<PAGE> 1
As filed with the Securities and Exchange Commission on September 13, 1999.
Registration No. 333-________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC. 20549
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
Atlantic Data Services, Inc.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2696393
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Batterymarch Park
Quincy, Massachusetts 02169
(617) 770-3333
(Address of Principal Executive Offices) (Zip Code)
-----------------------------
Amended and Restated 1997 Stock Plan, as amended
(Full title of the plan)
-----------------------------
Paul K. McGrath
Chief Financial Officer
Atlantic Data Services, Inc.
One Batterymarch Park
Quincy, Massachusetts 02169
(617) 770-3333
(Name and address including zip code and telephone number,
including area code, of agent for service)
-----------------------------
Copies to:
Mitchell S. Bloom, Esq.
TESTA, HURWITZ & THIBEAULT, LLP
High Street Tower, 125 High Street
Boston, Massachusetts 02110
(617) 248-7000
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CALCULATION OF REGISTRATION FEE
<TABLE>
=============================================================================================================
<CAPTION>
Proposed
maximum Proposed maximum
Title of securities Amount to be offering aggregate Amount of
to be registered registered(1) price per share offering price registration fee
------------------- ------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Amended and Restated 1997 Stock
Plan, as amended
Common Stock, par value $.01 per 45,000 $4.125(2) $ 185,625(2) $ 52(2)
share
36,875 $4.063(2) $ 149,823(2) $ 42(2)
120,000 $3.813(2) $ 457,560(2) $ 128(2)
1,298,125 $3.938(3) $5,112,016(3) $1,422(3)
--------- ---------- ------
TOTAL 1,500,000 $5,905,024 $1,644
=============================================================================================================
</TABLE>
(1) Plus such additional shares as may be required pursuant to the plan in
the event of a stock dividend, split-up of shares, recapitalization or
other similar change in the Common Stock.
(2) Such shares are issuable upon exercise of outstanding options with
fixed exercise prices. Pursuant to Rule 457(h)(1) of Regulation C, the
aggregate offering price and the fee have been computed upon the basis
of the price at which the options may be exercised. The offering price
per share set forth for such shares is the exercise price per share at
which such options are exercisable.
(3) Pursuant to Rule 457(c) and (h)(1) of Regulation C of the Securities
Act, the price of $3.938 per share, is the average of the high and low
prices of the Common Stock as reported on The Nasdaq National Market on
September 7, 1999 and is set forth solely for purposes of calculating
the filing fee for those shares without a fixed exercise price.
<PAGE> 3
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This Registration Statement registers additional securities of the same
class as other securities for which the Registration Statement No. 333-53805 on
Form S-8 as filed with the Securities and Exchange Commission on May 28, 1998,
relating to the registrant's Amended and Restated 1992 Incentive Stock Option
Plan, Amended and Restated 1997 Stock Plan and 1998 Employee Stock Purchase
Plan, is effective. Pursuant to General Instruction E to Form S-8, the contents
of the above-listed Registration Statement are hereby incorporated by reference.
<PAGE> 4
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PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.
The documents containing the information specified in this Item 1 will
be sent or given to employees, directors or others as specified by Rule
428(b)(1). In accordance with the rules and regulations of the Securities and
Exchange Commission (the "Commission") and the instructions to Form S-8, such
documents are not being filed with the Commission either as part of this
Registration Statement or as prospectuses or prospectus supplements pursuant to
Rule 424.
Item 2. Registrant Information and Employee Plan Annual Information.
The documents containing the information specified in this Item 2 will
be sent or given to employees as specified by Rule 428(b)(1). In accordance with
the rules and regulations of the Commission and the instructions to Form S-8,
such documents are not being filed with the Commission either as part of the
Registration Statement or as prospectuses or prospectus supplements pursuant to
Rule 424.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by Atlantic Data Services, Inc. (the
"Registrant") with the Commission pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"), are incorporated in this Registration
Statement by reference as of their respective dates:
(a) The Registrant's Annual Report on Form 10-K for the fiscal
year ended March 31, 1999, filed with the Commission on June
25, 1999;
(b) The Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1999, filed with the Commission on
August 9, 1999 under Section 15(d) of the Exchange Act; and
(c) The description of the Registrant's Common Stock incorporated
by reference into the Company's registration statement on Form
8-A (SEC File No. 0-24193), filed with the Commission on May
4, 1998 from the Registrant's registration statement on Form
S-1 (SEC File No. 333-48703) initially filed with the
Commission on March 26, 1998.
All documents subsequently filed with the Commission by the Registrant
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all securities
offered herein have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference in this Registration
Statement and to be a part hereof from the date of filing of such documents.
<PAGE> 5
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Item 8. Exhibits.
Exhibit No. Description of Exhibit
----------- ----------------------
4.1 Amended and Restated 1997 Stock Plan, as amended
effective as of July 28, 1999.
