MADE2MANAGE SYSTEMS, INC.
STOCK OPTION AGREEMENT
This Stock Option Agreement is entered into by and between _______________
(the "Optionee") hereinbelow set forth and Made2Manage Systems, Inc., an Indiana
corporation (the "Company").
1. OPTIONEE: BASIC TERMS. The Optionee is hereby granted an option to
purchase the number of fully paid and non-assessable shares of the
Common Stock, without par value, of the Company at the option price
hereinbelow set forth, subject to the following additional terms and
conditions:
A. DEFINITIONS
1. "Code" shall mean the Internal Revenue Code of 1986, and as
amended from time to time.
2. "Incentive Option" shall mean an option described in Section
422A of the Code. TO QUALIFY FOR FAVORABLE TAX TREATMENT
PROVIDED BY AN INCENTIVE OPTION, THE SHARES PURCHASED UPON
EXERCISE MUST BE HELD FOR A PERIOD OF TWO (2) YEARS FROM THE
DATE OF THE OPTION GRANT AND FOR A PERIOD OF ONE (1) YEAR
AFTER THE SHARES ARE TRANSFERRED TO OPTIONEE.
3. "Non-Qualified Option" shall mean an option other than an
Incentive Option, the exercise of which generally results in
an immediate taxable event.
4. Unless otherwise indicated, all capitalized terms set forth
in this Agreement shall have the meaning provided to them
under the Plan, a copy of which Optionee acknowledges having
received.
X. XXXXX OF OPTION
1. The Company hereby grants to the Optionee an option (the
"Option") to purchase _____ shares of Common Stock of the
Company, upon the terms and conditions set forth below. The
date of grant of the Option is _________________________
(the "Grant Date").
2. This Option is intended to be a(n):
/ / Incentive Option (to be received only by EMPLOYEES of
the Company).
/ / Non-Qualified Option.
3. The Optionee is a(n) (if applicable, check more than one):
/ / Employee / / Officer / / Director
/ / Consultant / / Other Person providing services
C. DURATION OF OPTION
1. INCENTIVE OPTION: If this Option is an Incentive Option, as
set forth above, it shall expire ten (10) years from the
Grant Date, provided, however, for any Optionee who owns
more than ten percent (10%) of the total combined voting
power or value of all classes of stock of the Company, the
duration of this Option shall be five (5) years.
2. NON-QUALIFIED OPTION: If this Option is a Non-Qualified
Option, as set forth above, it shall expire ten (10) years
after the Grant Date.
D. PURCHASE PRICE
The purchase price for the shares subject to the Option shall be
$___________ per share, which is either: (a) equal to at least
eighty-five percent (85%) of Fair Market Value if the Option is a
Non-Qualified Option, (b) equal to at least one-hundred percent
(100%) of Fair Market Value if the Option is an Incentive Option,
or (c) equal to at least one-hundred ten percent (110%) of Fair
Market Value if the Option is an Incentive Option and Optionee
holds more than ten percent (10%) of the total combined voting
power or value of all classes of stock of the Company.
2. EXERCISABILITY. This Option shall not be exercisable in whole or in
part until ___________________, 19____. Subject to Section 6
regarding termination of Optionee's employment, consulting or other
relationships with the Company and Section 10A regarding Incentive
Options, this Option shall become exercisable on or after
_________________, 19____, with respect to _____% of the shares of
Common Stock and on the first day of each month thereafter through
__________________, 19 ____, with respect to an additional 1/_____ of
the shares of Common Stock subject to the Option.
- 2 -
3. METHOD OF EXERCISE AND PAYMENT. This Option may be exercised from time
to time, in whole or in part, to the extent exercisable, only by
delivery to an officer of the Company of the original of this Option
with an appropriate Notice of Exercise duly signed by the holder,
together with the full purchase price of the shares purchased pursuant
to the exercise of the Option; provided, however, that this Option may
not be exercised if such exercise would violate any law or
governmental order or regulation. If the offer and sale of the shares
subject to the Option has not been registered under the Securities Act
of 1933, as amended (the "Act"), Optionee shall deliver to the
Company, at the time of exercise, an appropriate "investment letter"
in form and content satisfactory to the Company unless, in the opinion
of counsel for the Company, the shares issued would not be deemed
"restricted securities" within the meaning of such Act or the rules
and regulations promulgated thereunder. Payment for the shares
purchased pursuant to any exercise shall be made in full at the time
of such exercise, in any of the following methods, as may be elected
by the Optionee, except for those PROHIBITED methods indicated by a
check xxxx within any of the boxes below (A CHECK XXXX MEANS THE
METHOD IS PROHIBITED):
/ / In cash or by check payable to the order of the Company;
/ / In Common Stock of the Company already owned by the Optionee for a
period of six (6) months prior to such exercise, valued as of the
date of exercise of the Option at Fair Market Value;
/ / By a promissory note payable to the order of the Company; if a
promissory note is tendered, such note shall bear interest at an
interest rate determined by, and shall be subject to such terms
and conditions as are prescribed by, the Board of Directors of
the Company as set forth in the form of promissory note.
