<PAGE> 1
As filed with the Securities and Exchange Commission on January 13, 1997
Registration No. 333-[___________]
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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THE GNI GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0232338
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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2525 BATTLEGROUND ROAD
DEER PARK, TEXAS 77536
(Address of Principal Executive Offices Including Zip Code)
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THE GNI GROUP, INC. 1995 MANAGEMENT EQUITY INCENTIVE/STOCK OPTION PLAN
(Full title of the Plan)
---------------
Carl V Rush, Jr. Copy to:
President and Chief Executive Officer Geoffrey A. Long
The GNI Group, Inc. Bracewell & Patterson, L.L.P.
2525 Battleground Road 711 Louisiana Street, Suite 2900
P. O. Box 220 Houston, Texas 77002-2781
Deer Park, Texas 77536-0220 (713) 223-2900
(281) 930-0350
(Name, address and telephone number
of agent for service)
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===========================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLES OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 500,000 $6.125 $3,062,500 $929
$.01 par value shares
===========================================================================================================
</TABLE>
(1) Pursuant to Rule 416(a), this Registration Statement shall also include
any additional shares of Common Stock issuable pursuant to the
antidilution provisions of the Plan.
(2) The proposed maximum offering price per share and the proposed maximum
aggregate offering price are (a) calculated, pursuant to Rule 457(h)(1),
by multiplying the number of shares to be registered by the average of the
high and low prices of a share of Common Stock, as quoted on the NASDAQ
National Market System on January 9, 1997, which was $6.125, and (b)
provided herein for the sole purpose of determining the registration fee.
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<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following materials previously filed by The GNI Group, Inc. (the
"Company") with the Securities and Exchange Commission (the "Commission")
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1996;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996;
3. The description of the common stock, par value $.01 per share, of
the Company (the "Common Stock") which is contained in the
Registration Statement on Form 8-A filed by the Company on
February 25, 1988 under Section 12 of the Exchange Act; and
4. The Company's Current Report on Form 8-K filed on October 1,
1996.
All documents subsequently filed by the Company with the Commission pursuant to
Sections 13(a), 13(c) 14 and 15(d) of the Exchange Act, prior to the filing of
a post-effective amendment to this Registration Statement, which indicates that
all the shares of Common Stock registered hereunder have been sold or which
deregisters all shares of Common Stock then remaining unsold shall be deemed to
be incorporated herein by reference and to be a part hereof from the date of
filing of such documents.
Any statements contained in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this registration to the extent that a statement contained
herein or in any other subsequently filed document that also is or is deemed to
be incorporated herein by reference modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Registration Statement.
Item 6. Indemnification of Directors and Officers.
The Company's Certificate of Incorporation and Bylaws incorporate
substantially the provisions of the Delaware General Corporation Law ("DGCL")
providing for indemnification of directors and officers of the Company against
expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with any proceeding arising by reason of the
fact that such person is or was an officer or director of the Company or is or
was serving at the request of the Company as a director, officer or employee of
another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise.
As permitted by Section 102 of the DGCL, Article IX of the Company's
Certificate of Incorporation contains provisions eliminating a director's
personal liability for monetary damages to the Company and its stockholders
arising from a breach of a director's fiduciary duty except for liability (a)
for any breach of the director's duty of loyalty to the Company or its
stockholders, (b) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (c) under Section 174 of
the DGCL, or (d) for any transaction from which the director derived an
improper personal benefit.
<PAGE> 3
Section 145 of the DGCL provides generally that a person sued as a
director, officer, employee or agent of a corporation may be indemnified by the
corporation for reasonable expenses, including attorneys' fees, if in the case
of other than derivative suits he has acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation (and, in the case of a criminal proceeding, had no reasonable cause
to believe that his conduct was unlawful). In the case of a derivative suit,
an officer, employee or agent of the corporation which is not protected by the
Certificate of Incorporation may be indemnified by the corporation for
reasonable expenses, including attorneys' fees, if he has acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made in
the case of a derivative suit in respect of any claim as to which an officer,
employee or agent has been adjudged to be liable to the corporation unless that
person is fairly and reasonable entitled to indemnity for proper expenses.
Indemnification is mandatory in the case of a director, officer, employee, or
agent who is successful on the merits in defense of a suit against him.
Article VIII of the Bylaws of the Company authorizes the Company to
indemnify any person (including its directors and executive officers) entitled
to indemnity under law, to the fullest extent permitted by law.
The Company has entered into Indemnity Agreements with its directors and
certain key officers pursuant to which the Company generally is obligated to
indemnify its directors and such officers to the full extent permitted by the
DGCL as described above.
Item 8. Exhibits.
The list of Exhibits to this Registration Statement is set forth below
and in the Exhibit Index on page 7 hereof.
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- ------- ----------------------
<S> <C>
4.1 Certificate of Incorporation of the Company, as amended -
incorporated herein by reference from Exhibit 3.1 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995.
