Exhibit No. 10.15
EMPLOYMENT AGREEMENT
AGREEMENT dated as of the First day of March 1998 (the "Agreement"), among
ZILOG, Inc., a Delaware Corporation (the "Employee), and ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ (the
"Employee").
1. Employment, Duties and Agreement.
(a) The Employer hereby agrees to cause the Employee to be
elected as a member of the Board of Directors of the Employer and to
employ the Employee as President and Chief Executive Officer of the
Employer and the Employee hereby accepts such positions and agrees to
serve the Employer in such capacities during the employment period fixed
by Section 5 hereof (the "Employment") Period"). The Employee shall at
all times during the Employment Period be a member of the Board of
Directors of the Employer (the "Board") and shall serve on each committee
concerned with the strategic direction of the Employer. The Employee
shall report only to the Board. The Employee's responsibilities and
authority shall be such responsibilities and authority as are customarily
held by chief executive officers of corporations comparable to the
Employer. During the Employment Period, the Employee shall be subject to,
and shall act in accordance with. all reasonable instructions and
directions of the Board and all applicable policies and rules thereof as
are consistent with the above job titles and the other provisions of this
Agreement.
(b) During the Employment Period, excluding any periods of
vacation and sick leave to which the Employee is entitled, the Employee
shall devote his full business time to the performance of his duties and
responsibilities hereunder, except as provided in Section 1(c) below.
(c) During the Employment Period. the Employee may not,
without the prior written consent of the Board, operate. participate in
the management, operations or control of. or act as an employee, officer.
consultant, agent or representative of, any type of business or service
(other than as an employee of the Employer). Notwithstanding the
foregoing. the Employee shall be entitled (without obtaining the written
consent of the Board) to (i) act or serve as a director on the boards of
directors of any other company or any type of civil. cultural,
philanthropic and professional organization and (ii) without limiting the
generality of the foregoing, the Employee shall be entitled to serve on
the boards of directors of the three companies upon whose boards he
currently serves (ie., Lyondell Petrochemical Company, I-Stat Corporation
and ITT Industries, Inc.), so long as such service (described in clauses
(i) and (ii) above) does not detract from the Employee's performance of
his duties and responsibilities to the Employer as provided hereunder.
The Employee may also decide to resign from one of the boards described
in clause (ii) above and serve on the Dupont Board of Directors. Except
as described in this Section 1(c),
The Employee shall not provide any services to any other entity during
the Employment Period without the consent of the Board.
2. Compensation.
(a) As compensation for the agreements made by the Employee
herein and the performance by the Employee of his obligations hereunder
during the Employment Period, the Employer shall pay the Employee,
pursuant to the Employer's normal and customary payroll procedures (but
not less than monthly). a base salary at the rate of $800,000 per annum
(the "'Base Salary). Each year during the Employment Period, the Employee
shall be considered for an increase in his salary based on the Employee's
performance.
(b) In addition to the Base Salary, the Employee shall receive
a bonus of at least $600,000 for 1998, which shall be deemed earned and
paid in January, 1999. The Board of Directors may elect to award a larger
bonus for 1998 in its discretion, based on the Employee's performance.
For each year during the Employment Period after 1998, (i) the Board of
Directors will establish target bonuses for the Employee, each of which
shall be a minimum of $600,000 if certain performance objectives are
achieved and (ii) each year the Board will consider increasing the
Employee's minimum target bonus based on his performance.
(c) The Employer shall pay Eight Million Dollars
($8,000,000.00) to the Employee, together with interest from January 6,
1998 until paid at the rate of eight percent (8%) per annum, compounded
annually (the "$8 Million Bonus"). The $8 Million Bonus shall be paid on
January 2, 2002 or, at the Employee's election, on the later of January
1, 1999 or the first to occur of the following events: (i) Change in
Control of the Employer (as defined in Section 5(d)(ii) herein); (ii) the
sale of any class of stock of the Employer to the public wherein the
Employer receives gross proceeds of at least $20 million (other than a
sale exclusively to then existing shareholders of the Employer)
(HEREINAFTER REFERRED TO AS A "PUBLIC OFFERING"); or (iii) as provided in
Section 7(g) below. On or prior to December 1, 1998, the Employer and the
Employee shall enter into a separate deferred compensation plan with
respect to the $8 Million Bonus, the terms of which shall be mutually
agreed upon by the Employer and the Employee, which will (x) supersede
this Agreement with respect to the $8 Million Bonus and (y) permit the
Employee to elect to receive the $8 Million Bonus it a time later than
the time currently permitted herein.
(d) The Employer will pay to the Employee the sum of One
Million Dollars ($1,000,000.00) as soon as practicable after February 27,
1998. Such payment, subject only to such condition, is fully earned by
the Employee on the date hereof and not subject to any other condition,
except as provided in Section 2(f).
(e) The Employer shall grant $50,000 shares of the voting
common stock of the Employer on each of May 1, 1998, 1999, 2000, and 2001
(a total of 200,000 shares), provided that the number of shares of voting
common stock granted shall be adjusted proportionately in the event of
any stock split, combination, exchange or recapitalization having a
similar effect, other than the 4 for 1 stock split, occurring February
27, 1998. Such shares shall become fully deliverable (all 200,000 shares)
and vested on the earliest to occur of (i) a Change in Control of the
Employer (as defined in Section 5(d)(ii) herein), (ii) the Employee
ceasing to be employed by the Employer for any reason, subject to Section
2(f) below, or (iii) a Public Offering.
(f) The parties agree that the payments and stock grants
provided in Sections 2(c) through 2(e) are fully earned by the Employee
as of January 6, 1998 and at not subject to any condition or restriction,
except a provided in the following subsection 2(f)(i) and 2(f)(ii) below.
(i) Notwithstanding any provision in this Agreement, the
Employee shall not be entitled to receive the $8 Million
Bonus or any portion thereof if he terminates this Agreement
pursuant to Section 5(f) below prior to January 1, 1999. If
the Employee terminates this Agreement on or after January 1,
1999, he shall be fully vested in and receive full pay out of
the $8 Million Bonus in accordance with the terms of the
deferred compensation payment plan if and when such plan is
adopted, in accordance with Section 2(c) herein.
(ii) Notwithstanding any provision in this Agreement, the
Employee shall promptly return to the Employer, as
appropriate, All payments made to him pursuant to Sections
2(c) ad 2(d) and any shares of Employer stock issued to him
pursuant to Section 2(e), and the Employee shall forfeit any
compensation and shares which have not been paid or delivered
to him hereunder if, prior to January 6, 1999, the Employee
both terminates the Employment Period pursuant to Section
5(f) below and without the written consent of the Employer
becomes employed by Microelectronics Group, of Lucent
Technologies, Inc. (the "Former Employer") (other than on
account of the acquisition of an interest in the Employer by
the Former Employer).
(g) On or prior to March 30, 1998 the Employer, shall grant
the Employee options, in form reasonably satisfactory to the Employee, to
purchase 1,000,000 shares of the voting common stock of the Employer
(subject to restrictions on exercise as provided below) and which expire
ten years after the date of the grant of the options, provided that the
number of options granted and the exercise price for such options shall
be adjusted proportionately in the event of any stock split, combination,
exchange or recapitalization having a similar effect. The exercise price
for 500,000 shares of such stock shall be $5 per share (the "$5 Option")
and the price for the other 500,000 shares shall be $10 per share (the
"$10 Option"). The $5 option and the $10 option shall each become
exercisable on follows: (1) 62,500 shares under each Option shall be
immediately exercisable, (ii) 62,500 shares under each Option on December
31, 1998, and (iii) 31,250 shares under each Option at the end of each
calendar quarter in each of calendar years 1999, 2000, and 2001, provided
that the Employee is employed by the Employer on the date such options
become exercisable. Notwithstanding the foregoing, the options shall
become immediately exercisable upon the occurrence of any of the events
described in Sections 5(a), 5(b), 5(d), and 5(e), or in the event of a
Public Offering. Each year during the Employment Period, the Employee
shall be considered for grants of additional stock options based on the
Employee's performance.
3. Benefits.
During the Employment Period, the Employee shall be entitled
to the following expense reimbursements and benefits and perquisites:
(a) a suitable automobile. which shall be replaced with a new
automobile once every two years and all reasonable expenses associated
with the automobile. including but not limited to, liability insurance;
(b) customary directors' and officers' liability insurance
for the Employee, the other members of the Board and the other executives
of the Employer, and with respect to the Employee's activities on behalf
of the Employer, an indemnity in accordance with Section 9 herein;
(c) the Employer will adopt (and the Board will approve)
savings, retirement and incentive plans for its senior executive officers
which have been recommended by the Employee and are reasonably acceptable
to the Board, and the Employee will be entitled to fully participate on
the same basis as other senior executives;
(d) the Employer will adopt (and the Board will approve) such
qualified and nonqualified stock option plans for its senior executive
officers and others, which have been recommended by the Employee and are
reasonably acceptable to the Board, and the Employee will be entitled to
participate fully in the award of options under such plans on the same
basis as other senior executives; and
(e) the Employee and/or the Employee's family, as the case
may be, shall be eligible for participation in, and shall receive all
benefits under the medical, dental, life and disability insurance plans
which are at least equivalent in amounts and coverage to that which is
customary for chief executive officers in the Employer's industry. Should
such amounts and coverage described in this subsection (e), in any area,
be materially less, or cost the Employee materially more, than the
amounts and coverage the Employee enjoyed with the Former Employer
immediately prior to his resignation therefrom, the Employer will, at the
Employee's election, provide him with the equivalent coverage and
amounts, and at the same cost to the Employee, as he enjoyed with the
Former Employer, but only if, in the Employer's reasonable judgment, the
extra cost of doing so is not excessive and the providing of such extra
benefits does not unduly disrupt the continuity or effectiveness of
similar benefits made available to other senior executives of the
Employer. Evidence of insurability shall be waived, although the Employee
will agree to a standard physical examination.
(f) During the Employment Period, the Employee shall be
entitled to paid vacation of at least four (4) weeks per year. The
Employee shall have the unlimited right to carry over unused vacation
days and sick days and similar benefits consistent with the policies
applicable to other senior executives of the Employer
(g) The Employer will pay or reimburse the Employee for
reasonable expenses incurred by the Employee in promoting the business of
the Employer and in attending professional and educational events which
are reasonably related to the business of the Employer. Such expenses may
include, at the Employee's election, initiation payments and dues, at
such clubs as the Employee shall reasonably request.
