EMPLOYMENT AGREEMENT
Exhibit 10.20
Technology Solutions Company, a Delaware corporation doing business as TSC, and Xxxxxx
Xxxxx-Xxxxx (“Employee”) enter into this Employment Agreement (“Agreement”) as of December 4, 2006.
In consideration of the agreements and covenants contained in this Agreement, TSC and Employee
agree as follows:
1. Employment Duties: TSC shall employ Employee as its President and Chief Executive
Officer. Employee shall have the normal responsibilities, duties and authority of a President and
Chief Executive Officer and shall, at the direction of TSC’s Board of Directors, administer and
execute TSC’s policies, business affairs and operations. Employee shall perform faithfully the
duties assigned to him to the best of his ability and shall devote his full and undivided business
time and attention to the transaction of TSC’s business.
2. Term of Employment: The term of employment (“Term of Employment”) covered by this
Agreement shall commence as of the effective date of this Agreement and continue until terminated
pursuant to the provisions of paragraph 3 below.
3 (a). Termination in General: Upon giving Employee 30 days notice, TSC may terminate
Employee’s employment for any reason. TSC may make such termination effective at any time within
such 30 day notice period. TSC must, however, (i) continue Employee’s normal salary, health
insurance and general benefits from the effective date of termination for a period of 365 days;
(ii) immediately vest Employee’s unvested shares at option (this Agreement will supercede the terms
of any Employee’s stock option agreements, where relevant); and (iii) pay employee a one-time
termination payment equal to 50% of his annual base salary on the day following the effective date
of his termination. In addition, TSC may terminate Employee’s employment and this Agreement
immediately without notice and with no salary continuation, one-time termination payment, vesting
of options, or benefit continuation if Employee engages in “Serious Misconduct.” For purposes of
this Agreement, “Serious Misconduct” means embezzlement or misappropriation of corporate funds,
other acts of dishonesty, significant activities materially harmful to TSC’s reputation, willful
refusal to perform or substantial disregard of Employee’s assigned duties, or any significant
violation of any statutory or common law duty of loyalty to TSC. Employee may terminate his
employment upon giving TSC 30 days prior written notice. Upon receiving notice, TSC may waive its
rights under this paragraph and make Employee’s termination effective immediately or anytime before
the 30 day notice period ends.
3 (b). Termination upon a Change of Control: If following a Change of Control Employee is
terminated for whatever reason or resigns within 90 days, then: (x) Employee shall continue to
receive Employee’s base salary, health insurance and general benefits at the time of the Change in
Control for a 365-day period following the effective date of his resignation or termination; and
(y) TSC shall pay Employee the “one-time termination payment” described in
paragraph 3 (a) of this Employment Agreement as set forth therein. Further, upon a Change of
Control, Employee’s unvested shares at option shall vest immediately (this Agreement will supercede
the terms of any Employee’s stock option agreements, where relevant).
For purposes of this Employment Agreement, a “Change of Control” is defined as (i) the acquisition
by any individual, entity or group, of beneficial ownership (within the meaning of Rule 13 d-3
promulgated under the Securities Exchange Act of 1934) of 40% or more of the outstanding shares of
common stock of TSC; (ii) the approval of the stockholders of TSC of a merger, where immediately
after the merger, persons who were the holders of a majority of TSC’s outstanding common stock
immediately prior to the merger fail to own at least a majority of the outstanding common stock of
the surviving entity in substantially the same proportions as their holdings of TSC common stock
immediately prior to the merger; or (iii) the sale of substantially all of the assets of TSC other
than to a corporation in which more than 60% of the outstanding shares are beneficially owned by
the individuals and entities who are the beneficial owners of the Company stock prior to the
acquisition.
4. Salary: As compensation for his services, TSC shall pay Employee a base salary in the
amount listed in Exhibit A to this Agreement. Employee’s base salary shall be subject to annual
review by the Compensation Committee of the Board of Directors and may, at their discretion, be
adjusted from that listed in Exhibit A according to Employee’s responsibilities, capabilities and
performance during the preceding year.
