<PAGE> 1
As filed with the Securities and Exchange Commission on April 7, 1999
Registration No. 333-_________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM S-8(1)
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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THOMAS GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 72-0843540
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
5221 NORTH O'CONNOR BOULEVARD, SUITE 500 75039-3714
IRVING, TEXAS (Zip Code)
(Address of Principal Executive Offices)
1997 STOCK OPTION PLAN
AMENDED AND RESTATED 1988 STOCK OPTION PLAN
AMENDED AND RESTATED 1992 STOCK OPTION PLAN
(Full title of the plans)
----------------------------------
J. THOMAS WILLIAMS
PRESIDENT
THOMAS GROUP, INC.
5221 NORTH O'CONNOR BOULEVARD, SUITE 500
IRVING, TEXAS 75039-3714
(972) 869-3400
(Name, address and telephone number, including area code, of agent for service)
Copy to:
DAVID H. ODEN
HAYNES AND BOONE, LLP
3100 NATIONSBANK PLAZA
901 MAIN STREET
DALLAS, TEXAS 75202-3787
(214) 651-5000
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==================================================================================================================
Proposed Proposed
Title of Securities Amount Maximum Offering Maximum Aggregate
To Be Registered To Be Registered Price per Share(2) Offering Price(2) Amount of Registration Fee(2)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCK,
$.01 PAR VALUE........ 1,550,000 $9.032 $13,999,600 $3,891.90
==================================================================================================================
</TABLE>
(1) This Registration Statement on Form S-8 also constitutes a post-effective
amendment to the Registrant's Registration Statement on Form S-3, SEC file
number 333-39135 to remove from registration 1,400,000 shares of the
Registrant's Common Stock, $.01 par value per share, covered by that
registration statement that were unsold at the termination of the offering
covered by that registration statement.
(2) Estimated pursuant to Rule 457(h)(1) solely for the purpose of calculating
the registration fee based on the average of the high and low price of the
Common Stock, as registered on the NASDAQ National Market, on March 31,
1999.
PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, THE PROSPECTUS CONTAINING
THE INFORMATION SPECIFIED IN PART 1 OF FORM S-8 WITH RESPECT TO SECURITIES
COVERED BY THIS REGISTRATION STATEMENT WILL BE USED IN CONNECTION WITH
SECURITIES PREVIOUSLY REGISTERED ON FORM S-8 UNDER REGISTRATION STATEMENT NO.
33071752.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed by Thomas Group, Inc. (the "Registrant" or
the "Company") with the Securities and Exchange Commission (the "Commission")
are incorporated here by reference:
(a) The Registrant's latest annual report filed pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934.
(b) All other reports filed pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 since the end of the fiscal
year covered by the annual report referred to in (a) above.
(c) The description of the Registrant's Common Stock contained in
the Registrant's Registration Statements on Form 8-A as filed
with the Commission on July 2, 1993, and on July 16, 1998.
(d) All documents subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14, and 15(d) of the Securities Exchange
Act of 1934, prior to the filing of a post-effective amendment
that indicates that all securities offered have been sold or
that deregisters all securities then remaining unsold, will be
deemed to be incorporated by reference in, and to be a part of,
this Registration Statement from the date of filing of such
documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant is empowered by Section 145 of the Delaware General
Corporation Law, subject to the procedures and limitations stated therein, to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that such person is or was
an officer, employee, agent or director of the Registrant, or is or was serving
at the request of the Registrant as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding, if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
Registrant, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The Registrant may
indemnify any such person against expenses (including attorneys' fees) in an
action by or in right of the Registrant under the same conditions, except that
no indemnification is permitted without
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judicial approval if such person is adjudged to be liable to the Registrant. To
the extent such person is successful on the merits or otherwise in the defense
of any action referred to above, the Registrant must indemnify him against the
expenses which he actually and reasonably incurred in connection therewith.
The Registrant's Certificate of Incorporation and Bylaws provide broadly
for the indemnification of the officers and directors of the Registrant. In
addition, the Registrant's Certificate of Incorporation provides that, to the
fullest extent permitted by the Delaware General Corporation Law, a director of
the Registrant shall not be liable to the Registrant or its stockholders for
monetary damages for breach of fiduciary duty as a director.
The Registrant has entered into indemnification agreements with its
directors and certain officers. These agreements provide that the Registrant
will indemnify such persons against all costs and expenses incurred in
connection with legal proceedings that arise by reason of the fact that such
person is or was an officer or director of the Registrant. These agreements
continue until the conclusion of all legal proceedings brought within ten years
after such individual has ceased to be a director or officer of the Company.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
Exhibit No. Exhibit
3.1 Restated Certificate of Incorporation of the
Registrant (incorporated here by reference to Exhibit
3.1 to the Company's Registration Statement on Form
S-1 filed with the Commission on June 15, 1993,
Registration No. 33-64492) (the "1993 Form S-1").
3.2 Amendment to the Restated Certificate of
Incorporation (incorporated here by reference to
Exhibit 3.2 to the 1993 Form S-1).
3.3 Amendment to the Restated Certificate of
Incorporation (incorporated here by reference to
Exhibit 3.3 to the 1993 Form S-1).
3.4 Amendment to the Restated Certificate of
Incorporation (incorporated here by reference to
Exhibit 3.4 to the 1993 Form S-1).
3.5 Rights Agreement, dated as of July 9, 1998, by and
between Thomas Group, Inc. and Harris Trust and
Savings Bank, as Rights Agent, including exhibits
thereto (incorporated here by reference to Exhibit 1
to the Company's Registration Statement on Form 8-A,
filed with the Commission on July 16, 1998).
3.6 Amended and Restated Bylaws (incorporated here by
reference to Exhibit 3.5 to the 1993 Form S-1).
3.7 Amended and Restated 1988 Stock Option Plan
(incorporated here by reference to Exhibit 10.14 to the
1993 Form S-1).
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3.8 1997 Stock Option Plan.
3.9 Amended and Restated 1992 Stock Option Plan.
5.1 Opinion of Roger A. Crabb, Esq., Counsel for Thomas Group, Inc.
23.1 Consent of BDO Seidman, LLP.
23.2 Consent of Roger A. Crabb, Esq. (included in 5.1).
24.1 Power of Attorney of the Directors (included on signature page).
ITEM 9. UNDERTAKINGS.
(a) The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information
set forth in 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.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
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.
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(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Irving, State of Texas, on April 7, 1999.
THOMAS GROUP, INC.
By:
-----------------------------------
J. Thomas Williams, President
KNOW ALL BY THESE PRESENTS, that each of the undersigned hereby
constitutes and appoints J. Thomas Williams and Roger A. Crabb, the
undersigned's true and lawful attorneys-in-fact and agents, with full power of
substitution, for the undersigned and on the undersigned's behalf and in the
undersigned's name, place, and stead, in any and all capacities, to sign,
execute, and file with the Securities and Exchange Commission and any state
securities regulatory board or commission any documents relating to the proposed
issuance and registration of the securities offered pursuant to this
registration statement on Form S-8 under the Securities Act of 1933, including
any amendment or amendments, with all exhibits and any and all documents
required to be filed with respect thereto with any regulatory authority,
granting unto the attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as the undersigned might or could do if personally
present, hereby ratifying and confirming all that the attorneys-in-fact and
agents, or either of them, or their substitute or substitutes, may lawfully do
or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ JOHN T. CHAIN, JR.
- -------------------------------- Chairman of the Board April 7, 1999
John T. Chain, Jr. and Director
/s/ J. THOMAS WILLIAMS
- -------------------------------- President, April 7, 1999
J. Thomas Williams Chief Executive Officer,
and Director
/s/ LELAND L. GRUBB, JR.
- -------------------------------- Vice President, April 7, 1999
Leland L. Grubb, Jr. Chief Financial Officer,
and Treasurer
</TABLE>
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<TABLE>
<S> <C> <C>
/s/ JAMES E. DYKES
- -------------------------------- Director April 7, 1999
James E. Dykes
/s/ RICHARD A. FREYTAG
- -------------------------------- Director April 7, 1999
Richard A. Freytag
/s/ DAVID B. MATHIS
- -------------------------------- Director April 7, 1999
David B. Mathis
/s/ ALEXANDER W. YOUNG
- -------------------------------- Director April 7, 1999
Alexander W. Young
</TABLE>
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No. Exhibit
- ------- -------
<S> <C>
3.1 Restated Certificate of Incorporation of the Registrant
(incorporated here by reference to Exhibit 3.1 to the Company's
Registration Statement on Form S-1 filed with the Commission on June
15, 1993, Registration No. 33-64492) (the "1993 Form S-1").
3.2 Amendment to the Restated Certificate of Incorporation (incorporated
here by reference to Exhibit 3.2 to the 1993 Form S-1).
3.3 Amendment to the Restated Certificate of Incorporation (incorporated
here by reference to Exhibit 3.3 to the 1993 Form S-1).
3.4 Amendment to the Restated Certificate of Incorporation (incorporated
here by reference to Exhibit 3.4 to the 1993 Form S-1).
3.5 Rights Agreement, dated as of July 9, 1998, by and between Thomas
Group, Inc. and Harris Trust and Savings Bank, as Rights Agent,
including exhibits thereto (incorporated here by reference to
Exhibit 1 to the Company's Registration Statement on Form 8-A, filed
with the Commission on July 16, 1998).
3.6 Amended and Restated Bylaws (incorporated here by reference to
Exhibit 3.5 to the 1993 Form S-1).
3.7 Amended and Restated 1988 Stock Option Plan (incorporated here by
reference to Exhibit 10.14 to the 1993 Form S-1).
3.8 1997 Stock Option Plan.
3.9 Amended and Restated 1992 Stock Option Plan.
5.1 Opinion of Roger A. Crabb, Esq., Counsel for Thomas Group, Inc.
23.1 Consent of BDO Seidman, LLP.
23.2 Consent of Roger A. Crabb, Esq. (included in 5.1).
24.1 Power of Attorney of the Directors (included on signature page).
</TABLE>
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EXHIBIT 3.8
THOMAS GROUP, INC.
1997 STOCK OPTION PLAN
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TABLE OF CONTENTS
ARTICLE 1 PURPOSE
ARTICLE 2 DEFINITIONS
ARTICLE 3 ADMINISTRATION
ARTICLE 4 ELIGIBILITY
ARTICLE 5 SHARES SUBJECT TO PLAN
ARTICLE 6 GRANT OF AWARDS
6.1 In General
6.2 Maximum ISO Grants
ARTICLE 7 OPTION PRICE
ARTICLE 8 AWARD PERIOD; VESTING
8.1 Award Period
8.2 Vesting
ARTICLE 9 TERMINATION OF SERVICE
9.1 Death
9.2 Retirement
9.3 Disability
9.4 Leave of Absence
ARTICLE 10 EXERCISE OF INCENTIVE
10.1 In General
10.2 Disqualifying Disposition of ISO
ARTICLE 11 AMENDMENT OR DISCONTINUANCE
ARTICLE 12 TERM
ARTICLE 13 CAPITAL ADJUSTMENTS
ARTICLE 14 RECAPITALIZATION, MERGER AND CONSOLIDATION; CHANGE IN CONTROL
ARTICLE 15 LIQUIDATION OR DISSOLUTION
ARTICLE 16 INCENTIVES IN SUBSTITUTION FOR INCENTIVES GRANTED BY OTHER
CORPORATIONS
ARTICLE 17 MISCELLANEOUS PROVISIONS
17.1 Investment Intent
17.2 No Right to Continued Employment
17.3 Indemnification of Board and Committee
17.4 Effect of the Plan
17.5 Compliance With Other Laws and Regulations
17.6 Tax Requirements
17.7 Assignability
17.8 Use of Proceeds
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THOMAS GROUP, INC.
1997 STOCK OPTION PLAN
The name of the plan is the THOMAS GROUP, INC. 1997 STOCK OPTION PLAN
(the "PLAN"). The Plan was adopted by the Board of Directors of THOMAS GROUP,
INC., a Delaware corporation (hereinafter called the "COMPANY"), effective as of
April 3, 1997.
ARTICLE 1
PURPOSE
The purpose of the Plan is to attract and retain the services of key
employees of the Company and its Subsidiaries and to provide such persons with a
proprietary interest in the Company through the granting of incentive stock
options and non-qualified stock options that will
(a) increase the interest of such persons in the Company's
welfare;
(b) furnish an incentive to such persons to continue their
services for the Company; and
(c) provide a means through which the Company may attract able
persons as employees.
With respect to Reporting Participants, the Plan and all transactions
under the Plan are intended to comply with all applicable conditions of Rule
16b-3 promulgated under the Securities Exchange Act of 1934 (the "1934 ACT"). To
the extent any provision of the Plan or action by the Committee fails to so
comply, it shall be deemed null and void ab initio, to the extent permitted by
law and deemed advisable by the Committee.
ARTICLE 2
DEFINITIONS
For the purpose of the Plan, unless the context requires otherwise, the
following terms shall have the meanings indicated:
2.1 "AWARD" means the grant of any Incentive Stock Option or
Non-qualified Stock Option, whether granted singly, in combination or in tandem
(each individually referred to herein as an "incentive").
2.2 "AWARD AGREEMENT" means a written agreement between a Participant
and the Company which sets out the terms of an Award.
2.3 "AWARD PERIOD" means the period during which one or more Incentives
granted under an Award may be exercised.
2.4 "BOARD" means the board of directors of the Company.