(h) During the Employment Period. the Employer shall furnish
the Employee with a home computer system and shall assist the Employee in
integrating the system with the Employer's computer systems.
4. Relocation.
(a) The Employee will relocate from his New Jersey home to a
home selected by him in Northern California. The Employee shall perform
his obligations to the Employer from a base in Northern California, and
shall not be required to relocate again during the term of this
Agreement, although he shall travel as required by his duties hereunder.
(b) The Employer will pay the following relocation expenses
incurred by the Employee in connection with his move to California, all
of which shall be "grossed up" so that there will be no after-tax
consequences to the Employee of having received the following relocation
benefits:
(i) the Employee's reasonable relocation costs to
California, including moving costs;
(ii) the cost of appropriate temporary quarters for the
Employee and his immediate family in California from the
date of his employment with the Employer until he moves into
a new home in California, but in no event later than
December 31, 1998;
(iii) reasonable travel to and from California and New
Jersey for the Employee and his immediate family for a
period of two years from January 6, 1998, and lodging, meals
and related expenses for the Employee and his immediate
family until he moves into a permanent home in California;
and
(iv) the Employer will cause the Employee's New Jersey
home to be purchased for its appraised value (as determined
by an independent appraiser mutually agreed upon by the
parties) no later than six (6) months after the date the
Employee puts the home on the market. If the Employee sells
his house in an arms length transaction with the consent of
the Employer for less than such amount before that time, the
Employer shall pay him the difference between such appraised
value and the proceeds of the sale.
5. Employment Period.
The Employment Period shall commence on February 27, 1998
(the "Effective Date') and shall terminate on the day
preceding the fifth anniversary of the Effective Date (the
"Scheduled Termination Date"); provided, however, that the
Employee's employment hereunder may be terminated during the
Employment Period prior to the Scheduled Termination Date
upon the earliest to occur of the following events (at which
time the Employment Period shall be terminated):
(a) Death. The Employee's employment hereunder shall terminate
upon his death.
(b) Disability. The Employer or the Employee shall be
entitled to terminate the Employee's employment hereunder for Disability.
For purposes of this Agreement the term "Disability" shall mean that, as
a result of the Employee's incapacity due to physical or mental illness,
the Employee shall have been unable to perform his material duties
hereunder for a period of six (6) consecutive months.
(c) Cause. The Employer may terminate the Employee's
employment hereunder for Cause. For purposes of this Agreement, the term
"Cause" shall mean: (i) the willful and continued failure of the Employee
substantially to perform the Employee's duties under this Agreement
(other than as a result of physical or mental illness or injury), after
the Board delivers to the Employee a written demand for substantial
performance that specifically identifies the manner in which the Board
believes that the Employee has not substantially performed the Employee's
duties hereunder and the failure of the Employee to cease such willful
and continued failure within 30 days after having received such demand;
and (ii) conviction of a felony involving moral turpitude.
(d) Good Reason. The Employee may terminate his employment
hereunder for Good Reason (and such termination shall be treated as if it
were a termination by the Employer without Cause, and not a voluntary
termination by the Employee).
(i) For purposes of this Agreement, the term "Good
Reason" shall mean (A) the Employer has committed a material
breach of this Agreement and has not cured such breach within
30 days notice of such breach from the Employee or (B) the
Employee elects to terminate his employment within one year
after a Change in Control (other than on account of a Public
Offering).
(ii) For purposes of this Agreement, the term "Change
in Control" of the Employer shall mean the occurrence of any
of the following events: (A) any sale, lease, exchange or
other transfer (in one transaction or a series of related
transactions. directly or indirectly) of all or substantially
all of the assets of the Employer to any Person (as defined
below) or group of related persons for purposes of Section
13(d) of the Securities Exchange Act of 1934 (a "Group'),
together with any affiliates thereof (other than to TPG
Partners II. L.P. ("TPG") or any of its affiliates, unless
the transfer to TPG and its affiliates is part of a larger
transaction which would otherwise came a Change in Control to
occur); (B) the approval by the holders of capital stock of
the Employer of any plan or proposal for the liquidation or
dissolution of the Employer; (C) any Person or Group (other
than TPG or its affiliates) shall become the owner, directly
or indirectly, beneficially or of record, of shares
representing more of the aggregate voting power of the issued
and outstanding stock entitled to vote in the elections of
directors (the "Voting Stock") of the Employer than TPG and
its affiliates own, directly or indirectly, beneficially or
of record; (D) the replacement of a majority of the Board
over a two-year period from the directors who constituted the
Board at the beginning of such two-year period and such
replacement shall not have been approved by a vote of at
least a majority of the Board then still in office who either
were members of such Board at the beginning of such two year
period or whose election as a member of such Board was
previously so approved or who were nominated by, or designees
of, TPG or its Affiliates; (E) any Person or Group other than
TPG or its affiliates shall have acquired the power to elect
a majority of the members of the Board; or (F) a merger or
consolidation of the Employer with another entity in which
holders of the common stock of the Employer immediately prior
to the consummation of the transaction hold, directly or
indirectly, immediately following the consummation of the
transaction less than 50% of the common equity interest in
the surviving corporation in such transaction.
(iii) For purposes of this Agreement, the term "Person" shall
mean any individual, partnership, corporation, limited
liability company, unincorporated organization, trust or
joint venture, or a governmental agency or political
subdivision thereof.
(e) Without Cause. The Employer may terminate the Employee's
employment hereunder without Cause.
(f) Without Good Reason. The Employee may terminate his employment
hereunder without Good Reason.
6. Termination Procedure.
(a) Notice of Termination. Any termination of the Employee's
employment by the Employer or by the Employee during the Employment
Period (other than termination pursuant to Section 5(a) ) shall be
communicated by written Notice of Termination to the other party hereto
in accordance with Section 15(a). For purposes of this Agreement, a
"Notice of Termination" shall mean a notice which shall indicate the
specific termination provision in this Agreement relied upon and shall
set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Employee's employment under the
provision so indicated and shall attach or reference any prior notices
required under Section 5.
(b) Date of Termination. For purposes of this Agreement,
"Date of Termination" shall mean (i) if the Employee's employment is
terminated by his death, the date of his death, (ii) if the Employee's
employment is terminated pursuant to Section 5(b), thirty (30) days after
Notice of Termination (provided that the Employee shall not have returned
to the substantial performance of his duties on a full-time basis during
such thirty (30) day period), (iii) if the Employee's employment is
terminated pursuant to Section 5(f), a date specified in the Notice of
Termination; and if the Employee's employment is terminated for any other
reason, the date on which a Notice of Termination is given or any later
date (within thirty (30) days (or any alternative time period agreed upon
by the parties) after the giving of such notice) set forth in such Notice
of Termination.
7. Termination Payments.
(a) Death. In the event of the termination of the Employee's
employment during the Employment period as a result of the Employee's
death, the Employee shall be entitled to all base salary carried to date
but unpaid, together with a bonus equal to the prior year's bonus (or, if
applicable, the 1998 bonus), prorated for the year of death. All stock
options of the Employee which have not become exercisable will be
automatically exercisable in full, and both those options and any other
stock options the Employee holds shall remain exercisable until the later
of the dates set forth in subclauses (A) and (B) of subclause (e)(ii) of
this Section 7.
(b) Disability. In the event of the termination of the
Employee's employment during the Employment Period as a result of the
Employee's Disability, the Employee shall be entitled to the benefits in
Section 3(e) for a period of five years thereafter and shall be further
entitled to the same benefits set forth in Section 7(a) above.
(c) For Cause. In the event of the termination of the
Employee's employment during the Employment Period by the Employer for
Cause, the Employee shall be entitled to his base salary earned prior to
the date of termination, and all stock options which have not become
exercisable shall immediately expire as of the commencement of business
on the date of termination. In addition, all stock options which are
exercisable on the date of termination must be exercised within six
months after the date of termination, otherwise, they shall expire and be
void.
(d) For Good Reason. In the event of the termination of the
Employee's employment during the Employment Period by the Employee for
Good Reason, such termination shall be deemed a termination by the
Employer without cause and the Employee shall be entitled to the same
payments and other benefits as are set forth in paragraph (e) of this
Section 7.
(e) Without Cause. In the event of the termination of the
Employee's employment during the Employment Period by the Employer
without Cause (i) (A) prior to or on April 1, 1999, the Employer shall as
a condition to termination, pay the Employee an amount equal to
$2,400,000 (three times his base salary), plus $1,800,000 (three times
his first year's minimum bonus), or (13) after April 1, 1999, the
Employer shall as a condition to termination, pay the Employee an amount
equal to two times the base salary (but based on a base salary of no less
than $800,000) earned by the Employee during the preceding twelve months
plus two times the last bonus (but based on a bonus of no less than
$600,000) paid to the Employee; and (ii) all stock options held by the
Employee which have not become exercisable will automatically become
exercisable in full, and both those stock options and any other stock
options the Employee holds shall remain exercisable until the later of
(A) December 31, 2004 or (B) the earlier of (1) ten years from the date
of grant or (2) a Public Offering of voting common stock of the Employer
after the date of termination.
(f) Without Good Reason. In the event of the termination of
the Employee's employment during the Employment Period by the Employee
without Good Reason, the Employee shall be entitled to his unpaid base
salary earned prior to the date of termination, and all stock options
which were exercisable immediately prior to such date of termination
shall remain exercisable until 24 months after the date of termination.
All stock options which were not exercisable at the date of termination
shall lapse, and the Employee shall have no right to exercise them at any
time.
(g) Bonus Payment. In addition to the payments provided in
Sections 7(a) through 7(f) above, and to the extent not inconsistent
therewith upon the Employee ceasing to be an employee of the Employer,
(i) he shall be entitled to such payouts and benefits under then existing
Employer retirement and other fringe benefit programs (excluding any
severance plans or arrangements) as are normally provided by the Employer
to its senior level employees in similar circumstances, and (ii) the $8
Million Bonus (including accrued interest to the date of payment) shall,
at the option of the Employee become due and payable in full on the later
of the date of termination or September 1, 1999, in the event of a
termination pursuant to this Section 7; provided that such payment shall
be subject to Section 2(f) and provided further that in the event of a
termination pursuant to Section 7(f), the Employer shall pay the payment
on the later of the date of termination or September 1, 1999, at the
Employee's election, provided that the Employer can pay such amount
without violating the provisions of any lending agreement it then has
with an institutional lender unaffiliated with TPG. If such amount cannot
be paid on such date by reason of the foregoing, the Employer shall pay
such amount as soon as possible, but in no event later than January 2,
2002
8. No Offset: Excise Tax.
(a) The payments and other consideration to the Employee
under this Agreement shall be made without offset or deduction of any
kind by the Employer, except customary deductions for taxes and other
deductions required by law.
