-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OhAIyPykigcJPtEj8dnBIK5CtlxeKZhv4vjA9N0+vqpjDerGv3TpscLaK61iMOME fMkayUOlk2c/rBHwEs5JqQ== 0001141218-03-000101.txt : 20030624 0001141218-03-000101.hdr.sgml : 20030624 20030624170143 ACCESSION NUMBER: 0001141218-03-000101 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20030624 EFFECTIVENESS DATE: 20030624 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL TECHNICAL SYSTEMS INC /CA/ CENTRAL INDEX KEY: 0000110536 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-TESTING LABORATORIES [8734] IRS NUMBER: 954134955 STATE OF INCORPORATION: CA FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-106426 FILM NUMBER: 03755474 BUSINESS ADDRESS: STREET 1: 24007 VENTURA BLVD CITY: CALABASAS STATE: CA ZIP: 91302 BUSINESS PHONE: 8185910776 MAIL ADDRESS: STREET 1: 24007 VENTURA BLVD CITY: CALABASAS STATE: CA ZIP: 91302 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL TECHNICAL SYSTEMS /DE/ DATE OF NAME CHANGE: 19880218 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL TECHNICAL SERVICES INC DATE OF NAME CHANGE: 19810712 FORMER COMPANY: FORMER CONFORMED NAME: LINCOLN FUND INC DATE OF NAME CHANGE: 19760315 S-8 1 nts02stockplans8.txt REGISTRATION STATEMENT ON FORM S-8 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 24, 2003 Registration No. 333-___________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------- Form S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 NATIONAL TECHNICAL SYSTEMS, INC. ---------------------------------------------------- (Exact name of registrant as specified in its charter) California 95-4134955 ------------------------------ ------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 24007 Ventura Boulevard, Suite 200 Calabasas, California 91302 -------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) NATIONAL TECHNICAL SYSTEMS, INC. 2002 STOCK OPTION PLAN ------------------------------------------------------- (Full title of the plan) Lloyd Blonder Senior Vice President and Chief Financial Officer National Technical Systems, Inc. 24007 Ventura Boulevard, Suite 200 Calabasas, California 91302 ------------------------------------------------- (Name and address of agent for service) (818) 591-0776 ----------------------------------------------------------- (Telephone number, including area code, of agent for service) Copy to: Charles S. Kaufman, Esq. Sheppard, Mullin, Richter & Hampton LLP 333 South Hope Street, 48th Floor Los Angeles, California 90071 (213) 620-1780 CALCULATION OF REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------- Title of each class of Proposed maximum Proposed maximum securities to be Amount to be offering price per aggregate offering Amount of registered (1) registered (1) share (2) price registration fee - ----------------------------------------------------------------------------------------------------------------- Common Stock 1,000,000 shares $4.485 $4,485,000 $362.84 - -----------------------------------------------------------------------------------------------------------------
(1) In addition, this Registration Statement also covers such indeterminate number of shares of Common Stock as may be issued pursuant to the employee benefit plan described herein as a result of the adjustment provisions thereof. (2) Pursuant to Rule 457(h), the maximum offering price, per share and in the aggregate, and the registration fee were calculated based upon the average of the high and low prices of the Common Stock on June 23, 2003, as reported on the Nasdaq Stock Market. PART I INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS The document(s) containing the information specified in Part I of Form S-8 will be sent or given to participants in the 2002 Stock Option Plan of National Technical Systems, Inc., a California corporation (the "Company"), as specified in Rule 428(b)(1) promulgated by the Securities and Exchange Commission (the "Commission") pursuant to the Securities Act of 1933, as amended (the "Securities Act"). Such document(s) need not be filed with the Commission either as part of this Registration Statement or as prospectuses or prospectus supplements pursuant to Securities Act Rule 424 in accordance with the Note to Part I of Form S-8. These documents and the documents incorporated by reference into this Registration Statement pursuant to Item 3 of Part II Form S-8, taken together, constitute a prospectus that meets the requirements of Section 10(a) of the Securities Act. -1- PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT National Technical Systems, Inc. (the "Company") hereby files this Registration Statement on Form S-8 with the Securities and Exchange Commission (the "Commission") to register 1,000,000 shares (the "Shares") of the Company's Common Stock for issuance pursuant to the Company's 2002 Stock Option Plan (the "Plan), and such indeterminate number of shares as may become available under the Plan as a result of the adjustment provisions thereof. Item 3. Incorporation Of Documents by Reference. The following documents previously filed by the Company with the Commission are incorporated herein by reference: (a) The Company's Annual Report on Form 10-K for its fiscal year ended January 31, 2003. (b) The description of the Company's Common Stock contained in the Company's Registration Statement on Form 8-A/A, File No. 000-16438, as filed on June 19, 2003, including any amendment or report filed for the purpose of updating such description. All documents subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference into this Registration Statement and to be a part hereof from the date of filing of such documents. Any information which is furnished in any document incorporated or deemed to be incorporated by reference herein and which is not deemed "filed" under the Securities Act or the Exchange Act is not incorporated by reference herein. Any statement contained herein or in a document, all or a portion of which is incorporated or deemed to be incorporated by reference herein, shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or amended, to constitute a part of this Registration Statement. Item 4. Description of Securities. Not applicable. II-1 