2.5 "CHANGE OF CONTROL" means any of the following: (i) any
consolidation, merger or share exchange of the Company in which the Company is
not the continuing or surviving corporation or pursuant to which shares of the
Company's Common Stock would
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be converted into cash, securities or other property, other than a
consolidation, merger or share exchange of the Company in which the holders of
the Company's Common Stock immediately prior to such transaction have the same
proportionate ownership of Common Stock of the surviving corporation immediately
after such transaction; (ii) any sale, lease, exchange or other transfer
(excluding transfer by way of pledge or hypothecation) in one transaction or a
series of related transactions, of all or substantially all of the assets of the
Company; (iii) the stockholders of the Company approve any plan or proposal for
the liquidation or dissolution of the Company; (iv) the cessation of control (by
virtue of their not constituting a majority of directors) of the Board by the
individuals (the "CONTINUING DIRECTORS") who (x) at the date of this Plan were
directors or (y) become directors after the date of this Plan and whose election
or nomination for election by the Company's stockholders, was approved by a vote
of at least two-thirds of the directors then in office who were directors at the
date of this Plan or whose election or nomination for election was previously so
approved; (v) the acquisition of beneficial ownership (within the meaning of
Rule 13d-3 under the 1934 Act) of an aggregate of twenty percent (20%) of the
voting power of the Company's outstanding voting securities by any person or
group (as such term is used in Rule 13d-5 under the 1934 Act) who beneficially
owned less than 15% of the voting power of the Company's outstanding voting
securities on the date of this Plan, or the acquisition of beneficial ownership
of an additional 5% of the voting power of the Company's outstanding voting
securities by any person or group who beneficially owned at least 15% of the
voting power of the Company's outstanding voting securities on the date of this
Plan, provided, however, that notwithstanding the forgoing, an acquisition shall
not constitute a Change of Control hereunder if the acquirer is (x) a trustee or
other fiduciary holding securities under an employee benefit plan of the Company
and acting in such capacity, (y) a Subsidiary of the Company or a corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportion as their ownership of voting securities of the
Company or (z) any other person whose acquisition of shares of voting securities
is approved in advance by a majority of the Continuing Directors; or (vi) in a
Title 11 bankruptcy proceeding, the appointment of a trustee or the conversion
of a case involving the Company to a case under Chapter 7.
2.6 "CODE" means the Internal Revenue Code of 1986, as amended.
2.7 "COMMITTEE" means the Compensation and Stock Option Committee or
another committee appointed or designated by the Board to administer the Plan.
2.8 "COMMON STOCK" means the common stock, par value $.01 per share,
which the Company is currently authorized to issue or may in the future be
authorized to issue.
2.9 "COMPANY" means THOMAS GROUP, INC., a Delaware corporation, and any
successor entity.
2.10 "DATE OF GRANT" means the effective date on which an Award is made
to a Participant as set forth in the applicable Award Agreement; provided,
however, that solely for purposes of Section 16 of the 1934 Act and the rules
and regulations promulgated thereunder, the Date of Grant of an Award shall be
the date of stockholder approval of the Plan if such date is later than the
effective date of such Award as set forth in the Award Agreement.
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2.11 "EMPLOYEE" means common law employee (as defined in accordance
with the Regulations and Revenue Rulings then applicable under Section 3401(c)
of the Code) of the Company or any Subsidiary of the Company.
2.12 "FAIR MARKET VALUE" of a share of Common Stock is the mean of the
highest and lowest prices per share on the New York Stock Exchange Consolidated
Tape, or such reporting service as the Committee may select, on the appropriate
date, or in the absence of reported sales on such day, the most recent previous
day for which sales were reported.
2.13 "INCENTIVE STOCK OPTION" or "ISO" means an incentive stock option
within the meaning of Section 422 of the Code, granted pursuant to this Plan.
2.14 "NON-EMPLOYEE DIRECTOR" means a member of the Board who is not an
Employee and who satisfies the requirement of Rule 16b-3(b)(3) promulgated under
the 1934 Act or any successor provision.
2.15 "NON-QUALIFIED STOCK OPTION" or "NQSO" means a non-qualified stock
option granted pursuant to this Plan.
2.16 "OPTION PRICE" means the price which must be paid by a Participant
upon exercise of a Stock Option to purchase a share of Common Stock.
2.17 "PARTICIPANT" shall mean an Employee of the Company or a
Subsidiary to whom an Award is granted under this Plan.
2.18 "PLAN" means this THOMAS GROUP, INC. 1997 Stock Option Plan, as
amended from time to time.
2.19 "REPORTING PARTICIPANT" means a Participant who is subject to the
reporting requirements of Section 16 of the 1934 Act.
2.20 "RETIREMENT" means any Termination of Service solely due to
retirement upon attainment of age 60, or permitted early retirement as
determined by the Committee.
2.21 "STOCK OPTION" means a Non-qualified Stock Option or an Incentive
Stock Option.
2.22 "SUBSIDIARY" means (i) any corporation or limited liability
company in an unbroken chain of corporations or limited liability companies
beginning with the Company, if each of the corporations or limited liability
companies other than the last corporation or limited liability company in the
unbroken chain owns equity securities possessing a majority of the total
combined voting power of all classes of equity securities in one of the other
corporations or limited liability companies in the chain, and (ii) any limited
partnership, if the Company or any corporation or limited liability company
described in item (i) above owns a majority of the general partnership interest
and a majority of the limited partnership interests entitled to vote on the
removal and replacement of the general partner. "SUBSIDIARIES" means more than
one of any such corporations, limited partnerships or limited liability
companies.
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2.23 "TERMINATION OF SERVICE" occurs when a Participant who is an
Employee of the Company or any Subsidiary shall cease to serve as an Employee of
the Company and its Subsidiaries, for any reason.
2.24 "DISABILITY" shall have the meaning given it in the employment
agreement of the Participant; provided, however, that if that Participant has no
employment agreement, "Disability" shall mean a physical or mental impairment of
sufficient severity that, in the opinion of the Company, either the Participant
is unable to continue performing the duties he performed before such impairment
or the Participant's condition entitles him to disability benefits under any
insurance or employee benefit plan of the Company or its Subsidiaries and that
impairment or condition is cited by the Company as the reason for termination of
the Participant's employment; provided, however, with respect to any Incentive
Stock Option, Disability shall have the meaning given it under the rules
governing Incentive Stock Options under the Code.
ARTICLE 3
ADMINISTRATION
The Plan shall be administered by the Committee appointed by the Board.
The Committee shall consist of not fewer than two persons. Any member of the
Committee may be removed at any time, with or without cause, by resolution of
the Board. Any vacancy occurring in the membership of the Committee may be
filled by appointment by the Board.
Membership on the Committee shall be limited to those members of the
Board who are Non-employee Directors and who are "OUTSIDE DIRECTORS" under
Section 162(m) of the Code. The Committee shall select one of its members to act
as its Chairman. A majority of the Committee shall constitute a quorum, and the
act of a majority of the members of the Committee present at a meeting at which
a quorum is present shall be the act of the Committee.
The Committee shall determine and designate from time to time the
eligible persons to whom Awards will be granted and shall set forth in each
related Award Agreement the Award Period, the Date of Grant, and such other
terms, provisions, limitations, and performance requirements, as are approved by
the Committee, but not inconsistent with the Plan. The Committee shall determine
whether an Award shall include one type of Incentive, or two or more Incentives
granted in combination.
The Committee, in its discretion, shall (i) interpret the Plan, (ii)
prescribe, amend, and rescind any rules and regulations necessary or appropriate
for the administration of the Plan, and (iii) make such other determinations and
take such other action as it deems necessary or advisable in the administration
of the Plan. Any interpretation, determination, or other act made or taken by
the Committee shall be final, binding, and conclusive on all interested parties.
With respect to restrictions in the Plan that are based on the
requirements of Rule 16b-3 promulgated under the 1934 Act, Section 422 of the
Code, Section 162(m) of the Code, the rules of any exchange or inter-dealer
quotation system upon which the Company's securities are listed or quoted, or
any other applicable law, rule or restriction (collectively, "APPLICABLE LAW"),
to the extent that any such restrictions are no longer required by applicable
law, the Committee shall have the sole discretion and authority to
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<PAGE> 7
grant Awards that are not subject to such mandated restrictions and/or to waive
any such mandated restrictions with respect to outstanding Awards.
ARTICLE 4
ELIGIBILITY
Any Employee (including an Employee who is also a director or an
officer) whose judgment, initiative, and efforts contributed or may be expected
to contribute to the successful performance of the Company is eligible to
participate in the Plan; provided that only Employees shall be eligible to
receive Incentive Stock Options. The Committee, upon its own action, may grant,
but shall not be required to grant, an Award to any Employee of the Company or
any Subsidiary. Awards may be granted by the Committee at any time and from time
to time to new Participants, or to then Participants, or to a greater or lesser
number of Participants, and may include or exclude previous Participants, as the
Committee shall determine. Except as required by this Plan, Awards granted at
different times need not contain similar provisions. The Committee's
determinations under the Plan (including without limitation determinations of
which Employees, if any, are to receive Awards, the form, amount and timing of
such Awards, the terms and provisions of such Awards and the agreements
evidencing same) need not be uniform and may be made by it selectively among
Employees who receive, or are eligible to receive, Awards under the Plan.
ARTICLE 5
SHARES SUBJECT TO PLAN
Subject to adjustment as provided in ARTICLES 13 AND 14, the maximum
number of shares of Common Stock that may be delivered pursuant to Awards
granted under the Plan is (a) one hundred twenty-five thousand (125,000) shares;
plus (b) shares of Common Stock previously subject to Awards which are
forfeited, terminated, or expired unexercised; plus (c) without duplication for
shares counted under the immediately preceding clause, a number of shares of
Common Stock equal to the number of shares repurchased by the Company in the
open market or otherwise and having an aggregate repurchase price no greater
than the amount of cash proceeds received by the Company from the sale of shares
of Common Stock under the Plan; plus (d) any shares of Common Stock surrendered
to the Company in payment of the exercise price of options issued under the
Plan.
Shares to be issued may be made available from authorized but unissued
Common Stock, Common Stock held by the Company in its treasury, or Common Stock
purchased by the Company on the open market or otherwise. During the term of
this Plan, the Company will at all times reserve and keep available the number
of shares of Common Stock that shall be sufficient to satisfy the requirements
of this Plan.
ARTICLE 6
GRANT OF AWARDS
6.1 IN GENERAL. The grant of an Award shall be authorized by the
Committee and shall be evidenced by an Award Agreement setting forth the
Incentive or Incentives being granted, the total number of shares of Common
Stock subject to the Incentive(s), the Option Price (if applicable), the Award
Period, the Date of Grant, and such other terms,
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<PAGE> 8
provisions, limitations, and performance objectives, as are approved by the
Committee, but not inconsistent with the Plan. The Company shall execute an
Award Agreement with a Participant after the Committee approves the issuance of
an Award. Any Award granted pursuant to this Plan must be granted within ten
(10) years of the date of adoption of this Plan. The Plan shall be submitted to
the Company's stockholders for approval; however, the Committee may grant Awards
under the Plan prior to the time of stockholder approval. Any such Award granted
prior to such stockholder approval shall be made subject to such stockholder
approval. The grant of an Award to a Participant shall not be deemed either to
entitle the Participant to, or to disqualify the Participant from, receipt of
any other Award under the Plan.
6.2 MAXIMUM ISO GRANTS. The Committee may not grant Incentive Stock
Options under the Plan to any Employee which would permit the aggregate Fair
Market Value (determined on the Date of Grant) of the Common Stock with respect
to which Incentive Stock Options (under this and any other plan of the Company
and its Subsidiaries) are exercisable for the first time by such Employee during
any calendar year to exceed $100,000. To the extent any Stock Option granted
under this Plan which is designated as an Incentive Stock Option exceeds this
limit or otherwise fails to qualify as an Incentive Stock Option, such Stock
Option shall be a Non-qualified Stock Option.
ARTICLE 7
OPTION PRICE
The Option Price for any share of Common Stock which may be purchased
under a Stock Option shall be at least one hundred percent (100%) of the Fair
Market Value of the share on the Date of Grant. If an Incentive Stock Option is
granted to an Employee who owns or is deemed to own (by reason of the
attribution rules of Section 424(d) of the Code) more than ten percent (10%) of
the combined voting power of all classes of stock of the Company (or any parent
or Subsidiary), the Option Price shall be at least one hundred and ten percent
(110%) of the Fair Market Value of the Common Stock on the Date of Grant.
ARTICLE 8
AWARD PERIOD; VESTING
8.1 AWARD PERIOD. Subject to the other provisions of this Plan, the
Committee may, in its discretion, provide that an Incentive may not be exercised
in whole or in part for any period or periods of time or beyond any date
specified in the Award Agreement. Except as provided in the Award Agreement, an
Incentive may be exercised in whole or in part at any time during its term. The
Award Period for an Incentive shall be reduced or terminated upon Termination of
Service in accordance with this ARTICLE 8 AND ARTICLE 9. No Incentive granted
under the Plan may be exercised at any time after the end of its Award Period.
No portion of any Incentive may be exercised after the expiration of ten (10)
years from its Date of Grant. However, if an Employee owns or is deemed to own
(by reason of the attribution rules of Section 424(d) of the Code) more than ten
percent (10%) of the combined voting power of all classes of stock of the
Company (or any parent or Subsidiary) and an Incentive Stock Option is granted
to such Employee, the term of such Incentive Stock Option (to the extent
required by the Code at the time of grant) shall be no more than five (5) years
from the Date of Grant.