5. Bonuses: The Compensation Committee of the Board of Directors may, at its sole
discretion, elect to pay Employee an annual performance bonus pursuant to a plan similar to the
plan covering TSC’s senior employees. Annual performance bonuses are not guaranteed. However, in
the event TSC elects to pay Employee an annual performance bonus, it will range between 50% and
100% of Employee’s base salary. Notwithstanding the aforementioned, Employee shall be paid a
guaranteed one-time bonus of $175,000 within 30 days of his employment with TSC. Furthermore, no
annual performance bonus will be paid in a year in which Employee’s employment with TSC terminates
for any reason.
6. Employee Benefits: During the Term of Employment, Employee shall be entitled to
participate in such employee benefit plans, including group pension, life and health insurance and
other medical benefits, and shall receive all other fringe benefits as TSC may make available
generally to its Senior Vice Presidents.
7. Business Expenses: TSC shall reimburse Employee for all reasonable and necessary business
expenses incurred by Employee in performing his duties. Employee shall provide TSC with supporting
documentation sufficient to satisfy reporting requirements of the Internal Revenue Service and TSC.
TSC’s determination as to reasonableness and necessary shall be final.
8. Relocation: If Employee chooses to relocate to Chicago, Illinois within 24 months of the
date of this Agreement, and this Agreement has not been terminated before that time, TSC shall
reimburse Employee for all reasonable and necessary expenses associated with moving his household
possessions and immediate family from Birmingham, Alabama to Chicago, Illinois. If employee sells his home in Birmingham, Alabama at any time prior to the termination of this
Agreement, TSC will reimburse Employee for (i) any sales commissions he is required to pay a
realtor, up to a maximum of 6% of the sale price of the home, and (ii) any closing costs associated
with the sale of his home, up to a maximum of $3,000. Reimbursement of these amounts will be
grossed up to the extent necessary to avoid negative tax consequences to Employee.
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9. Options: Within 30 days of his hire date, Employee will be granted 125,000 inducement
stock options pursuant to the terms of the Option Agreement attached hereto as Exhibit B.
10. Noncompetition and Nondisclosure: Employee acknowledges that the successful development
and marketing of TSC’s professional services and products require substantial time and expense.
Such efforts generate for TSC valuable and proprietary information (“Confidential Information”)
which gives TSC a business advantage over others who do not have such information. Confidential
Information of TSC and its clients and prospects includes, but is not limited to, the following:
business strategies and plans; proposals; deliverables; prospects and customer lists;
methodologies; training materials; and computer software. Employee acknowledges that during the
Term of Employment, he will obtain knowledge of such Confidential Information. Accordingly,
Employee agrees to undertake the following obligations which he acknowledges to be reasonably
designed to protect TSC’s legitimate business interests without unnecessarily or unreasonably
restricting Employee’s post-employment opportunities:
(a) Upon termination of the Term of Employment for any reason, Employee shall return all TSC
property, including but not limited to computer programs, files, notes, records, charts, or other
documents or things containing in whole or in part any of TSC’s Confidential Information;
(b) During the Term of Employment and subsequent to termination, Employee agrees to treat all
such Confidential Information as confidential and to take all necessary precautions against
disclosure of such information to third parties during and after Employee’s employment with TSC.
Employee shall refrain from using or disclosing to any person, without the prior written approval
of TSC’s Board of Directors any Confidential Information unless at that time the
information has become generally and lawfully known to TSC’s competitors;
(c) Without limiting the obligations of paragraph 10 (b), Employee shall not, for a period of
one year following his termination of employment for any reason, for himself or as an agent,
partner or employee of any person, firm or corporation, engage in the practice of consulting or
related services for any client of TSC for whom Employee performed services, or prospective TSC
client to whom Employee submitted, or assisted in the submission of a proposal during the one year
period preceding his termination of employment;
(d) During a one year period immediately following Employee’s termination of
employment for any reason, Employee shall not hire, induce or assist in the hiring or inducement of
any TSC employee or independent contractor away from TSC’s employ or from the faithful
discharge of such employee’s contractual and fiduciary obligations to serve
TSC’s interests with undivided loyalty. For purposes of this paragraph, TSC employees
and independent contractors
shall include any persons who, at the time of hire or inducement, have been separated from the
employ of or engagement by TSC for fewer than six (6) months;
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(e) For one year following his termination of employment for any reason, Employee shall keep
TSC currently advised in writing of the name and address of each business organization for which he
acts as agent, partner, representative or employee.
