Document:

Form of Nonqualified Stock Option Agreement

 

Exhibit 10.1

THE ULTIMATE SOFTWARE GROUP, INC.

NONQUALIFIED STOCK OPTION AGREEMENT

     This AGREEMENT, made as of this ___day of ___, 200_, by and between The Ultimate
Software Group, Inc. (the “Company”) and ___(the “Optionee”);

     WHEREAS, the Company has adopted an Amended and Restated Nonqualified Stock Option Plan (the
“Plan”) pursuant to which certain employees, officers and directors of the Company and its
Subsidiaries are given the opportunity to acquire or increase their equity ownership in the Company
through the purchase of shares of Common Stock, par value $.01 per share, of the Company (“Stock”);
and

     WHEREAS, the Compensation Committee of the Board of Directors has approved the grant to the
Optionee, under the Plan, of the options provided for herein;

     NOW, THEREFORE, in consideration of the premises, it is agreed by and between the parties as
follows:

     1. Definition of Terms. All terms not defined herein shall have the meaning given to
them in the Plan.

     2. Grant of Options. The Company has granted to the Optionee the right, privilege and
option to purchase the number of shares of Stock specified in Appendix A hereto at a purchase price
(the “Option Price”) per share set forth therein. Appendix A may be amended by the Company from
time to time to reflect additional grants, or the exercise of Options, following the date hereof.
Each option identified in Appendix A shall be subject to the conditions hereinafter provided and
subject to the terms and conditions set forth in the Plan, a copy of which the Optionee
acknowledges having received. (Each option identified in Appendix A is hereinafter referred to as
an “Option”.)

     3. Vesting Schedule. Subject to the terms of the Plan, each Option shall vest and
become exercisable in equal annual installments, each of which shall relate to 25% of the number of
shares of Stock subject to such Option, on the respective dates of grant thereof set forth in
Appendix A and each of the first three anniversaries thereof, provided that the Optionee remains an
Employee of the Company on such respective dates. Such installments shall be cumulative. No
Option shall be exercisable after it terminates as provided in Section 5 hereof.

 

 

     4. Exercise of Option.

          a. Method of Exercise. An Option shall be exercised in whole or in part by written
notice of exercise delivered to the Secretary of the Company, at the Company’s principal place of
business, which notice shall specify the number of shares being purchased. The notice shall be
accompanied by a check or shares of Stock, or any combination thereof, in payment of the Option
Price pursuant to the Plan for the number of shares specified in the notice of exercise. As an
alternative, payment of the Option Price shall be deemed satisfied (i) if the Stock is listed on a
national securities exchange, by delivery to the Company of an assignment of a sufficient amount of
the proceeds from the sale of Stock acquired upon exercise to pay for all of the Stock acquired
upon exercise and an authorization to the broker or selling agent to pay that amount to the
Company, which sale shall be made at the Participant’s direction at the time of exercise, and (ii)
if the Stock is not listed on a national securities exchange, by having the Company withhold a
number of shares of Stock otherwise issuable to the Participant upon exercise of an Option, the
Fair Market Value of which equals the Option Price. For purposes hereof, the Fair Market Value of
the shares of Stock delivered and withheld shall be determined as of the date on which such Option
is exercised.

          b. Delivery of Stock Certificates Upon Exercise. Upon each exercise of an Option, the
Company shall mail or deliver to the Optionee (or Beneficiary in the case of exercise by a
Beneficiary), as promptly as practicable, a stock certificate or certificates representing the
shares then purchased, and will pay all stamp taxes payable in connection therewith.
Notwithstanding the foregoing, the Company shall not be obligated to deliver any such certificate
or certificates upon exercise of an Option until the Company shall have received such assurances
from its counsel as the Company may reasonably request that the exercise of the Option and the
issuance of shares of Stock pursuant to such exercise will not violate the Securities Act of 1933
(the “Act”), as amended (as then in effect or any similar statute then in effect), or the
securities laws of any State applicable to such exercise, issuance or transfer. Such assurances
may include (but need not be limited to) opinions of counsel to the Company, covenants by the
holder or transferee to observe such Act and laws and the placement of a legend on such certificate
or certificates restricting subsequent transfers or sales except in compliance with such Act and
laws.