(b) The amounts to which the Employee is entitled hereunder
shall be increased to the extent necessary to pay (i) any excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
(the "Code") on any portion of the compensation or benefits payable to
the Employee in connection with a Change in Control of the Employer and
(ii) any such excise tax and any other taxes imposed by the Code or under
state or local law on the payments provided for in this Section 8(b). The
Employee and the Employer agree to reasonably cooperate to mitigate the
amount of any such tax that might become payable. The Employer shall pay
to the Employee the payments, or portions thereof, provided for in this
Section 8(b) not later am fifteen (15) days prior to the date on which
such taxes, or portions thereof, are due as determined by the tax counsel
referred to below. Tax counsel (hereinafter "Tax Counsel') selected by
the Employer and reasonably acceptable to the Employee shall determine
whether the increase provided for by this Section 8(b) shall be required,
based on the actual tax rates to which the Employee is subject at the
time. The Employee shall provide Tax Counsel with the information that
such counsel reasonably requests in connection with such determination.
All determinations of Tax Counsel shall be binding on the Employee and
the Employer. Tax Counsel shall determine that payments shall be
increased only if, and to the extent that, it is more likely than not
that the payments or benefits are subject to a tax. In making the
determinations required by this Section 8(b), Tax Counsel may rely on
benefit consultants, accountants or other experts. The Employer agrees to
pay all reasonable fees and expenses of such Tax Counsel. If, subsequent
to the payment to the Employee of payments pursuant to this Section 8(b),
the Tax Counsel reasonably determines that the amount of the payments
paid pursuant to this Section 8(b) are greater than, or less than, the
amount required to have been paid, the Employee shall reimburse the
Employer an amount, or the Employer shall pay to the Employee an
additional amount, respectively, based upon such determination. In the
event that Tax Counsel reasonably determines that the Employee is
required to pay excise taxes, interest or penalties to a governmental
taxing authority as a result of his non-payment of taxes where such Tax
Counsel had determined that such taxes need not be paid, the Employer
shall pay to the Employee an additional amount equal to (i) the amount of
such interest and/or penalties, (ii) the excise tax which was not paid
and (iii) any excise tax and any other taxes imposed by the Code or under
state or local law on the payments provided for in this Section 8(b).
9. Indemnification.
(a) The Employer shall indemnify, defend and hold the
Employee harmless from and against any and all liability, damage, cost
expense, claim action, demand, suit or obligation arising from or
relating to this Agreement or the performance by the Employee of his
obligations hereunder, including on account of any act taken or omitted
to be taken by the Employee in connection with such agreement or the
business of the Employer, provided, that such act or omission was in good
faith and did not constitute grounds for the termination of the Employee
by the Employer for Cause; and provided further. that this obligation to
indemnify and defend shall not extend to disputes between the Employee
and the Employer, if any. which relate to the benefits from the Employer
to which the Employee believes he is entitled. The provisions of Section
10(b) of this Agreement, however, shall apply to such disputes.
10. Legal Fees.
(a) The Employer will pay, or reimburse the Employee for, the
reasonable expenses incurred by the Employee in negotiating and
documenting this Agreement and the Shareholders' Agreement described in
Section 11 below, including the reasonable fees and costs of attorneys
and consultants.
(b) In the event of litigation or any other proceeding
between the Employee and the Employer, arising from or pertaining to this
Agreement, the prevailing party in such litigation or other proceeding
shall be entitled to recover from the non-prevailing party the prevailing
party's reasonable attorneys' fees, costs and expenses (not limited to
taxable costs) including all expenses of experts, appeals and actions to
enforce awards.
11. Shareholders' Agreement.
(a) The Employer and the Employee shall enter into the
Shareholders' Agreement in the form attached hereto as Exhibit A;
provided that the following provisions shall control over any
inconsistent provisions of the Shareholders' Agreement:
(i) on one occasion at any time prior to the six-
month anniversary of the date the Employee's employment with the
Employer terminates, the Employee may request the Employer to
register a portion or all of the Employer voting common stock then-
owned by the Employee and, upon receipt of such request, (A) the
Employer shall register the number of shares of Employer voting
common stock requested by the Employee as soon as practicable after
the date of such request (but in no event later than 90 days
thereafter), or (B) at the Employer's option in lieu of the
obligation to so register, the Employer shall purchase the number
of shares requested to be so registered from the Employee as soon
as practicable after the date of such request (but in no event
later than 90 days thereafter), at a purchase price equal to the
product of the appraised fair market value per share of Employer
voting common stock and the number of shares of Employer common
stock requested to be registered by the Employee; (if such shares
or any portion thereof are registered, the Employer shall pay all
costs of registration, although the Employee shall be subject to
the underwriters' discount); and
(ii) all the voting common stock of the Employer held
by the Employee or which he is entitled to purchase from time to
time shall be subject to the antidilution provisions set out in
Exhibit "B", attached hereto.
(b) The appraisal with respect to Section 11(a)(i) above
shall be performed by a single investment banking firm selected by both
parties, acting reasonably, and such appraisal shall not take into
account any discount for the fact that such stock is illiquid and
represents a minority holding in the Employer. The cost of such appraisal
shall be borne by the Employer.
(c) Except as provided in Section 11(a)(i), the terms of this Section 11
shall survive until the later of the termination of this Agreement or February
27, 2008.
12. Restrictive Covenant.
(a) The Employee agrees not to disclose during the period of
employment to any person not employed by the Employer or employed as the
Employee's legal counsel, confidential information concerning the
Employer, including without limitation any inventions, processes, methods
of distribution or customer or Employer trade secrets. At any time when
he is not employed by the Employer, the Employee agrees not to disclose
to any person not employed by the Employer or employed as the Employee's
legal counsel trade secrets of the Employer or its customers which he
learned while employed by the Employer, except as consented to by the
Employer or such customer in writing. This clause (a) shall not preclude
the Employee from use or disclosure of (i) non-proprietary or non-
confidential information, (ii) confidential information concerning the
Employer in the conduct of the Employee's responsibilities hereunder or
required by law or court order or (iii) information which is available to
or known by the public.
(b) The parties hereto hereby declare that it is impossible
to measure in money the damages which will accrue to the Employer by
reason of a failure by the Employee to perform any of his obligations
under this Section 12. Accordingly, if the Employer institutes any action
or proceeding to enforce the provisions hereof, to the extent permitted
by applicable law, the Employee hereby waives the claim or defense that
the Employer has an adequate remedy at law, and the Employee shall not
urge in any such action or proceeding the claim or defense that any such
remedy at law exists.
(c) The restrictions in this Section 12, shall be in addition
to any restrictions imposed on the Employee by statute or at common law.
(d) The provisions of this Agreement shall be kept strictly
confidential by the Employee and the Employer and shall not be revealed
to any other person by either of them except (i) as required by law, (ii)
to legal and financial advisors; or (iii) as mutually agreed upon as
necessary in connection with the Employer's business.
13. Representations and Acknowledgments.
The Employee hereby represents and warrants to the Employer
that, to the best of his knowledge, after consultation with counsel, the
execution, delivery and performance of this Agreement does not violate
any provision of any agreement which the Employee has with the Former
Employer. The Employer acknowledges, however, that the Employee has an
obligation to the Former Employer not to disclose certain confidential
information, that the Employee intends to honor such obligation and that
honoring such obligation does not violate the foregoing representation
and warranty made by the Employee. The Employer further acknowledges that
the Employee is making no warranty or representation to the Employer
concerning whether the "inevitable disclosure" doctrine is applicable
to the transactions contemplated herein.
14. Litigation with The Former Employer.
In the unlikely event that the Former Employer (i) contests
the Employee's right to enter into, or carry out his obligations under
this Agreement or (ii) attempts, on account of this Agreement to (A)
recover the value of options covering the stock of the Former Employer or
its parent which have been exercised by the Employee prior to January 6.
1998 or (B) deny to the Employee the benefit of any deferred compensation
or non-qualified retirement benefits to which the Employee is entitled
pursuant to the terms of such plan or arrangements then the Employer
agrees that it will, at its expense, provide legal counsel reasonably
acceptable to the Employee to represent the Employee in connection with
any discussions litigation or other proceeding in connection therewith.
15. Miscellaneous.
(a) Any notice or other communication required or permitted
under this Agreement shall be effective only if it is in writing and
delivered personally or sent by registered or certified mail, postage
prepaid, addressed as follows (or if it is sent through any other method
agreed upon by the parties):
If to the Employer:
ZILOG, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Board of Directors and Secretary
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Employee:
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
Twenty-Ninth Floor
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇. ▇▇ ▇▇▇▇▇-▇▇▇▇
or to such other address as any party hereto may designate by notice to
the others, and shall be deemed to have been given upon receipt.
(b) This Agreement. along with the Stockholders' Agreement
attached hereto as Exhibit "A", constitutes the entire Agreement among
the parties hereto with respect to the Employee's employment, and
supersedes and is in full substitution for any and all prior
understandings or agreements with respect to the Employee's employment
with the Employer.
(c) This Agreement may be amended only by an instrument in
writing signed by the parties hereto and any provision hereof may be
waived only by an instrument in writing signed by the party or parties
against whom or which enforcement of such waiver is sought. The failure
of any party hereto at any time to require the performance by any other
party hereto of any provision hereof shall in no way affect the full
right to require such performance at any time thereafter, nor shall the
waiver by any party hereto of a breach of any provision hereof be taken
or held to be a waiver of any succeeding breach of such provision or a
waiver of the provision itself or a waiver of any other provision of this
Agreement.
(d) (i) This Agreement is binding on and is for the benefit
of the parties hereto and their respective successors, heirs,
executors, administrators and other legal representatives.
Neither this Agreement not any right or obligation hereunder may
be assigned by the Employee.
(ii) The Employer shall require any successor (whether
direct or indirect, by purchase, merger. consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Employer expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the
Employer would have been required to perform it if no such
succession had taken place; provided that the Employer shall
continue to be responsible for all its obligations hereunder. As
used in this Agreement, "the Employer" shall mean both the
Employer as defined above and any such successor that assumes and
agrees to perform this Agreement, by operation of law or
otherwise.
