<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
DA CONSULTING GROUP, INC.
______________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
______________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
______________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
______________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
______________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
______________________________________________________________________________
(5) Total fee paid:
______________________________________________________________________________
[_] Fee paid previously with preliminary materials.
______________________________________________________________________________
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
______________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
_______________________________________________________________________________
(3) Filing Party:
______________________________________________________________________________
(4) Date Filed:
______________________________________________________________________________
<PAGE>
DA CONSULTING GROUP, INC.
San Felipe Plaza
5847 San Felipe, Suite 3700
Houston, TX 77057
------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
December 7, 1999
------------------
To the Shareholders of DA Consulting Group, Inc.:
A Special Meeting of Shareholders of DA Consulting Group, Inc, a Texas
corporation (the "Company"), will be held at 9:00 a.m., local time, on December
7, 1999, at the Company's principal executive offices, San Felipe Plaza, 5847
San Felipe, Suite 3700, Houston, Texas, for the following purpose:
To approve the Company's 1997 Stock Option Plan (the "Plan"), as
amended to increase the number of shares of the Company's Common Stock
available for options granted under the Plan from 1,260,000 to
1,960,000.
Only holders of shares of the Company's Common Stock at the close of
business on November 4, 1999 are entitled to notice of, and to vote at, the
Special Meeting and any adjournments or postponements thereof. Such
shareholders may vote in person or by proxy. The stock transfer books of the
Company will not be closed. The accompanying form of proxy is solicited by the
Board of Directors of the Company.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. YOU ARE
CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT YOU EXPECT TO
ATTEND IN PERSON, YOU ARE URGED TO COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY
CARD IN THE SELF-ADDRESSED ENVELOPE ENCLOSED FOR YOUR CONVENIENCE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU DECIDE TO ATTEND THE
MEETING AND WISH TO VOTE IN PERSON, YOU MAY REVOKE YOUR PROXY BY WRITTEN NOTICE
AT THAT TIME.
By Order of the Board of Directors
/s/ Nicholas H. Marriner
Nicholas H. Marriner
Chairman of the Board
November 10, 1999
<PAGE>
DA CONSULTING GROUP, INC.
San Felipe Plaza
5847 San Felipe, Suite 3700
Houston, TX 77057
PROXY STATEMENT
FOR
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
December 7, 1999
--------------
This Proxy Statement, which is first being mailed to shareholders on or
about November 10, 1999, is furnished in connection with the solicitation by the
Board of Directors of DA Consulting Group, Inc. (the "Company") of proxies to be
used at the Special Meeting of Shareholders of the Company (the "Special
Meeting"), to be held at 9:00 a.m. on December 7, 1999, at the Company's
principal executive offices, San Felipe Plaza, 5847 San Felipe, Suite 3700,
Houston, Texas, and at any adjournments or postponements thereof. If proxies in
the accompanying form are properly executed and returned prior to voting at the
Special Meeting, the shares represented thereby will be voted as instructed on
the proxy. If no instructions are given on a properly executed and returned
proxy, the shares represented thereby will be voted in favor of the Company's
1997 Stock Option Plan, as amended to increase the number of shares of Common
Stock available for options granted under this plan from 1,260,000 to 1,960,000.
Shareholders whose shares are held of record by a broker or other nominee are
nevertheless encouraged to fill in the boxes of their choice on the proxy, as
brokers and other nominees may not be permitted to vote shares with respect to
certain matters for which they have not received specific instructions from the
beneficial owners of the shares. Any proxy may be revoked by a shareholder
prior to its exercise upon written notice to the Secretary of the Company, by
delivering a duly executed proxy bearing a later date, or by the vote of a
shareholder cast in person at the Special Meeting.
VOTING
Holders of record of the Company's Common Stock on November 4, 1999, will
be entitled to vote at the Special Meeting or any adjournments or postponements
thereof. As of that date, there were 6,650,074 shares of Common Stock
outstanding and entitled to vote. Each share of Common Stock entitles the
holder thereof to one vote on any matter that may properly come before the
Special Meeting.
Under Texas law and the By-laws of the Company, the presence of a quorum is
required for each matter to be acted upon at the Special Meeting. The presence
at the Special Meeting in person or by proxy, of shareholders entitled to cast
at least a majority of the votes that all
<PAGE>
shareholders are entitled to cast on a particular matter shall constitute a
quorum for the purposes of consideration and action on the matter. All actions
to be taken by the shareholders at the Special Meeting shall be taken by the
affirmative vote of the holders of a majority of the shares of Common Stock
present in person or by proxy at the Special Meeting. Votes that are withheld
and abstentions will be counted in determining the presence of a quorum, but
will not be counted in determining the number of votes cast in connection with
any particular matter. Broker non- votes, which occur when a broker or other
nominee holding shares for a beneficial owner does not vote on a proposal
because the broker or other nominee has not received specific instructions from
the beneficial owners, are not voted and will therefore have no effect on the
outcome of any of the matters to be voted upon at the Special Meeting.
The cost of solicitation of proxies by the Board of Directors will be borne
by the Company. Proxies may be solicited by mail, personal interview, telephone
or telegraph and, in addition, directors, officers and regular employees of the
Company may solicit proxies by such methods without additional remuneration.
Banks, brokerage houses and other institutions, nominees or fiduciaries will be
requested to forward the proxy materials to beneficial owners in order to
solicit authorizations for the execution of proxies. The Company will, upon
request, reimburse such banks, brokerage houses and other institutions, nominees
and fiduciaries for their expenses in forwarding such proxy materials to the
beneficial owners of the Company's stock.
APPROVAL OF 1997 STOCK OPTION PLAN, AS AMENDED
(Proposal 1)
The Company adopted its 1997 Stock Option Plan effective February 1, 1997
and amended and restated this plan in March 1998 (as so amended and restated,
the "Plan"). On November 2, 1999, the Board of Directors adopted (subject to
shareholder approval at the Special Meeting), an amendment to the Plan that
increases the total number of shares of Common Stock authorized for issuance
under the Plan from 1,260,000 to 1,960,000 (the "Amendment"). A copy of the
Plan, as amended by the Amendment, is attached to this Proxy Statement as
Appendix A. The Plan will continue as in effect in March 1998 if this Proposal
- ----------
is not approved.
As discussed below, the Company currently relies on an exemption from
Internal Revenue Code section 162(m), which denies a public company a deduction
for compensation of more than $1.0 million paid to any of the four highest
compensated officers or to the Chief Executive Officer of that company. The
Company may rely on this exemption until 2001. To do so beyond 2001,
shareholder approval of the Plan must be obtained. Approval of Proposal 1
satisfies this requirement.
-2-
<PAGE>
The Stock Option Plan
Subject to shareholder approval, the Board of Directors has adopted the
Amendment to the Plan. The Company believes that the Plan will promote the
long-term growth and profitability of the Company by providing key people
associated with the Company with incentives to improve shareholder value and to
contribute to the growth and financial success of the Company. Moreover, the
Company believes that the Plan will help the Company to attract, retain, and
reward the best available persons for positions of substantial responsibility.
The Plan is administered by the Board's Stock Option Committee, which has the
authority: (i) to grant Awards (as defined below) under the Plan; (ii) to make
all interpretations and determinations affecting the Plan; and (iii) to
determine the individuals to whom Awards are granted, the amount of such Awards,
any applicable vesting schedule, and any other terms of an Award. Participation
in the Plan is limited to employees and members of the Board of Directors of the
Company or any of its subsidiaries, as well as independent contractors and
consultants of the Company (the "Participants"). Awards under the Plan may be
in the form of incentive stock options ("ISOs") that meet the requirements of
Section 422 of the Internal Revenue Code or "nonqualified" stock options
("NQSOs") (collectively, "Awards"). ISOs may only be granted to individuals who
are employees of the Company at the date of grant. All options vest in one-
third installments on the second, third and fourth anniversaries of the date of
grant, unless otherwise specified in the terms of an individual Award. The
Company has issued Awards with different vesting schedules in the past, and
intends to do so in the future. Awards under the Plan are not transferable by
the Participants, except upon death. If any Award issued under the Plan expires
or becomes unexercisable for any reason without having been exercised in full,
or if shares issued pursuant to an Award are subsequently repurchased by the
Company, the unpurchased or repurchased shares will again become available for
future Awards under the Plan.
The Plan, as amended by the Amendment, provides for the grant of stock
options to purchase up to an aggregate of 1,960,000 shares of Common Stock. The
maximum number of options that can be granted to any individual under the Plan
is limited to 1,260,000. In the event of any stock split, reverse stock split,
stock dividend, recapitalization, reclassification, merger, consolidation,
exchange of shares, offering of rights to purchase shares of Common Stock at a
price substantially below fair market value, or other similar event, appropriate
proportional adjustments may be made to the number of shares reserved for
issuance under the Plan and the number, kind, and price of shares covered by
outstanding Awards. The Plan also provides for the ability of the Board or the
Stock Option Committee to accelerate the vesting of all unvested options, to
accelerate the expiration date of all options, whether or not vested, or to take
certain other actions upon the occurrence of a "Change of Control," as such term
is defined in the Plan. Stock options may not be exercised more than 10 years
after the date of grant (five years after the date of grant with respect to an
ISO granted to any person who owns stock of the Company possessing 10% or more
of the total voting power of all the Company's stock at the time of the grant).
