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EXHIBIT 10.12
STOCK OPTION GRANT
This Stock Option Grant (the "Grant") is made as of July 27, 1995, by
Xxxxx Systems Corporation, a Texas corporation ("PSC"), in favor of Xxxxx X.
Xxxxxxxxx ("Xxxxxxxxx").
WITNESSETH:
WHEREAS, PSC desires to xxxxx Xxxxxxxxx the right and option to
purchase shares of Common Stock, $0.01 par value per share, of PSC ("Common
Stock") in accordance with and subject to the terms and conditions of this
Grant;
NOW, THEREFORE, in consideration of good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, PSC hereby agrees
for the benefit of Xxxxxxxxx as follows:
1. Certain Definitions. As used in this Grant, the following
terms have the meanings indicated:
(a) "After-Tax Cost" of a share of Restricted Stock means
the Cost of such share, plus the amount of any taxes incurred by
Xxxxxxxxx in respect of such share, including without limitation any
taxes paid under Section 83 of the Internal Revenue Code of 1986, as
amended (the "Code"), or in respect of any dividends on such
Restricted Stock or in connection with a gain on the sale of such
Restricted Stock.
(b) "Board" means the Board of Directors of PSC.
(c) "Cost" of a share of Restricted Stock means the price
per share paid by Xxxxxxxxx to acquire such Restricted Stock plus
interest on such amount at the rate of interest applicable to the
Purchase Price Note (as defined below) from the date of payment by
Xxxxxxxxx to the date of tender of payment by PSC (or, if earlier, the
date that Xxxxxxxxx sells such Restricted Stock), minus the amount or
fair market value, as applicable, of any dividends or distributions
paid in respect of such Restricted Stock prior to the date of
disposition.
(d) "Effective Date" means the date on which Xxxxxxxxx
commences his employment with PSC pursuant to the Employment
Agreement.
(e) "Employment Agreement" means an employment agreement
between PSC and Xxxxxxxxx substantially in the form of Exhibit A
hereto.
(f) "Expiration Date" means the earlier of (i) the
fifteenth anniversary of the Effective Date, unless the Restricted
Stock is Publicly Traded on that date, and Xxxxxxxxx is terminated for
Cause (as defined in the Employment Agreement) or resigns for other
than Good Reason (as defined in the Employment Agreement) in which
case it will mean the twelfth anniversary of the Effective Date or
(ii) if Xxxxxxxxx ceases to be an employee of PSC for any reason and
on such date the Restricted Stock is Publicly Traded, the date five
years after the last Vesting Date, but if on the date of termination
the Restricted Stock is Publicly Traded, and Xxxxxxxxx is terminated
for Cause or other than for Good Reasons, the date two years after the
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last Vesting Date. Notwithstanding anything else in this paragraph
(f), the Expiration Date shall never occur less than one year after
the Restricted Stock is first Publicly Traded.
(g) "Market Value" of a share of Restricted Stock on a
given date (prior to the time the Restricted Stock is Publicly Traded)
means the fair market value of such Restricted Stock, as determined in
good faith by the Board as of the most recent Valuation Date on or
before such date.
(h) "Option" means the right and option to purchase
Restricted Stock evidenced by this Grant.
(i) "Publicly Traded" means the Restricted Stock has been
listed on a registered national securities exchange or approved for
quotation in the National Association of Securities Dealers Automated
Quotation ("Nasdaq") system.
(j) "Put Value" of a share of Restricted Stock on a given
date (prior to the time the Restricted Stock is Publicly Traded) means
the fair market value of such Restricted Stock, without discount for
minority interest or illiquidity, as agreed between PSC and Xxxxxxxxx
or, if no such agreement can be reached within 20 days, as determined
by an independent appraiser (the costs of which will be paid by PSC)
selected jointly by PSC and Xxxxxxxxx. If an independent appraisal is
necessary, PSC and Xxxxxxxxx will negotiate in good faith to agree on
the appraiser within 30 days. If they cannot agree, the appraiser
will be selected by an independent arbitrator selected pursuant to the
rules of the American Arbitration Association. The appraiser will
make its determination within 60 days after selection.