(e) If any provision of this Agreement or portion thereof is
so broad, in scope or duration, so as to be unenforceable, such provision
or portion thereof shall be interpreted to be only so broad as is
enforceable.
(f) The Employer may withhold from ray amounts payable to the
Employee hereunder all federal, state, city or other taxes that the
Employer may reasonably determine are required to be withheld pursuant to
any applicable law or regulation.
(g) This Agreement shall be governed by and construed in
accordance with the laws of the State of CALIFORNIA, without reference to
its principles of conflicts of law.
(h) This Agreement may be executed in several counterparts,
including by the exchange of facsimile signature pages containing the
signatures of one, or both parties, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument.
(i) The headings in this Agreement are inserted for
convenience of reference only and shall not be a part of or control or
affect the meaning of any provision hereof.
IN WITNESS WHEREOF. the parties have executed this Agreement.
as of the date first written above.
ZILOG, INC.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Member, Zilog Board of Directors
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
EXHIBIT "A"
STOCKHOLDIERS' AGREEMENT
by and among
ZiLOG, INC.,
TPG PARTNERS II, L.P.,
TPG INVESTORS II, L.P.,
TPG PARALLEL II, L.P.,
and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
dated as of August 7, 1998
TABLE OF CONTENTS
ARTICLE I 2
SECTION 1.01 Definition 2
SECTION 1.02 Interpretation 6
ARTICLE II 6
SECTION 2.01 General Prohibition on Transfers of Securities 6
SECTION 2.02 Permitted Transfers by TPG 7
SECTION 2.03 Permitted Transfers by ▇▇▇▇▇▇▇▇ 7
SECTION 2.04 Tag-Along Rights 9
SECTION 2.05 Drag-Along Rights 10
SECTION 2.06 Transfer Costs; Closing 11
SECTION 2.07 Restrictive Legend 11
ARTICLE III 12
SECTION 3.01 Piggy Back Registration 12
SECTION 3.02 Registration Procedures 14
SECTION 3.03 Indemnification: Contribution 16
ARTICLE IV
SECTION 4.01 Transactions with Affiliates 18
SECTION 4.02 Amendment 18
SECTION 4.03 Specific Performance 18
SECTION 4.04 Successor and Assigns 19
SECTION 4.05 Shares Subject to this Agreement 19
SECTION 4.06 Notices 19
SECTION 4.07 Complete Agreement: Counterpart 21
SECTION 4.08 Term of the Agreement 21
SECTION.4.09 Headings 21
SECTION 4.10 Choice of Law 21
SECTION 4.11 Consent by TPG 21
SECTION 4.12 Effectiveness of Agreement 21
THIS STOCKHOLDERS' AGREEMENT ("the Agreement"), dated as of
August 7, 1998, by and among ZILOG, INC. (the "Company'), TPG PARTNERS II
L.P. ("TPG Partners"), TPG INVEST0RS II L.P., TPG PARALLEL II. L.P.
("TPG Partners II L.P., TPG Investors II, L.P. and TPG Parallel II L.P.,
each a member and collectively referred to as "TPG"), and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇").
WHEREAS. TPG Partners and the Company entered into an Agreement and
Plan of Merger dated as of July 20,1997, as amended by Amendments Number
One, Number Two and Number Three dated as of November 18. 1997. December 10,
1997 and January 26,1998, respectively. (the "Merger Agreement) which
provided for the merger (the "Merger") of TPG Zeus Acquisition Corporation,
a subsidiary of TPG Partners and into the Company with the Company being
the surviving corporation (hereinafter sometimes referred to as the
"Surviving Corporation");
WHEREAS, TPG has entered into an agreement in substantially the
form of this Agreement with the other stockholders of the Company;
WHEREAS, ▇▇▇▇▇▇▇▇ has purchased shares of Common Stock (as deemed
herein) and has the right to acquire additional shares of Common Stock
pursuant to his Employment Agreement with the Company, dated as of March
1, 1998 through certain restricted stock grant and options to purchase
additional shares of Common Stock; and
WHEREAS, ▇▇▇▇▇▇▇▇ may acquire additional shares of Common Stock
during his employment with the company;
WHEREAS, the parties hereto to desire to enter into this
Agreement for the purpose of agreeing to certain aspects of
their relationship with respect to the Company;
NOW, THEREFORE. in consideration of the foregoing and the mutual
promises, covenants and agreements of the parties hereto, and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged. and subject to the conditions hereof, the parties
hereto agree as follows
ARTICLE I
SECTION 1.01 Definitions. In addition to the terms defined herein,
for purposes of this Agreement,. the following terms shall have the
meanings specified below. Capitalized terms used but not defined herein
having the meanings set forth in the Merger Agreement.
"100% Affiliate" shall mean (i) when used with reference to any
entity, (A) any partnership of which one hundred percent (100%) of either
the capital or profit interests of such partnership is directly or
indirectly owned or controlled by such entity or (B) any corporation or
limited liability company of which one hundred percent (100%) of the
outstanding voting securities or member interest of such corporation is.
directly or indirectly, owned or controlled by such entity. and (ii) when
used with respect to any natural person, any trust created for the
benefit of such person and/or members of such person's family. .
"1933 Act" means the Securities Act of 1933. as amended, and the
rules and regulations promulgated thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control
with such Person; "control" when used with respect to any Person means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person. whether through the
ownership of voting securities or by contact or otherwise; and the terra.
"voting securities" means securities or interest entitling the holder
thereof to vote or designate directors or individuals performing a similar
function.
"Agreement" has the meaning ascribed to it in the preamble hereto.
"Applicable Amount" has the meaning ascribed to it in Section
2.04(a) hereof.
"Board" means the Board of Directors of the Company.
"Bona Fide Offer" means with respect to an offer from a Person pursuant
to Section 2.03(c) or 2.05, an offer (i) from a Person who (A) makes such
offer in good faith. (B) is not an Affiliate of the Person receiving the
offer and (C) has the financial capability to purchase the Shares pursuant
to the offer and (ii) whose terms do not conflict with the provisions of
this Agreement.
"Certificate" shall mean the certificate of incorporation of the
Company.
"Common Stock" shall mean the voting common stock, par value $.01
per share, of the Company.
"Company" has the meaning ascribed to it in the preamble hereto.
"Drag-Along-Notice" means a written notice delivered to ▇▇▇▇▇▇▇▇
by TPG pursuant to Section 2.05 hereof pursuant to which ▇▇▇▇▇▇▇▇ shall
transfer all of his respective Shares to a Person making a Bona Fide
Offer. Such notice shall include, without limitation, the identity of
such Person, the price and other material terms and conditions of the
proposed transfer, the closing date of the proposed transfer and, if
applicable, TPG's valuation of any non-cash consideration to be received
by TPG and ▇▇▇▇▇▇▇▇ pursuant to such proposed transfer.
"Electing Stockholder" means, depending upon the context used.
▇▇▇▇▇▇▇▇ following delivery of an Election Notice pursuant to
Section 2.04(a) hereof or ▇▇▇▇▇▇▇▇ following sale of his Shares to
a Prospective Purchaser pursuant to Section 2.04(b) hereof.
"Election Notice" has the meaning ascribed to it in Section 2.04(a)
hereof.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended.
"Initial Public Offering" has the meaning ascribed to it in
Section 2.04(a) hereof.
"Merger" has the meaning ascribed to it in the recitals.
"NASDAQ'" has the meaning ascribed to it in Section 3.02(a)(ix)
hereof.
"Notice of Offer" has the meaning ascribed to it in Section
2.03(c.) hereof.
"Person" means any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or any
other entity or any government or political subdivision or an
agency, department or instrumentality thereof.
"Prospective Purchaser" has the meaning ascribed to it in
Section 2.04(a) hereof.
"Registrable Securities" means (i) the Shares and (ii) any shares
of common stock of the Company issued or issuable by way of stock
dividend or other distribution or stock split or in connection with a
combination. exchange or replacement of Shares, recapitalization, merger,
consolidation or other reorganization or otherwise with respect to
Registrable Securities. Registrable Securities shall cease to be
Registrable Securities when (i) a registration statement with respect to
the sale of such securities shall have become effective under the 1933
Act and such securities shall have been disposed of in accordance with
such registration statement (ii) such securities shall have been
distributed by a Person pursuant to a Rule 144 Sale or Rule 144(k) Sale
or (iii) such securities shall have been otherwise transferred and new
certificates therefor not bearing a legend restricting further transfer
shall have been delivered by the Company.
"Registration Expenses", means all expenses incident to the
Company's performance of or compliance with Article III including,
without limitation. all registration and filing fees. all fees and
expenses of complying with securities or blue sky laws. all printing
expenses the reasonable & fees and disbursements of counsel for the
Company and of its independent public accountants, including the expenses
of any special audits required by or incident to such performance and
compliance, but excluding (i) any allocation of salaries of personnel of
▇▇▇▇▇▇▇▇ on whose behalf Registrable Securities are being registered or
other general overhead expenses of ▇▇▇▇▇▇▇▇ or other expenses for the
preparation of financial statements or other data prepared by ▇▇▇▇▇▇▇▇,
(ii) any fees or expenses of legal counsel (other than the reasonable and
documented fees and expenses of one special counsel for all of the
Stockholders requesting Registrable Securities to be included in each
registration statement pursuant to Section 3.01 of the Retaining
Stockholders' Agreement and ▇▇▇▇▇▇▇▇, in the event that he requests
Registrable Securities to be included in each registration statement
pursuant to Section 3.01 hereof), financial advisor accountants or other
consultants or advisors engaged by ▇▇▇▇▇▇▇▇ and (iii) underwriting fee's,
discounts and commissions and applicable transfer taxes, if any,
applicable to the sale of Registrable Securities being registered by
▇▇▇▇▇▇▇▇ which shall be borne in all cases by ▇▇▇▇▇▇▇▇.
"Retaining Stockholders' Agreement" means the Stockholder
Agreement dated as of February 27, 1998 among Zilog, Inc, TPG Partners
II, L.P., TPG Investors II, L.P., TPG Parallel II, L.P., and Certain
Other Stockholders of ZiLOG, Inc.
"Rule 144 Sale" means a sale (other than a Rule 144(k) Sale)
pursuant to, and in compliance with, Rule 144 of the 1933 Act, as such
rule may be amended from time to time or any similar rule or regulation
enacted after the date of this Agreement.
