-----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, Cs+nLNibThOiyirBY7m7ZLx4FFDt3qLk8s5YdLOTp1sIHT/LPVqAl/lsCbQ0AeZN ytCahmkyBe99jxphFAVL7Q== 0000806388-98-000023.txt : 19980812 0000806388-98-000023.hdr.sgml : 19980812 ACCESSION NUMBER: 0000806388-98-000023 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19980810 EFFECTIVENESS DATE: 19980810 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NICHOLS RESEARCH CORP /AL/ CENTRAL INDEX KEY: 0000806388 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING SERVICES [8711] IRS NUMBER: 630713665 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-61093 FILM NUMBER: 98681140 BUSINESS ADDRESS: STREET 1: 4040 MEMORIAL PKWY S CITY: HUNTSVILLE STATE: AL ZIP: 35802 BUSINESS PHONE: 2058831140 S-8 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Nichols Research Corporation ------------------------------------------------------ (Exact name of issuer as specified in its charter) Delaware 63-0713665 - --------------------------------------------------------------------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 4040 Memorial Parkway, South, Huntsville, Alabama 35802-1326 - --------------------------------------------------------------------------- (Address of principal executive offices, including Zip Code) Incentive Stock Option Plan of 1988 of Welkin Associates, Ltd. - --------------------------------------------------------------------------- (Full Title of the Plan) Michael J. Mruz Nichols Research Corporation 4040 Memorial Parkway, South Huntsville, Alabama 35802-1326 (256)883-1140 - --------------------------------------------------------------------------- (Name, Address and Telephone Number, including area code, of Agent for Service) With a Copy to: John R. Wynn, Esq. Lanier Ford Shaver & Payne, P.C. P.O. Box 2087 Huntsville, Alabama 35804 - --------------------------------------------------------------------------- The Registrant requests that the Registration Statement become effective immediately upon filing pursuant to Securities Act Rule 462. CALCULATION OF REGISTRATION FEE - ------------------------------------------------------------------------------- Proposed Title of Proposed Maximum Securities Amount Maximum Aggregate Amount of to be to be Offering Price Offering Registration Registered Registered Per Share (1) Price Fee - ---------- ---------- -------------- --------- ------------ Common Stock 28,335 $23.375 $662,331 $196 $.01 par shares value (2) - ------------------------------------------------------------------------------- (1)This calculation, which is made solely for the purpose of determining the amount of the registration fee, is made pursuant to Rule 457 and is based on a price of $23.375 per share, the average of the high and low price of a share of common stock on August 3, 1998, as reported on the Nasdaq National Market. (2) Pursuant to an Agreement and Plan of Merger dated as of June 26, 1998, among Registrant, Welkin Associates, Ltd. ("Welkin"), and WAL Acquisition Company, Inc., Registrant assumed, effective as of July 28, 1998, all of the outstanding options to purchase common stock of Welkin under the Incentive Stock Option Plan of 1988 of Welkin Associates, Ltd., and such options became exercisable to purchase shares of Registrant's Common Stock, with appropriate adjustments to the number of shares and exercise price of each assumed option. PART I Information Required in Section 10(a) Prospectus Item 1. PLAN INFORMATION. This Registration Statement relates to the registration of 28,335 shares of $.01 par value common stock of Nichols Research Corporation (the "Common Stock") to be sold pursuant to the exercise of stock options granted to employees of Welkin Associates, Ltd. ("Welkin") under the Incentive Stock Option Plan of 1988 of Welkin Associates, Ltd. (the "Plan"). Documents containing the information specified in Part I of Form S-8 promulgated by the Securities and Exchange Commission (the "Commission") will be sent or given to participants in the Plan as specified by Commission Rule 428(b). Item 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION. See response to Item 1 above. PART II Information Required in the Registration Statement Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE. The following documents filed by Nichols Research Corporation (the "Company") with the Commission are hereby incorporated by reference as of their respective dates: 1) the Company's Annual Report on Form 10-K for the year ended August 31, 1997; and the Company's Quarterly Reports on Form 10-Q for the quarters ended ended November 30, 1997, February 28, 1998, and May 31, 1998; 2) the description of the Company's Common Stock contained in the Company's registration statement on Form 8-A filed with the Commission on January 14, 1987, as amended by Form 8 filed with the Commission on August 18, 1989; and 3) the Company's Current Report on Form 8-K dated August 31, 1997, and filed with the Commission on September 11, 1997, as amended by Form 8-K/A filed with the Commission on November 10, 1997. