<PAGE> 1
As filed with the Securities and Exchange Commission on June 13, 1995
Registration No. 33 -__________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
TOM BROWN, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 95-1949781
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
508 WEST WALL STREET, SUITE 500
MIDLAND, TEXAS 79701
(Address of principal executive offices) (Zip Code)
</TABLE>
TOM BROWN, INC. 1989 STOCK OPTION PLAN
(Full title of the plan)
DONALD L. EVANS
Chairman of the Board of Directors, Chief Executive Officer and President
500 Empire Plaza Building
Midland, Texas 79701
(Name and address of agent for service)
915-682-9715
(Telephone number, including area code, of agent for service)
Copy to:
Thomas W. Ortloff
Lynch, Chappell & Alsup
300 N. Marienfeld, Suite 700
Midland, Texas 7970l
(915) 683-3351
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================================
Proposed Proposed
Maximum Maximum Amount of
Title of Securities Amount to be Offering Price Aggregate Registration
To Be Registered Registered Per Share* Offering Price* Fee
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$.10 par value 400,000 $14.79 $5,916,000 $2,040.00
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
* Estimated solely for the purpose of calculating the registration fee pursuant
to Rule 457(c) based upon the average of the high and low prices of the
Registrant's Common Stock as reported on the NASDAQ National Market System
for June 9, 1995.
Exhibit Index on Page 6.
<PAGE> 2
PURSUANT TO GENERAL INSTRUCTION "E"
OF FORM S-8,
THE CONTENTS OF THE REGISTRANT'S
REGISTRATION STATEMENT NO. 33-42991
ARE HEREBY INCORPORATED BY REFERENCE
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The validity of the issuance of the Common Stock issuable upon exercise of
the options has been passed upon for the Company by Lynch, Chappell & Alsup, a
Professional Corporation, Midland, Texas. James M. Alsup, a shareholder in the
firm of Lynch, Chappell & Alsup, is the Secretary of the Company and the
beneficial owner of 10,000 shares of Common Stock of Registrant.
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
4.1 -- Certificate of Incorporation of Registrant
(Incorporated by reference to Exhibit No. 3.1 in the
Registrant's Form 8-B Registration Statement dated
July 15, 1987 and filed with the Securities and
Exchange Commission on July 17, 1987)
4.2 -- Certificate of Amendment to the Certificate of
Incorporation of Registrant, as amended September 7,
1988 (Incorporated by reference to Exhibit No. 3.1
in the Registrant's Form 10-K Report dated June 27,
1989 and filed with the Securities and Exchange
Commission on June 29, 1989)
4.3 -- Certificate of Amendment to the Certificate of
Incorporation of Registrant, as amended June 5, 1990
(Incorporated by reference to Exhibit No. 3.3 in the
Registrant's Form 10-K Report dated July 12, 1990
and filed with the Securities and Exchange
Commission on July 16, 1990)
</TABLE>
-2-
<PAGE> 3
<TABLE>
<S> <C>
4.4 -- Bylaws of Registrant (Incorporated by reference to
Exhibit No. 3.2 in the Registrant's Form 8-B
Registration Statement dated July 15, 1987 and filed
with the Securities and Exchange Commission on July
17, 1987)
4.5 -- Rights Agreement dated as of March 5, 1991 between
the Registrant and American Stock Transfer & Trust
Company (Incorporated by reference to Exhibit No.
4(a) in the Registrant's Form 8-K Report dated March
12, 1991 and filed with the Securities and Exchange
Commission on March 15, 1991)
* 4.6 -- Registrant's 1989 Stock Option Plan, as amended
* 5 -- Opinion of Lynch, Chappell & Alsup, a Professional
Corporation
*23.1 -- Consent of Lynch, Chappell & Alsup (contained in
Exhibit 5)
*23.2 -- Consent of Arthur Andersen LLP
*24.1 -- Power of Attorney contained on Page 5 hereof
</TABLE>
- --------------------
* Filed herewith.
-3-
<PAGE> 4
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 Midland, Texas, on June 9, 1995.
TOM BROWN, INC.