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<PAGE> 9
8.2 VESTING. Except as otherwise provided in the Award, vesting of all
Awards shall be annually, with monthly incremental vesting. The Committee, in
its sole discretion, may determine that an Incentive will be immediately
exercisable, in whole or in part, or that all or any portion may not be
exercised until a date, or dates, subsequent to its Date of Grant, or until the
occurrence of one or more specified events, subject in any case to the terms of
the Plan. Subsequent to the Date of Grant, the Committee may, in its sole
discretion, accelerate the date on which all or any portion of an Incentive may
be exercised.
ARTICLE 9
TERMINATION OF SERVICE
9.1 DEATH. Upon the death of a Participant, then any and all Awards
held by the Participant that are not yet exercisable as of the date of the
Participant's death shall be fully vested as of the date of death, and shall be
exercisable by that Participant's legal representatives, legatees or
distributees for a period of the lesser of (a) the remainder of the term of the
Award or (b) 180 days following the date of the Participant's death. Any portion
of an Award not exercised upon the expiration of the periods specified in (a) or
(b) shall be null and void.
9.2 RETIREMENT. If a Participant's employment relationship is
terminated by reason of the Participant's Retirement, then the portion, if any,
of any and all Awards held by the Participant that are not yet exercisable as of
the date of that Retirement shall become null and void as of the date of
Retirement; provided, however, that the portion, if any, of any and all Awards
held by the Participant that are exercisable as of the date of that Retirement
shall be exercisable for the lesser of (a) the remainder of the term of the
Award or (b) 90 days following the date of Retirement.
9.3 DISABILITY. If a Participant's employment relationship is
terminated by reason of the Participant's Disability, then the portion, if any,
of any and all Awards held by the Participant that are not yet exercisable as of
the date of that termination for Disability shall become null and void as of the
date of termination; provided, however, that the portion, if any, of any and all
Awards held by the Participant that are exercisable as of the date of that
termination shall survive the termination for the lesser of (a) the original
term of the Award and (b) 180 days following the date of termination, and the
Award shall be exercisable by the Participant, his guardian, or his legal
representative.
9.4 LEAVE OF ABSENCE. With respect to an Award, the Committee may, in
its sole discretion, determine that any Participant who is on leave of absence
for any reason will be considered to still be in the employ of the Company for
vesting and other purposes.
ARTICLE 10
EXERCISE OF INCENTIVE
10.1 IN GENERAL. A vested Incentive may be exercised during its Award
Period, subject to limitations and restrictions set forth therein and in ARTICLE
9. A vested Incentive may be exercised at such time and in such amounts as
provided in this Plan and the applicable Award Agreement, subject to the terms,
conditions, and restrictions of the Plan.
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<PAGE> 10
In no event may an Incentive be exercised or shares of Common Stock be
issued pursuant to an Award if a necessary listing or quotation of the shares of
Common Stock on a stock exchange or inter-dealer quotation system or any
registration under state or federal securities laws required under the
circumstances has not been accomplished. No Incentive may be exercised for a
fractional share of Common Stock. The granting of an Incentive shall impose no
obligation upon the Participant to exercise that Incentive.
STOCK OPTIONS. Subject to such administrative regulations as the
Committee may from time to time adopt, a Stock Option may be exercised by the
delivery of written or telephonic notice to the Company setting forth the number
of shares of Common Stock with respect to which the Stock Option is to be
exercised and the date of exercise thereof (the "EXERCISE DATE"), which shall be
at least three (3) days after giving such notice unless an earlier time shall
have been mutually agreed upon. On the Exercise Date, the Participant shall
deliver to the Company consideration with a value equal to the total Option
Price of the shares to be purchased, payable as follows: (a) cash, check, bank
draft, or money order payable to the order of the Company, (b) Common Stock
owned by the Participant on the Exercise Date, valued at its Fair Market Value
on the Exercise Date, and/or (c) by delivery (including by FAX) to the Company
or its designated agent of an executed irrevocable option exercise form together
with irrevocable instructions from the Participant to a broker or dealer,
reasonably acceptable to the Company, to sell certain of the shares of Common
Stock purchased upon exercise of the Stock Option or to pledge such shares as
collateral for a loan and promptly deliver to the Company the amount of sale or
loan proceeds necessary to pay such purchase price.
Upon payment of all amounts due from the Participant, the Company shall
cause certificates for the Common Stock then being purchased to be delivered as
directed by the Participant (or the person exercising the Participant's Stock
Option in the event of his death) at its principal business office promptly
after the Exercise Date. The obligation of the Company to deliver shares of
Common Stock shall, however, be subject to the condition that if at any time the
Committee shall determine in its discretion that the listing, registration, or
qualification of the Stock Option or the Common Stock upon any securities
exchange or inter-dealer quotation system or under any state or federal law, or
the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the Stock Option or the
issuance or purchase of shares of Common Stock thereunder, the Stock Option may
not be exercised in whole or in part unless such listing, registration,
qualification, consent, or approval shall have been effected or obtained free of
any conditions not acceptable to the Committee.
10.2 Disqualifying Disposition of ISO. If shares of Common Stock
acquired upon exercise of an Incentive Stock Option are disposed of by a
Participant prior to the expiration of either two(2) years from the Date of
Grant of such Stock Option or one (1) year from the transfer of shares of Common
Stock to the Participant pursuant to the exercise of such Stock Option, or in an
other disqualifying disposition within the meaning of Section 422 of the Code,
such Participant shall notify the Company in writing of the date and terms of
such disposition. A disqualifying disposition by a Participant shall not affect
the status of any other Stock Option granted under the Plan as an Incentive
Stock Option within the meaning of Section 422 of the Code.
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<PAGE> 11
ARTICLE 11
AMENDMENT OR DISCONTINUANCE
Subject to the limitations set forth in this ARTICLE 11, the Board may
at any time and from time to time, without the consent of the Participants,
alter, amend, revise, suspend, or discontinue the Plan in whole or in part;
provided, however, that no amendment which requires stockholder approval in
order for the Plan and Incentives awarded under the Plan to continue to comply
with Section 162(m) of the Code, including any successors to such Section, shall
be effective unless such amendment shall be approved by the requisite vote of
the stockholders of the Company entitled to vote thereon. Any such amendment
shall, to the extent deemed necessary or advisable by the committee, be
applicable to any outstanding Incentives theretofore granted under the Plan,
notwithstanding any contrary provisions contained in any option agreement.
Notwithstanding anything contained in this Plan to the contrary, unless required
by law, no action contemplated or permitted by this ARTICLE 11 shall adversely
affect any rights of Participants or obligations of the Company to Participants
with respect to any Incentive theretofore granted under the Plan without the
consent of the affected Participant.
ARTICLE 12
TERM
The Plan shall be effective from the date that this Plan is approved by
the Board. Unless sooner terminated by action of the Board, the Plan will
terminate on March 31, 2007, but Incentives granted before that date will
continue to be effective in accordance with their terms and conditions.
ARTICLE 13
CAPITAL ADJUSTMENTS
If at any time while the Plan is in effect, or Incentives are
outstanding, there shall be any increase or decrease in the number of issued and
outstanding shares of Common Stock resulting from (1) the declaration or payment
of a stock dividend, (2) any recapitalization resulting in a stock split-up,
combination, or exchange of shares of Common stock, or (3) other increase or
decrease in such shares of Common Stock effected without receipt of
consideration by the Company, then and in such event:
(i) An appropriate adjustment shall be made in the maximum
number of shares of Common Stock then subject to being awarded under
the Plan and in the maximum number of shares of Common Stock that may
be awarded to a Participant to the end that the same proportion of the
Company's issued and outstanding shares of Common Stock shall continue
to be subject to being so awarded.
(ii) Appropriate adjustments shall be made in the number of
shares of Common Stock and the Option Price thereof then subject to
purchase pursuant to each such Stock Option previously granted and
unexercised, to the end that the same proportion of the Company's
issued and outstanding shares of Common Stock in each such instance
shall remain subject to purchase qt the same aggregate Option Price.
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<PAGE> 12
Except as otherwise expressly provided herein, the issuance by the
Company of shares of its capital stock of any class, or securities convertible
into shares of capital stock of any class, either in connection with direct sale
or 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, shall not affect, and no adjustment by reason thereof shall
be made with respect to the number of or Option Price of shares of Common Stock
then subject to outstanding Stock Options granted under the Plan.
Upon the occurrence of each event requiring an adjustment with respect
to any Incentive, the Company shall mail to each affected Participant its
computation of such adjustment which shall be conclusive and shall be binding
upon each such Participant.
ARTICLE 14
RECAPITALIZATION, MERGER AND
CONSOLIDATION: CHANGE IN CONTROL
(a) The existence of this Plan and Incentives granted
hereunder 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, or other changes in the Company's
capital structure and its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or preference
stocks ranking prior to or otherwise affecting the Common Stock or the
rights thereof (or any rights, options, or warrants to purchase same),
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.
(b) Subject to any required action by the stockholders, if the
Company shall be the surviving or resulting corporation in any merger,
consolidation or share exchange, any Incentive granted hereunder shall
pertain to and apply to the securities or rights (including cash,
property, or assets) to which a holder of the number of shares of
Common Stock subject to the Incentive would have been entitled.
(c) In the event of any merger, consolidation or share
exchange pursuant to which the Company is not the surviving or
resulting corporation, there shall be substituted for each share of
Common Stock subject to the unexercised portions of such outstanding
Incentives, that number of shares of each class of stock or other
securities or that amount of cash, property, or assets of the
surviving, resulting or consolidated company which were distributed or
distributable to the stockholders of the Company in respect to each
share of Common Stock held by them, such outstanding Incentives to be
thereafter exercisable for such stock, securities, cash, or property in
accordance with their terms. Notwithstanding the foregoing, however,
all such Incentives may be canceled by the Company as of the effective
date of any such reorganization, merger, consolidation, share exchange
or any dissolution or liquidation of the Company by giving notice to
each holder thereof or his personal representative of its intention to
do so and by permitting the purchase during the thirty (30) day period
next preceding such effective date of all of the shares of Common Stock
subject to such outstanding Incentives.
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<PAGE> 13
(d) In the event of a Change of Control, then, notwithstanding
any other provision in this Plan to the contrary, all unmatured
installments of Incentives outstanding shall thereupon automatically be
accelerated and exercisable in full. The determination of the Committee
that any of the foregoing conditions has been met shall be binding and
conclusive on all parties.
ARTICLE 15
LIQUIDATION OR DISSOLUTION
In case the Company shall, at any time while any Incentive under this
Plan shall be in force and remain unexpired, (i) sell all or substantially all
of its property, or (ii) dissolve, liquidate, or wind up its affairs, then each
Participant shall be thereafter entitled to receive, in lieu of each share of
Common Stock of the Company which such Participant would have been entitled to
receive under the Incentive, the same kind and amount of any securities or
assets as may be issuable, distributable, or payable upon any such sale,
dissolution, liquidation, or winding up with respect to each share of Common
Stock of the Company. If the Company shall, at any time prior to the expiration
of any Incentive, make any partial distribution of its assets, in the nature of
a partial liquidation, whether payable in cash or in kind (but excluding the
distribution of a cash dividend payable out of earned surplus and designated as
such) then in such event the Option Prices then in effect with respect to each
Stock Option shall be reduced, on the payment date of such distribution, in
proportion to the percentage reduction in the tangible book value of the shares
of the Company's Common Stock (determined in accordance with generally accepted
accounting principles) resulting by reason of such distribution.
ARTICLE 16
INCENTIVES IN SUBSTITUTION FOR
INCENTIVES GRANTED BY OTHER CORPORATIONS
Incentives may be granted under the Plan from time to time in
substitution for similar instruments held by employees of a corporation who
become or are about to become management Employees of the Company or any
Subsidiary as a result of a merger or consolidation of the employing corporation
with the Company or the acquisition by the Company of stock of the employing
corporation. The terms and conditions of the substitute Incentives so granted
may vary from the terms and conditions set forth in this Plan to such extent as
the Board at the time of grant may deem appropriate to conform, in whole or in
part, to the provisions of the Incentives in substitution for which they are
granted.
ARTICLE 17
MISCELLANEOUS PROVISIONS
17.1 INVESTMENT INVENT. The Company may require that there be presented
to and filed with it by any Participant under the Plan, such evidence as it may
deem necessary to establish that the Incentives granted or the shares of Common
Stock to be purchased or transferred are being acquired for investment and not
with a view to their distribution.
17.2 NO RIGHT TO CONTINUED EMPLOYMENT. Neither the Plan nor any
Incentive granted under the Plan shall confer upon any Participant any right
with respect to continuance of employment by the Company or any Subsidiary.
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17.3 INDEMNIFICATION OF BOARD AND COMMITTEE. No member of the Board or
the Committee, nor any officer or Employee of the Company acting on behalf of
the Board or the Committee, shall be personally liable for any action,
determination, or interpretation taken or made in good faith with respect to the
Plan, and all members of the Board or the Committee and each and any officer or
employee of the Company acting on their behalf shall, to the extent permitted by
law, be fully indemnified and protected by the Company in respect of any such
action, determination, or interpretation.
17.4 EFFECT OF THE PLAN. Neither the adoption of this Plan nor any
action of the Board or the Committee shall be deemed to give any person any
right to be granted an Award or any other rights except as may be evidenced by
an Award Agreement, or any amendment thereto, duly authorized by the Committee
and executed on behalf of the Company, and then only to the extent and upon the
terms and conditions expressly set forth therein.
