<PAGE>
As filed with the Securities and Exchange Commission on ________, 1999
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 issuer 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
1993 STOCK OPTION/STOCK ISSUANCE PLAN
CERTAIN WARRANT ISSUED TO MR. BROOKS
(Full title of the plans)
------------
JOHN S. SIMON
CHIEF EXECUTIVE OFFICER AND DIRECTORS
QRS CORPORATION
1400 MARINA WAY SOUTH
RICHMOND, CALIFORNIA 94804
(Name and address of agent for service)
(510) 215-5000
(Telephone number, including area code, of agent for service)
------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Securities to be Registered Amount to be Offering Aggregate Amount of
Registered(1) Price Offering Price Registration Fee
per Share
========================================== ===================== ============== ================== =======================
<S> <C> <C> <C> <C>
1993 Stock Option/Stock Issuance Plan 400,000 shares $66.06 $26,424,000 $7,345.87(2)
- --------------------------------------
Common Stock, $0.001 par value
Warrant Issued to Mr. Brooks 10,000 shares $2.50 $25,000 $6.95(3)
- --------------------------------------
Common Stock, $0.001 par value
Aggregate Registration Fee $7,352.82
==============================================================================================================================
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Registrant's Common Stock which become issuable under the Registrant's 1993
Stock Option/Stock Issuance Plan and the Warrant issued to Mr. Brooks by
reason of any stock dividend, stock split, recapitalization or other similar
transaction effected without the Registrant's receipt of consideration which
results in an increase in the number of the Registrant's outstanding shares
of Common Stock.
(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 May 13,
1999 as reported by the Nasdaq National Market.
(3) Calculated solely for purposes of this offering under Rule 457(h) of the
Securities Act of 1933, as amended, on the basis of the exercise price of
the warrant issued to the listed individual.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF CERTAIN 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, 1998 filed with the SEC on March 24,
1999.
(b) The Registrant's Registration Statement 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 there is described the terms, rights and provisions
applicable to the Registrant's outstanding Common Stock.
All reports and definitive proxy or information statements
filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934 (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 CAPITAL STOCK
Inapplicable.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Inapplicable.
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 for (i) any breach of their duty of loyalty to the corporation or its
stockholders, (ii) any acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) the unlawful payment
of dividends or any unlawful stock repurchases or redemptions, as provided in
Section 174 of the Delaware General Corporation Law, or (iv) 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 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.
II-1
<PAGE>
The Registrant has entered into agreements to indemnify its
directors and executive officers, in addition to the indemnification to which
they are entitled under 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.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED
Inapplicable.
Item 8. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER EXHIBIT
-------------- -------
<C> <S>
4 Instruments Defining Rights of Stockholders. Reference is made
to Registrant's Registration Statement on Form 8-A, and the
exhibits thereto, which are incorporated herein by reference
pursuant to Item 3(b) of this Registration Statement.
5 Opinion 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-4 of this
Registration Statement.
99.1 QRS Corporation 1993 Stock Option/Stock Issuance Plan (as
amended and restated through February 15, 1999).
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 (Change in
Control).
99.5* Form of Addendum to Stock Option Agreement (Financial
Assistance).
99.6* Form of Addendum to Stock Option Agreement (Limited Stock
Appreciation Right).
99.7* Form of Addendum to Stock Option Agreement (Special Tax
Elections).
99.8* Form of Notice of Grant of Stock Option Agreement
(Non-Employee Director - Initial Grant).
99.9* Form of Notice of Grant of Stock Option Agreement
(Non-Employee Director - Subsequent Grant).
99.10** Form of Stock Option Agreement (Non-Employee Director).
99.11* Form of Stock Issuance Agreement.
99.12* Form of Addendum to Stock Issuance Agreement.
99.13 Warrant issued to Mr. Brooks for 10,000 shares.
</TABLE>
* Exhibits 99.4 through 99.9, 99.11 and 99.12 are incorporated herein by
reference to Exhibits 99.3 through 99.9, 99.11 and 99.12 respectively, of
Registrant's Registration Statement No. 33-74734 on Form S-8 which was filed
with the SEC on February 2, 1994.
** Exhibits 99.2, 99.3 and 99.10 are incorporated herein by reference to
Exhibits 99.6, 99.7 and 99.14 respectively, of Registrant's Registration
Statement No. 333-66837 on Form S-8 which was filed with the SEC on November
5, 1998.
