As filed with the Securities and Exchange Commission on May 30, 1996
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-8
Registration Statement
under
The Securities Act of 1933
QUAD SYSTEMS CORPORATION
(Exact name of issuer as specified in its charter)
Delaware 23-2180139
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Two Electronic Drive
Horsham, Pennsylvania 19044
(Address of principal executive offices) Zip Code
Quad Systems Corporation 1993 Stock Option Plan
(Full title of the plan)
David W. Smith
President
Quad Systems Corporation
Two Electronic Drive
Horsham, Pennsylvania 19044
(Name and address of agent for service)
(215) 657-6202
(Telephone number, including area code, of agent for service)
Copy to:
Raymond D. Agran, Esquire
Ballard Spahr Andrews & Ingersoll
1735 Market Street
51st Floor
Philadelphia, Pennsylvania 19103-7599
(215) 665-8500
<TABLE>
<CAPTION>
CALCULATION OF ADDITIONAL REGISTRATION FEE
Proposed Proposed
Additional maximum maximum Amount of
Amount offering aggregate Additional
Title of securities to be price per offering Registration
to be registered register share (1) price Fee
<S> <C> <C> <C> <C>
Common Stock, $.03 300,000(2) $9.00 $2,700,000 $931.03
par value
</TABLE>
(1) Calculated pursuant to Rule 457(h) and Rule 457(c) under the Securities
Act of 1933, based upon the average of the high and low prices of the Company's
Common Stock on the Nasdaq National Market on May 28, 1996.
(2) This Registration Statement also relates to 600,000 shares of Common Stock,
$.03 per value, previously registered pursuant to a Registration Statement on
Form S-8 and filed with the Securities and Exchange Commission (Registration
No. 33-71590 ) with respect to the Quad Systems Corporation 1993 Stock Option
Plan (the "Plan"). The current filing is being made to reflect an increase of
300,000 shares in the number of shares issuable under the Plan.
(3) Pursuant to Rule 416 under the Securities Act of 1933, this Registration
Statement also covers such additional shares as may hereinafter be offered or
issued to prevent dilution resulting from stock splits, stock dividends,
recapitalizations or certain other capital adjustments
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by Quad Systems Corporation (the
"Registrant") with the Securities and Exchange Commission pursuant to
the Securities Exchange Act of 1934 are incorporated into this
registration statement by reference:
1. The Registrant's Annual Report on Form 10-K, for the
year ended September 24, 1995.
2. The Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 24, 1996.
3. The description of the Registrant's shares of Common
Stock, par value $.03 per share (the "Common Stock"), contained in the
Registration Statement filed by the Registrant to register such
securities under the Securities Exchange Act of 1934, including all
amendments and reports filed for the purpose of updating such
description prior to the termination of the offering of the Common
Stock offered hereby.
All documents filed by the Registrant pursuant to Section 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934 after the
date of this registration statement and prior to the filing of a
post-effective amendment to this Registration Statement which
indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold, shall be deemed to
be incorporated by reference in this registration statement and to be
a part hereof from the date of filing such documents. Any statement
contained in a document incorporated by reference herein shall be
deemed to be modified or superseded for purposes hereof to the extent
that a statement contained herein (or in any other subsequently filed
document which also is incorporated by reference herein) modifies or
supersedes such statement. Any statement so modified or superseded
shall not be deemed to constitute a part hereof except as so modified
or superseded.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Under Section 145 of the General Corporation Law of the State
of Delaware, as amended, the Registrant has the power to indemnify
directors and officers under prescribed circumstances and subject to
certain limitations against certain costs and expenses, including
attorneys' fees actually and reasonably incurred in connection with
any action, suit or proceeding, whether civil, criminal,
administrative or investigative, to which any of them is a party by
reason of his or her being a director or officer of the Registrant if
it is determined that he or she acted in accordance with the
applicable standard of conduct set forth in such statutory provisions.
Article VII of the Company's Certificate of Incorporation, as
amended, provides indemnification to directors and officers of the
Registrant against all expenses, liability and loss incurred as a
result of such person's being a party to, or threatened to be made a
party to, any action, suit or proceeding by reason of the fact that he
or she is or was a director of officer of the Registrant or is or was
serving at the request of the Registrant as a director, officer,
employee or agent of another enterprise, to the fullest extent
authorized by the General Corporation Law of the State of Delaware.
Article VII of the Certificate of Incorporation further permits the
Registrant to maintain insurance, at its expense, to protect itself
and any such director or officer of the Registrant or another
enterprise against any such expenses, liability or loss, whether or
not the Registrant would have the power to indemnify such person
against such expenses, liability or loss under the General Corporation
Law of the State of Delaware. Amendments, repeals or modifications of
Article VII can only be prospective and such changes require the
affirmative vote of not less than three-fourths of the outstanding
shares of stock of the Registrant entitled to vote in elections of
directors.