(k) "Restricted Stock" means any Common Stock purchased
upon the exercise of this Option, together with any successor
security, property or cash issued or distributed by PSC or any
successor entity, whether by way of merger, consolidation, share
exchange, reorganization, liquidation, recapitalization or otherwise.
(l) "Transfer" or "transfer" or derivations thereof
include any sale, assignment, gift, pledge, encumbrance,
hypothecation, mortgage, exchange or any other disposition.
(m) "Unvested Stock" means all shares of Restricted Stock
other than Vested Stock.
(n) "Valuation Date" means each June 30 and December 31
of every year, and any other date as of which the Board determines the
Market Value of Restricted Stock.
(o) "Vested Stock" means those shares of Restricted Stock
that have vested to Xxxxxxxxx or Xxxxxxxxx'x estate pursuant to
Section 3.
(p) "Vesting Date" means each date upon which shares of
Restricted Stock vest to Xxxxxxxxx or Xxxxxxxxx'x estate pursuant to
this Grant, as set forth in Exhibit B hereto.
(q) "Vesting Period" means the period of time commencing
on the date of this Grant and ending on the last date on which
Restricted Stock vests hereunder.
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2. Grant of Option; Exercise.
(a) Subject to the terms, conditions and restrictions set
forth in this Grant, PSC hereby grants to Xxxxxxxxx the option to
purchase from PSC 1,000,000 shares of Common Stock, at an exercise
price of $2.00 per share. PSC is granting the Option hereunder in
consideration for Xxxxxxxxx'x agreement not to commence permanent,
full-time employment with any other company before January 1, 1996.
(b) Subject to the terms, conditions and restrictions set
forth in this Grant, Xxxxxxxxx may exercise the Option at any time
after the Effective Date and prior to the Expiration Date. If
Xxxxxxxxx does not accept employment with PSC pursuant to the
Employment Agreement by December 31, 1995, then the Option will be
canceled and have no further effect.
(c) To the extent that Xxxxxxxxx exercises the Option, in
whole or in part, on or prior to December 31, 1995, the exercise price
may be paid 30% in cash and 70% by delivery from Xxxxxxxxx to PSC of a
secured promissory note substantially in the form of Exhibit C hereto
(the "Purchase Price Note"), which will be secured by a pledge of this
Option and any Restricted Stock acquired hereunder pursuant to a
pledge agreement substantially in the form of Exhibit F hereto (the
"Pledge Agreement"). To the extent that Xxxxxxxxx exercises the
Option, in whole or in part, after December 31, 1995, the full
exercise price payable upon each exercise must be paid by Xxxxxxxxx to
PSC at the time of exercise.
3. Vesting of Restricted Stock. The Restricted Stock issuable
upon exercise of the Option will vest in Xxxxxxxxx in accordance with the
Vesting Schedule set forth on Exhibit B hereto, but only for so long as
Xxxxxxxxx is an employee of PSC, except as follows:
(a) If Xxxxxxxxx'x employment with PSC is terminated (i)
by PSC without Cause, including termination due to Xxxxxxxxx'x
physical or mental illness or death, or (ii) by Xxxxxxxxx with Good
Reason, then (A) the Restricted Stock scheduled to vest on each
Vesting Date to and including the Vesting Date in 1998 will vest on
such Vesting Dates (to the extent not previously vested)
notwithstanding such termination and (B) if such termination occurs
after the Vesting Date in 1998, the Restricted Stock scheduled to vest
on the next Vesting Date after such termination (if any) will vest on
such Vesting Date notwithstanding such termination. Notwithstanding
the foregoing, if vesting is accelerated under Section 3(b), then
Section 3(b) (and not this paragraph) will apply through the last
Vesting Date for which vesting is accelerated under Section 3(b) and,
thereafter, this paragraph will again apply.
