EXHIBIT 10.9
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of April 30,
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1999, between ZC Acquisition Corp., a Delaware corporation (the "Company"), and
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Xxxxxxx Xxxx ("Employee").
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The Company and Employee are parties to a certain Share Exchange
Agreement (the "Share Exchange Agreement") pursuant to which the Employee will
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be issued certain shares of the Company's Common Stock, par value $.01 per
share (the "Common Stock"). All shares of Common Stock so issued to the
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Employee are referred to herein as "Employee Stock." This Agreement contains
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certain restrictions with respect to the Employee Stock. In addition, the
Company desires to employ the Employee and the Employee desires to be employed
by the Company. Certain definitions are set forth in Section 10 of this
Agreement.
The execution and delivery of this Agreement by the Company and
Employee is a condition to the purchase of shares of Common Stock and shares of
the Class A Preferred by GTCR Fund VI, L.P., a Delaware limited partnership
("GTCR"), GTCR VI Executive Fund, L.P., a Delaware limited partnership
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("Employee Fund") and GTCR Associates VI, a Delaware general partnership
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("Associates Fund") (each an "Investor" and collectively, the "Investors")
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pursuant to a purchase agreement between the Company and the Investors dated as
of the date hereof (the "Purchase Agreement"). Certain provisions of this
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Agreement are intended for the benefit of, and will be enforceable by, the
Investors.
In consideration of the mutual covenants and promises contained herein
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged by the parties hereto, the parties agree as follows:
PROVISIONS RELATING TO EMPLOYEE STOCK
1. Issuance of Employee Stock.
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(a) Upon execution of this Agreement, the Company will deliver to
Employee a certificate representing 211,200 shares of Common Stock and Employee
shall be deemed to have paid fair market value for such shares pursuant to the
Share Exchange Agreement.
(b) Within 30 days after the date hereof, Employee will make an
effective election with the Internal Revenue Service under Section 83(b) of the
Internal Revenue Code and
the regulations promulgated thereunder in the form of Exhibit A attached
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hereto.
(c) Until the occurrence of a Sale of the Company or a Public
Offering, all certificates evidencing shares of Employee Stock shall be held by
the Company for the benefit of the Employee and the other holder(s) of Employee
Stock. Upon the occurrence of a Sale of the Company or a Public Offering, the
Company will return the certificates for the Employee Stock to the record
holders thereof.
(d) In connection with the issuance of the Employee Stock, Employee
represents and warrants to the Company that:
(i) The Employee Stock to be acquired by Employee pursuant to
the Share Exchange Agreement will be acquired for Employee's own account
and not with a view to, or intention of, distribution thereof in violation
of the Securities Act, or any applicable state securities laws, and the
Employee Stock will not be disposed of in contravention of the Securities
Act or any applicable state securities laws.
(ii) Employee is sophisticated in financial matters and is able
to evaluate the risks and benefits of the investment in the Employee Stock.
(iii) Employee is able to bear the economic risk of his
investment in the Employee Stock for an indefinite period of time because
the Employee Stock has not been registered under the Securities Act and,
therefore, cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is available.
(iv) Employee has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
Employee Stock and has had full access to such other information concerning
the Company as he has requested.
(v) This Agreement constitutes the legal, valid and binding
obligation of Employee, enforceable in accordance with its terms, and the
execution, delivery and performance of this Agreement by Employee does not
and will not conflict with, violate or cause a breach of any agreement,
contract or instrument to which Employee is a party or any judgment, order
or decree to which Employee is subject.
(vi) Employee has not and will not take any action that will
conflict with, violate or cause a breach of any noncompete, nonsolicitation
or confidentiality agreement to which Employee is a party to or by which
Employee is bound.
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(vii) Employee is a resident of the Commonwealth of
Massachusetts.
(e) As an inducement to the Company to issue the Employee Stock to
Employee, and as a condition thereto, Employee acknowledges and agrees that
neither the issuance of the Employee Stock to Employee nor any provision
contained herein shall entitle Employee to remain in the employment of the
Company or any of its Subsidiaries or affect the right of the Company to
terminate Employee's employment at any time for any reason.
(f) Concurrently with the execution of this Agreement, (i) Employee
shall execute in blank ten stock transfer powers in the form of Exhibit B
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attached hereto (the "Stock Powers") with respect to the Employee Stock and
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shall deliver such Stock Powers to the Company. The Stock Powers shall
authorize the Company to assign, transfer and deliver the shares of Employee
Stock to the appropriate acquiror thereof pursuant to Section 3 below or Section
5 of the Stockholders Agreement and under no other circumstances, and (ii) the
Employee's spouse shall execute the consent in the form of Exhibit C attached
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hereto.
2. Vesting of Employee Stock.
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(a) All of the shares of Employee Stock acquired hereunder shall be
subject to vesting in the manner specified in this Section 2. Except as
otherwise provided in Sections 2(b) and 2(c) below, the Employee Stock will
become vested in accordance with the following schedule (the "Vesting
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Schedule"), if as of each such date Employee is still employed by the Company or
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any of its Subsidiaries:
Date Cumulative Percentage of
---- Employee Stock to be Vested
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1st Anniversary of Closing 20%
2nd Anniversary of Closing 40%
3rd Anniversary of Closing 70%
4th Anniversary of Closing 100%
(b) Upon the occurrence of an initial Public Offering, the above
Vesting Schedule shall remain effective until the first to occur of (x) July
30, (y) October 30, and (z) January 30 (the first to occur of clauses (x), (y)
and (z) is referred to herein as the "Modification
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Date"), at which time the Vesting Schedule shall be modified such that, so long
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as Employee is still employed by the Company or any of its Subsidiaries, the
Employee Stock will vest as follows:
(i) If the Modification Date is July 30, then a percentage of
additional Employee Stock equal to the product of (A) .25 multiplied by (B)
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the percentage of additional Employee Stock scheduled to become vested
(according to the original Vesting Schedule) during the year ended on the
next anniversary of the Closing will vest on such Modification Date, and a
percentage of additional Employee Stock equal to the product of (A) .25
multiplied by (B) the percentage of additional Employee Stock scheduled to
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become vested (according to the original Vesting Schedule) during the year
ended on the next anniversary of the Closing will vest on each subsequent
October 30, January 30, April 30 and July 30 so that the Employee Stock
will be 100% vested on the 4th Anniversary of Closing.
