Sample Business Contracts

Stock Option Agreement - Manugistics Group Inc. and Gregory C. Cudahy

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                             MANUGISTICS GROUP, INC.

                             STOCK OPTION AGREEMENT

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                             STOCK OPTION AGREEMENT

       This Stock Option Agreement, dated as of October 16, 2000 is by and
between Manugistics Group, Inc., a Delaware corporation (the "Company"), and
Gregory C. Cudahy, an individual with an address at 4921 Karts Gate Drive,
Marietta, Georgia 30068 (the "Employee").


       Employee was employed by the Company as its Executive Vice President,
Pricing and Revenue Management pursuant to the terms of that certain letter
agreement dated October 16, 2000 between Employee and the Company (the
"Employment Letter"). In order to provide the Employee with a direct proprietary
interest in the future success of the Company and to encourage the Employee to
achieve maximum performance with the Company, the Company agreed as provided in
the Employment Letter, to grant to the Employee an option to purchase 235,000
shares of Common Stock of the Company at a price of Sixty-Nine and One-Sixteenth
Dollars ($69.0625) per share, on the terms and subject to the conditions set
forth herein.

       NOW, THEREFORE, in view of the foregoing, and in consideration of the
promises herein contained, and each intending to be legally bound hereby, the
parties agree as follows:

       1.     Grant of Option; Payment of Exercise Price.

              a.     The Company hereby grants to the Employee the right and
option to purchase under the terms and conditions set forth below, 235,000
shares of the Company's common stock, (the "Shares"), at a price of Sixty-Nine
and One-Sixteenth Dollars ($69.0625) per share (the "Purchase Price") payable as
set forth below (the "Option").

              b.     The Option may be exercised, in whole or in part as to a
minimum of 50

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shares or, if fewer, the total number of shares subject to the Option, by giving
written notice of exercise to the Company specifying the number of Shares to be
purchased. Such notice shall be accompanied by payment in full of the purchase
price, plus any required federal, state and/or local withholding taxes, in cash,
or in shares of common stock of the Company already owned by the Employee with
such shares valued at their Fair Market Value. For such purposes, "Fair Market
Value" shall be defined as the average of the high and low per share sales price
of the common stock of the Company on the day immediately preceding the exercise
date as reported on the Nasdaq System. The Employee may also simultaneously
exercise the Option (or a part thereof) and sell all or part of the Shares
thereby acquired pursuant to any arrangement then in effect between any broker
and the Company, and to use the proceeds from such sale to pay the exercise
price and withholding taxes.

       2.     Terms and Exercise of Option.

              a.     The Option shall have a term of ten years from the date
hereof, and shall vest in forty-eight equal monthly installments over the four
year period beginning on the date hereof (the "Vesting Period"). The Option may
only be exercised during the ten year term hereof and only to the extent it is

              b.     In the event of a Change in Control of the Company (defined
below), (i) if the Employee's responsibilities are not affected, fifty percent
(50%) of the outstanding Option shall immediately vest, and (ii) if the
Employee's responsibilities are significantly diminished or the Employee is
constructively terminated (i.e., the Employee's responsibilities no longer
consist of those reasonably associated with the position of Executive Vice
President, Pricing and Revenue

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Management) one hundred percent (100%) of the outstanding Option shall
immediately vest, in each instance as of the effective date of such Change in
Control, without regard to the Vesting Period. A Change in Control shall be
deemed to have occurred at such time as fifty one percent (51%) of the Company's
voting stock shall have been acquired by any person and/or its affiliates in a
single transaction or a series of related transactions.

              c.     In the event the Employee's employment with the Company is
terminated without cause by the Company, vesting of the Option shall continue
for the six months following such date of termination of employment, and any
remaining portion of the Option which is not vested or accelerated as of such
date of termination, shall terminate.

