<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Business Resource Group
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
LOGO
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 2, 1998
TO THE SHAREHOLDERS OF BUSINESS RESOURCE GROUP:
Notice is hereby given that the Annual Meeting of Shareholders of Business
Resource Group (the "Company"), a California corporation, will be held at the
Double Tree Hotel, 2050 Gateway Place, San Jose, California 95110, on Monday,
March 2, 1998, at 1:30 p.m., local time, for the following purposes:
1. To elect the following directors to serve for the ensuing year and
until their successors are elected: Jack A. Bradley, Brian D. McNay,
John W. Peth, Harry S. Robbins, Jeffrey Tuttle and Charles J. Winter.
2. To authorize an amendment to the Company's 1995 Stock Option Plan to
increase the number of shares of Common Stock reserved for issuance
thereunder by 500,000 shares to an aggregate of 2,200,000 shares.
3. To ratify the appointment of Deloitte & Touche LLP as the independent
auditors for the Company for the fiscal year ending October 31, 1998.
4. To transact such other business as may properly come before the
meeting or any postponement or adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on January 15, 1998
will be entitled to notice of and to vote at the Annual Meeting or any
adjournment thereof.
All shareholders are cordially invited to attend the Annual Meeting in
person. However, to assure your representation at the meeting, you are urged to
mark, sign, date and return the enclosed proxy card as promptly as possible in
the postage-prepaid envelope enclosed for that purpose. If you decide to attend
the meeting you may vote in person even if you returned a proxy card.
BY ORDER OF THE BOARD OF DIRECTORS
John W. Peth
President, Chief Executive Officer
and Chief Financial Officer
San Jose, California
January 30, 1998
YOUR VOTE IS IMPORTANT
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE REQUESTED TO
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE AND RETURN IT
IN THE ENVELOPE PROVIDED.
<PAGE> 3
LOGO
PROXY STATEMENT
FOR 1998 ANNUAL MEETING OF SHAREHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of
Business Resource Group (the "Company"), a California corporation, for use at
the Annual Meeting of Shareholders to be held Monday, March 2, 1998 at 1:30
p.m., local time, or at any postponement or adjournment thereof, for the
purposes set forth in this Proxy Statement and in the accompanying Notice of
Annual Meeting of Shareholders. The Annual Meeting will be held at the Double
Tree Hotel, 2050 Gateway Place, San Jose, California 95110. The Company's
principal executive offices are located at 2150 N. First Street, Suite 101, San
Jose, California 95131. The Company's principal telephone number at that
location is (408) 325-3200.
These proxy solicitation materials were mailed on or about January 30, 1998
to all shareholders entitled to vote at the meeting.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company (Attention:
Craig Cytron, Inspector of Elections) a written notice of revocation or a duly
executed proxy bearing a later date or by attending the meeting and voting in
person.
VOTING AND SOLICITATION
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the Inspector of Elections with the assistance of the Company's transfer agent.
The Inspector of Elections will also determine whether or not a quorum is
present.
Every shareholder voting for the election of directors may cumulate such
shareholder's votes and give one candidate a number of votes equal to the number
of directors to be elected multiplied by the number of shares held by such
shareholder, or distribute the shareholder's votes on the same principle among
as many candidates as the shareholder thinks fit, provided that votes cannot be
cast for more than the number of directors authorized by the Company's bylaws.
However, no shareholder shall be entitled to cumulate votes unless the
candidate's name has been placed in nomination prior to the voting and the
shareholder, or any other shareholder, has given notice at the meeting prior to
the voting of the intention to cumulate the shareholder's votes. On all other
matters, each share has one vote.
Except with respect to the election of directors, and except in certain
specific circumstances, the affirmative vote of a majority of shares represented
and voting with respect to a particular item at a duly held meeting at which a
quorum is present (which shares voting affirmatively also constitute a majority
of the required quorum) is required under California law for approval of
proposals presented to shareholders. In general, California law also provides
that a quorum consists of a majority of the shares entitled to vote, represented
either in person or by proxy. The Inspector of Elections will treat abstentions
as shares that are present and entitled to vote for purposes of determining the
presence of a quorum but as not voting for purposes of determining the approval
of any matter submitted to the shareholders for a vote. Any proxy which is
returned using the form of proxy enclosed and which is not marked as to a
particular item will be voted for the election of directors, for the amendment
to the Company's 1995 Stock Option Plan, for ratification of the appointment of
the designated independent auditors and as the proxy holders deem advisable on
other matters
<PAGE> 4
that may come before the meeting, as the case may be with respect to the item
not marked. If a broker indicates on the enclosed proxy or its substitute that
it does not have discretionary authority as to certain shares to vote on a
particular matter ("broker non-votes"), those shares will not be considered as
voting with respect to that matter. While there is no definitive specific
statutory or case law authority in California concerning the proper treatment of
abstentions and broker non-votes, the Company believes that the tabulation
procedures to be followed by the Inspector of Elections are consistent with the
general statutory requirements in California concerning voting of shares and
determination of a quorum.
The cost of soliciting proxies will be borne by the Company. The Company
will reimburse brokerage firms and other persons representing beneficial owners
of shares for their expenses in forwarding solicitation material to such
beneficial owners. Proxies may be solicited by certain of the Company's
directors, officers and regular employees, without additional compensation,
personally or by telephone, facsimile or telegram.
RECORD DATE AND SHARE OWNERSHIP
Only shareholders of record at the close of business on January 15, 1998
are entitled to notice of and to vote at the meeting. As of January 15, 1998,
4,914,249 shares of the Company's Common Stock were issued and outstanding.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
NOMINEES
The Company's Bylaws currently provide for six directors. At the Annual
Meeting six directors are to be elected to serve until the next Annual Meeting
and until their successors are elected and qualified at the meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the Company's six nominees named below, all of whom are presently directors
of the Company. In the event that any nominee of the Company is unable or
declines to serve as a director at the time of the Annual Meeting, the proxies
will be voted for any nominee who shall be designated by the present Board of
Directors to fill the vacancy. In the event that additional persons are
nominated for election as directors, the proxy holders intend to vote all
proxies received by them in such a manner in accordance with cumulative voting
as will assure the election of as many of the nominees listed below as possible,
and, in such event, the specific nominees to be voted for will be determined by
the proxy holders. Assuming a quorum is present, the six nominees for director
receiving the greatest number of votes cast at the Annual Meeting will be
elected. The term of office of each person elected as a director will continue
until the next Annual Meeting of Shareholders or until his or her successor has
been elected and qualified.
The nominees' names, ages as of October 31, 1997, and certain information
about them are set forth below:
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
- -------------------------- ---- ---------------------------------------------------- --------
<S> <C> <C> <C>
Jack A. Bradley........... 48 Vice President of Finance and Administration and 1997
Chief Financial Officer of Neuron Data, a software
development company
Brian D. McNay............ 41 Executive Vice President of Sales of the Company 1987
John W. Peth.............. 49 President, Chief Executive Officer, Chief Financial 1995
Officer and Director of the Company
Harry S. Robbins.......... 49 President, Chief Executive Officer and Chairman of 1995
the Board of Symphonix Devices, Inc., an implantable
hearing device company
Jeffrey Tuttle............ 40 Executive Vice President of Marketing of the Company 1987
Charles J. Winter......... 39 Director of the Company 1988
</TABLE>
2
<PAGE> 5
Except as set forth below, each of the nominees has been engaged in his
principal occupation set forth above during the past five years. There is no
family relationship between any director or executive officer of the Company.
Mr. Bradley has served as a member of the Board of Directors of the Company
since February 1997. Since October 1996, Mr. Bradley has served as Vice
President of Finance and Administration and Chief Financial Officer of Neuron
Data, a privately-held software development company. Prior to joining Neuron
Data, Mr. Bradley served as Vice President of Finance and Chief Financial
Officer of Network Computing Devices, a manufacturer of network computers, from
1988 to 1996. Mr. Bradley received his BS degree in Finance from the University
of San Francisco in 1970.
Mr. McNay has served as Executive Vice President of Sales since April 1995,
and as a member of the Board of Directors since the Company's inception in April
1987. Mr. McNay also served as President between April 1987 and April 1995. Mr.
McNay was also the founder and owner of Business Interiors, a sole
proprietorship sold to the Company in April 1987. In addition, Mr. McNay served
as a sales executive at various office furniture dealerships from 1979 to 1986,
including the Contract Source Center, the Contract Office Group and Design
Performance.
Mr. Peth has served as President, Chief Executive Officer and Chief
Financial Officer since December 1997 and as a director of the Company since
April 1995. From July 1997 to December 1997, Mr. Peth was a consultant to the
Company. From June 1996 to March 1997, Mr. Peth served as Acting President and
Chief Executive Officer of Tab Products Co. ("TAB"), an office filing and
furniture systems manufacturer and distributor. From April 1991 until June 1997,
Mr. Peth served as Executive Vice President and Chief Operating Officer of TAB.
From August 1984 to April 1991, Mr. Peth served as the managing partner of the
San Jose office of Deloitte & Touche LLP and one of its predecessor public
accounting firms. Mr. Peth is also a director of Aspect Telecommunications,
Inc., a manufacturer of transaction processing systems. Mr. Peth received his BA
degree in Economics in 1970 from the University of California at Santa Barbara,
and an MBA from the University of California at Los Angeles in 1972.
