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EXHIBIT 4.1
NONQUALIFIED OPTION AGREEMENT
THIS NONQUALIFIED OPTION AGREEMENT (the "Agreement"), made as of
December 31, 1998, between PLATINUM SOFTWARE CORPORATION, a Delaware corporation
(hereinafter referred to as the "Company"), and Xxxxxx X. Xxxxxxx, an employee
of the Company, its parent or one or more of its subsidiaries (the "Optionee"),
is made with reference to the following facts:
R E C I T A L S
A. Optionee is employed with the Company or a consultant to the Company
and is a valued and key employee of or a consultant to the Company.
B. The Company, Zoo Acquisition Corp. ("Merger Sub"), and DataWorks
Corporation entered into an Agreement and Plan of Reorganization dated as of
October 13, 1998 ("Merger Agreement"), pursuant to which DataWorks will become a
wholly owned subsidiary of the Company ("Merger").
C. Concurrent with the closing of the Merger, the Company desires to
employ the Optionee and the Company and the Optionee have entered into an
employment agreement ("Employment Agreement").
D. The Company and the Optionee acknowledge that the option grant
represented by this Agreement is an inducement essential to Optionee entering
into employment with the Company.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants hereinafter
set forth, and for good and valuable consideration, the parties hereto have
agreed, and do hereby agree, as follows:
1. GRANT OF OPTION.
The Company hereby irrevocably grants to the Optionee the right and
option (hereinafter called the "Option") to purchase all or any part of an
aggregate of 375,000 Shares (such number being subject to adjustment as provided
in Paragraph 7 hereof) on the terms and conditions herein set forth. The Option
granted herein is a "nonqualified option" and is not subject to the provisions
of Section 422A of the Internal Revenue Code of 1986, as amended.
2. PURCHASE PRICE.
The purchase price of the Shares covered by the Option shall be
$12.8125 per share (the "Exercise Price"), representing one hundred percent
(100%) of the fair market value of the shares as determined pursuant to Section
5 of the Plan as of the date hereof.
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3. TERM OF OPTION.
The term of the Option shall commence on the date hereof and all rights
to purchase shares hereunder shall cease at 11:59 p.m. on the day before the
tenth (10th) anniversary of the date hereof, subject to earlier termination as
provided herein. Except as may otherwise be provided in this Agreement, options
granted hereunder may be cumulative and exercised as follows:
(i) From and after the date hereof (the "Vesting Commencement Date")
and until one year from the Vesting Commencement Date, the Option may not be
exercised as to any of the Shares subject to the Option.
(ii) During the period commencing one year from the Vesting
Commencement Date, the Option may be exercised for one-third (1/3) of the Shares
subject to the Option, and, thereafter, on each succeeding anniversary of the
Vesting Commencement Date, the Option may be exercised for an additional
one-third (1/3) of the Shares subject to the Option, such that on and after
three (3) years from the Vesting Commencement Date, the Option may be exercised
as to all of the Shares subject to the Option.
The purchase price of the Shares as to which the Option shall be
exercised shall be paid in full at the time of exercise, as provided in
Paragraph 9 below. Except as provided in Paragraph 5 hereof, the Option may not
be exercised at any time unless the Optionee shall have been continuously, from
the date hereof to the date of the exercise of the Option, a Service Provider to
the Company. The holder of the Option shall not have any of the rights of a
shareholder with respect to the Shares covered by the Option as to any Shares of
Common Stock not actually issued and delivered to Optionee.
4. NONTRANSFERABILITY.
The Option shall not be transferable other than by will or the laws of
descent and distribution or with the prior written consent of the Plan
Administrator, and the Option may be exercised, during the lifetime of the
Optionee, only by Optionee. More particularly (but without limiting the
generality of the foregoing), the Option may not be assigned, transferred
(except as provided in Paragraph 6 hereof), pledged or hypothecated in any way,
shall not be assignable by operation of law and shall not be subject to
execution, attachment or similar process. Any attempted assignment, transfer,
pledge, hypothecation or other disposition of the Option contrary to the
provisions hereof, and the levy of any execution, attachment or similar process
upon the Option, shall be null and void and without effect.
5. TERMINATION OF OPTION.
Except as provided below in this Section, this Option shall terminate
on the date Optionee ceases to be a Service Provider for the Company or ceases
to be deemed to be considered a service provider as provided in Section 5.3 of
the Employment Agreement (the "Termination Date"). Optionee shall be considered
to be a Service Provider to the Company for all purposes under this Agreement if
either: (i) the Board of Directors or Administrator of the Plan determines that
Optionee is rendering or available to render substantial services as a part-time
employee, consultant, contractor or advisor to the Company or any Parent,
Subsidiary or Affiliate of the Company; or (ii) Optionee is deemed to be
considered a service provider pursuant to Section 5.3 of the Employment
Agreement. A leave of absence (regardless of the reason therefor) shall be
deemed to constitute the cessation of Service Provider status as of the
commencement date of the leave, unless such leave is authorized by the Company
in writing and the Optionee recommences providing services prior to the
expiration date of such leave. Accordingly, the Optionee shall receive credit as
a Service Provider to the Company during a leave of absence only if the
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leave is authorized by the Company and the Optionee recommences providing
services on or prior to the expiration date of the leave.
