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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-19872
WALKER INTERACTIVE SYSTEMS, INC.
--------------------------------
(Exact name of registrant as specified in its charter)
Delaware 95-2862954
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
303 SECOND STREET, SAN FRANCISCO, CA 94107
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(Address of principal executive offices including zip code)
(415) 495-8811
--------------
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such report) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
There were 14,045,445 Shares of $.001 Par Value Common Stock outstanding as of
November 6, 1998.
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WALKER INTERACTIVE SYSTEMS, INC.
FORM 10-Q
INDEX
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<CAPTION>
PART I. FINANCIAL INFORMATION Page
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<S> <C>
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets as of September 30, 1998 and
December 31, 1997............................................... 3
Consolidated Statements of Operations for the three and nine
months ended September 30, 1998 and 1997........................ 4
Consolidated Statements of Cash Flows for the nine months ended
September 30, 1998 and 1997..................................... 5
Notes to Consolidated Financial Statements........................ 6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS............................................. 7
PART II.
OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.................................. 15
SIGNATURES................................................................. 16
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2
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ITEM 1. FINANCIAL STATEMENTS
WALKER INTERACTIVE SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1998 1997
---------------- -------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 11,436 $ 7,646
Short-term investments 5,151 13,693
Accounts receivable, net 28,625 23,107
Prepaid expenses 2,296 2,001
-------- --------
Total current assets 47,508 46,447
Long-term investments 2,910 6,351
Property, net 4,711 4,599
Capitalized software, net 17,893 15,777
Deferred tax assets, net 12,115 13,632
Other assets 4,133 4,528
-------- --------
TOTAL ASSETS $ 89,270 $ 91,334
======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable & accrued liabilities $ 15,627 $ 19,201
Current portion of long-term debt 38 91
Deferred revenue 13,340 15,557
-------- --------
Total current liabilities 29,005 34,849
Deferred revenue 2,042 1,190
Accrued rent 936 887
Other long-term obligations 2,643 2,719
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Total liabilities 34,626 39,645
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Commitments and Contingencies - -
Stockholders' equity:
Common stock, $.001 par value: 50,000,000
shares authorized; issued 14,163,525 shares -
September 30, 1998; 13,973,457 shares -
December 31, 1997 14 14
Additional paid-in capital 75,019 73,622
Currency translation adjustments 358 238
Unrealized gain on investments 32 2
Accumulated deficit (19,483) (22,187)
Treasury stock, at cost (1,296) -
-------- --------
Total stockholders' equity 54,644 51,689
-------- --------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 89,270 $ 91,334
======== ========
</TABLE>
See notes to consolidated financial statements
3
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WALKER INTERACTIVE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1998 1997 1998 1997
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES:
License $ 3,116 $ 2,129 $15,083 $ 9,320
Maintenance 7,857 6,919 23,184 20,635
Consulting 13,739 7,219 35,547 19,646
------- ------- ------- -------
Total revenues 24,712 16,267 73,814 49,601
OPERATING EXPENSES:
Costs of revenues:
Costs of licenses, maintenance and consulting 10,711 7,347 30,969 20,523
Amortization of capitalized software 1,474 1,192 3,544 3,533
Sales and marketing 5,760 3,790 17,097 11,577
Product development 3,033 2,411 9,425 7,395
General and administrative 3,496 1,838 9,392 6,286
------- ------- ------- -------
Total operating expenses 24,474 16,578 70,427 49,314
Operating income (loss) 238 (311) 3,387 287
Interest income, net 250 451 834 1,445
------- ------- ------- -------
Income before income taxes 488 140 4,221 1,732
Income tax expense 173 48 1,517 605
------- ------- ------- -------
NET INCOME $ 315 $ 92 $ 2,704 $ 1,127
======= ======= ======= =======
BASIC NET INCOME PER SHARE $ 0.02 $ 0.01 $ 0.19 $ 0.09
======= ======= ======= =======
Shares used in computing
basic net income per share 14,042 13,328 13,998 13,238
======= ======= ======= =======
DILUTED NET INCOME PER SHARE $ 0.02 $ 0.01 $ 0.18 $ 0.08
======= ======= ======= =======
Shares used in computing
diluted net income per share 14,973 14,622 14,881 14,329
======= ======= ======= =======
</TABLE>
See notes to consolidated financial statements
4
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WALKER INTERACTIVE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1998 1997
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,704 $ 1,127
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation and amortization 5,351 5,496
Tax benefit of nonqualified stock options 218 259
Changes in operating assets and liabilities:
Accounts receivable, net (5,518) (3,909)
Prepaid expenses (295) (794)
Accounts payable & accrued liabilities (2,175) (1,385)
Deferred tax assets 1,517 615
Deferred revenue (1,365) (1,970)
Other 558 170
-------- --------
Net cash provided (used) by operations 995 (391)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from employee stock purchase plan
issuances and stock options exercised 1,997 1,630
Treasury stock acquired (2,114) (1,104)
Capital lease and loan payments (59) 13
Repayment of borrowings (1,422) -
-------- --------
Net cash provided (used) by financing activities (1,598) 539
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short- and long-term investments (3,706) (26,491)
Maturities of short-term investments 10,200 11,500
Sales of short-term investments 5,510 20,373
Purchases of property (1,962) (1,614)
Additions to capitalized software (5,659) (5,796)
Other 10 160
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Net cash provided (used) by investing activities 4,393 (1,868)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,790 (1,720)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 7,646 13,475
-------- --------
CASH AND CASH EQUIVALENTS - END OF PERIOD $11,436 $ 11,755
======== ========
</TABLE>
See notes to consolidated financial statements
5
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WALKER INTERACTIVE SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
-------------------------------
BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial statements and include all adjustments (consisting only
of normal recurring adjustments) which the Company considers necessary for
a fair presentation of the financial position, operating results and cash
flows for those periods. Results for the interim periods are not
necessarily indicative of the results for the entire year. These
consolidated financial statements and any notes thereto, should be read in
conjunction with the audited consolidated financial statements included in
the Walker Interactive Systems, Inc. Annual Report on Form 10-K for the
year ended December 31, 1997.
RECLASSIFICATIONS
Certain previously reported amounts have been reclassified to conform with
the current presentation format.
2. ACQUISITION OF REVERE, INC
--------------------------
On December 2, 1997, the Company acquired all the outstanding share capital
of Revere, Inc. ("Revere") in exchange for $7.7 million of the Company's
common stock (634,022 shares) and $0.6 million for various transaction
related costs and fees. An additional earnout of up to $2.0 million is
payable based upon the achievement of certain 1998 performance targets.
Associated with the transaction's closing total purchase price of $8.3
million, the Company allocated $4.1 million to goodwill, $4.6 million was
allocated to in-process research and development and the remaining amounts
allocated primarily to working capital. The amount of the purchase price
allocated to in-process research and development was charged to the
Company's operations, because technological feasibility had not been
established and no alternative future uses existed at the acquisition date.
The acquisition was accounted for as a purchase transaction. The goodwill
will be ratably charged to operations over six years. The results of
operations of Revere are included in the consolidated statements of
operations for the three and nine months ended September 30, 1998.
3. EARNINGS PER SHARE
------------------
The Company calculates basic earnings per share ("EPS") and diluted EPS in
accordance with Statement of Financial Accounting Standards ("SFAS") No.
128, "Earnings per Share". Basic EPS is computed by dividing net income
(loss) by the weighted average number of common shares outstanding for that
period. Diluted EPS takes into account the effect of dilutive instruments,
such as stock options, and uses the average share price for the period in
determining the number of incremental shares that are to be added to the
weighted average number of shares outstanding.
The following is a summary of the calculation of the number of shares used
in calculating basic and diluted EPS (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Shares used to compute basic EPS 14,042 13,328 13,998 13,238
Add:
Effect of dilutive securities 931 1,294 883 1,091
-------- -------- -------- --------
Shares used to compute diluted EPS 14,973 14,622 14,881 14,329
======== ======== ======== ========
</TABLE>
6
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WALKER INTERACTIVE SYSTEMS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The report on this Form 10-Q contains forward-looking statements, including
statements related to industry trends and demand for mainframe products, cash
commitments, working capital requirements and possible expansion in
international markets. Discussions containing such forward-looking statements
may be found in the material set forth in this section, generally and
specifically herein under the captions "Liquidity and Capital Resources", "Year
2000 Readiness" and "Additional Risk Factors." Actual events or results may
differ materially from those discussed herein. The Company disclaims any
obligation to update these forward-looking statements as a result of subsequent
events. The risk factors on pages 3 through 3, among others, should be
considered in evaluating the Company's prospects and future financial
performance.
Walker Interactive Systems, Inc. (hereinafter "Walker" or the "Company") was
incorporated in California in 1973 and reincorporated in Delaware in March 1992.
Walker designs, develops, markets and supports, on a worldwide basis, a family
of enterprise client/server financial application software products that enable
large and medium-sized organizations, higher education institutions, and
federal, state, and government agencies to accelerate time-to-benefit, lower
cost of ownership and reduce information systems risks stemming from changes in
information technology and/or business processes or structure.
Walker designs its software products specifically for the client/server and
network computing models and believes that its architecture is among the most
scalable and adaptable available for enterprise-level financial applications
software. The Company's strategy is to offer comprehensive enterprise financial
solutions to a variety of industries utilizing its best-of-breed software
products. Walker's internet/intranet-enabled applications support and enhance
enterprise-wide financial processes, including planning, budgeting, forecasting,
consolidation and performance management. The Company's software products
utilize the Microsoft Windows operating systems on the desktop, and industry-
leading relational database management systems including IBM's DB2, Oracle and
Microsoft SQL/Server.
The Tamaris product line represents the Company's core suite of business and
financial solutions utilizing the power of the enterprise server, while the
Aptos suite of financial applications provides a client/server architecture that
runs on UNIX and Windows NT servers. The Company also develops and markets
Horizon best-of-breed analytic applications which provide financial reporting,
budgeting and financial consolidation solutions for large and mid-sized
organizations. The Horizon analytic applications can be used with the Tamaris
and Aptos products or in conjunction with leading Enterprise Resource Planning
("ERP") applications. In addition, Walker's IMMPOWER product line provides best-
of-breed Enterprise Asset Management solutions for capital intensive industries.
The Company's software products include productivity tools that allow the
Company's applications to be extensively customized to fit the customer's
particular requirements. The Company complements its software products by
providing specialized consulting services to assist customers with
customization, implementation, migration, Year 2000 consulting and best practice
solutions.
The Company derives its revenues primarily from software licenses, software
maintenance and professional consulting services. The Company's Tamaris, Horizon
and IMMPOWER product lines are licensed to large and mid-size businesses and
governmental organizations worldwide. The Company's Aptos products are marketed
primarily in the United Kingdom and are licensed to mid-sized organizations. The
Company's products and services are marketed primarily through its sales forces
located in the United States, United Kingdom and Asia Pacific. The Company
licenses software products directly to customers and occasionally to
distributors for resale.
ACQUISITION OF REVERE, INC.
- ---------------------------
On December 2, 1997, the Company acquired all the outstanding share capital of
Revere, Inc. ("Revere") in exchange for $7.7 million of the Company's common
stock (634,022 shares) and $0.6 million for various transaction related costs
and fees. An additional earnout of up to $2.0 million is payable based upon the
achievement of certain 1998 performance targets. Associated with the
transaction's closing total purchase price of $8.3 million, the Company
allocated $4.1 million to goodwill, $4.6 million was allocated to in-process
research and development and the remaining amounts allocated primarily to
working capital. The amount of the purchase price
7
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allocated to in-process research and development was charged to the Company's
operations, because technological feasibility had not been established and no
alternative future uses existed at the acquisition date. The acquisition was
accounted for as a purchase transaction. The goodwill will be ratably charged to
operations over six years. The results of operations of Revere are included in
the consolidated statement of operations for the three and nine month periods
ended September 30, 1998. Therefore, period to period comparisons may not
meaningfully depict trends or changes in operating results.
RESULTS OF OPERATIONS
- ---------------------
The following results of operations for three and nine months ended September
30, 1998 include the operations of Revere, unless otherwise specified.
REVENUES. The Company recorded total revenues of $24.7 million and $73.8
million during the three and nine months ended September 30, 1998, respectively.
The increase in total revenues of $8.4 million and $24.2 million over the three
and nine months ended September 30, 1997, respectively, is primarily due to
increases in worldwide license and consulting revenues.
License revenues increased $1.0 million or 46 percent and $5.8 million or 62
percent to $3.1 million and $15.1 million for the three and nine months ended
September 30, 1998, respectively. The increase in license revenues is partly
attributable to license revenues generated from Revere operations during the
first nine months of 1998. The remaining increase in license revenues is
primarily attributable to increases in license revenues generated by the
Company's Horizon and Aptos product lines. The Company believes that the
increase in Horizon and Aptos license revenues during the first nine months of
1998 is attributable to increased sales and marketing efforts and enhanced
product offerings.
Maintenance revenues increased 14 percent to $7.9 million for the three months
ended September 30, 1998 and increased 12 percent to $23.2 million for the nine
months ended September 30, 1998. The increase is primarily attributable to
maintenance revenues from Revere operations. The remaining increase in
maintenance revenues is primarily attributable to growth in license sales during
1998.
Consulting revenues increased $6.5 million or 90 percent and $15.9 million or 81
percent to $13.7 million and $35.5 million, respectively, for the three and nine
months ended September 30, 1998, respectively. Consulting revenues are generated
from new and existing customers for services related to training,
implementation, customization, migration, enhancement, Year 2000 readiness
engagements, best practice consulting engagements and other special projects.
The Company generates a majority of its consulting revenues from implementation
related projects. The increase in consulting revenues during the third quarter
and first nine months of 1998 is partly attributable to consulting revenues
generated from Revere operations. The remaining increase in 1998 consulting
revenues is primarily due to revenues generated from Year 2000 readiness
engagements, best practice consulting engagements, and implementation related
projects associated with the Company's Tamaris, Aptos and Horizon product lines.
COSTS OF LICENSES, MAINTENANCE AND CONSULTING. Costs of licenses, maintenance
and consulting represented 43 percent and 45 percent of total revenues for the
three months ended September 30, 1998 and 1997, respectively. Excluding the
operations of Revere, the costs of licenses, maintenance and consulting
represented 42 percent and 45 percent of total revenues for the three months
ended September 30, 1998 and 1997, respectively. The decrease is primarily
attributable to an increase in revenue, in absolute dollars and as a percent of
total consulting business, which was derived from Year 2000 readiness and best
practice consulting engagements, which have higher profit margins.
For the nine months ended September 30, 1998 and 1997, the costs of licenses,
maintenance and consulting represented 42 percent and 41 percent of total
revenues, respectively. The increase in 1998 is primarily attributable to lower
profit margins in North America associated with a fixed fee consulting
engagement partially offset by relatively higher profit margins recognized on
Year 2000 readiness and best practice consulting engagements. The remaining
increases are attributable to higher fees associated with the use of third party
technology associated with the increase in license revenue and an increase in
consulting headcount due to the increased volume of consulting engagements.
AMORTIZATION OF CAPITALIZED SOFTWARE. Amortization of capitalized software
represented 6 percent and 5 percent of total revenues for the three and nine
months ended September 30, 1998, respectively, as compared to 7 percent of total
revenues for the same periods in 1997. The decrease in 1998 is attributable to
the completion of
8
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amortization for several products at the beginning of the fourth quarter of 1997
partially offset by amortization from recent product releases.
SALES AND MARKETING. In absolute dollars, sales and marketing expenses
increased 52 percent to $5.8 million for the three months ended September 30,
1998 and increased 48 percent to $17.1 million for the nine months ended
September 30, 1998. The increase in absolute dollars is primarily attributable
to Revere operations, higher commissions and travel expenses associated with the
increase in license revenues and increased costs associated with marketing
promotions. As a percentage of total revenues, sales and marketing expenses were
23 percent for the three and nine months ended September 30, 1998 and 1997.
PRODUCT DEVELOPMENT. Product development related expenses, excluding
amortization of capitalized software, are detailed as follows (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Product development costs including
additions to capitalized software
(gross) $ 4,984 $ 4,344 $ 15,095 $ 13,191
Less:
Additions to capitalized software (1,951) (1,933) (5,670) (5,796)
-------- -------- -------- --------
Product development expenses $ 3,033 $ 2,411 $ 9,425 $ 7,395
======== ======== ======== ========
</TABLE>
The increase in 1998 gross product development expenses is primarily due to
expenses generated by Revere operations. Further contributing to the increase in
gross expenses are the Company's continued efforts to broaden its existing
product offerings by further developing acquired technologies, incorporating
third party technologies in new products and enhancing existing products. As a
percentage of gross product development expenses, additions to capitalized
software were 39 percent and 44 percent for the three months ended September 30,
1998 and 1997, respectively. For the nine months ended September 30, 1998 and
1997, additions to capitalized software represented 38 percent and 44 percent of
gross development expenses, respectively. Historical additions to capitalized
software, in absolute dollars and as a percentage of gross product development
costs, are not a reliable indicator of additions to capitalized software in
absolute dollars and as a percentage of gross product development costs that
will be recognized in the future.
GENERAL AND ADMINISTRATIVE. General and administrative expenses were $3.5
million and $1.8 million for the three months ended September 30, 1998 and 1997,
respectively. For the nine months ended September 30, 1998 and 1997, general and
administrative expenses were $9.4 million and $6.3 million, respectively. The
increases are primarily due to expenses from Revere operations. Further
contributing to the increase in 1998 general and administrative expenses were
increased facility costs associated with rental increases and additional
headcount.
INCOME TAX EXPENSE. Income tax expense is recorded each quarter based on the
Company's estimated effective income tax rate for the year. The Company
estimates that the 1998 effective income tax rate will be 36 percent.
9
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LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash flows from financing activities used cash of $1.6 million in the first nine
months of 1998 and provided cash of $0.5 million in the same period in 1997. The
increase in cash used during 1998 is primarily a result of $1.4 million used to
repay an outstanding line of credit assumed during the acquisition of Revere in
December 1997. The Company further used $2.1 million during the first nine
months of 1998 for the repurchase of its common stock, offset by $2.0 million
provided by employee stock purchase plan issuances and exercises of stock
options.
The Company has a line of credit in the amount of $3.0 million, secured by
marketable securities. The line of credit expires on August 31, 1999. The
Company has never borrowed against this line of credit.
In October 1998, the Company's board of directors authorized a stock repurchase
program not to exceed $7.5 million over a 12-month period. As of September 30,
1998, the Company's principal sources of liquidity included cash, cash
equivalents and short- and long-term investments aggregating $19.5 million. The
following sentence is a forward looking statement. The Company believes that its
principal sources of liquidity, together with funds expected to be generated
from operations, will satisfy the Company's currently anticipated working
capital and capital expenditure requirements for at least the next twelve
months.
YEAR 2000 READINESS
- -------------------
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. The Company's computer
equipment and software and devices with imbedded technology that are time-
sensitive may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in a system failure or miscalculations causing
disruptions of operation, including, among other things, a temporary inability
to process transactions, send invoices or engage in normal business activities.
The Company has completed an assessment to determine the effect that the Year
2000 issue will have on it. The Company believes that its current commercial
application software products generally offered for license by the Company to
end-user customers are Year 2000 ready. However, certain versions of these
products currently installed at customers' sites will require upgrading or other
modifications to become Year 2000 ready. The Company has identified those
affected customers who are on the Company's warranty maintenance program, has
contacted those customers and is assisting those customers to assess their
readiness. The Company is making available to those customers a Year 2000 ready
release of its software and will assist such customers to become Year 2000
ready. The following sentence is a forward-looking statement. The Company
believes that the costs associated with making certain versions of the Company's
products Year 2000 ready will not be material to the Company's business, results
of operations or financial condition.
The Company has completed an assessment of its computer equipment and software,
including information technology systems, such as accounting, data processing
and telephone/PBX systems, and non-information technology systems, such as fax
machines and alarm systems, to determine if they are Year 2000 ready. The
following three sentences are forward-looking statements. The Company believes
that certain of its non-critical computer equipment and software will require
replacement or modification, at a total cost which is not material to the
Company's results of operations or financial condition. The Company believes
that even if such replacements or modifications were not completed, the Year
2000 issue would not have a material adverse effect on the Company's business,
results of operations or financial condition. In addition, even if the
Company's vendors or suppliers fail to become Year 2000 ready in a timely
manner, the Company believes that such failure would not have a material
adverse effect on the Company's business, results of operations or financial
condition.
The costs and impact of the Year 2000 issue are based upon management's best
estimates, which were derived using numerous assumptions regarding future
events, including the continued availability of certain resources, the
functioning of its products in accordance with specifications and other factors.
There can be no assurance that these estimates will prove to be accurate and
actual results could differ from those currently anticipated. Specific factors
that could cause such material differences include, but are not limited to, the
availability and cost of personnel trained in Year 2000 issues and the
functioning of the Company's products in accordance with specifications. In
addition, variability of definitions of "Year 2000 ready" and the number of
products that the Company has sold, may lead to claims whose impact on the
Company is not currently estimable. No assurance can be given that the aggregate
cost of defending and resolving such claims, if any, would not materially
adversely affect the Company's business, results of operations or financial
condition.
10
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ADDITIONAL RISK FACTORS
- -----------------------
The Company operates in a rapidly changing environment that involves numerous
risks and uncertainties which could have a material adverse effect on the
Company. The following discussion details some, but not all, of these risks and
uncertainties.
FLUCTUATION IN OPERATING RESULTS. The Company's operating results fluctuate as
a result of a variety of factors including: (i) the execution of new license
agreements; (ii) the shipment of software products; (iii) customer acceptance
criteria for services performed; (iv) completion of milestone or other
significant development requirements pursuant to the Company's license
agreements; (v) the financial terms of consulting agreements and the inclusion
of fixed as opposed to variable pricing; (vi) third-party royalty payments for
licensed software; (vii) the demand for the Company's products and services;
(viii) changes in the Company's product mix; (ix) the development and launch of
new products, and the life cycles of the Company's existing products; (x)
research and development expenditures required to update and expand the
Company's product portfolio and related third-party consulting costs; (xi) sales
and marketing expenses generally related to the entry into new markets with new
or existing products and maintenance of market share in existing markets; (xii)
acquisitions and the integration and development of acquired entities or
products; (xiii) competitive conditions in the industry and (xiv) general
economic conditions. As a result, the Company believes that period-to-period
comparisons of its operating results are not necessarily meaningful and should
not be relied upon as indications of future performance.
The Company's quarterly operating results are particularly dependent on the
number of license agreement bookings executed in each quarter. The amount of
quarterly bookings has varied substantially from quarter to quarter due to a
variety of reasons including: (i) a high proportion of license agreements are
negotiated during the latter part of each quarter which may not be completed
before the quarter end; (ii) the sales cycles for some of the Company's products
are relatively long due to the Company's focus on "enterprise solutions" as
opposed to individual products, which adds complexity to the customer's
selection, negotiation and approval process; (iii) the amount related to each
booking may vary significantly due to the need for different solutions for
different customers; (iv) procurement procedures may vary from customer to
customer, which may affect the timing of the bookings; (v) the period for a
customer to complete product evaluations and to complete any subsequent purchase
approval may be delayed due to resource limitations; and (vi) economic,
political and industrial conditions can adversely affect business opportunities
without notice. In addition, bookings that are executed during a particular
quarter may not be recognized as revenue during such quarter because such
bookings may not have met the Company's revenue recognition criteria. No
assurance can be given that the Company will be able to effect new bookings in
accordance with historical results or management's expectations, and the
inability of the Company to do so could have a material adverse effect on the
Company's operating results.
While the Company typically sells its software under a standard license
agreement, license agreements associated with large enterprise solutions often
require the negotiation of terms and conditions that differ substantially from
the Company's standard license agreement terms. The negotiation of these
agreements may extend the sales cycle. In certain circumstances, the Company may
not obtain terms and conditions that permit the recognition of revenue upon
shipment of the licensed product or under the percentage of completion method of
contract accounting rules. Accordingly, revenue may not be recognized despite
the shipment of a product because specified milestones have not been met or
because applicable services have not been completed.
The Company in the past has and in the future expects to enter into fixed price
consulting agreements, particularly in response to increased competition in the
industry. The Company has recognized lower profit margins on certain fixed-price
service agreements when compared to variable agreements. No assurance can be
given that the Company will be able to conclude fixed-price agreements on terms
that will allow the Company to retain its historical operating margins.
The Company has historically generated a majority of its consulting revenue from
pre- and post-implementation services. Recently, the Company has provided
services which include, but are not limited to, Year 2000 readiness engagements,
best practice solution engagements and other hardware and software solutions.