Mr. Robbins has served as a director of the Company since May 1995. Since
March 1994, Mr. Robbins has served as President, Chief Executive Officer and
Chairman of the Board of Symphonix Devices, Inc., an implantable hearing device
company. From January 1991 to December 1993, Mr. Robbins was President and a
member of the Board of Directors of Cardiorhythm, an electrophysiology catheter
company. From September 1986 to December 1990, Mr. Robbins served in a variety
of positions at Laserscope, a surgical systems company, including Executive Vice
President, Vice President of Sales, Marketing and Service and Director of Sales.
Mr. Robbins received his BA degree from Pennsylvania State University in 1969.
Mr. Tuttle has served as Executive Vice President of Marketing since April
1995, and as a member of the Board of Directors since its inception in 1987. Mr.
Tuttle also served as Vice President of Sales between April 1987 and April 1995.
From 1978 to 1987, Mr. Tuttle served as a sales executive with KBM Office
Furniture, an office furniture dealership. He received his BS degree in
Marketing in 1980 from Santa Clara University.
Mr. Winter has served as a member of the Board of Directors since August
1988. Mr. Winter served as President of the Company from April 1995 to December
1997, and as Chief Executive Officer from August 1988 to December 1997. Mr.
Winter also served as the Chief Financial Officer of the Company between August
1988 and April 1995. Prior to joining the Company, he served as a senior systems
analyst at Rolm Mil-Spec Computer, a division of IBM and a manufacturer of
ruggedized computers, from 1984 to 1987. Mr. Winter served as a senior systems
analyst with United Technologies, an aircraft engineering manufacturer, from
1982 to 1984. He received his BS degree in Economics with honors from the
University of California at Santa Cruz in 1980, and an MBA with honors from
Boston University in 1982.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of four formal meetings
during the fiscal year ended October 31, 1997. The Board of Directors has an
Audit Committee and a Compensation Committee. It does not have a nominating
committee or a committee performing the functions of a nominating committee.
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<PAGE> 6
Until July 1997, the Audit Committee of the Board of Directors was
comprised of Messrs. Bradley, Peth and Robbins. In July 1997, Mr. Peth resigned
from the Audit Committee when he became a consultant to the Company. The Audit
Committee held four formal meetings during the last fiscal year. The Audit
Committee recommends engagement of the Company's independent auditors, and is
primarily responsible for approving the services performed by the Company's
independent accountants and for reviewing and evaluating the Company's
accounting principles and its system of internal accounting controls.
Until July 1997, the Compensation Committee of the Board of Directors was
comprised of Messrs. Bradley, Peth and Robbins. In July 1997, Mr. Peth resigned
from the Compensation Committee when he became a consultant to the Company. The
Compensation Committee held one formal meeting during the last fiscal year. The
Compensation Committee makes recommendations to the Board of Directors regarding
the Company's executive compensation policy.
Mr. Robbins attended fewer than 75% of the aggregate number of meetings of
the Board of Directors and meetings of the committees of the Board on which he
serves.
COMPENSATION OF DIRECTORS
Non-employee members of the Board of Directors are eligible to receive a
retainer of $2,000 per quarter, $500 per meeting of the Board of Directors
attended and $250 for each committee meeting attended, and may be reimbursed for
costs of attending Board and Committee meetings. In addition, non-employee
members of the Board of Directors receive options to purchase shares of the
Company's Common Stock pursuant to the 1995 Directors' Stock Option Plan (the
"1995 Directors' Option Plan"). The 1995 Directors' Option Plan provides for the
grant of nonstatutory stock options to non-employee directors of the Company at
an exercise price not less than the fair market value of the Company's Common
Stock on the date of grant. Each current non-employee member of the Company's
Board of Directors was automatically granted an option to purchase 20,000 shares
of Common Stock (the "Initial Option") on the date on which such person first
became a non-employee director of the Company. In addition, each non-employee
director who joins the Board of Directors is similarly granted an Initial Option
on the date on which such person first becomes a director, whether through
election by the shareholders of the Company or appointment by the Board of
Directors to fill a vacancy. Thereafter, on the first calendar day of the
Company's fiscal year, each non-employee director is automatically granted an
option to purchase 5,000 shares of Common Stock (the "Subsequent Option") if, on
such date, he or she shall have served on the Company's Board for at least three
months. Options granted under the 1995 Directors' Option Plan have a term of ten
years. The Initial Options become exercisable cumulatively to the extent of 25%
of the shares subject to the option on each of the first four anniversaries of
the date of grant. The Subsequent Options become exercisable in full on the
fourth anniversary of the date of grant. Directors who are employees of the
Company do not receive any additional compensation for their services as a
director.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR ALL OF THE NOMINEES LISTED
ABOVE.
PROPOSAL NO. 2
AMENDMENT OF THE 1995 STOCK OPTION PLAN
At the Annual Meeting, shareholders are being asked to approve an amendment
to the Company's 1995 Stock Option Plan (the "1995 Option Plan") that would
increase the shares reserved for issuance thereunder by 500,000 shares of Common
Stock to an aggregate of 2,200,000 shares.
GENERAL
The 1995 Option Plan was adopted by the Board of Directors and approved by
the shareholders in April 1995. The shareholders approved amendments to increase
the number of shares reserved for issuance
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<PAGE> 7
under the 1995 Option Plan in March 1996 and in March 1997. A total of 1,700,000
shares of Common Stock has been reserved for issuance under the 1995 Option
Plan. Subject to shareholder approval, this amount would be increased to an
aggregate of 2,200,000 shares. The Board of Directors approved such increase on
December 8, 1997.
The Company's 1995 Option Plan provides for the grant of options to
employees and consultants of the Company. The aggregate number of shares
reserved for issuance under the 1995 Option Plan includes options previously
granted and exercised under the 1995 Option Plan. The increase in shares
reserved for issuance under the 1995 Option Plan has been necessitated by the
growth in the number of employees of the Company, the hiring of new management
personnel and the grant of additional stock options to current employees as
previously granted options vest and become exercisable. The Company does not
believe that the shares remaining available for future grant pursuant to the
1995 Option Plan are sufficient to attract new employees and to retain existing
employees. The increase will provide sufficient additional stock to continue the
Company's policy of equity ownership by employees and consultants as an
incentive to contribute to the Company's success.
Options granted under the 1995 Option Plan may be either "incentive stock
options" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), or nonstatutory stock options at the discretion of the
Board of Directors and as reflected in the terms of the written option
agreement. The 1995 Option Plan is not a qualified deferred compensation plan
under Section 401(a) of the Code, and is not subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
As of October 31, 1997, 34,051 shares had been issued upon exercise of
options granted under the 1995 Option Plan, options for 657,863 shares were
outstanding under the 1995 Option Plan and 1,008,086 shares remained available
for future grants. Shares not purchased under an option prior to its expiration
will be available for future option grants under the 1995 Option Plan. As of
October 31, 1997, the fair market value of shares subject to outstanding options
was $2,590,006.63 based upon the closing price of the Common Stock as reported
on the Nasdaq National Market on such date.
During the fiscal year ended October 31, 1997, (i) 50,000 options to
purchase shares of Common Stock were granted pursuant to the 1995 Option Plan to
current executive officers as a group (3 persons, including Mr. Peth, who was
not an executive officer of the Company during fiscal 1997), (ii) no shares of
Common Stock were granted under the 1995 Option Plan to current directors who
are not executive officers as a group (3 persons) and (iii) options to purchase
265,742 shares of Common Stock were granted to all employees, including current
officers who are not executive officers, as a group (44 persons). For
information with respect to options to purchase Common Stock of the Company
granted in 1997 under the 1995 Option Plan to the Company's Chief Executive
Officer and the four other executive officers of the Company whose annual salary
and bonus exceeded $100,000 for 1997, see "Compensation of Executive
Officers -- Stock Option Grants in Fiscal Year 1997."
PURPOSE
The purposes of the 1995 Option Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentive to employees and consultants of the Company and to promote
the success of the Company's business.
ADMINISTRATION
The 1995 Option Plan may be administered by the Board of Directors or by a
committee of the Board of Directors. The 1995 Option Plan is currently being
administered by the Board of Directors and the Compensation Committee of the
Board of Directors. The Compensation Committee has the authority to grant stock
options and otherwise administer the 1995 Option Plan with respect to the
Company's directors and executive officers eligible to participate in the 1995
Option Plan. Members of the Board of Directors or its Compensation Committee
receive no additional compensation for their services in connection with the
administration of the 1995 Option Plan. All questions of interpretation of the
1995 Option Plan are determined by the Board of Directors or its committee and
its decisions are final and binding upon all participants. All
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<PAGE> 8
directors currently hold office until the next annual meeting of shareholders of
the Company, or until their successors are duly elected and qualified.
ELIGIBILITY
The 1995 Option Plan provides that either incentive stock options or
nonstatutory stock options may be granted to employees (including officers and
directors who are also employees) of the Company or any of its subsidiaries. In
addition, the 1995 Option Plan provides that nonstatutory stock options may be
granted to consultants (not including directors who are not compensated for
their services or are paid only a director's fee by the Company) of the Company
or any of its subsidiaries. The Board of Directors or its committee selects the
optionees and determines the number of shares to be subject to each option. In
making such determination, there are taken into account the duties and
responsibilities of the optionee, the value of the optionee's services, the
optionee's present and potential contribution to the success of the Company and
other relevant factors.