"Rule 144(k) Sale" means a sale pursuant to, and in compliance
with, Rule 144(k) of the 1933 Act. as such rule may be amended from time
to time, or any similar provision, rule or regulation enacted after the
date of this Agreement which, upon compliance with its non-affiliate and
holding period requirements, terminates the volume, manner or other
restrictions set forth in Rule 144 of the 1933 Act.
"SEC" means the Securities and Exchange Commission.
"Shares" means all of the issued and outstanding shares of Common
Stock and Class A non-voting common stock, par value $.01 per share, of
the Company.
"Stockholder" means all the parties (other than the Company) to
the Retaining Stockholders' Agreement, as the same may be amended from.
time to time.
"Subsidiary " means, with respect to any Person, any other Person
of which a majority of the outstanding voting securities or ownership
interests is owned. directly or indirectly by such Person-
"Tag-Along-Notice" has the meaning ascribed to it in Section
2.04(a) hereof.
"Tag-Along Rights" means the rights of ▇▇▇▇▇▇▇▇ pursuant to
Section 2.04.
"TPG". has the meaning ascribed to it in the preamble hereto.
"TPG Partners" has the meaning ascribed to it in the preamble
hereto.
SECTION 1.02 Interpretation. For all purposes of this Agreement
except as otherwise expressly provided herein or unless the context
otherwise requires:
(a) the terms defined in this "Article" I or elsewhere in this
Agreement have the meanings assigned to them in this Article I or
elsewhere in this Agreement and include the plural as well as the
singular and vice-versa;
(b) words importing neuter or gender include all genders;
(c) any reference to an "Article". a "Section", an. "Exhibit" or a
"Schedule" refers to an Article, a Section, an Exhibit or a Schedule, as
the case may be, of this Agreement.
(d) all references to this Agreement and the words "herein",
"hereof", "hereto" and "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any one particular Article,
Section. Exhibit, Schedule or other subdivision:
(e) any references to agreements or contracts including this
Agreement similar such Agreement or contract together with all exhibits,
schedules, appendices and attachments thereto and as such agreements or
contracts may be amended, restated, supplemented or otherwise modified
from time to time: and
(f) the determination of whether a Person is a "beneficial
owner", has "beneficial ownership" or "beneficially owns" Shares or
any other securities shall be made in accordance with Rule 13d-3 of the
1934 Act.
ARTICLE II
TRANSFER RESTRICTIONS
SECTION 2.01 General Prohibition on Transfers of Securities.
▇▇▇▇▇▇▇▇ shall not directly or indirectly. sell, assign, pledge,
hypothecate, encumber or otherwise dispose (voluntarily or
involuntarily)) of any Shares or any interest therein beneficially owned
by him (all of which " shall be deemed included in. the term "transfer"
as used it this Agreement) unless (i) such transfer is expressly
permitted by, and made in compliance with the terms of Sections 2.03,
2.04. 2.05 or 3.01, or (ii) such transfer is made to a member of TPG or
one or more of TPG's Affiliates. Any transfer in violation of such
restrictions shall be void and ineffectual and shall not operate to
transfer any interest of title in the Shares so transferred to the
proposed transferee. If notwithstanding the immediately preceding
sentence, any such transfer is held by a court of competent jurisdiction
to be effective, then the provisions of this Agreement shall apply to the
transferee and to any subsequent transferee as fully as if such
transferee were a party hereto.
SECTION 2.02 Permitted Transfer by TPG. Each member of TPG may at
any time and from time to time after the Closing Date, transfer
(voluntarily or involuntarily) any Shares or any interest therein
beneficially owned by it to any Person (including any of its Affiliates)
free and clear of any restrictions set forth in this Agreement subject
only to the obligations of such member of TPG under the second sentence
of this Section 2.02 and under Section 2.04 of this Agreement. In the
event any member of TPG transfers any Shares or any interest therein
having beneficially owned by it to an Affiliate of TPG (a "TPG
Transferee"), then such member of TPG shall remain liable for such TPG
Transferees failure to perform its obligations under this Agreement with
respect to such transferred Shares such TPG Transferee shall take such
Shares such shares to all the provisions of this Agreement. and prior to
such transfer, such TPG Transferee shall (a) execute and deliver to the
Company (i) a written agreement satisfactory in substance and form to the
Company, assuming all of the obligations (including, without limitation
the obligations set forth in Section 2.04) of such member of TPG under
this Agreement with respect to such transferred Shares and (1i) such
other documents as may be reasonably necessary in the opinion of the
Company, to assume such obligations and (b) agree that it will not cease
to be = Affiliate of TPG unless prior to the time such TPG Transferee
ceases to be an Affiliate of TPG, such TPG Transferee transfer to such
member of TPG all Shares owned by such TPG Transferee.
SECTION 2.03 Permitted Transfers by ▇▇▇▇▇▇▇▇
(a) Notwithstanding the provisions of Section 2.01 and without
first offering his Shares to TPG as contemplated by Section 2.03(c),
▇▇▇▇▇▇▇▇ may transfer the Shares beneficially owned by him to a 100%
Affiliate of ▇▇▇▇▇▇▇▇; provided, that ▇▇▇▇▇▇▇▇ shall remain liable for
such 100% Affiliate's failure to perform its obligations under this
Agreement with respect to such transferred Shares, such 100% Affiliate
shall take such Shares subject to all the provisions of this Agreement,
and prior to such transfer such 100% Affiliate shall(I_ execute and
deliver to the Company and TPG(x) a written agreement, satisfactory in
substance and form to TPG, assuming all of the obligations (including,
without limitation, the obligations set forth in Section 2.05) of
▇▇▇▇▇▇▇▇ under this Agreement with respect to such transferred Shares and
(y) such other documents as may be reasonably necessary, in the opinion
of TPG, to assume such obligations, and (ii) agree that it will not cease
to be a 100% Affiliate of ▇▇▇▇▇▇▇▇ unless prior to the time such 100%
Affiliate ceases to be a 100% Affiliate of ▇▇▇▇▇▇▇▇, such 100% Affliate
transfers to ▇▇▇▇▇▇▇▇ all Shares owned by such 100% Affiliate.
(b) Notwithstanding the provisions of Section 2.01 and without
first offering his Shares to TPG as contemplated by Section 2.03(c).
▇▇▇▇▇▇▇▇ may pledge. hypothecate or encumber any Shares beneficially
owned by him to a financial institution: provided that pledgee (and any
subsequent transferee) agrees in writing to execute and deliver to the
Company and TPG (i) a written agreement satisfactory in substance and
form to TPG. assuming all of the obligations (including, without
limitation, the obligations set forth in Section 2.05) of ▇▇▇▇▇▇▇▇ under
this Agreement with respect to such Shares and (ii) such other documents
as may be reasonably necessary, in the opinion of TPG, to assume such
obligations.
(c) Notwithstanding the provisions of Section 2.01 but on the terms
and subject to the conditions set forth below in this Section 2.03(c)
(including the last sentence of this Section 2.03(c)), ▇▇▇▇▇▇▇▇ may transfer
all or a portion of his Shares to a third party pursuant to a Bona Fide
Offer. If ▇▇▇▇▇▇▇▇ desires to transfer all or a portion of the Shares owned
by him to a third party, ▇▇▇▇▇▇▇▇ shall give prompt written notice (a
"Notice of Offer") to the Company and TPG, which notice shall contain the
proposed purchase price for the Shares being offered, the proposed closing
date for such transfer, the number of Shares which ▇▇▇▇▇▇▇▇ proposes to
transfer and any other material term or condition of the transfer. If
▇▇▇▇▇▇▇▇ has received any written offer to purchase all or a portion of the
Shares owned by him, the "Notice of Offer "shall also contain a true and
complete copy of such offer. The date on which such notice is actually
received by the Company and TPG is referred, to hereinafter as the "Notice
Date." The Notice of Offer shall be deemed an irrevocable offer to sell to
TPG (or any Person designated by TPG) such Shares on the terms and
conditions set forth in the Notice of Offer. TPG shall have 20 days
following the Notice Date to notify ▇▇▇▇▇▇▇▇ in writing of its election to
purchase such Shares (or to have such Shares purchased by its designee). If
TPG notifies ▇▇▇▇▇▇▇▇ of its election to purchase such Shares, the closing
for such transaction shall take place in accordance with the terms of
Section 2.06 but in any event no earlier than 45 days from the date of the
Notice of Offer, provided that if the proposed transfer by ▇▇▇▇▇▇▇▇ to the
third party provides for the payment of non-cash consideration. TPG may in
its discretion, in lieu thereof, pay ▇▇▇▇▇▇▇▇ in cash the fair market value
of such non-cash consideration (which fair market value shall be determined
by TPG if ▇▇▇▇▇▇▇▇, in his sole discretion, agrees with such determination
or, in the absence of such agreement, by an independent investment bank
selected jointly by TPG and ▇▇▇▇▇▇▇▇ (or if there is no agreement as to the
selection of the independent investment bank, by an independent investment
bank selected by lot from among six such investment banks selected by TPG)).
If ▇▇▇▇▇▇▇▇ does not receive such written notice form TPG within the 20 day
period, TPG shall be deemed to have declined to purchase such Shares and
▇▇▇▇▇▇▇▇ may transfer all, but not less than all, of the Shares indicated in
the Notice of Offer upon the terms and conditions set forth therein:
provided that as a condition to such transfer, the transferee shall execute
and deliver to the Company and TPG (I) a written agreement, satisfactory in
substance and form to TPG, assuming all of the obligations ( including,
without limitation, the obligations set forth in Section 2.05) of ▇▇▇▇▇▇▇▇
under this Agreement with respect to such transferred Shares and (ii) such
other documents as may be reasonably necessary, in the opinion of TPG, to
assume such obligations; provided further that, if ▇▇▇▇▇▇▇▇ does not
complete the contemplated sale within 90 days of the Notice Date, the
provisions of this of Section 2.03(c) shall again apply, and no transfer of
Shares shall be made otherwise than in accordance with this Agreement.
Notwithstanding anything herein to the contrary, the terms and conditions of
this Section2.03(c) do not apply to transfers by ▇▇▇▇▇▇▇▇ pursuant to
Section 2.03(a), Section 2.03(b), 2.04,2.05, Section 3.01 or in connections
with any merger or business combination of the Company approved by the
Board.