Article VII of the Registrant's By-laws generally permits
indemnification of directors and officers to the fullest extent
authorized by the General Corporation Law of the State of Delaware.
The Registrant also has purchased directors' and officers'
liability insurance.
Item 7. Exemption from Registration Claimed.
None.
Item 8. Exhibits.
The following Exhibits are filed as part of this Registration Statement:
4.1 Quad Systems Corporation 1993 Stock Option Plan, as amended.
5 Opinion of Ballard Spahr Andrews & Ingersoll
24.1 Consent of Ernst & Young LLP, independent auditors
24.2 Consent of Ballard Spahr Andrews & Ingersoll (contained in Exhibit 5)
25 Power of Attorney (contained on signature page in Part II of
the Registration Statement)
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information
set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high and of
the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in
the registration statement;provided, however, that paragraphs (a)(l)(i)
and (a)(1)(ii) do not apply if the registration statement is on Form S-3,
Form S-8 or Form F-3, and the information required to be included in a
post-effective
amendment by those paragraphs is contained in periodic reports filed
by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.
2. That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the Registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Horsham, Pennsylvania on
May 30, 1996.
QUAD SYSTEMS CORPORATION
By: \s\ David W. Smith
David W. Smith, President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints David W. Smith, Anthony R.
Drury and each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign
any and all amendments to this Registration Statement, and to file the
same, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and
perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons
in the capacities and on the dates indicated.
Signature Title Date
\s\ David W. Smith President and Director May 30, 1996
David W. Smith (Principal Executive Officer)
\s\James R. Bergman Director May 30, 1996
James R. Bergman
\s\ Robert P. Pinkas Director May 30, 1996
Robert P. Pinkas
\s\ Lorin J. Randall Director May 30, 1996
Lorin J. Randall
\s\ David H. Young Director May 30, 1996
David H. Young
\s\ Anthony R. Drury Senior Vice President, May 30, 1996
Anthony R. Drury Finance and Chief
Financial Officer
(Principal Financial
and Accounting Officer)
QUAD SYSTEMS CORPORATION
REGISTRATION STATEMENT ON FORM S-8
EXHIBIT INDEX
Exhibit No. Page
4.1 Quad Systems Corporation
1993 Stock Option Plan, as amended 10
5 Opinion of Ballard Spahr Andrews & Ingersoll 33
24.1 Consent of Ernst & Young LLP, independent auditor 35
24.2 Consent of Ballard Spahr Andrews & Ingersoll
(contained in Exhibit 5)
25 Power of Attorney (contained on signature page in Part II of
the Registration Statement)
Exhibit 24.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8) pertaining to the Quad Systems Corporation Amended
and Restated 1993 Stock Option Plan of our report dated November 2,
1995, with respect to the consolidated financial statements and
schedule of Quad Systems Corporation included in its Annual Report
(Form 10-K) for the year ended September 24, 1995, filed with the
Securities and Exchange Commission.
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
May 29, 1996
Adopted 3/23/93 Exhibit 4.1
Amended 11/11/93
Amended 12/22/93
Amended 1/14/94
Amended 2/16/94
Amended 3/6/96
QUAD SYSTEMS CORPORATION
STOCK OPTION PLAN
1. Purpose. Quad Systems Corporation (the "Company") hereby
adopts the Quad Systems Corporation 1993 Stock Option Plan (the
"Plan"). The Plan is intended to recognize the contributions
made to the Company by employees (including employees who are
members of the Board of Directors) of the Company or any
Affiliate (as defined below) and certain consultants or advisors
to the Company or an Affiliate, to provide such persons with
additional incentive to devote themselves to the future success
of the Company or an Affiliate, and to improve the ability of the
Company or an Affiliate to attract, retain, and motivate
individuals upon whom the Company's sustained growth and
financial success depend, by providing such persons with an
opportunity to acquire or increase their proprietary interest in
the Company through receipt of rights to acquire the Company's
Common Stock, par value $.03 per Share (the "Common Stock"). In
addition, the Plan is intended as an additional incentive to
certain directors of the Company who are not employees of the
Company or an Affiliate to serve on the Board of Directors and to
devote themselves to the future success of the Company by
providing them with an opportunity to acquire or increase their
proprietary interest in the Company through the receipt of
Options to acquire Common Stock.
