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POLICY MANAGEMENT SYSTEMS CORPORATION
1989 STOCK OPTION PLAN
1.
PURPOSE
The purpose of this Plan is to promote the interest of PMSC
and its Subsidiaries by granting Options to purchase Common Stock
to certain Key Employees in order (1) to attract and retain said
Key Employees, (2) to provide an additional incentive to each
such Key Employee to work to increase the value of Common Stock
and (3) to provide each such Key Employee with a stake in the
future of PMSC which corresponds to the stake of each of PMSC's
shareholders.
2.
DEFINITIONS
Each term set forth in this Section 2 shall have the meaning
set forth opposite such term for purposes of this Plan and, for
purposes of such definitions, the singular shall include the
plural and the plural shall include the singular.
2.1. Board -- means the Board of Directors of PMSC.
2.2. Code -- means the Internal Revenue Code of 1986, as
amended.
2.3. Committee -- means the Compensation Committee of the
Board.
2.4. Common Stock -- means the common stock of PMSC.
2.5. Fair Market Value -- means the closing price on any
date for a share of Common Stock on the national securities
exchange on which the Common Stock is listed. In the event the
Common Stock is listed on NASDAQ, "Fair Market Value" shall mean
the average of the closing bid and asked prices of the Common
Stock on such date or, in the absence of bid and asked prices on
such day on NASDAQ, such average on the first preceding day the
Common Stock was traded. If no such price quotation is
available,
"Fair Market Value" shall mean the price which the Committee
acting in good faith determines through
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any reasonable valuation method that a share of Common Stock
would change hands between a willing buyer and a willing seller,
neither being under any compulsion to buy or to sell and both
having reasonable knowledge of the relevant facts.
2.6. ISO -- means an option granted under this Plan to
purchase Common Stock which satisfies the requirements of Section
422A of the Code.
2.7. Key Employee -- means a full time, salaried employee
or a director of PMSC or any Subsidiary who, in the judgment of
the Committee acting in its absolute discretion, is a key to the
success of PMSC or such Subsidiary and who is not a Ten Percent
Shareholder. With respect to grants of ISO's Key Employee shall
not include any director who is not otherwise also an employee of
PMSC or a Subsidiary.
2.8. Non-ISO -- means an option granted under this Plan to
purchase stock which is not intended to qualify as an ISO
pursuant to Section 422A of the Code.
2.9. Option -- means an ISO or a Non-ISO.
2.10. Option Agreement -- means the written agreement or
instrument which sets forth the terms of an Option granted to a
Key Employee under this Plan.
2.11. Option Price -- means the price which shall be paid
to purchase one share of stock upon the exercise of an Option
granted under this Plan.
2.12. Parent Corporation -- means any corporation which is
a parent of PMSC within the meaning of Section 425(e) of the
Code.
2.13. Plan -- means this PMSC 1989 Stock Option Plan, as
amended from time to time.
2.14. PMSC -- means Policy Management Systems Corporation,
a South Carolina corporation, and any successor to such
corporation.
2.15. Predecessor Corporation -- means any corporation
which is a predecessor corporation (within the meaning of Section
422(b)(7) of the Code) of PMSC, any Subsidiary or Parent
Corporation.
2.16. Subsidiary -- means any corporation which is a
subsidiary corporation (within the meaning of Section 425(f) of
the Code) of PMSC.
2.17. Ten Percent Shareholder -- means a person who owns
(after taking into account the attribution rules of Section
425(d) of the Code) more than ten percent (10%) of the total
combined voting power of all classes of stock of either PMSC, a
subsidiary or a parent corporation.
3.
SHARES SUBJECT TO OPTIONS
There shall be 1,200,000 shares of Common Stock reserved for
use under this Plan, and such shares of Common Stock shall be
reserved to the extent that PMSC deems appropriate from
authorized but
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unissued shares of Common Stock or from shares of Common Stock
which have been reacquired by PMSC.
Furthermore, any shares of Common Stock subject to an Option
which remain after the cancellation, expiration or exchange of
such Option thereafter shall again become available for use under
this Plan.
4.
EFFECTIVE DATE
The effective date of this Plan shall be the date it is
adopted by the Board, provided that the shareholders representing
a majority of the shares of PMSC voting at a duly called meeting
of such
shareholders approve this Plan within twelve (12) months after
such effective date. If such effective date comes before such
shareholder approval, any Options granted under this Plan before
the date of such approval automatically shall be granted subject
to such approval.
5.
