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EXHIBIT 10.41
December 23, 1997
Xx. Xxxxx Xxxxxxx
00 Xxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Dear Xxxxx:
Effective as of December 12, 1997, Xxxxx Systems Corporation ("PSC") and you
hereby agree to the following: (i) the purchase by PSC of 120,000 restricted
shares (the "Restricted Shares") of PSC's Class A Common Stock, par value $.01
per share (the "Common Stock"), owned by you, (ii) the issuance to you of
options to purchase 120,000 shares of Common Stock and (iii) the amendment of
the vesting schedule and certain other terms of the existing stock option
agreement (the "Existing Agreement") dated January 28, 1997, between PSC and
you. These transactions are being be consummated on the following terms and
conditions:
1. Xxxxx Systems hereby purchases from you the Restricted Shares for
$481,364.39 (the "Purchase Price"), which represents the price you
paid for the shares plus 8% interest from the date of purchase. The
Purchase Price will be paid by (i) issuing a check to you within 14
days of the execution by you of this letter agreement in the amount of
$6,875 and (ii) offsetting against the Purchase Price the current
principal balance and accrued interest on the following notes
(collectively, the "Notes"):
(a) Promissory Note dated January 28, 1997 in the principal amount
of $187,500 made by you in favor of PSC
(b) Bridge Note dated January 28, 1997 in the principal amount of
$187,500 made by you in favor of PSC
(c) Promissory Note dated February 14, 1997 in the principal
amount of $37,500 made by you in favor of PSC
(d) Bridge Note dated February 14, 1997 in the principal amount of
$37,500 made by you in favor of PSC.
As a result of these transactions, the Notes will be deemed paid in
full and, as soon as practicable following the consummation of these
transactions, will be so marked and returned to you.
2. You will execute a stock power or endorse your certificate in blank,
as requested by PSC, to effect the transfer of the Restricted Shares
to the Company.
3. The vesting schedule set forth as Attachment A to the Existing
Agreement is hereby amended to read in its entirety as set forth on
Exhibit 1. Section 3(d) of the Existing Agreement is hereby amended in
its entirety to read as follows:
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Xx. Xxxxx Xxxxxxx
December 23, 1997
Page 2
(d) Shares of Purchased Stock may not be sold or otherwise
transferred without the written consent of the underwriters of
the initial underwritten public offering of Common Stock
registered under the Securities Act, for the longer of (i) six
months after the Common Stock is listed on a registered
national securities exchange or approved for quotation in the
NASDAQ system and (ii) for the same period, and under the same
conditions, as the Underwriters request from the top five
executive officers of Xxxxx Systems (as designated by the
Chief Executive Officer of Xxxxx Systems) as a group.
4. PSC will issue you options to purchase 120,000 shares of Common Stock
under PSC's 1991 Stock Option Plan pursuant to a Stock Option
Agreement in the form of Exhibit 2. A Prospectus relating to the 1991
Stock Option Plan is included in this package for your benefit.
5. Each of the Restricted Stock Agreements and Pledge Agreements dated
January 28, 1997 and February 14, 1997 between PSC and you will be of
no further force and effect upon the consummation of the transactions
contemplated by this letter agreement.
6. PSC makes no representations or warranties to you in connection with
the repurchase of the Restricted Shares.
If you agree with the foregoing, please sign both copies of this letter in the
space provided below and return them to me at your earliest convenience.
Sincerely yours,
XXXXX SYSTEMS CORPORATION
By: /s/ XXXXX X. XXXXXXX
-----------------------
Xxxxx X. Xxxxxxx
General Counsel
ACCEPTED AND AGREED:
/s/ XXXXX X. XXXXXXX
--------------------------
Xxxxx X. Xxxxxxx
--------------------------
December 29, 1997
--------------------------
Date
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Exhibit 1
AMENDED
ATTACHMENT A
TO
STOCK OPTION AGREEMENT
FOR
XXXXX X. XXXXXXX
1. Purchase Price: $3.75 per Share.
2. Expiration Date: January 29, 2008
unless earlier terminated
under Section 2(a) or 2(d).