Optionee agrees to have withheld from any remuneration payable to
him/her by the Company and/or to pay to the Company, at the time of
exercise of the Option, an amount which is required to be withheld or
paid pursuant to any Federal, State or Local tax or revenue laws or
regulation, as may be determined by the Company. ****The Optionee:
may / / or may not / /
- 3 -
satisfy such tax withholding by instructing the Company to withhold
such number of option shares exercised which, when valued at fair
Market Value on the date of Exercise, equal the total tax obligations
required to be withheld.***
4. NON-TRANSFERABILITY. This Option shall not be transferred, sold,
pledged, assigned, hypothecated, or disposed of in any manner by
Optionee other than by will or the laws of descent and distribution
to the extent hereinafter set forth. This Option may be exercised
during the holder's lifetime only by the holder hereof or, upon the
holder's legal incapacity to act on his/her own behalf, by the
holder's conservator or other lawful representative. The Option
shall be null and void and without effect upon any attempted
assignment or transfer, except as hereinabove provided, including
without limitation, any purported assignment, whether voluntary
or by operation of law, pledge, hypothecation or other disposition
contrary to the provisions hereof, or levy of execution, attachment,
trustee process or similar process, whether legal or equitable, upon
the Option.
5. TERMINATION. To the extent that this Option shall not have been
exercised in full prior to its termination or expiration date,
whichever shall be sooner, it shall terminate and become void and of
no effect.
6. CESSATION OF CONTINUOUS STATUS -- TERMINATION RETIREMENT DEATH OR
DISABILITY. If the holder shall voluntarily or involuntarily cease
his/her Continuous Status (as such term is defined in the Plan)
(hereinafter referred to as a "Termination"), the Option of the holder
shall terminate forthwith, except that the holder shall have thirty
(30) days (or such longer period as the Board may approve) following
the Termination to exercise this Option or any portion hereof which
the holder could have exercised on the date of Termination; provided,
however, that if the Termination is due to retirement by the holder on
or after attaining the age of sixty-five (65) years, the disability of
the holder or the death of the holder, the holder or the
representative of the estate of the holder shall have the privilege of
exercising the entire unexercised portion of this Option (regardless
of whether otherwise exercisable on the date of such Termination),
provided that such exercise be accomplished: (1) prior to the
expiration of this Option and (2) either within thirty (30) days of
the holder's retirement, or within twelve (12) months after the date
of death of the holder, as the case may be. Notwithstanding any of
the foregoing, if the Termination is "for cause" (as defined in
Section (d) of the Plan), or the holder is terminated due to his
expropriation of Company property (including trade secrets or other
proprietary rights), the existence of which shall be determined by
the Board of Directors or the Committee established to administer the
Plan (such decision to be made by the Board or Committee in its sole
discretion and which determination shall be conclusive), this Option
shall terminate immediately upon the Termination and the holder in
such event shall have no right
- 4 -
after such Termination to exercise any unexercised Option he might
have exercised on or prior to the Termination.
7. STOCK SPLITS AND CAPITAL ADJUSTMENTS. If, prior to the complete
exercise of this Option, there shall be declared and paid a stock
dividend upon the Common Stock of the Company or if such stock shall
be split up, converted, exchanged or reclassified, this Option, to the
extent that it has not been exercised, shall entitle the holder, upon
the future exercise of this Option, to such number and kind of
securities or other property, subject to the terms of the Option, to
which the holder would be entitled had he/she actually owned the stock
subject to the unexercised portion of the Option at the time of the
occurrence of such stock dividend, split up, conversion, exchange,
reclassification or substitution; and the aggregate purchase price
upon the future exercise of the Option shall be the same as if shares
of Common Stock of the Company originally optioned were being
purchased as provided herein.
8. ACCELERATION OF EXERCISE DATE.
A. REORGANIZATION. Notwithstanding anything to the contrary
contained in this Agreement, all outstanding unexercised Options
shall become fully vested under the Plan and shall be fully
exercisable in the event of any reorganization, sale of all or
substantially all of the assets of the Company in a transaction
in which the Company does not survive in its present form (other
than a sale or transfer to a subsidiary or parent of the
Company), merger, consolidation, liquidation or similar
transaction pursuant to which the Company is not the surviving
corporation; provided, however, such Options shall not become
fully vested or immediately exercisable (1) if in its sole
discretion, the Board has affirmatively determined that such
immediate vesting is not in the best interests of the Company,
in which event the Option shall be assumed or an equivalent
option shall be substituted by the successor corporation or a
parent or subsidiary thereof, or (2) if such transaction is
effected by the Company for the principal purpose of changing
the Company's state of incorporation.
B. TIME OF EXERCISE. In the event of such accelerated vesting
pursuant to Section 8.A. above, the Option shall be fully
exercisable during a period to be designated by the Board
(but not less than ten (10) nor more than sixty (60) days prior
to the closing date of any such transaction).