The Company intends to continue its pursuit of consulting engagements for which
the Company believes it is qualified. There can be no assurances that these
engagements will result in profit margins equal to or greater than those
engagements that are specific to a customer's product implementation.
Furthermore, there can be no assurances that consulting revenue generated from
non-implementation related projects will continue in the future.
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Employee and facility related expenditures comprise a significant portion of the
Company's operating costs and expenses, and are therefore relatively fixed over
the short term. In addition, the Company's expense levels are based, in
significant part, on the Company's forecasted revenue. If revenue levels fall
below expectations, net income is likely to be adversely affected. There can be
no assurance that the Company will be able to maintain or to continue its
current level of profitability on a quarterly or annual basis in the future. Any
of the foregoing factors could cause the Company's future operating results to
fall below the expectations of public securities market analysts, which could
have an adverse effect on the trading price of the Company's common stock. See
"Volatility of Stock Price."
RELIANCE ON THIRD PARTY TECHNOLOGY. The Company generates revenue from
internally developed software products, some of which utilize technology
licensed from third parties. The Company expects to continue utilizing third
party technology and may enter into agreements with additional business
partners. If sales of software utilizing third party technology increase
disproportionately, gross margins may be below historical levels due to third
party royalty obligations. There can be no assurances that the third parties
will renew existing agreements with the Company or will not require financial
conditions which are unfavorable to the Company. Furthermore, there can be no
assurances that existing third party agreements will not be terminated.
INDUSTRY. Certain software companies, including the Company, have experienced
significant economic downturns as a result of technological shifts and
competitive pressures. These downturns are characterized by decreased product
demand, price erosion, work slowdowns and layoffs. The Company's operations may,
in the future, experience substantial fluctuations from period to period as a
consequence of such industry patterns and general economic and political
conditions which could affect the timing of orders from customers. There can be
no assurance that such factors will not have a materially adverse effect on the
Company's business, operating results or financial condition.
INTERNATIONAL. The Company plans to increase its presence in international
markets including, but not limited to, marketing the Tamaris and Aptos product
lines in additional countries. Risks associated with such pursuits include, but
are not limited to, the following: changing market demands, economic and
political conditions in foreign markets, foreign exchange fluctuations, longer
collections cycles, difficulty in managing a geographically dispersed
organization, and changes in international tax laws. The downturn in the Asia
Pacific and Russia business climate will have an adverse effect on some market
opportunities. Operating results are likely to be adversely affected if the
Company's expansion into international markets is not successful.
COMPETITION. The business and financial applications software market for large
and complex organizations is intensely competitive. The Company's principal
competitors with Tamaris solutions are Dun & Bradstreet Software Services, Inc.
(mainframe applications now owned by Geac Computer Corporation Limited), SAP AG,
Oracle and PeopleSoft, Inc. With Aptos solutions, the Company faces competition
from The BAAN Company N.V., Oracle Corporation, Lawson Software, Inc., Platinum
Software, Inc., Systems Union Group Ltd and Agresso AS. With the Horizon suite
of products, the Company faces competition from Hyperion Software, Longview and
Oracle Corporation. With the IMMPOWER suite of products, the Company faces
competition from Datastream Systems, Inc., Indus International, Inc., Marcam
Solutions, Inc., Mincom Pty Ltd., Product Software & Development, Inc. and SAP
AG.
The Company also competes to a lesser extent with other independent software
application vendors. Many of the Company's current and potential competitors
have substantially greater financial, technical, marketing and sales resources
than the Company. Some of these competitors also offer business application
products not offered by the Company, primarily in the areas of human resources
and manufacturing. However, Walker remains one of the few companies committed to
providing and enhancing applications for the mainframe environment. Many of the
competitors listed above compete with Walker by offering UNIX-based
applications.
The Company encounters competition from a broader range of firms in the market
for professional services. These competitors include the consulting divisions of
the major accounting firms which possess greater resources than the Company and
small independent firms which compete primarily on the basis of price of
services provided.
The principal competitive factors in the market for business and financial
applications software and services include product functionality, flexibility,
portability, integration, reliability, performance, product availability, speed
of implementation, quality of customer support and user documentation, vendor
reputation, experience, financial stability, cost effectiveness and price. The
Company believes that it competes favorably with respect to these factors. There
can be no assurance, however, that the Company will be able to compete
successfully in the future.
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RAPID TECHNOLOGICAL CHANGE. The software industry is characterized by rapid
technological change. The pace of change has accelerated due to advances in
mainframe and client/server technology and the growth in internet, intranet and
extranet utilization. The Company expects to evaluate potential opportunities
and may invest in those which are compatible with the Company's strategic
direction. However, there can be no assurance that any such investments will be
profitable. Furthermore, the Company's products are designed primarily for use
with certain mainframe and client/server systems. The introduction of products
embodying new technologies and the emergence of new industry standards can
render existing products obsolete. Accordingly, the Company's future success
depends in part upon its ability to continue to enhance its current products and
to develop and introduce new products that respond to evolving customer
requirements and keep pace with technological development and emerging industry
standards, such as new operating systems, hardware platforms, interfaces and
third party applications software. There can be no assurances that the Company
will be successful in developing and marketing product enhancements or new
products that respond to technological change, changes in customer requirements
or emerging industry standards, that the Company will not experience
difficulties that could delay or prevent the successful development,
introduction and marketing of such products and enhancements or that any new
products or enhancements that it may introduce will achieve market acceptance.
PRODUCT DEVELOPMENT. The Company's continued success is dependent on its
continued ability to introduce, develop and market new and enhanced versions of
its software products, although there can be no assurance that such ability can
be maintained. The Company plans to continue its investment in product
development in future periods. However, there can be no assurance that revenues
will be sufficient to support the future product development which is required
for the Company to be competitive. Although the Company may be able to release
new products in addition to enhancements to existing products, there can be no
assurance that the Company's new or upgraded products will be accepted, will not
be delayed or canceled, or will not contain errors or "bugs" that could affect
the performance of the product or cause damage to users' data.
PROPRIETARY RIGHTS. The Company regards its products as proprietary. Through
its license agreements with customers and its internal security systems,
confidentiality procedures and employee agreements, the Company has taken steps
to maintain the trade secrecy of its products. However, there can be no
assurances that misappropriation will not occur. In addition, the laws of some
countries do not protect the Company's proprietary rights to the same extent as
do the laws of the United States. There can be no assurance that the
confidentiality of any proprietary information will provide any meaningful
competitive advantage. The Company has no patents relating to its products. The
Company believes that, because of the rapid pace of technological change in the
computer software industry, that trade secrets are less significant than factors
such as the knowledge, ability and experience of the Company's employees,
frequent product enhancements and the timeliness and quality of support
services. There can be no assurance that the Company's current efforts to retain
its products as proprietary will be adequate.
Although the Company believes that its products do not infringe upon the
proprietary rights of third parties, there can be no assurance that third
parties will not assert infringement claims against the Company in the future
with respect to current or future products or that any such assertions may not
require the Company to enter into royalty arrangements or result in costly
litigation.
PRODUCT LIABILITY. The Company's license agreements with its customers contain
provisions designed to limit the Company's exposure to potential product
liability claims. It is possible, however, that the limitation of liability
provisions contained in such license agreements may not be enforced as a result
of international, federal, state and local laws or ordinances or unfavorable
judicial decisions. The license and support of the Company's software for use in
mission critical applications creates the risk of product liability claims
against the Company. Damage liability or injunctive relief resulting from such a
claim could cause a materially adverse impact on the Company's business,
operating results and financial condition.
EMPLOYEES. The Company believes that its continued success will depend in large
part upon its ability to attract, train and retain highly-skilled technical,
sales and marketing and managerial personnel. The Company continues to hire a
significant number of sales, marketing, services and technical personnel.
Because of the high level of demand, competition for such personnel is intense
and the Company from time to time experiences difficulty in locating candidates
with appropriate qualifications or within desired geographic locations. Revenue
growth is dependent on the Company's ability to attract, train, retain and
productively manage such personnel.
EXPANSION OF FACILITIES. Recently, commercial building vacancy rates have
significantly dropped in San Francisco, California, where the Company has its
headquarters. The Company's San Francisco office lease expires
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in 2007. However, the Company may experience difficulty obtaining additional
space if the Company's space requirements in San Francisco significantly exceed
the quantity of space the Company currently has under lease. In addition, the
increased demand for office space has caused commercial rental rates to increase
substantially. Failure to either obtain additional space, or obtain it on
reasonably attractive commercial terms, may inhibit the Company's ability to
grow or otherwise adversely affect the Company's operations and financial
results.
ACQUISITION RELATED RISKS. The Company has acquired and may continue to acquire
complimentary businesses, products or technology. The process of integrating an
acquired company's business into the Company's operations may result in
unforeseen operating difficulties and expenditures and may require significant
management attention that would otherwise be available for the ongoing
development of the Company's business. There can be no assurance that any
anticipated benefits of an acquisition will be realized. Future acquisitions by
the Company could result in potentially dilutive issuances of equity securities,
the incurrence of debt and contingent liabilities and amortization related to
goodwill and other intangible assets, which could materially affect the
Company's operating results and financial condition. Acquisitions involve
numerous risks, including difficulties in the assimilation of operations,
technologies and products of the acquired company, risks associated with
entering markets in which the Company has no or limited direct prior experience
and the potential loss of key employees of the acquired company.
VOLATILITY OF STOCK PRICE. High technology companies, including the Company,
frequently experience volatility in their common stock prices. Factors such as
quarterly fluctuations in results of operations, announcements of technological
innovations by the Company or its competitors or the introduction of new
products by the Company or its competitors and macroeconomic conditions in the
computer hardware and software industries generally may have a significant
adverse impact on the market price of the Company's stock. If revenues or
earnings in any quarter fail to meet the expectations of the investment
community, there could be an immediate impact on the Company's stock price. In
addition, the Company has issued shares and stock options which if sold directly
or exercised and sold on the open market in large concentrations, could cause
the Company's stock price to decline in the short term. Recent tax legislation
which lowered tax rates on capital gains could potentially result in increased
sales of all U.S. equity securities including the Company's common stock. Such
sales, if material, could negatively impact the stock price. Furthermore, the
stock market has from time to time experienced extreme price and volume
fluctuations which have particularly affected the market price for many high
technology companies, in some cases unrelated to the operating performance of
those companies. These broad market fluctuations may materially adversely affect
the market price of the stock of the Company.
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PART II. OTHER INFORMATION
- ---------------------------
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.2 Bylaws of Registrant, as amended to date.
10.3 1989 Employee Stock Option Plan, as amended to date.
10.10 1994 Equity Incentive Plan, as amended to date.
10.13(a) Amendment No. 1 (amended and restated) to 1995
Executive Employment Agreement between the Registrant
and Leonard Y. Liu
10.14 1995 Non-Statutory Stock Option Plan for Non-Officer
Employees, as amended to date.
10.17 Executive Severance Benefits Agreement entered into by
the Registrant and each of Paul Lord and Steve Tsui.
27.1 Financial Data Schedule (electronic filing only)
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the quarter ended
September 30, 1998.
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WALKER INTERACTIVE SYSTEMS, INC.
FORM 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WALKER INTERACTIVE SYSTEMS, INC.
--------------------------------
(Registrant)
Date: November 13, 1998 By: /s/ Barbara M. Hubbard
---------------- --------------------------
Barbara M. Hubbard
Vice President, Finance
(Chief Accounting Officer)
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WALKER INTERACTIVE SYSTEMS, INC.
FORM 10-Q
INDEX TO EXHIBITS
Exhibit Number Description
- --------------------------------------------------------------------------------
3.2 Bylaws of Registrant, as amended to date.
10.3 1989 Employee Stock Option Plan, as amended to date.
10.10 1994 Equity Incentive Plan, as amended to date.
10.13(a) Amendment No. 1 (amended and restated) to 1995 Executive
Employment Agreement between the Registrant and Leonard Y. Liu
10.14 1995 Non-Statutory Stock Option Plan for Non-Officer Employees,
as amended to date.
10.17 Executive Severance Benefits Agreement entered into by the
Registrant and each of Paul Lord and Steve Tsui.
27.1 Financial Data Schedule (electronic filing only)
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EXHIBIT 3.2
BYLAWS
OF
WALKER INTERACTIVE SYSTEMS, INC.
(A DELAWARE CORPORATION)
AS AMENDED THROUGH AUGUST 5, 1998
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BYLAWS
OF
WALKER INTERACTIVE SYSTEMS, INC.
(A DELAWARE CORPORATION)
AS AMENDED THROUGH AUGUST 5, 1998
ARTICLE I
OFFICES
Section 1. REGISTERED OFFICE. The registered office of the corporation
in the State of Delaware shall be in the City of Dover, County of Kent.
Section 2. OTHER OFFICES. The corporation shall also have and maintain
an office or principal place of business in San Francisco, California, at such
place as may be fixed by the Board of Directors, and may also have offices at
such other places, both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
CORPORATE SEAL
Section 3. CORPORATE SEAL. The corporate seal shall consist of a die
bearing the name of the corporation and the inscription, "Corporate Seal-
Delaware." Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE III
STOCKHOLDERS' MEETINGS
Section 4. PLACE OF MEETINGS. Meetings of the stockholders of the
corporation shall be held at such place, either within or without the State of
Delaware, as may be designated from time to time by the Board of Directors, or,
if not so designated, then at the office of the corporation required to be
maintained pursuant to Section 2 hereof.
Section 5. ANNUAL MEETING.
(a) The annual meeting of the stockholders of the corporation,
for the purpose of election of Directors and for such other business as may
lawfully come before it, shall be held on such date and at such time as may be
designated from time to time by the Board of Directors.
(b) At an annual meeting of the stockholders, only such business
shall be conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be: (A) specified in
the notice of meeting (or any
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supplement thereto) given by or at the direction of the Board of Directors, (B)
otherwise properly brought before the meeting by or at the direction of the
Board of Directors, or (C) otherwise properly brought before the meeting by a
stockholder. For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Secretary of the corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
corporation not later than the close of business on the sixtieth (60th) day nor
earlier than the close of business on the ninetieth (90th) day prior to the
first anniversary of the preceding year's annual meeting; provided, however,
that in the event that no annual meeting was held in the previous year or the
date of the annual meeting has been changed by more than thirty (30) days from
the date contemplated at the time of the previous year's proxy statement, notice
by the stockholder to be timely must be so received not earlier than the close
of business on the ninetieth (90th) day prior to such annual meeting and not
later than the close of business on the later of the sixtieth (60th) day prior
to such annual meeting or, in the event public announcement of the date of such
annual meeting is first made by the corporation fewer than seventy (70) days
prior to the date of such annual meeting, the close of business on the tenth
(10th) day following the day on which public announcement of the date of such
meeting is first made by the corporation. A stockholder's notice to the
Secretary shall set forth as to each matter the stockholder proposes to bring
before the annual meeting: (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting, (ii) the name and address, as they appear on the
corporation's books, of the stockholder proposing such business, (iii) the class
and number of shares of the corporation which are beneficially owned by the
stockholder, (iv) any material interest of the stockholder in such business and
(v) any other information that is required to be provided by the stockholder
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "1934 Act"), in his capacity as a proponent to a stockholder proposal.
Notwithstanding the foregoing, in order to include information with respect to a
stockholder proposal in the proxy statement and form of proxy for a
stockholder's meeting, stockholders must provide notice as required by the
regulations promulgated under the 1934 Act. Notwithstanding anything in these
Bylaws to the contrary, no business shall be conducted at any annual meeting
except in accordance with the procedures set forth in this paragraph (b). The
chairman of the annual meeting shall, if the facts warrant, determine and
declare at the meeting that business was not properly brought before the meeting
and in accordance with the provisions of this paragraph (b), and, if he should
so determine, he shall so declare at the meeting that any such business not
properly brought before the meeting shall not be transacted.
(c) Only persons who are nominated in accordance with the
procedures set forth in this paragraph (c) shall be eligible for election as
Directors. Nominations of persons for election to the Board of Directors of the
corporation may be made at a meeting of stockholders by or at the direction of
the Board of Directors or by any stockholder of the corporation entitled to vote
in the election of Directors at the meeting who complies with the notice
procedures set forth in this paragraph (c). Such nominations, other than those
made by or at the direction of the Board of Directors, shall be made pursuant to
timely notice in writing to the Secretary of the corporation in accordance with
the provisions of paragraph (b) of this Section 5. Such stockholder's notice
shall set forth (i) as to each person, if any, whom the stockholder proposes
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to nominate for election or re-election as a Director: (A) the name, age,
business address and residence address of such person, (B) the principal
occupation or employment of such person, (C) the class and number of shares of
the corporation which are beneficially owned by such person, (D) a description
of all arrangements or understandings between the stockholder and each nominee
and any other person or persons (naming such person or persons) pursuant to
which the nominations are to be made by the stockholder, and (E) any other
information relating to such person that is required to be disclosed in
solicitations of proxies for election of Directors, or is otherwise required, in
each case pursuant to Regulation 14A under the 1934 Act (including without
limitation such person's written consent to being named in the proxy statement,
if any, as a nominee and to serving as a Director if elected); and (ii) as to
such stockholder giving notice, the information required to be provided pursuant
to paragraph (b) of this Section 5. At the request of the Board of Directors,
any person nominated by a stockholder for election as a Director shall furnish
to the Secretary of the corporation that information required to be set forth in
the stockholder's notice of nomination which pertains to the nominee. No person
shall be eligible for election as a Director of the corporation unless nominated
in accordance with the procedures set forth in this paragraph (c). The chairman
of the meeting shall, if the facts warrant, determine and declare at the meeting
that a nomination was not made in accordance with the procedures prescribed by
these Bylaws, and if he should so determine, he shall so declare at the meeting,
and the defective nomination shall be disregarded.
(d) For purposes of this Section 5, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the 1934 Act.
Section 6. SPECIAL MEETINGS.
(a) Special meetings of the stockholders of the corporation may
be called, for any purpose or purposes, by (i) the Chairman of the Board of
Directors, (ii) the President, (iii) the Board of Directors pursuant to a
resolution adopted by a majority of the total number of authorized directors
(whether or not there exist any vacancies in previously authorized directorships
at the time any such resolution is presented to the Board of Directors for
adoption) or (iv) by the holders of shares entitled to cast not less than ten
percent (10%) of the votes at the meeting, and shall be held at such place, on
such date, and at such time as the President or the Board of Directors, as the
case may be, shall fix.
(b) If a special meeting is called by any person or persons
other than the Board of Directors, the request shall be in writing, specifying
the general nature of the business proposed to be transacted, and shall be
delivered personally or sent by registered mail or by telegraphic or other
facsimile transmission to the Chairman of the Board of Directors, the President,
or the Secretary of the corporation. No business may be transacted at such
special meeting otherwise than specified in such notice. The Board of Directors
shall determine the time and place of such special meeting, which shall be held
not less than thirty-five (35) nor more than one hundred twenty (120) days after
the date of the receipt of the request. Upon determination of the time and place
of the meeting, the officer receiving the request shall cause notice to be given
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<PAGE>
to the stockholders entitled to vote, in accordance with the provisions of
Section 7 of these Bylaws. If the notice is not given within sixty (60) days
after the receipt of the request, the person or persons requesting the meeting
may set the time and place of the meeting and give the Notice. Nothing contained
in this paragraph (b) shall be construed as limiting, fixing, or affecting the
time when a meeting of stockholders called by action of the Board of Directors
may be held.
Section 7. NOTICE OF MEETINGS. Except as otherwise provided by law or
the Certificate of Incorporation, written notice of each meeting of stockholders
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder entitled to vote at such meeting, such
notice to specify the place, date and hour and purpose or purposes of the
meeting. Notice of the time, place and purpose of any meeting of stockholders
may be waived in writing, signed by the person entitled to notice thereof,
either before or after such meeting, and will be waived by any stockholder by
his attendance thereat in person or by proxy, except when the stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Any stockholder so waiving notice of such meeting shall be
bound by the proceedings of any such meeting in all respects as if due notice
thereof had been given.
Section 8. QUORUM. At all meetings of stockholders, except where
otherwise provided by statute or by the Certificate of Incorporation, or by
these Bylaws, the presence, in person or by proxy duly authorized, of the
holders of a majority of the outstanding shares of stock entitled to vote shall
constitute a quorum for the transaction of business. In the absence of a
quorum, any meeting of stockholders may be adjourned, from time to time, either
by the chairman of the meeting or by vote of the holders of a majority of the
shares represented thereat, but no other business shall be transacted at such
Meeting. The stockholders present at a duly called or convened meeting, at
which a quorum is present, may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum. Except as otherwise provided by law, the Certificate of Incorporation
or these Bylaws, all action taken by the holders of a majority of the vote cast,
excluding abstentions, at any meeting at which a quorum is present shall be
valid and binding upon the corporation; provided, however, that Directors shall
be elected by a plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote on the election of
directors. Where a separate vote by a class or classes is required, a majority
of the outstanding shares of such class or classes, present in person or
represented by proxy, shall constitute a quorum entitled to take action with
respect to that vote on that matter and the affirmative vote of the majority
(plurality, in the case of the election of Directors) of shares of such class or
classes present in person or represented by proxy at the meeting shall be the
act of such class.
Section 9. ADJOURNMENT AND NOTICE OF ADJOURNED MEETINGS. Any meeting of
stockholders, whether annual or special, may be adjourned from time to time
either by the chairman of the meeting or by the vote of a majority of the shares
casting votes, excluding abstentions. When a meeting is adjourned to another
time or place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the
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<PAGE>
adjournment is taken. At the adjourned meeting, the corporation may transact any
business which might have been transacted at the original meeting. If the
adjournment is for more than thirty (30) days or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
Section 10. VOTING RIGHTS. For the purpose of determining those
stockholders entitled to vote at any meeting of the stockholders, except as
otherwise provided by law, only persons in whose names shares stand on the stock
records of the corporation on the record date, as provided in Section 12 of
these Bylaws, shall be entitled to vote at any meeting of stockholders. Every
person entitled to vote or execute consents shall have the right to do so either
in person or by an agent or agents authorized by a written proxy executed by
such person or his duly authorized agent, which proxy shall be filed with the
Secretary at or before the meeting at which it is to be used. An agent so
appointed need not be a stockholder. No proxy shall be voted after three (3)
years from its date of creation unless the proxy provides for a longer period.
All elections of Directors shall be by written ballot, unless otherwise provided
in the Certificate of Incorporation.
Section 11. JOINT OWNERS OF STOCK. If shares or other securities
having voting power stand of record in the names of two (2) or more persons,
whether fiduciaries, members of a partnership, joint tenants, tenants in common,
tenants by the entirety, or otherwise, or if two (2) or more persons have the
same fiduciary relationship respecting the same shares, unless the Secretary is
given written notice to the contrary and is furnished with a copy of the
instrument or order appointing them or creating the relationship wherein it is
so provided, their acts with respect to voting shall have the following effect:
(a) if only one (1) votes, his act binds all; (b) if more than one (1) votes,
the act of the majority so voting binds all; (c) if more than one (1) votes, but
the vote is evenly split on any particular matter, each faction may vote the
securities in question proportionally, or may apply to the Delaware Court of
Chancery for relief as provided in the General Corporation Law of Delaware,
Section 217(b). If the instrument filed with the Secretary shows that any such
tenancy is held in unequal interests, a majority or even-split for the purpose
of subsection (c) shall be a majority or even-split in interest.
Section 12. LIST OF STOCKHOLDERS. The Secretary shall prepare and
make, at least ten (10) days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at said meeting, arranged in
alphabetical order, showing the address of each stockholder and the number of
shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not
specified, at the place where the meeting is to be held. The list shall be
produced and kept at the time and place of meeting during the whole time thereof
and may be inspected by any stockholder who is present.
Section 13. ACTION WITHOUT MEETING.
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(a) Unless otherwise provided in the Certificate of Incorporation,
any action required by statute to be taken at any annual or special meeting of
the stockholders, or any action which may be taken at any annual or special
meeting of the stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted.
(b) Every written consent shall bear the date of signature of each
stockholder who signs the consent, and no written consent shall be effective to
take the corporate action referred to therein unless, within sixty (60) days of
the earliest dated consent delivered to the corporation in the manner herein
required, written consents signed by a sufficient number of stockholders to take
action are delivered to the corporation by delivery to its registered office in
the State of Delaware, its principal place of business or an officer or agent of
the corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to a corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
(c) Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing. If the action which is consented
to is such as would have required the filing of a certificate under any section
of the General Corporation Law of the State of Delaware if such action had been
voted on by stockholders at a meeting thereof, then the certificate filed under
such section shall state, in lieu of any statement required by such section
concerning any vote of stockholders, that written notice and written consent
have been given as provided in Section 228 of the General Corporation Law of
Delaware.