5.1 Opinion of Testa, Hurwitz & Thibeault, LLP.
23.1 Consent of Testa, Hurwitz & Thibeault, LLP
(contained in its opinion as Exhibit 5.1).
23.2 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of Ernst & Young LLP.
24.1 Power of Attorney (contained on page 8 of this
Registration Statement on Form S-8).
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(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; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the 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 Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated
by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of
any employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall
be deemed to be
<PAGE> 6
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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) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 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 Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of
such issue.
<PAGE> 7
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Quincy, the Commonwealth of Massachusetts, on this
13th day of September, 1999.
ATLANTIC DATA SERVICES, INC.
By: /s/ Robert W. Howe
----------------------------------
Robert W. Howe
Chairman of the Board of Directors
and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each such person whose
signature appears below constitutes and appoints, jointly and severally, Robert
W. Howe and William H. Gallagher and each of them, with full power to act
without the other, his true and lawful attorney-in-fact, with the power of
substitution, for him in any and all capacities, to sign any amendments to this
Registration Statement on Form S-8 (including post-effective amendments) and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact, or his or her substitute or
substitutes, may 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 date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert W. Howe Chairman of the Board of Directors September 13, 1999
- ----------------------------------- and Chief Executive Officer
Robert W. Howe (Principal Executive Officer)
/s/ William H. Gallagher President, Chief Operating Officer September 13, 1999
- -----------------------------------
William H. Gallagher and Director
/s/ Paul K. McGrath Senior Vice President, Finance and September 13, 1999
- ----------------------------------- Administration, and Chief Financial
Paul K. McGrath Officer (Principal Financial and
Accounting Officer)
/s/ David C. Hodgson Director September 13, 1999
- -----------------------------------
David C. Hodgson
/s/ Lee M. Kennedy Director September 13, 1999
- -----------------------------------
Lee M. Kennedy
/s/ George F. Raymond Director September 13, 1999
- -----------------------------------
George F. Raymond
/s/ Richard D. Driscoll Director September 13, 1999
- -----------------------------------
Richard D. Driscoll
</TABLE>
<PAGE> 8
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INDEX TO EXHIBITS
Sequentially
Exhibit Description of Exhibit Numbered Page
- ------- ---------------------- -------------
4.1 Amended and Restated 1997 Stock Plan, as 9
amended effective as of July 28, 1999.
5.1 Opinion of Testa, Hurwitz & Thibeault, LLP. 17
23.1 Consent of Testa, Hurwitz & Thibeault, LLP 17
(contained in its opinion as Exhibit 5.1).
23.2 Consent of PricewaterhouseCoopers LLP. 18
23.3 Consent of Ernst & Young LLP. 19
24.1 Power of Attorney (contained on page 8 of this 8
Registration Statement on Form S-7).
<PAGE> 1
Exhibit 4.1
ATLANTIC DATA SERVICES, INC.
AMENDED AND RESTATED 1997 STOCK PLAN, AS AMENDED
WHEREAS, on October 31, 1997, the Board of Directors of Atlantic Data
Services, Inc. (the "Company") adopted this 1997 stock plan (the "Plan"), which
was approved by the stockholders of the Company on October 31, 1997;
WHEREAS, the Board of Directors initially reserved 500,000 shares of
Class A Common Stock of the Company, $.01 par value per share (the "Class A
Common Stock") under the Plan;
WHEREAS, on March 25, 1998 the Board of Directors of the Company and on
April 7, 1998, the stockholders of the Company voted to amend and restate the
Plan to provide that the number of shares of Class A Common Stock reserved for
issuance under the Plan be increased from 500,000 to 1,500,000 shares;
WHEREAS, pursuant to the Company's Amended and Restated Articles of
Organization, upon the closing of the Company's initial public offering, all
shares of Class A Common Stock will be automatically converted into shares of
Common Stock, $.01 par value per share, (the "Common Stock");
WHEREAS, in such event, pursuant to Section 13.C of the Plan, any and
all references herein to Class A Common Stock, including any shares of Class A
Common Stock reserved for issuance under this Plan (and any options granted
prior to the date hereof) shall be deemed to mean and refer to Common Stock; and
WHEREAS, on March 9, 1999 the Board of Directors of the Company voted
to amend the Plan to provide that the number of shares of Common Stock reserved
for issuance under the Plan be increased from 1,500,000 to 3,000,000;
NOW THEREFOR, this Plan, as amended and restated on March 25, 1998 and
further amended on March 9, 1999, reads in its entirety as follows:
1. Purpose. The purpose of the Atlantic Data Services, Inc. 1997 Stock
Plan (the "Plan") is to encourage key employees of Atlantic Data Services, Inc.
