Option Amendment Agreement
Exhibit (d)(11)
This Option Amendment Agreement (this “Agreement”) is entered into and effective as of
the date of the last signature below by and between Progress Software Corporation, a Massachusetts
corporation (“Progress”), and _________(“Employee”), an employee of
Progress.
WHEREAS, Progress has granted to Employee, and Employee continues to hold, certain options to
purchase shares of Progress common stock at exercise prices below the fair market value of the
Progress common stock on the respective measurement dates for such options for tax and accounting
purposes (the “Employee Options”), which exercise prices and fair market values are set
forth on Exhibit A hereto;
WHEREAS, under Section 409A (“Section 409A”) of the Internal Revenue Code of 1986, as
amended, options granted with an exercise price less than the fair market value of the underlying
stock on the applicable measurement date for such options, to the extent they were not vested as of
December 31, 2004, will be subject to adverse income taxation unless such options are brought into
compliance with Section 409A;
WHEREAS, each portion of an Employee Option that (i) was unvested as of December 31, 2004 and
(ii) remains outstanding and unexercised on the date hereof (such portion to constitute an
“Eligible Option”) is not in compliance with Section 409A; and
WHEREAS, Employee wishes to avoid the adverse income tax consequences arising from Section
409A, and Progress is willing to amend the terms of the Eligible Options as set forth in this
Agreement to bring them into compliance with Section 409A;
NOW, THEREFORE, in consideration of the foregoing premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Progress and Employee
hereby agree as follows:
1. Increase in Exercise Price of Eligible Options. Each Eligible Option held by
Employee is hereby amended to increase the exercise price of such Eligible Option to the fair
market value of the Progress common stock on the applicable measurement date of such option for tax
and accounting purposes, in each case as set forth on Exhibit A hereto. Except for the
increased exercise price per share, each Eligible Option held by Employee will continue to remain
subject to the same terms and conditions as in effect for that option immediately prior to the date
hereof (it being understood that, because each Eligible Option was originally granted with an
exercise price below the fair market value of the Progress common stock on the applicable
measurement date for tax purposes, no Eligible Option will qualify as an incentive stock option for
tax purposes, regardless of whether it was designated as such at the time of grant). Accordingly,
each amended Eligible Option will vest in accordance with the same vesting schedule measured from
the same vesting commencement date, and it will have the same exercise period, option term and
other conditions currently in effect for that option (including its status as a nonqualified stock
option).
2. Pending Final Regulations. Employee understands that (a) the Internal Revenue
Service has stated its intention to issue final regulations under Section 409A during 2006 and
may issue such final regulations in the near future, (b) such final regulations may make the
amendment effected hereby unnecessary to bring the Eligible Options held by Employee into
compliance with Section 409A and (c) alternatively, under such final regulations, the amendment
effected hereby may not be sufficient to bring the Eligible Options held by Employee into
compliance with Section 409A. Notwithstanding the foregoing, Employee specifically agrees that
Employee wishes to increase the exercise price of the Eligible Options held by Employee as set
forth in Section 1 at this time and prior to the issuance of any such final regulations under
Section 409A.
3. Eligibility for Special Cash Bonus.
3.1 Subject to the terms and conditions of this Agreement, Progress shall pay Employee a
special cash bonus (the “Cash Bonus”) with respect to each Eligible Option held by Employee
in a dollar amount determined by multiplying (a) the number of shares of Progress common stock
subject to such Eligible Option by (b) the amount by which the amended exercise price per share
exceeds the original exercise price per share of that Eligible Option.
3.2 The Cash Bonus payable with respect to all of Employee’s Eligible Option shares that are
vested as of the date hereof (the “Vested Cash Bonus”) will be payable to Employee as soon
as practicable after January 20 of the first calendar year following the calendar year in which the
Amendment Date (as defined below) occurs.