(d) Notwithstanding the foregoing, no such action by written
consent may be taken following the closing of the initial public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), covering the offer and sale of Common Stock
of the corporation (the "Initial Public Offering").
Section 14. ORGANIZATION.
(a) At every meeting of stockholders, the Chairman of the Board
of Directors, or, if a Chairman has not been appointed or is absent, the
President, or, if the President is absent, the most senior Vice President
present, or in the absence of any such officer, a chairman of the meeting chosen
by a majority in interest of the stockholders entitled to vote, present in
person or by proxy, shall act as chairman. The Secretary, or, in his absence, an
Assistant Secretary directed to do so by the President, shall act as secretary
of the meeting.
(b) The Board of Directors of the corporation shall be entitled
to make such rules or regulations for the conduct of meetings of stockholders as
it shall deem necessary, appropriate or convenient. Subject to such rules and
regulations of the Board of Directors, if any, the chairman of the meeting shall
have the right and authority to prescribe such rules, regulations
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and procedures and to do all such acts as, in the judgment of such chairman, are
necessary, appropriate or convenient for the proper conduct of the meeting,
including, without limitation, establishing an agenda or order of business for
the meeting, rules and procedures for maintaining order at the meeting and the
safety of those present, limitations on participation in such meeting to
stockholders of record of the corporation and their duly authorized and
constituted proxies and such other persons as the chairman shall permit,
restrictions on entry to the meeting after the time fixed for the commencement
thereof, limitations on the time allotted to questions or comments by
participants and regulation of the opening and closing of the polls for
balloting on matters which are to be voted on by ballot. Unless and to the
extent determined by the Board of Directors or the chairman of the meeting,
meetings of stockholders shall not be required to be held in accordance with
rules of parliamentary procedure.
ARTICLE IV
DIRECTORS
Section 15. NUMBER AND TERM OF OFFICE. The authorized number of
Directors of the corporation shall be fixed from time to time by the Board of
Directors by a resolution duly adopted by the Board of Directors. Directors
need not be stockholders unless so required by the Certificate of Incorporation.
If for any cause, the Directors shall not have been elected at an annual
meeting, they may be elected as soon thereafter as convenient at a special
meeting of the stockholders called for that purpose in the manner provided in
these Bylaws.
Section 16. POWERS. The powers of the corporation shall be exercised,
its business conducted and its property controlled by the Board of Directors,
except as may be otherwise provided by statute or by the Certificate of
Incorporation.
Section 17. CLASSES OF DIRECTORS. Following the closing of the Initial
Public Offering, the directors shall be divided into three classes designated as
Class I, Class II and Class III, respectively. Directors shall be assigned to
each class in accordance with a resolution or resolutions adopted by the Board
of Directors. At the first annual meeting of stockholders following the closing
of the Initial Public Offering, the term of office of the Class I directors
shall expire and Class I directors shall be elected for a full term of three (3)
years. At the second annual meeting of stockholders following the closing of
the Initial Public Offering, the term of office of the Class II directors shall
expire and Class II directors shall be elected for a full term of three (3)
years. At the third annual meeting of stockholders following the closing of the
Initial Public Offering, the term of office of the Class III directors shall
expire and Class III directors shall be elected for a full term of three (3)
years. At each succeeding annual meeting of stockholders, directors shall be
elected for a full term of three (3) years to succeed the directors of the class
whose terms expire at such annual meeting.
Notwithstanding the foregoing provisions of this Article, each director
shall serve until his successor is duly elected and qualified or until his
death, resignation or removal. No decrease
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in the number of directors constituting the Board of Directors shall shorten the
term of any incumbent director.
Section 18. VACANCIES. Unless otherwise provided in the Certificate of
Incorporation, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes shall be filled by either
(i) the affirmative vote of the holders of a majority of the voting power of the
then-outstanding shares of voting stock of the corporation entitled to vote
generally in the election of directors (the "Voting Stock") voting together as a
single class; or (ii) by the affirmative vote of a majority of the remaining
directors then in office, even though less than a quorum of the Board of
Directors. Newly created directorships resulting from any increase in the
number of directors shall, unless the Board of Directors determines by
resolution that any such newly created directorship shall be filled by the
stockholders, be filled only by the affirmative vote of the directors then in
office, even though less than a quorum of the Board of Directors. Any director
elected in accordance with the preceding sentence shall hold office for the
remainder of the full term of the class of directors in which the new
directorship was created or the vacancy occurred and until such director's
successor shall have been elected and qualified. A vacancy in the Board of
Directors shall be deemed to exist under this Bylaw in the case of the death,
removal or resignation of any Director, or if the stockholders fail at any
meeting of stockholders at which Directors are to be elected (including any
meeting referred to in Section 21 below) to elect the number of Directors then
constituting the whole Board of Directors.
Section 19. RESIGNATION. Any Director may resign at any time by
delivering his written resignation to the Secretary, such resignation to specify
whether it will be effective at a particular time, upon receipt by the Secretary
or at the pleasure of the Board of Directors. If no such specification is made,
it shall be deemed effective at the pleasure of the Board of Directors. When
one or more Directors shall resign from the Board of Directors, effective at a
future date, a majority of the Directors then in office, including those who
have so resigned, shall have power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective, and each Director so chosen shall hold office for the unexpired
portion of the term of the Director whose place shall be vacated and until his
successor shall have been duly elected and qualified.
Section 20. REMOVAL. Subject to any limitations imposed by law or the
Certificate of Incorporation, the Board of Directors, or any individual
Director, may be removed from office at any time (a) with cause by the
affirmative vote of the holders of at least a majority of the then outstanding
shares of the capital stock of the corporation entitled to vote at an election
of Directors; or (b) without cause by an affirmative vote of the holders of at
least sixty-six and two-thirds percent (66-2/3%) of such outstanding shares.
Section 21. MEETINGS.
(a) ANNUAL MEETINGS. The annual meeting of the Board of
Directors shall be held immediately before or after the annual meeting of
stockholders and at the place where such meeting is held. No notice of an annual
meeting of the Board of Directors shall be necessary and
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such meeting shall be held for the purpose of electing officers and transacting
such other business as may lawfully come before it.
(b) REGULAR MEETINGS. Except as hereinafter otherwise
provided, regular meetings of the Board of Directors shall be held in the office
of the corporation required to be maintained pursuant to Section 2 hereof.
Unless otherwise restricted by the Certificate of Incorporation, regular
meetings of the Board of Directors may also be held at any place within or
without the State of Delaware which has been designated by resolution of the
Board of Directors or the written consent of all directors.
(c) SPECIAL MEETINGS. Unless otherwise restricted by the
Certificate of Incorporation, special meetings of the Board of Directors may be
held at any time and place within or without the State of Delaware whenever
called by the Chairman of the Board, the President or any two of the Directors.
(d) TELEPHONE MEETINGS. Any member of the Board of Directors,
or of any committee thereof, may participate in a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
by such means shall constitute presence in person at such meeting.
(e) NOTICE OF MEETINGS. Written notice of the time and place
of all special meetings of the Board of Directors shall be given at least one
(1) day before the date of the meeting. Notice of any meeting may be waived in
writing at any time before or after the meeting and will be waived by any
Director by attendance thereat, except when the Director attends the meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
(f) WAIVER OF NOTICE. The transaction of all business at any
meeting of the Board of Directors, or any committee thereof, however called or
noticed, or wherever held, shall be as valid as though had at a meeting duly
held after regular call and notice, if a quorum be present and if, either before
or after the meeting, each of the Directors not present shall sign a written
waiver of notice, or a consent to holding such meeting, or an approval of the
minutes thereof. All such waivers, consents or approvals shall be filed with the
corporate records or made a part of the minutes of the meeting.
Section 22. QUORUM AND VOTING.
(a) Unless the Certificate of Incorporation requires a greater
number and except with respect to indemnification questions arising under
Section 42 hereof, for which a quorum shall be one-third of the exact number of
Directors fixed from time to time in accordance with the Certificate of
Incorporation, but not less than one (1), a quorum of the Board of Directors
shall consist of a majority of the exact number of Directors fixed from time to
time by the Board of Directors in accordance with the Certificate of
Incorporation, but not less than one (1); provided, however, at any meeting
whether a quorum be present or otherwise, a majority of the
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Directors present may adjourn from time to time until the time fixed for the
next regular meeting of the Board of Directors, without notice other than by
announcement at the meeting.
(b) At each meeting of the Board of Directors at which a quorum
is present, all questions and business shall be determined by a vote of a
majority of the Directors present, unless a different vote be required by law,
the Certificate of Incorporation or these Bylaws.
Section 23. ACTION WITHOUT MEETING. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and such writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
Section 24. FEES AND COMPENSATION. Directors shall be entitled to such
compensation for their services as may be approved by the Board of Directors,
including, if so approved, by resolution of the Board of Directors, a fixed sum
and expenses of attendance, if any, for attendance at each regular or special
meeting of the Board of Directors and at any meeting of a committee of the Board
of Directors. Nothing herein contained shall be construed to preclude any
Director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise and receiving compensation therefor.
Section 25. COMMITTEES.
(a) EXECUTIVE COMMITTEE. The Board of Directors may by
resolution passed by a majority of the whole Board of Directors appoint an
Executive Committee to consist of one (1) or more members of the Board of
Directors. The Executive Committee, to the extent permitted by law and
specifically granted by the Board of Directors, shall have and may exercise when
the Board of Directors is not in session all powers of the Board of Directors in
the management of the business and affairs of the corporation, including,
without limitation, the power and authority to declare a dividend or to
authorize the issuance of stock, except such committee shall not have the power
or authority to amend the Certificate of Incorporation, to adopt an agreement of
merger or consolidation, to recommend to the stockholders the sale, lease or
exchange of all or substantially all of the corporation's property and assets,
to recommend to the stockholders of the corporation a dissolution of the
corporation or a revocation of a dissolution or to amend these Bylaws.
(b) OTHER COMMITTEES. The Board of Directors may, by
resolution passed by a majority of the whole Board of Directors, from time to
time appoint such other committees as may be permitted by law. Such other
committees appointed by the Board of Directors shall consist of one (1) or more
members of the Board of Directors and shall have such powers and perform such
duties as may be prescribed by the resolution or resolutions creating such
committees, but in no event shall such committee have the powers denied to the
Executive Committee in these Bylaws.
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(c) TERM. Each member of a committee of the Board of Directors
shall serve a term on the committee coexistent with such member's term on the
Board of Directors. The Board of Directors, subject to the provisions of
subsections (a) or (b) of this Bylaw may at any time increase or decrease the
number of members of a committee or terminate the existence of a committee. The
membership of a committee member shall terminate on the date of his death or
voluntary resignation from the committee or from the Board of Directors. The
Board of Directors may at any time for any reason remove any individual
committee member and the Board of Directors may fill any committee vacancy
created by death, resignation, removal or increase in the number of members of
the committee. The Board of Directors may designate one or more Directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee, and, in addition, in the absence or
disqualification of any member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member.
(d) MEETINGS. Unless the Board of Directors shall otherwise
provide, regular meetings of the Executive Committee or any other committee
appointed pursuant to this Section 24 shall be held at such times and places as
are determined by the Board of Directors, or by any such committee, and when
notice thereof has been given to each member of such committee, no further
notice of such regular meetings need be given thereafter. Special meetings of
any such committee may be held at any place which has been determined from time
to time by such committee, and may be called by any Director who is a member of
such committee, upon written notice to the members of such committee of the time
and place of such special meeting given in the manner provided for the giving of
written notice to members of the Board of Directors of the time and place of
special meetings of the Board of Directors. Notice of any special meeting of any
committee may be waived in writing at any time before or after the meeting and
will be waived by any Director by attendance thereat, except when the Director
attends such special meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. A majority of the authorized number of
members of any such committee shall constitute a quorum for the transaction of
business, and the act of a majority of those present at any meeting at which a
quorum is present shall be the act of such committee.
Section 26. ORGANIZATION. At every meeting of the Directors, the
Chairman of the Board of Directors, or, if a Chairman has not been appointed or
is absent, the President, or if the President is absent, the most senior Vice
President, or, in the absence of any such officer, a chairman of the meeting
chosen by a majority of the Directors present, shall preside over the meeting.
The Secretary, or in his absence, an Assistant Secretary directed to do so by
the President, shall act as secretary of the meeting.
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ARTICLE V
OFFICERS
Section 27. OFFICERS DESIGNATED. The officers of the corporation shall
include, if and when designated by the Board of Directors, the Chairman of the
Board of Directors, the Chief Executive Officer, the President, one or more Vice
Presidents, the Secretary, the Chief Financial Officer, the Treasurer, the
Controller, all of whom shall be elected at the annual organizational meeting of
the Board of Directors. The order of the seniority of the Vice Presidents shall
be in the order of their nomination, unless otherwise determined by the Board of
directors. The Board of Directors may also appoint one or more Assistant
Secretaries, Assistant Treasurers, Assistant Controllers and such other officers
and agents with such powers and duties as it shall deem necessary. The Board of
Directors may assign such additional titles to one or more of the officers as it
shall deem appropriate. Any one person may hold any number of offices of the
corporation at any one time unless specifically prohibited therefrom by law.
The salaries and other compensation of the officers of the corporation shall be
fixed by or in the manner designated by the Board of Directors.
Section 28. TENURE AND DUTIES OF OFFICERS.
(a) GENERAL. All officers shall hold office at the pleasure of
the Board of Directors and until their successors shall have been duly elected
and qualified, unless sooner removed. Any officer elected or appointed by the
Board of Directors may be removed at any time by the Board of Directors. If the
office of any officer becomes vacant for any reason, the vacancy may be filled
by the Board of Directors.
(b) DUTIES OF CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman
of the Board of Directors, when present, shall preside at all meetings of the
stockholders and the Board of Directors. The Chairman of the Board of Directors
shall perform other duties commonly incident to his office and shall also
perform such other duties and have such other powers as the Board of Directors
shall designate from time to time. If there is no President, then the Chairman
of the Board of Directors shall also serve as the Chief Executive Officer of the
corporation and shall have the powers and duties prescribed in paragraph (c) of
this Section 27.
(c) DUTIES OF PRESIDENT. The President shall preside at all
meetings of the stockholders and at all meetings of the Board of Directors,
unless the Chairman of the Board of Directors has been appointed and is present.
The President shall be the Chief Executive Officer of the corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and officers of the corporation. The
President shall perform other duties commonly incident to his office and shall
also perform such other duties and have such other powers as the Board of
Directors shall designate from time to time.
(d) DUTIES OF VICE PRESIDENTS. The Vice Presidents, in the
order of their seniority, may assume and perform the duties of the President in
the absence or disability of the President or whenever the office of President
is vacant. The Vice Presidents shall perform other
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duties commonly incident to their office and shall also perform such other
duties and have such other powers as the Board of Directors or the President
shall designate from time to time.
(e) DUTIES OF SECRETARY. The Secretary shall attend all
meetings of the stockholders and of the Board of Directors and shall record all
acts and proceedings thereof in the minute book of the corporation. The
Secretary shall give notice in conformity with these Bylaws of all meetings of
the stockholders and of all meetings of the Board of Directors and any committee
thereof requiring notice. The Secretary shall perform all other duties given him
in these Bylaws and other duties commonly incident to his office and shall also
perform such other duties and have such other powers as the Board of Directors
shall designate from time to time. The President may direct any Assistant
Secretary to assume and perform the duties of the Secretary in the absence or
disability of the Secretary, and each Assistant Secretary shall perform other
duties commonly incident to his office and shall also perform such other duties
and have such other powers as the Board of Directors or the President shall
designate from time to time.
(f) DUTIES OF CHIEF FINANCIAL OFFICER. The Chief Financial
Officer shall keep or cause to be kept the books of account of the corporation
in a thorough and proper manner and shall render statements of the financial
affairs of the corporation in such form and as often as required by the Board of
Directors or the President. The Chief Financial Officer, subject to the order of
the Board of Directors, shall have the custody of all funds and securities of
the corporation. The Chief Financial Officer shall perform other duties commonly
incident to his office and shall also perform such other duties and have such
other powers as the Board of Directors or the President shall designate from
time to time. The President may direct the Treasurer or any Assistant Treasurer,
or the Controller or any Assistant Controller to assume and perform the duties
of the Chief Financial Officer in the absence or disability of the Chief
Financial Officer, and each Assistant Treasurer shall perform other duties
commonly incident to his office and shall also perform such other duties and
have such other powers as the Board of Directors or the President shall
designate from time to time.
Section 29. DELEGATION OF AUTHORITY. The Board of Directors may from
time to time delegate the powers or duties of any officer to any other officer
or agent, notwithstanding any provision hereof.
Section 30. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Board of Directors or to the President or to the
Secretary. Any such resignation shall be effective when received by the person
or persons to whom such notice is given, unless a later time is specified
therein, in which event the resignation shall become effective at such later
time. Unless otherwise specified in such notice, the acceptance of any such
resignation shall not be necessary to make it effective. Any resignation shall
be without prejudice to the rights, if any, of the corporation under any
contract with the resigning officer.
Section 31. REMOVAL. Any officer may be removed from office at any
time, either with or without cause, by the vote or written consent of a majority
of the Directors in office at the time, or by any committee or superior officers
upon whom such power of removal may have been conferred by the Board of
Directors.
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ARTICLE VI
EXECUTION OF CORPORATE INSTRUMENTS AND VOTING
OF SECURITIES OWNED BY THE CORPORATION
Section 32. EXECUTION OF CORPORATE INSTRUMENTS. The Board of Directors
may, in its discretion, determine the method and designate the signatory officer
or officers, or other person or persons, to execute on behalf of the corporation
any corporate instrument or document, or to sign on behalf of the corporation
the corporate name without limitation, or to enter into contracts on behalf of
the corporation, except where otherwise provided by law or these Bylaws, and
such execution or signature shall be binding upon the corporation.
Unless otherwise specifically determined by the Board of Directors or
otherwise required by law, promissory notes, deeds of trust, mortgages and other
evidences of indebtedness of the corporation, and other corporate instruments or
documents requiring the corporate seal, and certificates of shares of stock
owned by the corporation, shall be executed, signed or endorsed by the Chairman
of the Board of Directors, or the President or any Vice President, and by the
Secretary or Chief Financial Officer or Treasurer or any Assistant Secretary or
Assistant Treasurer. All other instruments and documents requiring the
corporate signature, but not requiring the corporate seal, may be executed as
aforesaid or in such other manner as may be directed by the Board of Directors.
All checks and drafts drawn on banks or other depositaries on funds to
the credit of the corporation or in special accounts of the corporation shall be
signed by such person or persons as the Board of Directors shall authorize so to
do.
Unless authorized or ratified by the Board of Directors or within the
agency power of an officer, no officer, agent or employee shall have any power
or authority to bind the corporation by any contract or engagement or to pledge
its credit or to render it liable for any purpose or for any amount.
Section 33. VOTING OF SECURITIES OWNED BY THE CORPORATION. All stock
and other securities of other corporations owned or held by the corporation for
itself, or for other parties in any capacity, shall be voted, and all proxies
with respect thereto shall be executed, by the person authorized so to do by
resolution of the Board of Directors, or, in the absence of such authorization,
by the Chairman of the Board of Directors, the President, or any Vice President.
ARTICLE VII
SHARES OF STOCK
Section 34. FORM AND EXECUTION OF CERTIFICATES. Certificates for the
shares of stock of the corporation shall be in such form as is consistent with
the Certificate of Incorporation and applicable law. Every holder of stock in
the corporation shall be entitled to have a certificate signed by or in the name
of the corporation by the Chairman of the Board of Directors, or the
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President or any Vice President and by the Treasurer or Assistant Treasurer or
the Secretary or Assistant Secretary, certifying the number of shares owned by
him in the corporation. Where such certificate is countersigned by a transfer
agent other than the corporation or its employee, or by a registrar other than
the corporation or its employee, any other signature on the certificate may be a
facsimile. In case any officer, transfer agent, or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent, or registrar before such certificate is
issued, it may be issued with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue. Each certificate shall state
upon the face or back thereof, in full or in summary, all of the designations,
preferences, limitations, restrictions on transfer and relative rights of the
shares authorized to be issued.
Section 35. LOST CERTIFICATES. A new certificate or certificates shall
be issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen, or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen, or destroyed. The corporation may require, as a condition
precedent to the issuance of a new certificate or certificates, the owner of
such lost, stolen, or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require or to
give the corporation a surety bond in such form and amount as it may direct as
indemnity against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost, stolen, or destroyed.
Section 36. TRANSFERS.
(a) Transfers of record of shares of stock of the corporation
shall be made only upon its books by the holders thereof, in person or by
attorney duly authorized, and upon the surrender of a properly endorsed
certificate or certificates for a like number of shares.
(b) The corporation shall have power to enter into and perform
any agreement with any number of stockholders of any one or more classes of
stock of the corporation to restrict the transfer of shares of stock of the
corporation of any one or more classes owned by such stockholders in any manner
not prohibited by the General Corporation Law of Delaware.
Section 37. FIXING RECORD DATES.
(a) In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, the Board of Directors may fix, in advance, a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall not be more than sixty (60) nor less than ten (10) days before the
date of such meeting. If no record date is fixed by the Board of Directors, the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or if notice is waived, at the close
of business on the day next preceding the day on which the meeting is held. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to
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any adjournment of the meeting; provided, however, that the Board of Directors
may fix a new record date for the adjourned meeting.
(b) In order that the corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is adopted
by the Board of Directors, and which date shall not be more than ten (10) days
after the date upon which the resolution fixing the record date is adopted by
the Board of directors. Any stockholder of record seeking to have the
stockholders authorize or take corporate action by written consent shall, by
written notice to the Secretary, request the Board of Directors to fix a record
date. The Board of Directors shall promptly, but in all events within ten (10)
days after the date on which such a request is received, adopt a resolution
fixing the record date. If no record date has been fixed by the Board of
Directors within ten (10) days of the date on which such a request is received,
the record date for determining stockholders entitled to consent to corporate
action in writing without a meeting, when no prior action by the Board of
Directors is required by applicable law, shall be the first date on which a
signed written consent setting forth the action taken or proposed to be taken is
delivered to the corporation by delivery to its registered office in the State
of Delaware, its principal place of business or an officer or agent of the
corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
If no record date has been fixed by the Board of Directors and prior action by
the Board of Directors is required by law, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action.
(c) In order that the corporation may determine the
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights or the stockholders entitled to exercise any rights
in respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted, and which record date shall be not more than
sixty (60) days prior to such action. If no record date is fixed, the record
date for determining stockholders for any such purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto.
Section 38. REGISTERED STOCKHOLDERS. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and shall not
be bound to recognize any equitable or other claim to or interest in such share
or shares on the part of any other person whether or not it shall have express
or other notice thereof, except as otherwise provided by the laws of Delaware.
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ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION
Section 39. EXECUTION OF OTHER SECURITIES. All bonds, debentures and
other corporate securities of the corporation, other than stock certificates
(covered in Section 34), may be signed by the Chairman of the Board of
Directors, the President or any Vice President, or such other person as may be
authorized by the Board of Directors, and the corporate seal impressed thereon
or a facsimile of such seal imprinted thereon and attested by the signature of
the Secretary or an Assistant Secretary, or the Chief Financial Officer or
Treasurer or an Assistant Treasurer; provided, however, that where any such
bond, debenture or other corporate security shall be authenticated by the manual
signature of a trustee under an indenture pursuant to which such bond, debenture
or other corporate security shall be issued, the signatures of the persons
signing and attesting the corporate seal on such bond, debenture or other
corporate security may be the imprinted facsimile of the signatures of such
persons. Interest coupons appertaining to any such bond, debenture or other
corporate security, authenticated by a trustee as aforesaid, shall be signed by
the Treasurer or an Assistant Treasurer of the corporation or such other person
as may be authorized by the Board of Directors, or bear imprinted thereon the
facsimile signature of such person. In case any officer who shall have signed or
attested any bond, debenture or other corporate security, or whose facsimile
signature shall appear thereon or on any such interest coupon, shall have ceased
to be such officer before the bond, debenture or other corporate security so
signed or attested shall have been delivered, such bond, debenture or other
corporate security nevertheless may be adopted by the corporation and issued and
delivered as though the person who signed the same or whose facsimile signature
shall have been used thereon had not ceased to be such officer of the
corporation.
ARTICLE IX
DIVIDENDS
Section 40. DECLARATION OF DIVIDENDS. Dividends upon the capital stock
of the corporation, subject to the provisions of the Certificate of
Incorporation, if any, may be declared by the Board of Directors pursuant to law
at any regular or special meeting. Dividends may be paid in cash, in property,
or in shares of the capital stock, subject to the provisions of the Certificate
of Incorporation.