3. Vesting Schedule:
Vesting Dates Number of
Dates Certain Options Vesting
------------- ----------------
January 28, 1998 40,000
January 28, 1999 40,000
January 29, 2000 40,000
January 28, 2001 40,000
January 28, 2002 40,000
January 28, 2003 30,000
------
Total 230,000
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Exhibit 2
Xxxxx Systems Corporation
1991 Stock Option Plan
STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of December 12, 1997, is by and between Xxxxx Systems
Corporation ("Xxxxx Systems"), a Delaware corporation, and Xxxxx X. Xxxxxxx
("Participant").
WITNESSETH:
WHEREAS, Xxxxx Systems has adopted the Xxxxx Systems Corporation 1991 Stock
Option Plan (the "Plan") to enable employees of Xxxxx Systems and its
majority-owned subsidiaries to acquire shares of Class A common stock, $0.01
par value, of Xxxxx Systems ("Common Stock") in accordance with the provisions
of the Plan; and
WHEREAS, the Committee of the Board of Directors of Xxxxx Systems appointed to
administer the Plan (the "Committee") has selected Participant to participate
in the Plan and has determined to grant Participant the right and option to
purchase shares of Common Stock in accordance with the terms and conditions of
this Agreement, provided, that if any change is made in the shares of Common
Stock (including, but not limited to, by stock dividend, stock split, or merger
or consolidation, but not including the issuance of additional shares for
consideration), the Board of Directors or the Committee, will make such
adjustments in the number and kind of shares (which may consist of shares of a
surviving corporation to a merger) that may thereafter be optioned and sold
under the Plan and the number and kind of shares (which may consist of shares of
a surviving corporation to a merger) and purchase price per share of shares
subject to outstanding Stock Option Agreements under the Plan as the Board of
Directors or the Committee determines are equitable to preserve the respective
rights of the Participants under the Plan.
NOW, THEREFORE, in consideration of the foregoing and of the mutual promises
and other terms and conditions set forth in this Agreement, Xxxxx Systems and
Participant agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
have the meanings indicated:
(a) "Company" means Xxxxx Systems and its majority-owned
subsidiaries.
(b) "Confidential Information" means all written,
machine-reproducible, oral and visual data, information and
material, including but not limited to business, financial
and technical information, computer programs, documents and
records (including those that Participant develops in the scope
of his or her employment) that (i) the Company or any of its
customers or suppliers treats as proprietary or confidential
through markings or otherwise, (ii) relates to the Company or
any of its customers or suppliers or any of their business
activities, products or services (including software programs
and techniques) and is competitively sensitive or not
generally known in the relevant trade or industry, or (iii)
derives independent economic value from not
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being generally known to, and is not readily ascertainable by
proper means by, other persons who can obtain economic value
from its disclosure or use. Confidential Information does not
include any information or material that is approved by Xxxxx
Systems for unrestricted public disclosure.
(c) "Expiration Date" means the date and time as of which the
Option expires, which is the earlier of (i) the close of
business on the date one year after the entire Option has
Vested or (ii) the date and time as of which all rights to
exercise the Option are terminated under Section 2(d).
(d) "Market Value" of a share of Purchased Stock on a given date
means (i) if the Purchased Stock is Publicly Traded, the
closing sale price for Purchased Stock, as determined in good
faith by the Board of Directors, on such date or, if no
closing sale price is available for such date, on the most
recent prior date for which a closing sale price is available
or, if no closing sale price is available, the closing bid
price, as so determined, on such date or, if no closing bid
price is available for such date, the closing bid price on the
most recent prior date for which a closing bid price is
available, or (ii) if the Purchased Stock is not Publicly
Traded, its fair market value, as determined in good faith by
the Board of Directors, as of the most recent Valuation Date
on or before such date.
(e) "Net Investment Proceeds," with respect to any share of
Purchased Stock sold or otherwise transferred by Participant
or Participant's successor in interest, means the greater of
the value of the gross proceeds received for such share or the
Market Value of such share on the date of sale or transfer
less, in either case, (i) the exercise price of the Option for
such share plus simple interest on such amount at the rate of
8% per annum to the date of the sale or transfer, (ii) any
reasonable and customary commission paid for the sale or
transfer, and (iii) the verified amount of any income taxes
paid or payable on the sale or transfer.