17.5 COMPLIANCE WITH OTHER LAWS AND REGULATIONS. Notwithstanding
anything contained herein to the contrary, the Company shall not be required to
sell or issue shares of Common Stock under any Incentive if the issuance thereof
would constitute a violation by the Participant or the Company of any provisions
of any law or regulation of any governmental authority or any national
securities exchange or inter-dealer quotation system or other forum in which
shares of Common Stock are quoted or traded (including without limitation
Section 16 of the 1934 Act and Section 162(m) of the Code); and, as a condition
of any sale or issuance of shares of Common Stock under an Incentive, the
Committee may require such agreements or undertakings, if any, as the Committee
may deem necessary or advisable to assure compliance with any such law or
regulation. The Plan, the grant and exercise of Incentives hereunder, and the
obligation of the Company to sell and deliver shares of Common Stock, shall be
subject to all applicable federal and state laws, rules and regulations and to
such approvals by any government or regulatory agency as may be required.
17.6 TAX REQUIREMENTS. The Company shall have the right to deduct from
all amounts hereunder paid in cash or other form, any Federal, state, or local
taxes required by law to be withheld with respect to such payments. The
Participant receiving shares of Common Stock issued under the Plan shall be
required to pay the Company the amount of any taxes which the Company is
required to withhold with respect to such shares of Common Stock.
Notwithstanding the foregoing, in the event of an assignment of a Non-qualified
Stock Option pursuant to Section 17.7, the Participant who assigns the
Non-qualified Stock Option shall remain subject to withholding taxes upon
exercise of the Non-qualified Stock Option by the transferee to the extent
required by the Code or the rules and regulations promulgated thereunder. Such
payments shall be required to be made prior to the delivery of any certificate
representing such shares of Common Stock. Such payment may be made in cash, by
check, or through the delivery of shares of Common Stock owned by the
Participant (which may be effected by the actual delivery of shares of Common
Stock by the Participant or by the Company's withholding a number of shares to
be issued upon the exercise of a Stock Option, if applicable), which shares have
an aggregate Fair Market Value equal to the required minimum withholding
payment, or any combination thereof.
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17.7 ASSIGNABILITY. Incentive Stock Options may not be transferred or
assigned other than by will or the laws of descent and distribution and may be
exercised during the lifetime of the Participant only by the Participant or the
Participant's legally authorized representative. The designation by a
Participant of a beneficiary will not constitute a transfer of the Stock Option.
The Committee may waive or modify any limitation contained in the preceding
sentences of this Section 17.7 that is not required for compliance with Section
422 of the Code. Unless the Committee provides otherwise, all or a portion of a
Non-qualified Stock Option to be granted to a Participant may be transferred by
such Participant to (i) the spouse, children or grandchildren of the Participant
("IMMEDIATE FAMILY MEMBERS"), (ii) a trust or trusts for the exclusive benefit
of such Immediate Family members, or (iii) a partnership in which such Immediate
Family Members are the only partners, (iv) an entity exempt from federal income
tax pursuant to Section 501(c)(3) of the Code or any successor provision, or (v)
a split interest trust or pooled income fund described in Section 2522(c)(2) of
the Code or any successor provision, provided that (x) there shall be no
consideration for any such transfer, and (y) subsequent transfers of transferred
Non-qualified Stock Options shall be prohibited except those 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
of 1974, as amended. Following transfer, any such Non-qualified Stock Option
shall continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer, provided that for purposes of ARTICLES 10, 11,
13, 15 AND 17 hereof the term "PARTICIPANT" shall be deemed to include the
transferee. The events of Termination of Service shall continue to be applied
with respect to the original Participant, following which the Non-qualified
Stock Options shall be exercisable by the transferee only to the extent and for
the periods specified in the Award Agreement. The Committee and the Company
shall have no obligation to inform any transferee of a Non-qualified Stock
Option of any expiration, termination, lapse or acceleration of such Option. The
Company shall have no obligation to register with any federal or state
securities commission or agency any Common Stock issuable or issued under a
Non-qualified Stock Option that has been transferred by a Participant under this
Section 17.7.
17.8 USE OF PROCEEDS. Proceeds from the sale of shares of Common Stock
pursuant to Incentives granted under this Plan shall constitute general funds of
the Company.
A copy of this Plan shall be kept on file in the principal office of
the Company in Dallas, Texas.
* * * * * * * * * * * * * * *
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IN WITNESS WHEREOF, the Company has caused this instrument to be
executed as of April 3, 1997, by its duly authorized representative.
THOMAS GROUP, INC.
By: /s/ Alexander W. Young
--------------------------------------
Alexander W. Young,
President and Chief Operating Officer
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EXHIBIT 3.9
THOMAS GROUP, INC.
AMENDED AND RESTATED
1992 STOCK OPTION PLAN
24
<PAGE> 2
THOMAS GROUP, INC.
AMENDED AND RESTATED
1992 STOCK OPTION PLAN
SCOPE AND PURPOSE OF PLAN
Thomas Group, Inc., a Delaware corporation (the "CORPORATION"), has
amended and restated the 1992 Stock Option Plan as set forth herein (the "PLAN")
to provide for the granting of Nonstatutory Options and Incentive Stock Options
(hereafter defined) to certain Key Persons.
The purpose of the Plan is to provide an incentive for Key Persons of
the Corporation or its Subsidiaries (hereafter defined) to remain in the service
of the Corporation or its Subsidiaries, to extend to them the opportunity to
acquire a proprietary interest in the Corporation so that they will apply their
best efforts for the benefit of the Corporation, and to aid the Corporation in
attracting able persons to enter the service of the Corporation and its
Subsidiaries.
1. DEFINITIONS
(1.1) "ACQUIRING PERSON" means any Person other than the Corporation,
any of the Corporation's Subsidiaries, any employee benefit plan of the
Corporation or of a Subsidiary of the Corporation or of a corporation owned
directly or indirectly by the stockholders of the Corporation in substantially
the same proportions as their ownership of stock of the Corporation, or any
trustee or other fiduciary holding securities under an employee benefit plan of
the Corporation or of a Subsidiary of the Corporation or of a corporation owned
directly or indirectly by the stockholders of the Corporation in substantially
the same proportions as their ownership of stock of the Corporation.
(1.2) "AWARD" means the grant of any form of Option under the Plan,
whether granted singly, in combination, or in tandem, to a Holder pursuant to
the terms, conditions, and limitations that the Committee may establish in order
to fulfill the objectives of the Plan.
(1.3) "AWARD AGREEMENT" means the written agreement between the
Corporation and a Holder evidencing the terms, conditions, and limitations of
the Award granted to that Holder.
(1.4) "BOARD OF DIRECTORS" means the board of directors of the
Corporation.
(1.5) "BUSINESS DAY" means any day other than a Saturday, a Sunday, or
a day on which banking institutions in the State of Texas are authorized or
obligated by law or executive order to close.
(1.6) "CHANGE IN CONTROL" means the event that is deemed to have
occurred if:
((a)) any Acquiring Person is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing fifty percent
or more of the combined voting power of the then outstanding Voting
Securities of the Corporation; or
((b)) members of the Incumbent Board cease for any reason to
constitute at least a majority of the Board of Directors; or
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<PAGE> 3
((c)) a public announcement is made of a tender or exchange
offer by any Acquiring Person for fifty percent or more of the
outstanding Voting Securities of the Corporation, and the Board of
Directors approves or fails to oppose that tender or exchange offer in
its statements in Schedule 14D-9 under the Exchange Act; or
((d)) the stockholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation or
partnership (or, if no such approval is required, the consummation of
such a merger or consolidation of the Corporation), other than a merger
or consolidation that would result in the Voting Securities of the
Corporation outstanding immediately before the consummation thereof
continuing to represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving entity or of a parent
of the surviving entity) a majority of the combined voting power of the
Voting Securities of the surviving entity (or its parent) outstanding
immediately after that merger or consolidation; or
((e)) the stockholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all the
Corporation's assets (or, if no such approval is required, the
consummation of such a liquidation, sale, or disposition in one
transaction or series of related transactions) other than a
liquidation, sale, or disposition of all or substantially all the
Corporation's assets in one transaction or a series of related
transactions to a corporation owned directly or indirectly by the
stockholders of the Corporation in substantially the same proportions
as their ownership of stock of the Corporation.
(1.7) "CLASS B STOCK" means the Corporation's authorized Class B common
stock, $.01 par value per share, as described in the Corporation's Amended and
Restated Certificate of Incorporation, as amended on August 13, 1992, or any
securities which are substituted for the Class B Stock as provided in Section 7.
(1.8) "CODE" means the Internal Revenue Code of 1986, as amended.
(1.9) "COMMITTEE" means the committee appointed pursuant to Section 3
by the Board of Directors to administer this Plan.
(1.10) "CORPORATION" means Thomas Group, Inc., a Delaware corporation.
(1.11) "DATE OF GRANT" has the meaning given it in Paragraph 4.3.
(1.12) "EFFECTIVE DATE" means the closing date of the first sale of
shares of Stock to underwriters in a firm commitment underwriting pursuant to
the Registration Statement.
(1.13) "EXCHANGE ACT" means the Securities Exchange Act of 1934, or any
successor law, as it may be amended from time to time.
(1.14) "EXERCISE NOTICE" has the meaning given it in Paragraph 5.5.
(1.15) "EXERCISE PRICE" has the meaning given it in Paragraph 5.4.
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(1.16) "FAIR MARKET VALUE" means, for a particular day:
((a)) If shares of Stock of the same class are listed or
admitted to unlisted trading privileges on any national or regional
securities exchange at the date of determining the Fair Market Value,
then the last reported sale price, regular way, on the composite tape
of that exchange on the last Business Day before the date in question
or, if no such sale takes place on that Business Day, the average of
the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to unlisted trading
privileges on that securities exchange; or
((b)) If shares of Stock of the same class are not listed or
admitted to unlisted trading privileges as provided in Subparagraph
1.16(a) and if sales prices for shares of Stock of the same class in
the over-the-counter market are reported by the National Association of
Securities Dealers, Inc. Automated Quotations, Inc. ("NASDAQ") National
Market System (or such other system then in use) at the date of
determining the Fair Market Value, then the last reported sales price
so reported on the last Business Day before the date in question or, if
no such sale takes place on that Business Day, the average of the high
bid and low asked prices so reported; or
((c)) If shares of Stock of the same class are not listed or
admitted to unlisted trading privileges as provided in subparagraph
1.16(a) and sales prices for shares of Stock of the same class are not
reported by the NASDAQ National Market System (or a similar system then
in use) as provided in subparagraph 1.16(b), and if bid and asked
prices for shares of Stock of the same class in the over-the-counter
market are reported by NASDAQ (or, if not so reported, by the National
Quotation Bureau Incorporated) at the date of determining the Fair
Market Value, then the average of the high bid and low asked prices on
the last Business Day before the date in question; or
((d)) If shares of Stock of the same class are not listed or
admitted to unlisted trading privileges as provided in subparagraph
1.16(a) and sales prices or bid and asked prices therefor are not
reported by NASDAQ (or the National Quotation Bureau Incorporated) as
provided in subparagraph 1.16(b) or subparagraph 1.16(c) at the date of
determining the Fair Market Value, then the value determined in good
faith by the Committee, which determination shall be conclusive for all
purposes; or
((e)) If shares of Stock of the same class are listed or
admitted to unlisted trading privileges as provided in subparagraph
1.16(a) or sales prices or bid and asked prices therefor are reported
by NASDAQ (or the National Quotation Bureau Incorporated) as provided
in subparagraph 1.16(b) or subparagraph 1.16(c) at the date of
determining the Fair Market Value, but the volume of trading is so low
that the Board of Directors determines in good faith that such prices
are not indicative of the fair value of the Stock, then the value
determined in good faith by the Committee, which determination shall be
conclusive for all purposes notwithstanding the provisions of
subparagraphs 1.16(a), (b), or (c).
For purposes of the redemption provided for in subparagraph 7.3(d)(v),
Fair Market Value shall have the meaning and shall be determined as provided
above; provided, however, that the Committee, with respect to any such
redemption, shall have the right to determine that the Fair Market Value for
purposes of the redemption should be an amount measured by the value of the
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<PAGE> 5
shares of stock, other securities, cash, or property otherwise being received by
holders of shares of Stock in connection with the Restructure, and upon that
determination the Committee shall have the power and authority to determine Fair
Market Value for purposes of the redemption based upon the value of such shares
of stock, other securities, cash or property. Any such determination by the
Committee shall be conclusive for all purposes.
(1.17) "HOLDER" means a Key Person to whom an Award has been granted.
(1.18) "INCENTIVE STOCK OPTION" means an option to purchase shares of
Stock pursuant to this Plan and which is intended to qualify as an incentive
stock option under Section 422 of the Code.
(1.19) "INCUMBENT BOARD" means the individuals who, as of the Effective
Date, constitute the Board of Directors and any other individual who becomes a
director of the Corporation after that date and whose election or appointment by
the Board of Directors or nomination for election by the Corporation's
stockholders was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board.
(1.20) "KEY PERSON" means any director of the Corporation or
independent contractor whom the Committee identifies as having a direct and
significant effect on the performance of the Corporation or any of its
Subsidiaries.
(1.21) "NONSTATUTORY OPTION" means an option to purchase shares of
Stock pursuant to this Plan and which is not intended to qualify as an incentive
stock option under Section 422 of the Code.
(1.22) "NON-SURVIVING EVENT" means an event of Restructure as described
in either subparagraph (b) or (c) of Paragraph 1.27.
(1.23) "NORMAL RETIREMENT" means the separation of the Holder from
employment with the Corporation and its Subsidiaries on account of retirement at
any time on or after the date on which the Holder reaches age sixty.
(1.24) "OPTION" means a Nonstatutory Option or an Incentive Stock
Option granted pursuant to this Plan.