Section 41. DIVIDEND RESERVE. Before payment of any dividend, there
may be set aside out of any funds of the corporation available for dividends
such sum or sums as the Board of Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the Board of Directors shall think
conducive to the interests of the corporation, and the Board of Directors may
modify or abolish any such reserve in the manner in which it was created.
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ARTICLE X
FISCAL YEAR
Section 42. FISCAL YEAR. The fiscal year of the corporation shall be
fixed by resolution of the Board of Directors.
ARTICLE XI
INDEMNIFICATION
Section 43. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND
OTHER AGENTS.
(a) DIRECTORS AND EXECUTIVE OFFICERS. The corporation shall
indemnify its Directors and executive officers to the fullest extent not
prohibited by the Delaware General Corporation Law; provided, however, that the
corporation may limit the extent of such indemnification by individual contracts
with its Directors and executive officers; and, provided, further, that the
corporation shall not be required to indemnify any Director or executive officer
in connection with any proceeding (or part thereof) initiated by such person or
any proceeding by such person against the corporation or its Directors,
officers, employees or other agents unless (i) such indemnification is expressly
required to be made by law, (ii) the proceeding was authorized by the Board of
Directors of the corporation or (iii) such indemnification is provided by the
corporation, in its sole discretion, pursuant to the powers vested in the
corporation under the Delaware General Corporation Law.
(b) OTHER OFFICERS, EMPLOYEES AND OTHER AGENTS. The
corporation shall have power to indemnify its other officers, employees and
other agents as set forth in the Delaware General Corporation Law.
(c) GOOD FAITH.
(i) For purposes of any determination under this Bylaw, a
Director or executive officer shall be deemed to have acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, to have
had no reasonable cause to believe that his conduct was unlawful, if his action
is based on information, opinions, reports and statements, including financial
statements and other financial data, in each case prepared or presented by:
(A) one or more officers or employees of the
corporation whom the Director or executive officer believed to be reliable
and competent in the matters presented;
(B) counsel, independent accountants or other persons
as to matters which the Director or executive officer believed to be within
such person's professional competence; and
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(C) with respect to a Director, a committee of the
Board upon which such Director does not serve, as to matters within such
Committee's designated authority, which committee the Director believes to merit
confidence; so long as, in each case, the Director or executive officer acts
without knowledge that would cause such reliance to be unwarranted.
(ii) The termination of any proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent shall
not, of itself, create a presumption that the person did not act in good faith
and in a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal proceeding, that
he had reasonable cause to believe that his conduct was unlawful.
(iii) The provisions of this paragraph (c) shall not be
deemed to be exclusive or to limit in any way the circumstances in which a
person may be deemed to have met the applicable standard of conduct set forth by
the Delaware General Corporation Law.
(d) EXPENSES. The corporation shall advance, prior to the
final disposition of any proceeding, promptly following request therefor, all
expenses incurred by any Director or executive officer in connection with such
proceeding upon receipt of an undertaking by or on behalf of such person to
repay said amounts if it should be determined ultimately that such person is not
entitled to be indemnified under this Bylaw or otherwise.
Notwithstanding the foregoing, unless otherwise determined pursuant to
paragraph (e) of this Bylaw, no advance shall be made by the corporation if a
determination is reasonably and promptly made (i) by the Board of Directors by a
majority vote of a quorum consisting of Directors who were not parties to the
proceeding, or (ii) if such quorum is not obtainable, or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, that the facts known to the decision-making party at the time
such determination is made demonstrate clearly and convincingly that such person
acted in bad faith or in a manner that such person did not believe to be in or
not opposed to the best interests of the corporation.
(e) ENFORCEMENT. Without the necessity of entering into an
express contract, all rights to indemnification and advances to Directors and
executive officers under this Bylaw shall be deemed to be contractual rights and
be effective to the same extent and as if provided for in a contract between the
corporation and the Director or executive officer. Any right to indemnification
or advances granted by this Bylaw to a Director or executive officer shall be
enforceable by or on behalf of the person holding such right in any court of
competent jurisdiction if (i) the claim for indemnification or advances is
denied, in whole or in part, or (ii) no disposition of such claim is made within
ninety (90) days of request therefor. The claimant in such enforcement action,
if successful in whole or in part, shall be entitled to be paid also the expense
of prosecuting his claim. The corporation shall be entitled to raise as a
defense to any such action that the claimant has not met the standards of
conduct that make it permissible under the Delaware General Corporation Law for
the corporation to indemnify the claimant for the amount claimed. Neither the
failure of the corporation (including its Board of Directors,
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independent legal counsel or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because he has met the applicable standard of
conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the corporation (including its Board of Directors, independent
legal counsel or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that claimant has not met the applicable standard of conduct.
(f) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any
person by this Bylaw shall not be exclusive of any other right which such person
may have or hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
Directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office. The corporation is specifically
authorized to enter into individual contracts with any or all of its Directors,
officers, employees or agents respecting indemnification and advances, to the
fullest extent not prohibited by the Delaware General Corporation Law.
(g) SURVIVAL OF RIGHTS. The rights conferred on any person by
this Bylaw shall continue as to a person who has ceased to be a Director,
officer, employee or other agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(h) INSURANCE. To the fullest extent permitted by the Delaware
General Corporation Law, the corporation, upon approval by the Board of
Directors, may purchase insurance on behalf of any person required or permitted
to be indemnified pursuant to this Bylaw.
(i) AMENDMENTS. Any repeal or modification of this Bylaw shall
only be prospective and shall not affect the rights under this Bylaw in effect
at the time of the alleged occurrence of any action or omission to act that is
the cause of any proceeding against any agent of the corporation.
(j) SAVING CLAUSE. If this Bylaw or any portion hereof shall
be invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each Director and executive officer to
the full extent not prohibited by any applicable portion of this Bylaw that
shall not have been invalidated, or by any other applicable law.
(k) CERTAIN DEFINITIONS. For the purposes of this Bylaw, the
following definitions shall apply:
(i) The term "proceeding" shall be broadly construed and
shall include, without limitation, the investigation, preparation, prosecution,
defense, settlement, arbitration and appeal of, and the giving of testimony in,
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative.
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(ii) The term "expenses" shall be broadly construed and
shall include, without limitation, court costs, attorneys' fees, witness fees,
fines, amounts paid in settlement or judgment and any other costs and expenses
of any nature or kind incurred in connection with any proceeding.
(iii) The term the "corporation" shall include, in addition
to the resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that any person
who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
the provisions of this Bylaw with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(iv) References to a "director," "officer," "employee," or
"agent" of the corporation shall include, without limitation, situations where
such person is serving at the request of the corporation as a director, officer,
employee, trustee or agent of another corporation, partnership, joint venture,
trust or other enterprise.
(v) References to "other enterprises" shall include
employee benefit plans; references to "fines" shall include any excise taxes
assessed on a person with respect to an employee benefit plan; and references to
"serving at the request of the corporation" shall include any service as a
director, officer, employee or agent of the corporation which imposes duties on,
or involves services by, such director, officer, employee, or agent with respect
to an employee benefit plan, its participants, or beneficiaries; and a person
who acted in good faith and in a manner he reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit plan shall
be deemed to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this Bylaw.
ARTICLE XII
NOTICES
Section 44. NOTICES.
(a) NOTICE TO STOCKHOLDERS. Whenever, under any provisions of
these Bylaws, notice is required to be given to any stockholder, it shall be
given in writing, timely and duly deposited in the United States mail, postage
prepaid, and addressed to his last known post office address as shown by the
stock record of the corporation or its transfer agent.
(b) NOTICE TO DIRECTORS. Any notice required to be given to
any Director may be given by the method stated in subsection (a), or by
facsimile, telex or telegram, except that such notice other than one which is
delivered personally shall be sent to such address as such
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Director shall have filed in writing with the Secretary, or, in the absence of
such filing, to the last known post office address of such Director.
(c) ADDRESS UNKNOWN. If no address of a stockholder or
Director be known, notice may be sent to the office of the corporation required
to be maintained pursuant to Section 2 hereof.
(d) AFFIDAVIT OF MAILING. An affidavit of mailing, executed by
a duly authorized and competent employee of the corporation or its transfer
agent appointed with respect to the class of stock affected, specifying the name
and address or the names and addresses of the stockholder or stockholders, or
Director or Directors, to whom any such notice or notices was or were given, and
the time and method of giving the same, shall be conclusive evidence of the
statements therein contained.
(e) TIME NOTICES DEEMED GIVEN. All notices given by mail, as
above provided, shall be deemed to have been given as at the time of mailing,
and all notices given by facsimile, telex or telegram shall be deemed to have
been given as of the sending time recorded at time of transmission.
(f) METHODS OF NOTICE. It shall not be necessary that the same
method of giving notice be employed in respect of all Directors, but one
permissible method may be employed in respect of any one or more, and any other
permissible method or methods may be employed in respect of any other or others.
(g) FAILURE TO RECEIVE NOTICE. The period or limitation of
time within which any stockholder may exercise any option or right, or enjoy any
privilege or benefit, or be required to act, or within which any Director may
exercise any power or right, or enjoy any privilege, pursuant to any notice sent
him in the manner above provided, shall not be affected or extended in any
manner by the failure of such stockholder or such Director to receive such
notice.
(h) NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL.
Whenever notice is required to be given, under any provision of law or of the
Certificate of Incorporation or Bylaws of the corporation, to any person with
whom communication is unlawful, the giving of such notice to such person shall
not be required and there shall be no duty to apply to any governmental
authority or agency for a license or permit to give such notice to such person.
Any action or meeting which shall be taken or held without notice to any such
person with whom communication is unlawful shall have the same force and effect
as if such notice had been duly given. In the event that the action taken by the
corporation is such as to require the filing of a certificate under any
provision of the Delaware General Corporation Law, the certificate shall state,
if such is the fact and if notice is required, that notice was given to all
persons entitled to receive notice except such persons with whom communication
is unlawful.
(i) NOTICE TO PERSON WITH UNDELIVERABLE ADDRESS. Whenever
notice is required to be given, under any provision of law or the Certificate of
Incorporation or Bylaws
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of the corporation, to any stockholder to whom (i) notice of two consecutive
annual meetings, and all notices of meetings or of the taking of action by
written consent without a meeting to such person during the period between such
two consecutive annual meetings, or (ii) all, and at least two, payments (if
sent by first class mail) of dividends or interest on securities during a
twelve-(12)-month period, have been mailed addressed to such person at his
address as shown on the records of the corporation and have been returned
undeliverable, the giving of such notice to such person shall not be required.
Any action or meeting which shall be taken or held without notice to such person
shall have the same force and effect as if such notice had been duly given. If
any such person shall deliver to the corporation a written notice setting forth
his then current address, the requirement that notice be given to such person
shall be reinstated. In the event that the action taken by the corporation is
such as to require the filing of a certificate under any provision of the
Delaware General Corporation Law, the certificate need not state that notice was
not given to persons to whom notice was not required to be given pursuant to
this paragraph.
ARTICLE XIII
AMENDMENTS
Section 45. AMENDMENTS. Except as otherwise set forth in paragraph (i)
of Section 43 of these Bylaws, the Bylaws may be altered or amended or new
Bylaws adopted by the affirmative vote of at least sixty-six and two-thirds
percent (66-2/3%) of the voting power of all of the then-outstanding shares of
the Voting Stock. The Board of Directors shall also have the power, if such
power is conferred upon the Board of Directors by the Certificate of
Incorporation, to adopt, amend or repeal Bylaws.
ARTICLE XIV
LOANS TO OFFICERS
Section 46. LOANS TO OFFICERS. The corporation may lend money to, or
guarantee any obligation of, or otherwise assist any officer or other employee
of the corporation or of its subsidiaries, including any officer or employee who
is a Director of the corporation or its subsidiaries, whenever, in the judgment
of the Board of Directors, such loan, guarantee or assistance may reasonably be
expected to benefit the corporation. The loan, guarantee or other assistance
may be with or without interest and may be unsecured, or secured in such manner
as the Board of Directors shall approve, including, without limitation, a pledge
of shares of stock of the corporation. Nothing in this Bylaw shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
ARTICLE XV
MISCELLANEOUS
Section 47. ANNUAL REPORT.
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(a) Subject to the provisions of paragraph (b) of this Bylaw,
the Board of Directors shall cause an annual report to be sent to each
stockholder of the corporation not later than one hundred twenty (120) days
after the close of the corporation's fiscal year. Such report shall include a
balance sheet as of the end of such fiscal year and an income statement and
statement of changes in financial position for such fiscal year, accompanied by
any report thereon of independent accounts or, if there is no such report, the
certificate of an authorized officer of the corporation that such statements
were prepared without audit from the books and records of the corporation. When
there are more than 100 stockholders of record of the corporation's shares, as
determined by Section 605 of the California Corporations Code, additional
information as required by Section 1501(b) of the California Corporations Code
shall also be contained in such report, provided that if the corporation has a
class of securities registered under Section 12 of the 1934 Act, that Act shall
take precedence. Such report shall be sent to stockholders at least fifteen (15)
days prior to the next annual meeting of stockholders after the end of the
fiscal year to which it relates.
(b) If and so long as there are fewer than 100 holders of
record of the corporation's shares, the requirement of sending of an annual
report to the stockholders of the corporation is hereby expressly waived.
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I OFFICES................................................... 1
Section 1. Registered Office....................................... 1
Section 2. Other Offices........................................... 1
ARTICLE II CORPORATE SEAL............................................ 1
Section 3. Corporate Seal.......................................... 1
ARTICLE III STOCKHOLDERS' MEETINGS.................................... 1
Section 4. Place of Meetings....................................... 1
Section 5. Annual Meeting.......................................... 1
Section 6. Special Meetings........................................ 3
Section 7. Notice of Meetings...................................... 4
Section 8. Quorum.................................................. 4
Section 9. Adjournment and Notice of Adjourned Meetings............ 4
Section 10. Voting Rights........................................... 5
Section 11. Joint Owners of Stock................................... 5
Section 12. List of Stockholders.................................... 5
Section 13. Action Without Meeting.................................. 5
Section 14. Organization............................................ 6
ARTICLE IV DIRECTORS................................................. 7
Section 15. Number and Term of Office............................... 7
Section 16. Powers.................................................. 7
Section 17. Classes of Directors.................................... 7
Section 18. Vacancies............................................... 7
Section 19. Resignation............................................. 8
Section 20. Removal................................................. 8
Section 21. Meetings................................................ 8
(a) Annual Meetings......................................... 8
(b) Regular Meetings........................................ 8
(c) Special Meetings........................................ 8
(d) Telephone Meetings...................................... 9
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
(e) Notice of Meetings...................................... 9
(f) Waiver of Notice........................................ 9
Section 22. Quorum and Voting....................................... 9
Section 23. Action Without Meeting.................................. 9
Section 24. Fees and Compensation................................... 9
Section 25. Committees.............................................. 10
(a) Executive Committee..................................... 10
(b) Other Committees........................................ 10
(c) Term.................................................... 10
(d) Meetings................................................ 10
Section 26. Organization............................................ 11
ARTICLE V OFFICERS.................................................. 11
Section 27. Officers Designated..................................... 11
Section 28. Tenure and Duties of Officers........................... 11
(a) General................................................. 11
(b) Duties of Chairman of the Board of Directors............ 12
(c) Duties of President..................................... 12
(d) Duties of Vice Presidents............................... 12
(e) Duties of Secretary..................................... 12
(f) Duties of Chief Financial Officer....................... 12
Section 29. Delegation of Authority................................. 13
Section 30. Resignations............................................ 13
Section 31. Removal................................................. 13
ARTICLE VI EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF
SECURITIES OWNED BY THE CORPORATION....................... 13
Section 32. Execution of Corporate Instruments...................... 13
Section 33. Voting of Securities Owned by the Corporation........... 14
ARTICLE VII SHARES OF STOCK........................................... 14
Section 34. Form and Execution of Certificates...................... 14
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
Section 35. Lost Certificates....................................... 14
Section 36. Transfers............................................... 14
Section 37. Fixing Record Dates..................................... 15
Section 38. Registered Stockholders................................. 16
ARTICLE VIII OTHER SECURITIES OF THE CORPORATION....................... 16
Section 39. Execution of Other Securities........................... 16
ARTICLE IX DIVIDENDS................................................. 16
Section 40. Declaration of Dividends................................ 16
Section 41. Dividend Reserve........................................ 16
ARTICLE X FISCAL YEAR............................................... 17
Section 42. Fiscal Year............................................. 17
ARTICLE XI INDEMNIFICATION........................................... 17
Section 43. Indemnification of Directors, Officers, Employees and
Other Agents............................................ 17
(a) Directors and Executive Officers........................ 17
(b) Other Officers, Employees and Other Agents.............. 17
(c) Good Faith.............................................. 17
(d) Expenses................................................ 18
(e) Enforcement............................................. 18
(f) Non-Exclusivity of Rights............................... 19
(g) Survival of Rights...................................... 19
(h) Insurance............................................... 19
(i) Amendments.............................................. 19
(j) Saving Clause........................................... 19
(k) Certain Definitions..................................... 19
ARTICLE XII NOTICES................................................. 20
Section 44. Notices................................................. 20
(a) Notice to Stockholders.................................. 20
(b) Notice to Directors..................................... 20
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
(c) Address Unknown......................................... 20
(d) Affidavit of Mailing.................................... 20
(e) Time Notices Deemed Given............................... 21
(f) Methods of Notice....................................... 21
(g) Failure to Receive Notice............................... 21
(h) Notice to Person with Whom Communication Is Unlawful.... 21
(i) Notice to Person with Undeliverable Address............. 21
ARTICLE XIII AMENDMENTS................................................ 22
Section 45. Amendments.............................................. 22
ARTICLE XIV LOANS TO OFFICERS......................................... 22
Section 46. Loans to Officers....................................... 22
ARTICLE XV MISCELLANEOUS............................................. 22
Section 47. Annual Report........................................... 22
</TABLE>
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EXHIBIT 10.3
WALKER INTERACTIVE SYSTEMS
1989 STOCK OPTION PLAN
Adopted October 16, 1989
Approved by the Stockholders on October 16, 1989
As Amended by the Board on May 1, 1991
As Amended by the Board on January 15, 1992
As Approved by the Stockholders on March 6, 1992
As Amended by the Board on August 5, 1998
1. PURPOSE.
(a) The purpose of the Plan is to provide a means by which selected key
employees and directors (if declared eligible under paragraph 4) of and
"Company"), and its Affiliates, as defined in subparagraph l(b), may be
given an opportunity to purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company, as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended from time to time (the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of
persons now employed by or serving as consultants or directors to the Company,
to secure and retain the services of persons capable of filling such positions,
and to provide incentives for such persons to exert maximum efforts for the
success of the Company.
(d) The Company intends that the options issued under the Plan shall, in
the discretion of the Board of Directors of the Company (the "Board") or any
committee to which responsibility for administration of the Plan has been
delegated pursuant to subparagraph 2(c), be either incentive stock options as
that term is used in Section 422 of the Code ("Incentive Stock
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Options"), or options which do not qualify as incentive stock options
("Supplemental Stock Options"). All options shall be separately designated
Incentive Stock Options or Supplemental Stock Options at the time of grant, and
in such form as issued pursuant to paragraph 5, and a separate certificate or
certificates shall be issued for shares purchased on exercise of each type of
option. An option designated as a Supplemental Stock Option shall not be treated
as an incentive stock option.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a committee, as provided in subparagraph 2(c).
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(i) To determine from time to time which of the persons eligible
under the Plan shall be granted options; when and how the option shall be
granted; whether the option will be an Incentive Stock Option or a
Supplemental Stock Option; the provisions of each option granted (which
need not be identical), including the time or times during the term of each
option within which all or portions of such option may be exercised; and
the number of shares for which an option shall be granted to each such
person.
(ii) To construe and interpret the Plan and options granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any option agreement,
in a manner and to the extent it shall deem necessary or expedient to
make the Plan fully effective.
(iii) To amend the Plan as provided in paragraph 10.
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(iv) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company.
(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members (the "Committee"), all of the members
of which Committee shall be disinterested persons, if required and as defined by
the provisions of subparagraph 2(d). If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board, subject, however, to
such resolutions, not inconsistent with the provisions of the Plan, as may be
adopted from time to time by the Board. The Board may abolish the Committee at
any time and revest in the Board the administration of the Plan. Additionally,
prior to the date of the first registration of an equity security of the Company
under Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and notwithstanding anything to the contrary contained herein,
the Board may delegate administration of the Plan to any person or persons and
the term "Committee" shall apply to any person or persons to whom such authority
has been delegated.
(d) The term "disinterested person," as used in this Plan, shall mean a
director: (i) who was not during the one (1) year prior to service as an
administrator of the Plan granted or awarded equity securities pursuant to the
Plan or any other plan of the Company or any of its affiliates entitling the
participants therein to acquire equity securities of the Company or any of its
affiliates except as permitted by Rule l6b-3(c)(2)(i) promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") ("Rule l6b-
3(c)(2)(i)"); or (ii) who is otherwise considered to be a "disinterested person"
in accordance with Rule 16b-3(c)(2)(i), or any other applicable rules,
regulations or interpretations of the Securities and Exchange
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Commission. Any such person shall otherwise comply with the requirements of Rule
16b-3 promulgated under the Exchange Act.
(e) Any requirement that an administrator of the Plan be a
"disinterested person" shall not apply (i) prior to the date of the first
registration of an equity security of the Company under Section 12 of the
Exchange Act, or (ii) if the Board or the Committee expressly declares that such
requirement shall not apply.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 9 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to options granted
under the Plan shall not exceed in the aggregate One Million Six Hundred Fifty
Thousand (1,650,000) shares of the Company's common stock. If any option granted
under the Plan shall for any reason expire or otherwise terminate without having
been exercised in full, the stock not purchased under such option shall again
become available for the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
(c) An Incentive Stock Option may be granted to an eligible person under
the Plan only if the aggregate fair market value (determined at the time the
option is granted) of the stock with respect to which incentive stock options
(as defined in the Code) granted after 1986 are exercisable for the first time
by such optionee during any calendar year under all incentive stock option plans
of the Company and its Affiliates does not exceed one hundred thousand dollars
($100,000). Should it be determined that an option granted under the Plan
exceeds such maximum for any reason other than the failure of a good faith
attempt to value the stock subject to the option, such option shall be
considered a Supplemental Stock Option to the extent, but
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only to the extent, of such excess; provided, however, that should it be
determined that an entire option or any portion thereof does not qualify for
treatment as an Incentive Stock Option by reason of exceeding such maximum, such
option or the applicable portion shall be considered a Supplemental Stock
Option.
4. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to employees (including
officers) of the Company or its Affiliates. Supplemental Stock Options may be
granted only to key employees (including officers) of, directors of or
consultants to the Company or its Affiliates.
(b) A director shall in no event be eligible for the benefits of the
Plan unless at the time discretion is exercised in the selection of the director
as a person to whom options may be granted, or in the determination of the
number of shares which may be covered by options granted to the director: (i)
the Board has delegated its discretionary authority over the Plan to a Committee
which consists solely of "disinterested persons" as defined in subparagraph
2(d); or (ii) the Plan otherwise complies with the requirements of Rule 16b-3
promulgated under the Exchange Act, as from time to time in effect. The Board
shall otherwise comply with the requirements of Rule 16b-3 promulgated under the
Exchange Act, as from time to time in effect. This subparagraph 4(b) shall not
apply (i) prior to the date of the first registration of an equity security of
the Company under Section 12 of the Exchange Act, or (ii) if the Board or
Committee expressly declares that such requirement shall not apply.
(c) No person shall be eligible for the grant of an option under the
Plan if, at the time of grant, such person owns (or is deemed to own pursuant to
Section 425(d) of the Code) stock possessing more than ten percent (10%) of the
total combined voting power of all
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classes of stock of the Company or of any of its Affiliates unless the exercise
price of such option is at least one hundred ten percent (110 %) of the fair
market value of such stock at the date of grant and the term of the option does
not exceed five (5) years from the date of grant.
5. OPTION PROVISIONS.
Each option shall be in such form and shall contain such terms and conditions as
the Board or the Committee shall deem appropriate. The provisions of separate
options need not be identical, but each option shall include (through
incorporation of provisions hereof by reference in the option or otherwise) the
substance of each of the following provisions:
(a) The term of any option shall not be greater than ten (10) years from
the date it was granted.
(b) The exercise price of each Incentive Stock Option shall be not less
than one hundred percent (100%) of the fair market value of the stock subject to
the option on the date the option is granted. The exercise price of each
Supplemental Stock Option shall be not less than eighty-five percent (85%) of
the fair market value of the stock subject to the option on the date the option
is granted.