     Further, the Company may make such provisions as it may deem appropriate for the withholding
of any taxes or payment of any taxes which it determines it may be required to withhold or pay in
connection with the Option (including taxes with respect to Stock received by exercise of the
Option). The obligation of the Company to issue and deliver Stock pursuant to the Option is
conditioned upon the satisfaction of the provisions set forth in the preceding sentence.

     5. Termination of Option. Except as otherwise stated herein or in the Plan, each
Option shall terminate on the tenth anniversary of its date of grant. If the Optionee’s Employment
should terminate for any reason other than his or her death or

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Permanent and Total Disability, at a time when one or more of his or her Options remains
outstanding, then each such Option shall terminate on the date that is 90 days after the date of
such termination of Employment; provided, however, that such 90 day period may be
extended (but not beyond the terms of the Options) upon determination of the Committee following
recommendation of the Chief Executive Officer. In such event, the Optionee’s Options shall be
exercisable during such period after termination of Employment only to the extent vested and
exercisable on the date of such termination. Notwithstanding the foregoing, if the Optionee’s
Employment with the Company should be terminated for “cause” (as defined in the Plan), the
Optionee’s right to exercise any unexercised portion of his or her Option shall immediately
terminate and all rights thereunder shall cease. In the event the Optionee dies during Employment
or terminates Employment by reason of Permanent and Total Disability with one or more outstanding
Options, the Optionee’s outstanding Options shall continue to be exercisable until one year after
the date of such death or disability; provided, however, that such one year period
may be extended (but not beyond the terms of the Options) upon determination of the Committee
following recommendation of the Chief Executive Officer.

     6. Anti-Dilution. In the event of a reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger or consolidation, or the sale, conveyance, lease or
other transfer by the Company of all or substantially all of its property, or any other change in
the corporate structure or shares of the Company, pursuant to any of which events the then
outstanding shares of Stock are split up or combined, or are changed into, become exchangeable at
the holder’s election for, or entitle the holder thereof to, other shares of stock, or in the case
of any other transaction described in Section 424(a) of the Internal Revenue Code, then the number
and kind of shares subject to the Option and the price per share shall be proportionately adjusted
in accordance with the Plan (or other action taken with respect to an offering of rights, warrants
or options) to prevent dilution or enlargement of the Optionee’s rights hereunder. Nothing in this
paragraph shall require the issuance of any fractional shares.

     Notwithstanding anything herein to the contrary, upon a Change of Control in which shares of
Stock are converted into cash, securities or other property, any outstanding Option may, at the
election of the Committee, be terminated and the Participant would under such circumstances
receive, with respect to each share of the Stock issuable under any Option outstanding at such
time, a payment in cash equal to the excess of the Change of Control Price of the Stock over the
Option Price of the Stock less amounts withheld in satisfaction of applicable federal and state
withholding and other employment taxes. In making any election hereunder, the Committee shall act
in accordance with this Agreement, the Plan and its fiduciary duties.

     7. Rights Prior to Exercise of Option. Each Option is nontransferable by the
Optionee, except that (i) in the event of the Optionee’s death an Option may be transferred by the
Optionee’s will or by the laws of descent and distribution and shall then be exercisable only until
the date applicable under Section 5 above, and (ii) on a case by case basis as may be approved by
the Committee in its discretion in accordance with the terms of the Plan, the Participant may,
during his lifetime and subject to the prior approval of

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the Committee at the time of proposed transfer, transfer all or part of an Option to or for the
benefit of a Permitted Transferee in a manner consistent with the requirements for a Form S-8
registration statement under the Act. The Optionee or his Beneficiary shall have no rights as a
stockholder with respect to the shares subject to an Option until exercise of the Option and
delivery to the Optionee of shares of Stock.

