THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.
NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
STOCK OPTION AGREEMENT
Prophet 21, Inc., a Delaware corporation (the "Company"), hereby grants to
Xxxxx Xxxxxxxxx (the "Optionee") an Option to purchase a total of 10,000 shares
(the "Shares") of Common Stock of the Company, $0.01 par value (the "Common
Stock"), at the exercise price set forth herein.
1. Nature of the Option. This Option is a Nonstatutory Stock Option and
is not intended to qualify for any special tax benefits to the Optionee.
2. Exercise Price. The exercise price is $5.375 for each share of Common
Stock, which price is not less than the fair market value per share of Common
Stock on the date of grant.
3. Exercise of Option. This Option shall be exercisable during its term in
accordance with the following:
(i) Right to Exercise.
(a) Subject to subsections 3(i)(b), (c) and (d) below, the
shares subject to this Option shall become exercisable to the extent of
one-third of the options on each of the first, second and third anniversaries of
the date of grant.
(b) This Option may not be exercised for a fraction of a
Share.
(c) In the event of Optionee's death, the exercisability of
the option is governed by Section 7 below, subject to the limitations contained
in subsection 3(i)(d) hereof.
(d) In no event may this Option be exercised after the date of
expiration of the term of this Option as set forth in Section 9 below.
(ii) Method of Exercise. This Option shall be exercisable by written
notice in the form attached as Exhibit A, which shall state the election to
exercise the Option, the number of Shares in respect of which the Option is
being exercised, and such other representations and agreements as to the
holder's investment intent with respect to such shares of Common Stock as may be
required by the Company. Such written notice shall be signed by Optionee and
shall be delivered in person or by certified mail to the Chief Executive Officer
or Chief Financial Officer of the Company. The written notice shall be
accompanied by payment of the exercise price.
This Option shall be deemed to be exercised upon receipt by the Company of such
written notice accompanied by the exercise price. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the shares of stock underlying this
Option, notwithstanding the exercise of the Option. The Company shall issue (or
cause to be issued) such stock certificate promptly upon exercise of the Option.
No shares will be issued pursuant to the exercise of an Option
unless such issuance and such exercise shall comply with all relevant provisions
of law and the requirements of any stock exchange upon which the Shares may then
be listed. Assuming such compliance, for income tax purposes the Shares shall be
considered transferred to the Optionee on the date on which the Option is
exercised with respect to such Shares.
4. Investment Representations; Restrictions on Transfer.
By receipt of this Option, by its execution and by its exercise in
whole or in part, Optionee represents to the Company the following:
(a) Optionee understands that this Option and any Shares
purchased upon its exercise are securities, the issuance of which requires
compliance with federal and state securities laws.
(b) 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 acquire the securities. Optionee
is acquiring these securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
(c) Optionee acknowledges and understands that the securities
constitute "restricted securities" under the Securities Act and must be held
indefinitely unless they are subsequently registered under the Securities Act or
an exemption from such registration is available. Optionee further acknowledges
and understands that the Company is under no obligation to register the
securities. Optionee understands that the certificate evidencing the securities
will be imprinted with a legend which prohibits the transfer of the securities
unless they are registered or such registration is not required in the opinion
of counsel satisfactory to the Company and any other legend required under
applicable state securities laws.
(d) Optionee is familiar with the provisions of Rule 701 and
Rule 144, each promulgated under the Securities Act, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly, from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of exercise of the Option by the Optionee,
such exercise will
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be exempt from registration under the Securities Act. In the event the Company
later becomes subject to the reporting requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, ninety (90) days thereafter the securities
exempt under Rule 701 may be resold, subject to the satisfaction of certain of
the conditions specified by Rule 144, including among other things: (1) the sale
being made through a broker in an unsolicited "broker's transaction" or in
transactions directly with a market maker (as said term is defined under the
Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the
availability of certain public information about the Company, and the amount of
securities being sold during any three-month period not exceeding the
limitations specified in Rule 144(e), if applicable.
