<PAGE>
As filed with the Securities and Exchange Commission on November 5, 1998
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
QRS CORPORATION
(Exact name of Registrant as specified in its charter)
---------------------------
Delaware 68-0102251
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
1400 Marina Way South
Richmond, California 94804
(Address of principal executive offices) (Zip code)
---------------------------
QRS CORPORATION SPECIAL NON-OFFICER STOCK OPTION PLAN
QRS CORPORATION 1993 STOCK OPTION/STOCK ISSUANCE PLAN
(Full title of the Plan)
---------------------------
John S. Simon
Chief Executive Officer
QRS CORPORATION
1400 Marina Way South, Richmond, California 94804
(510) 215-5000
(Telephone number, including area code, of agent for service)
---------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(1) per Share(2) Price(2) Fee
------------------ -------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
QRS Corporation
Special Non-Officer Stock Option Plan
- -------------------------------------
Common Stock,
$0.001 par value 150,000 shares $38.75 $5,812,500 $1,615.88
QRS Corporation
1993 Stock Option/Stock Issuance Plan
- --------------------------------------
Common Stock,
$0.001 par value 350,000 shares $38.75 $13,562,500 $3,770.38
Aggregate Filing Fee: $5,386.26
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the Registrant's Special
Non-Officer Stock Option Plan or the Registrant's 1993 Stock Option/Stock
Issuance Plan by reason of any stock dividend, stock split,
recapitalization or any other similar transaction which results in an
increase in the number of outstanding shares of Registrant's Common Stock
without the Registrant's receipt of consideration.
(2) Calculated solely for purposes of this offering under Rule 457(h) of the
Securities Act of 1933, as amended, on the basis of the average of the high
and low selling prices per share of the Registrant's Common Stock on
November 2, 1998, as reported on the Nasdaq National Market.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
QRS Corporation (the "Registrant") hereby incorporates by
reference into this Registration Statement the following documents previously
filed with the Securities and Exchange Commission (the "SEC"):
(a) The Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, filed with the SEC on March 5, 1998;
(b) The Registrant's Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 31, 1998 and June 30, 1998, filed with the
SEC on May 15, 1998 and August 7, 1998, respectively; and
(c) The Registrant's Registration Statement No. 0-21958 on Form 8-A,
filed with the SEC on June 18, 1993 pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "1934 Act") in
which the terms, rights and provisions applicable to the
Registrant's Common Stock are described.
All reports and definitive proxy or information statements filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of
this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any subsequently filed
document which also is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
The Registrant's Certificate of Incorporation limits the liability
of directors to the maximum extent permitted by Delaware law. Delaware law
provides that directors of a corporation will not be personally liable for
monetary damages for breach of their fiduciary duties as directors, except for
liability (i) for any breach of their duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for unlawful
payments of dividends or unlawful stock repurchases or redemptions as provided
in Section 174 of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived an improper personal benefit.
The Registrant's Bylaws provide that the Registrant shall
indemnify its directors and may indemnify its other
II-2
<PAGE>
officers and employees and other agents to the fullest extent permitted by law.
The Registrant believes that indemnification under its Bylaws covers at least
negligence and gross negligence on the part of indemnified parties. The
Registrant's Bylaws also permit it to secure insurance on behalf of any officer,
director, employee or other agent for any liability arising out of his or her
actions in such capacity, regardless of whether the Bylaws have the power to
indemnify him or her against such liability under the General Corporation law of
Delaware. The Registrant currently has secured such insurance on behalf of its
directors and officers.
The Registrant has entered into agreements to indemnify its
directors and executive officers, in addition to indemnification provided for in
the Registrant's Bylaws. These agreements, among other things, indemnify the
Registrant's directors and executive officers for certain expenses (including
attorneys' fees), judgments, fines and settlement amounts incurred by any such
person in any action or proceeding, including any action by or in the right of
the Registrant, arising out of such person's services as a director or executive
officer of the Registrant, any subsidiary of the Registrant or any other company
or enterprise to which the person provides services at the request of the
Registrant. The Registrant believes that these provisions and agreements are
necessary to attract and retain qualified persons as directors and executive
officers.
At present, there is no pending litigation or proceeding involving
any director, officer, employee or agent of the Registrant where indemnification
will be required or permitted. The Registrant is not aware of any threatened
litigation or proceeding that might result in a claim for such indemnification.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
<TABLE>
<CAPTION>
Exhibit
No. Exhibit
- --------- ---------
<S> <C>
4 Instruments Defining Rights of Stockholders. Reference is made to
Registrant's Registration Statement No. 000-21958 on Form 8-A, as
amended, together with the exhibits thereto, which is incorporated
herein by reference pursuant to Item 3(c) of this Registration
Statement.
5 Opinion and Consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Deloitte & Touche LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-5 of this
Registration Statement.
99.1 QRS Corporation Special Non-Officer Stock Option Plan.
99.2 Form of Notice of Grant of Stock Option.
99.3 Form of Stock Option Agreement.
99.4 Form of Addendum to Stock Option Agreement (Involuntary
Termination upon a Corporate Transaction or Change in Control).
99.5 QRS Corporation 1993 Stock Option/Stock Issuance Plan (As Amended
and Restated February 16, 1998; As Further Amended May 5, 1998).
99.6 Form of Notice of Grant of Stock Option.
99.7 Form of Stock Option Agreement.
99.8* Form of Addendum to Stock Option Agreement (Change in Control).
99.9* Form of Addendum to Stock Option Agreement (Financial Assistance).
99.10* Form of Addendum to Stock Option Agreement (Limited Stock
Appreciation Right).
99.11* Form of Addendum to Stock Option Agreement (Special Tax
Elections).
99.12* Form of Notice of Grant of Stock Option (Non-Employee Director -
Initial Grant).
</TABLE>
II-3
<PAGE>
<TABLE>
<S> <C>
99.13* Form of Notice of Grant of Stock Option (Non-Employee Director -
Subsequent Grant).
99.14 Form of Stock Option Agreement (Non-Employee Director).
99.15* Form of Stock Issuance Agreement.
99.16* Form of Addendum to Stock Issuance Agreement.
</TABLE>
- ----------
* Exhibits 99.8 through 99.13 and Exhibits 99.15 and 99.16 are incorporated
herein by reference to Exhibits 99.4 through 99.9 and Exhibits 99.11 and
99.12, respectively, to Registrant's Registration Statement No. 33-74734 on
Form S-8, filed with the SEC on February 2, 1994.
Item 9. Undertakings
A. Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the indemnification provisions summarized in Item 6 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 1933 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 hereunder, 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 of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
B. 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 1933 Act, (ii) to reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in this
Registration Statement and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement; provided, however, that clauses (1)(i) and (1)(ii) shall
not apply if 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 Section 15(d) of the 1934 Act that are
incorporated by reference into this Registration Statement; (2) that for the
purpose of determining any liability under the 1933 Act each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof; and (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 Registrant's
Special Non-Officer Stock Option Plan and/or 1993 Stock Option/Stock Issuance
Plan.
C. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference into this Registration Statement shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Richmond, State of California on November 5,
1998.
QRS CORPORATION
By: /s/ John S. Simon
-------------------------------------
John S. Simon
Chief Executive Officer and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned officers and directors of QRS Corporation, a
Delaware corporation, do hereby constitute and appoint John S. Simon and Peter
Papano and each of them, the lawful attorneys-in-fact and agents, with full
power and authority to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, or either one of them, determine
may be necessary or advisable or required to enable said corporation to comply
with the Securities Act of 1933, as amended, and any rules or regulation or
requirements of the Securities and Exchange Commission in connection with this
Registration Statement. Without limiting the generality of the foregoing power
and authority, the powers granted include the power and authority to sign the
names of the undersigned officers and directors in the capacities indicated
below to this Registration Statement, to any and all amendments, both
pre-effective and post-effective, and supplements to this Registration Statement
and to any and all instruments or documents filed as part of or in conjunction
with this Registration Statement or amendments or supplements thereto, and each
of the undersigned hereby ratifies and confirms all that said attorneys and
agents, or either one of them, shall do or cause to be done by virtue hereof.
This Power of Attorney may be signed in several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power
of Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ----------- --------- -------
<S> <C> <C>
/s/ John S. Simon Chief Executive Officer and Director November 5, 1998
- ----------------------- (Principal Executive Officer)
John S. Simon
/s/ Peter Papano Vice President of Finance, Chief Financial November 5, 1998
- ---------------------- Officer and Secretary
Peter Papano (Principal Financial and
Accounting Officer)
</TABLE>
II-5
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Shawn M. O'Connor President and Chief Operating Officer November 5, 1998
- ----------------------
/s/ Peter R. Johnson Chairman of the Board of Directors November 5, 1998
- ----------------------
Peter R. Johnson
Director
- ----------------------
Tania Amochaev
Director
- ----------------------
Steven D. Brooks
Director
- ----------------------
John P. Dougall
Director
- ----------------------
H. Lynn Hazlett
/s/ Garth Saloner Director November 5, 1998
- ----------------------
Garth Saloner
/s/ Philip Schlein Director November 5, 1998
- ----------------------
Philip Schlein
/s/ Garen K. Staglin Director November 5, 1998
- ----------------------
Garen K. Staglin
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Exhibit
- -------- --------
<S> <C>
4 Instruments Defining Rights of Stockholders. Reference is made to
Registrant's Registration Statement No. 000-21958 on Form 8-A, as
amended, together with the exhibits thereto, which is incorporated
herein by reference pursuant to Item 3(c) of this Registration
Statement.
5 Opinion and Consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Deloitte & Touche LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-5 of this
Registration Statement.
99.1 QRS Corporation Special Non-Officer Stock Option Plan.
99.2 Form of Notice of Grant of Stock Option.
99.3 Form of Stock Option Agreement.
99.4 Form of Addendum to Stock Option Agreement (Involuntary
Termination upon a Corporate Transaction or Change in Control).
99.5 QRS Corporation Stock Option/Stock Issuance Plan (As Amended and
Restated February 16, 1998; As Further Amended May 5, 1998).
99.6 Form of Notice of Grant of Stock Option.
99.7 Form of Stock Option Agreement.
99.8* Form of Addendum to Stock Option Agreement (Change in Control).
99.9* Form of Addendum to Stock Option Agreement (Financial Assistance).
99.10* Form of Addendum to Stock Option Agreement (Limited Stock
Appreciation Right).
99.11* Form of Addendum to Stock Option Agreement (Special Tax
Elections).
99.12* Form of Notice of Grant of Stock Option (Non-Employee Director -
Initial Grant).
99.13* Form of Notice of Grant of Stock Option (Non-Employee Director -
Subsequent Grant).
99.14 Form of Stock Option Agreement (Non-Employee Director).
99.15* Form of Stock Issuance Agreement.
99.16* Form of Addendum to Stock Issuance Agreement.
</TABLE>
- ----------
* Exhibits 99.8 through 99.13 and Exhibits 99.15 and 99.16 are incorporated
herein by reference to Exhibits 99.4 through 99.9 and Exhibits 99.11 and
99.12, respectively, to Registrant's Registration Statement No. 33-74734 on
Form S-8, filed with the SEC on February 2, 1994.
<PAGE>
EXHIBIT 5
Opinion of Brobeck, Phleger & Harrison LLP
November 5, 1998
QRS Corporation
1400 Marina Way South
Richmond, California 94804
Re: QRS Corporation (the "Company")
Registration Statement for Registration
of an Aggregate of 500,000 Shares of Common Stock
Ladies and Gentlemen:
We have acted as counsel to QRS Corporation, a Delaware corporation
(the "Company") in connection with the registration on Form S-8 (the
"Registration Statement") under the Securities Act of 1933, as amended, of (i)
150,000 shares of common stock and related stock options for issuance under the
Company's Special Non-Officer Stock Option Plan (the "Non-Officer Plan") and
(ii) the additional 350,000 shares of common stock and related stock options for
issuance under the Company's 1993 Stock Option/Stock Issuance Plan (the "1993
Plan").
This opinion is being furnished in accordance with the requirements of
Item 8 of Form S-8 and Item 601(b)(5)(i) of Regulation S-K.
We have reviewed the Company's charter documents and the corporate
proceedings taken by the Company in connection with the establishment of the
Non-Officer Plan and the establishment and amendment of 1993 Plan. Based on such
review, we are of the opinion that, if, as and when the Shares are issued and
sold (and the consideration therefor received) pursuant to (a) the provisions of
option agreements duly authorized under the Non-Officer Plan and/or the 1993
Plan and in accordance with the Registration Statement or (b) duly authorized
direct stock issuances in accordance with the 1993 Plan and in accordance with
the Registration Statement, such Shares will be duly authorized, legally issued,
fully paid and nonassessable.
We consent to the filing of this opinion letter as Exhibit 5 to the
Registration Statement.
This opinion letter is rendered as of the date first written above and
we disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinion expressed herein. Our opinion is expressly
limited to the matters set forth above and we render no opinion, whether by
implication or otherwise, as to any other matters relating to the Company, the
Non-Officer Plan, the 1993 Plan or the shares of the Company's common stock
issuable under such plans or options.
Very truly yours,
/s/ Brobeck, Phleger & Harrison LLP
BROBECK, PHLEGER & HARRISON LLP
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
QRS Corporation on Form S-8 of our report dated February 4, 1998, appearing in
the Annual Report on Form 10-K of QRS Corporation for the year ended December
31, 1997.
DELOITTE & TOUCHE LLP
San Francisco, California
November 2, 1998
<PAGE>
Exhibit 99.1
QRS CORPORATION
SPECIAL NON-OFFICER STOCK OPTION PLAN
ARTICLE ONE
GENERAL
A. This Special Non-Officer Stock Option Plan is intended to
promote the interests of QRS Corporation, a Delaware corporation, by authorizing
an additional reserve of shares of the Corporation's common stock for issuance
through long-term option grants to individuals in the employ of the Corporation
(or any Parent or Subsidiary) who are neither officers of the Corporation nor
members of the Board and who are not otherwise Section 16 Insiders.
B. The Plan shall become effective immediately upon adoption
by the Board on December 24, 1997.
C. This Plan shall supplement the authorized share reserve
under the Corporation's 1993 Stock Option/Stock Issuance Plan, and share
issuances under this Plan shall not reduce or otherwise affect the number of
shares of the Corporation's common stock available for issuance under the 1993
Stock Option/Stock Issuance Plan. In addition, share issuances under the 1993
Stock Option/Stock Issuance Plan shall not reduce or otherwise affect the number
of shares of the Corporation's common stock available for issuance under this
Plan.
Capitalized terms shall have the meanings assigned to such terms
in the attached Appendix.
I. ADMINISTRATION OF THE PLAN
A. The Plan Administrator shall have full power and discretion
(subject to the express provisions of the Plan) to establish such rules and
regulations as it may deem appropriate for the proper administration of the Plan
and to make such determinations under, and issue such interpretations of, the
provisions of the Plan and any outstanding option grants thereunder as it may
deem necessary or advisable. Decisions of the Plan Administrator shall be final
and binding on all parties who have an interest in the Plan or any outstanding
option thereunder.
B. The individuals serving as Plan Administrator shall serve
for such period as the Board may determine and shall be subject to removal by
the Board at any time.
<PAGE>
C. Service as Plan Administrator shall constitute service as a
Board member, and each Board member serving as Plan Administrator shall
accordingly be entitled to full indemnification and reimbursement as a Board
member for such service. No individual serving as Plan Administrator shall be
liable for any act or omission made in good faith with respect to the Plan or
any option granted under the Plan.
II. ELIGIBILITY
A. The persons eligible to participate in the Plan shall be
limited to those Employees who are neither officers of the Corporation nor
members of the Board and who are not otherwise Section 16 Insiders.
B. The Plan Administrator shall have full authority to
determine which eligible Employees are to receive option grants under the Plan,
the number of shares to be covered by each such grant, the time or times at
which each granted option is to become exercisable and the maximum term for
which the option may remain outstanding. All options granted under the Plan
shall be Non-Statutory Options.
III. STOCK SUBJECT TO THE PLAN
A. Shares of Common Stock shall be available for issuance
under the Plan and shall be drawn from either the Corporation's authorized but
unissued shares of Common Stock or from reacquired shares of Common Stock,
including shares repurchased by the Corporation on the open market. The maximum
number of shares of Common Stock reserved for issuance over the term of the Plan
shall be limited to 150,0000 shares, subject to adjustment from time to time in
accordance with the provisions of this Section III.
B. Should one or more outstanding options under this Plan
expire or terminate for any reason prior to exercise in full (including any
option cancelled in accordance with the cancellation-regrant provisions of
Section III of Article Two), then the shares subject to the portion of each
option not so exercised shall be available for subsequent issuance under the
Plan. Should the exercise price of an outstanding option under the Plan be paid
with shares of Common Stock, then the number of shares of Common Stock available
for issuance under the Plan shall be reduced by the gross number of shares for
which the option is exercised, and not by the net number of shares of Common
Stock actually issued to the holder of such option.
C. Should any change be made to the Common Stock issuable
under the Plan by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, then appropriate adjustments shall be made to (i) the maximum
number and/or class of securities issuable under the Plan, and (ii) the number
and/or class of securities and price per share in effect under each option
outstanding under the Plan. Such adjustments to the outstanding
2.
<PAGE>
options are to be effected in a manner which shall preclude the enlargement or
dilution of rights and benefits under such options. The adjustments determined
by the Plan Administrator shall be final, binding and conclusive.
3.
<PAGE>
ARTICLE TWO
OPTION GRANT PROGRAM
I. OPTION TERMS
Options granted under the Plan shall be authorized by action of
the Plan Administrator and shall be evidenced by one or more instruments in the
form approved by the Plan Administrator; provided, however, that each such
instrument shall comply with the terms and conditions specified below. All such
granted options shall be Non-Statutory Options.
A. Exercise Price.
1. The exercise price per share shall be fixed by the Plan
Administrator but shall not be less than one hundred percent (100%) of the Fair
Market Value per share of Common Stock on the grant date.
2. Full payment of the exercise price shall become
immediately due upon exercise of the option and shall be payable in one or more
of the forms specified below:
(i) cash or check made payable to the
Corporation's order,
(ii) shares of Common Stock held for the requisite
period necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the
Exercise Date, or
(iii) through a special sale and remittance
procedure pursuant to which the Optionee shall concurrently provide
irrevocable instructions to (a) a Corporation-designated brokerage firm
to effect the immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate exercise price payable for the
purchased shares plus all applicable Federal, state and local income
and employment taxes required to be withheld by the Corporation in
connection with such purchase and to (b) the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm
in order to complete the sale transaction.
