STOCK OPTION AGREEMENT
Exhibit
4.3
AGREEMENT
made the
4th
day of
November, 2005 between Netsmart
Technologies, Inc.,
a
Delaware corporation, (hereinafter called the "Company") and «Name» (hereinafter
called the "Optionee").
W
I T N ES S E T H:
Whereas,
the
Company, CMHC Systems, Inc.(“CMHC”), Xxxxx Acquisition Corp. (“Xxxxx”) and,
solely in the capacity of and for the purpose of serving as security holders’
representative, Xxxx Xxxxx, entered into a Merger Agreement dated as of
September 20, 2005, pursuant to which, through the merger of Xxxxx with and
into
CMHC, the Company has acquired (the AAcquisition@)
CMHC;
and
Whereas,
the
Optionee was an employee of CMHC, and the Company is desirous of inducing or
encouraging the Optionee to continue to remain in the employ of CMHC after
the
Acquisition by offering the Optionee certain incentives or rewards to do so;
and
Whereas,
the
Board of Directors of the Company has determined that Optionee is eligible
for,
and should be granted an option as hereinbelow provided, and Optionee desires
to
have such option;
Now,
Therefore,
in
consideration of the premises and the mutual covenants hereinafter set forth,
the parties hereto agree as follows:
1. Grant
and Exercise of Option.
The
Company hereby grants to Optionee an option to purchase a total of
_________(_____)shares of the authorized and unissued Common Stock of the
Company, having a par value of $.01 per share, at the price of $14.77 per share,
upon and subject to the following terms and conditions:
(a) The
within option may be exercised on or before November 3, 2015 (the "Expiration
Date") and, within such period, only at the following times and in the following
amounts:
(i)
After
the expiration of one (1) year from the date of this Agreement, the option
may
be exercised to the extent of not more than THIRTY-THREE AND ONE-THIRD (33
1/3%)
PERCENT of the shares granted in Paragraph 1 hereof;
(ii)
After the expiration of two (2) years from the date of this Agreement, the
option may be exercised to the extent of not more than SIXTY-SIX AND TWO-THIRDS
(66 2/3%) PERCENT of the shares granted in Paragraph 1 hereof;
(iii)
After the expiration of three(3) years from the date of this Agreement, the
option may be exercised to the extent of not more than ONE HUNDRED (100%)
PERCENT of the shares granted in Paragraph 1 hereof.
(b) The
right
to exercise set forth in Paragraph 1(a)(i), (ii) and (iii) shall, at the option
of the Board of Directors, be accelerated to provide for immediate exercise
in
the event of a change in control of the Company.
(1) For
purposes of this Agreement, a change in control of the Company, or in any person
directly or indirectly controlling the Company, shall mean:
(i) a
change
in control as such term is presently defined in Regulation 240.12b-2 under
the
Securities and Exchange Act of 1934; or
(ii) if
any
Aperson@
(as such
term is used in Section 13(d) and 14(d) of the Exchange Act) other than the
Company or any Aperson@
who on
the date of this Agreement is a director or officer of the Company, becomes
the
Abeneficial
owner@
(as
defined in Rule 13(d)-3 under the Exchange Act) directly or indirectly, of
securities of the Company representing twenty (20%) percent of the voting power
of the Company=s
then
outstanding securities; or
(iii) if
during
any period of two (2) consecutive years during the term of this Agreement,
individuals who at the beginning of such period constitute the Board of
Directors, cease for any reason to constitute at least a majority thereof,
unless the election of each director who is not a director at the beginning
of
such period has been approved in advance by directors representing at least
two-third (2/3) of the directors then in office who were directors at the
beginning of the period.
(2) Notwithstanding
the foregoing, this paragraph shall have no applicability to any change of
control as defined hereunder in the event that:
(i)
a
majority of the Board of Directors in office immediately prior to the event
or
events resulting in the change of control determine that such change is in
the
best interests of the Company; or
(ii) a
majority of the Board of Directors in office immediately prior to the event
or
events resulting in the change of control determine that such change is not
in
the best interests of the Company; and thereafter Employee cooperates, assists
or acts, directly or indirectly, on behalf of or in connection with the party
seeking to acquire control of the Company; it being expressly understood and
agreed that in the event the within option is not exercised on or before the
Expiration Date, as to any part or all of the shares which may be purchased
under the option, the right to purchase such shares shall completely
lapse;
(c) Each
exercise of the within option shall be by delivery to the Company, at its then
principal office (attention of the Secretary) of written notice stating the
number of shares to be purchased, accompanied by payment in full of the option
price of such shares. The option price shall be payable in United States dollars
in cash or by certified check, bank draft, postal or express money order;
provided, however, that in lieu of payment in full in cash, the Optionee may,
with the approval of the Board of Directors, exercise his option by tendering
to
the Company shares of the Company's Common Stock owned by him and having a
fair
market value (as determined by the Board of Directors in its absolute
discretion) equal to the cash exercise price (or the balance thereof) applicable
to his option.
(d) In
the
event of each exercise of the within option, the Company shall deliver to the
Optionee, personally or at the Optionee=s
designated address, as soon as practicable, a certificate made out to the
Optionee for the number of shares being purchased.
2.
Non-Transferability
of Option.
The
option granted under this Agreement shall not be transferred otherwise than
by
will or the laws of descent and distribution and shall be exercisable during
Optionee's lifetime only by the Optionee. No option granted hereunder shall
be
subject to execution, attachment, pledge, hypothecation, or other
process.
3.
Death,
Retirement and Termination of Employment.
