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EMPLOYEE STOCK OPTION/NON-COMPETE AGREEMENT
THIS EMPLOYEE STOCK OPTION/NON-COMPETE AGREEMENT ("the Agreement") is made
effective as of January 8, 1997, by and between [NAME] ("EMPLOYEE") and
Policy Management
Systems Corporation ("PMSC").
W I T N E S S E T H:
WHEREAS, EMPLOYEE has been employed by PMSC in a position of significant
responsibility
and PMSC desires to recognize EMPLOYEE'S contribution to PMSC by making
EMPLOYEE a
"Key Employee" as defined in the Policy Management Systems Corporation 1989
Stock Option Plan
("Plan") and therefore eligible to be granted Options as defined therein; and
WHEREAS, EMPLOYEE has developed and will continue to develop intimate
knowledge of
PMSC's business practices, which, if exploited by EMPLOYEE in contravention of
this Agreement,
could seriously, adversely and irreparably affect the business of PMSC; and
WHEREAS, EMPLOYEE and PMSC each desire to induce the other to enter into this
Agreement;
and
WHEREAS, PMSC would not make EMPLOYEE a Key Employee in the event that
EMPLOYEE
refused to agree to the terms and conditions of this Agreement and thus
EMPLOYEE would not be
eligible to receive Options under the Plan;
NOW, THEREFORE, in consideration of the premises and the mutual promises and
covenants of
the parties hereto, EMPLOYEE and PMSC agree as follows:
1. Grant. Effective ____________, PMSC grants EMPLOYEE "non-qualified"
Options to
purchase up to [SHARES] shares of PMSC common stock pursuant to the Plan.
Non-qualified options are subject to tax upon exercise as set forth in
paragraph 5 below.
THESE OPTIONS MAY BE REVOKED BY THE COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS IN THEIR ABSOLUTE DISCRETION, PRIOR TO THE
TIME THEY BECOME EXERCISABLE IN ACCORDANCE WITH SECTION 9 OF THE
PLAN IF THEY DEEM IT APPROPRIATE TO DO SO BASED UPON SUCH FACTS OR
CIRCUMSTANCES AS THEY DEEM RELEVANT, INCLUDING, WITHOUT
LIMITATION, THE RESULTS OR FINDINGS, WHETHER PRELIMINARY OR FINAL,
OF THE VARIOUS INVESTIGATIONS INTO THE COMPANY'S PREVIOUSLY ISSUED
FINANCIAL STATEMENTS.
2. Price and Expiration. The option price of the shares subject to these
Options is the closing
price of the stock on the New York Stock Exchange on the date of grant,
i.e., $44.25. These
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Options must be exercised within ten (10) years of the effective date of
this Agreement or they
expire.
3. Availability for Exercise. 25% of the shares subject to the Options
granted will become
available for exercise at the end of each of the four (4) years following
the effective date of this
Agreement. For example . . . 25% of the total number of Options granted
will be available for
exercise beginning January 8, 1998; 50% will be available for exercise
beginning January 8,
1999; 75% will be available for exercise beginning January 8, 2000; and
100% will be
available for exercise beginning January 8, 2001. Once Options become
available for
exercise, they will remain available for exercise for so long as EMPLOYEE
is employed by
PMSC unless they expire. Notwithstanding the foregoing, the Options
hereby granted shall
not be exercisable until such time as the common stock to be issued on
exercise of the Options
has been registered under the Securities Act of 1933 or PMSC has
otherwise qualified such
issuance of shares under an exemption from registration under said Act.
3A. Change in Control. If there is a Change in Control (as hereinafter
defined) of PMSC prior to
the Expiration Date, then, notwithstanding any other provision of the
Plan or this Agreement
to the contrary other than Section 3B below: (I) each Option granted
hereby then outstanding
shall become immediately exercisable in full and shall become
nonforfeitable regardless of
whether there is a change in office or employment status subsequent to
such Change in
Control; (ii) EMPLOYEE shall have a period of ninety (90) days after
termination of
employment to exercise the Options granted hereby; and (iii) and in the
event of the death of
EMPLOYEE during the aforementioned ninety (90) day period, said Options
may be exercised
during a period of one (1) year from the date of death, as described in
Section 10 of the Plan,
but in no event shall these Options be exercised after the tenth
anniversary date these Options
were granted.