The 1995 Option Plan provides that the maximum number of shares of Common
Stock which may be granted under options to any one employee during any fiscal
year shall be 400,000, subject to adjustment as provided in the 1995 Option
Plan. There is also a limit on the aggregate market value of shares subject to
all incentive stock options that may be granted to an optionee during any
calendar year.
TERMS OF OPTIONS
Each option is evidenced by a stock option agreement between the Company
and the optionee. Each option is subject to the following additional terms and
conditions:
(a) Exercise of the Option. The Board of Directors or its committee
determines when options may be exercised. An option is exercised by giving
written notice of exercise to the Company specifying the number of full
shares of Common Stock to be purchased and by tendering of payment of the
purchase price. The purchase price of the shares purchased upon exercise of
an option shall be paid in consideration of such form as is determined by
the Board of Directors or its committee and specified in the option
agreement, and such form of consideration may vary for each option.
(b) Exercise Price. The exercise price under the 1995 Option Plan is
determined by the Board of Directors or its committee and may not be less
than 100% of the fair market value of the Common Stock on the date the
option is granted. The fair market value per share is equal to the closing
price on the Nasdaq National Market on the date of grant. In the case of an
option granted to an optionee who, immediately before the grant of such
option, owned more than ten percent of the voting power of all classes of
stock of the Company, its parent or subsidiaries, the exercise price must
not be less than 110% of the fair market value on the date of grant.
(c) Termination of Employment. If the optionee's employment or
consulting relationship terminates for any reason other than disability or
death, options under the 1995 Option Plan may be exercised not later than
30 days (or such other period of time not exceeding three months in the
case of an incentive stock option or six months in the case of a
nonstatutory stock option as is determined by the Board of Directors or its
committee) after such termination and may be exercised only to the extent
the option was exercisable on the date of termination. In no event may an
option be exercised by any person after the expiration of its term.
(d) Disability. If an optionee is unable to continue his or her
employment or consulting relationship with the Company as a result of his
or her total and permanent disability, options may be exercised within six
months (or such other period of time not exceeding 12 months as is
determined by the Board of Directors or its committee) of termination and
may be exercised only to the extent the option was exercisable on the date
of termination, but in no event may the option be exercised after its
termination date.
(e) Death. Under the 1995 Option Plan, if an optionee should die while
employed or retained by the Company, and such optionee has been
continuously employed or retained by the Company since the
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<PAGE> 9
date of grant of the option, the option may be exercised within six months
after the date of death (or such other period of time, not exceeding six
months, as is determined by the Board of Directors or its committee) by the
optionee's estate or by a person who acquired the right to exercise the
option by bequest or inheritance to the extent the optionee would have been
entitled to exercise the option had the optionee continued living and
remained employed or retained by the Company for three months after the
date of death, but in no event may the option be exercised after its
termination date.
If an optionee should die within 30 days (or such other period of time
not exceeding three months as is determined by the Board of Directors or
its committee) after the optionee has ceased to be continuously employed or
retained by the Company, the option may be exercised within six months
after the date of death by the optionee's estate or by a person who
acquired the right to exercise the option by bequest or inheritance to the
extent that the optionee was entitled to exercise the option at the date of
termination, but in no event may the option be exercised after its
termination date.
(f) Termination of Options. The 1995 Option Plan provides that options
granted under the 1995 Option Plan have the term provided in the option
agreement. In general, these agreements currently provide for a term of
five years. Incentive stock options granted to an optionee who, immediately
before the grant of such option, owned more than ten percent of the total
combined voting power of all classes of stock of the Company, its parent or
subsidiaries, may not in any case have a term of more than five years. No
option may be exercised by any person after its expiration.
(g) Option Not Transferable. An option is nontransferable by the
optionee other than by will or the laws of descent and distribution, and is
exercisable only by the optionee during his or her lifetime and in the
event of the optionee's death by a person who acquires the right to
exercise the option by bequest or inheritance or by reason of the death.
(h) Acceleration of Options. In the event of a merger or consolidation
in which the Company is not the surviving entity, the Board of Directors or
its committee may either accomplish a substitution or assumption of options
with the successor entity or give notice of the optionee's right to
exercise his or her outstanding options as to some or all of the optioned
stock (including any or all of the option which is not otherwise
exercisable but which the Board of Directors or its committee in its sole
discretion may make exercisable) at any time within 30 days of such notice.
(i) Other Provisions. The option agreement may contain such other
terms, provisions and conditions not inconsistent with the 1995 Option Plan
as may be determined by the Board of Directors or its committee.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event any change, such as a stock split or dividend, is made in the
Company's capitalization that results in an increase or decrease in the number
of outstanding shares of Common Stock without receipt of consideration by the
Company, appropriate adjustment shall be made in the exercise price of each
outstanding option, the number of shares subject to each option, the annual
limitation on grants to employees, as well as the number of shares available for
issuance under the 1995 Option Plan. In the event of a dissolution or
liquidation of the Company, each option will terminate unless otherwise provided
by the Board of Directors or its committee.
AMENDMENT AND TERMINATION
The Board of Directors may amend the 1995 Option Plan at any time or from
time to time or may terminate it without approval of the shareholders; provided,
however, that shareholder approval is required for any amendment to the 1995
Option Plan that increases the number of shares that may be issued under the
1995 Option Plan, modifies the standards of eligibility, modifies the limitation
on grants to employees described in the 1995 Option Plan or results in other
changes which would require shareholder approval to qualify options granted
under the 1995 Option Plan as performance-based compensation under Section
162(m) of the Code. However, no action by the Board of Directors or shareholders
may alter or impair
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<PAGE> 10
any option previously granted under the 1995 Option Plan. The 1995 Option Plan
shall terminate in April 2005, provided that any options then outstanding under
the 1995 Option Plan shall remain outstanding until they expire by their terms.
SECTION 162(m) OF THE CODE
Section 162(m) of the Code provides that a publicly-held corporation cannot
deduct compensation of a covered employee (the CEO and the four other most
highly compensated employees for the taxable year whose compensation is required
to be reported to shareholders under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) to the extent the compensation exceeds $1 million
per tax year. There is a statutory exception to this limitation for compensation
based on the attainment of performance goals. Income derived from stock options
will qualify for this exception and thus be treated as performance-based
compensation if granted in accordance with requirements set forth in Section
162(m). The 1995 Option Plan complies with those requirements. However, because
the 1995 Option Plan is being amended to increase the number of shares of Common
Stock reserved for issuance under the 1995 Option Plan, the Company is again
required to obtain shareholder approval for the amended plan in order for the
options to continue to qualify as performance-based compensation under Section
162(m).
FEDERAL INCOME TAX ASPECTS OF THE 1995 OPTION PLAN
The following is a brief summary of the U.S. federal income tax
consequences of transactions under the 1995 Option Plan based on federal income
tax laws in effect as of this date. The summary addresses only current U.S.
federal income tax law and expressly does not discuss the income tax law of any
state, municipality or non-U.S. taxing jurisdiction or gift, estate or other tax
laws other than federal income tax law.
Options granted under the 1995 Option Plan may be either "incentive stock
options," which are intended to qualify for the special tax treatment provided
by Section 422 of the Code, or nonstatutory stock options, which will not so
qualify.
If an option granted under the 1995 Option Plan is an incentive stock
option, under U.S. tax laws the optionee will recognize no income upon grant of
the incentive stock option and incur no tax liability due to the exercise,
except to the extent that such exercise causes the optionee to incur alternative
minimum tax (see the discussion below). The Company will not be allowed a
deduction for federal income tax purposes as a result of the exercise of an
incentive stock option regardless of the applicability of the alternative
minimum tax. Upon the sale or exchange of the shares acquired upon exercise more
than two years after grant of the option and one year after such exercise, any
gain will be treated as long-term capital gain under U.S. tax laws. If both of
these holding periods are not satisfied, the optionee will recognize ordinary
income under U.S. tax laws equal to the difference between the exercise price
and the lower of the fair market value of the stock at the date of the option
exercise or the sale price of the stock. The Company will be entitled to a
deduction in the same amount as the ordinary income recognized by the optionee.
Any gain recognized on a disposition of the shares prior to completion of both
of the above holding periods in excess of the amount treated as ordinary income
will be characterized under U.S. tax laws as long-term capital gain if the sale
occurs more than one year after exercise of the option or as short-term capital
gain if the sale is made earlier. The federal tax rate on long-term capital gain
under current federal tax laws for federal income tax and alternative minimum
tax purposes is capped at 28% for shares held more than one year but not more
than 18 months after the date of exercise and at 20% for shares held more than
18 months after the date of exercise. Capital losses are allowed under U.S. tax
laws in full against capital gains plus $3,000 of other income.
The exercise of an incentive stock option may subject the optionee to the
alternative minimum tax under Section 55 of the Code. The alternative minimum
tax is calculated by applying a tax rate of 26% to alternative minimum taxable
income of joint filers up to $175,000 ($87,500 for married taxpayers filing
separately) and 28% to alternative minimum taxable income above that amount.
Alternative minimum taxable income is equal to (i) taxable income adjusted for
certain items, plus (ii) items of tax preference, less (iii) an exclusion of
$45,000 for joint returns and $33,750 for individual returns. Alternative
minimum tax will be due if the tax determined under the foregoing formula
exceeds the regular tax of the taxpayer for the year.