COMMITTEE
This Plan shall be administered by the Committee. The
Committee acting in its absolute discretion shall exercise such
powers and take
such action as expressly called for under this Plan and, further,
the Committee shall have the power to interpret this Plan and
(subject to Section 13, Section 14 and Section 15) to take such
other action in the administration and operation of this Plan as
the Committee deems equitable under the circumstances, which
action shall be binding on PMSC, on each affected Key Employee
and on each other person directly or indirectly affected by such
action.
6.
ELIGIBILITY
Only Key Employees shall be eligible for the grant of
Options under this Plan.
7.
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GRANT OF OPTIONS
(a) Committee Action. The Committee acting in its absolute
discretion shall grant Options to certain Key Employees under
this Plan from time to time to purchase shares of Common Stock
and, further, shall have the right to grant new Options in
exchange for outstanding Options. Each grant of an Option shall
be evidenced by an Option Agreement, and each Option Agreement
shall incorporate such terms and conditions as the Committee
acting in its absolute discretion deems consistent with the terms
of this Plan; provided, however, if the Committee grants an ISO
and a Non-ISO to a Key Employee on the same date, the right of
the Key Employee to exercise
or surrender one such Option shall not be conditioned on his or
her surrender of or failure to exercise the other such Option.
(b) Directors. The Committee shall not grant Options for
more than fifteen percent (15%) of the number of shares reserved
hereunder to the members of the Board who are not also employees
of PMSC or its subsidiaries. The Committee shall not grant
Options for more than twenty-five percent (25%) of the number of
shares reserved hereunder to members of the Board who are also
employees of PMSC or its subsidiaries.
(c) Limitation on Grant. The aggregate fair market value
(determined at the time of Option grant) of stock with respect to
which ISOs are exercisable for the first time by a Key Employee
during any calendar year (under all stock option plans of PMSC
and any parent or subsidiary corporation of such Key Employee's
employer
corporation) shall not exceed One Hundred Thousand Dollars
($100,000.00). In the event of an acceleration of an Option
pursuant to the terms of Section 14, only such portion of such
Option as may be accelerated, consistent with the provisions of
the preceding sentence, shall be accelerated and treated as an
ISO and any remaining portion of such Option shall be accelerated
but shall be redesignated a non-ISO.
8.
OPTION PRICE
The Option Price for each share of Common Stock subject to
an Option shall be no less than the Fair Market Value of a share
of
Common Stock on the date the Option is granted. The Option Price
shall be payable in cash in full upon the exercise of any Option,
or the Key Employee may pay all or part of the Option Price upon
exercise of the Option in shares of Common Stock already held by
the Key Employee. In the event that all or part of the Option
Price is paid in shares of Common Stock, the value of such shares
shall be equal to the Fair Market Value of such shares on the
date of exercise of the Option.
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9.
EXERCISE PERIOD
Each Option granted under this Plan may be exercised in
whole or in part only during a term (the "Term") commencing on
the date one (1) year after the date such Option is granted and
ending on the earlier of:
(1) the date such Option is exercised in full,
(2) the date which is the tenth anniversary of the date such
Option is granted, if such Option is an ISO, or
(3) the date which is one day after the tenth anniversary of the
date such Option is granted, if such Option is a Non-ISO.
An Option Agreement shall provide that Options may only be
exercised in annual installments as follows:
(1) During the first year of the Term, the Option shall be
exercisable as to one-third (1/3) of the number of shares subject
to the Option;
(2) During the second year of the Term, the Option shall be
exercisable as to two-thirds (2/3) of the number of shares
subject to the Option, minus the number of shares, if any, as to
which the Option was exercised during the first year of the Term;
and
(3) During the third and following years of the Term, the Option
shall be exercisable as to all of the shares subject to the
Option, minus the number of shares, if any, as to which the
Option was exercised during the first and second years of the
Term.
An Option Agreement shall provide that an Option may not be
exercised after the termination of employment or term as director
of a Key Employee with the Company or its Subsidiaries, except
that in the event of retirement with the consent of the Company
or any of its Subsidiaries such a Key Employee may exercise their
Option for a period of three (3) months from said retirement, and
in the event of the death of a Key Employee, during their
employment or term as director or within three (3) months after
retirement, said Option may be exercised during a period of one
(1) year from the date of death, as described in Section 10
below. In no event shall any such extended period result in the
exercise of an Option later than the date which is the tenth
anniversary of the date such Option is granted, however, nor
shall any Options be exercisable to any greater extent than they
may have been at the date of said retirement or death.
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10.
