Document:

NonQualified Stock Option Award Agreement

 

Exhibit 10.3

NONQUALIFIED STOCK 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”). 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 the Fair Market Value of a share of the Common Stock on the Date of Grant (as defined in the
Plan) (the “Option Price”) as set forth on Appendix A hereto.

     Section 3. Vesting of Options.

     (a) Vesting Schedule. Each Option shall vest and become exercisable in equal annual
installments, each of which shall relate to 25% of the number of shares of Common 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, subject to the Optionee’s continued employment with the
Company or any Subsidiary on each such vesting date.

     (b) Acceleration Events. Notwithstanding the foregoing, each Option shall become
fully and immediately vested and exercisable upon (i) the Optionee’s termination of employment as a
result of death or Disability, or (ii) the occurrence of a Change in Control of the Company,
provided that the respective Option remains outstanding immediately prior to the effective date of
the Change in Control.

     Section 4. Option Term. Option Shares that become vested pursuant to Section
3 hereof may be purchased at any time on or after the date of such vesting and prior to the
expiration of the term of the Option to which they relate (each, an “Option Term”). An Option Term
shall expire on the day prior to the tenth anniversary of the applicable Date of Grant, unless
earlier terminated in accordance with the terms of the Plan or upon termination of the Optionee’s

 

 

employment with the Company or any Subsidiary (“Termination of Employment”) in accordance with
Section 5 hereof. Upon the expiration of an Option Term, any unexercised Option Shares underlying
such expiring Option shall be cancelled and shall be of no further force or effect.

     Section 5. Termination of Employment.

     (a) General. Subject to the provisions of Sections 5(b) and 5(c) hereof, in the event
of a Termination of Employment for any reason prior to the date that all Option Shares become
vested in accordance with Section 3 hereof, the Optionee shall forfeit the Optionee’s interest in
any Option Shares that have not yet become vested, which shall be cancelled and be of no further
force or effect. In the event of a Termination of Employment for any reason following vesting, the
Optionee shall retain the right to purchase any Option Shares that have previously become vested
until the expiration of 90 days following the effective date of such Termination of Employment (or
the expiration of the applicable Option Term, if earlier); provided, however, that
such 90-day period may be extended (but not beyond the applicable Option Term) upon determination
of the Committee.

     (b) Cause. Notwithstanding the provisions of Section 5(a) hereof, in the event of a
Termination of Employment for “Cause” (as defined below), the Optionee’s right to purchase any
Option Shares, whether or not vested, shall immediately terminate and all rights thereunder shall
cease. For purposes hereof, termination for “Cause” shall mean a Termination of Employment due to
(i) embezzlement or misappropriation of corporate funds, (ii) any acts of dishonesty resulting in
conviction for a felony, (iii) misconduct resulting in material injury to the Company, (iv) a
significant violation of Company policy, (v) willful refusal to perform, or substantial disregard
of, the duties properly assigned to the Optionee, or (vi) a significant violation of any
contractual, statutory or common law duty of loyalty to the Company. Notwithstanding the
foregoing, if the Optionee is a party to an employment or similar agreement with the Company or any
Subsidiary, the term “Cause” shall, for the purposes of this Agreement, have the same meaning set
forth in such employment or similar agreement if and to the extent such term is defined therein.

     (c) Death or Disability. Notwithstanding the provisions of Section 5(a) hereof, in
the event of a Termination of Employment as a result of death or Disability, all unvested Options
hereunder shall become fully and immediately vested and exercisable in accordance with Section 3(b)
hereof, and the Optionee, or the Optionee’s legal representative, shall retain the right to
purchase the Option Shares in accordance with the terms hereof until the expiration of 12 months
following the date of such Termination of Employment (or the expiration of the applicable Option
Term, if earlier); provided, however, that such 12-month period may be extended
(but not beyond the applicable Option Term) upon determination of the Committee.

     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, at any time during the term thereof by notice to the Company in the
form required by the Committee, together with payment of the aggregate Option Price therefor and
any applicable withholding taxes.

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     (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 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. The Company reserves the right to legend any certificate for shares of Common Stock,
conditioning sales of such shares upon compliance with applicable federal and state securities laws
and regulations.

     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.

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Nothing in this Agreement or an Option shall confer upon the Optionee any right to continued
employment with the Company or to interfere in any way with the right of the Company to terminate
the Optionee’s employment at any time.

     Section 9. Adjustments. All Options granted hereunder shall be subject to the
provisions of Section 4.2 of the Plan relating to adjustments for recapitalizations,
reclassifications and other changes in the Company’s corporate structure.

     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, 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. All Options hereunder are granted pursuant to the
Plan and are 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.