Item 9. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes: (1) to
file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement; (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933, as
amended (the "1933 Act"), (ii) to reflect in the prospectus
II-2
<PAGE>
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 the
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 upon the termination of the 1993 Stock Option/Stock
Issuance Plan or the Warrant issued to Mr. Brooks.
B. 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.
C. 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 above, or otherwise, the Registrant has been advised
that in the opinion of the SEC 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, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
II-3
<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 this 14th day of May, 1999.
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, the lawful attorneys and agents, with full power and
authority to do any and all acts and things and to execute any and all
instruments which said attorney and agent determines 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 regulations 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
thereof, and each of the undersigned hereby ratifies and confirms all that
said attorneys and agents, or any 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 May 14, 1999
- --------------------------------- (Principal Executive Officer)
John S. Simon
II-4
<PAGE>
<CAPTION>
SIGNATURES TITLE DATE
- ---------- ----- ----
<S> <C> <C>
/s/ Peter Papano Vice President, Finance, Chief Financial, May 14, 1999
- --------------------------------- Officer and Secretary (Principal Financial
Peter Papano and Accounting Officer)
/s/ Peter R. Johnson Chairman of the Board of Directors May 14, 1999
- ---------------------------------
Peter R. Johnson
/s/ Tania Amochaev Director May 14, 1999
- ---------------------------------
Tania Amochaev
/s/ Steven D. Brooks Director May 14, 1999
- ---------------------------------
Steven D. Brooks
/s/ John P. Dougall Director May 14, 1999
- ---------------------------------
John P. Dougall
/s/ H. Lynn Hazlett Director May 14, 1999
- ---------------------------------
H. Lynn Hazlett
/s/ Philip Schlein Director May 14, 1999
- ---------------------------------
Philip Schlein
/s/ Garth Saloner Director May 14, 1999
- ---------------------------------
Garth Saloner
/s/ Garen K. Staglin Director May 14, 1999
- ---------------------------------
Garen K. Staglin
</TABLE>
II-5
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
QRS CORPORATION
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------- -------
<C> <S>
4 Instruments Defining Rights of Stockholders. Reference is made
to Registrant's Registration Statement No. 000-21958 on Form
8-A, and the exhibits thereto, which are incorporated herein
by reference pursuant to Item 3(b) of this Registration
Statement.
5 Opinion 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 1993 Stock Option/Stock Issuance Plan (as
amended and restated through February 15, 1999).
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 (Change in Control).
99.5* Form of Addendum to Stock Option Agreement (Financial
Assistance).
99.6* Form of Addendum to Stock Option Agreement (Limited Stock
Appreciation Right).
99.7* Form of Addendum to Stock Option Agreement (Special Tax
Elections).
99.8* Form of Notice of Grant of Stock Option Agreement
(Non-Employee Director - Initial Grant).
99.9* Form of Notice of Grant of Stock Option Agreement
(Non-Employee Director - Subsequent Grant).
99.10** Form of Stock Option Agreement (Non-Employee Director).
99.11* Form of Stock Issuance Agreement.
99.12* Form of Addendum to Stock Issuance Agreement.
99.13 Warrant issued to Mr. Brooks for 10,000 shares.
</TABLE>
* Exhibits 99.4 through 99.9, 99.11 and 99.12 are incorporated herein by
reference to Exhibits 99.4 through 99.9, 99.11 and 99.12 respectively, of
Registrant's Registration Statement No. 33-74734 on Form S-8 which was filed
with the SEC on February 2, 1994.
** Exhibits 99.2, 99.3 and 99.10 are incorporated herein by reference to
Exhibits 99.6, 99.7 and 99.14 respectively, of Registrant's Registration
Statement No. 333-66837 on Form S-8 which was filed with the SEC on November
5, 1998.
<PAGE>
EXHIBIT 5
OPINION OF BROBECK, PHLEGER & HARRISON LLP
May 14, 1999
QRS Corporation
1400 Marina Way South
Richmond, CA 94804
Re: QRS Corporation Registration Statement on Form S-8
for an aggregate of 410,000 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 an aggregate of 410,000 shares of common stock (the "Common Stock") and
related stock options under (i) the Company's 1993 Stock Option/Stock
Issuance Plan (the "Incentive Plan") and (ii) the warrant issued to Mr.
Brooks (the "Warrant").
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 and amendment of the Incentive Plan and the Warrant. Based on
such review, we are of the opinion that if, as and when the shares of Common
Stock are issued and sold (and the consideration therefor received) pursuant
to the provisions of the option agreements or direct stock issuances duly
authorized under the Incentive Plan or pursuant to the provisions of the
Warrant and in accordance with the Registration Statement, such shares will
be duly authorized, legally issued, fully paid and non-assessable.