Except to the extent such sale and remittance procedure is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.
4.
<PAGE>
B. Term and Exercise of Options. Each option shall be
exercisable at such time or times, during such period and for such number of
shares as shall be determined by the Plan Administrator and set forth in the
documents evidencing such option. No option shall have a maximum term in excess
of ten (10) years. During the lifetime of the Optionee, the option shall be
exercisable only by the Optionee and shall not be assignable or transferable
except for a transfer of the option effected by will or by the laws of
inheritance following the Optionee's death.
C. Effect of Termination of Service.
1. The following provisions shall govern the exercise of
any option held by the Optionee at the time of cessation of Service or death:
(i) Should Optionee cease to remain in Service for
any reason (other than death, Permanent Disability or Misconduct) while
the option is outstanding, then Optionee shall retain the right to
exercise that option until the earlier of (A) the expiration of the
three (3)-month period commencing with the date of such cessation of
Service or (B) the expiration of the ten (10)-year option term.
(ii) If the Optionee dies while holding an
outstanding option, then the personal representative of Optionee's
estate or the person or persons to whom the option is transferred
pursuant to Optionee's will or in accordance with the laws of
inheritance shall have the right to exercise the option. Such right
shall lapse, and the option shall cease to be outstanding, upon the
earlier of (A) the expiration of the twelve (12)-month period measured
from the date of Optionee's death or (B) the expiration of the ten
(10)-year option term.
(iii) Should Optionee cease Service by reason of
Permanent Disability while the option is outstanding, then Optionee
shall retain the right to exercise that option until the earlier of (A)
the expiration of the twelve (12)-month period commencing with the date
of such cessation of Service or (B) the expiration of the ten (10)-year
option term.
(iv) Should Optionee's Service be terminated for
Misconduct, then each outstanding option held by the Optionee shall
terminate immediately and cease to remain outstanding.
(v) During the applicable post-Service exercise
period, the option may not be exercised in the aggregate for more than
the number of shares for which the option is exercisable on the date of
Optionee's cessation of Service. Upon the expiration of the applicable
exercise period or (if earlier) upon the expiration of the option term,
the option shall terminate and cease to be outstanding for any
otherwise exercisable shares for which the option has not been
exercised. However,
5.
<PAGE>
the option shall, immediately upon Optionee's cessation of Service for
any reason, terminate and cease to be outstanding with respect to any
and all option shares for which the option is not otherwise at the time
exercisable.
2. The Plan Administrator shall have the discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding, to:
(i) extend the period of time for which the option
is to remain exercisable following Optionee's cessation of Service or
death from the limited period otherwise in effect for that option to
such greater period of time as the Plan Administrator shall deem
appropriate, but in no event beyond the expiration of the option term,
and/or
(ii) permit the option to be exercised, during the
applicable post-Service exercise period, not only with respect to the
number of shares of Common Stock for which such option is exercisable
at the time of the Optionee's cessation of Service but also with
respect to one or more additional installments for which the option
would have become exercisable had the Optionee continued in Service.
D. Shareholder Rights. A Optionee shall have none of the
rights of a shareholder with respect to any option shares until such person
shall have exercised the option and paid the exercise price for the purchased
shares.
II. CORPORATE TRANSACTION
A. In the event of any Corporate Transaction, each option
which is at the time outstanding under the Plan shall automatically accelerate
so that each such option shall, immediately prior to the specified effective
date for such Corporate Transaction, become fully exercisable with respect to
the total number of shares of Common Stock at the time subject to that option
and may be exercised for all or any portion of those shares as fully-vested
shares. However, an outstanding option under the Plan shall not so accelerate if
and to the extent: (i) such option is, in connection with the Corporate
Transaction, to be assumed by the successor corporation or parent thereof, (ii)
such option is to be replaced with a cash incentive program of the successor
corporation which preserves the option spread existing at the time of the
Corporate Transaction and provides for subsequent payout in accordance with the
same exercise/vesting schedule applicable to such option or (iii) the
acceleration of such option is subject to other limitations imposed by the Plan
Administrator at the time of the option grant.
B. The Plan Administrator shall have the discretionary
authority to structure one or more options under the Plan so that those options
shall immediately accelerate upon an Involuntary Termination of the Optionee's
Service within a designated period (not to exceed twelve
6.
<PAGE>
(12) months) following the effective date of a Corporate Transaction in which
those options are assumed by the successor corporation and accordingly do not
accelerate at the time of such Corporate Transaction.
C. Immediately following the consummation of the Corporate
Transaction, all outstanding options under the Plan shall terminate and cease to
remain outstanding, except to the extent assumed by the successor corporation or
its parent company.
D. Each outstanding option which is assumed in connection with
the Corporate Transaction shall be appropriately adjusted, immediately after
such Corporate Transaction, to apply and pertain to the number and class of
securities which would have been issued to the Optionee, in consummation of the
Corporate Transaction, had such person exercised the option immediately prior to
such Corporate Transaction. Appropriate adjustments shall also be made to the
exercise price payable per share, provided the aggregate exercise price payable
for such securities shall remain the same. In addition, the class and number of
securities available for issuance under the Plan following the consummation of
the Corporate Transaction shall be appropriately adjusted.
E. The grant of options under the Plan shall in no way affect
the right of the Corporation to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.
III. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the sole and exclusive
authority to effect, at any time and from time to time, with the consent of the
affected Optionees, the cancellation of any or all outstanding options under the
Plan and to grant in substitution new options under the Plan covering the same
or different numbers of shares of Common Stock but with an exercise price per
share not less than the Fair Market Value of the Common Stock on the new grant
date.
7.
<PAGE>
ARTICLE THREE
MISCELLANEOUS
I. AMENDMENT OF THE PLAN
The Board has complete and exclusive power and authority to amend
or modify the Plan in any or all respects whatsoever. However, no such amendment
or modification shall adversely affect rights and obligations with respect to
stock options at the time outstanding under the Plan, unless the affected
Optionees consent to such amendment.
II. TAX WITHHOLDING
The Corporation's obligation to deliver shares of Common Stock
upon the exercise of stock options under the Plan shall be subject to the
satisfaction of all applicable Federal, state and local income tax and
employment tax withholding requirements.
III. EFFECTIVE DATE AND TERM OF PLAN
A. This Plan became effective upon approval by the Board at the
December 24, 1997 Board meeting and shall not be subject to shareholder
approval.
B. The Plan shall terminate upon the earlier of (i) December 31,
2007 or (ii) the date on which all shares available for issuance under the Plan
shall have been issued pursuant to the exercise of options under the Plan. If
the date of termination is determined under clause (i) above, then all option
grants outstanding on such date shall thereafter continue to have force and
effect in accordance with the provisions of the instruments evidencing those
grants.
IV. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of
shares pursuant to option grants under the Plan shall be used for general
corporate purposes.
V. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option
under the Plan, and the issuance of Common Stock upon the exercise of the stock
options granted hereunder shall be subject to the Corporation's procurement of
all approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the stock options granted under it and the Common Stock issued
pursuant to it.
8.
<PAGE>
B. No shares of Common Stock or other assets shall be issued or
delivered under this Plan unless and until there shall have been compliance with
all applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any securities exchange on which the Common Stock is then listed for trading.
VI. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Corporation in establishing the Plan,
nor any action taken by the Plan Administrator hereunder, nor any provision of
the Plan shall be construed so as to grant any individual the right to remain in
Service for any period of specific duration, and the Corporation (or any Parent
or Subsidiary employing such individual) may terminate such individual's Service
at any time and for any reason, with or without cause.
9.
<PAGE>
APPENDIX
The following definitions shall be in effect under the Plan:
A. Board shall mean the Corporation's Board of Directors.
B. Code shall mean the Internal Revenue Code of 1986, as amended.
C. Common Stock shall mean the Corporation's common stock.
D. Corporate Transaction shall mean any of the following
shareholder-approved transactions to which the Corporation is a party:
- a merger or consolidation in which the Corporation is not the
surviving entity, except for a transaction the principal purpose of
which is to change the State in which the Corporation is incorporated;
- the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation
or dissolution of the Corporation; or
- any reverse merger in which the Corporation is the surviving
entity but in which securities possessing more than fifty percent (50%)
of the total combined voting power of the Corporation's outstanding
securities are transferred to a person or persons different from the
persons holding those securities immediately prior to such merger.
E. Corporation shall mean QRS Corporation, a Delaware corporation, and
any corporate successor to all or substantially all of the assets or voting
stock of QRS Corporation which shall by appropriate action adopt the Plan.
F. Employee shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
G. Exercise Date shall mean the date on which the Corporation shall
have received written notice of the option exercise.
A-1.
<PAGE>
H. Fair Market Value per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
- If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question, as
such price is reported by the National Association of Securities
Dealers on the Nasdaq National Market. If there is no closing selling
price for the Common Stock on the date in question, then the Fair
Market Value shall be the closing selling price on the last preceding
date for which such quotation exists.
- If the Common Stock is at the time listed on any national
securities exchange, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question on that
exchange, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value
shall be the closing selling price on the last preceding date for which
such quotation exists.
I. Involuntary Termination shall mean the termination of the Service of
any individual which occurs by reason of:
- such individual's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
- such individual's voluntary resignation following (A) a
change in his or her position with the Corporation which materially
reduces his or her duties and responsibilities or the level of
management to which he or she reports, (B) a reduction in his or her
level of compensation (including base salary, fringe benefits and
target bonuses under corporate-performance based bonus or incentive
programs) by more than fifteen percent (15%) or (C) a relocation of
such individual's place of employment by more than fifty (50) miles,
provided and only if such change, reduction or relocation is effected
by the Corporation without the individual's consent.
J. Misconduct shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee, any unauthorized use or disclosure
by the Optionee of confidential information or trade secrets of the Corporation
(or any Parent or Subsidiary), or any other intentional misconduct by the
Optionee adversely affecting the business or affairs of the Corporation (or any
Parent or Subsidiary) in a material manner. The foregoing definition shall not
be deemed to be inclusive of all the acts or omissions which the Corporation (or
any Parent or Subsidiary) may
A-2.
<PAGE>
consider as grounds for the dismissal or discharge of any Optionee or other
person in the Service of the Corporation (or any Parent or Subsidiary).
K. Non-Statutory Option shall mean an option not intended to satisfy
the requirements of Code Section 422.
L. Optionee shall mean any person to whom an option is granted under
the Plan.
M. Parent shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
N. Permanent Disability or Permanently Disabled shall mean the
inability of the Optionee to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment expected to
result in death or to be of continuous duration of twelve (12) months or more.
O. Plan shall mean the Corporation's Special Non-Officer Stock Option
Plan, as set forth in this document.
P. Plan Administrator shall mean the committee comprised of one or more
Board members appointed by the Board to administer the Plan.
Q. Section 16 Insider shall mean an officer or director of the
Corporation subject to the short-swing profit restrictions of Section 16 of the
1934 Act.
R. Service shall mean the provision of services on a periodic basis to
the Corporation (or any Parent or Subsidiary) in the capacity of an Employee or
an independent consultant or advisor, except to the extent otherwise
specifically provided in the applicable stock option agreement.
S. Subsidiary shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations beginning with the Corporation, provided
each corporation (other than the last corporation) in the unbroken chain owns,
at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.
A-3.
<PAGE>
Exhibit 99.2
QRS CORPORATION
NOTICE OF GRANT OF STOCK OPTION
Notice is hereby given of the following stock option grant (the
"Option") to purchase shares of the Common Stock of QRS Corporation (the
"Corporation"):
Optionee:
---------------------------------------
Grant Date:
-------------------------------------
Grant Number:
-----------------------------------
Exercise Price: $ per share
-------------------------------
Number of Option Shares: shares
------------------------
Expiration Date:
--------------------------------
Type of Option: Non-Statutory Option
Exercise Schedule: The Option shall become exercisable for the
Option Shares in a series of four (4) successive equal annual
installments upon the Optionee's completion of each year of
Service over the four (4)-year period measured from the Grant
Date. In no event shall the Option become exercisable for any
additional Option Shares following the Optionee's cessation of
Service.
Optionee understands and agrees that the Option is granted subject
to and in accordance with the express terms and conditions of the QRS
Corporation Special Non-Officer Stock Option Plan (the "Plan"). Optionee further
agrees to be bound by the terms and conditions of the Plan and the terms and
conditions of the Option as set forth in the Stock Option Agreement attached
hereto as Exhibit A. Optionee also acknowledges receipt of a copy of the
official prospectus for the Plan attached hereto as Exhibit B.
<PAGE>
No Employment or Service Contract. Nothing in this Agreement or in
the Plan shall confer upon Optionee any right to continue in Service for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any parent or subsidiary employing Optionee)
or Optionee, which rights are hereby expressly reserved by each, to terminate
Optionee's Service at any time for any reason whatsoever, with or without cause.
DATED: , 199
QRS CORPORATION
By:
----------------------------
Title:
-------------------------
-------------------------
OPTIONEE
Address:
-----------------------
-------------------------------
Exhibit A: Stock Option Agreement
Exhibit B: Plan Prospectus
2.
<PAGE>
EXHIBIT A
STOCK OPTION AGREEMENT
<PAGE>
EXHIBIT B
PLAN PROSPECTUS
<PAGE>
Exhibit 99.3
QRS CORPORATION
STOCK OPTION AGREEMENT
WITNESSETH:
RECITALS
A. The Board has adopted the Plan for the purpose of attracting and
retaining the services of employees who are neither executive officers of the
Corporation nor members of the Board and who are not otherwise subject to
Section 16 of the Securities Exchange Act of 1934, as amended.
B. Optionee is an individual who is to render valuable services to the
Corporation (or any Parent or Subsidiary), and this Agreement is executed
pursuant to, and is intended to carry out the purposes of, the Plan in
connection with the Corporation's grant of a stock option to Optionee.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. The Corporation hereby grants to Optionee, as of
the Grant Date, an option to purchase up to that number of Option Shares
specified in the Grant Notice. The Option Shares shall be purchasable from time
to time during the option term specified in Paragraph 2 at the Exercise Price.
2. Option Term. This option shall expire at the close of business on
the Expiration Date specified in the Grant Notice, unless sooner terminated in
accordance with Paragraph 5 or 6.
3. Limited Transferability. This option shall be exercisable only by
Optionee during Optionee's lifetime and shall not be transferable or assignable
by Optionee other than by will or by the laws of descent and distribution
following Optionee's death.
4. Dates of Exercise. This option shall become exercisable for the
Option Shares in accordance with the installment schedule specified in the Grant
Notice. As the option becomes exercisable for one or more installments, those
installments shall accumulate, and the option shall remain exercisable for the
accumulated installments until the Expiration Date or sooner termination of the
option term under Paragraph 5 or Paragraph 6 of this Agreement. In no event
shall this option become exercisable for any additional Option Shares following
Optionee's cessation of Service.
5. Cessation of Service. The option term specified in Paragraph 2 shall
terminate (and this option shall cease to be outstanding) prior to the
Expiration Date in accordance with the following provisions:
(i) Should Optionee cease to remain in Service for any reason (other
than death, Permanent Disability or Misconduct) while this option remains
outstanding, then Optionee
<PAGE>
shall have a right to exercise this option until the earlier of (A) the
expiration of the three (3)-month period measured from the date of such
cessation of Service or (B) the Expiration Date.
(ii) If the Optionee dies while holding this option, then the personal
representative of Optionee's estate or the person or persons to whom this
option is transferred pursuant to Optionee's will or in accordance with the
laws of inheritance shall have the right to exercise this option. Such right
shall lapse, and this option shall cease to be outstanding, upon the earlier
of (A) the expiration of the twelve (12)-month period measured from the date
of Optionee's death or (B) the Expiration Date.
(iii) Should Optionee cease Service by reason of Permanent Disability
while this option remains outstanding, then Optionee shall have the right to
exercise this option until the earlier of (A) the expiration of the twelve
(12)-month period measured from the date of such cessation of Service or (B)
the Expiration Date.
(iv) During the applicable post-Service exercise period, this option
may not be exercised in the aggregate for more than the number of shares for
which the option is exercisable on the date of Optionee's cessation of Service.
Upon the expiration of the applicable exercise period or (if earlier) upon the
Expiration Date, this option shall terminate and cease to be outstanding for any
otherwise exercisable shares for which the option has not been exercised.
However, this option shall, immediately upon Optionee's cessation of Service for
any reason, terminate and cease to be outstanding with respect to any and all
option shares for which the option is not otherwise at the time exercisable.
(v) Should Optionee's Service be terminated for Misconduct, then this
option shall terminate immediately and cease to remain outstanding.
6. Corporate Transaction.
A. In the event of any Corporate Transaction, this option, to the
extent outstanding at such time but not otherwise fully exercisable, shall
automatically accelerate so that this option shall, immediately prior to the
specified effective date for the Corporate Transaction, become fully exercisable
for all the Option Shares at the time subject to this option and may be
exercised for all or any portion of such shares. No such acceleration of this
option, however, shall occur if and to the extent: (i) this option is, in
connection with the Corporate Transaction, either to be assumed by the successor
corporation or parent thereof or replaced with a comparable option to purchase
shares of the capital stock of the successor corporation or parent thereof or
(ii) such option is to be replaced with a cash incentive program of the
successor corporation which preserves the spread existing at the time of the
Corporate Transaction on any Option Shares for which this option is not
otherwise at that time exercisable (the excess of the Fair Market Value of those
Option Shares over the aggregate Exercise Price payable for such shares) and
provides for subsequent pay-out in accordance with the same vesting schedule in
effect for those Option Shares pursuant to the Exercise Schedule set forth in
the Grant Notice. The determination of option comparability under clause (i)
shall be made by the Plan Administrator, and such determination shall be final,
binding and conclusive.
<PAGE>
B. Immediately following the consummation of the Corporate Transaction,
this option shall terminate and cease to be outstanding, except to the extent
assumed by the successor corporation or its parent company.