For purposes of this Section, a "Change in Control" shall be deemed to
have occurred in the
event: (1) that substantially all of PMSC's assets are sold to another
person, corporation,
partnership, or other entity other than one owned or controlled by PMSC;
or (2) any person,
corporation, partnership or other entity, either alone or in conjunction
with its "affiliates" as
that term is defined in Rule 405 of the General Rules and Regulations
under the Securities Act
of 1933, as amended, or other group of persons, corporations,
partnerships or other entities
who are not affiliates, but who are acting in concert, becomes the owner
of record or
beneficially of securities of PMSC which represent thirty-three and
one-third percent
(33-1/3%) or more of the combined voting power of PMSC's then outstanding
securities
entitled to elect directors; or (3) the Board or a committee thereof
makes a determination in
its reasonable judgment that a Change in Control of PMSC has taken place.
3B. Sale or Merger. In the event of dissolution or liquidation of PMSC or
any merger or
combination in which PMSC is not a surviving corporation ("Sale or
Merger"), each
outstanding Option granted hereunder shall terminate, but the Optionee
shall have the right,
immediately prior to such dissolution, liquidation, merger or
combination, to exercise his or
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her Option, in whole or in part, to the extent that it shall not have been
exercised, without
regard to any installment exercise provisions.
4. Order of Exercise. The Options may be exercised without regard to the
order in which these
and any other Options were granted and without regard to any unexpired
and unexercised
qualified, Incentive Stock Options ("ISO's") or other non-qualified
options.
5. Tax Liability. The tax liability which EMPLOYEE may incur relating to
these Options is
described below based upon present law and regulations which are subject
to change. Taxes
incurred are:
+ when options are granted - none
+ when options are exercised - the difference between the fair market
value of the stock at
the date of exercise of an Option and the option price is a capital
gain but generally will
be treated as ordinary income during the year the Option is
exercised. Such tax liability
is created at the time EMPLOYEE exercises an Option and PMSC is
required to collect
withholding taxes from EMPLOYEE. Federal income taxes (computed at
a rate of 28%
of the above described difference) and FICA and state income taxes
(computed at the
applicable rate of the above described difference) are withheld.
For example...if the
option price is $33.00 and the fair market value at the date of the
exercise is $38.00, the
difference is $5.00, and assuming an applicable FICA rate of 7.65%
and state income tax
rate of 7%, along with the 28% federal income tax, the Company would
collect a tax of
$2.13 per share from EMPLOYEE.
+ when shares are sold - the difference between the fair market value
at the date of exercise
(the $38.00 in the above example) and the price at which EMPLOYEE
sells the stock is
treated the same as above described during the year in which
EMPLOYEE sells the stock
purchased by exercise of his or her options.
6. Exercise and Payment. Exercises of Options shall only be handled
pursuant to the Instructions
set forth on the last page of this Agreement. To exercise these Options,
EMPLOYEE shall
make payment in full to PMSC for the option price of the shares to be
purchased...plus the
combined (federal, FICA and state) tax liability EMPLOYEE incurs. Such
taxes paid to
PMSC will be forwarded to the Internal Revenue Service and appropriate
state tax commission
and credited to EMPLOYEE in the same manner as the withholding tax on
EMPLOYEE's
salary. EMPLOYEE's actual tax will depend upon the overall tax rate
calculated when
EMPLOYEE prepares his or her tax returns. EMPLOYEE should consult a tax
professional
regarding questions about EMPLOYEE's actual tax liability.
