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EXHIBIT 99.9
[TRANSITION ANALYSIS COMPONENT TECHNOLOGY, INC. LETTERHEAD]
September 22, 1997
Xxxx Xxxxxx
0000 Xxxxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Re: Option to Purchase Shares of Common Stock of Transition
Analysis Component Technology, Inc. (the "Company" or "TACTech")
Dear Xx. Xxxxxx:
Reference is made to the Company, its issued and outstanding shares of
Common Stock, $.01 Company's agreement to grant to you an option to purchase
from the Company up to 22,452 shares of Common Stock (the "Option"). The Option
shall be on the terms set forth in this letter agreement and the grant of the
Option shall be made in consideration for the terms and covenants set forth
herein.
1. Agreement to Grant Options. The Company hereby grants the Option to you
in consideration for your exchange of shares of common stock of Research
Analysis Corporation for shares of Common Stock pursuant to the agreement by
and among Research Analysis Corporation, you, Xxxxx X. Xxxxxxxxx, Research
Technology Analysis Corp., and the Company of even date herewith, and other
good and valuable consideration, the receipt of which is hereby acknowledged.
2. Terms of Options. The Options shall have the following terms:
(a) Exercise Date. Subject to the limitations on vesting set forth
below, the Option may be exercised by you in whole or in part at any time after
the date hereof and prior to 5:00 p.m. New York City time on September 22, 2002
(the "Termination Date").
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(b) Exercise Price. The exercise price payable in respect of the
Option shall equal $3.00 per share (the "Exercise Price").
(c) Exercise of Option. You may exercise the Option with respect to
all or any part of the shares then exercisable under the Option by giving the
Company written notice, as provided below, of such exercise. Such notice shall
specify the number of shares as to which the Option is being exercised and
shall be accompanied by payment in cash of an amount equal to the aggregate
Exercise Price of such shares. Such Exercise Price shall be paid in full upon
the exercise of the Option (or any portion thereof). If exercised in part, the
Option shall remain exercisable with respect to the shares of Common Stock as
to which the Option was not exercised, subject to expiration on the Termination
Date and as otherwise provided herein. As soon as practicable after receipt of
the notice and payment referred to above, the Company shall deliver to you at
the office of the Secretary of the Company, or at such other place as may be
mutually acceptable to the Company and you, a certificate or certificates
representing such shares; provided, however, that the time of such delivery may
be postponed by the Company for such period of time as the Company may require
to comply with any applicable registration requirements of any national
securities exchange and/or other law or regulation applicable to the issuance
or transfer of the subject shares. If you fail for any reason to accept
delivery of all or any part of the number of shares specified in such notice
upon tender of delivery thereof, your right to purchase such undelivered shares
may be terminated by the Company by notice to you and refund to you of your
payment of the aggregate Exercise Price therefor. Prior to or concurrently with
the delivery by the Company to you of a certificate(s) representing such
shares, you shall (i) upon notification of the amount due, pay to the Company
promptly any amount necessary to satisfy applicable federal, state or local tax
withholding requirements imposed on the Company, and (ii) if such shares are not
then registered under the Securities Act of 1933, as amended, give assurance
satisfactory to the Company that such shares are being purchased for investment
and not with a view to the distribution thereof, and you shall give such other
assurance and take such other action as the Company shall require to secure
compliance with any federal or state securities law applicable to the issuance
of the subject shares; provided that out-of-pocket expenses of such
registration or compliance shall be borne by the Company.
(d) Vesting Limitations. The Option (and any portion thereof) may not be
exercised until it has been vested in accordance with the terms of this letter
agreement. The Option shall vest as follows:
On each of the first three anniversaries of the date hereof (each an
"Anniversary Date"), that portion of your Option to purchase "X" shares of
Common Stock shall vest where "X" equals the product of (A) 7,484 and (B) a
fraction the numerator of which is the lesser of (i) the applicable Target (as
defined below) for such period and (ii) the amount of "Net Revenues" for the 12-
month period immediately preceding such Anniversary Date, and the denominator
of which is the applicable Target for such period. Notwithstanding the
foregoing, no portion of this Option shall vest on such Anniversary Date if Net
Revenues for the 12-month period immediately preceding such Anniversary Date
were less than 80% of the applicable Target (such 80%
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amount, the "Minimum Target"). To the extent this Option does not vest on an
Anniversary Date, the unvested portion of this Option shall automatically
expire and cannot vest after such Anniversary Date. To the extent that Options
do not vest on an Anniversary Date, such Options shall automatically expire and
cannot vest after such Anniversary Date. To the extent that the Minimum Target
is exceeded for any such 12-month period (an "Achieved Year"), such excess
shall be carried forward and added to the 12-month period immediately following
such Achieved Year if (and only if) the Net Revenues achieved in such following
12-month period exceed 120% of the Net Revenues achieved in the Achieved Year.
For purposes hereof, "Net Revenues" means TACTech's gross revenues less any
rebates or credits given by TACTech to any of its customers for sales booked
after the Closing. "Net Revenues" shall be determined by TACTech's chief
financial officer calculated in accordance with GAAP on a consolidated basis.
Such determination shall be final and binding, absent manifest error. TACTech
shall use its commercially reasonable efforts to furnish the optionees with
written evidence of the determination of "Net Revenues" required in order to
determine an applicable Target within 135 days after the end of each applicable
Anniversary Date. For purposes hereof, "Target" in respect of an Anniversary
Date means the amount of Net Revenues for the corresponding 12-month period set
forth below:
12 months 12 months 12 months
immediately preceding immediately preceding immediately preceding
First Anniversary Date Second Anniversary Date Third Anniversary Date
---------------------- ----------------------- ----------------------
Target - $3,780,000 Target - $5,280,000 target - $7,400,000
3. Termination of Option: Exercise of Option upon Termination of Employment
(a) If your employment with the Company shall be terminated by the
Company for cause (as defined in your Employment Agreement with the Company) or
you resign from your employment, (i) any vested portion of this Option must be
exercised within two (2) business days following such termination or resignation
and (ii) after such two business day period, this Option shall forthwith
terminate.