11. Remedies: Employee recognizes and agrees that a breach of any or all of the provisions
of paragraph 10 will constitute immediate and irreparable harm to TSC’s business advantage,
including but not limited to TSC’s valuable business relations, for which damages cannot be readily
calculated and for which damages are an inadequate remedy. Accordingly, Employee acknowledges that
TSC shall therefore be entitled to an order enjoining any further breaches by the Employee.
12. Intellectual Property: During the Term of Employment, Employee shall disclose to TSC all
ideas, inventions and business plans which he develops during the course of his employment with TSC
which relate directly or indirectly to TSC’s business, including but not limited to any computer
programs, processes, products or procedures which may, upon application, be protected by patent or
copyright. Employee agrees that any such ideas, inventions or business plans shall be the property
of TSC and that Employee shall at TSC’s request and cost, provide TSC with such assurances as is
necessary to secure a patent or copyright.
13. Assignment: Employee acknowledges that the services to be rendered pursuant to this
Agreement are unique and personal. Accordingly, Employee may not assign any of his rights or
delegate any of his duties or obligations under this Agreement. TSC may assign its rights, duties
or obligations under this Agreement to a subsidiary or affiliated company of TSC or purchaser or
transferee of a majority of TSC’s outstanding capital stock or a purchaser of all, or substantially
all, of the assets of TSC.
14. Notices: All notices shall be in writing, except for notice of termination of
employment, which may be oral if confirmed in writing within 14 days. Notices intended for TSC
shall be sent by registered or certified mail addressed to it at 00 X. Xxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxx 00000 or its current principal office, and notices intended for Employee shall be
either delivered personally to him or sent by registered or certified mail addressed to his last
known address.
15. Entire Agreement: This Agreement and Exhibits A and B attached hereto constitute the
entire agreement between TSC and Employee. Neither Employee nor TSC may modify this Agreement by
oral agreements, promises or representations. The parties may modify this Agreement only by a
written instrument signed by the parties.
16. Applicable Law: This Agreement shall be governed by and construed in accordance with the
laws of the State of Illinois.
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17. Mediation of Disputes: Neither party shall initiate arbitration or other legal
proceedings (except for any claim under paragraph 10 of this Agreement), against the other
party, or, in the case of TSC, any of its directors, officers, employees, agents, or
representatives, relating in any way to this Agreement, to Employee’s employment with TSC, the
termination of his employment or any or all other claims that one party might have against the
other party until 30 days after the party against whom the claim[s] is made (“Respondent”) receives
written notice from the claiming party of the specific nature of any purported claim and the amount
of any purported damages. Employee and TSC further agree that if Respondent submits the claiming
party’s claim to the Center for Public Resources, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, for
nonbinding mediation prior to the expiration of such 30 day period, the claiming party may not
institute arbitration or other legal proceedings against Respondent until the earlier of (i) the
completion of nonbinding mediation efforts, or (ii) 90 days after the date on which the Respondent
received written notice of the claimant’s claim.
18. Binding Arbitration: Employee and TSC agree that all claims or disputes relating to his
employment with TSC or the termination of such employment, and any and all other claims that
Employee might have against TSC, any TSC director, officer, employee, agent, or representative, and
any and all claims or disputes that TSC might have against Employee (except for any claims under
paragraph 10 of this Agreement) shall be resolved under the Expedited Commercial Rules of the
American Arbitration Association. If either party pursues a claim and such claim results in an
Arbitrator’s decision, both parties agree to accept such decision as final and binding. TSC and
Employee agree that any litigation under paragraph 10 of this Agreement shall be brought in the
Circuit Court for Xxxx County, Illinois.
