UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934*
ELECTRONIC MANUFACTURING SERVICES GROUP, INC.
(Name of Issuer)
Common Stock, Par Value $.0025 per Share
(Title of Class of Securities)
466086-20-4
(CUSIP Number)
Gerald F. Roach
Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P.
P.O. Box 2611, Raleigh, North Carolina 27602 (919) 821-6668
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
July 31, 1996
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Check the following box if a fee is being paid with the statement [X]. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7).
Note: Six copies of this statement, including all exhibits, should
be filed with the Commission. See Rule 13d-1(a) for other parties
to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Craig Macnab
###-##-####
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
- -------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- -------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E)
[ ]
- -------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- -------------------------------------------------------------------
7 SOLE VOTING POWER
281,171
NUMBER OF _______________________________________
SHARES 8 SHARED VOTING POWER
76,170
BENEFICIALLY _______________________________________
OWNED BY 9 SOLE DISPOSITIVE POWER
281,171
EACH _______________________________________
PERSON 10 SHARED DISPOSITIVE POWER
76,170
- -------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
357,341
- -------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
[ ]
- -------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.4%
- -------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- -------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Item 1. Security and Issuer.
Common Stock, par value $.0025 per share, of
Electronic Manufacturing Services Group, Inc., a Delaware
corporation ("EMSG") whose principal executive offices are
located at 6638 Old Wake Forest Road, Raleigh, North Carolina
27604. The principal executive officers of EMSG are (i)
Kenneth H. Marks, President and Chief Executive Officer, and
(ii) Kenneth L. Marks, Secretary. The business address for
Messrs. Marks and Marks is the same as set forth above for
EMSG's principal executive offices.
Item 2. Identity and Background.
This Schedule 13D is filed by Craig Macnab, a citizen
of the United States ("Macnab"). Macnab is currently employed
by MacNeil Advisors. Macnab's business address is 330 Commerce
Street, Nashville, Tennessee 37201.
Macnab has not, during the last five years, been
convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors), and he has not been party
to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which he was or is
subject to a judgment, decree, or final order enjoining future
violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or any violations with
respect to such laws.
Item 3. Sources and Amount of Funds or Other Consideration.
Macnab acquired his shares in EMSG on July 31, 1996
pursuant to the consummation of that certain Agreement and
Plan of Merger by and among EMSG, J.A. Industries of North
Carolina, Inc. ("Acquisition"), and Kenmar Business Groups,
Inc. ("Kenmar") dated as of March 1, 1996 (the "Merger
Agreement"). Pursuant to the Merger Agreement, the parties
thereto effected a reverse triangular merger whereby Kenmar
(which has subsequently changed its name to "EMSG Systems
Division, Inc.") became a wholly-owned subsidiary of EMSG, and
each share of Kenmar's Common Stock was converted into the
right to receive 42.06 shares of unregistered Common Stock of
EMSG. At the consummation of the merger pursuant to the Merger
Agreement, Macnab owned 5,285 shares of the Common Stock of
Kenmar, and his wife Deirdre Macnab owned 700 shares. In
addition, MacNeil Advisors, a general partnership of which
Macnab is a 50% general partner, owned 1,111 shares of the
Common Stock of Kenmar at the consummation of the merger. The
sum of these shares, 7,096, was converted into the right to
receive 298,457 shares of the Common Stock of EMSG upon the
consummation of the merger. Macnab disclaims beneficial
ownership of all shares owned by his wife and by MacNeil
Advisors.
Pursuant to two separate Employee Stock Option
Agreements between Macnab and EMSG, each dated as of July 30,
1996, Macnab has an option to purchase an additional 58,884
shares of EMSG Common Stock (16,824 at an exercise price of
$1.07 per share and 42,060 at $.06 per share) (the "Macnab
Option Agreements").
None of the shares currently owned by Macnab are
subject to any liens or encumbrances.
<PAGE>
Item 4. Purpose of Transaction.
Macnab has no current intentions with respect to EMSG
other than personal investment.
Item 5. Interest in Securities of the Issuer.
As described above, Macnab acquired 298,457 shares of
EMSG Common Stock on July 31, 1996 pursuant to the
consummation of the merger contemplated by the Merger
Agreement. In addition, pursuant to the Macnab Option
Agreements, Macnab has options to purchase an additional
16,824 shares of EMSG Common Stock at an exercise price of
$1.07 per share and an option to purchase an additional 42,060
shares of EMSG Common Stock at an exercise price of $.06 per
share.
Pursuant to the Merger Agreement, EMSG entered into
an Option Agreement, dated as of July 30, 1996, with Kenmar,
Acquisition and Kenneth H. Marks (as representative of the
Kenmar shareholders) (the "Option Agreement"). Pursuant to the
Option Agreement, the former Kenmar shareholders have a right
to purchase 750,000 shares of EMSG Common Stock for an
aggregate purchase price of $1 upon the occurrence of any
breach of any representation, warranty, covenant, or other
obligation of EMSG or Acquisition under the Merger Agreement.
In the event the option under the Option Agreement were to be
exercised, Macnab would acquire an additional 60,318 shares of
EMSG Common Stock, his wife would acquire an additional 7,987
shares of EMSG Common Stock, and MacNeil Advisors would
acquire an additional 12,680 shares of EMSG Common Stock.