The Board has the discretion to award stock options to Participants as either
ISOs (employees only) or as NQSOs. Stock options awarded to Participants who
are not employees
-3-
<PAGE>
will be NQSOs. The exercise price of an ISO must be not less than the fair
market value of the Common Stock on the date the option is granted (110% of fair
market value with respect to an ISO granted to any person who owns stock of the
Company possessing 10% or more of the total voting power of all the Company's
stock at the time of the grant), and is payable upon the exercise of the option.
Although the exercise price of an NQSO may be less than the fair market value of
the Common Stock on the date the option is granted, the Board does not intend to
grant NQSOs at less than fair market value. The number of shares covered by ISOs
granted to any optionee is limited such that the aggregate fair market value of
stock (determined as of the date of the grant) with respect to which ISOs are
exercisable for the first time by such optionee in any calendar year may not
exceed $100,000. The excess options, if any, will be treated as NQSOs. If an
optionee's service with the Company ceases for any reason other than death,
disability, or termination for cause, unless otherwise specified in the terms of
an individual option agreement, any option exercisable on the date of such
termination generally may be exercised for a period of three months from the
date of such termination or until the expiration of the stated term of the
option, whichever period is shorter. In the event of termination of service by
reason of death or disability, unless otherwise specified in the terms of an
individual option agreement, any option exercisable at the date of such
termination generally may be exercised for a period of one year from the date of
termination or until the expiration of the stated term of the option, whichever
period is shorter. If an optionee's service is terminated for cause, any option
not exercised prior to the date of such termination shall be forfeited.
Federal Income Tax Consequences
No tax obligation will arise for the optionee or the Company upon the
granting of either incentive stock options or non-qualified stock options under
the Plan. Upon exercise of a non-qualified stock option, an optionee will
recognize ordinary income in an amount equal to the excess, if any, of the fair
market value, on the date of exercise, of the stock acquired over the exercise
price of the option. Thereupon, the Company will be entitled to a tax deduction
in an amount equal to the ordinary income recognized by the optionee. Any
additional gain or loss realized by an optionee on disposition of the shares
generally will be capital gain or loss to the optionee and will not result in
any additional tax deduction to the Company. The taxable event arising from
exercise of non-qualified stock options by officers of the Company subject to
Section 16(b) of the Securities Exchange Act of 1934 occurs on the later of the
date on which the option is exercised or the date six months after the date the
option was granted unless the optionee elects, within 30 days of the date of
exercise, to recognize ordinary income as of the date of exercise. The income
recognized at the end of any deferred period will include any appreciation in
the value of the stock during that period and the capital gain holding period
will not begin to run until the completion of such period. Upon the exercise of
an incentive stock option, an optionee recognizes no immediate taxable income.
The tax cost is deferred until the optionee ultimately sells the shares of
stock. If the optionee does not dispose of the option shares within two years
from the date the option was granted and within one year after the exercise of
the option, and the option is exercised no later than three months after the
termination of the
-4-
<PAGE>
optionee's employment, the gain on the sale will be treated as long term capital
gain. Subject to the limitations in the Plan, certain of these holding periods
and employment requirements are liberalized in the event of the optionee's death
or disability while employed by the Company. The Company is not entitled to any
tax deduction, except that if the stock is not held for the full term of the
holding period outlined above, the gain on the sale of such stock, being the
lesser of (i) the fair market value of the stock on the date of exercise minus
the option price, and (ii) the amount realized on disposition minus the option
price, will be taxed to the optionee as ordinary income and the Company will be
entitled to a deduction in the same amount. Any additional gain or loss realized
by an optionee upon disposition of shares prior to the expiration of the full
term of the holding period outlined above generally will be capital gain or loss
to the optionee and will not result in any additional tax deduction to the
Company. The "spread" upon exercise of an incentive stock option constitutes a
tax preference item within the computation of the "alternative minimum tax"
under the Internal Revenue Code. The tax benefits which might otherwise accrue
to an optionee may be affected by the imposition of such tax if applicable to
the optionee's individual circumstances.
The Internal Revenue Code, in section 162(m), generally limits the
deduction for compensation paid in any taxable year to any of the Chief
Executive Officer or the other four most highly paid executive officers to $1.0
million. The limit does not apply to "qualified performance-based
compensation." Income recognized on the exercise of stock options or the sale
of option stock cannot be treated as qualified performance-based compensation
exempt from the $1.0 million cap unless the plan under which the options are
granted has been approved by shareholders. Treasury Department Regulations
provide an exception for private companies that become public companies. For a
company that becomes publicly held in connection with an initial public
offering, the limits do not apply for a specified period to any amounts paid
pursuant to a compensation plan that existed during the period in which the
company was private, provided that the prospectus accompanying the initial
public offering met the applicable securities laws disclosures for the company's
compensation plans. Such a company is subject to section 162(m) at the earliest
of the following to occur: (i) the expiration of the plan; (ii) the material
modification of the plan; (iii) the issuance of all employer stock that has been
allocated under the plan; or, (iv) the first meeting of shareholders at which
directors are to be elected that occurs after the close of the third calendar
year following the calendar year in which the initial public offering occurs.
Accordingly, since the Company's prospectus in connection with its initial
public offering met the applicable securities laws disclosures for the Company's
compensation plans, absent a material modification to the Plan, the Company may
rely on the exemption from section 162(m) until 2001. The Amendment constitutes
a material modification of the Plan. Therefore, shareholder approval of the
Plan must be obtained in order to continue to rely on the exemption from section
162(m). If this Proposal is not approved, the Amendment will not become
effective and the Plan will continue as in effect in March 1998. In this case,
the exemption from section 162(m) will cease in April 2001 unless shareholder
approval of the Plan is obtained prior to then.
-5-
<PAGE>
Grant of Options
Pursuant to the terms of the Plan, as amended by the Amendment, incentive
and non-qualified options may be granted to eligible individuals for the
purchase of an aggregate of up to 1,960,000 shares of Common Stock. As of
November 1, 1999, the Company had granted incentive and non-qualified stock
options to purchase shares of Common Stock issuable under the Plan, which had
been exercised as to 68,530 shares, and which were outstanding as to 1,054,660
shares. The closing bid price per share of the Common Stock on the Nasdaq Stock
Market was $3.50 on November 4, 1999. If the Amendment is not approved, the
Plan will continue in effect without regard to the proposed Amendment and the
number of options available for grant under the Plan will remain unchanged.
Required Affirmative Vote
Approval of the Plan, as amended by the Amendment, requires the affirmative
vote of the holders of a majority of the shares of Common Stock present in
person or by proxy at the Special Meeting.
THE BOARD OF DIRECTORS BELIEVES THAT THE PROPOSAL IS IN THE BEST INTERESTS
OF THE COMPANY AND ITS SHAREHOLDERS AND RECOMMENDS THAT THE SHAREHOLDERS VOTE
FOR APPROVAL OF THE PLAN, AS AMENDED.
DIRECTOR COMPENSATION
During 1998, the Company paid each director who was not also an employee of
the Company an annual fee of $1,250 for each Board and Committee meeting
attended by such director in person. For their service during 1999, the Company
paid each non-employee director an annual retainer of $12,500, and awarded,
pursuant to the Plan, each such director options to purchase 1,025 shares of the
Common Stock of the Company, being that number of options to purchase Common
Stock determined by dividing $10,000 by the fair market value of a share of
Common Stock on the date of the Company's 1999 Annual Meeting of Shareholders.
The Company no longer pays meeting attendance fees. The Company also reimburses
directors for travel expenses incurred on behalf of the Company.
-6-
<PAGE>
EXECUTIVE COMPENSATION
Cash and Non-Cash Compensation Paid To Certain Executive Officers
The following table sets forth, with respect to services rendered during
1998, 1997 and 1996, the total compensation paid by the Company to the Company's
Chief Executive Officer and each other executive officer whose total annual
salary and bonus exceeded $100,000 during 1998 (the "named executive officers").
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Compensation
------------
Year Annual Compensation (1) Awards
---- ----------------------- ------
All Other
Securities Compensation
Underlying ------------
Name and Principal Position Salary($)(2) Bonus($) Options (#) ($)(3)
- --------------------------- ------------ -------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Nicholas H. Marriner ........................... 1998 $ 432,000 $ 168,480 --- ---
Chairman of the Board and 1997 $ 270,000 $ 205,878 --- $ 7,979
Chief Executive Officer 1996 $ 180,000 $ 129,600 --- $ 9,885
Patrick J. Newton .............................. 1998 $ 306,000 $ 295,068 42,200 $2,192,400
President and Chief Operating Officer 1997 $ 210,000 $ 95,317 8,400 ---
1996 $ 125,000 $ 125,000 --- $ 291,960
Michael J. Mackey (4) .......................... 1998 $ 185,370 $ 108,744 42,200 ---
Executive Vice President - Finance and 1997 $ 142,083 $ 35,805 63,000 $ 4,354
Administration, Chief Financial Officer
Lisa L. Costello ............................... 1998 $ 156,313 $ 36,042 21,000 ---
Executive Vice President - $ 113,927 $ 56,000 21,000 $ 7,657
Research and Development $ 97,200 $ 32,500 $ 300
Eric J. Fernette (5) ........................... 1998 $ 176,001 $ 132,818 4,200 ---
Executive Vice President - 1997 $ 48,159 $ 20,000 25,200 ---
Human Resources
</TABLE>
-7-
<PAGE>
(1) All figures converted to U.S. dollars based upon the exchange rate at the
end of the applicable fiscal year.
