EXHIBIT 10.6
MANHATTAN ASSOCIATES, LLC
SHARE OPTION AGREEMENT
This Share Option Agreement (the "Option Agreement") is made as of February
16, 1998, by and between MANHATTAN ASSOCIATES, LLC, a Georgia limited liability
company (the "Company"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇., an individual employed by
the Company (the "Optionee").
W I T N E S S E T H:
--------------------
WHEREAS, in connection with the acquisition of Performance Analysis
Corporation ("PAC") as a wholly-owned subsidiary of the Company and the
employment of Optionee as President of PAC, the Company has agreed to issue to
Optionee an option to purchase 34,000 shares of the Company at a purchase price
of $20.00 per share; and
WHEREAS, the parties desire to execute this Option Agreement to confirm the
terms and conditions of said option;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and for other valuable consideration, the receipt of which is
hereby acknowledged by the Company, the parties hereto do hereby agree as
follows:
1. GRANT OF OPTION
The Company hereby grants to Optionee the right and option (the "Option")
to purchase from the Company, on the terms and subject to the conditions set
forth in this Agreement, thirty-four thousand (34,000) shares of the Company
(the "Option Shares"), subject to adjustment pursuant to Section 5 hereof. The
Option Shares shall be of the same class as shares issued pursuant to any
options granted to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇. The date of grant of this Option shall be
February 16, 1998 ("Date of Grant").
2. PRICE
The purchase price (the "Option Price") for the Option Shares subject to
the Option granted by this Option Agreement shall be $20.00 per share.
3. EXERCISE OF OPTION
The Option granted pursuant to this Option Agreement shall be subject to
vesting and exercise as follows:
3.1 VESTING AND TIME OF EXERCISE OF OPTION.
The Option shall vest as to 8,500 of the Option Shares on February 16,
1999. The Option shall vest as to 8,500 of the Option Shares each on February
16, 2000, February 16, 2001, and February 16, 2002, respectively. Except as
provided in Section 3.5.1 below, the Option shall not become exercisable until
an Exercise Event. An Option shall be exercisable only upon the occurrence of an
Exercise Event, which shall be the earliest to occur of the following: (1) a
Change in Control, at which time all outstanding and unexercised Options shall
be deemed to be fully vested; (2) the date which is nine (9) years and six (6)
months following the date of the grant of the Option; or (3) to the extent
vested, upon the occurrence of an Initial Public Offering or whenever more than
fifty percent (50%) of the issued and outstanding Shares are acquired by persons
who are not Shareholders or Affiliates in a single transaction or series of
transactions occurring over a period of thirty (30) consecutive days Change in
Control.
For purposes of this Agreement, a Change of Control shall mean a sale or
transfer (other than as security for the Company's obligations) of title to all
of the computer software as well as the other material assets of the Company
having a combined value of more than ninety percent (90%) of the total value of
all the assets of the Company, as determined on the date of sale or transfer. A
Change of Control shall not be deemed to occur merely upon the conversion of the
Company to a corporation or other entity, whether by contribution of the
Company's assets, merger or otherwise, if upon the conversion the ownership of
the Company's equity interests remains in the hands of those who were
shareholders of the Company immediately preceding the conversion.
Initial Public Offering means the closing of the first underwritten firm
commitment offering of Shares following the declaration of effectiveness of a
registration statement for such Shares by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (excluding any registration
statement solely covering an employee benefit plan or corporate reorganization).
Affiliate means a person or entity that, directly or indirectly, through
one or more intermediaries, controls, or is controlled by, or is under common
control with, the Company.
Share means an ownership interest in the Company which serves as a basis
for determining a Shareholder's share of the net profits and losses,
distributions of the Company's assets, and voting rights of Shareholders, or, if
the Company is restructured or recapitalized as a corporation, a share of the
common stock of the Company. Shareholder means an owner of Shares.
The foregoing, installments, to the extent not exercised, shall accumulate
and be exercisable, in whole or in part, at any time and from time to time,
after becoming exercisable and prior to the termination of the Option; provided,
--------
that no single exercise of the Option shall be for less than 10 shares, unless
the number of shares purchased is the total number at that time available for
purchase under this Option.
-2-
3.2. TERMINATION OF OPTION
Except as otherwise provided in Section 3.3, 3.4 and 3.5 below, this Option
shall terminate and be o no further force and effect immediately upon the
earlier of (i) the expiration of a period of 10 years from the Date of Grant, or
(ii) the termination of Optionee's employment with PAC, Company or any successor
entity.
3.3. DEATH
In the event of Optionee's death while employed by the Company, this Option
shall become fully vested effective as of the date of Optionee's death, and the
personal representatives or legatees or distributees of Optionee's estate, as
the case may be, shall have the right (subject to the general limitations on
exercise set forth in this Article 3) to exercise this Option to the extent held
by Optionee on the date of such Optionee's death, at any time within on year
after the date of Optionee's death and prior to the termination of the Option
pursuant to Section 3.2(i) above.