All ownership percentages set forth herein are based
on (i) 5,510,082 shares of EMSG Common Stock outstanding,
which was the approximate amount outstanding after the
consummation of the merger described above, plus (ii) the
58,884 shares of EMSG Common Stock subject to the Macnab
Option Agreements. Such percentages do not include shares
issuable pursuant to the Option Agreement upon the occurrence
of the conditions described therein.
Information concerning the Common Stock ownership and
percentage of outstanding shares of Macnab is contained in the
cover page to this Schedule 13D and such information is
incorporated herein by reference.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
As described above, pursuant to the Macnab Option
Agreements, Macnab has the right to purchase 16,824 shares of
EMSG Common Stock at an exercise price of $1.07 per share and
the right to purchase 42,060 shares of EMSG Common Stock at an
exercise price of $.06 per share. Also as described above,
Macnab would acquire an additional 60,318 shares of EMSG
Common Stock, his wife would acquire an additional 7,989
shares of EMSG Common Stock, and MacNeil Advisors would
acquire an additional 12,680 shares of EMSG Common Stock
pursuant to the Option Agreement upon the occurrence of the
conditions described therein.
<PAGE>
Item 7. Material to Be Filed as Exhibits.
<TABLE>
<CAPTION>
Exhibit Description Status
<S> <C> <C>
1. Merger Agreement and all schedules and Filed as exhibit to Proxy Statement
exhibits thereto dated July 10, 1996
2. Macnab Option Agreements Attached
</TABLE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete, and correct.
Dated: August 9, 1996
Craig Macnab
ELECTRONIC MANUFACTURING SERVICES GROUP, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT is made effective as of the 30th day of
July, 1996, by and between Electronic Manufacturing Services Group, Inc., a
corporation formed under the laws of the State of Delaware (which has changed
its name from "J.A. Industries, Inc.") ("EMSG"), and Craig Macnab, a citizen and
resident of the State of Tennessee, (the "Optionee").
WITNESSETH:
WHEREAS, the Optionee has an option to purchase shares of the common
stock of Kenmar Business Groups, Inc. ("Kenmar") pursuant to Kenmar's
Nonqualified Stock Option Plan (the "Kenmar Option"); and
WHEREAS, pursuant to the terms of the Merger Agreement by and among
EMSG, J.A. Industries of North Carolina, Inc., a North Carolina corporation
("Acquisition"), and Kenmar dated as of March 1, 1996 (the "Merger Agreement"),
the Kenmar Option will be cancelled and replaced with a substitute corresponding
option to purchase shares of the $.0025 par value common stock of EMSG pursuant
to the provisions of the "J.A. Industries, Inc. 1996 Nonqualified Stock Option
Plan" (the "Plan") effective as of the consummation of the merger contemplated
by the Merger Agreement (the "Merger").
NOW, THEREFORE, in consideration of the premises contained herein and
in the Plan, it is agreed as follows:
(1) Cancellation of Kenmar Option and Grant of EMSG Option. Effective
as of the consummation of the Merger:
(a) The Kenmar Option shall be cancelled in all respects.
(b) Subject to the terms and conditions contained herein
and in the Plan, EMSG hereby grants the Optionee the
right, privilege and option (the "Option") to
purchase 16,824 shares of the $.0025 par value common
stock of EMSG at a price of $1.07 per share. The
number of such shares is determined by multiplying
the number of shares of Kenmar common stock subject
to the Kenmar Option by the Exchange Ratio, as
defined in the Merger Agreement (fractional shares
shall be eliminated and not included in the number of
shares). As of the date of this Agreement, the
Exchange Ratio is forty-two & 6/100th (42.06) shares
of EMSG common stock for each share of Kenmar common
stock, but it is subject to adjustment pursuant to
the terms of the Merger Agreement. The price per
share under the Option is determined by dividing the
exercise price per share of the Kenmar common stock
under the Kenmar Option by the Exchange Ratio. In the
event of an adjustment of the Exchange Ratio, the
number of shares and the price per share set forth in
this Agreement shall be proportionately and
automatically adjusted without the need for any
written amendment of this Agreement.
(2) Term and Vesting of Option. The term of the Option commences as of
the consummation of the Merger and, unless sooner terminated as set forth below
or in the Plan, terminates on March 28, 2004 (which date shall be no more than
ten (10) years from the date the Option is granted) (the "Term") and, subject to
the
<PAGE>
terms and provisions hereof and the Plan, the Option shall be fully vested and
immediately exercisable. Subject to the foregoing, the Option may be exercised
in whole or in part with respect to all or any portion of the shares to which it
relates.
(3) Method of Exercise. The Option shall be exercised by the
transmittal of written notice thereof to EMSG at its principal place of
business. The notice shall include the Optionee's designation of the number of
shares to be purchased and cash or a certified check in payment of the purchase
price. Upon receipt of such notice and cash, or, if applicable, and negotiation
of said certified check, EMSG shall deliver to the Optionee a certificate
representing the shares purchased, provided that if any law or regulation
requires EMSG to take any action with respect to the shares specified in such
notice before the issuance thereof, the date of delivery of the shares shall be
extended for the necessary period.