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 Incentive Plan, the Warrant or the shares of
Common Stock issuable under such Plan or Warrant.
Very truly yours,
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 January 28, 1999,
appearing in the Annual Report on Form 10-K of QRS Corporation for the year
ended December 31, 1998.
DELOITTE & TOUCHE LLP
San Jose, California
May 14, 1999
<PAGE>
EXHIBIT 99.1
QRS CORPORATION
1993 STOCK OPTION/STOCK ISSUANCE PLAN
(AS AMENDED AND RESTATED THROUGH FEBRUARY 15, 1999)
<PAGE>
QRS CORPORATION
1993 STOCK OPTION/STOCK ISSUANCE PLAN
(AS AMENDED AND RESTATED FEBRUARY 15, 1999)
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.
2
<PAGE>
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 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. 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.
3
<PAGE>
PLAN ADMINISTRATOR: the Committee in its capacity as the
administrator of the Plan.
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.
4
<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 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.
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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 2,600,000 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
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additional 500,000 shares authorized by the Board on February 16, 1996 and
approved by the stockholders at the 1996 Annual Meeting, (v) an additional
increase of another 350,000 shares authorized by the Board on February 16,
1998 and approved by the stockholders at the 1998 Annual Meeting and (vi) an
additional increase of 400,000 shares authorized by the Board on February 15,
1999, subject to stockholder approval at the 1999 Annual Meeting.
B. 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.
C. 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 IV 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.
D. 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.
E. 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
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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 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.
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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 but in no event shall be less than one hundred percent (100%)
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 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
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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 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
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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 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
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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.
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
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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.
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
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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.
The Plan Administrator may also structure one or more option grants under
this Article Two so that those options will automatically accelerate at the
time of a Corporate Transaction, whether or not those options are to be
assumed or replaced by successor corporation.
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 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. 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 IV, 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
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(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 IV 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.
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. At
the time such limited stock appreciation right is granted, the Plan
Administrator shall pre-approve the subsequent exercise of that right in
accordance with the terms of this Paragraph D. Accordingly, no further
approval of the Plan Administrator or the Board shall be required at the time
of the actual 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 IV shall NOT be
available for subsequent option grant under the Plan.
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ARTICLE THREE
AUTOMATIC OPTION GRANT PROGRAM
The following provisions set forth the terms and conditions of the
Automatic Option Grant Program as amended by the Board on February 15, 1999,
subject to stockholder approval at the 1999 Annual Meeting. Stockholder
approval of the February 15, 1999 restatement shall also constitute
pre-approval of each option grant made under this amended Automatic Option
Grant Program on or after the date of the 1999 Annual Stockholders Meeting
and the subsequent exercise of that option in accordance with the terms of
such program as set forth below.
I. ELIGIBILITY
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 after the date of the 1999 Annual Stockholders Meeting, 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,
beginning with the 1999 Annual Stockholders Meeting. 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.
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) On the date of the 1999 Annual Stockholders
Meeting, each individual who is to continue to serve as a non-employee
Board member 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 such individual has served
as a non-employee Board member for at least six (6) months prior to
the date of such meeting.
(ii) Each Eligible Director who first becomes a non-
employee Board member after the date of the 1999 Annual Stockholders
Meeting, 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 10,000 shares of Common Stock upon the terms and
conditions of this Article Three.
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(iii) On the first trading day in January each year,
beginning with calendar year 2000, each individual who is at the time
serving as a non-employee Board member will automatically be granted an
option to purchase 10,000 shares of Common Stock, and each individual
who is also at the time serving as a Chairperson of any Board committee
will automatically be granted a second option for an additional 10,000
shares, provided in each instance that such individual has served as a
non-employee Board member for at least six (6) months. There shall be no
limit on the number of such 10,000-share option grants any one
non-employee Board member or Chairperson 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.
B. EXERCISE PRICE. The exercise price per share of Common Stock
subject to each automatic option grant made under this Article Three 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 certificates for the
purchased shares directly to such brokerage firm in order to complete
the sale transaction.
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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) successive equal 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 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.
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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 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
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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 1999
Restatement at the 1999 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.
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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. All Newly Issued Shares shall be issued for consideration
with a value less not less than one-hundred percent (100%) of the Fair Market
Value of such shares at the time of issuance.
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, provided such consideration is in an
amount not less 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.
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B. VESTING PROVISIONS.
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
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<PAGE>
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.