     8. Entire Agreement. This Agreement sets forth the entire agreement and understanding
between the parties hereto as to the Options, and merges and supersedes all prior discussions,
agreements (including, without limitation, any stock option agreements) and understandings of every
kind and nature between them with respect to the Options. This Agreement shall not be changed or
amended except by a writing signed by each of the parties hereto.

     9. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.

     10. Binding Effect. This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, executors, administrators, successors and assigns.

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the day
and year first above written.

	 	 	 	 	 
	 	THE ULTIMATE SOFTWARE GROUP, INC.

 	 
	 	By:  	
 	 
	 	 	 	 
	 	 	Title:  	 	 
	 
	 	____________________________________________

(Signature of Optionee)

 	 
	 	 	 
	 	 	 
	 	 	 
	 
	 	____________________________________________

(Print Name)

 	 
	 	 	 
	 	 	 
	 	 	 

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Appendix A

	 	 	 	 	 	 	 	 	 
	 	Date of Grant
	 	 	# of Shares Subject to Option
	 	 	Option Price	 
	 	 	 	 	 	 	 	 	 
	 

6Form of Director Fee Option Agreement

 

Exhibit 10.2

DIRECTOR FEE OPTION AWARD AGREEMENT

The Ultimate Software Group, Inc.

2005 Equity and Incentive Plan

     This Award Agreement (the “Agreement”) made as of this [___] day of [___], 20[___], between
The Ultimate Software Group, Inc., a Delaware corporation (the “Company”), and ___
(the “Optionee”), is made pursuant to the terms of The Ultimate Software Group, Inc. 2005 Equity
and Incentive Plan (the “Plan”). This Agreement and the benefits conferred hereunder shall be
subject to the approval of the Plan by the Company’s stockholders at the Company’s 2005 Annual
Meeting of Stockholders. Capitalized terms used herein but not defined shall have the meanings set
forth in the Plan.

     Section 1. Grant of Option. The Company has granted to the Optionee a
non-qualified stock option for the purchase of the number of shares of common stock of the Company,
par value $.01 per share (the “Common Stock”), specified in Appendix A hereto (the “Option
Shares”). Appendix A may be amended by the Company from time to time to reflect additional
grants, or the exercise of an option, following the date hereof. Each option identified in
Appendix A shall be subject to the conditions hereinafter provided and subject to the terms
and conditions set forth in the Plan, a copy of which the Optionee acknowledges having received.
(Each option identified in Appendix A is hereinafter referred to as an “Option.”)

     Section 2. Exercise Price. The exercise price per share of each Option shall
be 30% of the Fair Market Value of a share of the Common Stock on the Date of Grant (as defined in
the Plan) (the “Option Price”).

     Section 3. Vesting and Term. Each Option shall be fully and immediately
vested on the Date of Grant, but shall become exercisable or payable only in accordance with the
provisions of Sections 4 and 5 hereof. To the extent that an Option is not exercised within the
exercise period described in Section 4 hereof, and is not otherwise settled in accordance with
Section 5 hereof, the Option shall be terminated and the Optionee’s rights hereunder shall be
forfeited.

     Section 4. Exercise. An Option shall first become exercisable on the earliest
to occur of the following events: (i) the fifth (5th) anniversary of the Date of Grant, (ii) the
date on which the Optionee ceases to be a member of the Board, and (iii) the effective date of a
Change in Control (each, an “Exercise Event”); and shall remain exercisable for a period of 90 days
following the applicable Exercise Event. Notwithstanding the foregoing, a Change in Control that
does not also qualify as a “change in control” for purposes of Section 409A of the Code shall not
be treated as an Exercise Event for purposes hereof.

     Section 5. Cash Settlement. Notwithstanding the provisions of Section 4
hereof, the Committee may, in its discretion, cancel the right of the Optionee to exercise an

 

 

Option upon or following the occurrence of an Exercise Event as provided in Section 4 hereof
in exchange for a cash settlement payment to the Optionee (or the Optionee’s legal representative)
equal to the product of: (i) the number of shares of Common Stock subject to the Option being
cancelled, multiplied by (ii) the excess, if any, of the per share Fair Market Value of the Common
Stock on the date of cancellation of the Option over the exercise price per share of the Option.