SEC11ON 2.04 Tag-Along-Rights. (a) Notwithstanding the provisions
of Section 2.01 and without first offering its Shares to TPG as
contemplated by Section 2.03(c), in the event that at any time prior to
the completion of an initial public offering of any of the Shares (the
"Initial Public Offering"') TPG reaches a binding agreement with a Person
to sell all or a portion of its Shares that would result in any Person
(together with its Affiliates) unaffiliated with TPG holding 40% or more
of the voting power of the Company, TPG shall cause the prospective
purchaser ("Prospective Purchaser"), subject to the terms and conditions
set forth in this Section 2.04 and subject further to the terms and
conditions set forth in Section 2.05, which terms and conditions shall
control in the event that TPG is proposing to sell all of its shares of
Common Stock, to purchase from the Electing Stockholder (in lieu of
purchasing from TPG) that number of shares of Common Stock then owned by
the Electing Stockholder that equals the product of (1) the number of
shares of Common Stock then owned by the Electing Stockholder multiplied
by (2) a fraction, the numerator of which equals the number of shares of
Common Stock to be purchased by the Prospective Purchaser from TPG and
the denominator of which equals the total number of Shares of Common
Stock then owned by TPG (the "Applicable Amount"). TPG shall notify
▇▇▇▇▇▇▇▇ promptly in writing of any such binding agreement indicating the
price and other material terms and conditions of the proposed sale, the
identity of the Prospective Purchaser, the intended closing date of such
sale, the percentage of issued and outstanding shares of Common Stock
being sold by TPG and the Applicable Amount of shares of Common, Stock of
▇▇▇▇▇▇▇▇ that may be sold by ▇▇▇▇▇▇▇▇ pursuant: to this Section 2.04(a)
(the "Tag-Along Notice") and shall provide a copy of such binding
agreement to ▇▇▇▇▇▇▇▇. Any purchase, by the Prospective Purchaser of the
Applicable Amount of shares of Common Stock of the Electing Stockholder
shall be at the same consideration per share of Common Stock and on the
same terms and conditions as are applicable to TPG in such transaction.
▇▇▇▇▇▇▇▇ will have 20 days from receipt of the Tag-Along Notice (or any
amendment or supplement thereto) to notify TPG in writing of its election
to exercise its Tag-Along Rights (an "Election Notice") and to exercise
its Tag-Along Rights pursuant to this Section 2.04. In the event that
▇▇▇▇▇▇▇▇ notifies TPG in writing of its election to exercise Tag-Along
Rights within 20 days of the receipt of a Tag-Along Notice and ▇▇▇▇▇▇▇▇
subsequently receives an amendment or supplement to such Tag-Along Notice
from TPG. ▇▇▇▇▇▇▇▇ shall be able to withdraw his previously given
election to exercise Tag-Along Rights by giving written notice to TPG
within 20 days of the receipt of such amendment or supplement. In the
event TPG does not receive an Election Notice from ▇▇▇▇▇▇▇▇ within 20
days of receipt of the Tag-Along Notice (or any amendment or supplement
thereto), ▇▇▇▇▇▇▇▇ shall be deemed to have elected not to exercise his
Tag-Along Rights hereunder. Notwithstanding anything to the contrary
contained herein, (i) TPG shall not be obligated to cause it Prospective
Purchaser to purchase ▇▇▇▇▇▇▇▇'▇ shares of Common Stock hereunder if at
the time of such sale (but prior to giving effect thereto) TPG
beneficially owns less than 40% of the voting power of the Company and
(ii) TPG shall not be obligated to consummate the transfer of shares of
Common Stock contemplated by an agreement between TPG and a Prospective
Purchaser if, pursuant to the terms and conditions of such agreement TPG
is not obligated to do so and, in the event TPG elects not to consummate
a transfer which it is not obligated to consummate as provided in this
clause (ii), TPG shall have no liability to ▇▇▇▇▇▇▇▇.
(b)The closing of the sale of TPG's shares of Common Stock to the
Prospective Purchaser hereunder shall be conditioned on the simultaneous
purchase by the Prospective Purchaser of the Applicable Amount of shares
of Common Stock from the Electing Stockholder. Notwithstanding the
foregoing, in the event the Electing Stockholder breaches any obligation
he may have under this Section 2.04 or, in the event that any
representation and warranty of the Electing Stockholder contained in the
purchase agreement with the Prospective Purchaser is not true and correct
as of the date made or as of the proposed closing date or the Electing
Stockholder shall fail to perform any covenant or agreement contained in
such agreement or the Electing Stockholder shall otherwise breach its
obligations under such agreement and, in each case, such
misrepresentation breach or failure to perform such covenant or agreement
results in the nonsatisfaction of a condition precedent to such agreement
(and the Prospective Purchaser does not waive such condition precedent),
TPG shall be free to sell its Shares to the Prospective Purchaser without
liability to the Electing Stockholder under this Agreement and such sale
shall not limit or waive in any respect any claim, right or cause of
action that TPG may have against the Electing Stockholder in respect of
such breach.
SECTION 2.05 Drag-Along-Rights, Notwithstanding the provisions of
Section 2.01 and without first offering its shares of Common Stock to TPG as
contemplated by Section 2.03(c), if TPG executes a binding agreement to
transfer all of its shares of Common Stock to a Person
making a Bona Fide Offer, then ▇▇▇▇▇▇▇▇ shall transfer, subject to the
terms and conditions set forth below, at the sole election of TPG
(exercisable by delivery to ▇▇▇▇▇▇▇▇ of a copy of such binding agreement
and a Drag-Along Notice at least 20 days prior to the closing date
specified in such Notice), all his shares of Common Stock to such Person;
provided that (I) ▇▇▇▇▇▇▇▇ shall receive from such Person the same per
share consideration to be paid to TPG in such transaction, (ii) the
consideration received in such transaction shall be the same as the
consideration to be paid to TPG in such transaction and (iii) the closing
of any transaction effected pursuant to this Section 2.05 shall be
conditioned on the simultaneous purchase of TPG's shares of Common Stock:
and provided, further, that ▇▇▇▇▇▇▇▇ shall not be obligated to transfer
his shares of Common Stock pursuant to this Section 2.05 if at the time
of TPG's transfer pursuant to such agreement (prior to giving effect
thereto) TPG beneficially owns less than 40% of the voting power of the
Company. Notwithstanding the foregoing, in the event ▇▇▇▇▇▇▇▇ breaches
his obligations under this Section 2.05 or, in the event that any
misrepresentation and warranty of ▇▇▇▇▇▇▇▇ contained in the purchase
agreement with the Person making the Bona Fide Offer is not true and
correct as of the date make or as of the proposed closing date or
▇▇▇▇▇▇▇▇ shall fail to perform any covenant or agreement results in the
nonsatisfaction of a condition precedent to such agreement (and the
Person making the Bona Fide Offer does not waive such condition
precedent). TPG shall be free to sell its shares of Common Stock to such
Person without liability to ▇▇▇▇▇▇▇▇ under this Agreement and such sale
shall not limit or waive in any respect any claim, right or cause of
action that TPG may have against ▇▇▇▇▇▇▇▇ in respect of such breach.
SECTION 2.06 Transfer Costs, Closing
In the event ▇▇▇▇▇▇▇▇ receives a Tag-Along Notice or Drag-Along
Notice pursuant to Section 2.04 or 2.05, as the case may be. ▇▇▇▇▇▇▇▇
agrees to use his commercially reasonable efforts. in good faith and in a
timely matter, to take, or cause to be taken, all actions and to do, or
cause to be done, all things reasonably necessary, proper or advisable,
under applicable laws and regulations (including, without limitation, to
ensure that all appropriate legal and other requirements are met and all
consents of third Persons are obtained, in each case, with respect to the
transfer by ▇▇▇▇▇▇▇▇), to consummate the proposed transactions
contemplated by Section 2.04 or 2.05, as the case may be. All reasonable
costs and expenses incurred by ▇▇▇▇▇▇▇▇ in connection with a transfer
made pursuant to Section 2.04 or 2.05 (including, without limitation, all
costs and disbursements, finders' fees or brokerage commissions, and
disbursements of counsel), or to be paid by ▇▇▇▇▇▇▇▇ as provided for in
the relevant purchase agreement. Shall be borne by ▇▇▇▇▇▇▇▇.
(b) The closing of any transfer of Shares pursuant to Section
2.03(c), 2.04 or 2.05 shall take place at the offices of the Company (or
at such other place as the participants shall mutually agree upon.) not
later than 90 days form the receipt by TPG of a Notice of Offer or from
the receipt by ▇▇▇▇▇▇▇▇ of the Tag-Along Notice or the Drag-Along
Notice, as the case my be (subject to the expiration of any waiting
period under the HSR Act and the other terms and conditions provided in
the underlying purchase agreement). At such closing, the purchaser shall
pay the purchase price for such Shares, in the form and in the manner
provided for in the underlying purchase agreement, against delivery by
the transferors of the Shares to be transferred. Free and clear of all
liens , security interests or adverse claims of any kind and nature
except as otherwise provided for in this Agreement, duly endorsed or
accompanied by duly executed documents of transfer, in each case with
signatures guaranteed by a signature guarantor reasonably acceptable to
the purchaser, and with any required stock transfer tax stamp
SECTION 2.07 Restrictive Legend. Each certificate evidencing
Shares shall contain the following restrictive legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE TERMS OF A STOCKHOLDERS' AGREEMENT DATED AS OF AUGUST 7, 1998
AND MAY BE VOTED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF ONLY
IN ACCORDANCE WITH SUCH AGREEMENT.
ARTICLE III
PIGGY BACK REGISTRATION
SECTION 3.01 Piggy Back Registration.
(a) If the Company. at any time. proposes to register any of its
equity securities (or securities convertible into equity securities)
under the 1933 Act (other than by registration on a Form S-4 or ▇▇▇▇, ▇-▇
or any successor or similar form then in effect), whether or not for sale
for its own account, on a form and in a manner which would permit
registration of Registrable Securities for sale, each such time it shall
give prompt written notice to ▇▇▇▇▇▇▇▇ of its intention to do so,
describing such securities and specifying the form and manner and the
other relevant facts involved in such proposed registration, and upon the
written request of ▇▇▇▇▇▇▇▇ delivered to the Company within 30 days after
the giving of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by ▇▇▇▇▇▇▇▇ and the
intended method of disposition thereof), the Company shall use its
reasonable best efforts to effect the registration under the 1933 Act of
all Registrable Securities which the Company has been so requested to
register by ▇▇▇▇▇▇▇▇, to the extent required to permit the disposition (
in accordance with the intended methods thereof as aforesaid) of the
Registrable Securities so the be registered, provided that:
(i) if, at any time after giving such written notice of
its intention to register any of its securities and prior to
the effective date of the registration statement filed in
connection with such registration, the Company shall
determine foe any reason not to register or delay the
registration of such securities, the Company may, at its
election, give written notice of such determination not to
register, shall be relieved of its obligation to register any
registrable Securities in connection with such registration,
and (B) in the case of a determination to delay registering,
shall be permitted to delay registering any Registrable
Securities for the same period as the delay in registering
such other securities.