(b) If a Change in Control (as defined in the Employment
Agreement) occurs while Xxxxxxxxx is employed by PSC, or if
Xxxxxxxxx'x employment with PSC is terminated prior to but in
connection with a Change in Control, then (A) the Restricted Stock
scheduled to vest on each Vesting Date to and including the Vesting
Date in 2000 will vest immediately upon such Change in Control (to the
extent not previously vested) and (B) if the Change in Control occurs
after the Vesting Date in 1999, the Restricted Stock scheduled to vest
on the next two Vesting Dates after such termination (if any) will
vest immediately upon such Change in Control. If the vesting
scheduled to occur on one or more Vesting Dates is accelerated
pursuant to this paragraph, then the remaining Vesting Dates, which
are not accelerated, will remain unchanged, with the result that no
vesting will occur during the years for which vesting was accelerated.
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(c) If Xxxxxxxxx is employed by PSC pursuant to the
Employment Agreement by December 31, 1995, but his employment with PSC
is terminated prior to the Vesting Date in 1996 (i) by PSC with Cause
or (ii) by Xxxxxxxxx without Good Reason, then the Restricted Stock
scheduled to vest on the Vesting Date in 1996 will vest on such
Vesting Date notwithstanding such termination.
4. Restrictions on Transfer. The following restrictions on
transfer apply unless PSC otherwise agrees in writing:
(a) The Option may not be sold or otherwise transferred,
except by will or the laws of descent and distribution. If the Option
is transferred by will or the laws of descent and distribution, the
transferee will hold the Option and any Restricted Stock acquired upon
exercise of the Option subject to all of the vesting provisions,
transfer restrictions, repurchase options and other provisions of this
Grant and the Pledge Agreement, in each case as if such Option or
Restricted Stock continued to be held by Xxxxxxxxx. Without limiting
the generality of the foregoing, a transferee under this paragraph
will hold the Option and any Restricted Stock subject to PSC's
repurchase options and other rights under Section 5, Section 6 and
paragraphs (b), (c) and (d) of Section 7 and PSC's rights of offset
under Section 13.
(b) Shares of Unvested Stock may not be sold or otherwise
transferred.
(c) One-half of the total number of shares of Vested
Stock that vest on a particular Vesting Date may not be sold or
otherwise transferred for two years after such Vesting Date; provided
that such restriction on transfer will not apply (i) if Xxxxxxxxx
sells Vested Stock and applies the proceeds of such sale, less any
federal income taxes incurred by Xxxxxxxxx as a result of such sale,
to prepayment of the Notes (as defined in Section 12), or (ii) if
Xxxxxxxxx'x employment with PSC terminates for any reason.
(d) Shares of Vested Stock may not be sold or otherwise
transferred prior to the Restricted Stock being Publicly Traded unless
the holder has given PSC any notice required under Section 5 and PSC
has waived in writing any right it has to buy back the shares under
Section 5.
(e) Notwithstanding the foregoing restrictions on
transfer, Xxxxxxxxx may transfer, while he is alive or as a
distribution upon his death, all or a portion of the Restricted Stock
to a maximum of two transferees, but only if each transferee is
Xxxxxxxxx'x spouse, descendant or a trust for their benefit. Any such
transfer must be effected pursuant to documentation reasonably
acceptable in form and substance to PSC, and such documentation must
provide that the Restricted Stock transferred remains subject to all
of the vesting provisions, transfer restrictions, repurchase options
and other provisions of this Grant and the Pledge Agreement, in each
case as if such Restricted Stock continued to be held by Xxxxxxxxx.
Without limiting the generality of the foregoing, a transferee under
this paragraph will hold the Restricted Stock subject to PSC's
repurchase options and other rights under Section 5, Section 6 and
Section 7 and PSC's rights of offset under Section 13.