     Section 6. Procedure for Exercise.

     (a) Notice of Exercise. An Option may be exercised, in whole or in part, and whole
Option Shares may be purchased, by delivery of a notice (the “Notice”) to the Secretary of the
Company at the Company’s principal business address and under any procedures specified by the
Committee, which Notice shall: (i) state the number of whole Option Shares being exercised; (ii)
state the method of payment of the Option Price and tax withholding; (iii) include any
representation of the Optionee required pursuant to Section 7 hereof; (iv) in the event that the
Option shall be exercised by any person other than the Optionee pursuant to Section 10 hereof,
include appropriate proof of the right of such person to exercise the Option; and (v) comply with
such further requirements consistent with the Plan as the Committee may from time to time
prescribe.

     (b) Payment of Option Price. Payment of the Option Price shall be made: (i) in cash
or by cash equivalent acceptable to the Committee, (ii) by payment in shares of Common Stock that
have been held by the Optionee for at least six months (or such other period as the Committee may
deem appropriate for purposes of applicable accounting rules), valued at the Fair Market Value of
such shares on the date of exercise, (iii) through an open-market, broker-assisted transaction, or
(iv) by a combination of the foregoing methods. In addition and at the time of exercise, if and to
the extent required by applicable law, the Optionee shall remit to the Company under procedures
specified by the Company all required Federal, state and local withholding tax amounts in any
manner as permitted above for payment of the Option Price.

     (c) Delivery of Stock Certificates Upon Exercise. Upon each exercise of an Option,
the Company shall mail or deliver to the Optionee (or beneficiary in the case of exercise by a
beneficiary), as promptly as practicable, a stock certificate or certificates representing the
shares of Common Stock then purchased, and will pay all stamp taxes payable in connection
therewith. Notwithstanding the foregoing, the Company shall not be obligated to deliver any such
certificate or certificates upon exercise of an Option until the Company shall have received such
assurances from its counsel as the Company may reasonably request that the exercise of the Option
and the issuance of shares of Common Stock pursuant to such exercise will not violate the
Securities Act of 1933 (the “Act”), as amended (as then in effect or any similar statute then in
effect), or the securities laws of any state applicable to such exercise, issuance or transfer.
Such assurances may include (but need not be limited to) opinions of counsel to the Company,
covenants by the holder or transferee to observe such Act and laws and the placement of a legend on
such certificate or certificates restricting subsequent transfers or sales except in compliance
with such Act and laws.

     Section 7. Investment Representation. Upon the exercise of an Option at a
time when there is not in effect a registration statement under the Act relating to the shares of
Common Stock, by virtue of such exercise, the Optionee shall be deemed to represent and warrant

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to the Company that the shares of Common Stock shall be acquired for investment and not with a view
to the distribution thereof, and not with any present intention of distributing the same, and the
Optionee shall provide the Company with such further representations and warranties as the Company
may require in order to ensure compliance with applicable Federal and state securities, blue sky
and other laws. No shares of Common Stock shall be acquired unless and until the Company and/or
the Optionee shall have complied with all applicable Federal or state registration, listing and/or
qualification requirements and all other requirements of law or of any regulatory agencies having
jurisdiction, unless the Committee has received evidence satisfactory to it that the Optionee may
acquire such shares pursuant to an exemption from registration under the applicable securities
laws. Any determination in this connection by the Committee shall be final, binding and
conclusive.

     Section 8. Limitation of Rights. The Optionee shall not have any privileges
of a stockholder of the Company with respect to any Option Shares, including without limitation any
right to vote such Option Shares or to receive dividends or other distributions in respect thereof,
until the date of the issuance to the Optionee of a stock certificate evidencing the Common Stock.
Nothing in this Agreement or an Option shall confer upon the Optionee any right to continued
service with the Company or to interfere in any way with the right of the Company to terminate the
Optionee’s service at any time.

