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Exhibit (c)(3)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of December 17, 1999 between SERSys
Acquisition Corporation, a Delaware corporation (the "Company," which term shall
refer to EIS International, Inc. ("EIS") after the Effective Time, as defined
below), and Xxxxx X. XxXxxxx (the "Executive"). In consideration of the mutual
covenants and representations herein contained and the mutual benefits derived
herefrom, the parties, intending to be legally bound, covenant and agree as
follows:
1. PURPOSE. The Company is engaged in the business of software solutions
(the "Business"). The Company has entered into an Agreement and Plan of Merger
dated as of the date hereof (the "Merger Agreement"), pursuant to which the
Company shall merge with and into EIS International, Inc., following the
completion of the tender offer described in the Merger Agreement (the "Tender
Offer"). The Company wishes to employ the Executive, and the Executive has
agreed to be employed by the Company, on the terms and conditions herein
provided, to be effective at the Effective Time of the Merger (as defined in the
Merger Agreement). If, after consummation of the Tender Offer, the Effective
Time does not occur promptly as contemplated by the Merger Agreement, the
Company shall cause EIS to enter into an employment agreement with Executive,
and Executive agrees to enter into such employment agreement, on terms identical
to those contained herein and each shall take such other actions as shall be
necessary to provide Executive and EIS with all of the benefits contemplated by
this Agreement, including, without limitation, preparing and executing
additional agreements in place of those contemplated by this Agreement.
2. FULL-TIME EMPLOYMENT OF EXECUTIVE - DUTIES AND STATUS.
(a) The Company hereby engages the Executive as a full-time
executive employee to hold the office of President and Chief Executive Officer,
and shall nominate him for election to the board of directors of the Company,
for the period (the "Employment Period") specified in Section 4(a) hereof with
such duties and responsibilities as Executive has performed in the past for EIS
International, Inc., and the Executive accepts such employment, on the terms and
conditions set forth in this Agreement. Throughout the Employment Period, the
Executive shall faithfully exercise such authority and perform such executive
duties as are commensurate with the authority and duties of Chief Executive
Officer of the Company. Executive shall perform such duties in the same fashion,
at the same locations, and with the same general amount of travel, as has
historically been the case in connection with Executive's prior work for the
Business.
(b) Throughout the Employment Period, the Executive shall devote
his full business time and efforts to the business of the Company and will not
engage in consulting work or any trade or business for his own account or for or
on behalf of any other person, firm or corporation which competes, conflicts or
interferes with the performance of his duties hereunder in any way, excepting
that (i) the Executive shall be
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entitled to accept such additional office or offices to which he may be
appointed by the Company, provided that the performance of the duties of such
office or offices shall generally be consistent with the scope of the duties
provided for in Section 2(a) hereof and (ii) subject to the provisions of
Section 5 hereof and the approval of the Board of Directors of the Company, the
Executive will be permitted to serve as a director of one or more corporations
not affiliated with the Company.
(c) The Executive agrees to execute the Employee Proprietary
Information and Inventions Agreement (the "Proprietary Rights Agreement"),
attached hereto as EXHIBIT A, and to comply with the provisions thereof. The
Executive understands that both entering into and complying with the terms of
the Proprietary Rights Agreement is a condition to the Executive's continued
employment with the Company and that Executive's material breach of his
obligations under Sections 1 and 2 of the Proprietary Rights Agreement will, if
not cured within thirty (30) days after written notice of such breach is
delivered by the Company to Executive, constitute "cause" for purposes of this
Agreement. The Executive further represents and warrants that his employment by
the Company, and the performance by the Executive of his duties hereunder, will
not violate any of the terms and conditions of any agreement with any previous
employer.
3. COMPENSATION AND GENERAL BENEFITS. As full compensation for his
services to the Company, the Executive shall, during the Employment Period, be
compensated as follows:
(a) The Company shall pay to the Executive a salary (the
"Salary") based upon a per annum rate of three hundred and twenty-five thousand
dollars ($325,000.00). The Salary shall be payable in periodic equal
installments on a monthly basis, less such sums as may be required to be
deducted or withheld under applicable provisions of federal, state and local
law.
In addition to salary, the Executive shall be eligible for bonuses. A bonus up
to but not exceeding fifty percent (50%) of the Salary per calendar year shall
be payable in the case of good performance. Furthermore, an additional bonus up
to but not exceeding fifty percent (50%) of the Salary per calendar year shall
be payable in the case of exceptional performance. The objectives to achieve
such bonuses will be defined by the compensation committee of the board before
January 15 of the relevant year.
The total compensation shall be increased after December 30, 2001 and the salary
and bonuses shall be reviewed as part of the total increase in compensation.