C. This Agreement shall not in any way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise make changes in its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
7. Adjustment in Option Shares.
A. In the event any change is made to the Common Stock issuable under
the Plan by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class effected without the Corporation's receipt
of consideration, the Plan Administrator shall make appropriate adjustments to
(i) the number and/or class of securities subject to this option and (ii) the
Exercise Price payable per share in order to prevent any dilution or enlargement
of benefits hereunder. Such adjustments shall be final, binding and conclusive.
B. If this option is to be assumed in connection with any Corporate
Transaction under Paragraph 6 or is otherwise to continue outstanding, then this
option shall, immediately after such Corporate Transaction, be appropriately
adjusted to apply and pertain to the number and class of securities which would
have been issued to Optionee in the consummation of such Corporate Transaction
had the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the Exercise Price payable per
share, provided the aggregate Exercise Price payable hereunder shall remain the
same.
8. Privilege of Stock Ownership. The holder of this option shall not
have any of the rights of a stockholder with respect to the Option Shares until
such individual shall have exercised the option and paid the Exercise Price for
the purchased Option Shares.
9. Manner of Exercising Option.
A. In order to exercise this option with respect to all or any part of
the Option Shares for which this option is at the time exercisable, Optionee (or
in the case of exercise after Optionee's death, Optionee's executor,
administrator, heir or legatee, as the case may be) must take the following
actions:
(i) Deliver to the Corporate Secretary of the Corporation a Notice of
Exercise for the Option Shares for which this option is exercised.
(ii) Pay the aggregate Exercise Price for the purchased shares through
one or more of the following alternatives:
- full payment in cash or by check payable to the Corporation's order;
<PAGE>
- full payment in shares of Common Stock held for the requisite period
necessary to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise Date (as
such term is defined below);
- full payment in a combination of shares of Common Stock held for the
requisite period necessary to avoid a charge to the Corporation's reported
earnings and valued at Fair Market Value on the Exercise Date and cash or
check payable to the Corporation's order; or
- full payment effected through a broker-dealer sale and remittance
procedure pursuant to which Optionee shall concurrently provide irrevocable
instructions to (a) a Corporation-designated brokerage firm to effect the
immediate sale of the purchased shares and remit to the Corporation, out of
the sale proceeds available on the settlement date, sufficient funds to
cover the aggregate Exercise Price payable for the purchased shares plus all
applicable Federal, State and local income taxes and employment taxes
required to be withheld by the Corporation in connection with such purchase
and to (b) the Corporation to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the sale
transaction.
(iii) Furnish to the Corporation appropriate documentation that the
person or persons exercising the option (if other than Optionee) have the
right to exercise this option.
B. For purposes of this Agreement, the Exercise Date shall be the date
on which the executed Exercise Notice shall have been delivered to the
Corporation. Except to the extent the sale and remittance procedure specified
above is utilized in connection with the option exercise, payment of the
Exercise Price for the purchased shares must accompany such Exercise Notice.
C. As soon as practical after receipt of the Exercise Notice, the
Corporation shall mail or deliver to or on behalf of Optionee (or any other
person or persons exercising this option in accordance herewith) a certificate
or certificates representing the purchased Option Shares.
D. In no event may this option be exercised for any fractional shares.
10. Governing Law. The interpretation, performance, and enforcement of
this Agreement shall be governed by the laws of the State of California without
resort to that State's conflict-of-laws rules.
11. Compliance with Laws and Regulations. The exercise of this option
and the issuance of Option Shares upon such exercise shall be subject to
compliance by the Corporation and Optionee with all applicable requirements of
law relating thereto and with all applicable regulations of any stock exchange
on which shares of the Corporation's Common Stock may be listed at the time of
such exercise and issuance.
<PAGE>
12. Successors and Assigns. Except to the extent otherwise provided in
Paragraph 3 or 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the successors, administrators, heirs and legal
representatives of Optionee and the successors and assigns of the Corporation.
13. Liability of Corporation. The inability of the Corporation to
obtain approval from any regulatory body having authority deemed by the
Corporation to be necessary to the lawful issuance and sale of any Common Stock
pursuant to this option shall relieve the Corporation of any liability with
respect to the non-issuance or sale of the Common Stock as to which such
approval shall not have been obtained. The Corporation however, shall use its
best efforts to obtain all such approvals.
14. No Employment/Service Contract. Nothing in this Agreement or in the
Plan shall confer upon Optionee any right to continue in the Service of the
Corporation (or any Parent or Subsidiary) for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Corporation
(or Parent or Subsidiary) or Optionee, which rights are hereby expressly
reserved by each party, to terminate Optionee's Service at any time for any
reason whatsoever, with or without cause.
15. Notices. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation in care of the Corporate Secretary at the Corporation's
principal offices at 1400 Marina Way South, Richmond, California 94804. Any
notice required to be given or delivered to Optionee shall be in writing and
addressed to Optionee at the address indicated on the Grant Notice. All notices
shall be deemed to have been given or delivered upon personal delivery or upon
deposit in the U.S. mail, by registered or certified mail, postage prepaid and
properly addressed to the party to be notified.
16. Construction. This Agreement and the option evidenced hereby are
made and granted pursuant to the Plan and are in all respects limited by and
subject to the express terms and provisions of the Plan. All decisions of the
Plan Administrator with respect to any question or issue arising under the Plan
or this Agreement shall be conclusive and binding on all persons having an
interest in this option.
17. Taxes. Optionee shall make appropriate arrangements with the
Corporation or any Parent or Subsidiary employing Optionee for the satisfaction
of all Federal, State or local income tax and employment tax withholding
requirements applicable to the exercise of this option.
<PAGE>
EXHIBIT I
NOTICE OF EXERCISE OF STOCK OPTION
I hereby notify QRS Corporation (the "Corporation") that I elect to
purchase shares of the Corporation's Common Stock (the "Purchased Shares")
at the option exercise price of $ per share (the "Exercise Price") pursuant
to that certain option (the "Option") granted to me under the Corporation's
Special Non-Officer Stock Option Plan on
, 199 .
- -----------------------
Concurrently with the delivery of this Exercise Notice to the Corporate
Secretary of the Corporation, I shall hereby pay to the Corporation the Exercise
Price for the Purchased Shares in accordance with the provisions of my agreement
with the Corporation evidencing the Option and shall deliver whatever additional
documents may be required by such agreement as a condition for exercise.
Alternatively, I may utilize the special broker-dealer sale and remittance
procedure specified in my agreement to effect the payment of the Exercise Price
for the Purchased Shares.
, 199 .
- -----------------------
Date
--------------------------------------
Optionee
Address:
------------------------------
--------------------------------------
Print name in exact manner
it is to appear on the
stock certificate:
--------------------------------------
Address to which certificate
is to be sent, if different
from address above:
--------------------------------------
--------------------------------------
Social Security Number:
--------------------------------------
Employee Number:
--------------------------------------
<PAGE>
APPENDIX
The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Stock Option Agreement.
B. Board shall mean the Corporation's Board of Directors.
C. Code shall mean the Internal Revenue Code of 1986, as amended.
D. Common Stock shall mean the Corporation's common stock.
E. Corporate Transaction shall mean any of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which the Corporation is not the
surviving entity, except for a transaction the principal purpose of which is
to change the State in which the Corporation is incorporated,
(ii) the sale, transfer or other disposition of all or substantially
all of the assets of the Corporation in complete liquidation or dissolution
of the Corporation, or
(iii) any reverse merger in which the Corporation is the surviving
entity but in which securities possessing more than fifty percent (50%) of
the total combined voting power of the Corporation's outstanding securities
are transferred to a person or persons different from those who held such
securities immediately prior to such merger.
F. Corporation shall mean QRS Corporation, a Delaware corporation.
G. Employee shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
H. Exercise Date shall mean the date on which the option shall have
been exercised in accordance with Paragraph 9 of the Agreement.
I. Exercise Price shall mean the exercise price per share as specified
in the Grant Notice.
J. Exercise Schedule shall mean the exercise schedule set forth in the
Grant Notice pursuant to which the option evidenced by this Agreement is to
become exercisable for the Option Shares in a series of installments over the
Optionee's period of Service.
<PAGE>
K. Expiration Date shall mean the date on which the option expires as
specified in the Grant Notice.
L. Fair Market Value per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question, as the price is reported by
the National Association of Securities Dealers on the Nasdaq National
Market. If there is no closing selling price for the Common Stock on the
date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any national
securities exchange, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question on that exchange, as
such price is officially quoted in the composite tape of transactions on
such exchange. If there is no closing selling price for the Common Stock on
the date in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation exists.
M. Grant Date shall mean the date of grant of the option as specified
in the Grant Notice.
N. Grant Notice shall mean the Notice of Grant of Stock Option
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.
O. Misconduct shall mean the commission of any act of fraud,
embezzlement or dishonesty by Optionee, any unauthorized use or disclosure by
Optionee of confidential information or trade secrets of the Corporation (or any
Parent or Subsidiary), or any other intentional misconduct by Optionee adversely
affecting the business or affairs of the Corporation (or any Parent or
Subsidiary) in a material manner. The foregoing definition shall not be deemed
to be inclusive of all the acts or omissions which the Corporation (or any
Parent or Subsidiary) may consider as grounds for the dismissal or discharge of
Optionee or any other individual in the Service of the Corporation (or any
Parent or Subsidiary).
P. Non-Statutory Option shall mean an option not intended to satisfy
the requirements of Code Section 422.
Q. Notice of Exercise shall mean the notice of exercise in the form
attached hereto as Exhibit I.
<PAGE>
R. Option Shares shall mean the number of shares of Common Stock
subject to the option as specified in the Grant Notice.
S. Optionee shall mean the person to whom the option is granted as
specified in the Grant Notice.
T. Parent shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
U. Permanent Disability or Permanently Disabled shall mean the
inability of Optionee to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment expected to result in
death or to be of continuous duration of twelve (12) months or more.
V. Plan shall mean the Corporation's Special Non-Officer Stock Option
Plan.
W. Plan Administrator shall mean the committee comprised of one or more
Board members appointed by the Board to administer the Plan.
X. Service shall mean the Optionee's performance of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an Employee or an
independent consultant or advisor.
Y. Subsidiary shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations beginning with the Corporation, provided
each corporation (other than the last corporation) in the unbroken chain owns,
at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.
<PAGE>
Exhibit 99.4
ADDENDUM
TO
STOCK OPTION AGREEMENT
The following provisions are hereby incorporated into, and are
hereby made a part of, that certain Stock Option Agreement (the "Option
Agreement") by and between QRS Corporation. (the "Corporation") and
_____________ ("Optionee") evidencing the stock option (the "Option") granted
on _______________ to Optionee under the terms of the Corporation's Special
Non-Officer Stock Option Plan, and such provisions shall be effective
immediately. All capitalized terms used in this Addendum, to the extent not
otherwise specifically defined herein, shall have the meanings assigned to
such terms in the Option Agreement.
INVOLUNTARY TERMINATION UPON A CORPORATE TRANSACTION OR
CHANGE IN CONTROL
A. To the extent the Option does not accelerate upon the occurrence of
a Corporate Transaction by reason of one or more of the limitations set forth in
Paragraph 6 of the Option Agreement, Optionee shall continue to vest in the
Option Shares (or any replacement option or cash incentive program) in
accordance with the normal exercise provisions of the Option Agreement over
Optionee's continued period of Service following such Corporate Transaction.
However, upon the Involuntary Termination of Optionee's Service within twelve
(12) months after the Corporate Transaction, the Option shall become immediately
exercisable for all of the Option Shares at the time subject thereto and may be
exercised for all or any portion of such shares as fully-vested shares. The
Option shall remain so exercisable until the expiration or sooner termination of
the option term as set forth in the Option Agreement.
B. The Option shall not accelerate upon the occurrence of a Change in
Control and shall continue to become exercisable for the Option Shares in
accordance with the normal exercise provisions of the Option Agreement over
Optionee's continued period of Service following such Change in Control.
However, upon the Involuntary Termination of Optionee's Service within twelve
(12) months after the effective date of the Change in Control, the Option shall
become immediately exercisable for all of the Option Shares at the time subject
to the Option and may be exercised for all or any portion of those Option Shares
as fully-vested shares. The Option shall remain so exercisable until the
expiration or sooner termination of the option term as set forth in the Option
Agreement.
C. For purposes of this Addendum, a Change in Control shall be deemed
to occur:
(i) should any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is controlled
by or is under common control with the Corporation) directly or indirectly
acquire beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of securities possessing more
than fifty percent (50%) of the total combined voting power
<PAGE>
of the Corporation's outstanding securities pursuant to a tender or exchange
offer made directly to the Corporation's shareholders; or
(ii) should there occur a change in the composition of the Board over
any period of thirty-six (36) consecutive months or less such that a
majority of the Board members ceases, by reason of one or more proxy
contests for the election of Board members, to be comprised of individuals
who either (A) have been members of the Board continuously since the
beginning of such period or (B) have been elected or nominated for election
as Board members during such period by at least a majority of the Board
members described in clause (A) who were still in office at the time such
election or nomination was approved by the Board.
D. For purposes of this Addendum, there shall be deemed to an
Involuntary Termination of Optionee's Service, if such Service is terminated:
(i) involuntarily upon the Optionee's involuntary dismissal or
discharge by the Corporation for reasons other than Misconduct, or
(ii) upon the Optionee's voluntary resignation following (A) a change
in Optionee's position with the Corporation which materially reduces his or
her duties and the responsibilities or the level of management to which he
or she reports, (B) a reduction in his or her level of compensation
(including base salary, fringe benefits, and target bonuses under
corporate-performance based bonus or incentive programs) by more than
fifteen percent (15%) or (C) a relocation of Optionee's place of employment
by more than fifty (50) miles, provided and only if such change, reduction
or relocation is effected by the Corporation without the individual's
consent.
<PAGE>
IN WITNESS WHEREOF, QRS Corporation. has caused this Addendum to be
executed by its duly-authorized officer as of the Effective Date specified
below.
QRS CORPORATION
By:
-------------------------------
Title:
----------------------------
EFFECTIVE DATE:
-------------
<PAGE>
Exhibit 99.5
QRS CORPORATION
1993 STOCK OPTION/STOCK ISSUANCE PLAN
(As Amended and Restated February 16, 1998;
As Further Amended May 5, 1998)
ARTICLE ONE
GENERAL
I. PURPOSE OF THE PLAN
A. This 1993 Stock Option/Stock Issuance Plan ("Plan") is
intended to promote the interests of QRS Corporation, a Delaware corporation
(the "Corporation"), by providing (i) key employees (including officers) of the
Corporation (or its parent or subsidiary corporations) who are responsible for
the management, growth and financial success of the Corporation (or its parent
or subsidiary corporations), (ii) the non-employee members of the Corporation's
Board of Directors and (iii) consultants and other independent contractors who
provide valuable services to the Corporation (or its parent or subsidiary
corporations) with the opportunity to acquire a proprietary interest, or
otherwise increase their proprietary interest, in the Corporation as an
incentive for them to remain in the service of the Corporation (or its parent or
subsidiary corporations).
B. The Discretionary Option Grant and Stock Issuance Programs
under this Plan became effective on the date on which the shares of the
Corporation's Common Stock were first registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"). Such date is
hereby designated as the Effective Date for those two programs. The Automatic
Option Grant Program under this Plan became effective immediately upon the
execution and final pricing of the Underwriting Agreement for the initial public
offering of the Corporation's Common Stock. The execution date of such
Underwriting Agreement is hereby designated as the Effective Date of the
Automatic Option Grant Program.
C. This Plan shall serve as the successor to the Corporation's
amended and restated 1990 Stock Option Plan (the "1990 Plan"), and no further
option grants or stock issuances shall be made under the 1990 Plan from and
after the Effective Date of this Plan. All options outstanding under the 1990
Plan on the Effective Date of the Discretionary Option Grant Program are hereby
incorporated into this Plan and shall accordingly be treated as outstanding
options under this Plan. However, each outstanding option so incorporated shall
continue to be governed solely by the express terms and conditions of the
instrument evidencing such grant, and no provision of this Plan shall be deemed
to affect or otherwise modify the rights or obligations of the holders of such
incorporated options with respect to their acquisition of shares of the
Corporation's Common Stock thereunder.
II. DEFINITIONS
A. For purposes of the Plan, the following definitions shall
be in effect:
Board: the Corporation's Board of Directors.
<PAGE>
Code: the Internal Revenue Code of 1986, as amended.
Committee: the committee of two (2) or more non-employee
Board members appointed by the Board to administer the Plan.
Common Stock: shares of the Corporation's common stock.
Change in Control: a change in ownership or control of the
Corporation effected through either of the following transactions:
a. any person or related group of persons (other than
the Corporation or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Corporation)
directly or indirectly acquires beneficial ownership (within the
meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as
amended) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities
pursuant to a tender or exchange offer made directly to the
Corporation's stockholders; or
b. there is a change in the composition of the Board
over a period of thirty-six (36) consecutive months or less such that a
majority of the Board members (rounded up to the next whole number)
ceases, by reason of one or more proxy contests for the election of
Board members, to be comprised of individuals who either (A) have been
Board members continuously since the beginning of such period or (B)
have been elected or nominated for election as Board members during
such period by at least a majority of the Board members described in
clause (A) who were still in office at the time such election or
nomination was approved by the Board.
Corporate Transaction: any of the following
stockholder-approved transactions to which the Corporation is a party:
a. a merger or consolidation in which the Corporation
is not the surviving entity, except for a transaction the principal
purpose of which is to change the State in which the Corporation is
incorporated,
b. the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in complete
liquidation or dissolution of the Corporation, or
c. any reverse merger in which the Corporation is the
surviving entity but in which securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons different
from those who held such securities immediately prior to such merger.
Employee: an individual who performs services while in the
employ of the Corporation or one or more parent or subsidiary corporations,
subject to the control and direction
<PAGE>
of the employer entity not only as to the work to be performed but also as to
the manner and method of performance.
Fair Market Value: the fair market value per share of Common
Stock determined in accordance with the following provisions:
a. If the Common Stock is not at the time listed or admitted
to trading on any national stock exchange but is traded on the
Nasdaq National Market, the Fair Market Value shall be the
closing selling price per share on the date in question, as
such price is reported by the National Association of
Securities Dealers on the Nasdaq National Market or any
successor system. If there is no reported closing selling
price for the Common Stock on the date in question, then the
closing selling price on the last preceding date for which
such quotation exists shall be determinative of Fair Market
Value.
b. If the Common Stock is at the time listed or admitted to
trading on any national stock exchange, then the Fair Market
Value shall be the closing selling price per share on the date
in question on the exchange determined by the Plan
Administrator to be the primary market for the Common Stock,
as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no reported sale of
Common Stock on such exchange on the date in question, then
the Fair Market Value shall be the closing selling price on
the exchange on the last preceding date for which such
quotation exists.