3.4. DISABILITY
If Optionee's termination of employment is by reason of permanent and total
disability as defined in the Employment Agreement executed among the Company,
PAC and Optionee of even date herewith (the "Employment Agreement"), this Option
shall become fully vested effective as of the date of disability, and Optionee
shall have the right (subject to the general limitations on exercise set forth
in this Article 3) to exercise all or any part of the Option, at any time within
one year after such termination of employment and prior to the termination of
the Option pursuant to Section 3.2(i) above.
3.5. TERMINATION OF EMPLOYMENT BY PAC
Notwithstanding anything herein to the contrary, if Optionee's employment
by PAC is terminated by PAC or the Company and such termination is not for Good
Cause, this Option (a) shall not terminate pursuant to Section 3.2(iii) hereof,
and (b) shall become fully vested effective on the date of termination of
employment. Good Cause shall mean the following: (i) Optionee's willful and
material breach of the Employment Agreement or any subsequently executed written
employment agreement by and between PAC and Optionee by act or omission or
misconduct which materially and adversely affects the reputation or operations
of PAC or the Company continuing for ten days after Optionee's receipt of
written notice of need to cure; (ii) Optionee's willful dishonesty or fraud with
respect to the business or affairs of PAC or Company which materially and
adversely affects the operations or reputation of PAC or the Company; (iii)
Optionee's conviction of a felony; or (iv) chronic alcohol abuse or illegal drug
abuse by Optionee during the performance of his duties.
3.5.1. LIMITATIONS ON EXERCISE OF OPTION
In no event may the Option be exercised prior to the occurrence of an
Exercise Event without the prior written approval and consent of the
shareholders of the Company. Notwithstanding the foregoing, if not earlier
exercised, the Option may be exercised, even if an
-3-
Exercise Event has not occurred, beginning on the date which is nine (9) years
and six (6) months following the Date of Grant. In no event, however, shall the
Option be exercisable, in whole or in part, following the termination of the
Option pursuant to Section 3.2 hereof. In no event may the Option be exercised
for a fractional share.
3.6. METHOD OF EXERCISE OF OPTION
Subject to the terms and conditions of this Option Agreement, the Option
may be exercised by delivering written notice of exercise to the Company, at its
principal office, addressed to the attention of the President, which notice
shall specify the number of shares for which the Option is being exercised, and
shall be accompanied by payment in full of the Option Price of the shares for
which the Option is being exercised. Payment of the Option Price for the Option
Shares purchased pursuant to the exercise of the Option shall be made in whole
or in part either: (i) in cash or by check payable to the order of the Company;
(ii) to the extent permitted by applicable law and agreed to by the Company, by
the delivery to the Company of a promissory note of the person exercising the
Option, in which such person promises to pay the Option Price to the Company on
such terms (including, without limitation, payment of interest) as shall be
agreed to by the Company; (iii) to the extent permitted by applicable law
through the tender to the Company of shares of the Company previously acquired
by Optionee and held for a period of at least six months, which shares shall be
valued, for purposes of determining the extent to which the Option Price has
been paid thereby, at their fair market value (determined by the Board of
Directors of the Company) on the date of exercise; or (iv) by a combination of
the foregoing methods. If the person exercising the Option is not Optionee, such
person shall also deliver with the notice of exercise appropriate proof of his
or her right to exercise the Option. An attempt to exercise the Option granted
hereunder other than as set forth above shall be invalid and of no force and
effect. Promptly after exercise of the Option as provided above, the Company
shall deliver to the person exercising the Option a certificate or certificates
for the Option Shares being purchased. Upon acceptance of payment of the Option
Price by the Company, Optionee shall execute the Operating Agreement of the
Company then in effect (the "Operating Agreement") and shall become subject to
all of the rights, restrictions and limitations of a shareholder of the Company.
4. TRANSFERABILITY
4.1. TRANSFERABILITY OF OPTIONS
During the lifetime of Optionee, only Optionee (or, in the event of legal
incapacity or incompetency, Optionee's guardian or legal representative) may
exercise the Option. This Option shall not be assignable or transferable other
than by will or the laws of descent and distribution.
4.2. TRANSFERABILITY OF OPTION SHARES
Optionee (or any other person who is entitled to exercise an Option
pursuant to the terms of this Agreement) shall not sell, pledge, assign, give or
otherwise transfer or dispose of any Option Shares except in accordance with the
provisions of the Operating Agreement.
-4-
4.3. PUBLICLY TRADED SHARES
If the Option Shares become listed on an established national or regional
exchange or are admitted to quotation on the National Association of Securities
Dealers Automated Quotation System, or are publicly traded in an established
securities market, the foregoing restrictions of this Section 4 shall terminate
as of the first date that the Option Shares are so listed, quoted or publicly
traded.