(2) Salary includes amounts deferred, if any, pursuant to the Company's 401(k)
plan.
(3) Amounts include compensation expense attributed to employee stock awards,
employer 401(k) contributions and Company perquisites. Mr. Newton's "all
other compensation" represents shares of Common Stock awarded to him
without cash consideration.
(4) Mr. Mackey was elected as an executive officer of the Company on February
1, 1997 at a base annual salary of $155,000. Options with respect to
63,000 shares of Common Stock were granted to Mr. Mackey on February 1,
1997. Mr. Mackey resigned his employment with the Company effective April
15, 1999.
(5) Mr. Fernette was elected as an executive officer of the Company on July 28,
1997 at a base annual salary of $155,000. Options with respect to 25,200
shares of Common Stock were granted to Mr. Fernette on August 1, 1997.
The Company entered into employment agreements with the named executive
officers effective January 1, 1998, the initial terms of which expired on
December 31, 1998. All of the employment agreements were renewed under the
same terms on January 1, 1999. The base annual salaries under the employment
agreements of the named executive officers are $432,000 for Mr. Marriner,
$306,000 for Mr. Newton, $169,200 for Mr. Mackey, $144,000 for Ms. Costello, and
$144,000 for Mr. Fernette. The base annual salary of each of the named
executive officers is subject to increases periodically at the discretion of the
Board of Directors, and each named executive officer may receive an annual bonus
as determined by the Board of Directors. Each of the employment agreements
provides for customary benefits, including life, health and disability insurance
and 401(k) plan participation and further provides that if the employee is
terminated without cause, such employee is entitled to severance pay of up to 18
months base salary, bonus, and benefits. In the event such employee is
terminated in connection with a change in control (as defined therein), Mr.
Fernette and Ms. Costello would be entitled to receive one year's base salary
and benefits and 100% of any bonus paid with respect to the calendar year
immediately preceding termination, and Messrs. Marriner, Newton, and Mackey
would be entitled to receive two years' base salary and benefits and 200% of any
bonus paid with respect to the calendar year immediately preceding termination.
In addition, the Company maintains, and is the beneficiary of, "key man"
life insurance policies on the lives of Messrs. Marriner and Newton, each in the
face amount of $1.0 million.
Mr. Mackey resigned his employment with the Company effective April 15,
1999. In connection with Mr. Mackey's resignation, the Board of Directors
appointed Dennis Fairchild as Executive Vice President - Finance and
Administration, and Chief Financial Officer.
-8-
<PAGE>
Stock Options Granted to Certain Executive Officers During Last Fiscal Year
Under the 1997 Stock Option Plan, options to purchase Common Stock are
available for grant to directors, officers and other key employees of the
Company. The following table sets forth certain information regarding options
for the purchase of Common Stock that were awarded to the named executive
officers during 1998.
OPTION GRANTS IN CALENDAR YEAR 1998
<TABLE>
<CAPTION>
Number of Potential Realizable Gain
Securities Percent of Total at Assumed Annual Rates
Underlying Options Granted Exercise or of Stock Appreciation for
Options to Employees in Base Price Expiration Option Terms
Name Granted (#) Last Fiscal Year ($/Sh) (1) Date (2) Compounded Annually
- ---- ----------- ---------------- ---------- -------- -------------------
5% 10%
--- ---
<S> <C> <C> <C> <C> <C> <C>
Nicholas H. Marriner. --- --- --- --- --- ---
Patrick J. Newton .......... 42,000 11.6% $14.50 11/30/08 $382,997 $970,589
Michael J. Mackey (3) 42,000 11.6 14.50 11/30/08 $382,997 $970,589
Lisa L. Costello ........... 21,000 5.8 14.50 11/30/08 $191,498 $485,295
Eric J. Fernette ........... 4,200 1.1 14.50 11/30/08 $ 38,300 $ 97,059
</TABLE>
- --------
(1) The exercise price equaled the fair market value of a share of Common
Stock on the date of grant as determined by the Board of Directors. The
exercise price is payable in cash or by delivery of shares of Common Stock
having a fair market value equal to the exercise price of the options
exercised.
(2) All options vest in one-third installments on the second, third, and fourth
anniversaries of the date of grant.
(3) Mr. Mackey resigned his employment with the Company effective April 15,
1999.
Stock Options Exercised by Named Executive Officers During 1998 and Held by
Named Executive Officers at December 31, 1998
No options granted by the Company were exercised by the named executive
officers during 1998. The following table sets forth certain information
regarding options for the purchase of Common Stock that were held by the named
executive officers.
-9-
<PAGE>
AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Shares Number of Securities Value of Unexercised In-the-
Acquired on Value Underlying Unexercised Money Options at FY-End ($)
Name Exercise (#) Realized ($) Options at FY-End (#) ---------------------------
---- ------------ ------------ ----------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Nicholas H. Marriner --- --- --- --- --- ----
Patrick J. Newton --- --- --- 42,000 --- $309,750
Michael J. Mackey (1) --- --- --- 42,000 --- $309,750
Lisa L. Costello --- --- --- 21,000 --- $154,875
Eric J. Fernette --- --- --- 4,200 --- $ 30,975
</TABLE>
- ----------
(1) Mr. Mackey resigned his employment with the Company effective April 15,
1999.
1998 Compensation Committee Report on Executive Compensation
The function of the Compensation Committee is to advise the Board regarding
overall compensation policies and recommend specific compensation for the
Company's senior executives. The Compensation Committee is responsible for
providing guidance to the Board of Directors regarding broad compensation
issues. The Committee is composed of Virginia L. Pierpont, Gunther E.A. Fritze
and Nigel W.E. Curlet.
The Company applies a consistent philosophy to compensation for all
employees, including senior management. This philosophy is based on the
premises that the success of the Company results from the efforts of each
employee and that a cooperative, team-oriented environment is an essential part
of the Company's culture. The Company believes in the importance of rewarding
employees for the Company's successes. Particular emphasis is placed on broad
employee equity participation through the use of stock options and annual cash
bonuses linked to overall Company profitability.
The Committee has retained a leading compensation consulting firm to advise
the Committee on the Company's executive compensation programs. The
consultants' review provides benchmarks for comparison of executive compensation
to that of other companies whose business is similar in nature to the Company's
or who may compete with the Company for executive talent. The compensation
consultants advise the Committee using resources that include publicly available
information and the consultants' prior experience.
-10-
<PAGE>
The principal elements of the Company's executive compensation program
consist of both annual compensation (primarily base salary and annual incentive
cash bonuses) and long-term incentive compensation in the form of stock options.
Base salary, annual cash bonuses, and option grants are determined on the basis
of the overall financial performance of the Company and the performance of the
individual officer.
The Compensation Committee recommends base salary levels and annual cash
bonuses of the Company's senior management for approval by the Board. The Board
approved base salaries of $432,000 for the Company's Chief Executive Officer and
$306,000 for the Company's Chief Operating Officer, effective January 1998. The
Compensation Committee recommended, and the Board approved, bonuses of $168,480
for the Company's Chief Executive Officer and $295,068 for the Company's Chief
Operating Officer for 1998.
During 1998, the Company granted stock options for 396,090 shares to
officers and employees of the Company (of which 109,200 were granted to
executive officers of the Company). The executive officers also directly own a
meaningful percentage of the Company's Common Stock, and, therefore, each of
them participates proportionately in any increase in shareholder value. The
Compensation Committee believes that the directors', officers' and employees'
existing equity ownership and stock options sufficiently link their interests to
the financial success of the Company.
Nigel W.E. Curlet, Chair
Gunther E.A. Fritze
Virginia L. Pierpont
-11-
<PAGE>
Stock Performance Chart
The following Stock Performance Chart compares the Company's cumulative
total shareholder return on its Common Stock quarterly, for the period from
April 24, 1998 (the date the Common Stock commenced trading on the Nasdaq
National Market) to December 31, 1998 (the date the Company's 1998 fiscal year
ended), with the cumulative total return of the Nasdaq Composite and Nasdaq
Computer and Data Processing Indices. The comparison assumes $100 was invested
on April 24, 1998 in the Company's Common Stock and in each of the foregoing
indices and assumes reinvestment of dividends.
TOTAL SHAREHOLDERS RETURNS
--------------------------
(DIVIDENDS REINVESTED)
ANNUAL RETURN PERCENTAGE
Quarter Ending
Company/Index Jun98 Sep98 Dec98
- --------------------------------------------------------------------------------
DA CONSULTING GROUP (0.86) 6.09 43.44
NASDAQ US COMPOSITE 1.18 (9.47) 28.97
NASDAQ COMPUTER AND DATA PROCESSING (3.16) (15.66) 13.26
INDEX RETURNS
Quarter Ending
Base
Period
Company/Index 24Apr98 Jun98 Sep98 Dec98
- --------------------------------------------------------------------------------
DA CONSULTING GROUP INC. 100 99.14 105.17 150.86
NASDAQ US COMPOSITE 100 101.18 91.60 118.14
NASDAQ COMPUTER AND DATA
PROCESSING 100 96.84 81.68 92.50
-12-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of October 1, 1999, with
respect to the beneficial ownership of shares of Common Stock of the Company by
each person who is known to the Company to be the beneficial owner of more than
five percent of either class of stock, by each director or nominee for director,
by each of the named executive officers, and by all directors and executive
officers as a group. Unless otherwise indicated, each person listed has sole
voting power and sole investment power over the shares indicated.