(c) The purchase price of stock acquired pursuant to an option shall be
paid, to the extent permitted by applicable statutes and regulations, either (i)
in cash at the time the option is exercised, or (ii) at the discretion of the
Board or the Committee, either at the time of the grant or exercise of the
option, (A) by delivery to the Company of other common stock of the Company, (B)
according to a deferred payment or other arrangement (which may include, without
limiting the generality of the foregoing, the use of other common stock of the
Company) with the person to whom the option is granted or to whom the option is
transferred pursuant to subparagraph 5(d), or (C) in any other form of legal
consideration that may be acceptable to the Board or the Committee.
In the case of any deferred payment arrangement, interest shall be payable
at least
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annually and shall be charged at the minimum rate of interest necessary to avoid
the treatment as interest, under any applicable provisions of the Code, of any
amounts other than amounts stated to be interest under the deferred payment
arrangement.
(d) An option shall not be transferable except by will or by the laws of
descent and distribution, and shall be exercisable during the lifetime of the
person to whom the option is granted only by such person.
(e) The total number of shares of stock subject to an option may, but
need not, be allotted in periodic installments, which may, but need not, be
equal and which installments may not be less than twenty percent (20%) per year.
From time to time during each of such installment periods, the option may become
exercisable ("vest") with respect to some or all of the shares allotted to that
period, and may be exercised with respect to some or all of the shares allotted
to such period and/or any prior period as to which the option was not fully
exercised. During the remainder of the term of the option (if its term extends
beyond the end of the installment periods), the option may be exercised from
time to time with respect to any shares then remaining subject to the option.
The provisions of this subparagraph 5(e) are subject to any option provisions
governing the minimum number of shares as to which an option may be exercised.
(f) The Company may require any optionee, or any person to whom an
option is transferred under subparagraph 5(d), as a condition of exercising any
such option, (1) to give written assurances satisfactory to the Company as to
the optionee's knowledge and experience in financial and business matters and/or
to employ a purchaser representative reasonably satisfactory to the Company who
is knowledgeable and experienced in financial and business matters, and that he
or she is capable of evaluating, alone or together with the purchaser
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representative, the merits and risks of exercising the option; and (2) to give
written assurances satisfactory to the Company stating that such person is
acquiring the stock subject to the option for such person's own account and not
with any present intention of selling or otherwise distributing the stock. These
requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (i) the issuance of the shares upon the exercise of the option
has been registered under a then currently effective registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), or (ii) as
to any particular requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances under the
then applicable securities laws.
(g) An option shall terminate three (3) months after termination of the
optionee's employment or relationship as a consultant or director with the
Company or an Affiliate, unless (i) such termination is due to such person's
permanent and total disability, within the meaning of Section 422(c)(6) of the
Code, in which case the option may, but need not, provide that it may be
exercised at any time within one (1) year following such termination of
employment or relationship as a consultant or director; or (ii) the optionee
dies while in the employ of or while serving as a consultant or director to the
Company or an Affiliate, or within not more than three (3) months after
termination of such relationship, in which case the option may, but need not,
provide that it may be exercised at any time within eighteen (18) months
following the death of the optionee by the person or persons to whom the
optionee's rights under such option pass by will or by the laws of descent and
distribution; or (iii) the option by its terms specifies either (a) that it
shall terminate sooner than three (3) months after termination of the optionee's
employment or relationship as a consultant or director, or (b) that it may be
exercised more than three (3) months after termination of the relationship with
the Company or an
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Affiliate. This subparagraph 5(g) shall not be construed to extend the term of
any option or to permit anyone to exercise the option after expiration of its
term, nor shall it be construed to increase the number of shares as to which any
option is exercisable from the amount exercisable on the date of termination of
the optionee's employment or relationship as a consultant or director.
(h) The option may, but need not, include a provision whereby the
optionee may elect at any time during the term of his or her employment or
relationship as a consultant or director with the Company or any Affiliate to
exercise the option as to any part or all of the shares subject to the option
prior to the stated vesting date of the option or of any installment or
installments specified in the option. Any shares so purchased from any unvested
installment or option may be subject to a repurchase right in favor of the
Company or to any other restriction the Board or the Committee determines to be
appropriate.
(i) To the extent provided by the terms of an option, the optionee may
satisfy any federal, state or local tax withholding obligation relating to the
exercise of such option by any of the following means or by a combination of
such means: (1) tendering a cash payment; (2) authorizing the Company to
withhold from the shares of the common stock otherwise issuable to the
participant as a result of the exercise of the stock option a number of shares
having a fair market value less than or equal to the amount of the withholding
tax obligation; or (3) delivering to the Company owned and unencumbered shares
of the common stock having a market value less than or equal to the amount of
the withholding tax obligation.
6. COVENANTS OF THE COMPANY.
(a) During the terms of the options granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such options.
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(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the options granted under the
Plan; provided, however, that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any option granted under the
Plan or any stock issued or issuable pursuant to any such option. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems necessary
for the lawful issuance and sale of stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell stock upon exercise of
such options unless and until such authority is obtained.
7. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to options granted under the
Plan shall constitute general funds of the Company.
8. MISCELLANEOUS.
(a) The Board or the Committee shall have the power to accelerate the
time during which an option may be exercised or the time during which an option
or any part thereof will vest pursuant to subparagraph 5(e), notwithstanding the
provisions in the option stating the time during which it may be exercised or
the time during which it will vest.
(b) Neither an optionee nor any person to whom an option is transferred
under subparagraph 5(d) shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to such option unless
and until such person has satisfied all requirements for exercise of the option
pursuant to its terms.
(c) Throughout the term of any option granted pursuant to the Plan, the
Company shall make available to the holder of such option, not later than one
hundred twenty
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(120) days after the close of each of the Company's fiscal years during the
option term, upon request, such financial and other information regarding the
Company as comprises the annual report to the shareholders of the Company
provided for in the bylaws of the Company.
(d) Nothing in the Plan or any instrument executed or option granted
pursuant thereto shall confer upon any eligible employee or optionee any right
to continue in the employ of the Company or any Affiliate (or to continue acting
as a consultant or director) or shall affect the right of the Company or any
Affiliate to terminate the employment or consulting relationship or directorship
of any eligible employee or optionee with or without cause. In the event that an
optionee is permitted or otherwise entitled to take a leave of absence, the
Company shall have the unilateral right to (i) determine whether such leave of
absence will be treated as a termination of employment for purposes of paragraph
5(g) hereof and corresponding provisions of any outstanding options, and (ii)
suspend or otherwise delay the time or times at which the shares subject to the
option would otherwise vest.
9. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject
to any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Plan and outstanding
options will be appropriately adjusted in the class(es) and maximum number of
shares subject to the Plan and the class(es) and number of shares and price per
share of stock subject to outstanding options.
(b) The term "Change in Control" as used in this Plan means (1) a
dissolution, liquidation or sale of substantially all of the assets of the
Company; (2) a merger or consolidation
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in which the Company is not the surviving corporation; or (3) a reverse merger
in which the Company is the surviving corporation but the shares of the
Company's common stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise.
(c) In the event of a Change in Control, then, to the extent permitted
by applicable law: (i) any surviving corporation shall assume any options
outstanding under the Plan or shall substitute similar options for those
outstanding under the Plan, or (ii) such options shall continue in full force
and effect. In the event any surviving corporation refuses to assume or continue
such options, or to substitute similar options for those outstanding under the
Plan, then, with respect to options held by persons then performing services as
employees, consultants or directors for the Company, the time during which such
options become vested or may be exercised shall be accelerated and the options
terminated if not exercised prior to such event. In the event of a dissolution
or liquidation of the Company, any options outstanding under the Plan shall
terminate if not exercised prior to such event.
(d) In the event the employment of an employee of the Company is
terminated due to an Involuntary Termination Without Cause within twenty-four
(24) months after the effective date of a Change in Control, then all options
issued and outstanding under the Plan and held by the employee shall accelerate
and become immediately vested and exercisable. Notwithstanding the foregoing, if
the Change in Control was a transaction that was accounted for as a pooling of
interests for financial reporting purposes, then the unvested portion of such
stock options shall not accelerate unless the Company receives reasonable
assurances from the Company's independent public accountants (and from the
acquiring party's independent public
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accountants) that in their good faith judgment such acceleration will not
adversely affect the pooling of interests accounting treatment of such Change in
Control transaction.
(e) The term "Cause" as used in this Plan means termination of an
employee's employment with the Company for any of the following reasons as
determined in good faith by the Company:
(i) an intentional act which materially injures the Company;
(ii) an intentional refusal or failure to follow lawful and
reasonable directions of the Board or the individual to whom the employee
reports;
(iii) a willful and habitual neglect of duties; or
(iv) a conviction of a felony involving moral turpitude which is
reasonably likely to inflict or has inflicted material injury on the
Company.
(f) The term "Involuntary Termination Without Cause" as used in this
Plan means an employee's dismissal or discharge other than for Cause. The
termination of an employee's employment as a result of the employee's death or
disability will not be deemed to be an Involuntary Termination Without Cause.
10. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 9 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the shareholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
(i) Increase the number of shares reserved for options under the
Plan;
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(ii) Modify the requirements as to eligibility for participation in
the Plan (to the extent such modification requires shareholder approval in
order for the Plan to satisfy the requirements of Section 422(b) of the
Code); or
(iii) Modify the Plan in any other way if such modification requires
shareholder approval in order for the Plan to satisfy the requirements of
Section 422(b) of the Code or to comply with the requirements of Rule 16b-3
promulgated under the Exchange Act.
(b) It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide optionees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to employee incentive stock
options and/or to bring the Plan and/or incentive stock options granted under it
into compliance therewith.
(c) Rights and obligations under any option granted before amendment of
the Plan shall not be altered or impaired by any amendment of the Plan unless:
(i) the Company requests the consent of the person to whom the option was
granted and (ii) such person consents in writing.
11. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate ten (10) years from the date the
Plan is adopted by the Board or approved by the shareholders of the Company,
whichever is earlier. No options may be granted under the Plan while the Plan is
suspended or after it is terminated.
(b) Rights and obligations under any option granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom the option was granted.
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12. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no
options granted under the Plan shall be exercised unless and until the Plan has
been approved by the shareholders of the Company, and, if required, an
appropriate permit has been issued by the Commissioner of Corporations of the
State of California.
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EXHIBIT 10.10
WALKER INTERACTIVE SYSTEMS, INC.
1994 EQUITY INCENTIVE PLAN
ADOPTED FEBRUARY 17, 1994
AS AMENDED MAY 11, 1994
APPROVED BY THE STOCKHOLDERS MAY 23, 1994
AS AMENDED FEBRUARY 11, 1998
APPROVED BY THE STOCKHOLDERS MAY 21, 1998
AS AMENDED AUGUST 5, 1998
1. PURPOSES.
(a) The purpose of the 1994 Equity Incentive Plan (the "Plan") is to
provide a means by which employees of and consultants to the Company, and its
Affiliates, may be given an opportunity to benefit from increases in value of
the stock of the Company through the granting of (i) Incentive Stock Options,
(ii) Nonstatutory Stock Options, (iii) stock bonuses, and (iv) rights to
purchase restricted stock, all as defined below.
(b) The Company, by means of the Plan, seeks to retain the services
of persons who are now Employees or Directors of or Consultants to the Company,
to secure and retain the services of new Employees, Directors and Consultants,
and to provide incentives for such persons to exert maximum efforts for the
success of the Company.
(c) The Company intends that the Stock Awards issued under the Plan
shall, in the discretion of the Board or any Committee to which responsibility
for administration of the Plan has been delegated pursuant to subsection 3(c),
be either (i) Options granted pursuant to paragraph 6 hereof, including
Incentive Stock Options and Nonstatutory Stock Options, or (ii) stock bonuses or
rights to purchase restricted stock granted pursuant to paragraph 7 hereof. All
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Options shall be separately designated Incentive Stock Options or Nonstatutory
Stock Options at the time of grant, and in such form as issued pursuant to
section 6, and a separate certificate or certificates will be issued for shares
purchased on exercise of each type of Option.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f) respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CAUSE" means termination of an Employee's employment with the
Company for any of the following reasons as determined in good faith by the
Company:
(i) an intentional act which materially injures the Company;
(ii) an intentional refusal or failure to follow lawful and
reasonable directions of the Board or the individual to whom the Employee
reports;
(iii) a willful and habitual neglect of duties; or
(iv) a conviction of a felony involving moral turpitude which
is reasonably likely to inflict or has inflicted material injury on the Company.
(d) "CHANGE IN CONTROL" means:
(i) a dissolution, liquidation or sale of substantially all of
the assets of the Company;
(ii) a merger or consolidation in which the Company is not the
surviving corporation; or
(iii) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's common stock outstanding immediately
preceding
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the merger are converted by virtue of the merger into other property, whether in
the form of securities, cash or otherwise.
(e) "CODE" means the Internal Revenue Code of 1986, as amended.
(f) "COMMITTEE" means a Committee appointed by the Board in
accordance with subsection 3(c) of the Plan.
(g) "COMPANY" means Walker Interactive Systems, Inc., a Delaware
corporation.
(h) "CONSULTANT" means any person, including an advisor, engaged by
the Company or an Affiliate to render consulting services and who is compensated
for such services, provided that the term "Consultant" shall not include
Directors who are paid only a director's fee by the Company or who are not
compensated by the Company for their services as Directors.
(i) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT" means
the employment or relationship as a Director or Consultant is not interrupted or
terminated by the Company or any Affiliate. The Board, in its sole discretion,
may determine whether Continuous Status as an Employee, Director or Consultant
shall be considered interrupted in the case of: (i) any leave of absence
approved by the Board, including sick leave, military leave, or any other
personal leave; provided, however, that for purposes of Incentive Stock Options,
any such leave may not exceed ninety (90) days, unless reemployment upon the
expiration of such leave is guaranteed by contract (including certain Company
policies) or statute; or (ii) transfers between locations of the Company or
between the Company, Affiliates or its successor.
(j) "DIRECTOR" means a member of the Board.
(k) "DISABILITY" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
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(l) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(n) "FAIR MARKET VALUE" means, as of any date, the value of the
common stock of the Company as determined as follows:
(i) If the common stock is listed on any established stock
exchange or a national market system, including without limitation the National
Market System of the National Association of Securities Dealers, Inc. Automated
Quotation ("Nasdaq") System, the Fair Market Value of a share of common stock
shall be the closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in common stock) on the last market trading day prior
to the day of determination, as reported in the Wall Street Journal or such
other source as the Board deems reliable;
(ii) If the common stock is quoted on the Nasdaq System (but
not on the National Market System thereof) or is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a share of common stock shall be the mean between the bid and
asked prices for the common stock on the last market trading day prior to the
day of determination, as reported in the Wall Street Journal or such other
source as the Board deems reliable;
(iii) In the absence of an established market for the common
stock, the Fair Market Value shall be determined in good faith by the Board.
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(o) "INCENTIVE STOCK OPTION" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(p) "INVOLUNTARY TERMINATION WITHOUT CAUSE" means an Employee's
dismissal or discharge other than for Cause. The termination of an Employee's
employment as a result of the Employee's death or disability will not be deemed
to be an Involuntary Termination Without Cause.
(q) "NON-EMPLOYEE DIRECTOR" means a Director of the Company who
either (i) is not a current Employee or Officer of the Company or its parent or
a subsidiary, does not receive compensation (directly or indirectly) from the
Company or its parent or a subsidiary for services rendered as a consultant or
in any capacity other than as a Director (except for an amount as to which
disclosure would not be required under Item 404(a) of Regulation S-K promulgated
pursuant to the Securities Act ("Regulation S-K")), does not possess an interest
in any other transaction as to which disclosure would be required under Item
404(a) of Regulation S-K and is not engaged in a business relationship as to
which disclosure would be required under Item 404(b) of Regulation S-K; or (ii)
is otherwise considered a "non-employee director" for purposes of Rule 16b-3.
(r) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.
(s) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(t) "OPTION" means a stock option granted pursuant to the Plan.
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(u) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the Plan.
(v) "OPTIONEE" means an Employee, Director or Consultant who holds an
outstanding Option.
(w) "OUTSIDE DIRECTOR" means a Director who either (A) is not a
current employee of the Company or an affiliated corporation, is not a former
employee of the Company or an affiliated corporation receiving compensation for
prior services (other than benefits under a tax qualified pension plan), was not
an officer of the Company or an affiliated corporation at any time, and is not
currently receiving compensation for personal services in any capacity other
than as a Director, or (B) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.
(x) "PLAN" means this 1994 Equity Incentive Plan.
(y) "RULE 16B-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(z) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(aa) "STOCK AWARD" means any right granted under the Plan, including
any Option, any stock bonus and any right to purchase restricted stock.
(bb) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. The Stock Award Agreement is subject to the terms
and conditions of the Plan.
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3. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a committee, including the Committee, as
provided in subsection 3(c).
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(i) To determine from time to time which of the persons
eligible under the Plan shall be granted Stock Awards; when and how Stock Awards
shall be granted; whether a Stock Award will be an Incentive Stock Option, a
Nonstatutory Stock Option, a stock bonus, a right to purchase restricted stock,
or a combination of the foregoing; the provisions of each Stock Award granted
(which need not be identical), including the time or times when a person shall
be permitted to receive stock pursuant to a Stock Award; and the number of
shares with respect to which Stock Awards shall be granted to each such person.
(ii) To construe and interpret the Plan and Stock Awards
granted under it, and to establish, amend and revoke rules and regulations for
its administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.
(iii) To amend the Plan as provided in Section 12.
(iv) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests of
the Company.
(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members (the "Committee"). All of the
members of such
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Committee may be Non-Employee Directors and/or Outside Directors. If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board (and references in this Plan to the Board shall thereafter be to
the Committee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan. Notwithstanding anything in this Section 3 to the
contrary, the Board may delegate to a committee of one or more members of the
Board the authority to grant options to eligible persons who are not then
subject to Section 16 of the Exchange Act and to eligible persons with respect
to whom the Company does not wish to comply with Section 162(m) of the Code.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 11 relating to adjustments
upon changes in stock, the stock that may be issued pursuant to Stock Awards
shall not exceed in the aggregate two million four hundred thousand (2,400,000)
shares of the Company's common stock. If any Stock Award shall for any reason
expire or otherwise terminate without having been exercised in full, the stock
not purchased under such Stock Award shall again become available for the Plan.
(b) The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to Employees. Stock
Awards other than Incentive Stock Options may be granted only to Employees,
Directors or Consultants.
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(b) No person shall be eligible for the grant of an Incentive Stock
Option if, at the time of grant, such person owns (or is deemed to own pursuant
to Section 424(d) of the Code) stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or of any
of its Affiliates unless the exercise price of such Incentive Stock Option is at
least one hundred ten percent (110%) of the Fair Market Value of such stock at
the date of grant and the Incentive Stock Option is not exercisable after the
expiration of five (5) years from the date of grant.
(c) No employee shall be eligible to be granted Options covering more
than five hundred thousand (500,000) shares of the Company's common stock in any
twelve (12) month period.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise)
the substance of each of the following provisions:
(a) TERM. No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.
(b) PRICE. The exercise price of each Incentive Stock Option shall
be not less than one hundred percent (100%) of the Fair Market Value of the
stock subject to the Option on the date the Option is granted. The exercise
price of each Nonstatutory Stock Option shall be not less than eighty-five
percent (85%) of the Fair Market Value of the stock subject to the Option on the
date the Option is granted.
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(c) CONSIDERATION. The purchase price of stock acquired pursuant to
an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the option is exercised, or (ii) at
the discretion of the Board or the duly authorized Committee, either at the time
of the grant or exercise of the Option, (A) by delivery to the Company of other
common stock of the Company, or (B) in any other form of legal consideration
that may be acceptable to the Board.
(d) TRANSFERABILITY. An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the person to whom the Incentive
Stock Option is granted only by such person. A Nonstatutory Stock Option shall
be transferable to the extent provided in the Option Agreement. If the Option
Agreement for the Nonstatutory Stock Option does not provide for
transferability, then the Nonstatutory Stock Option shall not be transferable
except by will or by the laws of descent and distribution and shall be
exercisable during the lifetime of the person to whom the Nonstatutory Stock
Option is granted only by such person.
(e) VESTING. The total number of shares of stock subject to an
Option may, but need not, be allotted in periodic installments (which may, but
need not, be equal). The Option Agreement may provide that from time to time
during each of such installment periods, the Option may become exercisable
("vest") with respect to some or all of the shares allotted to that period, and
may be exercised with respect to some or all of the shares allotted to such
period and/or any prior period as to which the Option became vested but was not
fully exercised. During the remainder of the term of the Option (if its term
extends beyond the end of the installment periods) the Option may be exercised
from time to time with respect to any shares then remaining subject to the
Option. The Option may be subject to such other terms and
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conditions on the time or times when it may be exercised (which may be based on
performance criteria) as the Board may deem appropriate. The provisions of this
subsection 6(e) are subject to any Option provisions governing the minimum
number of shares as to which an Option may be exercised.
(f) SECURITIES LAW COMPLIANCE. The Company may require any Optionee,
or any person to whom an Option is transferred under subsection 6(d), as a
condition of exercising any such Option, (1) to give written assurances
satisfactory to the Company as to the Optionee's knowledge and experience in
financial and business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and experienced in
financial and business matters, and that he or she is capable of evaluating,
alone or together with the purchaser representative, the merits and risks of
exercising the Option; and (2) to give written assurances satisfactory to the
Company stating that such person is acquiring the stock subject to the Option
for such person's own account and not with any present intention of selling or
otherwise distributing the stock. These requirements, and any assurances given
pursuant to such requirements, shall be inoperative if (i) the issuance of the
shares upon the exercise of the Option has been registered under a then
currently effective registration statement under the Securities Act, or (ii) as
to any particular requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances under the
then applicable securities laws.
(g) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. In the event an Optionee's Continuous Status as an Employee,
Director or Consultant terminates (other than upon the Optionee's death or
Disability), the Optionee may exercise his or her Option, but only within such
period of time as is determined by the Board,
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and only to the extent that the Optionee was entitled to exercise it at the date
of termination (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement). In the case of an Incentive Stock
Option, the Board shall determine such period of time (in no event to exceed
three (3) months from the date of termination) when the Option is granted. If,
at the date of termination, the Optionee is not entitled to exercise his or her
entire Option, the shares covered by the unexercisable portion of the Option
shall revert to the Plan. If, after termination, the Optionee does not exercise
his or her Option within the time specified in the Option Agreement, the Option
shall terminate, and the shares covered by such Option shall revert to the Plan.
(h) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous
Status as an Employee, Director or Consultant terminates as a result of the
Optionee's Disability, the Optionee may exercise his or her Option, but only
within twelve (12) months from the date of such termination (or such shorter
period specified in the Option Agreement), and only to the extent that the
Optionee was entitled to exercise it at the date of such termination (but in no
event later than the expiration of the term of such Option as set forth in the
Option Agreement). If, at the date of termination, the Optionee is not entitled
to exercise his or her entire Option, the shares covered by the unexercisable
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified herein,
the Option shall terminate, and the shares covered by such Option shall revert
to the Plan.
(i) DEATH OF OPTIONEE. In the event of the death of an Optionee, the
Option may be exercised, at any time within eighteen (18) months following the
date of death (or such shorter period specified in the Option Agreement) (but in
no event later than the expiration of the term of such Option as set forth in
the Option Agreement), by the Optionee's estate or by a
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person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent the Optionee was entitled to exercise the Option at the
date of death. If, at the time of death, the Optionee was not entitled to
exercise his or her entire Option, the shares covered by the unexercisable
portion of the Option shall revert to the Plan. If, after death, the Optionee's
estate or a person who acquired 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 shares covered by such Option shall revert to
the Plan.
(j) EARLY EXERCISE. The Option may, but need not, include a
provision whereby the Optionee may elect at any time while an Employee, Director
or Consultant to exercise the Option as to any part or all of the shares subject
to the Option prior to the full vesting of the Option. Any unvested shares so
purchased may be subject to a repurchase right in favor of the Company or to any
other restriction the Board determines to be appropriate.
(k) WITHHOLDING. To the extent provided by the terms of an Option
Agreement, the Optionee may satisfy any federal, state or local tax withholding
obligation relating to the exercise of such Option by any of the following means
or by a combination of such means: (1) tendering a cash payment; (2) authorizing
the Company to withhold shares from the shares of the common stock otherwise
issuable to the participant as a result of the exercise of the Option; or (3)
delivering to the Company owned and unencumbered shares of the common stock of
the Company.