(a) TERMINATION GENERALLY. In the event Optionee ceases to be a Service
Provider to the Company for any reason except death or disability, this Option,
to the extent (and only to the extent) that it would have been exercisable by
Optionee on the Termination Date, may be exercised by Optionee within three (3)
months after the Termination Date, but in no event later than the Expiration
Date.
(b) DEATH OR DISABILITY. In the event Optionee ceases to be a Service
Provider to the Company because of the death of Optionee or the disability of
Optionee within the meaning of Section 22(e)(3) of the Code, this Option shall
continue to vest for the remainder of the Consulting Period (as defined in the
Employment Agreement) and may be exercised by Optionee (or Optionee's legal
representative) within one year after the expiration of the Consulting Period
(as defined in the Employment Agreement), but in no event later than the
Expiration Date.
6. OTHER TERMINATIONS OR EXPIRATIONS.
(a) In addition to any other event causing an expiration or termination
of this Option, this Option shall expire and all rights to purchase Shares shall
cease (to the extent not theretofore terminated or expired as herein provided)
upon the effective date of a Change of Control. To the extent applicable, based
upon the event causing a Change of Control, the Company shall give written
notice to the Optionee of the proposed Change of Control not less than thirty
(30) days prior to the anticipated effective date of the Change of Control. The
Option shall be accelerated and, concurrent with the effective date of the
Change of Control, the Optionee shall have the right to either (i) exercise the
Option in respect to any or all of the Shares then subject thereto, or (ii)
exchange this Option for cash in an amount equal to the number of Shares which
as of the effective date of the Change of Control may be acquired upon the
exercise of the Option, multiplied by the difference between (1) the fair market
value of the consideration to be paid per Share in connection with the Change of
Control as determined by the Board of Directors, which determination shall be
final and binding on Optionee, and (2) The Exercise Price. Such cash payment
shall be paid within thirty (30) days following the consummation of the Change
of Control. Neither the approval of the Board or the Committee shall be required
in connection with such election and the cash distribution.
(b) For the purposes of this Agreement, the term "Change of Control"
shall mean the occurrence of any of the following:
(i) Any "person," as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than the Company, a Company subsidiary, or a Company employee benefit
plan, including any trustee of such plan acting as trustee) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company (or a successor to the Company)
representing fifty percent (50%) or more of the combined voting power of the
then outstanding securities of the Company or such successor; or
(ii) At least a majority of the directors of the Company
constitute persons who were not at the time of their first election to the
Board, candidates proposed by a majority of the Board of Directors in office
prior to the time of such first election; or
(iii) A merger or consolidation in which the Company is not
the surviving entity, except for a transaction, the principal purpose of which
is to change the state in which the Company is incorporated; or
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(iv) A sale, transfer or other disposition of assets involving
fifty percent (50%) or more in value of the assets of the Company; or
(v) The dissolution of the Company, or liquidation of more
than fifty percent (50%) in value of the Company; or
(vi) Any reverse merger in which the Company is a surviving
entity but in which securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities are
transferred to a person or persons different from the persons holding those
securities immediately prior to such reverse merger.
7. ADJUSTMENTS.
The number and class of shares subject to this Option, and the purchase
price per share (but not the total purchase price), and the minimum number of
shares as to which this Option may be exercised at any one time, shall all be
proportionately adjusted in the event of any change or increase or decrease in
the number of issued shares of Common Stock in the Company, without receipt of
consideration by the Company, which result from a split-up or consolidation of
shares, payment of a share dividend (in excess of two percent (2%)), a
recapitalization, combination of shares or other like capital adjustment, so
that, upon exercise of this Option, the Optionee shall receive the number and
class of shares Optionee would have received had Optionee been the holder of the
number of shares of Common Stock in the Company, for which this Option is being
exercised, on the date of such change or increase or decrease in the number of
issued shares of Common Stock in the Company. Adjustments under this paragraph
shall be made by the Board of Directors whose determination with respect thereto
shall be final and conclusive. No fractional share shall be issued under this
Option or upon any such adjustment.
8. NOTICE.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered or
mailed, by United States certified or registered mail, prepaid, to the parties
or their assignees at the addresses set forth opposite their signatures below
(or such other address as shall be given in writing by either party to the
other).