(1.25) "PERSON" means any person or entity of any nature whatsoever,
specifically including (but not limited to) an individual, a firm, a company, a
corporation, a partnership, a trust or other entity. A Person, together with
that Person's affiliates and associates (as those terms are defined in Rule
12b-2 under the Exchange Act for purposes of this definition only), and any
Persons acting as a partnership, limited partnership, joint venture,
association, syndicate, or other group (whether or not formally organized), or
otherwise acting jointly or in concert or in a coordinated or consciously
parallel manner (whether or not pursuant to any express agreement), for the
purpose of acquiring, holding, voting, or disposing of securities of the
Corporation with that Person, shall be deemed a single "PERSON."
(1.26) "PLAN" means the Corporation's Amended and Restated 1992 Stock
Option Plan, as it may be amended from time to time.
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(1.27) "RESTRUCTURE" means the occurrence of any one or more of the
following:
((a)) The merger or consolidation of the Corporation with any
Person, whether effected as a single transaction or a series of related
transactions, with the Corporation remaining the continuing or
surviving entity of that merger or consolidation and the Stock
remaining outstanding and not changed into or exchanged for stock or
other securities of any other Person or of the Corporation, cash, or
other property;
((b)) The merger or consolidation of the Corporation with any
Person, whether effected as a single transaction or a series of related
transactions, with (i) the Corporation not being the continuing or
surviving entity of that merger or consolidation or (ii) the
Corporation remaining the continuing or surviving entity of that merger
or consolidation but all or a part of the outstanding shares of Stock
are changed into or exchanged for stock or other securities of any
other Person or the Corporation, cash, or other property; or
((c)) The transfer, directly or indirectly, of all or
substantially all of the assets of the Corporation (whether by sale,
merger, consolidation, liquidation, or otherwise) to any Person whether
effected as a single transaction or a series of related transactions.
(1.28) "SECURITIES ACT" means the Securities Act of 1933, or any
successor law, as it may be amended from time to time.
(1.29) "STOCK" means the Corporation's authorized common stock, $.01
par value per share, as described in the Corporation's Amended and Restated
Certificate of Incorporation as it shall have been amended on August 13, 1993,
or any other securities that are substituted for the Stock as provided in
Section 7.
(1.30) "SUBSIDIARY" means, with respect to any Person, any corporation
or other entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by that Person.
(1.31) "TOTAL SHARES" has the meaning given it in Paragraph 7.2.
(1.32) "VOTING SECURITIES" means any securities that are entitled to
vote generally in the election of directors, in the admission of general
partners, or in the selection of any other similar governing body.
2. SHARES OF STOCK SUBJECT TO THE PLAN
(2.1) MAXIMUM AMOUNT OF SHARES. Subject to the provisions of Paragraph
2.6 and Section 7 of the Plan, the aggregate number of shares of Stock that may
be issued, transferred, or exercised pursuant to Awards under the Plan shall be
1,100,000, unless amended by the Board of Directors, and the aggregate number of
shares of Class B Stock that may be issued, transferred or exercised pursuant to
Awards under the Plan shall be 600,000, unless amended by the Board of
Directors.
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<PAGE> 7
(2.2) REDUCTION IN AVAILABLE SHARES. In computing the total number of
shares available at a particular time for Awards under the Plan, there shall be
counted against the limitations stated in Paragraph 2.1 the number of shares of
Stock or Class B Stock, as the case may be, subject to issuance upon exercise or
settlement of Awards and the number of shares of Stock or Class B Stock, as the
case may be, that have been issued upon exercise or settlement of Awards (except
as otherwise provided in Paragraph 2.3).
(2.3) RESTORATION OF UNUSED AND SURRENDERED SHARES. If Stock or Class B
Stock, as the case may be, subject to any Award is not issued or transferred, or
ceases to be issuable or transferable for any reason, including (but not
exclusively) because an Award is forfeited, terminated, expires unexercised, or
is exchanged for other Awards, the shares of Stock or Class B Stock, as the case
may be, that were subject to that Award shall no longer be charged against the
number of available shares provided for in Paragraph 2.2 and shall again be
available for issue, transfer, or exercise pursuant to Awards under the Plan to
the extent of such forfeiture, termination, expiration, or other cessation of
its subjection to an Award.
(2.4) DESCRIPTION OF SHARES. The shares to be delivered under the Plan
shall be made available from (a) authorized but unissued shares of Stock or
Class B Stock, as the case may be, (b) Stock or Class B Stock, as the case may
be, held in the treasury of the Corporation, or (c) previously issued shares of
Stock or Class B Stock, as the case may be, reacquired by the Corporation,
including shares purchased on the open market, in each situation as the Board of
Directors or the Committee may determine from time to time at its sole option.
(2.5) REGISTRATION AND LISTING OF SHARES. From time to time, the Board
of Directors and appropriate officers of the Corporation shall and are
authorized to take whatever actions are necessary to file required documents
with governmental authorities, stock exchanges, and other appropriate Persons to
make shares of Stock or Class B Stock, as the case may be, available for
issuance pursuant to Awards.
(2.6) REDUCTION IN OUTSTANDING SHARES OF STOCK OR CLASS B STOCK.
Nothing in this Section 2 shall impair the right of the Corporation to reduce
the number of outstanding shares of Stock or Class B Stock, as the case may be,
pursuant to repurchases, redemptions, or otherwise; provided, however, that no
reduction in the number of outstanding shares of Stock or Class B Stock, as the
case may be, shall (a) impair the validity of any outstanding Award, whether or
not that Award is fully exercisable or fully vested or (b) impair the status of
any shares of Stock or Class B Stock, as the case may be, previously issued
pursuant to an Award or thereafter issued pursuant to a then-outstanding Award
as duly authorized, validly issued, fully paid, and nonassessable shares.
3. ADMINISTRATION OF THE PLAN
(3.1) COMMITTEE. The Board of Directors or the Committee shall
administer the Plan. The number of persons that shall constitute the Committee
shall be determined from time to time by a majority of all the members of the
Board of Directors, and, unless that majority of the Board of Directors
determines otherwise, shall be no less than two persons.
(3.2) DURATION, REMOVAL, ETC. The members of the Committee shall serve
at the pleasure of the Board of Directors, which shall have the power, at any
time and from time to time, to remove members from or add members to the
Committee. Removal from the Committee may be with or without cause. Any
individual serving as a member of the Committee shall have the
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<PAGE> 8
right to resign from membership in the Committee by at least three day's written
notice to the Board of Directors. The Board of Directors, and not the remaining
members of the Committee, shall have the power and authority to fill vacancies
on the Committee, however caused. The Board of Directors shall promptly fill any
vacancy.
(3.3) MEETINGS AND ACTIONS OF COMMITTEE. The Board of Directors shall
designate which of the Committee members shall be the chairman of the Committee.
If the Board of Directors fails to designate a Committee chairman, the members
of the Committee shall elect one of the Committee members as chairman, who shall
act as chairman until he ceases to be a member of the Committee or until the
Board of Directors elects a new chairman. The Committee shall hold its meetings
at those times and places as the chairman of the Committee may determine. At all
meetings of the Committee, a quorum for the transaction of business shall be
required, and a quorum shall be deemed present if at least a majority of the
members of the Committee are present. At any meeting of the Committee, each
member shall have one vote. All decisions and determinations of the Committee
shall be made by the majority vote or majority decision of all of its members
present at a meeting at which a quorum is present; provided, however, that any
decision or determination reduced to writing and signed by all of the members of
the Committee shall be as fully effective as if it had been made at a meeting
that was duly called and held. The Committee may make any rules and regulations
for the conduct of its business that are not inconsistent with the provisions of
the Plan, the Restated Certificate of Incorporation, and the by-laws of the
Corporation, as the Committee may deem advisable.
(3.4) COMMITTEE'S POWERS. Subject to the express provisions of the
Plan, the Committee shall have the authority, in its sole and absolute
discretion, (a) to adopt, amend, and rescind administrative and interpretive
rules and regulations relating to the Plan; (b) to determine the Key Persons to
whom, and the time or times at which, Awards shall be granted; (c) to determine
the number of shares of Stock or Class B Stock, as the case may be, that shall
be the subject of each Award; (d) to determine the terms and provisions of each
Award Agreement (which need not be identical), including provisions defining or
otherwise relating to (i) the term and the period or periods and extent of
exercisability of the Options, (ii) the extent to which the transferability of
shares of Stock or Class B Stock, as the case may be, issued or transferred
pursuant to any Award is restricted, (iii) the effect of termination of
employment on the Award, and (iv) the effect of approved leaves of absence
(consistent with any applicable regulations of the Internal Revenue Service);
(e) to accelerate, pursuant to Section 7, the time of exercisability of any
Option that has been granted; (f) to construe the respective Award Agreements
and the Plan; (g) to make determinations of the Fair Market Value of Stock or
Class B Stock, as the case may be, pursuant to the Plan; (h) to delegate its
duties under the Plan to such agents as it may appoint from time to time; and
(i) to make all other determinations, perform all other acts, and exercise all
other powers and authority necessary or advisable for administering the Plan,
including the delegation of those ministerial acts and responsibilities as the
Committee deems appropriate. The Committee may correct any defect, supply any
omission, or reconcile any inconsistency in the Plan, in any Award, or in any
Award Agreement in the manner and to the extent it deems necessary or desirable
to carry the Plan into effect, and the Committee shall be the sole and final
judge of that necessity or desirability. The determinations of the Committee on
the matters referred to in this Paragraph 3.4 shall be final and conclusive.
4. ELIGIBILITY AND PARTICIPATION
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(4.1) KEY PERSONS. Awards may be granted pursuant to the Plan only to
persons who are Key Persons at the time of the grant thereof. Only employees of
Corporation or any of its Subsidiaries, including employee-directors, shall be
eligible to receive grants of Incentive Stock Options.
(4.2) GRANT OF AWARDS. Subject to the express provisions of the Plan,
the Committee shall determine which Key Persons shall be granted Awards from
time to time. In making grants, the Committee shall take into consideration the
contribution the potential Holder has made or may make to the success of the
Corporation or its Subsidiaries and such other considerations as the Board of
Directors may from time to time specify. The Committee shall also determine the
number of shares subject to each of the Awards and shall authorize and cause the
Corporation to grant Awards in accordance with those determinations.
(4.3) DATE OF GRANT. The date on which the Committee completes all
action resolving to offer an Award to an individual, including the specification
of the number of shares of Stock to be subject to the Award, shall be the date
on which the Award covered by an Award Agreement is granted (the "DATE OF
GRANT"), even though certain terms of the Award Agreement may not be determined
at that time and even though the Award Agreement may not be executed until a
later time. In no event shall a Holder gain any rights in addition to those
specified by the Committee in its grant, regardless of the time that may pass
between the grant of the Award and the actual execution of the Award Agreement
by the Corporation and the Holder.
(4.4) AWARD AGREEMENTS. Each Award granted under the Plan shall be
evidenced by an Award Agreement that is executed by the Corporation and the Key
Person to whom the Award is granted and incorporating those terms that the
Committee shall deem necessary or desirable. In the case of an Incentive Stock
Option, the Award Agreement shall also include provisions that may be necessary
to assure that the option is an incentive stock option under Section 422 of the
Code. More than one Award may be granted under the Plan to the same Key Person
and be outstanding concurrently.
(4.5) NO RIGHT TO AWARD. The adoption of the Plan shall not be deemed
to give any person a right to be granted an Award.
5. TERMS AND CONDITIONS OF OPTIONS
All Options granted under the Plan shall comply with, and the related
Award Agreements shall be deemed to include and be subject to, the terms and
conditions set forth in this Section 5 (to the extent each term and condition
applies to the form of Option) and also to the terms and conditions set forth in
Section 7 and Section 8; provided, however, that the Committee may authorize an
Award Agreement that expressly contains terms and provisions that differ from
the terms and provisions set forth in Paragraphs 7.2, 7.3, and 7.4 and any of
the terms and provisions of Section 8 (other than Paragraph 8.6).
(5.1) NUMBER OF SHARES. Each Award Agreement shall state the total
number of shares of Stock or Class B Stock, as the case may be, to which it
relates.
(5.2) VESTING. Each Award Agreement shall state the time or periods in
which or the conditions upon, satisfaction of which the right to exercise the
Option or a portion thereof shall vest and the number of shares of Stock or
Class B Stock, as the case may be, for which the right to exercise the Option
shall vest at each such time, period, or fulfillment of condition.
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(5.3) EXPIRATION OF OPTIONS. Options may be exercised during the term
determined by the Committee and set forth in the Award Agreement; provided that
no Option shall be exercised after the expiration of a period of ten years
commencing on the Date of Grant of the Option.
(5.4) EXERCISE PRICE. Each Award Agreement shall state the exercise
price per share of Stock (the "EXERCISE PRICE"). The exercise price per share of
Stock subject to a Nonstatutory Option shall not be less than the par value per
share of the Stock. The exercise price for an Incentive Stock Option shall be an
amount not less than the Fair Market Value per share of the Stock on the Date of
Grant.
(5.5) METHOD OF EXERCISE. The Option shall be exercisable only by
written notice of exercise (the "EXERCISE NOTICE") delivered to the Corporation
during the term of the Option, which notice shall (a) state the number of shares
of Stock or Class B Stock, as the case may be, with respect to which the Option
is being exercised, (b) be signed by the Holder of the Option or, if the Holder
is dead or disabled, by the person authorized to exercise the Option pursuant to
Paragraphs 8.2, (c) be accompanied by the Exercise Price for all shares of Stock
or Class B Stock, as the case may be, for which the Option is exercised, and (d)
include such other information, instruments, and documents as may be required to
satisfy any other condition to exercise contained in the Award Agreement. The
Option shall not be deemed to have been exercised unless all of the requirements
of the preceding provisions of this Paragraph 5.5 have been satisfied.