(4) Plan; Restrictions.
a) In all respects this Agreement and the Option granted
herein shall be subject to the terms and provisions
of the Plan which is attached hereto as Schedule A
and incorporated herein by reference. Accordingly,
the rights of the Optionee under this Agreement and
the shares of common stock of EMSG which the Optionee
may purchase hereunder are subject to certain
restrictions as set forth in the Plan.
b) In addition, the Optionee's right and ability to sell
shares of EMSG common stock that the Optionee may
purchase pursuant to the Option shall be restricted
as follows: (i) during the ninety (90)-day period
immediately following the Effective Time (as defined
in the Merger Agreement), the Optionee shall not sell
any shares of EMSG common stock purchased pursuant to
the Option; and (ii) during any three month period,
the Optionee shall not sell more than one-eighth
(1/8) of the total number of shares purchasable
pursuant to the EMSG Option; provided, however, that
the restrictions set forth in this Section 4(b) shall
be void in the event of a liquidation of EMSG, a
merger or consolidation in which EMSG is not the
surviving or resulting corporation, or a sale of all
or substantially all of EMSG's assets.
c) Optionee represents that it intends to purchase the
shares for investment and not for resale. Optionee
agrees that Optionee will not distribute or resell
any shares (or other securities) issuable upon
exercise of the option granted hereby in violation of
the Securities Act of 1933, as amended, that Optionee
will indemnify and hold EMSG harmless against all
liability for any such violation, that upon request
Optionee will furnish a letter agreement in
connection with any exercise of the Option which
shall provide that he or she is purchasing the shares
(or other securities) subject to the Option for
investment and not for resale, and that Optionee will
accept a stock certificate bearing the following
legend:
"The securities represented by this certificate (i)
are subject to the Electronic Manufacturing Services
Group, Inc. (`EMSG') Nonqualified Stock Option
Agreement, dated ______________, 1996, between EMSG
and the registered owner of this stock certificate,
including certain restrictions on transfer, and (ii)
have not been registered under the Securities Act of
1933, as amended (the `Act'), or any state securities
law. Accordingly, the Securities represented by this
certificate (i) may not be sold, offered for sale or
otherwise transferred, pledged or hypothecated
without compliance with that Agreement, and (ii) in
the absence of an effective registration statement as
to the securities under the Act and applicable state
securities law, may not be sold, offered for sale,
transferred, pledged or hypothecated without an
opinion of counsel satisfactory to EMSG
2
<PAGE>
that registration under the Act and applicable state
securities law is not required." or such other
appropriate legend regarding restrictions on resale
as EMSG may determine. The shares shall not be
transferable except in compliance with conditions
indicated in the legend.
d) EMSG may impose stop-transfer instructions with
respect to any shares (or other securities) subject
to any restriction set forth in this section 4 until
the restriction has been satisfied or terminates.
(5) Rights Prior to Exercise of Option. The Optionee shall
have no rights as a stockholder with respect to the shares of stock subject to
the Option until the exercise of his rights hereunder and the issuance and
delivery to Optionee of a certificate or certificates evidencing such shares.
(6) Assignment. The Option shall not be transferable other than by
will or the laws of descent and distribution, and the Option may be exercised,
during the lifetime of the Optionee, only by the Optionee. More particularly,
(but without limiting the generality of the foregoing), the Option, may not be
assigned, transferred (except as provided above), pledged or hypothecated in any
way, shall not be assignable by operation of law and shall not be subject to
execution, attachment or similar processes. Any attempted assignment, transfer,
pledge, hypothecation or other disposition of the Option contrary to the
provisions hereof, and the levy of any execution, attachment or similar process
upon the Option shall be null and void and without effect.
(7) Applicable Laws. The validity, construction, interpretation and
enforceability of this Agreement and the capacity of the parties shall be
determined and governed by the laws of the State of North Carolina.
(8) Severability. The provisions of this Agreement are severable and
if any one or more provisions may be determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions, and any partially
unenforceable provision to the extent enforceable in any jurisdiction, shall
nevertheless be binding and enforceable.
(9) Waiver. The waiver by EMSG of a breach of any provision of this
Agreement by Optionee shall not operate or be construed as a waiver of any
subsequent breach by Optionee.
(10) Binding Effect. The provisions of this Agreement shall be binding
upon the parties hereto, their successors and assigns, including, without
limitation, the estate of the Optionee and the executors, administrators or
trustees of such estate and any receiver, trustee in bankruptcy or
representative of the creditors of the Optionee.
(11) Construction. This Agreement is subject to and shall be construed
in accordance with the Plan, the terms of which are explicitly made applicable
hereto. Unless otherwise defined herein, capitalized terms in this Agreement
shall have the same definitions as set forth in the Plan. In the event of any
conflict between the provisions hereof and those of the Plan, the provisions of
the Plan shall govern.
3
<PAGE>
THIS STOCK OPTION AGREEMENT is hereby confirmed and executed as of the
30th day of July, 1996.
ELECTRONIC MANUFACTURING SERVICES
GROUP, INC.