(ii) If the Modification Date is October 30, then a percentage of
additional Employee Stock equal to the product of (A) .50 multiplied by (B)
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the percentage of additional Employee Stock scheduled to become vested
(according to the original Vesting Schedule) during the year ended on the
next anniversary of the Closing will vest on such Modification Date, and a
percentage of additional Employee Stock equal to the product of (A) .25
multiplied by (B) the percentage of additional Employee Stock scheduled to
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become vested (according to the original Vesting Schedule) during the year
ended on the next anniversary of the Closing will vest on each subsequent
January 30, April 30, July 30, and October 30 so that the Employee Stock
will be 100% vested on the 4th Anniversary of Closing.
(iii) If the Modification Date is January 30, then a percentage
of additional Employee Stock equal to the product of (A) .75 multiplied by
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(B) the percentage of additional Employee Stock scheduled to become vested
(according to the original Vesting Schedule) during the year ended on the
next anniversary of the Closing will vest on such Modification Date, and a
percentage of additional Employee Stock equal to the product of (A) .25
multiplied by (B) the percentage of additional Employee Stock scheduled to
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become vested (according to the original Vesting Schedule) during the year
ended on the next anniversary of the Closing will vest on each subsequent
April 30, July 30, October 30 and January 30 so that the Employee Stock
will be 100% vested on the 4th Anniversary of Closing.
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(c) Upon the occurrence of a Transaction, all shares of Employee
Stock which have not yet vested shall automatically vest one business day prior
to the time of such event. The term "Transaction" shall mean (i) a Sale of the
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Company or (ii) the liquidation, dissolution or winding up of the Company.
Shares of Employee Stock which have become vested are referred to herein as
"Vested Shares" and all other shares of Employee Stock are referred to herein as
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"Unvested Shares."
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3. Repurchase Option.
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(a) In the event Employee ceases to be employed by the Company and
its Subsidiaries for any reason (the "Separation"), the Employee Stock (whether
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held by Employee or one or more of Employee's transferees, other than the
Company and Investors) will be subject to repurchase pursuant to the terms and
conditions set forth in this Section 3 (the "Repurchase Option").
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(b) In the event of a Separation, (i) the purchase price for each
Unvested Share of Employee Stock will be Employee's Original Cost for such share
and (ii) the purchase price for each Vested Share of Employee Stock will be the
Fair Market Value for such share as at the date of the Separation; provided,
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however, that if Employee's employment is terminated with Cause, the purchase
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price for each Vested Share of Employee Stock will be Employee's Original Cost
for such share.
(c) The Company may elect to purchase all or any portion of the
Unvested Shares or the Vested Shares by delivering written notice (the
"Repurchase Notice") to the holder or holders of the Employee Stock within 120
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days after the Separation. The Repurchase Notice will set forth the number of
Unvested Shares and Vested Shares to be acquired from each holder, the aggregate
consideration to be paid for such shares and the time and place for the closing
of the transaction. The number of shares to be repurchased by the Company shall
first be satisfied to the extent possible from the shares of Employee Stock held
by Employee at the time of delivery of the Repurchase Notice. If the number of
shares of Employee Stock then held by Employee is less than the total number of
shares of Employee Stock which the Company has elected to purchase, the Company
shall purchase the remaining shares elected to be purchased from the other
holder(s) of Employee Stock under this Agreement, pro rata according to the
number of shares of Employee Stock held by such other holder(s) at the time of
delivery of such Repurchase Notice (determined as nearly as practicable to the
nearest share). The number of Unvested Shares and Vested Shares to be
repurchased hereunder will be allocated among
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Employee and the other holders of Employee Stock (if any) pro rata according to
the number of shares of Employee Stock to be purchased from such person.
(d) If for any reason the Company does not elect to purchase all of
the Employee Stock pursuant to the Repurchase Option, all employees and/or
executives of the Company who are parties to an agreement with the Company which
is substantially similar in form and substance to this Agreement (each a "Senior
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Manager", and collectively, the "Senior Management") on the date of the
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Separation or Triggering Event and the Investors shall be entitled to exercise
the Repurchase Option for all or any portion of the shares of Employee Stock the
Company has not elected to purchase (the "Available Shares"). As soon as
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practicable after the Company has determined that there will be Available
Shares, but in any event within 90 days after the Separation or Triggering
Event, the Company shall give written notice (the "Option Notice") to the Senior
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Management and Investors setting forth the number of Available Shares and the
purchase price for the Available Shares. Senior Management and the Investors
may elect to purchase any or all of the Available Shares by giving written
notice to the Company within one month after the Option Notice has been given by
the Company. If Senior Management and the Investors elect to purchase an
aggregate number of shares greater than the number of Available Shares, the
Available Shares shall be allocated among Senior Management and the Investors
based upon the number of shares of Common Stock owned by each Senior Manager and
each Investor on a fully diluted basis. As soon as practicable, and in any
event within ten days, after the expiration of the one-month period set forth
above, the Company shall notify each holder of Employee Stock as to the number
of shares being purchased from such holder by the Senior Management and the
Investors (the "Supplemental Repurchase Notice"). At the time the Company
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delivers the Supplemental Repurchase Notice to the holder(s) of Employee Stock,
the Company shall also deliver written notice to each Senior Manager and each
Investor setting forth the number of shares such Senior Manager and such
Investor is entitled to purchase, the aggregate purchase price and the time and
place of the closing of the transaction. The number of Unvested Shares and
Vested Shares to be repurchased hereunder shall be allocated among the Company,
Senior Management and the Investors pro rata according to the number of shares
of Employee Stock to be purchased by each of them.