8
<PAGE> 11
In computing alternative minimum taxable income, shares purchased upon
exercise of an incentive stock option are treated as if they had been acquired
by the optionee pursuant to exercise of a nonstatutory stock option. As a
result, the optionee recognizes alternative minimum taxable income equal to the
excess of the fair market value of the shares on the date of exercise over the
option's exercise price. In certain circumstances, where the shares are subject
to a substantial risk of forfeiture when acquired or where the optionee is an
officer, director or 10% shareholder of the Company, the date of taxation under
U.S. tax laws may be deferred unless the optionee files an election with the
Internal Revenue Service under Section 83(b) of the Code. If an optionee pays
alternative minimum tax, the amount of such tax may be carried forward as a
credit against any subsequent year's regular tax in excess of the alternative
minimum tax for such year.
All other stock options which do not qualify as incentive stock options are
referred to as nonstatutory stock options. An optionee will not recognize any
taxable income under U.S. tax laws at the time he or she is granted a
nonstatutory stock option. However, upon its exercise, under U.S. tax laws the
optionee will recognize ordinary income for tax purposes measured by the excess
of the then fair market value of the shares over the exercise price. In certain
circumstances, where the shares are subject to a substantial risk of forfeiture
when acquired or where the optionee is an officer, director or 10% shareholder
of the Company, the date of taxation under U.S. tax laws may be deferred unless
the optionee files an election with the Internal Revenue Service under Section
83(b) of the Code. The income recognized by an optionee who is also an employee
of the Company will be subject to income and employment tax withholding by the
Company by payment in cash or out of the current earnings paid to the optionee.
Upon resale of such shares by the optionee, any difference between the sales
price and the fair market value of the shares as of the date of exercise of the
option will be treated under U.S. tax laws as capital gain or loss, and will
qualify for long-term capital gain or loss treatment if the shares have been
held for more than one year.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the Common Stock
present and voting at the Annual Meeting with respect to the amendment to the
1995 Option Plan is required for its approval.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR THE AMENDMENT TO THE 1995
STOCK OPTION PLAN.
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche LLP, independent
auditors, to audit the financial statements of the Company for the fiscal year
ending October 31, 1998 and recommends that the shareholders vote for
ratification of such appointment. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection. Deloitte &
Touche LLP has audited the financial statements of the Company since 1994.
Representatives of Deloitte & Touche LLP are expected to be present at the
meeting and will have the opportunity to make a statement if they desire to do
so. They are also expected to be available to respond to appropriate questions.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS VOTING IN FAVOR OF THE RATIFICATION OF
THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS FOR THE
COMPANY.
9
<PAGE> 12
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Company's
Common Stock as of December 31, 1997 as to (i) each person who is known by the
Company to own beneficially more than five percent of the Company's Common
Stock, (ii) each of the Company's directors, (iii) each of the executive
officers named in the Summary Compensation Table beginning on page 14, and (iv)
all directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)
5% SHAREHOLDERS, DIRECTORS, NAMED --------------------------
EXECUTIVE OFFICERS, AND DIRECTORS AND PERCENT OF
EXECUTIVE OFFICERS AS A GROUP NUMBER TOTAL
------------------------------------------------------ --------- ------------
<S> <C> <C>
Heartland Advisors.................................... 500,000(2) 10.2%
790 North Milwaukee Street
Milwaukee, Wisconsin 53202
T. Rowe Price Associates, Inc......................... 350,000(3) 7.1%
100 East Pratt Street
Baltimore, Maryland 21202
Jack A. Bradley....................................... 5,000(4) *
Scott Lappin(5)....................................... -- --
Brian D. McNay........................................ 1,262,780 25.7%
P. Steven Melman(6)................................... -- --
Jeffrey D. Tuttle..................................... 930,000 18.9%
Charles J. Winter..................................... 655,980 13.3%
John W. Peth.......................................... 87,083(7) 1.7%
Harry S. Robbins...................................... 10,000(8) *
All directors and executive officers as a group (8
persons)(9)......................................... 2,950,843(10) 58.8%
</TABLE>
- ---------------
* Less than 1%
(1) To the Company's knowledge, the persons named in the table have sole voting
and investment power with respect to all shares of Common Stock shown as
beneficially owned by them, subject to community property laws where
applicable and the information contained in the footnotes to this table.
Unless otherwise indicated, the address of each of the named individuals
is: c/o Business Resource Group, 2150 North First Street, Suite 101, San
Jose, California 95131.
(2) Based solely on information contained in the Schedule 13G dated October 10,
1997 filed by the named shareholder with the Securities and Exchange
Commission.
(3) Based solely on information contained in the Schedule 13G dated February 9,
1996 filed by the named shareholder with the Securities and Exchange
Commission.
(4) Includes 5,000 shares subject to stock options exercisable within 60 days
of December 31, 1997.
(5) Mr. Lappin resigned from the Company in April 1997.
(6) Mr. Melman resigned from the Company in April 1997.
(7) Includes 87,083 shares subject to stock options exercisable within 60 days
of December 31, 1997.
(8) Includes 10,000 shares subject to stock options exercisable within 60 days
of December 31, 1997.
(9) Includes two executive officers (Mr. Lappin and Mr. Melman) who resigned
from the Company in April 1997.
(10) Includes 102,083 shares subject to stock options exercisable within 60 days
of December 31, 1997.
10
<PAGE> 13
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the following report and
the Performance Graph on page 13 shall not be incorporated by reference into any
such filings.
REPORT OF THE COMPENSATION COMMITTEE
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors was constituted in May
1995, shortly prior to the Company's initial offering of its shares to the
public. This committee establishes policies relating to compensation of
executive officers of the Company. All decisions relating to executive
compensation are also reviewed by the full Board.
Executive Compensation Policies
The goal of the Company's executive compensation policy is to ensure that
an appropriate relationship exists between executive pay and the creation of
shareholder value, while at the same time motivating and retaining key
employees. To achieve this goal, the Company's executive compensation policies
include base salaries, commission incentive plans and/or bonuses based upon
corporate performance, supplemented with long-term equity-based ownership and
incentives.
Base salaries, when applicable, are designed to maximize shareholder value
by being based upon corporate financial performance.
Long-term incentive awards, when applicable, are made in the form of
periodic grants of stock options pursuant to the Company's 1995 Stock Option
Plan. The Committee believes that stock options are an effective long-term
incentive for executive officers to create value for shareholders, since the
value of an option bears a direct relationship to the Company's stock price.
Stock options are granted at the fair market value of the underlying shares at
the date of grant and generally vest in installments over multiple years.
In addition, executive officers of the Company either have substantial
equity ownership positions in the Company or have received meaningful stock
option grants. The Compensation Committee believes that as a result of such
equity positions and opportunities, the interests of management are closely
aligned with the Company's other equity owners in seeking to maximize value
provided to shareholders.
CEO Compensation
Charles J. Winter, the Company's Chief Executive Officer until December
1997, received a base salary during fiscal 1997 of $120,000. This amount has not
changed since fiscal 1995. Mr. Winter is a founder of the Company and held 13.3%
of the total outstanding shares of the Company at December 31, 1997. Mr. Winter
received no stock option grants during 1997, as the Committee did not believe
such action was necessary given Mr. Winter's ownership position in the Company.
During fiscal 1997, Mr. Winter did not participate in an executive bonus plan.
Mr. Winter resigned as the Company's President and Chief Executive Officer in
December 1997, but remains on the Company's Board of Directors.
Compensation of Other Executives
Brian D. McNay, the Company's Executive Vice President of Sales, is
compensated by commissions earned on the sale of the Company's products and
services. Mr. McNay participates in the same commission plan as other Company
sales personnel. Mr. McNay is a founder of the Company and held 25.7% of the
total outstanding shares of the Company at December 31, 1997.
Jeffrey Tuttle, the Company's Executive Vice President of Marketing, is
compensated by commissions earned on the sale of the Company's products and
services. Mr. Tuttle participates in the same commission
11
<PAGE> 14
plan as other Company sales personnel. Mr. Tuttle is a founder of the Company
and held 18.9% of the total outstanding shares of the Company at December 31,
1997.
Relative to Mr. McNay's and Mr. Tuttle's commission-based compensation,
since its introduction in July 1995, the Company's commission structure has
limited sales representatives who hold more than five percent of the Company's
outstanding Common Stock (or options therefor) to a maximum commission level of
$480,000 per fiscal year. Mr. McNay obtained the maximum commission level during
fiscal 1997.
Presently, neither Mr. McNay nor Mr. Tuttle participate in an executive
bonus plan. The Compensation Committee may consider their participation in such
a plan in the future if it believes such participation is likely to provide
appropriate motivation to increase shareholder value. Additionally, neither Mr.
McNay nor Mr. Tuttle received any stock option grants during 1997, as the
Committee did not believe such action was necessary given their ownership
position in the Company.
P. Steven Melman, the Company's Chief Financial Officer until April 1997,
was compensated with a base salary of $140,000 per year, a performance-based
bonus based upon corporate net profits, and long-term equity-based incentives.
Mr. Melman was granted 150,000 stock options when he joined the Company in 1995,
and no additional stock options were granted Mr. Melman in fiscal 1997. Mr.
Melman resigned from the Company in April 1997.