(b) Throughout the Employment Period and to the extent
commensurate with the Executive's level of responsibility within the Company,
the Executive shall be entitled to participate in such pension, profit sharing,
bonus or incentive compensation, incentive, group and individual disability,
group and individual life, survivor income, sickness, accident, dental, medical
and health benefits and other
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plans of the Company or additional benefit programs, which may be established by
the Company for its executive officers, as and to the extent any such benefit
programs, plans and arrangements are or may from time to time be in effect, to
the extent that the Executive is eligible to participate in such plans under the
terms of such plans. Notwithstanding the above, the Executive shall be entitled
to participate in the stock option plan that shall be adopted by the Company at
the Effective Time in the form attached hereto as Exhibit B at levels
commensurate with his position in the Company and with industry practices
generally (with such plan to be registered under the Securities Act of 1933 on
Form S-8 as soon as practicable following the initial public offering of the
Company's common stock, subject to the discretion of the managing underwriter of
such offering), and the Company shall retain the existing life insurance policy
on Executive. The Company shall enter into the Stock Option Grant Agreement and
the Stockholders Agreement in the form attached hereto as Exhibits C and D
effective as of the Effective Time. The Stock Option Agreement shall provide for
the issuance to Executive of options to acquire shares of the Company's common
stock equal to 5% of the number of shares issued and outstanding immediately
following the Effective Time. The Company shall take all action necessary to
authorize such number of shares for issuance. The death benefit of such policy
shall be payable to any beneficiary as designated by the Executive.
(c) The Company shall reimburse the Executive from time to time
for all reasonable and customary business expenses incurred by him in the
performance of his duties hereunder, provided that the Executive shall submit
vouchers and other supporting data to substantiate the amount of said expenses
in accordance with Company policy from time to time in effect.
(d) Throughout the Employment Period, the Executive shall be
entitled to four (4) weeks of annual vacation. In addition, Executive shall be
entitled to leave of absence and leave for illness or temporary disability in
accordance with the policies of the Company in effect from time to time for its
executive officers or, if more generous, the policy in effect for its employees
generally. Vacation leave and leave of absence, if taken by the Executive, shall
be taken at such times as are reasonably acceptable to the Company. Any leave on
account of illness or temporary disability which is short of Total Disability
(as defined in Section 4(c)(ii) hereof) shall not constitute a breach by the
Executive of his agreements hereunder even though leave on account of a Total
Disability may be deemed to result in a termination of the Employment Period
under the applicable provisions of this Agreement.
(e) If the Company purchases and maintains at any time during the
term of this Agreement one or more life insurance policies on the life of the
Executive, in addition to any policies purchased pursuant to Section 3(b)
hereof, in whatever amount or amounts which the Company deems desirable, the
Company shall be the beneficiary of such policy or policies and the Executive
shall cooperate with the Company and submit to such reasonable medical
examinations as are necessary to enable the Company to purchase and maintain in
full force and effect such additional insurance policy or policies.
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(f) During the term of this Agreement, the Company shall pay to
the Executive an automobile allowance of $600 per month.
4. EMPLOYMENT PERIOD.
(a) Duration. The Employment Period shall commence on the date of
this Agreement and shall continue until the close of business on December 30,
2001, unless earlier terminated for "cause" (as defined in Section 4(c)(i)
hereof). Thereafter, the Employment Period shall continue until the earlier of
(i) termination by the Company without "cause", or (ii) termination of this
Agreement by the Company for "cause" (as defined in Section 4(c)(i) hereof), or
(iii) the Executive's resignation for "good reason" (as defined in Section
4(c)(iii)), or (iv) the Executive's resignation without "good reason", provided
that the Executive provides no less than three (3) months notice to the Company
of such resignation, or (v) the death or Total Disability of the Executive.
(b) Payments Upon Termination.
(i) Except as otherwise provided herein, if the
Executive's employment is terminated by the Company for any reason other than
"cause" (as defined in Section 4(c)(i) hereof), or by the Executive for "good
reason" (as defined in Section 4(c)(iii) hereof), at any time during the
Employment Period, the Company shall pay to, or provide at the Company's expense
for, as the case may be, the Executive:
(A) (i)if such termination occurs before January 1,
2001, 100% of his Salary for the remainder of the term of this Agreement, equal
to at least 12 months and (ii) if such termination occurs after January 1, 2001,
100% of his annual Salary, with such amounts payable in equal installments over
a three (3) month period commencing on the date of termination; and
(B) for a period of twelve (12) months following
such termination, the sickness, health and disability insurance programs to
which he would have been entitled under this Agreement if he had remained in the
employ of the Company for such twelve-month period.
