EXHIBIT 10.14.2
THE SYSTEM WORKS, INC.
1995 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of January 4, 1995, is made by and between THE SYSTEM
WORKS, INC., a Georgia corporation, hereinafter referred to as "Company," and
Xxxxxx Xxxxxx, an Outside Director of the Company, hereinafter referred to as
"Optionee":
WHEREAS, the Company wishes to afford the Optionee the opportunity to purchase
shares of its $.01 par value Common Stock (as defined hereunder); and
WHEREAS, the Company wishes to carry out The System Works, Inc. 1995 Stock
Option Plan for Outside Directors (the terms of which are hereby incorporated by
reference and made a part of this Agreement).
NOW, THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, receipt of which is hereby acknowledged,
the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall have the
meaning specified below unless the context clearly indicates to the contrary.
The masculine pronoun shall include the feminine and neuter, and the singular
the plural, where the context so indicates.
SECTION 1.1 - BOARD
"Board" shall mean the Board of Directors of the Company.
SECTION 1.2 - CHIEF FINANCIAL OFFICER
"Chief Financial Officer" shall mean the chief financial officer of the
Company.
SECTION 1.3 - CODE
"Code" shall mean the Internal Revenue Code of 1986, as amended.
SECTION 1.4 - COMMON STOCK
"Common Stock" shall mean the Company's common stock, $.01 par value.
SECTION 1.5 - COMPANY
"Company" shall mean The System Works, Inc.
SECTION 1.6 - EXCHANGE ACT
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
SECTION 1.7 - FAIR MARKET VALUE
"Fair Market Value" of a share of the Company's stock as of a given date
shall be: (i) the closing price of a share of the Company's stock on the
principal exchange on which shares of the Company's stock are then trading, if
any, on the day previous to such date, or, if shares were not traded on the day
previous to such date, then on the next preceding trading day during which a
sale occurred; (ii) if such stock is not traded on an exchange but is quoted on
NASDAQ or a successor quotation system, (1) the last sales price (if the stock
is then listed as a National Market Issue under the NASD National Market System)
or (2) the mean between the closing representative bid and asked prices (in all
other cases) for the stock on the day previous to such date as reported by
NASDAQ or such successor quotation system; (iii) if such stock is not publicly
traded on an exchange and not quoted on NASDAQ or a successor quotation system,
the mean between the closing bid and asked prices for the stock, on such date,
as determined in good faith by the Chief Financial Officer: or (iv) if the
Company's stock is not publicly traded, the fair market value established by the
members of the Board who do not participate in the Plan acting in good faith.
SECTION 1.8 - OPTION
"Option" shall mean a non-qualified option to purchase Common Stock of the
Company granted under this Agreement pursuant to the Plan.
SECTION 1.9 - OPTIONEE
"Optionee" shall mean the Outside Director to whom this Option is granted
under the Plan.
SECTION 1.10 - OUTSIDE DIRECTOR
"Outside Director" shall mean a member of the Board who is not an employee
of the Company, a Parent Corporation or a Subsidiary under Section 3401(c) of
the Code and who is not legally or contractually prohibited from receiving and
holding personally the Option.
SECTION 1.11 - PARENT CORPORATION
"Parent Corporation" shall mean any corporation in an unbroken chain of
corporations ending with the Company if each of the corporations other than the
Company then owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
SECTION 1.12 - PLAN
"Plan" shall mean this 1994 The System Works, Inc. Stock Option Plan for
Outside Directors.
SECTION 1.13 - RETIREMENT
"Retirement" shall mean acceptance by the Board of an Outside Director's
resignation from the Board by reason of retirement as determined by the Chief
Financial Officer.
SECTION 1.14 - RULE 16b-3
"Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange Act, as
such rule may be amended in the future.
SECTION 1.15 - SECRETARY
"Secretary" shall mean the Secretary of the Company.
SECTION 1.16 - SECURITIES ACT
"Securities Act" shall mean the Securities Act of 1933, as amended.
SECTION 1.17 - SUBSIDIARY
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain. "Subsidiary" shall also mean any partnership
in which the Company and/or any Subsidiary owns more than 50% of the capital or
profits interests.