Scott Lappin, the Company's Vice President of Sales until April 1997, was
compensated with a base salary of $130,000 per year, a performance-based bonus
based upon corporate net revenues and net profits and long-term equity-based
incentives. Mr. Lappin's initial stock option grant of 75,000 shares was
determined in negotiations prior to his employment with the Company, and no
additional stock options were granted Mr. Lappin in fiscal 1997. Mr. Lappin
resigned from the Company in April 1997.
COMPENSATION COMMITTEE
Jack A. Bradley
Harry S. Robbins
12
<PAGE> 15
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are currently no employee directors serving on the Compensation
Committee. Until July 1997, the Compensation Committee of the Board of Directors
was comprised of Messrs. Bradley, Peth and Robbins. In July 1997, Mr. Peth
resigned from the Compensation Committee when he became a consultant to the
Company.
See "Proposal No. 1 -- Election of Directors -- Compensation of Directors"
for a discussion of certain information with respect to all outside directors,
including directors serving on the Compensation Committee.
PERFORMANCE GRAPH
The following graph compares, for the period that the Company's Common
Stock has been registered under Section 12 of the Securities Exchange Act of
1934, as amended, (which commenced June 27, 1995), the cumulative total
shareholder return for the Company, the CRSP Total Return Index for the Nasdaq
Stock Market (U.S. companies) (the "Nasdaq Composite Index"), and a group
consisting of publicly-traded U.S. companies in the Company's industry (the
"Industry Group"). The Industry Group consists of four companies compiled from
Standard & Poor's CompuStat as follows: Hon Industries, Kimball International,
Herman Miller, Inc. and TAB Products Co. Measurement points are June 27, 1995
and the last trading day of the Company's fiscal years ended October 31, 1995,
October 31, 1996 and October 31, 1997. The graph assumes that $100 was invested
on June 27, 1995 (at the initial offering price of $7.00 per share) in the
Common Stock of Business Resource Group, the Nasdaq Composite Index and the
Industry Group, and further assumes reinvestment of dividends. The stock price
performance on the following graph is not necessarily indicative of future stock
price performance.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) BRG Nasdaq Peer Group
<S> <C> <C> <C>
6/27/95 100 100 100
10/31/95 68 113 104
10/31/96 57 134 145
10/31/97 57 173 246
</TABLE>
13
<PAGE> 16
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table shows the compensation received by the Company's Chief
Executive Officer and the four other most highly compensated executive officers
of the Company for the fiscal year ended October 31, 1997 (the "Named
Executives"), and the compensation received by each such individual for the
Company's two prior fiscal years.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
NAME AND PRINCIPAL ---------------------- OTHER ANNUAL OPTIONS/SARS ALL OTHER
POSITION YEAR SALARY BONUS(1) COMPENSATION(2) (SHARES) COMPENSATION
- -------------------------- ----- -------- --------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Charles J. Winter......... 1997 $120,000 -- $11,314 -- --
President and Chief 1996 $120,000 -- $12,307 -- --
Executive Officer(3) 1995 $110,000(4) -- $12,536 -- --
Scott Lappin(5)........... 1997 $ 76,330 $ 5,020 $ 2,313 -- --
Vice President 1996 $105,625 $ 35,313 $ 1,988 75,000(6) --
of Sales 1995 -- -- -- -- --
Brian D. McNay............ 1997 -- $ 480,000 $ 7,302 -- --
Executive Vice 1996 -- $ 480,000 $ 8,151 -- --
President of Sales 1995 -- $ 629,204 $ 7,046 -- --
P. Steven Melman(7)....... 1997 $ 71,677 $ 10,110 $ 7,473 -- --
Vice President of 1996 $140,000 $ 9,330 $14,648 -- --
Finance and Chief 1995 $ 79,336 -- $ 786 150,000(8) --
Financial Officer
Jeffrey Tuttle............ 1997 -- $ 381,801 $ 7,726 -- --
Executive Vice 1996 -- $ 221,982 $ 6,899 -- --
President of Marketing 1995 -- $ 315,480 $ 7,978 -- --
</TABLE>
- ---------------
(1) Stated amounts include amounts earned by Mr. Lappin and Mr. Melman as
performance bonuses and by Mr. McNay and Mr. Tuttle as sales commissions,
and exclude amounts paid during each referenced year relating to amounts
earned in prior years. In general, the Company's sales representatives,
including Messrs. McNay and Tuttle, receive no salary. In June 1995 the
Company adopted a new commission structure which limits sales
representatives who hold more than five percent of the Company's outstanding
Common Stock (or options therefor) to a maximum commission level of $480,000
per fiscal year. This commission structure was effective July 1, 1995 and
was pro rated for the balance of fiscal 1995.
(2) Stated amounts for 1997, 1996 and 1995 represent the Company's contributions
to its 401(k) plan for the benefit of the named executives, as well as
automobile and medical expense allowances in the following amounts: 401(k)
plan contributions -- Mr. Winter ($1,863, $1,725 and $1,630), Mr. McNay
($2,250, $2,250 and $2,250), Mr. Tuttle ($2,250, $2,250 and $2,250), Mr.
Lappin ($1,703, $0 and $0) and Mr. Melman ($2,250, $0 and $0); automobile
expense allowances -- Mr. Winter ($6,956, $8,163 and $9,186), Mr. Lappin
($398, $1,988 and $0), Mr. McNay ($2,087, $2,449 and $2,950), Mr. Tuttle
($2,087, $2,250 and $4,008) and Mr. Melman ($2,440, $11,196 and $0); medical
expense allowances -- Mr. Winter ($2,495, $2,419 and $1,720), Mr. McNay
($2,965, $3,452 and $1,846), Mr. Tuttle ($3,389, $2,399 and $1,720), Mr.
Lappin ($212, $0 and $0) and Mr. Melman ($2,783, $3,452 and $786).
(3) Mr. Winter resigned as President and Chief Executive Officer of the Company
in December 1997, but remains on the Company's Board of Directors.
(4) During one of the twelve months in fiscal 1995, Mr. Winter chose not to
receive his base salary.
14
<PAGE> 17
(5) Mr. Lappin began his employment with the Company in January 1996 and became
an executive officer in April 1996. Mr. Lappin resigned from the Company in
April 1997.
(6) Mr. Lappin's option was granted at market value on the date of grant and
terminated upon his resignation from the Company. Such option vested as to
25,000 shares prior to his resignation.
(7) Mr. Melman resigned from the Company in April 1997.
(8) Mr. Melman's option was granted at market value on the date of grant and
terminated upon his resignation from the Company. Such option vested as to
150,000 shares prior to his resignation.
STOCK OPTION GRANTS IN FISCAL YEAR 1997
The following table sets forth information for the Named Executives with
respect to grants of options to purchase Common Stock of the Company made in the
fiscal year ended October 31, 1997 and the value of all options held by such
executive officers on October 31, 1997.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT
ASSUMED ANNUAL
INDIVIDUAL GRANTS RATES OF
-------------------------- STOCK PRICE
% OF TOTAL APPRECIATION
OPTIONS FOR OPTION
OPTIONS GRANTED TO EXERCISE TERM
GRANTED EMPLOYEES IN PRICE EXPIRATION ----------------
NAME (SHARES) FISCAL YEAR(1) (PER SHARE) DATE 5% 10%
-------------------- -------- --------------- ------------ ----------- --- ----
<S> <C> <C> <C> <C> <C> <C>
Charles J.
Winter(2)......... -- -- -- -- -- --
Scott Lappin(3)..... -- -- -- -- -- --
Brian D. McNay...... -- -- -- -- -- --
P. Steven
Melman(4)......... -- -- -- -- -- --
Jeffrey Tuttle...... -- -- -- -- -- --
</TABLE>
- ---------------
(1) The Company granted options to employees for an aggregate of 265,742 shares
of Common Stock during the 1997 fiscal year.
(2) Mr. Winter resigned as President and Chief Executive Officer of the Company
in December 1997, but remains on the Company's Board of Directors.
(3) Mr. Lappin resigned from the Company in April 1997.
(4) Mr. Melman resigned from the Company in April 1997.
15
<PAGE> 18
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1997 AND
YEAR-END OPTION VALUES
The following table sets forth information for the Named Executives with
respect to exercises in fiscal year 1997 of options to purchase Common Stock of
the Company.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
OCTOBER 31, 1997 OCTOBER 31, 1997
SHARES ---------------- ----------------
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
----------- -------- ---------------- ----------------
<S> <C> <C> <C> <C>
Charles J. Winter(1).... -- -- -- --
Scott Lappin(2)......... 25,000 $23,297 -- --
Brian D. McNay.......... -- -- -- --
P. Steven Melman(3)..... -- -- -- --
Jeffrey Tuttle.......... -- -- -- --
</TABLE>
- ---------------
(1) Mr. Winter resigned as President and Chief Executive Officer of the Company
in December 1997, but remains on the Company's Board of Directors.
(2) Mr. Lappin resigned from the Company in April 1997.
(3) Mr. Melman resigned from the Company in April 1997.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Charles J. Winter resigned as President and Chief Executive Officer of the
Company in December 1997, but remains on the Company's Board of Directors. John
W. Peth, a member of the Company's Board of Directors since April 1995 and a
consultant to the Company since July 1997, was appointed as President, Chief
Executive Officer and Chief Financial Officer to replace Mr. Winter in December
1997. In connection with his resignation from the Company, Mr. Winter entered
into a separation agreement which provides, among other things, for payment of
his regular salary, automobile expense allowance and medical insurance premiums
under the Company's standard medical insurance program until December 31, 1998.