4.2 Bylaws of the Company, as amended - incorporated by reference
from Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1995.
4.3 Specimen form of Certificate evidencing Common Stock, par value
$.01 per share - incorporated by reference from Exhibit 4.3 to
the Company's Registration Statement on Form S-1 (Registration
No. 33-58784).
*4.4 The Company's 1995 Management Equity Incentive/Stock Option Plan.
*5 Opinion of Bracewell & Patterson, L.L.P. regarding the legality
of the shares of Common Stock covered by this Registration
Statement.
</TABLE>
2
<PAGE> 4
<TABLE>
<S> <C>
*23.1 Consent of Bracewell & Patterson, L.L.P. (included in their
opinion filed as Exhibit 5 to this Registration Statement).
*23.2 Consent of KPMG Peat Marwick LLP, independent certified public
accountants.
*24 Powers of Attorney (included on the signature page of this
Registration Statement as originally filed).
</TABLE>
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* filed herewith
Item 9. Undertakings.
The Company hereby adopts the following undertakings pursuant to Item
512(a), (b) and (h) of Regulation S-K under the Securities Act of 1933, as
amended (the "Securities Act") and the Exchange Act.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement
(or the most recent post-effective amendment hereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in this Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information
in this Registration Statement.
Provided, however, that paragraph (a)(1)(i) and (a)(1)(ii) above shall
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by
the Company pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
3
<PAGE> 5
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
Company's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or controlling person of
the Company 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 Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
4
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, The GNI
Group, Inc., 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 Deer Park, State of Texas, on January 13, 1997.
THE GNI GROUP, INC.
By: /s/ Carl V Rush, Jr.
------------------------------------
Carl V Rush, Jr.
President and
Chief Executive Officer
Each person whose signature appears below on this Registration Statement
hereby constitutes and appoints Carl V Rush, Jr. and Dawn S. Born, each with
full power to act without the other, his or her true and lawful attorney-in-
fact and agent, with full power of substitution and resubstitution, for him or
her and in his or her name, place and stead, in any and all capacities (until
revoked in writing) to sign any and all amendments (including post-effective
amendments and amendments thereto) 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
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing he or she might do or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agent, or his substitute, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
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<S> <C> <C>
/s/ Carl V Rush, Jr. Director, President and January 13, 1997
- ------------------------------- Chief Executive Officer
Carl V Rush, Jr.
/s/ Titus H. Harris, III Executive Vice President, January 13, 1997
- ------------------------------- Chief Financial Officer
Titus H. Harris, III and Secretary (principal
financial officer)
/s/ Donna L. Ratliff Treasurer (principal January 13, 1997
- ------------------------------- accounting officer)
Donna L. Ratliff
</TABLE>
5
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<TABLE>
<S> <C> <C>
/s/ Titus H. Harris, Jr. Director, Chairman of the January 13, 1997
- ------------------------------- Board of Directors
Titus H. Harris, Jr.
/s/ Newton E. Dudney Director January 13, 1997
- -------------------------------
Newton E. Dudney
/s/ John W. Lyons, Jr. Director January 13, 1997
- -------------------------------
John W. Lyons, Jr.
/s/ F. Oliver Nicklin, Jr. Director January 13, 1997
- -------------------------------
F. Oliver Nicklin, Jr.
</TABLE>
6
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
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<S> <C>
4.1 Certificate of Incorporation of the Company, as amended -
incorporated herein by reference from Exhibit 3.1 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995.
4.2 Bylaws of the Company, as amended - incorporated by reference
from Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1995.
4.3 Specimen form of Certificate evidencing Common Stock, par value
$.01 per share - incorporated by reference from Exhibit 4.3 to
the Company's Registration Statement on Form S-1 (Registration
No. 33-58784).
*4.4 The Company's 1995 Management Equity Incentive/Stock Option Plan.
*5 Opinion of Bracewell & Patterson, L.L.P. regarding the legality
of the shares of Common Stock covered by this Registration
Statement.
*23.1 Consent of Bracewell & Patterson, L.L.P. (included in their
opinion filed as Exhibit 5 to this Registration Statement).
*23.2 Consent of KPMG Peat Marwick LLP, independent certified public
accountants.
*24 Powers of Attorney (included on the signature page of this
Registration Statement as originally filed).
</TABLE>
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* filed herewith
<PAGE> 1
EXHIBIT 4.4
THE GNI GROUP, INC.