ARTICLE II
GRANT OF OPTION
SECTION 2.1 - GRANT OF OPTION
On the date hereof the Company irrevocably grants to the Optionee the
Option to purchase any part or all of an aggregate of 7,500 shares of its $.01
par value Common Stock upon the terms and conditions set forth in this Agreement
and the Plan.
SECTION 2.2 - PURCHASE PRICE
The purchase price of the shares of Common Stock covered by the Option
shall be $4.51 per share without commission or other charge.
SECTION 2.3 - ADJUSTMENTS IN OPTION
Subject to Section 3.4, in the event that the outstanding shares of Common
Stock subject to the Option are changed into or exchanged for a different number
or kind of shares of the Company or other securities of the Company, or of
another corporation, by reason of merger, consolidation, recapitalization or
reclassification, or the number of shares is increased or decreased by reason of
a stock split-up, stock dividend, combination of shares or any other increase or
decrease in the number of such shares of Common Stock effected without receipt
of consideration by the Company (provided, however, that conversion of any
convertible securities of the Company shall not be
deemed to have been "effected without receipt of consideration") the Chief
Financial Officer acting in good faith shall make appropriate adjustments in the
number and kind of shares as to which any unexercised portion of the Option
shall be exercisable, to the end that after such event the Optionee's
proportionate interest shall be maintained as before the occurrence of such
event. Such adjustment in the Option shall be made without change in the total
price applicable to the unexercised portion of the Option (except for any change
in the aggregate price resulting from rounding-off of share quantities or
prices) and with any necessary corresponding adjustment in the Option price per
share. Any such adjustment made by the Chief Financial Officer shall be final
and binding upon the Optionee, the Company and all other interested persons.
ARTICLE III
PERIOD OF EXERCISABILITY
SECTION 3.1 - TERM OF OPTION
The term of the Option shall be ten years and one day from the date hereof
subject to earlier termination in accordance with Sections 3.3 or 3.4.
SECTION 3.2 - EXERCISE SCHEDULE
The Option shall be exercisable on the following schedule: Beginning on
the first anniversary of the date of grant, for up to 25% of the shares covered
by the Option; beginning on the second anniversary of the date of grant, for up
to 50% of such shares; beginning on the third anniversary of the date of grant,
for up to 75% of such shares; and beginning on the fourth anniversary of the
date of grant, and thereafter until the earlier of expiration of the Option's
term or termination of the Option in accordance with Section 3.3 and Section
3.4, for up to 100% of such shares. Notwithstanding the foregoing, an Option
held by an Outside Director shall become immediately exercisable in full upon
the death or disability of such Outside Director, upon Retirement of such
Outside Director from the Board, upon an unsuccessful attempt by such Outside
Director to win reelection to the Board after nomination for election at the
recommendation of the Board, or upon adoption by the Company of a plan for a
liquidation, dissolution, merger, consolidation or reorganization as described
in clause (x), (y) or (z) of Section 3.4.
SECTION 3.3 - TERMINATION OF MEMBERSHIP ON THE BOARD
If the Optionee's membership on the Board terminates for any reason other
than death, disability, Retirement or an unsuccessful attempt to win reelection
to the Board after nomination for election at the recommendation of the Board,
the Option, or any remaining portion thereof, to the extent otherwise
exercisable pursuant to Section 3.2, may be exercised in whole or in part at
anytime within one year after the date of such termination (to the extent the
Option has not otherwise terminated) and shall thereafter terminate. If the
Optionee's membership on the Board terminates due to death, disability,
Retirement or an unsuccessful attempt to win reelection to the Board after
nomination for election at the recommendation of the Board, any remaining
portion of the Option held at the date of such termination may be exercised for
up to 100% of the shares covered hereby any anytime within three years after the
date of such termination (but in no event after the term of the Option expires)
and shall thereafter terminate.
SECTION 3.4 - CHANGE OF CONTROL
In the event of (x) a dissolution or liquidation of the Company, (y) a
merger or consolidation in which the Company is not the surviving corporation,
or (z) any other capital reorganization in which more than fifty percent (50%)
of the shares of the Company entitled to vote are exchanged, the Company shall
give to the Optionee, at the time of adoption of the plan for liquidation,
dissolution, merger, consolidation or reorganization, either (i) a reasonable
time thereafter within which to exercise any remaining portion of the Option,
prior to the effectiveness of such liquidation, dissolution, merger,
consolidation or reorganization, at the end of which time the Option shall
terminate, or (ii) the right to exercise the remaining portion of the Option as
to an equivalent number of shares of stock of the corporation succeeding the
Company or acquiring its business by reason of such liquidation, dissolution,
merger, consolidation or reorganization.