Item 5. Interests of Named Experts and Counsel. Not applicable. Item 6. Indemnification of Directors and Officers. Section 317 of the California General Corporations Law (the "CGCL") authorizes a court to award, or a corporation's board of directors to grant, indemnity to directors and officers who are parties or are threatened to be made parties to any proceeding (with certain exceptions) by reason of the fact that the person is or was an agent of the corporation, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with the proceeding if that person acted in good faith and in a manner the person reasonably believed to be in the best interests of the corporation, and in the case of a criminal proceeding, had no reasonable cause to believe the conduct of the person was unlawful. Section 204 of the CGCL provides that a corporation's articles of incorporation may not limit the liability of directors (i) for acts or omissions that involve intentional misconduct or a knowing and culpable violation of law, (ii) for acts or omissions that a director believes to be contrary to the best interests of the corporation or its shareholders or that involve the absence of good faith on the part of the director, (iii) for any transaction from which a director derived an improper personal benefit, (iv) for acts or omissions that show a reckless disregard for the director's duty to the corporation or its shareholders in circumstances in which the director was aware, or should have been aware, in the ordinary course of performing a director's duties, of a risk of a serious injury to the corporation or its shareholders, (v) for acts or omissions that constitute an unexcused pattern of inattention that amounts to an abdication of the director's duty to the corporation or its shareholders, (vi) under Section 310 of the CGCL (concerning transactions between corporations and directors or corporations having interrelated directors) or (vii) under Section 316 of the CGCL (concerning directors' liability for distributions, loans, and guarantees). Section 204 further provides that a corporation's articles of incorporation may not limit the liability of directors for any act or omission occurring prior to the date when the provision became effective or any act or omission as an officer, notwithstanding that the officer is also a director or that his or her actions, if negligent or improper, have been ratified by the directors. Further, Section 317 has no effect on claims arising under federal or state securities laws and does not affect the availability of injunctions and other equitable remedies available to a corporation's shareholders for any violation of a director's fiduciary duty to the corporation or its shareholders. In accordance with Section 317, the Company's Articles of Incorporation (the "Articles") eliminate the liability of a director to the Company or its shareholders for monetary damages to the fullest extent permissible under California law. The Articles further authorize the Company to provide indemnification to its agents (including officers and directors), to the fullest extent permissible under California law. Pursuant to the authority provided in the Articles and the Company's Bylaws, the Company has entered into indemnification agreements with each of its executive officers and directors, indemnifying them against certain potential II-2 liabilities that may arise as a result of their service to the Company, and providing for certain other protection. The Company maintains an insurance policy pursuant to which the directors and officers of the Company are insured, within the limits and subject to the limitations of the policy, against certain expenses in connection with the defense of certain claims, actions, suits or proceedings, and certain liabilities which might be imposed as a result of such claims, actions, suits or proceedings, which may be brought against them by reason of their being or having been such directors or officers. The foregoing descriptions of the California statutes, the Articles and the Bylaws and agreements of the Company are not intended to be exhaustive and are qualified in their entirety by reference to the complete text of each. Item 7. Exemption from Registration Claimed. Not applicable. Item 8. Exhibits. Exhibit Number Description of Exhibit - ------- ---------------------- 3.1 Articles of Incorporation of the Company (incorporated by reference from the Company's Annual Report on Form 10-K, File No. 000-16438, for the year ended January 31, 2003, as filed on April 28, 2003) 3.3 Bylaws of the Company (incorporated by reference from the Company's Annual Report on Form 10-K, File No. 000-16438, for the year ended January 31, 2003, as filed on April 28, 2003) 4.1 National Technical Systems, Inc. 2002 Stock Option Plan.* 5.1 Opinion of Sheppard, Mullin, Richter & Hampton LLP* 23.1 Consent of Sheppard, Mullin, Richter & Hampton LLP (see Exhibit 5.1)* 23.2 Consent of Independent Auditors, Ernst & Young LLP* 24.1 Power of Attorney (see Page II-6)* - ---------------------- * Filed Herewith II-3 Item 9. Undertakings. (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; Provided, however, That paragraphs 1(i) and (1)(ii) above do not apply if this registration statement is on Form S-3 or Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this registration statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing II-4 of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-5 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Calabasas, State of California, on June 24, 2003. NATIONAL TECHNICAL SYSTEMS, INC. By: /s/ Jack Lin ____________________________________ Jack Lin Principal Executive Officer and Chairman of the Board POWER OF ATTORNEY FILING OF REGISTRATION STATEMENT ON FORM S-8 KNOW ALL BY THESE PRESENTS, that each of the undersigned directors of NATIONAL TECHNICAL SYSTEMS, INC., a California corporation (the "Company"), hereby nominate and appoint Lloyd Blonder and Raffy Lorentzian, and each of them acting or signing singly, as his or her agents and attorneys-in-fact (the "Agents"), in his or her respective name and in the capacity or capacities indicated below to execute and/or