9. METHOD OF EXERCISING OPTION.
Subject to the terms and conditions of this Option Agreement, this
Option may be exercised by written notice to the Company, at its principal
office in the State of California, which presently is located at 000 Xxxxxxxxxx
Xxxxx, Xxxxxx, Xxxxxxxxxx 00000-0000. Such notice shall state the election to
exercise the Option and the number of shares in respect of which it is being
exercised and shall be signed by the person or persons so exercising the Option.
Such notice shall be accompanied by payment in (i) cash, certified check, bank
draft; (ii) (subject to the limitations and with the prior approval required
under Paragraph 3 above) certificates for shares of the Common Stock of the
Company; or (iii) (subject to the limitations and with the terms and provisions
specified pursuant to Paragraph 3 above) with the prior written consent and
approval of the Company, by the execution and delivery of Optionee's promissory
note in the principal amount of the exercise price, with such term, interest
rate and other terms and provisions, including, without limitation, requiring
the Shares acquired upon exercise to be pledged to the Company to secure payment
of the note, as the Board of Directors may specify, equal to at the time of
exercise, in the aggregate, the full purchase price of such shares, (iv) by
cancellation of indebtedness of the Company to Optionee, (v) by waiver of
compensation due or accrued to Optionee for services rendered, (vi) provided
that a public market for the Company's stock exists, through a "same day sale"
commitment from the Optionee and a broker-dealer that is a member of the
National Association of Securities Dealers (an "NASD" Dealer) whereby the
Optionee irrevocably elects to exercise his Option
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and to sell a portion of the Shares so purchased to pay for the exercise price
and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the exercise price directly to the Company, (vii) provided that a public
market for the Company's stock exists, through a "margin" commitment from the
Optionee and NASD Dealer whereby the Optionee irrevocably elects to exercise
this Option and to pledge the Shares so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer in the amount of the
exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of
such Shares to forward the exercise price directly to the Company, or (viii) any
combination of (i), (ii), (iii), (iv), (v), (vi) or (vii) above, and the Company
shall deliver a certificate or certificates representing the Shares subject to
such exercise as soon as practicable after the notice shall be received. The
certificate or certificates for the shares as to which the Option shall have
been so exercised shall be registered in the name of the person or persons so
exercising the Option and shall be delivered as provided above to or upon the
written order of the person or persons exercising the Option. In the event the
Option shall be exercised by any person or persons other than the Optionee in
accordance with the terms hereof, such notice shall be accompanied by
appropriate proof of the right of such person or persons to exercise the Option.
All shares that shall be purchased upon the exercise of the Option as provided
herein shall be fully paid and nonassessable. The holder of this Option shall
not be entitled to the privileges of share ownership as to any shares of Common
Stock not actually issued and delivered to Optionee. Until and unless the Plan
and the issuance of securities thereunder shall have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), the Optionee hereby
certifies that all shares of Common Stock in the Company purchased or to be
purchased by Optionee pursuant to the exercise of this Option are being or are
to be acquired by Optionee for investment and not with a view to the
distribution thereof.
10. NO AGREEMENT TO EMPLOY.
Nothing in this Agreement shall be construed to constitute or be
evidence of any agreement or understanding, express or implied, on the part of
the Company to employ or retain Optionee for any specific period of time. This
Agreement is being entered into pursuant to the terms of that certain employment
agreement between the Company and the Optionee.
11. MARKET STANDOFF AGREEMENT.
Optionee agrees in connection with any underwritten registration of the
Company's securities that, upon the request of the Company or the underwriters
managing any public offering of the Company's securities, Optionee will not sell
or otherwise dispose of any Shares without the prior written consent of the
Company or such underwriters, as the case may be, for a period of time (not to
exceed 90 days) from the effective date of such registration as the Company or
the underwriters may specify.
12. STOP-TRANSFER NOTICES.
Optionee understands and agrees that, in order to ensure compliance
with the restrictions referred to herein, the Company may issue appropriate
"stop-transfer" instructions to its transfer agent, if any, and that, if the
Company transfers its own securities, it may make appropriate notations to the
same effect in its own records.
13. GENERAL.
The Company shall at all times during the term of the Option reserve
and keep available such number of shares of Common Stock as will be sufficient
to satisfy the requirements of this Option Agreement, shall pay all original
issue and transfer taxes with respect to the issue and transfer of shares
pursuant hereto and all other fees and expenses necessarily incurred by the
Company in connection
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therewith, and will from time to time use its best efforts to comply with all
laws and regulations, which, in the opinion of counsel for the Company, shall be
applicable thereto.
IN WITNESS WHEREOF, the Company has caused this Nonqualified Option
Agreement to be duly executed by its officers thereunto duly authorized, and the
Optionee has hereunto set his hand, all as of the day and year first above
written.
COMPANY:
PLATINUM SOFTWARE CORPORATION
Address:
000 Xxxxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000 By: /s/ Xxxxx X. Xxxxxxxxx
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OPTIONEE:
Address:
______________________________
______________________________
/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
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