(the "Company") and of any present or future parent or subsidiary of the Company
(collectively, "Related Corporations") and other individuals who render services
to the Company or a Related Corporation, by providing opportunities to
participate in the ownership of the Company and its future growth through (a)
the grant of options which qualify as "incentive stock options" ("ISOs") under
Section 422(b) of the Internal Revenue Code of 1986, as amended (the "Code");
(b) the grant of options which do not qualify as ISOs ("Non-Qualified Options");
(c) awards of stock in the Company ("Awards"); and (d) opportunities to make
direct purchases of stock in the Company ("Purchases"). Both ISOs and
Non-Qualified Options are referred to hereafter individually as an "Option" and
collectively as "Options." Options, Awards and authorizations to make Purchases
are referred to hereafter collectively as "Stock Rights." As used herein, the
terms "parent" and "subsidiary" mean "parent corporation" and "subsidiary
corporation," respectively, as those terms are defined in Section 424 of the
Code.
2. Administration of the Plan.
A. Board or Committee Administration. The Plan shall
(be administered by the Board of Directors of the Company (the
"Board") or, subject to paragraph 2(D) (relating to compliance
with Section 162(m) of the Code), by a committee appointed by
the Board (the "Committee"). Hereinafter, all references in
this Plan to the "Committee" shall mean the Board if no
Committee has been appointed. Subject to ratification of the
grant or authorization of each Stock Right by the Board (if so
required by applicable state law), and subject to the terms of
the Plan, the Committee shall have the authority to (i)
determine to whom (from among the class of employees eligible
under paragraph 3 to receive ISOs) ISOs shall be granted, and
to whom (from
<PAGE> 2
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among the class of individuals and entities eligible under
paragraph 3 to receive Non-Qualified Options and Awards and to
make Purchases) Non-Qualified Options, Awards and authorizations to
make Purchases may be granted; (ii) determine the time or times at
which Options or Awards shall be granted or Purchases made; (iii)
determine the purchase price of shares subject to each Option or
Purchase, which prices shall not be less than the minimum price
specified in paragraph 6; (iv) determine whether each Option
granted shall be an ISO or a Non-Qualified Option; (v)
determine (subject to paragraph 7) the time or times when each
Option shall become exercisable and the duration of the
exercise period; (vi) extend the period during which
outstanding Options may be exercised; (vii) determine whether
restrictions such as repurchase options are to be imposed on
shares subject to Options, Awards and Purchases and the nature
of such restrictions, if any, and (viii) interpret the Plan
and prescribe and rescind rules and regulations relating to
it. If the Committee determines to issue a Non-Qualified
Option, it shall take whatever actions it deems necessary,
under Section 422 of the Code and the regulations promulgated
thereunder, to ensure that such Option is not treated as an
ISO. The interpretation and construction by the Committee of
any provisions of the Plan or of any Stock Right granted under
it shall be final unless otherwise determined by the Board.
The Committee may from time to time adopt such rules and
regulations for carrying out the Plan as it may deem
advisable. No member of the Board or the Committee shall be
liable for any action or determination made in good faith with
respect to the Plan or any Stock Right granted under it.
B. Committee Actions. The Committee may select one of
its members as its chairman, and shall hold meetings at such
time and places as it may determine. A majority of the
Committee shall constitute a quorum and acts of a majority of
the members of the Committee at a meeting at which a quorum is
present, or acts reduced to or approved in writing by all the
members of the Committee (if consistent with applicable state
law), shall be the valid acts of the Committee. From time to
time the Board may increase the size of the Committee and
appoint additional members thereof, 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.
C. Grant of Stock Rights to Board Members. Stock Rights may be
granted to members of the Board. All grants of Stock Rights to
members of the Board shall in all respects be made in
accordance with the provisions of this Plan applicable to
other eligible persons. Members of the Board who either (i)
are eligible to receive grants of Stock Rights pursuant to the
Plan or (ii) have been granted Stock Rights may vote on any
matters affecting the administration of the Plan or the grant
of any Stock Rights pursuant to the Plan, except that no such
member shall act upon the granting to himself or herself of
Stock Rights, but any such member may be counted in
determining the existence of a quorum at any meeting of the
Board during which action is taken with respect to the
granting to such member of Stock Rights.
D. Performance-Based Compensation. The Board, in its
discretion, may take such action as may be necessary to ensure
that Stock Rights granted under the Plan qualify as "qualified
performance-based compensation" within the meaning of Section
162(m) of the Code and applicable regulations promulgated
thereunder ("Performance-Based Compensation"). Such action may
include, in the Board's discretion, some or all of the
following (i) if the Board determines that Stock Rights
granted under the Plan generally shall constitute
Performance-Based Compensation, the Plan shall be
administered, to the extent required for such Stock Rights to
constitute Performance-Based Compensation, by a Committee
consisting solely of two or more "outside directors" (as
defined in applicable regulations promulgated under Section
162(m) of the Code), (ii) if any Non-Qualified Options with an
exercise price less than the fair market value per share of
Class A Common Stock are granted under the Plan and the Board
determines that such Options should constitute
Performance-Based Compensation, such options shall be made
exercisable only upon the attainment of a pre-established,
objective performance goal established by the Committee, and
such grant shall be submitted for, and shall be contingent
upon shareholder approval and (iii) Stock Rights granted under
the Plan may be subject to such other terms and conditions as
are necessary for compensation recognized in connection with
the exercise or
<PAGE> 3
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disposition of such Stock Right or the disposition of Class A
Common Stock acquired pursuant to such Stock Right, to
constitute Performance-Based Compensation.