file, with all exhibits thereto, and other documents in connection therewith, (1) a registration statement on Form S-8 under the Securities Act of 1933, as amended, (the "Act"), in connection with the registration under the Act of shares of the Company's common stock issuable under the National Technical Systems, Inc. 2002 Stock Option Plan (including the schedules and all exhibits and other documents filed therewith or constituting a part thereof); and (2) any one or more amendments to any part of the foregoing registration statement, including any post-effective amendments, or appendices or supplements that may be required to be filed under the Act to keep such registration statement effective or to terminate its effectiveness. Further, the undersigned do hereby authorize and direct such agents and attorneys-in-fact to take any and all actions and execute and file any and all documents with the Securities and Exchange Commission (the "SEC"), or state regulatory agencies, necessary, proper or convenient in their opinion to comply with the Act and the rules and regulations or orders of the SEC, or state regulatory agencies, adopted or issued pursuant thereto, including the making of any requests for acceleration of the effective date of said registration statement, to the end that the registration statement of the Company shall become effective under the Act and any other applicable law. Finally, each of the undersigned does hereby ratify, confirm and approve each and every act and document which the said appointment agents and attorneys-in-fact may take, execute or file pursuant thereto with the same force and effect as though such action had been taken or such documents had been executed or filed by the undersigned respectively. II-6 This Power of Attorney shall remain in full force and effect until revoked or superseded by written notice filed with the SEC. Pursuant to the requirements of the Securities Act, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- /s/ Jack Lin _______________________________ Principal Executive Officer and June 24, 2003 Jack Lin Chairman of the Board /s/ Aaron Cohen _______________________________ Senior Vice President and June 24, 2003 Aaron Cohen Vice Chairman of the Board /s/ William McGinnis _______________________________ President, Chief Operating June 24, 2003 William McGinnis Officer and Director /s/ Marvin Hoffman _______________________________ Senior Vice President, Chief June 24, 2003 Marvin Hoffman Information Officer and Vice Chairman of the Board /s/ Lloyd Blonder _______________________________ Senior Vice President and June 24, 2003 Lloyd Blonder Treasurer (Principal Financial Officer) /s/ Raffy Lorentzian _______________________________ Vice President and Chief June 24, 2003 Raffy Lorentzian Accounting Officer /s/ Richard D. Short _______________________________ Senior Vice President and June 24, 2003 Richard D. Short Director /s/ Sheldon M. Fechtor _______________________________ Director June 24, 2003 Sheldon M. Fechtor /s/ Norman S. Wolfe _______________________________ Director June 24, 2003 Norman S. Wolfe /s/ Robert I Lin _______________________________ Director June 24, 2003 Robert I Lin /s/ William L. Traw _______________________________ Senior Vice President and June 24, 2003 William L. Traw Director
II-7 /s/ Ralph F. Clements _______________________________ Director June 24, 2003 Ralph F. Clements /s/ Donald J. Tringali _______________________________ Director June 24, 2003 Donald J. Tringali /s/ George F. Kabouchy _______________________________ Director June 24, 2003 George F. Kabouchy
II-8 EXHIBIT INDEX Exhibit Number Description of Exhibit - ------- ---------------------- 3.1 Articles of Incorporation of the Company (incorporated by reference from the Company's Annual Report on Form 10-K, File No. 000-16438, for the year ended January 31, 2003, as filed on April 28, 2003) 3.3 Bylaws of the Company (incorporated by reference from the Company's Annual Report on Form 10-K, File No. 000-16438, for the year ended January 31, 2003, as filed on April 28, 2003) 4.1 National Technical Systems, Inc. 2002 Stock Option Plan.* 5.1 Opinion of Sheppard, Mullin, Richter & Hampton LLP* 23.1 Consent of Sheppard, Mullin, Richter & Hampton LLP (see Exhibit 5.1)* 23.2 Consent of Independent Auditors, Ernst & Young LLP* 24.1 Power of Attorney (see Page II-6)* - ---------------------- * Filed Herewith II-9 EX-4 3 nts02stockplans8ex41.txt 2002 STOCK OPTION PLAN Exhibit 4.1 ----------- NATIONAL TECHNICAL SYSTEMS, INC. 2002 STOCK OPTION PLAN ---------------------- 1. Purpose of the Plan. The purpose of this Plan is to offer certain Service Providers the opportunity to acquire a proprietary interest in the Company by the grant of options to purchase Common Stock. Through the Plan, the Company and its Affiliates seek to attract, motivate, and retain highly competent persons. The success of the Company and its Affiliates are dependent upon the efforts of these persons. An Option granted under the Plan may be a Non-Statutory Stock Option or an Incentive Stock Option, as determined by the Administrator. 2. Definitions. "Administrator" shall mean the Board or any one of the Committees. "Affiliate" shall mean any parent or subsidiary (as defined in Sections 424(e) and (f) of the Code) of the Company. "APB 25" shall mean Opinion 25 of the Accounting Principles Board, as amended, and any successor thereof. "Board" shall mean the Board of Directors of the Company. "Cause" shall have the meaning given to it under California law, as interpreted by the Administrator. "Change in Control" shall mean: (i) the acquisition by any entity, person, or group (other than the Company, any one of its Affiliates, or an employee benefit plan maintained by the Company or any one of its Affiliates) of beneficial ownership of 50% or more of the outstanding voting stock (other than preferred stock) of the Company; (ii) the occurrence of a transaction requiring shareholder approval for the acquisition of the Company by the purchase of stock or assets, or by merger, or otherwise; or (iii) the election during any period of 24 months or less of 50% or more of the members of the Board without the approval of the nomination of such members by a majority of the Board consisting of members who were serving at the beginning of such period. