-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IVKkXZsdkYEyleLNzwIwLqHDMn8XosTBq88M2cyYelnvSrMA7gcwflP4jRMyeBYL uzVo+j1fDrrGQFxjweDmzw== 0000950149-96-000555.txt : 19960515 0000950149-96-000555.hdr.sgml : 19960515 ACCESSION NUMBER: 0000950149-96-000555 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOFTWARE PROFESSIONALS INC CENTRAL INDEX KEY: 0000919175 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 943008888 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-23446 FILM NUMBER: 96562325 BUSINESS ADDRESS: STREET 1: 999 BAKER WAY STE 390 CITY: SAN MATCO STATE: CA ZIP: 94404-1578 BUSINESS PHONE: 4155780700 10QSB 1 FORM 10QSB FOR PERIOD ENDED 03-31-96 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10 - QSB (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 or / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 Commission File Number 0-23446 SOFTWARE PROFESSIONALS, INC. (Exact Name as registrant specified in its charter) CALIFORNIA 94-3008888 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 999 BAKER WAY, FIFTH FLOOR, SAN MATEO, CALIFORNIA 94404 (Address of principal executive offices) (Zip code) (415) 578-0700 (Registrant's telephone number, including area code) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of March 31, 1996:
OUTSTANDING CLASS MARCH 31, 1996 ----- -------------- Common Stock, no par value 2,823,775
This is Page 1 of 40 Pages. The Index to Exhibits begins on Page 13 2 SOFTWARE PROFESSIONALS, INC. QUARTERLY REPORT ON FORM 10-QSB QUARTER ENDED MARCH 31, 1996 TABLE OF CONTENTS Page No. - -------------------------------------------------------------------------------- PART I FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets - 3 As of March 31, 1996 and December 31, 1995 Condensed Consolidated Statements of Operations - 4 Three months ended March 31, 1996 and 1995 Condensed Consolidated Statements of Cash Flows - 5 Three months ended March 31, 1996 and 1995 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of 8 Financial Condition and Results of Operations - -------------------------------------------------------------------------------- PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 11 - -------------------------------------------------------------------------------- SIGNATURES 12 - -------------------------------------------------------------------------------- Page 2 3 PART I: FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS SOFTWARE PROFESSIONALS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
March 31, December 31, 1996 1995 ---------- ----------- ASSETS Current assets: Cash and cash equivalents $2,303,430 $2,124,525 Short term investments 1,002,000 1,320,727 Accounts receivable, less allowance for doubtful accounts 881,289 1,100,625 Refundable income taxes 327,453 288,265 Prepaid expenses and other assets 132,790 116,536 ---------- ---------- Total current assets 4,646,962 4,950,678 Property and equipment, net 1,233,587 1,268,337 Acquired technology and software development costs, net 857,736 720,667 Deferred income taxes 210,512 210,512 Other assets 183,545 178,577 ---------- ---------- $7,132,342 $7,328,771 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Bank borrowings and current portion of long-term debt $ 80,000 $ 129,188 Trade accounts payable 399,791 276,151 Accrued and other current liabilities 56,258 333,176 Deferred revenue 1,640,675 1,539,074 ---------- ----------- Total current liabilities 2,176,724 2,277,589 ---------- ----------- Shareholders' equity: Common stock 4,650,062 4,639,954 Retained earnings 305,556 411,228 ---------- ----------- Total shareholders' equity 4,955,618 5,051,182 ---------- ----------- $7,132,342 $ 7,328,771 ========== ===========
The accompanying notes are an integral part of the condensed consolidated financial statements Page 3 4 SOFTWARE PROFESSIONALS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three months ended March 31, ------------------------- 1996 1995 ---------- ---------- Revenue: Product license fees $ 327,618 $ 851,148 Product maintenance fees 914,842 914,566 Consulting services 226,136 48,454 ---------- ---------- Total revenue 1,468,596 1,814,168 Cost of revenue 301,780 430,207 ---------- ---------- Gross profit 1,166,816 1,383,961 ---------- ---------- Operating expenses: Research and development 399,902 317,425 Sales and marketing 581,953 631,072 General and administrative 321,082 329,222 ---------- ---------- Total operating expenses 1,302,937 1,277,719 ---------- ---------- Operating income (loss) (136,121) 106,242 ---------- ---------- Other income (expense): Interest income net of interest expense 32,946 39,145 Foreign exchange gain (loss), net (37,326) 41,262 ---------- ---------- Total other income (expense) (4,380) 80,407 ---------- ---------- Income (loss) before income taxes (140,501) 186,649 Income tax expense (benefit) (34,828) 63,736 ---------- ---------- Net income (loss) $ (105,673) $ 122,913 ========== ========== Net income (loss) per share $ (0.04) $ 0.04 ========== ========== Shares used in computing net income (loss) per share 2,827,160 2,877,217 ========== ==========
The accompanying notes are an integral part of the condensed consolidated financial statements. Page 4 5 SOFTWARE PROFESSIONALS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three months ended March 31, ------------------------------ 1996 1995 ---------- ----------- Cash flows from operating activities: Net income (loss) $ (105,673) $ 122,913 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 124,774 250,102 Changes in operating assets and liabilities: Accounts receivable, net 219,336 (142,127) Refundable income taxes (39,188) - Prepaid expenses and other assets (21,222) (57,030) Trade accounts payable 123,640 (104,451) Accrued and other current liabilities (276,918) (180,019) Deferred revenue 101,601 124,575 ---------- ----------- Net cash provided by operating activities 126,350 13,963 ---------- ----------- Cash flows from investing activities: Sales (purchases) of short-term investments 318,727 (1,581,818) Acquired technology and software development costs (189,574) (95,427) Purchases of property and equipment (37,518) (235,910) ---------- ----------- Net cash (used for) provided by investing activities 91,635 (1,913,155) ---------- ----------- Cash flows from financing activities: Net proceeds from issuance of common stock and other stock transactions 10,108 8,759 Principal payments under notes payable to bank and third parties (49,188) (64,163) ---------- ----------- Net cash used for financing activities (39,080) (55,404) ---------- ----------- Net increase (decrease) in cash and cash equivalents 178,905 (1,954,596) Cash and cash equivalents at beginning of period 2,124,525 3,659,607 ---------- ----------- Cash and cash equivalents at end of period $2,303,430 $ 1,705,011 ========== =========== Supplemental disclosures of cash flow information: Cash paid during the period: Income taxes $ - $ 110,000 ========== ===========
The accompanying notes are an integral part of the condensed consolidated financial statements Page 5 6 SOFTWARE PROFESSIONALS, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Basis of Presentation The Consolidated Financial Statements of Software Professionals, Inc. and Subsidiary (the "Company") included in the Company's Form 10-KSB for the year ended December 31, 1995 contain additional information about the Company, its operations, and its financial statements and accounting practices, and should be read in conjunction with this Quarterly Report on Form 10-QSB. These unaudited condensed consolidated financial statements have been prepared in accordance with the instructions for Form 10-QSB and therefore certain information and footnote disclosures normally contained in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The accompanying unaudited condensed consolidated financial statements of the Company reflect all adjustments of a normal recurring nature which are, in the opinion of management, necessary to present a fair statement of the financial position as of March 31, 1996, and the results of operations and cash flows for the interim periods presented. 2. Revenue Recognition Product license fees are recognized after the following events have occurred: a product evaluation has been shipped to the customer; the customer elects to purchase the software following an evaluation period; and the customer signs the related contract. Product maintenance fees committed as part of new product licenses and maintenance resulting from renewed maintenance contracts are deferred and recognized ratably over the contract period, generally one year. Consulting service revenue is recognized when services are performed for time and material contracts and on a percentage of completion basis for fixed price contracts. 3. Cost of Revenue Included in cost of revenue are royalties, amortization of capitalized software and acquired technology, and direct costs relating to consulting services revenue. 4. Cash and Cash Equivalents The Company considers all liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company accounts for its investments in debt and equity securities in accordance with Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" (SFAS 115). Under the provisions of SFAS 115, the Company has classified its investments in commercial paper and U.S. Treasury notes as "held-to-maturity." All such investments mature in less than one year and are stated at amortized cost, which approximates fair value. Interest income is recorded using an effective interest rate, with the associated discount or premium amortized to interest income. Additionally, the Company has classified its investments in preferred stock as "available-for-sale." Such investments are recorded at fair market value based on quoted market prices, with unrealized gains and losses reported as a separate component of stockholders' equity. As of March 31, 1996, unrealized gains and losses were not material. Page 6 7 SOFTWARE PROFESSIONALS, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (UNAUDITED) 5. Property and Equipment Property and equipment are stated at cost. Depreciation is calculated on the straight-line basis over the estimated useful lives of the assets, generally five years. Leasehold improvements are amortized on a straight-line basis over the lease term or the estimated useful life of the asset, whichever is less. 6. Acquired Technology and Software Development Costs A summary of acquired technology and software development costs as of March 31, 1996 and December 31, 1995 follows:
March 31, December 31, 1996 1995 ---- ---- Acquired technology $2,205,837 $2,205,837 Software development costs 1,957,198 1,767,624 --------- --------- 4,163,035 3,973,461 --------- --------- Less accumulated amortization: Acquired technology 1,995,524 1,972,086 Software development costs 1,309,775 1,280,708 --------- --------- 3,305,299 3,252,794 --------- --------- $ 857,736 $ 720,667 ========== ==========