(ii) If the Executive's employment is terminated (A) by
the Company for "cause", or (B) by the Executive by resignation without "good
reason", or (C) upon the death or due to the "Total Disability" (as defined in
Section 4(c)(ii) hereof) of the Executive, then the Company shall have no
further liability to the Executive hereunder with respect to periods following
the date of such termination, except (1) for the Salary which has accrued
through the date of termination, which amounts shall be paid by the Company
within thirty (30) days of such termination; and (2) for such other benefits as
may be required to be provided by the Company under the provisions of applicable
law.
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(c) Definitions. When used in this Agreement, the words "cause",
"Total Disability" and "good reason" shall have the respective meanings set
forth below:
(i) The term "cause" means: (A) the Executive's failure
to devote his full business time and efforts to the business of the Company as
required by Section 2(b) after reasonable notice to the Executive by the Board
specifying such failure and providing the Executive with a reasonable
opportunity to cure such failure given the context of the circumstances, (B) the
Executive's material breach of the covenants or agreements contained in Sections
1 and 2 of the Proprietary Rights Agreement, if not cured within thirty (30)
days after written notice of such breach is delivered by the Company to
Executive, (C) the commission by Executive of an intentional tort causing
material loss or damage to the Company, (D) the commission by Executive of any
crime or act of fraud or material dishonesty against Company and/or its
subsidiaries and affiliates causing material loss or damage to the Company, or
(E) the commission by Executive of any serious felony (not involving motor
vehicles) evidencing moral turpitude. Notwithstanding the foregoing, or anything
else in this Agreement to the contrary, no termination by Company of Executive's
employment hereunder for Cause shall occur, and Executive's full salary and
benefits shall continue, until the existence of Cause (or other reason for
termination permitted hereunder) is finally determined by final and binding
adjudication pursuant to an arbitration proceeding taking place in the Northern
Virginia area under the then applicable rules of the American Arbitration
Association. Both parties consent to such arbitration as the required method of
dispute resolution with respect to such issues.
(ii) To the extent permitted by applicable law, the term
"Total Disability" means total disability as defined in the Company's group and
individual disability plans, if any. If the Company does not have in existence
such plans, then "Total Disability" shall mean:
(y) The inability to perform the duties required
hereunder for a continuous period of six (6) months during the Employment Period
due to "mental incompetence" or "physical disability" as hereinafter defined.
The Executive shall be considered to be mentally incompetent and/or physically
disabled: (A) if he is under a legal decree of incompetency (the date of such
decree being deemed the date on which such mental incompetence occurred for
purposes of this Section 4(c)); or (B) because of a "Medical Determination of
Mental and/or Physical Disability." A Medical Determination of Mental and/or
Physical Disability shall mean the written determination by: (1) the physician
regularly attending the Executive, and (2) a physician selected by the Company,
that because of a medically determinable mental and/or physical disability the
Executive is unable to perform each of the essential functions of the Executive,
and such mental and/or physical disability is determined or reasonably expected
to last twelve (12) months or longer after the date of determination, based on
medically available information. If the two physicians do not agree, they shall
jointly choose a third consulting physician and the written opinion of the
majority of these three (3) physicians shall be conclusive as to such mental
and/or physical disability and shall be binding on
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the parties. The date of any written opinion which is conclusive as to the
mental and/or physical disability shall be deemed the date on which such mental
and/or physical disability commenced for purposes of this Section 4(c), if the
written opinion concludes that the Executive is mentally and/or physically
disabled. In conjunction with determining mental and/or physical disability for
purposes of this Agreement, the Executive consents to any such examinations
which are relevant to a determination of whether he is mentally and/or
physically disabled, and which is required by any two (2) of the aforesaid
physicians, and to furnish such medical information as may be reasonably
requested, and to waive any applicable physician patient privilege that may
arise because of such examination. All physicians selected hereunder shall be
Board-certified in the specialty most closely related to the nature of the
mental and/or physical disability alleged to exist.
(z) For purposes of determining whether the
Executive is mentally incompetent or physically disabled for the continuous six
(6) month period specified in this Section 4(c), such disability shall be deemed
to continue from the date of any legal decree of incompetency, or written
opinion which is conclusive as to the mental and/or physical disability, through
the date the legal decree expires or is otherwise revoked or removed, or the
date on which the mental and/or physical disability has ceased, as the case may
be, as set forth in a written opinion prepared by the physicians described in
this Section 4(c) pursuant to the procedures provided herein.