(l) RE-LOAD OPTIONS. Without in any way limiting the authority of
the Board or duly authorized Committee to make or not to make grants of Options
hereunder, the Board or duly authorized Committee shall have the authority (but
not an obligation) to include as part of any Option Agreement a provision
entitling the Optionee to a further Option (a "Re-Load
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Option") in the event the Optionee exercises the Option evidenced by the Option
agreement, in whole or in part, by surrendering other shares of common stock in
accordance with this Plan and the terms and conditions of the Option Agreement.
Any such Re-Load Option (i) shall be for a number of shares equal to the number
of shares surrendered as part or all of the exercise price of such Option; (ii)
shall have an expiration date which is the same as the expiration date of the
Option the exercise of which gave rise to such Re-Load Option; and (iii) shall
have an exercise price which is equal to one hundred percent (100%) of the Fair
Market Value of the common stock subject to the Re-Load Option on the date of
exercise of the original Option or, in the case of a Re-Load Option which is an
Incentive Stock Option and which is granted to a 10% stockholder (as described
in subparagraph 5(b)), shall have an exercise price which is equal to one
hundred ten percent (110%) of the Fair Market Value of the stock subject to the
Re-Load Option on the date of exercise of the original Option.
Any such Re-Load Option may be an Incentive Stock Option or a Nonqualified
Stock Option, as the Board or duly authorized Committee may designate at the
time of the grant of the original Option, provided, however, that the
designation of any Re-Load Option as an Incentive Stock Option shall be subject
to the one hundred thousand dollars ($100,000) annual limitation on
exercisability of Incentive Stock Options described in subparagraph 10(d) of the
Plan and in Section 422(d) of the Code. There shall be no Re-Load Options on a
Re-Load Option. Any such Re-Load Option shall be subject to the availability of
sufficient shares under subparagraph 4(a) and shall be subject to such other
terms and conditions as the Board or duly authorized Committee may determine.
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7. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.
Each stock bonus or restricted stock purchase agreement shall be in
such form and shall contain such terms and conditions as the Board or the duly
authorized Committee shall deem appropriate. The terms and conditions of stock
bonus or restricted stock purchase agreements may change from time to time, and
the terms and conditions of separate agreements need not be identical, but each
stock bonus or restricted stock purchase agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions as appropriate:
(a) PURCHASE PRICE. The purchase price under each stock purchase
agreement shall be such amount as the Board or Committee shall determine and
designate in such agreement. Notwithstanding the foregoing, the Board or the
Committee may determine that eligible participants in the Plan may be awarded
stock pursuant to a stock bonus agreement in consideration for past services
actually rendered to the Company or for its benefit.
(b) TRANSFERABILITY. No rights under a stock bonus or restricted
stock purchase agreement shall be assignable by any participant under the Plan,
either voluntarily or by operation of law, except where such assignment is
required by law or expressly authorized by the terms of the applicable stock
bonus or restricted stock purchase agreement.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to
a stock purchase agreement shall be paid either: (i) in cash at the time of
purchase; or (ii) in any other form of legal consideration that may be
acceptable to the Board or the Committee in their discretion. Notwithstanding
the foregoing, the Board or the Committee to which administration of the Plan
has been delegated may award stock pursuant to a stock bonus agreement in
consideration for past services actually rendered to the Company or for its
benefit.
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(d) VESTING. Shares of stock sold or awarded under the Plan may, but
need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board or the
Committee.
(e) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. In the event a Participant's Continuous Status as an Employee,
Director or Consultant terminates, the Company may repurchase or otherwise
reacquire any or all of the shares of stock held by that person which have not
vested as of the date of termination under the terms of the stock bonus or
restricted stock purchase agreement between the Company and such person.
8. COVENANTS OF THE COMPANY.
(a) During the terms of the Stock Awards, the Company shall keep
available at all times the number of shares of stock required to satisfy such
Stock Awards up to the number of shares of stock authorized under the Plan.
(b) The Company shall seek to obtain from each regulatory commission
or agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock under the Stock Awards; provided, however, that
this undertaking shall not require the Company to register under the Securities
Act either the Plan, any Stock Award or any stock issued or issuable pursuant to
any such Stock Award. If, after reasonable efforts, the Company is unable to
obtain from any such regulatory commission or agency the authority which counsel
for the Company deems necessary for the lawful issuance and sale of stock under
the Plan, the Company shall be relieved from any liability for failure to issue
and sell stock under such Stock Awards unless and until such authority is
obtained.
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9. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Stock Awards shall
constitute general funds of the Company.
10. MISCELLANEOUS.
(a) The Board shall have the power to accelerate the time at which a
Stock Award may first be exercised or the time during which a Stock Award or any
part thereof will vest, notwithstanding the provisions in the Stock Award
stating the time at which it may first be exercised or the time during which it
will vest.
(b) Neither an Optionee nor any person to whom an Option is
transferred under subsection 6(d) shall be deemed to be the holder of, or to
have any of the rights of a holder with respect to, any shares subject to such
Option unless and until such person has satisfied all requirements for exercise
of the Option pursuant to its terms.
(c) Nothing in the Plan or any instrument executed or Stock Award
granted pursuant thereto shall confer upon any Employee, Director, Consultant,
Optionee, or other holder of Stock Awards any right to continue in the employ of
the Company or any Affiliate (or to continue acting as a Director or Consultant)
or shall affect the right of the Company or any Affiliate to terminate the
employment or relationship as a Director or Consultant of any Employee,
Director, Consultant or Optionee with or without cause.
(d) To the extent that the aggregate Fair Market Value (determined at
the time of grant) of stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar year under
all plans of the Company and its Affiliates exceeds one hundred thousand dollars
($100,000), the Options or portions thereof which exceed
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such limit (according to the order in which they were granted) shall be treated
as Nonstatutory Stock Options.
11. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or
subject to any Stock Award, without the receipt of any consideration by the
Company (through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan will be appropriately adjusted in the
class(es) and maximum number of securities subject to the Plan pursuant to
subsection 4(a) and the maximum number of securities subject to award to any
person pursuant to subsection 5(c), and the outstanding Stock Awards will be
appropriately adjusted in the class(es) and number of securities and price per
share of stock subject to such outstanding Stock Awards. Such adjustments shall
be made by the Board, the determination of which shall be final, binding and
conclusive. (The conversion of any convertible securities of the Company shall
not be treated as a transaction "without receipt of consideration" by the
Company.)
(b) In the event of a Change in Control then, to the extent permitted
by applicable law: (i) any surviving corporation shall assume any Stock Awards
outstanding under the Plan or shall substitute similar Stock Awards for those
outstanding under the Plan; or (ii) such Stock Awards shall continue in full
force and effect. In the event any surviving corporation refuses to assume or
continue such Stock Awards or to substitute similar Stock Awards for those
outstanding under the Plan, then, with respect to such Stock Awards held by
persons then performing services as employees, consultants or directors for the
Company, the
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time during which such Stock Awards become vested or may be exercised shall be
accelerated and any outstanding unexercised rights under any Stock Awards
terminated if not exercised prior to such event.
(c) In the event an Employee's employment is terminated due to an
Involuntary Termination Without Cause within twenty-four (24) months after the
effective date of a Change in Control, then all Stock Awards issued and
outstanding under the Plan and held by the Employee shall accelerate and become
immediately vested and exercisable. Notwithstanding the foregoing, if the
Change in Control was a transaction that was accounted for as a pooling of
interests for financial reporting purposes, then the unvested portion of such
Stock Awards shall not accelerate unless the Company receives reasonable
assurances from the Company's independent public accountants (and from the
acquiring party's independent public accountants) that in their good faith
judgment such acceleration will not adversely affect the pooling of interests
accounting treatment of such Change in Control transaction.
12. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 11 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company within twelve (12) months before or after the adoption of the
amendment, to the extent stockholder approval is necessary to satisfy the
requirements of Section 422 of the Code, Rule 16b-3 or any Nasdaq or securities
exchange listing requirements.
(b) The Board may in its sole discretion submit any other amendment
to the Plan for stockholder approval, including, but not limited to, amendments
to the Plan intended to satisfy the requirements of Section 162(m) of the Code
and the regulations promulgated
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thereunder regarding the exclusion of performance-based compensation from the
limit on corporate deductibility of compensation paid to certain executive
officers.
(c) It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide Optionees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to Incentive Stock Options
and/or to bring the Plan and/or Incentive Stock Options granted under it into
compliance therewith.
(d) Rights and obligations under any Stock Award granted before
amendment of the Plan shall not be altered or impaired by any amendment of the
Plan unless (i) the Company requests the consent of the person to whom the Stock
Award was granted and (ii) such person consents in writing.
13. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on February 16, 2004. No Stock
Awards may be granted under the Plan while the Plan is suspended or after it is
terminated.
(b) Rights and obligations under any Stock Award granted while the
Plan is in effect shall not be altered or impaired by suspension or termination
of the Plan, except with the consent of the person to whom the Stock Award was
granted.
14. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no Stock Awards
granted under the Plan shall be exercisable unless and until the Plan has been
approved by the stockholders of the Company.
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EXHIBIT 10.13(a)
AMENDMENT NO. 1
TO
EXECUTIVE EMPLOYMENT AGREEMENT
(AMENDED AND RESTATED VERSION)
THIS AMENDMENT NO. 1 (this "Amendment"), as amended and restated, is
entered into by and between WALKER INTERACTIVE SYSTEMS, INC. (the "Company") and
LEONARD Y. LIU ("Executive"), effective August 5, 1998.
WITNESSETH
WHEREAS, the Company and Executive entered into an Executive Employment
Agreement effective June 25, 1995 (the "Employment Agreement") and the original
Amendment No. 1 to the Employment Agreement effective as of March 4, 1998;
WHEREAS, the parties desire to modify certain provisions in the original
Amendment No. 1 in order to provide Executive greater benefits than those
provided by such original Amendment No. 1 in return for Executive's continued
service to the Company;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, it is hereby agreed by and between the parties hereto that
Amendment No.1 to the Employment Agreement is hereby amended and restated to
read as follows:
1. SUBSTITUTION OF PROVISIONS. The following provisions shall replace Sections
7.1(a) and 7.1(b) of the Employment Agreement:
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7.1 COMPANY INITIATED TERMINATION.
(a) If within the first six (6) months of Executive's employment with
the Company, the Company terminates Executive's employment without cause or
Executive terminates employment because the Company has reduced Executive's
responsibilities, functions, titles, or overall compensation package, Executive
shall receive, as severance: (i) continued payment of Executive's base salary
for twelve (12) months from the Effective Date, (ii) continued health care
benefits for twelve (12) months from the Effective Date following Executive's
date of termination under the federal COBRA law; (iii) accelerated vesting of
any and all shares pursuant to any and all stock options granted to Executive
such that all shares which otherwise would have vested on or before the end of
the twelfth month following the Effective Date had Executive's termination not
occurred until the end of such period will be deemed vested as of the date of
the Executive's termination; and (iv) six (6) months after the date of
Executive's termination to exercise any and all vested shares subject to any and
all stock options granted to Executive (provided that any such extension shall
not extend the maximum term during which any such option may be exercised beyond
ten (10) years).
If after the first six (6) months of Executive's employment with the
Company, the Company terminates Executive's employment without cause or
Executive terminates employment because the Company has reduced Executive's
responsibilities, functions, titles, or overall compensation package, the
Executive shall receive, as severance: (i) continued payment of Executive's base
salary for twelve (12) months; (ii) continued health care benefits for twelve
(12) months following Executive's termination of employment under the federal
COBRA law;
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(iii) accelerated vesting of any and all shares pursuant to any and all stock
options granted to Executive such that all shares which otherwise would have
vested on or before the end of the sixth month following the date of Executive's
termination, with respect to all stock options granted to Executive prior to
March 4, 1998, and the twelfth month following the date of Executive's
termination, with respect to all stock options granted to Executive on or
subsequent to March 4, 1998, will be deemed vested as of the date of the
Executive's termination; and (iv) with respect to all stock options granted to
Executive prior to March 4, 1998, six (6) months, and with respect to all stock
options granted to Executive on or subsequent to March 4, 1998, twelve (12)
months, after the date of Executive's termination to exercise any and all vested
shares subject to any and all stock options granted to Executive (provided that
any such extension shall not extend the maximum term during which any such
option may be exercised beyond ten (10) years). For purposes of this Section 7.1
(a), the second option as described in Section 2.d. shall be considered to have
vested at the rate of 2.0833% per month over 48 months beginning from the
Effective Date.
(b) Notwithstanding Section 7.1(a) above, if the Company (i) merges or
combines with any other company or entity in a manner which produces a change of
control; (ii) sells all or substantially all its assets to any other company or
entity; (iii) has forty percent (40%) or more of its stock acquired by a person
and/or affiliates of such person, the Executive shall receive: (i) continued
payment of base salary for twenty-four (24) months and payment of 200% of
Executive's Bonus following Executive's date of termination for any reason; (ii)
continued health care benefits for twenty-four (24) months following Executive's
termination of employment under the federal COBRA law; (iii) accelerated vesting
of any and all shares,
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pursuant to any and all stock options granted to Executive; and (iv) with
respect to all stock options granted to Executive prior to March 4, 1998, twelve
(12) months, and with respect to all stock options granted to Executive on or
subsequent to March 4, 1998, twenty-four (24) months, after the date of
Executive's termination of employment for any reason to exercise any and all
vested shares subject to any and all stock options granted to Executive
(provided that any such extension shall not extend the maximum term during which
any such option may be exercised beyond ten (10) years). For the purposes of
this agreement, "change of control" means a merger or consolidation in which the
Company is not the surviving corporation, or in which the shareholders of the
Company immediately prior to the merger or consolidation do not hold a majority
of the shares of the resulting corporation and "Bonus" means the average of the
amount of Executive's bonus for the previous two (2) fiscal years of the
Company.
2. TAX CONSEQUENCES. Executive acknowledges that he has been advised by the
Company to consult with a tax advisor or attorney with respect to the tax
consequences, if any, of these amendments to his stock option grants.
3. AFFIRMATION. Subject to the foregoing modifications to Section 7.1(a) and
7.1(b), the Company and Executive each hereby affirm all of the terms and
conditions of the Employment Agreement, and acknowledge that the Employment
Agreement is a binding agreement between the Executive and the Company.
4. ENTIRE AGREEMENT. This Amendment, together with the Employment Agreement,
contains the entire agreement between the parties and constitutes the complete,
final and exclusive embodiment of their agreement with respect to the subject
matter. This Amendment is executed without reliance upon any promise, warranty
or representation, written or oral, by any
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party or any representative of any party other than those expressly contained
herein and it supersedes any other such promises, warranties or representations.
IN WITNESS WHEREOF, the parties have duly authorized and caused this
Amendment to be executed as follows:
LEONARD Y. LIU WALKER INTERACTIVE SYSTEMS, INC.
/s/ Leonard Y. Liu By: /s/ Wally Breitman
_________________________________ __________________________________
Date: November 13, 1998 Title: Vice President, Human Resource
____________________________ ______________________________
Date: November 13, 1998
________________________________
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EXHIBIT 10.14
WALKER INTERACTIVE SYSTEMS, INC.
1995 NONSTATUTORY STOCK OPTION PLAN
FOR NON-OFFICER EMPLOYEES
ADOPTED AUGUST 28, 1995
RATIFIED AND AMENDED SEPTEMBER 20, 1995
AMENDED MAY 9, 1996, OCTOBER 20, 1997 AND AUGUST 5, 1998
1. PURPOSES.
(a) The purpose of the Plan is to provide a means by which selected
Employees of the Company, and its Affiliates, may be given an opportunity to
purchase stock of the Company.
(b) The Company, by means of the Plan, seeks to retain the services of
persons who are now non-officer Employees of the Company or its Affiliates, to
secure and retain the services of new Employees in such positions, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company and its Affiliates.
(c) The Company intends that the Options issued under the Plan shall be
only Nonstatutory Stock Options.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f) respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CAUSE" means termination of an Employee's employment with the Company
for any of the following reasons as determined in good faith by the Company:
(i) an intentional act which materially injures the Company;
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(ii) an intentional refusal or failure to follow lawful and reasonable
directions of the Board or the individual to whom the Employee reports;
(iii) a willful and habitual neglect of duties; or
(iv) a conviction of a felony involving moral turpitude which is
reasonably likely to inflict or has inflicted material injury on the Company.
(d) "CHANGE IN CONTROL" means:
(i) a dissolution, liquidation or sale of substantially all of the
assets of the Company;
(ii) a merger or consolidation in which the Company is not the
surviving corporation; or
(iii) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's common stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise.
(e) "CODE" means the Internal Revenue Code of 1986, as amended.
(f) "COMMITTEE" means a Committee appointed by the Board in accordance with
subsection 3(c) of the Plan.
(g) "COMPANY" means Walker Interactive Systems, Inc., a Delaware
corporation.
(h) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT" means the
employment relationship, or service as a member of the Board or Consultant, is
not interrupted or terminated. The Board, in its sole discretion, may determine
whether Continuous Status as an Employee, Director or Consultant shall be
considered interrupted in the case of: (i) any leave of absence approved by the
Board, including sick leave, military leave, or any other personal leave;
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or (ii) transfers between locations of the Company or between the Company,
Affiliates or their successors.
(i) "DIRECTOR" means a member of the Board.
(j) "DISINTERESTED PERSON" means a Director who either (i) was not during
the one year prior to service as an administrator of the Plan granted or awarded
equity securities pursuant to the Plan or any other plan of the Company or any
Affiliate entitling the participants therein to acquire equity securities of the
Company or any Affiliate except as permitted by Rule 16b-3(c)(2)(i); or (ii) is
otherwise considered to be a "disinterested person" in accordance with Rule 16b-
3(c)(2)(i), or any other applicable rules, regulations or interpretations of the
Securities and Exchange Commission.
(k) "EMPLOYEE" means any person employed by the Company or any Affiliate of
the Company.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(m) "FAIR MARKET VALUE" means, as of any date, the value of the common
stock of the Company determined as follows:
(1) If the common stock is listed on any established stock exchange or
a national market system, including without limitation the Nasdaq National
Market, the Fair Market Value of a share of common stock shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such system or exchange (or the exchange with the greatest volume of
trading in common stock) on the last market trading day prior to the day of
determination, as reported in the Wall Street Journal or such other source as
the Board deems reliable;
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(2) If the common stock is quoted on the Nasdaq System (but not on the
Nasdaq National Market) or is regularly quoted by a recognized securities dealer
but selling prices are not reported, the Fair Market Value of a share of common
stock shall be the mean between the bid and asked prices for the common stock on
the last market trading day prior to the day of determination, as reported in
the Wall Street Journal or such other source as the Board deems reliable;
(3) In the absence of an established market for the common stock, the
Fair Market Value shall be determined in good faith by the Board.
(m) "INVOLUNTARY TERMINATION WITHOUT CAUSE" means an Employee's dismissal
or discharge other than for Cause. The termination of an Employee's employment
as a result of the Employee's death or disability will not be deemed to be an
Involuntary Termination Without Cause.
(n) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as
an Incentive Stock Option.
(o) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(p) "OPTION" means a stock option granted pursuant to the Plan.
(q) "OPTION AGREEMENT" means a written agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. Each
Option Agreement shall be subject to the terms and conditions of the Plan.
(r) "OPTIONEE" means an Employee who holds an outstanding Option.
(s) "PLAN" means this Walker Interactive Systems, Inc. 1995 Nonstatutory
Stock Option Plan for Non-Officer Employees.
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(t) "RULE 16B-3" means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3, as in effect when discretion is being exercised with respect to the
Plan.
3. ADMINISTRATION.
(a) The Plan shall be administered by Compensation Committee of the Board
unless and until the Compensation Committee or the Board delegates
administration to a Committee, as provided in subsection 3(c).
(b) The Compensation Committee shall have the power, subject to, and within
the limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the persons eligible under
the Plan shall be granted Options; when and how each Option shall be granted;
the provisions of each Option granted (which need not be identical), including
the time or times such Option may be exercised in whole or in part; and the
number of shares for which an Option shall be granted to each such person.
(2) To construe and interpret the Plan and Options granted under it,
and to establish, amend and revoke rules and regulations for its administration.
The Compensation Committee, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Option Agreement, in a
manner and to the extent it shall deem necessary or expedient to make the Plan
fully effective.
(3) To amend the Plan or an Option as provided in Section 11 of the
Plan.
(4) Generally, to exercise such powers and to perform such acts as the
Compensation Committee deems necessary or expedient to promote the best
interests of the Company.
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(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members (the "Committee"), all of the members
of which Committee shall be Disinterested Persons. If administration is
delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Compensation
Committee (and references in this Plan to the Compensation Committee shall
thereafter be to the Committee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Compensation Committee. The Compensation Committee may abolish the
Committee at any time and revest in the Compensation Committee the
administration of the Plan. Notwithstanding anything in this Section 3 to the
contrary, the Board or the Compensation Committee may delegate to a committee of
one or more members of the Board the authority to grant Options to persons
eligible to receive Options as provided in Section 5 of the Plan.
(d) Any requirement that an administrator of the Plan be a Disinterested
Person shall not apply if the Board or the Compensation Committee expressly
declares that such requirement shall not apply. Any Disinterested Person shall
otherwise comply with the requirements of Rule 16b-3.
(e) The Board shall at all times have the authority to arrogate to itself
any or all of the powers and responsibilities allocated to the Compensation
Committee or to the Committee under the Plan.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 10 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to Options shall not
exceed in the aggregate one million six hundred thousand (1,600,000) shares of
the Company's common stock. If any Option
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shall for any reason expire or otherwise terminate, in whole or in part, without
having been exercised in full, the stock not purchased under such Option shall
revert to and again become available for issuance under the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
5. ELIGIBILITY.
Nonstatutory Stock Options may be granted under the Plan only to Employees
who (i) hold positions below the level of Officer, and (ii) are not then subject
to Section 16 of the Exchange Act.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Compensation Committee shall deem appropriate. The provisions
of separate Options need not be identical, but each Option shall include
(through incorporation of provisions hereof by reference in the Option or
otherwise) the substance of each of the following provisions:
(a) TERM. No Option shall be exercisable after the expiration of ten (10)
years from the date it was granted.
(b) PRICE. The exercise price of each Nonstatutory Stock Option shall be
not less than eighty-five percent (85%) of the Fair Market Value of the stock
subject to the Option on the date the Option is granted.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, in one or more of the following forms: (i) in cash at the time the
Option is exercised, (ii) at the discretion of the Compensation Committee or the
Committee, by delivery to the Company of other common stock
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of the Company, or (iii) pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board which results in the receipt of cash
(or check) by the Company prior to the issuance of the stock.
(d) TRANSFERABILITY. A Nonstatutory Stock Option shall not be transferable
except by will or by the laws of descent and distribution or pursuant to a
qualified domestic relations order satisfying the requirements of Rule 16b-3 and
the rules thereunder (a "QDRO"), and shall be exercisable during the lifetime of
the person to whom the Option is granted only by such person or any transferee
pursuant to a QDRO. The person to whom the Option is granted may, by delivering
written notice to the Company, in a form satisfactory to the Company, designate
a third party who, in the event of the death of the Optionee, shall thereafter
be entitled to exercise the Option.
(e) VESTING. The total number of shares of stock subject to an Option may,
but need not, be allotted in periodic installments (which may, but need not, be
equal). The Option Agreement may provide that from time to time during each of
such installment periods, the Option may become exercisable ("vest") with
respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period
and/or any prior period as to which the Option became vested but was not fully
exercised. The Option may be subject to such other terms and conditions on the
time or times when it may be exercised (which may be based on performance or
other criteria) as the Board may deem appropriate. The provisions of this
subsection 6(e) are subject to any Option provisions governing the minimum
number of shares as to which an Option may be exercised.
(f) SECURITIES LAW COMPLIANCE. The Company may require any Optionee, or
any person to whom an Option is transferred under subsection 6(d), as a
condition of exercising any
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such Option, (1) to give written assurances satisfactory to the Company as to
the Optionee's knowledge and experience in financial and business matters and/or
to employ a purchaser representative reasonably satisfactory to the Company who
is knowledgeable and experienced in financial and business matters, and that he
or she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Option; and (2) to give
written assurances satisfactory to the Company stating that such person is
acquiring the stock subject to the Option for such person's own account and not
with any present intention of selling or otherwise distributing the stock. The
foregoing requirements, and any assurances given pursuant to such requirements,
shall be inoperative if (i) the issuance of the shares upon the exercise of the
Option has been registered under a then currently effective registration
statement under the Securities Act of 1933, as amended (the "Securities Act"),
or (ii) as to any particular requirement, a determination is made by counsel for
the Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the transfer
of the stock.