2. Definitions. Unless the context clearly indicates
otherwise, the following terms shall have the following meanings:
a) "Affiliate" means a corporation which is a parent
corporation or a subsidiary corporation with respect to the
Company within the meaning of Section 424(e) or (f) of the Code.
b) "Board of Directors" or "Board" means the Board of
Directors of the Company.
c) "Change in Control" shall have the meaning as set
forth in Section 10 of the Plan.
d) "Code" means the Internal Revenue Code of 1986, as
amended.
e) "Committee" shall have the meaning set forth in
Section 3 of the Plan.
f) "Company" means Quad Systems Corporation, a Delaware
corporation.
g) "Disability" shall have the meaning set forth in Section
22(e)(3) of the Code.
h) "Fair Market Value" shall have the meaning set forth
in Subsection 8(b) of the Plan.
i) "ISO" means an Option granted under the Plan which
is intended to qualify as an "incentive stock option" within the
meaning of Section 422 of the Code.
j) "Non-employee Director" means a member of the Board
of Directors who is not an employee of the Company or an
Affiliate.
k) "Non-qualified Stock Option" means an Option granted
under the Plan which is not intended to qualify, or otherwise
does not qualify, as an "incentive stock option" within the
meaning of Section 422(b) of the Code.
l) "Option" means either an ISO or a Non-qualified
Stock Option granted under the Plan.
m) "Optionee" means a person to whom an Option has been
granted under the Plan, which Option has not been exercised and
has not expired or terminated.
n) "Option Document" means the document described in
Section 8 or Section 9 of the Plan, as applicable, which sets
forth the terms and conditions of each grant of Options.
o) "Option Price" means the price at which Shares may
be purchased upon exercise of an Option, as calculated pursuant
to Subsection 8(b) or Subsection 9(a) of the Plan, as applicable.
p) "Rule 16b-3" means Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended.
q) "Shares" means the shares of Common Stock of the
Company which are the subject of Options.
3. Administration of the Plan. The Plan shall be
administered by the Board of Directors of the Company; however,
the Board of Directors may (i) designate a committee composed of
two or more of its Non-employee Directors to operate and
administer the Plan in its stead, (ii) designate two committees
to operate and administer the Plan in its stead, one of such
committees composed of two or more of its Non-employee Directors
to operate and administer the Plan with respect to the Company's
"Principal Officers" (as defined below), and the other such
committee composed of two or more directors (which may include
directors who are also employees of the Company) to operate and
administer the Plan with respect to persons other than Principal
Officers and Non-employee Directors or (iii) designate only one
of the two committees referred to in subparagraph (ii) and itself
operate and administer the Plan with respect to persons not
within the jurisdiction of such committee. Any of such
committees designated by the Board of Directors, and the Board of
Directors itself in its administrative capacity with respect to
the Plan, is referred to as the "Committee." With respect to Non-
employee Directors, who are to be granted Options in accordance
with the provisions of Section 9, the directors to whom Options
will be granted, the timing of grants of Options, the price at
which Shares may be purchased and the number of Shares covered by
Options granted to each Optionee shall be as specifically set
forth herein, and subject to the foregoing and the other
provisions set forth herein, the Plan, as it pertains to Non
employee Directors, shall be administered by the Board of
Directors. As used herein, the term "Principal Officers" means
the Chairman of the Board of Directors (if the Chairman of the
Board of Directors is a payroll employee), President, Executive
Vice President, Senior Vice President, Vice President, Treasurer,
and any other person who is an "officer" within the meaning of
Rule 16a-1(f) promulgated under the Securities Exchange Act of
1934, as amended, or any successor rule.
i) Meetings. The Committee shall hold meetings at such
times and places as it may determine. Acts approved at a meeting
by a majority of the members of the Committee or acts approved in
writing by the unanimous consent of the members of the Committee
shall be the valid acts of the Committee.
ii) Grants. Except with respect to Options granted to
Non-employee Directors pursuant to Section 9 of the Plan, the
Committee shall from time to time at its discretion direct the
Company to grant Options pursuant to the terms of the Plan. The
Committee shall have plenary authority to (i) determine the
Optionee to whom, the times at which, and the price at which
Options shall be granted, (ii) determine the type of Option to be
granted and the number of Shares subject thereto, and (iii)
approve the form and terms and conditions of the Option
Documents; all subject, however, to the express provisions of the
Plan. In making such determinations, the Committee may take into
account the nature of the Optionee's services and
responsibilities, the Optionee's present and potential
contribution to the Company's success and such other factors as
it may deem relevant. Notwithstanding the foregoing, grants of
Options to Non-employee Directors shall be made only in
accordance with Section 9 of the Plan. The interpretation and
construction by the Committee of any provisions of the Plan or of
any Option granted under it shall be final, binding and
conclusive.
b) Exculpation. No member of the Board of Directors shall
be personally liable for monetary damages for any action taken or
any failure to take any action in connection with the
administration of the Plan or the granting of Options under the
Plan, provided that this Subsection 3(c) shall not apply to (i)
any breach of such member's duty of loyalty to the Company or its
stockholders, (ii) acts or omissions not in good faith or
involving intentional misconduct or a knowing violation of law,
(iii) acts or omissions that would result in liability under
Section 174 of the General Corporation Law of the State of
Delaware, as amended, and (iv) any transaction from which the
member derived an improper personal benefit.