1995 MANAGEMENT EQUITY INCENTIVE/
STOCK OPTION PLAN
SECTION 1. PURPOSE OF THE PLAN. The purpose of The GNI Group, Inc. 1995
Management Equity Incentive/Stock Option Plan ("Plan") is to encourage
ownership of common stock, $.01 par value ("Common Stock"), of The GNI Group,
Inc., a Delaware corporation (the "Company"), by the executive officers of the
Company and its Affiliates (as defined below) and to provide increased
incentive for such officers to render services and to exert maximum effort for
the success of the Company business. In addition, the Company expects that the
Plan will further strengthen the identification of the executive officers with
the stockholders. Certain options to be granted under this Plan are intended to
qualify as Incentive Stock Options ("ISOs") pursuant to Section 422 of the
Internal Revenue Code of 1986, as amended ("Code"), while other options granted
under this Plan will be nonqualified options which are not intended to qualify
as ISOs ("Nonqualified Options"), either or both as provided in the agreements
evidencing the options as provided in Section 6 hereof. As used in this Plan,
the term "Affiliates" means any "parent corporation" of the Company and any
"subsidiary corporation" of the Company within the meaning of Code Sections
424(e) and (f), respectively.
SECTION 2. ADMINISTRATION OF THE PLAN.
(a) Composition of Committee. The Plan shall be administered by the
Compensation Committee (the "Committee") designated by the Board of
Directors of the Company (the "Board"), which shall also designate the
Chairman of the Committee. If the Company is governed by Rule 16b-3
promulgated by the Securities and Exchange Commission ("Commission")
pursuant to the Securities Exchange Act of 1934, as amended ("Exchange
Act"), no director shall serve as a member of the Committee unless he or
she is a "disinterested person" within the meaning of such Rule 16b-3.
(b) Committee Action. The Committee shall hold its meetings at such
times and places as it may determine. A majority of its members shall
constitute a quorum, and all determinations of the Committee shall be made
by not less than a majority of its members. Any decision or determination
reduced to writing and signed by a majority of the members shall be fully
as effective as if it had been made by a majority vote of its members at a
meeting duly called and held. The Committee may designate the Secretary of
the Company or other Company employees to assist the Committee in the
administration of the Plan, and may grant authority to such persons to
execute award agreements or other documents on behalf of the Committee and
the Company. Any duly constituted committee of the Board satisfying the
qualifications of this Section 2 may be appointed as the Committee.
(c) Committee Expenses. All expenses and liabilities incurred by the
Committee in the administration of the Plan shall be borne by the Company.
The Committee may employ attorneys, consultants, accountants or other
persons.
<PAGE> 2
SECTION 3. STOCK RESERVED FOR THE PLAN. Subject to adjustment as provided
in Section 6(k) hereof, the aggregate number of shares of Common Stock that may
be optioned under the Plan is 500,000. The shares subject to the Plan shall
consist of authorized but unissued shares of Common Stock and such number of
shares shall be and is hereby reserved for sale for such purpose. Any of such
shares which may remain unsold and which are not subject to outstanding options
at the termination of the Plan shall cease to be reserved for the purpose of
the Plan, but until termination of the Plan or the termination of the last of
the options granted under the Plan, whichever last occurs, the Company shall at
all times reserve a sufficient number of shares to meet the requirements of the
Plan. Should any option expire or be cancelled prior to its exercise in full,
the shares theretofore subject to such option may again be made subject to an
option under the Plan.
SECTION 4. ELIGIBILITY. The persons eligible to participate in the Plan as
a recipient of options ("Optionee") shall include only executive officers of
the Company or its Affiliates at the time the option is granted; provided,
however, that the members of the Committee shall not be eligible to be granted
options. An executive officer who has been granted an option hereunder may be
granted an additional option or options, if the Committee shall so determine.
SECTION 5. GRANT OF OPTIONS.
(a) Committee Discretion. The Committee shall have sole and absolute
discretionary authority (i) to determine, authorize, and designate those
persons pursuant to this Plan who are to receive options under the Plan,
(ii) to determine the number of shares of Common Stock to be covered by
such options and the terms thereof, and (iii) to determine the type of
option granted: ISO, Nonqualified Option or a combination of ISO and
Nonqualified Options. The Committee shall thereupon grant options in
accordance with such determinations as evidenced by a written option
agreement. Subject to the express provisions of the Plan, the Committee
shall have discretionary authority to prescribe, amend and rescind rules
and regulations relating to the Plan, to interpret the Plan, to prescribe
and amend the terms of the option agreements (which need not be identical)
and to make all other determinations deemed necessary or advisable for the
administration of the Plan.
(b) Stockholder Approval. All options granted under this Plan are
subject to, and may not be exercised before, the approval of this Plan by
the stockholders prior to the first anniversary date of the Board meeting
held to approve the Plan, by the affirmative vote of the holders of a
majority of the outstanding shares of the Company present, or represented
by proxy, and entitled to vote thereat, or by written consent in accordance
with the laws of the State of Delaware, provided that if such approval by
the stockholders of the Company is not forthcoming, all options previously
granted under this Plan shall be void.
(c) Limitation on Incentive Stock Options. The aggregate fair market
value (determined in accordance with Section 6(b) of this Plan at the time
the option is granted) of the Common Stock with respect to which ISOs may
be exercisable for the
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<PAGE> 3
first time by any Optionee during any calendar year under all such plans
of the Company and its Affiliates shall not exceed $100,000.