In the event that the Company does not qualify under Rule 701 at the
time of exercise of the Option, then the securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires
among other things: (1) the availability of certain public information about the
Company; (2) the resale occurring not less than two years after the party has
purchased, and made full payment for, within the meaning of Rule 144, the
securities to be sold; and (3) in the case of an affiliate, or of a
non-affiliate who has held the securities less than three years, the sale being
made through a broker in an unsolicited "broker's transaction" or in
transactions directly with a market maker (as said term is defined under the
Securities Exchange Act of 1934) and the amount of securities being sold during
any three month period not exceeding the specified limitations stated therein,
if applicable.
5. Method of Payment. Payment of the purchase price shall be made by cash
or check.
6. Restrictions on Exercise. This Option may not be exercised if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations (Regulation G) as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
option, the Company may require Optionee to make any representation and warranty
to the Company as may be required by any applicable law or regulation.
7. Death of Optionee. In the event of the death of Optionee this Option
may be exercised, at any time within six (6) months following the date of death
(but in no event later than the date of expiration of the term of this Option as
set forth in Section 9 below), by Optionee's estate or by a person who acquired
the right to exercise the Option by bequest or inheritance, but only to the
extent of the right to exercise that would have accrued had Optionee continued
living.
8. Non-Transferability of Option. This Option may not be transferred in
any manner other than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee only by Optionee. The terms of this
Option shall be binding upon the executors, administrators, heirs, successors
and assigns of Optionee.
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9. Term of Option. Notwithstanding any provision herein to the contrary,
this Option may not be exercised after the close of business (New York, New York
EST) on [ , 2007] (the "Termination Date"), and may be exercised from the date
hereof until the Termination Date only in accordance with the terms of this
Option.
10. Taxation Upon Exercise of Option. Optionee understands that, upon
exercise of this Option, Optionee will recognize income for tax purposes in an
amount equal to the excess of the then fair market value of the Shares over the
exercise price. Upon a resale of such shares by the Optionee, any difference
between the sale price and the fair market value of the shares on the date of
exercise of the option will be treated as capital gain or loss.
11. Tax Consequences. The Optionee understands that any of the foregoing
references to taxation are based on federal income tax laws and regulations now
in effect. The Optionee has reviewed with the Optionee's own tax advisors the
federal, state, local and foreign tax consequences of the transactions
contemplated by this Agreement. The Optionee is relying solely on such advisors
and not on any statements or representations of the Company or any of its
agents. The Optionee understands that the Optionee (and not the Company) shall
be responsible for the Optionee's own tax liability that may arise as a result
of the transactions contemplated by this Agreement.
DATE OF GRANT:
June 20, 1997
Prophet 21, Inc.
By: /s/ Xxxxxxx X. Xxxxx, III
-------------------------
Xxxxxxx X. Xxxxx, III, President and
Chief Executive Officer
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Optionee has had an opportunity to obtain the advice of counsel prior to
executing this Option and fully understands all provisions of the Option.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Board of Directors of the Company upon any questions
arising under this Option. Optionee further agrees to notify the Company upon
any change in the residence address indicated below.
Dated:
--------------------
/s/ Xxxxx X. Xxxxxxxxx
-------------------------------------
Name:
Residence Address:
18145 Xxxxxx Way
-------------------------------------
Xxxx Xxxxxxx, XX 00000
-------------------------------------
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Social Security No. ###-##-####
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EXHIBIT A
NOTICE OF EXERCISE OF STOCK OPTION
TO:
FROM:
DATE:
RE: Exercise of Stock Option
I hereby exercise my option to purchase shares of Common Stock
at $5.375 per share (total exercise price of $ ), effective today's date.
This notice is given in accordance with the terms of my Stock Option Agreement
dated , 1997. The option price and vested amount is in accordance with Sections
2 and 3 of the Stock Option Agreement.
Attached is a check payable to Prophet 21, Inc. for the total exercise
price of the shares being purchased. The undersigned confirms the
representations made in Section 4 of the Stock Option Agreement.
Please prepare the stock certificate in the following name(s):
------------------------------
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If the stock is to be registered in a name other than your name, please so
advise the Company. The Stock Option Agreement requires the Company's approval
for registration in a name other than your name and requires certain agreements
from any joint owner.
Sincerely,
--------------------------------------
(Signature)
--------------------------------------
(Print or Type Name)
Letter and consideration
received on , 19 .
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By:
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