Any
Option, the period of which has not expired, shall terminate at the time of
death of the Optionee, or at the time of retirement or termination for any
reason of such person's employment or service, including service as a
consultant, and no share of Common Stock may thereafter be delivered pursuant
to
such Option, except that:
(a)
Upon
retirement or termination of employment or service (other than by death,
disability, retirement or termination for cause), an Optionee may within three
(3) months after the date of such retirement or termination, purchase all or
part of the shares with respect to which the Option was exercisable on the
date
of such termination, in accordance herewith, but in no event after the
Expiration Date;
(b)
Upon
the termination of employment or service for cause, this Option shall
immediately terminate. For purposes of this Section, Acause@
shall
mean (i) willful disregard of duties and/or gross insubordination, (ii) habitual
absence from employment,(iii) the commission of fraud, misrepresentation or
embezzlement; or (iv) as defined in any employment agreement between the Company
or any affiliate of the Company and the Optionee;
(c)
Upon
the "disability" or retirement of any Optionee, the Optionee may within one
(1)
year after the date of such termination of employment, but in no event after
the
Expiration Date, purchase all or part of the shares with respect to which the
Option was exercisable on the date of such termination. For purposes of this
section, the term "disability" shall mean a physical or mental disability as
defined in Section 105 of the Internal Revenue Code of 1986, as amended;
(d)
Upon
the death of the Optionee during his employment or within one (1) year after
termination due to Adisability@,
the
person or persons to whom such Optionee's rights under the Option are
transferred by will or the laws of descent and distribution may, within one
(1)
year after the date of such Optionee's death, but in no event after the
Expiration Date, purchase all of the shares subject to this Option, including
any shares for which the Option was not yet exercisable on the date of death.
Upon the death of the Optionee within three (3) months after any termination
of
employment under clause 3(a) of this Option, the person or persons to whom
such
Optionee=s
rights
under the Option are transferred by will or the laws of descent and distribution
may, within one (1) years after the date of such Optionee=s
death,
but in no event after the Expiration Date, purchase all or any part of the
shares with respect to which the Option was exercisable on the date of
termination of employment or service in accordance herewith.
4.
Dilution
and Other Adjustments. In
the
event that there is any change in the stock subject to the within option through
merger, consolidation or reorganization, or in the event of any dividend in
stock of the same class to holders of issued and outstanding stock of the same
class, or the issuance to the holders of such stock of rights to subscribe
to
stock of the same class, or in the event of any split, combination or exchange
of stock or other change in the capital structure of the Company, the Board
of
Directors of the Company shall make such adjustments in the within option as
it
may deem equitable to prevent dilution or enlargement of the rights granted
to
the Optionee hereunder, and such adjustments, when so made, shall be conclusive
and binding on the parties to this Agreement; and provided, further, that
nothing herein shall be construed as limiting or preventing the Company from
exercising any right or power to make or enter into adjustments,
reclassifications, reorganizations, or changes in its capital or business
structure or to merge, consolidate or dissolve or to sell or transfer all or
any
part of its business or assets.
5. Registration.
The
Company shall cause a Registration Statement on Form S-8 covering the Shares
of
the Common Stock of the Company issuable upon the exercise of the Option granted
hereunder to be filed with the Securities and Exchange Commission and to become
effective under the Securities Act of 1933, as amended, prior to the first
anniversary date of this Agreement; provided, however, that if the Company
is
not permitted for any reason to register such Common Stock pursuant to a
Registration Statement on Form S-8, the Company shall use its best efforts
to
cause a Registration Statement on Form S-3 covering the Common Stock to be
filed
with the Securities and Exchange Commission and to become effective under the
Securities Act of 1933, as amended, prior to the first anniversary date of
this
Agreement.
6.
Requirements
of Law.
(a) If
any
law, regulation of the Securities and Exchange Commission, or any regulation
of
any other commission or agency having jurisdiction shall require the Company
or
the Optionee to take any action with respect to the shares of stock to be
acquired upon the exercise of the within option, then the date upon which the
Company shall deliver or cause to be delivered the certificate or certificates
for the shares of stock shall be postponed until full compliance has been made
with all such requirements of law or regulation.
(b) Neither
the Optionee nor any person or persons referred to in Paragraph 3 above, as
the
case may be, shall be, or shall be deemed to be, a holder of any shares subject
to the within option unless and until certificates for such shares are delivered
to him or them in accordance with this Agreement, and no certificates may be
delivered until the shares represented thereby are paid in full.
7.
Purchase
for Investment.
The
Optionee represents, on behalf of himself and the person or persons referred
to
in Paragraph 3 above, that any shares of the Company purchased pursuant to
this
Agreement will be acquired in good faith for investment and not for resale
or
distribution, and Optionee on behalf of himself and said person or persons,
agrees that each notice of the exercise of the within option shall contain
or be
accompanied by a representation in writing signed by him or said person or
persons, as the case may be, in form satisfactory to the Company, that the
shares of the Company to be purchased pursuant to such notice are being so
acquired and will not be sold except in compliance with applicable securities
laws. The requirements of this Paragraph 7 may be waived by the Company if
the
Company shall have received an opinion of its counsel that such representation
is not required.
8.
Acknowledgment.
Optionee
represents that he has read and understands the terms and conditions of this
Agreement and agrees to be bound thereby.
In
Witness Whereof,
the
parties hereto have duly executed this Agreement as of the day and year first
above written.
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NETSMART
TECHNOLOGIES, INC.
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By:
___________________________
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| __________________________ | |
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_______________,
Optionee
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