              d.     In the event the Employee's employment with the Company is
terminated by the Company for cause or voluntarily by the Employee, any portion
of the Option not vested as of such date of termination of employment shall
terminate. For purposes hereof, "cause" shall mean (i) substantial and continued
failure by the Employee to perform his duties as Executive Vice-President,
Pricing and Revenue Management which results, or could reasonably be expected to
result, in material harm to the business or reputation of the Company, which
failure is not cured (if curable) by the Employee within fifteen (15) days after
written notice of such failure is delivered to the Employee by the Company, (ii)
gross misconduct including, without limitation, embezzlement, fraud, or
misappropriation, or (iii) the commission of a felony.

              e.     In no event may this Option be exercised after the
expiration of the ten year term hereof. Except as provided in this Paragraph
2(e), no portion of this Option may be exercised unless the Employee is employed
by the Company at the time of exercise, and may only be

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exercised by the following persons, under the following conditions, and in all
cases subject to all provisions of this Option Agreement, and all applicable
laws, rules and regulations: (i) by the Employee, (ii) by the Employee's
permitted transferees as provided below in Paragraph 2(f), (iii) if the Employee
shall become disabled or die, and shall not have fully exercised the Option, by
the Employee or by the executors or administrators of the Employee or by any
person or persons who shall have acquired the Option directly from the Employee
by bequest or inheritance, but only within one year of the date of death or
disability, (iv) by the Employee in the event that the Employee's employment
with the Company is terminated without cause by the Company, but only within
thirty (30) days after termination of the vesting as set forth in Paragraph
2(d); (v) by the Employee in the event that the Employee's employment with the
Company is terminated voluntarily by the Employee or with cause by the Company,
but only within one month after such date of termination of employment; or (vi)
subject to the provisions of Paragraph 4(b) of this Agreement, by the Employee
in the event that the Employee's employment with the Company is terminated
without cause within one year after a merger or consolidation in which the
Company is not the survivor, for a period of ninety days following the date of
termination. Notwithstanding the foregoing, the Option may be exercised only to
the extent that the Option is vested pursuant to Paragraphs 2(a), 2(b), 2(c) or
2(d) of this Agreement at the date of the Employee's disability, death or
termination of employment.

              f.     Except as provided herein, no part of this Option, and no
right or interest therein, shall be (i) assignable, alienable or transferable by
the Employee, except by will or the laws of descent and distribution, or (ii)
subject to any obligation, or the lien or claims of any

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creditor, of the Employee, or (iii) subject to any lien, encumbrance or claim of
any party made in respect of or through the Employee, however arising. During
the lifetime of the Employee, this Option is exercisable only by, and the Shares
issued upon the exercise of this Option will be issued only to the Employee, his
permitted transferees, or his legal representative. Notwithstanding the
foregoing, the Committee, in its sole discretion and subject to such terms and
conditions as it shall deem appropriate, may authorize the Employee to transfer
all or a portion of this Option; provided, that in no event shall any transfer
be made to any person or persons other than the Employee's parents, spouse or
other life partner, children or grandchildren, siblings, or children of
siblings, or a trust for the exclusive benefit of one or more such persons,
which transfer must be made as a gift and without any consideration, or pursuant
to a qualified domestic relations order. All other transfers and any retransfer
by any permitted transferee are prohibited and any such purported transfer shall
be null and void. In the event of a permitted transfer, this Option and the
Employee shall continue to be subject to the same terms and conditions as were
in effect immediately prior to any such permitted transfer. The Employee shall
remain responsible to the Company for the payment of all withholding taxes
incurred as a result of any exercise of this Option. In no event shall any
permitted transfer of this Option create any right in any party in respect of
this Option, other than the right of the permitted transferee to exercise this
Option to the extent the Employee could have exercised this Option had such
transfer not occurred.