Non-employee members of the Company's Board of Directors are eligible to
receive cash compensation and options to purchase shares of Common Stock in
connection with their service on the Board. See "Proposal No. 1 -- Election of
Directors -- Compensation of Directors."
The Company has entered into indemnification agreements with each of its
directors and officers, which may require the Company, among other things, to
indemnify them against certain liabilities that may arise by reason of their
status or service as directors or officers, to advance their expenses incurred
as a result of any proceeding against them as to which they could be
indemnified, and to obtain directors' and officers' liability insurance if
available on reasonable terms.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
certain reports of ownership with the Securities and Exchange Commission ("SEC")
and with the National Association of Securities Dealers. Such executive
officers, directors and shareholders are also required by SEC rules to furnish
the Company with copies of all Section 16(a) forms that they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that its officers, directors and ten percent shareholders complied with all
Section 16(a) filing requirements for the fiscal year ended October 31, 1997.
16
<PAGE> 19
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Proposals of shareholders of the Company which are intended to be presented
by such shareholders at the Company's 1999 Annual Meeting must be received by
the Company no later than October 2, 1998 in order that they may be included in
the proxy statement and form of proxy relating to that meeting.
OTHER MATTERS
The Board of Directors knows of no other matters to be submitted to the
meeting. If any other matters properly come before the meeting or any
postponement(s) or adjournment(s) thereof, it is the intention of the persons
named in the enclosed form of Proxy to vote the shares they represent as the
Board of Directors may recommend.
BY ORDER OF THE BOARD OF DIRECTORS
JOHN W. PETH
President, Chief Executive Officer
and Chief Financial Officer
Dated: January 30, 1998
17
<PAGE> 20
BUSINESS RESOURCE GROUP
1995 STOCK OPTION PLAN
1. Purposes of the Plan. The purposes of this Stock Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to give Employees and Consultants of the Company a greater
personal stake in the success of the Company's business, to provide additional
incentive to the Employees and Consultants of the Company to continue and
advance in their employment and service to the Company and to promote the
success of the Company's business.
Options granted hereunder may be either Incentive Stock Options or
Nonstatutory Stock Options, at the discretion of the Board and as reflected in
the terms of the written option agreement.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" shall mean the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.
(b) "Applicable Laws" shall have the meaning set forth in Section
4(a) below.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(e) "Committee" shall mean the Committee appointed by the Board
of Directors in accordance with Section 4(a) of the Plan, if one is appointed.
(f) "Common Stock" shall mean the Common Stock of the Company.
(g) "Company" shall mean Business Resource Group, a California
corporation.
(h) "Consultant" shall mean any person who is engaged by the
Company or any Parent or Subsidiary to render consulting services and is
compensated for such consulting services, and any director of the Company
whether compensated for such services or not; provided that if and in the event
the Company registers any class of any equity security pursuant to Section 12 of
the Exchange Act, the term Consultant shall thereafter not include directors who
are not compensated for their services or are paid only a director's fee by the
Company.
(i) "Continuous Status as an Employee or Consultant" shall mean
the absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of sick leave, military leave, or any other
leave of absence approved by the Administrator; provided that such leave is
<PAGE> 21
for a period of not more than 90 days or reemployment upon the expiration of
such leave is guaranteed by contract or statute. Notwithstanding the foregoing,
a leave of absence shall not be considered as interrupting the Continuous Status
of an Employee or Consultant if the leave has been designated by the Company as
(or required by law to be) a leave for which such status shall continue. For
purposes of this Plan, a change in status from an Employee to a Consultant or
from a Consultant to an Employee will not constitute a termination of
employment.
(j) "Director" shall mean a member of the Board.
(k) "Employee" shall mean any person, including officers, Named
Executives and those Directors who are also employees of the Company, who are,
employed by the Company or any Parent or Subsidiary of the Company. The payment
by the Company of a director's fee to a Director shall not be sufficient to
constitute "employment" of such Director by the Company.
(l) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(m) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system including without limitation the National
Market of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, its Fair Market Value shall be the closing sales
price for such stock as quoted on such system on the date of determination (if
for a given day no sales were reported, the closing bid on that day shall be
used), as such price is reported in The Wall Street Journal or such other source
as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System
(but not on the National Market thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the bid and asked prices for the Common Stock or;
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Administrator.
(n) "Incentive Stock Option" shall mean an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code, as designated in the applicable written option agreement.
(o) "Named Executive" shall mean any individual who, on the last
day of the Company's fiscal year, is the chief executive officer of the Company
(or is acting in such capacity) or among the four highest compensated officers
of the Company (other than the chief
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<PAGE> 22
executive officer). Such officer status shall be determined pursuant to the
executive compensation disclosure rules under the Exchange Act.
(p) "Nonstatutory Stock Option" shall mean an Option not intended
to qualify as an Incentive Stock Option, as designated in the applicable written
option agreement.
(q) "Officer" shall mean a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(r) "Option" shall mean a stock option granted pursuant to the
Plan.
(s) "Optioned Stock" shall mean the Common Stock subject to an
Option.
(t) "Optionee" shall mean an Employee or Consultant who receives
an Option.
(u) "Parent" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(v) "Plan" shall mean this 1995 Stock Option Plan.
(w) "Rule 16b-3" shall mean Rule 16b-3 promulgated under the
Exchange Act as the same may be amended from time to time, or any successor
provision.
(x) "S Corporation" shall mean a corporation that meets the
requirements of Sections 1361 and 1362 of the Code.
(y) "Share" shall mean a share of the Common Stock, as adjusted
in accordance with Section 14 of the Plan.
(z) "Subsidiary" shall mean a "subsidiary corporation," whether
now or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 14 of
the Plan, the maximum aggregate number of shares that may be optioned and sold
under the Plan is 2,200,000 Shares of Common Stock. The Shares may be
authorized, but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares that were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan. Notwithstanding any other provision of the Plan,
Shares issued under the Plan and later repurchased by the Company shall not
become available for future grant or sale under the Plan.
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<PAGE> 23
4. Administration of the Plan.
(a) Composition of Administrator.
(i) Multiple Administrative Bodies. If permitted by Rule
16b-3, and by the legal requirements relating to the administration of incentive
stock option plans, if any, of applicable securities laws and the Code
(collectively, the "Applicable Laws"), the Plan may (but need not) be
administered by different administrative bodies with respect to directors,
officers who are not directors and Employees who are neither directors nor
officers.
(ii) Administration with respect to Directors and
Officers. With respect to grants of Options to Employees or Consultants who are
also Officers or Directors of the Company, the Plan shall be administered by (A)
the Board, if the Board may administer the Plan in compliance with Rule 16b-3 as
it applies to a plan intended to qualify thereunder as a discretionary plan and
Section 162(m) of the Code as it applies so as to qualify grants of Options to
Named Executives as performance-based compensation, or (B) a Committee
designated by the Board to administer the Plan, which Committee shall be
constituted in such a manner as to permit the Plan to comply with Rule 16b-3 as
it applies to a plan intended to qualify thereunder as a discretionary plan, to
qualify grants of Options to Named Executives as performance-based compensation
under Section 162(m) of the Code, and otherwise so as to satisfy the Applicable
Laws.
(iii) Administration with respect to Other Persons. With
respect to grants of Options to Employees or Consultants who are neither
Directors nor Officers of the Company, the Plan shall be administered by (A) the
Board or (B) a Committee designated by the Board, which Committee shall be
constituted in such a manner as to satisfy the Applicable Laws.
(iv) General. If a Committee has been appointed pursuant
to subsection (ii) or (iii) of this Section 4(a), such Committee shall continue
to serve in its designated capacity until otherwise directed by the Board. From
time to time the Board may increase the size of any Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies (however caused) and remove
all members of a Committee and thereafter directly administer the Plan, all to
the extent permitted by the Applicable Laws and, in the case of a Committee
appointed under subsection (ii), to the extent permitted by Rule 16b-3 as it
applies to a plan intended to qualify thereunder as a discretionary plan, and to
the extent required under Section 162(m) of the Code to qualify grants of
Options to Named Executives as performance-based compensation.
(b) Powers of the Administrator. Subject to the provisions of the
Plan and in the case of a Committee, the specific duties delegated by the Board
to such Committee, the Administrator shall have the authority, in its
discretion:
(i) to determine the Fair Market Value of the Common
Stock, in accordance with Section 2(m) of the Plan;
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<PAGE> 24
(ii) to select the Employees and Consultants to whom
Options may from time to time be granted hereunder;
(iii) to determine whether and to what extent Options are
granted hereunder;
(iv) to determine the number of shares of Common Stock to
be covered by each such award granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder
(including, but not limited to, the share price and any restriction or
limitation, or any vesting acceleration or waiver of forfeiture restrictions
regarding any Option and/or the shares of Common Stock relating thereto, based
in each case on such factors as the Administrator shall determine, in its sole
discretion);
(vii) to determine whether, to what extent and under what
circumstances Common Stock and other amounts payable with respect to an award
under this Plan shall be deferred either automatically or at the election of the
participant (including providing for and determining the amount, if any, of any
deemed earnings on any deferred amount during any deferral period); and
(viii) to reduce the exercise price of any Option to the
then current Fair Market Value if the Fair Market Value of the Shares covered by
such Option shall have declined since the date the Option was granted;
(c) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options.