(e) The closing of the purchase of the Employee Stock pursuant to the
Repurchase Option shall take place on the date designated by the Company in the
Repurchase Notice or Supplemental Repurchase Notice, which date shall not be
more than one month nor less than five days after the delivery of the later of
either such notice to be delivered. The Company will pay for the Employee Stock
to be repurchased by it pursuant to the Repurchase
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Option with (i) a check or wire transfer of funds for (A) any shares of Employee
Stock to be repurchased at Employee's Original Cost and (B) in the case of
Employee Stock to be repurchased at Fair Market Value, that portion of such
Employee Stock which is equal to the Employee's Original Cost, and (ii) in the
case of Employee Stock to be repurchased at Fair Market Value, a subordinate
note or notes for that portion of such Employee Stock which exceeds the
Employee's Original Cost; it being understood and agreed that such note or notes
shall be payable in up to two annual installments beginning on the first
anniversary of the closing of such repurchase and bearing interest (payable
quarterly) at a rate per annum equal to the prime rate as published in The Wall
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Street Journal from time to time. Notwithstanding anything in this Section 3 to
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the contrary, any amounts to be paid by the Company with a check or wire
transfer of funds pursuant to this Section 3(e) shall first be reduced (on a
dollar for dollar basis) by all amounts outstanding under any bona fide debts
owed by Employee to the Company. Each Senior Manager and each Investor will pay
for the Employee Stock to be purchased by each of them pursuant to the
Repurchase Option with a check or wire transfer of funds. The Company, the
Senior Management and the Investors will be entitled to receive customary
representations and warranties from the sellers regarding each seller's title to
such Employee Stock.
(f) Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of Employee Stock by the Company shall be subject to
applicable restrictions contained in the Delaware General Corporation Law and in
the Company's and its Subsidiaries' debt and equity financing agreements. If
any such restrictions prohibit the repurchase of Employee Stock hereunder which
the Company is otherwise entitled or required to make, the Company may make such
repurchases as soon as it is permitted to do so under such restrictions.
(g) Notwithstanding anything to the contrary contained in this
Agreement, if the Fair Market Value of a share of Employee Stock is finally
determined to be an amount at least 10% greater than the per share repurchase
price for such share of Employee Stock in the Repurchase Notice or in the
Supplemental Repurchase Notice, each of the Company and the Investors shall have
the right to revoke its exercise of the Repurchase Option for all or any portion
of the Employee Stock elected to be repurchased by it by delivering notice of
such revocation in writing to the holders of Employee Stock during the thirty-
day period beginning on the date that the Company and/or the Investors are given
written notice that the Fair Market Value of a share of Employee Stock was
finally determined to be an amount at least 10% greater than the per share
repurchase price for Employee Stock set forth in the Repurchase Notice or in the
Supplemental Repurchase Notice.
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(h) The provisions of this Section 3 shall terminate with respect to
Vested Shares upon consummation of a Public Offering or the occurrence of a
Transaction.
4. Restrictions on Transfer of Employee Stock.
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(a) Transfer of Employee Stock. The holder of Employee Stock shall
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not Transfer any interest in any shares of Employee Stock, except pursuant to
(i) the provisions of Section 3 hereof, (ii) the provisions of Section 3 of the
Stockholders Agreement (a "Participating Sale"), (iii) an Approved Sale (as
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defined in Section 5 of the Stockholders Agreement), or (iv) the provisions of
Section 4(b) below.