(5.6) MEDIUM AND TIME OF PAYMENT. The Exercise Price of an Option shall
be payable in full upon the exercise of the Option (a) in cash or by an
equivalent means acceptable to the Committee, (b) on the Committee's prior
consent, with shares of Stock or Class B Stock, as the case may be, owned by the
Holder (including shares received upon exercise of the Option or restricted
shares already held by the Holder) and having a Fair Market Value at least equal
to the aggregate Exercise Price payable in connection with such exercise, or (c)
by any combination of clauses (a) and (b). If the Committee elects to accept
shares of Stock or Class B Stock, as the case may be, in payment of all or any
portion of the Exercise Price, then (for purposes of payment of the Exercise
Price) those shares of Stock or Class B Stock, as the case may be, shall be
deemed to have a cash value equal to their aggregate Fair Market Value
determined as of the date of the delivery of the Exercise Notice. If the
Committee elects to accept shares of restricted Stock or Class B Stock, as the
case may be, in payment of all or any portion of the Exercise Price, then an
equal number of shares issued pursuant to the exercise shall be restricted on
the same terms and for the restriction period remaining on the shares used for
payment.
(5.7) PAYMENT WITH SALE PROCEEDS. In addition, at the request of the
Holder and to the extent permitted by applicable law, the Committee may (but
shall not be required to) approve arrangements with a brokerage firm under which
that brokerage firm, on behalf of the Holder, shall pay to the Corporation the
Exercise Price of the Option being exercised, and the Corporation shall promptly
deliver the exercised shares to the brokerage firm. To accomplish this
transaction, the Holder must deliver to the Corporation an Exercise Notice
containing irrevocable instructions from the Holder to the Corporation to
deliver the stock certificates directly to the broker. Upon receiving a copy of
the Exercise Notice acknowledged by the Corporation, the broker shall sell that
number of shares of Stock or loan the Holder an amount sufficient to pay the
Exercise Price and any withholding obligations due. The broker shall then
deliver to the Corporation that portion of the sale or loan proceeds necessary
to cover the Exercise Price and any withholding obligations due.
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(5.8) PAYMENT OF TAXES. The Committee may, in its discretion, require a
Holder to pay to the Corporation (or the Corporation's Subsidiary if the Holder
is an employee of a Subsidiary of the Corporation), at the time of the exercise
of an Option, the amount that the Committee deems necessary to satisfy the
Corporation's or its Subsidiary's current or future obligation to withhold
federal, state, or local income or other taxes that the Holder incurs by
exercising an Option. Upon the exercise of an Option requiring tax withholding,
a Holder may (a) direct the Corporation to withhold from the shares of
Stock or Class B Stock, as the case may be, to be issued to the Holder the
number of shares necessary to satisfy the Corporation's obligation to withhold
taxes, that determination to be based on the shares' Fair Market Value as of the
date on which tax withholding is to be made; (b) deliver to the Corporation
sufficient shares of Stock or Class B Stock, as the case may be, (based upon the
Fair Market Value at date of withholding) to satisfy the Corporation's tax
withholding obligations, based on the shares' Fair Market Value as of the date
of exercise; or (c) deliver sufficient cash to the Corporation to satisfy its
tax withholding obligations. Holders who elect to use such a stock withholding
feature must make the election at the time and in the manner that the Committee
prescribes. The Committee may, at its sole option, deny any Holder's request to
satisfy withholding obligations through Stock or Class B Stock, as the case may
be, instead of cash. In the event the Committee subsequently determines that the
aggregate Fair Market Value (as determined above) of any shares of Stock or
Class B Stock, as the case may be, withheld as payment of any tax withholding
obligation is insufficient to discharge that tax withholding obligation, then
the Holder shall pay to the Corporation, immediately upon the Committee's
request, the amount of that deficiency.
(5.9) NO FRACTIONAL SHARES. The Corporation shall not in any case be
required to sell, issue, or deliver a fractional share with respect to any
Option. In lieu of the issuance of any fractional share of Stock or Class B
Stock, as the case may be, the Corporation shall pay to the Holder an amount in
cash equal to the same fraction (as the fractional Stock or Class B Stock, as
the case may be) of the Fair Market Value of a share of Stock or Class B Stock,
as the case may be, determined as of the date of the applicable Exercise Notice.
(5.10) MODIFICATION, EXTENSION, AND RENEWAL OF OPTIONS. Subject to the
terms and conditions of and within the limitations of the Plan, and any consent
required by the last sentence of this Paragraph 5.10, the Committee may (a)
modify, extend, or renew outstanding Options granted under the Plan and (b)
accept the surrender of Options outstanding hereunder (to the extent not
previously exercised) and authorize the granting of new Options in substitution
for outstanding Options (to the extent not previously exercised). Nevertheless,
without the consent of the Holder, the Committee may not modify any outstanding
Options so as to specify a higher or lower Exercise Price. In addition, no
modification of an Option granted hereunder shall, without the consent of the
Holder, alter or impair any rights or obligations under any Option theretofore
granted hereunder to such Holder under the Plan.
(5.11) OTHER AGREEMENT PROVISIONS. The Award Agreements authorized
under the Plan shall contain such provisions in addition to those required by
the Plan (including, without limitation, restrictions or the removal of
restrictions upon the exercise of the Option and the retention or transfer of
shares thereby acquired) as the Committee may deem advisable.
6. LIMITATIONS OF INCENTIVE STOCK OPTIONS
Notwithstanding anything to the contrary, the following provisions of
this Section 6 shall apply to all Incentive Stock Options granted under this
Plan.
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(6.1) STOCK OWNERSHIP LIMITATION. In the case of an Incentive Stock
Option, the Award Agreement shall include provisions that may be necessary to
assure that the option is an incentive stock option under the Code. No Incentive
Stock Option may be granted to an employee who owns more than 10% of the total
combined voting powers of all classes of stock of the Corporation or its
Subsidiaries. This limitation will not apply if the option price is at least
110% of the fair market value of the Stock on the Date of Grant and the
Incentive Stock Option is not exercisable more than five years from the Date of
Grant.
(6.2) OPTION PERIOD. Notwithstanding the provisions of Section 5.3
hereof, if a Key Person owns or is deemed to own (by reason of the attribution
rules of Section 424(d) of the Code) more than 10% of the combined voting power
of all classes of stock of the Corporation (or any subsidiary of the
Corporation) and an Incentive Stock Option is granted to such employee, the
term of such Incentive Stock Option (to the extent required by the Code at the
time of grant) shall be no more than five years from the Date of Grant.
(6.3) LIMITATION ON EXERCISE OF INCENTIVE STOCK OPTIONS. To the extent
required by the Code for incentive stock options, the exercise of Incentive
Stock Options granted under the Plan shall be subject to the $100,000 calendar
year limit as set forth in Section 422(d) of the Code.
(6.4) DISQUALIFYING DISPOSITION. If Stock acquired upon exercise of an
Incentive Stock Option is disposed of by a Holder prior to the expiration of
either two years from the Date of Grant of such option or one year from the
transfer of shares to the Holder pursuant to the exercise of such option, or in
any other disqualifying disposition within the meaning of Section 422 of the
Code, such Holder shall notify the Corporation in writing of the date and terms
of such disposition. A disqualifying disposition by a Holder shall not affect
the status of any other option granted under the Plan as an incentive stock
option within the meaning of Section 422 of the Code.
7. ADJUSTMENT PROVISIONS
(7.1) ADJUSTMENT OF AWARDS AND AUTHORIZED STOCK OR CLASS B STOCK. The
terms of an Award and the number of shares of Stock or Class B Stock, as the
case may be, authorized pursuant to Paragraph 2.1 for issuance under the Plan
shall be subject to adjustment, from time to time, in accordance with the
following provisions:
((a)) If at any time or from time to time, the Corporation shall
subdivide as a whole (by reclassification, by a split of Stock or Class
B Stock, as the case may be, by the issuance of a distribution on Stock
or Class B Stock, as the case may be, payable in Stock or Class B
Stock, as the case may be, or otherwise) the number of shares of Stock
or Class B Stock, as the case may be, then outstanding into a greater
number of shares of Stock or Class B Stock, as the case may be, then
(i) the maximum number of shares of Stock or Class B Stock, as the case
may be, available for the Plan as provided in Paragraph 2.1 shall be
increased proportionately, and the kind of shares or other securities
available for the Plan shall be appropriately adjusted, (ii) the number
of shares of Stock or Class B Stock, as the case may be, (or other kind
of shares or securities) that may be acquired under any Award shall be
increased proportionately, and (iii) the price (including Exercise
Price) for each share of Stock or Class B Stock, as the case may be,
(or other kind of shares or unit of other securities) subject to then
outstanding Awards shall be reduced proportionately, without changing
the aggregate purchase price or value as to which outstanding Awards
remain exercisable or subject to restrictions.
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((b)) If at any time or from time to time, the Corporation shall
consolidate as a whole (by reclassification, reverse split of Stock or
Class B Stock, as the case may be, or otherwise) the number of shares
of Stock or Class B Stock, as the case may be, then outstanding into a
lesser number of shares of Stock or Class B Stock, as the case may be,
(i) the maximum number of shares of Stock or Class B Stock, as the case
may be, available for the Plan as provided in Paragraph 2.1 shall be
decreased proportionately, and the kind of shares or other securities
available for the Plan shall be appropriately adjusted, (ii) the number
of shares of Stock or Class B Stock, as the case may be (or other kind
of shares or securities), that may be acquired under any Award shall be
decreased proportionately, and (iii) the price (including Exercise
Price) for each share of Stock or Class B Stock, as the case may be (or
other kind of shares or unit of other securities), subject to then
outstanding Awards shall be increased proportionately, without changing
the aggregate purchase price or value as to which outstanding Awards
remain exercisable or subject to restrictions.
((c)) Whenever the number of shares of Stock or Class B Stock,
as the case may be, subject to outstanding Awards and the price for
each share of Stock or Class B Stock, as the case may be, subject to
outstanding Awards are required to be adjusted as provided in this
Paragraph 7.1, the Committee shall promptly prepare a notice setting
forth, in reasonable detail, the event requiring adjustment, the amount
of the adjustment, the method by which such adjustment was calculated,
and the change in price and the number of shares of Stock or Class B
Stock, as the case may be, other securities, cash, or property
purchasable subject to each Award after giving effect to the
adjustments. The Committee shall promptly give each Holder such a
notice.
((d)) Adjustments under subparagraphs 7.1(a) and (b) shall be made
by the Committee, and its determination as to what adjustments shall be
made and the extent thereof shall be final, binding, and conclusive. No
fractional interest shall be issued under the Plan on account of any
such adjustments.
(7.2) CHANGES IN CONTROL. Any Award Agreement may provide that, upon
the occurrence of a Change in Control, all outstanding Options shall immediately
become fully vested and exercisable in full, including that portion of any
Option that pursuant to the terms and provisions of the applicable Award
Agreement had not yet become exercisable (the total number of shares of Stock or
Class B Stock, as the case may be, as to which an Option is exercisable upon the
occurrence of a Change in Control is referred to herein as the "TOTAL SHARES").
If a Change in Control involves a Restructure or occurs in connection with a
series of related transactions involving a Restructure and if such Restructure
is in the form of a Non-Surviving Event and as a part of such Restructure shares
of stock, other securities, cash, or property shall be issuable or deliverable
in exchange for Stock or Class B Stock, as the case may be, then the Holder of
an Award shall be entitled to purchase (in lieu of the Total Shares that the
Holder would otherwise be entitled to purchase) the number of shares of stock,
other securities, cash, or property to which that number of Total Shares would
have been entitled in connection with such Restructure (and at an aggregate
exercise price equal to the Exercise Price that would have been payable if that
number of Total Shares had been purchased on the exercise of the Option
immediately before the consummation of the Restructure). Nothing in this
Paragraph 7.2 shall impose on a Holder the obligation to exercise any Award
immediately before or upon the Change of Control, nor shall the Holder forfeit
the right to exercise the Award during the remainder of the original term of the
Award because of a Change in Control or because the Holder's employment is
terminated for any reason following a Change in Control.
