever insofar as such rights may be claimed to have otherwise
arisen as a result of your ceasing to have any rights (actual or prospective)
under, or to be entitled to exercise, this option as a result of such
termination.
9. NOTICES. Any notices provided for in this option or the Plan shall be given
in writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
below or at such other address as you hereafter designate by written notice to
the Company.
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10. GOVERNING PLAN DOCUMENT. This option is subject to all the provisions of the
Plan, a copy of which is attached hereto and its provisions are hereby made a
part of this option, including without limitation the provisions of Section 6 of
the Plan relating to option provisions, and is further subject to all
interpretations, amendments, rules and regulations which may from time to time
be promulgated and adopted pursuant to the Plan. In the event of any conflict
between the provisions of this option and those of the Plan, the provisions of
the Plan shall control.
FIRST CONSULTING GROUP, INC.
By
--------------------------------------
Stock Plan Administrator
ATTACHMENTS:
First Consulting Group, Inc. 1999 Non-Officer Equity Incentive Plan
The undersigned:
(a) Acknowledges receipt of the foregoing option and the attachments
referenced therein and understands that all rights and liabilities with respect
to this option are set forth in the option and the Plan; and
(b) Acknowledges that as of the date of grant of this option, it sets
forth the entire understanding between the undersigned optionee and the Company
and its Affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of the options previously granted and delivered to the undersigned
under stock option plans of the Company.
ACCEPTANCE BY OPTIONEE:
-----------------------------------------
< < Name1 > > < < Name2 > > (signature)
Address:
---------------------------------
---------------------------------
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