SECTION 6. TERMS AND CONDITIONS. Each option granted under the Plan shall
be evidenced by an agreement, in a form approved by the Committee, which shall
be subject to the following express terms and conditions and to such other
terms and conditions as the Committee may deem appropriate.
(a) Option Period. The Committee shall promptly notify the Optionee of
the option grant and a written agreement shall promptly be executed and
delivered by and on behalf of the Company and the Optionee, provided that
the option grant shall expire if a written agreement is not signed by said
Optionee (or his agent or attorney) and returned to the Company within 60
days from date of receipt by the Optionee of such agreement. The date of
grant shall be the date the option is actually granted by the Committee,
even though the written agreement may be executed and delivered by the
Company and the Optionee after that date. Each option agreement shall
specify the period for which the option thereunder is granted (which in no
event shall exceed ten years from the date of grant) and shall provide
that the option shall expire at the end of such period. If the original
term of an option is less than ten years from the date of grant, the option
may be amended prior to its expiration, with the approval of the Committee
and the Optionee, to extend the term so that the term as amended is not
more than ten years from the date of grant. However, in the case of an ISO
granted to an individual who, at the time of grant, owns stock possessing
more than 10 percent of the total combined voting power of all classes of
stock of the Company or its Affiliate ("Ten Percent Stockholder"), such
period shall not exceed five years from the date of grant.
(b) Option Price. The purchase price of each share of Common Stock
subject to each option granted pursuant to the Plan shall be determined by
the Committee at the time the option is granted and, in the case of ISOs,
shall not be less than 100% of the fair market value of a share of Common
Stock on the date the option is granted, as determined by the Committee. In
the case of an ISO granted to a Ten Percent Stockholder, the option
price shall not be less than 110% of the fair market value of a share of
Common Stock on the date the option is granted. The purchase price of each
share of Common Stock subject to a Nonqualified Option under this Plan
shall be determined by the Committee prior to granting the option. The
Committee shall set the purchase price for each share subject to a
Nonqualified Option at either the fair market value of each share on the
date the option is granted, or at such other price as the Committee in its
sole discretion shall determine.
At the time a determination of the fair market value of a share of
Common Stock 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.
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<PAGE> 4
(c) Exercise Period. The Committee may provide in the option agreement
that an option may be exercised in whole, immediately, or is to be
exercisable in increments. However, no portion of any option may be
exercisable by an Optionee prior to the approval of the Plan by the
stockholders of the Company.
(d) Procedure for Exercise. Options shall be exercised by the delivery
of written notice to the Secretary of the Company setting forth the number
of shares with respect to which the option is being exercised. Such notice
shall be accompanied by cash or cashier's check, bank draft, postal or
express money order payable to the order of the Company, or at the option
of the Committee, in Common Stock theretofore owned by such Optionee (or
any combination of cash and Common Stock). Notice may also be delivered by
fax or telecopy provided that the purchase price of such shares is
delivered to the Company via wire transfer on the same day the fax is
received by the Company. The notice shall specify the address to which the
certificates for such shares are to be mailed. An Optionee shall be deemed
to be a stockholder with respect to shares covered by an option on the
date the Company receives such written notice and such option payment. As
promptly as practicable after receipt of such written notification and
payment, the Company shall deliver to the Optionee certificates for the
number of shares with respect to which such option has been so exercised,
issued in the Optionee's name or such other name as Optionee directs;
provided, however, that such delivery shall be deemed effected for all
purposes when a stock transfer agent of the Company shall have deposited
such certificates in the United States mail, addressed to the Optionee at
the address specified pursuant to this Section 6(d).
(e) Termination of Employment. If an executive officer to whom an
option is granted ceases to be employed by the Company for any reason
other than death or disability, any option which is exercisable on the
date of such termination of employment may be exercised during a period
beginning on such date and ending at the time set forth in the option
agreement; provided, however, that if an Optionee's employment is
terminated because of the Optionee's theft or embezzlement from the
Company, disclosure of trade secrets of the Company or the commission of a
willful, felonious act while in the employment of the Company (such reasons
shall hereinafter be collectively referred to as "for cause"), then any
option or unexercised portion thereof granted to said Optionee shall
expire upon such termination of employment. Notwithstanding the foregoing,
no ISO may be exercised later than three months after an employee's
termination of employment for any reason other than death or disability.