Hostile Take-Over: a change in ownership of the Corporation
effected through the acquisition, directly or indirectly, by any person or
related group of persons (other than the Corporation or a person that directly
or indirectly controls, is controlled by, or is under common control with, the
Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly to
the Corporation's stockholders which the Board does not recommend such
stockholders to accept.
Optionee: any person to whom an option is granted under
either the Discretionary Option Grant or Automatic Option Grant Program in
effect under the Plan.
Participant: any person who receives a direct issuance of
Common Stock under the Stock Issuance Program in effect under the Plan.
Plan Administrator: the Committee in its capacity as the
administrator of the Plan.
<PAGE>
Permanent Disability or Permanently Disabled: the inability of
the Optionee or the Participant to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment expected to
result in death or to be of continuous duration of twelve (12) months or more.
Service: the performance of services on a periodic basis to
the Corporation (or any parent or subsidiary corporation) in the capacity of an
Employee, a non-employee member of the board of directors or an independent
consultant or advisor, except to the extent otherwise specifically provided in
the applicable stock option or stock issuance agreement.
Take-Over Price: the greater of (a) the Fair Market Value per
share of Common Stock on the date the option is surrendered to the Corporation
in connection with a Hostile Take-Over or (b) the highest reported price per
share of Common Stock paid by the tender offeror in effecting such Hostile
Take-Over. However, if the surrendered option is an incentive stock option under
the Federal tax laws, the Take-Over Price shall not exceed the clause (a) price
per share.
The following provisions shall be applicable in determining
the parent and subsidiary corporations of the Corporation:
Any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation
shall be considered to be a parent of the Corporation,
provided each such corporation in the unbroken chain (other
than the Corporation) owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the
other corporations in such chain.
Each corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation
shall be considered to be a subsidiary of the Corporation,
provided each such corporation (other than the last
corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one
of the other corporations in such chain.
<PAGE>
III. STRUCTURE OF THE PLAN
A. Stock Programs. The Plan shall be divided into three
separate components: the Discretionary Option Grant Program specified in Article
Two, the Automatic Option Grant Program specified in Article Three and the Stock
Issuance Program specified in Article Four. Under the Discretionary Option Grant
Program, eligible individuals may, at the discretion of the Plan Administrator,
be granted options to purchase shares of Common Stock in accordance with the
provisions of Article Two. Under the Automatic Option Grant Program,
non-employee members of the Corporation's Board of Directors (the "Board") will
receive at periodic intervals special option grants to purchase shares of Common
Stock in accordance with the provisions of Article Three. Under the Stock
Issuance Program, eligible individuals may be issued shares of Common Stock
directly, either through the immediate purchase of such shares at a price not
less than eighty-five percent (85%) of the Fair Market Value of the shares at
the time of issuance or as a bonus tied to the performance of services or the
Corporation's attainment of financial objectives, without any cash payment
required of the recipient.
B. General Provisions. Unless the context clearly indicates
otherwise, the provisions of Articles One and Five shall apply to the
Discretionary Option Grant Program, the Automatic Option Grant Program and the
Stock Issuance Program and shall accordingly govern the interests of all
individuals under the Plan.
IV. ADMINISTRATION OF THE PLAN
A. Both the Discretionary Option Grant Program and the Stock
Issuance Program shall be administered by the Committee. Members of the
Committee shall serve for such period of time as the Board may determine and
shall be subject to removal by the Board at any time.
B. The Committee as Plan Administrator shall have full power
and authority (subject to the express provisions of the Plan) to establish rules
and regulations for the proper administration of the Discretionary Option Grant
and Stock Issuance Programs and to make such determinations under, and issue
such interpretations of, the provisions of such programs and any outstanding
option grants or stock issuances thereunder as it may deem necessary or
advisable. Decisions of the Plan Administrator shall be final and binding on all
parties who have an interest in the Discretionary Option Grant or Stock Issuance
Program or any outstanding option or share issuance thereunder.
C. Administration of the Automatic Option Grant Program shall
be self-executing in accordance with the express terms and conditions of Article
Three, and the Committee as Plan Administrator shall exercise no discretionary
functions with respect to option grants made pursuant to that program.
<PAGE>
V. OPTION GRANTS AND STOCK ISSUANCES
A. The persons eligible to participate in the Discretionary
Option Grant Program under Article Two or the Stock Issuance Program under
Article Four are as follows:
(i) officers and other key employees of the Corporation
(or its parent or subsidiary corporations) who render services which
contribute to the management, growth and financial success of the
Corporation (or its parent or subsidiary corporations);
(ii) non-employee Board members; and
(iii) those consultants or other independent contractors
who provide valuable services to the Corporation (or its parent or
subsidiary corporations).
B. Non-employee Board members shall also be eligible to
receive automatic option grants pursuant to the provisions of Article Three.
C. The Plan Administrator shall have full authority to
determine, (I) with respect to the option grants made under the Plan, which
eligible individuals are to receive option grants, the number of shares to be
covered by each such grant, the status of the granted option as either an
incentive stock option ("Incentive Option") which satisfies the requirements of
Code Section 422 or a non-statutory option not intended to meet such
requirements, the time or times at which each granted option is to become
exercisable and the maximum term for which the option may remain outstanding and
(II), with respect to stock issuances under the Stock Issuance Program, the
number of shares to be issued to each Participant, the vesting schedule (if any)
to be applicable to the issued shares, and the consideration to be paid by the
individual for such shares.
VI. STOCK SUBJECT TO THE PLAN
A. Shares of Common Stock shall be available for issuance
under the Plan and shall be drawn from either the Corporation's authorized but
unissued shares of Common Stock or from reacquired shares of Common Stock,
including shares repurchased by the Corporation on the open market. The maximum
number of shares of Common Stock which may be issued over the term of the Plan
shall not exceed 2,200,000 shares, subject to adjustment from time to time in
accordance with the provisions of this Section V. Such authorized share reserve
is comprised of (i) the number of shares which remained available for issuance,
as of the Effective Date, under the 1990 Plan as last approved by the
Corporation's stockholders prior to such Effective Date, including the shares
subject to the outstanding options incorporated into this Plan and any other
shares which would have been available for future option grant under the 1990
Plan as last approved by the stockholders (estimated to be 722,000 shares in the
aggregate), (ii) an increase of 128,000 shares authorized by the Board under
this Plan as of the Effective Date, (iii) an additional increase of 500,000
shares authorized by the Board on February 27, 1995 and approved by the
stockholders at the 1995 Annual Meeting, (iv) a further increase of an
additional 500,000 shares authorized by the Board on February 16, 1996 and
approved by the stockholders at the 1996 Annual Meeting and (v) an additional
increase of another 350,000
<PAGE>
shares authorized by the Board on February 16, 1998, and approved by the
stockholders at the 1998 Annual Meeting. To the extent one or more outstanding
options under the 1990 Plan which have been incorporated into this Plan are
subsequently exercised, the number of shares issued with respect to each such
option shall reduce, on a share-for-share basis, the number of shares available
for issuance under this Plan.
B. Should one or more outstanding options under this Plan
(including outstanding options under the 1990 Plan incorporated into this Plan)
expire or terminate for any reason prior to exercise in full (including any
option cancelled in accordance with the cancellation-regrant provisions of
Section IV of Article Two of the Plan), then the shares subject to the portion
of each option not so exercised shall be available for subsequent option grants
under the Plan. Unvested shares issued under the Plan and subsequently cancelled
or repurchased by the Corporation, at the original option exercise or direct
issue price paid per share, pursuant to the Corporation's repurchase rights
under the Plan shall be added back to the number of shares of Common Stock
reserved for issuance under the Plan and shall accordingly be available for
reissuance through one or more subsequent option grants or direct stock
issuances under the Plan. However, the shares subject to any option or portion
thereof surrendered in accordance with Section V of Article Two or Section III
of Article Three shall reduce on a share-for-share basis the number of shares of
Common Stock available for subsequent option grants under the Plan. In addition,
should the exercise price of an option under the Plan (including any option
incorporated from the Predecessor Plan) be paid with shares of Common Stock or
should shares of Common Stock otherwise issuable under the Plan be withheld by
the Corporation in satisfaction of the withholding taxes incurred in connection
with the exercise of an option or the vesting of a stock issuance under the
Plan, then the number of shares of Common Stock available for issuance under the
Plan shall be reduced by the gross number of shares for which the option is
exercised or which vest under the stock issuance, and not by the net number of
shares of Common Stock issued to the holder of such option or stock issuance.
C. In no event may any one individual participating in the
Plan be granted stock options, separately exercisable stock appreciation rights
and direct stock issuances for more than 500,000 shares in the aggregate over
the term of the Plan. However, any stock options, stock appreciation rights or
direct stock issuances granted prior to January 1, 1994 shall not be taken into
account for purposes of such limitation.
D. Should any change be made to the Common Stock issuable
under the Plan by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, then appropriate adjustments shall be made to (i) the maximum
number and/or class of securities issuable under the Plan, (ii) the maximum
number and/or class of securities for which any one individual participating in
the Plan may be granted stock options, separately exercisable stock appreciation
rights and direct stock issuances in the aggregate over the term of the Plan,
(iii) the number and/or class of securities for which automatic option grants
are to be subsequently made per non-employee Board member under the Automatic
Option Grant Program, (iv) the number and/or class of securities and price per
share in effect under each option outstanding under either the Discretionary
Option Grant or Automatic Option Grant Program and (v) the number and/or class
of securities and price per share in effect
<PAGE>
under each outstanding option incorporated into this Plan from the 1990 Plan.
Such adjustments to the outstanding options are to be effected in a manner which
shall preclude the enlargement or dilution of rights and benefits under such
options. The adjustments determined by the Plan Administrator shall be final,
binding and conclusive.
<PAGE>
ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Discretionary Option Grant
Program shall be authorized by action of the Plan Administrator and may, at the
Plan Administrator's discretion, be either Incentive Options or non-statutory
options. Individuals who are not Employees of the Corporation or its parent or
subsidiary corporations may only be granted non-statutory options. Each granted
option shall be evidenced by one or more instruments in the form approved by the
Plan Administrator; provided, however, that each such instrument shall comply
with the terms and conditions specified below. Each instrument evidencing an
Incentive Option shall, in addition, be subject to the applicable provisions of
Section II of this Article Two.
A. Option Price.
1. The option price per share shall be fixed by the
Plan Administrator in accordance with the following provisions:
(i) The option price per share of the Common
Stock subject to an Incentive Option shall in no event be less than one
hundred percent (100%) of the Fair Market Value of such Common Stock on
the grant date.
(ii) The option price per share of the Common
Stock subject to a non-statutory stock option shall in no event be less
than eighty-five percent (85%) of the Fair Market Value of such Common
Stock on the grant date.
2. The option price shall become immediately due upon
exercise of the option and, subject to the provisions of Section I of Article
Five and the instrument evidencing the grant, shall be payable in one of the
following alternative forms specified below:
- full payment in cash or check drawn to the
Corporation's order;
- full payment in shares of Common Stock held for the
requisite period necessary to avoid a charge to the Corporation's
earnings for financial reporting purposes and valued at Fair Market
Value on the Exercise Date (as such term is defined below);
- full payment in a combination of shares of Common
Stock held for the requisite period necessary to avoid a charge to the
Corporation's earnings for financial reporting purposes and valued at
Fair Market Value on the Exercise Date and cash or check drawn to the
Corporation's order; or
- full payment through a broker-dealer sale and
remittance procedure pursuant to which the Optionee (I) shall provide
irrevocable
<PAGE>
instructions to a designated brokerage firm to effect the
immediate sale of the purchased shares and remit to the Corporation,
out of the sale proceeds available on the settlement date, sufficient
funds to cover the aggregate option price payable for the purchased
shares plus all applicable Federal and State income and employment
taxes required to be withheld by the Corporation in connection with
such purchase and (II) shall provide directives to the Corporation to
deliver the certificates for the purchased shares directly to such
brokerage firm in order to complete the sale transaction.
For purposes of this subparagraph (2), the Exercise
Date shall be the date on which written notice of the option exercise is
delivered to the Corporation. Except to the extent the sale and remittance
procedure is utilized in connection with the exercise of the option, payment of
the option price for the purchased shares must accompany such notice.
B. Term and Exercise of Options. Each option granted under
this Discretionary Option Grant Program shall be exercisable at such time or
times and during such period as is determined by the Plan Administrator and set
forth in the instrument evidencing the grant. No such option, however, shall
have a maximum term in excess of ten (10) years from the grant date.
C. Termination of Service.
1. The following provisions shall govern the exercise
period applicable to any outstanding options held by the Optionee at the time of
cessation of Service or death.
- Should an Optionee cease Service for any reason
(including death or Permanent Disability) while holding one or more
outstanding options under this Article Two, then none of those options
shall (except to the extent otherwise provided pursuant to subparagraph
C.(3) below) remain exercisable for more than a thirty-six (36)-month
period (or such shorter period determined by the Plan Administrator and
set forth in the instrument evidencing the grant) measured from the
date of such cessation of Service.
- Any option held by the Optionee under this Article
Two and exercisable in whole or in part on the date of his or her death
may be subsequently exercised by the personal representative of the
Optionee's estate or by the person or persons to whom the option is
transferred pursuant to the Optionee's will or in accordance with the
laws of descent and distribution. Such exercise, however, must occur
prior to the earlier of (i) the third anniversary of the date of the
Optionee's death (or such shorter period determined by the Plan
Administrator and set forth in the instrument evidencing the grant) or
(ii) the specified expiration date of the option term. Upon the
occurrence of the earlier event, the option shall terminate and cease
to be outstanding.
- During the applicable post-Service period, the
option may not be exercised in the aggregate for more than the number
of shares (if any) in
<PAGE>
which the Optionee is vested at the time of cessation of Service. Upon
the expiration of the limited post-Service exercise period or (if
earlier) upon the specified expiration date of the option term, each
such option shall terminate and cease to be outstanding with respect to
any vested shares for which it has not otherwise been exercised.
However, each outstanding option shall immediately terminate and cease
to be outstanding, at the time of the Optionee's cessation of Service,
with respect to any shares for which it is not otherwise at that time
exercisable or in which Optionee is not otherwise vested.
- Under no circumstances, however, shall any such
option be exercisable after the specified expiration date of the option
term.
- Should (i) the Optionee's Service be terminated for
misconduct (including, but not limited to, any act of dishonesty,
willful misconduct, fraud or embezzlement) or (ii) the Optionee make
any unauthorized use or disclosure of confidential information or trade
secrets of the Corporation or its parent or subsidiary corporations,
then in any such event all outstanding options held by the Optionee
under this Article Two shall terminate immediately and cease to be
outstanding.
2. The Plan Administrator shall have complete discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to permit one or more options held by the Optionee
under this Article Two to be exercised, during the limited post-Service exercise
period applicable under subparagraph (1) above, not only with respect to the
number of vested shares of Common Stock for which each such option is
exercisable at the time of the Optionee's cessation of Service but also with
respect to one or more subsequent installments of vested shares for which the
option would otherwise have become exercisable had such cessation of Service not
occurred.
(3) The Plan Administrator shall also have full power and
authority to extend the period of time for which the option is to remain
exercisable following the Optionee's cessation of Service or death from the
limited period in effect under subparagraph (1) above to such greater period of
time as the Plan Administrator shall deem appropriate. In no event, however,
shall such option be exercisable after the specified expiration date of the
option term.
D. Stockholder Rights. An Optionee shall have no stockholder
rights with respect to any shares covered by the option until such individual
shall have exercised the option and paid the option price for the purchased
shares.
E. Limited Transferability of Options. During the lifetime of
the Optionee, Incentive Options shall be exercisable only by the Optionee and
shall not be assignable or transferable other than by will or by the laws of
descent and distribution following the Optionee's death. However, a
Non-Statutory Option may, in connection with the Optionee's estate plan, be
assigned in whole or in part during the Optionee's lifetime to one or more
<PAGE>
members of the Optionee's immediate family or to a trust established exclusively
for one or more such family members. The assigned portion may only be exercised
by the person or persons who acquire a proprietary interest in the option
pursuant to the assignment. The terms applicable to the assigned portion shall
be the same as those in effect for the option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as
the Plan Administrator may deem appropriate.
F. Repurchase Rights. The shares of Common Stock acquired upon
the exercise of any Article Two option grant may be subject to repurchase by the
Corporation in accordance with the following provisions:
a. The Plan Administrator shall have the discretion
to authorize the issuance of unvested shares of Common Stock under this
Article Two. Should the Optionee cease Service while holding such
unvested shares, the Corporation shall have the right to repurchase any
or all of those unvested shares at the option price paid per share. The
terms and conditions upon which such repurchase right shall be
exercisable (including the period and procedure for exercise and the
appropriate vesting schedule for the purchased shares) shall be
established by the Plan Administrator and set forth in the instrument
evidencing such repurchase right.
b. All of the Corporation's outstanding repurchase
rights under this Article Two shall automatically terminate, and all
shares subject to such terminated rights shall immediately vest in
full, upon the occurrence of a Corporate Transaction, except to the
extent: (i) any such repurchase right is expressly assigned to the
successor corporation (or parent thereof) in connection with the
Corporate Transaction or (ii) such termination is precluded by other
limitations imposed by the Plan Administrator at the time the
repurchase right is issued.
<PAGE>
c. The Plan Administrator shall have the
discretionary authority, exercisable either before or after the
Optionee's cessation of Service, to cancel the Corporation's
outstanding repurchase rights with respect to one or more shares
purchased or purchasable by the Optionee under this Discretionary
Option Grant Program and thereby accelerate the vesting of such shares
in whole or in part at any time.
II. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable
to all Incentive Options granted under this Article Two. Incentive Options may
only be granted to individuals who are Employees of the Corporation. Options
which are specifically designated as "non-statutory" options when issued under
the Plan shall not be subject to such terms and conditions.