(ii) if (A) the registration so proposed by the Company
involves an underwritten offering of the securities so being
registered, whether or not for sale for the account of the
Company, to be distributed (on a firm commitment basis) by or
through one or more underwriters under underwriting terms
appropriate for such transaction and (B) the managing
underwriter of such underwritten offering shall advise the
Company, and/ or the party on whose behalf the securities are
being registered, that, in its opinion, the distribution of
all or a specified portion of such Registrable Securities
concurrently with the securities being distributed by such
underwriters, then the Company shall promptly furnish
▇▇▇▇▇▇▇▇ accompanying such opinion, the registration of all
or a specified portion of such Registrable Securities (in
case of a denial as to a portion of such Registrable
Securities, such portion to be that number of Registrable
Securities that equals the product of (1) the number of
Registrable Securities requested by ▇▇▇▇▇▇▇▇ pursuant to this
Section3.01 multiplied by (2) a fraction, the numerator of
which equals the number of Registrable Securities to be
registered on behalf of the Stockholders by the Company
pursuant to Section 3.01 of the Retaining Stockholders'
Agreement); and
(iii) ▇▇▇▇▇▇▇▇ shall be permitted to withdraw all or
part of such Registrable Securities requested pursuant to
this Section 3.01 at any time prior to the effective date of
such registration; provided that in the event of a withdrawal
from a registration, any fees and disbursements incurred by
▇▇▇▇▇▇▇▇ requesting withdrawal in connection with such
registration shall be paid by ▇▇▇▇▇▇▇▇.
(iv) The Company shall not be obligated to effect any
registration of Registrable Securities under this Section
3.01.(A) in connection with any merger, acquisition, exchange
offer, recapitalization, or consolidation of the Company or
any of its Subsidiaries or the adoption or implementation of
any dividend reinvestment plan, stock options or other
employee benefit plan or (B) in connection with and Initial
Public Offering unless the Company permits any Stockholder to
participate in such Initial Public Offering, in which case,
▇▇▇▇▇▇▇▇ shall be allowed to participate in such offering ,
and the Company shall be obligated to give prompt written
notice to ▇▇▇▇▇▇▇▇ of his right to do so.
(v) ▇▇▇▇▇▇▇▇ will, if requested by the underwriters for
an underwritten public offering of equity securities of the
Company, agree not to sell or transfer any equity securities
of the Company (other than equity securities, if any,
included in such offering), without the consent of the
underwriters, for a period of not more than 180 days
following effectiveness of the registration statement
relating to such public offering.
(b) In connection with the preparation and filing of each
registration statement under the 1933 Act pursuant to which
Registrable Securities will be registered, the Company will hive
(I) ▇▇▇▇▇▇▇▇, if he beneficially owns in excess of 5% of the shares
of Common Stock then outstanding, to be registered under such
registration statement, (ii) his underwriters, if any, and (iii)
his respective counsel and accountants such reasonable access to
its books and records and such opportunities to discuss the
business of the Company woth its officers and the independent
public accountants who have certified its financial statemnets as
shall be necessary , in the opinion of ▇▇▇▇▇▇▇▇'▇ and such
underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the 1933 Act.
(c) Subject to Section 3.01 (a)(iii), the Company shall pay
all Registration Expenses in connection with each registration of
Registrable Securities requested to be registered pursuant to the
Section 3.01(including Registration expenses incurred in connection
with registration efforts which are terminated in accordance with
Section 3.01(a)(1) hereof). All other costs and expenses shall be
borne by ▇▇▇▇▇▇▇▇.
SECTION 3.02 Registration Procedures.
(a) In connection with the registration of any Registrable
Securities under the 1933 Act as provided in Section 3.01, the
Company shall as soon as pracitcable:
(i) prepare and file with the SEC a registration
statement with respect to such Registrable Securititres and
use its reasonable best offers to cause such registration
statement to become effective:
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the
provisions of the 1933 Act with respect to the disposition
of all Registrable Securities covered by such registration
gtatement until the earlier of such time as all of such
Registrable Securities have been disposed of in accordance
with the intended methods of disposition by ▇▇▇▇▇▇▇▇, thereof
set forth in such registration statement or the expiration of
six (6) months after such registrations statement becomes
effective;
(iii) furnish ▇▇▇▇▇▇▇▇ with such number of conformed
copies of such registration statement and of each such
amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus included
in such registration statement (including each preliminary
prospectus and any summary prospectus), in conformity with
the requirements of the 1933 Act, such documents incorporated
by reference in such registration statement or such documents
incorporated by reference in such registration statement or
prospectus, and other such documents, as ▇▇▇▇▇▇▇▇ may
reasonably request in order to facilitate the disposition of
the Registrable Securities being sold by him:
(iv) use its reasonable best effort to register or
qualify all Registrable Securities covered by such
registration statement under such other securities or blue
sky laws of such jurisdictions as ▇▇▇▇▇▇▇▇ shall reasonably
request, and do any and all other acts and things which may
be reasonably request, and do any and all other acts and
thing which may be reasonably necessary or advisable to
enable ▇▇▇▇▇▇▇▇ to consummate the disposition in such
jurisdictions of its Registrable Securities covered by such
registration statement. Except that the Company shall not for
any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein
it is not so qualified or subject itself to taxation in any
such jurisdiction or to consent to general service of process
in any such jurisdiction;
(v) use its best efforts to furnish to ▇▇▇▇▇▇▇▇, in the
event he is the holder of at least twenty-five percent (25%)
of the Registrable Securities covered by the registration
statement, upon his request, a signed counterpart, addressed
to ▇▇▇▇▇▇▇▇, of an opinion of counsel for the Company, dated
the effective date of such registration statement (or, if
such registration includes and underwritten public offering,
dated the date of the closing under the underwriting
agreement speaking both as of the effective date of the
registration statement and the date of the closing under the
underwriting agreement) covering substantially the same
matters with respect to such registration statement (and the
prospectus included therein) as are customarily covered in
opinions of issuer's counsel:
(vi) use its reasonable best efforts to obtain a "cold
comfort" letter from the Company's independent public
accountant in customary form and covering such ▇▇▇▇▇▇ of the
type customarily covered by "cold comfort" letters as
▇▇▇▇▇▇▇▇, in the event he is the holder of a majority of the
Registrable Securities covered by the registration statement,
may request:
(vii) promptly notify ▇▇▇▇▇▇▇▇, in the event his is the
holder of Registrable Securities covered by such registration
statement, at any time when a prospectus relating thereto is
required to be delivered under the 1933 Act, of the happening
of any event known to the Company as a result of which the
prospectus included in such registration statement, as then
in effect, included and untrue statement of a material fact
or omits to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing,
and at the request of ▇▇▇▇▇▇▇▇ prepare and furnish to
▇▇▇▇▇▇▇▇ a reasonable number of copies of a supplement to or
an amendment of such prospectus as may ne necessary so that,
as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall not include and untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading in the light of the
circumstances existing:
(viii) otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the SEC,
and generally make available to ▇▇▇▇▇▇▇▇ an earnings
statement satisfying the provisions of Section11(a) of the
1933 Act and Rule 158 under the 1933 Act not later than
eighteen (18) months after the effective date of such
registration: and
(ix) use its reasonable best efforts to (A) list the
Registrable Securities covered by such registration statement
on any securities exchange on which any of the Shares is then
listed, if any, or (B) have authorized for quotation and/ or
listing, as the applicable, on the National Association of
Securities Dealers, Inc. Automated Quotation ("NASDAQ") or
the National Market System of NASDAQ if the Registrable
Securities so qualify; in each case subject to the applicable
listing requirements of the respective securities exchange or
NASDAQ.
The Company may require, as a condition to his participation in the
registration, ▇▇▇▇▇▇▇▇ (I) to furnish the Company with such information
regarding ▇▇▇▇▇▇▇▇ and the distribution of such Registrable Securities as
the Company may from time to time reasonably request or as shall be
required by law (including, without limitation, any applicable state
securities law) or by the SEC in connection therewith and (ii) to enter
into a holdback agreement on customary terms and conditions.
(b) If the securities proposed to be registered are to be
distributed by or through one or more underwriters, the managing
underwriter shall be selected by the Company or the Person (other than
▇▇▇▇▇▇▇▇) on whose behalf the securities were initially requested to be
registered.
SECTION 3.03 Indemnification: Contribution
(a) In the event of any registration of any Registrable Securities
under the 1933 Act, the Company shall indemnify and hold
harmless (I) in the case of any registration statement
(including any related notification or document incident to such
registration statement) filed pursuant to Section 3.01,
▇▇▇▇▇▇▇▇, in the event he is the seller of any Registrable
Securities covered by such registrations statement, each officer
and director of each underwriter, each other Person who
participates as an underwriter in the offering or sale of such
Registrable Securities and each other Person, if any, who
controls any such underwriter, within the meaning of the 1933
Act, against any losses, claims, damages, liabilities and
expenses (including reasonable fees and expenses incurred in
connection with enforcing the provisions of this Section
3.03(a)), joint or several, to which any such indemnified party
may become subject under the 1933 Act or otherwise, insofar as
such losses, claims, damages, liabilities and expenses (or
actions or proceedings in respect thereof) arise out of or are
based upon (x) any untrue statement or alleged untrue statement
of any material fact contained in any registration statement
under which such Registrable Securities were registered under
the 1933 Act, any preliminary prospectus (unless any such
statement is corrected in a subsequent prospectus and the
underwriters are given the opportunity to circulate the
corrected prospectus to all persons receiving the preliminary
prospectus), final prospectus or summary prospectus included
therein, or any amendment or supplement thereto, or any document
incorporated by reference therein, or (y) any omission or
alleged omission to state the therein a material fact required
to be stated therein or necessary to make the statements therein
not misleading, and the Company will reimburse such indemnified
parties for any legal or any other expenses reasonably incurred
by them in connection with investigating or defending any such
loss, claim, liability, action or proceeding; provided that the
Company shall not be liable in any such case and shall not
indemnify any Person to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof)
or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in
any such registration statement, preliminary prospectus, final
prospectus summary prospectus, amendment or supplement or
document incorporated by reference based upon written
information furnished by such Person to the Company for use in
the preparation thereof. Such indemnity shall remain in full
force and effect regardless of any investigation make by or on
behalf of such indemnified parties and shall survive the
transfer of such securities by such seller. The Company shall
agree to provide for contribution relating to such indemnity
pursuant to Section 3.03(b) below.