(g) TERMINATION OF SERVICE. In the event an Optionee's Continuous Status
as an Employee, Director or Consultant terminates (other than upon the
Optionee's death or disability), the Optionee may exercise his or her Option (to
the extent that the Optionee was entitled to exercise it at the date of
termination) but only within such period of time ending on the earlier of (i)
the date three (3) months after the termination of the Optionee's Continuous
Status as an Employee, Director or Consultant or such longer or shorter period
specified in the Option Agreement, or (ii) the expiration of the term of the
Option as set forth in the Option Agreement.
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If, after termination, the Optionee does not exercise his or her Option within
the time specified in the Option Agreement, the Option shall terminate, and the
shares covered by such Option shall revert to and again become available for
issuance under the Plan.
(h) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous Status
as an Employee, Director or Consultant terminates as a result of the Optionee's
disability, the Optionee may exercise his or her Option (to the extent that the
Optionee was entitled to exercise it at the date of termination), but only
within such period of time ending on the earlier of (i) the date twelve (12)
months following such termination (or such longer or shorter period specified in
the Option Agreement), or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. If, at the date of termination, the Optionee is
not entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become available
for issuance under the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan.
(i) DEATH OF OPTIONEE. In the event of the death of an Optionee during, or
within a period specified in the Option after the termination of, the Optionee's
Continuous Status as an Employee, Director or Consultant, the Option may be
exercised (to the extent the Optionee was entitled to exercise the Option at the
date of death) by the Optionee's estate, by a person who acquired the right to
exercise the Option by bequest or inheritance or by a person designated to
exercise the option upon the Optionee's death pursuant to subsection 6(d), but
only within the period ending on the earlier of (i) the date eighteen (18)
months following the date of death (or such longer or shorter period specified
in the Option Agreement), or (ii) the expiration of the
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term of such Option as set forth in the Option Agreement. If, at the time of
death, the Optionee was not entitled to exercise his or her entire Option, the
shares covered by the unexercisable portion of the Option shall revert to and
again become available for issuance under the Plan. If, after death, the Option
is not exercised within the time specified herein, the Option shall terminate,
and the shares covered by such Option shall revert to and again become available
for issuance under the Plan.
(j) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee, Director or
Consultant to exercise the Option as to any part or all of the shares subject to
the Option prior to the full vesting of the Option. Any unvested shares so
purchased may be subject to a repurchase right in favor of the Company or to any
other restriction the Board determines to be appropriate.
(k) WITHHOLDING. To the extent provided by the terms of an Option
Agreement, the Optionee may satisfy any federal, state, local or foreign tax
withholding obligation relating to the exercise of such Option by any of the
following means or by a combination of such means: (1) tendering a cash payment;
(2) authorizing the Company to withhold shares from the shares of the common
stock otherwise issuable to the participant as a result of the exercise of the
Option; or (3) delivering to the Company owned and unencumbered shares of the
common stock of the Company.
7. COVENANTS OF THE COMPANY.
(a) During the terms of the Options, the Company shall keep available at
all times the number of shares of stock required to satisfy such Options.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of
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stock upon exercise of the Options; provided, however, that this undertaking
shall not require the Company to register under the Securities Act either the
Plan, any Option or any stock issued or issuable pursuant to any such Option.
If, after reasonable efforts, the Company is unable to obtain from any such
regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell stock
upon exercise of such Options unless and until such authority is obtained.
8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Options shall constitute general
funds of the Company.
9. MISCELLANEOUS.
(a) The Compensation Committee shall have the power to accelerate the time
at which an Option may first be exercised or the time during which an Option or
any part thereof will vest pursuant to subsection 6(e), notwithstanding the
provisions in the Option stating the time at which it may first be exercised or
the time during which it will vest.
(b) Neither an Optionee nor any person to whom an Option is transferred
under subsection 6(d) shall be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any shares subject to such Option unless and
until such person has satisfied all requirements for exercise of the Option
pursuant to its terms.
(c) Nothing in the Plan or any instrument executed or Option granted
pursuant thereto shall confer upon any Employee any right to continue in the
employ of the Company or any Affiliate, or to continue to serve as a member of
the Board or as a consultant, or shall affect the right of the Company or any
Affiliate to terminate the employment relationship of any Employee
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with or without cause, to remove a member of the Board pursuant to the terms of
the Company's Bylaws, or to terminate a consultant in accordance with the terms
of this agreement with the Company or Affiliate.
(d) The Compensation Committee shall have the authority to effect, at any
time and from time to time (i) the repricing of any outstanding Options under
the Plan and/or (ii) with the consent of the affected holders of Options, the
cancellation of any outstanding Options and the grant in substitution therefor
of new Options under the Plan covering the same or different numbers of shares
of Common Stock, but having an exercise price per share not less than eighty-
five percent (85%) of the Fair Market Value per share of Common Stock on the new
grant date.
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject to
any Option (through merger, consolidation, reorganization, recapitalization,
stock dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or otherwise), the Plan will be appropriately adjusted in the
class(es) and maximum number of shares subject to the Plan pursuant to
subsection 4(a) and the outstanding Options will be appropriately adjusted in
the class(es) and number of shares and price per share of stock subject to such
outstanding Options.
(b) In the event of a Change in Control, then, to the extent permitted by
applicable law: (i) any surviving corporation shall assume any Options
outstanding under the Plan or shall substitute similar Options for those
outstanding under the Plan; or (ii) such Options shall continue in full force
and effect. In the event any surviving corporation refuses to assume or continue
such options, or to substitute similar options for those outstanding under the
Plan, then, with respect to options held by persons then performing services as
employees, consultants or
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directors for the Company, the time during which such Options become vested or
may be exercised shall be accelerated and any outstanding unexercised rights
under any Options terminated if not exercised prior to such event.
(c) In the event an Employee's employment is terminated due to an
Involuntary Termination Without Cause within twenty-four (24) months after the
effective date of a Change in Control, then all Options issued and outstanding
under the Plan and held by the Employee shall accelerate and become immediately
vested and exercisable. Notwithstanding the foregoing, if the Change in Control
was a transaction that was accounted for as a pooling of interests for financial
reporting purposes, then the unvested portion of such stock options shall not
accelerate unless the Company receives reasonable assurances from the Company's
independent public accountants (and from the acquiring party's independent
public accountants) that in their good faith judgment such acceleration will not
adversely affect the pooling of interests accounting treatment of such Change in
Control transaction.
11. AMENDMENT OF THE PLAN AND OPTIONS.
(a) The Board or the Compensation Committee at any time, and from time to
time, may amend the Plan.
(b) The Compensation Committee may, in its sole discretion, submit the
Plan or any amendment to the Plan for stockholder approval.
(c) It is expressly contemplated that the Board or the Compensation
Committee may amend the Plan in any respect the Board or the Compensation
Committee deems necessary or advisable to provide Optionees with the maximum
benefits provided or to be provided under the provisions of the Code and the
regulations promulgated thereunder.
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(d) Rights and obligations under any Option granted before amendment of the
Plan shall not be impaired by any amendment of the Plan unless (i) the Company
requests the consent of the person to whom the Option was granted and (ii) such
person consents in writing.
(e) The Board or the Compensation Committee at any time, and from time to
time, may amend the terms of any one or more Options; provided, however, that
the rights and obligations under any Option shall not be impaired by any such
amendment unless (i) the Company requests the consent of the person to whom the
Option was granted and (ii) such person consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board or the Compensation Committee may suspend or terminate the
Plan at any time. Unless sooner terminated, the Plan shall terminate on the date
when all the shares of the Company's common stock reserved for issuance under
the Plan have been issued. No Options may be granted under the Plan while the
Plan is suspended or after it is terminated.
(b) Rights and obligations under any Option granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom the Option was granted.
13. EFFECTIVE DATE OF PLAN.
The Plan shall become effective on August 28, 1995.
Adopted by the Compensation Committee on August 28, 1995 with an aggregate share
reserve of 140,000 shares.
Ratified and amended by the Board of Directors on September 20, 1995 to increase
the aggregate share reserve to 600,000 shares.
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Amended by the Board of Directors on May 9, 1996 to increase the aggregate share
reserve to 1,100,000 shares.
Amended by the Board of Directors on October 20, 1997 to increase the aggregate
share reserve to 1,600,000 shares.
Amended by the Board of Directors on August 5, 1998 to remove the discretion of
the Board to determine whether acceleration of vesting shall occur in the event
of a Change in Control if the successor entity does not assume or continue
outstanding options or substitute similar options and to provide for
acceleration of vesting upon an employee's Involuntary Termination Without Cause
within twenty-four months after a Change in Control.
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EXHIBIT 10.17
EXECUTIVE SEVERANCE BENEFITS AGREEMENT
THIS EXECUTIVE SEVERANCE BENEFITS AGREEMENT (this "Agreement") is entered
into by and between WALKER INTERACTIVE SYSTEMS, INC., a Delaware corporation
(the "Company") and PAUL LORD ("Executive"), effective August 5, 1998. This
Agreement is intended to provide Executive with the compensation and benefits
described herein upon the occurrence of specific events. Certain capitalized
terms used in this Agreement are defined in Article 6.
The Company and Executive hereby agree as follows:
ARTICLE 1
EMPLOYMENT BY THE COMPANY
1.1 The Company currently employs Executive.
1.2 The Company and Executive wish to set forth the compensation and
benefits which Executive shall be entitled to receive in the event Executive's
employment with the Company is terminated under the circumstances described
herein.
1.3 The duties and obligations of the Company to Executive under this
Agreement shall be in consideration for Executive's past services to the
Company, Executive's continued employment with the Company and Executive's
execution of the general waiver and release described in Section 3.2.
1.4 This Agreement shall supersede any other agreement relating to
Executive's severance from employment with the Company.
ARTICLE 2
SEVERANCE BENEFITS
2.1 SEVERANCE BENEFITS. If within TWENTY-FOUR (24) months following a
Change of Control, Executive's employment terminates due to an Involuntary
Termination Without Cause or a Constructive Termination, such termination of
employment will be deemed a Covered Termination. A Covered Termination entitles
Executive to receive the following benefits set forth in Sections 2.2 through
2.5.
2.2 SEVERANCE PAYMENT. Executive shall receive a severance payment equal
to TWELVE (12) months of Base Pay plus Bonus, subject to applicable tax
withholding, payable at such time or times as the Company may elect; provided
that Executive shall not receive such severance payments at a rate slower than
the Company's regularly scheduled payment dates for payroll and bonus. If
Executive is indebted to the Company at his or her date
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of termination, the Company reserves the right to offset any severance payment
under this Agreement by the amount of such indebtedness. In no event shall
payment of any severance payment be made prior to Executive's date of
termination or in the absence of an effective release pursuant to Section 3.2
2.3 ACCELERATION OF STOCK OPTION VESTING. The portion of Executive's stock
options that would have vested on or before the date TWELVE (12) months from the
occurrence of the Covered Termination shall accelerate and immediately become
vested and exercisable. Notwithstanding the foregoing, if the Change of Control
was a transaction that was accounted for as a pooling of interests for financial
reporting purposes, then the unvested portion of such stock options shall not
accelerate unless the Company receives reasonable assurances from the Company's
independent public accountants (and from the acquiring party's independent
public accountants) that in their good faith judgement such acceleration will
not adversely affect the pooling of interests accounting treatment of such
Change of Control transaction.
2.4 COBRA CONTINUATION. Executive and Executive's covered dependents who
are enrolled in a health or dental plan sponsored by the Company may be eligible
to continue coverage under such health or dental plan (or to convert to an
individual policy), at the time of the Executive's termination of employment
under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"). The
Company will notify the individual of any such right to continue health coverage
at the time of termination. The Company will continue to pay its share of
Executive's health insurance premiums until the earlier of: (i) TWELVE (12)
months after the date of termination, or (ii) such time as the Executive becomes
eligible to participate in another employer's health insurance plan (the "COBRA
Period"); provided that Executive elects to continue coverage under COBRA and
timely pays Executive's portion of the premium. No provision of this Agreement
will affect the continuation coverage rules under COBRA, except that the
Company's payment of any applicable insurance premiums during the COBRA Period
will be credited as payment by Executive for purposes of Executive's payment
required under COBRA. Therefore, the period during which Executive must elect to
continue the Company's group medical or dental coverage at his or her own
expense under COBRA, the length of time during which COBRA coverage will be made
available to the Executive, and all other rights and obligations of Executive
under COBRA (except the obligation to pay insurance premiums that the Company
pays during the COBRA Period) will be applied in the same manner that such rules
would apply in the absence of this Agreement.
2.5 ACCRUED VACATION PAY. In addition to any other amount payable under
this Article 2, Executive will be entitled to receive any accrued vacation pay
in accordance with the Company's vacation pay policy then in effect for
employees generally.
2.6 MITIGATION. Except as otherwise specifically provided herein, Executive
shall not be required to mitigate damages or the amount of any payment provided
under this Agreement by seeking other employment or otherwise, nor shall the
amount of any payment provided for under this Agreement be reduced by any
compensation earned by
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Executive as a result of employment by another employer or by any retirement
benefits received by Executive after the date of the Covered Termination, or
otherwise.
ARTICLE 3
LIMITATIONS AND CONDITIONS ON BENEFITS
3.1 TAX CONSEQUENCES. The Company shall withhold appropriate federal,
state, local (and foreign, if applicable) income and employment taxes from any
payments hereunder. Executive acknowledges that he or she has been advised by
the Company to consult with a tax advisor or attorney with respect to the tax
consequences, if any, of these amendments to his or her stock option grants.
3.2 EMPLOYEE AGREEMENT AND RELEASE PRIOR TO RECEIPT OF BENEFITS. Upon the
occurrence of a Covered Termination, and prior to the receipt of any benefits
under this Agreement on account of such Covered Termination, Executive shall
execute the Employee Agreement and Release (the "Release") in the form attached
hereto as Exhibit A. Such Release shall specifically relate to all of
Executive's rights and claims in existence at the time of such execution and
shall confirm Executive's obligations under the Company's standard form of
proprietary information and inventions agreement. It is understood that
Executive has twenty-one (21) calendar days to consider whether to execute such
Release, and Executive may revoke such Release within seven (7) calendar days
after execution. In the event Executive does not execute such Release within the
twenty-one (21)-day period, or if Executive revokes such Release within the
subsequent seven (7)-day period, no benefits shall be payable under this
Agreement, and this Agreement shall be null and void.
ARTICLE 4
OTHER RIGHTS AND BENEFITS
4.1 NONEXCLUSIVITY. Nothing in this Agreement shall prevent or limit
Executive's continuing or future participation in any benefit, bonus, incentive
or other plans, programs, policies or practices provided by the Company and for
which Executive may otherwise qualify, nor shall anything herein limit or
otherwise affect such rights as Executive may have under other agreements with
the Company. Except as otherwise expressly provided herein, amounts which are
vested benefits or which Executive is otherwise entitled to receive under any
plan, policy, practice or program of the Company at or subsequent to the date of
a Covered Termination shall be payable in accordance with such plan, policy,
practice or program.
4.2 CERTAIN REDUCTIONS IN PAYMENTS.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event that any payment, distribution or other benefit provided by the
Company to or for the benefit of Executive (whether paid or payable or provided
or to be provided pursuant to the terms of this Agreement or otherwise) (a
"Payment") would (i) constitute a "parachute payment" within the meaning of
Section 280G of the Internal Revenue Code of 1986 ("the Code") and (ii) but for
this
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Section 4.2, be subject to the excise tax imposed by Section 4999 of the Code
(the "Excise Tax"), then, in accordance with this Section 4.2, such Payments
shall be reduced to the maximum amount that would result in no portion of the
Payments being subject to the Excise Tax, but only if and to the extent that
such a reduction would result in Executive's receipt of Payments that are
greater than the net amount Executive would receive (after application of the
Excise Tax) if no reduction is made. The amount of required reduction, if any,
shall be the smallest amount so that the Executive's net proceeds with respect
to the Payments (after taking into account payment of any Excise Tax and all
federal, state and local income, employment or other taxes) shall be maximized.
If, notwithstanding any reduction described in this Section 4.2 (or in the
absence of any such reduction), the Internal Revenue Service (the "IRS")
determines that a Payment is subject to the Excise Tax (or subject to a
different amount of the Excise Tax than determined by the Company or the
Executive), then Section 4.2(c) shall apply. If the Excise Tax is not eliminated
pursuant to this Section 4.2, Executive shall pay the Excise Tax.
(b) All determinations required to be made under this Section 4.2
shall be made by the Company's independent auditors. Such auditors shall
provide detailed supporting calculations both to the Company and Executive. Any
such reasonable determination by the Company's independent auditors shall be
binding upon the Company and Executive. The Executive shall determine which and
how much of the Payments, including without limitation any option acceleration
benefits provide under this Agreement or any option ("Option Benefits"), as the
case may be, shall be eliminated or reduced consistent with the requirements of
this Section 4.2, provided that, if Executive does not make such determination
within ten (10) business days of the receipt of the calculations made by the
Company's independent auditors, the Company shall elect which and how much of
the Option Benefits or other Payments, as the case may be, shall be eliminated
or reduced consistent with the requirements of this Section 4.2, and then the
Company shall notify Executive promptly of such election. Within five (5)
business days thereafter, the Company shall pay to or distribute to or for the
benefit of Executive such amounts as are then due to Executive under this
Agreement.
(c) As a result of the uncertainty in the application of Section
280G of the Code at the time of the initial determination by the Company's
independent auditors hereunder, it is possible that Option Benefits or other
Payments, as the case may be, will have been made by the Company which should
not have been made ("Overpayment") or that additional Option Benefits or other
Payments, as the case may be, which will not have been made by the Company could
have been made ("Underpayment"), in each case, consistent with the calculations
required to be made hereunder. In the event that the Company's independent
auditors, based upon the assertion of a deficiency by the IRS against Executive
or the Company which the Company's independent auditors believe has a high
probability of success, determine that an Overpayment has been made, any such
Overpayment paid or distributed by the Company to or for the benefit of
Executive shall be treated for all purposes as a loan ab initio to Executive
which Executive shall repay to the Company together with interest at the
applicable federal rate provided for in Section 7872(f)(2) of the Code;
provided, however, that no such loan shall be deemed to have been made and no
amount shall be payable by Executive to the Company if and to the extent such
deemed loan and payment would not either reduce the amount on which Executive is
subject to tax under Section 1 and Section 4999 of the Code or generate a refund
of such taxes. In the event that the Company's independent auditors, based upon
controlling precedent or other
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substantial authority, determine that an Underpayment has occurred, any such
Underpayment shall be promptly paid by the Company to or for the benefit of
Executive together with interest at the applicable federal rate provided for in
Section 7872(f)(2) of the Code.
ARTICLE 5
TRANSFERABILITY OF BENEFITS
5.1 No benefit hereunder shall be subject to sale, transfer, assignment,
pledge, encumbrance or charge, and any attempt to do so shall be void.
ARTICLE 6
DEFINITIONS
For purposes of this Agreement, the following terms are defined as follows:
6.1 "BASE PAY" means Executive's base pay (excluding overtime, bonuses,
draws, commission, and other forms of additional compensation and benefits), at
the rate in effect during the last regularly scheduled payroll period
immediately preceding any termination of Executive's employment.
6.2 "BOARD" means the Board of Directors of the Company.
6.3 "BONUS" means the average of the amount of Executive's bonus for the
previous two (2) fiscal years of the Company.
6.4 "CAUSE" means termination of Executive's employment with the Company
for any of the following reasons as determined in good faith by the Board:
(a) an intentional act which materially injures the Company;
(b) an intentional refusal or failure to follow lawful and
reasonable directions of the Board or an individual to whom Executive reports
(as appropriate);
(c) a willful and habitual neglect of duties; or
(d) a conviction of a felony involving moral turpitude which is
reasonably likely to inflict or has inflicted material injury on the Company.
6.5 "CHANGE OF CONTROL" means that the Company (a) merges or combines with
any other company or entity and the Company is not the surviving corporation, or
the stockholders of the Company immediately prior to the merger or consolidation
do not hold a majority of the shares of the resulting corporation; (b) sells all
or substantially all its assets to any other company or entity; or (c) has forty
percent (40%) or more of its stock acquired by a person and/or affiliates of
such person.
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6.6 "CONSTRUCTIVE TERMINATION" means that Executive voluntarily terminates
employment after any of the following are undertaken without Executive's express
written consent:
(a) the assignment to Executive of any duties or responsibilities
which result in a diminution or adverse change of Executive's position, status
or circumstances of employment; provided, however, that a mere change in
Executive's title or reporting relationship shall not constitute a Constructive
Termination;
(b) a reduction by the Company in Executive's Base Pay;
(c) a relocation of Executive's business office to a location more
than thirty (30) miles from the location at which Executive performs duties as
of the date of this Agreement, except for required travel by Executive on the
Company's business to an extent substantially consistent with Executive's
business travel obligations;
(d) any breach by the Company of any provision of this Agreement or
any other material agreement between Executive and the Company concerning
Executive's employment; or
(e) any failure by the Company to obtain the assumption of this
Agreement by any successor or assign of the Company.
6.7 "COVERED TERMINATION" means an Involuntary Termination Without Cause or
a Constructive Termination.
6.8 "INVOLUNTARY TERMINATION WITHOUT CAUSE" means Executive's dismissal or
discharge other than for Cause. The termination of Executive's employment as a
result of Executive's death or disability will not be deemed to be an
Involuntary Termination Without Cause.
ARTICLE 7
GENERAL PROVISIONS
7.1 EMPLOYMENT STATUS. This Agreement does not constitute a contract of
employment or impose upon Executive any obligation to remain as an employee, or
impose on the Company any obligation (i) to retain Executive as an employee,
(ii) to change the status of Executive as an at-will employee, or (iii) to
change the Company's policies regarding termination of employment.
7.2 NOTICES. Any notices provided hereunder must be in writing, and such
notices or any other written communication shall be deemed effective upon the
earlier of personal delivery (including personal delivery by facsimile) or the
third day after mailing by first class mail, to the Company at its primary
office location and to Executive at Executive's address as listed in the
Company's payroll records. Any payments made by the Company to Executive
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under the terms of this Agreement shall be delivered to Executive either in
person or at the address as listed in the Company's payroll records.
7.3 SEVERABILITY. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provisions had never been contained herein.
7.4 WAIVER. If either party should waive any breach of any provisions of
this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
7.5 COMPLETE AGREEMENT. This Agreement, including Exhibit A, constitutes
the entire agreement between Executive and the Company and is the complete,
final, and exclusive embodiment of their agreement with regard to this subject
matter, wholly superseding all written and oral agreements with respect to
payments and benefits to Executive in the event of employment termination. It is
entered into without reliance on any promise or representation other than those
expressly contained herein.
7.6 DURATION OF AGREEMENT. This Agreement shall terminate upon the date of
Executive's termination of employment with the Company. If not sooner
terminated, this Agreement shall terminate on June 30, 2000 and beginning on
July 1, 2000 and on each subsequent anniversary of such date, one (1) year shall
be added to the term of this Agreement, unless at least twelve (12) months prior
to such date or anniversary, the Company shall have notified Executive in
writing that such extension will not become effective. Notwithstanding the
foregoing, this Agreement shall not terminate or expire with respect to
Executive if Executive becomes entitled to receive the payments and benefits set
forth in Sections 2.2 through 2.5 until Executive shall have received such
payments and benefits in full.
7.7 AMENDMENT OR TERMINATION OF AGREEMENT. Notwithstanding anything in
Section 7.6 to the contrary, this Agreement may be changed or terminated upon
the mutual written consent of the Company and Executive. The written consent of
the Company to a change or termination of this Agreement must be signed by an
executive officer of the Company after such change or the Board has approved
termination.
7.8 COUNTERPARTS. This Agreement may be executed in separate counterparts,
any one of which need not contain signatures of more than one party, but all of
which taken together will constitute one and the same Agreement.
7.9 HEADINGS. The headings of the Articles and Sections hereof are inserted
for convenience only and shall not be deemed to constitute a part hereof or to
affect the meaning thereof.
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7.10 SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure
to the benefit of and be enforceable by Executive and the Company, and their
respective successors, assigns, heirs, executors and administrators, except that
Executive may not assign any duties hereunder and may not assign any rights
hereunder without the written consent of the Company, which consent shall not be
withheld unreasonably.
7.11 CHOICE OF LAW. All questions concerning the construction, validity and
interpretation of this Agreement will be governed by the law of the State of
California, without regard to such state's conflict of laws rules.
7.12 NON-PUBLICATION. The parties mutually agree not to disclose publicly
the terms of this Agreement except to the extent that disclosure is mandated by
applicable law or to respective advisors (e.g., attorneys, accountants).
7.13 CONSTRUCTION OF AGREEMENT. In the event of a conflict between the
text of the Agreement and any summary, description or other information
regarding the Agreement, the text of the Agreement shall control.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year written above.