(iii) The term "resignation for good reason" or "good
reason" means any of the following:
(A) the failure of the Company within ten (10)
days written notice by the Executive to the Board to make any payment due to the
Executive hereunder;
(B) without the express written consent of the
Executive, any change by the Company in the Executive's function, duties, or
responsibilities not generally consistent with those contemplated in Section 2
hereof, which is not rescinded within thirty (30) days after the Executive has
given the Board written notice of such change which notice specifies in detail
the change;
(C) any decrease in the Executive's base salary,
life or disability insurance coverage or benefits payable to the Executive or to
which he is entitled other than a decrease in benefits which is part of a
general decrease in benefits provided or payable to officers and other salaried
employees of the Company;
(D) any material failure (other than a failure to
make payments) by the Company to comply with any of the provisions of this
Agreement, which change or failure, as the case may be, continues unremedied for
thirty (30) days after Executive has given the Board written notice of such
change or failure which notice specifies in detail the change or failure, as the
case may be;
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(E) upon (i) any sale, exchange or other
disposition of substantially all of the Company's assets or over 50% of its
Common Stock; or (ii) any merger, share exchange, consolidation or other
reorganization or business combination in which the Company is not the surviving
or continuing corporation, or in which the Company's stockholders become
entitled to receive cash, securities of the Company other than voting common
stock, or securities of another issuer;
(F) upon the Executive's assignment to an office of
the Company located more than twenty-five (25) miles from its existing facility
in Herndon, Virginia; and
(G) Executive's failure to be elected to, or his
removal from, the Board of Directors.
(d) Disparaging Remarks. Throughout the Employment Period and
during any period subsequent to the termination of the Employment Period during
which the Executive receives any form of compensation from the Company, each of
the Company and the Executive covenants to not make any disparaging remarks
concerning the other, its or his operations, or its or his attorneys, relatives,
employees, officers or directors to any persons either publicly or in private
whether or not such disparaging remarks may be found to adversely affect the
Executive or the Company, its employees, officers, or directors, as the case may
be.
5. AGREEMENT NOT TO COMPETE OR HIRE THE COMPANY'S EMPLOYEES AFTER
TERMINATION.
(a) The Executive agrees with the Company that the services that
the Executive shall render during the Employment Period are unique, special and
of extraordinary character and that the Company shall be substantially dependent
upon such services to develop and market its products and to earn a profit.
Accordingly, in consideration for employment by the Company and compensation and
other benefits, during the Employment Period, and for a period of one (1) year
after the Executive's employment is terminated (the "Restricted Period"), the
Executive shall not directly or indirectly compete or interfere with the Company
(or any division, subsidiary or other affiliate of the Company) in the provision
of, development of, or marketing of the Business.
(b) The term "compete" as used herein means to engage directly or
indirectly either as a proprietor, partner, employee, agent, consultant,
director, officer, stockholder or in any other capacity or manner whatsoever.
The phrase "interfere with" includes, but is not limited to, soliciting or
selling services or products which provide similar functions to any of the
Company's services or products to any current or potential customer of the
Company (it being understood that the Company refers to EIS(as the surviving
corporation of the Merger, and not SER Systeme AG). The
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provisions of this Section shall not prevent the Executive from investing any
assets in securities of any corporation provided that such investments do not,
directly or indirectly, result in the Executive, family members and other
affiliates, collectively (i) owning beneficially at any time five percent (5%)
or more of the equity securities of any corporation engaged in a business
competitive with the Company, or (ii) otherwise being able to control or
actively participate in the business decisions of such competing business.
(c) The Executive agrees not to employ or call upon any employee
of the Company during the Restricted Period with the intent of enticing the
employee away or out of the employ of the Company for any reason whatsoever.
(d) The provisions of this Section 5 shall be enforced to the
fullest extent permissible under the laws and public policies applied to each
jurisdiction which enforcement is sought. If any particular provision or portion
of this Section shall be adjudicated to be invalid or unenforceable, this
Section shall be deemed amended to interpret such provision or portion thereof
so adjudicated to be invalid or unenforceable to extend only over the maximum
period of time, range of activities or geographic area as to which it may be
enforceable, such amendment to apply only with respect to the operation of this
Section in the particular jurisdiction in which such adjudication is made.
6. NOTICES. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and if sent by
registered or certified mail to the Executive at the last address he has filed
in writing with the Company.
7. BINDING AGREEMENT; ASSIGNMENT. This Agreement shall be effective
as of the date hereof and shall be binding upon and inure to the benefit of,
the parties and their respective heirs, successors, assigns, and personal
representatives, as the case may be. The Executive may not assign any rights or
duties under this Agreement. The Company may not assign this Agreement, or its
rights hereunder, except to a successor of the Company. As used herein, the
successors of the Company shall include, but not be limited to, any successor
by way of merger, consolidation, sale of all or substantially all of the
assets, or similar reorganization or change in control.
8. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding of the Executive and the Company with respect to the subject
matter hereof and supersede any and all prior understandings written or oral.
This Agreement may not be changed, modified or discharged orally, but only by
an instrument in writing signed by the parties.