7. Recent Accounting Pronouncements In October 1995 the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based Compensation. SFAS No. 123 will be effective for fiscal years beginning after December 15, 1995, and will require that the Company recognize in its financial statements costs related to its employee stock-based compensation plans, such as stock option and stock purchase plans, or pro forma disclosures of such costs in a footnote to the financial statements. The Company will continue to use the intrinsic value-based method of Accounting Principles Board Opinion No. 25, as allowed under SFAS No. 123, to account for all of its employee stock-based compensation plans. Therefore, in its financial statements for fiscal 1996, the Company will make the required pro forma disclosures in a footnote to the financial statements. SFAS No. 123 is not expected to have a material effect on the Company's results of operations or financial position. Page 7 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Management's Discussion and Analysis Of Financial Condition and Results Of Operations includes a number of forward-looking statements which reflect the Company's current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties, including those discussed below, that could cause actual results to differ materially from historical results or those anticipated. In this report, the words "anticipates", "believes", "expects", "intends", "future", and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. OVERVIEW Software Professionals develops, markets, and supports software products designed to automate the management of computer systems used by some of the world's largest companies in banking, finance, telecommunications, health care, information technology, and other major industries. The Company develops software products internally and enhances and packages other software products it acquires. The Company intends to continue expansion of its market presence through hiring additional staff, diversifying its product line, and/or adding features to existing products. This may require the Company to incur substantial additional operating expenses prior to its receipt of material additional revenues, if any, resulting from those expenditures. The combination of these expenses and this revenue lag may adversely affect the Company's quarterly net income in 1996 and, perhaps, thereafter. VARIABILITY OF QUARTERLY RESULTS The Company has experienced significant quarterly fluctuations in operating results and expects that these fluctuations will continue in future periods. These fluctuations have been caused by a number of factors, including the timing of new product or product enhancement introductions by the Company or its competitors, purchasing patterns of its customers, size and timing of individual orders, the rate of customer acceptance of new products, and pricing and promotion strategies undertaken by the Company or its competitors. Future operating results may fluctuate as a result of these and other factors, including the Company's ability to continue to develop, acquire, and introduce new products on a timely basis. Additionally, the Company's operating results may be influenced by seasonality (principally in Europe where sales are typically lower in the summer months) and overall trends in the global economy. Because the Company operates with a relatively small backlog, quarterly sales and operating results generally depend on the volume and timing of orders received during the quarter, which are difficult to forecast. RESULTS OF OPERATIONS Total revenue. Total revenue for the first quarter of 1996, totaled $1,469,000, a 19% decrease when compared to the same quarter in 1995. Product license fees decreased, while revenues from maintenance fees remained constant and consulting services revenue increased slightly over the same quarter of the prior year. Product license fees decreased by $524,000, or 62%, in the first quarter of 1996 when compared to the same quarter of 1995. The decrease is primarily related to a single foreign order recorded in the first quarter of 1995 which accounted for 34% of that quarter's license fees. There was no comparable sale in the first quarter of 1996. Excluding that transaction, Page 8 9 product license fees across product families decreased by $235,000, or 42%, compared with the same quarter of the prior year. License revenue from the Company's most significant product family, the performance family of products, decreased $15,000, or 7%, during the period. License fees from the storage family of produces decreased $72,000, or 54%, due to decreased unit sales of the Company's DFM II product, which is to be released in mid-1996. The license fees from Company's security products decreased $62,000, or 73%, compared to the first quarter of 1995. This decrease resulted from the replacement of the Company's SAFEGUARD MANAGER product with a new product, ENTRUST, during the quarter. Entrust was released in March 1996. Additionally, license fees during the quarter were impacted by a change in sales executive management. In March 1996, Byron Jacobs was hired as the Vice President of Sales and Marketing. Mr. Jacobs has begun implementing a new sales strategy for the Company which includes setting up remote field sales offices, staffing a larger telesales organization, and leveraging an increased number of VARs and other third party distribution channels. The effects of such changes on the Company's revenues may take several quarters to be realized. Revenues from consulting services increased by $178,000, or 367%, in the first quarter of 1996 when compared to the same quarter of 1995. The increase is due to a higher level of Tandem-related services projects, most of which commenced in mid to late 1995. Cost of revenue. Cost of revenue decreased by $128,000, or 30%, in the first quarter of 1996 compared to the same quarter in 1995. This decrease is attributable to a decrease in third party royalties and a decrease in amortization related to acquired software technology. The decrease in third party royalties is approximately proportional to the decrease in product license fees for the quarter. The decrease in amortization is a result of a write-down of acquired technology in the fourth quarter of 1995. These decreases were partially offset by an increase in the cost of revenue related to consulting services. This increase is approximately proportional to the increase in consulting services revenue. Research and development. Research and development expenditures increased by $82,000, or 26%, in the first quarter of 1996, compared with same quarter in 1995. The increase in research and development is primarily attributable to the development of the Company's open systems administration product. Along with other anticipated releases, release 2.0 of ENlighten for UNIX - Distributed Systems ManagerTM is scheduled for mid-1996. In conjunction with this release, the Company is continuing to increase its research and development headcount in order to deliver its planned open systems products. The Company expects research and development expenditures to continue to increase both in total dollars and as a percentage of revenue throughout 1996 as compared to 1995. Sales and marketing. Sales and marketing expenses decreased by $49,000, or 8%, during the first quarter of 1996 compared to the same quarter of 1995. This decrease was primarily due to decreased sales commissions as a result of lower revenues during the quarter. General and administrative. General and administrative expenses decreased by $8,000, or 2%, for the first quarter of 1996 as compared to the same quarter of 1995. The decrease in expenses during the quarter was due to continuous efforts by management to control costs. Other income (expense), net. Other income and expense includes interest income, net of interest expense, gains and losses on assets disposals, and foreign currency transactions. Net interest income totaled $33,000 during the first quarter of 1996. In the same quarter of 1995, net interest income totaled $39,000. The decrease in net interest is primarily due to a reduction in cash, which was used to fund expanding operations. Provision for income taxes. The Company recognized a tax benefit of $35,000 in the first quarter of 1996 as a result of a net loss during the quarter. The Company expects to recover this amount in future taxable periods. Page 9 10 Net income(loss). Pre-tax loss was $141,000 in the first quarter of 1996, compared to pre-tax income of $187,000 in the same quarter in 1995. Loss per share was $.04 per share, based on 2,827,000 shares in the first quarter of 1996, compared to a gain of $.04 per share, based on 2,877,000 shares outstanding in the same quarter of 1995. LIQUIDITY AND CAPITAL RESOURCES During the first three months of 1996 the Company's operating activities provided cash of $126,000, compared to cash provided from operating activities of $14,000 in the same period of the prior year. The change is related to reduced accounts receivable and an increase in trade accounts payable, both of which more than offset the decrease in net income. The Company's investing activities have consisted primarily of purchases of short-term investments, expenditures for software product acquisitions, capitalization of software development costs, and additions to capital equipment. Investing activities provided cash of $92,000 in first quarter of 1996, compared with using cash of $1,913,000 in same period in 1995. The change is due to the purchase of short-term investments in the first quarter of 1995 following the Company's initial public offering. Financing activities used cash of $39,000 in the first quarter of 1996, compared with using cash of $55,000 for the same period in the prior year. The use of cash in both years is primarily a result of the payments related to debt incurred on software acquisitions in prior years. In September 1994, the Company acquired all rights to a suite of SQL database management products from Sierra Software, Inc. Pursuant to the agreement, the two principals of Sierra Software will each provide two years of services exclusively for the Company. The purchase price and incentives are to be paid over a two year period. In December 1994, the Company acquired all of the outstanding shares of Network Partners, Inc. Additionally, in December 1994, the Company acquired core UNIX systems management technology from Overseers Corporation. Both purchases were cash acquisitions requiring down payments for a portion of the guaranteed purchase price at time of acquisition with payment of the balance within one year. In connection with