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POLICY MANAGEMENT SYSTEMS CORPORATION
EXHIBIT 10.C
EMPLOYEE STOCK OPTION/NON-COMPETE AGREEMENT
THIS EMPLOYEE STOCK OPTION/NON-COMPETE AGREEMENT ("the Agreement")
is made effective as of May 10, 1995, 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 May 10, 1995, 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., forty-nine
dollars
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($49.00). These Options must be exercised within ten (10)
years of the effective date of this Agreement or they expire.
3. Availability for Exercise. 20% of the shares subject to the
Options granted will become available for exercise at the end
of each of the five (5) years following the effective date of
this Agreement. For example . . . 20% of the total number of
Options granted will be available for exercise beginning May
10, 1996; 40% will be available for exercise beginning May 10,
1997; 60% will be available for exercise beginning May 10,
1998; 80% will be available for exercise beginning May 10,
1999; and 100% will be available for exercise beginning May
10, 2000. 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.
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, 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.
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.
If there is a Change in Control of PMSC prior to the
Expiration Date, then notwithstanding any other provision of
the Plan or this Agreement except Section 3B below: (i) each
Option granted hereby then outstanding shall become
immediately exercisable in full 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,
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but in no event shall these Options be exercised after the
tenth anniversary date these Options were granted.
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 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
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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.
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
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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.
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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 (SIGNATURE) /s/ Stephen G. Morrison
(NAME AND TITLE Stephen G. Morrison, 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: Lynn W. Dillard, Ext. 4303
1A4
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
NAMED EXECUTIVE DATE OF NUMBER OPTION
OFFICER GRANT GRANTED PRICE
G. Larry Wilson May 10, 1995 75,000 $49.00
David T. Bailey May 10, 1995 35,000 $49.00
Donald A. Coggiola May 10, 1995 25,000 $49.00
Stephen G. Morrison May 10, 1995 25,000 $49.00