(f) Disability or Death of Optionee. In the event of the determination
of disability or death of an Optionee under the Plan while he or she is
employed by the Company, the options previously granted to him may be
exercised (to the extent he or she would have been entitled to do so at
the date of the determination of disability or death) at any time and
from time to time, within a period beginning on the date of such
determination of disability or death and ending at the time set forth in
the option agreement, by the former employee, the guardian of his estate,
the executor or administrator of his estate or by the person or persons to
whom his rights under the
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<PAGE> 5
option shall pass by will or the laws of descent and distribution, but in
no event may the option be exercised after its expiration under the terms
of the option agreement. Notwithstanding the foregoing, no ISO may be
exercised later than one year after the determination of disability or
death. An Optionee shall be deemed to be disabled if, in the opinion of a
physician selected by the Committee, he or she is incapable of performing
services for the Company of the kind he or she was performing at the time
the disability occurred by reason of any medically determinable physical
or mental impairment which can be expected to result in death or to be of
long, continued and indefinite duration. The date of determination of
disability for purposes hereof shall be the date of such determination by
such physician.
(g) Assignability. An option shall not be assignable or otherwise
transferable except by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined in the Code or
Title I of the Employee Retirement Income Security Act, as amended, or the
rules thereunder. During the lifetime of an Optionee, an option shall be
exercisable only by him.
(h) Incentive Stock Options. Each option agreement may contain such
terms and provisions as the Committee may determine to be necessary or
desirable in order to qualify an option designated as an incentive stock
option.
(i) No Rights as Stockholder. No Optionee shall have any rights as a
stockholder with respect to shares covered by an option until the option
is exercised by the written notice and accompanied by payment as provided
in clause (d) above.
(j) Extraordinary Corporate Transactions. The existence of outstanding
options shall not affect in any way the right or power of the Company or
its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations, exchanges, or other changes in the
Company's capital structure or its business, or any merger or
consolidation of the Company, or any issuance of Common Stock or other
securities or subscription rights thereto, or any issuance of bonds,
debentures, preferred or prior preference stock ahead of or affecting the
Common Stock or the rights thereof, or the dissolution or liquidation of
the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar
character or otherwise. If the Company recapitalizes or otherwise changes
its capital structure, or merges, consolidates, sells all of its assets or
dissolves (each of the foregoing a "Fundamental Change"), then 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
Common Stock as to which 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 Fundamental Change if,
immediately prior to such Fundamental Change, the Optionee had been the
holder of record of the number of shares of Common 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 another entity), (ii) the Company sells all or
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<PAGE> 6
substantially all of its assets to any other person or entity (other than
a wholly-owned subsidiary), (iii) any person or entity (including a
"group" as contemplated by Section 131(d)(3) of the Exchange Act) acquires
or gains ownership or control of (including, without limitation, power to
vote) more than 50% of the outstanding shares of Common Stock, (iv) the
Company is to be dissolved and liquidated, 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 in clauses (i) through (v) above is
referred to herein as a "Corporate Change"), the Committee, in its sole
discretion, may accelerate the time at which all or a portion of an
Optionee's Options may be exercised for a limited period of time before or
after a specified date.
(k) Changes in Company's Capital Structure. If the outstanding shares
of Common Stock or other securities of the Company, or both, for which the
option is then exercisable shall at any time be changed or exchanged by
declaration of a stock dividend, stock split, combination of shares,
recapitalization, or reorganization, the number and kind of shares of
Common Stock or other securities which are subject to the Plan or subject
to any options theretofore granted, and the option prices, shall be
appropriately and equitably adjusted so as to maintain the proportionate
number of shares or other securities without changing the aggregate option
price.
(l) Acceleration of Options. Except as hereinbefore expressly
provided, (i) the issuance by the Company of shares of stock or any class
of 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, (ii) the payment of a dividend in property other than Common
Stock or (iii) the occurrence of any similar transaction, 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
Common Stock subject to options theretofore granted or the purchase price
per share, unless the Committee shall determine, in its sole discretion,
that an adjustment is necessary to provide equitable treatment to
Optionee. Notwithstanding anything to the contrary contained in this
Plan, the Committee may, in its sole discretion, accelerate the time at
which any option may be exercised, including, but not limited to, upon the
occurrence of the events specified in this Section 6, and is authorized at
any time (with the consent of the Optionee) to purchase options pursuant
to Section 7.
SECTION 7. RELINQUISHMENT OF OPTIONS.
(a) The Committee, in granting options hereunder, shall have
discretion to determine whether or not options shall include a right of
relinquishment as hereinafter provided by this Section 7. The Committee
shall also have discretion to determine whether an option agreement
evidencing an option initially granted by the Committee without a right of
relinquishment shall be amended or supplemented to include such a
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<PAGE> 7
right of relinquishment. Neither the Committee nor the Company shall be
under any obligation or incur any liability to any person by reason of the
Committee's refusal to grant or include a right of relinquishment in any
option granted hereunder or in any option agreement evidencing the same.