(b) Certain Permitted Transfers. The restrictions in this Section 4
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will not apply with respect to any Transfer of Employee Stock if made (i)
pursuant to applicable laws of descent and distribution or to such Person's
legal guardian in the case of any mental incapacity or among such Person's
Family Group, or (ii) at a time when (A) the Common Stock of the Company has
been trading for at least 45 consecutive days (including the day immediately
preceding such Transfer) at a price that exceeds the initial Public Offering
price by at least 20% and (B) the Common Stock bid and asked price on the day of
such Transfer was at least 20% greater than the initial Public Offering price,
but in the case of this clause (ii) only an amount of shares per calendar year
up to the lesser of (x) the number of Vested Shares owned by Employee at the
time of such Transfer and (y) 10% of the total number of shares of Common Stock
owned by Employee at the time of the Company's initial Public Offering, or (iii)
at such time as the Investors sell shares of Common Stock in a Public Sale, but
in the case of this clause (iii) only an amount of shares (the "Transfer
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Amount") equal to the lesser of (C) the number of Vested Shares of Common Stock
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owned by Employee at the time of such Transfer and (D) the number of shares of
Common Stock owned by Employee multiplied by a fraction (the "Transfer
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Fraction"), the numerator of which is the number of shares of Common Stock sold
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by the Investors in such Public Sale and the denominator of which is the total
number of shares of Common Stock held by the Investors prior to the Public Sale;
provided that, if at the time of a Public Sale of shares by the Investors,
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Employee chooses not to Transfer the Transfer Amount, Employee shall retain the
right to Transfer an amount of Employee Stock at a future date equal to the
lesser of (x) the number of Vested Shares owned by Employee at such future date
and (y) the number of shares of Employee Stock owned by Employee at such future
date multiplied by the Transfer Fraction; provided further, that at any
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particular point in time during any given calendar year the number of shares of
Common Stock which the Employee has a right to Transfer pursuant to clause (ii)
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above shall be reduced by the number of shares of Common Stock which the
Employee has Transferred in such calendar year pursuant to clause (iii) above
and the number of shares of Common Stock which the Employee has a right to
Transfer pursuant to clause (iii) above shall be reduced by the number of shares
of Common Stock which the Employee has Transferred in such calendar year
pursuant to clause (ii) above. Notwithstanding anything in this Section 4 to
the contrary, the restrictions contained in this Section 4 will continue to be
applicable to the Employee Stock after any Transfer of the type referred to in
clause (i) and the transferees of such Employee Stock will agree in writing to
be bound by the provisions of this Agreement. Any transferee of Employee Stock
pursuant to a transfer in accordance with the provisions of this Section 4(b)(i)
is herein referred to as a "Permitted Transferee." Upon the transfer of
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Employee Stock pursuant to this Section 4(b), the transferring Employee
Stockholder will deliver a written notice (a "Transfer Notice") to the Company.
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In the case of a Transfer pursuant to clause (i) hereof, the Transfer Notice
will disclose in reasonable detail the identity of the Permitted Transferee(s).
(c) Termination of Restrictions. The restrictions set forth in this
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Section 4 will continue with respect to each share of Employee Stock until the
earlier of (i) the date on which such share of Employee Stock has been
transferred in a Public Sale permitted by this Section 4, or (ii) the
consummation of an Approved Sale.
5. Additional Restrictions on Transfer of Employee Stock.
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(a) Legend. The certificates representing the Employee Stock will
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bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY
ISSUED AS OF APRIL 30, 1999, HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION
THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN
REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN AN
EMPLOYMENT AGREEMENT BETWEEN THE COMPANY AND AN EMPLOYEE OF THE
COMPANY DATED AS OF APRIL 30, 1999.
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A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE
COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE."
(b) Opinion of Counsel. No holder of Employee Stock may sell,
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transfer or dispose of any Employee Stock (except pursuant to an effective
registration statement under the Securities Act) without first delivering to the
Company an written notice describing in reasonable detail the proposed transfer,
together with an opinion of counsel (reasonably acceptable in form and substance
to the Company) that neither registration nor qualification under the Securities
Act and applicable state securities laws is required in connection with such
transfer. In addition, if the holder of the Employee Stock delivers to the
Company an opinion of counsel that no subsequent transfer of such Employee Stock
shall require registration under the Securities Act, the Company shall promptly
upon such contemplated transfer deliver new certificates for such Employee Stock
which do not bear the Securities Act portion of the legend set forth in Section
5(a). If the Company is not required to deliver new certificates for such
Employee Stock not bearing such legend, the holder thereof shall not transfer
the same until the prospective transferee has confirmed to the Company in
writing its agreement to be bound by the conditions contained in this Section 5.
PROVISIONS RELATING TO EMPLOYMENT
6. Employment. The Company agrees to employ Employee and Employee
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accepts such employment for the period beginning as of the date hereof and
ending upon his separation pursuant to Section 6(c) hereof (the "Employment
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Period").
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(a) Position and Duties. During the Employment Period, Employee shall
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serve in such position as may be designated by the President of the Company from
time to time. Employee shall report to the President or his designee, and
Employee shall devote his or her best efforts and his or her full business time
and attention to t he business and affairs of the Company and its subsidiaries.
(b) Salary, Bonus and Benefits. During the Employment Period, the
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Company will pay Employee a base salary (the "Annual Base Salary") of $165,000
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per annum, subject to any increase as determined in the discretion of the
President based upon the Company's achievements of budgetary and other
objectives set by the Board. As soon as
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practicable following the date hereof, the Company agrees to review Employee's
Annual Base Salary in light of certain objective criteria (determined in its
sole discretion), and may (but shall have no obligation to) adjust such Annual
Base Salary as the Company deems appropriate in its sole discretion. Employee's
Annual Base Salary for any partial year will be prorated based upon the number
of days elapsed in such year. During the Employment Period, the Employee shall
also be eligible for an annual bonus of 35% of Employee's then applicable Annual
Base Salary for such year based upon Employee's attainment of individual
performance objectives and the Company's attainment of its budgetary objectives
established by the Board of Directors; such bonus to be determined by the
President or his designee. Employee shall also be entitled to participate in
such benefit plans as are made available to employees of the Company generally.
(c) Events of Separation. The Employment Period will continue until
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Employee's resignation, disability (as determined by the President in his good
faith judgment) or death or until the President decides to terminate Employee's
employment.
(d) Payments in the Event of Separation. In the event of a
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Separation, the Company shall pay to the Employee, in a lump sum within 15 days
after such termination or resignation, an amount equal to the sum of (A) any
unpaid base salary owed to the Employee for services performed prior to such
termination, plus (B) the amount of any compensation previously deferred by the
Employee (together with any accrued interest or earnings thereon) and any
accrued vacation pay, in each case to the extent not previously paid (the
obligations set forth in clauses (A) and (B) are collectively referred to herein
as the "Accrued Obligations").