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934 after the date hereof and prior to the filing of a post-effective amendment which indicates that all securites offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing such documents. Item 4. DESCRIPTION OF SECURITIES. Not applicable. Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. The legality of the Common Stock issuable upon the exercise of options granted under the Plan has been passed upon for the Company by the law firm of Lanier Ford Shaver & Payne, P.C., 200 West Court Square, Suite 5000, Huntsville, Alabama 35801. John R. Wynn, a member-stockholder of Lanier Ford Shaver & Payne, P.C., is a director of the Company. As of July 27, 1998, four (4) attorneys of Lanier Ford Shaver & Payne, P.C., including Mr. Wynn, beneficially owned 23,773 shares of the Company's Common Stock. Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 145 of the Delaware General Corporation Law permits indemnification by the Company of any director, officer, employee or agent of the Company or person who is serving or was serving at the Company's request as a director, officer, employee or agent of another corporation or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement, actually and reasonably incurred by him in connection with the defense of any threatened, pending or completed action (whether civil, criminal, administrative or investigative), to which he is or may be a party by reason of having been such director, officer, employee or agent, provided that he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding had no reasonable cause to believe his conduct was unlawful. The Company also has the power under Section 145 to indemnify persons set forth above from threatened, pending or completed actions or suits by or in the right of the Company to procure a judgment in its favor by reason of the fact that such person was a director, officer, employee or agent of the Company or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation or enterprise against expenses actually and reasonably incurred by him in connection with the defense or settlement of the action if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, except that no indemnification can be made with regard to any claim, issue or matter as to which the person has been adjudged to be liable for negligence or misconduct in the performance of his duty to the Company unless and only to the extent that the Delaware Court of Chancery or the court in which the action was brought determines that the person was fairly and reasonably entitled to indemnity. Any indemnification (unless ordered by a court) must be made by the Company only as authorized in the specific case upon a determination that indemnification of the person is proper in the circumstances because he has met the applicable standards of conduct. The determination must be made by the Board of Directors by a majority vote of a quorum consisting of directors who are not parties to the action, or if a quorum is not obtainable or, even if obtainable, a quorum of disinterested directors so directs, by independent counsel in a written opinion, or by the stockholders. The Company may pay the expenses of an action in advance of final disposition if authorized by the Board of Directors in a specific case, upon receipt of an undertaking by the person to be indemnified to repay any such advances unless it shall ultimately be determined that such person is entitled to be indemnified by the Company as authorized by law. Article Nine of the Company's By-laws provides for indemnification of the Company's directors, officers, employees or agents to the extent permitted by Section 145 of the Delaware General Corporation Law. Article Nine of the Company's By-laws further provides that the Company may purchase and maintain insurance on behalf of those persons described above as eligible for indemnification for liability arising out of such person's duties or status with the Company whether or not indemnification in respect of such liability would be permissible. The Company has in effect an officers and directors liability insurance policy with Royal Insurance Company. The policy provides indemnity to the directors and officers of the Company for the loss arising from any claim by reason of a wrongful act where there is no corporate indemnification. The insurance provides for the Company to be reimbursed for any indemnification it may be required by statute or the Company's By-laws to make to any of its