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Committee" shall mean a committee appointed by the Board in accordance with Section 3 below. "Common Stock" shall mean the common stock of the Company. "Company" shall mean National Technical Systems, Inc. -1- "Consultant" shall mean any natural person who performs bona fide services for the Company or an Affiliate as a consultant or advisor, excluding Employees and Non-Employee Directors. "Date of Exercise" shall mean the date on which the Company shall have received written notice of the Option exercise accompanied by the Exercise Price. "Date of Grant" shall mean the effective date on which the Administrator grants an Option to an Optionee. "Disability" shall mean total and permanent disability as defined in Section 22(e)(3) of the Code. "Employee" shall mean any individual who is a common-law employee of the Company or an Affiliate. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Exercise Price" shall mean the exercise price of a share of Optioned Stock. "Fair Market Value" shall mean, 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 Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or (ii) In the absence of an established market for the Common Stock, its Fair Market Value shall be determined, in good faith, by the Administrator. "FASB" shall mean the Financial Accounting Standards Board. "Incentive Stock Option" shall mean an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code. "Mature Shares" shall mean Shares that had been held by the Optionee for a meaningful period of time such as six months or such other period of time that is consistent with FASB's interpretation of APB 25. -2- "Non-Employee Director" shall mean a non-employee member of the Board. "Non-Statutory Stock Option" shall mean an Option not intended to qualify as an Incentive Stock Option. "Option" shall mean a stock option granted pursuant to the Plan. "Option Agreement" shall mean a written agreement that evidences an Option in such form as the Administrator shall approve from time to time. "Optioned Stock" shall mean the Common Stock subject to an Option. "Optionee" shall mean a person to whom an Option is granted pursuant to the Plan or, if applicable, such person who holds an outstanding Option. "Person" shall be construed broadly and shall include, without limitation, an individual, a partnership, an investment fund, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, and a governmental entity or any department, agency or political subdivision thereof. "Plan" shall mean the National Technical Systems, Inc. 2002 Stock Option Plan. "Rule 16b-3" shall mean Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3. "Securities Act" shall mean the Securities Act of 1933, as amended. "Service" shall mean the performance of services for the Company (or any Affiliate) by an Employee, Non-Employee Director, or Consultant, as determined by the Administrator in its sole discretion. Service shall not be considered interrupted in the case of: (i) a change of status (i.e., from Employee to Consultant, Non-Employee Director to Consultant, or any other combination); (ii) transfers between locations of the Company or between the Company and any Affiliate; or (iii) a leave of absence approved by the Company or an Affiliate. A leave of absence approved by the Company or an Affiliate shall include sick leave, military leave, or any other personal leave approved by an authorized representative of the Company or an Affiliate. "Service Provider" shall mean an Employee, Non-Employee Director, or Consultant. "Share" shall mean a share of Common Stock. -3- "Taxes" shall mean the federal, state, and local income and employment tax liabilities incurred by the Optionee in connection with his/her Options. "10% Shareholder" shall mean the owner of stock (as determined under Section 424(d) of the Code) possessing more than 10% of the total combined voting power of all classes of stock of the Company (or any Affiliate). "Termination Date" shall mean the date on which an Optionee's Service terminates, as determined by the Administrator in its sole discretion. 3. Administration of the Plan. (a) Administration by Board. The Plan shall be administered by the Board or a committee appointed by the Board. (b) Multiple Administrative Bodies. The Plan may be administered by different Committees with respect to different groups of Service Providers. (i) Section 162(m). To the extent that the Administrator determines that it is desirable to qualify Options as "performance-based compensation" within the meaning of Section 162(m) of the Code, the Plan shall be administered by a Committee of two or more "outside directors" within the meaning of Section 162(m) of the Code. (ii) Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder shall be structured to satisfy the requirements for exemption under Rule 16b-3. (iii) Other Administration. Other than as provided for above, the Plan shall be administered by (A) the Board or (B) a Committee, which Committee shall be constituted to satisfy applicable laws. (c) Powers of the Administrator. Subject to the provisions of the Plan and in the case of specific duties delegated by the Administrator, and subject to the approval of relevant authorities, including the approval, if required, of any stock exchange or national market system upon which the Common Stock is then listed, the Administrator shall have the authority, in its sole discretion: (i) to determine the Fair Market Value of the Common Stock; (ii) to select the Service Providers to whom Options may, from time to time, be granted under the Plan; (iii) to determine whether and to what extent Options are granted under the Plan; -4- (iv) to determine the number of Shares that are covered by an Option; (v) to approve the terms of the Option Agreements; (vi) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Option. Such terms and conditions may include, but are not limited to, the Exercise Price, the status of an Option (Non-Statutory Stock Option or Incentive Stock Option), the time or times when the