By: /s/ Donald L. Evans
-------------------------------
Donald L. Evans, Chairman of
the Board of Directors, Chief
Executive Officer and President
-4-
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Donald L. Evans and R. Kim Harris and
each of them, either one of whom may act without joinder of the other, his true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him in his name, place and stead, in any and all
capacities, to sign any and all amendments to this Registration Statement, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them severally, full power and
authority to do and to perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully and to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, and each of them, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- -------------------- ---------------- ----------------
<S> <C> <C>
/s/ Donald L. Evans Chairman of the Board of Directors,
- ---------------------------- Chief Executive Officer and President
Donald L. Evans (Principal Executive Officer) June 9, 1995
/s/ R. Kim Harris Controller
- ---------------------------- (Principal Financial Officer) June 9, 1995
R. Kim Harris
/s/ Thomas C. Brown Director June 9, 1995
- ----------------------------
Thomas C. Brown
/s/ William R. Granberry Director June 9, 1995
- ----------------------------
William R. Granberry
/s/ Henry Groppe Director June 9, 1995
- ----------------------------
Henry Groppe
/s/ Edward W. LeBaron, Jr. Director June 9, 1995
- ----------------------------
Edward W. LeBaron, Jr.
/s/ James B. Wallace Director June 9, 1995
- ----------------------------
James B. Wallace
/s/ Robert H. Whilden, Jr. Director June 9, 1995
- ----------------------------
Robert H. Whilden, Jr.
</TABLE>
-5-
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
4.1 -- Certificate of Incorporation of Registrant
(Incorporated by reference to Exhibit No. 3.1 in the
Registrant's Form 8-B Registration Statement dated
July 15, 1987 and filed with the Securities and
Exchange Commission on July 17, 1987)
4.2 -- Certificate of Amendment to the Certificate of
Incorporation of Registrant, as amended September 7,
1988 (Incorporated by reference to Exhibit No. 3.1
in the Registrant's Form 10-K Report dated June 27,
1989 and filed with the Securities and Exchange
Commission on June 29, 1989)
4.3 -- Certificate of Amendment to the Certificate of
Incorporation of Registrant, as amended June 5, 1990
(Incorporated by reference to Exhibit No. 3.3 in the
Registrant's Form 10-K Report dated July 12, 1990
and filed with the Securities and Exchange
Commission on July 16, 1990)
4.4 -- Bylaws of Registrant (Incorporated by reference to
Exhibit No. 3.2 in the Registrant's Form 8-B
Registration Statement dated July 15, 1987 and filed
with the Securities and Exchange Commission on July
17, 1987)
4.5 -- Rights Agreement dated as of March 5, 1991 between
the Registrant and American Stock Transfer & Trust
Company (Incorporated by reference to Exhibit No.
4(a) in the Registrant's Form 8-K Report dated March
12, 1991 and filed with the Securities and Exchange
Commission on March 15, 1991)
* 4.6 -- Registrant's 1989 Stock Option Plan, as amended
* 5 -- Opinion of Lynch, Chappell & Alsup, a Professional
Corporation
*23.1 -- Consent of Lynch, Chappell & Alsup (contained in
Exhibit 5)
*23.2 -- Consent of Arthur Andersen LLP
*24.1 -- Power of Attorney contained in Page 5 hereof
</TABLE>
- --------------------
* Filed herewith.
-6-
<PAGE> 1
EXHIBIT 4.6
TOM BROWN, INC.
1989 STOCK OPTION PLAN
(AS AMENDED)
I. PURPOSE OF THE PLAN
The TOM BROWN, INC. 1989 STOCK OPTION PLAN (the "Plan") is intended to
provide a means whereby certain employees and directors who are not employees
("Nonemployee Directors") of TOM BROWN, INC., a Delaware corporation (the
"Company"), and its subsidiaries may develop a sense of proprietorship and
personal involvement in the development and financial success of the Company,
and to encourage them to remain with and devote their best efforts to the
business of the Company, thereby advancing the interests of the Company and its
shareholders. Accordingly, the Plan provides for granting certain employees
and Nonemployee Directors the option ("Option") to purchase shares of the
common stock of the Company ("Stock"), as hereinafter set forth. Options
granted under the Plan to employees may be either incentive stock options,
within the meaning of section 422A(b) of the Internal Revenue Code of 1986, as
amended (the "Code"), ("Incentive Stock Options") or options which do not
constitute Incentive Stock Options. Options granted under the Plan to
Nonemployee Directors will be options which do not constitute Incentive Stock
Options.