7. Noncompetition. In consideration of the Options hereby granted, EMPLOYEE
covenants and
agrees that EMPLOYEE shall devote his or her best efforts to furthering
the best interests of
PMSC and that for the one (1) year period from the effective date hereof,
and if EMPLOYEE
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separates from employment with PMSC for any reason within said one (1)
year period, then
for a one (1) year period from the date of such separation from
employment, EMPLOYEE
shall not "Compete" with PMSC. The region within which EMPLOYEE agrees
not to
Compete with PMSC is the United States, Canada and those countries in
which PMSC has
customers or clients as of the date of EMPLOYEE's separation from
employment. For the
purpose of this Agreement, the term "Compete" shall have its commonly
understood meaning
which shall include, but not be limited by, the following items with
respect to PMSC's
insurance application software licensing, data processing, consulting and
information services
businesses and any other businesses carried on by PMSC at the time of
EMPLOYEE's
separation from employment:
(I) soliciting or accepting as a client or customer any individual,
partnership, corporation,
trust or association that was a client, customer or actively
sought after prospective client
or customer of PMSC during the twelve (12) calendar month
period immediately
preceding the date of EMPLOYEE's separation from employment;
(ii) acting as an employee, independent contractor, agent,
representative, consultant, officer,
director, or otherwise affiliated party of any entity or
enterprise which is competing with
PMSC in offering similar application software or services to
parties described in (I)
above; or
(iii) participating in any such competing entity or enterprise as an
owner, partner, limited
partner, joint venturer, creditor or stockholder (except as an
equity holder holding less
than a one percent (1%) interest).
8. Non-Hiring. During EMPLOYEE'S employment with PMSC and for a period of
three (3)
years after separation from such employment, EMPLOYEE agrees that
EMPLOYEE shall
under no circumstances hire, attempt to hire or assist or be involved in
the hiring of any
employee of PMSC either on EMPLOYEE'S behalf or on behalf of any other
person, entity
or enterprise. Also, for a similar period of time, EMPLOYEE agrees to
not communicate to
any such person, entity or enterprise the names, addresses or any other
information concerning
any employee of PMSC or any past, present or prospective client or
customer of PMSC.
9. Equitable Relief. EMPLOYEE acknowledges (I) that EMPLOYEE'S skill,
knowledge, ability
and expertise in the business described herein is of a special, unique,
unusual, extraordinary,
and/or intellectual character which gives said skill, etc. a peculiar
value; (ii) that PMSC could
not reasonably or adequately be compensated in damages in an action at
law for breach of this
Agreement; and (iii) that a breach of any of the provisions contained in
this Agreement could
be extremely detrimental to PMSC and could cause PMSC irreparable injury
and damage.
Therefore, EMPLOYEE agrees that PMSC shall be entitled, in addition to
any other remedies
it may have under this Agreement or otherwise, to preliminary and
permanent injunctive and
other equitable relief to prevent or curtail any breach of this
Agreement; provided, however,
that no specification in this Agreement of a specific legal or equitable
remedy shall be
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construed as a waiver of or prohibition against the pursuing of other
legal or equitable
remedies in the event of such a breach.
10. Breach of Agreement. EMPLOYEE agrees that in the event EMPLOYEE breaches
any
provision of this Agreement, PMSC shall be entitled, in addition to any
other remedies it may
have under this Agreement, to offset, to the extent of any liability,
loss, damage or injury from
such breach, any payments due to EMPLOYEE pursuant to his or her
employment with
PMSC.
11. Employment Understanding. This Agreement constitutes the entire
agreement between the
parties with regard to the subject matter hereof, and there are no
agreements, understandings,
restrictions, warranties or representations between the parties relating
to said subject matter
other than those set forth or provided for herein or in any Agreement Not
To Divulge or
employment agreement between PMSC and EMPLOYEE. It is understood that
PMSC's and
EMPLOYEE's relationship is one of "at will" employment unless EMPLOYEE
and PMSC
have entered into a written employment agreement which provides
otherwise. This Agreement
shall not affect, or be affected by, any employment agreement, if any,
between PMSC and
EMPLOYEE.