NONTRANSFERABILITY
No Option granted under this Plan shall be transferable by a
Key Employee other than by will or by the laws of descent and
distribution, and such Option shall be exercisable during a Key
Employee's lifetime only by the Key Employee. The estate of a
deceased Key Employee or the person or persons to whom an Option
is transferred by will or by the laws of descent and distribution
thereafter shall be treated as the Key Employee.
11.
SECURITIES REGISTRATION
Each Option Agreement shall provide that, upon the receipt
of shares of Common Stock as a result of the surrender or
exercise of an Option, the Key Employee shall, if so requested by
PMSC, hold such shares of Common Stock for investment and not
with a view of resale or distribution to the public and, if so
requested by PMSC, shall deliver to PMSC a written statement
satisfactory to PMSC to that effect. As for Common Stock issued
pursuant to this Plan, PMSC at its expense shall take such action
as it deems necessary or appropriate to register the original
issuance of such Common Stock to a Key Employee under the
Securities Act of 1933 and under any other applicable securities
laws or to qualify such Common Stock for an exemption under any
such laws prior to the issuance of such Common
Stock to a Key Employee; however, PMSC shall have no obligation
whatsoever to take any such action in connection with the
transfer, resale or other disposition of such Common Stock by a
Key Employee.
12.
LIFE OF PLAN
No Option shall be granted under this Plan on or after the
earlier of:
(1) the tenth anniversary of the effective date of this
Plan (as determined under Section 4 of this Plan),
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in which event this Plan otherwise thereafter shall continue in
effect until all outstanding Options have
been surrendered or exercised in full or no longer are
exercisable, or
(2) the date on which all of the Common Stock reserved under
Section 3 of this Plan has (as a result of the surrender or
exercise of Options granted under this Plan) been issued or no
longer is available for use under this Plan, in which event this
Plan also shall terminate on such date.
13.
ADJUSTMENT
The number of shares of Common Stock reserved under Section
3 of this Plan, the number of shares of Common Stock subject to
Options granted under this Plan, and the Option Price, as defined
in Section 8 hereof, in each Option Agreement outstanding at said
time, shall
all be adjusted by the Board in an equitable manner to reflect
any change in the capitalization of PMSC including, but not
limited to, such changes as stock dividends or stock splits.
Furthermore, the Board shall have the right to adjust (in a
manner which satisfies the requirements of Section 425(a) of the
Code) the number of shares of Common Stock reserved under Section
3 of this Plan, the number of shares subject to Options granted
under this Plan and the Option Price, as defined in Section 8
hereof, in each Option Agreement outstanding at said time, in the
event of any corporate transaction described in Section 425(a) of
the Code which provides for the substitution or assumption of
such Options. If any adjustment under this Section 13 would
create a fractional share of Common Stock or a right to acquire a
fractional share of Common Stock, such fractional share shall be
disregarded and the number of shares of Common Stock reserved
under this Plan and the number subject to any Options granted
under this Plan shall be the next lower number of shares of
Common Stock, rounding all fractions downward. An adjustment
made under this Section 13 by the Board shall be conclusive and
binding on all affected persons and, further, shall not
constitute an increase in "the number of shares reserved under
Section 3" within the meaning of Section 15(1) of this Plan.
14.
SALE OR MERGER OF PMSC
In the event of dissolution or liquidation of PMSC or any
merger or combination in which PMSC is not a surviving
corporation, each
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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 her Option, in whole or in part, to the extent
that it shall not have been exercised, without regard to any
installment exercise provisions.
15.
AMENDMENT TO PLAN
This Plan may be amended by the Board from time to time to
the extent that the Board deems necessary or appropriate;
provided, however, no such amendment shall be made absent the
approval of the shareholders of PMSC (1) to increase the number
of shares reserved under Section 3, (2) to extend the maximum
life of the Plan under Section 12 or the maximum exercise period
under Section 9, (3) to decrease the minimum Option Price under
Section 8, (4) to change the class of persons eligible for
Options as Key Employees under Section 6 or to otherwise
materially modify (within the meaning of Rule 16b-3 of the
Securities Exchange Act of 1934, as amended) the requirements as
to eligibility for participation in this Plan or (5) to otherwise
materially increase (within the meaning of Rule 16b-3 of the
Securities Exchange Act of 1934, as amended) the benefits
accruing under this Plan. The Board also may suspend the
granting of Options under this Plan at any time and may terminate
this Plan at any time; provided, however, PMSC shall not have the
right to modify, amend or cancel any Option granted before such
suspension or termination
unless (1) the Key Employee consents in writing to such
modification, amendment or cancellation or (2) there is a
dissolution or liquidation of PMSC or a transaction described in
Section 13 or Section 14 of this Plan.
16.