II. ADMINISTRATION
The Plan shall be administered by the Board of Directors of the Company
(the "Board") or by a committee (the "Committee") of three or more directors of
the Company appointed by the Board. If the Plan is administered by the Board,
a majority of the members of the Board, and a majority of the members of the
Board acting in the matter, shall not be eligible, and shall not have been
eligible at any time within one year prior to their appointment to the Board,
to participate in the Plan or in any other stock, stock option or stock
appreciation rights plan of the Company or any of its affiliates ("Company
Stock Plan"), other than the eligibility of Nonemployee Directors to
participate in the Plan pursuant to paragraph (b) of Article IV or eligibility
to participate in any other Company Stock Plan which would not cause the
individuals constituting such majority to cease to be "disinterested persons"
within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as
amended (the "1934 Act"). Moreover, members of the Committee shall not be
eligible, and shall not have been eligible at any time within one year prior to
their appointment to the Committee, to participate in a Company Stock Plan,
other than the eligibility of Nonemployee Directors to participate in the Plan
pursuant to paragraph (b) of Article IV or eligibility to participate in any
other Company Stock Plan which would not cause such members to cease to be
"disinterested persons" within the meaning of Rule 16b-3 under the 1934 Act.
If a Committee is not appointed by the Board, the Board shall act as and be
deemed to be the Committee for all purposes of the Plan other than the
immediately preceding sentence. The Committee shall have sole authority to
select the employees who
<PAGE> 2
are to be granted Options from among those eligible hereunder and to establish
the number of shares which may be issued to employees under each Option. The
Committee is authorized to interpret the Plan and may from time to time adopt
such rules and regulations, consistent with the provisions of the Plan, as it
may deem advisable to carry out the Plan. All decisions made by the Committee
in selecting the employees to whom Options shall be granted, in establishing
the number of shares which may be issued to employees under each Option and in
construing the provisions of the Plan shall be final.
III. OPTIONS AGREEMENTS
Each Option granted to an employee shall be evidenced by an Employee
Option Agreement and shall contain such terms and conditions, and may be
exercisable for such periods, as may be approved by the Committee. The terms
and conditions of the respective Employee Option Agreements need not be
identical. Specifically, an Employee Option Agreement may provide for the
surrender of the right to purchase shares under the Option in return for a
payment in cash or shares of Stock or a combination of cash and shares of Stock
equal in value to the excess of the fair market value of the shares with
respect to which the right to purchase is surrendered over the option price
therefor ("Stock Appreciation Rights"), on such terms and conditions as the
Committee in its sole discretion may prescribe; provided, that with respect to
Stock Appreciation Rights granted to employees who are subject to Section 16 of
the 1934 Act, except as provided in Subparagraph IX(c) hereof, the Committee
shall retain final authority (i) to determine whether an employee optionee
shall be permitted, or (ii) to approve an election by an employee optionee, to
receive cash in full or partial settlement of Stock Appreciation Rights.
Moreover, an Employee Option Agreement may provide for the payment of the
option price, in whole or in part, by the delivery of a number of shares of
Stock (plus cash if necessary) having a fair market value equal to such option
price. For all purposes under the Plan, the fair market of a share of Stock on
a particular date shall be equal to the mean of the reported high and low sales
prices of the Stock on the stock exchange composite tape if the Stock is traded
on a stock exchange on that date, or if no prices are reported on that date, on
the last preceding date on which such prices of the Stock are so reported. If
the Stock is traded over the counter at the time a determination of its fair
market value is required to be made hereunder, its fair market value shall be
deemed to be equal to the average between the reported high and low or closing
bid and asked prices of Stock on the most recent date on which Stock was
publicly traded. In the event Stock is not publicly traded at the time a
determination of its value is required to be made hereunder, the determination
of its fair market value shall be made by the Committee in such manner as it
deems appropriate. Each Option granted to a Nonemployee Director shall be
evidenced by a Nonemployee Option Agreement in the form attached to the Plan as
Exhibit 1. Each Option and all rights granted thereunder shall not be
transferable other than by will or the laws of descent and distribution, and
shall be exercisable during the optionee's lifetime only by the optionee or the
optionee's guardian or legal representative.