c) Indemnification. Service on the Committee shall
constitute service as a member of the Board of Directors of the
Company. Each member of the Committee shall be entitled without
further act on his or her part to indemnity from the Company to
the fullest extent provided by applicable law and the Company's
Certificate of Incorporation and/or By-laws in connection with or
arising out of any action, suit or proceeding with respect to the
administration of the Plan or the granting of Options thereunder
in which he or she may be involved by reason of his or her being
or having been a member of the Committee, whether or not he or
she continues to be such member of the Committee at the time of
the action, suit or proceeding.
d) Limitations on Grants of Options to Consultants and
Advisors. With respect to the grant of Options to consultants or
advisors, bona fide services shall be rendered by consultants or
advisors and such services must not be in connection with the
offer or sale of securities in a capital-raising transaction.
4. Grants under the Plan. Grants under the Plan may be in
the form of a Non-qualified Stock Option, an ISO or a combination
thereof, at the discretion of the Committee.
5. Eligibility. All employees of the Company or an
Affiliate (including employees who are members of the Board of
Directors), consultants or advisors to the Company or an
Affiliate who satisfy the requirements set forth in Subsection
3(e), and all Non-employee Directors shall be eligible to receive
Options hereunder. However, Non-employee Directors may receive
Options only pursuant to Section 9. The Committee, in its sole
discretion, shall determine whether an individual is eligible to
receive Options under the Plan
6. Shares Subject to Plan. The aggregate maximum number of
Shares for which Options may be granted pursuant to the Plan is
nine hundred thousand (900,000), subject to adjustment as
provided in Section 11 of the Plan. The Shares shall be issued
from authorized and unissued Common Stock or Common Stock held in
or hereafter acquired for the treasury of the Company. If an
Option terminates or expires without having been fully exercised
for any reason, the Shares for which the Option was not exercised
may again be the subject of one or more Options granted pursuant
to the Plan.
7. Term of the Plan. The Plan is effective as of March 23,
1993, the date on which it was adopted by the Board of Directors,
subject to the approval of the Plan on or before March 22, 1994
by a majority of the votes cast at a duly called meeting of the
stockholders at which a quorum representing a majority of all
outstanding voting stock of the Company is, either in person or
by proxy, present and voting. If the Plan is not so approved on
or before March 22, 1994, all Options granted under the Plan
shall be null and void. No Option may be granted under the Plan
after March 22, 2003.
If the Reverse Split (as defined in Section 11) is not
approved by stockholders of the Company at the Annual Meeting of
Stockholders on April 2, 1993 or any adjournment or postponement
thereof, the Plan shall be terminated, and any Options granted
under the Plan shall be null and void.
8. Option Documents and Terms. Each Option granted under
the Plan shall be a Non-qualified Stock Option unless the Option
shall be specifically designated at the time of grant to be an
ISO for Federal income tax purposes. If any Option designated as
an ISO is determined for any reason not to qualify as an
incentive stock option within the meaning of Section 422 of the
Code, such Option shall be treated as a Non-qualified Stock
Option for all purposes under the provisions of the Plan.
Options granted pursuant to the Plan shall be evidenced by the
Option Documents in such form as the Committee shall from time to
time approve, which Option Documents shall comply with and be
subject to the following terms and conditions and such other
terms and conditions as the Committee shall from time to time
require which are not inconsistent with the terms of the Plan.
However, the following provisions of this Section 8 shall not be
applicable to Options granted to Non-employee Directors, except
as otherwise provided in Subsection 9(c).
a) Number of Option Shares. Each Option Document shall
state the number of Shares to which it pertains. An Optionee may
receive more than one Option, which may include Options which are
intended to be ISO's and Options which are not intended to be
ISO's, but only on the terms and subject to the conditions and
restrictions of the Plan. Effective February 17, 1993, the
maximum number of Shares for which Options may be granted to any
eligible individual during any fiscal year of the Company is
thirty thousand (30,000) Shares.
b) Option Price. Each Option Document shall state the
Option Price, which shall be at least 100% of the Fair Market
Value of the Shares on the date the Option is granted; provided,
however, that if an ISO is granted to an Optionee who then owns,
directly or by attribution under Section 424(d) of the Code,
shares possessing more than ten percent of the total combined
voting power of all classes of stock of the Company or an
Affiliate, then the Option Price shall be at least 110% of the
Fair Market Value of the Shares on the date the Option is
granted. If the Common Stock is traded in a public market, then
the Fair Market Value per share shall be, if the Common Stock is
listed on a national securities exchange or included in the
NASDAQ National Market System, the last reported sale price
thereof on the relevant date, or, if the Common Stock is not so
listed or included, the mean between the last reported "bid" and
"asked" prices thereof on the relevant date, as reported on
NASDAQ or, if not so reported, as reported by the National Daily
Quotation Bureau, Inc. or as reported in a customary financial
reporting service, as applicable and as the Committee determines.