(c) The Company may require, as a condition to including
any Registrable Securities in any registration statement filed
pursuant to Section 3.02(a), that the Company shall have
received an undertaking satisfactory to it from ▇▇▇▇▇▇▇▇ and his
underwriters, to indemnify and hold harmless, and to provide for
contribution (in the same manner and to the same extent as set
forth in subdivisions (a) and (b) of this Section 3.03), the
Company, each director of the Company, each officer of the
Company who shall sign such registration statement and each
other Person, of any, who controls the Company within the
meaning of the 1933 Act, with respect to any untrue statement,
or alleged untrue statement, or omission, or alleged omission,
made in such registration statement, any preliminary prospectus,
final prospectus or summary prospectus included therein, or any
amendment or supplement thereto, or any document incorporated by
reference therein , if such untrue statement, or alleged untrue
statement, or omission, or alleged omission, was based upon
written information furnished by any such prospective sellers or
their underwriters to the Company for use in the preparation of
such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement or
document incorporated by reference. Such indemnity shall remain
in full force and effect regardless of any investigation make by
or on behalf of the Company or any such director, officer, or
controlling Person and shall survive the transfer of such
securities by ▇▇▇▇▇▇▇▇.
(d) Promptly after receipt by an indemnified party of written notice of
the commencement of any action or proceeding involving a claim referred to
in the preceding subdivisions of this Section 3.03, such indemnified party
shall, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement of such action:
provided that the failure of any indemnified to give notice as provided
herein shall not relieve the indemnifying party of its obligations under the
preceding subdivisions of his Section 3.03 except to the extent that the
indemnifying party's liabilities and obligations under this Section3.03 are
prejudiced as a result of such failure to give notice. In case any such
action is brought against an indemnified party, the indemnifying party shall
be entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified, to the extent that it
may wish, with counsel reasonably satisfactory to such satisfied party.
After notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not
be liable to such indemnified party for any legal or other expenses
subsequently incurred by the latter in connection with the defense thereof
unless (i) the indemnifying party shall have failed to retain counsel for
the indemnified party as aforesaid, (ii) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such
counsel or (iii) representation of such indemnified party by the counsel in
such proceeding. No indemnifying party will consent to entry of any
judgement or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim
or litigation.
ARTICLE IV
MISCELLANEOUS PROVISIONS
SECTION 4.01 Transactions with Affiliates. All transaction
between the Company and any member of TPG or any Affiliate of TPG shall
require the prior approval of the holders of a majority of Common Stock
(excluding stock held by TPG and its Affiliates) other than agreements or
transactions which are on arms-length terms or consulting fees with terms
which are customary as between TPG and its portfolio companies.
SECTION 4.02 Amendment . This Agreement may be altered or
amended only with the written consent of the Company., TPG and ▇▇▇▇▇▇▇▇.
Any provision of this Agreement which is prohibited or unenforceable
shall be ineffective to the extent of such prohibition or
unenforceability without affecting the validity or enforceability of the
remaining provisions hereof.
SECTION 4.03 Specific Performance. The parties hereto agree
that the obligations imposed on them in this Agreement are special,
unique and of an extraordinary character, and that in the event of breach
by any party damages would not be an adequate remedy, and each of the
other parties shall be entitled to specific performance and injunctive
and other equitable relief in addition to any other remedy to which it
may be entitled, at law or in equity; and the parties hereto further
agree to waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such injunctive or other equitable
relief.
SECTION 4.04 Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and permitted assignees of the parties hereto; provided that
except as expressly permitted or required elsewhere in this Agreement, the
rights and obligations of the parties hereto may not be assigned without the
prior written consent of all of the other parties. Notwithstanding the
foregoing, TPG may assign its rights under this Agreement to any trasferee
of its Shares other than a transferee pursuant to Article III or pursuant to
a Rule 144 or rule 144(k) Sale and (ii) ▇▇▇▇▇▇▇▇ may assign any of his
rights hereunder to any transferee of his Shares pursuant to Section 2.03.
Any party to, or Person who is subject to, this Agreement, upon ceasing to
own Shares or any interest therein, shall thereafter have no tights or
obligations hereunder except as expressly provided for elsewhere in this
Agreement, included without limitation, Section 2.03(a) and Section 3.03.
SECTION 4.05 Shares Subject to this Agreement. All Shares of the
Company (or any successor thereto) beneficially owned or hereafter
acquired by ▇▇▇▇▇▇▇▇. TPG or any of their respective Affiliates shall be
subject to the terms of this Agreement. Any Shares acquired in the open
market or pursuant to a public offering or a Rule 144 or Rule 144(k)
Sale shall not be subject to this Agreement.
SECTION 4.06 Notices. All notices, statements. instructions or
other documents provided for herein shall be in writing and shall be
delivered either personally or by mailing the same in a sealed envelope,
first-class mail, postage prepaid and either certified or registered,
return receipt requested or by mailing (as set forth above) and
transmitting by facsimile a copy of such writing, addressed as follows:
(a) if to TPG. to:
TPG Partners II. L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a Copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇. ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention; ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ & Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Compaty, to:
Zilog, Inc.Suite 110
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention; ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇. Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Pillsbury Madison & Sutro LLP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇. ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇. Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇. ▇▇ ▇▇▇▇▇
with a Copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Esq.
Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
Twenty-Ninth Floor
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇. ▇▇ ▇▇▇▇▇-▇▇▇▇
Each party. by written notice given, to the other parties in accordance
with this Section 4.06, may change the address to which notices,
statements , instructions or other documents are to be sent to such
party. Except as otherwise provided herein, all notices, statements,
instructions and other documents hereunder shall be deemed to have been
given on the earlier of the date of actual delivery and 3 days after the
date of mailing, except that notice of a change of address shall be
effective only upon actual delivery.
SECTION 4.07 Complete Agreement: Counterparts. This Agreement,
together with the Employment Agreement dated as of March 1, 1998
between the Company and ▇▇▇▇▇▇▇▇. constitutes the entire agreement among
the parties hereto or any of them with respect to the matters referred to
herein as they relate to the parties hereto . This Agreement may be
executed by the parties hereto in any number of counterparts, each of
which shall be deemed to be an original, but all of which shall together
constitute one and the same instrument.
SECT10N 4.08 1= Term of the Agreement. Unless this Section 4.08 is
amended in accordance with the provisions of Section 4.02 hereof, this
Agreement shall expire on February 27. 2006; provided that the provisions
of Article III of this Agreement shall expire upon the earlier of
February 27. 2006 and the completion of the Initial Public Offering;
provided further that the provisions of Article III of this Agreement
shall expire on February 27, 2013.
SECTION 4.09 Headings. The section headings herein are of
convenience of reference only and in no way define, limit or extend the
scope or intent of this Agreement or any provisions hereof.
SECTION 4.10 Choice of Law. This Agreement shall be governed by. And
construed in accordance with, the laws of the State of Delaware (without
regard to principles of conflicts of law). The parties agree that any
service of process to be made hereunder may be made by certified mail,
return receipt rquested, addressed to the party at the address appearing in
Section 4.06 together with a copy to be delivered to such party's attorneys
as provided in Section 4.06 The partied consent and agree that the state or
federal courts located in Delaware shall have jurisdiction to hear and
determine any claims or disputes pertaining to this Agreement or to any
matter arising out of or related to this Agreement and each party waives any
objection that it may have based upon lack of personal jurisdiction,
improper venue or forum non conveniens and hereby consents to the granting
of such legal or equitable relief as is deemed appropriate by such court.
SECTION 4.11 Consent by TPG Any provision of this Agreement that
requires any consent, agreement, waiver, designation or other
determination or decision of TPG shall require, and shall be deemed to
have been given or made upon, the consent, agreement, waiver,
designation or other determination or decision of TPG Partners.
SECTION 4.12 Effectiveness of Agreement. This Agreement shall be
effective upon execution by all parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
TPG PARTNERS 11, L.P"
By TPGenParII, L.P., General Partner
By TPG Advisors II, Inc., General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Title: Vice President
TPG INVESTORS II, L.P.
By TPG GenPAR II, L.P., General Partner
By TPG Advisors II, Inc., General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Title: Vice President
TPG Parallel II, L.P.
By TPG Advisors II, Inc., General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Title: Vice President
ZILOG. INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Title: Board Member
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
(signature)
SCHEDULE I
SCHEDULE OF RETAINING STOCKHOLDERS
EXHIBIT "B"
All stock received by the Employee under Section 2(e) and all
options to purchase stock provided by Section 2(g) shall be subject to the
following antidilution provisions.
1. The number of shares of stock of the Employer which am at
any time subject to options held by the Employee, and the exercise prices
for such options, shall be adjusted proportionately in the event of any
stock split, combination, exchange or recapitalization. having a similar
effect.
2. If the Employer issues any common voting stock of the
Employer for a Per share price less than the per share exercise price
applicable to any shares of voting common stock subject to any options
held by the Employee. the exercise price for those shares of stock shall
be automatically reduced to that lower per shares exercise price;
provided that the $40 Option shall only be reduced by the mount by which
the exercise price of the S20 Option exceeds the option price at which
the Employer issues such voting Stock. This paragraph shall not be
applicable to: (i) a proportionate dividend to the holders of the Voting
Stock; (ii) the bona fide offer and sale of Voting Stock in a Public
Offering, or in a non-public offering to a person or persons who are not
affiliated with my then existing shareholder of the Employer, or (iii)
the bona fide offer and sale of Voting Stock in an acquisition or similar
transaction by the Employer unless a Person or Persons affiliated with
then existing shareholders of the Employer have a substantial interest,
directly or indirectly, in other entities involved m such acquisition or
other transaction.
3. The Employee shall have a fight of first refusal to
participate on a proportional basis (according to his fully diluted
percentage interest W the Employer) in any offering of capital stock by
the Employer that has greater voting rights than the voting common stock
to which the Employee is entitled pursuant to Section 2(e).