2
<PAGE> 3
IV. ELIGIBILITY OF OPTIONEE
(a) Subject to the provisions of Article II and paragraphs (b) and
(c) below, Options may be granted only to individuals who are key employees
(including officers and directors who are also key employees) of the Company or
any parent or subsidiary corporation (as defined in section 425 of the Code) of
the Company at the time the Option is granted. Options may be granted to the
same employee on more than one occasion.
(b) Subject to the limitation on the number of shares of stock set
forth in Article V, (i) each individual who is a Nonemployee Director on
December 12, 1989 is hereby granted, effective as of such date, an Option to
purchase 25,000 shares of Stock and (ii) each individual who becomes a
Nonemployee Director following December 12, 1989 shall be granted, effective
the Monday following such individual's election to the Board as a Nonemployee
Director, an Option to purchase 25,000 shares of Stock.
(c) No Incentive Stock Option shall be granted to an individual if,
at the time the Option is granted, such individual owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or of its parent or subsidiary corporation, within the meaning of
Section 422A(b)(6) of the Code, unless (i) at the time such Option is granted
the option price is at least 110% of the fair market value of the Stock subject
to the Option and (ii) such Option by its terms is not exercisable after the
expiration of five years from the date of grant. To the extent that the
aggregate fair market value (determined at the time the respective Incentive
Stock Option is granted) of stock with respect to which Incentive Stock Options
granted after 1986 are exercisable for the first time by an individual during
any calendar year under all incentive stock option plans of the Company and its
parent and subsidiary corporations exceeds $100,000, such Incentive Stock
Options shall be treated as options which do not constitute Incentive Stock
Options. The Committee shall determine, in accordance with applicable
provisions of the Code, Treasury Regulations and other administrative
pronouncements, which of an employee optionee's Incentive Stock Options will
not constitute Incentive Stock Options because of such limitation and shall
notify the employee optionee of such determination as soon as practicable after
such determination.
V. SHARES SUBJECT TO THE PLAN
The aggregate number of shares which may be issued under Options granted
under the Plan shall not exceed 1,400,000 shares of Stock. Such shares may
consist of authorized but unissued shares of Stock or previously issued shares
of Stock reacquired by the Company. Any of such shares which remain unissued
and which are not subject to outstanding Options at the termination of the Plan
shall cease to be subject to the Plan, but, until termination of the Plan, the
Company shall at all times make available sufficient number of shares to meet
the requirements of the Plan. Should any Option hereunder expire or terminate
prior to its exercise in full, the shares theretofore subject to such Option
may again be subject to an Option granted under the Plan. The aggregate number
of shares which may be issued under the Plan shall be subject to adjustment in
the same manner as
3
<PAGE> 4
provided in Paragraph IX hereof with respect to share of Stock subject to
Options then outstanding. Exercise of an Option in any manner, including an
exercise involving a Stock Appreciation Right by an employee, shall result in a
decrease in the number of shares of Stock which may thereafter be available,
both for purposes of the Plan and for sale to any one individual, by the number
of shares as to which the Option is exercised. Separate stock certificates
shall be issued by the Company for those shares acquired pursuant to the
exercise of an Incentive Stock Option and for those shares acquired pursuant to
the exercise of any Option which does not constitute an Incentive Stock Option.
(Amended May 17, 1995)
VI. OPTION PRICE
Subject to the provisions of Article VII, the purchase price of Stock
issued under each Option shall be the fair market value of Stock subject to the
Option on the date the Option is granted.
VII. OPTIONS EXCHANGED FOR PRIOR OPTIONS
An Option may be granted in exchange for an individual's right and
option to purchase shares of Stock pursuant to the terms of an agreement that
existed prior to the date of such Option is granted ("Prior Option"). An
Option Agreement that grants an Option in exchange for a Prior Option shall
provide for the surrender and cancellation of the Prior Option. The purchase
price of Stock issued under an Option granted in exchange for a Prior Option
shall be determined by the Committee and, such purchase price may, without
limitation, be equal to the price for which the optionee could have purchased
Stock under the Prior Option.