c) Exercise. No Option shall be deemed to have been
exercised prior to the receipt by the Company of written notice
of such exercise and payment in full of the Option Price for the
Shares to be purchased. Each such notice shall specify the
number of Shares to be purchased and shall (unless the Shares are
covered by a then current registration statement or a
Notification under Regulation A under the Securities Act of 1933,
as amended (the "Act")), contain the Optionee's acknowledgment in
form and substance satisfactory to the Company that (a) such
Shares are being purchased for investment and not for
distribution or resale (other than a distribution or resale
which, in the opinion of counsel satisfactory to the Company, may
be made without violating the registration provisions of the
Act), (b) the Optionee has been advised and understands that (i)
the Shares have not been registered undo the Act and are
"restricted securities" within the meaning of Rule 144 under the
Act and are subject to restrictions on transfer and (ii) the
Company is under no obligation to register the Shares under the
Act or to take any action which would make available to the
Optionee any exemption from such registration, (c) such Shares
may not be transferred without compliance with all applicable
federal and state securities laws, and (d) an appropriate legend
referring to the foregoing restrictions on transfer and any other
restrictions imposed under the Option Documents may be endorsed
on the certificates. Notwithstanding the foregoing, if the
Company determines that issuance of Shares should be delayed
pending (A) registration under federal or state securities laws,
(B) the receipt of an opinion of counsel acceptable to the
Company that an appropriate exemption from such registration is
available, (C) the listing or inclusion of the Shares on any
securities exchange or an automated quotation system or (D) the
consent or approval of any governmental regulatory body whose
consent or approval is necessary in connection with the issuance
of such Shares, the Company may defer exercise of any Option
granted hereunder until any of the events described in this
Subsection 8(c) has occurred.
d) Medium of Payment. An Optionee shall pay for Shares
(i) in cash, (ii) by certified or cashier's check payable to the
order of the Company, or (iii) by such other mode of payment as
the Committee may approve, including payment through a broker in
accordance with procedures permitted by Regulation T of the
Federal Reserve Board. Without limiting the foregoing, the
Committee may provide (and in the case of Options granted to Non-
employee Directors, shall provide) in an Option Document that
payment may be made in whole or in part in shares of the
Company's Common Stock. If payment is made in whole or in part in
shares of the Company's Common Stock, then the Optionee shall
deliver to the Company certificates registered in the name of
such Optionee representing the shares owned by such Optionee,
free of all liens, claims and encumbrances of every kind and
having an aggregate Fair Market Value on the date of delivery
that is at least as great as the Option Price of the Shares (or
relevant portion thereof) with respect to which such Option is to
be exercised by the payment in shares of Common Stock,
accompanied by stock powers duly endorsed in blank by the
Optionee. In the event that certificates for shares of the
Company's Common Stock delivered to the Company represent a
number of shares in excess of the number of shares required to
make payment for the Option Price of the Shares (or relevant
portion thereof) with respect to which such Option is to he
exercised by payment in shares of Common Stock, the stock
certificate issued to the Optionee shall represent (i) the Shares
in respect of which payment is made, and (ii) such excess number
of shares. Notwithstanding the foregoing, the Committee may
impose from time to time such limitations and prohibitions on the
use of shares of the Common Stock to exercise an option as it
deems appropriate.
e) Termination of Options.
i) No Option shall be exercisable after the first to
occur of the following:
a) Expiration of the Option term specified in the
Option Document, which, in the case of an ISO, shall not occur
after (1) ten years from the date of grant, or (2) five years
from the date of grant of an ISO if the Optionee on the date of
grant owns, directly or by attribution under Section 424(d) of
the Code, shares possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the
Company or of an Affiliate;
b) Expiration of three months from the date the
Optionee's employment or service with the Company or its
Affiliates terminates for any reason other than Disability or
death or as otherwise specified in Subsection 8(e)(i)(D) or
8(e)(i)(E) below; c) Expiration of one year from the date such
employment or service with the Company or its Affiliates
terminates due to the Optionee's Disability or death;
d) A finding by the Committee, after full consideration
of the facts presented on behalf of both the Company and the
Optionee, that the Optionee has breached his or her employment or
service contract with the Company or an Affiliate, or has been
engaged in disloyalty to the Company or an Affiliate, including,
without limitation, fraud, embezzlement, theft, commission of a
felony or proven dishonesty in the course of his employment or
service, or has disclosed trade secrets or confidential
information of the Company or an Affiliate. In such event, in
addition to immediate termination of the Option, the Optionee
shall automatically forfeit all Shares for which the Company has
not yet delivered the share certificates upon refund by the
Company of the Option Price. Notwithstanding anything herein to
the contrary, the Company may withhold delivery of share
certificates pending the resolution of any inquiry that could
lead to a finding resulting in a forfeiture; or
e) The date, if any, set by the Board of Directors as
an accelerated expiration date pursuant to Section 10 of the
Plan.