3.3 The Cash Bonus payable with respect to all of Employee’s Eligible Option shares that are
scheduled to vest after the date hereof (the “Unvested Cash Bonus”) will become payable to
Employee in up to four installments payable on or about April 5 and October 5 (each, a “Payment
Date”) of the two calendar years following the calendar year in which the Amendment Date
occurs. The number of installments for Employee’s Unvested Cash Bonus will depend on the date when
the latest to vest of Employee’s Eligible Options will become fully vested in accordance with their
respective current vesting schedules, as follows:
3.3.1 If the latest to vest of Employee’s Eligible Options will become fully vested on
or before the first Payment Date, Employee will receive Employee’s entire Unvested Cash
Bonus on the first Payment Date.
3.3.2 If the latest to vest of Employee’s Eligible Options will become fully vested
after the first Payment Date and on or before the second Payment Date, Employee will receive
Employee’s Unvested Cash Bonus in two equal installments on the first and second Payment
Dates.
3.3.3 If the latest to vest of Employee’s Eligible Options will become fully vested
after the second Payment Date and on or before the third Payment Date, Employee will receive
Employee’s Unvested Cash Bonus in three equal installments on the first, second and third
Payment Dates.
3.3.4 If the latest to vest of Employee’s Eligible Options will become fully vested
after the third Payment Date, Employee will receive Employee’s Unvested Cash Bonus
(including any portion attributable to Eligible Options that vest after the third or fourth
Payment Dates) in four equal installments on the four Payment Dates.
2
3.4 Employee must remain employed by Progress on the applicable payment date to receive the
Vested Cash Bonus or the portion of the Unvested Cash Bonus payable on that date. Employee agrees
that Progress’ determination of Employee’s eligibility to receive any Cash Bonus shall be final and
binding on Employee.
3.5 Employee understands that Progress intends to conduct an issuer tender offer in order to
offer other holders of Eligible Options the opportunity to amend their Eligible Options in a manner
substantially similar to the amendment effected hereby in order to bring their Eligible Options
into compliance with Section 409A, and that such option holders whose Eligible Options are amended
pursuant to such issuer tender offer will become eligible to receive cash bonuses calculated in
substantially the same manner as set forth in this Section 3. The “Amendment Date” shall
be the latest date on which the amendment of Eligible Options pursuant to such issuer tender offer
shall occur or, if there is no such amendment by reason of termination or abandonment of the issuer
tender offer or for other reasons, December 31, 2007.
3.6 Employee understands and agrees that Progress must withhold all applicable U.S. federal,
state and local income and employment withholding taxes as well as all applicable foreign tax and
other payments from each Cash Bonus payment and that Employee will receive only the portion of the
payment remaining after those taxes and payments have been withheld. Employee agrees that
Progress’ calculation of any Cash Bonus, including any amount to be withheld therefrom, shall be
final and binding on Employee.
4. Amendment; Waiver. This Agreement may be amended, modified or supplemented by the
parties hereto only by a written instrument signed by Progress and Employee. The terms and
conditions of this Agreement may be waived only by a written instrument signed by the party waiving
compliance.
5. Governing Law. This Agreement shall be governed by, and construed and enforced in
accordance with, the substantive laws of the Commonwealth of Massachusetts, without regard to its
principles of conflicts of laws.
6. Entire Agreement, Assignment, etc. This Agreement supersedes all prior written and
oral negotiations, discussions, communications, understandings, arrangements and agreements between
the parties with respect to the subject matter hereof. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement is personal to Employee and shall not be assignable by Employee,
by operation of law or otherwise.
7. Counterparts. This Agreement may be executed in one or more counterparts, all of
which together shall constitute one and the same Agreement.
3
In Witness Whereof, the parties have caused this Agreement to be executed as an agreement
under seal as of the date of the last signature below.
| PROGRESS SOFTWARE CORPORATION | ||||
| By: | ||||
| Title: | ||||
| Printed Name: | ||||
| Date Signed: | ||||
| EMPLOYEE: | ||||
| [Name] | ||||
| Date Signed: | ||||
4