     Section 9. Adjustments. If there shall occur any recapitalization,
reclassification, stock dividend, extraordinary dividend, stock split, reverse stock split, or
other distribution with respect to the shares of Common Stock, or any merger, reorganization,
consolidation or other change in corporate structure affecting the Common Stock, the Committee
shall, in the manner and to the extent that it deems appropriate and equitable to the Optionee and
consistent with the terms of the Plan, cause an adjustment to be made in (i) the number and kind of
shares of Common Stock subject to the Option, (ii) the Option Price, and (iii) any other terms of
the Option that are affected by the event to prevent dilution or enlargement of the Optionee’s
rights hereunder.

     Section 10. Transfer Restrictions. No Option may be transferred, pledged,
assigned, hypothecated or otherwise disposed of in any way by the Optionee, except by will or by
the laws of descent and distribution; provided, however, that the Optionee may,
during the Optionee’s lifetime and subject to the prior approval of the Committee at the time of
proposed transfer, transfer all or part of an Option to or for the benefit of the Optionee’s
“family members” (as defined in a manner consistent with the rules applicable to registration
statements on Form S-8 promulgated under the Securities Act of 1933), which include certain trusts
and other entities established for the benefit of the Optionee and/or the Optionee’s family
members. Subsequent transfers of an Option shall be prohibited other than by will or the laws of
descent and distribution upon the death of the transferee. In the event that an Optionee becomes
legally incapacitated, an Option shall be exercisable by the Optionee’s legal guardian, committee
or legal representative. If the Optionee dies, an Option shall thereafter be exercisable by the
legatee of such Option under the Optionee’s will or by the Optionee’s estate in accordance with the
Optionee’s will or the laws of descent and distribution, in each case in the same manner and to the
same extent that such Option was exercisable by the Optionee on the date of the Optionee’s death.
An Option shall not be subject to execution, attachment or similar process. Any attempted
assignment,

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transfer, pledge, hypothecation or other disposition of an Option contrary to the provisions
hereof, and the levy of any execution, attachment or similar process upon an Option, shall be null
and void and without effect.

     Section 11. Notices. Any notice hereunder by the Optionee shall be given to
the Company in writing and such notice shall be deemed duly given only upon receipt thereof by the
Secretary of the Company. Any notice hereunder by the Company shall be given to the Optionee in
writing and such notice shall be deemed duly given only upon receipt thereof at such address as the
Optionee may have on file with the Company.

     Section 12. Construction. Any Option hereunder is granted pursuant to the
Plan and is in all respects subject to the terms and conditions of the Plan. The Optionee hereby
acknowledges that a copy of the Plan has been delivered to the Optionee and accepts the Options
hereunder subject to all terms and provisions of the Plan, which is incorporated herein by
reference. In the event of a conflict or ambiguity between any term or provision contained herein
and a term or provision of the Plan, the Plan will govern and prevail. The construction of and
decisions under the Plan are vested in the Committee, whose determinations shall be final,
conclusive and binding upon the Optionee.

     Section 13. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware, without giving effect to the choice of law
principles thereof.

     Section 14. Binding Effect. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective heirs, executors, administrators,
successors and assigns.

     Section 15. Entire Agreement. This Agreement sets forth the entire agreement
and understanding between the parties hereto as to the Options, and merges and supersedes all prior
discussions, agreements (including, without limitation, any stock option agreements) and
understandings of every kind and nature between them with respect to the Options. This Agreement
shall not be changed or amended except by a writing signed by each of the parties hereto.

[SIGNATURES ON FOLLOWING PAGE]

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     IN WITNESS WHEREOF, the Company and the Optionee have executed this Agreement effective as of
the date first above written.

	 	 	 	 	 
	 	THE ULTIMATE SOFTWARE GROUP, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	OPTIONEE

________________________________________________

Signature of Optionee

 	 
	 	 	 
	 	 	 
	 	 	 
	 
	 	________________________________________________

Print Name

 	 
	 	 	 
	 	 	 
	 	 	 

5

 

	 	 	 	 	 

Appendix A

	 	 	 	 	 	 	 	 	 
	 	Date of Grant
	 	 	Number of Shares

Subject to Option 
	 	 	Option Price	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

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