With respect to Subsections 8(e) (i) (B) and (C) above,
the only Options which may be exercised during the three-month or
one-year period, as the case may be, following the date of
Optionee's termination of employment or service with the Company
or its Affiliates are Options which were exercisable on the last
date of such employment or service and not Options which, if the
Optionee were still employed or rendering service during such
three-month or one-year period, would become exercisable, unless
the Option Document specifically provides to the contrary.
ii) Notwithstanding the foregoing, the Committee may
bend the period during which all or any portion of an Option may
be exercised to a date no later than the Option term specified in
the Option Document pursuant to Subsection 8(e)(i)(A), provided
that any change pursuant to this Subsection 8(e)(ii) which would
cause an ISO to become a Non-qualified Stock Option may be made
only with the consent of the Optionee. The terms of an executive
severance agreement or other agreement between the Company and an
Optionee, approved by the Committee, whether entered into prior
or subsequent to the grant of an Option, which provide for Option
exercise dates later than those set forth in Subsection 8(e)(i)
but permitted by this Subsection 8(e)(ii) shall be deemed to be
Option terms approved by the Committee and consented to by the
Optionee.
f) Transfers. No Option granted under the Plan may be
transferred, except by will or by the laws of descent and
distribution. During the lifetime of the person to whom an
Option is granted, such Option may be exercised only by such
person. Notwithstanding the foregoing, a Non-qualified Stock
Option may be transferred pursuant to the terms of a "qualified
domestic relations order," within the meaning of Sections
401(a)(13) and 414(p) of the Code or within the meaning of Title
I of the Employee Retirement Income Security Act of 1974, as
amended.
g) Limitation on ISO Grants. In no event shall the
aggregate Fair Market Value of the Shares of Common Stock
(determined at the time the ISO is granted) with respect to which
incentive stock options under all stock option plans of the
Company or its Affiliates are exercisable for the first time by
the Optionee during any calendar year exceed $100,000.
h) Other Provisions. Subject to the provisions of the
Plan, the Option Documents shall contain such other provisions
including, without limitation, additional restrictions upon the
exercise of the Option or additional limitations upon the term of
the Option, as the Committee shall deem advisable.
i) Amendment. Subject to the provisions of the Plan,
the Committee shall have the right to amend Option Documents
issued to an Optionee, subject to the Optionee's consent if such
amendment is not favorable to the Optionee, except that the
consent of the Optionee shall not be required for any amendment
made under Subsection 8(e)(i)(E) or Section 10 of the Plan, as
applicable.
9. Special Provisions Relating to Grants of Options to Non-
employee Directors. Options granted pursuant to the Plan to Non-
employee Directors shall be granted, without any further action
by the Committee, in accordance with the terms and conditions set
forth in this Section 9. Options granted pursuant to this
Section 9 shall be evidenced by Option Documents in such form as
the Committee shall from time to time approve, which Option
Documents shall comply with and be subject to the following terms
and conditions and such other terms and conditions as the
Committee shall from time to time require which are not
inconsistent with the terms of the Plan.
a) Timing of Grants; Number of Shares Subject of
Options; Exercisability of Options; Option Price. Each Non-
employee Director on the effective date of the Plan shall be
granted, on the date of the first closing of the initial public
offering of the Common Stock, an Option to purchase three
thousand (3,000) Shares. Each Non-employee Director first
elected to the Board of Directors after the date of the first
closing of the initial public offering of the Shares shall be
granted an Option to purchase three thousand (3,000) Shares on
the date he or she becomes a director. Subsequent to the grants
of Options to Nonemployee Directors pursuant to the preceding two
sentences (each such grant of Options hereinafter referred to as
the "Initial Grant"), each Non-employee Director shall thereafter
be granted an Option to purchase an additional one thousand
(1,000) Shares on the anniversary of the date of the Initial
Grant and on the anniversary of the date of each grant after the
Initial Grant. Subject to Section 10, each Option granted in the
Initial Grant shall be a Non-qualified Stock Option becoming
exercisable over a period of three (3) years, so that the
Optionee shall have the right to exercise the Option with respect
to one third (1/3) of the Shares covered thereby commencing on
the first anniversary of the date of grant, and the right to
exercise the Option with respect to an additional one third (1/3)
of such Shares commencing on each of the following two
anniversaries of the date of grant. Any Option granted pursuant
to this Section 9(a) after the Initial Grant shall be a Non-
qualified Stock Option becoming exercisable commencing on the
third anniversary of the date on which such Option is granted.