Option may be exercised, any vesting acceleration, and any restriction or limitation regarding the Option or the Shares relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine; (vii) to determine the method of payment of the Exercise Price; (viii) to reduce the Exercise Price of any Option to the then current Fair Market Value if the Fair Market Value of the Optioned Stock has declined since the Date of Grant of such Option; (ix) to delegate to others responsibilities to assist in administering the Plan; and (x) to construe and interpret the terms of the Plan, Option Agreements, and any other documents related to the Options. (d) 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. The Administrator's decisions and determinations under the Plan need not be uniform and may be made selectively among Optionees whether or not such Optionees are similarly situated. (e) Liability. No member of the Committee shall be personally liable by reason of any contract or other instrument executed by such member or on his/her behalf in his/her capacity as a member of the Committee for any mistake of judgment made in good faith, and the Company shall indemnify and hold harmless each member of the Committee and each other employee, officer or director of the Company to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim) arising out of any act or omission to act in connection with the Plan unless arising out of such person's own fraud or bad faith. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any power the Company may have to indemnify them or hold them harmless. -5- 4. Stock Subject To The Plan. (a) Basic Limitation. The total number of Shares subject to issuance under the Plan may not exceed 1,000,000 subject to adjustments as provided for in the Plan. (b) Source of Shares. Shares to be delivered under the Plan may consist, in whole or in part, of authorized but unissued Shares, or Shares purchased by the Company on the open market. (c) Additional Shares. In the event that any outstanding Option expires or is canceled or otherwise terminated, the Shares allocable to the unexercised portion of such Option shall again be available for the purposes of the Plan, except that the aggregate number of Shares which may be issued upon the exercise of Incentive Stock Options shall in no event exceed 1,000,000 Shares, subject to adjustment, pursuant to Section 8 below. 5. Eligibility. (a) Eligibility for Options. The persons eligible to participate in the Plan shall be limited to Employees, Non-Employee Directors, and Consultants who have the potential to impact the long-term success of the Company and/or its Affiliates and who have been selected by the Administrator to participate in the Plan. (b) Section 162(m) Limitation. No Employee may be granted (in any calendar year) Options to purchase more than 100,000 Shares, subject to adjustment, pursuant to Section 8 below. (c) Consultants. A Consultant shall not be eligible for the grant of an Option if, at the time of grant, a Form S-8 Registration Statement under the Securities Act ("Form S-8") is not available to register either the offer or the sale of the Company's securities to such Consultant because of the nature of the services that the Consultant is providing to the Company, or because the Consultant is not a natural person, or as otherwise provided by the rules governing the use of Form S-8, unless the Company determines both (i) that such grant (A) shall be registered in another manner under the Securities Act (e.g., on a Form S-3 Registration Statement) or (B) does not require registration under the Securities Act in order to comply with the requirements of the Securities Act, if applicable, and (ii) that such grant complies with the securities laws of all other relevant jurisdictions. 6. Option Terms. Each Option shall be evidenced by an Option Agreement, in the form approved by the Administrator and may contain such provisions as the Administrator deems appropriate; provided, however, that each Option Agreement -6- shall comply with the terms specified below. Each Option Agreement evidencing an Incentive Stock Option shall, in addition, be subject to Section 7 below. (a) Exercise Price. (i) The Exercise Price of an Option shall be determined by the Administrator but shall not be less than 100% of the Fair Market Value of a Share on the Date of Grant of such Option. (ii) 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 may consist of (A) cash, (B) check, (C) Mature Shares, or (D) any other form of legal consideration that is acceptable to the Administrator. (b) Vesting. Any Option granted hereunder shall be exercisable and shall vest at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. (c) Term of Options. No Option shall have a term in excess of 10 years measured from the Date of Grant of such Option. (d) Procedure for Exercise. 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 Agreement by the person entitled to exercise the Option and full payment of the applicable Exercise Price for the Share being exercised has been received by the Administrator. Full payment may, as authorized by the Administrator, consist of any consideration and method of payment allowable under Subsection (a)(ii) above. (e) Effect of Termination of Service. (i) Termination of Service. Upon termination of an Optionee's Service, other than due to death, Disability, or Cause, the Optionee may exercise his/her Option, but only on or prior to the date that is three months following the Optionee's Termination Date, and only to the extent that the Optionee was entitled to exercise such Option on the Termination Date (but in no event later than the expiration of the term of such Option, as set forth in the Notice of Stock Option Grant to the Option Agreement). If, on the Termination Date, the Optionee is not entitled to exercise the Optionee's entire Option, the Shares covered by the unexercisable portion of the Option shall revert to the Plan. If, after termination of Service, the Optionee does not exercise his/her Option within the time specified herein, the Option shall terminate, and the Optioned Stock shall revert to the Plan. (ii) Disability of Optionee. In the event of termination