5. Eligibility.
(a) Recipients of Grants. Nonstatutory Stock Options may be
granted only to Employees and Consultants. Incentive Stock Options may be
granted only to Employees. An Employee or Consultant who has been granted an
Option may, if he or she is otherwise eligible, be granted an additional Option
or Options.
(b) Type of Option. Each Option shall be designated in the
written option agreement as either an Incentive Stock Option or a Nonstatutory
Stock Option. However, notwithstanding such designations, to the extent that the
aggregate Fair Market Value of Shares with respect to which Incentive Stock
Options are exercisable for the first time by an Optionee during any calendar
year (under all plans of the Company or any Parent or Subsidiary) exceeds
$100,000, such excess Options shall be treated as Nonstatutory Stock Options.
For purposes of this Section 5(b), Incentive Stock Options shall be taken into
account in the order in which they
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<PAGE> 25
were granted, and the Fair Market Value of the Shares shall be determined as of
the time the Option with respect to such Shares is granted.
(c) No Employment Rights. The Plan shall not confer upon any
Optionee any right with respect to continuation of employment or consulting
relationship with the Company, nor shall it interfere in any way with his or her
right or the Company's right to terminate his or her employment or consulting
relationship at any time, with or without cause.
6. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the shareholders of the
Company as described in Section 20 of the Plan. It shall continue in effect for
a term of ten (10) years unless sooner terminated under Section 16 of the Plan.
7. Term of Option. The term of each Option shall be the term stated in
the Option Agreement; provided, however, that in the case of an Incentive Stock
Option, the term shall be no more than ten (10) years from the date of grant
thereof or such shorter term as may be provided in the Option Agreement, and
provided further that, in the case of an Option granted to an Optionee who, at
the time the Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the term of the Option shall be five (5) years from the date of
grant thereof or such shorter term as may be provided in the Option Agreement.
8. Limitation on Grants to Employees. Subject to adjustment as provided
in this Plan, the maximum number of Shares which may be subject to Options
granted to any one Employee under this Plan for any fiscal year of the Company
shall be 400,000.
9. Option Exercise Price and Consideration.
(a) The per Share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time
of the grant of such Incentive Stock Option, owns stock representing more than
ten percent (10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the per Share exercise price shall be no less than
110% of the Fair Market Value per Share on the date of grant;
(B) granted to any other Employee, the per
Share exercise price shall be no less than 100% of the Fair Market Value per
Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option
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<PAGE> 26
(A) granted to a person who, at the time of
the grant of such Option, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of the grant;
(B) granted to a person who, at the time of
the grant of such Option, is a Named Executive of the Company, the per share
Exercise Price shall be no less than 100% of the Fair Market Value on the date
of grant;
(C) granted to any person other than a Named
Executive, the per Share exercise price shall be no less than 85% of the Fair
Market Value per Share on the date of grant (and no less than 90% prior to the
termination of the Company's status as an S Corporation).
(iii) In the case of an Option granted on or after the
effective date of registration of any class of equity security of the Company
pursuant to Section 12 of the Exchange Act and prior to six months after the
termination of such registration, the per Share exercise price shall be no less
than 100% of the Fair Market Value per Share on the date of grant.
(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash, (2)
check, (3) promissory note, (4) other Shares that (x) in the case of Shares
acquired upon exercise of an Option either have been owned by the Optionee for
more than six months on the date of surrender or were not acquired, directly or
indirectly, from the Company, and (y) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised, (5) authorization from the Company to retain from the
total number of Shares as to which the Option is exercised that number of Shares
having a Fair Market Value on the date of exercise equal to the exercise price
for the total number of Shares as to which the Option is exercised, (6) delivery
of a properly executed exercise notice together with irrevocable instructions to
a broker to deliver promptly to the Company the amount of sale or loan proceeds
required to pay the exercise price, (7) delivery of an irrevocable subscription
agreement for the Shares that irrevocably obligates the option holder to take
and pay for the Shares not more than twelve months after the date of delivery of
the subscription agreement, (8) any combination of the foregoing methods of
payment, or (9) such other consideration and method of payment for the issuance
of Shares to the extent permitted under Applicable Laws. In making its
determination as to the type of consideration to accept, the Administrator shall
consider if acceptance of such consideration may be reasonably expected to
benefit the Company.
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the
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<PAGE> 27
Administrator, including performance criteria with respect to the Company and/or
the Optionee, and as shall be permissible under the terms of the Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 9(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 14 of the Plan.
Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Conditions upon Exercise. Notwithstanding Section 10(a)
above, if the Company is an S Corporation at the time when an Optionee intends
to exercise an Option:
(i) the Option will not be exercisable if the purchase of
the Option Shares would cause the 35 shareholder limit of Section 1361 of the
Code to be exceeded; and
(ii) if the exercise is not prohibited by paragraph (i)
above, the Optionee shall be required, as a condition to such exercise, to sign
the Buy - Sell Agreement dated October 31, 1987, as amended, among the
shareholders of the Company.
(c) Termination of Status as an Employee or Consultant. In the
event of termination of an Optionee's Continuous Status as an Employee or
Consultant, such Optionee may, but only within thirty (30) days (or such other
period of time, not exceeding three (3) months in the case of an Incentive Stock
Option or six (6) months in the case of a Nonstatutory Stock Option, as is
determined by the Administrator, with such determination in the case of an
Incentive Stock Option being made at the time of grant of the Option) after the
date of such termination (but in no event later than the date of expiration of
the term of such Option as set forth in the Option Agreement), exercise his or
her Option to the extent that he or she was entitled to exercise it at the date
of such termination. To the extent that the Optionee was not entitled to
exercise the Option at the date of such termination, or if the optionee does not
exercise such Option within the time specified herein, the Option shall
terminate.
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<PAGE> 28
(d) Disability of Optionee. Notwithstanding Section 10(c) above,
in the event of termination of an Optionee's Continuous Status as an Employee or
Consultant as a result of his or her total and permanent disability (as defined
in Section 22(e)(3) of the Code), he or she may, but only within six (6) months
(or such other period of time not exceeding twelve (12) months as is determined
by the Administrator, with such determination in the case of an Incentive Stock
Option being made at the time of grant of the Option) from the date of such
termination (but in no event later than the date of expiration of the term of
such Option as set forth in the Option Agreement), exercise his or her Option to
the extent he or she was entitled to exercise it at the date of such
termination. To the extent that he or she was not entitled to exercise the
Option at the date of termination, or if he does not exercise such Option within
the time specified herein, the Option shall terminate.
(e) Death of Optionee. In the event of the death of an Optionee:
(i) during the term of the Option who is at the time of
his death an Employee or Consultant of the Company and who shall have been in
Continuous Status as an Employee or Consultant since the date of grant of the
Option, the Option may be exercised, at any time within six (6) months (or such
other period of time, not exceeding six (6) months, as is determined by the
Administrator, with such determination in the case of an Incentive Stock Option
being made at the time of grant of the Option) following the date of death (but
in no event later than the date of expiration of the term of such Option as set
forth in the Option Agreement), by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance but only to
the extent of the right to exercise that would have accrued had the Optionee
continued living and remained in Continuous Status as an Employee or Consultant
three (3) months (or such other period of time as is determined by the
Administrator as provided above) after the date of death, subject to the
limitation set forth in Section 5(b); or
(ii) within thirty (30) days (or such other period of time
not exceeding three (3) months as is determined by the Administrator, with such
determination in the case of an Incentive Stock Option being made at the time of
grant of the Option) after the termination of Continuous Status as an Employee
or Consultant, the Option may be exercised, at any time within six (6) months
following the date of death (but in no event later than the date of expiration
of the term of such Option as set forth in the Option Agreement), by the
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent of the right to exercise that
had accrued at the date of termination.
(f) Rule 16b-3. Options granted to persons subject to Section
16(b) of the Exchange Act must comply with Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
11. Withholding Taxes. As a condition to the exercise of Options granted
hereunder, the Optionee shall make such arrangements as the Administrator may
require for the satisfaction of any federal, state, local or foreign withholding
tax obligations that may arise in connection
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<PAGE> 29
with the exercise, receipt or vesting of such Option. The Company shall not be
required to issue any Shares under the Plan until such obligations are
satisfied.
12. Stock Withholding to Satisfy Withholding Tax Obligations. At the
discretion of the Administrator, Optionees may satisfy withholding obligations
as provided in this paragraph. When an Optionee incurs tax liability in
connection with an Option which tax liability is subject to tax withholding
under applicable tax laws, and the Optionee is obligated to pay the Company an
amount required to be withheld under applicable tax laws, the Optionee may
satisfy the withholding tax obligation by one or some combination of the
following methods: (a) by cash payment, or (b) out of Optionee's current
compensation, (c) if permitted by the Administrator, in its discretion, by
surrendering to the Company Shares that (i) in the case of Shares previously
acquired from the Company, have been owned by the Optionee for more than six
months on the date of surrender, and (ii) have a fair market value on the date
of surrender equal to or less than Optionee's marginal tax rate times the
ordinary income recognized, or (d) by electing to have the Company withhold from
the Shares to be issued upon exercise of the Option that number of Shares having
a fair market value equal to the amount required to be withheld. For this
purpose, the fair market value of the Shares to be withheld shall be determined
on the date that the amount of tax to be withheld is to be determined (the "Tax
Date").