VIII. TERM OF PLAN
The Plan shall be effective upon the date of its adoption by the Board.
Except with respect to Options then outstanding, if not sooner terminated under
the provisions of Paragraph X, the Plan shall terminate upon and no further
Options shall be granted after the expiration of ten years from the date of its
adoption by the Board.
IX. RECAPITALIZATION OR REORGANIZATION
(a) The existence of the Plan and the Options granted hereunder
shall not affect in any way the right or power of the Board or the shareholders
of the Company to make or authorize any adjustment, recapitalization,
reorganization or other change in the Company's capital structure or its
business, any merger or consolidation of the Company, any issue of debt or
equity securities ahead of or affecting Stock or the rights thereof, the
dissolution or liquidation of the Company or any sale, lease, exchange or other
disposition of all or any part of its assets or business or any other corporate
act or proceeding.
4
<PAGE> 5
(b) The shares with respect to which Options may be granted are
shares of Stock as presently constituted, but if, and whenever, prior to the
expiration of an Option theretofore granted, the Company shall effect a
subdivision or consolidation of shares of Stock or the payment of a stock
dividend on Stock without receipt of consideration by the Company, the number
of shares of Stock with respect to which such Option may thereafter be
exercised (i) in the event of an increase in the number of outstanding shares
shall be proportionately increased, and the purchase price per share shall be
proportionately reduced, and (ii) in the event of a reduction in the number of
outstanding shares shall be proportionately reduced, and the purchase price per
share shall be proportionately increased.
(c) If the Company recapitalizes or otherwise changes its capital
structure, thereafter upon any exercise of an Option theretofore granted the
optionee shall be entitled to purchase under such Option, in lieu of the number
of shares of Stock as to which such Option shall then be exercisable, the
number and class of shares of stock and securities to which the optionee would
have been entitled pursuant to the terms of the recapitalization if,
immediately prior to such recapitalization, the optionee had been the holder of
record of the number of shares of Stock as to which such Option is then
exercisable. If (i) the Company shall not be the surviving entity in any
merger or consolidation (or survives only as a subsidiary of an entity other
than a previously wholly-owned subsidiary of the Company), (ii) the Company
sells, leases or exchanges or agrees to sell, lease or exchange all or
substantially all of its assets to any other person or entity (other than a
wholly-owned subsidiary of the Company), (iii) the Company is to be dissolved
and liquidated, (iv) any person or entity, including a "group" as contemplated
by Section 13(d)(3) of the 1934 Act, acquires or gains ownership or control
(including, without limitation, power to vote) of more than 50% of the
outstanding shares of Stock, or (v) as a result of or in connection with a
contested election of directors, the persons who were directors of the Company
before such election shall cease to constitute a majority of the Board (each
such event is referred to herein as a "Corporate Change"), then effective as of
a date (selected by the Committee) within (a) ten days after the approval by
the shareholders of the Company of such merger, consolidation, sale, lease or
exchange of assets or dissolution or such election of directors or (b) thirty
days of such change of control, the Committee, acting in its sole discretion
without the consent or approval of any optionee, shall effect one or more of
the following alternatives with respect to the then outstanding Options held by
employees, which may vary among individual employee optionees: (1) accelerate
the time at which such Options may be exercised so that such Options may be
exercised in full for a limited period of time on or before a specified date
(before or after such Corporate Change) fixed by the Committee, after which
specified date all unexercised Options and all rights of employee optionees
thereunder shall terminate, (2) require the mandatory surrender to the Company
by selected employee optionees of some or all of such Options (irrespective of
whether such Options are then exercisable under the provisions of the Plan) as
of a date, before or after such Corporate Change, specified by the Committee,
in which event the Committee shall thereupon cancel such Options any pay to
each employee optionee an amount of cash per share equal to the excess of the
amount calculated in Subparagraph (d) below (the "Change of Control Value") of
the shares subject to such Option over the exercise price(s) under such
5
<PAGE> 6
Options for such shares, (3) make such adjustments to such Options as the
Committee deems appropriate to reflect such Corporate Change (provided,
however, that the Committee may determine in its sole discretion that no
adjustment is necessary to such Options) or (4) provide that thereafter upon
any exercise of an Option theretofore granted the employee optionee shall be
entitled to purchase under such Option, in lieu of the number of shares of
Stock as to which such Option shall then be exercisable, the number and class
of shares of stock or other securities or property to which the employee
optionee would have been entitled pursuant to the terms of the agreement of
merger, consolidation or sale of assets and dissolution if, immediately prior
to such merger, consolidation or sale of assets and dissolution the employee
optionee had been the holder of record of the number of shares of Stock as to
which such Option is then exercisable. In the event of a Corporate Change, as
described in the immediately preceding sentence, any then outstanding Options
held by Nonemployee Directors shall become fully exercisable on the fifth day
following the approval by the shareholders of the Company of such Corporate
Change.