Name and Address of Amount and Nature of Percent of Voting
Beneficial Owner Beneficial Ownership Power
- ------------------- -------------------- -----------------
Executive Officers and
Directors
Nicholas H. Marriner (1) .......... 370,000 5.8%
Patrick J. Newton (1)(2) ......... 101,080 1.6%
Dennis Fairchild (1) .............. * *
Lisa L. Costello (1)(3) ........... 11,200 *
Eric J. Fernette (1) .............. 38,640 *
Nigel W.E. Curlet (1)(4)(5) ....... 26,375 *
Gunther E.A. Fritze
(1)(4)(6) ........................ 40,925 *
Richard W. Thatcher, Jr
(1)(4) ........................... 77,245 1.2%
Virginia L. Pierpont (1)(7) ....... 391,842 6.1%
Other Shareholders
Amicable Discretionary
Trust (1)(8)(9)(11) .............. 693,200 10.8%
Worcester Discretionary
Trust (1)(8)(10)(11) ............. 631,092 9.8%
Woodbourne Discretionary
Trust (1)(8)(10)(11) ............. 629,034 9.8%
Dimensional Fund Advisors,
Inc. (12) ........................ 425,800 6.6%
Benson Associates LLC (13) ........ 321,100 5.0%
All directors and
executive officers as a
group (9 persons) ................ 1,057,307 16.3%
________________
* Less than 1%
-13-
<PAGE>
(1) The address of each of these people is: c/o DA Consulting Group, Inc., San
Felipe Plaza, 5847 San Felipe, Suite 3700, Houston, TX 77057.
(2) Includes 2,800 shares of Common Stock that may be acquired upon the
exercise of stock options.
(3) Includes 7,000 shares of Common Stock that may be acquired upon the
exercise of stock options.
(4) Includes 13,625 shares of Common Stock that may be acquired upon the
exercise of stock options.
(5) Includes 11,300 shares owned by Mr. Curlet's spouse and 1,450 shares owned
by his son.
(6) Includes 12,600 shares owned by Mr. Fritze's children.
(7) Includes 1,025 shares of Common Stock that may be acquired upon the
exercise of stock options. Ms. Pierpont is married to Mr. Marriner.
(8) John Andrew Cowan and Roger Geoffrey Barrs are the co-trustees of each of
these trusts. Messrs. Cowan and Barrs are also trustees of the David
Michael Payne Settlement (which beneficially owns 21,000 shares of Common
Stock), the sole beneficiary of which is Piero Granelli, a former employee
of the Company.
(9) The beneficiaries under this trust include Ms. Pierpont, her children and
grandchildren, the spouses and children of any of the beneficiaries, and
any other persons or class of persons named by the trustees. As of the
date above, no other persons or classes of persons have been so named.
(10) The beneficiaries under these trusts include Ms. Pierpont, her children,
the spouses and children of any of the beneficiaries, and any other persons
or class of persons named by the trustees. As of the date above, no other
persons or classes of persons have been so named.
(11) The trustees of each of these trusts have the authority to appoint all or
any part of the capital and income of the trust for one or more of the
beneficiaries and in such names and proportions and at such time as such
trustees shall determine.
(12) This information was obtained from Nasdaq Online and was confirmed with
this shareholder by telephone on November 8, 1999. The address of this
shareholder is 1299 Ocean Avenue, Eleventh Floor, Santa Monica, CA 90401.
(13) This information was obtained from Nasdaq Online and was confirmed with
this shareholder by telephone on November 8, 1999. The address of this
shareholder is 111 SW Fifth Avenue, Suite 2130, Portland, OR 97204.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
During the years ended December 31, 1996, 1997 and 1998, the Company paid
$58,000, $23,000 and $12,000, respectively, for accounting services provided by
an accountancy practice in which the Company's Chairman was a partner until June
30, 1996.
Until December 31, 1997, the Company leased a facility in Leeds, England
from its Chief Executive Officer and office space in Johannesburg, South Africa
from an entity of which the Chairman and a former employee of the Company are
owners. The aggregate rent paid by the Company for these properties was $38,000
in 1996, $28,000 in 1997 and $8,000 in 1998.
-14-
<PAGE>
APPRAISAL RIGHTS
Under Texas law, no appraisal rights are available to dissenting
shareholders in regard to the proposed Amendment.
OTHER BUSINESS
Management knows of no other matters that will be presented at the Special
Meeting. However, if any matter reasonably related to Proposal 1 comes before
the meeting, or any adjournment or postponement thereof, it is intended that
proxies in the accompanying form will be voted in accordance with the judgment
of the persons named therein.
SHAREHOLDER PROPOSALS
To be eligible for inclusion in the Company's proxy materials for the 2000
Annual Meeting of Shareholders, a proposal intended to be presented by a
shareholder for action at that meeting must, in addition to meeting the
shareholder eligibility and other requirements of the Securities and Exchange
Commission's rules governing such proposals, be received not later than November
30, 1999, by the Chief Financial Officer of the Company at the Company's
principal executive offices, San Felipe Plaza, 5847 San Felipe, Suite 3700,
Houston, TX 77057. In addition, the execution of a proxy solicited by the
Company in connection with the 2000 Annual Meeting of Shareholders shall confer
on the designated proxyholder discretionary voting authority to vote on any
shareholder proposal which is not included in the Company's proxy materials for
such meeting and for which the Company has not received notice before February
13, 2000.
________________
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<PAGE>
THE COMPANY WILL PROVIDE TO EACH PERSON SOLICITED, WITHOUT CHARGE EXCEPT
FOR EXHIBITS, UPON REQUEST IN WRITING, A COPY OF ITS ANNUAL REPORT ON FORM 10-K,
INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES, AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL YEAR ENDED DECEMBER
31, 1998. REQUESTS SHOULD BE DIRECTED TO CHIEF FINANCIAL OFFICER, DA CONSULTING
GROUP, INC., SAN FELIPE PLAZA, 5847 SAN FELIPE, SUITE 3700, HOUSTON, TX 77057.
By Order of the Board of Directors
/s/ Nicholas H. Marriner
Nicholas H. Marriner
Chairman of the Board
Date: November 10, 1999
Houston, Texas
-16-
<PAGE>
[Appendix A]
DA CONSULTING GROUP, INC.
1997 STOCK OPTION PLAN
(Effective as of February 1, 1997, Amended and Restated Effective March 1998
and, if approved by the shareholders, Amended and Restated Effective December 7,
1999)
-17-
<PAGE>
DA CONSULTING GROUP, INC.
1997 STOCK OPTION PLAN
Section 1. Purposes.
--------
The DA Consulting Group, Inc. 1997 Stock Option Plan (the "Plan") was
originally effective February 1, 1997, and is amended and restated as set forth
in this document, effective December 7, 1999, subject to approval by the
Company's stockholders. The purposes of the Plan are to: (a) assist DA
Consulting Group, Inc. ("the Company") in recruiting and retaining highly
qualified managers, consultants and staff; (b) provide Employees with an
incentive for productivity; and (c) provide Employees an opportunity to share in
the growth and value of the Company. The Options granted pursuant to the Plan
are intended to constitute either Incentive Stock Options within the meaning of
section 422 of the Code, or non-qualified stock options, as determined by the
Committee, or the Board if no Committee has been appointed, at the time of
Award. The type of Options awarded will be specified in the Option Agreement
between the Company and the Optionee. The terms of this Plan shall be
incorporated in the Option Agreement to be executed by the Optionee.
Section 2. Definitions.
-----------
(a) "Affiliate" shall mean, with respect to a Person, a Person that
directly or indirectly controls, or is controlled by, or is under common control
with such Person.
(b) "Award" shall mean a grant of an Option or Options to an Employee
pursuant to the provisions of this Plan. Each separate grant of an Option or
Options to an Employee and each group of Options which matures on a separate
date, is treated as a separate Award.
(c) "Board" shall mean the Board of Directors of the Company, as
constituted from time to time.
(d) "Change of Control" shall mean a change in the control of the Company
which shall be deemed to have occurred upon the earliest to occur of the
following:
(i) the date the stockholders of the Company (or the Board, if
stockholder action is not required) approve a plan or other
arrangement pursuant to which the Company will be dissolved or
liquidated;
-1-
<PAGE>
(ii) the date the stockholders of the Company approve a definitive
agreement to sell or otherwise dispose of all or substantially
all of the assets of the Company;
(iii) the date or dates the stockholders of the Company and the
stockholders of the other constituent corporations (or their
respective boards of directors, if and to the extent that
stockholder action is not required) have approved a definitive
agreement to merge or consolidate the Company with or into
another corporation, other than, in either case, a merger or
consolidation of the Company in which the Company is the
surviving entity, and in which shares of the Company's voting
capital stock outstanding immediately before such merger or
consolidation are exchanged or converted into shares which
represent more than 50% of the Company's voting capital stock
after such merger or consolidation, as such holders' ownership
of voting capital stock of the Company immediately before the
merger or consolidation; or
(iv) the date any Person, other than (A) the Company, or (B) any of
its Subsidiaries, or (C) any of the holders of the capital stock
of the Company, as determined on the date that this Plan is
adopted by the Board, or (D) any employee benefit plan (or
related trust) sponsored or maintained by the Company or any of
its Subsidiaries or (E) any Affiliate of any of the foregoing,
shall have acquired beneficial ownership of, or shall have
acquired voting control over more than 50% of the outstanding
shares of the Company's voting capital stock, unless the
transaction pursuant to which such Person acquired such
beneficial ownership or control resulted from the original
issuance by the Company of shares of its voting capital stock
and was approved by at least a majority of the Directors then in
office.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(f) "Committee" shall mean the Committee appointed by the Board in
accordance with Section 4(a) of the Plan, if one is appointed, in which event in
connection with this Plan, the Committee shall possess all of the power and
authority of, and shall be authorized to take any and all actions required to be
taken hereunder by, and make any and all determinations required taken hereunder
by, the Board.