ARTICLE IV
EXERCISE OF OPTION
SECTION 4.1 - PERSON ELIGIBLE TO EXERCISE
During the lifetime of the Optionee, only the Optionee may exercise the
Option or any portion thereof. After the death of the Optionee, any exercisable
portion of the Option may, prior to the time when the Option becomes
unexercisable under the Plan or this Agreement, be exercised by the Optionee's
personal representative or by any person empowered to do so under the Optionee's
will or under the then applicable laws of descent and distribution.
SECTION 4.2 - PARTIAL EXERCISE
At any time and from time to time prior to the time when the Option or
exercisable portion thereof becomes unexercisable under this Agreement, such
Option or portion thereof may be exercised in whole or in part; provided,
however, that the Company shall not be required to issue fractional shares and
any partial exercise of the Option shall be with respect to no less than 100
shares (or such lesser remaining number of shares subject to the Option).
SECTION 4.3 - MANNER OF EXERCISE
The Option, or any exercisable portion thereof, may be exercised solely by
delivery to the Secretary of all of the following prior to the time when the
Option or such portion becomes unexercisable under the Plan or this Agreement:
(a) Notice in writing signed by the Optionee or the other person then
entitled to exercise the Option or portion, stating that the Option or portion
is thereby exercised, such notice complying with all applicable rules
established by the Chief Financial Officer;
(b) (i) Full payment (in cash or by check) for the shares with
respect to which the Option or portion of the Option is exercised;
(ii) With the consent of the Chief Financial Officer, shares of
the Company's Common Stock owned by the Optionee duly endorsed for transfer to
the Company;
(iii) With the consent of two Outside Directors, each of whom is
a "disinterested person" as defined in Rule 16b-3 and subject to the timing
requirements of Section 4.4, shares of the Company's Common Stock issuable to
the Optionee upon exercise of the Option, with a Fair Market Value on the date
of Option exercise equal to the aggregate Option price of the shares with
respect to which such Option or portion is exercised;
(iv) With the consent of the Chief Financial Officer, a full
recourse promissory note bearing interest (as least such rate as shall then
preclude the imputation of interest under the Code or successor provision) and
payable upon such terms as may be prescribed by the Chief Financial Officer.
The Chief Financial Officer may also prescribe the form of such note and the
security to be given for such note. The Option may not be exercised, however,
by delivery of a promissory note or by a loan from the Company when or where
such loan or other extension of credit is prohibited by law; or
(v) With the consent of the Chief Financial Officer, any
combination of the consideration provided in the foregoing subparagraphs (i),
(ii), (iii) and (iv); and
(c) A bona fide written representation and agreement, in a form
satisfactory to the Chief Financial Officer, signed by the Optionee or other
person then entitled to exercise such Option or portion, stating that the shares
of stock are being acquired for his own account, for investment and without any
present intention of distributing or reselling said shares or any of them except
as may be permitted under the Securities Act and then applicable rules and
regulations thereunder, and that the Optionee or other person then entitled to
exercise such Option or portion will indemnify the Company against and hold it
free and harmless from any loss, damage, expense or liability resulting to the
Company if any sale or distribution of the shares by such person is contrary to
the representation and agreement referred to above. The Chief Financial Officer
may also take whatever additional actions he or she deems appropriate to insure
the observance and performance of such representation and agreement and to
effect compliance with the Securities Act and any other federal or state
securities laws or regulations. Without limiting the generality of the
foregoing, the Chief Financial Officer may require an opinion of counsel
acceptable to it to the effect that any subsequent transfer of shares acquired
on an Option exercise does not violate the Securities Act, and may issue stop-
transfer orders covering such shares. Share certificates evidencing stock
issued on exercise of the Option shall bear an appropriate legend referring to
the provisions of this subsection (c) and the agreements herein. The written
representation and agreement referred to in the first sentence of this
subsection (c) shall, however, not be required if the shares to be issued
pursuant to such exercise have been registered under the Securities Act, and
such registration is then effective in respect of such shares; and
(d) Full payment to the Company of all amounts, if any, which, under
federal, state or local tax law, it is required to withhold upon exercise of the
Option; with the consent of (i) the Chief Financial Officer, shares of the
Company's Common Stock owned by the Optionee duly endorsed for transfers, or
(ii) two Outside Directors, each of whom is a "disinterested person" as defined
in Rule 16b-3 and subject to the timing requirements of Section 4.4, shares of
the Company's Common Stock issuable to the
Optionee upon exercise of the Option, valued at Fair Market Value as of the date
of Option exercise, may be used to make all or part of such payment; and
(e) In the event the Option or portion shall be exercised pursuant to
Section 4.1 by any person or persons other than the Optionee, appropriate proof
of the right of such person or persons to exercise the Option.