these two acquisitions, the Company immediately expensed $983,000, representing acquired in-process research and development. An additional $50,000 of the purchase price was related to the value of non-competition agreements entered into with the principals of both organizations. Under the terms of the agreements, the purchase price is increased by incentive amounts based upon future sales levels of the technology acquired. Should revenues directly resulting from these technologies fail to exceed certain revenue thresholds, no additional amounts will be paid. Any increases to the purchase price under these agreements are to be paid annually through 1998, should revenue exceed stated thresholds in any twelve month period. As of March 31, 1996, the Company had cash, cash equivalents, and short-term investments of $3,305,000, compared to $3,445,000 at March 31, 1995, and working capital of $2,470,000, compared to working capital of $2,673,000 at March 31, 1995. The Company believes that its existing sources of liquidity, anticipated funds from operations, and increased borrowing capacity will satisfy the Company's projected working capital and capital expenditure requirements through at least the next twelve months. The Company is currently leasing approximately 17,000 square feet of office space in San Mateo, California, under a lease expiring in April 2001. The Company believes that its existing sources of liquidity and anticipated funds from operations will satisfy the Company's projected working capital and capital expenditure requirements through at least the next twelve months. Page 10 11 SOFTWARE PROFESSIONALS, INC. FORM 10-QSB, March 31, 1996 PART II: OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits The exhibits listed in the accompanying Index of Exhibits on Page 14 are filed or incorporated by reference as part of this report. Exhibit numbers 10.1, 10.2, 10.3, 10.14, 10.15, 10.16, 10.21, 10.22, and 10.23 are management contracts or compensatory plans or arrangements. (b) Reports on Form 8-K During the quarter ended March 31, 1996, the Company did not file any reports on Form 8-K. ITEMS 1, 2, 3, 4, AND 5 HAVE BEEN OMITTED AS THEY ARE NOT APPLICABLE. Page 11 12 SOFTWARE PROFESSIONALS, INC. FORM 10-QSB, MARCH 31, 1996 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SOFTWARE PROFESSIONALS, INC. DATE: SIGNATURE: /s/ Peter J. McDonald --------------------------------- ---------------------------- Peter J. McDonald Chief Executive Officer DATE: SIGNATURE: /s/ Michael A. Morgan --------------------------------- ---------------------------- Michael A. Morgan Page 12 13 SOFTWARE PROFESSIONALS, INC. FORM 10-QSB, March 31, 1996 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION PAGE NO. - ------ ----------- -------- 10.1(1)@ Form of Indemnity Agreement for officers and directors. 10.2(1)@ First Amended and Restated 1992 Stock Option Plan. 10.3(1)@ 1994 Employee Stock Purchase Plan. 10.4(1) Business Loan Agreement and related agreements, dated April 14, 1993, by and between Software Professionals, Inc. and Commercial Center Bank. 10.5(1) Commercial Security Agreement and related agreements, dated April 14, 1993, by and between Software Professionals, Inc. and Commercial Center Bank. 10.6(1) Loan Agreement and related agreements, dated April 14, 1993, by and between Software Professionals, Inc. and Commercial Center Bank. 10.7(1) Demand Note, dated December 31, 1990, by and between Software Professionals, Inc. and Peter J. McDonald. 10.8(1) Demand Note, dated September 21, 1991, by and between Software Professionals, Inc. and Peter J. McDonald. 10.9(1) Demand Note, dated September 23, 1991, by and between Software Professionals, Inc. and Peter J. McDonald. 10.10(1) Lease, dated January 19, 1989, by and between Software Professionals and Mariner's Island Ltd. for 999 Baker Way, Suite 390, San Mateo, California 94404, and Amendments 1, 2, 3 and 4 thereto. 10.11(1) Lease, dated November 25, 1994, by and between Software Professionals, Ltd. and Cannon Silver Quastel for 6 Eghams Court, Boston Drive, Bourne End, Bucks, SL8 54S, U.K. 10.12(1) Enlighten Purchase Agreement, dated April 10, 1993, by and between and Software Professionals, Inc. and Steve Killelea. 10.13(1) Partner Agreement, dated December 29, 1993, by and between Software Professionals, Inc. and Gupta Corporation. 10.14(2)@ Nonqualified Stock Option Agreement, dated January 1, 1993, by and between Software Professionals, Inc. and Kenneth S. Voss. 10.15(2)@ Nonqualified Stock Option Agreement, dated January 1, 1993, by and between Software Professionals, Inc. and Michael A. Morgan. 10.16(2)@ Nonqualified Stock Option Agreement, dated January 1, 1993, by and between Software Professionals, Inc. and Michael A. Morgan. 10.17(3) Software Purchase and Assignment Agreement dated September 9, 1994 by and between Software Professionals and Sierra Software. 10.18(4) Stock Agreement dated December 30, 1994, by and between Software Professionals, Inc. and Network Partners, Inc.
Page 13 14
Exhibit Number Description Page No. - ------ ----------- -------- 10.19(5) Software Purchase and Assignment Agreement dated December 30, 1994, by and between Software Professionals, Inc., Thomas Kraus, and Overseers Corporation. 10.20(5) Lease, dated February 24, 1995, by and between Software Professionals and Mariner's Island Ltd. for 999 Baker Way, Suite 500, San Mateo, California 94404. 10.21@ Employment letter and Termination and Change in Control Agreement, dated March 4, 1996, by and between Software Professionals, Inc. and Byron E. Jacobs. 15 10.22@ Nonqualified Stock Option Agreement, dated March 4, 1996, by and between Software Professionals, Inc. and Byron E. Jacobs. 20 10.23@ Incentive Stock Option Agreement, dated March 4, 1996, by and between Software Professionals, Inc. and Byron E. Jacobs. 30 11.1 Calculation of Net Income (Loss) per Share. 40 21.1(5) Subsidiaries of the Company. 23.1(5) Consent of KPMG Peat Marwick. LLP 27 Financial Data Schedule
- ------------------------------- 1 Incorporated by reference from exhibits of the same number in the Company's Registration Statement on Form S-1 (No. 33-75388), which was declared effective on April 19, 1994. 2 Exhibits 10.14, 10.15, 10.16 are incorporated by reference from exhibits 4.1, 4.2, and 4.3, respectively, in the Company's Registration Statement on Form S-1 (No. 33-75388), which was declared effective on April 19, 1994. 3 Incorporated by reference from an exhibit of the same number in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1994. 4 Incorporated by reference from exhibit 2.1 in the Company's Current Report on Form 8-K dated December 30, 1994. 5 Incorporated by reference from an exhibit of the same number in the Company's Annual Report on Form 10-KSB for the year ended December 31, 1995. @ Compensatory or employment arrangement Page 14 EX-10.21 2 EXHIBIT 10.21 1 February 20, 1996 Mr. Byron Jacobs 17 Calypso Lane San Carlos, CA 94070 Dear Byron: I am pleased to offer you a position with Software Professionals, Inc. as Vice President Sales and Marketing commencing on March 4, 1996. Your compensation is outlined in Attachment A to this letter, which will be paid in accordance with the Company's normal payroll procedures. As a Software Professionals employee, you are also eligible to receive, in accordance with each applicable plan document, certain employee benefits including: incentive stock options (100,000 options initially, effective as of March 4, 1996, with a 3 1/2 year vesting schedule; additional options may be granted annually at the Board's discretion), participation in the employee stock purchase plan, medical insurance, dental insurance, 401(k) plan, an accrued 20 days paid personal days during each year of employment (to be used as vacation, sick leave, etc.), plus paid public holidays recognized by the Company. You should be aware that your employment with Software Professionals is for no specified period. As a result, you are free to resign at any time, for any reason or no reason. Similarly, the Company is free to conclude its relationship with you at any time, with or without cause. For purposes of federal immigration law, you will be required to provide to Software Professionals documentary evidence of your identity and eligibility for employment in the United States. Such documentation must be provided to us within three (3) business days of your date of hire, or our employment relationship with you may be terminated. As a condition of employment you will be required to work outside of the office at client sites from time to time. Additionally, you may be required to pass security clearance procedures, although this is not a condition of employment. In the event of any dispute or claim relating to or arising out of our employment relationship, you and Software Professionals agree that all such disputes shall be fully and finally resolved by binding arbitration conducted by the American Arbitration Association in San Mateo, California, HOWEVER, we agree that this arbitration provision shall not apply to any disputes or claims relating to or arising out of the misuse or misappropriation of Software Professionals' trade secrets or proprietary information. (a) You agree that, while you are a Software Professionals employee, you will not, directly or indirectly, work for, advise, consult, render services to or invest directly or indirectly in any individual or entity (in any capacity) which directly or indirectly engages in any business in which Software Professionals is engaged at the time of such work, advice, 2 Software Professionals, Inc. February 20, 1996 Page 2 consultation, rendering of services or investment. None of the forgoing shall restrict any direct or indirect investments in any publicly traded company, provided such investment does not exceed 5% of the company's total voting shares. (b) You further agree that for a period of two (2) years after termination of your employment with Software Professionals, you will not, directly or indirectly, hire, or in any other manner persuade an employee, dealer or customer, of the Company to discontinue that person's relationship with or to Software Professionals as an employee, dealer or customer, as the case may be. (c) We both agree that: (i) the services to be rendered by you are special, unique and of an extraordinary character; (ii) because of the nature of the business of Software Professionals, and the types of information which you will obtain with respect to the business of Software Professionals, it would be impractical or extremely difficult to determine actual damages in the event of a breach of your promises in this letter; and (iii) resulting damages would not adequately compensate Software Professionals. Accordingly, if you commit such a breach or threaten to commit such a breach the Company