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
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RESTRICTIONS AND THE TERMS AND CONDITIONS OF SUCH CANCELLATION OR
REPURCHASE ARE SET FORTH IN A STOCK ISSUANCE AGREEMENT BETWEEN THE
CORPORATION AND THE REGISTERED HOLDER (OR HIS/HER PREDECESSOR IN
INTEREST) DATED _____________________, _____, 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.
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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
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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 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 withholding
taxes to which such holders may become subject in connection with the
exercise of their options or the vesting of their shares (the "Withholding
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 Withholding 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 Withholding Taxes) with an aggregate Fair
Market Value equal to the percentage of the Withholding
Taxes incurred in connection with such option exercise or
share vesting (not to exceed one hundred percent (100%))
designated by the holder.
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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. 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.
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E. In February 1999, the Board further amended and restated the
Plan (the "February 1999 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 400,000 shares to 2,600,000 shares, (ii)
increase the number of shares of Common Stock subject to both the initial and
annual option grants made to non-employee Board members under the Automatic
Option Grant Program from 5,000 shares to 10,000 shares, (iii) implement new
automatic option grant for an additional 10,000 shares to be made each year
to each non-employee Board member serving as the Chairperson of any Board
committee and (iv) change the date on which the annual automatic option
grants are to be made to the non-employee Board members and Chairpersons from
the date of the Annual Stockholders Meeting to the first trading day in
January each year, beginning with calendar year 2000. The February 1999
Restatement is subject to stockholder approval at the 1999 Annual Meeting,
and no option grants made on the basis of the February 1999 Restatement shall
become exercisable in whole or in part, and no shares of Common Stock shall
be issued on the basis of such restatement, unless and until such stockholder
approval is obtained. All option grants and stock issuances made prior to
the February 1999 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 1999 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.
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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 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.
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EXHIBIT A
NON-STATUTORY STOCK OPTION AGREEMENT
AUTOMATIC OPTION GRANT PROGRAM
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EXHIBIT 99.15
WARRANT ISSUED TO MR. BROOKS
<PAGE>
AMENDED AND RESTATED WARRANT
FOR THE PURCHASE OF COMMON STOCK
NO PAR VALUE
QRS CORPORATION
VOID AFTER SEPTEMBER 30, 1999
THIS CERTIFIES THAT, for value received, STEVEN D. BROOKS or his assigns
(the "Holder") is entitled, in accordance with the terms and conditions
hereinafter set forth, to purchase, at the price of Two Dollars and Fifty
Cents ($2.50) per share (the "Exercise Price"), Ten Thousand (10,000) shares
of common stock, no par value (the "Common Stock"), of QRS CORPORATION, a
Delaware corporation (hereafter called the "Company"), and to receive a
certificate or certificates for the shares of Common Stock so purchased, upon
presentation and surrender of this Warrant, at the office of the Company, at
1400 Marina Way South, Richmond, California 94804, together with the purchase
price of the shares so purchased. The number, character and Exercise Price of
such shares of Common Stock are subject to adjustment as provided below.
1. RESERVATION OF SHARES. The Company shall reserve and keep available
out of its authorized but unissued Common Stock such number of shares of Common
Stock as shall from time to time be sufficient for purchase pursuant to this
Warrant. All shares which may be issued upon the exercise of this Warrant will,
upon issuance, be duly authorized, validly issued, fully paid and nonassessable
and be free from all taxes, liens and charges in respect of the issuance
thereof.
2. TERM. The Warrant shall be exercisable at the option of the Holder in
whole at any time or in part from time to time, on or before September 30, 1999,
and shall be void thereafter. In case of the purchase of less than all shares
purchasable under this Warrant, the Company shall cancel this Warrant upon
surrender hereof and provided the unexercised portion has not expired as
provided above, shall execute and deliver a new Warrant of like tenor and date
for the balance of the shares purchasable hereunder.
3. EXERCISE. This Warrant may be exercised by Holder during the term
hereof by the surrender of this Warrant and
THIS WARRANT HAS BEEN AMENDED AND RESTATED THIS 14TH DAY OF MAY 1999 TO
REFLECT FOUR-FOR-ONE SPLIT OF THE COMMON STOCK AND THE EXTENSION OF THE
WARRANT EXPIRATION DATE AUTHORIZED AND APPROVED BY QRS CORPORATION ON
DECEMBER 13, 1997.