3. Eligible Employees and Others. ISOs may be granted only to employees
of the Company or any Related Corporation. Non-Qualified Options, Awards and
authorizations to make Purchases may be granted to any employee, officer or
director (whether or not also an employee) or consultant of the Company or any
Related Corporation. The Committee may take into consideration a recipient's
individual circumstances in determining whether to grant a Stock Right. The
granting of any Stock Right to any individual or entity shall neither entitle
that individual or entity to, nor disqualify such individual or entity from,
participation in any other grant of Stock Rights.
4. Stock. The stock subject to Stock Rights shall be authorized but
unissued shares of Class A Common Stock of the Company, par value $.01 per share
(the "Class A Common Stock"), or shares of Class A Common Stock reacquired by
the Company in any manner. The aggregate number of shares which may be issued
pursuant to the Plan is 3,000,000, subject to adjustment as provided in
paragraph 13. If any Option granted under the Plan shall expire or terminate for
any reason without having been exercised in full or shall cease for any reason
to be exercisable in whole or in part or shall be repurchased by the Company,
the unpurchased shares of Class A Common Stock subject to such Option shall
again be available for grants of Stock Rights under the Plan.
No employee of the Company or any Related Corporation may be granted
Options to acquire, in the aggregate, more than 1,000,000 shares of Class A
Common Stock under the Plan during any fiscal year of the Company. If any Option
granted under the Plan shall expire or terminate for any reason without having
been exercised in full or shall cease for any reason to be exercisable in whole
or in part or shall be repurchased by the Company, the shares subject to such
Option shall be included in the determination of the aggregate number of shares
of Class A Common Stock deemed to have been granted to such employee under the
Plan.
5. Granting of Stock Rights. Stock Rights may be granted under the Plan
at any time on or after October 31, 1997 and prior to October 31, 2007. The date
of grant of a Stock Right under the Plan will be the date specified by the
Committee at the time it grants the Stock Right; provided, however, that such
date shall not be prior to the date on which the Committee acts to approve the
grant.
6. Minimum Option Price; ISO Limitations.
A. Price for Non-Qualified Options, Awards and Purchases. Subject
to paragraph 2(D) (relating to compliance with Section 162(m)
of the Code), the exercise price per share specified in the
agreement relating to each Non-Qualified Option granted, and
the purchase price per share of stock granted in any Award or
authorized as a Purchase, under the Plan may be less than the
fair market value of the Class A Common Stock of the Company
on the date of grant; provided that, in no event shall such
exercise price or such purchase price be less than the minimum
legal consideration required therefor under the laws of any
jurisdiction in which the Company or its successors in
interest may be organized.
B. Price for ISOs. The exercise price per share specified in the
agreement relating to each ISO granted under the Plan shall
not be less than the fair market value per share of Class A
Common Stock on the date of such grant. In the case of an ISO
to be granted to an employee owning stock possessing more than
ten percent (10%) of the total combined voting power of all
classes of stock of the Company or any Related Corporation,
the price per share specified in the agreement relating to
such ISO shall not be less than one hundred ten percent (110%)
of the fair market value per share of Class A Common Stock on
the date of grant. For purposes of determining stock ownership
under this paragraph, the rules of Section 424(d) of the Code
shall apply.
C. $100,000 Annual Limitation on ISO Vesting. Each eligible
employee may be granted Options treated as ISOs only
to the extent that, in the aggregate under this Plan and all
incentive stock option plans of the Company and any Related
Corporation, ISOs do not become exercisable for the first time
by such employee during any calendar year with respect to
stock having a fair market value (determined at the time the
ISOs were granted) in excess of $100,000.
<PAGE> 4
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The Company intends to designate any Options granted in excess
of such limitation as Non-Qualified Options, and the Company
shall issue separate certificates to the optionee with respect
to Options that are Non-Qualified Options and Options that are
ISOs.