directors and officers in connection with a claim by reason of a wrongful act. Pursuant to exclusions, the policy covers negligent acts, errors, omissions or breach of duty by a director or officer. The principal exclusions from coverage include the following: (i) claims involving various violations of Section 16(b) of the Securities Exchange Act of 1934; (ii) dishonest acts; and (iii) libel, slander, or non-monetary damages. The policy has no deductible amount per director or officer for each loss. A $500,000 deductible self- insurance retention applies to the Company. The limit of liability under the policy is $5,000,000 in the aggregate annually in excess of deductibles and participations. Item 7. EXEMPTION FROM REGISTRATION CLAIMED. Not applicable. Item 8. EXHIBITS. Exhibit No. Description ----------- ----------- 4 Incentive Stock Option Plan of 1988 of Welkin Associates, Ltd. 5 Opinion and Consent of Lanier Ford Shaver & Payne, P.C. 23.1 Consent of Ernst & Young, LLP, Independent Auditors 23.2 Consent of Lanier Ford Shaver & Payne, P.C. (included in Exhibit 5) Item 9. UNDERTAKINGS. The Company 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 the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the informa- tion 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% change in the maxi- mum 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 plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. Provided, however, that paragraphs (1)(i) and (1)(ii) above do not apply if the information required to be included in a post- effective amendment by those paragraphs is contained in the perio- dic reports filed by the registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by refer- ence in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed a new Registration Statement relating to the securities offered therein, and the 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. (4) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. SIGNATURES THE REGISTRANT. Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8, and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Huntsville, State of Alabama, on the 5th day of August, 1998. NICHOLS RESEARCH CORPORATION Michael J. Mruz By:__________________________________ Michael J. Mruz Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date --------- ----- ---- Chris H. Horgen _________________________ Chairman of the Board August 6, 1998 Chris H. Horgen (Principal Executive Officer) Michael J. Mruz _________________________ Chief Executive Officer, August 5, 1998 Michael J. Mruz President, Chief Operating Officer and Director Roy J. Nichols _________________________ Senior Vice President and Vice- August 6, 1998 Roy J. Nichols Chairman of the Board Patsy L. Hattox _________________________ Chief Administrative Officer, August 6, 1998 Patsy L. Hattox Corporate Vice President, Secretary and Director Thomas L. Patterson _________________________ President of NicholsTXEN August 6, 1998 Thomas L. Patterson Corporation and Director Roger P. Heinish _________________________ Director August 6, 1998 Roger P. Heinish John R. Wynn _________________________ Director August 10, 1998 John R. Wynn _________________________ Director William E. Odom James R. Thompson, Jr. _________________________ Director August 6, 1998 James R. Thompson, Jr. _________________________ Director Phil E. DePoy _________________________ Director Daniel W. McGlaughlin _________________________ Director David Friend Allen E. Dillard _________________________ Chief Financial Officer and August 6, 1998 Allen E. Dillard Treasurer (Principal Financial and Accounting Officer) EXHIBIT INDEX Exhibit No. Description ----------- ----------- 4 Incentive Stock Option Plan of 1988 of Welkin Associates, Ltd. 5 Opinion and Consent of Lanier Ford Shaver & Payne, P.C. 23.1 Consent of Ernst & Young, LLP, Independent Auditors 23.2 Consent of Lanier Ford Shaver & Payne, P.C. (included in Exhibit 5) EX-4 2 INCENTIVE STOCK OPTION PLAN OF 1988 OF WELKIN ASSOCIATES, LTD. THIS IS THE INCENTIVE STOCK OPTION PLAN OF 1988 ("the Plan") of Welkin Associates, Ltd. ("the Corporation"), under which options may be granted from time to time to eligible employees of the Corporation or any of its subsidiary corporations ("the Subsidiaries") to purchase shares of the Corporation, subject to the limitations, provisions and requirements hereinafter stated. The Plan is as follows: 1. PURPOSE The general purpose of the Plan is to aid in developing and retaining key employees capable of assuring the future success of the Corporation. The Plan is designed to aid the Corporation in attracting and retaining the services of key employees by offering such personnel additional incentives to put forth maximum efforts for the success of the business, to afford them opportunities to obtain or increase a proprietary interest in the Corporation on a favorable basis, and thereby to have an opportunity to share in its success. 