9. ENFORCEABILITY. This Agreement has been duly authorized,
executed and delivered and constitutes the valid and binding obligations of the
parties hereto, enforceable in accordance with its terms. The undertakings
herein shall not be construed as any limitation upon the remedies either party
might, in the absence of this Agreement,
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have at law or in equity for any wrongs of the other party.
10. GOVERNING LAW. The validity and construction of this Agreement or
any of its provisions shall be determined under the internal laws of the
Commonwealth of Virginia, without giving effect to its conflicts of laws
provisions, and without regard to its place of execution or its place of
performance. The parties irrevocably consent and agree to the exclusive
jurisdiction of the courts of the Commonwealth of Virginia and the Federal
courts of the United States of America located in the Commonwealth of Virginia.
11. SEVERABILITY. If any one or more of the terms or provisions of
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable, in whole or in part, or in any respect or in the event that any
one or more of the provisions of this Agreement operated or would prospectively
operate to invalidate this Agreement, then and in either of those events, such
provision or provisions only shall be deemed null and void and shall not affect
any other provision of this Agreement and the remaining provisions of this
Agreement shall remain operative and in full force and effect and shall in no
way be affected, prejudiced or disturbed thereby.
12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one Agreement.
13. AMENDMENTS AND WAIVERS. This Agreement may, to the maximum extent
permitted by applicable law, be amended by the parties, which amendment shall be
set forth in an instrument executed by all of the parties. Any term, provision
or condition of this Agreement (other than as prohibited by applicable law) may
be waived in writing at any time by the party which is entitled to the benefits
thereof. No waiver by either party of any breach of this Agreement shall be a
waiver of any preceding or succeeding breach. No waiver by the either party of
any right under this Agreement shall be construed as a waiver of any other
right.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement on the date first above written.
For the Company: By the Executive:
By: /s/ XX. XXXXXX X. XXXXXX /s/ XXXXX X. XxXXXXX
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Title: President
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During the Employment Term, SER Systeme AG agrees to vote, or cause to
be voted, all of voting shares of the Company beneficially owned by it from time
to time for the election of Executive to the Board of Directors and against any
proposal to remove Executive from the Board of Directors, and for any amendment
to the Company's Certificate of Incorporation necessary for the adoption by the
Company of the Stock Option Plan and the issuance of the options referred to in
Section 3(b) of this Agreement.
For SER Systeme AG:
By: /s/ XXXX X. XXXXXXXXX
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Title: Chief Executive Officer
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SERSYS ACQUISITION CORPORATION
STOCK OPTION PLAN
STOCK OPTION GRANT AGREEMENT
This Grant Agreement (the "Agreement") is entered into this day of
__________ 2000, by and between SERSys Acquisition Corporation (the
"Corporation"), a Delaware corporation, and Xxxxx X. XxXxxxx ("Grantee").
Grantee and the Corporation agree that, until such time as securities
issuable pursuant to the Plan become registered under the Securities Act of
1933, the grant of options hereunder and the purchase and sale of Common Stock
upon exercise thereof are intended to comply with the exemption from
registration provided by Rule 701 of the Securities Act of 1933 and each party
hereto shall use his or its best efforts to comply with such Rule 701. To the
extent that an exemption from registration under the Securities Act provided by
Rule 701 is unavailable, the grant of options hereunder and the sale of Common
Stock upon exercise thereof are intended to be exempt from registration under
the Securities Act in reliance upon the private offering exemption contained in
Section 4(2) of the Securities Act, or other available exemption.
ARTICLE 1
GRANT OF OPTION
SECTION 1.1 GRANT OF OPTIONS. Subject to the provisions of the Agreement,
and pursuant to the provisions of the SERSys Acquisition Corporation Stock
Option Plan (the "Plan"), Corporation hereby grants to Grantee, as of the Grant
Date specified in Attachment A, a Stock Option (the "Option") of the type stated
in Attachment A to purchase all or any part of the number and class of shares of
Common Stock set forth on Attachment A at the exercise price per share ("Option
Price") set forth on Attachment A.
SECTION 1.2 TERM OF OPTIONS. Unless the Option granted pursuant to Section
1.1 terminates earlier pursuant to other provisions of the Agreement, including
the expiration date specified in Attachment A, the Option shall expire on the
day prior to the tenth (10th) anniversary of its Grant Date.
ARTICLE 2
VESTING
SECTION 2.1 VESTING SCHEDULE. Unless the Option has earlier terminated
pursuant to the provisions of the Agreement, Grantee shall become vested on the
dates specified on Attachment A in a portion of the Option with respect to a
percentage or number of the underlying shares in accordance with the vesting
schedule specified on Attachment A; provided that Grantee shall have been in the
continuous employ of or affiliation (as a consultant or director) with the
Corporation from the Grant Date through any such date.