(d) For the purposes of clause (2) in paragraph (c) above, the
"Change of Control Value" shall equal the amount determined in clause (i), (ii)
or (iii), whichever is applicable, as follows: (i) the per share price offered
to shareholders of the Company in any such merger, consolidation, sale of
assets or dissolution transaction, (ii) the price per share offered to
shareholders of the Company in any tender offer or exchange offer whereby a
Corporate Change takes place, or (iii) if such Corporate Change occurs other
than pursuant to a tender or exchange offer, the fair market value per share of
the shares into which such Options being surrendered are exercisable, as
determined by the Committee as of the date determined by the Committee to be
the date of cancellation and surrender of such Options. In the event that the
consideration offered to shareholders of the Company in any transaction
described in this Subparagraph (d) or Subparagraph (c) above consists of
anything other than cash, the Committee shall determine the fair cash
equivalent of the portion of the consideration offered which is other than
cash.
(e) Any adjustment provided for in Subparagraphs (b) or (c) above
shall be subject to any required shareholder action.
(f) Except as hereinbefore expressly provided, the issuance by the
Company of shares of stock of any class or securities convertible into shares
of stock of any class, for cash, property, labor or services, upon direct sale,
upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, and in any case whether or not for fair value, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number of shares of Stock subject to Options theretofore granted or the
purchase price per share.
6
<PAGE> 7
X. AMENDMENT OR TERMINATION OF THE PLAN
The Board in its discretion may terminate the Plan at any time with
respect to any shares for which Options have not theretofore been granted. The
Board shall have the right to alter or amend the Plan or any part thereof from
time to time, provided, that no change in any Option theretofore granted may be
made which would impair the rights of the optionee without the consent of such
optionee; and provided, further, that the Board may not make any alteration or
amendment which would materially increase the benefits accruing to participants
under the Plan, increase the aggregate number of shares which may be issued
pursuant to the provisions of the Plan, change the class of individuals
eligible to receive Options under the Plan, change the purchase price of Stock
purchased pursuant to an Option granted to a Nonemployee Director or extend the
term of the Plan, without the approval of the shareholders of the Company.
XI. SECURITIES LAWS
The Company shall not be obligated to issue any Stock pursuant to any
Option granted under the Plan at any time when the shares covered by such
Option have not been registered under the Securities Act of 1933 and such other
state and federal laws, rules or regulations as the Company or the Committee
deems applicable and, in the opinion of legal counsel for the Company, there is
no exemption from the registration requirements of such laws, rules or
regulations available for the issuance and sale of such shares.
7
<PAGE> 8
EXHIBIT 1
NONSTATUTORY STOCK OPTION AGREEMENT
FOR NONEMPLOYEE DIRECTORS
AGREEMENT made as of the _____________ day of _______________, 19____,
between TOM BROWN, INC., a Delaware corporation (the "Company") and
____________________________________________ ("Director").
To carry out the purposes of the TOM BROWN, INC. 1989 STOCK OPTION
PLAN (the "Plan"), by affording Director the opportunity to purchase shares of
common stock of the Company ("Stock"), and in consideration of the mutual
agreements and other matters set forth herein and in the Plan, the Company and
Director hereby agree as follows:
1. GRANT OF OPTION. The Company hereby irrevocably grants to
Director the right and option ("Option") to purchase all or any part of an
aggregate of 25,000 shares of Stock, on the terms and conditions set forth
herein and in the Plan, which Plan is incorporated herein by reference as a
part of this Agreement. This Option shall not be treated as an incentive stock
option within the meaning of section 422A(b) of the Internal Revenue Code of
1986, as amended (the "Code").