2. ADMINISTRATION The Plan shall be administered by the Board of Directors of the Corporation. The interpretation and construction by the Board of any provisions of the Plan or of any option granted under it shall be final. No member of the Board of Directors shall be liable for any action or determination made in good faith with respect to the Plan or any option granted under it. 3. ELIGIBILITY The persons who shall be eligible to receive options shall be such key employees (including officers, whether or not they are directors) of the Corporation or its Subsidiaries (as such term is defined in Section 425 of the Internal Revenue Code of 1954) existing from time to time as the Board shall select from time to time. An optionee may hold more than one option, but only on the terms and subject to the restrictions hereafter set forth. No option shall be granted hereunder to any employee if, at the time of the grant, such employee owns stock representing more than ten (10) percent of the total combined voting power of all classes of stock of the Corporation, its parent or Subsidiaries. This stock ownership limitation will not apply if the option price is at least 110 percent of the fair market value (at the time the option is granted) of the stock subject to the option, and the option by its terms is not exercisable more than five (5) years from the date it is granted. 4. STOCK The stock subject to the options shall be shares of the Corporations's authorized but unissued or reacquired $1.00 par value common stock, hereafter sometimes called Capital Stock. The aggregate number of shares which may be issued under such options shall not exceed 17,500. This number shall be appropriately adjusted if the number of the Corporation's issued shares shall be increased or reduced by change in par value, combination, split-up, reclassification, distribution of dividend payable in stock, or the like. In the event that any outstanding option under the Plan for any reason expires or is terminated, the shares of such option may again be subjected to an option under the Plan. 5. TERMS AND CONDITIONS OF OPTIONS Incentive Stock Options granted pursuant to the Plan by the Board shall be evidenced by agreements in such form as the Board shall from time to time approve, which agreements shall comply with and be subject to the following terms and conditions: (a) NUMBER OF SHARES Each option shall state the number of shares to which it pertains. (b) OPTION PRICE Each option shall state the option price, which shall be not less than 100% of the fair market value of the shares of Capital Stock of the Corporation on the date of the granting of the option, as determined by the Board at the time of the grant in accordance with applicable provisions of the Internal Revenue Code and Treasury Department rulings and regulations thereunder. (c) MEDIUM AND TIME OF PAYMENT The option price shall be payable in United States dollars upon the exercise of the option and may be paid by Cashier's, Certified or other check. (d) APPLICABILITY OF THE STOCK REPURCHASE AGREEMENT OF JUNE 10, 1988 As a condition of exercising an option granted under the Plan, the optionee must understand and agree to execute and be bound by the terms of the Welkin Associates, Ltd., Stock Repurchase Agreement dated June 10, 1988, which provides that any Stockholder leaving the Corporation or otherwise needing to dispose of his shares must offer those shares for sale to the Corporation or other Stockholders. Legends restricting the sale, transfer, pledge or hypothecation of the stock will be affixed to each certificate representing stock acquired through exercise of an option granted under this Plan. (e) TERM AND EXERCISE OF OPTIONS No option shall be exercised prior to the expiration of twelve months from the date of granting thereof. Subject to the right of cumulation provided in the last sentence of this Article 5(e), each option shall be exercisable as to not more than twenty-five percent (25%) of the total number of shares covered thereby during each consecutive twelve-month period commencing on a date twelve months after the granting of the option until all shares covered by the option shall have been purchased. No option shall be exercisable after the expiration of ten years from the date it is granted. (For rules applicable to ten-percent shareholders, see Article 3 hereof.) Not less than one hundred shares may be purchased at any one time unless the number purchased is the total number at the time purchasable under the option. During the life-time of the optionee, the option shall be exercisable only by him and shall not be