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FORM OF
EMPLOYEE STOCK OPTION/NON-COMPETE AGREEMENT
THIS EMPLOYEE STOCK OPTION/NON-COMPETE AGREEMENT ("the Agreement")
is made effective as of May 12, 1994 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 therefor 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 May 12, 1994, 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.
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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., thirty and one-quarter
dollars ($30.25). These Options must be exercised within ten (10)
years of the effective date of this Agreement or they expire.
3.Availability for Exercise. 33 1/3% of the shares subject to the
Options granted will become available for exercise at the end of
each of the three (3) years following the effective date of this
Agreement. For example ... 33 1/3% of the total number of Options
granted will be available for exercise beginning May 12, 1995; 66
2/3% will be available for exercise beginning May 12, 1996; and
100% will be available for exercise beginning May 12, 1997. Once
Options become available for exercise, they will remain available
for exercise for so long as EMPLOYEE is employed by the Company
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.
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 20% 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 $30.25 and the fair
market value at the date of the exercise is $35.25, the difference
is $5.00, and assuming an applicable FICA rate of 7.65% and state
income tax rate of 7%, along with the 20% federal income tax, the
Company would collect a tax of $1.73 per share from EMPLOYEE.
+ when shares are sold - the difference between the fair
market value at the date of exercise (the $35.25 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.
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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 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.
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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
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.
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.
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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:_________________________________
Stephen G. Morrison
Executive Vice President
TITLE:______________________________
EMPLOYEE
_____________________________________
(Signature)
_____________________________________
(Type or Print Name)
_____________________________________
(Date Signed by Employee)
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INSTRUCTIONS FOR EXERCISE OF PMSC STOCK OPTIONS
Contact Person: Lynn W. Dillard, Ext. 4303
4B3
Post Office Box Ten, Columbia, SC 29202
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
DATE: MAY 12, 1994
NAME SHARES
G. Larry Wilson 50,000
David T. Bailey 35,000
Charles E. Callahan 35,000
Donald A. Coggiola 25,000
Robert L. Gresham 15,000