of an Optionee's Service due to his/her Disability, the Optionee may exercise his/her Option, but only on or prior to the date that is twelve months -7- following the Termination Date, and only to the extent that the Optionee was entitled to exercise such Option on the Termination Date (but in no event later than the expiration date of the term of his/her Option, as set forth in the Notice of Stock Option Grant to the Option Agreement). To the extent the Optionee is not entitled to exercise the Option on the Termination Date, or if the Optionee does not exercise the Option to the extent so entitled within the time specified herein, the Option shall terminate, and the Optioned Stock shall revert to the Plan. (iii) Death of Optionee. In the event that an Optionee should die while in Service, the Optionee's Option may be exercised by the Optionee's estate or by a person who has acquired the right to exercise the Option by bequest or inheritance, but only on or prior to the date that is twelve months following the date of death, and only to the extent that the Optionee was entitled to exercise the Option at the date of death (but in no event later than the expiration date of the term of his/her Option, as set forth in the Notice of Stock Option Grant to the Option Agreement). If, at the time of death, the Optionee was not entitled to exercise his/her entire Option, the Shares covered by the unexercisable portion of the Option shall immediately revert to the Plan. If after death, the Optionee's estate or a person who acquires the right to exercise the Option by bequest or inheritance does not exercise the Option within the time specified herein, the Option shall terminate, and the Optioned Stock shall revert to the Plan. (iv) Cause. In the event of termination of an Optionee's Service due to Cause, the Optionee's Options shall terminate on the Termination Date, unless otherwise determined by the Administrator. (v) The Administrator shall have complete discretion, exercisable either at the time an Option is granted or at any time while the Option remains outstanding, to: (A) extend the period of time for which the Option is to remain exercisable following the Optionee's cessation of Service from the limited exercise period otherwise in effect for that Option to such greater period of time as the Administrator shall deem appropriate, but in no event beyond the expiration of the Option term; and/or (B) permit the Option to be exercised, during the applicable post-Service exercise period, not only with respect to the number of vested Shares for which such Option is exercisable at the time of the Optionee's cessation of Service but also with respect to one or more additional installments in which the Optionee would have vested had the Optionee continued in Service. -8- (f) Shareholder Rights. 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 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 8 below. (g) Non-transferability of Options. Options may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent and distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee. 7. Incentive Stock Options. The terms specified below shall be applicable to all Incentive Stock Options, and these terms shall, as to such Incentive Stock Options, supercede any conflicting terms in Section 6 above. Options which are specifically designated as Non-Statutory Stock Options when issued under the Plan shall not be subject to the terms of this Section. (a) Eligibility. Incentive Stock Options may only be granted to Employees. (b) Exercise Price. The Exercise Price of an Incentive Stock Option shall not be less than 100% of the Fair Market Value of a Share on the Date of Grant of such Option, except as otherwise provided in Section 7(d) below. (c) Dollar Limitation. In the case of an Incentive Stock Option, the aggregate Fair Market Value of the Optioned Stock (determined as of the Date of Grant of each Option) with respect to Options granted to any Employee under the Plan (or any other option plan of the Company or any Affiliate) that may for the first time become exercisable as Incentive Stock Options during any one calendar year shall not exceed the sum of $100,000. To the extent the Employee holds two or more such Options which become exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability of such Options as Incentive Stock Options shall be applied on the basis of the order in which such Options are granted. Any Options in excess of such limitation shall automatically be treated as Non-Statutory Stock Options. (d) 10% Shareholder. If any Employee to whom an Incentive Stock Option is granted is a 10% Shareholder, then the Exercise Price shall not be less than 110% of the Fair Market Value of a Share on the Date of Grant of such Option, and the Option term shall not exceed five years measured from the Date of Grant of such Option. -9- (e) Change in Status. In the event of an Optionee's change of status from Employee to Consultant or to Non-Employee Director, an Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Non-Statutory Stock Option three months and one day following such change of status. (f) Approved Leave of Absence. If an Optionee is on an approved leave of absence, and the Optionee's reemployment upon expiration of such leave is not guaranteed by statute or contract, including Company policies, then on the 91st day of such leave any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Non-Statutory Stock Option. 8. Adjustments Upon Changes in Capitalization. (a) Changes in Capitalization. The number of Shares covered by each outstanding Option, the number of Shares which have been authorized for 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 which may be optioned to an Employee in any year, and the Exercise Price per Share covered by each such outstanding Option, shall be proportionately adjusted for any increase or decrease in the number of issued and outstanding Shares resulting from a stock split, reverse stock split, stock dividend, recapitalization, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued and outstanding Shares, effected without the receipt of consideration by the Company. Such adjustment shall be made by the Administrator so that the adjustment shall not result in an accounting consequence under APB 25 and FASB Interpretation No. 44, as amended, and any successor thereof. The Administrator's determination with respect to the adjustment shall be final, binding, and conclusive. (b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable prior to the effective date of such proposed transaction. In such event, the Administrator, in its discretion, may provide for an Optionee to fully vest in his/her Option. To the extent it has not been previously exercised, an Option will terminate upon termination or liquidation of the Company. 