shall have the right to have the provisions of this Agreement specifically enforced by any court having equity jurisdiction without the posting of bond or other security, since any such breach or threatened breach would cause irreparable injury to Software Professionals. (d) The above-mentioned right is in addition to, and not in lieu of, any other rights and remedies available to Software Professionals under law or in equity. (e) This covenant shall be construed as a series of separate covenants, one for each of the fifty-eight (58) counties in California, for each state in the United States, and for each nation outside the United States. To indicate your acceptance of Software Professionals' offer, please sign and date both letters in the space provided below and return them to me. This letter, between you and Software Professionals, sets forth the terms of your employment with Software Professionals and supersedes any prior representations or agreements, whether written or oral. This letter may not be modified or amended except by a written agreement, signed by Software Professionals and by you. We look forward to working with you at Software Professionals. Welcome aboard! AGREED TO AND ACCEPTED AGREED TO AND ACCEPTED ________________________________ __________________________________ Peter J. McDonald Byron Jacobs Dated:________/________/_______ Dated:________/________/_______ 3 ATTACHMENT A VICE PRESIDENT SALES AND MARKETING COMPENSATION PROGRAM This document defines the compensation program for the position of Vice President Sales and Marketing at Software Professionals, Inc. (the "Company"). The total targeted compensation is made up of your base salary and deferred compensation/bonus. The total targeted compensation is $200,000, excluding any stock options. COMPENSATION 1. Base Salary: Your base salary is $120,000 per year, this will be paid through the regular semi-monthly company payroll at $5,000 per pay period. 2. Deferred Compensation/Bonus: For the year ending December 31, 1996, your deferred compensation/bonus program will be as follows: (a) $30,000 upon achievement of $8.5 million in total world-wide revenue for the year ending December 31, 1996 (b) $30,000 upon achievement of $1.5 million in total UNIX related world-wide license fees and maintenance fees for the year ending December 31, 1996 (c) $20,000 upon the Company achieving its net income targets for the year ended December 31, 1996 All such incentives would not be earned until February 15, 1997. In order for these amounts to be earned, you must be employed by the Company on that date. Additional bonuses may be earned for extraordinary performance at the discretion of the Compensation Committee of the Board of Directors. TERMINATION PROVISIONS 3. Benefits Upon Voluntary Termination: In the event that you voluntarily resign from your employment with the Company (unless such resignation is for Good Reason), or in the event that your employment terminates as a result of your death or disability, you shall be entitled to no compensation or benefits from the Company other than those earned under paragraphs 1 and 2 above through the date of your termination. 4. Benefits Upon Other Termination: You agree that your employment may be terminated by the Company at any time, with or without cause. In the event of the termination of your employment by the Company for the reasons set forth below, you shall be entitled to the following: (a) Termination for Cause: If your employment is terminated by the Company for cause as defined below, you shall be entitled to no compensation or benefits from the Company other than those earned under paragraphs 1 and 2 through the date of your termination. For purposes of this Agreement, a termination "for cause" occurs if you are terminated for any of the following reasons: 4 (i) theft, dishonesty, or falsification of any employment or Company records; (ii) improper disclosure of the Company's confidential or proprietary information; (iii) any intentional act by you which causes loss, damage, or injury to the Company's property, reputation, employees, or business; (iv) your failure to perform to the minimum standards of a written plan mutually agreed upon by you and the Company, provided such failure is not cured within thirty (30) days following written notice of such failure from the Company; or (v) any material breach of this Agreement, which breach is not cured within thirty (30) days following written notice of such breach from the Company. (b) Termination for Other Than Cause: If your employment is terminated by the Company for any reason other than cause, you shall be entitled to the following separation benefits: (i) a termination severance package equal to twelve (12) months of your then current base alary, or $120,000, whichever is greater. Such severance package shall be payable in four (4) equal installments, each due respectively within thirty (30), sixty (60), ninety (90), and one hundred twenty (120) days of your termination of employment with the Company. (c) Termination for Good Reason: If your employment is terminated by you for good reason you shall be entitled to the separation benefits outlined in paragraph 4(b). For purposes of this Agreement, a termination "for good reason" occurs if you terminate your employment as a result of the Company, without your consent: (i) reducing your salary or benefits, title, or authority; (ii) relocating your place of performance of services outside a sixty (60) mile radius of San Mateo; or (iii) directing you to violate a reasonable and normal code of business ethics so as to cause loss, damage, or injury to your property or reputation, or the property or reputation of clients or customers of the Company; (d) Termination Following a Change in Control: (i) In the event of a Change in Control and your employment is terminated by the Company or its successor within twelve (12) months of a Change in Control, other than for cause, or you terminate your employment because of a change in duties, or any reason stated in paragraph 4(c), you shall be entitled to the following: A. a termination severance package equal to twelve (12) months of your then current base salary, or $120,000, whichever is greater. Such 5 severance package shall be payable within thirty (30) days of your termination of employment with the Company; B. full vesting in all of the Stock Options granted to you through the date of the Change in Control; and C. payment of the Deferred Compensation/Bonus. You shall be entitled to receive the Deferred Compensation/Bonus for the fiscal year in which the Change in Control occurs and your employment terminates. Following the twelve (12) month period after a Change in Control, the provisions of paragraph 4(b) shall remain in effect. (ii) For purposes of this Agreement a "Change of Control" shall mean an Ownership Change in which the shareholders of the Company before such Ownership Change do not retain, directly or indirectly, at least a majority of the beneficiary interest in the voting stock of the Company after such transaction or in which the Company is not the surviving corporation. For purposes of this Agreement an "Ownership Change" shall be deemed to have occurred in the event any of the following occurs with respect to the Company: A. the direct or indirect sale or exchange by the shareholders of the Company of more than fifty percent (50%) of the stock of the Company; B. a merger or consolidation in which the Company is a party; C. the sale, exchange, or transfer of all or substantially all of the assets of the Company; or D. a liquidation or dissolution of the Company. 5. Exclusive Remedy: Subject to paragraph 4 above, you shall be entitled to no further compensation for any damage or injury arising out of the termination of your employment by the Company. 6. Successors and Assigns: This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. In view of the personal nature of the services to be performed by you under this Agreement, you shall not have the right to assign or transfer any of your rights, obligations, or benefits under this Agreement. 7. Minimum Plan: For purposes of the this Agreement, the Minimum Plan referred to in paragraph 4(a)(iv) for calendar year ended December 31, 1996, is as follows: (a) $6.5 million in total world-wide revenue for the year ending December 31, 1996; (b) $750,000 in total UNIX related net world-wide license fees and maintenance fees for the year ending December 31, 1996; and (c) not exceeding total expense budget for all areas under your direction (Sales, Marketing, Support, UK operations) for the year ending December 31, 1996. EX-10.22 3 EX-10.22 NONQUALIFIED STOCK OPTION AGREEMENT 1 SOFTWARE PROFESSIONALS, INC. NONQUALIFIED STOCK OPTION AGREEMENT Software Professionals, Inc. (the "Company") granted to the individual named below an option to purchase certain shares of common stock of the Company, in the manner and subject to the provisions of the Option Agreement. 1. Definitions: (a) "Optionee" shall mean Byron E. Jacobs. (b) "Date of Option Grant" shall mean March 4, 1996. (c) "Number of Option Shares" shall mean 75,000 shares of common stockof the Company as adjusted from time to time pursuant to paragraph 9 below. (d) "Exercise Price" shall mean $2.13 per share as adjusted from time to time pursuant to paragraph 9 below. (e) "Initial Exercise Date" shall be the Initial Vesting Date. (g) "Initial Vesting Date" shall be the date occuring six (6) months after the Date of the Option Grant. (h) Determination of "Vested Ratio":
Vested Ratio ------------ Prior to Initial Vesting Date 0 On Initial Vesting Date, 1/7 provided the Optionee is continuously employed by a Participating Company from the Date of the Option Grant until the Initial Vesting Date
Page 1 2
Vested Ratio ------------ Plus For each full month 1/42 of the Optionee's continuous Employment by a Participating Company from the Initial Vesting Date In no event shall the Vested Ratio exceed 1/1