A. Dollar Limitation. The aggregate Fair Market Value
(determined as of the respective date or dates of grant) of the Common Stock for
which one or more options granted to any Employee under this Plan (or any other
option plan of the Corporation or its parent or subsidiary corporations) may for
the first time become exercisable as incentive stock options under the Federal
tax laws during any one calendar year shall not exceed the sum of One Hundred
Thousand Dollars ($100,000). To the extent the Employee holds two (2) or more
such options which become exercisable for the first time in the same calendar
year, the foregoing limitation on the exercisability of such options as
incentive stock options under the Federal tax laws shall be applied on the basis
of the order in which such options are granted. Should the number of shares of
Common Stock for which any Incentive Option first becomes exercisable in any
calendar year exceed the applicable One Hundred Thousand Dollar ($100,000)
limitation, then that option may nevertheless be exercised in that calendar year
for the excess number of shares as a non-statutory option under the Federal tax
laws.
B. 10% Stockholder. If any individual to whom an Incentive
Option is granted is the owner of stock (as determined under Section 424(d) of
the Internal Revenue Code) possessing ten percent (10%) or more of the total
combined voting power of all classes of stock of the Corporation or any one of
its parent or subsidiary corporations, then the option price per share shall not
be less than one hundred and ten percent (110%) of the Fair Market Value per
share of Common Stock on the grant date, and the option term shall not exceed
five (5) years, measured from the grant date.
Except as modified by the preceding provisions of this Section
II, the provisions of Articles One, Two and Five of the Plan shall apply to all
Incentive Options granted hereunder.
<PAGE>
III. CORPORATE TRANSACTIONS/CHANGES IN CONTROL
A. In the event of any Corporate Transaction, each option
which is at the time outstanding under this Article Two shall automatically
accelerate so that each such option shall, immediately prior to the specified
effective date for the Corporate Transaction, become fully exercisable with
respect to the total number of shares of Common Stock at the time subject to
such option and may be exercised for all or any portion of such shares. However,
an outstanding option under this Article Two shall not so accelerate if and to
the extent: (i) such option is, in connection with the Corporate Transaction,
either to be assumed by the successor corporation or parent thereof or to be
replaced with a comparable option to purchase shares of the capital stock of the
successor corporation or parent thereof, (ii) such option is to be replaced with
a cash incentive program of the successor corporation which preserves the option
spread existing at the time of the Corporate Transaction and provides for
subsequent payout in accordance with the same vesting schedule applicable to
such option, or (iii) the acceleration of such option is subject to other
limitations imposed by the Plan Administrator at the time of the option grant.
The determination of option comparability under clause (i) above shall be made
by the Plan Administrator, and its determination shall be final, binding and
conclusive.
B. Upon the consummation of the Corporate Transaction, all
outstanding options under this Article Two shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation or its
parent company.
C. Each outstanding option under this Article Two which is
assumed in connection with the Corporate Transaction or is otherwise to continue
in effect shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply and pertain to the number and class of securities which
would have been issued to the option holder, in consummation of such Corporate
Transaction, had such person exercised the option immediately prior to such
Corporate Transaction. Appropriate adjustments shall also be made to the option
price payable per share, provided the aggregate option price payable for such
securities shall remain the same. In addition, the class and number of
securities available for issuance under the Plan following the consummation of
the Corporate Transaction shall be appropriately adjusted.
D. The Plan Administrator shall have the discretion,
exercisable either in advance of any actually-anticipated Corporate Transaction
or at the time of an actual Corporate Transaction, to provide (upon such terms
as it may deem appropriate) for the automatic acceleration of one or more
outstanding options under this Article Two which are assumed or replaced in the
Corporate Transaction and do not otherwise accelerate at that time, in the event
the Optionee's Service should subsequently terminate within a designated period
following the effective date of such Corporate Transaction.
E. The grant of options under this Article Two shall in no way
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
F. The Plan Administrator shall have the discretionary
authority, exercisable either in advance of any actually-anticipated Change in
Control or at the time of an actual
<PAGE>
Change in Control, to provide for the automatic acceleration of one or more
outstanding options under this Article Two (and the termination of one or more
of the Corporation's outstanding repurchase rights under this Article Two) upon
the occurrence of the Change in Control. The Plan Administrator shall also have
full power and authority to condition any such option acceleration (and the
termination of any outstanding repurchase rights) upon the subsequent
termination of the Optionee's Service within a specified period following the
Change in Control.
G. Any options accelerated in connection with the Change in
Control shall remain fully exercisable until the expiration or sooner
termination of the option term.
H. The exercisability as incentive stock options under the
Federal tax laws of any options accelerated under this Section III in connection
with a Corporate Transaction or Change in Control shall remain subject to the
dollar limitation of Section II of this Article Two.
IV. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at
any time and from time to time, with the consent of the affected optionees, the
cancellation of any or all outstanding options under this Article Two (including
outstanding options under the 1990 Plan incorporated into this Plan) and to
grant in substitution new options under the Plan covering the same or different
numbers of shares of Common Stock but with an option price per share not less
than (i) eighty five percent (85%) of the Fair Market Value of the Common Stock
on the new grant or (ii) one hundred percent (100%) of such Fair Market Value in
the case of an Incentive Option.
V. STOCK APPRECIATION RIGHTS
A. Provided and only if the Plan Administrator determines in
its discretion to implement the stock appreciation right provisions of this
Section V, one or more Optionees may be granted the right, exercisable upon such
terms and conditions as the Plan Administrator may establish, to surrender all
or part of an unexercised option under this Article Two in exchange for a
distribution from the Corporation in an amount equal to the excess of (i) the
Fair Market Value (on the option surrender date) of the number of shares in
which the Optionee is at the time vested under the surrendered option (or
surrendered portion thereof) over (ii) the aggregate option price payable for
such vested shares.
B. No surrender of an option shall be effective hereunder
unless it is approved by the Plan Administrator. If the surrender is so
approved, then the distribution to which the Optionee shall accordingly become
entitled under this Section V may be made in shares of Common Stock valued at
Fair Market Value on the option surrender date, in cash, or partly in shares and
partly in cash, as the Plan Administrator deems appropriate.
C. If the surrender of an option is rejected by the Plan
Administrator, then the Optionee shall retain whatever rights the Optionee had
under the surrendered option (or surrendered portion thereof) on the option
surrender date and may exercise such rights at any time prior to the later of
(i) five (5) business days after the receipt of the rejection notice or (ii) the
last day on which the option is otherwise exercisable in accordance with the
terms of the instrument evidencing such option, but in no event may such rights
be exercised more than ten (10) years after the date of the option grant.
<PAGE>
D. One or more officers of the Corporation subject to the
short-swing profit restrictions of the Federal securities laws may, in the Plan
Administrator's sole discretion, be granted limited stock appreciation rights in
tandem with their outstanding options under the Plan. Upon the occurrence of a
Hostile Take-Over, the officer will have a thirty (30)-day period in which he or
she may surrender any outstanding options with such a limited stock appreciation
right to the Corporation, to the extent such options are at the time exercisable
for fully-vested shares of Common Stock. The officer shall in return be entitled
to a cash distribution from the Corporation in an amount equal to the excess of
(i) the Take-Over Price of the vested shares of Common Stock at the time subject
to each surrendered option over (ii) the aggregate exercise price payable for
such vested shares. The cash distribution payable upon such option surrender
shall be made within five (5) days following the consummation of the Hostile
Take-Over. Neither the approval of the Plan Administrator nor the consent of the
Board shall be required in connection with such option surrender and cash
distribution. Any unsurrendered portion of the option shall continue to remain
outstanding and become exercisable in accordance with the terms of the
instrument evidencing such grant.
E. The shares of Common Stock subject to any option
surrendered for an appreciation distribution pursuant to this Section V shall
not be available for subsequent option grant under the Plan.
<PAGE>
ARTICLE THREE
AUTOMATIC OPTION GRANT PROGRAM
I. ELIGIBILITY
A. Eligible Directors. The individuals eligible to receive
automatic option grants pursuant to the provisions of this Article Three program
shall be limited to (i) those individuals who are first elected or appointed as
non-employee Board members on or after the Effective Date of this Automatic
Option Grant Program whether through appointment by the Board or election by the
Corporation's stockholders, and (ii) those individuals who continue to serve as
non-employee Board members at one or more Annual Stockholders Meetings held
after such Effective Date, whether or not they commenced Board service prior to
the Effective Date. In no event, however, shall a clause (i) non-employee Board
member be eligible to participate in the Automatic Option Grant Program if such
individual has at any time been in the prior employ of the Corporation (or any
parent or subsidiary corporation). Any non-employee Board member eligible to
participate in the Automatic Option Grant Program pursuant to the foregoing
criteria shall be designated an Eligible Director for purposes of this Plan.
B. Limitation. Except for the option grants to be made
pursuant to the provisions of this Automatic Option Grant Program, an Eligible
Director serving as Plan Administrator shall not be eligible during such period
of service to receive any additional option grants or stock issuances under this
Plan or any other stock plan of the Corporation (or its parent or subsidiaries).
II. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
A. Grant Dates. Option grants shall be made under this Article
Three on the dates specified below:
(i) Each Eligible Director who first becomes a
non-employee Board member on or after the Effective Date of this
Automatic Option Grant Program, whether through election by the
Corporation's stockholders or appointment by the Board, shall
automatically be granted, at the time of such initial election or
appointment, a non-statutory stock option to purchase 5,000 shares of
Common Stock upon the terms and conditions of this Article Three.
(ii) On the date of each Annual Stockholders
Meeting held after the Effective Date of this Automatic Option Grant
Program, each individual who is at the time serving as an Eligible
Director shall automatically be granted at that meeting, whether or not
such individual is standing for re-election as a Board member at that
particular meeting, a non-statutory stock option to purchase an
additional 5,000 shares of Common Stock upon the terms and conditions
of this Article Three, provided he or she has served as a non-employee
Board member for at least six (6) months prior to the date of such
meeting. There
<PAGE>
shall be no limit on the number of 5,000-share option grants any one
Eligible Director may receive over his or her period of Board service.
The number of shares for which the automatic grants
are to be made to each newly-elected or continuing Eligible Director shall be
subject to periodic adjustment pursuant to the applicable provisions of Section
V.C of Article One.
Stockholder approval of this February 1998
Restatement at the 1998 Annual Stockholders Meeting will constitute pre-approval
of each option granted on or after the date of such Annual Meeting pursuant to
the express terms of this Automatic Option Grant Program and the subsequent
exercise of that option in accordance with its terms.
B. Exercise Price. The exercise price per share of Common
Stock subject to each automatic option grant made under this Article Three shall
be determined as follows:
(i) For each automatic grant made on the
Effective Date of this Automatic Option Grant Program, the exercise
price shall be equal to the price per share at which the Common Stock
is first sold to the public in connection with the initial public
offering of such Common Stock.
(ii) For each automatic grant made after such
Effective Date, the exercise price shall be equal to one hundred
percent (100%) of the Fair Market Value per share of Common Stock on
the automatic grant date.
C. Payment.
The exercise price shall be payable in one of the
alternative forms specified below:
(i) full payment in cash or check made payable
to the Corporation's order; or
(ii) full payment in shares of Common Stock
held for the requisite period necessary to avoid a charge to the
Corporation's reported earnings and valued at Fair Market Value on the
Exercise Date; or
(iii) full payment in a combination of shares
of Common Stock held for the requisite period necessary to avoid a
charge to the Corporation's reported earnings and valued at Fair Market
Value on the Exercise Date and cash or check payable to the
Corporation's order; or
(iv) full payment through a sale and remittance
procedure pursuant to which the non-employee Board member (I) shall
provide irrevocable written instructions to a designated brokerage firm
to effect the immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate exercise price payable for the
purchased shares and shall (II) concurrently provide written directives
to the Corporation to deliver the
<PAGE>
certificates for the purchased shares directly to such brokerage
firm in order to complete the sale transaction.
The Exercise Date shall be the date on which written notice of
the option exercise is delivered to the Corporation. Except to the extent the
sale and remittance procedure is utilized for the exercise of the option,
payment of the option price for the purchased shares must accompany the exercise
notice.
D. Option Term. Each automatic grant under this Article Three
shall have a maximum term of ten (10) years measured from the automatic grant
date.
E. Exercisability. Each automatic grant shall become
exercisable in a series of four (4) equal and successive annual installments
over the Optionee's period of service on the Board, with the first such
installment to become exercisable six (6) months after the automatic grant date.
The exercisability of each automatic grant shall be subject to acceleration in
accordance with the provisions of Section II.G and Section III of this Article
Three.
F. Limited-Transferability. During the lifetime of the
Optionee, each automatic option grant, together with the limited stock
appreciation right pertaining to such option, shall be exercisable only by the
Optionee and shall not be assignable or transferable by the Optionee other than
(i) a transfer of the option effected by will or by the laws of descent and
distribution following Optionee's death or (ii) an assignment of the option in
whole or in part during the Optionee's lifetime to one or more members of the
Optionee's immediate family or to a trust established exclusively for one or
more such family members, to the extent such assignment is effected for estate
planning purposes. The assigned portion may only be exercised by the person or
persons who acquire a proprietary interest in the option pursuant to the
assignment. The terms applicable to the assigned portion shall be the same as
those in effect for the option immediately prior to such assignment and shall be
set forth in such documents issued to the assignee as the Plan Administrator may
deem appropriate.
G. Termination of Board Service.
1. Should the Optionee cease service as a Board
member cease for any reason (other than death or Permanent Disability) while
holding one or more automatic option grants under this Article Three, then such
individual shall have a six (6)-month period following the date of such
cessation of Board service in which to exercise each such option for any or all
of the shares of Common Stock for which the option is exercisable at the time of
such cessation of Board service. However, each such option shall immediately
terminate and cease to be outstanding, at the time of such cessation of Board
service, with respect to any shares for which the option is not otherwise at
that time exercisable.
2. Should the Optionee die within six (6) months
after cessation of Board service, then each outstanding automatic option grant
held by the Optionee at the time of death may subsequently be exercised, for any
or all of the shares of Common Stock for which such option is exercisable at the
time of the Optionee's cessation of Board service (less any option shares
subsequently purchased by the Optionee prior to death), by the personal
representative of the Optionee's estate or by the person or persons to whom the
option is
<PAGE>
transferred pursuant to the Optionee's will or in accordance with the laws of
descent and distribution. Any such exercise must occur within twelve (12) months
after the date of the Optionee's death.
3. Should the Optionee die or become permanently
disabled while serving as a Board member, then each automatic option grant held
by such Optionee under this Article Three shall accelerate in full, and the
Optionee (or the representative of the Optionee's estate or the person or
persons to whom the option is transferred upon the Optionee's death) shall have
a twelve (12)-month period following the date of the Optionee's cessation of
Board service in which to exercise each such option for any or all of the shares
of Common Stock subject to that option at the time of such cessation of Board
service.
4. In no event shall any automatic grant under this
Article Three remain exercisable after the specified expiration date of the ten
(10)-year option term. Upon the expiration of the applicable post-service
exercise period under subparagraph 1, 2 or 3 above or (if earlier) upon the
expiration of the ten (10)-year option term, the automatic grant shall terminate
and cease to be outstanding for any unexercised shares for which the option was
otherwise exercisable at the time of the Optionee's cessation of Board service.
H. Stockholder Rights. The holder of an automatic option grant
under this Article Three shall have none of the rights of a stockholder with
respect to any shares subject to such option until such individual shall have
exercised the option and paid the exercise price for the purchased shares.
I. Remaining Terms. The remaining terms and conditions of each
automatic option grant shall be as set forth in the prototype Non-statutory
Stock Option Agreement attached as Exhibit A to the Plan.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Corporate Transaction, each automatic
option grant at the time outstanding under this Article Three shall
automatically accelerate so that each such option shall, immediately prior to
the specified effective date for the Corporate Transaction, become fully
exercisable with respect to the total number of shares of Common Stock at the
time subject to such option and may be exercised for all or any portion of such
shares. Upon the consummation of the Corporate Transaction, all automatic option
grants under this Article Three shall terminate and cease to be outstanding.
B. In connection with any Change in Control of the
Corporation, each automatic option grant at the time outstanding under this
Article Three shall automatically accelerate so that each such option shall,
immediately prior to the specified effective date for the Change in Control,
become fully exercisable with respect to the total number of shares of Common
Stock at the time subject to such option and may be exercised for all or any
portion of such shares.
C. The Optionee shall have the right, exercisable at any time
during the thirty (30)-day period immediately following a Hostile Take-Over, to
surrender each option held by
<PAGE>
him or her under this Article Three to the Corporation. The Optionee shall in
return be entitled to a cash distribution from the Corporation in an amount
equal to the excess of (i) the Take-Over Price of the shares of Common Stock at
the time subject to the surrendered option (whether or not the option is
otherwise at the time exercisable for such shares) over (ii) the aggregate
exercise price payable for such shares. Such cash distribution shall be paid
within five (5) days following the consummation of the Hostile Take-Over.
Stockholder approval of this 1998 Restatement at the 1998 Annual Meeting shall
constitute pre-approval of each such option surrender right granted under this
Automatic Option Grant Program on or after the date of such Annual Meeting and
the subsequent exercise of each such right in accordance with the terms and
provisions of this Section III.C. No additional approval or consent of the Plan
Administrator or the Board shall be required at the time of the actual option
surrender and cash distribution.
D. The shares of Common Stock subject to each option
surrendered in connection with the Hostile Take-Over shall not be available for
subsequent option grant under this Plan.
E. The automatic option grants outstanding under this Article
Three shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
<PAGE>
ARTICLE FOUR
STOCK ISSUANCE PROGRAM
I. TERMS AND CONDITIONS OF STOCK ISSUANCES
Shares may be issued under the Stock Issuance Program through
direct and immediate purchases without any intervening stock option grants. The
issued shares shall be evidenced by a Stock Issuance Agreement ("Issuance
Agreement") that complies with the terms and conditions of this Article Four.
A. Consideration.
1. Shares of Common Stock drawn from the
Corporation's authorized but unissued shares of Common Stock ("Newly Issued
Shares") shall be issued under the Stock Issuance Program for one or more of the
following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:
(i) cash or check drawn to the Corporation's
order;
(ii) a promissory note payable to the
Corporation's order in one or more installments, which may be subject
to cancellation in whole or in part upon terms and conditions
established by the Plan Administrator; or
(iii) past services rendered to the Corporation
or any parent or subsidiary corporation.