19. 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 prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
20. Employee acknowledges that he has read, understood and accepts the provisions of this
Agreement.
| Technology Solutions Company | Employee |
|||||||||||
By:
|
/s/ Xxxx X. Xxxx, Xx. | /s/ Xxxxxx X. Xxxxx-Xxxxx | ||||||||||
Position:
|
Chairman | |||||||||||
Date:
|
November 27, 2006 | Date: | November 27, 2006 | |||||||||
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EXHIBIT A
EMPLOYEE:
|
Xxxxxx Xxxxx-Xxxxx | |
POSITION:
|
President and Chief Executive Officer | |
BASE SALARY:
|
$375,000 | |
EFFECTIVE DATE:
|
December 4, 2006 |
| /s/ Xxxxxx X. Xxxxx-Xxxxx | ||
| Employee | ||
| November 27, 2006 | ||
| Date | ||
| /s/ Xxxx X. Xxxx, Xx. | ||
| Technology Solutions Company | ||
| November 27, 2006 | ||
| Date |
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EXHIBIT B
TECHNOLOGY SOLUTIONS COMPANY
2006 EMPLOYMENT INCENTIVE AWARD PLAN
2006 EMPLOYMENT INCENTIVE AWARD PLAN
INDUCEMENT STOCK OPTION AGREEMENT
Technology Solutions Company, a Delaware corporation (the “Company”), hereby grants to the
employee whose name appears below (the “Employee”), an option to purchase from the Company (the
“Option”) such number of shares of its Common Stock, $0.01 par value (“Stock”), as set forth below,
at the price per share set forth below, and subject to the other terms and conditions set forth
herein and in Annex I hereto (“Annex I”). The Option is granted subject to the terms and
conditions of the Company’s 2006 Employment Inducement Award Plan (the “Plan”). Capitalized terms
used but not otherwise defined in this Agreement shall have the meanings given them in Annex I or
the Plan, as applicable. The Option shall become null and void unless the Employee shall accept
this Agreement by executing it in the space provided and returning it to the Company.
| Employee Name: | ||||||
| Number of Shares | ||||||
| Subject to Option: | ||||||
| Exercise Price | ||||||
| Per Share: | ||||||
| Exercise Provisions: |
(a) The Option shall become exercisable (i) on the first anniversary of the Option Date with
respect to one-third of the number of shares subject to the Option on the Option Date, (ii) on the
last day of each calendar month for 24 months thereafter, beginning the month following the first
anniversary of the Option Date, with respect to an additional 1/36 of the number of shares subject
to the Option on the Option Date, and (iii) as otherwise provided pursuant to paragraphs (b)
through (g) of this Agreement or Section 10 of the Plan.
(b) If, prior to the first anniversary of the Option Date, the Employee’s employment by the
Company terminates for any reason whatsoever (including, without limitation, involuntary
termination by the Company) other than death or Disability, the Option shall terminate in its
entirety upon the effective date of Employee’s termination of employment.
(c) If, on or after the first anniversary of the Option Date, the Employee’s employment by
the Company terminates for any reason whatsoever (including, without limitation, involuntary
termination by the Company) other than death, Disability, or Retirement, the Option shall remain
exercisable with respect to the number of shares subject to the Option that are exercisable upon
the effective date of the Employee’s termination of employment and may thereafter be exercised for
a period of 90 days from the effective date of the Employee’s termination of employment or until
the Expiration Date, whichever period is shorter, after which the Option shall terminate in its
entirety.
(d) If the Employee’s employment by the Company terminates by reason of the Employee’s death,
the Option shall become exercisable as of the date of death with respect to any or all of the
shares subject to the Option on the Option Date and may thereafter be exercised for a period of one
year
from the date of death or until the Expiration Date, whichever period is shorter, after which
the Option shall terminate in its entirety.