(i) "Option Term Date" shall mean the date ten (10) years after the Date of Option Grant. (j) "Code" shall mean the Internal Revenue Code of 1986, as amended. (k) "Company" shall mean Software Professionals, Inc., a California corporation, and any successor corporation thereto. (l) "Participating Company" shall mean (i) the Company and (ii) any future parent and/or subsidiary corporation of the Company while such corporation is a parent or subsidiary of the Company. For purposes of this Option Agreement, a parent corporation and a subsidiary corporation shall be as defined in sections 424(e) and 424(f) of the Code. (m) "Participating Company Group" shall mean at any point in time affiliated corporations collectively which are then a Participating Company. 2. Status of the Option. This Option is intended to be a nonqualified stock option and shall not be treated as an incentive stock option as described in section 422(b) of the Code. 3. Administration. All questions of interpretation concerning this Option Agreement shall be determined by the Board of Directors of the Company (the "Board") and/or by a duly appointed committee of the Board having such powers as shall be specified by the Board. Any subsequent references herein to the Board shall also mean the committee if such committee has been appointed and, unless the powers of the committee have been specifically limited, the committee shall have all of the powers of the Board, including, without limitation, the power to terminate or amend this Option at any time, subject to the terms of this Option and any applicable limitations imposed by law. All determinations by the Board shall be final and binding upon all persons having an interest in the Option. Any officer of a Participating Company shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, or election which is the responsibility of or which is allocated to the Company herein, provided the officer has apparent authority with respect to such matter, right, obligation, or election. Page 2 3 4. Exercise of the Option. (a) Right to Exercise. The Option shall be exercisable in full on the Vesting Date and for a period ending on the termination date set forth in paragraph 6 below. (b) Method of exercise. The Option may be exercised by written notice to the Company which must state the election to exercise the Option, the number of shares for which the Option is being exercised and such other representations and agreements as to the Optionee's investment intent with respect to such shares as may be required pursuant to the provisions of this Option Agreement. The written notice must be signed by the Optionee and must be delivered in person or by certified or registered mail, return receipt requested, to the Chief Financial Officer of the Company, or other authorized representative of the Participating Company Group, prior to the termination of the Option as set forth in paragraph 6 below, accompanied by full payment of the exercise price for the number of shares being purchased. (c) Form of Payment of Option Exercise Price. Such payment shall be made (i) in cash, by check, or cash equivalent, (ii) by tender to the Company of shares of the Company's common stock owned by the Optionee having a value not less than the option price, which either have been owned by the Optionee for more than six (6) months or were not acquired, directly or indirectly, from the Company, or (iii) by any combination of the foregoing. Notwithstanding the foregoing, the Option may not be exercised by tender to the Company of shares of the Company's common stock to the extent such tender of stock would constitute a violation of the provisions of any law, regulation and/or agreement restricting the redemption of the Company's common stock. (d) Withholding. At the time the Option is exercised, in whole or in part, or at any time thereafter as requested by the Company, the Optionee hereby authorizes payroll withholding and otherwise agrees to make adequate provision for foreign, federal and state tax withholding obligations of the Company, if any, which arise in connection with the Option, including, without limitation, obligations arising upon (i) the exercise, in whole or in part, of the Option, (ii) the transfer, in whole or in part, of any shares acquired on exercise of the Option, (iii) the operation of any law or regulation providing for the imputation of interest, or (iv) the lapsing of any restriction with respect to any shares acquired on exercise of the Option. The Optionee is cautioned that the Option is not exercisable unless the Company's withholding obligations are satisfied. Accordingly, the Optionee may not be able to exercise the Option when desired even though the Option is vested and the Company shall have no obligation to issue a certificate for such shares. Page 3 4 (e) Certificate Registration. The certificate or certificates for the shares as to which the Option shall be exercised shall be registered in the name of the Optionee, or, if applicable, the heirs of the Optionee. (f) Restrictions on Grant of the 0ption and Issuance of Shares. The grant of the Option and the issuance of the shares upon exercise of the Option shall be subject to compliance with all applicable requirements of federal or state law with respect to such securities. The Option may not be exercised if the issuance of shares upon such exercise would constitute a violation of any applicable federal or state securities laws or other law or regulations. IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES. Section 260.141.11 of the Rules of the Commissioner of Corporations of the State of California is set forth in paragraph 14 herein. In addition, no Option may be exercised unless (i) a registration statement under the Securities Act of 1933, as amended (the "Securities Act"), shall at the time of exercise of the Option be in effect with respect to the shares issuable upon exercise of the Option or (ii) in the opinion of legal counsel to the Company, the shares issuable upon exercise of the Option may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. THE OPTIONEE IS CAUTIONED THAT THE OPTION MAY NOT BE EXERCISABLE UNLESS THE FOREGOING CONDITIONS ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. Questions concerning this restriction should be directed to the Chief Financial Officer of the Company. As a condition to the exercise of the Option, the Company may require the Optionee to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company. (g) Fractional Shares. The Company shall not be required to issue fractional shares upon the exercise of the Option. 5. Non-Transferability of the Option. The Option may be exercised during the lifetime of the Optionee only by the Optionee and may not be assigned or transferred in any manner except by will or by the laws of descent and distribution. Following the death of the Optionee, the Option, to the extent unexercised and exercisable by the Optionee on the date of death, may be exercised by the Optionee's legal representative or by any person empowered to do so under the deceased Optionee's will or under the then applicable laws of descent and distribution. Page 4 5 6. Termination of the Option. The Option shall terminate and may no longer be exercised on the first to occur of (a) the Option Term Date as defined above, (b) the last date for exercising the Option following termination of employment as described in paragraph 7 below, or (c) upon a Transfer of Control as described in paragraph 8 below. 7. Termination of Employment. (a) Termination of the Option. If the Optionee ceases to be an employee of the Participating Company Group for any reason, except death or disability within the meaning of section 422(c) of the Code, the Option, to the extent unexercised and exercisable by the Optionee on the date on which the Optionee ceased to be an employee, may be exercised by the Optionee within thirty (30) days after the date on which the Optionee's employment terminated, but in any event no later than the Option Term Date. If the Optionee's employment with the Company is terminated because of the death or disability of the Optionee within the meaning of section 422(c) of the Code, the Option, to the extent unexercised and exercisable by the Optionee on the date on which the Optionee ceased to be an employee, may be exercised by the Optionee (or the Optionee's legal representative) at any time prior to the expiration of six (6) months from the date on which the Optionee's employment terminated, but in any event no later than the Option Term Date. The Optionee's employment shall be deemed to have terminated on account of death if the Optionee dies within thirty (30) days after the Optionee's termination of employment. Except as provided in this paragraph 7(a), the Option shall terminate and may not be exercised after the Optionee ceases to be an employee of the Participating Company Group. (b) Termination of Employment Defined. For purposes of this paragraph 7, the Optionee's employment shall be deemed to have terminated either upon an actual termination of employment or upon the Optionee's employer ceasing to be a Participating Company. (c) Extension if Exercise Prevented by Law. Notwithstanding the foregoing, if the exercise of the Option within the applicable time periods set forth above is prevented by the provisions of paragraph 4(f) above, the Option shall remain exercisable until three (3) months after the date the Optionee is notified by the Company that the Option is exercisable, but in any event no later than the Option Term Date. (d) Extension if Optionee Subject to Section 16(b). Notwithstanding the foregoing, if the exercise of the Option within the applicable time periods set forth above would subject the Optionee to suit under Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Option shall remain exercisable until the earliest to occur of (i) the tenth (10th) day following the date on which the Optionee would no longer be subject to such suit, (ii) the one hundred and ninetieth (119th) day after the Optionee's termination of employment, or (iii) the Option Term Date. Page 5 6 (e) Leave of Absence. For purposes hereof, the Optionee's employment with the Participating Company Group shall not be deemed to terminate if the Optionee takes any military leave, sick leave, or other bona fide leave of absence approved by the Company of ninety (90) days or less. In the event of a leave in excess of ninety (90) days, the Optionee's employment shall be deemed to terminate on the ninety-first (91st) day of the leave unless the Optionee's right to reemployment with the Participating Company Group remains guaranteed by statute or contract. Notwithstanding the foregoing, however, a leave of absence shall be treated as employment for purposes of determining the Optionee's Vested Ratio if and only if the leave of absence is designated by the Company as (or required by law to be) a leave for which vesting credit is given. 