assignable or transferable by him, and no other person shall acquire any rights therein. To the extent not exercised, installments shall accumulate and be exercisable, in whole or in part, in any subsequent period but not later than ten years from the date the option is granted. (f) PRIOR OUTSTANDING OPTION No option (for purposes of this Article 5(f) called New Option) shall be exercisable while there is outstanding any Incentive Stock Option (as defined in Section 422A of the Internal Revenue Code), granted under this or any other Plan before the granting of the New Option, to the person to whom the New Option is granted, to purchase stock in the Corporation or in a corporation which, at the time the New Option is granted, is a parent or subsidiary corporation (as those terms are defined in Section 425 of the Internal Revenue Code of 1954) of the Corporation, or is a predecessor corporation of the Corporation, or of such parent or subsidiary corporation. (g) MAXIMUM AMOUNT OF OPTIONS THAT MAY BE GRANTED The aggregate fair market value (determined as of the time the option is granted) of the stock for which any employee may be granted options in any calendar year (under all Incentive Stock Option plans, as described in Section 422A of the Internal Revenue Code of 1954, of the Corporation, its parent or Subsidiaries) shall not exceed one hundred thousand dollars plus any unused limit carryover to that year, as defined in Article 5(h) hereof. (h) CARRYOVER OF UNUSED LIMIT If one hundred thousand dollars exceeds the aggregate fair market value (determined as of the time the option is granted) of the stock for which an employee was granted options in any calendar year (under all Incentive Stock Option plans, as described in Section 422A of the Internal Revenue Code of 1954, of his employer corporation and its parent and subsidiary corporations), one-half of such excess shall be unused limit carryover to each of the three succeeding calendar years. The amount of the unused limit carryover from any calendar year which may be taken into account in any succeeding calendar year shall be the amount of such carryover reduced by the amount of such carryover which was used in prior calendar years. For purposes of the previous sentence the amount of options granted during any calendar year shall be treated as first using up the $100,000 limitation of Article 5(g) hereof, and then shall be treated as using up unused limit carryovers to such year in the order of the calendar years in which the carryovers arose. (i) TERMINATION OF EMPLOYMENT EXCEPT DEATH In the event that an optionee shall cease to be employed by the Corporation or Subsidiaries for any reason other than his death and shall be no longer in the employ of any of them, no option shall be exercisable by such optionee. Whether authorized leave of absence or absence for military or governmental service shall constitute termination of employment, for purposes of the Plan, shall be determined by the Board, which determination shall be final and conclusive. (j) DEATH OF OPTIONEE AND TRANSFER OF OPTION If the optionee shall die while in the employ of the Corporation or a Subsidiary and shall not have fully exercised the option, the option may be exercised, subject to the condition that no option shall be exercisable after the expiration of ten years from the date it is granted, to the extent that the optionee's right to exercise such option had accrued pursuant to Article 5(e) of the Plan at the time of his death and had not been previously exercised, at any time prior to one year after the date of the optionee's death, which date shall not in any event be later than ten years from the date the option is granted, by the executors or administrators of the optionee's estate or by any person or persons who shall have acquired the option directly from the optionee by bequest or inheritance. No option shall be transferable by the optionee otherwise than by will or the laws of descent and distribution. As a condition of exercising such option, the executor, administrator, or inheritor must understand and agree to execute and be bound by the terms of the Welkin Associates, Ltd., Stock Repurchase Agreement dated June 10, 1988, which, among other things, specifically provides that the estate of such deceased optionee must offer shares of stock purchased pursuant to this Article 5(j) for sale to the Corporation or other Stockholders within 210 days of exercise of the option. Legends restricting the sale, transfer, pledge or hypothecation of the stock will be affixed to each certificate representing stock acquired through exercise of such option. (k) RECAPITALIZATION, MERGER, LIQUIDATION, ETC. Subject to any required action by the Stockholders, the number of shares of Capital Stock covered by each