C. DEFINITION OF SUBSIDIARY. For purposes of this paragraph, the
term "subsidiary" means any corporation which is part of a chain,
beginning with the Company, which owns at least fifty percent
(50%) or more of the
- 5 -
total combined voting power of all classes of stock in one of the
other corporations in such a chain.
9. COMPLIANCE WITH SECURITIES LAWS.
A. POSTPONE ISSUANCE. Notwithstanding any provision of this Option
to the contrary, the Company may postpone the issuance and
delivery of shares upon any exercise of this Option until one of
the following conditions shall be met:
1. The shares with respect to which such Option has been
exercised are at the time of the issue of such shares
effectively registered under applicable Federal and State
securities laws now in force or hereafter enacted or
amended; or
2. Counsel for the Company shall have given an opinion that
registration of such shares under applicable Federal and
State securities laws, as now in force or hereafter enacted
or amended, is not required.
B. INVESTMENT REPRESENTATION. In the event that for any reason the
shares to be issued upon exercise of the Option shall not be
effectively registered under the Securities Act of 1933
(the "1933 Act"), upon any date on which the Option is exercised
in whole or in part, the Company shall be under no further
obligation to issues shares covered by the Option, unless the
Optionee shall give a written representation to the Company, in
form satisfactory to the Company, that such person is acquiring
the shares issued pursuant to such exercise of the Option for
investment and not with a view to, or for sale in connection
with, the distribution of any such shares, and that he/she will
make no transfer of the same except in compliance with the 1933
Act and the rules and regulations promulgated thereunder and then
in force, and in such event, the Company may place an "investment
legend" upon any certificate for the shares issued by reason of
such exercise.
10. SPECIAL RULES REGARDING INCENTIVE OPTIONS.
A. NOTICE OF TRANSFER. If this Option is an Incentive Option, the
employee-optionee hereby agrees to notify the Company in writing
within three (3) days after any sale, transfer or other
disposition of shares acquired upon the exercise of this Option
which occurs within either twelve (12) months following the date
of exercise or twenty-four (24) months following the date of
grant.
- 6 -
B. $100,000 PER YEAR EXERCISE LIMIT. If this Option is an Incentive
Stock Option it shall be exercisable in accordance with the above
Section 2, but in no event shall it be exercised to the extent
that the aggregate fair market value of Common Stock covered by
such Option which is exercisable for the first time during any
calendar year, when combined with the aggregate fair market value
of all stock covered by incentive stock options (as defined in
the Code) granted to Optionee after December 31, 1986 by the
Company, its parent or a subsidiary of the Company which are
exercisable for the first time during the same calendar year,
exceeds $100,000.
11. NO AGREEMENT OF EMPLOYMENT. Neither the grant of this Option nor this
Agreement shall be deemed to create any agreement with, or obligation
by, the Company to employ the Optionee for any period of time, it
being understood that employment is strictly "at will" in the absence
of any written agreement to the contrary and, in the absence of such
written agreement, such person may be terminated by the Company at any
time, with or without cause.
12. SUBJECT TO PLAN. This Option is issued subject and pursuant to the
provisions of the Plan, receipt of a copy of which the holder
acknowledges. A determination of the Board of Directors or the
Committee established pursuant to the Plan as to any questions which
may arise with respect to the interpretation of the provisions of this
Option and of the Plan shall be final. The Board of Directors or the
Committee may authorize and establish such rules and regulations, and
revisions thereof, not inconsistent with the provisions of the Plan,
as it may deem advisable. Any provision hereof which is inconsistent
with, or contrary to, the terms and conditions of the Plan shall be
superseded and governed by the Plan.
13. SEVERABILITY. If any condition, term or provision of this Agreement is
determined by a court to be illegal or in conflict with any law, State
or Federal, the validity of the remaining portions or provisions shall
not be affected, and the rights and obligations of the parties shall
be construed and enforced as if this Agreement did not contain the
particular condition, terms or provisions determined to be
unenforceable.
14. ENTIRE AGREEMENT; INDIANA LAW. This Agreement contains the entire
understanding and agreement between the parties hereto respecting the
within subject matter, and there are no representations, agreements,
arrangements or understandings, oral or written, between the parties
hereto relating to the subject matter of this Agreement that are not
fully expressed herein. The Company is an Indiana corporation, and
this Agreement shall be governed by and construed in accordance with
the laws and the State of Indiana.
- 7 -
WITNESS the signature of its duly authorized office of the Company as of
the date of grant hereof.
MADE2MANAGE SYSTEMS, INC.
By:
-------------------------------------
Name: Xxxxx X. Xxxxxxx
-----------------------------------
Title: President and CEO
----------------------------------
Acknowledged and Agreed to:
-----------------------------------
Signature
-----------------------------------
Name
-----------------------------------
Xxxxxx Xxxxxxx
-----------------------------------
Xxxx, Xxxxx, Zip Code
-----------------------------------
Social Security No.
- 8 -