(f) "Option" means the right and option evidenced by this
Agreement.
(g) "Publicly Traded" means Purchased Stock has been listed on a
registered national securities exchange or approved for
quotation in the National Association of Securities Dealers
Automated Quotation ("NASDAQ") system.
(h) "Purchased Stock" means any Common Stock purchased upon the
exercise of this Option, together with any successor security,
property or cash issued or distributed by Xxxxx Systems or any
successor entity, whether by way of merger, consolidation,
share exchange, reorganization, liquidation, recapitalization
or otherwise.
(i) "Termination for Substantial Misconduct" means termination of
employment for a felony conviction of the Participant; actions
involving moral turpitude, theft, or dishonesty in a material
matter; breach of any obligation under Section 5 of this Stock
Option Agreement; or failure by Participant to carry out the
directions, instructions, policies, rules, regulations, or
decisions of the Board of Directors of
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Xxxxx Systems including, without limitation, those relating to
business ethics and the ethical conduct of the business of the
Company.
(j) "Transfer" or "transfer" or derivations thereof includes any
sale, assignment, gift, pledge, encumbrance, hypothecation,
mortgage, exchange or any other disposition.
(k) "Valuation Date" means each June 30 and December 31 of every
year, beginning on January 1, 1991, and any other date as of
which the Board of Directors determines the Market Value of
Purchased Stock.
(l) "Vesting" or "vesting" or derivations thereof with respect to
any Option issued under this Agreement, means receiving the
right to exercise the Option.
(m) "Vesting Period" means the period of time commencing on the
date of this Agreement and ending on the date on which the
entire Option has Vested.
2. Grant of Option; Purchase of Stock.
(a) Subject to the terms, conditions, and restrictions set forth
in the Plan and in this Agreement, Xxxxx Systems hereby grants
to Participant, and Participant hereby accepts from Xxxxx
Systems, the option to purchase from Xxxxx Systems the number
of shares of Common Stock specified on Attachment A hereto, at
the purchase price so specified, which option will Vest in
Participant in accordance with the Vesting Schedule set forth
on Attachment A hereto. The Option shall only continue to Vest
only for as long as Participant is an employee of Company,
unless the Committee, in its sole discretion, agrees in
writing otherwise. Participant will have the right to exercise
the Vested Option and purchase Common Stock after the Option
Vests as provided in Section 2(d) below.
(b) The purchase price of shares as to which the Option is
exercised must be paid to Xxxxx Systems at the time of the
exercise either in cash or in such other consideration as the
Committee may approve having a total fair market value, as
determined by the Committee, equal to the purchase price, or a
combination of cash and such other consideration.
(c) The Committee may elect to assist Participant in satisfying an
obligation to pay or withhold taxes required as a result
of the exercise of this Option by accepting shares of Purchased
Stock at Market Value to satisfy the tax obligation. The shares
of Purchased Stock accepted may be either shares withheld upon
the exercise of this Option or other shares already owned by
Participant. In determining whether to approve acceptance of
Purchased Stock to satisfy such a tax obligation, the Committee
may consider whether the shares proposed to be delivered are
subject to any holding period or other restrictions on transfer
and may waive or arrange for the waiver of any such
restrictions.
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(d) The Option is only exercisable as to Vested Options. Once
Vested, the Option may be exercised until the Expiration Date,
provided, however, (i) if the Participant ceases to be an
employee for any reason other than death, the Option may be
exercised only for sixty days after the date of cessation of
employment, and in any case no later than the Expiration Date,
and (ii) if the Participant ceases to be an Employee because of
death of the Participant, the Option may be exercised by the
Participant's estate only for two years after the Participant's
Death and in any case no later than the Expiration Date.