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(e) If the Employee’s employment by the Company terminates by reason of the Employee’s
Disability, the Option shall become exercisable with respect to any or all of the shares subject to
the Option on the Option Date and may thereafter be exercised for a period of 90 days from the
effective date of the Employee’s termination of employment or until the Expiration Date, whichever
period is shorter, after which the Option shall terminate in its entirety. For purposes of this
Agreement, “Disability” shall mean the inability of an individual to fully perform the duties
pertaining to his or her employment for a continuous period in excess of 360 days, as determined by
the Board in its sole discretion.
(f) If the Employee’s employment by the Company terminates by reason of the Employee’s
retirement after the Employee has completed five years of service as an Employee of the Company and
is at least 55 years of age (“Retirement”), the Option shall remain exercisable with respect to the
number of shares subject to the Option that are exercisable upon the effective date of Employee’s
Retirement, and may thereafter be exercised for a period of two years from the effective date of
the Employee’s Retirement or until the Expiration Date, whichever period is shorter, after which
the Option shall terminate in its entirety.
(g) If the Employee dies following the termination of the Employee’s employment by the
Company, the Option shall be exercisable only to the extent that it is exercisable on the date of
the Employee’s death and may thereafter be exercised only for that period of time for which the
Option is exercisable immediately prior to the Employee’s death.
General:
A copy of the Plan is available upon request by contacting the Company’s Legal Department in
the Chicago office. Employee acknowledges that the grant of the Option is an inducement material
to the Employee’s entering into employment with the Company. This Agreement may be executed in two
counterparts each of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed this day of ,
20 (the “Option Date”).
Accepted and agreed this
day of , 20
day of , 20
EMPLOYEE
|
TECHNOLOGY SOLUTIONS COMPANY | |||
| By: | ||||
Name:
|
Name: | |||
| Title: |
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Annex I
to
Inducement Stock Option Agreement
to
Inducement Stock Option Agreement
1. Meaning of Certain Terms. As used herein, the following terms shall have the
meanings set forth below. “Board” shall mean the Board of Directors of the Company. “Securities
Act” shall mean the Securities Act of 1933, as amended, together with the rules and regulations
thereunder. References to this “Agreement,” the “Option” and “herein” shall be deemed to include
the Inducement Stock Option Agreement and this Annex I to Inducement Stock Option Agreement taken
as a whole. This Annex I and the Inducement Stock Option Agreement shall be deemed to be one and
the same instrument. References herein to sections of the Code shall be deemed to refer to any
successor section of the Code or any successor internal revenue law.
2. Time and Manner of Exercise of Option.
2.1. Term and Termination of Option. The maximum term of the Option shall be the date
which is 10 years after the Option Date (the “Expiration Date”). The Option shall terminate, to
the extent not exercised or earlier terminated pursuant to the terms of this Agreement, on its
Expiration Date. In no event may the Option be exercised, in whole or in part, after it
terminates.
2.2. Exercisability of Option. The Option shall become exercisable on the date or
dates as set forth in this Agreement.
2.3. Procedure for Exercise; Payment of Purchase Price. Subject to the limitations
set forth in this Agreement, the Option may be exercised by delivery of written notice to the
Company specifying the number of shares to be purchased, accompanied by payment in full of the
purchase price for such number of shares. The purchase price shall be payable either (A) in cash,
(B) by delivery of Mature Shares having an aggregate Fair Market Value, determined as of the date
of exercise, equal to the aggregate purchase price payable by reason of such exercise, (C) in cash
by a broker-dealer acceptable to the Company to whom the Employee has submitted an irrevocable
notice of exercise or (D) a combination of (A) and (B). The Company shall have sole discretion to
disapprove of an election pursuant to any of clauses (B)-(D) and if the Employee is subject to
Section 16 of the Exchange Act, the Company may require that the method of making such payment be
in compliance with Section 16 and the rules and regulations thereunder. Any fraction of a share of
Stock which would be required to pay such purchase price shall be disregarded and the remaining
amount due shall be paid in cash by the Employee. No certificate representing Stock shall be
delivered until the full purchase price therefor has been paid (or arrangement made for such
payment to the Company’s satisfaction).