The Option Price of any Option granted under this Section 9(a)
shall be- equal to the Fair Market Value of the Shares on the
date the Option is granted.
b) Termination of Options Granted Pursuant to Section
9. All Options granted pursuant to this Section 9 shall be
exercisable until the first to occur of the following:
i) Expiration of ten (10) years from the date of grant,
ii) Expiration of three months from the date the
Optionee's service as a Non-employee Director terminates for any
reason other than Disability or death; or
iii) Expiration of one year from the date the
Optionee's service with Company as a Non-employee Director
terminates due to the Optionee's Disability or death.
c) Applicability of Provisions of Section 8 to Options
Granted Pursuant to Section 9. The following provisions of
Section 8 shall be applicable to Options granted pursuant to this
Section 9: Subsection 8(a) (provided that all Options granted
pursuant to this Section 9 shall be Non-qualified Stock Options);
the last sentence of Subsection 8(b); Subsection 8(c); Subsection
8(d); subsection 8(f); and Subsection 8(I).
10. Change in Control. In the event of a Change in Control,
the Committee may take whatever action it deems necessary or
desirable with respect to the Options outstanding, including,
without limitation, accelerating the expiration or termination
date in the respective Option Documents for Options, other than
Options granted under Section 9, to a date no earlier than thirty
(30) days after notice of such acceleration is given to the
Optionees. Notwithstanding anything herein to the contrary, the
exercise date of Options granted under Section 9 may not be
accelerated under this Section.
A "Change of Control" shall be deemed to have occurred upon
the earliest to occur of the following events: (i) the date the
stockholders of the Company (or the Board of Directors, if
stockholder action is not required) approve a plan or other
arrangement pursuant to which the Company will be dissolved or
liquidated, or (ii) the date the stockholders of the Company (or
the Board of Directors, if stockholder action is not required)
approve a definitive agreement to sell or otherwise dispose of
substantially all of the assets of the Company, or (iii) the date
the stockholders of the Company (or the Board of Directors, if
stockholder action is not required) and the stockholders of the
other constituent corporation (or its board of directors if
stockholder action is not required) have approved a definitive
agreement to merge or consolidate the Company with or into such
other corporation, other than, in either case, a merger or
consolidation of the Company in which holders of shares of the
Company's Common Stock immediately prior to the merger or
consolidation will hold at least a majority of the ownership of
common stock of the surviving corporation (and, if one class of
common stock is not the only class of voting securities entitled
to vote on the election of directors of the surviving
corporation, a majority of the voting power of the surviving
corporation's voting securities) immediately after the merger or
consolidation, which common stock (and if applicable voting
securities) is to be held in the same proportion as such holders'
ownership of Common Stock of the Company immediately before the
merger or consolidation, or (iv) the date any entity, person or
group within the meaning of Section 13(d)(3) or Section 14(d)(2)
of the Securities Exchange Act of 1934, as amended (other than
(A) the Company or any of its subsidiaries or any employee
benefit plan (or related trust) sponsored or maintained by the
Company or any of its subsidiaries, or (B) any person who, on the
date the Plan is effective, shall have been the beneficial owner
of or have voting control over shares of Common Stock of the
Company, possessing more than ten percent (10%) of the aggregate
voting power of the Company's Common Stock) shall have become the
beneficial owner of, or shall have obtained voting control over,
more than ten percent (10%) of the outstanding shares of the
Company's Common Stock, or (v) the first day after the date this
Plan is effective when directors are elected such that a majority
of the Board of Directors shall have been members of the Board of
Directors for less than two (2) years, unless the nomination for
election of each new director who was not a director at the
beginning of such two (2) year period was approved by a vote of
at least two-thirds of the directors then still in office who
were directors at the beginning of such period.
11. Adjustments on Changes in Capitalization. The aggregate
number of Shares and class of shares as to which Options may be
granted hereunder and to any eligible individual hereunder, the
number and class or classes of shares covered by each outstanding
Option and the Option Price thereof shall be appropriately
adjusted in the event of a stock dividend, stock split,
recapitalization or other change in the number or class of issued
and outstanding equity securities of the Company resulting from a
subdivision or consolidation of the Common Stock and/or, if
appropriate, other outstanding equity securities or a
recapitalization or other capital adjustment (not including the
issuance of Common Stock on the conversion of other securities of
the Company which are convertible into Common Stock) affecting
the Common Stock which is effected without receipt of
consideration by the Company. The Committee shall have authority
to determine the adjustments to be made under this Section, and
any such determination by the Committee shall be final, binding
and conclusive; provided, however, that no adjustment shall be
made which will cause an ISO to lose its status as such without
the consent of the Optionee, except for adjustments made pursuant
to Section 10 hereof. Notwithstanding the foregoing, the number
of shares set forth in Section 6 already reflects a one-for-three
reverse stock split (the "Reverse Split") expected to be approved
by stockholders of the Company at the Annual Meeting of
Stockholders on April 2, 1993 or any adjournment or postponement
thereof; no adjustments will be made pursuant to this Section 11
as a result of the Reverse Split.