PSC is not obligated to recognize any purported sale or other transfer
of the Option or any Restricted Stock in violation of this Section 4 and,
unless it elects to do otherwise, may treat any such purported sale or transfer
as null, void and of no effect.
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5. First Option to Buy Restricted Stock. At any time before the
Restricted Stock is Publicly Traded, if Xxxxxxxxx desires or is obligated to
sell or otherwise transfer any Vested Stock (including any distribution to
heirs or other beneficiaries of Xxxxxxxxx'x estate, but excluding any transfer
pursuant to Section 4(e) or Section 9), Xxxxxxxxx is required to give PSC
written notice of the proposed sale or transfer, including notice of the
proposed purchaser or transferee, and, for a period of 30 days after receipt of
such notice, PSC will have the right to buy back such Restricted Stock for cash
at a purchase price equal to its Market Value.
6. Option to Buy Unvested Stock. If Xxxxxxxxx'x employment with
PSC is terminated for any reason during the Vesting Period, then (a) the Option
will be immediately canceled with respect to any shares of Unvested Stock,
except for Unvested Stock that will vest at or following such termination
pursuant to Section 3, and (b) PSC will be entitled, by notice to Xxxxxxxxx
within 150 days after such termination, to require Xxxxxxxxx to sell to PSC all
or any part of the Unvested Stock then held by Xxxxxxxxx, except for any
Unvested Stock that will vest at or following such termination pursuant to
Section 3. The purchase price applicable to PSC's purchase option under clause
(b) above will be (i) the After-Tax Cost of such Unvested Stock, if Xxxxxxxxx'x
employment with PSC is terminated by PSC without Cause or by Xxxxxxxxx with
Good Reason, or (ii) the Cost of such Unvested Stock, if Xxxxxxxxx'x employment
with PSC is terminated by PSC with Cause or by Xxxxxxxxx without Good Reason.
7. Competition. If, following Xxxxxxxxx'x employment by PSC
pursuant to the Employment Agreement, Xxxxxxxxx breaches Section 4 of the
Employment Agreement and such breach is not cured in accordance with the notice
and cure provisions of Section 5 of the Employment Agreement (either because
Xxxxxxxxx fails to give notice of the action constituting a breach within the
time period specified therein or because he fails to effect the cure required
thereunder within the specified time period), then PSC will have the right, for
150 days after PSC discovers such breach, to
(a) cancel any unexercised portion of the Option;
(b) cancel any remaining vesting that has not yet
occurred, but is scheduled to occur in the future under Section 3;
(c) require Xxxxxxxxx to sell to PSC all or any part of
the Restricted Stock then owned by Xxxxxxxxx at a purchase price equal
to its After-Tax Cost; and
(d) if any shares of Restricted Stock have been sold or
otherwise transferred by Xxxxxxxxx (including any shares sold to PSC
but excluding any shares transferred under Section 4(e) or acquired by
a transferee under Section 4(a), which shares will be held subject to
this paragraph) prior to such time, require Xxxxxxxxx to pay to PSC,
with respect to each share of Restricted Stock not then held by
Xxxxxxxxx, an amount in cash equal to the value of the consideration
received by Xxxxxxxxx for such share or, if such share was not
transferred in a bona fide arm's length sale, the greater of the value
of such consideration or the Market Value of such share on the date of
such transfer, less (in either case) the After-Tax Cost of such share;
provided that (i) the total number of shares of Restricted Stock as to which
the Option is canceled pursuant to clause (a) that are vested on the date of
cancellation or would vest subsequent to such date pursuant to Section 3, plus
(ii) the total number of shares of Restricted Stock as to which future vesting
is canceled pursuant to clause (b), plus (iii) the total number of shares of
Restricted Stock that are repurchased by PSC pursuant to clause (c), plus (iv)
the total number of shares of Restricted Stock with
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respect to which Xxxxxxxxx is required to make the payment described in clause
(d), may not exceed 200,000 shares (as adjusted to reflect any stock split,
stock dividend or similar event affecting the total number of shares of Common
Stock outstanding). PSC will exercise its remedies under this Section 7 in the
order of paragraphs (a) through (d), above, until the 200,000 share limit is
reached.