2. PURCHASE PRICE. The purchase price of Stock purchased
pursuant to the exercise of this Option shall be $___________ ____ , which has
been determined to be the fair market value of the Stock at the date of grant
of this Option. For all purposes of this Agreement, fair market value of Stock
shall be determined in accordance with the provisions of the Plan.
3. EXERCISE OF OPTION. Subject to the earlier expiration of this
Option as herein provided, this Option may be exercised, by written notice to
the Company at its principal executive office addressed to the attention of its
Chief Executive Officer, at any time and from time to time following the
expiration of six months from the date of grant hereof, but, except as
otherwise provided below, this Option shall not be exercisable for more than a
percentage of the aggregate number of shares offered by this Option determined
by the number of full years from the date of grant hereof to the date of such
exercise, in accordance with the following schedule:
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES THAT
NUMBER OF FULL YEARS MAY BE PURCHASED
-------------------- ----------------
<S> <C>
Less than 1 year 40%
1 year 70%
2 years or more 100%
</TABLE>
<PAGE> 9
This Option is not transferable by Director otherwise than by will or
the laws of descent and distribution, and may be exercised only by Director
during Director's lifetime and while Director remains a director of the
Company, except that:
(a) If Director ceases to be a director of the Company because of
disability (within the meaning of section 22(e)(3) of the Code),
this Option may be exercised in full by Director (or Director's
estate or the person who acquires this Option by will or the
laws of descent and distribution or otherwise by reason of the
death of Director) at any time during the period of one year
following such termination.
(b) If Director dies while he is a director of the Company,
Director's estate, or the person who acquires this Option by
will or the laws of descent and distribution or otherwise by
reason of the death of Director, may exercise this Option in
full at any time during the period of one year following the
date of Director's death.
(c) If Director ceases to be a director of the Company for any
reason other than as described in (a) or (b) above, unless
Director is removed for cause, this Option may be exercised by
Director at any time during the period of three months following
the date Director ceases to be a director of the Company, or by
Director's estate (or the person who acquires this Option by
will or the laws of descent and distribution or otherwise by
reason of the death of Director) during a period of one year
following Director's death if Director dies during such
three-month period, but in each case only as to the number of
shares Director was entitled to purchase hereunder upon exercise
of this Option as of the date Director ceases to be a director.
For purposes of this Agreement, "cause" shall mean Director's
gross negligence or willful misconduct in the performance of his
duties as a director, or Director's final conviction of a felony
or of a misdemeanor involving moral turpitude.
This Option shall not be exercisable in any event after the expiration of ten
years from the date of grant hereof. The purchase price of shares as to which
this Option is exercised shall be paid in full at the time of exercise (a) in
cash (including check, bank draft or money order payable to the order of the
Company), (b) by delivering to the Company shares of Stock having a fair market
value equal to the purchase price, or (c) any combination of cash or Stock. No
fraction of a share of Stock shall be issued by the Company upon exercise of an
Option or accepted by the Company in payment of the purchase price thereof;
rather, Director shall provide a cash payment for such amount as is necessary
to effect the issuance and acceptance of only whole shares of Stock. Unless
and until a certificate or certificates representing such shares shall have
been issued by the Company to Director, Director (or the
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person permitted to exercise this Option in the event of Director's death)
shall not be or have any of the rights or privileges of a shareholder of the
Company with respect to shares acquirable upon an exercise of this Option.
4. STATUS OF STOCK. Director understands that at the time of the
execution of this Agreement the shares of Stock to be issued upon exercise of
this Option have not been registered under the Securities Act of 1933, as
amended (the "Act"), or any state securities law. The Company may effect such
a registration in the future; however, until the shares of Stock acquirable
upon the exercise of the Option have been registered for issue under the Act,
the Company will not issue such shares unless the holder of the Option provides
the Company with a written opinion of legal counsel, who shall be satisfactory
to the Company, addressed to the Company and satisfactory in form and substance
to the Company's counsel, to the effect that the proposed issuance of such
shares to such Option holder may be made without registration under the Act.