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7. Confidential Information. Employee acknowledges that the
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information, observations and data obtained by him during the course of his
performance under this Agreement concerning the business and affairs of the
Company and its affiliates are the property of the Company, including
information concerning acquisition opportunities in or reasonably related to the
Company's business or industry of which Employee becomes aware during the
Employment Period. Therefore, Employee agrees that he will not disclose to any
unauthorized person or use for his own account any of such information,
observations or data without the Board's written consent, unless and to the
extent that the aforementioned matters become generally known to and available
for use by the public other than as a result of Employee's acts or omissions to
act. Employee agrees to deliver to the Company at a Separation, or at any other
time the Company may request in writing, all memoranda, notes, plans, records,
reports and other documents (and copies thereof) relating to the business of the
Company and its affiliates (including, without limitation, all acquisition
prospects, lists and contact information) which he
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may then possess or have under his control.
8. Noncompetition and Nonsolicitation. Employee acknowledges
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that in the course of his employment with the Company he will become familiar
with the Company's and its Subsidiaries' trade secrets and with other
confidential information concerning the Company and such Subsidiaries and that
his services will be of special, unique and extraordinary value to the Company.
Therefore, Employee agrees that:
(a) Noncompetition. During the Employment Period and for a period of
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one year thereafter (the "Noncompete Period"), Employee shall not, within the
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United States, directly or indirectly own, manage, control, participate in,
consult with, render services for, or in any manner engage in any business
engaged in Internet consulting or implementation services (or any other business
directly competitive with a portion of the business of the Company or its
Subsidiaries in which Employee has participated substantially) or any business
in which the Company or any of its Subsidiaries has requested and received
information relating to the acquisition of such business by the Company and the
Subsidiaries prior to the Separation; provided that passive ownership of less
than 5% of the outstanding stock of any publicly-traded corporation shall not,
in and of itself, be deemed to violate this Section 8(a).
(b) Nonsolicitation. During the Noncompete Period, Employee shall not
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directly or indirectly through another entity (i) induce or attempt to induce
any employee of the Company or its Subsidiaries to leave the employ of the
Company or such Subsidiary, or in any way interfere with the relationship
between the Company and any Subsidiary and any employee thereof, (ii) hire any
person who was an employee of the Company and any Subsidiary within 180 days
prior to the time such employee was hired by the Employee, (iii) induce or
attempt to induce any customer, supplier, licensee or other business relation of
the Company and any Subsidiary to cease doing business with the Company or such
Subsidiary or in any way interfere with the relationship between any such
customer, supplier, licensee or business relation and the Company and any
Subsidiary or (iv) directly or indirectly acquire or attempt to acquire an
interest in any business relating to the business of the Company and any
Subsidiary and with which the Company and any Subsidiary has entertained
discussions or has requested and received information relating to the
acquisition of such business by the Company and any Subsidiary in the two-year
period immediately preceding a Separation.
(c) Enforcement. If, at the time of enforcement of Section 7 or this
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Section 8,
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a court holds that the restrictions stated herein are unreasonable under
circumstances then existing, the parties hereto agree that the maximum duration,
scope or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum
duration, scope and area permitted by law. Because Employee's services are
unique and because Employee has access to confidential information, the parties
hereto agree that money damages would be an inadequate remedy for any breach of
this Agreement. Therefore, in the event a breach or threatened breach of this
Agreement, the Company or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce, or prevent any violations of, the provisions hereof (without posting
a bond or other security).
(d) Additional Acknowledgments. Employee acknowledges that the
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provisions of this Section 8 are in consideration of: (i) the consideration set
forth in the Share Exchange Agreement, (ii) employment with the Company, (iii)
the issuance of the Employee Stock and (iv) additional good and valuable
consideration as set forth in this Agreement. In addition, Employee agrees and
acknowledges that the restrictions contained in Section 7 and this Section 8 do
not preclude Employee from earning a livelihood, nor do they unreasonably impose
limitations on Employee's ability to earn a living. In addition, Employee agrees
and acknowledges that the potential harm to the Company of the non-enforcement
of Section 7 and this Section 8 outweighs any potential harm to Employee of its
enforcement by injunction or otherwise. Employee acknowledges that he has
carefully read this Agreement and has given careful consideration to the
restraints imposed upon Employee by this Agreement, and is in full accord as to
their necessity for the reasonable and proper protection of confidential and
proprietary information of the Company now existing or to be developed in the
future. Employee expressly acknowledges and agrees that each and every restraint
imposed by this Agreement is reasonable with respect to subject matter, time
period and geographical area.
(e) Election as Director. The Company shall cause Employee to be
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elected as a Class I Director of the Company as soon as practicable after the
date hereof.
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GENERAL PROVISIONS
10. Definitions.
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"Affiliate" of an Investor means any direct or indirect general or
---------
limited partner of such Investor, or any employee or owner thereof, or any other
person, entity or investment fund controlling, controlled by or under common
control with such Investor, and will include, without limitation, its owners and
employees.
"Cause" means (i) the commission of a felony or a crime involving
-----
moral turpitude or the commission of any other act or omission involving
dishonesty or fraud with respect to the Company or any of its Subsidiaries or
any of their customers or suppliers, (ii) conduct which brings the Company or
any of its Subsidiaries into substantial public disgrace or disrepute, (iii)
substantial and repeated failure to perform duties of the position held by
Employee as reasonably directed by the President, (iv) gross negligence or
willful misconduct with respect to the Company or any of its Subsidiaries or (v)
any material breach of Section 6(a)(ii), 7 or 8 of this Agreement.
"Closing" shall have the meaning set forth in the Share Exchange
-------
Agreement.