8. Procedure for Repurchase of Stock. Whenever PSC has a right
to buy back shares of Restricted Stock under Section 5, 6 or 7, PSC may
exercise its right by notifying Xxxxxxxxx of PSC's election to exercise its
right within the designated exercise period. The giving of such notice will
give rise to an obligation on the part of Xxxxxxxxx to tender to PSC, within 10
days, any previously issued certificate representing shares of Restricted Stock
to be bought back, duly endorsed in blank or having a duly executed stock power
attached in proper form for transfer. If any such certificate is not tendered
within 10 days, PSC may cancel any outstanding certificate representing shares
to be bought back. PSC is required to tender the purchase price for shares to
be bought back under this Section 8 within 20 days of giving notice of its
election to exercise its right to buy back shares. If Xxxxxxxxx has not
complied with an obligation to return a certificate representing shares to be
bought back, however, PSC is not required to tender the purchase price until 20
days after the certificate is returned or 20 days after it cancels the
certificate, whichever occurs first.
9. Put Option. If the Restricted Stock is not Publicly Traded by
the fifteenth anniversary of the Effective Date (the "Put Date"), then,
beginning on the Put Date and ending on the date that the Restricted Stock is
Publicly Traded, Xxxxxxxxx will have the option (the "Put Option") to require
PSC to repurchase and exchange Vested Stock at its Put Value, on the terms set
forth in this Section 9. but such exercise will be limited to a number of
shares of Vested Stock equal to the shares resulting in profits to Xxxxxxxxx
(calculated as the Put Value, less any federal income taxes incurred by
Xxxxxxxxx as a result of such sale or exchange) equal to no more than all the
then outstanding principal and interest under the Notes, provided that
Xxxxxxxxx will transfer and exchange such Vested Stock to PSC, at the Put
Value, equal to such outstanding principal and interest under the Notes in
exchange for cancellation of such principal and interest, and will only receive
from PSC cash equal to the amount necessary to pay any federal income taxes
incurred by Xxxxxxxxx as a result of such sale or exchange.
The Put Option may be exercised no more than once. The Put Option may be
exercised only by Xxxxxxxxx with respect to shares of Vested Stock that he owns
(or shares that are held by a transferee under Section 4(e) before or after
Xxxxxxxxx'x death by the holders of such shares, proportionate to their
holdings). Xxxxxxxxx may exercise the Put Option by notifying PSC of his
election to exercise and the number of shares to be sold (up to the maximum as
permitted under the Put above), and upon delivery of such notice the parties
will determine the Put Value (in accordance with Section 1(j)). The purchase
and sale of shares pursuant to the Put Option will occur at a closing to be
held 30 days after the determination of the Put Value (or such earlier date as
may be mutually agreed). At the closing, Xxxxxxxxx will deliver to PSC all
certificates representing shares of Vested Stock to be sold to PSC, duly
endorsed in blank or having a duly executed stock power attached in proper form
for transfer, and PSC will cancel the indebtedness exchanged for such shares
and deliver the purchase price so much of the Vested Stock as is put to PSC to
permit Xxxxxxxxx to pay any income taxes associated with the Put.
Alternatively, if Xxxxxxxxx so elects in his notice of exercise, he may
exercise the Option (subject to the vesting and other provisions of this Grant)
at the closing and simultaneously sell Restricted Stock acquired upon exercise
to PSC pursuant to the Put Option, in which case PSC may deduct the applicable
exercise price from the amount to be paid to Xxxxxxxxx for such taxes (after
deduction for the canceled Notes); provided however in such case the number of
shares of Vested Stock which may be exercised by the Put Option shall include
shares to also cover the expense of the exercise price.