3. Restrictions on Transfer. The following restrictions on transfer apply
unless the Committee otherwise agrees in writing or unless the
transfer is by will or the laws of descent and distribution upon
Participant's death:
(a) The Option may not be sold or otherwise transferred and is
exercisable only by Participant during Participant's lifetime.
(b) One-half of the shares of Purchased Stock purchased on any day
may not be sold or otherwise transferred for two years after
purchase.
(c) Shares of Purchased Stock may not be sold or otherwise
transferred unless the holder has given Xxxxx Systems any
notice required under Section 4(a) and Xxxxx Systems has
waived in writing any right it has to buy back the shares
under Section 4(a).
(d) Shares of Purchased Stock may not be sold or otherwise
transferred without the written consent of the underwriters of
the initial underwritten public offering of Common Stock
registered under the Securities Act, for the longer of (i) six
months after the Common Stock is listed on a registered
national securities exchange or approved for quotation in the
NASDAQ system and (ii) for the same period, and under the same
conditions, as the underwriters request from the top five
executive officers of Xxxxx Systems (as designated by the
Chief Executive Officer of Xxxxx Systems) as a group.
Xxxxx Systems is not obligated to recognize any purported sale or
other transfer of the Option or any Purchased Stock in violation of
this Section 3 and, unless it elects to do otherwise, may treat any
such purported sale or transfer as null, void, and of no effect.
4. Rights to Buy Back Purchased Stock and to Require Payback of Certain
Profits.
(a) At any time before the Purchased Stock is Publicly Traded, if
Participant or any subsequent holder of shares of Purchased
Stock desires or is obligated to sell or otherwise transfer
any such shares (including any distribution to heirs or other
beneficiaries of Participant's estate), the holder is required
to give Xxxxx Systems written notice of the proposed sale or
transfer, including notice of the proposed purchaser or
transferee, and, for a period of 30 days after receipt of
such notice, Xxxxx Systems will have the right to buy back
such shares for cash at a purchase price equal to the price
per share paid by Participant for the shares plus simple
interest on
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such amount at the rate of 8% per annum from the date of
payment by Participant to the date of tender of payment by
Xxxxx Systems is set forth in Section 4(c) below.
(b) If the Committee discovers that Participant has engaged in any
conduct prohibited by Section 5 or if Participant ceases to be
employed by the Company and the Committee, in its sole
discretion, determines that Participant's cessation of
employment resulted from a Termination for Substantial
Misconduct or would have resulted in a Termination for
Substantial Misconduct had the relevant facts been known at
the time of Participant's cessation of employment, Xxxxx
Systems will have the right for 150 days after the Committee
discovers the relevant facts to cancel any unexercised Option,
whether or not Vested, and to buy back from Participant any
shares of Purchased Stock then owned by Participant, at a
purchase price equal to the price per share paid by
Participant for the shares plus simple interest on such amount
at the rate of 8% per annum from the date of payment by
Participant to the date of tender of payment by Xxxxx Systems
as set forth in Section 4(c) below, and the right to require
Participant to pay back to Xxxxx Systems in cash the Net
Investment Proceeds with respect to any shares of Purchased
Stock that have been sold or otherwise transferred by
Participant.
(c) Whenever Xxxxx Systems has a right to buy back shares of
Purchased Stock or to require Participant to pay back to Xxxxx
Systems Participant's Net Investment Proceeds with respect to
any shares of Purchased Stock under this Section 4, Xxxxx
Systems may exercise its right by notifying Participant or the
subsequent holder of Xxxxx Systems' election to exercise its
right within the designated exercise period. In the case of a
buyback under Section 4(a) or Section 4(b), the giving of
such notice will give rise to an obligation on the part of
Participant or the subsequent holder to tender to Xxxxx
Systems, within 10 days, any previously issued certificate
representing shares of Purchased Stock to be bought back, duly
endorsed in blank or having a duly executed stock power
attached in proper form for transfer. If any such certificate
is not tendered within 10 days, Xxxxx Systems may cancel any
outstanding certificate representing shares to be bought back.