ATTEST:
/s/ Kenneth L. Marks By: /s/ Kenneth H. Marks
Secretary Title: CEO
[Corporate Seal]
OPTIONEE:
/s/ Craig Macnab (SEAL)
Name:
4
<PAGE>
SCHEDULE A
(J.A. Industries, Inc. 1996 Nonqualified Stock Option Plan)
5
<PAGE>
J.A. INDUSTRIES, INC.
1996 NONQUALIFIED STOCK OPTION PLAN
1. Purpose
The purpose of the 1996 Nonqualified Stock Option Plan (the "Plan") is
to further the success of J.A. Industries, Inc. (the "Company") by making shares
of the Company's Common Stock ("Common Stock") available for purchase by
eligible employees, officers, directors and consultants of the Company, or any
affiliated company or partnership in which the Company has an ownership
interest, and other persons receiving services from or providing services to the
Company in order to provide an additional incentive to such participants to
continue their relationship with the Company and in order to give such
participants a greater interest in the Company's success. This purpose will be
carried out through the granting of options which do not meet the statutory
requirements of Sections 422 or 423 of the Internal Revenue Code of 1986, as
amended (the "Code").
2. Stock Subject to Plan
Subject to the provisions of Section 10 of the Plan, the Company's
Board of Directors (the "Board") shall reserve initially an aggregate of
one million (1,000,000) authorized and unissued shares of Common Stock for
issuance upon the exercise of the options. The Board may from time to time
reserve additional shares of authorized and unissued Common Stock for issuance
upon exercise of options. If any option granted under the Plan shall expire or
terminate for any reason without having been exercised in full, the unpurchased
shares of Common Stock subject to the expired or terminated option shall again
be available for options under the Plan.
3. Administration
The Board shall designate a committee (the "Committee") to administer
the Plan. The Committee shall report all of its actions to the Board. The Board
may from time to time remove members from the Committee and appoint their
successors. The Board shall fill all vacancies on the Committee however caused.
Except as otherwise expressly provided in the Plan, the Committee shall have
absolute discretionary authority (a) to determine the individuals to receive
options, the times when options shall be granted, the number of shares to be
subject to each option, the option price, the option period, and the time or
times when each option shall be exercisable; (b) to interpret the Plan; (c) to
prescribe, amend, and rescind rules and regulations relating to the Plan; (d) to
determine the terms and provisions (and amendments of the terms and provisions)
of the option agreements to be entered into between the Company and each
Participant granted an option under the Plan (which option agreements need not
be identical), including such terms and provisions as shall be required in the
Committee's judgment to conform to any change in any applicable law or
regulation; and (e) to make all other determinations the Committee shall deem
necessary or advisable for the Plan's administration.
No member of the Committee or the Board shall be liable to any person
for any action or determination which he or she makes in good faith.
4. Eligibility
Subject to the provisions of Section 3, any employee, officer,
director, and consultant of the Company or any affiliated company or partnership
in which the Company has an ownership interest and other persons receiving
services from or providing services to the Company designated by the Committee
shall be eligible to receive options under the Plan (the "Participants"). In
designating Participants and in recommending the number of shares of Common
Stock to be covered by each option granted to a Participant, the Committee may
take into account the nature of the services rendered by or for each
Participant, his or her present and potential contributions to the Company's
success, and such other factors as the Committee in its discretion shall deem
<PAGE>
relevant. The Company may grant additional options to Participants who have
already been granted options under the Plan.
5. Option Price
The Committee shall determine the purchase price of the shares of
Common Stock covered by each option, which purchase price may be above or below
the fair market value of the Common Stock at the time of the grant, as
determined by the Committee.
6. Exercise of Option
The period during which an option may be exercised shall be determined
by the Committee when the option is granted and shall not extend more than ten
(10) years from the date on which the option is granted. Except as provided in
the option agreement relating to such option, an option may be exercised in
whole or in part at any time during its term. The Committee may impose vesting
or other restrictions on the exerciseability or conditions of options. The term
of each option shall be for such period as the Committee shall determine, but
such term shall not extend for more than the period prescribed in Sections 8, 9
and 10 of the Plan. The purchase price of the shares of Common Stock subject to
the option shall be paid in full in cash upon the exercise of the option. The
holder of an option under the Plan shall not have any of the rights of a
shareholder with respect to the Common Stock subject to the option until such
shares shall be issued to him or her upon the exercise of the option and payment
of the purchase price.
7. Nontransferability of Option
No option granted under the Plan shall be transferable (including by
pledge or hypothecation) and shall be exercisable only by the Participant.
8. Termination of Relationship with the Company
The times and conditions upon which an option will terminate where a
Participant to whom an option has been granted under the Plan terminates, or the
Company terminates, his or her employment, consultant, or service relationship
with the Company or an affiliated company or partnership in which the Company
has an ownership interest shall be determined by the Committee when the option
is granted; provided, however, that in no event shall an option be exercisable
more than ten (10) years from the date it was granted. Nothing in the Plan or
any option granted pursuant to the Plan shall (a) confer on any individual any
right to continue in the employ of the Company or to continue any consultant or
service relationship with the Company or (b) interfere in any way with the
Company's right to terminate such individual's employment, consultant or service
relationship at any time.