D. Determination of Fair Market Value. If, at the time an Option
is granted under the Plan, the Company's Class A Common Stock
is publicly traded, "fair market value" shall be determined as
of the date of grant or, if the prices or quotes discussed in
this sentence are unavailable for such date, the last business
day for which such prices or quotes are available prior to the
date of grant and shall mean (i) the average (on that date) of
the high and low prices of the Class A Common Stock on the
principal national securities exchange on which the Class A
Common Stock is traded, if the Class A Common Stock is then
traded on a national securities exchange; or (ii) the last
reported sale price (on that date) of the Class A Common Stock
on the Nasdaq National Market, if the Class A Common Stock is
not then traded on a national securities exchange; or (iii)
the closing bid price (or average of bid prices) last quoted
(on that date) by an established quotation service for
over-the-counter securities, if the Class A Common Stock is
not reported on the Nasdaq National Market. If the Class A
Common Stock is not publicly traded at the time an Option is
granted under the Plan, "fair market value" shall mean the
fair value of the Class A Common Stock as determined by the
Committee after taking into consideration all factors which it
deems appropriate, including, without limitation, recent sale
and offer prices of the Class A Common Stock in private
transactions negotiated at arm's length.
7. Option Duration. Subject to earlier termination as provided in
paragraphs 9 and 10 or in the agreement relating to such Option, each Option
shall expire on the date specified by the Committee, but not more than (i) ten
years from the date of grant in the case of Options generally and (ii) five
years from the date of grant in the case of ISOs granted to an employee owning
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any Related Corporation, as determined
under paragraph 6(B). Subject to earlier termination as provided in paragraphs 9
and 10, the term of each ISO shall be the term set forth in the original
instrument granting such ISO, except with respect to any part of such ISO that
is converted into a Non-Qualified Option pursuant to paragraph 16.
8. Exercise of Option. Subject to the provisions of paragraphs 9
through 12, each Option granted under the Plan shall be exercisable as follows:
A. Vesting. The Option shall either be fully exercisable on the
date of grant or shall become exercisable thereafter in such
installments as the Committee may specify.
B. Full Vesting of Installments. Once an installment becomes
exercisable, it shall remain exercisable until expiration or
termination of the Option, unless otherwise specified by the
Committee.
C. Partial Exercise. Each Option or installment may be exercised
at any time or from time to time, in whole or in part, for up
to the total number of shares with respect to which it is then
exercisable.
D. Acceleration of Vesting. The Committee shall have the right to
accelerate the date that any installment of any Option becomes
exercisable; provided that the Committee shall not, without
the consent of an optionee, accelerate the permitted exercise
date of any installment of any Option granted to any employee
as an ISO (and not previously converted into a Non-Qualified
Option pursuant to paragraph 16) if such acceleration would
violate the annual vesting limitation contained in Section
422(d) of the Code, as described in paragraph 6(C).
9. Termination of Employment. Unless otherwise specified in the
agreement relating to such ISO, if an ISO optionee ceases to be employed by the
Company and all Related Corporations other than by reason of death or disability
as defined in paragraph 10, no further installments of his or her ISOs shall
become exercisable, and his or her ISOs shall terminate on the earlier of (a)
thirty (30) days after the date of termination of his or her employment, or (b)
their specified expiration dates, except to the extent that such ISOs (or
unexercised installments
<PAGE> 5
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thereof) have been converted into Non-Qualified Options pursuant to paragraph
16. For purposes of this paragraph 9, employment shall be considered as
continuing uninterrupted during any bona fide leave of absence (such as those
attributable to illness, military obligations or governmental service) provided
that the period of such leave does not exceed 90 days or, if longer, any period
during which such optionee's right to reemployment is guaranteed by statute or
by contract. A bona fide leave of absence with the written approval of the
Committee shall not be considered an interruption of employment under this
paragraph 9, provided that such written approval contractually obligates the
Company or any Related Corporation to continue the employment of the optionee
after the approved period of absence. ISOs granted under the Plan shall not be
affected by any change of employment within or among the Company and Related
Corporations, so long as the optionee continues to be an employee of the
Company or any Related Corporation. Nothing in the Plan shall be deemed to give
any grantee of any Stock Right the right to be retained in employment or other
service by the Company or any Related Corporation for any period of time.
10. Death; Disability.
A. Death. If an ISO optionee ceases to be employed by
the Company and all Related Corporations by reason of his or
her death, any ISO owned by such optionee may be exercised, to
the extent otherwise exercisable on the date of death, by the
estate, personal representative or beneficiary who has
acquired the ISO by will or by the laws of descent and
distribution, until the earlier of (i) the specified
expiration date of the ISO or (ii) 12 months from the date of
the optionee's death.
B. Disability. If an ISO optionee ceases to be employed by the
Company and all Related Corporations by reason of his or her
disability, such optionee shall have the right to exercise any ISO
held by him or her on the date of termination of employment, for
the number of shares for which he or she could have exercised it on
that date, until the earlier of (i) the specified expiration date
of the ISO or (ii) 12 months from the date of the termination of the
optionee's employment. For the purposes of the Plan, the term
"disability" shall mean "permanent and total disability" as
defined in Section 22(e)(3) of the Code or any successor statute.
11. Assignability. No ISO shall be assignable or transferable by the
optionee except by will or by the laws of descent and distribution, and during
the lifetime of the optionee shall be exercisable only by such optionee. Stock
Rights other than ISOs shall be transferable to the extent set forth in the
agreement relating to such Stock Right.