Subject to the Committee's determination in any case that the grant by it
of a right of relinquishment is consistent with Paragraph 1 hereof, any
option granted under this Plan, and the option agreement evidencing such
option, may provide:
(i) That the Optionee, or his or her heirs or other legal
representatives to the extent entitled to exercise the option under
the terms thereof, in lieu of purchasing the entire number of shares
subject to purchase thereunder, shall have the right to relinquish all
or any part of the then unexercised portion of the option (to the
extent then exercisable) for a number of shares of Common Stock, for
an amount of cash or for a combination of Common Stock and cash to be
determined in accordance with the following provisions of this clause
(i):
(A) The written notice of exercise of such right of
relinquishment shall state the percentage, if any, of the
Appreciated Value (as defined below) that the Optionee elects to
receive in cash ("Cash Percentage"), such Cash Percentage to be
in increments of 10% of such Appreciated Value up to 100%
thereof;
(B) The number of shares of Common Stock, if any, issuable
pursuant to such relinquishment shall be the number of such
shares, rounded to the next greater number of full shares, as
shall be equal to the quotient obtained by dividing (A) the
difference between (I) the Appreciated Value and (II) the result
obtained by multiplying the Appreciated Value and the Cash
Percentage by (B) the then current market value per share of
Common Stock;
(C) The amount of cash payable pursuant to such
relinquishment shall be an amount equal to the Appreciated Value
less the aggregate current market value of the Common Stock
issued pursuant to such relinquishment, if any, which cash shall
be paid by the Company subject to such conditions as are deemed
advisable by the Committee to permit compliance by the Company
with the withholding provisions applicable to employers under the
Code and any applicable state income tax laws;
(D) For the purpose of this clause (i), "Appreciated Value"
means the excess of (x) the aggregate current market value of the
shares of Common Stock covered by the option or the portion
thereof to be relinquished over (y) the aggregate purchase price
for such shares specified in such option;
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<PAGE> 8
(ii) That such right of relinquishment may be exercised only upon
receipt by the Company of a written notice of such relinquishment
which shall be dated the date of election to make such relinquishment;
and that, for the purposes of this Plan, such date of election shall
be deemed to be the date when such notice is sent by registered or
certified mail, or when receipt is acknowledged by the Company, if
mailed by other than registered or certified mail or if delivered by
hand or by any telegraphic communications equipment of the sender or
otherwise delivered; provided, that, in the event the method just
described for determining such date of election shall not be or remain
consistent with the provisions of Section 16(b) of the Exchange Act or
the rules and regulations adopted by the Commission thereunder, as
presently existing or as may be hereafter amended, which regulations
exempt from the operation of Section 16(b) of the Exchange Act in
whole or in part any such relinquishment transaction, then such date
of election shall be determined by such other method consistent with
Section 16(b) of the Exchange Act or the rules and regulations
thereunder as the Committee shall in its discretion select and apply;
(iii) That the "current market value" of a share of Common Stock
on a particular date shall be deemed to be its fair market value on
that date as determined in accordance with Paragraph 6(b); and
(iv) That the option, or any portion thereof, may be relinquished
only to the extent that (A) it is exercisable on the date written
notice of relinquishment is received by the Company, (B) the
Committee, subject to the provisions of Paragraph 7(b), shall consent
to the election of the holder to relinquish such option in whole or in
part for cash as set forth in such written notice of relinquishment
and (C) the holder of such option pays, or makes provision
satisfactory to the Company for the payment of, any taxes which the
Company is obligated to collect with respect to such relinquishment.
(b) The Committee shall have sole discretion to consent to or
disapprove, and neither the Committee nor the Company shall be under any
liability by reason of the Committee's disapproval of, any election by a
holder of an option to relinquish such option in whole or in part for cash
as provided in Paragraph 7(a), except that no such consent to or approval
of a relinquishment for cash shall be required under the following
circumstances. Each Optionee who is subject to the short-swing profits
recapture provisions of Section 16(b) of the Exchange Act ("Covered
Optionee") shall be entitled to receive payment only in cash when options
are relinquished during any window period commencing on the third
business day following the Company's release of a quarterly or annual
summary statement of sales and earnings and ending on the twelfth business
day following such release ("Window Period"); provided, however, that
payment shall be so made in cash only in respect of 50% of the options
covered by any stock option agreement. A Covered Optionee shall be
entitled to receive payment only in shares of Common Stock upon (a) the
relinquishment of options outside a Window Period and (b) the
relinquishment of options during a Window Period once such
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<PAGE> 9
Optionee has received payment in cash for the relinquishment of 50% of the
options covered by any stock option agreement.
(c) The Committee, in granting options hereunder, shall have
discretion to determine the terms upon which such options shall be
relinquishable, subject to the applicable provisions of this Plan, and
including such provisions as are deemed advisable to permit the exemption
from the operation from Section 16(b) of the Exchange Act of any such
relinquishment transaction, and options outstanding, and option agreements
evidencing such options, may be amended, if necessary, to permit such
exemption. If an option is relinquished, such option shall be deemed to
have been exercised to the extent of the number of shares of Common Stock
covered by the option or part thereof which is relinquished, and no
further options may be granted covering such shares of Common Stock.