"Employee's Family Group" means Employee's spouse and descendants
-----------------------
(whether natural or adopted), any trust solely for the benefit of Employee
and/or Employee's spouse and/or descendants and any retirement plan for the
Employee.
"Employee Stock" will continue to be Employee Stock in the hands of
--------------
any holder other than Employee (except for the Company and the Investors and
except for transferees in a Public Sale), and except as otherwise provided
herein, each such other holder of Employee Stock will succeed to all rights and
obligations attributable to Employee as a holder of Employee Stock hereunder.
Employee Stock will also include shares of the Company's capital stock issued
with respect to Employee Stock by way of a stock split, stock dividend or other
recapitalization. Notwithstanding the foregoing, all Unvested Shares shall
remain Unvested Shares after any Transfer thereof.
"Fair Market Value" of each share of Employee Stock means the average
-----------------
of the closing prices of the sales of such Employee Stock on all securities
exchanges on which such
-14-
Employee Stock may at the time be listed, or, if there have been no sales on any
such exchange on any day, the average of the highest bid and lowest asked prices
on all such exchanges at the end of such day, or, if on any day such Employee
Stock is not so listed, the average of the representative bid and asked prices
quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if on any day
such Employee Stock is not quoted in the NASDAQ System, the average of the
highest bid and lowest asked prices on such day in the domestic over-the-counter
market as reported by the National Quotation Bureau Incorporated, or any similar
successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which the Fair Market Value is being determined and
the 20 consecutive business days prior to such day. If at any time such Employee
Stock is not listed on any securities exchange or quoted in the NASDAQ System or
the over-the-counter market, the Fair Market Value will be the fair value of
such Employee Stock as determined in good faith by the Board. If the Employee
reasonably disagrees with such determination, the Employee shall deliver to the
Board a written notice of objection within ten days after delivery of the
Repurchase Notice (or if no Repurchase Notice is delivered, then within ten days
after delivery of the Supplemental Repurchase Notice). Upon receipt of the
Employee's written notice of objection, the Board and the Employee will
negotiate in good faith to agree on such Fair Market Value. If such agreement is
not reached within 30 days after the delivery of the Repurchase Notice (or if no
Repurchase Notice is delivered, then within 30 days after the delivery of the
Supplemental Repurchase Notice), Fair Market Value shall be determined by an
appraiser jointly selected by the Board and the Employee, which appraiser shall
submit to the Board and the Employee a report within 30 days of its engagement
setting forth such determination. If the parties are unable to agree on an
appraiser within 45 days after delivery of the Repurchase Notice or the
Supplemental Repurchase Notice, within seven days, each party shall submit the
names of four nationally recognized investment banking firms, and each party
shall be entitled to strike two names from the other party's list of firms, and
the appraiser shall be selected by lot from the remaining four investment
banking firms. The expenses of such appraiser shall be borne by the party whose
Fair Market Value determination when subtracted from the appraiser's
determination of Fair Market Value has the greater absolute value; provided
that, in the event that there is no difference between each party's absolute
value, then the expenses of such appraiser shall be shared equally by the
parties. The determination of such appraiser as to Fair Market Value shall be
final and binding upon all parties.
"GAAP" means United States generally accepted accounting
----
principles as in effect from time to time.
"Original Cost" means, with respect to each share of Common Stock
-------------
received by
-15-
the Employee under the Share Exchange Agreement, $.50 (as proportionately
adjusted for all subsequent stock splits, stock dividends and other
recapitalizations).
"Person" means an individual, a partnership, a limited liability
------
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Public Offering" means the sale in an underwritten public offering
---------------
registered under the Securities Act of shares of the Company's Common Stock
approved by the Board of Directors of the Company.
"Public Sale" means (i) any sale pursuant to a registered public
-----------
offering under the Securities Act or (ii) any sale to the public pursuant to
Rule 144 promulgated under the Securities Act effected through a broker, dealer
or market maker (other than pursuant to Rule 144(k) prior to a Public Offering).
"Sale of the Company" means any transaction or series of transactions
-------------------
pursuant to which any person(s) or entity(ies) other than the Investor and its
Affiliates in the aggregate acquire(s) (i) capital stock of the Company
possessing the voting power (other than voting rights accruing only in the event
of a default, breach or event of noncompliance) to elect a majority of the
Company's board of directors (whether by merger, consolidation, reorganization,
combination, sale or transfer of the Company's capital stock, shareholder or
voting agreement, proxy, power of attorney or otherwise) or (ii) all or
substantially all of the Company's assets determined on a consolidated basis.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
"Stockholders Agreement" means the Stockholders Agreement of even date
----------------------
herewith among the Company and certain of its stockholders.
"Subsidiary" means any corporation of which the Company owns
----------
securities having a majority of the ordinary voting power in electing the board
of directors directly or through one or more subsidiaries.
-16-
"Transfer" means to sell, transfer, assign, pledge or otherwise
--------
dispose of (whether with or without consideration and whether voluntarily or
involuntarily or by operation of law).
11. Notices. Any notice provided for in this Agreement must be in
-------
writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service (charges prepaid) to the recipient at the address below
indicated:
If to the Company:
-----------------
ZC Acquisition Corp.
000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: General Counsel
with copies to:
--------------
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
If to the Employee:
------------------
Xx. Xxxxxxx Xxxx
000 Xxxxxxxx Xxxxxx
Xxxx 000
Xxxxxxxxx, XX 00000
-17-
If to the Investors:
-------------------
GTCR Fund VI, L.P.
GTCR VI Employee Fund, L.P.
GTCR Associates VI
c/o GTCR Xxxxxx Xxxxxx, L.L.C.