(g) "Common Stock" shall mean Class A common stock of the Company, $.01 par
value per Share.
-2-
<PAGE>
(h) "Company" shall mean DA Consulting Group, Inc.
(i) "Director" shall mean an individual who is a member of the Board of
Directors of the Company.
(j) "Disability" shall mean a disability of an employee, officer or a
director which renders such employee, officer or director unable to perform the
full extent of his duties and responsibilities by reason of his illness or
incapacity which would entitle that employee, officer or director to receive
Social Security Disability Income under the Social Security Act, as amended, and
the regulations promulgated thereunder. "Disabled" shall mean having a
Disability. The determination of whether an Optionee is Disabled shall be made
by the Board, whose determination shall be conclusive; provided that,
-------- ----
(i) if an Optionee is bound by the terms of an employment agreement
between the Optionee and the Company, whether the Optionee is
"Disabled" for purposes of the Plan shall be determined in
accordance with the procedures set forth in said employment
agreement, if such procedures are therein provided; and
(ii) an Optionee bound by such an employment agreement shall not be
determined to be Disabled under the Plan any earlier than he
would be determined to be disabled under his employment
agreement.
(k) "Employee" shall mean any person employed by the Company or any of its
Subsidiaries. Additionally, solely for purposes of determining those persons
eligible under the Plan to be recipients of Awards of Options, which Options
shall be limited to non-qualified stock options, and not for the purpose of
affecting the status of the relationship between such person and the Company,
the term "Employee" shall include independent contractors of and consultants to
the Company, as well as Directors and members of the board of directors of a
Subsidiary.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(m) "Fair Market Value Per Share" shall mean the fair market value of a
share of Common Stock, as determined pursuant to Section 8 hereof.
(n) "Incentive Stock Option" shall mean an Option which is an incentive
stock option as described in Section 422 of the Code.
(o) "Non-Employee Director" shall have the meaning set forth in Rule 16b-
3(b)(3)(i) promulgated by the Securities and Exchange Commission under the
Exchange Act, or any successor definition adopted by the Securities and Exchange
Commission; provided,
-3-
<PAGE>
however, that the Board or the Committee may, in its sole
discretion, substitute the definition of "outside director" provided in the
regulations under Section 162(m) of the Code in place of the definition of Non-
Employee Director contained in the Exchange Act.
(p) "Option(s)" shall mean an Incentive Stock Option or a non-qualified
stock option to purchase Shares that is awarded pursuant to the Plan.
(q) "Option Agreement" shall mean a written agreement substantially in the
form of Exhibit A-1, A-2 or A-3, or such other form or forms as the Board or
Committee (subject to the terms and conditions of this Plan) may from time to
time approve evidencing and reflecting the terms of an Option.
(r) "Optionee" shall mean an Employee to whom an Option is awarded.
(s) "Participant" shall mean each Employee of the Company or a Subsidiary
to whom an Award is granted pursuant to the Plan.
(t) "Person" shall mean an individual, partnership, corporation, limited
liability company, trust, joint venture, unincorporated association, or other
entity or association.
(u) "Plan" shall mean the DA Consulting Group, Inc. 1997 Stock Option Plan,
as amended from time to time.
(v) "Pool" shall mean the pool of Shares of Common Stock subject to the
Plan, as described in Section 6 hereof.
(w) "Securities Act" shall mean the Securities Act of 1933, as amended.
(x) "Shares" shall mean shares of Common Stock contained in the Pool, as
adjusted in accordance with Section 9 of the Plan.
(y) "Stock Purchase and Restriction Agreement" shall mean an agreement
substantially in the form attached hereto as Exhibit B, or such other form as
the Board or Committee (subject to the terms and conditions of this Plan) may
from time to time approve, which an Optionee shall be required to execute as a
condition of purchasing Shares upon the exercise of an Option.
(z) "Subsidiary" shall mean a subsidiary corporation, whether now or
hereafter existing, as defined in sections 424(f) and (g) of the Code.
-4-
<PAGE>
Section 3. Participation.
-------------
Participants in the Plan shall be selected by the Board from the Employees.
The Board may make Awards at any time and from time to time to Employees. Any
Award may include or exclude any Employee, as the Board shall determine in its
sole discretion.
Section 4. Administration.
--------------
(a) Procedure.
---------
(i) In General. The Plan shall be administered by the Board. The
----------
Board may at any time by a unanimous vote, with each Member voting, appoint a
Committee consisting of not less than two persons to administer the Plan on
behalf of the Board, subject to such terms and conditions as the Board may
prescribe. Members of the Committee shall serve for such period of time as the
Board may determine. Members of the Board or the Committee who are eligible for
Options or have been awarded Options may vote on any matters affecting the
administration of the Plan or the Award of any Options pursuant to the Plan,
except that no such member shall act upon the Award of an Option to himself or
herself, but any such member may be counted in determining the existence of a
quorum at any meeting of the Board or Committee during which action is taken
with respect to the Award of Options to himself or herself.
From time to time the Board may increase the size of the Committee and
appoint additional members thereto, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies however caused, or
remove all members of the Committee and thereafter directly administer the Plan.
(ii) Company Registers Securities Under Exchange Act. In the event
-----------------------------------------------
the Company has a class of equity securities registered under Section 12 of the
Exchange Act, the Plan shall be administered either by the Board, or by a
Committee, appointed in the same manner and subject to the same terms as
provided in the preceding subsection, provided that said Committee shall consist
of not less than two persons, each of whom is a Non-Employee Director.
(b) Powers of the Board and the Committee. Subject to the provisions of
-------------------------------------
the Plan, the Board or its Committee shall have the authority, in its
discretion:
(i) to make Awards;
(ii) to determine the Fair Market Value Per Share;
(iii) to determine the exercise price of the Options to be awarded in
accordance with Sections 7 and 8 of the Plan;
-5-
<PAGE>
(iv) to determine the Employees to whom, and the time or times at
which, Awards shall be made, and the number of Shares to be
subject to each Award;
(v) to prescribe, amend and rescind rules and regulations relating
to the Plan;
(vi) to determine the terms and provisions of each Award under the
Plan, each Option Agreement and each Stock Purchase and
Restriction Agreement (which need not be identical with the
terms of other Awards, Option Agreements and Stock Purchase and
Restriction Agreements) and, with the consent of the Optionee,
to modify or amend an outstanding Option, Option Agreement or
Stock Purchase and Restriction Agreement;
(vii) to accelerate the vesting or exercise date of any Award;
(viii) to interpret the Plan or any agreement entered into with
respect to an Award or exercise of Options;
(ix) to authorize any person to execute on behalf of the Company any
instrument required to effectuate an Award or to take such
other actions as may be necessary or appropriate with respect
to the Company's rights pursuant to Awards or agreements
relating to the Award or exercise thereof; and
(x) to make such other determinations and establish such other
procedures as it deems necessary or advisable for the
administration of the Plan.
(c) Effect of the Board's or Committee's Decision. All decisions,
---------------------------------------------
determinations and interpretations of the Board or the Committee shall be final
and binding with respect to all Awards under the Plan.
(d) Limitation of Liability. Notwithstanding anything herein to the
-----------------------
contrary (with the exception of Section 31 hereof), no member of the Board or of
the Committee shall be liable for any good faith determination, act or failure
to act in connection with the Plan or any Award hereunder.
-6-
<PAGE>
Section 5. Eligibility.
-----------
Awards may be made only to Employees. An Employee who has received an
Award, if he or she is otherwise eligible, may receive additional Awards.
Section 6. Stock Subject to the Plan.
-------------------------
Subject to the provisions of this Section 6 and the provisions of Section 9
of the Plan, the maximum aggregate number of Shares which may be awarded and
sold under the Plan is 1,960,000 Shares of Common Stock (collectively, the
"Pool"). The maximum aggregate number of Shares which may be awarded and sold
under the Plan to any individual Optionee is 1,260,000 Shares of Common Stock.
Options awarded from the Pool may be either Incentive Stock Options or non-
qualified stock options, as determined by the Board. If an Option should expire
or become unexercisable for any reason without having been exercised in full, or
if Shares are subsequently repurchased by the Company, the unpurchased or
repurchased Shares which were subject thereto shall, unless the Plan shall have
been terminated, be returned to the Plan and become available for future Award
under the Plan.
Section 7. Terms and Conditions of Options.
--------------------------------
Each Option awarded pursuant to the Plan shall be authorized by the Board
and shall be evidenced by an Option Agreement in such form as the Board may from
time to time determine. Each Option Agreement shall incorporate by reference
all other terms and conditions of the Plan, including the following terms and
conditions:
(a) Number of Shares. The number of Shares subject to the Option, which
----------------
may include fractional Shares.