8. Ownership Change and Transfer of Control. An "Ownership Change" shall be deemed to have occurred in the event any of the following occurs with respect to the Company: (a) the direct or indirect sale or exchange by the shareholders of the Company of all or substantially all of the stock of the Company; (b) a merger or consolidation in which the Company is a party; (c) the sale, exchange, or transfer of all or substantially all of the assets of the Company (other than a sale, exchange, or transfer to one (1) or more subsidiary corporations as defined in paragraph 10) above of the Company); or (d) a liquidation or dissolution of the Company. A "Transfer of Control" shall mean an Ownership Change in which the shareholders of the Company before such Ownership Change do not retain, directly or indirectly, at least a majority of the beneficial interest in the voting stock of the Company after such transaction or in which the Company is not the surviving corporation. In the event of a Transfer of Control, the Board, in its sole discretion, shall either (i) provide that any unexercised portion of the Option shall be fully exercisable as of a date prior to the Transfer of Control, as the Board so determines or (ii) arrange with the surviving, continuing, successor, or purchasing corporation or parent corporation thereof, as the case may be (the "Acquiring Corporation"), for the Acquiring Corporation to either assume the Company's rights and obligations under this Option Agreement or substitute an option for the Acquiring Corporation's stock for the Option. The Option shall terminate and cease to be outstanding effective as of the date of the Transfer of Control to the extent that the Option is neither assumed or substituted for by the Acquiring Corporation in connection with the Transfer of Control nor exercised as of the date of the Transfer of Control. Page 6 7 9. Effect of Change in Stock Subject to the Option. Appropriate adjustments shall be made in the number, exercise price and class of shares of stock subject to the Option in the event of a stock dividend, stock split, reverse stock split, recapitalization, combination, reclassification, or like change in the capital structure of the Company. In the event a majority of the shares which are of the same class as the shares that are subject to the Option are exchanged for, converted into, or otherwise become shares of another corporation (the 'New Shares"), the Company may unilaterally amend the Option to provide that the Option is exercisable for New Shares. In the event of any such amendment, the number of shares and the exercise price shall be adjusted in a fair and equitable manner. 10. Rights as a Shareholder or Employee. The Optionee shall have no rights as a shareholder with respect to any shares covered by the Option until the date of the issuance of a certificate or certificates for the shares for which the Option has been exercised. No adjustment shall be made for dividends or distributions or other rights for which the record date is prior to the date such certificate or certificates are issued, except as provided in paragraph 9 above. Nothing in the Option shall confer upon the Optionee any right to continue in the employ of a Participating Company or interfere in any way with any right of the Participating Company Group to terminate the Optionee's employment at any time. 11. Representations and Warranties. The Optionee represents and warrants that the Optionee is over eighteen (18) years of age and that the Optionee is acquiring the Option and any shares purchased upon exercise thereof ("Shares") solely for the Optionee's own account, and not on behalf of any other person or as a nominee, for investment and not with a view to, or for sale in connection with, any distribution of the Shares. The Optionee further represents that the Optionee does not have any present intention of selling, offering to sell, or otherwise disposing of or distributing the Option or any portion thereof, and that the entire legal and beneficial interest in the Option the Optionee is acquiring is being acquired for, and will be held for the account of, the Optionee only and neither in whole nor in part for any other person. The Optionee acknowledges and understands that the Option and the Shares have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), and that consequently the Option and the Shares must be held indefinitely unless they are subsequently registered under the Securities Act, an exemption from such registration is available, or they are sold in accordance with Rule 144 or Rule 701. The Optionee further acknowledges and understands that the Company is under no obligation to register the Option and the Shares and that, in the absence of registration, the Option and the Shares may not be transferred. The Optionee understands that the certificate or certificates evidencing the Shares will be imprinted with legends which prohibit the transfer of the Shares unless they are registered or such registration is not required in the opinion of legal counsel satisfactory to the Company. The Optionee does not have any contract, undertaking, agreement, or arrangement with any person to Page 7 8 sell, transfer, or grant participations to such person or to any third person with respect to any of the Shares. The Optionee is aware that Rule 144, promulgated under the Securities Act, which permits limited public resale of securities acquired in a nonpublic offering, is not currently available with respect to the Shares and, in any event, is available only if certain conditions are satisfied. The Optionee understands that any sale of the Shares that might be made in reliance upon Rule 144 may only be made in limited amounts in accordance with the terms and conditions of such rule and that a copy of Rule 144 will be delivered to the Optionee upon request. The Optionee is a sophisticated investor having such knowledge and experience in financial and business matters that the Optionee is capable of evaluating the merits and risks of the prospective investment in the Shares. The Optionee represents and warrants that the Optionee is aware of the Company's business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to purchase the Shares. The Optionee further represents and wan-ants that the Optionee has discussed the Company and its plans, operations and financial condition with its officers, has received all such information as the Optionee deems necessary and appropriate to enable the Optionee to evaluate the financial risk inherent in making an investment in the Shares and has received satisfactory and complete information concerning the business and financial condition of the Company in response to all inquiries in respect thereof. The Optionee warrants that the nature and amount of the Shares are consistent with the Optionee's investment objectives, abilities and resources. The Optionee acknowledges and understands that the purchase of the Shares is a highly speculative investment and the Optionee represents and warrants that the Optionee is able, without impairing the Optionee's financial condition, to hold the Shares for an indefinite period of time and to suffer a complete loss of the investment. The Optionee has a preexisting personal or business relationship with the Company or any of its officers, directors, or controlling persons, or has such knowledge and experience in financial and business matters, or has relied on the review and analysis done in this regard by the Optionee's professional adviser, as to make the Optionee capable of using the information made available to the Optionee to evaluate the merits and risks of an investment in the Shares and to make an informed investment decision. The Optionee understands that the Shares have not been qualified under the Corporate Securities Law of 1968, as amended, of the State of California by reason of a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the Optionee's representations as expressed herein. Page 8 9 12. Legends. The Company may at any time place legends referencing any applicable federal or state securities law restrictions on all certificates representing shares of stock subject to the provisions of this Option Agreement. The Optionee shall, at the request of the Company, promptly present to the Company any and all certificates representing shares acquired pursuant to the Option in the possession of the Optionee in order to effectuate the provisions of this paragraph. Unless otherwise specified by the Company, legends placed on such certificates may include, but shall not be limited to, the following: (a) "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT." 13. Binding Effect. This Option Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns. 14. Termination or Amendment. The Board, including any duly appointed committee of the Board, may terminate or amend the Option at any time; provided, however, that no such termination or amendment may adversely affect the Option or any unexercised portion hereof without the consent of the Optionee. 15. Integrated Agreement. This Option Agreement constitutes the entire understanding and agreement of the Optionee and the Participating Company Group with respect to the subject matter contained herein, and there are no agreements, understandings, restrictions, representations, or warranties among the Optionee and the Company other than those as set forth or provided for herein. To the extent contemplated herein, the provisions of this Option Agreement shall survive any exercise of the Option and shall remain in full force and effect. Page 9 10 16. Applicable Law. This Option Agreement 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. SOFTWARE PROFESSIONALS, INC. By: ------------------------------- Title: ----------------------------- The Optionee represents that the Optionee is familiar with the terms and provisions of this Option Agreement and hereby accepts the Option subject to all of the terms and provisions thereof. The Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board upon any questions arising under this Option Agreement. Date: ------------------------- ------------------------------------ Page 10 EX-10.23 4 EX-10.23 INCENTIVE STOCK OPTION AGREEMENT 1 Option No. SOFTWARE PROFESSIONALS, INC. INCENTIVE STOCK OPTION AGREEMENT Software Professionals, Inc. (the "Company"), granted to the individual named below an option to purchase certain shares of common stock of the Company, in the manner and subject to the provisions of this Option Agreement. 1. Definitions: (a) "Optionee" shall mean Byron E. Jacobs. (b) "Date of Option Grant" shall mean March 4, 1996. (c) "Number of Option Shares" shall mean 25,000 shares of common stock of the Company as adjusted from time to time pursuant to paragraph 9 below. (d) "Exercise Price" shall mean $2.13 per share as adjusted from time to time pursuant to paragraph 9 below. (e) "Initial Exercise Date" shall be the Initial Vesting Date. (f) "Initial Vesting Date" shall be the date occurring six (6) months after the Date of the Option Grant. (g) Determination of "Vested Ratio":
Vested Ratio ------------ Prior to Initial Vesting Date 0 On Initial Vesting Date, 1/7 provided the Optionee is continuously employed by a Participating Company from the Date of Option Grant until the Initial Vesting Date
1 2
Vested Ratio ------------ Plus For each full month 1/42 of the Optionee's continuous Employment by a Participating Company from the Initial Vesting Date In no event shall the Vested Ratio exceed 1/1.