<PAGE>
delivery of the Notice of Exercise attached hereto specifying the number of
shares to be purchased, the total purchase price and the amount of such
purchase price, if any, to be paid by Holder in shares of the Company's
Common Stock held for the requisite period necessary to avoid a charge to the
Company's earnings for financial reporting purposes, accompanied by a check
to the order of the Company in payment of any cash portion of such price. The
"fair market value" of any shares of the Company's Common Stock delivered in
payment of the purchase price shall be determined: (i) if the shares are then
publicly traded (as defined below), as of the day of the delivery to the
Company of the Notice of Exercise (or, if such day is not a trading day in
the U.S. securities markets, on the nearest preceding trading day), on the
basis of the closing price therefor as reported with respect to the market
(or the composite of the markets, if more than one) in which such shares are
then traded, or if no such closing prices are reported, the lowest
independent offer quotation reported therefor in Level 2 of NASDAQ, or if no
such quotations are reported on the basis of the most nearly comparable
valuation method acceptable to the Company and the Holder, and (ii) if the
shares are not then publicly traded, as of the day of the delivery to the
Company of the Notice of Exercise, on the basis of the fair value thereof at
the time of such issue, as determined in good faith by the Company's Board of
Directors. For purposes of this paragraph, "publicly traded" shares are those
which are listed or admitted to unlisted trading privileges on a national
securities exchange or as to which sales or bid and offer quotations are
reported in the automated quotation system ("NASDAQ") operated by the
National Association of Securities Dealers, Inc. ("NASD").
4. NO VOTING RIGHTS. This Warrant shall not entitle the Holder to
any voting rights or other rights whatsoever except the rights herein
expressed, and no dividend or interest shall be payable or accrue in respect
of this Warrant or the interest represented hereby or the shares purchasable
hereunder except to the extent that this Warrant shall be exercised and as
provided in Section 7 hereof.
5. SECURITIES LAW COMPLIANCE. The shares to be issued upon the
exercise of this Warrant will be registered on a Form S-8 Registration
Statement under the Securities Act of 1933, as amended (the "Act").
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6. TRANSFERABILITY. This Warrant shall not be transferable or
assignable by the Holder except by will or the laws of descent and distribution
following the Holder's death. During the Holder's lifetime, this Warrant may
only be exercised by the Holder.
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7. ADJUSTMENTS. The Exercise Price and the number of shares
purchasable hereunder are subject to adjustment from time to time as follows:
(a) ADJUSTMENTS TO EXERCISE PRICE FOR CERTAIN DILUTING ISSUES.
(i) SPECIAL DEFINITIONS.
For purposes of this Warrant, the following definitions shall
apply:
(1) "Shares" and "Common Stock" shall mean the fully paid
and non-assessable shares of the Common Stock of the Company and any other
class of Common Stock hereafter authorized by the Company.
(2) "Options" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire any shares of any class of
Common Stock or Convertible Securities.
(3) "Original Issue Date" shall mean the date hereof.
(4) "Convertible Securities" shall mean any evidences of
indebtedness, shares or other securities directly or indirectly convertible
into or exchangeable for any shares of any class of Common Stock.
(5) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued (or, pursuant to Section 7(a)(iii) hereof,
deemed to be issued) by the Company after the Original Issue Date (for which
adjustment of the Exercise Price is not otherwise made pursuant to this
Section 7) to persons other than (i) Holder, affiliates of Holder or persons
controlled by, under common control with or controlling Holder or (ii)
officers, directors or employees of, or consultants to, the Company pursuant
to stock option or stock purchase plans or agreements on terms approved by
the Board of Directors, but not exceeding 117,129 shares of Common Stock (net
of any repurchases of such shares or cancellations or expirations of
options), subject to adjustment for all subdivisions and combinations.
(ii) NO ADJUSTMENT OF EXERCISE PRICE. Notwithstanding any
provision herein to the contrary, no adjustment in the Exercise Price shall be
made in respect of the issuance of Additional Shares of Common Stock unless the
consideration per share (determined pursuant to Section 7(a)(v) hereof) for an
Additional Share of Common Stock issued or deemed issued by the Company is less
than the Exercise Price in effect on the date of, and immediately prior to, such
issue.