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxx
Xxxxxxx X. XxXxxx
with a copy to:
--------------
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
12. General Provisions.
------------------
(a) The Company agrees to pay the reasonable legal expenses of the
Employee incurred in connection with the negotiation and execution of this
Agreement. In addition, expenses (including reasonable attorneys' fees)
incurred by the Employee in defending any civil, criminal, administrative or
investigative action, suit or proceeding shall be paid by the Company in advance
of the final disposition of such action, suit or proceeding, unless otherwise
determined by the Outside Directors (as defined in that certain Stockholders
Agreement, dated as of March 23, 1999, by and among the Company, the Investors,
the Employee and certain other stockholders), upon receipt of an undertaking by
or on behalf of the Employee to repay such amount if it shall ultimately be
determined that the Employee is not entitled to indemnification
-18-
by the Company.
(b) Transfers in Violation of Agreement. Any Transfer or attempted
-----------------------------------
Transfer of any Employee Stock in violation of any provision of this Agreement
shall be void, and the Company shall not record such Transfer on its books or
treat any purported transferee of such Employee Stock as the owner of such stock
for any purpose.
(c) Severability. Whenever possible, each provision of this
------------
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(d) Complete Agreement. This Agreement, those documents expressly
------------------
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
(e) Counterparts. This Agreement may be executed in separate
------------
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(f) Successors and Assigns. Except as otherwise provided herein, this
----------------------
Agreement shall bind and inure to the benefit of and be enforceable by Employee,
the Company, the Investors and their respective successors and assigns
(including subsequent holders of Employee Stock); provided that the rights and
obligations of Employee under this Agreement shall not be assignable except in
connection with a permitted transfer of Employee Stock hereunder.
(g) Choice of Law. The laws of Delaware shall govern all issues
-------------
concerning the relative rights of the Company and its stockholders and all other
questions concerning the construction, validity and interpretation of this
Agreement, without giving effect to any choice of
-19-
law or other conflict of law provision or rule (whether of the State of Delaware
or any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.
(h) Remedies. Each of the parties to this Agreement (including the
--------
Investors) will be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including attorney's fees) caused by
any breach of any provision of this Agreement and to exercise all other rights
existing in its favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any party may in its sole discretion apply to any court of
law or equity of competent jurisdiction (without posting any bond or deposit)
for specific performance and/or other injunctive relief in order to enforce or
prevent any violations of the provisions of this Agreement.
(i) Amendment and Waiver. The provisions of this Agreement may be
--------------------
amended and waived only with the prior written consent of the Company, the
Employee and the Majority Holders (as defined in the Purchase Agreement).
(j) Insurance. The Company, at its discretion, may apply for and
---------
procure in its own name and for its own benefit life and/or disability insurance
on Employee in any amount or amounts considered available. Employee agrees to
cooperate in any medical or other examination, supply any information, and to
execute and deliver any applications or other instruments in writing as may be
reasonably necessary to obtain and constitute such insurance. Employee hereby
represents that he has no reason to believe that his life is not insurable at
rates now prevailing for healthy men of his age.
(k) Business Days. If any time period for giving notice or taking
-------------
action hereunder expires on a day which is a Saturday, Sunday or holiday in the
state in which the Company's chief executive office is located, the time period
shall be automatically extended to the business day immediately following such
Saturday, Sunday or holiday.
(l) Indemnification and Reimbursement of Payments on Behalf of
----------------------------------------------------------
Employee. The Company and its Subsidiaries shall be entitled to deduct or with
--------
hold from any amounts owing from the Company or any of its Subsidiaries to the
Employee any federal, state, local or foreign withholding taxes, excise taxes,
or employment taxes ("Taxes") imposed with respect to
-----
-20-
the Employee's compensation or other payments from the Company or any of its
Subsidiaries or the Employee's ownership interest in the Company, including,
without limitation, wages, bonuses, dividends, the receipt or exercise of stock
options and/or the receipt or vesting of restricted stock. The Employee shall
indemnify the Company and its Subsidiaries for any amounts paid with respect to
any such Texas, together with any interest, penalties and related expenses
thereto.
(m) Termination. This Agreement (except for the provisions of Section
-----------
7) shall survive a Separation and shall remain in full force and effect after
such Separation .
(n) Generally Accepted Accounting Principles; Adjustments of Numbers.
----------------------------------------------------------------
Where any accounting determination or calculation is required to be made under
this Agreement or the exhibits hereto, such determination or calculation (unless
otherwise provided) shall be made in accordance with generally accepted
accounting principles, consistently applied, except that if because of a change
in generally accepted accounting principles the Company would have to alter a
previously utilized accounting method or policy in order to remain in compliance
with generally accepted accounting principles, such determination or calculation
shall continue to be made in accordance with the Company's previous accounting
methods and policies. All numbers set forth herein which refer to share prices
or amounts will be appropriately adjusted to reflect stock splits, stock
dividends, combinations of shares and other recapitalizations affecting the
subject class of stock.
(o) Deemed Transfer of Employee Stock. If the Company (and/or the
---------------------------------
Investors and/or any other Person acquiring securities) shall make available, at
the time and place and in the amount and form provided in this Agreement, the
consideration for the Employee Stock to be repurchased in accordance with the
provisions of this Agreement, then from and after such time, the person from
whom such shares are to be repurchased shall no longer have any rights as a
holder of such shares (other than the right to receive payment of such
consideration in accordance with this Agreement), and such shares shall be
deemed purchased in accordance with the applicable provisions hereof and the
Company (and/or the Investors and/or any other Person acquiring securities)
shall be deemed the owner and holder of such shares, whether or not the
certificates therefor have been delivered as required by this Agreement.