(h) "Optionee Term Date" shall mean the date ten (10) years after the Date of Option Grant. (i) "Code" shall mean the Internal Revenue Code of 1986, as amended. (j) "Company" shall mean Software Professionals, Inc., a California corporation, and any successor thereto. (k) "Participating Company" shall mean (i) the Company and (ii) any future parent and/or subsidiary corporation of the Company while such corporation is a parent or subsidiary of the Company. For purposes of this Option Agreement, a parent corporation and a subsidiary corporation shall be as defined in section 424(e) and 424(f) of the Code. (l) "Participating Company Group" shall mean at any point in time all corporations collectively which are then a Participating Company. (m) "Plan" shall mean the Software Professionals, Inc. 1992 Stock Option Plan. 2. Status of the Option. This Option is intended to be an incentive stock option as described in section 422 of the Code, but the Company does not represent or warrant that this Option qualifies as such. The Optionee should consult with the 2 3 Optionee's own tax advisors regarding the tax effects of this Option and the requirements necessary to obtain favorable income tax treatment under section 422 of the Code, including, but not limited to, holding period requirements. (NOTE: If the aggregate Exercise Price of the Option (that is, the Exercise Price multiplied by the Number of Option Shares) plus the aggregate exercise price of any other incentive stock options held by the Optionee (whether granted pursuant to the Plan or any other stock option plan of the Participating Company Group) is greater than One Hundred Thousand Dollars ($100,000), the Optionee should contact the Chief Financial Officer of the Company to ascertain whether the entire Option qualifies as an incentive stock option.) 3. Administration. All questions of interpretation concerning this Option Agreement shall be determined by the Board of Directors of the Company (the "Board") and/or by a duly appointed committee of the Board having such powers as shall be specified by the Board. Any subsequent references herein to the Board shall also mean the committee if such committee has been appointed and, unless the powers of the committee have been specifically limited, the committee shall have all of the powers of the Board granted in the Plan, including, without limitation, the power to terminate or amend the Plan at any time, subject to the terms of the Plan and any applicable limitations imposed by law. All determinations by the Board shall be final and binding upon all persons having an interest in the Option. Any officer of a Participating Company shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, or election which is the responsibility of or which is allocated to the Company herein, provided the officer has apparent authority with respect to such matter, right, obligation, or election. 4. Exercise of the Option. (a) Right to Exercise. The Option shall first become exercisable on the Initial Exercise Date. The Option shall be exercisable on and after the Initial Exercise Date and prior to the termination of the Option in the amount equal to the Number of Option Shares multiplied by the Vested Ratio as set forth in paragraph 1 above less the number of shares previously acquired upon exercise of the Option. In no event shall the Option be exercisable for more shares than the Number of Option Shares. In addition to the foregoing, in the event that the adoption of the Plan or any amendment of the Plan is subject to the approval of the Company's shareholders in order for the Plan to comply with the requirements of Rule 16b-3, promulgated under the Exchange Act, the Option shall not be exerciseable prior to such shareholder approval if the Optionee is subject to Section 16(b) of the Exchange Act, unless the Board, in its sole discretion, approves the exercise of the Option prior to such shareholder approval. (b) Method of Exercise. The Option may be exercised by written notice to the Company which must state the election to exercise the Option, the number of shares for which the Option is being exercised and such other representations and agreements as to the Optionee's investment intent with respect to such shares as may be required pursuant to the provisions of this Option Agreement. The written notice must be signed by the Optionee and must be delivered in person or by certified or registered mail, return receipt requested, to the Chief Financial Officer of the Company, or other authorized representative of the Participating Company Group, prior to the termination of the Option as set forth in paragraph 6 below, accompanied by (i) full payment of the exercise price for the number of shares being purchased and (ii) an executed copy, if required herein, of the then current forms of escrow and security agreements referenced below. 3 4 (c) Form of Payment of Option Exercise Price. Such payment shall be made (i) in cash, by check, or cash equivalent, (ii) by tender to the Company of shares of the Company's common stock owned by the Optionee having a value not less than the option price, which either have been owned by the Optionee for more than six (6) months or were not acquired, directly or indirectly, from the Company, or (iii) by any combination of the foregoing. Notwithstanding the foregoing, the Option may not be exercised by tender to the Company of shares of the Company's common stock to the extent such tender of stock would constitute a violation of the provisions of any law, regulation and/or agreement restricting the redemption of the Company's common stock. (d) Withholding. At the time the Option is exercised, in whole or in part, or at any time thereafter as requested by the Company, the Optionee hereby authorizes payroll withholding and otherwise agrees to make adequate provision for foreign, federal and state tax withholding obligations of the Company, if any, which arise in connection with the Option, including, without limitation, obligations arising upon (i) the exercise, in whole or in part, of the Option, (ii) the transfer, in whole or in part, of any shares acquired on exercise of the Option, (iii) the operation of any law or regulation providing for the imputation of interest, or (iv) the lapsing of any restriction with respect to any shares acquired on exercise of the Option. The Optionee is cautioned that the Option is not exercisable unless the Company's withholding obligations are satisfied. Accordingly, the Optionee may not be able to exercise the Option when desired even though the Option is vested and the Company shall have no obligation to issue a certificate for such shares. (e) Certificate Registration. The certificate or certificates for the shares as to which the Option shall be exercised shall be registered in the name of the Optionee, or, if applicable, the heirs of the Optionee. (f) Restrictions on Grant of the 0ption and Issuance of Shares. The grant of the Option and the issuance of the shares upon exercise of the Option shall be subject to compliance with all applicable requirements of federal or state law with respect to such securities. The Option may not be exercised if the issuance of shares upon such exercise would constitute a violation of any applicable federal or state securities laws or other law or regulations. IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES. Section 260.141.11 of the Rules of the Commissioner of Corporations of the State of California is set forth in paragraph 14 herein. In addition, no Option may be exercised unless (i) a registration statement under the Securities Act of 1933, as amended (the "Securities Act"), shall at the time of exercise of the Option be in effect with respect to the shares issuable upon exercise of the Option or (ii) in the opinion of legal counsel to the Company, the shares issuable upon exercise of the Option may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. THE OPTIONEE IS CAUTIONED THAT THE OPTION MAY NOT BE EXERCISABLE UNLESS THE FOREGOING CONDITIONS ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. Questions concerning this restriction should be directed to the Chief Financial Officer of the Company. As a condition to the exercise of the Option, the Company may require the Optionee to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company. 4 5 (g) Fractional Shares. The Company shall not be required to issue fractional shares upon the exercise of the Option. 5. Non-Transferability of the 0ption. The Option may be exercised during the lifetime of the Optionee only by the Optionee and may not be assigned or transferred in any I manner except by will or by the laws of descent and distribution. Following the death of the Optionee, the Option, to the extent unexercised and exercisable by the Optionee on the date of death, may be exercised by the Optionee's legal representative or by any person empowered to do so under the deceased Optionee's will or under the then applicable laws of descent and distribution. 6. Termination of the Option. The Option shall terminate and may no longer be exercised on the first to occur of (a) the Option Term Date as defined above, (b) the last date for exercising the Option following termination of employment as described in paragraph 7 below, or (c) upon a Transfer of Control as described in paragraph 8 below. 7. Termination of Employment. (a) Termination of the Option. If the Optionee ceases to be an employee of the Participating Company Group for any reason, except death or disability within the meaning of section 422(c) of the Code, the Option, to the extent unexercised and exercisable by the Optionee on the date on which the Optionee ceased to be an employee, may be exercised by the Optionee within thirty (30) days after the date on which the Optionee's employment terminated, but in any event no later than the Option Term Date. If the Optionee's employment with the Company is terminated because of the death or disability of the Optionee within the meaning of section 422(c) of the Code, the Option, to the extent unexercised and exercisable by the Optionee on the date on which the Optionee ceased to be an employee, may be exercised by the Optionee (or the Optionee's legal representative) at any time prior to the expiration of six (6) months from the date on which the Optionee's employment terminated, but in any event no later than the Option Term Date. The Optionee's employment shall be deemed to have terminated on account of death if the Optionee dies within thirty (30) days after the Optionee's termination of employment. Except as provided in this paragraph 7(a), the Option shall terminate and may not be exercised after the Optionee ceases to be an employee of the Participating Company Group. (b) Termination of Employment Defined. For purposes of this paragraph 7, the term "employee" shall mean any person, including officers and directors, employed by a Participating Company or performing services for a Participating Company as a director, consultant, advisor or other independent contractor. For purposes of this paragraph 7, the Optionee's employment shall be deemed to have terminated either upon an actual termination of employment or upon the Optionee's employer ceasing to be a Participating Company. (c) Extension if Exercise Prevented by Law. Notwithstanding the foregoing, if the exercise of the Option within the applicable time periods set forth above is prevented by the provisions of paragraph 4(f) above, the Option shall remain exercisable until three (3) months after. the date the Optionee is notified by the Company that the Option is exercisable, but in any event no later than the Option Term Date. The Company makes no representation as to the tax consequences of any such delayed exercise. The Optionee should consult with the Optionee's own tax advisors as to the tax consequences to the Optionee of any such delayed exercise. 