12. Terms and Conditions of Options. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof and may contain such
other provisions as the Committee deems advisable which are not inconsistent
with the Plan, including restrictions applicable to shares of Class A Common
Stock issuable upon exercise of Options. The Committee may specify that any
Non-Qualified Option shall be subject to the restrictions set forth herein with
respect to ISOs, or to such other termination and cancellation provisions as the
Committee may determine. The Committee may from time to time confer authority
and responsibility on one or more of its own members and/or one or more officers
of the Company to execute and deliver such instruments. The proper officers of
the Company are authorized and directed to take any and all action necessary or
advisable from time to time to carry out the terms of such instruments.
13. Adjustments. Upon the occurrence of any of the following events, an
optionee's rights with respect to Options granted to such optionee hereunder
shall be adjusted as hereinafter provided, unless otherwise specifically
provided in the written agreement between the optionee and the Company relating
to such Option:
A. Stock Dividends and Stock Splits. If the shares of Class A
Common Stock shall be subdivided or combined into a greater or
smaller number of shares or if the Company shall issue any shares
of Class A Common Stock as a stock dividend on its outstanding
Class A Common Stock, the number of shares of Class A Common Stock
deliverable upon the exercise of Options shall be appropriately
increased or decreased proportionately, and appropriate
<PAGE> 6
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adjustments shall be made in the purchase price per share to
reflect such subdivision, combination or stock dividend.
B. Consolidations or Mergers. If the Company is to be
consolidated with or acquired by another entity in a merger or
other reorganization in which the holders of the outstanding
voting stock of the Company immediately preceding the
consummation of such event, shall, immediately following such
event, hold, as a group, less than a majority of the voting
securities of the surviving or successor entity, or in the
event of a sale of all or substantially all of the Company's
assets or otherwise (each, an "Acquisition"), the Committee or
the board of directors of any entity assuming the obligations
of the Company hereunder (the "Successor Board"), shall, as to
outstanding Options, either (i) make appropriate provision for
the continuation of such Options by substituting on an
equitable basis for the shares then subject to such Options
either (a) the consideration payable with respect to the
outstanding shares of Class A Common Stock in connection with
the Acquisition, (b) shares of stock of the surviving or
successor corporation or (c) such other securities as the
Successor Board deems appropriate, the fair market value of
which shall not materially exceed the fair market value of the
shares of Class A Common Stock subject to such Options
immediately preceding the Acquisition; or (ii) upon written
notice to the optionees, provide that all Options must be
exercised, to the extent then exercisable or to be exercisable
as a result of the Acquisition, within a specified number of
days of the date of such notice, at the end of which period
the Options shall terminate; or (iii) terminate all Options in
exchange for a cash payment equal to the excess of the fair
market value of the shares subject to such Options (to the
extent then exercisable or to be exercisable as a result of
the Acquisition) over the exercise price thereof.
C. Recapitalization or Reorganization. In the event
of a recapitalization or reorganization of the Company (other
than a transaction described in subparagraph B above) pursuant
to which securities of the Company or of another corporation
are issued with respect to the outstanding shares of Class A
Common Stock, an optionee upon exercising an Option shall be
entitled to receive for the purchase price paid upon such
exercise the securities he or she would hold if he or she had
exercised such Option prior to such recapitalization or
reorganization.
D. Modification of ISOs. Notwithstanding the foregoing, any
adjustments made pursuant to subparagraphs A, B or C with respect
to ISOs shall be made only after the Committee, after consulting
with counsel for the Company, determines whether such adjustments
would constitute a "modification" of such ISOs (as that term is
defined in Section 424 of the Code) or would cause any adverse tax
consequences for the holders of such ISOs. If the Committee
determines that such adjustments made with respect to ISOs
would constitute a modification of such ISOs or would cause
adverse tax consequences to the holders, it may refrain from
making such adjustments.
E. Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company, each
Option will terminate immediately prior to the consummation of
such proposed action or at such other time and subject to such
other conditions as shall be determined by the Committee.
F. Issuances of Securities. Except as expressly provided herein,
no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Options. No
adjustments shall be made for dividends paid in cash or in property
other than securities of the Company.
G. Fractional Shares. No fractional shares shall be issued under
the Plan and the optionee shall receive from the Company cash in
lieu of such fractional shares.
H. Adjustments. Upon the happening of any of the events described
in subparagraphs A, B or C above, the class and aggregate number of
shares set forth in paragraph 4
<PAGE> 7
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hereof that are subject to Stock Rights which previously have been
or subsequently may be granted under the Plan shall also be
appropriately adjusted to reflect the events described in such
subparagraphs. The Committee or the Successor Board shall
determine the specific adjustments to be made under this
paragraph 13 and, subject to paragraph 2, its determination
shall be conclusive.