2. Newly Issued Shares may, in the absolute
discretion of the Plan Administrator, be issued for consideration with a value
less than one-hundred percent (100%) of the Fair Market Value of such shares at
the time of issuance, but in no event less than eighty-five percent (85%) of
such Fair Market Value.
3. Shares of Common Stock reacquired by the
Corporation and held as treasury shares ("Treasury Shares") may be issued under
the Stock Issuance Program for such consideration (including one or more of the
items of consideration specified in subparagraph 1. above) as the Plan
Administrator may deem appropriate, whether such consideration is in an amount
less than, equal to, or greater than the Fair Market Value of the Treasury
Shares at the time of issuance. Treasury Shares may, in lieu of any cash
consideration, be issued subject to such vesting requirements tied to the
Participant's period of future Service or the Corporation's attainment of
specified performance objectives as the Plan Administrator may establish at the
time of issuance. The Treasury Share provisions shall be in effect only for such
period or periods (if any) during which the Corporation is incorporated under
the laws of the State of Delaware.
B. Vesting Provisions.
<PAGE>
1. Shares of Common Stock issued under the Stock
Issuance Program may, in the absolute discretion of the Plan Administrator, be
fully and immediately vested upon issuance or may vest in one or more
installments over the Participant's period of Service. The elements of the
vesting schedule applicable to any unvested shares of Common Stock issued under
the Stock Issuance Program, namely:
(i) the Service period to be completed by the
Participant or the performance objectives to be achieved by the
Corporation,
(ii) the number of installments in which the
shares are to vest,
(iii) the interval or intervals (if any) which
are to lapse between installments, and
(iv) the effect which death, Permanent
Disability or other event designated by the Plan Administrator is to
have upon the vesting schedule,
shall be determined by the Plan Administrator and incorporated into the Issuance
Agreement executed by the Corporation and the Participant at the time such
unvested shares are issued.
2. The Participant shall have full stockholder rights
with respect to any shares of Common Stock issued to him or her under the Plan,
whether or not his or her interest in those shares is vested. Accordingly, the
Participant shall have the right to vote such shares and to receive any regular
cash dividends paid on such shares. Any new, additional or different shares of
stock or other property (including money paid other than as a regular cash
dividend) which the Participant may have the right to receive with respect to
his or her unvested shares by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration or by reason of any Corporate Transaction shall be
issued, subject to (i) the same vesting requirements applicable to his or her
unvested shares and (ii) such escrow arrangements as the Plan Administrator
shall deem appropriate.
3. Should the Participant cease to remain in Service
while holding one or more unvested shares of Common Stock under the Stock
Issuance Program, then those shares shall be immediately surrendered to the
Corporation for cancellation, and the Participant shall have no further
stockholder rights with respect to those shares. To the extent the surrendered
shares were previously issued to the Participant for consideration paid in cash
or cash equivalent (including the Participant's purchase-money promissory note),
the Corporation shall repay to the Participant the cash consideration paid for
the surrendered shares and shall cancel the unpaid principal balance of any
outstanding purchase-money note of the Participant attributable to such
surrendered shares. The surrendered shares may, at the Plan Administrator's
discretion, be retained by the Corporation as Treasury Shares or may be retired
to authorized but unissued share status. Treasury Shares will only be an
available election during the period or periods (if any) the Corporation is
incorporated under the laws of the State of Delaware.
<PAGE>
4. The Plan Administrator may in its discretion elect
to waive the surrender and cancellation of one or more unvested shares of Common
Stock (or other assets attributable thereto) which would otherwise occur upon
the non-completion of the vesting schedule applicable to such shares. Such
waiver shall result in the immediate vesting of the Participant's interest in
the shares of Common Stock as to which the waiver applies. Such waiver may be
effected at any time, whether before or after the Participant's cessation of
Service or the attainment or non-attainment of the applicable performance
objectives.
II. CORPORATE TRANSACTIONS/CHANGE IN CONTROL
A. Upon the occurrence of any Corporate Transaction, all of
the Corporation's outstanding repurchase rights under this Article Three shall
automatically terminate, and all shares subject to such terminated rights shall
immediately vest in full, except to the extent: (i) any such repurchase right is
expressly assigned to the successor corporation (or parent thereof) in
connection with the Corporate Transaction or (ii) such termination is precluded
by other limitations imposed by the Plan Administrator at the time the
repurchase right is issued.
B. The Plan Administrator shall have the discretionary
authority, exercisable either in advance of any actually-anticipated Change in
Control or at the time of an actual Change in Control, to provide for the
immediate and automatic vesting of one or more unvested shares outstanding under
the Stock Issuance Program at the time of such Change in Control. The Plan
Administrator shall also have full power and authority to condition any such
accelerated vesting upon the subsequent termination of the Participant's Service
within a specified period following the Change in Control.
III. SHARE ESCROW/TRANSFER RESTRICTIONS
A. Unvested shares may, in the Plan Administrator's
discretion, be held in escrow by the Corporation until the Participant's
interest in such shares vests or may be issued directly to the Participant with
restrictive legends on the certificates evidencing such unvested shares. To the
extent an escrow arrangement is utilized, the unvested shares and any securities
or other assets issued with respect to such shares (other than regular cash
dividends) shall be delivered in escrow to the Corporation to be held until the
Participant's interest in such shares (or other securities or assets) vests.
Alternatively, if the unvested shares are issued directly to the Participant,
the restrictive legend on the certificates for such shares shall read
substantially as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE UNVESTED AND
ARE ACCORDINGLY SUBJECT TO (I) CERTAIN TRANSFER RESTRICTIONS
AND (II) CANCELLATION OR REPURCHASE IN THE EVENT THE
REGISTERED HOLDER (OR HIS/HER PREDECESSOR IN INTEREST) CEASES
TO REMAIN IN THE CORPORATION'S SERVICE. SUCH TRANSFER
RESTRICTIONS AND THE TERMS AND CONDITIONS OF SUCH CANCELLATION
OR REPURCHASE ARE SET FORTH IN A STOCK ISSUANCE AGREEMENT
BETWEEN THE CORPORATION AND THE
<PAGE>
REGISTERED HOLDER (OR HIS/HER PREDECESSOR IN INTEREST) DATED
, 199 , A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICE OF THE CORPORATION."
B. The Participant shall have no right to transfer any
unvested shares of Common Stock issued to him or her under the Stock Issuance
Program. For purposes of this restriction, the term "transfer" shall include
(without limitation) any sale, pledge, assignment, encumbrance, gift, or other
disposition of such shares, whether voluntary or involuntary. Upon any such
attempted transfer, the unvested shares shall immediately be cancelled in
accordance with substantially the same procedure in effect under Section I.B.3
of this Article Four, and neither the Participant nor the proposed transferee
shall have any rights with respect to such cancelled shares. However, the
Participant shall have the right to make a gift of unvested shares acquired
under the Stock Issuance Program to his or her spouse or issue, including
adopted children, or to a trust established for such spouse or issue, provided
the donee of such shares delivers to the Corporation a written agreement to be
bound by all the provisions of the Stock Issuance Program and the Issuance
Agreement applicable to the gifted shares.
<PAGE>
ARTICLE FIVE
MISCELLANEOUS
I. LOANS OR INSTALLMENT PAYMENTS
A. The Plan Administrator may, in its discretion, assist any
Optionee or Participant (including an Optionee or Participant who is an officer
of the Corporation) in the exercise of one or more options granted to such
Optionee under the Discretionary Option Grant Program or the purchase of one or
more shares issued to such Participant under the Stock Issuance Program,
including the satisfaction of any Federal and State income and employment tax
obligations arising therefrom, by (i) authorizing the extension of a loan from
the Corporation to such Optionee or Participant or (ii) permitting the Optionee
or Participant to pay the option price or purchase price for the purchased
Common Stock in installments over a period of years. The terms of any loan or
installment method of payment (including the interest rate and terms of
repayment) shall be upon such terms as the Plan Administrator specifies in the
applicable option or issuance agreement or otherwise deems appropriate under the
circumstances. Loans or installment payments may be authorized with or without
security or collateral. However, the maximum credit available to the Optionee or
Participant may not exceed the option or purchase price of the acquired shares
plus any Federal and State income and employment tax liability incurred by the
Optionee or Participant in connection with the acquisition of such shares.
B. The Plan Administrator may, in its absolute discretion,
determine that one or more loans extended under this financial assistance
program shall be subject to forgiveness by the Corporation in whole or in part
upon such terms and conditions as the Plan Administrator may deem appropriate.
II. AMENDMENT OF THE PLAN AND AWARDS
A. The Board has complete and exclusive power and authority to
amend or modify the Plan (or any component thereof) in any or all respects
whatsoever. However, no such amendment or modification shall adversely affect
rights and obligations with respect to options at the time outstanding under the
Plan, nor adversely affect the rights of any Participant with respect to Common
Stock issued under the Stock Issuance Program prior to such action, unless the
Optionee or Participant consents to such amendment. In addition, certain
amendments may require stockholder approval pursuant to applicable laws or
regulations.
B. (i) Options to purchase shares of Common Stock may be
granted under the Discretionary Option Grant Program and (ii) shares of Common
Stock may be issued under the Stock Issuance Program, which are in both
instances in excess of the number of shares then available for issuance under
the Plan, provided any excess shares actually issued under the Discretionary
Option Grant Program or the Stock Issuance Program are held in escrow until
stockholder approval is obtained for a sufficient increase in the number of
shares available for issuance under the Plan. If such stockholder approval is
not obtained within twelve (12) months after the date the first such excess
option grants or excess share issuances are made, then (I) any unexercised
excess options shall terminate and cease to be exercisable and (II) the
Corporation
<PAGE>
shall promptly refund the purchase price paid for any excess shares actually
issued under the Plan and held in escrow, together with interest (at the
applicable Short Term Federal Rate) for the period the shares were held in
escrow.
III. TAX WITHHOLDING
The Corporation's obligation to deliver shares of Common Stock
upon the exercise of stock options for such shares or the vesting of such shares
under the Plan shall be subject to the satisfaction of all applicable Federal,
State and local income and employment tax withholding requirements.
The Plan Administrator may, in its discretion and in
accordance with the provisions of this Section III of Article Five and such
supplemental rules as the Plan Administrator may from time to time adopt
(including the applicable safe-harbor provisions of SEC Rule 16b-3), provide any
or all holders of non-statutory options (other than the automatic grants made
pursuant to Article Three of the Plan) or unvested shares under the Plan with
the right to use shares of the Corporation's Common Stock in satisfaction of all
or part of the Federal, State and local income and employment tax liabilities
incurred by such holders in connection with the exercise of their options or the
vesting of their shares (the "Taxes"). Such right may be provided to any such
holder in either or both of the following formats:
(a) Stock Withholding: The holder of the non-statutory option
or unvested shares may be provided with the election to have
the Corporation withhold, from the shares of Common Stock
otherwise issuable upon the exercise of such non-statutory
option or the vesting of such shares, a portion of those
shares with an aggregate Fair Market Value equal to the
percentage of the applicable Taxes (not to exceed one hundred
percent (100%)) designated by the holder.
(b) Stock Delivery: The Plan Administrator may, in its
discretion, provide the holder of the non-statutory option or
the unvested shares with the election to deliver to the
Corporation, at the time the non-statutory option is exercised
or the shares vest, one or more shares of Common Stock
previously acquired by such individual (other than in
connection with the option exercise or share vesting
triggering the Taxes) with an aggregate Fair Market Value
equal to the percentage of the Taxes incurred in connection
with such option exercise or share vesting (not to exceed one
hundred percent (100%)) designated by the holder.
<PAGE>
IV. EFFECTIVE DATE AND TERM OF PLAN
A. This Plan as successor to the Corporation's 1990 Stock
Option Plan became effective as of the applicable Effective Date for each of the
equity incentive programs in effect hereunder, and no further option grants or
stock issuances shall be made under the 1990 Plan from and after such Effective
Date. Each option issued and outstanding under the 1990 Plan immediately prior
to the Effective Date of the Discretionary Option Grant Program shall be
incorporated into this Plan and treated as an outstanding option under this
Plan, but each such option shall continue to be governed solely by the terms and
conditions of the instrument evidencing such grant, and nothing in this Plan
shall be deemed to affect or otherwise modify the rights or obligations of the
holders of such options with respect to their acquisition of shares of Common
Stock thereunder.
B. The option/vesting acceleration provisions of Section III
of Article Two relating to Corporate Transactions and Changes in Control may, in
the Plan Administrator's discretion, be extended to one or more stock options
outstanding under the 1990 Plan on the Effective Date of the Discretionary
Option Grant Program, but which do not otherwise provide for such acceleration.
C. The Plan was subsequently amended by the Board on February
27, 1995 to increase the number of shares of Common Stock authorized for
issuance under the Plan by an additional 500,000 shares, and such amendment was
approved by the stockholders at the 1995 Annual Meeting on May 22, 1995. The
Plan was further amended by the Board on February 16, 1996 to increase the
number of shares of Common Stock authorized for issuance under the Plan by
another 500,000 shares, subject to stockholder approval at the 1996 Annual
Meeting.
D. In February 1998, the Board further amended and restated
the Plan (the "February 1998 Restatement") to effect the following revisions:
(i) increase the number of shares of Common Stock reserved for issuance over the
term of the Plan by an additional 350,000 shares to 2,200,000 shares, (ii)
render the non-employee Board members (including those serving on as the Plan
Administrator) eligible to receive option grants under the Discretionary Option
Grant and Stock Issuance Programs, (iii) allow unvested shares issued under the
Plan and subsequently repurchased by the Corporation at the option exercise or
direct issue price paid per share to be reissued under the Plan, (iv) remove
certain restrictions on the eligibility of non-employee Board members to serve
as Plan Administrator and (v) effect a series of additional changes to the
provisions of the Plan (including the stockholder approval requirements and the
option transferability restrictions) in order to take advantage of the recent
amendments to Rule 16b-3 of the Securities and Exchange Commission which exempts
certain officer and director transactions under the Plan from the short-swing
liability provisions of the federal securities laws.
<PAGE>
E. The February 1998 Restatement was approved by the
stockholders at the 1998 Annual Meeting. All option grants and stock issuances
made prior to the February 1998 Restatement shall remain outstanding in
accordance with the terms and conditions of the respective instruments
evidencing those options or issuances, and nothing in the February 1998
Restatement shall be deemed to modify or in any way affect those outstanding
options or issuances. Subject to the foregoing limitations, the Plan
Administrator may make option grants and direct stock issuances under the Plan
at any time before the date fixed herein for the termination of the Plan.
F. The Plan shall terminate upon the earlier of (i) December
31, 2003 or (ii) the date on which all shares available for issuance under the
Plan shall have been issued or cancelled pursuant to the exercise, surrender or
cash-out of the options granted under the Plan or the issuance of shares
(whether vested or unvested) under the Stock Issuance Program. If the date of
termination is determined under clause (i) above, then all option grants and
unvested stock issuances outstanding on such date shall thereafter continue to
have force and effect in accordance with the provisions of the instruments
evidencing such grants or issuances.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of
shares pursuant to option grants or stock issuances under the Plan shall be used
for general corporate purposes.
VI. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any stock
option or stock appreciation right under the Plan, the issuance of any shares
under the Stock Issuance Program, and the issuance of Common Stock upon the
exercise of the stock options or stock appreciation rights granted hereunder
shall be subject to the Corporation's procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the stock
options and stock appreciation rights granted under it, and the Common Stock
issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued
or delivered under this Plan unless and until there shall have been compliance
with all applicable requirements of Federal and State securities laws, including
the filing and effectiveness of the Form S-8 registration statement for the
shares of Common Stock issuable under the Plan, and all applicable listing
requirements of any securities exchange on which stock of the same class is then
listed.
VII. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Corporation in establishing the
Plan, nor any action taken by the Plan Administrator hereunder, nor any
provision of the Plan shall be construed so as to grant any individual the right
to remain in the employ or service of the Corporation (or any
<PAGE>
parent or subsidiary corporation) for any period of specific duration, and the
Corporation (or any parent or subsidiary corporation retaining the services of
such individual) may terminate such individual's employment or service at any
time and for any reason, with or without cause.
VIII. MISCELLANEOUS PROVISIONS
A. Except to the extent otherwise expressly provided in the
Plan, the right to acquire Common Stock or other assets under the Plan may not
be assigned, encumbered or otherwise transferred by any Optionee or Participant.
B. The provisions of the Plan relating to the exercise of
options and the vesting of shares shall be governed by the laws of the State of
California without resort to that State conflict-of-laws rules.
C. The provisions of the Plan shall inure to the benefit of,
and be binding upon, the Corporation and its successors or assigns, whether by
Corporate Transaction or otherwise, and the Participants and Optionees, the
legal representatives of their respective estates, their respective heirs or
legatees and their permitted assignees.
<PAGE>
EXHIBIT A
Non-Statutory Stock Option Agreement
Automatic Option Grant Program
<PAGE>
Exhibit 99.6
QRS CORPORATION
NOTICE OF GRANT OF STOCK OPTION
Notice is hereby given of the following stock option grant
(the "Option") to purchase shares of the Common Stock of QRS Corporation (the
"Corporation"):
Optionee:
--------------------------------------
Grant Date:
------------------------------------
Grant Number:
----------------------------------
Option Price: $ per share
-------------------
Number of Option Shares: shares
----------------------
Expiration Date:
-------------------------------
Type of Option: Incentive Stock Option
---------
Non-Statutory Option
---------
Exercise Schedule: The Option shall become exercisable for the
Option Shares in a series of four (4) successive equal annual
installments upon the Optionee's completion of each year of
Service over the four (4)-year period measured from the Grant
Date. In no event shall the Option become exercisable for any
additional Option Shares following the Optionee's cessation of
Service.
Optionee understands and agrees that the Option is granted
subject to and in accordance with the express terms and conditions of the QRS
Corporation 1993 Stock Option/Stock Issuance Plan (the "Plan"). Optionee further
agrees to be bound by the terms and conditions of the Plan and the terms and
conditions of the Option as set forth in the Stock Option Agreement attached
hereto as Exhibit A. Optionee also acknowledges receipt of a copy of the
official prospectus for the Plan attached hereto as Exhibit B.