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(iii) DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON STOCK. In
the event the Company, at any time after the Original Issue Date, shall issue
any Options or Convertible Securities or shall fix a record date for the
determination of holders of any class of securities then entitled to receive
any such Options or Convertible Securities, then the maximum number of shares
(as set forth in the instrument relating thereto without regard to any
provisions contained therein designed to protect against dilution) of Common
Stock issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exercise of
such Convertible Securities, shall be deemed to be Additional Shares of
Common Stock issued as of the time of such issue or, in case such a record
date shall have been fixed, as of the close of business on such record date,
provided that in any such case in which Additional Shares of Common Stock are
deemed issued:
(1) no further adjustments in the Exercise Price shall be
made upon the subsequent issue of Convertible Securities or shares of Common
Stock upon the exercise of such Options or conversion or exchange of such
Convertible Securities;
(2) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any increase or
decrease in the consideration payable to the Company, or decrease or increase
in the number of shares of Common Stock issuable upon the exercise of
conversion thereof, the Exercise Price computed on the original issue thereof
(or upon the occurrence of the record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon any such increase or
decrease becoming effective, be recomputed to reflect such increase or
decrease insofar as it affects such Options or rights of conversion or
exchange under such Convertible Securities (provided, however, that no such
adjustment of the Exercise Price shall affect Common Stock previously issued
upon exercise of this Warrant);
(3) upon the expiration of any such Options or any rights
of conversion or exchange under such Convertible Securities which shall not
have been exercised, the Exercise Price computed on the original issue
thereof (or upon the occurrence of the record date with respect thereto), and
any subsequent adjustments based thereon, shall, upon any such expiration, be
recomputed as if:
(A) in the case of Convertible Securities or Options
for Common Stock the only Additional Shares of Common Stock issued were the
shares of Common Stock, if any, actually issued upon the exercise of such
Options or the conversion or exchange of such Convertible Securities and the
consideration received therefor was the consideration actually received by
the
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Company for the issue of all such Options, whether or not exercised, plus the
consideration actually received by the Company upon such exercise, or for the
issue of all such Convertible Securities which were actually converted or
exchanged, plus the additional consideration, if any, actually received by
the Company upon such conversion or exchange, and
(B) in the case of Options for convertible Securities
only the Convertible Securities, if any, actually issued upon the exercise
thereof were issued at the time of issue of such Options, and the
consideration received by the Corporation for the Additional Shares of Common
Stock deemed to have been then issued was the consideration actually received
by the Corporation for the issue of all such Options, whether or not
exercised, plus the consideration deemed to have been received by the
Corporation (determined pursuant to Section 7) upon the issue of the
Convertible Securities with respect to which such Options were actually
exercised;
(4) no readjustment pursuant to clause (2) or (3) above
shall have the effect of increasing the Exercise Price to an amount which
exceeds the lower of (a) the Exercise Price on the original adjustment date,
or (b) the Exercise Price that would have resulted from any issuance of
Additional Shares of Common Stock between the original adjustment date and
such readjustment date.
(5) in the case of any Options which expire by their
terms not more than 30 days after the date of issue thereof, no adjustment of
the Exercise Price shall be made until the expiration or exercise of all such
Options, whereupon such adjustment shall be made in the same manner provided
in clause (3) above.
(iv) ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE OF
ADDITIONAL SHARES OF COMMON STOCK. In the event the Company, at any time
after the Original Issue Date, shall issue Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be issued pursuant to
Section 6(a)(iii)) without consideration or for a consideration per share
less than the Exercise Price in effect immediately prior to such issue, then
and in such event, the Exercise Price shall be reduced, concurrently with
such issue, to a price (calculated to the nearest cent) determined by
multiplying such Exercise Price by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
issue plus the number of shares of Common Stock which the aggregate
consideration received by the Company for the total number of Additional
Shares of Common Stock so issued would purchase at such Exercise Price in
effect immediately prior to such issuance, and the denominator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
issue plus the number of such Additional
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Shares of Common Stock so issued. For purposes of the above calculation, the
number of shares of Common Stock outstanding immediately prior to such issue
shall be calculated on a fully diluted basis, as if this Warrant and all
Convertible Securities had been fully converted into shares of Common Stock
immediately prior to such issuance and any outstanding Options had been fully
exercised immediately prior to such issuance (and the resulting securities
fully converted into Common Stock, if so convertible) as of such date, but
not including in such calculation any additional shares of Common Stock
issuable with respect to this Warrant or such Convertible Securities or
Options solely as a result of the adjustment of the respective Exercise
Prices (or other conversion ratios) resulting from the issuance of Additional
Shares of Common Stock causing such adjustment.
(v) DETERMINATION OF CONSIDERATION. For purposes of this
Section 6(a), the consideration received by the corporation for the issue of
any Additional Shares of Common Stock shall be computed as follows:
(1) CASH AND PROPERTY. Such consideration shall:
(A) insofar as it consists of cash, be computed at
the aggregate amount of cash received by the Corporation excluding amounts
paid or payable for accrued interest or accrued dividends;
(B) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of such issue, as
determined in good faith by the Board; and
(C) in the event Additional Shares of Common Stock
are issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (A) and (B) above,
as determined in good faith by the Board.