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ARTICLE 3
EXERCISE OF OPTION
SECTION 3.1 EXERCISABILITY OF OPTION. No portion of the Option granted to
Grantee shall be exercisable by Grantee prior to the time such portion of the
Option has vested.
SECTION 3.2 MANNER OF EXERCISE. The Option may be exercised, in whole or in
part, by delivering written notice to the Committee in the form attached hereto
as Attachment B or in such other form as the Committee may require from time to
time. Such notice shall specify the number of shares of Common Stock subject to
the Option as to which the Option is being exercised, and shall be accompanied
by full payment of the Option Price of the shares of Common Stock as to which
the Option is being exercised. Payment of the Option Price shall be made in cash
(or cash equivalents acceptable to the Committee in the Committee's discretion).
In the Committee's sole and absolute discretion, the Committee may authorize
payment of the Option Price to be made, in whole or in part, by such other means
as the Committee may prescribe. The Option may be exercised only in multiples of
whole shares and no partial shares shall be issued.
SECTION 3.3 ISSUANCE OF SHARES AND PAYMENT OF CASH UPON EXERCISE. Upon
exercise of the Option, in whole or in part, in accordance with the terms of the
Agreement and upon payment of the Option Price for the shares of Common Stock as
to which the Option is exercised, the Corporation shall issue to Grantee or, in
the event of Grantee's death, to Grantee's executor, personal representative or
the person to whom the Option shall have been transferred by will or the laws of
descent and distribution, as the case may be, the number of shares of Common
Stock so paid for, in the form of fully paid and nonassessable Common Stock. The
stock certificates for any shares of Common Stock issued hereunder shall, unless
such shares are registered or an exemption from registration is available under
applicable federal and state law, bear a legend restricting transferability of
such shares.
ARTICLE 4
TERMINATION OF EMPLOYMENT
SECTION 4.1 UNVESTED PORTION. Unless the Option has earlier terminated
pursuant to the provisions of this Agreement, the unvested portion of the Option
shall terminate upon termination of Grantee's employment or affiliation (as a
consultant or director) with the Corporation for any reason.
SECTION 4.2 TERMINATION OF EMPLOYMENT OR AFFILIATION FOR REASON OTHER THAN
DEATH OR DISABILITY. Unless the Option has earlier terminated pursuant to the
provisions of the Agreement, the Option granted to Grantee shall terminate in
its entirety, regardless of whether the Option is vested in whole or in part,
six (6) months after the date Grantee is no longer employed by, nor affiliated
(as a consultant or director) with, the Corporation for any reason other than
Grantee's death or Disability. Notwithstanding the foregoing, the Option granted
to Grantee shall terminate in its entirety, regardless of whether the Option is
vested in whole or in part, upon the termination of the Grantee's employment or
affiliation (as a consultant or director)
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with the Corporation by resignation or by the Corporation for "cause". If
Grantee is a party to a written employment agreement with the Corporation which
contains a definition of "cause", "termination for cause" or any other similar
term or phrase, whether such Grantee is terminated for "cause" pursuant to this
Section 4.2 shall be determined according to the terms of and in a manner
consistent with the provisions of such written employment agreement. If Grantee
is not party to such a written employment agreement with the Corporation, then
for purposes of this Section 4.2, "cause" shall mean the failure by the Grantee
to perform his or her duties as assigned by the Corporation in a reasonable
manner; any act by the Grantee of dishonesty or bad faith with respect to the
Corporation; chronic addiction to alcohol, drugs or other similar substances
affecting the Grantee's work performance; or the commission by the Grantee of
any act, misdemeanor, or crime reflecting unfavorably upon the Grantee or the
Corporation. The good faith determination by the Committee of whether the
Grantee's employment was terminated by the Corporation for "cause" pursuant to
the preceding sentence shall be final and binding for all purposes hereunder.
SECTION 4.3 UPON GRANTEE'S DEATH. Unless the Option has earlier terminated
pursuant to the provisions of the Agreement, upon Grantee's death Grantee's
executor, personal representative or the person to whom the Option shall have
been transferred by will or the laws of descent and distribution, as the case
may be, may exercise all or any part of the vested portion of the Option,
provided such exercise occurs within twelve (12) months after the date Grantee
dies, but not later than the end of the stated term of the Option.
SECTION 4.4 TERMINATION OF EMPLOYMENT OR AFFILIATION BY REASON OF
DISABILITY. Unless the Option has earlier terminated pursuant to the provisions
of the Agreement, in the event that Grantee ceases, by reason of Disability, to
be an employee of or affiliated (as a consultant or director) with the
Corporation, the vested portion of the Option may be exercised in whole or in
part at any time within twelve (12) months after the date of Disability, but not
later than the end of the stated term of the Option. For purposes of this
Agreement, Disability shall be as defined in Code Section 22(e)(3) and shall be
determined by the Committee, with its determination on the matter being final
and binding.