<PAGE>
No Employment or Service Contract. Nothing in this Agreement
or in the Plan shall confer upon Optionee any right to continue in Service for
any period of specific duration or interfere with or otherwise restrict in any
way the rights of the Corporation (or any parent or subsidiary employing
Optionee) or Optionee, which rights are hereby expressly reserved by each, to
terminate Optionee's Service at any time for any reason whatsoever, with or
without cause.
Dated: , 199
----------------- -
QRS CORPORATION
By:
------------------------------------
Title:
---------------------------------
---------------------------------------
OPTIONEE
Address:
-------------------------------
---------------------------------------
Exhibit A: Stock Option Agreement
Exhibit B: Plan Prospectus
2.
<PAGE>
EXHIBIT A
STOCK OPTION AGREEMENT
<PAGE>
EXHIBIT B
PLAN PROSPECTUS
<PAGE>
Exhibit 99.7
QRS CORPORATION
STOCK OPTION AGREEMENT
WITNESSETH:
RECITALS
A. The Corporation's Board of Directors (the "Board") has
adopted the Corporation's 1993 Stock Option/Stock Issuance Plan (the "Plan") for
the purpose of attracting and retaining the services of key employees (including
officers and directors), non-employee Board members and consultants and other
independent advisors.
B. Optionee is an individual who is to render valuable
services to the Corporation or one or more parent or subsidiary corporations,
and this Agreement is executed pursuant to, and is intended to carry out the
purposes of, the Plan in connection with the Corporation's grant of a stock
option to Optionee.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. Subject to and upon the terms and
conditions set forth in this Agreement, the Corporation hereby grants to
Optionee, as of the grant date (the "Grant Date") specified in the accompanying
Notice of Grant of Stock Option (the "Grant Notice"), a stock option to purchase
up to that number of shares of the Corporation's Common Stock (the "Option
Shares") as is specified in the Grant Notice. Such Option Shares shall be
purchasable from time to time during the option term at the option price (the
"Option Price") specified in the Grant Notice.
2. Option Term. This option shall expire at the close of
business on the expiration date (the "Expiration Date") specified in the Grant
Notice, unless sooner terminated in accordance with Paragraph 5 or 6.
3. Limited Transferability. This option shall be exercisable
only by Optionee during Optionee's lifetime and shall not be transferable or
assignable by Optionee other than by will or by the laws of descent and
distribution following Optionee's death.
4. Dates of Exercise. This option shall become exercisable for
the Option Shares in accordance with the installment schedule specified in the
Grant Notice. As the option becomes exercisable for one or more installments,
those installments shall accumulate, and the option shall remain exercisable for
the accumulated installments until the Expiration Date or sooner termination of
the option term under Paragraph 5 or Paragraph 6 of this Agreement.
In no event shall this option become exercisable for any
additional Option Shares following Optionee's cessation of Service.
<PAGE>
5. Cessation of Service. The option term specified in
Paragraph 2 shall terminate (and this option shall cease to be outstanding)
prior to the Expiration Date in accordance with the following provisions:
(i) This option shall immediately terminate and cease
to be outstanding with respect to any Option Shares for which the
option is not exercisable at the time of Optionee's cessation of
Service.
(ii) Should Optionee cease Service for any reason
other than death or permanent disability while this option remains
outstanding, then Optionee shall have a three (3)-month period measured
from the date of such cessation of Service in which to exercise this
option for any or all of the Option Shares for which this option is
exercisable at the time of such cessation of Service. This option shall
cease to be so exercisable, and shall accordingly terminate, upon the
expiration of such three (3)-month period or (if earlier) upon the
specified Expiration Date of the option term.
(iii) Should Optionee die while in Service or within
the three (3)-month period following his or her cessation of Service,
then the personal representative of Optionee's estate or the person or
persons to whom this option is transferred pursuant to Optionee's will
or in accordance with the laws of descent and distribution shall have
the right to exercise the option for any or all of the Option Shares
for which this option is exercisable at the time of Optionee's
cessation of Service, less any Option Shares subsequently purchased by
Optionee prior to death. Such right shall lapse, and this option shall
terminate and cease to remain outstanding, upon the earlier of (A) the
expiration of the twelve (12)-month period measured from the date of
Optionee's death or (B) the Expiration Date.
(iv) Should Optionee become permanently disabled and
cease by reason thereof to remain in Service at any time during the
option term, then Optionee shall have a twelve (12) month period
commencing with the date of such cessation of Service in which to
exercise this option for any or all of the Option Shares for which this
option is exercisable at the time of such cessation of Service. This
option shall cease to remain so exercisable, and shall accordingly
terminate, upon the expiration of such twelve (12)-month period or (if
earlier) upon the Expiration Date.
(v) Should (A) Optionee's Service be terminated for
misconduct (including, but not limited to, any act of dishonesty,
willful misconduct, fraud or embezzlement) or (B) Optionee make any
unauthorized use or disclosure of confidential information or trade
secrets of the Corporation or any parent or subsidiary, then in any
such event this option shall terminate immediately and cease to be
outstanding.
<PAGE>
(vi) During the limited period of post-Service
exercisability applicable pursuant to subparagraphs (ii) through (iv)
above, this option may not be exercised in the aggregate for more than
the number of Option Shares (if any) for which this option is, at the
time of the Optionee's cessation of Service, exercisable in accordance
with either the normal exercise provisions specified in the Grant
Notice or the special acceleration provisions of Paragraph 6 of this
Agreement.
(vii) For purposes of this Agreement, the following
definitional provisions shall be in effect:
A. Optionee shall be deemed to remain in Service for
so long as such individual renders services on a periodic basis to the
Corporation (or any parent or subsidiary) in the capacity of an
Employee, a non-employee member of the board of directors or an
independent consultant or advisor.
B. Optionee shall be considered to be an Employee for
so long as such individual remains in the employ of the Corporation or
any parent or subsidiary, subject to the control and direction of the
employer entity not only as to the work to be performed but also as to
the manner and method of performance.
C. Optionee shall be deemed to be permanently
disabled and to have incurred a permanent disability if Optionee is
unable to engage in any substantial gainful activity by reason of any
medically-determinable physical or mental impairment expected to result
in death or to be of continuous duration of twelve (12) months or more.
D. A corporation shall be considered to be a
subsidiary of the Corporation if it is a member of an unbroken chain of
corporations beginning with the Corporation, provided each such
corporation in the chain (other than the last corporation) owns, at the
time of determination, stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one of the
other corporations in such chain.
E. A corporation shall be considered to be a parent
of the Corporation if it is a member of an unbroken chain ending with
the Corporation, provided each such corporation in the chain (other
than the Corporation) owns, at the time of determination, stock
possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in such
chain.
6. Corporate Transaction.
A. In the event of any of the following shareholder-approved
transactions to which the Corporation is a party (a "Corporate Transaction"):
<PAGE>
(i) a merger or consolidation in which the
Corporation is not the surviving entity, except for a transaction the
principal purpose of which is to change the State in which the
Corporation is incorporated,
(ii) the sale, transfer or other disposition of all
or substantially all of the assets of the Corporation in complete
liquidation or dissolution of the Corporation, or
(iii) any reverse merger in which the Corporation is
the surviving entity but in which securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons different
from those who held such securities immediately prior to such merger,
this option, to the extent outstanding at such time
but not otherwise fully exercisable, shall automatically accelerate so that such
option shall, immediately prior to the specified effective date for the
Corporate Transaction, become fully exercisable for all the Option Shares at the
time subject to such option and may be exercised for all or any portion of such
shares. No such acceleration of this option, however, shall occur if and to the
extent: (i) this option is, in connection with the Corporate Transaction, either
to be assumed by the successor corporation or parent thereof or replaced with a
comparable option to purchase shares of the capital stock of the successor
corporation or parent thereof or (ii) such option is to be replaced with a cash
incentive program of the successor corporation which preserves the spread
existing at the time of the Corporate Transaction on any Option Shares for which
this option is not otherwise at that time exercisable (the excess of the Fair
Market Value of those Option Shares over the aggregate Option Price payable for
such shares) and provides for subsequent pay-out in accordance with the same
vesting schedule in effect for those Option Shares pursuant to the option
exercise schedule set forth in the Grant Notice. The determination of option
comparability under clause (i) shall be made by the Plan Administrator, and such
determination shall be final, binding and conclusive.
B. The portion of this option accelerated in connection with
any Corporate Transaction shall remain exercisable as an incentive stock option
under the Federal tax laws (if the option is designated as such in the Grant
Notice) only to the extent the applicable dollar limitation of Paragraph 17 is
not exceed in the calendar year of such Corporate Transaction.
C. This option, to the extent not previously exercised, shall
terminate upon the consummation of such Corporate Transaction and cease to be
outstanding, unless it is expressly assumed by the successor corporation or
parent thereof.
D. This Agreement shall not in any way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise make changes in its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
7. Adjustment in Option Shares.
<PAGE>
A. In the event any change is made to the Common Stock
issuable under the Plan by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class effected without the
Corporation's receipt of consideration, the Plan Administrator shall make
appropriate adjustments to (i) the number and/or class of securities subject to
this option and (ii) the Option Price payable per share in order to prevent any
dilution or enlargement of benefits hereunder. Such adjustments shall be final,
binding and conclusive.
B. If this option is to be assumed in connection with any
Corporate Transaction under Paragraph 6 or is otherwise to continue outstanding,
then this option shall, immediately after such Corporate Transaction, be
appropriately adjusted to apply and pertain to the number and class of
securities which would have been issued to Optionee in the consummation of such
Corporate Transaction had the option been exercised immediately prior to such
Corporate Transaction. Appropriate adjustments shall also be made to the Option
Price payable per share, provided the aggregate Option Price payable hereunder
shall remain the same.
8. Privilege of Stock Ownership. The holder of this option
shall not have any of the rights of a shareholder with respect to the Option
Shares until such individual shall have exercised the option and paid the Option
Price for the purchased Option Shares.
9. Manner of Exercising Option.
A. In order to exercise this option with respect to all or any
part of the Option Shares for which this option is at the time exercisable,
Optionee (or in the case of exercise after Optionee's death, Optionee's
executor, administrator, heir or legatee, as the case may be) must take the
following actions:
(i) Deliver to the Corporate Secretary of the
Corporation an executed notice of exercise in substantially the form of
Exhibit I to this Agreement (the "Exercise Notice") in which there is
specified the number of Option Shares which are to be purchased under
the exercised option.
(ii) Pay the aggregate Option Price for the purchased
shares through one or more of the following alternatives:
- full payment in cash or by check payable to the
Corporation's order;
- full payment in shares of Common Stock held for the
requisite period necessary to avoid a charge to the Corporation's
earnings for financial reporting purposes and valued at Fair Market
Value on the Exercise Date (as those terms are defined below);
- full payment in a combination of shares of Common
Stock held for the requisite period necessary to avoid a charge to the
Corporation's reported earnings and valued at Fair Market Value on the
Exercise Date and cash or check payable to the Corporation's order; or
<PAGE>
- full payment effected through a broker-dealer sale
and remittance procedure pursuant to which Optionee (I) shall provide
irrevocable instructions to a Corporation-designated brokerage firm to
effect the immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate Option Price payable for the
purchased shares plus all applicable Federal, State and local income
taxes and employment taxes required to be withheld in connection with
such purchase and (II) shall provide directives to the Corporation to
deliver the certificates for the purchased shares directly to such
brokerage firm in order to complete the sale transaction.
(iii) Furnish to the Corporation appropriate
documentation that the person or persons exercising the option (if
other than Optionee) have the right to exercise this option.
B. For purposes of this Agreement, the Exercise Date shall be
the date on which the executed Exercise Notice shall have been delivered to the
Corporation. Except to the extent the sale and remittance procedure specified
above is utilized in connection with the option exercise, payment of the Option
Price for the purchased shares must accompany such Exercise Notice. For all
valuation purposes under this Agreement, the Fair Market Value per share of
Common Stock on any relevant date shall be the closing selling price per share
of Common Stock on the date in question, as such price is reported by the
National Association of Securities Dealers on the Nasdaq National Market. If
there is no such reported price on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for which
such quotation exists.
C. As soon as practical after receipt of the Exercise Notice,
the Corporation shall mail or deliver to or on behalf of Optionee (or any other
person or persons exercising this option in accordance herewith) a certificate
or certificates representing the purchased Option Shares.
D. In no event may this option be exercised for any fractional
shares.
10. Governing Law. The interpretation, performance, and
enforcement of this Agreement shall be governed by the laws of the State of
California without resort to that State's conflict-of-laws rules.
11. Compliance with Laws and Regulations. The exercise of this
option and the issuance of Option Shares upon such exercise shall be subject to
compliance by the Corporation and Optionee with all applicable requirements of
law relating thereto and with all applicable regulations of any stock exchange
on which shares of the Corporation's Common Stock may be listed at the time of
such exercise and issuance.
12. Successors and Assigns. Except to the extent otherwise
provided in Paragraph 3 or 6, the provisions of this Agreement shall inure to
the benefit of, and be binding
<PAGE>
upon, the successors, administrators, heirs and legal representatives of
Optionee and the successors and assigns of the Corporation.
13. Liability of Corporation. The inability of the Corporation
to obtain approval from any regulatory body having authority deemed by the
Corporation to be necessary to the lawful issuance and sale of any Common Stock
pursuant to this option shall relieve the Corporation of any liability with
respect to the non-issuance or sale of the Common Stock as to which such
approval shall not have been obtained. The Corporation however, shall use its
best efforts to obtain all such approvals.
14. No Employment/Service Contract. Nothing in this Agreement
or in the Plan shall confer upon Optionee any right to continue in the Service
of the Corporation (or any parent or subsidiary employing or retaining Optionee)
for any period of specific duration or interfere with or otherwise restrict in
any way the rights of the Corporation (or any such parent or subsidiary) or
Optionee, which rights are hereby expressly reserved by each party, to terminate
Optionee's Service at any time for any reason whatsoever, with or without cause.
15. Notices. Any notice required to be given or delivered to
the Corporation under the terms of this Agreement shall be in writing and
addressed to the Corporation in care of the Corporate Secretary at the
Corporation's principal offices at 1400 Marina Way South, Richmond, California
94804. Any notice required to be given or delivered to Optionee shall be in
writing and addressed to Optionee at the address indicated on the Grant Notice.
All notices shall be deemed to have been given or delivered upon personal
delivery or upon deposit in the U.S. mail, by registered or certified mail,
postage prepaid and properly addressed to the party to be notified.
16. Construction. This Agreement and the option evidenced
hereby are made and granted pursuant to the Plan and are in all respects limited
by and subject to the express terms and provisions of the Plan. All decisions of
the Plan Administrator with respect to any question or issue arising under the
Plan or this Agreement shall be conclusive and binding on all persons having an
interest in this option.
17. Additional Terms Applicable to an Incentive Stock Option.
In the event this option is designated an incentive stock option in the Grant
Notice, the following terms and conditions shall also apply to the grant:
A. This option shall cease to qualify for favorable tax
treatment as an incentive stock option under the Federal tax
laws if (and to the extent) this option is exercised for one
or more Option Shares: (i) more than three (3) months after
the date Optionee ceases to be an Employee for any reason
other than death or permanent disability (as defined in
Paragraph 5) or (ii) more than one (1) year after the date
Optionee ceases to be an Employee by reason of permanent
disability.
B. If this option is to become exercisable in a series of
<PAGE>
installments as indicated in the Grant Notice, no such
installment shall qualify for favorable tax treatment as an
incentive stock option under the Federal tax laws if (and to
the extent) the aggregate Fair Market Value (determined at the
Grant Date) of the Corporation's Common Stock for which such
installment first becomes exercisable hereunder will, when
added to the aggregate fair market value (determined as of the
respective date or dates of grant) of the Common Stock or
other securities for which this option or one or more other
incentive stock options granted to Optionee prior to the Grant
Date (whether under the Plan or any other option plan of the
Corporation or any parent or subsidiary) first become
exercisable during the same calendar year, exceed One Hundred
Thousand Dollars ($100,000) in the aggregate. Should the
number of shares of Common Stock for which this option first
becomes exercisable in any calendar year exceed the applicable
One Hundred Thousand Dollar ($100,000) limitation, the option
may nevertheless be exercised for those excess shares in such
calendar year as a non-statutory option.
C. Should the exercisability of this option be accelerated
upon a Corporate Transaction in accordance with Paragraph 6,
then this option shall qualify for favorable tax treatment as
an incentive stock option under the Federal tax laws only to
the extent the aggregate Fair Market Value (determined at the
Grant Date) of the Corporation's Common Stock for which this
option first becomes exercisable in the calendar year in which
the Corporate Transaction occurs does not, when added to the
aggregate fair market value (determined as of the respective
date or dates of grant) of the Common Stock or other
securities for which this option or one or more other
incentive stock options granted to Optionee prior to the Grant
Date (whether under the Plan or any other option plan of the
Corporation or any parent or subsidiary) first become
exercisable during the same calendar year, exceed One Hundred
Thousand Dollars ($100,000) in the aggregate. Should the
number of shares of Common Stock for which this option first
becomes exercisable in the calendar year of such Corporate
Transaction exceed the applicable One Hundred Thousand Dollar
($100,000) limitation, the option may nevertheless be
exercised for the excess shares in such calendar year as a
non-statutory option.
D. Should the Optionee hold, in addition to this option, one
or more other options to purchase Common Stock which become
exercisable for the first time in the same calendar year as
this option, then the foregoing limitations on the
exercisability of such options as incentive stock options
under the Federal tax laws shall be applied on the basis of
the order in which such options are
<PAGE>
granted.
E. To the extent this option should fail to qualify as an
incentive stock option under the Federal tax laws, Optionee
will recognize compensation income in connection with the
acquisition of one or more Option Shares hereunder, and
Optionee must make appropriate arrangements for the
satisfaction of all Federal, State or local income and
employment tax withholding requirements applicable to such
compensation income.
18. Additional Terms Applicable to a Non-Statutory Stock
Option. In the event this option is designated a non-statutory stock option in
the Grant Notice, Optionee shall make appropriate arrangements with the
Corporation or any parent or subsidiary employing Optionee for the satisfaction
of all Federal, State or local income tax and employment tax withholding
requirements applicable to the exercise of this option.