(2) OPTIONS AND CONVERTIBLE SECURITIES. The consideration
per share received by the Corporation for Additional Shares of Common Stock
deemed to have been issued pursuant to Section 7(a)(iii), relating to Options
and Convertible Securities shall be determined by dividing:
(A) the total amount, if any, received or receivable
by the Corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without
regard to any provision contained therein designed to protect against
dilution) payable to the Corporation
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upon the exercise of such Options or the conversion or exchange of such
Convertible Securities, or in the case of Options for Convertible Securities,
the exercise of such Options for Convertible Securities and the conversion or
exchange of such Convertible Securities by
(B) the maximum number of shares of Common Stock (as
set forth in the instruments relating thereto, without regard to any
provision contained therein designed to protect against the dilution)
issuable upon the exercise of such Options or conversion or exchange of such
Convertible Securities.
(b) MERGER, SALE OF ASSETS, ETC. If at any time while this Warrant
is outstanding and unexpired there shall be (i) a reorganization (other than
a combination, reclassification, exchange or subdivision of shares otherwise
provided for herein), (ii) a merger or consolidation of the Company with or
into another corporation in which the Company is not the surviving entity, or
a reverse triangular merger in which the Company is the surviving entity but
the shares of the Company's capital stock outstanding immediately prior to
the merger are converted by virtue of the merger into other property, whether
in the form of securities, cash, or otherwise, (iii) a sale or transfer of
the Company's properties or assets as, or substantially as, an entirety to
any other person, or (iv) a sale or transfer of the properties or assets of
any division of the Company as, or substantially as, an operating entirety to
any other person, THEN, as part of such reorganization, merger,
consolidation, sale or transfer, lawful provision shall be made so that the
Holder of this Warrant shall thereafter be entitled to receive upon exercise
of this Warrant, during the period specified herein and upon payment of the
Exercise Price then in effect, the number of shares of stock or other
securities of the successor corporation or property (including cash)
resulting from such reorganization, merger, consolidation, sale or transfer
that a holder of the shares deliverable upon exercise of this Warrant would
have been entitled to receive in such reorganization, consolidation, merger,
sale or transfer of this Warrant had been exercised immediately before prior
thereto, all subject to further adjustments as provided in this Section 6.
The foregoing provisions shall similarly apply to successive reorganizations,
consolidations, mergers, sales and transfers and to the stock or securities
of any other corporation that are at the time receivable upon the exercise of
this Warrant. If the per share consideration payable to Holder in connection
with any such transaction is in a form other than cash or marketable
securities, then the value of such consideration shall be determined in good
faith by the Company's Board of Directors. In all events, appropriate
adjustment (as determined in good faith by the Company's Board of Directors)
shall be made in the application of the provisions of this Warrant with
respect to the rights and interests of the Holder after the transaction, to
the end that the
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provisions of this Warrant shall be applicable after the event, as near as
reasonably may be, in relation to any shares or other property deliverable
after that event upon the exercise of this Warrant.
(c) RECLASSIFICATION. ETC. If the Company, at any time while this
Warrant remains outstanding and unexpired, by reclassification of securities
or otherwise, shall change any of the securities as to which purchase rights
under this Warrant exist into the same or a different number of securities of
any other class or classes, this Warrant shall thereafter represent the right
to acquire such number and kind of securities as would have been issuable as
the result of such change with respect to the securities that were subject to
such purchase rights immediately prior to such reclassification or other
change and the Exercise Price therefor shall be appropriately adjusted, all
subject to further adjustment as provided in this Section 7.
(d) SPLIT, SUBDIVISION OR COMBINATION OF SHARES. If the Company, at
any time while this Warrant remains outstanding and unexpired, shall split,
subdivide or combine the securities as to which purchase rights under this
Warrant exist into a different number of securities of the same class, the
Exercise Price for such securities shall be proportionately decreased in the
case of a split or subdivision or proportionately increased in the case of a
combination.
(e) DIVIDENDS IN STOCK OR OTHER SECURITIES OR PROPERTY. If while
this Warrant remains outstanding and unexpired, the holders of the securities
as to which purchase rights under this Warrant exist at the time shall have
received, or, on or after the record date fixed for determination of eligible
shareholders, shall have become entitled to receive, without payment
therefor, other additional stock or other securities or property (other than
cash) of the Company by way of dividend, then and in each such case, the
Warrant shall represent the right to acquire, in addition to the number of
shares of the security receivable upon exercise of this Warrant, and without
payment of any additional consideration therefor, the amount of such other or
additional stock or other securities or property (other than cash) of the
Company that such holder would hold on the date of such exercise of this
Warrant on the date hereof and had thereafter, during the period from the
date hereof to and including the date of such exercise, retained such shares
and/or all other additional stock available by it as aforesaid during such
period, giving effect to all adjustments called for during such period by the
provisions of this Section 7.