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     Section 14. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original but all of which together shall constitute one and
the same instrument.

     Section 15. 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 16. Entire Agreement. This Agreement and the Plan constitute the
entire agreement between the parties with respect to the subject matter hereof and thereof, merging
any and all prior agreements.

[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:  	/s/
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	OPTIONEE

 	 
	 	
 	 
	 	Signature of Optionee 	 

	 
	 	_________________________________________

Print Name 	 

6

 

	 	 	 	 	 

Appendix A

	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	Number of Shares	 	 	 	 
	 	Date of Grant	 	 	Subject to Option	 	 	Option Price	 
	 	 

	 	 	 	 	 	 	 
	 	 

	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 
	 

A-1Restricted Stock Award Agreement

 

Exhibit 10.4

RESTRICTED STOCK AWARD AGREEMENT

The Ultimate Software Group, Inc.

2005 Equity and Incentive Plan

     This RESTRICTED STOCK AWARD AGREEMENT (this “Agreement”) made as of this ___day of
___, 20___, between The Ultimate Software Group, Inc., a Delaware corporation (the
“Company”), and ___(the “Grantee”), is made pursuant to the terms of The Ultimate
Software Group, Inc. 2005 Equity and Incentive Plan (the “Plan”). Capitalized terms used herein
but not defined shall have the meanings set forth in the Plan.

     Section 1. Restricted Stock Award. The Company has granted to the Grantee a
Restricted Stock Award with respect to the number of shares of common stock of the Company, par
value $.01 per share (the “Common Stock”), specified in Appendix A hereto (the “Restricted
Shares”). Appendix A may be amended by the Company from time to time to reflect additional
grants of Restricted Stock Awards following the date hereof. Each Restricted Stock Award
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 Grantee acknowledges
having received. (Each Restricted Stock Award identified in Appendix A is hereinafter
referred to as an “Award.”)

     Section 2. Vesting of Awards.

     (a) Vesting Schedule. Each Award shall become fully vested on the fourth (4th)
anniversary of the respective Dates of Grant thereof as set forth in Appendix A, subject to
the Grantee’s continued employment with the Company or any Subsidiary on each such vesting date.

     (b) Full Accelerated Vesting. Notwithstanding the provisions of Section 2(a) hereof,
upon (i) the Grantee’s termination of employment as a result of death or Disability, or (ii)
the occurrence of a Change in Control of the Company while the Grantee is employed by the Company,
the transfer restrictions and forfeiture conditions imposed hereunder on any Restricted Shares
shall immediately lapse and all such unvested shares shall become fully and immediately vested.

     (c) Partial Accelerated Vesting. Notwithstanding the provisions of Section 2(a)
hereof, upon the Grantee’s termination of employment by the Company without “Cause” (as defined
below), the transfer restrictions and forfeiture conditions imposed hereunder on any Restricted
Shares shall immediately lapse as to 1/48th (one forty-eighth) of the Restricted Shares subject to
each Award hereunder for each complete month of continued employment by the Grantee with the
Company or any Subsidiary following the applicable Dates of Grant, and such Restricted Shares shall
become immediately vested. For purposes hereof, termination for “Cause” shall mean a termination
of employment due to (i) embezzlement or misappropriation of corporate funds, (ii) any acts of
dishonesty resulting in conviction for a felony, (iii) misconduct

 

 

resulting in material injury to the Company, (iv) a significant violation of Company policy,
(v) willful refusal to perform, or substantial disregard of, the duties properly assigned to the
Grantee, or (vi) a significant violation of any contractual, statutory or common law duty of
loyalty to the Company. Notwithstanding the foregoing, if the Grantee is a party to an employment
or similar agreement with the Company or any Subsidiary, the term “Cause” shall, for the purposes
of this Agreement, have the same meaning set forth in such employment or similar agreement if and
to the extent such term is defined therein.

     Section 3. Termination of Employment. Except as provided in Sections 2(b) and
2(c) hereof, if the Grantee’s employment with the Company or any Subsidiary is terminated prior to
the occurrence of any otherwise applicable vesting date provided in Section 2 hereof, the Grantee
shall (i) forfeit the Grantee’s interest in the Restricted Shares that have not yet become vested,
(ii) assign, transfer, and deliver any certificates evidencing ownership of such shares to the
Company, and (iii) cease for all purposes to be a stockholder with respect to such shares.

     Section 4. Rights as a Stockholder. Subject to the otherwise applicable
provisions of this Agreement, the Grantee will have all rights of a stockholder with respect to the
Restricted Shares granted to the Grantee hereunder, including the right to vote the shares and
receive all dividends and other distributions paid or made with respect thereto.