ARTICLE 5
MISCELLANEOUS
SECTION 5.1 NON-GUARANTEE OF EMPLOYMENT. Nothing in the Plan or the
Agreement shall be construed as a contract of employment between the Corporation
(or an affiliate) and Grantee, or as a contractual right of Grantee to continue
in the employ of the Corporation or an affiliate, or as a limitation of the
right of the Corporation or an affiliate to discharge Grantee at any time.
SECTION 5.2 NO RIGHTS OF STOCKHOLDER. Grantee shall not have any of the
rights of a stockholder with respect to the shares of Common Stock that may be
issued upon the exercise of the Option until such shares of Common Stock have
been issued to him upon the due exercise of the Option.
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SECTION 5.3 NOTICE OF DISQUALIFYING DISPOSITION. If Grantee makes a
disposition (as that term is defined in Section 424(c) of the Code) of any
shares of Common Stock acquired pursuant to the exercise of an Incentive Stock
Option within two (2) years of the Grant Date or within one (1) year after the
shares of Common Stock are transferred to Grantee, Grantee shall notify the
Committee of such disposition in writing.
SECTION 5.4 WITHHOLDING OF TAXES. The Corporation or any affiliate shall
have the right to deduct from any compensation or any other payment of any kind
(including withholding the issuance of shares of Common Stock) due Grantee the
amount of any federal, state or local taxes required by law to be withheld as
the result of the exercise of the Option or the disposition (as that term is
defined in Section 424(c) of the Code) of shares of Common Stock acquired
pursuant to the exercise of the Option; provided, however, that the value of the
shares of Common Stock withheld may not exceed the statutory minimum withholding
amount required by law. In lieu of such deduction, the Committee may require
Grantee to make a cash payment to the Corporation or an affiliate equal to the
amount required to be withheld. If Grantee does not make such payment when
requested, the Corporation may refuse to issue any Common Stock certificate
under the Plan until arrangements satisfactory to the Committee for such payment
have been made.
SECTION 5.5 NONTRANSFERABILITY OF OPTION. The Option shall be
nontransferable otherwise than by will or the laws of descent and distribution.
During the lifetime of Grantee, the Option may be exercised only by Grantee or,
during the period Grantee is under a legal disability, by Grantee's guardian or
legal representative.
SECTION 5.6 AGREEMENT SUBJECT TO CHARTER AND BYLAWS. This Agreement is
subject to the Charter and Bylaws of the Corporation in effect as of the date
hereof, and any applicable Federal or state laws, rules or regulations,
including without limitation, the laws, rules, and regulations of the State of
Delaware.
SECTION 5.7 GENDER. As used herein the masculine shall include the feminine
as the circumstances may require.
SECTION 5.8 HEADINGS. The headings in the Agreement are for reference
purposes only and shall not affect the meaning or interpretation of the
Agreement.
SECTION 5.9 NOTICES. All notices and other communications made or given
pursuant to the Agreement shall be in writing and shall be sufficiently made or
given if hand delivered or mailed by certified mail, addressed to Grantee at the
address contained in the records of the Corporation, or addressed to the
Committee, care of the Corporation for the attention of its Secretary at its
principal office or, if the receiving party consents in advance, transmitted and
received via telecopy or via such other electronic transmission mechanism as may
be available to the parties.
SECTION 5.10 ENTIRE AGREEMENT; MODIFICATION. The Agreement contains the
entire agreement between the parties with respect to the subject matter
contained herein and may not be
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modified, except as provided in the Plan or in a written document signed by each
of the parties hereto.
SECTION 5.11 CONFORMITY WITH PLAN. This Agreement is intended to conform in
all respects with, and is subject to all applicable provisions of, the Plan,
which is incorporated herein by reference. Unless stated otherwise herein,
capitalized terms in this Agreement shall have the same meaning as defined in
the Plan. Inconsistencies between this Agreement and the Plan shall be resolved
in accordance with the terms of the Plan. In the event of any ambiguity in the
Agreement or any matters as to which the Agreement is silent, the Plan shall
govern including, without limitation, the provisions thereof pursuant to which
the Committee has the power, among others, to (i) interpret the Plan and Grant
Agreements related thereto, (ii) prescribe, amend and rescind rules and
regulations relating to the Plan, and (iii) make all other determinations deemed
necessary or advisable for the administration of the Plan. The Grantee
acknowledges by signing this Agreement that he or she has received and reviewed
a copy of the Plan.