(d) Neither any option nor any right to relinquish the same to the
Company as contemplated by this Paragraph 7 shall be assignable or
otherwise transferable except by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order as
defined in the Code or Title I of the Employee Retirement Income Security
Act, as amended, or the rules thereunder.
(e) Except as provided in Section 7(f) below, no right of
relinquishment may be exercised within the first six months after the
initial award of any Option containing, or the amendment or
supplementation of any existing option agreement adding, the right of
relinquishment.
(f) No right of relinquishment may be exercised after the initial
award of any option containing, or the amendment or supplementation of any
existing option agreement adding the right of relinquishment, unless such
right of relinquishment is effective upon the Optionee's death, disability
or termination of his relationship with the Company for a reason other
than "for cause", and the payment upon the exercise of such right is only
in cash.
SECTION 8. AMENDMENTS OR TERMINATION. The Board may amend, alter or
discontinue the Plan, but no amendment or alteration shall be made which would
impair the rights of any Optionee, without his consent, under any option
theretofore granted, or which, without the approval of the stockholders, would:
(i) except as is provided in Section 6(k) of the Plan, increase the total
number of shares reserved for the purposes of the Plan, (ii) change the class
of persons eligible to participate in the Plan as provided in Section 4 of the
Plan, (iii) extend the applicable maximum option period provided for in
Section 6(a) of the Plan, (iv) extend the expiration date of this Plan set
forth in Section 15 of the Plan, (v) except as provided in Section 6(k) of the
Plan, decrease to any extent the option price of any option granted under the
Plan or (vi) withdraw the administration of the Plan from the Committee.
SECTION 9. COMPLIANCE WITH OTHER LAWS AND REGULATIONS. The Plan, the grant
and exercise of options thereunder, and the obligation of the Company to sell
and deliver
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<PAGE> 10
shares under such options, shall be subject to all applicable federal and state
laws, rules and regulations and to such approvals by any governmental or
regulatory agency as may be required. The Company shall not be required to
issue or deliver any certificates for shares of Common Stock prior to the
completion of any registration or qualification of such shares under any
federal or state law or issuance of any ruling or regulation of any government
body which the Company shall, in its sole discretion, determine to be necessary
or advisable. Any adjustments provided for in subparagraphs 60(j), (k) and (l)
shall be subject to any shareholder action required by Delaware corporate law.
SECTION 10. PURCHASE FOR INVESTMENT. Unless the options and shares of
Common Stock covered by this Plan have been registered under the Securities Act
of 1933, as amended, or the Company has determined that such registration is
unnecessary, each person exercising an option under this Plan may be required
by the Company to give a representation in writing that he or she is acquiring
such shares for his own account for investment and not with a view to, or for
sale in connection with, the distribution of any part thereof.
SECTION 11. TAXES.
(a) The Company may make such provisions as it may deem appropriate
for the withholding of any taxes which it determines is required in
connection with any options granted under this Plan.
(b) Notwithstanding the terms of Paragraph 11 (a), any Optionee may
pay all or any portion of the taxes required to be withheld by the Company
or paid by him or her in connection with the exercise of a nonqualified
option by electing to have the Company withhold shares of Common Stock, or
by delivering previously owned shares of Common Stock, having a fair
market value, determined in accordance with Paragraph 6(b), equal to the
amount required to be withheld or paid. An Optionee must make the
foregoing election on or before the date that the amount of tax to be
withheld is determined ("Tax Date"). All such elections are irrevocable
and subject to disapproval by the Committee. Elections by Covered
Optionees are subject to the following additional restrictions: (i) such
election may not be made within six months of the grant of an option,
provided that this limitation shall not apply in the event of death or
disability, and (ii) such election must be made either six months or more
prior to the Tax Date or in a Window Period. Where the Tax Date in respect
of an option is deferred until six months after exercise and the Covered
Optionee elects share withholding, the full amount of shares of Common
Stock will be issued or transferred to him upon exercise of the option,
but he or she shall be unconditionally obligated to tender back to the
Company the number of shares necessary to discharge the Company's
withholding obligation or his estimated tax obligation on the Tax Date.
SECTION 12. REPLACEMENT OF OPTIONS. The Committee from time to time may
permit an Optionee under the Plan to surrender for cancellation any
unexercised outstanding option and receive from the Company in exchange an
option for such number of shares of Common Stock as may be designated by the
Committee. The Committee may, with the
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<PAGE> 11
consent of the person entitled to exercise any outstanding option, amend such
option, including reducing the exercise price of any option to not less than
the fair market value of the Common Stock at the time of the amendment and
extending the term thereof.
SECTION 13. NO RIGHT TO COMPANY EMPLOYMENT. Nothing in this Plan or as a
result of any option granted pursuant to this Plan shall confer on any
individual any right to continue in the employ of the Company or interfere in
any way with the right of the Company to terminate an individual's employment
at any time. The option agreements may contain such provisions as the Committee
may approve with reference to the effect of approved leaves of absence.