     Section 5. Restrictions on Transfer. Neither this Agreement nor any
Restricted Shares covered hereby may be sold, assigned, transferred, encumbered, hypothecated or
pledged by the Grantee, otherwise than to the Company, unless as of the date of any such sale,
assignment, transfer, encumbrance, hypothecation or pledge, such Restricted Shares to be thus
disposed of have become vested in accordance with Section 2 hereof. The certificate or
certificates representing shares delivered pursuant to this Agreement shall bear a legend referring
to the nontransferability or assignability of such shares pursuant to this Section, and a
stop-transfer order against such certificate or certificates will be placed by the Company with its
transfer agents and registrars. At the discretion of the Committee, in lieu of issuing a stock
certificate to the Grantee, the Company may hold the Restricted Shares in escrow during the period
such shares remain subject to the vesting restrictions and other restrictions provided hereunder.

     Section 6. Investment Representation. Upon acquisition of the Restricted
Shares at a time when there is not in effect a registration statement under the Securities Act of
1933 relating to the Common Stock, the Grantee hereby represents and warrants, and by virtue of
such acquisition shall be deemed to represent and warrant, to the Company that the Restricted
Shares 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 Grantee 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 Restricted
Shares shall be acquired unless and until the Company and/or the Grantee 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 Grantee 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. The Company reserves the right
to legend any

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certificate for shares of Common Stock, conditioning sales of such shares upon compliance with
applicable federal and state securities laws and regulations.

     Section 7. Adjustments. All Awards hereunder shall be subject to the
provisions of Section 4.2 of the Plan relating to adjustments for recapitalizations,
reclassifications and other changes in the Company’s corporate structure.

     Section 8. No Right of Continued Employment. Nothing in this Agreement shall
confer upon the Grantee any right to continue as an employee of the Company or any Subsidiary or to
interfere in any way with any right of the Company to terminate the Grantee’s employment at any
time.

     Section 9. Section 83(b) Election; Withholding. The Grantee may make an
election under Section 83(b) of the Code with respect to any grant of Restricted Shares by filing a
copy of such election with the Company within 30 days of the Date of Grant. If the Grantee makes
such an election, such grant of Restricted Shares shall be conditioned upon the prompt payment by
the Grantee to the Company of an amount equal to the applicable federal, state and local income
taxes and other amounts required by law to be withheld (the “Withholding Taxes”) in connection with
such election. If the Grantee does not make an election under Section 83(b) of the Code with
respect to a grant of Restricted Shares, the Grantee shall pay to the Company the Withholding Taxes
upon the lapse of the vesting restrictions, and the lapse of the restrictions shall be conditioned
upon the prior payment of the applicable Withholding Taxes by the Grantee. Subject to the
limitations of applicable law, the Grantee hereby consents to the collection of the Withholding
Taxes by the Company from the Grantee’s regular paychecks to the extent necessary to satisfy the
obligations of the Grantee hereunder.

     Section 10. Notices. Any notice hereunder by the Grantee 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 Grantee in
writing and such notice shall be deemed duly given only upon receipt thereof at such address as the
Grantee may have on file with the Company.

     Section 11. Construction. This Agreement and the Awards hereunder are granted
by the Company pursuant to the Plan and are in all respects subject to the terms and conditions of
the Plan. The Grantee hereby acknowledges that a copy of the Plan has been delivered to the
Grantee and accepts the Restricted Shares 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 and this Agreement are vested in the
Committee, whose determinations shall be final, conclusive and binding upon the Grantee and the
Company.

     Section 12. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware, excluding the choice of law rules thereof.

3

 

     Section 13. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original but all of which together shall constitute one and
the same instrument.

     Section 14. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the legatees, distributees, and personal representatives of the Grantee and the
successors of the Company.

     Section 15. Entire Agreement. This Agreement and the Plan constitute the
entire agreement between the parties with respect to the subject matter hereof and thereof, merging
any and all prior agreements.

[SIGNATURES ON FOLLOWING PAGE]

4

 

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

	 	 	 	 	 
	 	THE ULTIMATE SOFTWARE GROUP, INC.

 	 
	 	By:  	/s/
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	GRANTEE

 	 
	 	By:  	/s/
 	 
	 	 	Name:  	 	 
	 	 	 	 

5

 

	 	 	 	 	 

Appendix A

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	Number of Shares Subject	 
	 	Date of Grant	 	 	to Award	 
	 	 

	 	 	 	 	 	 
	 	 

	 	 	 	 	 	 
	 	 

	 	 	 	 	 	 
	 	 

	 	 	 	 	 	 
	 

A-1

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