9. Adjustment Upon Changes In Capitalization
In the event of a change in the Company's Common Stock by reason of any
stock dividend, split-up, recapitalization, combination or exchange of shares,
merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation or similar action, the Committee shall make an
appropriate adjustment of the number and class of shares of Common Stock subject
to and the purchase price for each then outstanding option, consistent with and
as provided in the corresponding option agreement under the Plan. In the event
of any such change in the outstanding Common Stock, the Committee shall adjust
appropriately the aggregate number and class of shares of Common Stock reserved
and available under the Plan appropriately, and the Committee's determination on
adjustment shall be conclusive.
-2-
<PAGE>
10. Termination of Options on Merger or Sale of Assets
A liquidation of the Company, a merger or consolidation in which the
Company is not the surviving or resulting corporation, or a sale of all or
substantially all of the Company's assets shall cause every option outstanding
under the Plan to terminate on the effective date of such action.
Notwithstanding the preceding sentence, upon a liquidation of the Company, a
merger or consolidation in which the Company is not the surviving or resulting
corporation, or a sale of all or substantially all of the Company's assets, each
option holder shall have the right, within his or her sole discretion, to
exercise before the effective date of such action any or all of the options he
or she then holds, but only to the extent that such options are otherwise
exercisable under the terms of the Plan. Any options not so exercised shall
terminate on the effective date of such action.
11. Amendment, Suspension, or Termination of the Plan
The Board may at any time suspend or terminate the Plan or may amend it
from time to time in such respects as the Board may deem advisable in order that
the options granted under the Plan may conform to any changes in the law or in
any other respect which the Board may deem to be in the best interest of the
Company. Modifications or amendments to the Plan are not required to be approved
by the Company's shareholders, except to the extent required by applicable North
Carolina law or by the Company's Bylaws. No termination, modification, or
amendment of the Plan without the consent of the Participant to whom any option
shall have been previously granted shall adversely affect such Participant's
rights under such option. Unless terminated earlier in accordance with this
Section, the Plan shall terminate when all shares of Common Stock reserved for
issuance under the Plan have been issued.
12. Effectiveness of the Plan
The Plan shall become effective on such date as the Board shall
determine. The exercise of each option granted pursuant to the Plan shall be
subject to the condition that if at any time the Company shall determine in its
discretion that (a) the satisfaction of withholding tax or other withholding
liabilities, (b) the listing on any securities exchange or the registration or
qualification under any state or federal law of any shares of Common Stock
otherwise deliverable upon its exercise, or (c) the consent or approval of any
regulatory body or the shareholders is necessary or desirable as a condition of,
or in connection with, such exercise or the delivery or purchase of shares of
Common Stock pursuant to such exercise, then, in any such event, such exercise
shall not be effective unless such withholding, listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions unacceptable to the Company.
13. Time of Granting Options
Nothing contained in the Plan or in any resolution adopted or to be
adopted by the Board or the Committee will constitute the granting of an option
pursuant to the Plan. The granting of an option pursuant to the Plan will occur
only when a written option agreement is duly executed and delivered by and on
behalf of the Company and the Participant to whom such option is to be granted.
14. Applicable Law
Except as otherwise provided herein, the Plan shall be construed and
enforced according to the laws of the State of North Carolina.
-3-
<PAGE>
IN WITNESS WHEREOF, the Company has caused the Plan to be executed by
the action of its duly authorized officers this 28th day of June, 1996.
J.A. INDUSTRIES, INC.
By: /s/ Bob Knight
Title: President
ATTEST:
Secretary
[CORPORATE SEAL]
-4-
<PAGE>
ELECTRONIC MANUFACTURING SERVICES GROUP, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT is made effective as of the 30th day of
July, 1996, by and between Electronic Manufacturing Services Group, Inc., a
corporation formed under the laws of the State of Delaware (which has changed
its name from "J.A. Industries, Inc.") ("EMSG"), and Craig Macnab, a citizen and
resident of the State of Tennessee, (the "Optionee").
WITNESSETH:
WHEREAS, the Optionee has an option to purchase shares of the common
stock of Kenmar Business Groups, Inc. ("Kenmar") pursuant to Kenmar's
Nonqualified Stock Option Plan (the "Kenmar Option"); and
WHEREAS, pursuant to the terms of the Merger Agreement by and among
EMSG, J.A. Industries of North Carolina, Inc., a North Carolina corporation
("Acquisition"), and Kenmar dated as of March 1, 1996 (the "Merger Agreement"),
the Kenmar Option will be cancelled and replaced with a substitute corresponding
option to purchase shares of the $.0025 par value common stock of EMSG pursuant
to the provisions of the "J.A. Industries, Inc. 1996 Nonqualified Stock Option
Plan" (the "Plan") effective as of the consummation of the merger contemplated
by the Merger Agreement (the "Merger").
NOW, THEREFORE, in consideration of the premises contained herein and
in the Plan, it is agreed as follows:
(1) Cancellation of Kenmar Option and Grant of EMSG Option. Effective
as of the consummation of the Merger:
(a) The Kenmar Option shall be cancelled in all respects.