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Notwithstanding the foregoing, if, prior to the Put Date and prior to the time
that the Restricted Stock is Publicly Traded, Xxxxxxxxx incurs liability for an
excise tax under Section 4999 of the Code, without regard to the effect of this
Section 9, then Xxxxxxxxx may additionally exercise the Put Option (which
shares will not be considered with regard to the above Put) beginning on the
date that Xxxxxxxxx incurs such excise tax liability, but such exercise will be
limited to a number of shares of Vested Stock equal to the lesser of (a) shares
resulting in aggregate net profits to Xxxxxxxxx (calculated as the Put Value,
less Xxxxxxxxx'x tax basis in such shares, less any federal income taxes
incurred by Xxxxxxxxx as a result of such sale, less any portion of the sale
proceeds that is required to be applied to the Purchase Price Note) equal to
Xxxxxxxxx'x excise tax liability and (b) during any 12 month period, one
quarter of the total number of shares that have previously vested.
10. Defense of Certain Claims. If (a) Xxxxxxxxx accepts
employment pursuant to the Employment Agreement by December 31, 1995, and (b)
International Business Machines Corporation ("IBM") asserts a claim against
Xxxxxxxxx, based on his association with PSC prior to the Effective Date,
seeking a refund of any profits realized by Xxxxxxxxx from the exercise during
March, April or May of 1995 of stock options granted by IBM, which profits
would not be subject to any claim by IBM if Xxxxxxxxx had no contact with PSC
prior to the Effective Date, regardless of any conduct of Xxxxxxxxx after the
Effective Date (a "Covered Claim"), then (i) PSC will pay all reasonable costs
associated with contesting the Covered Claim, but only if and for so long as
Xxxxxxxxx'x defense against the Covered Claim has merit, as determined in good
faith by PSC, and only if PSC consents in advance to the selection of
Xxxxxxxxx'x attorneys (which consent will not be unreasonably withheld), and
(ii) PSC will loan to Xxxxxxxxx any amount that Xxxxxxxxx is required to pay to
his former employer in respect of a Covered Claim (whether pursuant to a
judgment or in settlement), up to an aggregate of $2,700,000, pursuant to a
promissory note in the form of Exhibit D hereto (the "Covered Claims Note"),
which will be secured by the Pledge Agreement. The Covered Claims specifically
exclude any claim relating to activities by Xxxxxxxxx subsequent to his
employment by PSC. In the course of defending himself against a Covered Claim,
Xxxxxxxxx may also defend himself against other claims that are based on the
same facts as the Covered Claim, in which case Xxxxxxxxx will be responsible
only for those non-incidental costs that would not have been incurred if his
defense was limited solely to the Covered Claim (subject to the limitations in
clause (i) above). PSC will not be required to advance any funds under the
Covered Claims Note after Xxxxxxxxx'x death or after the date on which the
Covered Claims Note would be due in accordance with its terms. PSC hereby
consents to the selection of Proskauer Xxxx Xxxxx & Xxxxxxxxxx LLP as
Xxxxxxxxx'x attorney (for purposes of clause (i) above) if the fees charged by
such firm are reasonable.
11. General Advance. At the request of Xxxxxxxxx at any time
prior to August 15, 1996, PSC will loan Xxxxxxxxx up to $1,500,000 pursuant to
a promissory note substantially in the form of Exhibit E hereto (the "General
Note"), which will be secured by the Pledge Agreement. Such loan will be made
in a single advance, and any portion of such loan that is repaid by Xxxxxxxxx
may not be reborrowed. Xxxxxxxxx may use the proceeds of such loan for any
purpose, including without limitation purchasing a house or furnishings for a
house or for other personal expenditures. PSC will not be required to advance
any funds under the General Note after Xxxxxxxxx'x death or after the date on
which the General Note would be due in accordance with its terms.