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3. Additional Terms and Conditions of Option.
3.1. Nontransferability of Option. Neither the Option nor any right under this
Agreement may be transferred by the Employee other than (i) by will or the laws of descent and
distribution or (ii) to a Permitted Transferee, as hereinafter defined. During the Employee’s
lifetime the Option is exercisable only by the Employee or a Permitted Transferee. Upon the
Employee’s death, the Option may be exercised by the Employee’s successor in interest in accordance
with the terms and conditions of this Agreement. Any other transfer or any attempted assignment,
pledge or hypothecation, whether or not by operation of law, shall be void. The Option shall not
be subject to execution, attachment or other process, and no person shall be entitled to exercise
any rights of the Employee hereunder or possess any rights hereunder by virtue of any attempted
execution, attachment or other process. For purposes of this Agreement, a “Permitted Transferee”
shall mean (i) the Employee’s spouse, (ii) any of the Employee’s lineal descendants, (iii) a trust
or similar arrangement of which such spouse, a lineal descendant of the Employee, or one or more of
such persons are the only current beneficiaries, or (iv) a charitable organization described in
Section 170(c) of the Code, provided that such transferee has entered into a written agreement with
the Company authorizing the Company to withhold shares of Stock which would otherwise be delivered
to such person upon an exercise of the Option to pay any federal, state, local or other taxes which
may be required to be withheld or paid in connection with such exercise in the event that the
Employee does not provide for an arrangement satisfactory to the Company to assure that such taxes
will be paid.
3.2. Investment Representation. The Employee hereby represents and covenants that (a)
any share of Stock purchased upon exercise of the Option will be purchased for investment and not
with a view to the distribution thereof within the meaning of the Securities Act unless such
purchase has been registered under the Securities Act or applicable state securities law; (b) any
subsequent resale of any such shares shall be made either pursuant to an effective registration
statement under the Securities Act and any applicable state securities laws, or pursuant to an
exemption from registration under the Securities Act and such state securities laws; and (c) if
requested by the Company, the Employee shall submit a written statement, in form satisfactory to
counsel for the Company, to the effect that either representation (a) above is true and correct as
of the date of purchase of any shares hereunder, or representation (b) above is true and correct as
of the date of any resale of any such shares, as applicable. As a further condition precedent to
any exercise of the Option, the Employee shall comply with all regulations and requirements of
regulatory authority having control of or supervision over the issuance of the shares and, in
connection therewith, shall execute any documents which the Company shall in its sole discretion
deem necessary or advisable. Unless covered by an effective registration statement filed with the
U.S. Securities and Exchange Commission, all certificates representing shares of Stock acquired
pursuant to the exercise of the Option shall bear the following legend:
The shares represented by this certificate have been acquired for investment and
have not been registered under the Securities Act of 1933, as amended. The shares
may not be sold or transferred in the absence of such registration or exemption
therefrom under said Act.
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3.3. Withholding Taxes. As a condition precedent to any exercise of the Option, the
Employee shall, upon request by the Company, pay to the Company in addition to the purchase price
of the Stock, such amount of cash as the Company may be required, under all applicable
federal, state, local or other laws or regulations, to withhold and pay over as income or
other withholding taxes (the “Required Tax Payments”) with respect to such exercise of the Option.
If the Employee shall fail to advance such Required Tax Payments after request by the Company, the
Company may, in its discretion, deduct any such Required Tax Payments from the amount to be paid
hereunder, whether in Stock or in cash, or from any other amount then or thereafter payable by the
Company to the Employee.