9. Change in Control. (a) Except as otherwise provided for in the Optionee's Option Agreement, in the event of a Change in Control, the Company and the successor corporation, if any, may agree (without the Optionee's consent): -10- (i) that, subject to Subsection (b) below, all Options that are outstanding on the date that immediately precedes the date of the Change in Control shall become exercisable on the date that immediately precedes the date of the Change in Control and the Administrator shall notify the Optionees of their Options' exercisability at least 21 days prior to the date of the Change in Control so that the Optionees can decide whether or not to exercise their Options on the date that immediately precedes the date of the Change in Control. Effective as of the date of the Change in Control, the Plan shall terminate and all unexercised Options shall be cancelled; (ii) to terminate the Plan and cancel all outstanding Options effective as of the date of the Change in Control without the payment of any consideration; provided, however, that the Company shall notify the Optionees of their Options' cancellation at least 21 days prior to the date of the Change in Control so that the Optionees can exercise those Options that are otherwise exercisable before they are cancelled; (iii) that the successor corporation or its parent shall assume the Plan and all outstanding Options effective as of the date of the Change in Control; (iv) to terminate the Plan and cancel all outstanding Options effective as of the date of the Change in Control and replace such Options with comparable options in the successor corporation or parent thereof (the determination of comparability shall be made by the Administrator, and its determination shall be final, binding, and conclusive); (v) to terminate the Plan and cancel all outstanding Options effective as of the date of the Change in Control and, subject to Subsection (b) below, deliver to the Optionee in lieu thereof the difference between the Fair Market Value of a Share on the date of the Change in Control and the Exercise Price of the Optionee's Option, multiplied by the number of Shares to which the Option relates; or (vi) to terminate the Plan and cancel all outstanding Options effective as of the date of the Change in Control and deliver to the Optionee in lieu thereof the difference between the Fair Market Value of a Share on the date of the Change in Control and the Exercise Price of the Optionee's Option, multiplied by the number of vested Shares that the Optionee would have received had he/she exercised the Option. (b) Notwithstanding the foregoing, no acceleration of exercisability or payment shall occur under Subsection (a) above to the extent that such acceleration or payment would, after taking into account any other payments in the nature of compensation to which the Optionee would have a right to receive from the Company and any other Person contingent upon the occurrence -11- of such Change in Control, result in a "parachute payment" as defined in Section 280G(b)(2) of the Code. (c) The outstanding Options shall in no way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. 10. Cancellation and Regrant of Options. The Administrator shall have the authority to effect, at any time and from time to time, with the consent of the affected Optionee, the cancellation of any or all outstanding Options and to grant in substitution new Options covering the same or a different number of Shares but with an Exercise Price per Share based on the Fair Market Value per Share on the new Date of Grant of the Option. 11. Tax Withholding. (a) The Company's obligation to deliver Shares upon the exercise of Options shall be subject to the satisfaction of all applicable federal, state and local income and employment tax withholding requirements. (b) The Administrator may, in its discretion, provide any or all holders of Non-Statutory Stock Options with the right to use previously vested Shares in satisfaction of all or part of the Taxes incurred by such holders in connection with the exercise of their Options or the vesting of their Shares; provided, however, that this form of payment shall be limited to the withholding amount calculated using the minimum statutory rates. Such right may be provided to any such holder in either or both of the following formats: (i) Stock Withholding: The election to have the Company withhold, from the Shares otherwise issuable upon the exercise of such Non-Statutory Stock Option, a portion of those Shares with an aggregate Fair Market Value equal to the Taxes calculated using the minimum statutory rates. (ii) Stock Delivery: The election to deliver to the Company, at the time the Non-Statutory Stock Option is exercised, one or more Shares previously acquired by such holder (other than in connection with the Option exercise or Share vesting triggering the Taxes) with an aggregate Fair Market Value equal to the Taxes calculated using the minimum statutory rates. 12. Effective Date and Term of the Plan. The Plan shall become effective as of April 12, 2002, the date of its adoption by the Board, subject to ratification by the shareholders of the Company within 12 months of the adoption date. Unless sooner terminated by the Administrator, the Plan shall continue until the day prior to the tenth anniversary of the date on which the Board -12- adopted the Plan or the date on which the shareholders of the Company approved the Plan, which ever is earlier. When the Plan terminates, no Options shall be granted under the Plan thereafter. The termination of the Plan shall not affect any Shares previously issued or any Option previously granted under the Plan. 13. 