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(7.3) Restructure and No Change in Control. In the event a Restructure
should occur at any time while there is any outstanding Award hereunder and that
Restructure does not occur in connection with a Change in Control or in
connection with a series of related transactions involving a Change in Control,
then:
((a)) no outstanding Option shall immediately become fully
vested and exercisable in full merely because of the occurrence of the
Restructure; and
((b)) at the option of the Committee, the Corporation may (but
shall not be required to) take any one or more of the following
actions:
(i) accelerate in whole or in part the time of the vesting
and exercisability of any one or more of the outstanding
Options so as to provide that those Options shall be
exercisable before, upon, or after the consummation of the
Restructure;
(ii) if the Restructure is in the form of a Non-Surviving
Event, cause the surviving entity to assume in whole or in
part any one or more of the outstanding Awards upon such terms
and provisions as the Committee deems desirable; or
(iii) redeem in whole or in part any one or more of the
outstanding Awards (whether or not then exercisable) in
consideration of a cash payment, as such payment may be
reduced for tax withholding obligations as contemplated in
Paragraph 5.8 in an amount equal to the excess of (1) the Fair
Market Value, determined as of a date immediately preceding
the consummation of the Restructure, of the aggregate number
of shares of Stock or Class B Stock, as the case may be,
subject to the Award and as to which the Award is being
redeemed over (2) the Exercise Price for that number of shares
of Stock or Class B Stock, as the case may be;
The Corporation shall promptly notify each Holder of any election or action
taken by the Corporation under this Paragraph 7.3. In the event of any election
or action taken by the Corporation pursuant to this Paragraph 7.3 that requires
the amendment or cancellation of any Award Agreement as may be specified in any
notice to the Holder thereof, that Holder shall promptly deliver that Award
Agreement to the Corporation in order for that amendment or cancellation to be
implemented by the Corporation and the Committee. The failure of the Holder to
deliver any such Award Agreement to the Corporation as provided in the preceding
sentence shall not in any manner effect the validity or enforceability of any
action taken by the Corporation and the Committee under this Paragraph 7.3,
including, without limitation, any redemption of an Award as of the consummation
of a Restructure. Any cash payment to be made by the Corporation pursuant to
this Paragraph 7.3 in connection with the redemption of any outstanding Awards
shall be paid to the Holder thereof currently with the delivery to the
Corporation of the Award Agreement evidencing that Award; provided, however,
that any such redemption shall be effective upon the consummation of the
Restructure notwithstanding that the payment of the redemption price may occur
subsequent to the consummation. If all or any portion of an outstanding Award is
to be exercised or accelerated to upon or after the consummation of a
Restructure that is in the form of a Non-Surviving Event and as a part of that
Restructure shares of stock, other securities, cash, or property shall be
issuable or deliverable in exchange for Stock or Class B Stock, as the case may
be, then the Holder of the Award shall thereafter be entitled to purchase (in
lieu of the number of shares of Stock or Class B Stock, as the case may be, that
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<PAGE> 15
the Holder would otherwise be entitled to purchase) the number of shares of
stock, other securities, cash, or property to which such number of shares of
Stock or Class B Stock, as the case may be, would have been entitled in
connection with the Restructure (and, for Options, at an aggregate exercise
price equal to the Exercise Price that would have been payable if that number of
Total Shares had been purchased on the exercise of the Option immediately before
the consummation of the Restructure).
(7.4) NOTICE OF CHANGE IN CONTROL OR RESTRUCTURE. The Corporation shall
attempt to keep all Holders informed with respect to any Change in Control or
Restructure or of any potential Change in Control or Restructure to the same
extent that the Corporation's stockholders are informed by the Corporation of
any such event or potential event.
8. ADDITIONAL PROVISIONS
(8.1) LOSS OF ELIGIBILITY. If a Holder is a key person because the
Holder is serving in a capacity other than as a director and if that capacity is
terminated for any reason other than the Holder's death, retirement, or
disability, then any and all Awards held by the Holder as of the date of the
termination that were granted because of that capacity shall be exercisable by
that Holder for a period of the lesser of (a) the remainder of the term of the
Award or (b) 210 days following the date of the Holder's termination. Despite a
Holder's termination, each Option that is scheduled to vest during the period
specified in (a) or (b) in the preceding sentence, as applicable, shall vest;
however, each such Option shall expire at the same time that all other Awards
expire pursuant to (a) or (b) in the preceding sentence, as applicable. Any
portion of an Award not exercised upon the expiration of the periods specified
in (a) or (b) shall be null and void. However, in the event the termination of
the Holder is for dishonesty or other acts detrimental to the interests of the
Corporation or its subsidiaries, or if after termination, the Holder commits
acts that are detrimental to the interests of the Corporation as determined by
its Stock Option Committee, all Awards held by such Holder shall become null and
void at and after the time such determination is made.
(8.2) OTHER LOSS OF ELIGIBILITY. If a Holder is an Eligible Individual
because the Holder is serving in a capacity other than as an employee and if
that capacity is terminated for any reason other than the Holder's death, then
any and all Awards held by the Holder that were granted because of that capacity
as of the date of the termination shall become null and void as of the date of
the termination.
(8.3) DEATH. Upon the death of a Holder, then any and all Awards held
by the Holder that are not yet exercisable as of the date of the Holder's death
shall become null and void as of the date of death; provided, however, that the
portion, if any, of any and all Awards held by the Holder that are exercisable
as of the date of death shall be exercisable by that Holder's legal
representatives, legatees or distributees for a period of the lesser of (a) the
remainder of the term of the Award or (b) 210 days following the date of the
Holder's death. Any portion of an Award not exercised upon the expiration of the
periods specified in (a) or (b) shall be null and void. Except as expressly
provided in this Paragraph 8.3, no Award held by a Holder shall be exercisable
after the death of that Holder.
(8.4) RETIREMENT. If a Holder is an Eligible Individual because the
Holder is an employee and if that employment relationship is terminated by
reason of the Holder's Normal Retirement, then the portion, if any, of any and
all Awards held by the Holder that are not yet exercisable as of the date of
that retirement shall become null and void as of the date of retirement;
provided, however, that the portion, if any, of any and all Awards held by the
Holder that are exercisable as
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of the date of that retirement shall be exercisable for a period of the lesser
of (a) the remainder of the term of the Award or (b) 90 days following the date
of retirement.
(8.5) DISABILITY. If a Holder is an Eligible Individual because the
Holder is an Employee and if that employment relationship is terminated by
reason of the Holder's Disability, then the portion, if any, of any and all
Awards held by the Holder that are not yet exercisable as of the date of that
termination for Disability shall become null and void as of the date of
termination; provided, however, that the portion, if any, of any and all Awards
held by the Holder that are exercisable as of the date of that termination shall
survive the termination for the lesser of (a) the original term of the Award and
(b) 210 days following the date of termination, and the Award shall be
exercisable by the Holder, his guardian, or his legal representative.
"DISABILITY" shall have the meaning given it in the employment agreement of the
Holder; provided, however, that if that Holder has no employment agreement,
"DISABILITY" shall mean a physical or mental impairment of sufficient severity
that, in the opinion of the Corporation, either the Holder is unable to continue
performing the duties he performed before such impairment or the Holder's
condition entitles him to disability benefits under any insurance or employee
benefit plan of the Corporation or its Subsidiaries and that impairment or
condition is cited by the Corporation as the reason for termination of the
Holder's employment.
(8.6) LEAVE OF ABSENCE. With respect to an Award, the Committee may, in
its sole discretion, determine that any Holder who is on leave of absence for
any reason will be considered to still be in the employ of the Corporation,
provided that rights to that Award during a leave of absence will be limited to
the extent to which those rights were earned or vested when the leave of absence
began.
(8.7) TRANSFERABILITY OF AWARDS. In addition to such other terms and
conditions as may be included in a particular Award Agreement, an Award
requiring exercise shall be exercisable during a Holder's lifetime only by that
Holder or by that Holder's guardian or legal representative. An Award requiring
exercise shall not be transferable other than by will or the laws of descent and
distribution.
(8.8) FORFEITURE AND RESTRICTIONS ON TRANSFER. Each Award Agreement may
contain or otherwise provide for conditions giving rise to the forfeiture of the
Stock or Class B Stock, as the case may be, acquired pursuant to an Award or
otherwise and may also provide for those restrictions on the transferability of
shares of the Stock or Class B Stock, as the case may be, acquired pursuant to
an Award or otherwise that the Committee in its sole and absolute discretion may
deem proper or advisable. The conditions giving rise to forfeiture may include,
but need not be limited to, the requirement that the Holder render substantial
services to the Corporation or its Subsidiaries for a specified period of time.
The restrictions on transferability may include, but need not be limited to,
options and rights of first refusal in favor of the Corporation and stockholders
of the Corporation other than the Holder of such shares of Stock or Class B
Stock, as the case may be, who is a party to the particular Award Agreement or a
subsequent holder of the shares of Stock or Class B Stock, as the case may be,
who is bound by that Award Agreement.
(8.9) DELIVERY OF CERTIFICATES OF STOCK. Subject to Paragraph 8.10, the
Corporation shall promptly issue and deliver a certificate representing the
number of shares of Stock or Class B Stock, as the case may be, as to which an
Option has been exercised after the Corporation receives an Exercise Notice and
upon receipt by the Corporation of the Exercise Price and any tax withholding as
may be requested. The value of the shares of Stock or Class B Stock, as the
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case may be, transferable because of an Award under the Plan shall not bear any
interest owing to the passage of time, except as may be otherwise provided in an
Award Agreement. If a Holder is entitled to receive certificates representing
Stock or Class B Stock, as the case may be, received for more than one form of
Award under the Plan, separate certificates of Stock or Class B Stock, as the
case may be, shall be issued with respect to Incentive Options and Nonstatutory
Stock Options separately.
(8.10) CONDITIONS TO DELIVERY OF STOCK. Nothing herein or in any Award
granted hereunder or any Award Agreement shall require the Corporation to issue
any shares with respect to any Award if that issuance would, in the opinion of
counsel for the Corporation, constitute a violation of the Securities Act or any
similar or superseding statute or statutes, any other applicable statute or
regulation, or the rules of any applicable securities exchange or securities
association, as then in effect. At the time of any exercise of an Option, the
Corporation may, as a condition precedent to the exercise of such Option,
require from the Holder of the Award (or in the event of his death, his legal
representatives, heirs, legatees, or distributees) such written representations,
if any, concerning the Holder's intentions with regard to the retention or
disposition of the shares of Stock or Class B Stock, as the case may be, being
acquired pursuant to the Award and such written covenants and agreements, if
any, as to the manner of disposal of such shares as, in the opinion of counsel
to the Corporation, may be necessary to ensure that any disposition by that
Holder (or in the event of the Holder's death, his legal representatives, heirs,
legatees, or distributees), will not involve a violation of the Securities Act
or any similar or superseding statute or statutes, any other applicable state or
federal statute or regulation, or any rule of any applicable securities exchange
or securities association, as then in effect.
(8.11) CERTAIN DIRECTORS AND OFFICERS. With respect to Holders who are
directors or officers of the Corporation or any Subsidiary and who are subject
to Section 16(b) of the Exchange Act, and if Rule 16b-3 requires the following
conditions at the time of the Award, Awards and all rights under the Plan,
contingent or otherwise, shall be exercisable during the Holder's lifetime only
by the Holder or the Holder's guardian or legal representative, but not for at
least six months after grant, unless death or Disability of the Holder occurs
before the expiration of the six-month period. In addition, no such officer or
director shall use shares to pay tax withholding obligations within the first
six months of the term of the Award. Any election by any such officer or
director to have tax withholding obligations satisfied by the withholding of
shares of Stock or Class B Stock, as the case may be, shall be irrevocable and
shall be communicated to the Committee during the period beginning on the third
day following the date of release of quarterly or annual summary statements of
sales and earnings and ending on the twelfth business day following such date
(the "WINDOW PERIOD") or by an irrevocable election communicated to the
Committee at least six months before the date of exercise of the Award for which
such withholding is desired.
(8.12) SECURITIES ACT LEGEND. Certificates for shares of Stock or Class
B Stock, as the case may be, when issued, may have the following legend, or
statements of other applicable restrictions, endorsed thereon, and may not be
immediately transferable:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED,
TRANSFERRED, OR OTHERWISE DISPOSED OF UNTIL THE HOLDER HEREOF PROVIDES
EVIDENCE SATISFACTORY TO THE ISSUER (WHICH, IN THE
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<PAGE> 18
DISCRETION OF THE ISSUER, MAY INCLUDE AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER) THAT SUCH OFFER, SALE, PLEDGE, TRANSFER, OR
OTHER DISPOSITION WILL NOT VIOLATE APPLICABLE FEDERAL OR STATE LAWS.
This legend shall not be required for shares of Stock or Class B Stock, as the
case may be, issued pursuant to an effective registration statement under the
Securities Act.
(8.13) LEGEND FOR RESTRICTIONS ON TRANSFER. Each certificate
representing shares issued to a Holder pursuant to an Award granted under the
Plan shall, if such shares are subject to any transfer restriction, including a
right of first refusal, provided for under this Plan or an Award Agreement, bear
a legend that complies with applicable law with respect to the restrictions on
transferability contained in this Paragraph 8.13, such as:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY IMPOSED BY THAT CERTAIN INSTRUMENT
ENTITLED "THOMAS GROUP, INC. 1992 STOCK OPTION PLAN" AS ADOPTED BY
THOMAS GROUP, INC. (THE "CORPORATION") ON MARCH 16, 1992 AS AMENDED,
AND AN AGREEMENT THEREUNDER BETWEEN THE CORPORATION AND [HOLDER] DATED
____________________, 199__, AND MAY NOT BE TRANSFERRED, SOLD, OR
OTHERWISE DISPOSED OF EXCEPT AS THEREIN PROVIDED. THE CORPORATION WILL
FURNISH A COPY OF SUCH INSTRUMENT AND AGREEMENT TO THE RECORD HOLDER OF
THIS CERTIFICATE WITHOUT CHARGE ON REQUEST TO THE CORPORATION AT ITS
PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE.
(8.14) RIGHTS AS A STOCKHOLDER. A Holder shall have no right as a
stockholder with respect to any shares covered by his Award until a certificate
representing those shares is issued in his name. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash or other property) or
distributions or other rights for which the record date is before the date that
certificate is issued, except as contemplated by Section 7. Nevertheless,
dividends and dividend equivalent rights may be extended to and made part of any
Award denominated in Stock or Class B Stock, as the case may be, or units of
Stock or Class B Stock, as the case may be, subject to such terms, conditions,
and restrictions as the Committee may establish. The Committee may also
establish rules and procedures for the crediting of interest on deferred cash
payments and dividend equivalents for deferred payment denominated in Stock or
Class B Stock, as the case may be, or units of Stock or Class B Stock, as the
case may be.