3.4. Adjustments in the Event of Capitalization Changes. In the event of any stock
split, stock dividend, recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, liquidation, spin-off or other similar change in capitalization or event, or
any distribution to holders of Stock other than a regular cash dividend, the number and class of
securities subject to the Option and the purchase price per security, shall be appropriately
adjusted by the Committee in accordance with the Plan. The decision of the Committee regarding any
such adjustment shall be final, binding and conclusive.
3.5. Compliance with Applicable Law. The Option is subject to the requirement that
if at any time the Company determines that the listing, registration or qualification of the shares
of Stock subject to the Option upon any securities exchange or under any law, or the consent or
approval of any governmental body, or the taking of any other action is necessary or desirable as a
condition of, or in connection with, the delivery of shares hereunder, such shares shall not be
delivered unless such listing, registration, qualification, consent, approval or other action shall
have been effected or obtained, free of any conditions not acceptable to the Company. The Company
may require that certificates evidencing shares of Stock delivered pursuant to the Option bear a
legend indicating that the sale, transfer or other disposition thereof by the holder is prohibited
except in compliance with the Securities Act.
3.6. Indemnification. The Employee hereby covenants and agrees to indemnify and hold
harmless the Company, its officers, directors, employees and agents from and against any loss,
claim, damage and expense (including, without limitation, reasonable attorneys’ fees) arising out
of or based upon any breach or failure by the Employee to comply with any representation, warranty,
covenant or agreement made by the Employee herein or in any other document furnished by the
Employee in connection with this transaction.
3.7. Delivery of Certificates. Upon the exercise of the Option in whole or in part,
the Company shall deliver one or more certificates representing the number of shares purchased
against full payment therefor. The Company shall pay all original issue or transfer taxes and all
fees and expenses incident to such delivery, except as otherwise provided in paragraph 3.3.
3.8. Option Confers No Rights as Stockholder. The Employee shall have no rights as a
stockholder of the Company with respect to any shares of Stock or other equity security of the
Company which is subject to the Option hereunder unless and until the Employee becomes a
stockholder of record with respect to such shares of Stock or equity security.
3.9. Option Confers No Rights to Continued Employment. In no event shall the
granting of the Option or its acceptance by the Employee confer upon the Employee any right to
continued employment by the Company or any of its subsidiaries or affiliates or affect in any
manner the right of the Company or any of its subsidiaries or affiliates to terminate the
employment of the Employee at any time without liability hereunder.
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3.10. Decisions of Committee. The Committee shall have the right to resolve all
questions which may arise in connection with the Option or its exercise. Any interpretation,
determination or other action made or taken by the Committee regarding this Agreement including any
of the terms or conditions of the Plan that are incorporated herein by reference, shall be final,
binding and conclusive.
3.11. Company to Reserve Shares. The Company shall at all times prior to the
expiration or termination of the Option reserve and keep available, either in its treasury or out
of its authorized but unissued shares of Stock, the full number of shares subject to the Option
from time to time.
4. Miscellaneous Provisions.
4.1. Designation as Nonqualified Stock Option. The Option is hereby designated as
not constituting an “incentive stock option” within the meaning of section 422A of the Code; this
Agreement shall be interpreted and treated consistently with such designation.
4.2. Successors. This Agreement shall be binding upon and inure to the benefit of
any successor or successors of the Company and any person or persons who shall acquire any rights
under this Agreement or the Plan.
4.3. Notices. All notices, requests or other communications provided for in this
Agreement shall be made in writing either (1) by actual delivery to the party entitled thereto, or
(2) by mailing in the U.S. mails to the last known address of the party entitled thereto, via
certified or registered mail, return receipt requested. The notice shall be deemed to be received
in case (1) on the date of its actual receipt by the party entitled thereto, and in case (2) on the
date of its mailing.
4.4. Governing Law. This Agreement, the Option and all determinations made and
actions taken pursuant hereto and thereto, to the extent not otherwise governed by the Code or the
laws of the United States, shall be governed by the laws of the State of Delaware and construed in
accordance therewith without giving effect to the principles of conflicts of laws.
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