SECTION 14. LIABILITY OF COMPANY. The Company and any Affiliate which is
in existence or hereafter comes into existence shall not be liable to an
Optionee or other persons as to:
(a) The Non-Issuance of Shares. The non-issuance or sale of shares as
to which the Company has been unable to obtain from any regulatory body
having jurisdiction the authority deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any shares hereunder; and
(b) Tax Consequences. Any tax consequence expected, but not realized,
by any Optionee or other person due to the exercise of any option granted
hereunder.
SECTION 15. EFFECTIVENESS AND EXPIRATION OF PLAN. The Plan shall be
effective on the date the Board adopts the Plan. If the stockholders of the
Company fail to approve the Plan within twelve months of the date the Board
approved the Plan, the Plan shall terminate and all options previously granted
under the Plan shall become void and of no effect. The Plan shall expire ten
years after the date the Board approves the Plan and thereafter no option shall
be granted pursuant to the Plan.
SECTION 16. NON-EXCLUSIVITY OF THE PLAN. Neither the adoption by the Board
nor the submission of the Plan to the stockholders of the Company for approval
shall be construed as creating any limitations on the power of the Board to
adopt such other incentive arrangements as it may deem desirable, including
without limitation, the granting of restricted stock or stock options otherwise
than under the Plan, and such arrangements may be either generally applicable
or applicable only in specific cases.
SECTION 17. GOVERNING LAW. This Plan and any agreements hereunder shall be
interpreted and construed in accordance with the laws of the State of Delaware
and applicable federal law.
SECTION 18. CASHLESS EXERCISE. The Committee also may allow cashless
exercises as permitted under Federal Reserve Board's Regulation T, subject to
applicable securities law restrictions. or by any other means which the
Committee determines to be consistent with the
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<PAGE> 12
Plan's purpose and applicable law. The proceeds from such a payment shall be
added to the general funds of the Company and shall be used for general
corporate purposes.
IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the
foregoing by directors of the Company, The GNI Group, Inc., has caused these
presents to be duly executed in its name and behalf by its proper officers
thereunto duly authorized as of this 11 day of January, 1995.
THE GNI GROUP, INC.
By: /s/ CARL V RUSH, JR.
-----------------------------------
Carl V Rush, Jr.
President and Chief Executive
Officer
ATTEST:
/s/ TITUS H. HARRIS, III
- ------------------------------
Titus H. Harris, III
Executive Vice President,
Chief Financial Officer
and Secretary
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<PAGE> 1
EXHIBIT 5
January 13, 1997
The GNI Group, Inc.
2525 Battleground Road
Deer Park, Texas 77536
Ladies and Gentlemen:
We have acted as counsel to The GNI Group, Inc., a Delaware corporation (the
"Company"), in connection with the proposed issuance by the Company of up to
500,000 shares (the "Shares") of Common Stock, par value $.01 per share, upon
the exercise of options granted to executive officers of the Company pursuant
to the terms of The GNI Group, Inc. 1995 Management Equity Incentive/Stock
Option Plan (the "Plan"). The Company proposes to file with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, a Registration Statement on Form S-8 relating to the Shares (the
"Registration Statement").
We have examined originals or copies of (i) the Certificate of Incorporation of
the Company, as amended, (ii) the Bylaws of the Company, as amended, (iii) the
Plan, (iv) certain resolutions of the Board of Directors of the Company and the
Compensation Committee thereof, and (v) such other documents and records as we
have deemed necessary and relevant for purposes hereof. In addition, we have
relied on certificates of officers of the Company and certificates of public
officials as to certain matters of fact relating to this opinion and have made
such investigations of law as we have deemed necessary and relevant as a basis
hereof.
We have assumed the genuineness of all signatures, the authenticity of all
documents, certificates and records submitted to us as originals, the
conformity to original documents, certificates and records of all documents,
certificates and records submitted to us as copies, and the truthfulness of all
statements of fact contained therein.
Based solely on the foregoing, and subject to the limitations, assumptions and
qualifications set forth herein, and having due regard for such legal
considerations as we deem relevant, we are of the opinion that:
1. The Company is duly incorporated, validly existing and in good
standing under the laws of the State of Delaware.
2. The Shares have been duly and validly authorized and when issued
and paid for in accordance with the terms of the Plan, for a consideration at
least equal to the par value thereof, will be validly issued, fully paid and
nonassessable.
The foregoing opinion is based on and is limited to the General Corporation Law
of the State of Delaware and the relevant law of the United States of America,
and we render no opinion with respect to the law of any other jurisdiction.
We hereby consent to the filing of this opinion with the Commission as Exhibit
5 to the Registration Statement and to the use of our name therein.
Very truly yours,
Bracewell & Patterson, L.L.P.
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors
The GNI Group, Inc.:
We consent to the use of our reports incorporated herein by reference.
KPMG Peat Marwick LLP
Houston, Texas
January 13, 1997