(b) If you shall die or become permanently and totally disabled within
the meaning of Section 22(e)(iii) of the Internal Revenue Code of 1986, as
amended, the Option may be exercised as set forth herein by your guardian or
legal representative; provided that the Option shall be exercisable only (i)
during the three month period commencing with the Anniversary Date immediately
following such death or disability and (ii) with respect to the portion of the
Option which is vested and exercisable pursuant to Sections 2(c) and 2(d) above
on such Anniversary Date.
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(c) If you are terminated without cause, your Option may be exercised at
any time according and subject to the other terms and conditions of this Option.
4. Acceleration of Vesting. Notwithstanding anything to the contrary set
forth in Section 2(d) above, in the event of a (a) dissolution or liquidation of
the Company, or the merger or consolidation of the Company (in which the Company
is not the surviving entity), (b) the sale of all or substantially all of the
assets of the Company, (c) a sale to the public in an underwritten offering
(which shall not include the spinoff of all Common Stock owned by Zing
Technologies, Inc. to the extent such spinoff occurs on or after the date
hereof) pursuant to an effective registration statement under the Securities Act
of 1933, as amended, of shares of TACTech owned by an Affiliate (as defined
under the Securities Act of 1933, as amended) of TACTech (other than you or Xx.
Xxxxx X. Xxxxxxxxx), provided that this paragraph (c) shall not result in
accelerated vesting if Xxx Xxxx, Xxxxxx Xxxxxxxx or another Affiliate of TACTech
does not participate as a selling shareholder in the offering; (d) the
acquisition of 80% or more of the issued and outstanding shares of Common Stock
by a Person, group of Persons or their Affiliates other than Xxxxxx X. Xxxxxxxx,
a family member of Xxxxxx X. Xxxxxxxx or an Affiliate of either such Person, or
(e) if your employment with TACTech shall be terminated by TACTech without
cause, then the previously unvested portion of the Option, if any, shall become
vested as of the time immediately preceding such event; provided that in no
event shall any portion of this Option which did not vest as a result of the
failure to achieve an applicable Target or a Minimum Target become vested
pursuant to this Section 4. "Affiliate" shall mean, with respect to any person
or entity (a "Person"), any other Person who, directly or indirectly, controls,
is controlled by or under common control with the subject Person. For the
purposes of the preceding sentence the word "control" (including the terms
"controlling", "controlled by" and "under common control with") shall mean the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise.
5. Assignment. Your rights under this letter agreement shall not be
assignable (other than by will or the laws of descent and distribution) by you
without the prior written consent of the Company, and any purported assignment
in contravention of this Section 6 shall be null and void and of no effect.
6. Counterparts. This letter agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.
7. Choice of Law. This letter agreement shall be governed by and construed
in accordance with the laws of the State of Delaware without regard to such
State's conflicts of law principles.
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8. Amendments; Waivers. This letter agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms or covenants hereof
may be waived, only by a written instrument executed by the parties hereto, or
in the case of a waiver, by the party waiving compliance. The failure of any
party at any time or times to require performance of any provision hereof shall
in no manner affect its right at a later time to enforce the same. No waiver by
any party of the breach of any term or covenant contained in this letter
agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be, or construed as, a further or continuing waiver of any breach,
or a waiver of the breach of any other term or covenant contained herein.
9. Notices. Any notice to the Company provided for in this letter
agreement shall be addressed to the Company in care of its Secretary, 00000
Xxxx Xxxxx Xxxxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 with copy to Xx. Xxxxxx Xxxxx
c/o Zing Technologies, Inc., 000 Xxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000, and
any notice to you shall be addressed to you at your address now on file with
the Company, or such other address as either party may have informed the other
by notice herein provided. Any notice so addressed shall be deemed to be given
on the fourth business day after mailing, by registered or certified mail,
return receipt requested, at a post office or branch post office within the
United States.
10. Adjustments. In the event of any change in the Common Stock subject
to this Option, by reason of any stock dividend, split-up, recapitalization,
merger, consolidation, combination or exchange of shares, spinoff,
reorganization, liquidation or the like, such adjustment shall be made in the
number of shares of Common Stock subject to this Option and the Exercise Price
to give proper effect to such event. Such adjustment shall be made by the
Company which, absent manifest error, shall be binding upon the parties hereto.
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Please indicate your agreement with the foregoing by executing one copy
of this letter agreement in the space provided below and returning a fully
executed copy to the Company.
Very truly yours,
TRANSITION ANALYSIS COMPONENT
TECHNOLOGY, INC.
By: /s/ XXXXXX X. XXXXX
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Name: Xxxxxx X. Xxxxx
Title: Chief Financial Officer
AGREED AND ACCEPTED:
By:
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Name: Xxxx Xxxxxx
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Please indicate your agreement with the foregoing by executing one copy
of this letter agreement in the space provided below and returning a fully
executed copy to the Company.
Very truly yours,
TRANSITION ANALYSIS COMPONENT
TECHNOLOGY, INC.
By:
--------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Financial Officer
AGREED AND ACCEPTED:
By: /s/ XXXX XXXXXX
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Name: Xxxx Xxxxxx