MISCELLANEOUS
16.1 No Shareholder Rights. No Key Employee shall have any
right as a shareholder of PMSC as a result of the grant of an
Option under this Plan or the exercise of such Option, pending
the actual delivery of the Common Stock subject to such Option to
such Key Employee.
16.2 No Contract of Employment. The grant of an Option to
a Key Employee under this Plan shall not constitute a contract of
employment and shall not confer on a Key Employee any rights upon
his or her termination of employment in addition to those rights,
if any, expressly set forth in the Option Agreement which
evidences his or her Option.
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16.3 Withholding. The exercise of any Option granted under
this Plan shall constitute a Key Employee's full and complete
consent to whatever action the Committee directs to satisfy the
federal and state tax withholding requirements, if any, which the
Committee in its discretion deems applicable to such exercise.
16.4 Construction. This Plan shall be construed under the
laws of the State of South Carolina.
IN WITNESS WHEREOF, PMSC has caused its duly authorized
officer to execute this Plan effective as of October 18, 1988 to
evidence its adoption of this Plan.
POLICY MANAGEMENT SYSTEMS CORPORATION
By: ________________________________
G. Larry Wilson
President
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FIRST AMENDMENT
TO THE
POLICY MANAGEMENT SYSTEMS CORPORATION
1989 STOCK OPTION PLAN
THIS AMENDMENT to the Policy Management Systems Corporation 1989
Stock Option Plan (the "Plan") is made by POLICY MANAGEMENT
SYSTEMS CORPORATION (the "Company") and entered into as of this
21st day of July, 1992, to be effective as of the date this
amendment is approved by a majority of the stockholders of the
Company at a meeting duly called and held.
W I T N E S S E T H:
WHEREAS, the Company sponsors and maintains the Plan and,
pursuant to Section 15 thereof, the Company has the right to
amend the Plan subject to stockholders approving certain
amendments; and
WHEREAS, the Company desires to amend the Plan to authorize
additional shares of the Company's stock to be reserved for use
under the Plan;
NOW, THEREFORE, the Plan is hereby amended, effective as set
forth above, as follows:
I. The first sentence of Section 3 is amended to read as
follows:
There shall be 2,500,000 shares of Common Stock reserved
for use under this Plan, and such shares of Common Stock shall be
reserved to the extent that PMSC deems appropriate from
authorized but unissued shares of Common Stock.
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IN WITNESS WHEREOF, this First Amendment has been executed on the
day and year first above written.
POLICY MANAGEMENT SYSTEMS
CORPORATION
BY: __________________________
G. Larry Wilson
President
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SECOND AMENDMENT
TO THE
POLICY MANAGEMENT SYSTEMS CORPORATION
1989 STOCK OPTION PLAN
THIS AMENDMENT to Policy Management Systems Corporation 1989
Stock Option Plan (the "Plan) is made by POLICY MANAGEMENT
SYSTEMS CORPORATION (the "Company") and entered into as of this
____ day of ____________, 1994, to be effective as of the date
this amendment is approved by the stockholders of the Company at
a meeting duly called and held.
W I T N E S S E T H:
WHEREAS, the Company sponsors and maintains the Plan and,
pursuant to Section 15 thereof, the Company has the right to
amend the Plan subject to stockholders approving certain
amendments; and
WHEREAS, the Company desires to amend the Plan to authorize
additional shares of the Company's stock to be reserved for use
under the Plan;
NOW THEREFORE, the Plan is hereby amended, effective as set forth
above, as follows:
1. The first sentence of Section 3 is amended to read as
follows:
There shall be 2,750,000 shares of Common Stock
reserved for use under this Plan, and such shares of
Common Stock shall be reserved to the extent that PMSC
deems appropriate from authorized but unissued shares
of Common Stock.
2. The first sentence in the second paragraph of Section 3 is
amended to read as follows:
An Option Agreement shall provide when the Option shall
become exercisable, but in no event shall an Option
become exercisable earlier than in installments as
follows:
(1) During the first year of the Term, the Option shall be
exercisable as to one-third (1/3) of the number of
shares subject to the Option;
(2) During the second year of the Term, the Option shall be
exercisable as to two-thirds (2/3) of the number of
shares subject to the Option, minus the number of
shares, if any, as
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to which the Option was exercised during the first year of the
Term; and
(3) During the third and following years of the Term, the
Option shall be exercisable as to all of the shares
subject to the Option, minus and number of shares, if
any, as to which the Option was exercised during the
first and second years of the Term.
IN WITNESS WHEREOF, this Amendment has been executed on the day
and year first above written.