Xxxxx Systems is required to tender the purchase price for
shares to be bought back under this Section 4 within 20 days
of giving notice of its election to exercise its right to buy
back shares. If the person from whom the shares are to be
bought back has not complied with an obligation to return a
certificate representing shares to be bought back, however,
Xxxxx Systems is not required to tender the purchase price
until 20 days after the certificate is returned or 20 days
after it cancels the certificate, whichever occurs first.
5. Competition and Non-Disclosure. Participant acknowledges that: (i) in
the course and as a result of employment with the Company, Participant
will obtain special training and knowledge and will come in contact
with the Company's current and potential customers, which training,
knowledge, and contacts would provide invaluable benefits to
competitors of the Company; (ii) the Company is continuously
developing or receiving Confidential Information, and that during
Participant's employment he or she will receive Confidential
Information from the Company, its customers and suppliers and special
training related to the Company's business methodologies; and (iii)
Participant's employment by Company
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creates a relationship of trust that extends to all Confidential
Information that becomes known to Participant. Accordingly, and in
consideration of Xxxxx Systems' granting this Option to Participant,
Participant agrees that Xxxxx Systems will be entitled to terminate
all rights to exercise the Option and to exercise the rights specified
in Section 4 above if Participant does any of the following without
the prior written consent of the Company:
(a) while employed by the Company or within one year thereafter:
(i) competes with, or engages in any business that is
competitive with, the Company within 250 miles of any
location at which Participant was employed by or
provided services to the Company;
(ii) solicits or performs services, as an employee,
independent contractor, or otherwise, for any person
(including any affiliates or subsidiaries of that
person) that is or was a customer or prospect of the
Company during the two years before Participant's
employment with the Company ended if Participant
solicited business from or performed services for
that customer or prospect while employed by Company
or
(iii) recruits, hires, or helps anyone to recruit or hire
anyone who was an employee of Xxxxx Systems, or of
any of its customers for whom Participant performed
services of from whom Participant solicited business,
within the six months before Participant's employment
with the Company ended; or
(b) discloses or uses any Confidential Information, except in
connection with the good faith performance of Participant's
duties as an employee; or fails to take reasonable precautions
against the unauthorized disclosure or use of Confidential
Information; or fails, upon Xxxxx Systems' request, to execute
and comply with a third party's agreement to protect its
confidential and proprietary information, or solicits or
induces the unauthorized disclosure or use of Confidential
Information.
If any court of competent jurisdiction finds any provision of this
Section 5 to be unreasonable, then that provision shall be considered
to be amended to provide the broadest scope of protection to the
Company that such court would find reasonable and enforceable.
6. Compliance with Securities Laws, Participant hereby agrees that upon
demand by Xxxxx Systems, any person exercising this Option, at the
time of such exercise, will deliver to Xxxxx Systems a written
representation to the effect that the shares of Purchased Stock being
acquired are being acquired for investment and not with a view to any
resale or distribution thereof. Participant further agrees that neither
Participant nor any successor in interest of Participant will sell or
otherwise transfer the Option or any shares of Purchased Stock in any
way that might result in a violation of any federal or state
securities laws or regulations. Participant further acknowledges and
agrees that Xxxxx Systems may require Participant or any subsequent
holder of the Option or of any shares of Purchased Stock to provide
Xxxxx Systems, prior to any sale or other transfer, with such other
representations, commitments,
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and opinions regarding compliance with applicable securities laws and
regulations as Xxxxx Systems may deem necessary or advisable.
7. Stock Certificates: Rights as Shareholder. Xxxxx Systems will retain
for safekeeping all certificates representing shares of Purchased
Stock. Each such certificate will bear such legends as the Committee
determines are necessary or appropriate. Whether or not certificates
representing shares of Purchased Stock have been issued or delivered,
Participant will have all the rights of a shareholder of Purchased
Stock, including voting, dividend and distribution rights, with
respect to shares of Purchased Stock owned by Participant. Participant
will not have any rights as a shareholder with respect to any shares
of Purchased Stock subject to the Option before the date of issuance
to Participant of shares upon exercise of the Option.