4.4. LEGEND DESCRIBING RESTRICTIONS AND OBLIGATIONS
The Company may cause a legend to be placed prominently on certificates
representing shares issued pursuant to this Option Agreement in order to give
notice of the transferability restrictions and obligations imposed by this
Section 4.
5. SHARE ADJUSTMENTS
In the event the outstanding shares of the Company are increased or
decreased or changed into or exchanged for a different number or kind of
interest or other securities of the Company or of any other entity by reason of
any merger, sale, consolidation, liquidation, recapitalization,
reclassification, split up, combination, or dividend, the total number of shares
subject to this Option and the Option Price for this Option shall be
appropriately adjusted by the Company's Board of Managers to reflect the change
in the outstanding shares of the Company in the same manner as adjustments made
to any options granted to ▇▇▇▇ ▇▇▇▇▇▇▇▇.
6. RIGHTS AS SHAREHOLDER
Neither Optionee nor any executor, administrator, distributee or legatee of
Optionee's estate shall be, or have any of the rights or privileges of, a
shareholder of the Company in respect of any Option Shares issuable hereunder
unless and until such shares have been fully paid and certificates representing
such shares have been endorsed, transferred and delivered, and the name of
Optionee (or of such personal representative, administrator, distributee or
legatee of Optionee's estate) has been entered as the shareholder of record on
the books of the Company.
7. WITHHOLDING OF TAXES
The parties hereto recognize that the Company may be obligated to withhold
federal and local income taxes and Social Security taxes to the extent that
Optionee realizes ordinary income in connection with the exercise of the Option
or in connection with a disposition of any Option Shares acquired by exercise of
the Option. Optionee agrees that the Company may withhold amounts needed to
cover such taxes from payments otherwise due and owing to Optionee, and also
agrees that upon demand Optionee will promptly pay to the Company having such
obligation any additional amounts as may be necessary to satisfy such
withholding tax obligation. Such payment shall be made in cash or by certified
check payable to the order of the Company, or, at the discretion of the Company,
may be made by withholding Option Shares upon exercise sufficient to cover the
tax liability.
-5-
8. DISCLAIMER OF RIGHTS
No provision in this Option Agreement shall be construed to confer upon
Optionee the right to be employed by the Company, or to interfere in any way
with the right and authority of the Company either to increase or decrease the
compensation of Optionee at any time, or to terminate any employment or other
relationship between Optionee and the Company.
9. CONVERSION OF THIS OPTION AGREEMENT
This Option Agreement shall be converted into and replaced by an option
agreement pursuant to the Manhattan Associates, Inc. 1998 Stock Option Plan on
the effective date of the transactions contemplated by the Subscription and
Contribution Agreement which Optionee has agreed to execute pursuant to Section
4.5 of that certain Contribution Agreement dated as of February 16, 1998, among
the Company, PAC and Optionee. The replacement option agreement shall provide
for immediate exercisability of any options vested as of its effective date, and
for immediate exercisability upon vesting of the options in accordance with the
vesting schedule set forth in Section 3.1 of this Option Agreement. Furthermore,
the replacement option agreement shall provide terms and conditions no less
favorable than those contained in this Option Agreement.
10. GOVERNING LAW
This Option Agreement shall be governed by the laws of the State of
Georgia.
11. BINDING EFFECT
Subject to all restrictions provided for in this Option Agreement and by
applicable law relating to assignment and transfer of this Option Agreement and
the Option provided for herein, this Option Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors, and assigns.
12. NOTICE
Any notice hereunder by Optionee to the Company shall be in writing and
shall be deemed duly given if mailed or delivered to the Company at its
principal office, addressed to the attention of the President, or if so mailed
or delivered to such other address as the Company may hereafter designate by
notice to Optionee. Any notice hereunder by the Company to Optionee shall be in
writing and shall be deemed duly given if mailed or delivered to Optionee at the
address specified below by Optionee for such purpose, or if so mailed or
delivered to such other address as Optionee may hereafter designate by written
notice given to the Company.
13. ENTIRE AGREEMENT
This Option Agreement constitutes the entire agreement between the parties
concerning the Option and supersedes all prior understandings and agreements,
written or oral, of the parties hereto with respect to the subject matter hereof
Neither this Option Agreement nor any term
-6-
hereof may be amended, waived, discharged or terminated except by a written
instrument signed by the Company and Optionee.
IN WITNESS WHEREOF the parties hereto have duly executed this Option
Agreement, or caused this Option Agreement to be duly executed on their behalf,
as of the day and year first above written.
OPTIONEE: COMPANY:
MANHATTAN ASSOCIATES, LLC
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇.
-----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇. By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
-7-