12. Tax Matters. PSC agrees to indemnify Xxxxxxxxx from any
liability for federal income taxes that Xxxxxxxxx may incur as a result of any
finding that the interest rate on the Purchase Price Note, the General Note or
the Covered Claims Note (collectively, the "Notes"), if any such Notes are
issued, is below the minimum interest rate respected for tax purposes under
applicable federal law. Such indemnification payments will be "grossed up" as
necessary to compensate Xxxxxxxxx for any additional
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federal income tax liability incurred as a result of such indemnification
payments and any "gross up" payment.
13. Rights of Offset. PSC may, in its discretion, satisfy any
payment obligations to Xxxxxxxxx under this Grant by offset against amounts
owing from Xxxxxxxxx to PSC under any of the Notes, whether or not such amounts
are then due and payable under the Notes; provided that PSC must pay in cash
(a) defense costs for Covered Claims to the extent required under Section
10(i), (b) indemnity payments to the extent required under Section 12 and (c)
the initial advances required in respect of the Notes. Xxxxxxxxx may, in his
discretion, satisfy any payment obligation to PSC under the Notes by offset
against amounts then owing from PSC to Xxxxxxxxx under this Grant.
14. Compliance with Securities Laws. Exercise of the Option may,
in PSC's discretion, be conditioned upon a representation by the Option holder
that he is an "accredited investor" within the meaning of Regulation D under
the Securities Act of 1933, as amended (the "Securities Act"), and that he is
acquiring the Restricted Stock for his own account and not with a view to any
resale or distribution thereof. Neither Xxxxxxxxx nor any subsequent holder of
the Restricted Stock may sell or otherwise transfer any Restricted Stock in any
way that may result in a violation of any federal or state securities laws or
regulations. PSC may require any subsequent purchaser or other transferee of
Restricted Stock that cannot be publicly traded to provide PSC, prior to such
sale or other transfer, with such representations, commitments and opinions
regarding compliance with applicable securities laws and regulations as PSC may
deem necessary or advisable. PSC is granting the Option and will offer and
sell the Restricted Stock hereunder pursuant to an exemption from the
registration requirements of the Securities Act provided by Section 4(2)
thereof, and under similar provisions of state securities laws (and not under
Rule 701 under the Securities Act).
15. Stock Certificates; Rights as Shareholder. PSC will retain
for safekeeping all certificates representing Unvested Stock and, until all
obligations under the Notes have been repaid in full, all other Restricted
Stock. Each certificate evidencing Restricted Stock will bear such legends as
PSC determines are necessary or appropriate. Whether or not certificates
representing shares of Restricted Stock have been issued or delivered,
Xxxxxxxxx will have all the rights of a shareholder of Restricted Stock,
including voting, dividend and distribution rights, with respect to shares of
Restricted Stock owned by Xxxxxxxxx, subject to PSC's repurchase rights
hereunder. Xxxxxxxxx will not have any rights as a shareholder with respect to
any shares subject to the Option before the date of exercise of the Option with
respect to such shares.
16. Income Tax Withholding. Xxxxxxxxx shall, upon request by PSC,
reimburse PSC for, or PSC may withhold from sums or property otherwise due or
payable to Xxxxxxxxx, any amounts PSC is required to remit to applicable taxing
authorities as withholding pursuant to any law or government regulation or
ruling. If shares of Restricted Stock are withheld for such purpose, they will
be withheld at Market Value. If Xxxxxxxxx fails to reimburse PSC for any such
amount within 30 days after PSC requests reimbursement in writing, PSC has the
right to recover that amount by selling or canceling sufficient shares of any
Restricted Stock held by Xxxxxxxxx.