5 6 (d) Extension if Optionee Subject to Section 16(b). Notwithstanding the foregoing, if the exercise of the Option within the applicable time periods set forth above would subject the Optionee to suit under Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Option shall remain exercisable until the earliest to occur of (i) the tenth (10th) day following the date on which the Optionee would no longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day after the Optionee's termination of employment, or (iii) the Option Term Date. The Company makes no representation as to the tax consequences of any such delayed exercise. The Optionee should consult with the Optionee's own tax advisors as to the tax consequences to the Optionee of any such delayed exercise. (e) Leave of Absence. For purposes hereof, the Optionee's employment with the Participating Company Group shall not be deemed to terminate if the Optionee takes any military leave, sick leave, or other bona fide leave of absence approved by the Company of ninety (90) days or less. In the event of a leave in excess of ninety (90) days, the Optionee's employment shall be deemed to terminate on the ninety-first (91st) day of the leave unless the Optionee's right to reemployment with the Participating Company Group remains guaranteed by statute or contract. Notwithstanding the foregoing, however, a leave of absence shall be treated as employment for purposes of determining the Optionee's Vested Ratio if and only if the leave of absence is designated by the Company as (or required by law to be) a leave for which vesting credit is given. 8. Ownership Change and Transfer of Control. An "Ownership Change" shall be deemed to have occurred in the event any of the following occurs with respect to the Company: (a) the direct or indirect sale or exchange by the shareholders of the Company of all or substantially all of the stock of the Company; (b) a merger or consolidation in which the Company is a party; (c) the sale, exchange, or transfer of all or substantially all of the assets of the Company (other than a sale, exchange, or transfer to one (1) or more subsidiary corporations as defined in paragraph l(k) above of the Company); or (d) a liquidation or dissolution of the Company. A "Transfer of Control" shall mean an Ownership Change in which the shareholders of the Company before such Ownership Change do not retain, directly or indirectly, at least a majority of the beneficial interest in the voting stock of the Company after such transaction or in which the Company is not the surviving corporation. In the event of a Transfer of Control, the Board, in its sole discretion, may arrange with the surviving, continuing, successor, or purchasing corporation or parent corporation thereof, as the case may be (the "Acquiring Corporation"), for the Acquiring Corporation to assume the Company's rights and obligations under this Option Agreement or substitute an option for the Acquiring Corporation's stock in exchange for the Option. The Option shall terminate and cease to be outstanding effective as of the date of the Transfer of Control to the extent that the Option is neither assumed or substituted for by the Acquiring Corporation in connection with the Transfer of Control nor exercised as of the date of the Transfer of Control. 6 7 9. Effect of Change in Stock Subject to the Option. Appropriate adjustments shall be made in the number, exercise price and class of shares of stock subject to the Option in the event of a stock dividend, stock split, reverse stock split, recapitalization, combination, reclassification, or like change in the capital structure of the Company. In the event a majority of the shares which are of the same class as the shares that are subject to the Option are exchanged for, converted into, or otherwise become (whether or not pursuant to an Ownership Change) shares of another corporation (the "New Shares"), the Company may unilaterally amend the Option to provide that the Option is exercisable for New Shares. In the event of any such amendment, the number of shares and the exercise price shall be adjusted in a fair and equitable manner. 10. Rights as a Shareholder or Employee. The Optionee shall have no rights as a shareholder with respect to any shares covered by the Option until the date of the issuance of a certificate or certificates for the shares for which the Option has been exercised. No adjustment shall be made for dividends or distributions or other rights for which the record date is prior to the date such certificate or certificates are issued, except as provided in paragraph 9 above. Nothing in the Option shall confer upon the Optionee any right to continue in the employ of a Participating Company or interfere in any way with any right of the Participating Company Group to terminate the Optionee's employment at any time. 11. Notice of Sales Upon Disqualifying Disposition. The Optionee shall dispose of the shares acquired pursuant to the Option only in accordance with the provisions of this Option Agreement. In addition, the Optionee shall promptly notify the Chief Financial Officer of the Company if the Optionee disposes of any of the shares acquired pursuant to the Option within one (1) year from the date the Optionee exercises all or part of the Option or within two (2) years of the date of grant of the Option. Until such time as the Optionee disposes of such shares in a manner consistent with the provisions of this Option Agreement, the Optionee shall hold all shares acquired pursuant to the Option in the Optionee's name (and not in the name of any nominee) for the one-year period immediately after exercise of the Option and the two-year period immediately after grant of the Option. At any time during the one-year or two-year periods set forth above, the Company may place a legend or legends on any certificate or certificates representing shares acquired pursuant to the Option requesting the transfer agent for the Company's stock to notify the Company of any such transfers. The obligation of the Optionee to notify the Company of any such transfer shall continue notwithstanding that a legend has been placed on the certificate or certificates pursuant to the preceding sentence. 12. Legends. The Company may at any time place legends referencing any applicable federal or state securities law restrictions on all certificates representing shares of stock subject to the provisions of this Option Agreement. The Optionee shall, at the request of the Company, promptly present to the Company any and all certificates representing shares acquired pursuant to the Option in the possession of the Optionee in order to carry out the provisions of this paragraph. Unless otherwise specified by the Company, legends placed on such certificates may include, but shall not be limited to, the following: "THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE CORPORATION TO THE REGISTERED HOLDER UPON EXERCISE OF AN INCENTIVE STOCK OPTION AS DEFINED IN SECTION 422 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED ("ISO"). IN ORDER TO OBTAIN THE PREFERENTIAL TAX TREATMENT AFFORDED TO ISOs, THE SHARES SHOULD NOT BE TRANSFERRED PRIOR TO ___________ SHOULD THE REGISTERED HOLDER ELECT TO TRANSFER ANY OF THE SHARES PRIOR TO THIS DATE AND FOREGO ISO TAX TREATMENT, THE 7 8 TRANSFER AGENT FOR THE SHARES SHALL NOTIFY THE CORPORATION IMMEDIATELY. THE REGISTERED HOLDER SHALL HOLD ALL SHARES PURCHASED UNDER THE INCENTIVE STOCK OPTION IN THE REGISTERED HOLDER'S NAME (AND NOT IN THE NAME OF ANY NOMINEE) PRIOR TO THIS DATE OR UNTIL TRANSFERRED AS DESCRIBED ABOVE." 13. Initial Public Offering . The Optionee hereby agrees that in the event of any underwritten public offering of stock, including an initial public offering of stock, made by the Company pursuant to an effective registration statement filed under the Securities Act, the Optionee shall not offer, sell, contract to sell, pledge, hypothecate, grant any option to purchase or make any short sale of, or otherwise dispose of any shares of stock of the Company or any rights to acquire stock of the Company for such period of time from and after the effective date of such registration statement as may be established by the underwriter for such public offering; provided, however, that such period of time shall not exceed one hundred eighty (180) days from the effective date of the registration statement to be filed in connection with such public offering. The foregoing limitation shall not apply to shares registered in the initial public offering under the Securities Act and shall cease to apply once a registration statement is effective covering shares issuable pursuant to options granted pursuant to the Plan, whether or not such registration statement applies to any of the shares issued or issuable pursuant to the Option. 14. Binding Effect. This Option Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns. 15. Termination or Amendment. The Board, including any duly appointed committee of the Board, may terminate or amend the Plan and/or the Option at any time; provided, however, that no such termination or amendment may adversely affect the Option or any unexercised portion hereof without the consent of the Optionee unless such amendment is required to enable the Option to qualify as an Incentive Stock Option. 16. Integrated Agreement. This Option Agreement constitutes the entire understanding and agreement of the Optionee and the Participating Company Group with respect to the subject matter contained herein, and there are no agreements, understandings, restrictions, representations, or warranties among the Optionee and the Company other than those as set forth or provided for herein. To the extent contemplated herein, the provisions of this Option Agreement shall survive any exercise of the Option and shall remain in full force and effect. 8 9 17. Applicable Law. This Option Agreement 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. Software Professionals, Inc. By: ___________________ Title: __________________ The Optionee represents that the Optionee is familiar with the terms and provisions of this Option Agreement, including the Right of First Refusal set forth in paragraph 11, and hereby accepts the Option subject to all of the terms and provisions thereof. The Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board upon any questions arising under this Option Agreement. The undersigned acknowledges receipt of a copy of Section 260.141.11 of the Rules of the Commissioner of Corporations of the State of California regarding restriction on transfer. Date: _____________________ ________________________ 9 10 The undersigned, being the spouse of the above-named Optionee, does hereby acknowledge that the undersigned has read and is familiar with the provisions of the above Option Agreement, including, without limitation, the provisions of paragraph 11 providing a right of first refusal in favor of the Company upon certain changes in record ownership, and the undersigned hereby agrees thereto and joins therein to the extent, if any, that the agreement and joinder of the undersigned may be necessary. Date: _____________________ ________________________ 10 EX-27 5 EX-27 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 2,303,430 1,002,000 881,289 0 0 4,646,962 1,233,587 0 7,132,342 2,176,724 0 0 0 4,650,062 305,556 7,132,342 327,618 1,468,596 0 581,953 720,984 0 4,380 (140,501) (34,828) (105,673) 0 0 0 (105,673) (0.04) (0.04)
-----END PRIVACY-ENHANCED MESSAGE-----