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 to grant such Option, or such other date as determined by the Administrator. Notice of the determination shall be given to each Service Provider to whom an Option is so granted within a reasonable period of time after the date of such grant. 14. Amendment and Termination of the Plan. (a) Amendment and Termination. The Board may at any time amend, alter, suspend, or discontinue the Plan, but no amendment, alteration, suspension, or discontinuation shall be made which would impair the rights of any Optionee under any grant theretofore made without his/her consent. In addition, to the extent necessary and desirable to comply with Section 422 of the Code (or any other applicable law or regulation, including the requirements of any stock exchange or national market system upon which the Common Stock is then listed), the Company shall obtain shareholder approval of any Plan amendment in such a manner and to such a degree as required. (b) Effect of Amendment and 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. 15. Regulatory Approvals. (a) The implementation of the Plan, the granting of any Option and the issuance of any Shares upon the exercise of any granted Option shall be subject to the Company's procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the Options granted under it, and the Shares issued pursuant to it. (b) No Shares or other assets shall be issued or delivered under the Plan unless and until there shall have been compliance with all applicable requirements of federal and state securities laws, including the filing and effectiveness of the Form S-8 registration statement (if required) for the Shares issuable under the Plan, and all applicable listing requirements of any stock exchange (or the Nasdaq National Market, if applicable) on which Common Stock is then listed for trading (if any). -13- 16. No Employment/Service Rights. Nothing in the Plan shall confer upon the Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Affiliate employing or retaining such person) or of the Optionee, which rights are hereby expressly reserved by each, to terminate such person's Service at any time for any reason, with or without cause. 17. Shareholder Approval. The Plan shall be subject to approval by the shareholders of the Company within 12 months before or after the date the Plan is adopted by the Board. Such shareholder approval shall be obtained in the degree and manner required under applicable state and federal law and the rules of any stock exchange or national market system upon which the Common Stock is then listed or traded. 18. Governing Law. This Plan shall be governed by California law, applied without regard to conflict of law principles. IN WITNESS WHEREOF, the Company, by its duly authorized officer, has executed this Plan effective as of April 12, 2002. NATIONAL TECHNICAL SYSTEMS, INC. By: __________________________________ Its: __________________________________ EX-5 4 nts02stockplans8ex51.txt OPINION Exhibit 5.1 ----------- [Sheppard, Mullin, Richter & Hampton LLP Letterhead] June 24, 2003 National Technical Systems, Inc. 24007 Ventura Boulevard, Suite 200 Calabasas, California 91302 Re: Registration Statement on Form S-8 ---------------------------------- Ladies and Gentlemen: We have acted as special counsel to National Technical Systems, Inc., a California corporation (the "Company"), in connection with the registration on Form S-8 (the "Registration Statement") under the Securities Act of 1933, as amended, of 1,000,000 shares of the Company's common stock reserved for issuance under the National Technical Systems, Inc. 2002 Stock Option Plan (the "Plan"). This opinion is being furnished in accordance with the requirements of Item 8 of Form S-8 and Item 601(b)(5)(i) of Regulation S-K. We have reviewed the Company's charter documents and the corporate proceedings taken by the Company with respect to the establishment and amendment of the Plan. With respect to the foregoing documents, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity to originals of all documents submitted to us as certified or reproduced copies. We also have obtained from the officers of the Company certificates as to all factual matters necessary for the purpose of this opinion and, insofar as this opinion is based on such matters of fact, we have relied on such certificates without independent investigation. Based on such review, we are of the opinion that, if, as and when the shares of the Company's common stock are issued and sold (and the consideration therefor received) pursuant to the provisions of the Plan and stock option agreements duly authorized under the Plan, and in accordance with the Registration Statement, such shares will be duly authorized, legally issued, fully paid and nonassessable We consent to the filing of this opinion letter as Exhibit 5.1 to the Registration Statement. This opinion letter is rendered as of the date first written above and we disclaim any obligation to advise you of facts, circumstances, events or developments which hereafter may be brought to our attention and which may alter, affect or modify the opinion expressed herein. Our opinion is expressly limited to the matters set forth above and we render no opinion, whether by June 24, 2003 Page 2 implication or otherwise, as to any other matters relating to the Company, the Plan, or the shares of the Company's common stock issuable under such plan. Respectfully submitted, /s/ SHEPPARD, MULLIN, RICHTER & Hampton LLP EX-23 5 nts02stockplans8ex232.txt CONSENT Exhibit 23.2 ------------ CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statements on Form S-8 pertaining to the National Technical Systems, Inc. 1994 Stock Option Plan and 2002 Stock Option Plan of our report dated April 14, 2003, with respect to the consolidated financial statements and schedule of National Technical Systems, Inc. included in its Annual Report (Form 10-K) for the year ended January 31, 2003. Woodland Hills, California June 23, 2003 -----END PRIVACY-ENHANCED MESSAGE-----