Any surrender by an Officer or Director of previously owned
Shares to satisfy tax withholding obligations arising upon exercise of this
Option must comply with the applicable provisions of Rule 16b-3 and shall be
subject to such additional conditions or restrictions as may be required
thereunder to qualify for the maximum exemption from Section 16 of the Exchange
Act with respect to Plan transactions.
All elections by an Optionee to have Shares withheld to satisfy
tax withholding obligations shall be made in writing in a form acceptable to the
Administrator and shall be subject to the following restrictions:
(a) the election must be made on or prior to the applicable Tax
Date;
(b) once made, the election shall be irrevocable as to the
particular Shares of the Option as to which the election is made;
(c) all elections shall be subject to the consent or disapproval
of the Administrator;
(d) if the Optionee is an Officer or Director, the election must
comply with the applicable provisions of Rule 16b-3 and shall be subject to such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
In the event the election to have Shares withheld is made by an
Optionee and the Tax Date is deferred under Section 83 of the Code because no
election is filed under Section 83(b) of the Code, the Optionee shall receive
the full number of Shares with respect to
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<PAGE> 30
which the Option is exercised but such Optionee shall be unconditionally
obligated to tender back to the Company the proper number of Shares on the Tax
Date.
13. Non-Transferability of Options. No Option may be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution. The designation of a beneficiary
by an Optionee will not constitute a transfer. An Option may be exercised,
during the lifetime of the Optionee, only by the Optionee or a transferee
permitted by this Section 13.
14. Adjustments Upon Changes in Capitalization or Merger.
(a) Adjustments. Subject to any required action by the
shareholders of the Company, the number of Shares covered by each outstanding
Option, the number of Shares that have been authorized for issuance under the
Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, the maximum
number of Shares for which Options may be granted to any Employee under Section
8 of the Plan, and the price per Share covered by each such outstanding Option,
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock of the Company resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification of the
Common Stock, or any other increase or decrease in the number of issued shares
of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the Administrator, whose determination in that
respect shall be final, binding and conclusive. Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option.
(b) Corporate Transactions. In the event of the proposed
dissolution or liquidation of the Company, the Option will terminate immediately
prior to the consummation of such proposed action, unless otherwise provided by
the Administrator. The Administrator may, in the exercise of its sole discretion
in such instances, declare that any Option shall terminate as of a date fixed by
the Administrator and give each Optionee the right to exercise his or her Option
as to all or any part of the Optioned Stock, including Shares as to which the
Option would not otherwise be exercisable. In the event of a proposed sale of
all or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, the Option shall be assumed or an
equivalent option shall be substituted by such successor corporation or a parent
or subsidiary of such successor corporation, unless the Administrator
determines, in the exercise of its sole discretion and in lieu of such
assumption or substitution, that the Optionee shall have the right to exercise
the Option as to some or all of the Optioned Stock, including Shares as to which
the Option would not otherwise be exercisable. If the Administrator makes an
Option exercisable in lieu of assumption or substitution in the event of a
merger or sale of assets, the Administrator shall notify the Optionee that the
Option shall be
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<PAGE> 31
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option will terminate upon the expiration of such period.
15. Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date on which the Administrator makes the determination
granting such Option or such other date as is determined by the Administrator.
Notice of the determination shall be given to each Employee or Consultant to
whom an Option is so granted within a reasonable time after the date of such
grant.
16. Amendment and Termination of the Plan.
(a) Authority to Amend or Terminate. The Board may amend or
terminate the Plan from time to time in such respects as the Board may deem
advisable; provided that, the following revisions or amendments shall require
approval of the shareholders of the Company in the manner described in Section
20 of the Plan:
(i) any increase in the number of Shares subject to
the Plan, other than in connection with an adjustment under
Section 14 of the Plan;
(ii) any change in the designation of the class of
persons eligible to be granted Options;
(iii) any change in the limitation on grants to
employees as described in Section 8 of the Plan or other changes
which would require shareholder approval to qualify options
granted hereunder as performance-based compensation under Section
162(m) of the Code; or
(iv) if the Company has a class of equity
securities registered under Section 12 of the Exchange Act at the
time of such revision or amendment, any material increase in the
benefits accruing to participants under the Plan.
(b) Shareholder Approval. If any amendment requiring shareholder
approval under Section 16(a) of the Plan is made subsequent to the first
registration of any class of equity securities by the Company under Section 12
of the Exchange Act, such shareholder approval shall be solicited as described
in Section 20 of the Plan.
(c) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.
17. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of Applicable Laws, including,
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<PAGE> 32
without limitation, the Securities Act of 1933, as amended, the Exchange Act,
the rules and regulations promulgated thereunder, and the requirements of any
stock exchange upon which the Shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance. As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
18. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan. The inability of the Company
to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
19. Option Agreement. Options shall be evidenced by written option
agreements in such forms as the Administrator shall approve.
20. Shareholder Approval.
(a) Continuance of the Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months before or after the date
the Plan is adopted. Such shareholder approval shall be obtained in the manner
and to the degree required under applicable federal and state law.
(b) In the event that the Company registers any class of equity
securities pursuant to Section 12 of the Exchange Act, any required approval of
the shareholders of the Company obtained after such registration shall be
solicited substantially in accordance with Section 14(a) of the Exchange Act and
the rules and regulations promulgated thereunder.
(c) If any required approval by the shareholders of the Plan
itself or of any amendment thereto is solicited at any time otherwise than in
the manner described in Section 20(b) hereof, then the Company shall, at or
prior to the first annual meeting of shareholders held subsequent to the later
of (1) the first registration of any class of equity securities of the Company
under Section 12 of the Exchange Act or (2) the granting of an Option hereunder
to an officer or director after such registration, do the following:
(i) furnish in writing to the holders entitled to vote for
the Plan substantially the same information that would be required (if proxies
to be voted with respect to approval or disapproval of the Plan or amendment
were then being solicited) by the rules and regulations in effect under Section
14(a) of the Exchange Act at the time such information is furnished; and
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<PAGE> 33
(ii) file with, or mail for filing to, the Securities and
Exchange Commission four copies of the written information referred to in
subsection (i) hereof not later than the date on which such information is first
sent or given to shareholders.
21. Information to Optionees. The Company shall provide to each
Optionee, during the period for which such Optionee has one or more Options
outstanding, copies of all annual reports and other information which are
provided to all shareholders of the Company. The Company shall not be required
to provide such information if the issuance of Options under the Plan is limited
to key employees whose duties in connection with the Company assure their access
to equivalent information.
-14-
<PAGE> 34
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF BUSINESS RESOURCE GROUP
1998 ANNUAL MEETING OF SHAREHOLDERS
The undersigned shareholder of Business Resource Group, a California
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement, each dated January 30, 1998 and hereby
appoints John Peth and Craig Cytron or either of them, proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in the
name of the undersigned to represent the undersigned at the 1998 Annual Meeting
of Shareholders of Business Resource Group to be held on March 2, 1998 at 1:30
p.m., local time, at the Double Tree Hotel, 2050 Gateway Place, San Jose,
California 95110 and at any postponement or adjournment thereof, and to vote all
shares of Common Stock which the undersigned would be entitled to vote if then
and there personally present, on the matters set forth below:
SEE REVERSE SIDE
<PAGE> 35
<TABLE>
<S> <C> <C> <C>
Please mark your
[X] votes as in this
example
FOR all nominees WITHHOLD authority to
listed to the right vote for all nominees
(except as indicated) listed to the right
1. Election of / / / / Nominees: Jack Bradley
Directors Brian D. McNay
John W. Peth
Harry S. Robbins
Jeffrey Tuttle
Charles J. Winter
If you wish to withhold authority to vote for any individual
nominee, strike a line through that nominee's name in the list
to the right.
FOR AGAINST ABSTAIN
2. Proposal to approve an amendment to the Company's 1995 / / / / / /
Stock Option Plan to increase the number of shares of
Common Stock reserved for issuance thereunder by
500,000 shares to an aggregate of 2,200,000 shares.
3. Proposal to approve the appointment of Deloitte & Touch / / / / / /
LLP as the independent auditors of the Company for the
fiscal year ending October 31, 1998.
</TABLE>
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED AS FOLLOWS: (1) FOR THE ELECTION OF DIRECTORS; (2) FOR APPROVAL OF
THE AMENDMENT TO THE COMPANY'S 1995 STOCK OPTION PLAN; (3) FOR RATIFICATION OF
THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS, AND AS SAID
PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING.
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON. IF THE STOCK IS REGISTERED IN
THE NAMES OF TWO OR MORE PERSONS, EACH SHOULD SIGN. EXECUTORS, ADMINISTRATORS,
TRUSTEES, GUARDIANS AND ATTORNEYS-IN-FACT SHOULD ADD THEIR TITLES. IF SIGNER IS
A CORPORATION, PLEASE GIVE FULL CORPORATE NAME AND HAVE A DULY AUTHORIZED
OFFICER SIGN, STATING TITLE. IF SIGNER IS A PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED PERSON.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE
WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
SIGNATURE(S) ______________________________________ DATE ______________________
SIGNATURE(S) _____________________________________ DATE ______________________
NOTE: (This Proxy should be marked, dated, signed by the shareholder(s) exactly
as his or her name appears herein, and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate. If shares
are held by joint tenants or as community property, both should sign.)