(b) Option Price. The price per Share payable on the exercise of any
------------
Option which is an Incentive Stock Option shall be stated in the Option
Agreement and shall be no less than the Fair Market Value Per Share of the
Common Stock on the date such Option is awarded, without regard to any
restriction other than a restriction which will never lapse. Notwithstanding
the foregoing, if an Option which is an Incentive Stock Option shall be awarded
under this Plan to any person who, at the time of the Award of such Option, owns
stock possessing more than 10% of the total combined voting power of all classes
of the Company's stock, the price per Share payable upon exercise of such
Incentive Stock Option shall be no less than 110 percent (110%) of the Fair
Market Value Per Share of the Common Stock on the date such Option is awarded.
The price per Share payable on the exercise of an Option which is a non-
qualified stock option shall be at least $.01 per Share and shall be stated in
the Option Agreement.
(c) Consideration. The consideration to be paid for the Shares to be
--------------
issued upon the exercise of an Option, including the method of payment, shall be
determined by the
-7-
<PAGE>
Board and may consist entirely of cash, check, promissory
notes or Shares of Common Stock having an aggregate Fair Market Value Per Share
on the date of surrender equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised, or any combination of such methods of
payment, or such other consideration and method of payment permitted under any
laws to which the Company is subject and which is approved by the Board. In
making its determination as to the type of consideration to accept, the Board
shall consider if acceptance of such consideration may be reasonably expected to
benefit the Company.
(i) If the consideration for the exercise of an Option is a
promissory note, it may, in the discretion of the Board, be
either full recourse or nonrecourse and shall bear interest at a
per annum rate which is not less than the applicable federal rate
determined in accordance with section 1274(d) of the Code as of
the date of exercise. In such an instance the Company may, in its
sole discretion, retain the Shares purchased upon exercise of the
Option in escrow as security for payment of the promissory note.
(ii) If the consideration for the exercise of an Option is the
surrender of previously acquired and owned shares of Common
Stock, the Optionee will be required to make representations and
warranties satisfactory to the Company regarding his title to the
shares of Common Stock used to effect the purchase (the "Payment
Shares"), including without limitation, representations and
warranties that the Optionee has good and marketable title to
such Payment Shares free and clear of any and all liens,
encumbrances, charges, equities, claims, security interests,
options or restrictions, and has full power to deliver such
Payment Shares without obtaining the consent or approval of any
person or governmental authority other than those which have
already given consent or approval in a manner satisfactory to the
Company. The per Share value of the Payment Shares shall be the
Fair Market Value Per Share of such Payment Shares on the date of
exercise as determined by the Board in its sole discretion,
exercised in good faith. If such Payment Shares were acquired
upon previous exercise of Incentive Stock Options granted within
two years prior to the exercise of the Option or acquired by the
Optionee within one year prior to the exercise of the Option,
such Optionee shall be required, as a condition to using the
Payment Shares in payment of the exercise price of the Option, to
acknowledge the tax consequences of doing so, in that such
previously exercised Incentive Stock Options may have, by such
action, lost their status
-8-
<PAGE>
as Incentive Stock Options, and the Optionee may have to
recognize ordinary income for tax purposes as a result.
(d) Form of Option. The Option Agreement will state whether the Option
--------------
awarded is an Incentive Stock Option or a non-qualified stock option, and will
constitute a binding determination as to the form of Option awarded.
(e) Exercise of Options. Any Option awarded hereunder shall be exercisable
-------------------
at such times and under such conditions as shall be set forth in the Option
Agreement (as may be determined by the Board and as shall be permissible under
the terms of the Plan), which may include performance criteria with respect to
the Company and/or the Optionee, and as shall be permissible under the terms of
the Plan.
An Option may be exercised in accordance with the provisions of this Plan
as to all or any portion of the Shares then exercisable under an Option from
time to time during the term of the Option. An Option may not be exercised for
a fraction of a Share.
Except as may otherwise be provided in an Option Agreement, if an Option
would first become exercisable while the Optionee is absent from service on an
approved leave of absence, the Optionee shall not be permitted to exercise such
Option until the Optionee's return to active employment with the Company.
Except as may otherwise be provided in an Option Agreement, if an Option had
become exercisable before or as of the commencement of an approved leave of
absence, the Optionee may exercise such previously vested Option while on such
leave. Whether an Optionee is absent on a leave or has terminated employment
shall be determined in accordance with the Company's regular personnel policies.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company at its principal executive office in
accordance with the terms of the Option Agreement by the person entitled to
exercise the Option and full payment for the Shares with respect to which the
Option is exercised has been received by the Company, accompanied by any
agreements required by the terms of the Plan and/or Option Agreement, including
an executed Stock Purchase and Restriction Agreement. Full payment may consist
of such consideration and method of payment allowable under this Section 7 of
the Plan. No adjustment shall be made for a dividend or other right for which
the record date is prior to the date the Option is exercised, except as provided
in Section 9 of the Plan.
As soon as practicable after any proper exercise of an Option in accordance
with the provisions of the Plan, the Company shall, without transfer or issue
tax to the Optionee, deliver to the Optionee at the principal executive office
of the Company or such other place as shall be mutually agreed upon between the
Company and the Optionee, a certificate or certificates representing the Shares
for which the Option shall have been exercised.
-9-
<PAGE>
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(f) Term and Vesting of Options.
---------------------------
(i) Except as otherwise provided by the Committee in an Option
Agreement, one-third of the Options granted pursuant to each
Award shall vest on the second anniversary of the date of
grant, an additional one-third of the Options granted pursuant
to the Award shall vest on the third anniversary of the date of
grant, and the balance of the Award shall vest on the fourth
anniversary of the date of grant. Notwithstanding the preceding
sentence, Options awarded to Directors shall be fully vested at
grant. Options may be exercised in any order elected by the
Optionee whether or not the Optionee holds any unexercised
Options under this Plan or any other plan of the Company.
(ii) Notwithstanding any other provision of this Plan, no Option
shall be (A) awarded under this Plan after February 6, 2007, or
(B) exercisable more than ten (10) years from the date of
Award; provided, however, that if an Option that is intended to
-------- -------
be an Incentive Stock Option shall be awarded under this Plan
to any person who, at the time of the Award of such Option,
owns stock possessing more than 10% of the total combined
voting power for all classes of the Company's stock, the
foregoing clause (B) shall be deemed modified by substituting
"five (5) years" for the term "ten (10) years" that appears
therein.
(iii) No Option awarded to any Optionee shall be treated as an
Incentive Stock Option, to the extent such Option would cause
the aggregate Fair Market Value Per Share (determined as of the
date of Award of each such Option) of the Shares with respect
to which Incentive Stock Options are exercisable by such
Optionee for the first time during any calendar year to exceed
$100,000. For purposes of determining whether an Incentive
Stock Option would cause such aggregate Fair Market Value Per
Share to exceed the $100,000 limitation, such Incentive Stock
Options shall be taken into account in the order awarded. For
purposes of this subsection, Incentive Stock Options include
all Incentive Stock Options under all plans of the Company that
are Incentive Stock Option plans within the meaning of section
422 of the Code.
-10-
<PAGE>
(g) Termination of Options.
(i) Unless sooner terminated as provided in this Plan, each Option
shall be exercisable for such period of time as shall be
determined by the Board and set forth in the Option Agreement,
and shall be void and unexercisable thereafter.
(ii) Except as otherwise provided herein or by the terms of any
Award, upon the termination of the Optionee's employment or
other relationship with the Company or a Subsidiary for any
reason, Options exercisable on the date of termination of
employment or such other relationship shall be exercisable by
the Optionee (or in the case of the Optionee's death subsequent
to termination of employment or such other relationship, by the
Optionee's executor(s) or administrator(s)) for a period of
three (3) months from the date of the Optionee's termination of
employment or such other relationship.
(iii) Except as otherwise provided herein or by the terms of any
Award, upon the Disability or death of an Optionee while in the
employ of the Company or a Subsidiary, Options held by such
Optionee which are exercisable on the date of Disability or
death shall be exercisable for a period of twelve (12) months
commencing on the date of the Optionee's Disability or death,
by the Optionee or his legal guardian or representative or, in
the case of death, by his executor(s) or administrator(s).
(iv) Options may be terminated at any time by agreement between the
Company and the Optionee.
(h) Forfeiture. Notwithstanding any other provision of this Plan, if the
----------
Optionee's employment or engagement is terminated for "cause" (as such term is
defined in the Optionee's employment agreement or non-disclosure agreement with
the Company, if any, and if the Optionee is not a party to any such agreement,
then, as such term is defined in the Stock Purchase and Restriction Agreement)
or if the Board makes a determination that the Optionee:
(i) has engaged in any type of disloyalty to the Company, including
without limitation, fraud, embezzlement, theft, or dishonesty
in the course of his employment or engagement, or has otherwise
breached any fiduciary duty owed to the Company;
-11-
<PAGE>
(ii) has been convicted of a felony;
(iii) has disclosed trade secrets or confidential information of the
Company; or
(iv) has breached any agreement with or duty to the Company in
respect of confidentiality, non-disclosure, non-competition or
otherwise, all unexercised Options shall terminate upon the
date of such a finding, or, if earlier, the date of termination
of employment or engagement for "cause"
then, in the event of such a finding, in addition to immediate termination of
all unexercised Options, the Optionee shall forfeit all Shares for which the
Company has not yet delivered share certificates to the Optionee and the Company
shall refund to the Optionee the Option purchase price paid to it, if any, in
the same form as it was paid (or in cash at the Company's discretion).