WALKER INTERACTIVE SYSTEMS, INC. [EXECUTIVE]
/s/ Leonard Y. Liu /s/ Paul Lord
By: ________________________________ _____________________________
Leonard Y. Liu
Name:_______________________________
Chairman of the Board &
Chief Executive Officer
Title:______________________________
Exhibit A: Employee Agreement and Release
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EXHIBIT A
EMPLOYEE AGREEMENT AND RELEASE
I understand and agree completely to the terms set forth in the foregoing
agreement.
I hereby confirm my obligations under the Walker Interactive Systems,
Inc.'s (the "Company") proprietary information and inventions agreement.
In granting the release herein, I acknowledge that I understand that I am
waiving the benefit of any provision of law in any jurisdiction to the following
effect: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HER SETTLEMENT WITH THE
DEBTOR." (California Civil Code section 1542). I hereby expressly waive and
relinquish all rights and benefits under that section and any law or legal
principle of similar effect in any jurisdiction with respect to the release of
unknown and unsuspected claims granted in this Agreement.
Except as otherwise set forth in this Agreement, I hereby release, acquit
and forever discharge the Company, its parents and subsidiaries, and its and
their respective officers, directors, agents, servants, employees, shareholders,
successors, assigns and affiliates, of and from any and all claims, liabilities,
demands, causes of action, costs, expenses, attorneys fees, damages, indemnities
and obligations of every kind and nature, in law, equity, or otherwise, known
and unknown, suspected and unsuspected, disclosed and undisclosed (other than
any claim for indemnification I may have as a result of any third party action
against me based on my employment with the Company), arising out of or in any
way related to agreements, events, acts or conduct at any time prior to the date
I execute this Agreement, including but not limited to: all such claims and
demands directly or indirectly arising out of or in any way connected with my
employment with the Company or the termination of that employment, including but
not limited to, claims of intentional and negligent infliction of emotional
distress, any and all tort claims for personal injury, claims or demands related
to salary, bonuses, commissions, stock, stock options, or any other ownership
interests in the Company, vacation pay, fringe benefits, expense reimbursements,
severance pay, or any other form of compensation; claims pursuant to any
federal, state or local law or cause of action including, but not limited to,
the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination
in Employment Act of 1967, as amended ("ADEA"); the federal Employee Retirement
Income Security Act of 1974, as amended; the federal Americans with Disabilities
Act of 1990; the California Fair Employment and Housing Act, as amended; tort
law; contract law; wrongful discharge; harassment; discrimination; fraud;
defamation; emotional distress; and breach of the implied covenant of good faith
and fair dealing; provided, however, that nothing in this paragraph shall be
construed in any way to release the Company from its obligation to indemnify me
pursuant to the Company's indemnification agreement.
I acknowledge that I am knowingly and voluntarily waiving and releasing any
rights I may have under ADEA. I also acknowledge that the consideration given
for the waiver and release in the preceding paragraph hereof is in addition to
anything of value to which I was already entitled. I further acknowledge that I
have been advised by this writing, as required by the ADEA, that: (A) my waiver
and release do not apply to any rights or claims that may arise on or after the
date I execute this Agreement; (B) I have the right to consult with an attorney
prior to executing this Agreement; (C) I have twenty-one (21) days to consider
this Agreement (although I may choose to voluntarily execute this Agreement
earlier); (D) I have seven (7) days following the execution of this Agreement by
the parties to revoke the Agreement; and (E) this Agreement shall not be
effective until the date upon which the revocation period has expired, which
shall be the eighth day after this Agreement is executed by me, provided that
the Company has also executed this Agreement by that date (the "Effective
Date").
WALKER INTERACTIVE SYSTEMS, INC. [EXECUTIVE]
By:________________________________ _________________________________
Title:_____________________________ Date:____________________________
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EXHIBIT 10.17
EXECUTIVE SEVERANCE BENEFITS AGREEMENT
THIS EXECUTIVE SEVERANCE BENEFITS AGREEMENT (this "Agreement") is entered
into by and between WALKER INTERACTIVE SYSTEMS, INC., a Delaware corporation
(the "Company") and SZE-LO (STEVE) TSUI ("Executive"), effective August 5, 1998.
This Agreement is intended to provide Executive with the compensation and
benefits described herein upon the occurrence of specific events. Certain
capitalized terms used in this Agreement are defined in Article 6.
The Company and Executive hereby agree as follows:
ARTICLE 1
EMPLOYMENT BY THE COMPANY
1.1 The Company currently employs Executive.
1.2 The Company and Executive wish to set forth the compensation and
benefits which Executive shall be entitled to receive in the event Executive's
employment with the Company is terminated under the circumstances described
herein.
1.3 The duties and obligations of the Company to Executive under this
Agreement shall be in consideration for Executive's past services to the
Company, Executive's continued employment with the Company and Executive's
execution of the general waiver and release described in Section 3.2.
1.4 This Agreement shall supersede any other agreement relating to
Executive's severance from employment with the Company.
ARTICLE 2
SEVERANCE BENEFITS
2.1 SEVERANCE BENEFITS. If within TWENTY-FOUR (24) months following a
Change of Control, Executive's employment terminates due to an Involuntary
Termination Without Cause or a Constructive Termination, such termination of
employment will be deemed a Covered Termination. A Covered Termination entitles
Executive to receive the following benefits set forth in Sections 2.2 through
2.5.
2.2 SEVERANCE PAYMENT. Executive shall receive a severance payment equal to
TWELVE (12) months of Base Pay plus Bonus, subject to applicable tax
withholding, payable at such time or times as the Company may elect; provided
that Executive shall not receive such severance payments at a rate slower than
the Company's regularly scheduled payment dates for payroll and bonus. If
Executive is indebted to the Company at his or her date
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of termination, the Company reserves the right to offset any severance payment
under this Agreement by the amount of such indebtedness. In no event shall
payment of any severance payment be made prior to Executive's date of
termination or in the absence of an effective release pursuant to Section 3.2
2.3 ACCELERATION OF STOCK OPTION VESTING. The portion of Executive's stock
options that would have vested on or before the date TWELVE (12) months from the
occurrence of the Covered Termination shall accelerate and immediately become
vested and exercisable. Notwithstanding the foregoing, if the Change of Control
was a transaction that was accounted for as a pooling of interests for financial
reporting purposes, then the unvested portion of such stock options shall not
accelerate unless the Company receives reasonable assurances from the Company's
independent public accountants (and from the acquiring party's independent
public accountants) that in their good faith judgement such acceleration will
not adversely affect the pooling of interests accounting treatment of such
Change of Control transaction.
2.4 COBRA CONTINUATION. Executive and Executive's covered dependents who
are enrolled in a health or dental plan sponsored by the Company may be eligible
to continue coverage under such health or dental plan (or to convert to an
individual policy), at the time of the Executive's termination of employment
under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"). The
Company will notify the individual of any such right to continue health coverage
at the time of termination. The Company will continue to pay its share of
Executive's health insurance premiums until the earlier of: (i) TWELVE (12)
months after the date of termination, or (ii) such time as the Executive becomes
eligible to participate in another employer's health insurance plan (the "COBRA
Period"); provided that Executive elects to continue coverage under COBRA and
timely pays Executive's portion of the premium. No provision of this Agreement
will affect the continuation coverage rules under COBRA, except that the
Company's payment of any applicable insurance premiums during the COBRA Period
will be credited as payment by Executive for purposes of Executive's payment
required under COBRA. Therefore, the period during which Executive must elect to
continue the Company's group medical or dental coverage at his or her own
expense under COBRA, the length of time during which COBRA coverage will be made
available to the Executive, and all other rights and obligations of Executive
under COBRA (except the obligation to pay insurance premiums that the Company
pays during the COBRA Period) will be applied in the same manner that such rules
would apply in the absence of this Agreement.
2.5 ACCRUED VACATION PAY. In addition to any other amount payable under
this Article 2, Executive will be entitled to receive any accrued vacation pay
in accordance with the Company's vacation pay policy then in effect for
employees generally.
2.6 MITIGATION. Except as otherwise specifically provided herein, Executive
shall not be required to mitigate damages or the amount of any payment provided
under this Agreement by seeking other employment or otherwise, nor shall the
amount of any payment provided for under this Agreement be reduced by any
compensation earned by
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Executive as a result of employment by another employer or by any retirement
benefits received by Executive after the date of the Covered Termination, or
otherwise.
ARTICLE 3
LIMITATIONS AND CONDITIONS ON BENEFITS
3.1 TAX CONSEQUENCES. The Company shall withhold appropriate federal,
state, local (and foreign, if applicable) income and employment taxes from any
payments hereunder. Executive acknowledges that he or she has been advised by
the Company to consult with a tax advisor or attorney with respect to the tax
consequences, if any, of these amendments to his or her stock option grants.
3.2 EMPLOYEE AGREEMENT AND RELEASE PRIOR TO RECEIPT OF BENEFITS. Upon the
occurrence of a Covered Termination, and prior to the receipt of any benefits
under this Agreement on account of such Covered Termination, Executive shall
execute the Employee Agreement and Release (the "Release") in the form attached
hereto as Exhibit A. Such Release shall specifically relate to all of
Executive's rights and claims in existence at the time of such execution and
shall confirm Executive's obligations under the Company's standard form of
proprietary information and inventions agreement. It is understood that
Executive has twenty-one (21) calendar days to consider whether to execute such
Release, and Executive may revoke such Release within seven (7) calendar days
after execution. In the event Executive does not execute such Release within the
twenty-one (21)-day period, or if Executive revokes such Release within the
subsequent seven (7)-day period, no benefits shall be payable under this
Agreement, and this Agreement shall be null and void.
ARTICLE 4
OTHER RIGHTS AND BENEFITS
4.1 NONEXCLUSIVITY. Nothing in this Agreement shall prevent or limit
Executive's continuing or future participation in any benefit, bonus, incentive
or other plans, programs, policies or practices provided by the Company and for
which Executive may otherwise qualify, nor shall anything herein limit or
otherwise affect such rights as Executive may have under other agreements with
the Company. Except as otherwise expressly provided herein, amounts which are
vested benefits or which Executive is otherwise entitled to receive under any
plan, policy, practice or program of the Company at or subsequent to the date of
a Covered Termination shall be payable in accordance with such plan, policy,
practice or program.
4.2 CERTAIN REDUCTIONS IN PAYMENTS.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event that any payment, distribution or other benefit provided by the
Company to or for the benefit of Executive (whether paid or payable or provided
or to be provided pursuant to the terms of this Agreement or otherwise) (a
"Payment") would (i) constitute a "parachute payment" within the meaning of
Section 280G of the Internal Revenue Code of 1986 ("the Code") and (ii) but for
this
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Section 4.2, be subject to the excise tax imposed by Section 4999 of the Code
(the "Excise Tax"), then, in accordance with this Section 4.2, such Payments
shall be reduced to the maximum amount that would result in no portion of the
Payments being subject to the Excise Tax, but only if and to the extent that
such a reduction would result in Executive's receipt of Payments that are
greater than the net amount Executive would receive (after application of the
Excise Tax) if no reduction is made. The amount of required reduction, if any,
shall be the smallest amount so that the Executive's net proceeds with respect
to the Payments (after taking into account payment of any Excise Tax and all
federal, state and local income, employment or other taxes) shall be maximized.
If, notwithstanding any reduction described in this Section 4.2 (or in the
absence of any such reduction), the Internal Revenue Service (the "IRS")
determines that a Payment is subject to the Excise Tax (or subject to a
different amount of the Excise Tax than determined by the Company or the
Executive), then Section 4.2(c) shall apply. If the Excise Tax is not eliminated
pursuant to this Section 4.2, Executive shall pay the Excise Tax.
(b) All determinations required to be made under this Section 4.2
shall be made by the Company's independent auditors. Such auditors shall
provide detailed supporting calculations both to the Company and Executive. Any
such reasonable determination by the Company's independent auditors shall be
binding upon the Company and Executive. The Executive shall determine which and
how much of the Payments, including without limitation any option acceleration
benefits provide under this Agreement or any option ("Option Benefits"), as the
case may be, shall be eliminated or reduced consistent with the requirements of
this Section 4.2, provided that, if Executive does not make such determination
within ten (10) business days of the receipt of the calculations made by the
Company's independent auditors, the Company shall elect which and how much of
the Option Benefits or other Payments, as the case may be, shall be eliminated
or reduced consistent with the requirements of this Section 4.2, and then the
Company shall notify Executive promptly of such election. Within five (5)
business days thereafter, the Company shall pay to or distribute to or for the
benefit of Executive such amounts as are then due to Executive under this
Agreement.
(c) As a result of the uncertainty in the application of Section
280G of the Code at the time of the initial determination by the Company's
independent auditors hereunder, it is possible that Option Benefits or other
Payments, as the case may be, will have been made by the Company which should
not have been made ("Overpayment") or that additional Option Benefits or other
Payments, as the case may be, which will not have been made by the Company could
have been made ("Underpayment"), in each case, consistent with the calculations
required to be made hereunder. In the event that the Company's independent
auditors, based upon the assertion of a deficiency by the IRS against Executive
or the Company which the Company's independent auditors believe has a high
probability of success, determine that an Overpayment has been made, any such
Overpayment paid or distributed by the Company to or for the benefit of
Executive shall be treated for all purposes as a loan ab initio to Executive
which Executive shall repay to the Company together with interest at the
applicable federal rate provided for in Section 7872(f)(2) of the Code;
provided, however, that no such loan shall be deemed to have been made and no
amount shall be payable by Executive to the Company if and to the extent such
deemed loan and payment would not either reduce the amount on which Executive is
subject to tax under Section 1 and Section 4999 of the Code or generate a refund
of such taxes. In the event that the Company's independent auditors, based upon
controlling precedent or other
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substantial authority, determine that an Underpayment has occurred, any such
Underpayment shall be promptly paid by the Company to or for the benefit of
Executive together with interest at the applicable federal rate provided for in
Section 7872(f)(2) of the Code.
ARTICLE 5
TRANSFERABILITY OF BENEFITS
5.1 No benefit hereunder shall be subject to sale, transfer, assignment,
pledge, encumbrance or charge, and any attempt to do so shall be void.
ARTICLE 6
DEFINITIONS
For purposes of this Agreement, the following terms are defined as follows:
6.1 "BASE PAY" means Executive's base pay (excluding overtime, bonuses,
draws, commission, and other forms of additional compensation and benefits), at
the rate in effect during the last regularly scheduled payroll period
immediately preceding any termination of Executive's employment.
6.2 "BOARD" means the Board of Directors of the Company.
6.3 "BONUS" means the average of the amount of Executive's bonus for the
previous two (2) fiscal years of the Company.
6.4 "CAUSE" means termination of Executive's employment with the Company
for any of the following reasons as determined in good faith by the Board:
(a) an intentional act which materially injures the Company;
(b) an intentional refusal or failure to follow lawful and
reasonable directions of the Board or an individual to whom Executive reports
(as appropriate);
(c) a willful and habitual neglect of duties; or
(d) a conviction of a felony involving moral turpitude which is
reasonably likely to inflict or has inflicted material injury on the Company.
6.5 "CHANGE OF CONTROL" means that the Company (a) merges or combines with
any other company or entity and the Company is not the surviving corporation, or
the stockholders of the Company immediately prior to the merger or consolidation
do not hold a majority of the shares of the resulting corporation; (b) sells all
or substantially all its assets to any other company or entity; or (c) has forty
percent (40%) or more of its stock acquired by a person and/or affiliates of
such person.
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6.6 "CONSTRUCTIVE TERMINATION" means that Executive voluntarily terminates
employment after any of the following are undertaken without Executive's express
written consent:
(a) the assignment to Executive of any duties or responsibilities
which result in a diminution or adverse change of Executive's position, status
or circumstances of employment; provided, however, that a mere change in
Executive's title or reporting relationship shall not constitute a Constructive
Termination;
(b) a reduction by the Company in Executive's Base Pay;
(c) a relocation of Executive's business office to a location more
than thirty (30) miles from the location at which Executive performs duties as
of the date of this Agreement, except for required travel by Executive on the
Company's business to an extent substantially consistent with Executive's
business travel obligations;
(d) any breach by the Company of any provision of this Agreement or
any other material agreement between Executive and the Company concerning
Executive's employment; or
(e) any failure by the Company to obtain the assumption of this
Agreement by any successor or assign of the Company.
6.7 "COVERED TERMINATION" means an Involuntary Termination Without Cause
or a Constructive Termination.
6.8 "INVOLUNTARY TERMINATION WITHOUT CAUSE" means Executive's dismissal or
discharge other than for Cause. The termination of Executive's employment as a
result of Executive's death or disability will not be deemed to be an
Involuntary Termination Without Cause.
ARTICLE 7
GENERAL PROVISIONS
7.1 EMPLOYMENT STATUS. This Agreement does not constitute a contract of
employment or impose upon Executive any obligation to remain as an employee, or
impose on the Company any obligation (i) to retain Executive as an employee,
(ii) to change the status of Executive as an at-will employee, or (iii) to
change the Company's policies regarding termination of employment.
7.2 NOTICES. Any notices provided hereunder must be in writing, and such
notices or any other written communication shall be deemed effective upon the
earlier of personal delivery (including personal delivery by facsimile) or the
third day after mailing by first class mail, to the Company at its primary
office location and to Executive at Executive's address as listed in the
Company's payroll records. Any payments made by the Company to Executive
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under the terms of this Agreement shall be delivered to Executive either in
person or at the address as listed in the Company's payroll records.
7.3 SEVERABILITY. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provisions had never been contained herein.
7.4 WAIVER. If either party should waive any breach of any provisions of
this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
7.5 COMPLETE AGREEMENT. This Agreement, including Exhibit A, constitutes
the entire agreement between Executive and the Company and is the complete,
final, and exclusive embodiment of their agreement with regard to this subject
matter, wholly superseding all written and oral agreements with respect to
payments and benefits to Executive in the event of employment termination. It is
entered into without reliance on any promise or representation other than those
expressly contained herein.
7.6 DURATION OF AGREEMENT. This Agreement shall terminate upon the date of
Executive's termination of employment with the Company. If not sooner
terminated, this Agreement shall terminate on June 30, 2000 and beginning on
July 1, 2000 and on each subsequent anniversary of such date, one (1) year shall
be added to the term of this Agreement, unless at least twelve (12) months prior
to such date or anniversary, the Company shall have notified Executive in
writing that such extension will not become effective. Notwithstanding the
foregoing, this Agreement shall not terminate or expire with respect to
Executive if Executive becomes entitled to receive the payments and benefits set
forth in Sections 2.2 through 2.5 until Executive shall have received such
payments and benefits in full.
7.7 AMENDMENT OR TERMINATION OF AGREEMENT. Notwithstanding anything in
Section 7.6 to the contrary, this Agreement may be changed or terminated upon
the mutual written consent of the Company and Executive. The written consent of
the Company to a change or termination of this Agreement must be signed by an
executive officer of the Company after such change or the Board has approved
termination.
7.8 COUNTERPARTS. This Agreement may be executed in separate counterparts,
any one of which need not contain signatures of more than one party, but all of
which taken together will constitute one and the same Agreement.
7.9 HEADINGS. The headings of the Articles and Sections hereof are
inserted for convenience only and shall not be deemed to constitute a part
hereof or to affect the meaning thereof.
118
<PAGE>
7.10 SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure
to the benefit of and be enforceable by Executive and the Company, and their
respective successors, assigns, heirs, executors and administrators, except that
Executive may not assign any duties hereunder and may not assign any rights
hereunder without the written consent of the Company, which consent shall not be
withheld unreasonably.
7.11 CHOICE OF LAW. All questions concerning the construction, validity and
interpretation of this Agreement will be governed by the law of the State of
California, without regard to such state's conflict of laws rules.
7.12 NON-PUBLICATION. The parties mutually agree not to disclose publicly
the terms of this Agreement except to the extent that disclosure is mandated by
applicable law or to respective advisors (e.g., attorneys, accountants).
7.13 CONSTRUCTION OF AGREEMENT. In the event of a conflict between the text
of the Agreement and any summary, description or other information regarding the
Agreement, the text of the Agreement shall control.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year written above.
WALKER INTERACTIVE SYSTEMS, INC. [EXECUTIVE]
/s/ Leonard Y. Liu /s/ Sze-Lo (Steve) Tsui
By: ________________________________ _____________________________
Leonard Y. Liu
Name:_______________________________
Chairman of the Board &
Chief Executive Officer
Title:______________________________
Exhibit A: Employee Agreement and Release
119
<PAGE>
EXHIBIT A
EMPLOYEE AGREEMENT AND RELEASE
I understand and agree completely to the terms set forth in the foregoing
agreement.
I hereby confirm my obligations under the Walker Interactive Systems,
Inc.'s (the "Company") proprietary information and inventions agreement.
In granting the release herein, I acknowledge that I understand that I am
waiving the benefit of any provision of law in any jurisdiction to the following
effect: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HER SETTLEMENT WITH THE
DEBTOR." (California Civil Code section 1542). I hereby expressly waive and
relinquish all rights and benefits under that section and any law or legal
principle of similar effect in any jurisdiction with respect to the release of
unknown and unsuspected claims granted in this Agreement.
Except as otherwise set forth in this Agreement, I hereby release, acquit
and forever discharge the Company, its parents and subsidiaries, and its and
their respective officers, directors, agents, servants, employees, shareholders,
successors, assigns and affiliates, of and from any and all claims, liabilities,
demands, causes of action, costs, expenses, attorneys fees, damages, indemnities
and obligations of every kind and nature, in law, equity, or otherwise, known
and unknown, suspected and unsuspected, disclosed and undisclosed (other than
any claim for indemnification I may have as a result of any third party action
against me based on my employment with the Company), arising out of or in any
way related to agreements, events, acts or conduct at any time prior to the date
I execute this Agreement, including but not limited to: all such claims and
demands directly or indirectly arising out of or in any way connected with my
employment with the Company or the termination of that employment, including but
not limited to, claims of intentional and negligent infliction of emotional
distress, any and all tort claims for personal injury, claims or demands related
to salary, bonuses, commissions, stock, stock options, or any other ownership
interests in the Company, vacation pay, fringe benefits, expense reimbursements,
severance pay, or any other form of compensation; claims pursuant to any
federal, state or local law or cause of action including, but not limited to,
the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination
in Employment Act of 1967, as amended ("ADEA"); the federal Employee Retirement
Income Security Act of 1974, as amended; the federal Americans with Disabilities
Act of 1990; the California Fair Employment and Housing Act, as amended; tort
law; contract law; wrongful discharge; harassment; discrimination; fraud;
defamation; emotional distress; and breach of the implied covenant of good faith
and fair dealing; provided, however, that nothing in this paragraph shall be
construed in any way to release the Company from its obligation to indemnify me
pursuant to the Company's indemnification agreement.
I acknowledge that I am knowingly and voluntarily waiving and releasing any
rights I may have under ADEA. I also acknowledge that the consideration given
for the waiver and release in the preceding paragraph hereof is in addition to
anything of value to which I was already entitled. I further acknowledge that I
have been advised by this writing, as required by the ADEA, that: (A) my waiver
and release do not apply to any rights or claims that may arise on or after the
date I execute this Agreement; (B) I have the right to consult with an attorney
prior to executing this Agreement; (C) I have twenty-one (21) days to consider
this Agreement (although I may choose to voluntarily execute this Agreement
earlier); (D) I have seven (7) days following the execution of this Agreement by
the parties to revoke the Agreement; and (E) this Agreement shall not be
effective until the date upon which the revocation period has expired, which
shall be the eighth day after this Agreement is executed by me, provided that
the Company has also executed this Agreement by that date (the "Effective
Date").
WALKER INTERACTIVE SYSTEMS, INC. [EXECUTIVE]
By:___________________________________ ______________________________
Title:________________________________ Date:_________________________
120
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM WALKER
INTERACTIVE SYSTEMS, INC. QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED
SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 11,436
<SECURITIES> 8,061
<RECEIVABLES> 29,766
<ALLOWANCES> 1,141
<INVENTORY> 0
<CURRENT-ASSETS> 47,508
<PP&E> 27,499
<DEPRECIATION> 22,788
<TOTAL-ASSETS> 89,270
<CURRENT-LIABILITIES> 29,005
<BONDS> 0
0
0
<COMMON> 14
<OTHER-SE> 54,630
<TOTAL-LIABILITY-AND-EQUITY> 89,270
<SALES> 73,814
<TOTAL-REVENUES> 73,814
<CGS> 34,513
<TOTAL-COSTS> 70,427
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,221
<INCOME-TAX> 1,517
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,704
<EPS-PRIMARY> 0.19<F1>
<EPS-DILUTED> 0.18
<FN>
<F1>Basic earnings per share are reported under "EPS-Primary"
</FN>
</TABLE>