outstanding option and the price per share thereof in each such option, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Capital Stock of the Corporation resulting from a subdivision or consolidation of shares or the payment of a stock dividend (but only on the Capital Stock) or any other increase or decrease in the number of such shares effected without receipt of consideration by the Corporation. Subject to any required action by the Stockholders, if the Corporation shall be the surviving corporation in any merger or consolidation, each outstanding option shall pertain to and apply to the securities to which a holder of the number of shares of Capital Stock subject to the option would have been entitled. In the event that the Corporation is succeeded by another corporation in a reorganization, merger, consolidation, sale or acquisition of property or stock, or liquidation, or in the event that the Corporation is dissolved, each outstanding option will terminate, provided that each optionee shall, in such event, if a period of two years from the date of the option shall have expired, have the right immediately prior to such reorganization, dissolution or liquidation, merger or consolidation, sale or acquisition to exercise his option in whole or in part without regard to the installment provisions of Article 5(e) of the Plan. In the event of a change in the Capital Stock of the Corporation as presently constituted, which is limited to a change of all of its authorized shares with par value into the same number of shares with a different par value or without par value, the shares resulting from any such change shall be deemed to be the Capital Stock within the meaning of the Plan. To the extent that the foregoing adjustments relate to stock or securities of the Corporation, such adjustments shall be made by the Board, whose determination in that respect shall be final, binding and conclusive, provided that each option granted pursuant to this Plan shall not be adjusted in a manner that causes the option to fail to continue to qualify as an Incentive Stock Option within the meaning of Section 422A of the Internal Revenue Code of 1954. Except as hereinbefore expressly provided in this Article 5(k), the optionee shall have no rights by reason of any subdivision or consolidation of shares of stock of any class or the payment of any stock dividend or any other increase or decrease in the number of shares of any class or by reason of any dissolution, liquidation, merger, or consolidation or spin-off of assets or stock of another corporation, and any issue by the Corporation of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Capital Stock subject to the option. The grant of an option pursuant to the Plan shall not affect in any way the right or power of the Corporation to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge or to consolidate or to dissolve, liquidate or sell, or transfer all or any part of its business or assets. (l) RIGHTS AS A STOCKHOLDER An optionee or a transferee of an option shall have no rights as a Stockholder with respect to any shares covered by his option until the date of the issuance of a stock certificate to him for such shares. No adjustments shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights for which the record date is prior to the date such stock certificate is issued, except as provided in Article 5(k) hereof. (m) INVESTMENT PURPOSES Each option under the Plan shall be granted on the condition that the purchases of stock thereunder shall be for investment purposes, and not with a view to resale or distribution except that in the event that stock subject to such option is registered under the Securities Act of 1933, as amended, or in the event a resale of such stock without such registration would otherwise be permissible, such condition shall be inoperative if in the opinion of counsel for the Corporation such condition is not required under the Securities Act of 1933 or any other applicable law, regulation or rule of any governmental agency. (n) OTHER PROVISIONS The option agreements authorized under the Plan shall contain such other provisions, including, without limitation, restrictions upon the exercise of the option, as the Board of Directors of the Corporation shall deem advisable. 6. TERM OF PLAN Options may be granted pursuant to the Plan from time to time, within a period of ten years from the date the Plan is adopted, or the date the Plan is approved by the Stockholders, whichever is earlier. 