14. Means of Exercising Options. An Option (or any part or installment
thereof) shall be exercised by giving written notice to the Company at its
principal office address, or to such transfer agent as the Company shall
designate. Such notice shall identify the Option being exercised and specify the
number of shares as to which such Option is being exercised, accompanied by full
payment of the purchase price therefor either (a) in United States dollars in
cash or by check, (b) at the discretion of the Committee, through delivery of
shares of Class A Common Stock having a fair market value equal as of the date
of the exercise to the cash exercise price of the Option, (c) at the discretion
of the Committee, by delivery of the grantee's personal recourse note bearing
interest payable not less than annually at no less than 100% of the lowest
applicable Federal rate, as defined in Section 1274(d) of the Code, (d) at the
discretion of the Committee and consistent with applicable law, through the
delivery of an assignment to the Company of a sufficient amount of the proceeds
from the sale of the Class A Common Stock acquired upon exercise of the Option
and an authorization to the broker or selling agent to pay that amount to the
Company, which sale shall be at the participant's direction at the time of
exercise, or (e) at the discretion of the Committee, by any combination of (a),
(b), (c) and (d) above. If the Committee exercises its discretion to permit
payment of the exercise price of an ISO by means of the methods set forth in
clauses (b), (c), (d) or (e) of the preceding sentence, such discretion shall be
exercised in writing at the time of the grant of the ISO in question. The holder
of an Option shall not have the rights of a shareholder with respect to the
shares covered by such Option until the date of issuance of a stock certificate
to such holder for such shares. Except as expressly provided above in paragraph
13 with respect to changes in capitalization and stock dividends, no adjustment
shall be made for dividends or similar rights for which the record date is
before the date such stock certificate is issued.
15. Term and Amendment of Plan. This Plan was adopted by the Board on
October 31, 1997, subject, with respect to the validation of ISOs granted under
the Plan, to approval of the Plan by the stockholders of the Company at the next
Meeting of Stockholders or, in lieu thereof, by written consent. If the approval
of stockholders is not obtained prior to October 31, 1998, any grants of ISOs
under the Plan made prior to that date will be rescinded. The Plan shall expire
at the end of the day on October 31, 2007 (except as to Options outstanding on
that date). Subject to the provisions of paragraph 5 above, Options may be
granted under the Plan prior to the date of stockholder approval of the Plan.
The Board may terminate or amend the Plan in any respect at any time, except
that, without the approval of the stockholders obtained within 12 months before
or after the Board adopts a resolution authorizing any of the following actions:
(a) the total number of shares that may be issued under the Plan may not be
increased (except by adjustment pursuant to paragraph 13); (b) the provisions of
paragraph 3 regarding eligibility for grants of ISOs may not be modified; (c)
the provisions of paragraph 6(B) regarding the exercise price at which shares
may be offered pursuant to ISOs may not be modified (except by adjustment
pursuant to paragraph 13); and (d) the expiration date of the Plan may not be
extended. Except as otherwise provided in this paragraph 15, in no event may
action of the Board or stockholders alter or impair the rights of a grantee,
without such grantee's consent, under any Stock Right previously granted to such
grantee.
16. Modifications of ISOs; Conversion of ISOs into Non-Qualified
Options. Subject to paragraph 13(D), without the prior written consent of the
holder of an ISO, the Committee shall not alter the terms of such ISO (including
the means of exercising such ISO) if such alteration would constitute a
modification (within the meaning of Section 424(h)(3) of the Code). The
Committee, at the written request or with the written consent of any optionee,
may in its discretion take such actions as may be necessary to convert such
optionee's ISOs (or any installments or portions of installments thereof) that
have not been exercised on the date of conversion into Non-Qualified Options at
any time prior to the expiration of such ISOs, regardless of whether the
optionee is an employee of the Company or a Related Corporation at the time of
such conversion. Such actions may include, but shall not be limited to,
extending the exercise period or reducing the exercise price of the appropriate
installments of such ISOs. At the time of such conversion, the Committee (with
the consent of the optionee) may impose such conditions on the exercise of the
resulting Non-Qualified Options as the Committee in its discretion may
determine, provided that such conditions shall not be inconsistent with this
Plan. Nothing in the Plan shall be deemed to give any optionee the right to have
such optionee's ISOs converted into Non-Qualified Options, and no such
conversion shall occur until and unless the Committee takes appropriate action.
Upon the taking of such action, the Company
<PAGE> 8
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shall issue separate certificates to the optionee with respect to Options that
are Non-Qualified Options and Options that are ISOs.
17. Application Of Funds. The proceeds received by the Company from the
sale of shares pursuant to Options granted and Purchases authorized under the
Plan shall be used for general corporate purposes.
18. Notice to Company of Disqualifying Disposition. By accepting an ISO
granted under the Plan, each optionee agrees to notify the Company in writing
immediately after such optionee makes a Disqualifying Disposition (as described
in Sections 421, 422 and 424 of the Code and regulations thereunder) of any
stock acquired pursuant to the exercise of ISOs granted under the Plan. A
Disqualifying Disposition is generally any disposition occurring on or before
the later of (a) the date two years following the date the ISO was granted or
(b) the date one year following the date the ISO was exercised.