Notwithstanding anything herein to the contrary, the Company may withhold
delivery of share certificates pending the resolution of any inquiry that could
lead to a finding resulting in forfeiture.
Section 8. Determination of Fair Market Value Per Share of Common Stock.
------------------------------------------------------------
(a) Except to the extent otherwise provided in this Section 8, the Fair
Market Value Per Share of Common Stock shall be determined by the Board in its
sole discretion.
(b) Notwithstanding the provisions of Section 8(a), in the event that
shares of Common Stock are traded in the over-the-counter market, the Fair
Market Value Per Share of Common Stock shall be the mean of the closing bid and
asked prices for a share of Common Stock on the relevant valuation date as
reported in The Wall Street Journal (or, if not so reported, as otherwise
-----------------------
reported by the Nasdaq Stock Market) as applicable or, if there is no trading on
such date, on the next preceding date on which there were reported share prices.
In the event shares of Common Stock are listed on a national or regional
securities exchange or traded through the Nasdaq National Market, the Fair
Market Value of a share of Common Stock shall be the closing price for a share
of Common Stock on the exchange or on the Nasdaq National Market, as reported in
The Wall Street Journal on the relevant valuation date, or if there is no
- -----------------------
trading on that date, on the next preceding date on which there were reported
share prices.
Section 9. Adjustments.
-----------
(a) Subject to required action by the stockholders, if any, the number of
Shares as to which Awards may be made under this Plan and the number of Shares
subject to outstanding Options and the Option prices thereof shall be adjusted
proportionately for any increase or decrease in the number of outstanding Shares
of Common Stock of the Company resulting from stock splits, reverse stock
splits, stock dividends, reclassifications and recapitalizations, merger,
consolidation, exchange of shares, or rights offered to purchase shares
-12-
<PAGE>
of Common Stock at a price substantially below Fair Market Value Per Share or
any similar change affecting Common Stock.
(b) No fractional Shares shall be issuable on account of any action
mentioned in Section 9(a), and the aggregate number of Shares into which Shares
then covered by the Award, when changed as the result of such action, shall be
reduced to the number of whole Shares resulting from such action, unless the
Board, in its sole discretion, shall determine to issue scrip certificates with
respect to any fractional Shares, which scrip certificates, in such event, shall
be in a form and have such terms and conditions as the Board in its discretion
shall prescribe.
Section 10. Rights as a Stockholder.
-----------------------
A recipient of an Option Award shall have no rights as a stockholder of the
Company and shall neither have the right to vote nor receive dividends with
respect to any Shares subject to an Option until such Option has been exercised
and a certificate with respect to the Shares purchased upon such exercise has
been issued to him.
Section 11. Time of Awarding Options.
------------------------
The date of an Award shall, for all purposes, be the date which the Board
specifies when the Board makes its determination that an Award is made or if
none is specified, then the date of the Board's determination. Notice of the
determination shall be given to each Employee to whom an Award is made within a
reasonable time after the date of such Award.
Section 12. Modification, Extension and Renewal of Option.
----------------------------------------------
Subject to the terms and conditions of the Plan, the Board may modify,
extend or renew an Award, or accept the surrender of an Award (to the extent not
theretofore exercised). Notwithstanding the foregoing, (a) no modification of
an Award which adversely affects the Optionee shall be made without the consent
of the Optionee, and (b) no Incentive Stock Option may be modified, extended or
renewed if such action would cause it to cease to be an "Incentive Stock Option"
within the meaning of section 422 of the Code, unless the Optionee specifically
acknowledges and consents to the tax consequences of such action.
-13-
<PAGE>
Section 13. Purchase for Investment and Other Restrictions.
----------------------------------------------
(a) The obligation of the Company to issue Shares to an Optionee upon the
exercise of an Option granted under the Plan is conditioned upon:
(i) the Company obtaining any required permit or order from
appropriate United States, state and foreign governmental
agencies or stock exchange or similar body, authorizing the
Company to issue such Shares; and
(ii) such issuance complying with all relevant provisions of
applicable law, including, without limitation, the Securities
Act, the Exchange Act, the rules and regulations promulgated
thereunder and any applicable foreign laws.
(b) At the option of the Board, the obligation of the Company to issue
Shares to an Optionee upon the exercise of an Option granted under the Plan may
be conditioned upon obtaining appropriate representations, warranties,
restrictions and agreements of the Optionee as set forth in the applicable Stock
Purchase and Restriction Agreement. Among other representations, warranties,
restrictions and agreements, the Optionee may be required to represent and agree
that the purchase of Shares shall be for investment, and not with a view to the
public resale or distribution thereof, unless the Shares are registered under
the Securities Act and the issuance and sale of the Shares complies with all
other laws, rules and regulations applicable thereto. Unless the issuance of
such Shares is registered under the Securities Act (and any similar law of a
foreign jurisdiction applicable to the Optionee), the Optionee shall acknowledge
that the Shares purchased are not registered under the Securities Act (or any
such other law) and may not be sold or otherwise transferred unless the Shares
have been registered under the Securities Act (or any such other law) in
connection with the sale or other transfer thereof, or that counsel satisfactory
to the Company has issued an opinion satisfactory to the Company that the sale
or other transfer of such Shares is exempt from registration under the
Securities Act (or any such other law), and unless said sale or transfer is in
compliance with all other applicable laws, rules and regulations, including all
applicable federal, state and foreign securities laws, rules and regulations.
Additionally, the Shares, when issued, shall be subject to other transfer
restrictions, rights of first refusal and rights of repurchase as set forth in
Stock Purchase and Restriction Agreement. Unless the Shares subject to an Award
are registered under the Securities Act, the certificates representing such
Shares issued shall contain the following legend in substantially the following
form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED OR ANY APPLICABLE STATE SECURITIES
LAWS. THESE SHARES HAVE NOT BEEN ACQUIRED WITH A VIEW TO DISTRIBUTION OR
RESALE,
-14-
<PAGE>
AND MAY NOT BE SOLD, ASSIGNED, EXCHANGED, MORTGAGED, PLEDGED, HYPOTHECATED
OR OTHERWISE TRANSFERRED OR DISPOSED OF, BY GIFT OR OTHERWISE, OR IN ANY
WAY ENCUMBERED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SHARES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE
SECURITIES LAWS, OR A SATISFACTORY OPINION OF COUNSEL SATISFACTORY TO DA
CONSULTING GROUP, INC. THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND
UNDER APPLICABLE STATE SECURITIES LAWS.
If required under the laws of any jurisdiction in which the Optionee resides,
the certificate or certificates may bear any such legend.
Section 14. Transferability.
---------------
Except as specifically approved by the Board or the Committee with respect
to a particular Option which is not intended to be an Incentive Stock Option, no
Option shall be assignable or transferable otherwise than by will or by the laws
of descent and distribution, and during the lifetime of the Optionee, his
Options shall be exercisable only by such Optionee, or, in the event of his or
her legal incapacity or Disability, then by the Optionee's legal guardian or
representative.
Section 15. Other Provisions.
----------------
The Option Agreement and Stock Purchase and Restriction Agreement may
contain such other provisions as the Board in its discretion deems advisable and
which are not inconsistent with the provisions of this Plan, including, without
limitation, restrictions upon or conditions precedent to the exercise of the
Option.
Section 16. Power of Board in Case of Change of Control.
-------------------------------------------
Notwithstanding anything to the contrary set forth in this Plan (with the
exception of Section 31 hereof), in the event of a Change of Control, the Board
shall have the authority, in its discretion, to accelerate the vesting of all
unmatured Options and to accelerate the expiration date of all Options, whether
or not matured. In addition, in the event of a Change of Control of the Company
by reason of a merger, consolidation or tax free reorganization or sale of all
or substantially all of the assets of the Company, the Board shall have the
authority, in its discretion, to terminate this Plan and to (a) exchange all
Options for options to purchase common stock in the successor corporation or (b)
distribute to each Optionee cash and/or other property in an amount equal to and
in the same form as the Optionee would have received from the successor
corporation if the Optionee had owned the Shares subject to the Option rather
than the Option at
-15-
<PAGE>
the time of the Change of Control, provided that any such amount paid to an
Optionee shall reflect the deduction of the exercise price the Optionee would
have paid to purchase such Shares. The form of payment or distribution to the
Optionee pursuant to this Section shall be determined by the Board.
Section 17. Amendment of the Plan.
---------------------
Insofar as permitted by law and the Plan, the Board may from time to time
suspend, terminate or discontinue the Plan or revise or amend it in any respect
whatsoever with respect to any Shares at the time not subject to an Option;
provided, however, that without approval of the stockholders by a majority of
the votes cast at a duly held stockholder meeting at which a quorum representing
a majority of the Company's outstanding voting shares is present (either in
person or by proxy), within one year (365 days) of the adoption of an amendment
or revision by the Board, no such amendment or revision may change the aggregate
number of Shares for which Options may be awarded hereunder, change the
designation of the class of Employees eligible to receive Options or decrease
the price at which Options may be awarded.
The Board may make Awards hereunder prior to approval of any amendment;
provided, however, that any and all Options so awarded automatically shall be
- -------- -------
converted into non-qualified stock options if the amendment is not approved by
such stockholders within 365 days of its adoption.
Any other provision of this Section 17 notwithstanding, the Board
specifically is authorized to adopt any amendment to this Plan deemed by the
Board to be necessary or advisable to assure that the Incentive Stock Options or
the non-qualified stock options available under the Plan continue to be treated
as such, respectively, under all applicable laws.