(p) No Pledge or Security Interest. The purpose of the Company's
------------------------------
retention of the Employee's stock certificates and executed stock powers is
solely to facilitate the repurchase provisions set forth in Section 3 herein and
does not constitute a pledge by the Employee of, or
-21-
the granting of a security interest in, the underlying stock.
(q) Rights Granted to GTCR and its Affiliates. Any rights granted to
-----------------------------------------
GTCR and its Affiliates hereunder may also be exercised (in whole or in part) by
its designees (which may be Affiliates).
* * * * *
-22-
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement on the date first written above.
ZC ACQUISITION CORP.
By: [ILLEGIBLE]^^
----------------------------------
Its: President
----------------------------------
/s/ Xxxxxxx Xxxx
------------------------------------
Xxxxxxx Xxxx
Agreed and Accepted:
GTCR FUND VI, L.P.
By: GTCR Partners VI, L.P.
Its: General Partner
By: GTCR Xxxxxx Xxxxxx, L.L.C.
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxx
----------------------------------
Its: Principal
GTCR VI EXECUTIVE FUND, L.P.
By: GTCR Partners VI, L.P.
Its: General Partner
By: GTCR Xxxxxx Xxxxxx, L.L.C.
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxx
----------------------------------
Its: Principal
GTCR ASSOCIATES VI
By: GTCR Partners VI, L.P.
Its: Managing General Partner
By: GTCR Xxxxxx Xxxxxx, L.L.C.
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxx
----------------------------------
Its: Principal
SIGNATURE PAGE TO EMPLOYEE AGREEMENT
EXHIBIT A
---------
April ___, 1999
ELECTION TO INCLUDE STOCK IN GROSS
INCOME PURSUANT TO SECTION 83(b) OF THE
INTERNAL REVENUE CODE
The undersigned purchased shares of Common Stock, par value $.01 per
share (the "Shares"), of ZC Acquisition Corp. (the "Company") on April ___, 1999
------ -------
(the "Closing Date"). Under certain circumstances, the Company has the right to
------------
repurchase certain of the Shares at cost from the undersigned (or from the
holder of the Shares, if different from the undersigned) should the undersigned
cease to be employed by the Company and its subsidiaries or upon certain other
events. Hence, the Shares are subject to a substantial risk of forfeiture and
are non-transferable. The undersigned desires to make an election to have the
Shares taxed under the provision of Code (S)83(b) at the time he purchased the
Shares.
Therefore, pursuant to Code (S)83(b) and Treasury Regulation (S)1.83-2
promulgated thereunder, the undersigned hereby makes an election, with respect
to the Shares (described below), to report as taxable income for calendar year
1999 the excess (if any) of the Shares' fair market value on April __, 1999 over
the purchase price thereof.
The following information is supplied in accordance with Treasury
Regulation (S)1.83-2(e):
1. The name, address and social security number of the undersigned:
[Name]
[Address]
Social Security Number: ______________
2. A description of the property with respect to which the election
is being made: [ ] shares of Common Stock, par value $.01 per share, of the
Company.
3. The date on which the property was transferred April ___, 1999.
The taxable year for which such election is made: calendar year 1999.
4. The restrictions to which the property is subject: If during the
first four years after the Closing Date, the undersigned ceases to be employed
by the Company or any of
its subsidiaries, the unvested portion of the Shares will be subject to
repurchase by the Company at cost. 20% of the Shares become vested shares on
each of the first and second anniversaries of the Closing Date and 30% of the
Shares become vested on each of the third and fourth anniversary thereof.
5. The fair market value on April __, 1999 of the property with
respect to which the election is being made, determined without regard to any
lapse restrictions: $.50 per share of Common Stock.
6. The amount paid for such property: $.50 per share of Common
Stock.
A copy of this election has been furnished to the Secretary of the
Company pursuant to Treasury Regulations (S)1.83-2(e)(7).
Dated: April ____, 1999
______________________________
Name:
EXHIBIT B
---------
ASSIGNMENT SEPARATE FROM CERTIFICATE
------------------------------------
FOR VALUE RECEIVED, [Name of Individual] does hereby sell, assign and
transfer unto _______________, _____________ shares of the Common Stock, par
value $.01 per share, of ZC Acquisition Corp., a Delaware corporation (the
"Corporation"), standing in the undersigned's name on the books of the
------------
Corporation represented by Certificate Nos. _________ herewith and does hereby
irrevocably constitute and appoint each principal of GTCR Xxxxxx Xxxxxx, L.L.C.
(acting alone or with one or more other such principals) as attorney to transfer
the said stock on the books of the Corporation with full power of substitution
in the premises.
Dated:_________ __, _____
______________________________
[NAME]
EXHIBIT C
---------
SPOUSAL CONSENT
---------------
The undersigned spouse of the Employee hereby acknowledges that I have
read the foregoing Employment Agreement and Stockholders Agreement and
Registration Agreement referred to therein, each executed by the Employee and
dated as of the date hereof, and that I understand their contents. I am aware
that the foregoing Employment Agreement and Stockholders Agreement and
Registration Agreement provide for the repurchase of my spouse's securities
under certain circumstances and/or impose other restrictions on such securities
(including, without limitation, the transfer restriction thereof). I agree that
my spouse's interest in these securities is subject to these restrictions and
any interest that I may have in such securities shall be irrevocably bound by
these agreements and further, that my community property interest, if any, shall
be similarly bound by these agreements.
_________________________ Date: April ___, 1999
Spouse's
Name:____________________
_________________________ Date: April ___, 1999
Witness'
Name:____________________