SECTION 4.4 - CERTAIN TIMING REQUIREMENTS
Shares of the Company's Common Stock issuable to the Optionee upon exercise
of the Option may be used to satisfy the Option price of the tax withholding
consequences of such exercise only (i) during the period beginning on the third
business day following the date of release of the quarterly or annual summary
statement of sales and earnings of the Company and ending on the twelfth
business day following such date or (ii) pursuant to an irrevocable written
election by the Optionee to use shares of the Company's Common Stock issuable to
the Optionee upon exercise of the Option to pay all or part of the Option price
or the withholding taxes (subject to the approval required by Section 4.3(b) and
(d)) made at least six months prior to the payment of such withholding taxes.
SECTION 4.5 - CONDITIONS OF ISSUANCE OF STOCK CERTIFICATES
The shares of stock deliverable upon the exercise of the Option, or any
portion thereof, may be either previously authorized but unissued shares or
issues shares which have been reacquired by the Company. Such shares shall be
fully paid and nonassessable. The Company shall not be required to issue or
deliver any certificate or certificates for shares of stock purchased upon the
exercise of the Option or portion thereof prior to fulfillment of all of the
following conditions:
(a) The admission of such shares to listing on all stock exchanges on
which such class of stock is then listed; and
(b) The completion of any registration or other qualification of such
shares under any state or federal law or under rulings or regulations of the
Securities and Exchange Commission or of any other governmental regulatory body,
which the Chief Financial Officer shall deem necessary or advisable; and
(c) The obtaining of any approval or other clearance from any state
or federal governmental agency which the Chief Financial Officer shall determine
to be necessary or advisable; and
(d) The payment to the Company (or other employer corporation) of all
amounts, which, under federal, state or local tax law, it is required to
withhold upon exercise of the Option; and
(e) The lapse of such reasonable period of time following the exercise of
the Option as the Chief Financial Officer may from time to time establish for
reasons of administrative convenience.
SECTION 4.6 - RIGHTS AS STOCKHOLDER
The holder of the Option shall not be, nor have any of the rights or
privileges of, a stockholder of the Company in respect to any shares purchasable
upon the exercise of any
part of the Option unless and until certificates representing such shares shall
have been issued by the Company to such holder.
ARTICLE V
OTHER PROVISIONS
SECTION 5.1 - ADMINISTRATION
The Chief Financial Officer shall have the power to interpret the Plan,
this Agreement and all other documents relating to the Option and to adopt such
rules for the administration, interpretation and application of the Plan as are
consistent therewith and to interpret or revoke any such rules. All actions
taken and all interpretations and determinations made by the Chief Financial
Officer in good faith shall be final and binding upon the Optionee, the Company
and all other interested persons. The Chief Financial Officer shall not be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or the Option and the Chief Financial Officer
shall be fully protected by the Company in respect to any such action,
determination or interpretation.
SECTION 5.2 - OPTION NOT TRANSFERABLE
Unless otherwise approved in writing by the Board, no shares acquired upon
exercise of the Option by any Outside Director may be sold, assigned, pledged,
encumbered or otherwise transferred until at least six months have elapsed from
(but excluding) the date the Option was granted.