(f) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment pursuant to this Section 7, the Company at its
expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish to the
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Holder a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is
based. The Company shall, upon the written request of the Holder and at the
expense of the Holder, furnish or cause to be furnished to it a like
certificate setting forth (i) such adjustments and readjustments, (ii) the
number of shares of Common Stock then deliverable upon exercise of this
Warrant, and (iii) the amount, if any, of other property which at the time
would be received upon exercise hereof.
(g) FRACTIONAL SHARES. No fractional shares of Common Stock shall
be issuable upon the exercise of this Warrant. If the Holder exercising this
Warrant in full would otherwise be entitled to a fractional share of Common
Stock, in lieu of any such fractional share, the Company shall make a cash
payment equal to the Exercise Price multiplied by such fraction.
(h) LIMITATION OF ADJUSTMENTS. Notwithstanding the foregoing, the
Company shall not be required to give effect to any adjustments under this
Section unless and until the net effect of one or more adjustments not
theretofore given effect, determined as provided in this Section, shall
result in a change of the Exercise Price of 5% or more. When the cumulative
effect of more than one adjustment so determined but not theretofore given
effect shall be to change the Exercise Price by at least 5%, such adjustments
shall thereupon be made.
(i) NO IMPAIRMENT. The Company will not, by amendment of its
Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issuance or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed hereunder by the Company but
will at all times in good faith assist in the carrying out of all the
provisions of this Section 6 and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Holder.
9. GENERAL.
(a) INITIAL PUBLIC OFFERING. In connection with any underwritten
public offering by the Company of its equity securities pursuant to an
effective registration statement filed under the Securities Act of 1933,
including the Company's initial public offering, the Holder shall not sell,
make any short sale of, loan, hypothecate, pledge, grant any option for the
purchase of, or otherwise dispose or transfer for value or otherwise agree to
engage in any of the foregoing transactions with respect to, any shares
purchased under this Warrant without the prior written consent of the Company
or its underwriters. Such limitations shall be in effect for such period of
time from and after the effective
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date of the final prospectus for such offering as may be requested by the
Company or such underwriters; PROVIDED, however, that in no event shall such
period exceed one hundred-eighty (180) days. The limitations of this
paragraph 12 shall in all events terminate two (2) years after the effective
date of the Company's initial public offering. The Holder of this Warrant
shall be subject to the market stand-off provisions of this paragraph 9
PROVIDED AND ONLY IF the officers and directors of the Company are also
subject to similar arrangements. In order to enforce the limitations of this
paragraph 12, the Company may impose stop-transfer instructions with respect
to the shares purchased under this Warrant until the end of the applicable
stand-off period.
(b) BINDING EFFECT. This Warrant shall inure to the benefit of and
be binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
(c) INTEGRATED AGREEMENT. This Warrant constitutes the entire
understanding and agreement of the Holder and the Company with respect to the
subject matter contained herein, and there are no agreements, understandings,
restrictions, representations, or warranties among the Holder and the Company
other than those as set forth or provided for herein. To the extent
contemplated herein, the provisions of this Warrant shall survive any
exercise of the Warrant and shall remain in full force and effect.
(d) APPLICABLE LAW. This Warrant shall be governed by the laws of
the State of California as such laws are applied to agreements between
California residents entered into and to be performed entirely within the
State of California.
(e) NOTICES. All notices required pursuant to this Agreement shall
be given in writing and shall be deemed effective upon personal delivery or
upon deposit in the United States mail, first-class and registered or
certified, postage prepaid and addressed to the party entitled to such notice
at the following address:
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If addressed to the Company,
1400 Marina Way South
Richmond, CA 94804
If addressed to the Holder,
3049 South Perry Park Road
Sedalia, Colorado 80135
Either party may change the address applicable to it by ten (10) days advance
written notice to the other party.
IN WITNESS WHEREOF, the Company has caused this amended and
restated Warrant to be executed by its proper officer thereunto duly
authorized and the Company's corporate seal to be hereunto affixed this 14th
day of May, 1999.
QRS CORPORATION
By /s/ Peter R. Johnson
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Title: Chairman
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