In the event exemption from registration under the Act is available upon an
exercise of this Option, Director (or the person permitted to exercise this
Option in the event of Director's death), if requested by the Company to do so,
will execute and deliver to the Company in writing an agreement containing such
provisions as the Company may require to assure compliance with applicable
securities laws.
Director agrees that the shares of Stock which Director may acquire by
exercising this Option shall be acquired for investment without a view to
distribution, within the meaning of the Act, and shall not be sold,
transferred, assigned, pledged or hypothecated in the absence of an effective
registration statement for the shares under the Act and applicable state
securities laws or an applicable exemption from the registration requirements
of the Act and any applicable state securities laws. Director also agrees that
the shares of Stock which Director may acquire by exercising this Option will
not be sold or otherwise disposed of in any manner which would constitute a
violation of any applicable securities laws, whether federal or state.
In addition, Director agrees (i) that the certificates representing
the shares of Stock purchased under this Option may bear such legend or legends
as the Committee deems appropriate in order to assure compliance with
applicable securities laws, (ii) that the Company may refuse to register the
transfer of the shares of Stock purchased under this Option on the stock
transfer records of the Company if such proposed transfer would in the opinion
of counsel satisfactory to the Company constitute a violation of any applicable
securities law and (iii) that the Company may give related instructions to its
transfer agent, if any, to stop registration of the transfer of the shares of
Stock purchased under this Option.
5. BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of any successors to the Company and all persons lawfully
claiming under Director.
6. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas.
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IN WITNESS WHEREOF, The Company has caused this Agreement to be duly
executed by its officer thereunto duly authorized, and Director has executed
this Agreement, all as of the day and year first above written.
TOM BROWN, INC.
BY:
-------------------------
-----------------------------
DIRECTOR
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EXHIBIT 5
LYNCH, CHAPPELL & ALSUP
A Professional Corporation
ATTORNEYS
THE SUMMIT, SUITE 700
300 NORTH MARIENFELD
MIDLAND, TEXAS 79701
(915) 683-3351
June 9, 1995
Tom Brown, Inc.
500 Empire Plaza Building
Midland, Texas 79701
Re: Tom Brown, Inc. 1989 Stock Option Plan; Sale of up to 400,000
shares of Common Stock
Gentlemen:
We have acted as counsel to Tom Brown, Inc., a Delaware corporation
(the "Company"), in connection with the proposed issuance and sale by the
Company of up to 400,000 shares of Common Stock, $.10 par value ("Common
Stock"), of the Company upon exercise of stock options granted or to be granted
by the Company under the Company's 1989 Stock Option Plan (the "Plan"), as
further described in a Registration Statement on Form S-8 filed by the Company
with the Securities and Exchange Commission (herein referred to as the
"Registration Statement").
We have made such inquiries and examined such documents as we have
considered necessary or appropriate for the purpose of giving the opinions
hereinafter set forth. We have assumed the genuineness and authenticity of all
signatures on all original documents, the authenticity of all documents
submitted to us as originals, the conformity to originals of all documents
submitted to us as copies and the due authorization, execution, delivery or
recordation of all documents where due authorization, execution or recordation
are prerequisites to the effectiveness thereof.
Based upon the foregoing, and having regard for such legal
considerations as we deem relevant, we are of the opinion that the Plan has
been duly and validly authorized and adopted, and the 400,000 shares of Common
Stock that may be issued and sold by the Company from time to time upon the
exercise of stock options granted or to be granted in accordance with the
Company's Plan, as described in the Registration Statement, will, upon issuance
and delivery against payment therefor, be legally issued, fully paid and
nonassessable.
<PAGE> 2
We hereby consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement and to the
statements made regarding our Firm and to the use of our name under the heading
"Item 5. Interests of Named Experts and Counsel" in the Registration
Statement.
Yours very truly,
LYNCH, CHAPPELL & ALSUP,
a Professional Corporation
By: /s/ Thomas W. Ortloff
--------------------------
Thomas W. Ortloff
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EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we consent to the incorporation by
reference in this registration statement of our report dated February 24, 1995
included in the Annual Report on Form 10-K of Tom Brown, Inc. for the year
ended December 31, 1994 and to all references to our firm included in this
registration statement.
/s/ ARTHUR ANDERSEN LLP
Houston, Texas
June 9, 1995