(b) Subject to the terms and conditions contained herein
and in the Plan, EMSG hereby grants the Optionee the
right, privilege and option (the "Option") to
purchase 42,060 shares of the $.0025 par value common
stock of EMSG at a price of $0.06 per share. The
number of such shares is determined by multiplying
the number of shares of Kenmar common stock subject
to the Kenmar Option by the Exchange Ratio, as
defined in the Merger Agreement (fractional shares
shall be eliminated and not included in the number of
shares). As of the date of this Agreement, the
Exchange Ratio is forty-two & 6/100th (42.06) shares
of EMSG common stock for each share of Kenmar common
stock, but it is subject to adjustment pursuant to
the terms of the Merger Agreement. The price per
share under the Option is determined by dividing the
exercise price per share of the Kenmar common stock
under the Kenmar Option by the Exchange Ratio. In the
event of an adjustment of the Exchange Ratio, the
number of shares and the price per share set forth in
this Agreement shall be proportionately and
automatically adjusted without the need for any
written amendment of this Agreement.
(2) Term and Vesting of Option. The term of the Option commences as of
the consummation of the Merger and, unless sooner terminated as set forth below
or in the Plan, terminates on December 6, 2005 (which date shall be no more than
ten (10) years from the date the Option is granted) (the "Term") and, subject to
the
<PAGE>
terms and provisions hereof and the Plan, the Option shall be fully vested
and immediately exercisable. Subject to the foregoing, the Option may be
exercised in whole or in part with respect to all or any portion of the shares
to which it relates.
(3) Method of Exercise. The Option shall be exercised by the
transmittal of written notice thereof to EMSG at its principal place of
business. The notice shall include the Optionee's designation of the number of
shares to be purchased and cash or a certified check in payment of the purchase
price. Upon receipt of such notice and cash, or, if applicable, and negotiation
of said certified check, EMSG shall deliver to the Optionee a certificate
representing the shares purchased, provided that if any law or regulation
requires EMSG to take any action with respect to the shares specified in such
notice before the issuance thereof, the date of delivery of the shares shall be
extended for the necessary period.
(4) Plan; Restrictions.
a) In all respects this Agreement and the Option granted
herein shall be subject to the terms and provisions
of the Plan which is attached hereto as Schedule A
and incorporated herein by reference. Accordingly,
the rights of the Optionee under this Agreement and
the shares of common stock of EMSG which the Optionee
may purchase hereunder are subject to certain
restrictions as set forth in the Plan.
b) In addition, the Optionee's right and ability to sell
shares of EMSG common stock that the Optionee may
purchase pursuant to the Option shall be restricted
as follows: (i) during the ninety (90)-day period
immediately following the Effective Time (as defined
in the Merger Agreement), the Optionee shall not sell
any shares of EMSG common stock purchased pursuant to
the Option; and (ii) during any three month period,
the Optionee shall not sell more than one-eighth
(1/8) of the total number of shares purchasable
pursuant to the EMSG Option; provided, however, that
the restrictions set forth in this Section 4(b) shall
be void in the event of a liquidation of EMSG, a
merger or consolidation in which EMSG is not the
surviving or resulting corporation, or a sale of all
or substantially all of EMSG's assets.
c) Optionee represents that it intends to purchase the
shares for investment and not for resale. Optionee
agrees that Optionee will not distribute or resell
any shares (or other securities) issuable upon
exercise of the option granted hereby in violation of
the Securities Act of 1933, as amended, that Optionee
will indemnify and hold EMSG harmless against all
liability for any such violation, that upon request
Optionee will furnish a letter agreement in
connection with any exercise of the Option which
shall provide that he or she is purchasing the shares
(or other securities) subject to the Option for
investment and not for resale, and that Optionee will
accept a stock certificate bearing the following
legend:
"The securities represented by this certificate (i)
are subject to the Electronic Manufacturing Services
Group, Inc. (`EMSG') Nonqualified Stock Option
Agreement, dated ______________, 1996, between EMSG
and the registered owner of this stock certificate,
including certain restrictions on transfer, and (ii)
have not been registered under the Securities Act of
1933, as amended (the `Act'), or any state securities
law. Accordingly, the Securities represented by this
certificate (i) may not be sold, offered for sale or
otherwise transferred, pledged or hypothecated
without compliance with that Agreement, and (ii) in
the absence of an effective registration statement as
to the securities under the Act and applicable state
securities law, may not be sold, offered for sale,
transferred, pledged or hypothecated without an
opinion of counsel satisfactory to EMSG
2
<PAGE>
that registration under the Act and applicable state
securities law is not required." or such other
appropriate legend regarding restrictions on resale
as EMSG may determine. The shares shall not be
transferable except in compliance with conditions
indicated in the legend.
d) EMSG may impose stop-transfer instructions with
respect to any shares (or other securities) subject
to any restriction set forth in this section 4 until
the restriction has been satisfied or terminates.
(5) Rights Prior to Exercise of Option. The Optionee shall
have no rights as a stockholder with respect to the shares of stock subject to
the Option until the exercise of his rights hereunder and the issuance and
delivery to Optionee of a certificate or certificates evidencing such shares.