19. Withholding of Additional Income Taxes. Upon the exercise of a
Non-Qualified Option, the transfer of a Non-Qualified Stock Option pursuant to
an arm's-length transaction, the grant of an Award, the making of a Purchase of
Class A Common Stock for less than its fair market value, the making of a
Disqualifying Disposition (as defined in paragraph 18), the vesting or transfer
of restricted stock or securities acquired on the exercise of an Option
hereunder, or the making of a distribution or other payment with respect to such
stock or securities, the Company may withhold taxes in respect of amounts that
constitute compensation includible in gross income. The Committee in its
discretion may condition (i) the exercise of an Option, (ii) the transfer of a
Non-Qualified Stock Option, (iii) the grant of an Award, (iv) the making of a
Purchase of Class A Common Stock for less than its fair market value, or (v) the
vesting or transferability of restricted stock or securities acquired by
exercising an Option, on the grantee's making satisfactory arrangement for such
withholding. Such arrangement may include payment by the grantee in cash or by
check of the amount of the withholding taxes or, at the discretion of the
Committee, by the grantee's delivery of previously held shares of Class A Common
Stock or the withholding from the shares of Class A Common Stock otherwise
deliverable upon exercise of a Option shares having an aggregate fair market
value equal to the amount of such withholding taxes.
20. Governmental Regulation. The Company's obligation to sell and
deliver shares of the Class A Common Stock under this Plan is subject to the
approval of any governmental authority required in connection with the
authorization, issuance or sale of such shares.
Government regulations may impose reporting or other obligations on the
Company with respect to the Plan. For example, the Company may be required to
send tax information statements to employees and former employees that exercise
ISOs under the Plan, and the Company may be required to file tax information
returns reporting the income received by grantees of Options in connection with
the Plan.
21. Governing Law. The validity and construction of the Plan and the
instruments evidencing Stock Rights shall be governed by the laws of the
Commonwealth of Massachusetts, or the laws of any jurisdiction in which the
Company or its successors in interest may be organized.
<PAGE> 1
Exhibit 5.1
TESTA, HURWITZ & THIBEAULT, LLP
ATTORNEYS AT LAW
HIGH STREET TOWER, 125 HIGH STREET
BOSTON, MASSACHUSETTS 02110
OFFICE (617) 248-7000 FAX (617) 248-7000
September 13, 1999
Atlantic Data Services, Inc.
One Batterymarch Park
Quincy, Massachusetts 02169
Re: Registration Statement on Form S-8 Relating to the
Amended and Restated 1997 Stock Plan, as amended
--------------------------------------------------
Ladies and Gentlemen:
Reference is made to the above-captioned Registration Statement on Form
S-8 (the "Registration Statement") filed by Atlantic Data Services, Inc. (the
"Company") with the Securities and Exchange Commission under the Securities Act
of 1933, as amended, relating to an aggregate of 1,500,000 shares of Common
Stock, par value $.01 per share, of the Company (the "Shares").
We are counsel to the Company and are familiar with the proceedings of its
shareholders and Board of Directors. We have examined original or certified
copies of the Company's Second Amended and Restated Articles of Organization,
the Company's Second Amended and Restated By-Laws, the corporate records of the
Company to the date hereof, and such other certificates, documents, records and
materials as we have deemed necessary in connection with this opinion.
We are members only of the Bar of the Commonwealth of Massachusetts and
are not experts in, and express no opinion regarding, the laws of any
jurisdiction other than the Commonwealth of Massachusetts and the United States
of America.
Based upon and subject to the foregoing, we are of the opinion that the
Shares issued or proposed to be issued by the Company pursuant to the Amended
and Restated 1997 Stock Plan, as amended (the "Plan") will be, upon receipt of
the consideration provided for in the Plan, validly issued, fully paid and
nonassessable after the issuance of such Shares in accordance with the terms of
the Plan.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement.
Very truly yours,
/s/ TESTA, HURWITZ & THIBEAULT, LLP
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-8 of our report dated April 26, 1999 relating
to the financial statements and financial statement schedule, which appears in
Atlantic Data Services, Inc.'s Annual Report on Form 10-K for the year ended
March 31, 1999.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
September 10, 1999
<PAGE> 1
Exhibit 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this registration
statement on Form S-8 pertaining to the Amended and Restated 1997 Stock Plan, as
amended, of Atlantic Data Services, Inc. of our report dated April 13, 1998,
with respect to the financial statements and schedule of Atlantic Data Services,
Inc. as of March 31, 1998 and and for the years ended March 31, 1998 and 1997
included in the Annual Report on Form 10-K of Atlantic Data Services, Inc. for
the year ended March 31, 1999, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
Boston, Massachusetts
September 7, 1999