12. General. In the event that any provision of this Agreement or any word,
phrase, clause,
sentence or other portion thereof (including, without limitation, the
geographical and temporal
restrictions contained herein) should be held to be unenforceable or
invalid for any reason,
such provision or portion thereof shall be modified or deleted in such a
manner so as to make
this Agreement enforceable to the fullest extent permitted under
applicable laws. All
references to PMSC shall include its subsidiaries as applicable. This
Agreement shall inure
to the benefit of and be enforceable by PMSC and its successors and
assigns. No provision
of this Agreement may be changed, modified, waived or terminated, except
by an instrument
in writing signed by the party against whom the enforcement of such is
sought. No waiver of
any provision or provisions of this Agreement shall be deemed or shall
constitute a waiver of
any other provision, whether or not similar, nor shall any waiver
constitute a continuing
waiver. Headings in this Agreement are inserted solely as a matter of
convenience and
reference and are not a part of this Agreement in any substantive sense.
This Agreement may
be executed in two counterparts, each of which will take effect as an
original and shall
evidence one and the same Agreement.
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13. Plan Controls. In the event of any discrepancy between this Agreement
and the Plan as to the
terms and conditions of the Options, the Plan shall control.
14. Governing Law. The terms of this Agreement shall be governed by and
construed in
accordance with the laws of the State of South Carolina.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective
as of the date
first above written.
POLICY MANAGEMENT SYSTEMS CORPORATION
"PMSC"
BY: _________________________________
Xxxxxxx X. Xxxxxxxx
TITLE: Executive Vice President
EMPLOYEE
_____________________________________
(Signature)
_____________________________________
(Type or Print Name)
_____________________________________
(Date Signed by Employee)
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INSTRUCTIONS FOR EXERCISE OF PMSC STOCK OPTIONS
Contact Person: Xxxx X. Xxxxxxx, Ext. 4303
1A4
Xxxx Xxxxxx Xxx Xxx
Xxxxxxxx, XX 00000
An exercise form must be obtained and properly filled out. The form and
employee's check for the
appropriate exercise price and withholding taxes (federal and state income
taxes and FICA) must be
delivered to the Contact Person. The Company does not deal with third parties
concerning
employee's exercise of his or her stock options. If an employee deals with a
brokerage firm, a bank
or any other third party, the employee shall be responsible to keep such party
from impacting on the
two-party transaction between the Company and the employee. This transaction
solely consists of
employee bringing Company the exercise form and his or her own check and after
several days the
Company giving employee a certificate for his or her shares of stock. The
Company's stock transfer
agent is located in New York. If desired, an employee may request and pay the
charges for the
certificate to be sent to the Company via Federal Express. The certificate
will only be issued in the
employee's name. Employees may only exercise a whole number of options as
PMSC shall not
direct the transfer agent to issue fractional shares.
As an optionholder, an employee is entitled to request copies of the Company's
Annual and Quarterly
Reports. An employee will not receive such reports automatically as an
optionholder. Additionally,
reports are available upon request showing a complete list of employee's
options outstanding, options
available for exercise, cost per share, total costs, and expiration dates of
options. An employee may
wish to request these materials or information before exercising options by
calling or writing the
Contact Person.
THESE INSTRUCTIONS ARE SUBJECT TO CHANGE WITHOUT NOTICE.
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SCHEDULE OF PARTICULARS
FOR NAMED EXECUTIVE OFFICERS
RE: EMPLOYEE STOCK OPTION/NON-COMPETE AGREEMENT
NAMED EXECUTIVE
NUMBER
OFFICER
GRANTED
G. Xxxxx Xxxxxx
75,000
Xxxxx X. Xxxxxx
35,000
Xxxx X. Xxxxxx
35,000
Xxxxxx X. Xxxxxxxx
35,000
Xxxxxxx X. Xxxxxxxx
35,000
Xxxxxxx X. Xxxxxxxx
35,000