<PAGE>
EXHIBIT I
NOTICE OF EXERCISE OF STOCK OPTION
I hereby notify QRS Corporation (the "Corporation") that I
elect to purchase _____ shares of the Corporation's Common Stock (the "Purchased
Shares") at the option exercise price of $_____ per share (the "Option Price")
pursuant to that certain option (the "Option") granted to me under the
Corporation's 1993 Stock Option/Stock Issuance Plan on_____________, 199__.
Concurrently with the delivery of this Exercise Notice to the
Corporate Secretary of the Corporation, I shall hereby pay to the Corporation
the Option Price for the Purchased Shares in accordance with the provisions of
my agreement with the Corporation evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition
for exercise. Alternatively, I may utilize the special broker-dealer sale and
remittance procedure specified in my agreement to effect the payment of the
Option Price for the Purchased Shares.
______________, 199__
Date
--------------------------------------
Optionee
Address:
------------------------------
------------------------------
Print name in exact manner
it is to appear on the
stock certificate:
----------------------------
Address to which certificate
is to be sent, if different
from address above:
----------------------------
----------------------------
Social Security Number:
----------------------------
Employee Number:
----------------------------
<PAGE>
Exhibit 99.14
QRS CORPORATION
NON-EMPLOYEE DIRECTOR AUTOMATIC STOCK OPTION AGREEMENT
RECITALS
A. The Corporation has approved an automatic option grant
program under the 1993 Stock Option/Stock Issuance Plan (the "Plan") pursuant to
which the non-employee members of the Corporation's Board of Directors (the
"Board") will automatically receive periodic option grants designed to reward
them for services they have rendered to the Corporation and to encourage them to
continue in the service of the Corporation.
B. Optionee is a non-employee member of the Board and this
Agreement is executed pursuant to, and is intended to carry out the purposes of,
the Plan in connection with the automatic grant of a stock option to purchase
shares of the Corporation's common stock ("Common Stock") under the Plan.
C. The granted option is intended to be a non-statutory option
which does not meet the requirements of Section 422 of the Internal Revenue
Code.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. Subject to and upon the terms and
conditions set forth in this Agreement, there is hereby granted to Optionee, as
of the date of grant (the "Grant Date") specified in the accompanying Notice of
Grant of Non-Employee Director Automatic Stock Option (the "Grant Notice"), a
stock option to purchase up to that number of shares of Common Stock (the
"Option Shares") as is specified in the Grant Notice. The Option Shares shall be
purchasable from time to time during the option term at the price per share (the
"Option Price") specified in the Grant Notice.
2. Option Term. This option shall have a maximum term of ten
(10) years measured from the Grant Date and shall expire at the close of
business on the Expiration Date specified in the Grant Notice, unless sooner
terminated in accordance with Paragraph 5, 7 or 8 of this Agreement.
3. Limited Transferability. This option may, in connection
with Optionee's estate plan, be assigned in whole or in part during Optionee's
lifetime to one or more members of Optionee's immediate family or to a trust
established for the exclusive benefit of Optionee and/or one or more such family
members. The assigned portion shall be exercisable only by the person or persons
who acquire a proprietary interest in the option pursuant to such assignment.
The terms applicable to the assigned portion shall be the same as those in
effect for this option immediately
<PAGE>
prior to such assignment. Should Optionee die while holding this option, then
this option shall be transferred in accordance with Optionee's will or the laws
of descent and distribution.
4. Dates of Exercise. This option shall become exercisable in
a series of successive annual installments as specified in the Grant Notice. As
the option becomes exercisable for one or more installments, those installments
shall accumulate, and the option shall remain exercisable for the accumulated
installments until the expiration or sooner termination of the option term. In
no event shall this option become exercisable for any additional Option Shares
following Optionee's cessation of service as a Board member.
5. Cessation of Board Service. Should Optionee's service as a
Board member cease while this option remains outstanding, then the option term
specified in Paragraph 2 shall terminate (and this option shall cease to be
outstanding) prior to the Expiration Date in accordance with the following
provisions:
(i) Should Optionee cease to serve as a Board member for any
reason (other than death or permanent disability) while holding this
option, then the period for exercising this option shall be reduced to
a six (6)-month period commencing with the date of such cessation of
Board service, but in no event shall this option be exercisable at any
time after the Expiration Date. During such limited period of
exercisability, this option may not be exercised for more than the
number of Option Shares (if any) for which such option is exercisable
on the date of Optionee's cessation of Board service. Upon the
expiration of such six (6)-month period, the option shall terminate and
cease to be outstanding.
(ii) Should Optionee die during the six (6)-month period
following his or her cessation of Board service, then the personal
representative of Optionee's estate or the person or persons to whom
the option is transferred pursuant to Optionee's will or in accordance
with the laws of descent and distribution shall have the right to
exercise this option for any or all of the Option Shares for which the
option is exercisable at the time of Optionee's cessation of Board
service (less any Option Shares purchased by Optionee after his or her
cessation of Board service but prior to death). Such right of exercise
shall terminate, and this option shall accordingly cease to be
outstanding, upon the earlier of (A) the expiration of the twelve
(12)-month period measured from the date of Optionee's death or (B) the
specified Expiration Date of the option term.
(iii) Should Optionee die or become permanently disabled while
serving as a Board member, then this option shall accelerate in full
and Optionee, or the personal representative of Optionee's estate or
the person or persons to whom the option is transferred pursuant to
Optionee's will or in accordance with the laws of descent and
distribution, shall have the right to exercise this option for
2.
<PAGE>
any or all of the Option Shares subject to this option at the time of
Optionee's cessation of Board service. Such right of exercise shall
terminate, and this option shall accordingly cease to be outstanding,
upon the earlier of (A) the expiration of the twelve (12)-month period
measured from the date on which Optionee dies or becomes permanently
disabled or (B) the specified Expiration Date of the option term.
(iv) Upon Optionee's cessation of Board service for any
reason other than death or permanent disability, this option shall
immediately terminate and cease to be outstanding with respect to any
and all Option Shares for which such option is not otherwise at that
time exercisable in accordance with the normal exercise provisions of
Paragraph 4 or the special acceleration provisions of Paragraph 7 or 8.
(iv) Optionee shall be deemed to be permanently disabled if
Optionee is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted or can be
expected to last for a continuous period of not less than twelve (12)
months.
6. Adjustment in Option Shares.
A. Should any change be made to the Common Stock issuable
under the Plan by reason of any stock split, stock dividend, combination of
shares, exchange of shares or other change affecting such Common Stock as a
class without the Corporation's receipt of consideration, then the number and
class of securities purchasable under this option and the Option Price payable
per share shall be appropriately adjusted to prevent the dilution or enlargement
of Optionee's rights hereunder; provided, however, the aggregate Option Price
shall remain the same.
B. Should this option be assumed in connection with a
Corporate Transaction under Paragraph 7, then the option shall, immediately
after such Corporate Transaction, be appropriately adjusted to apply and pertain
to the number and class of securities which would have been issued to Optionee
in the consummation of such Corporate Transaction had the option been exercised
immediately prior to such Corporate Transaction. Appropriate adjustments shall
also be made to the Option Price payable per share, provided the aggregate
Option Price payable hereunder shall remain the same.
7. Corporate Transaction. In the event of any of the following
stockholder-approved transactions to which the Corporation is a party (a
"Corporate Transaction"):
3.
<PAGE>
(i) a merger or consolidation in which the Corporation is
not the surviving entity, except for a transaction the principal
purpose of which is to change the State in which the Corporation is
incorporated,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in liquidation or
dissolution of the Corporation, or
(iii) any reverse merger in which the Corporation is the
surviving entity but in which securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to person or persons different
from those who held such securities immediately prior to such merger,
this option, to the extent outstanding at such time but not
otherwise fully exercisable, shall automatically accelerate so that such option
shall, immediately prior to the specified effective date for the Corporate
Transaction, become fully exercisable for all of the Option Shares at the time
subject to this option and may be exercised for all or any portion of such
shares as fully-vested shares of Common Stock. Immediately following the
consummation of the Corporate Transaction, this option shall terminate and cease
to be outstanding, except to the extent the option is expressly assumed by the
successor corporation or parent thereof.
8. Change in Control/Hostile Takeover.
(a) This option, to the extent outstanding at the time of a
Change in Control (as defined below) but not otherwise fully exercisable, shall
automatically accelerate so that this option shall, immediately prior to the
effective date of such Change in Control, become fully exercisable for all of
the Option Shares at the time subject to this option and may be exercised for
all or any portion of such shares as fully-vested shares of Common Stock. This
option as so accelerated shall remain exercisable until the earliest to occur of
(i) the specified Expiration Date of the option term, (ii) the sooner
termination of this option in accordance with Paragraph 5 or 7 or (iii) the
surrender of this option under Paragraph 8(b).
(b) Optionee shall have an unconditional right, exercisable
during the thirty (30)-day period immediately following the consummation of a
Hostile Take-Over, to surrender this option to the Corporation in exchange for a
cash distribution from the Corporation in an amount equal to the excess of (I)
the Take-Over Price of the Option Shares at the time subject to the surrendered
option (whether or not the option is otherwise at the time exercisable for such
shares) over (II) the aggregate Option Price payable for such shares.
To exercise this limited stock appreciation right, Optionee
must, during the applicable thirty (30)-day exercise period, provide the
Corporation with written notice of the option surrender
4.
<PAGE>
in which there is specified the number of Option Shares as to which the Option
is being surrendered. Such notice must be accompanied with the return of
Optionee's copy of this Agreement, together with any written amendments to such
Agreement. The cash distribution shall be paid to Optionee within five (5) days
following such delivery date, and neither the approval of the Plan Administrator
nor the consent of the Board shall be required in connection with such option
surrender and cash distribution. Upon receipt of such cash distribution, this
option shall be cancelled with respect to the shares subject to the surrendered
option (or the surrendered portion), and Optionee shall cease to have any
further right to acquire those Option Shares under this Agreement. In the event
this option is surrendered for only a portion of the Option Shares at the time
subject to such option, the Corporation shall issue a new stock option agreement
(substantially in the form of this Agreement) for the balance of the Option
Shares for which this option is not surrendered.
This limited stock appreciation right shall in all events
terminate upon the expiration or sooner termination of the option term and may
not be assigned or transferred by Optionee.
(c) Definitions: For purposes of this Agreement, the following
definitional provisions shall be in effect:
A Change in Control shall be deemed to occur in the event:
(i) any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Corporation)
directly or indirectly acquires beneficial ownership (within the
meaning of Rule 13d-3 of the Securities Exchange Act of 1934 (the "1934
Act")) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities
pursuant to a tender or exchange offer made directly to the
Corporation's stockholders, or
(ii) there is a change in the composition of the Board over a
period of thirty-six (36) consecutive months or less such that a
majority of the Board members ceases, by reason of one or more proxy
contests for the election of Board members, to be comprised of
individuals who either (A) have been Board members continuously since
the beginning of such period or (B) have been elected or nominated for
election as Board members during such period by at least a majority of
the Board members described in clause (A) who were still in office at
the time such election or nomination was approved by the Board.
A Hostile Take-Over shall be deemed to occur in the event (i)
any person or related group of persons (other than the Corporation or a
person that directly or indirectly controls, is controlled by, or is
under common control with, the Corporation) directly or indirectly
acquires beneficial ownership (within the meaning
5.
<PAGE>
of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer which the
Board does not recommend the Corporation's shareholders to accept.
The Take-Over Price per share shall be deemed to be equal to
the greater of (a) the Fair Market Value per share of Common Stock on
the option surrender date, as determined in accordance with the
valuation provisions of Paragraph 9(b), or (b) the highest reported
price per share of Common Stock paid by the tender offeror in effecting
the Hostile Take-Over.
9. Manner of Exercising Option.
(a) In order to exercise this option for all or any part of
the Option Shares for which the option is at the time exercisable, Optionee (or
in the case of exercise after Optionee's death, Optionee's executor,
administrator, heir or legatee, as the case may be) must take the following
actions:
(i) Provide the Secretary of the Corporation with written
notice of the option exercise (the "Exercise Notice"), in substantially
the form of Exhibit I attached hereto, in which there is specified the
number of Option Shares to be purchased under the exercised option.
(ii) Pay the aggregate Option Price for the purchased shares
in one of the following alternative forms:
1. full payment in cash or check made payable to the
Corporation's order; or
2. full payment in shares of Common Stock held by
Optionee for the requisite period necessary to avoid a charge to
the Corporation's reported earnings and valued at Fair Market
Value on the Exercise Date; or
3. full payment in a combination of shares of Common
Stock held for the requisite period necessary to avoid a charge to
the Corporation's earnings for financial reporting purposes and
valued at Fair Market Value on the Exercise Date and cash or check
made payable to the Corporation's order; or
4. full payment effected through a broker-dealer sale
and remittance procedure pursuant to which Optionee
6.
<PAGE>
shall provide irrevocable written instructions (A) to a
Corporation-designated brokerage firm to effect the immediate sale
of the purchased shares and remit to the Corporation, out of the
sale proceeds available on the settlement date, sufficient funds
to cover the aggregate Option Price payable for the purchased
shares and (B) to the Corporation to deliver the certificates for
the purchased shares directly to such brokerage firm in order to
complete the sale.
(iii) Furnish to the Corporation appropriate documentation
that the person or persons exercising the option (if other than
Optionee) have the right to exercise this option.
(b) For purposes of subparagraph 9(a) above and for all other
valuation purposes under this Agreement, the Fair Market Value per share of
Common Stock on any relevant date shall be the determined in accordance with the
following provisions:
(i) If the Common Stock is not at the time listed or
admitted to trading on any national stock exchange but is traded on the
Nasdaq National Market, the Fair Market Value shall be the closing
selling price per share on the date in question, as such price is
reported by the National Association of Securities Dealers on the
Nasdaq National Market or any successor system. If there is no reported
closing selling price for the Common Stock on the date in question,
then the closing selling price on the last preceding date for which
such quotation exists shall be determinative of Fair Market Value.
(ii) If the Common Stock is at the time listed or admitted to
trading on any national stock exchange, then the Fair Market Value
shall be the closing selling price per share on the date in question on
the exchange determined by the Plan Administrator to be the primary
market for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no
reported sale of Common Stock on such exchange on the date in question,
then the Fair Market Value shall be the closing selling price on the
exchange on the last preceding date for which such quotation exists.
(c) The Exercise Date shall be the date on which the Exercise
Notice is delivered to the Secretary of the Corporation. Except to the extent
the sale and remittance procedure specified above is utilized in connection with
the option exercise, payment of the Option Price for the purchased shares must
accompany such notice.
(d) As soon as practical after the Exercise Date, the
Corporation shall issue to or on behalf of Optionee (or other person or persons
exercising this option) a certificate or certificates representing the purchased
Option Shares.
7.
<PAGE>
(e) In no event may this option be exercised for any
fractional share.
10. Stockholder Rights. The holder of this option shall not
have any of the rights of a stockholder with respect to the Option Shares until
such individual shall have exercised this option and paid the Option Price for
the purchased shares.
11. No Impairment of Rights. This Agreement shall not in any
way affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise make changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets. Nor shall this Agreement in any way be construed or
interpreted so as to affect adversely or otherwise impair the right of the
Corporation or the stockholders to remove Optionee from the Board at any time in
accordance with the provisions of applicable law.
12. Compliance with Laws and Regulations. The exercise of this
option and the issuance of the Option Shares upon such exercise shall be subject
to compliance by the Corporation and Optionee with all applicable requirements
of law relating thereto and with all applicable regulations of any stock
exchange (or the Nasdaq National Market, if applicable) on which shares of the
Common Stock may be listed for trading at the time of such exercise and
issuance.
13. Successors and Assigns. Except to the extent otherwise
provided in Paragraph 3 or 7, the provisions of this Agreement shall inure to
the benefit of, and be binding upon, the successors, administrators, heirs,
legal representatives and assigns of Optionee and the successors and assigns of
the Corporation.
14. Discharge of Liability. The inability of the Corporation
to obtain approval from any regulatory body having authority deemed by the
Corporation to be necessary to the lawful issuance and sale of any Common Stock
pursuant to this option shall relieve the Corporation of any liability with
respect to the non-issuance or sale of the Common Stock as to which such
approval shall not have been obtained. However, the Corporation shall use its
best efforts to obtain all such applicable approvals.
15. Notices. Any notice required to be given or delivered to
the Corporation under the terms of this Agreement shall be in writing and
addressed to the Corporation in care of the Corporate Secretary at the Corporate
Offices at 1400 Marina Way South, Richmond, CA 94804. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated below Optionee's signature line on the Grant Notice. All
notices shall be deemed to have been given or delivered upon personal delivery
or upon deposit in the U.S. mail, postage prepaid and properly addressed to the
party to be notified.
16. Construction/Governing Law. This Agreement and the option
evidenced hereby are made and granted pursuant to the Plan and are in all
respects limited by and subject to
8.
<PAGE>
the express terms and provisions of the Plan, including the automatic option
grant provisions of Article Three of the Plan. The interpretation, performance,
and enforcement of this Agreement shall be governed by the laws of the State of
California without resort to that State's conflict-of-laws rules.
9.
<PAGE>
EXHIBIT I
NOTICE OF EXERCISE OF
NONSTATUTORY STOCK OPTION
I hereby notify QRS Corporation (the "Corporation") that I
elect to purchase shares of Common Stock of the Corporation (the "Purchased
Shares") pursuant to that certain option (the "Option") granted to me on
___________, 199__ to purchase up to __________ shares of the Corporation's
Common Stock at an option price of $ per share (the "Exercise Price").
Concurrently with the delivery of this Exercise Notice to the
Secretary of the Corporation, I shall hereby pay to the Corporation the Exercise
Price for the Purchased Shares in accordance with the provisions of my agreement
with the Corporation evidencing the Option and shall deliver whatever additional
documents may be required by such agreement as a condition for exercise.
Alternatively, I may utilize the special broker/dealer sale and remittance
procedure specified in my agreement to effect payment of the Exercise Price for
the Purchased Shares.
- ------------------------- -------------------------------------
Date Optionee
Address:
-----------------------------
-------------------------------------
Print name in exact manner
it is to appear on the
stock certificate:
-------------------------------------
Address to which certificate
is to be sent, if different
from address above:
-------------------------------------
Social Security Number:
-------------------------------------