POLICY MANAGEMENT SYSTEMS
CORPORATION
BY: __________________________
G. Larry Wilson
President and Chairman
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THIRD AMENDMENT
TO THE
POLICY MANAGEMENT SYSTEMS CORPORATION
1989 STOCK OPTION PLAN
THIS AMENDMENT to Policy Management Systems Corporation 1989
Stock Option Plan (the "Plan) is made by POLICY MANAGEMENT
SYSTEMS CORPORATION (the "Company") and entered into as of this
____ day of _____, 1995, to be effective as of the date this
amendment is approved by the stockholders of the Company at a
meeting duly called and held.
W I T N E S S E T H:
WHEREAS, the Company sponsors and maintains the Plan and,
pursuant to Section 15 thereof, the Company has the right to
amend the Plan subject to stockholders approving certain
amendments; and
WHEREAS, the Company desires to amend the Plan to authorize
additional shares of the Company's stock to be reserved for use
under the Plan;
NOW THEREFORE, the Plan is hereby amended, effective as set forth
above, as follows:
1. There shall be an additional 2,250,000 shares of Common
Stock reserved for use under this Plan, and such shares of
Common Stock shall be reserved to the extent that PMSC deems
appropriate from authorized but unissued shares of Common
Stock.
2. Section 14 of the Plan is amended to add the following
Subsection 14.2 and the existing paragraph under Section 14
is re-numbered as Section 14.1:
14.2 The Committee may, in its sole and absolute discretion,
include in an Option Agreement a provision stating that
if there is a Change in Control of PMSC (as
hereinafter defined) prior to the expiration date of
the Options, then, notwithstanding any other provision
of this Plan or the Option Agreement to the contrary,
each Option granted under that Option Agreement shall
become immediately exercisable regardless of whether
there is a change in office or employment status
subsequent to such Change in Control. For purposes of
this Section, a "Change in Control" shall be deemed to
have occurred in the event: (1) that substantially all
of the Company's assets are sold to another
corporation; 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
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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. In addition, the Committee may, in its sole
and absolute discretion, include in an Option Agreement
that notwithstanding Section 9 of the Plan or the terms
of the Option Agreement to the contrary, following a
Change in Control of PMSC the Key Employee shall have
a period of ninety (90) days after termination of
employment to exercise the Options granted thereby,
and in the event of the death of the Key Employee
during said 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, but in no
event shall such Options be exercised after the tenth
anniversary date such Options were granted.
3. Section 9 is amended to add to the end of the Section the
following:
Notwithstanding the foregoing, the Committee may, but
shall not be required to do so, in its sole and
absolute discretion, permit a Key Employee to exercise
outstanding options sooner than would otherwise be
permitted by the foregoing and as set forth in the
Option Agreement in the event the Key Employee retires
or otherwise leaves the employ of the PMSC.
IN WITNESS WHEREOF, this Amendment has been executed on the day
and year first above written.
POLICY MANAGEMENT SYSTEMS
CORPORATION
BY: __________________________
G. Larry Wilson
President and Chairman
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FOURTH AMENDMENT
TO THE
POLICY MANAGEMENT SYSTEMS CORPORATION
1989 STOCK OPTION PLAN
THIS AMENDMENT to Policy Management Systems Corporation 1989
Stock Option Plan (the "Plan) is made by POLICY MANAGEMENT
SYSTEMS CORPORATION ("PMSC") and entered into as of this ____ day
of ______, 1995.
W I T N E S S E T H:
WHEREAS, PMSC sponsors and maintains the Plan and, pursuant to
Section 15 thereof, PMSC has the right to make certain amendments
to the Plan, such as the one set forth herein, without the
stockholders approving such amendments; and
WHEREAS, under Section 162(m) of the Internal Revenue Code, for
PMSC to receive certain tax treatment relating to the Plan, the
Plan must set forth the maximum amount of Options which can be
granted to individuals in a specified period pursuant to the
Plan; and
WHEREAS, PMSC now desires to amend the Plan to satisfy the
requirements of Section 162(m).
NOW THEREFORE, the Plan is hereby amended, effective as set forth
above, as follows:
A new subsection (d) is added to Section 7 of the Plan as
follows:
(d) The maximum number of Options which may be granted
under this Plan during any calendar year to any
individual shall not exceed 500,000, subject to
adjustment in the manner provided in the Plan for
changes in capital structure and other corporate
transactions.
IN WITNESS WHEREOF, this Amendment has been executed on the day
and year first above written.
POLICY MANAGEMENT SYSTEMS
CORPORATION
BY: __________________________
G. Larry Wilson
President and Chairman