       3.     Recapitalization. Subject to any required action by the
stockholders of the Company, the number of Shares which may be purchased at any
time under the Option, and the price per share therefor, shall be
proportionately adjusted for any increase or decrease in the

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number of outstanding shares of the common stock of the Company resulting from a
subdivision or consolidation of shares or the payment of a stock dividend (but
only on the common stock) or any other increase or decrease in the number of
such shares effected without receipt of consideration by the Company, such that,
upon exercise of the Option from time to time thereafter, the Employee shall be
entitled to receive such number of Shares as he would have received had the
Option been exercised prior to such action.

       4.     Consolidation; Merger; Dissolution and Conversion.

              a.     Subject to any required action by the shareholders of the
Company, if the Company shall be the surviving corporation in any merger or
consolidation, while any part of this Option remains unexercised, such
unexercised part of this Option shall pertain to and apply to the securities to
which a holder of the number of Shares subject hereto would have been entitled
(i.e., the Employee shall be entitled to purchase such number of securities as
he would have received had this Option been exercised prior to such merger or

              b.     Subject to Section 2(b) above, in the event of a
dissolution or liquidation of the Company or a merger or consolidation in which
the Company is not the surviving corporation, the Employee shall, in such event,
have the right, immediately prior to such dissolution, liquidation, merger or
consolidation, to exercise this Option in whole or in part without regard to the
installment provisions of Paragraph 2(a) above, unless this Option is assumed by
the surviving or acquiring corporation, or its parent.

              c.     In the event of a change in the Common Stock of the Company
as presently constituted, which is limited to a change of all of its authorized
shares with par value into the same

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number of shares with a different par value or without par value, the shares
resulting from any such change shall be deemed to be Shares within the meaning
of this Option.

       5.     Notice of Exercise. The Option shall be exercisable upon the
Employee giving (a) written notice to the Company of such exercise specifying
the number of Shares to be purchased, (b) payment of the Purchase Price of the
Shares being purchased and any applicable withholding taxes as provided in
Paragraph 1(b) above, and, subject to applicable federal and state securities
laws, shall be effective upon actual receipt of the foregoing (a) and (b).

       6.     Failure to Exercise. If the Employee fails to exercise any part of
the Option in accordance with the terms of this Agreement within the period set
forth in Paragraph 2(a) above, then such part and all rights attached thereto
shall automatically and immediately terminate without notice. This Agreement
does not impose any obligation on the Employee to exercise the Option or any
part hereof nor does it modify the other terms of Employee's employment set
forth in the Employment Letter. The Employee shall have no rights as a
stockholder of the Company with respect to the Shares covered by the Option
unless and except to the extent that the Option shall have been validly

       7.     Notices. Any and all notices or other writings, which are required
to be served, or which may be served under the provisions of this Agreement,
shall be in writing, and shall be sufficiently served if delivered personally or
mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the addresses set forth on the first page of this
Agreement, or at such other address for a party as shall be specified by like
notice; provided, that notices of a change of address shall be effective only
upon receipt thereof. If mailed as aforesaid,

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three (3) days after the date of mailing shall be the date notice shall be
deemed to have been received.

       8.     Entire Agreement. This Agreement and the Employment Letter
constitute the entire agreement between the parties hereto pertaining to the
subject matter hereof, and supersede all prior and contemporaneous agreements,
understandings and discussions, whether written or oral between the parties and
may be amended only by a written document signed by the parties hereto.

       9.     Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Delaware, without reference to principles of
conflicts of laws.

       10.    Headings. The headings and captions contained herein are for
convenience only and shall not control or affect the meaning or construction of
any provision hereof.

       11.    Corporate Action. No provision of this Option shall be construed
as altering Employee's status as an employee at will, or to prevent the Company
from taking any corporate action deemed by the Company to be appropriate or in
its best interest, whether or not such action could have an adverse effect on
this Option, and neither the Employee or the Employee's estate, personal
representative, beneficiary or permitted transferee shall have any claim against
the Company as a result of taking such action.

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       IN WITNESS WHEREOF, the patties hereto have executed this Option on the
day and year first above written.




By: /s/ Gregory C. Cudahay
Gregory C. Cudahy