8. Income Tax Withholding. Participant shall, upon request by the
Company, reimburse the Company for, or the Company may withhold from
sums or property otherwise due or payable to Participant, any amounts
the Company is required to remit to applicable taxing authorities as
income tax withholding with respect to the Option or any Purchased
Stock. If shares of Purchased Stock are withheld for such purpose,
they will be withheld at Market Value. If Participant fails to
reimburse the Company for any such amount when requested, the Company
has the right to recover that amount by selling or canceling
sufficient shares of any Purchased Stock held by Participant.
9. Compliance with Plan. Participant acknowledges receipt of a copy of
the Plan and further acknowledges that this Agreement is entered into,
and the Option is granted, pursuant to the Plan. If the provisions of
the Plan are inconsistent with the provisions of this Agreement, the
provisions of the Plan supersede the provisions of this Agreement.
10. Notices. Any notice to Xxxxx Systems or the Company that is required
or permitted by this Agreement shall be addressed to the attention of
the Secretary of Xxxxx Systems at its principal office. Any notice to
Participant that is required or permitted by this Agreement shall be
addressed to Participant at the most recent address for Participant
reflected in the appropriate records of the Company. Either party may
at any time change its address for notification purposes by giving
the other written notice of the new address and the date upon which it
will become effective. Whenever this Agreement requires or permits any
notice from one party to another, the notice must be in writing to be
effective and, if mailed, shall be deemed to have been given on the
third business day after the same is enclosed in an envelope,
addressed to the party to be notified at the appropriate address,
properly stamped, sealed, and deposited in the United States mail,
and, if mailed to the Company, by certified mail, return receipt
requested.
11. Remedies. Xxxxx Systems is entitled, in addition to any other
remedies it may have at law or in equity, to temporary and permanent
injunctive and otherwise equitable relief to enforce the provisions of
this Agreement. Any action to enforce the provisions of, or other
relating to, this Agreement may be brought in the state or federal
courts having jurisdiction in Dallas, Dallas County, Texas. By signing
this Agreement, Participant consents to the personal jurisdiction of
such courts in any such action.
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12. Assignment. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, personal
representatives, successors, and assigns. However, Participant does
not have the power or right to assign this Agreement without the prior
written consent of Xxxxx Systems.
13. Attorneys' Fees. If any legal proceeding is brought to enforce or
interpret the terms of this Agreement, the prevailing party will be
entitled to reasonable attorneys' fees, costs, and necessary
disbursements in addition to any other relief to which that party may
be entitled.
14. Severability. If any provision of this Agreement is held invalid or
unenforceable for any reason, the validity and enforceability of all
other provisions of this Agreement will not be affected.
15. Headings. The section headings used herein are for reference and
convenience only and do not affect the interpretation of this
Agreement.
16. Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the State of Texas, without regard to the
choice of law rules in such law.
17. Entire Agreement. This Agreement, together with the Plan and any
procedure adopted by the Committee thereunder, constitutes the entire
agreement between the parties with respect to its subject matter and
may be waived or modified only in writing.
IN WITNESS WHEREOF, and intending to be legally bound hereby, Participant and a
duly authorized representative of Xxxxx Systems have executed this Agreement as
of the date first above written.
PARTICIPANT XXXXX SYSTEMS CORPORATION
By:
--------------------------- ---------------------------------
Signature Title: Chairman of the Board
------------------------------
Printed Name
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CONSENT OF SPOUSE
As the spouse of Participant, I consent to be bound by this Stock Option
Agreement and agree that this consent shall be binding on my interest under
this Agreement and on my heirs, legatees, and assigns.
--------------------------------
Signature
--------------------------------
Printed Name
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ATTACHMENT A
TO
STOCK OPTION AGREEMENT
FOR
XXXXX X. XXXXXXX
1. Purchase Price: $6.75 per Share.
2. Expiration Date: January 28, 2008, unless
earlier terminated under
Section 2(a) or 2(d)
3. Vesting Schedule:
Vesting Dates Number of
Dates Certain Options Vesting
------------- ---------------
January 28, 2004 30,000
January 28, 2005 30,000
January 28, 2006 30,000
January 28, 2007 30,000
------
TOTAL 120,000
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