(6) Assignment. The Option shall not be transferable other than by
will or the laws of descent and distribution, and the Option may be exercised,
during the lifetime of the Optionee, only by the Optionee. More particularly,
(but without limiting the generality of the foregoing), the Option, may not be
assigned, transferred (except as provided above), pledged or hypothecated in any
way, shall not be assignable by operation of law and shall not be subject to
execution, attachment or similar processes. Any attempted assignment, transfer,
pledge, hypothecation or other disposition of the Option contrary to the
provisions hereof, and the levy of any execution, attachment or similar process
upon the Option shall be null and void and without effect.
(7) Applicable Laws. The validity, construction, interpretation and
enforceability of this Agreement and the capacity of the parties shall be
determined and governed by the laws of the State of North Carolina.
(8) Severability. The provisions of this Agreement are severable and
if any one or more provisions may be determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions, and any partially
unenforceable provision to the extent enforceable in any jurisdiction, shall
nevertheless be binding and enforceable.
(9) Waiver. The waiver by EMSG of a breach of any provision of this
Agreement by Optionee shall not operate or be construed as a waiver of any
subsequent breach by Optionee.
(10) Binding Effect. The provisions of this Agreement shall be binding
upon the parties hereto, their successors and assigns, including, without
limitation, the estate of the Optionee and the executors, administrators or
trustees of such estate and any receiver, trustee in bankruptcy or
representative of the creditors of the Optionee.
(11) Construction. This Agreement is subject to and shall be construed
in accordance with the Plan, the terms of which are explicitly made applicable
hereto. Unless otherwise defined herein, capitalized terms in this Agreement
shall have the same definitions as set forth in the Plan. In the event of any
conflict between the provisions hereof and those of the Plan, the provisions of
the Plan shall govern.
3
<PAGE>
THIS STOCK OPTION AGREEMENT is hereby confirmed and executed as of the
30th day of July, 1996.
ELECTRONIC MANUFACTURING SERVICES
GROUP, INC.
ATTEST:
/s/ Kenneth L. Marks By: /s/ Kenneth H. Marks
Secretary Title: CEO
[Corporate Seal]
OPTIONEE:
/s/ Craig Macnab (SEAL)
Name:
4
<PAGE>
SCHEDULE A
(J.A. Industries, Inc. 1996 Nonqualified Stock Option Plan)
5
<PAGE>
J.A. INDUSTRIES, INC.
1996 NONQUALIFIED STOCK OPTION PLAN
1. Purpose
The purpose of the 1996 Nonqualified Stock Option Plan (the "Plan") is
to further the success of J.A. Industries, Inc. (the "Company") by making shares
of the Company's Common Stock ("Common Stock") available for purchase by
eligible employees, officers, directors and consultants of the Company, or any
affiliated company or partnership in which the Company has an ownership
interest, and other persons receiving services from or providing services to the
Company in order to provide an additional incentive to such participants to
continue their relationship with the Company and in order to give such
participants a greater interest in the Company's success. This purpose will be
carried out through the granting of options which do not meet the statutory
requirements of Sections 422 or 423 of the Internal Revenue Code of 1986, as
amended (the "Code").
2. Stock Subject to Plan
Subject to the provisions of Section 10 of the Plan, the Company's
Board of Directors (the "Board") shall reserve initially an aggregate of
one million (1,000,000) authorized and unissued shares of Common Stock for
issuance upon the exercise of the options. The Board may from time to time
reserve additional shares of authorized and unissued Common Stock for issuance
upon exercise of options. If any option granted under the Plan shall expire or
terminate for any reason without having been exercised in full, the unpurchased
shares of Common Stock subject to the expired or terminated option shall again
be available for options under the Plan.
3. Administration
The Board shall designate a committee (the "Committee") to administer
the Plan. The Committee shall report all of its actions to the Board. The Board
may from time to time remove members from the Committee and appoint their
successors. The Board shall fill all vacancies on the Committee however caused.
Except as otherwise expressly provided in the Plan, the Committee shall have
absolute discretionary authority (a) to determine the individuals to receive
options, the times when options shall be granted, the number of shares to be
subject to each option, the option price, the option period, and the time or
times when each option shall be exercisable; (b) to interpret the Plan; (c) to
prescribe, amend, and rescind rules and regulations relating to the Plan; (d) to
determine the terms and provisions (and amendments of the terms and provisions)
of the option agreements to be entered into between the Company and each
Participant granted an option under the Plan (which option agreements need not
be identical), including such terms and provisions as shall be required in the
Committee's judgment to conform to any change in any applicable law or
regulation; and (e) to make all other determinations the Committee shall deem
necessary or advisable for the Plan's administration.
No member of the Committee or the Board shall be liable to any person
for any action or determination which he or she makes in good faith.
4. Eligibility
Subject to the provisions of Section 3, any employee, officer,
director, and consultant of the Company or any affiliated company or partnership
in which the Company has an ownership interest and other persons receiving
services from or providing services to the Company designated by the Committee
shall be eligible to receive options under the Plan (the "Participants"). In
designating Participants and in recommending the number of shares of Common
Stock to be covered by each option granted to a Participant, the Committee may
take into account the nature of the services rendered by or for each
Participant, his or her present and potential contributions to the Company's
success, and such other factors as the Committee in its discretion shall deem
<PAGE>
relevant. The Company may grant additional options to Participants who have
already been granted options under the Plan.