Neither the Option nor any interest or right therein or part thereof shall
be liable for the debts, contracts or engagements of the Optionee or his
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that this Section 5.2
shall not prevent transfers by will or by the applicable laws or descent and
distribution.
SECTION 5.3 - SHARES TO BE RESERVED
The Company shall at all times during the term of the Option reserve and
keep available such number of shares of stock as will be sufficient to satisfy
the requirements of this Agreement.
SECTION 5.4 - NOTICES
Any notice to be given under the terms of this Agreement to the Company
shall be addressed to the Company in care of its Secretary, and any notice to be
given to the Optionee shall be addressed to him at the address given beneath his
signature hereto. By a notice given pursuant to this Section 5.4, either party
may hereafter designate a different address for notices to be given to it or
him. Any notice which is required to be given to the Optionee shall, if the
Optionee is then deceased, be given to the Optionee's personal representative if
such representative has previously informed the Company of his status and
address by written notice under this Section 5.4. Any notice shall be deemed
duly given when enclosed in a properly sealed envelope addressed as aforesaid,
deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service.
SECTION 5.5 - TITLES
Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of this Agreement.
SECTION 5.6 - CONFORMITY TO SECURITIES LAWS
This Agreement is intended to conform to the extent necessary with all
provisions of the Securities Act and the Exchange Act and any and all
regulations and rules promulgated by the Securities and Exchange Commission
thereunder, including without limitation Rule 16b-3. Without limiting the
generality of the foregoing, this Agreement is intended to comply with the
formula award plan provisions set forth in Rule 16(b)-3(c)(2)(ii).
Notwithstanding anything herein to the contrary, this Agreement shall be
administered, and the Option shall be granted and may be exercised, only in such
a manner as to conform to such laws, rules and regulations. To the extent
permitted by applicable law, this Agreement and the Option granted hereunder
shall be deemed amended to the extent necessary to conform to such laws, rules
and regulations.
SECTION 5.7 - AMENDMENT OF THIS AGREEMENT
This Agreement may be amended only by a writing executed by the parties
hereto which specifically states that it is amending this Agreement.
SECTION 5.8 - GOVERNING LAW
The laws of the State of Georgia shall govern the interpretation, validity,
administration, enforcement and performance of the terms of this Agreement
regardless of the law that might be applied under principles of conflicts of
laws. The parties agree that the exclusive jurisdiction and venue of any action
with respect to this Agreement shall be in the Superior Court of Xxxx County
Georgia or the United States District Court for the Northern District of
Georgia, and each of the parties hereby submits to the exclusive jurisdiction
and venue of such courts for the purpose of such action. The parties agree that
service of process in any such action may be effected by delivery of the summons
to the parties in the manner provided for delivery of notices set forth in
Section 5.4.
SECTION 5.9 - NO RIGHT TO CONTINUED MEMBERSHIP ON THE BOARD
Nothing in this Agreement shall confer upon any Outside Director any right
to continue as a director of the Company or shall interfere with or restrict in
any way the rights of the Company and its stockholders, which are hereby
expressly reserved, to remove any Outside Director at any time for any reason
whatsoever with or without cause.
IN WITNESS HERETO this Agreement has been executed and delivered by the parties
hereto.
THE SYSTEM WORKS, INC.
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------
Title: Chief Financial Officer
The Optionee hereby accepts and agrees to be bound by all of the terms and
conditions of this Agreement and the Plan.
/s/ Xxxxxx Xxxxxx
------------------------------
Optionee
###-##-####
------------------------------
Optionee's Social Security Number
Optionee's Address:
Xxx Xxx Xxxxxxx Xxxxx
Xxxxxx, XX 00000
SCHEDULE TO EXHIBIT 10.14.2
SCHEDULE OF TERMS OF
STOCK OPTION AGREEMENTS
GRANTED PURSUANT TO THE 1995 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS
TO XXXXXX X. XXXXXX
DATE OF TYPE OF NUMBER OF EXERCISE
AGREEMENT OPTION SHARES (1) PRICE
---------- ------------- ----------- ---------
1/4/95 Non-qualified 7,500 $4.51
8/9/96 Non-qualified 2,000 9.23
9/6/96 Non-qualified 2,000 9.23
(1) Each option vests in four equal annual installments beginning on
the first anniversary date of the date of the agreement.