17. Adjustments. If any change is made in the shares of Common
Stock (including without limitation by stock dividend, stock split, merger or
consolidation, but not including the issuance of additional shares for
consideration or the issuance of restricted stock to employees, consultants or
other agents of PSC), the Board will make such adjustments in the number and
kind of shares (which may consist of shares of a surviving corporation to a
merger) that may thereafter be acquired by Xxxxxxxxx
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upon exercise of the Option and the exercise price applicable thereto as are
equitable to preserve the intent and economic effect of this Grant.
18. Action by PSC. Any election, consent, waiver or other action
that may be taken by PSC hereunder will be taken by the Chairman of the Board,
unless Xxxxxxxxx is then serving in such capacity, in which case such action
will be taken by the Board.
19. Notices. Any notice to PSC that is required or permitted by
this Grant must be addressed to PSC at its principal office to the attention of
the Chairman (unless Xxxxxxxxx is then the Chairman, in which case to the
attention of the Board of Directors), with a copy to the General Counsel. Any
notice to Xxxxxxxxx that is required or permitted by this Grant must be
addressed to Xxxxxxxxx at the most recent address for Xxxxxxxxx reflected in
the appropriate records of PSC, with copies to Proskauer Xxxx Xxxxx &
Xxxxxxxxxx LLP, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X.
Xxxxxx (telecopy: 212-969-2900). Either party may at any time change its
address for notification purposes by giving the other prior written notice of
the new address and the date upon which it will become effective. Whenever
this Grant requires or permits any notice from one party to another, the notice
must be in writing and must be sent by courier, overnight delivery service,
facsimile or certified mail, return receipt requested, and such notice will be
deemed to be given (a) if sent by courier, on the date actually delivered, (b)
if sent by overnight delivery service, one day after being sent, (c) if sent by
telecopy, on the date that confirmation of transmission is received by the
sender, or (d) if sent by certified mail, on the third business day after being
mailed.
20. Enforcement. This Grant will be governed by and construed in
accordance with the laws of the State of Texas, without regard to the choice of
law rules thereof. PSC will be entitled, in addition to any other remedies it
may have at law or in equity, to temporary and permanent injunctive and other
equitable relief to enforce the provisions of this Grant. Any action to
enforce the provisions of, or otherwise relating to, this Grant may be brought
in the appropriate courts in Dallas, Dallas County, Texas, and by accepting the
Option Xxxxxxxxx hereby consents to the personal jurisdiction of such courts in
any such action; provided that, at the request of PSC or Xxxxxxxxx, any claim
or dispute arising out of or relating to this Grant or the transactions
contemplated hereby, will be resolved without resort to the courts solely
through mediation and, if mediation is not successful, through binding
arbitration pursuant to the rules of the American Arbitration Association. A
judgment upon the award rendered by the arbitrators may be entered by any court
having jurisdiction. Neither party will be liable to the other for punitive
damages for any such claim or dispute.
21. Entire Agreement. This Grant, the Employment Agreement and
the other documents and instruments specifically referenced therein constitute
the entire agreement between the parties hereto with respect to the subject
matter thereof, and except as expressly set forth therein, there are no
agreements or representations, written or oral, express or implied, with
respect to such subject matter. No provision of this Grant may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by Xxxxxxxxx and PSC. No waiver by either party hereto of
any condition or provision of this Grant to be performed by the other party
will be deemed a waiver of any other provisions or conditions at the same or at
any prior or subsequent time.
22. Severability. If any provision of this Grant is held to be
invalid or unenforceable for any reason, the validity and enforceability of all
other provisions of this Grant will not be affected thereby.
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IN WITNESS WHEREOF, PSC has executed this Grant as of the date first above
written.
XXXXX SYSTEMS CORPORATION
By: /s/ XXXXXX X. XXXXXXXX
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Name: XXXXXX X. XXXXXXXX
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Title: President and Chief Executive
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Officer
Exhibits
A. Employment Agreement
B. Vesting Schedule
C. Form of Purchase Price Note
D. Form of Covered Claims Note
E. Form of General Note
F. Form of Pledge Agreement
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