5. Option Price
The Committee shall determine the purchase price of the shares of
Common Stock covered by each option, which purchase price may be above or below
the fair market value of the Common Stock at the time of the grant, as
determined by the Committee.
6. Exercise of Option
The period during which an option may be exercised shall be determined
by the Committee when the option is granted and shall not extend more than ten
(10) years from the date on which the option is granted. Except as provided in
the option agreement relating to such option, an option may be exercised in
whole or in part at any time during its term. The Committee may impose vesting
or other restrictions on the exerciseability or conditions of options. The term
of each option shall be for such period as the Committee shall determine, but
such term shall not extend for more than the period prescribed in Sections 8, 9
and 10 of the Plan. The purchase price of the shares of Common Stock subject to
the option shall be paid in full in cash upon the exercise of the option. The
holder of an option under the Plan shall not have any of the rights of a
shareholder with respect to the Common Stock subject to the option until such
shares shall be issued to him or her upon the exercise of the option and payment
of the purchase price.
7. Nontransferability of Option
No option granted under the Plan shall be transferable (including by
pledge or hypothecation) and shall be exercisable only by the Participant.
8. Termination of Relationship with the Company
The times and conditions upon which an option will terminate where a
Participant to whom an option has been granted under the Plan terminates, or the
Company terminates, his or her employment, consultant, or service relationship
with the Company or an affiliated company or partnership in which the Company
has an ownership interest shall be determined by the Committee when the option
is granted; provided, however, that in no event shall an option be exercisable
more than ten (10) years from the date it was granted. Nothing in the Plan or
any option granted pursuant to the Plan shall (a) confer on any individual any
right to continue in the employ of the Company or to continue any consultant or
service relationship with the Company or (b) interfere in any way with the
Company's right to terminate such individual's employment, consultant or service
relationship at any time.
9. Adjustment Upon Changes In Capitalization
In the event of a change in the Company's Common Stock by reason of any
stock dividend, split-up, recapitalization, combination or exchange of shares,
merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation or similar action, the Committee shall make an
appropriate adjustment of the number and class of shares of Common Stock subject
to and the purchase price for each then outstanding option, consistent with and
as provided in the corresponding option agreement under the Plan. In the event
of any such change in the outstanding Common Stock, the Committee shall adjust
appropriately the aggregate number and class of shares of Common Stock reserved
and available under the Plan appropriately, and the Committee's determination on
adjustment shall be conclusive.
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<PAGE>
10. Termination of Options on Merger or Sale of Assets
A liquidation of the Company, a merger or consolidation in which the
Company is not the surviving or resulting corporation, or a sale of all or
substantially all of the Company's assets shall cause every option outstanding
under the Plan to terminate on the effective date of such action.
Notwithstanding the preceding sentence, upon a liquidation of the Company, a
merger or consolidation in which the Company is not the surviving or resulting
corporation, or a sale of all or substantially all of the Company's assets, each
option holder shall have the right, within his or her sole discretion, to
exercise before the effective date of such action any or all of the options he
or she then holds, but only to the extent that such options are otherwise
exercisable under the terms of the Plan. Any options not so exercised shall
terminate on the effective date of such action.
11. Amendment, Suspension, or Termination of the Plan
The Board may at any time suspend or terminate the Plan or may amend it
from time to time in such respects as the Board may deem advisable in order that
the options granted under the Plan may conform to any changes in the law or in
any other respect which the Board may deem to be in the best interest of the
Company. Modifications or amendments to the Plan are not required to be approved
by the Company's shareholders, except to the extent required by applicable North
Carolina law or by the Company's Bylaws. No termination, modification, or
amendment of the Plan without the consent of the Participant to whom any option
shall have been previously granted shall adversely affect such Participant's
rights under such option. Unless terminated earlier in accordance with this
Section, the Plan shall terminate when all shares of Common Stock reserved for
issuance under the Plan have been issued.
12. Effectiveness of the Plan
The Plan shall become effective on such date as the Board shall
determine. The exercise of each option granted pursuant to the Plan shall be
subject to the condition that if at any time the Company shall determine in its
discretion that (a) the satisfaction of withholding tax or other withholding
liabilities, (b) the listing on any securities exchange or the registration or
qualification under any state or federal law of any shares of Common Stock
otherwise deliverable upon its exercise, or (c) the consent or approval of any
regulatory body or the shareholders is necessary or desirable as a condition of,
or in connection with, such exercise or the delivery or purchase of shares of
Common Stock pursuant to such exercise, then, in any such event, such exercise
shall not be effective unless such withholding, listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions unacceptable to the Company.
13. Time of Granting Options
Nothing contained in the Plan or in any resolution adopted or to be
adopted by the Board or the Committee will constitute the granting of an option
pursuant to the Plan. The granting of an option pursuant to the Plan will occur
only when a written option agreement is duly executed and delivered by and on
behalf of the Company and the Participant to whom such option is to be granted.
14. Applicable Law
Except as otherwise provided herein, the Plan shall be construed and
enforced according to the laws of the State of North Carolina.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused the Plan to be executed by
the action of its duly authorized officers this 28th day of June, 1996.
J.A. INDUSTRIES, INC.
By: /s/ Bob Knight
Title: President
ATTEST:
Secretary
[CORPORATE SEAL]
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<PAGE>