7. INDEMNIFICATION OF THE BOARD OF DIRECTORS In addition to such other rights of indemnification as they may have as directors, the members of the Board shall be indemnified by the Corporation against the reasonable expenses, including attorneys' fees actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any option granted thereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Corporation) or paid by them in satisfaction of a judgement in any action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such Board member is liable for negligence or misconduct in the performance of this duties; provided that within 60 days after institution of any such action, suit or proceeding a Board member shall in writing offer the Corporation the opportunity, at its own expense, to handle and defend the same. 8. AMENDMENT OF THE PLAN The Board of Directors of the Corporation may, insofar as permitted by law, from time to time, suspend or discontinue the Plan or revise or amend it in any respect whatsoever except that without approval of the Stockholders, no such revision or amendment shall change the number of shares subject to the Plan, change the designation of the class of employees eligible to receive options, decrease the price at which options may be granted, or remove the administration of the Plan from the Board. 9. APPLICATION OF FUNDS The proceeds received by the Corporation from the sale of Capital Stock pursuant to options will be used for general corporate purposes. 10. NO OBLIGATION TO EXERCISE OPTION The granting of an option shall impose no obligation upon the optionee to exercise such option. 11. APPROVAL OF STOCKHOLDERS The Plan shall become effective on the date the Plan is adopted by the Board of Directors of the Corporation, provided, however, any options granted under the Plan shall be void and of no effect if the Plan is not approved by the holders of a majority of the outstanding shares of Capital Stock of the Corporation, which approval must occur within the period beginning twelve months before and ending twelve months after the date the Plan is adopted by the Board of Directors. Moreover, in the event such options are granted under the Plan prior to approval of such Plan by the holders of a majority of the outstanding shares of the Capital Stock of the Corporation, such options shall not be exercisable until such approval is obtained. Date Plan adopted by the Board of Directors: June 10, 1988 Date Plan approved by Stockholders: June 10, 1988 EX-5 3 EX-5 OPINION OF LEGAL COUNSEL RE: LEGALITY LANIER FORD SHAVER & PAYNE, P.C. P.O. Box 2087 Huntsville, Alabama 35804 August 10, 1998 Nichols Research Corporation 4040 Memorial Parkway, S. Huntsville, Alabama 35802 Gentlemen and Ladies: As counsel for Nichols Research Corporation (herein called the "Corporation"), we are familiar with the records of the proceedings by which its Certificate of Incorporation has from time to time been amended, the records of the proceedings by which the shares of its common stock have from time to time been issued, and the proceedings by which the outstanding options granted under the Incentive Stock Option Plan of 1988 of Welkin Associates, Ltd. (herein called the "Plan") were assumed by the Corporation. We have also reviewed such documents and records as we have deemed necessary to enable us to express an informed opinion with respect to the matters covered hereby. Based upon the foregoing, we are of the opinion that the 28,335 shares of common stock of the par value of $.01 each of the Corporation that may be issued and sold from time to time upon the exercise of options granted in accordance with the Plan will be duly authorized for issuance and will, when issued, sold and paid for in accordance with the Plan and for a price of not less than $.01 per share, be validly issued, fully paid and nonassessable, and no personal liability will attach to the holders thereof under the laws of the State of Delaware in which the Corporation is incorporated and in the State of Alabama in which its principal place of business is located. We hereby consent to the use of our name in the Registration Statement (Form S-8), pertaining to the Plan as counsel who has passed upon the legality of the shares of common stock that may be issued and sold under the Plan, and to the use of this opinion as a part of such Registration Statement as required by Section 7 of the Securities Act of 1933, as amended. Sincerely, LANIER FORD SHAVER & PAYNE P.C. Elizabeth W. Abel By:_______________________________ Elizabeth W. Abel Member-Shareholder EX-23 4 EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8, No. 333-___________) pertaining to the 1988 Incentive Stock Option Plan of Welkin Associates, Ltd., of our report dated October 8, 1997, with respect to the consolidated financial statements of Nichols Research Corporation included in its Annual Report (Form 10-K) for the year ended August 31, 1997, filed with the Securities and Exchange Commission. ERNST & YOUNG LLP Birmingham, Alabama August 10, 1998 -----END PRIVACY-ENHANCED MESSAGE-----