IN WITNESS WHEREOF, the parties have executed the Agreement as of the date
first above written.
ATTEST: SERSYS ACQUISITION CORPORATION
By:
------------------------ ---------------------------------------
WITNESS: GRANTEE
------------------------ ------------------------------------------
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ATTACHMENT A
STOCK OPTION GRANTED TO XXXXX X. XXXXXXX
TYPE OF OPTION: ISO TO THE MAXIMUM EXTENT PERMITTED BY LAW WITH
ANY EXCESS CONSTITUTING A NONQUALIFIED STOCK OPTION.
GRANT DATE: EFFECTIVE TIME
NUMBER AND CLASS
OF SHARES: 50,000 SHARES OF COMMON STOCK
EXERCISE PRICE PER SHARE: $69.20 PER SHARE
EXPIRATION DATE:
The Option shall expire on January 1, 2005, if a public offering of the Common
Stock that requires registration under the Securities Act (an "IPO") has not
been consummated by that date. If an IPO of the Common Stock has been
consummated by January 1, 2005, the Option shall not expire until the 10th
anniversary of the Grant Date.
VESTING SCHEDULE:
A. Regular Vesting. The Option shall be vested as to:
1. 50% of the underlying shares subject to the Option on the first anniversary
of the Grant Date; and an additional
2. 50% of the underlying shares subject to the Option on the second anniversary
of the Grant Date.
B. Accelerated Vesting. The Option shall become vested as to 100% of the
underlying shares subject to the Option in the event of the following:
1. A termination by the Corporation without "cause" or by the Grantee for "good
reason," as defined in Section 4 of the Employment Agreement between the Company
and Grantee of even date herewith, of Grantee's employment or affiliation (as a
consultant or director) with the Corporation.
2. The consummation of an IPO of the Common Stock.
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ATTACHMENT B
EXERCISE FORM
SERSys Acquisition Corporation
[Address]
[Address]
Gentlemen:
1. Exercise of Stock Option. I hereby exercise the [Insert Type]
______________Stock Option (the "Stock Option") granted to me on
____________________, 199____, by SERSys Acquisition Corporation (the
"Corporation"), subject to all the terms and provisions thereof and of the
SERSys Acquisition Corporation Stock Option Plan (the "Plan"), and notify you of
my desire to purchase ____________ shares (the "Shares") of Common Stock of the
Corporation at a price of $___________ per share pursuant to the exercise of
said Stock Option.
2. Information about the Corporation. I am aware of the Corporation's
business affairs and financial condition and have acquired sufficient
information about the Corporation to reach an informed and knowledgeable
decision to acquire the Shares.
3. Tax Consequences. I am not relying upon the Corporation for any tax
advice in connection with this option exercise, but rather am relying on my own
personal tax advisors in connection with the exercise of the Stock Option and
any subsequent disposition of the Shares.
4. Tax Withholding. I understand that, in the case of a nonqualified
stock option, I must submit upon demand from the Corporation an amount in cash
or cash equivalents sufficient to satisfy any federal, state or local tax
withholding applicable to this Stock Option exercise, in addition to the
purchase price enclosed, or make such other arrangements for such tax
withholding that are satisfactory to the Corporation, in its sole discretion, in
order for this exercise to be effective.
5. Unregistered Shares. The following shall apply in the event the Shares
purchased herein are not registered under the Securities Exchange Act of 1933,
as amended:
(a) I am acquiring the Shares for my own account for investment with
no present intention of dividing my interest with others or of reselling or
otherwise disposing of any of the Shares.
(b) The Shares are being issued without registration under the
Securities Act of 1933, as amended (the "Act"), in reliance upon the exemption
provided by Section 3(b) of the Act for employee benefit plans, contained in
Rule 701 promulgated thereunder, or in lieu thereof
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upon the private offering exemption contained in Section 4(2) of the Act, and
such reliance is based in part on the above representation.
(c) Since the Shares have not been registered under the Act, they
must be held indefinitely until an exemption from the registration requirements
of the Act is available or they are subsequently registered, in which event the
representation in Paragraph (a) hereof shall terminate. As a condition to any
transfer of the Shares, I understand that the Corporation will require an
opinion of counsel satisfactory to the Corporation to the effect that such
transfer does not require registration under the Act or any state securities
law.
(d) The issuer is not obligated to comply with the registration
requirements of the Act or with the requirements for an exemption under
Regulation A under the Act for my benefit.
(e) The certificates for the shares to be issued to me shall contain
appropriate legends to reflect the restrictions on transferability imposed by
the Act.
Total Amount Enclosed: $
----------
Date:
------------------------ ---------------------------------------------
(Optionee)
Received by SERSys Acquisition Corporation
On: , 19
------------------------- ------
By:
-----------------------------------
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