12. Amendment of the Plan. The Board of Directors of the
Company may amend the Plan from time to time in such manner as it
may deem advisable. Nevertheless, the Board of Directors of the
Company may not change the class of individuals eligible to
receive an ISO or increase the maximum number of Shares as to
which Options may be granted without obtaining stockholder
approval, within twelve months before or after such action. In
addition, the provisions of Section 9 that determine (i) which
directors shall be granted Options pursuant to Section 9; (ii)
the amount of Shares subject to Options granted pursuant to
Section 9; (iii) the price at which Shares subject to Options
granted pursuant to Section 9 may be purchased and (iv) the
timing of grants of Options pursuant to Section 9 shall not be
amended more than once every six months, other than to comport
with changes in the Code or the Employee Retirement Income
Security Act of 1974, as amended. No amendment to the Plan shall
adversely affect any outstanding Option, however, without the
consent of the Optionee that holds such Option.
13. No Commitment to Retain. The grant of an Option
pursuant to the Plan shall not be construed to imply or to
constitute evidence of any agreement, express or implied, on the
part of the Company or any Affiliate to retain the Optionee in
the employ of the Company or an Affiliate and/or as a member of
the Company's Board of Directors or in any other capacity.
14. Withholding of Taxes. Whenever the Company proposes or
is required to deliver or transfer Shares in connection with the
exercise of an Option, the Company shall have the right to (a)
require the recipient to remit or otherwise make available to the
Company an amount sufficient to satisfy any federal, state and/or
local withholding tax requirements prior to the delivery or
transfer of any certificate or certificates for such Shares or
(b) take whatever other action it deems necessary to protect its
interests with respect to tax liabilities. The Company's
obligation to make any delivery or transfer of Shares shall be
conditioned on the Optionee's compliance, to the Company's
satisfaction, with any withholding requirement.
15. Interpretation. The Plan is intended to enable
transactions under the Plan with respect to directors and
officers (within the meaning of Section 16(a) under the
Securities Exchange Act of 1934, as amended) to satisfy the
conditions of Rule 16b-3; to the extent that any provision of the
Plan, or any provisions of any Option granted pursuant to the
Plan, would cause a conflict with such conditions or would cause
the administration of the Plan as provided in Section 3 to fail
to satisfy the conditions of Rule 16b-3, such provision shall be
deemed null and void to the extent permitted by applicable law.
[LETTERHEAD OF BALLARD SPAHR ANDREWS & INGERSOLL]
May 30, 1996
Quad Systems Corporation
Two Electronic Drive
Horsham, PA 19044
Re: Shares of Common Stock of Quad Systems Corporation
to be Issued Pursuant to the Quad Systems
Corporation 1993 Stock Option Plan
Ladies and Gentlemen:
We have acted as counsel to Quad Systems Corporation
(the "Company") in connection with the Company's 1993 Stock
Option Plan, as amended (the "Plan"), and the registration and
issuance of up to 300,000 additional shares of the Company's
common stock, par value $0.001 per share (the "Shares") issuable
under the Plan pursuant to the terms thereof.
In rendering our opinion, we have assumed that a
Registration Statement on Form S-8 (the "Registration Statement")
under the Securities Act of 1933, as amended, with respect to the
Shares will have been filed by the Company with the Securities
and Exchange Commission and will have become effective before any
of the Shares are issued, and that persons acquiring the Shares
will do so strictly in accordance with the terms of the Plan and
will receive a prospectus containing all of the information
required by Part I of Form S-8 before acquiring such Shares. We
have also reviewed such certificates, documents, corporate
records and other instruments as in our judgment are necessary or
appropriate to enable us to render the opinion expressed below.
In giving this opinion, we are assuming the authenticity of all
instruments presented to us as originals, the conformity with the
originals of all instruments presented to us as copies and the
genuineness of all signatures.
Based upon the foregoing, we are of the opinion that
the 300,000 additional shares covered by the Plan, when issued by
the Company to the purchasers of the Shares in accordance with
the terms and conditions of the Plan, will be legally issued,
fully paid and non-assessable.
We consent to the filing of this opinion as Exhibit 5
to the Registration Statement.
Very truly yours,
/s/ Ballard Spahr Andrews & Ingersoll
Quad Systems Corporation
May 30, 1996
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