EXHIBIT 10.42

 

March 18, 2003

 

James Rowley

444 Douglass Street

San Francisco, CA 94114

 

Re:    Restricted Share Right Grant

 

Dear James:

 

Pursuant to its 1993 Stock Option/Stock Issuance Plan (the “Plan”), QRS
Corporation (the “Company”) hereby grants you Fifteen Thousand (15,000)
restricted share rights (“share rights”) with respect to its Common Stock
(“Common Stock”). These share rights are granted to you in accordance with the
restrictions, terms and conditions hereinafter set forth and are in all respects
limited and conditioned by the provisions of the Plan.

 

1.    Each share right entitles you to receive one share of Common Stock on the
date that the share rights vest in accordance with paragraph 2 (the “Vesting
Date”). A certificate representing the shares of Common Stock will be issued
without restriction on or as soon as practicable following the Vesting Date of
the share right, provided that such share right has not been terminated or
canceled before such date in accordance with the provisions hereinafter set
forth.

 

2.    100% of your share rights will vest on March 18, 2006, provided that you
remain employed with the Company through such date. However, if you are employed
by the Company at the time of a Change of Control or Corporate Transaction (as
defined below), all of your outstanding share rights, to the extent not
previously vested or canceled, will immediately vest in full upon a Change in
Control or a Corporate Transaction (both as defined in the Plan, except that for
purposes of this agreement a Corporate Transaction shall not include any merger,
whether forward or reverse, if, immediately after the merger, securities
possessing 50% or more of the total combined voting power of the surviving
entity or parent thereof are beneficially owned, directly or indirectly, by
those persons who were the Company’s stockholders immediately before the merger
in substantially the same proportion as their stockholdings immediately before
the merger), except that where any excess parachute payment under Internal
Revenue Code Section 280G(b) would occur when such accelerated vesting is
aggregated with any other compensation that constitutes a parachute payment,
such accelerated vesting will be limited to the extent necessary to assure that
no excess parachute payment will occur and the remaining non-accelerated share
rights will continue to vest in accordance with this agreement; provided,
however, those remaining share rights shall immediately vest in full (i) at the
time of a Corporate Transaction, if the successor corporation or parent thereof
does not assume the remaining non-accelerated share rights or (ii) upon your
employment being involuntarily terminated other than for “misconduct” (as
defined below) at the time of or within twenty four (24) months after a
Corporate Transaction or a Change in Control or upon your resignation at the
time of or within twenty four (24) months after a Corporate Transaction or a
Change in Control by reason of (a) a material reduction (15% will be deemed a
material reduction) in your base compensation, your annual total target
compensation, or your benefits; (b) a material reduction in your duties or
responsibilities, or (c) a change in your principal place of employment that
increases your commute by more than 25 miles.

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Except as provided in the previous paragraph, if your employment with the
Company terminates for any reason before March 18, 2006, any share right held by
you that has not vested before the date of your termination of employment will
be canceled automatically and will no longer be outstanding and no shares of
Common Stock will be issued hereunder.

 

For purposes of this Agreement, “misconduct” means (i) your willful engagement
in gross misconduct injurious to the Company or your commission of any act of
gross negligence or malfeasance with respect to your duties incident to your
employment; (ii) your willful failure to attend to the material duties assigned
to you by the Board of Directors; (iii) your commission of any act of fraud,
embezzlement or dishonesty against the Company or any affiliate thereof, or (iv)
your conviction for any criminal offense involving fraud or dishonesty or any
similar conduct that is injurious to the reputation of the Company.

 

3.    The issuance of shares of Common Stock under vested share rights is
subject to satisfaction of all tax withholding obligations with respect to such
shares. At your discretion, the number of shares of Common Stock which you would
otherwise be entitled to receive on the Vesting Date may be reduced by that
number of shares which, as of that date, has an aggregate Fair Market Value (as
defined in the Plan) equal to the employer’s minimum statutory tax withholding
obligations applicable to the shares issuable on that date.

 

4.    Your share rights hereunder may not be sold, assigned, transferred,
alienated, subject to garnishment or otherwise encumbered in any manner other
than by transfer by will or the laws of descent and distribution.

 

5.    The issuance of shares of Common Stock hereunder is subject to the
procurement by the Company of all approvals and permits required by regulatory
authorities having jurisdiction over the share rights and stock to be issued
hereunder. The inability of the Company to obtain approval from any regulatory
body having authority deemed by the Company to be necessary to the lawful
issuance of any Common Stock hereunder will relieve the Company of any liability
with respect to the non-issuance of the Common Stock as to which such approval
is not obtained. The Company, however, will use its best efforts to obtain all
such approvals.

 

6.    If any change is made to the Common Stock issuable hereunder by reason of
any stock split, stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the outstanding Common Stock as a
class without receipt of consideration, the Compensation Committee of the Board
of Directors of the Company (the “Compensation Committee”) will make appropriate
adjustments to such share rights to prevent the enlargement or dilution of your
rights thereunder.

 

7.    You will not have any rights as a shareholder with respect to the shares
of Common Stock issuable hereunder until you have been issued a stock
certificate for such shares. It is the intention of the parties that the
Company’s obligations under your share rights are unfunded for purposes of the
Internal Revenue Code and that the Employee Retirement Income Security Act of
1974 does not apply to your share rights.

 

8.    The Compensation Committee, may, in its discretion, modify or waive any or
all of the terms, conditions or restrictions hereof, provided, however, that no
such modification or waiver may, without your consent, adversely affect your
rights hereunder.

 

9.    The Compensation Committee has full authority to administer the Plan,
including authority to interpret and construe any provision thereof and hereof
and to adopt such rules and regulations for

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administering the Plan as it may deem necessary. Decisions of the Compensation
Committee are final and binding on all persons who have an interest in the Plan.

 

10.    This agreement does not constitute a contract of employment. Neither the
grant of this share right, nor any action taken under the terms of this share
right or the Plan, nor any provision of this share right or the Plan will be
construed to grant you the right to remain in the employ of the Company (or any
subsidiary or parent of the Company) for any period of specific duration, and
the Company (or any subsidiary or parent of the Company retaining your services)
may terminate your employment at any time and for any reason, with or without
cause. However, nothing contained in this share right or the Plan will affect
any contractual rights you may have pursuant to a written employment agreement,
duly executed on behalf of the Company.

 

If the foregoing is satisfactory, please sign, date and return the enclosed copy
of this letter to me.

 

 

Very truly yours,

 

/s/    ELIZABETH A. FETTER

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Elizabeth A. Fetter

President and Chief Executive Officer

 

 

 

AGREED AND ACCEPTED:

 

 

/s/    JAMES ROWLEY

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James Rowley

Senior Vice President, Engineering and Chief Technology Officer