Section 18. Application of Funds.
--------------------
The proceeds received by the Company from the sale of Shares pursuant to
the exercise of Options shall be used for general corporate purposes or such
other purpose as may be determined by the Board.
Section 19. No Obligation to Exercise Option.
--------------------------------
The Awarding of an Option shall impose no obligation upon the Optionee to
exercise such Option.
-16-
<PAGE>
Section 20. Approval of Stockholders.
------------------------
This Plan originally became effective on February 1, 1997, the date as of
which it was adopted by the Board. This amendment and restatement of the Plan
shall become effective on December 7, 1999, provided it is approved by the
Company's stockholders.
Section 21. Conditions Upon Issuance of Shares.
----------------------------------
Shares shall not be issued pursuant to the exercise of an Option unless the
exercise of such Option and the issuance and delivery of such Shares pursuant
thereto shall comply with all relevant provisions of law, including, without
limitation, the Securities Act, the Exchange Act, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which
the Shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
Section 22. Reservation of Shares.
---------------------
The Company, during the term of this Plan, shall at all times reserve and
keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
The Company, during the term of this Plan, shall use its best efforts to
seek to obtain from appropriate regulatory agencies any requisite authorization
in order to issue and sell such number of Shares as shall be sufficient to
satisfy the requirements of the Plan. The inability of the Company to obtain
from any such regulatory agency having jurisdiction the requisite
authorization(s) deemed by the Company's counsel to be necessary for the lawful
issuance and sale of any Shares hereunder, or the inability of the Company to
confirm to its satisfaction that any issuance and sale of any Shares hereunder
will meet applicable legal requirements, shall relieve the Company of any
liability in respect to the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
Section 23. Stock Option and Stock Purchase and Restriction Agreements.
----------------------------------------------------------
Options shall be evidenced by an Option Agreement in such form or forms as
the Board shall approve from time to time. Upon the exercise of an Option, the
Optionee shall sign and deliver to the Company a Stock Purchase and Restriction
Agreement in such form or forms as the Board shall approve from time to time.
-17-
<PAGE>
Section 24. Taxes, Fees, Expenses and Withholding of Taxes.
----------------------------------------------
(a) The Company shall pay all original issue and transfer taxes (but not
income taxes, if any) with respect to the Award of Options and/or the issue and
transfer of Shares pursuant to the exercise thereof, and all other fees and
expenses necessarily incurred by the Company in connection therewith, and will
from time to time use its best efforts to comply with all laws and regulations
which, in the opinion of counsel for the Company, shall be applicable thereto.
(b) The Award of Options hereunder and the issuance of Shares pursuant to
the exercise of Options is conditioned upon the Company's reservation of the
right to withhold in accordance with any applicable law, from any compensation
or other amounts payable to the Optionee, any taxes required to be withheld
under federal, state or local law as a result of the Award or exercise of such
Option or the sale of the Shares issued upon exercise thereof. To the extent
that compensation or other amounts, if any, payable to the Optionee is
insufficient to pay any taxes required to be so withheld, the Company may, in
its sole discretion, require the Optionee (or such other person entitled herein
to exercise the Option), as a condition of the exercise of an Option, to pay in
cash to the Company an amount sufficient to cover such tax liability or
otherwise to make adequate provision for the Company's satisfaction of its
withholding obligations under federal, state and local law, provided that such
satisfaction of tax liability is made within 60 days of the date on which
written notice of exercise has been given to the Company.
Section 25. Notices.
-------
Any notice to be given to the Company pursuant to the provisions of this
Plan shall be addressed to the Company in care of its Secretary (or such other
person as the Company may designate from time to time) at its principal
executive office, and any notice to be given to an Optionee shall be delivered
personally or addressed to him or her at the address given beneath his or her
signature on his or her Option Agreement, or at such other address as such
Optionee or his or her permitted transferee (upon the transfer of the Shares)
may hereafter designate in writing to the Company. Any such notice shall be
deemed duly given on the date and at the time delivered via personal, courier or
recognized overnight delivery service or, if sent via telecopier, on the date
and at the time telecopied with confirmation of delivery or, if mailed, on the
date five (5) days after the date of the mailing (which shall be by regular,
registered or certified mail). Delivery of a notice by telecopy (with
confirmation) shall be permitted and shall be considered delivery of a notice
notwithstanding that it is not an original that is received. It shall be the
obligation of each Optionee and each permitted transferee holding Shares
purchased upon exercise of an Option to provide the Secretary of the Company, by
letter mailed as provided herein, with written notice of his or her direct
mailing address.
-18-
<PAGE>
Section 26. No Enlargement of Optionee Rights.
---------------------------------
This Plan is purely voluntary on the part of the Company, and the
continuance of the Plan shall not be deemed to constitute a contract between the
Company and any Optionee, or to be consideration for or a condition of the
employment or service of any Optionee. Nothing contained in this Plan shall be
deemed to give any Optionee the right to be retained in the employ or service of
the Company or any Subsidiary, or to interfere with the right of the Company or
any such corporation to discharge or retire any Optionee thereof at any time
subject to applicable law. No Optionee shall have any right to or interest in
Awards authorized hereunder prior to the Award thereof to such Optionee, and
upon such Award he shall have only such rights and interests as are expressly
provided herein, subject, however, to all applicable provisions of the Company's
Certificate of Incorporation, as the same may be amended from time to time.
Section 27. Information to Optionees.
------------------------
The Company, upon request, shall provide without charge to each Optionee
copies of such annual and periodic reports as are provided by the Company to its
stockholders generally.
Section 28. Availability of Plan.
--------------------
A copy of this Plan shall be delivered to the Secretary of the Company and
shall be shown by him to any eligible person making reasonable inquiry
concerning it.
Section 29. Invalid Provisions.
------------------
In the event that any provision of this Plan is found to be invalid or
otherwise unenforceable under any applicable law, such invalidity or
unenforceability shall not be construed as rendering any other provisions
contained herein as invalid or unenforceable, and all such other provisions
shall be given full force and effect to the same extent as though the invalid or
unenforceable provision was not contained herein.
Section 30. Applicable Law.
--------------
This Plan shall be governed by and construed in accordance with the laws of
the State of Texas.
-19-
<PAGE>
Section 31. Board Action.
------------
Notwithstanding anything to the contrary set forth in this Plan, any and
all actions of the Board or Committee, as the case may be, taken under or in
connection with this Plan and any agreements, instruments, documents,
certificates or other writings entered into, executed, granted, issued and/or
delivered pursuant to the terms hereof, shall be subject to and limited by any
and all votes, consents, approvals, waivers or other actions of all or certain
stockholders of the Company or other persons required pursuant to:
(i) the Company's Certificate of Incorporation (as the same may be
amended and/or restated from time to time);
(ii) the Company's Bylaws (as the same may be amended and/or restated from
time to time); and
(iii) any other agreement, instrument, document or writing now or hereafter
existing, between or among the Company and its stockholders or other
persons (as the same may be amended from time to time).
-20-
<PAGE>
DA CONSULTING GROUP, INC.
Proxy Solicited On Behalf Of The Board of Directors
from holders of Common Stock
The undersigned, revoking all previous proxies, hereby appoints Nicholas H.
Marriner and Patrick J. Newton, and each of them acting individually, as the
attorney and proxy of the undersigned, with full power of substitution, to vote
all shares of Common Stock which the undersigned would be entitled to vote at
the Special Meeting of the Shareholders of DA Consulting Group, Inc. to be held
on December 7, 1999, and at any adjournment or postponement thereof.
1. Approval of the Company's 1997 Stock Option Plan, as amended to increase
the number of shares of stock available for options under the Plan from
1,260,000 to 1,960,000:
[_] For [_] Against [_] Abstain
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. UNLESS
OTHERWISE SPECIFIED, THE SHARES WILL BE VOTED "FOR" APPROVAL OF THE COMPANY'S
1997 STOCK OPTION PLAN, AS AMENDED TO INCREASE THE NUMBER OF SHARES OF STOCK
AVAILABLE FOR OPTIONS UNDER THE PLAN FROM 1,260,000 TO 1,960,000. THIS PROXY
ALSO DELEGATES DISCRETIONARY AUTHORITY WITH RESPECT TO ANY OTHER BUSINESS
REASONABLY RELATED TO THE MATTER DISCUSSED ABOVE WHICH MAY PROPERLY COME BEFORE
THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL
MEETING AND PROXY STATEMENT.
------------------------------------------
Signature of Shareholder
------------------------------------------
Date:_________________, 1999 Signature of Shareholder
NOTE: PLEASE SIGN THIS PROXY EXACTLY AS NAME(S) APPEARS ON YOUR STOCK
CERTIFICATE. WHEN SIGNING AS ATTORNEY-IN-FACT, EXECUTOR, ADMINISTRATOR, TRUSTEE
OR GUARDIAN, PLEASE ADD YOUR TITLE AS SUCH, AND IF SIGNER IS A CORPORATION,
PLEASE SIGN WITH FULL CORPORATE NAME BY A DULY AUTHORIZED OFFICER OR OFFICERS
AND AFFIX THE CORPORATE SEAL. WHERE STOCK IS ISSUED IN THE NAME OF TWO (2) OR
MORE PERSONS, ALL SUCH PERSONS SHOULD SIGN.