(8.15) FURNISH INFORMATION. Each Holder shall furnish to the
Corporation all information requested by the Corporation to enable it to comply
with any reporting or other requirement imposed upon the Corporation by or under
any applicable statute or regulation.
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(8.16) OBLIGATION TO EXERCISE. The granting of an Award hereunder shall
impose no obligation upon the Holder to exercise the same or any part thereof.
(8.17) ADJUSTMENTS TO AWARDS. Subject to the general limitations set
forth in Sections 5 and 7, the Committee may make any adjustment in the exercise
price of, the number of shares subject to or the terms of an Option by canceling
an outstanding Option and regranting an Option. Such adjustment shall be made by
amending, substituting, or regranting an outstanding Option. Such amendment,
substitution, or regrant may result in terms and conditions that differ from the
terms and conditions of the original Option. The Committee may not, however,
impair the rights of any Holder to previously granted Options without that
Holder's consent. If such action is effected by amendment, the effective date of
such amendment shall be the date of the original grant.
(8.18) REMEDIES. The Corporation shall be entitled to recover from a
Holder reasonable attorneys' fees incurred in connection with the enforcement of
the terms and provisions of the Plan and any Award Agreement whether by an
action to enforce specific performance or for damages for its breach or
otherwise.
(8.19) INFORMATION CONFIDENTIAL. As partial consideration for the
granting of each Award hereunder, the Holder shall agree with the Corporation
that he will keep confidential all information and knowledge that he has
relating to the manner and amount of his participation in the Plan; provided,
however, that such information may be disclosed as required by law and may be
given in confidence to the Holder's spouse, tax and financial advisors, or to a
financial institution to the extent that such information is necessary to secure
a loan. In the event any breach of this promise comes to the attention of the
Committee, it shall take into consideration that breach in determining whether
to recommend the grant of any future Award to that Holder, as a factor
militating against the advisability of granting any such future Award to that
individual.
(8.20) CONSIDERATION. No Option shall be exercisable with respect to a
Holder unless and until the Holder shall have paid cash or property to, or
performed services for, the Corporation or any of its Subsidiaries that the
Committee believes is equal to or greater in value that the par value of the
Stock or Class B Stock, as the case may be, subject to such Award.
9. DURATION AND AMENDMENT OF PLAN
(9.1) DURATION. No Awards may be granted hereunder after the date that
is ten (10) years from the earlier of (a) the date the Plan was originally
adopted by the Board of Directors and (b) the date the Plan is approved by the
stockholders of the Corporation.
(9.2) AMENDMENT. The Board of Directors may, insofar as permitted by
law, with respect to any shares which, at the time, are not subject to Awards,
suspend, or discontinue the Plan or revise or amend it in any respect
whatsoever. The Board of Directors may not alter, amend, revise, suspend or
discontinue the Plan without obtaining approval of the Corporation's
stockholders if such action would (i) materially increase the
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benefits accruing to Holders under the Plan, (ii) materially increase the number
of securities which may be issued under the Plan, or (iii) materially modify the
requirements as to eligibility for participation in the Plan. The Board of
Directors may also amend, modify, suspend, or terminate the Plan for the purpose
of meeting or addressing any changes in other legal requirements applicable to
the Corporation or the Plan or for any other purpose permitted by law.
10. GENERAL
(10.1) APPLICATION OF FUNDS. The proceeds received by the Corporation
from the sale of shares pursuant to Awards may be used for any general corporate
purpose.
(10.2) NO LIABILITY FOR GOOD FAITH DETERMINATIONS. Neither the members
of the Board of Directors nor any member of the Committee shall be liable for
any act, omission, or determination taken or made in good faith with respect to
the Plan or any Award granted under it, and members of the Board of Directors
and the Committee shall be entitled to indemnification and reimbursement by the
Corporation in respect of any claim, loss, damage, or expense (including
attorneys' fees, the costs of settling any suit, provided such settlement is
approved by independent legal counsel selected by the Corporation, and amounts
paid in satisfaction of a judgment, except a judgment based on a finding of bad
faith) arising therefrom to the full extent permitted by law and under any
directors and officers liability or similar insurance coverage that may from
time to time be in effect. This right to indemnification shall be in addition
to, and not a limitation on, any other indemnification rights any member of the
Board of Directors or the Committee may have.
(10.3) OTHER BENEFITS. Participation in the Plan shall not preclude the
Holder from eligibility in any other stock or stock option plan of the
Corporation or any Subsidiary or any old age benefit, insurance, pension, profit
sharing retirement, bonus, or other extra compensation plans that the
Corporation or any Subsidiary has adopted, or may, at any time, adopt for the
benefit of its Employees. Neither the adoption of the Plan by the Board of
Directors nor the submission of the Plan to the stockholders of the Corporation
for approval shall be construed as creating any limitations on the power of the
Board of Directors to adopt such other incentive arrangements as it may deem
desirable, including, without limitation, the granting of stock options and the
awarding of stock and cash otherwise than under the Plan, and such arrangements
may be either generally applicable or applicable only in specific cases.
(10.4) EXCLUSION FROM PENSION AND PROFIT-SHARING COMPENSATION. By
acceptance of an Award (whether in Stock or cash), as applicable, each Holder
shall be deemed to have agreed that the Award is special incentive compensation
that will not be taken into account in any manner as salary, compensation, or
bonus in determining the amount of any payment under any pension, retirement, or
other employee benefit plan of the Corporation or any Subsidiary. In addition,
each beneficiary of a deceased Holder shall be deemed to have agreed that the
Award will not affect the amount of any life insurance coverage, if any,
provided by the Corporation or a Subsidiary on the life of the
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Holder that is payable to the beneficiary under any life insurance plan covering
employees of the Corporation or any Subsidiary.
(10.5) EXECUTION OF RECEIPTS AND RELEASES. Any payment of cash or any
issuance or transfer of shares of Stock or Class B Stock, as the case may be, to
the Holder, or to his legal representative, heir, legatee, or distributee, in
accordance with the provisions hereof, shall, to the extent thereof, be in full
satisfaction of all claims of such persons hereunder. The Committee may require
any Holder, legal representative, heir, legatee, or distributee, as a condition
precedent to such payment, to execute a release and receipt therefor in such
form as it shall determine.
(10.6) UNFUNDED PLAN. Insofar as it provides for Awards of cash and
Stock or Class B Stock, as the case may be, the Plan shall be unfunded. Although
bookkeeping accounts may be established with respect to Holders who are entitled
to cash, Stock or Class B Stock, as the case may be, or rights thereto under the
Plan, any such accounts shall be used merely as a bookkeeping convenience. The
Corporation shall not be required to segregate any assets that may at any time
be represented by cash, Stock or Class B Stock, as the case may be, or rights
thereto, nor shall the Plan be construed as providing for such segregation, nor
shall the Corporation nor the Board of Directors nor the Committee be deemed to
be a trustee of any cash, Stock or Class B Stock, as the case may be, or rights
thereto to be granted under the Plan. Any liability of the Corporation to any
Holder with respect to a grant of cash, Stock or Class B Stock, as the case may
be, or rights thereto under the Plan shall be based solely upon any contractual
obligations that may be created by the Plan and any Award Agreement; no such
obligation of the Corporation shall be deemed to be secured by any pledge or
other encumbrance on any property of the Corporation. Neither the Corporation
nor the Board of Directors nor the Committee shall be required to give any
security or bond for the performance of any obligation that may be created by
the Plan.
(10.7) NO GUARANTEE OF INTERESTS. Neither the Committee nor the
Corporation guarantees the Stock or Class B Stock, as the case may be, of the
Corporation from loss or depreciation.
(10.8) PAYMENT OF EXPENSES. All expenses incident to the
administration, termination, or protection of the Plan, including, but not
limited to, legal and accounting fees, shall be paid by the Corporation or its
Subsidiaries; provided, however, the Corporation or a Subsidiary may recover any
and all damages, fees, expenses, and costs arising out of any actions taken by
the Corporation to enforce its right to purchase Stock or Class B Stock, as the
case may be, under this Plan.
(10.9) CORPORATION RECORDS. Records of the Corporation or its
Subsidiaries regarding the Holder's period of employment, termination of
employment and the reason therefor, leaves of absence, re-employment, and other
matters shall be conclusive for all purposes hereunder, unless determined by the
Committee to be incorrect.
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(10.10) INFORMATION. The Corporation and its Subsidiaries shall, upon
request or as may be specifically required hereunder, furnish or cause to be
furnished, all of the information or documentation which is necessary or
required by the Committee to perform its duties and functions under the Plan.
(10.11) NO LIABILITY OF CORPORATION. The Corporation assumes no
obligation or responsibility to the Holder or his legal representatives, heirs,
legatees, or distributees for any act of, or failure to act on the part of, the
Committee.
(10.12) CORPORATION ACTION. Any action required of the Corporation
shall be by resolution of its Board of Directors or by a person authorized to
act by resolution of the Board of Directors.
(10.13) SEVERABILITY. If any provision of this Plan is held to be
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining provisions hereof, but such provision shall be fully severable and
the Plan shall be construed and enforced as if the illegal or invalid provision
had never been included herein.
(10.14) NOTICES. Whenever any notice is required or permitted
hereunder, such notice must be in writing and personally delivered or sent by
mail. Any notice required or permitted to be delivered hereunder shall be deemed
to be delivered on the date on which it is personally delivered, or, whether
actually received or not, on the third Business Day after it is deposited in the
United States mail, certified or registered, postage prepaid, addressed to the
person who is to receive it at the address which such person has theretofore
specified by written notice delivered in accordance herewith. The Corporation or
a Holder may change, at any time and from time to time, by written notice to the
other, the address which it or he had previously specified for receiving
notices. Until changed in accordance herewith, the Corporation and each Holder
shall specify as its and his address for receiving notices the address set forth
in the Award Agreement pertaining to the shares to which such notice relates.
(10.15) WAIVER OF NOTICE. Any person entitled to notice hereunder may
waive such notice.
(10.16) SUCCESSORS. The Plan shall be binding upon the Holder, his
legal representatives, heirs, legatees, and distributees, upon the Corporation,
its successors, and assigns, and upon the Committee, and its successors.
(10.17) HEADINGS. The titles and headings of Sections and Paragraphs
are included for convenience of reference only and are not to be considered in
construction of the provisions hereof.
(10.18) GOVERNING LAW. All questions arising with respect to the
provisions of the Plan shall be determined by application of the laws of the
State of Delaware except to the extent Delaware law is preempted by federal law.
Questions arising with respect to the provisions of an Award Agreement that are
matters of contract law shall be governed by
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the laws of the state specified in the Award Agreement, except to the extent
Delaware corporate law conflicts with the contract law of such state, in which
event Delaware corporate law shall govern. The obligation of the Corporation to
sell and deliver Stock hereunder is subject to applicable laws and to the
approval of any governmental authority required in connection with the
authorization, issuance, sale, or delivery of such Stock.
(10.19) WORD USAGE. Words used in the masculine shall apply to the
feminine where applicable, and wherever the context of this Plan dictates, the
plural shall be read as the singular and the singular as the plural.
* * * * *
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<PAGE> 24
IN WITNESS WHEREOF, Thomas Group, Inc., acting by and through its
officer hereunto duly authorized, has executed this instrument, this the _____
day of _________, 1999.
THOMAS GROUP, INC.
By:
-------------------------------
President
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<PAGE> 1
EXHIBIT 5.1
April 7, 1999
Thomas Group, Inc.
5221 N. O'Connor Blvd., Suite 500
Irving, Texas 75039
Attn: Mr. Leland L. Grubb, Chief Financial Officer
Ladies and Gentlemen:
I have acted as counsel to Thomas Group, Inc. ("Thomas Group") in connection
with that certain registration statement on Form S-8 covering shares issuable
upon the exercise of common stock options under the Thomas Group 1997 Stock
Option Plan, the Thomas Group Amended and Restated 1988 Stock Option Plan, and
the Thomas Group Amended and Restated 1992 Stock Option Plan (collectively, the
"Plans").
In rendering the opinions hereinafter expressed, I have made such examination
of law and have examined such Thomas Group documents as I have deemed necessary
for the purposes of this opinion, including the following documents:
1. The Plans;
2. Restated Certificate of Incorporation, as amended;
3. Amended and Restated Bylaws; and
4. Rights Agreement between Thomas Group and Harris Trust and Savings
Bank.
Based upon the foregoing, I am of the opinion that, with respect to shares of
common stock of Thomas Group issuable upon the exercise of options under the
Plans, such shares will, when sold, be legally issued, fully paid and
non-assessable.
The undersigned consents to the inclusion of this opinion letter as an exhibit
to the registration statement on Form S-8 covering the shares referenced in the
preceding paragraph.
<PAGE> 2
I am a member of the State Bar of Texas and do not purport to be expert on, or
generally familiar with, or qualified to express legal conclusions based on,
laws other than those of the State of Texas and the United States of America
and the General Corporation Law of the State of Delaware and, except as
otherwise stated, the legal opinions expressed herein are specifically limited
to the laws of the State of Texas and the federal laws of the United States of
America and the General Corporation Law of the State of Delaware.
Yours very truly,
Roger A. Crabb
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated February 12, 1999, related to the
consolidated financial statements of Thomas Group, Inc. and subsidiaries
appearing in the 1998 Annual Report on Form 10-K for the year ended December 31,
1998. We also consent to the reference to us under the caption "Experts" in the
Registration Statement.
BDO SEIDMAN, LLP
Dallas, Texas
April 1, 1999
48
